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The sole responsibility of a corporation, according to economist Milton Friedman, is to make money. A corporation exists to serve its shareholders—that is, any entity which owns any part of the company—whose goal is to increase the value of their investment in that company. As long as the decisions made by a company’s executives further this aim, a corporation is fulfilling its duty. Profits aside, if a company’s actions harm its employees, customers, the community, or the environment, surely this must be problematic. In recent decades, more people have realized that these affected groups, known as stakeholders, deserve consideration in corporate decision making. In contrast to Friedman’s shareholder view, the stakeholder view contends that corporations have an obligation to integrate social and environmental concerns into their business model. For example, corporations should contribute to community development, pay respectable wages, or donate to worthy causes. For Milton Friedman, however, addressing social issues is the responsibility of the government, not corporations. Asking companies to spend revenue on social welfare is akin to imposing taxation on shareholders. Friedman makes it clear that corporations are not public servants and so are not responsible to the public. What’s more, a corporation, as an artificial construct, does not have moral or social responsibilities in the same sense as people. For Friedman, the sole social responsibility of a corporation is to maximize profits while obeying the law. Ethicist Margaret White says Friedman is right in one sense. While it would undoubtedly be kind for a rich company to give money to a community struggling economically, we can no more require a company to hand out donations than we can require a person to give money to someone on the street who asks for change. Charity should not be mandated. White points out that in many cases, however, corporations are inextricably linked to social or environmental problems. Many companies, for example, find legal loopholes to irresponsibly dispose of their waste. Though they manage to skirt the law, companies, just like people, should be held morally responsible for the consequences of their actions. Interestingly, whether companies agree or disagree with White, it’s now in their interest to adopt a socially responsible position. With the rise of ethics-influenced consumerism, shoppers are demanding that products be produced with the concerns of labourers, animals, and the environment in mind. Sadly, as a by-product, this has also given rise to a form of “greenwashing” in advertising, where companies market themselves with an environmentally friendly image for the sole interest of increasing sales.
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