Economists say that the main goal of a business is to maximize its profits. According to the canonical view a business or a corporation has completed the task of the social responsibility with this maximization, always of course by obeying the laws. But the question that arises under this consumption is whether or not a company must be ethical and behave to its employers and its customers as if it was a good and moral citizen; or as the book says `'a good citizen''. From the theory of the psychological egoism we know that human beings are selfish and self-interested. They care only about themselves, they are not capable for unselfish altruistic actions and they do not care for anyone else unless they have to gain something from them.
As human begins, we do not want to see unjust or unethical actions taken upon other’s, or ourselves, especially by business’s we contribute too. However, we need to understand that the business’s, or employee’s, first concern is not social responsibility. If a business is making profit, in a lawful manner, it is already contributing to its consumers and its society. Friedman states in his book Capitalism and Freedom, “in a free society, and have said that in such a society, ‘there is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.’” (Friedman, pg 6). Meanwhile, Mintzberg argues that there has a to be a balance between the greed and helping one another.
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.
I believe capitalism forces business men to make profitable amoral decisions may not benefit our society at all. However, maybe Smith is also correct on capitalism is the best way to serve the society before other solutions appear. And with many evidences from different countries, I have to agree with Griffin and Smith that capitalism is efficient. However, I would only describe capitalism as an insensitive, bloody, efficiently machine that does not have feel and moral. The core of capitalism is still profit driven, materialistic, and money.
It is not only a fiduciary duty, but the manager’s job to increase profits. Friedman (1970) says “allowing ethics to dictate business operations is similar to socialism because shareholders money is being used for the betterment of others.” (p. 84). Essentially, it is redistribution of wealth, which is consequently the foundation of socialism (Friedman, 1970). Subsequently there are some major flaws in Friedman’s logic. The conflict arises because ethics are not taken into consideration.
Milton Friedman presents a compelling argument in “The Social Responsibility of Business is to Increase Profits” by arguing that businesses need to focus only on increasing their profits and integrating social responsibility will only hurt them as a company. Since “only people can have responsibilities” (Friedman 52), Friedman argues that businesses as a whole do not have any type of real responsibilities because there is not a singular person for these responsibilities to fall on. Corporate executives are people as well and may feel they have social responsibilities to society but these “are the social responsibilities of individuals, not of business” (51). In terms of corporations, the businessmen are the ones that hold the responsibility of the company. Friedman argues that the only responsibility these managers hold is to those who own the corporation, the shareholders.
And lastly, I think Friedman is right in saying that business’s only social responsibility is to use its resources to engage in increasing profits as long as they stay within the rules of the game. That is the sole function of a business. Government can keep changing the rules and adding to them but business will not go above and beyond what is necessary for them to maintain their profits. These reasons go to show that the agent-of-society view is not a good one to adopt.
From my results I can see that it is true that the majority's aim at start is to make profits, but in a long-term is to keep costs as low as possible. Regardless a firm's size and status, survival is often considered very important, especially if it has recently entered the market (where customers and suppliers meet) and may fear from established competitors. Firm sometimes become targets of other firms to take over. When this happens the survival of the firm in its existing form may be the main objective. One way to achieve this is to persuade the owners (the shareholders) not to sell shares to the person or company bidding them.
A firm’s profitability is considered to not always be a good indicator of a dominant position. A firm’s profitability represents its aptitude to gain profit. The level of a firm’s profit can be a sign of dominance, but it is debatable if a decision regarding market power should be based only on the value of profit. Making profits is the goal of a company and it can be achieved through efficient behavior. Punishing a firm for being efficient may harm in the end the consumers.
Nowadays, Outsourcing is the famous and important things in business. Outsourcing also to describe in practice of handling over the control of the public services for profit organization. With outsourcing, all the task that company must do, company will give the project to another company to do the project. Outsourcing is good strategy to finish the task that the company can’t do, outsource is to avoid losses of cost. There a reason why companies like to outsource the project, which are too avoided of regulation, high tax, cost of energy, in other word are to avoid taxes for government.