Steve Denning Argument

Does the maximaization of shareholder value reward socially destructive actions by corporations?Certainly not.A company is not an instrument of shareholders, but a coalition between various resource suppliers, with the intention of increasing their common wealth and hence is contradictory to Mr Al Dunlaps view of share holder primancy.

Milton Friedman argues that persons may choose to undertake social responsibilities to their communities, churches, or nations, and devote their own incomes to causes that they deem morally worthy. But, he adds, if corporate executives attempt to take such social responsibilities or to direct the corporation’s profits to such personal causes, without approval from the shareholders, then:

Friedman’s second argument follows a similar idea, but with another reason why the businessman’s ideas of social responsibility aren’t to be fulfilled through the business. If the agent of a business would spend money to further his supposed social responsibilities, he is using something that is not his to spend as he sees fit. Any money earned by increasing the price to consumers, decreasing the wages of the workers, or withheld from the stockholders belongs to the business and has been taken from these parties to be used in ways that they could have used it on their own. If the agent uses the money in

Does the maximaization of shareholder value reward socially destructive actions by corporations?Certainly not.A company is not an instrument of shareholders, but a coalition between various resource suppliers, with the intention of increasing their common wealth and hence is contradictory to Mr Al Dunlaps view of share holder primancy.

What is the corporation’s social responsibility? Many might say the main idea is that a corporation must go further than carrying out their basic function of purely making profits. A corporation must create wealth in ways that avoid under minding society, and instead enrich the society it operates in. The term “corporate social responsibility” has been defined in numerous ways; from the constricted economic perception of increasing stockholder wealth (Friedman, 1962), to economic, legal, ethical and flexible strands of accountability (Carroll, 1979) to good corporate social responsibility to citizens (Hemphill, 2004). These disparities differ from fundamental assumptions of what corporate social responsibility involves. However, one has to keep in mind that the CEO of any corporation is legally the agent of the stockholder, and must focus on what the shareholder wants. More often than not, the shareholder would prefer profits for individual gain rather than spending their money on social projects. Stakeholder groups have increased their influence to enact their agendas. Using profits to fund schools and partake in fixing the environment are all great and wonderful things, but this social tax of using profits for social ends projects goes entirely against democracy. Or does it? Who should truly be held responsible for stakeholders around the corporation? Is it the responsibility of the government, philanthropists, employees, its

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).

What Friedman implies is that shareholders should only be concerned with maximizing profits and not be obligated to be “socially responsible.” In that case, the manager would only have one priority, to maximize profits. However, what if that manager determined that social endeavors is the best option to maximize profits? This would make the corporation socially responsible while still maintaining maximum profits. The argument presented by Friedman in this case is that while the manager is performing as expected by maximizing profits, this type of “social responsibility is frequently a cloak for actions that are justified on other grounds rather than a reason for those actions.”

Nevertheless, Friedman pointed out that the profits has taken the firms in to the hand of business intellectuals by which Friedman recommend that the financial system by which the organisation run its business is in the restricted responsibility protection which makes the organisations to privatise their profits (Friedman 1970 pp. 177-184). Friedman also suggested that according to him the shareholder theory in terms of socially responsible can only increase the profit. But on the other hand shareholder theory of Edward Freeman completely support the theory of shareholder towards its role to be socially responsible in the society and maximising the profits for the benefits of shareholders within the firms and society as well (Freeman 2008 pp. 162-165).

In this paper, I show that Friedman’s argument that it is immoral for managers to act on social responsibilities, fails. He relies on that assertion that shareholders expect a maximal return on their investment and if managers spend corporate funds on “social responsibilities,” they are in turn taking profits away from shareholders and using their money for an unintended purpose. However, this claim is false, as shareholders cannot expect maximal profits and cannot dictate exactly what company funds are spent on.

Milton Friedman was an American economist, statistician and writer, who had a massive impact on the research agenda of the economics profession. His famous words “the only responsibility of business is to increase its profits” (Friedman, Milton. 1970) led to many controversial debates on whether businesses should have ethics or if profit should be their main goal. Corporate social responsibility has many definitions, as its interpretation is quite loose, so I have chosen one that relates the most to this essay, given by the World Business Council for Sustainable Development, in 2000: “Corporate social

Milton Friedman’s shareholder theory of management says that the purpose of a business is to make money for the owner or the stockholders of the business. Friedman says that there is only one social responsibility for the business: to use its resources in order to increase

“Corporate finance theory, teaching and the typically recommended practice at least in the US are all built on the premise that the primary goal of a corporation should be the maximization of shareholder value.”

According to Milton Friedman “the only social responsibility of business is to increase its profits.” As with the case study, Mr. Paulson solely aims for maximizing profit. “Acting "responsibly" risks reducing profits or forgoing revenue in the name of social good.” “Profits are the most important, but not the only behavioral constraint of the firm.”

For a long time now, there has been much debate over the social responsibility of a business. Friedman is one of the most influential

So the partnership officials are capable of the general public not the entire business. The Corporate Executive drove the business. They have the principle obligations towards their managers to make the most benefit by performing best exercises for the business. Then the Corporate Executive, as a man may have his own social obligation, which implies he doesn 't generally need to take after of his proprietors. On the off chance that the corporative official 's moral qualities are not quite the same as the business, he may consider his own advantage as opposed to for the business. Along these lines, the stockholders, clients, or representatives ought to have the capacity to pick how they wish to spend their cash in the business. It is then seen that the corporate official is going about as an "open worker," as opposed to an operators of the partnership. This can prompt a loss of both clients and workers if the corporate official 's activities diminish corporate benefit and the cost of its stock. Friedman accepts, in a free society, "there is one and one and only social obligation of business—to utilize its assets and take part in exercises intended to expand its benefits insofar as it stays inside of the diversion 's standards, which is to say, participate