Critical Analysis: "The Social Responsibility of Busine
Critical Analysis of "The Social Responsibility of Business" from Milton Friedman
In this essay I evaluate Milton Friedman’s essay: “The Social Responsibility of Business Is to Increase Its Profits” in 1970, on the Social Responsibility of a business and his theory, which is called the “Efficiency Perspective”. In every article and book that I have read about social responsibility, Friedman’s “Efficiency Perspective is placed centrally. During my research I found that Friedman is often criticised for being too classical. Friedman believes that manager’s foremost objective or even moral obligation to the firm should be to maximise profits always. There is however one condition that makes his perspective more complicated, not only for me, but also for several well-known authors. According to Friedman, the managers obligations should be carried out: “…while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom”. This leads to one of the main questions of my essay: To what extent does Friedman’s “Efficiency Perspective” give foundation for responsible and moral international management behaviour? And need we any concern if it fails to do so? To fully answer the questions, I first need to explain the two different parts of the first question: responsible international management behaviour and moral international management behaviour. In businesses nowadays they combine these two parts, respectively responsible and moral becomes social responsibility in international management. The second question anticipates the other theories and models we need to consider when Friedman’s efficiency perspective does not give foundation for social responsibility in international management.
However before I go in further detail to answer these questions, I first explain more about the concept social responsibility. After this I explain Friedman’s full theory, and how it related to these different models of social responsibility, and finally I will draw a conclusion.
“Business ethics compromises moral principles and standards that guide behaviour in the world of business” (Ferrell & Fraedrich). Individuals or groups of individuals evaluate this specific behaviour. The judgement of this evaluation can be right or wrong, ethical or unethical, internal or external from the firm. The outcomes of these judgements influence the society’s acceptance or rejection of activities within the business. “Social responsibility refers to a firm’s obligation to maximise its positive impact on society and to minimise its negative impact” (Ferrell &Fraedrich). As we are talking about ‘international’ management behaviour, A.K. Sundaram and J.S....