discussion write down the main question and two responses

To begin, read The Social Responsibility of Business is to Increase its Profits (Links to an external site.) by Milton Friedman. Do you agree with any elements of the argument that Friedman is making? Why do you agree? Which elements of the argument do you disagree with and why?

Your initial post should contain 200-250 words. Your two responses to the discussion board post should be about 150 words.

#1

I agree with Milton Friedman with respect to his position that a corporate executive is responsible for conducting the business in accordance with the business owners’ desires, which is to maximize their interests as possible while being compliance with basic rules of the society (Milton, 1970). The corporate executive who should always act with due diligence is an agent of the owners and the primary responsibility of the agent is to them. I also concurred with Milton that if these are “social responsibilities,” they belong to the individuals rather than the business. It is the executives’ decision to devote the business’s resources into social consciousness, but not the business’s. Accordingly, corporate contribution in these purposes is beyond the corporate responsibilities in nature.

However, I disagree with his opinion regarding the acceptance of social responsibility purely due to the political mechanisms instead of the market mechanisms. The market mechanism drives businesses to optimize their allocation of resources in order to generate returns. It is not reasonable to deny the market mechanisms involved in contributing to social responsibilities. This is because Milton neglected to account for the benefits, both quantitative and qualitative, that the businesses derive from their contributions. Customers tend to choose brands that are owned by businesses which are more socially responsible for their decision making, which rewards the ones that participate. It also improves the corporate image and reputation of a business with their acts in social consciousness, which may be more effective and efficient than investing in traditional marketing. This is to determine what the market expect in terms of allocating resources.

#2

First, I agree with Friedman’s logic that, in order to identify social responsibilities of a business, we have to identify “what it implies for whom”. And, yes, corporation is an artificial person which should not have the social responsibilities. However, businessman should be our analysis target.

In addition, I agree with Friedman’s viewpoint about the social responsibilities of a corporate executive. Corporate executive should act as a agent of the individuals who own the business and the primary responsibility of corporate executive is to those owners. Just like the CFO, CEO, or board of directors for a corporation. Being as a CEO, one of the most senior executive and administrative officer, CEO in charge of managing the overall organization. However, whatever decision CEO makes based on the overall profits for the entire business. In other words, CEO should be responsible for owners, and make decision to achieve the maximum profit for both owners and corporation.

I disagree with the example that Friedman provided to support his element that corporate executive “is to act in some way that is not in the interest of his employers”. I do not think “refraining from increasing the price of the product in order to contribute to the social objective of preventing inflation” is not in the interest of his employers. Sometime, the business strategy should be made in the long-term. Even though it will not make the profit since refraining from increasing the price is the short-term, but that “refraining” might help corporation to will the reputation in the market which will bring unexpected income in the future.

 

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