The paper 'Corporate Social Responsibility - Milton Friedman" is a perfect example of business coursework. There exist major wrangles in the world of business between the corporate and the stakeholders. Various approaches to improving the relationship between businesses and stakeholders have been suggested but none the less, the stalemate still continues. How can businesses fulfill their duties of social responsibilities? Whose interest should corporate give more consideration? That of stakeholders or shareholders? These are questions that offer a challenge to the corporate. My thesis is that I can revive the notion of managerial capitalism by replacing the concept that managers have an obligation to stockholders with the opinion that managers owe a fiduciary relationship to stakeholders.
In doing this I will examine and analyze the arguments put forward by Milton Friedman in his book, “ The Social Responsibility of Business Is to Increase Its Profit” ; Edward Freeman in his book, “ A Stakeholder Theory of the Modern Corporation, ” and Joseph Heath, “ Business Ethics Without Stakeholders” According to Milton Friedman, the social responsibility of any business enterprise is to increase its profit. It surprises him that some businessmen praise themselves through offering employment, avoiding pollution, eliminating discrimination yet they do this in order to show solidarity with the society but their main aim is maximizing their profits.
He argues that only individuals can be responsible and not businesses. The corporate only fulfills the wishes of the management which requires them to make more money for the business owners. Every corporate has the duty to exercise social responsibility towards its stakeholders. An organization ought to treat any individual or group that influences its operations as a stakeholder.
The notion that companies' only interest is to maximize their profits should be treated as a thing of the past. In recent times we have seen corporate being a core element in facilitating changes within the industry they operate in. Organizations’ have stood on a common goal regarding the production of quality products that do not threaten human life. Exercising care in the products they produce is itself a social responsibility. In such a situation the stakeholders who include the consumers rely on good faith that what they purchase is good for their health.
This is one type of fiduciary relationship. We as consumers have no alternative but to trust that the products and services we purchase from firms are of good quality. Friedman had made a critical analysis of what goes through the minds of corporate owners in the pretense of social responsibility. The relationship between the executive corporate and stockholders is a fiduciary one. The managers are agents to the stockholders who are actually the owners of an organization. It’ s the duty of managers to manage resources entrusted upon them with due care.
The interest of a firm is to make profits but this should not let them forsake the interest of stakeholders especially those people who have allowed them to operate in that locality and any other who has an interest in the operations of the firm. Should the fiduciary relationship between the managers and shareholders extend to other parties? Take an example of the firm’ s employees, aren’ t they legitimate stakeholders? Actually they are but what relationship exists between them and the management? Is it not a fiduciary one or is it an obligation?
What about between the corporate and the suppliers? In light of this, I believe corporate responsibility should be extended to other stakeholders rather than on shareholders alone.
Evan, William M, and R E. Freeman. A Stakeholder Theory of the Modern Corporation: Kantian Capitalism. , 1988. Print.
Friedman, Milton. "A Friedman Doctrine: The Social Responsibility of Business Is to Increase Its Profits." Corporate Social Responsibility : Readings and Cases in a Global Context. (2008): 26-32. Print.
Heath, Joseph. Business Ethics Without Stakeholders: Business Ethics Quarterly. (2006): 533- 557. Print.