Free market theory and corporate social responsibility

When I hear businessmen speak eloquently about the "social responsibilities of business in a free-enterprise system," I am reminded of the wonderful line about the Frenchman who discovered at the age of 70 that he had been speaking prose all his life. What does it mean to say that "business" has responsibilities? Only people can have responsibilities. A corporation is an artificial person and in this sense may have artificial responsibilities, but "business" as a whole cannot be said to have responsibilities, even in this vague sense.

Free market theory and corporate social responsibility

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Milton Friedman on Corporate Social Responsibility

Starting Rs for 10 pages. The stakeholder theory of CSR. The business ethics theory of CSR. And the shareholder value theory of CSR. Ethical and pragmatic as it ought to be business success assume vast interests of stakeholders than the shareholders interest alone.

The stakeholder theory emphasizes special social rather than any others unrelated to the corporation. Thus CSR is denoted as a company stakeholder responsibility.

Business ethics theory of CSR The business ethics theory is based on wider social obligation and the moral duty that business has towards society Bigg, This theory justifies CSR on 3 varied but interrelated ethical grounds: Changing and emerging social responsiveness and social expectations to particular social problems.

Three Theories of Corporate Social Responsibility

Eternal or intrinsic ethical values always inspired by Kantian ethics and denoted as some normative and universal principles like social justice, fairness and human rights Corporate citizenship i.

The business ethics theory views CSR more as philanthropic and ethical responsibilities rather than legal and economic responsibilities. CSR initiates where legal obligation declines. The shareholder value theory of CSR The shareholder value theory a perspective denoted by the Nobel Laureate Milton Friedman argues that only social responsibility of business is to develop its profits while following legal norms.

Neoclassical economists like Hayek assert that the function of business is doing business that contributes to society and economy and its function must not be confused with other social functions performed by not for profit organizations and governments.

Otherwise it is not the most effective way of allocating resources in a free market. Economists like agency theorists believe that the corporation owners are its managers and stakeholders as agents have fiduciary duty to serve the shareholders interest rather than any others.

Although maximizing the profit of shareholder is justified as the most significant or only corporate responsibility, corporate social obligations are regarded often as strategic instrument for corporate competitive benefit and more profit gain. A Stakeholder Approach, Boston: National Conference on CSR:Free Market Theory And Corporate Social Responsibility.

Social Responsibility Theory To combat the pressures that threatened freedom of the press, this theory was first introduced in and was recommended by the Hutchins Commission on Freedom of the Press.

It stated that the media should serve the public, and in order to do so, should remain free of government interference. What is Corporate Social Responsibility in light of Milton Friedman's rejection of this concept? Esay on Milton Friedman on corporate social responsibility Such giving by corporations is an inappropriate use of corporate funds in a free-enterprise society.

applying the survival of the fittest principle to the market to ensure the best. The present practice of corporate social responsibility (CSR) has been depicted and informed by three CSR theories: The stakeholder theory of CSR.

Free market theory and corporate social responsibility

Assuming the resource is not free, this leaves the manager with the question of how much such as the Fortune Reputation Survey, as well as social responsibility stock market indices, such as the Domini Social Index, the Calvert Social Corporate social responsibility: A theory of the firm perspective.

Academy of Management Review, Most of the discussion of social responsibility is directed at corporations, so in what follows I shall mostly neglect the individual proprietors and speak of corporate executives. In a free-enterprise, private-property sys­tem, a corporate executive is an employee of the owners of the business.

Corporate social responsibility (CSR, also called corporate sustainability, sustainable business, corporate conscience, corporate citizenship or responsible business) is a type of international private business self-regulation.

Theories of CSR | Knowledge Tank