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We want businesses to make money and take some actions that benefit the local community, so a company that engages in these activities can be considered socially responsible. Who cares if the financial rewards of having a good reputation are the company management’s sole motivation for doing this?’

Critically discuss this statement following the outline given below.

In your answer you should:

i) discuss what the social responsibility of business is.

- students’ discussion should cover either or both of the Friedmanite ‘profit-maximising’ position and the ‘stakeholder theory’ position. If a student covers only one position, the student should go into detail about the justification for the position.

- Friedman argues that the only proper function of business is to maximise profit for its owners/shareholders while remaining within the law and engaging in open and free competition without deception or fraud. Businesses pay taxes to Governments whose job it is to take care of social interests, so as long as businesses are acting without deception and abiding by the laws set out by Government, then a business is fulfilling its responsibilities to society. We elect representatives to government – politicians – to impose and taxes on businesses and individuals and spend these taxes to take care of society’s needs. This is their mandated sphere of concern, where they can develop knowledge and expertise. A manager, in contrast, is not an elected representative and does not necessarily have much knowledge or expertise in this sphere. Friedman argues that for a manager to fail to maximise profits would effectively both impose an unsolicited tax on owners / stockholders, and decide how the proceeds of this tax should be spent.

- Stakeholder theory argues that business has several roles in society and it’s not the case that the role of maximising profits to take care of shareholders’...