Freeman and Friedman have very contrasting opinions on the goals and responsibilities of a business. Freeman supports the Stakeholder Theory in suggesting that anyone who has a stake in the firm deserves to be treated as a participating determining factor in the direction of a firm. They are not just a means to the end. Friedman pretty much says the opposite. He believes that businesses have no responsibility outside of those who have ownership in the company. In devising my own opinion, being part of the Millennial generation I feel that we lean more towards Freeman’s argument.…
In order to make justification for the type of behaviours business managers have and to outline the appropriate actions they should take, many ethical theories have been developed since. There are three that best represent the key perspectives in this matter; Friedman’s Shareholder theory, Freeman’s Stakeholder theory and Heath’s Market Failure Model of business ethics (Heath). Each of them is the pillars of which many other theories are based on but have very different and opposite views. The Shareholder theory suggests that manager has fiduciary duties to the shareholders only and must maximize profits as long as the law permits. The Stakeholder theory on the other hand suggests that managers have fiduciary duties to all stakeholders whom are positively or negatively affected by the…
Friedman criticizes business managers who engage in socially responsible behavior by using the argument that there is a different set of criteria for social responsible behavior of a person, who happens to be a corporate executive (businessman) versus that same person acting as an individual in a free-society. A business manager’s main responsibility is to maximize the profit of the corporation. When that person combines those roles and directs a corporation to take on a social responsible cause, because it would either increase cost or decrease revenue, it would be equivalent to a tax on the customers, shareholders and employees without their consent and in some cases, knowledge.…
"Milton Friedman and the Social Responsibility of Business." Worldchanging: Bright Green. Tue. 02 Feb. 2010. .…
References: Friedman, Milton. (September 13, 1970). The Social Responsibility of Business is to Increase its…
Friedman argues that the objective of a corporation is to maximize the profits within the guidelines of the law in the free and open society. If the corporate executive has a “social responsibility”, which means his is to act that is not in the interest of his employers.…
Milton Friedman and others have argued that a corporation 's purpose is to maximize returns to its shareholders, and that since only people can have social responsibilities, corporations are only responsible to their shareholders and not to society as a whole. They assert that corporations have no other obligation to society. (Freeman,…
Both Friedman and Mackey don’t agree with what the text had to say, each has his own opinion on how working under ethics can make a company profitable. In Friedman’s article “The Social Responsibility of a Business is to Increase its Profits”, he stated that for a business to be profitable, there is only and only one corporate social responsible framework to work with under certain rules; that is engage in an open and free competition without fraud and deception. Mackey strongly disagreed with Friedman’s opinion, as he states that each person or stakeholder affected by the company “customer, employee, supplier, public” have an expected need and want from the company itself. Of course the goal of the shareholders is to gain profit, but other stakeholders like customers might want good customer service.…
Thirty-five years ago, Milton Friedman wrote a famous article for The New York Times Magazine whose title aptly summed up its main point: "The Social Responsibility of Business Is to Increase Its Profits." Friedman had no patience for capitalists who claimed that "business is not concerned 'merely' with profit but also with promoting desirable 'social' ends; that business has a 'social conscience' and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers." Friedman wrote that such people are "preaching pure and unadulterated socialism. Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades."…
What do you think about the social responsibility of businesses? Do you think they have certain social requirements or should the main objective of a business be to make money? This is a very in-depth and valid question in which both Milton Friedman and Robert Almeder have strong opinions. Although their opinions are polar opposite they have valid arguments. The objective is to analyze both opinions from their perspective point of views based on the examples given in the text. A mixture of both positions would provide a common ground for all people involved.…
Friedman argues that "only people can have responsibilities" but that "businesses as a whole” cannot, as they are not persons. Since the corporate executive is an employee of the shareholders, and therefore only “responsible to his employers.” The corporate executive has primary responsibility to his employers to conduct business as they see fit, and manage the business to create the most profit while following the “basic rules of the society”. It is then seen that the corporate executive is acting as a “public employee,” while serving shareholders and should be directed by those shareholders how to spend their money.…
• ‘The one and only social responsibility of business is to make profits’ (the economics guru Milton Friedman)…
According to Friedman, a ‘good’ corporation is not one that undertakes activities only because they are ethically sound, but because they are economically viable. Milton Friedman argued against spending shareholder’s money for anything that does not directly contribute to increasing shareholder wealth or profit. His main argument stems from his views on what constitutes ethical spending. In other words, he noted that it is not appropriate for a corporate executive or director to embark on social objectives or programs because there is little incentive for prudent expenditure, particularly when one is spending money owed to the shareholders through dividends. In addition, companies should not engage in any charitable activities or dedicate…
Milton Friedman says that a company’s main goal is to maximize profits only to the stockholders. The owners own the corporation and therefore the profits belong to them. So why care about anyone else other than the shareholders? Everyone else involved are merely strategic tools that assist in some way to maximize profits but don’t benefit in the same way a shareholder does. Saying this pretty much says that the non-owners are not human, and are just tools used to help maximize profits for the owners.…
The stockholder theory suggests that organizations are responsible only to shareholders, and all of the employees ' actions are directed towards maximizing shareholder wealth without breaking the law. Manager 's act as agents to the stockholders, the business can have no social responsibility (Hasnas 1998).…