...illustrates the social responsibility of business and the corporate social responsibility of the business. According to Friedman, the social responsibility only is to make the profit. “Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large” (Baker, 2015). I do not agree with this statement under the stakeholder theory, I will explain the reason relate to the stakeholder theory. Explain this statement In this statement, “There is one and only one social responsibility of the business to increase the profit” In this sentence, we can see that the only social responsibility is to make the profit, whenever do the untrue things for personal gain. For example, to stolen competitor’s product to make the product. “The rules of the game, which is to say, engages in open and free competition without deception or fraud”. These rules is about side-constraints of the business, the company need to follow the rules, and they not be deception or fraud to become the free competition. Analysis of this statement By definition, stakeholder are the individual or groups that have an interest in the organization and are affected by its action. Actually, A corporation have can have legal, but also moral responsibility. “If the business wants to be sustained over time, must maximize its profit but do so...
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...Ethical Standards Increase Efficiency Presented to: The CEO of Company X Student Name: Student ID: Date: December 27, 2011 Table of Contents Executive Summary 3 Introduction 4 Research Findings 5 Finding Number 1 5 Finding Number 2 6 Finding Number 3 7 Recommendations 8 Conclusion 9 References 10 Executive Summary Strong business ethics and social responsibility go a long way for businesses. My CEO had tasked me with researching how ethics and social responsibility affect our employees, reputation, and relationships. Promoting good ethical standards at first glance seems like the right thing to do, however through studying the research provided; they are also the smart thing to do. The information gathered for this report gives clear and definitive answers to the three main questions posed by the CEO of our company. The addition to business ethics can increase efficiency in our company’s employees. This would require the incorporation of a code of ethics in the company’s mission statement as well as having the human resources department designing and training employees on ethics. Having strong ethics within a company promotes trust from within, and a happy employee is a more productive employee. It is by no accident that almost 80% of corporations in the United States today have incorporated some sort of ethics program into their company. Generally, the reputation of a company with good social responsibility is higher than the opposite...
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...Government have the largest influence on Corporate Social Responsibility ? Introduction Carroll’s four responsibilities of business are economic, legal, ethical, and discretionary (Carroll, 1991). Economic responsibility is a business organization to produce goods or service to society, and creditors or shareholders can get return. Legal responsibility is defined in law by government that management is expected to follow. Ethical responsibility is organization management to obey the beliefs in a society. The last discretionary responsibility is the management of their own accord to take obligations, they do it by themselves, and not others force them to do (Carroll, 1991). Definition of Corporate Social Responsibility Corporate Social Responsibility (CSR) is defined as a business’s decisions or actions are made which take outcomes beyond the organization's economic profit into account in the decision making process (Carroll, 1991). Social responsibilities include ethical responsibilities and discretionary responsibilities. The difference between them was that less people expect a firm to perform discretionary responsibilities, while a lot of people expect a firm to perform ethical responsibilities. Discretionary responsibilities are like day-care centers, to training the hard-core unemployed and philanthropic contributions. A firm can take actions to perform its ethical responsibilities and discretionary responsibilities that society will value it but not put it into...
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...Social Responsibly of Business Argument PHI 103: Informal Logic November 3, 2014 In Milton Friedman’s article, “The Social Responsibility of Business is to Increase its Profits”, published in The New York Time Magazine back in 1970 Friedman proposes the argument that a corporations social responsibility is to increase profits. “Milton Friedman’s article entitled The Social Responsibility of Business is to Increase its Profit is one of the most often used counter arguments for people who would eschew the idea that a corporation should consider more than just shareholders.” (College of Law) While creating a very debatable argument Friedman has opened my eyes to a topic of which I have never thought about or pondered. One premise that he makes is that only people or humans have responsibilities while a corporation may be considered an “artificial person” with artificial responsibilities yet an actual business cannot have social responsibilities. So does this mean corporations are to only look after themselves and shareholders and let customers deal with it? Working for the large corporation Ingersoll Rand I have seen first-hand that profit is more important than satisfied customers. For instance, there was a certain product my store was purchasing locally and selling it at different margins depending on the circumstances and customer. By purchasing this product locally we had the freedom to sell at basically whatever margin we wanted. Almost three months...
