Social Responsibility in business

In a New York Times Magazine article, Milton Friedman said, “the basic mission of a business is to provide goods and services at a profit and by doing so said business is making its maximum contribution to society and is therefore being socially responsible” (Friedman, 1970). Friedman’s belief is a core concept of the shareholder model of corporate governance. Clearly Company Q’s behavior indicates that it subscribe to Freidman’s principle. Their sole concern is increasing the wealth of their shareholders, and investors with no regard to the negative impact, their actions cause in the community.
Company Q closed down two stores in higher - crime - rate neighborhoods claiming that these store were consistently losing money. Company Q further declined a request from the neighborhood food bank to donate day old goods, choosing to dump them instead. The company claimed that donating the goods would make them vulnerable to loss of revenue from possible fraud and theft from employees. Their claim of loss revenue is completely unfounded because no revenue is derived from dumping food. In both of these scenarios Company Q displays a callous disregard for the community that patronizes them. Even knowing that the job loss resulting caused by their withdrawal would further burden the economy of a community already in crisis, they persisted with their withdrawal. Furthermore their refusal to donate to the food bank using such flimsy and unfounded reasoning, demonstrates the company’s poor corporate citizenship.
The stakeholder model of corporate governance is the polar opposite of the shareholders model, which Company Q currently functions under. This model believes a company is responsible not only to its stockholders but also other s...

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...responsible policies and corporate culture improves a company’s image and reputation, thereby attracting the most highly skilled and qualified employees on the market. Company Q has been operating under the ideal that it has no responsibility to its stakeholders only their shareholders. This model of corporate governance is unethical, and harmful to both the company and the community. Company Q’s implementation of the above measures will improve its reputation and image allowing it to reap the benefits of being a good corporate citizen.

Works Cited

Ferrell, O. C. (2010). business ethics ethical decision making and cases, 2009 update. (7th ed., p. 40). Mason: South-Western Cengage Learning. DOI. www.cengage.com

Friedman, M. (1970, September 13). The social responsibility of a business is to increase its profits. New York Times Magazine. DOI. www.nytimes.com