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business ethics case study example
business ethics case study example
agruements of milton friedman on corporation
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Since the motto “Doing Well By Doing Good” appeared, the number of businesses that have adopted it has increased over time. In order to tell whether this increase is substantial and significant we must first analyze the steps into which this motto has gone through. The implications it has on the market and economy as a whole will also be determinants of whether to adopt the motto or not. In the essay below we will go through the evolution of the meaning of the motto, the concept of social responsibility, the supporters’ argument and their cons.
The debate is divided in two camps. The supporters of the first idea claim that by doing good business, the economy as a whole benefits without the need to donate or contribute in distinct ways to the community. The second idea is that businesses should behave in such a way to create an environment where everyone should use its power to help out the community.
The very first time I read the topic of the essay, it reminded me of a movie I watched when I was around 13. “When someone does you a big favour don’t pay it back, pay it forward” is what little Trevor says in the movie “Pay it forward”. Being at the age of 13 I took it as a lesson of life and it gave me additional incentives to help who the most needed me. Most of the times I received the satisfaction of seeing a smile in the face of someone else, and half of the times I was let down realizing that I was just used by someone else. But I decided not to care; I wanted to do something that would have changed that conservative community I lived in.
That is what most of the people would call “social responsibility” and what Milton Friedman would define as an individual initiative to contribute to the society.
As defined by Wikiped...
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...ston Publications, August 27, 2007 (also found at http://www.bos.frb.org/economic/wp/index.htm )
Friedman, M. “A Friedman Doctrine – The Social Responsibility of Business is to increase Its Profits”, The New York Times Publications, September 13, 1970
Gates, B. “On Creative Capitalism”, World Economic Forum Realises, http://www.youtube.com/watch?v=Ql-Mtlx31e8
NY Times. January 9, 2009 http://economix.blogs.nytimes.com/2009/01/06/can-business-do-well-and-do-good/
Oxford Publications. “Oxford Dictionary of English (2nd edition revised)” , 1998, ISBN 0198610572
Wikipedia, http://en.wikipedia.org/wiki/Creative_capitalism
Wikipedia, http://en.wikipedia.org/wiki/Social_responsibility
Hamm, S. “Coke: On Doing Well by Doing Good“, BusinessWeek Publications, http://www.businessweek.com/globalbiz/blog/globespotting/archives/2009/05/coke_on_doing_w.html
Milton Friedman, who was a prominent economist, wrote a thought-provoking article in the New York Times Magazine in 1970 on the subject: social responsibility and ethics in strategic management. The one end of the economic policy spectrum, Adam Smith, influences Freidman. Smith embraces the knowledge that consumer and producer control the stability of the economy. This is based on free market equilibrium. Freidman most renowned quote is “There is one and only one social responsibility of business-to increase its profits.” The above quote clearly state his opinion on the concept of social responsibility. Freidman argues against the concept of social responsibility and his reasoning’s of corporations having one responsibility that is to make money, which has made him quite legendary.
“There is only one and only one social responsibility of business- to use its resources and engage in activities designated to increase its profits so long as it decides to stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”
Perhaps Friedman’s most prevalent justification for dismissing social responsibility from business arises from his view on ethical spending. He believed that it was unethical for businessmen to spend other people’s (shareholders) money on other people (i.e. the community), and that transactions of such a nature should be left to government and corporate social responsibility programs. This line of thinking reinforced what is known today as the shareholder primacy model, whereby the primary moral duty of any corporation is to serve the shareholder’s interests, subject to some moral minimum (Smith, 2003). Friedman held that it was the shareholders money being spent, not the corporation 's, as corporations were merely fictional entities. Numerous
Mackey, J. (2005, October). Rethinking the social responsibility of business. Journal of Reason, 10, 15-17.
Friedman, M., (2007). The Social Responsibility of Business Is to Increase Its Profits. In W.
Finally, my views have changed since the beginning of the term when I initially answered the question of how I would have direction Keurig and why I chose to stand by such claims. The first time I approached this situation, I answered with the overall mindset that is very similar to Friedman in the aspect that the one and only one social responsibility the business has is to use its resources in order to increase profits. Therefore, in my initial mindset, that was all that mattered. I described how the company should be mainly focused on the profits of the company and then worry about the “more current trends” of society as an afterthought – this was when I implied that caring for the environment was a trend that swept across society.
Friedman, Milton. “The Social Responsibility of Business Is to Increase Its Profits.” From The New York Times Magazine, September 13, 1970. Rpt. in Open Questions: Reading for Critical Thinking and Writing. Eds. Chris Anderson and Lex Runaman. Boston: Bedford / St. Martin’s, 2005. 518-525. Print.
Friedman, M. (1970). The Social Responsibility of Business is to make Profit. New York Times
Friedman’s views are that business’ main responsibility is to maximize shareholders wealth and that in doing so, they are being socially responsible. He also contends that corporations are not people and therefore they cannot be responsible for social issues.
The article “The Social Responsibility of Business is to Increase its Profits” is written by a famous economist Milton Friedman. Friedman in this article implies that shareholders are the main drivers of the corporations and he believes that it is to them corporations must be socially responsible to. The goal of any corporation is to maximize profits and return the portion of these profits to shareholders for investing in the corporation. The shareholders can themselves decide which social causes to take part in rather than assigning a corporate executive to decide on their behalf. Friedman argues that a corporation must have no social responsibility to society because its only concern is the increase profits for itself and its shareholders.
First thing let us start with a little overview of what Milton Friedman exposed in his article. It seems that the whole point of his essay revolves around one basic statement which clearly says that the only social responsibility of business is to use its resources and engage in activities designed to increase its profits so long it stays within the rules of the game (Milton Friedman, the social responsibility of business is to increase profit).
Dahl(1972: 18) “every large corporation should be thought of as a social enterprise: that is an entity whose existence and decisions can be justified insofar as they serve public or social
While the concept of an individual having responsibility is commonly recognized, modern views have lead to the emerging issue of corporate responsibility. Business Directory.com defines corporate social responsibility as, “A company’s sense of responsibility towards the community and environment (both ecological and social) in which it operates. Companies express this citizenship (1) through their waste and pollution reduction processes, (2) by contributing educational and social programs, and (3) by earning adequate returns on the employed resources.” But such a concept has been much disputed since at least the 1970’s.
Reed, B. (2011). The Business of Social Responsibility. Retrieved from Dollars and Sense Real World Economics: http://www.dollarsandsense.org/archives/1998/0598reed.html
Business organizations should act responsible towards society as it will benefit society, culture, economical condition and environmental issues as well. In other words, business organization are currently only focusing on their core objective that is only maximizing their profit but this profit maximization comes with a cost to the society like over exploiting resources, polluting environment, producing products which are not environmental friendly. If business organization acts socially responsible they will help the society to develop.