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...Profit Maximization and Corporate Social Responsibility Over the past few decades’ American companies have been obsessed with maximizing profits. This obsession has resulted in big businesses having some of the highest profit margins in history. To shareholders, this news couldn’t be better. But many times these high profit margins have come with a great price, and it is not the businesses that are paying for it. Milton Friedman’s famous article The Social Responsibility of Business is to Increase Profits, is considered by many to be the seminal piece of literature against corporate social responsibility. In his article, Friedman argues in favor of unrestricted profit maximization. While Friedman’s argument makes valid points discussing the simple nature of business in a capitalist market, he neglects to effectively address the complex issue of negative externalities that businesses impose on society. I will go on to discuss the errors in Friedman’s assumptions about the capitalist market, and explain how profit maximization can be achieved, while practicing corporate social responsibility. I will discuss more theories on why CSR is not only socially desirable; it is necessary to increase profits. Friedman’s belief that executives who practice CSR are “…unwitting puppets of intellectual forces that have been undermining the basis of a free society these past decades. (31)” He goes to explain how people have responsibilities, not businesses, and that the responsibility...
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...Social Responsibility of Business Introduction What is the social responsibility of a business? Is it to increase its profits as Milton Friedman affirms? Before starting any debate about this topic, first let’s see what its definition is. According to the Business Dictionary, social responsibility is an “obligation of an organization's management towards the welfare and interests of the society which provides it the environment and resources to survive and flourish, and which is affected by the organizations actions and policies. 1 ” Furthermore, according to the Dictionary of Finance and Investment Terms, social responsibility is the “principle that businesses should actively contribute to the welfare of society and not only maximize profits. 2 ”These two definitions are in total opposition to Friedman’s statement. Never the less, I do think that any corporation can be social responsible in terms of these opposing points of view at the same time. In this essay, I will first present a summary of the article of Milton Friedman; then I will express my personal reflection on the topic and tell why a corporation can comply with both positions simultaneously Milton Friedman in his article “The Social Responsibility of Business is to Increase its Profits” states that only people can have responsibilities, and that there is not such a thing like social responsibility of business. A corporation, according to Friedman, is an artificial person and, therefore, may have artificial...
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...Social Responsibility Views on Corporate Social Responsibility Abstract This dissertation examines R. Edward Freeman and Milton Freidman perspectives surrounding corporate social responsibility by summarizing their respective articles titled: “Stakeholder Theory and The Corporate Objective Revisited” and “The Social Responsibility of Business is to Increase its Profits”. By examining their articles, I will provide a personal opinion of which of their economic models should be the leading model when it comes to business and corporate social responsibility. Summary of Articles Author R. Edward Freeman’s article “Stakeholder Theory and The Corporate Objective Revisited,” emphasized a response to a piece put out by Sundaram and Inkpen titled “The Corporate Objective Revisited” by clarifying misconceptions about stakeholder theory and concluding that truth and freedom are best served by seeing business and ethics as connected (Freeman, Wicks, & Parmar, 2004). Freeman supports the above statement by providing the following three main critiques: 1) the mischaracterization of stakeholder theory; 2) the primacy of creating value for stakeholders, and; 3) the real issues of economic and political freedom (Freeman, Wicks, & Parmar, 2004). In response to social responsibility, Freeman clarifies that stakeholder theory claims that no matter what the ultimate mission of the corporations or any form of business activity, managers and owners must take into account the legitimate...
