Compare and contrast with your arguments and identify any new information learned from reading their posts.Provide two references, one for each response.

On the other hand, John McVea and R. Edward Freeman argue that businesses should take into equal consideration the needs of all stakeholders who they define as “any group or individual who is affected by or can affect the achievement of an organization’s objectives” (Freeman & McVea, 2001).
Friedman argues that businesses are artificial people and cannot have responsibilities beyond creating profit for their owners. His focus is around corporations which are entities that people run on behalf of the shareholders.

Corporate executives are employees of the business, and they should do what is best for the business owners. “In his capacity as a corporate executive, the manager is the agent of the individuals who own the corporation or establish the eleemosynary institution, and his primary responsibility is to them” (Friedman, 1970). If the company manager pursues objectives beyond profits, they use other people’s money (shareholders) to implement their social responsibilities. Company managers are free to support social causes using their own personal money.

McVea and Freeman argue that all stakeholders should be considered when operating a business. The focus should go beyond profits for shareholders. “The central task in this process is to manage and integrate the relationships and interests of shareholders, employees, customers, suppliers, communities and other groups in a way that ensures the long-term success of the firm” (Freeman & McVea, 2001). Managers need to continuously come up with compromises that will not satisfy all of the desires of any particular stakeholder but will satisfy at least some of the needs of all stakeholders.

I believe that McVea’s and Freeman’s statements are the stronger argument. Friedman is correct that businesses need to be run in the best interest of shareholders because if shareholders do not receive a profit, they will not invest in the business, to begin with. This is the core reason why most businesses are started – to make a profit for the owners. Still, McVea and Feeman are correct that if a business is going to remain successful, it must consider everyone who is affected by the objectives of the business. If a business is run for maximum profit at all costs, it eventually will not have any goodwill and fail.

References

Freeman, R. E., & McVea, J. (2001, March 16). A Stakeholder Approach to Strategic Management. Retrieved from SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=263511

Friedman, M. (1970, September 13). The Social Responsibility of Business is to Increase its Profits. Retrieved from WayBackMachine: https://web.archive.org/web/20180901082333/https://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html

 

2 Post

2-1 Discussion: Social Responsibility

 

How do you feel about Friedman’s and Freeman and McVea’s statements? Explore both sides of the argument in your initial post by providing one argument that supports Friedman’s assertion and one argument that refutes it.

I believe businessmen in the 70’s and earlier were not trained or taught how to be socially responsible, and to Friedman’s point, had little knowledge of what that actually meant and how to follow through with it. Friedman also is correct in his explanation of what an executive’s job is, and that is to be successful and make the shareholders money and be profitable.

Provide one argument that supports Freeman and McVea’s assertion and one argument that refutes it. Once you have explored both sides of each argument, explain which author(s) you think is correct and why.

Freeman talks about the responsibility of stakeholders over the company and the process for making decisions: “The central task in this process is to manage and integrate the relationships and interests of shareholders, employees, customers, suppliers, communities and other groups in a way that ensures the long-term success of the firm. A stakeholder approach emphasizes active management of the business environment, relationships and the promotion of shared interests.” (Freeman, 2001) This supports the idea of all employees having ownership over the CSR of the company.

Friedman talks about the executives’ personal values coming into play: “As a person, he may have many other responsibilities that he recognizes or assumes voluntarily–to his family, his conscience, his feelings of charity, his church, his clubs, his city, his country. He may feel impelled by these responsibilities to devote part of his income to causes he regards as worthy, to refuse to work for particular corporations, even to leave his job, for example, to join his country’s armed forces. If we wish, we may refer to some of these responsibilities as “social responsibilities.” (Friedman, 1970)

I think Friedman’s views on business ethics are antiquated and old-fashioned. In today’s business world, leaders are trained and taught these skills, and shareholders are concerned about societal issues just as much as anyone else.

References

Freeman, R. Edward and McVea, John, A Stakeholder Approach to Strategic Management (2001). Available at SSRN: https://ssrn.com/abstract=263511 or http://dx.doi.org/10.2139/ssrn.263511
Friedman, M. (1970) The Social Responsibility of Business Is to Increase Its Profits. New York Times Magazine, 13 September 1970, 122-126.

 

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