Corporate Social Responsibility: Was Milton Friedman Right?

~Milton Friedman~
US economist (1912-2006)

Milton Friedman's Theory on Corporate Social Responsibility

Milton Friedman's statement that a business's social responsibility lies in making profit has shown a controversial point of view in modern business. Some people believe in Friedman's ideas while others do not. Is it possible that Friedman can be both right and wrong? In business, there are different situations that require different perspectives and methods of approach. On one hand, it is correct to say that the main focus of a business should be to make profit. Without profit, a business can not survive. In a way, Friedman's theory does promote social responsibility to society. The increase of profits in a company benefits the economy which benefits the citizens of that economy.

Friedman also believed that social responsibility should not be forced by the government. While most economists agree with this notion, many believe that he may have gone to an extreme by saying that it is the company's only social responsibility. Companies can still maintain their successful path while pursuing several different methods of social responsibility simultaneously. Responsibility to stakeholders can still be achieved while helping to strengthen the community. For example, companies can conduct research to provide a safer product to consumers.

Alternative Perspective to Milton Friedman's Theory

There are many ways that an organization can be socially responsible. There are three that stick out the most to me. I feel that the three main focuses of a company wanting to promote social responsibility are the environment, the community, and their employees.

Environmental Social Responsibility

First, let's discuss the effects of social responsibility on the environment. We live in a world that is moving at unbelievable speeds. We are always looking for the fastest and most efficient ways to complete tasks. Unfortunately, some of the easiest paths are the most troublesome. It is important for organizations to be conscious of the environment around them.

Simple steps to environmental social responsibility can be taken such as cleaner smoke stacks or cautious examination of wastes dumped into water supplies. Most can be completed by simply following laws established by the government.

Social Responsibility in the Community

Next is responsibility to the community. The companies that are aware of the space that they share with the local community can become a great ally to its citizens. Companies that are planning new developments should take into consideration the effect that it will have on local economic and social patterns. Other ways that a business can promote social responsibility in the community are by participating in local charities and benefits. By helping their neighbors, they will gain the support of the community and potential customers. It can be very difficult for an organization to survive when it is opposed by those around it.

Social Responsibility Supports Healthy Employee Relations

The last and most important is social responsibility to employees. Employers that promote increased benefits and better working conditions have what it takes to become a great company. I believe that if companies show their employees that they care about them the employees will care more about the company. This begins a cycle that will work around-and-around benefiting all who are involved. Also, bad relations with employees will eventually begin to show in the community.

Sure, social responsibility is not a forced issue and no one is there to make companies participate. But by being socially responsible, they enable themselves to gain support of the community, customer respect, and loyalty of employees. Large organizations, especially, have the means to make a great difference in our world. I think they should do so not because they should but because they can.

References

Bartkowiak, G. (2006). Practical Aspects of a Social Responsibility in Business. Dialogue & Universalism, 16(5/6), 133-140. Retrieved October 3, 2007, from Academic Search Complete database.

Lenkowsky, L. (2006, December 7). Milton Friedman Was Right About Philanthropy After All. Chronicle of Philanthropy, pp. 48. Retrieved October 3, 2007, from Academic Search Complete database.