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...Edward Freeman and Milton Friedman both had great argument on social responsibility, Friedman argued that “There is one and only one social responsibility of business to increase its profits”. Friedman believed that taking on a social and moral issues is not necessarily effective for a company. This will place those corporations at a better competitive disadvantage if they do not focus on making their profit. Taking on social and moral responsibility is not economically feasible for the corporation. Corporations should just focus on earning a profit and leave social issues to others. It’s in the best interest of a corporation to not deal with social problems. However, if Friedman truly believed in that corporations have no social responsibility then it’s possible that corporations are encouraged to steal, defraud for their customers and shareholder. Looking at Freeman in the other hand, he believed in moral responsibility to all stakeholders. He believed that those people that are focusing on just profits and shareholder are greedy. As modern corporation continues to grow many social problems will accrue and it’s the corporate world responsibility to address those problems. In the long run it will increase the future of the company and reduce any governmental regulation. If large corporation can spend time addressing their social issues it will benefit, there company. Looking at environmental issues as an example, some corporations have had a negative effect on the environment...
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...The purpose of this research paper is to investigate whether Corporate Social Responsibility (CSR) is becoming a common standard in the Caribbean corporate financial community and the associated benefits as it relates to the business strategy and financial performance. Historically, corporations were expected to serve some public purpose as justification for the benefits and privileges they receive. However, since the 1970s, the view has become widespread that corporations exist solely to maximize profits and to increase shareholder’s wealth and for no other purpose Bartlett (2015). In a capitalist society it is rare to hear that one has gone into business for reasons other than to make as much money as possible. Based on this capitalistic...
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...vs. Thomas Mulligan Social responsibility, business, shareholders, taxation, executive branches and socialism are not common words that we use in our daily routine life, unless you are in a business or administration scopes. Also, you may not aware about who is Milton Friedman, and why Thomas Mulligan has strong oppositions toward him. In this essay you are going to read a comparison of two different arguments by Thomas Mulligan and Milton Friedman. Their contentions are about corporate social responsibilities. What are responsibilities for executives and companies? Do they have to fulfill them or not? Are social responsibilities only for individuals? Wikipedia defines Social Responsibility as “an ethical framework which suggests that an entity, be it an organization or individual.” It means it is not only obligated for individuals or just companies. However, Milton Friedman doesn’t think so; and Thomas Mulligan has strong arguments against Friedman’s. Milton Friedman is an American economist that received Nobel Memorial Prize in Economic Sciences. He has lots of theories and doctrines about monetary policy, taxation and socialism. One and the most popular of his article published in New York Times Magazine at September 13, 1970. In his article, he approached to social responsibility of companies’ and stakeholders’. Briefly, he stands behind the view that "There is one and only one social responsibility of business to increase its profits." (Friedman, 1970, p.268) ...
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...Social Responsibility requires a sense of duty of good to the stakeholder and environment where the business operates. Social responsibility concepts are a part of society focus and adopted by business as the standard for ethics, Presently Company Q attitude toward social responsibility is negative or nonexistent. Consistently, management of Company Q approached business matters with mindset of profit gain. Company Q primary focus on loss revenue created missed opportunities to be social responsible. The missed socially responsible acts were missed increases in sustainable long term revenue or profit gains. Company Q revenue driven attitude is the prevailing decision maker for closing two alleged profit losing stores. When Company Q had the appearance of being social responsible by management deciding to offer a few healthconscious and organic products, it was revenue motivated. The revenue motive is overt by the products being high margin items. Although Company Q would not observe a specific loss of profit by donating day old product to a local food bank, management chose to heedless and claim loss due to presumed untrustworthy employees claiming food. Company Q could greatly benefit by reviewing it mission statement or creating a new statement that incorporates ethics and values that meet the needs of it primary and secondary stakeholders. Future management decision should be based on effects of the stakeholder. Company Q incorporation of the stakeholder need will create ...
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...Milton Friedman in his article “The Social Responsibility of Business is to Increase its Profits” states that only people can have responsibilities, and that there is not such a thing like social responsibility of business. A corporation, according to Friedman, is an artificial person and, therefore, may have artificial responsibilities. The individuals who are responsible of the corporation are businessmen, which are individual proprietors or corporate executives. A corporate executive is employed by the owners of the business. And its responsibility is to conduct the business in a way that maximizes the profits while conforming to the basic rules of the society. A corporate executive, as any other person, may have many other responsibilities that he recognizes or assumes voluntarily, which can be referred as “social responsibilities.” These social responsibilities correspond to individuals, not to businesses. The main objective of corporate executives is to maximize the profits of all stockholders; therefore, they are to act in a way that is in the interest of those owners of the business. In this sense, a corporate executive shall not engage in social activities, unless they are done from an individualistic point of view instead of from a business point of view because, in the last case, he or she would be spending somebody else’s money, and not serving the interests of the employers. On the other hand, the situation of the individual proprietor differs because, if he reduces...
