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Essay on business sustainability
A business model of sustainability. case study essay
Milton Friedman views on business ethics
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Introduction: Sustainability within the business community is changing.
The subjects business and sustainability have long been looked at as inconsistent philosophies for many years. The great business mind Milton Friedman has spoken extensively on the subject of the ethical business behaviour’s purpose to consider only a profit motive of a business for its shareholders; however, his view only adds to the short-termism approach that propagates the inconsistency between the two subjects (Friedman, 2008). It is of this papers purpose to show that businesses are changing their approach to what is ethically purposeful for a business and how not only have the sole factor of profit motives driving business changed but new factors such as social and environmental factors have been added to the constitution of a success with in a business.
The shareholder model created by Friedman consists of the philosophy that a business’ purpose should be to create profits for its shareholders. This is to mean that the activities driving business should be such that they are to be activities that serve ...
Whilst many firms’ Corporate Responsibility efforts prove to be counterproductive, pitting business against society and pressuring companies to think of generic CSR responses, addressing social issues by creating shared value for both society and the firm can ultimately increase profitability and operational sustainability (Kramer, 2006). In the case of Cameco, the corporation’s 5 pillar strategy demonstrates a strategic ethics policy (Moroz et al, 2015), its focus on creating shared-value enhancing the overall effectiveness of business operations in terms of increased worker productivity through improved working and living environments, and increased revenue due to more efficient operations. As measures of stakeholder power, strategic posture, and economic performance are significantly linked to levels of corporate social disclosure (Roberts, 1992), it is evident that adopting wholesome ethical processes in business practices can aid U92 in the achievement of business
Business ethics are the moral principles that describe the way a business behaves. Because businesses are treated as “persons”, it can be said that the same principles that determine an individual’s actions can also apply to business. Making ethical choices involves distinguishing between right and wrong, and then making the right choice; and while it can be easy to identify unethical business practices, such as using child labor or not paying employees properly, good ethical practice can be harder to define simply because what is deemed right is not always universally accepted. In other words, everyone has a unique moral compass, and can see black and white as different shades of gray. In the face of this, every business holds corporate social responsibility to act fairly for their employees’, stakeholders’, and sometimes even the earth’s sake. However, whether or not the business adheres to this ethical paradigm varies.
Furthermore, he believed that any corporation assuming a more socially responsible attitude would be met with economic limitations, rendering them less competitive in the market area (Friedman, 1970). R.E. Freeman’s ‘Stakeholder theory’ is often seen as a better alternative to Friedman’s ‘Shareholder primacy theory’. Both the Stakeholder theory and Shareholder theory are normative theories explaining what a corporations social responsibilities ought to be and both adopt a similar stance on management’s accountability (Smith, 2003). However, the Stakeholder theory states that a manager’s duty is not only to focus on shareholder’s interests, but also to balance them against the interests of the company’s other stakeholders. Freeman believes that managers should take into account their customer’s, supplier’s and employee’s interests, even if it brings about a decrease in shareholder returns (Smith, 2003). This is being expanded on because Freeman believes that if Friedman were alive today, he would be a supporter of his Stakeholder Theory. Simply because, in today’s day and age, globalization and increased competition in the markets has led to corporations having to rely not only their shareholders for support but on all their stakeholders (Makower,
Business performance of organizations are primarily steered through good ethics and corporate social responsibility, and such business practices have become an integral part in order to conduct successful business operations in today’s highly competitive and dynamic environment (Joyner & Payne, 2012). Ethical business practices are widely implemented in small or large enterprise as the growing need of social responsibility and environmentally proactive practices are recognized by these businesses. Hence businesses should be conducted in a way that it not only benefits the owners, employees or customers but the society and community at large (Smith, 2008).
Friedman argues that, for example a corporate executive has a responsibility to his employers, which is usually to make as much money as possible for the company while conforming to the laws and ethical customs of the society. This employer, outside his work, may devote his time and money to certain charities that he regards as worthy and while these are social responsibilities they are the individual’s social responsibilities, not the company’s. Friedman in a sense says how entities have responsibilities; it is the people that have the responsibilities. A corporation in a way is too vague of an entity to assume responsibilities. Again, he feels ‘’that the key point is that, in his capacity as a corporate executive, the manager is the agent of the individuals who own the corporation…. And his primary responsibility is to them’’ . The only responsibility a director should have is to its shareholders and not to society or any other interest group or public good. And so if the interest of the shareho...
