Read the following two articles: http://www.colorado.edu/studentgroups/libertari
ID: 399385 • Letter: R
Question
Read the following two articles: http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=263511 The Social Responsibility of Business Is to Increase Its Profits, Friedman A Stakeholder Approach to Strategic Management, Freeman and McVea Friedman argued, “Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible.” In contrast, Freeman and McVea argued that the role of a corporation is to balance the needs of all stakeholders. How do you feel about Friedman’s and Freeman and McVea’s statements? Explore both sides of the argument in your initial post by providing one argument that supports Friedman’s assertion and one argument that refutes it. Then provide one argument that supports Freeman and McVea’s assertion and one argument that refutes it. Once you have explored both sides of each argument, explain which author(s) you think is correct and why.
http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html
Explanation / Answer
Social responsibility is a duty or the responsibility of an organisation or a person towards the society. It is a social contract wherein, the society benefits the organisation and in turn, the organisation benefits the society.
According to Friedman, "social responsibility of business is to increase its profits. " According to me, the social responsibility of a business is to save and not cause any harm to the society in which it operates. For example, over-use of the material or the natural resources by the business. With the goal of exclusive profit making, the business will cause harm to the society and will not survive for long.
According to Freeman and McVea’s statement, "Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible"-Stakeholders are organisational, economic, societal, etc. These are the persons who are directly or indirectly involved in the activities of the business.
The supporting argument is that the stakeholder's are very important to the business. They are the employees, the creditors, managers, the bankers, etc. They hold a large share of profits of the company. The company has to earn the trust of the stakeholder's and provide them with sufficient share of profits for the smooth functioning of the business.
The argument that refutes the view is that the company has to follow trends which are not against the society and are in the interest of the society and also benefit the stakeholder's at the same time.
According to me, both, Freeman and McVea’s assertion was correct. Their statement focused on meeting the needs of the society as well as the stakeholders, but Friedman's assertion was concentrating on profit making only. It did not say anything about protecting the society or the stakeholder's any time.
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