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...Topic 3: Does CSR represent a genuine desire by corporations to do well towards society? Introduction The dominant model of business activity in the past merely concentrated on the benefit of the shareholders, which is maximizing profit from the firms’ activities. Any other benefits or harms created in the process of the activity were considered secondary. Issues such as ethics and creating values for customers and stakeholders were thus ignored and rarely paid attention to. Unfortunately with the business world ever-changing, the culture that was embedded in the past is no longer workable in this 21st century as it was resistant to changes, inconsistent with the laws and ignores the ethical side (Freeman 2008). The issue of Corporate Social Responsibility or CSR has been the subject of debate among researchers for the past twenty years (Chen & Winai, 2011). There have been many arguments if businesses should engage CSR initiatives in their operations. CSR or corporate citizenship is defined as the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large (Moir 2001). The essay will discuss on the literature review of the different perspectives of CSR, arguments against it and the analysis if CSR represent corporations’ genuine desire to contribute towards the society. Literature Review Arguments for CSR ...
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...that only people can have responsibilities, not business. Friedman stated that "the social responsibility of business is to increase its profits" only, he does not agree social responsibility is part of the responsibilities of Business, he stated that "Only people can have responsibilities" instead of a corporate, a business itself. "The corporate executive is an employee of the owners of the business, which generally will be to make as much money as possible while conforming to the basic rules of the society". In other words, the only reason to Corporate Social Responsibility (CSR) is to maximize the profit of the business. "Only individuals who are to be responsible are businessmen, the owners of the business, has the direct responsibility to his employers and to conduct the business in accordance with their desires". So it comes to an individual can perceive responsibilities but not business itself. Business as a whole cannot be said to have responsibilities. While according to Freeman (2006) does not agree to Milton Friedman's argument that only social responsibility is to increase profit; in the moral sense, giving money doesn't make up at all in doing CSR. Freeman has reassigned a new interpretation of CSR. "A conceptual scheme that separates the social responsibilities of a corporate from its business responsibilities has long outlived its usefulness." To replace Corporate Social Responsibility, Company Stakeholder Responsibility has formed. He also introduces...
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...Claremont Colleges Scholarship @ Claremont CMC Senior Theses CMC Student Scholarship 2012 Corporate Social Responsibility and Financial Performance: Does it Pay to Be Good? Harmony J. Palmer Claremont McKenna College Recommended Citation Palmer, Harmony J., "Corporate Social Responsibility and Financial Performance: Does it Pay to Be Good?" (2012). CMC Senior Theses. Paper 529. http://scholarship.claremont.edu/cmc_theses/529 This Open Access Senior Thesis is brought to you by Scholarship@Claremont. It has been accepted for inclusion in this collection by an authorized administrator. For more information, please contact scholarship@cuc.claremont.edu. CLAREMONT McKENNA COLLEGE CORPORATE SOCIAL RESPONSIBILITY AND FINANCIAL PERFORMANCE: DOES IT PAY TO BE GOOD? SUBMITTED TO PROFESSOR MATTHEW MAGILKE AND DEAN GREGORY HESS BY HARMONY J. PALMER FOR SENIOR THESIS FALL 2012 DECEMBER 3, 2012 Acknowledgements I have many people to thank for their help with this study. First and foremost, I want to thank my thesis reader, Professor Magilke, for all his help. This study would have be quite difference without his constant guidance and our numerous meetings and e-mail exchanges. Second, I would like to thank Mary Martin, the Reference & Instruction Librarian for Business and Law, at the Claremont Colleges Library. Obtaining the CSR data would not have been possible without her help and the library’s funding. Third, I want to thank the Kravis Leadership Institute...
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