In this essay we take a look at the famous Milton Friedman's essay "The Social Responsibility of Business is to Increase Profit ". The following paper is an attempt to critically evaluate the article in consideration of Freeman Stakeholder Theory. 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 a 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 a business is to increase profit). We probably all agree that the primary objective of any business is to achieve revenue and attain a certain profit.
This paper will compare and contrast the various interpretations of four separate authors in respect to ethics and social responsibility as they apply to business. The four articles to be reviewed are; “The Social Responsibilities of Business is to Increase its Profits” by Milton Friedman, “The Relevance of Responsibility to Ethical Business Decisions” by Patrick E. Murphy, “What is ‘business ethics’” by Peter F. Drucker and “To Be Ethical Not To Be: An International Code of Ethics for Leadership” by Ala’ Alahmad. Each of these articles represents the author’s interpretations on the interplay between “business ethics” and “social responsibility” supported by both external and personal research. Although none of the authors represent themselves as being opposed to ethics or responsibility in general, there appears to be opposition in the attempt to silo these two topics into a separate, distinct business application rather than maintain them as applicable to individuals’ separate of any corporate (or business) relationships.
This paper will have a detailed discussion on the shareholder theory of Milton Friedman and the stakeholder theory of Edward Freeman. Friedman argued that “neo-classical economic theory suggests that the purpose of the organisations is to make profits in their accountability to themselves and their shareholders and that only by doing so can business contribute to wealth for itself and society at large”. On the other hand, the theory of stakeholder suggests that the managers of an organisation do not only have the duty towards the firm’s shareholders; rather towards the individuals and constituencies who contribute to the company’s wealth, capacity and activities. These individuals or constituencies can be the shareholders, employees, customers, local community and the suppliers (Freeman 1984 pp. 409–421).
While going through my academic program, I have learned the importance of organizations having to integrate strategic planning in accordance with ethics and social responsibility practices; it is necessary for an organization’s survival. As such, an organization needs to implement its mission, strategy, and vision while considering the stakeholders and general public. My academic program has brought me to this realization and provided me with a means to effectively associate the implications of an organization’s ethics and social responsibility from a strategic perspective. When integrated effectively, establishing these components within the organization’s strategic plan has the capacity to largely benefit the organization's daily operations, which in turn, affect overall profit.
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.
Lazonick, W., & O'Sullivan, M. (2000). Maximizing shareholder value: a new ideology for corporate governance. Economy and Society, 29(1), 13-35. Retrieved from http://www.uml.edu/centers/cic/Research/Lazonick_Research/Older_Research/Business_Institutions/maximizing shareholder value.pdf
Sustainability is a concept with a diverse array of meanings and definitions – a widely used glamorous, ambiguous, ambivalent and vague concept that is used by different stakeholder groups in various ways. Presumably to avoid noodling over a terminology or to avoid the confrontation with a definition, most widely the concept is broken down a planning process (c.f. e.g. Döring & Muraca, 2010). That is why most common sustainability is understood as sustainable development.1
The first discussion question posed was, “How does Dr. Friedman characterize discussions on the “social responsibilities of business”? Why (Jennings, 2009, p. 79)? Friedman (1970) characterized the discussions on social responsibilities as one hundred percent unadulterated socialism. Friedman (1970) characterized these discussions in that manner because he felt that a corporate executive should focus solely on making profits and not on social aspects. He mentioned how people who conduct and express themselves in this fashion are positively reinforcing and supporting the actions of individuals that have been weakening the foundational blocks of free society. Friedman (1970) posed a question which was the crux of his 1970 article “The Social Responsibility of Business is to Increase its Profits” where he investigated the true contextual meaning of what responsibilities mean to businesses. Friedman describes how businesses cann...
Sustainability in the United States and in international business is more than simply adopting sustainable practices, but actually has the potential to help companies gain competitive advantage. Other companies prefer to describe this kind of thing as “corporate responsibility” (dropping the “social” as too narrow), or “corporate citizenship”, or “building a sustainable business”. All this is convoluted code for something simple: companies meaning (or seeming) to be good all in the name for higher profit margins. The social sustainability that companies practice spans everything from volunteering in the local community to looking after employees properly, from helping the poor to saving the planet. With such a fuzzy, wide-ranging subject, many companies find it hard to know what to focus on. So what does a company honestly practicing an environmentally sustainable business model look like, and is it
I shall answer this question by discussing what ethics and values are and how they can influence business sustainability. I will also discuss why ethics and values are important and necessary in a business, and the possible repercussions that could occur without ethics and values in a business.