BUS101CompiledNotes

Everything they do is just for self interest

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Unformatted text preview: als “pure and unadulterated som”. Businesses cannot have a social conscience; only individuals. Friedman’s belief is that the social responsibility of business is to increase its profits. If a business acts to reduce the returns of it’s enterprise in order to exercise it’s ‘social responsibility’, it is spending it’s own money, not someone else’s. “A Corporate executive has direct responsibility to his employer and must conduct the business in accordance with their desires, which general will be to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom” COMPANIES ACT IN SELF- INTEREST. EVERYTHING THEY DO IS JUST FOR SELF- INTEREST Capitalism: Relies on market mechanisms as the method to allocate scare resources - competition, supply and demand, costs of production, etc. Som: Relies on political mechanisms to allocate those same resources - Government intervention, societal needs, etc. Corporate Social Responsibility: CSR is businesses acting in ways that enhance society while being held accountable for their actions that affect their stakeholders. Business expectations in today’s environment: - To meet multiple economic, legal, and social responsibilities simultaneously - The belief that the business of business is to attend to stockholders’ return on investment and make a profit only is no longer Edward Freeman Professor, University of Virginia Professes the Stakeholder Theory “Business creates value in a responsible way that takes care of the environment, that tries to make the world a better place, that engages employees, and it makes money for shareholders.” Freeman wants to pose challenges to the stockholder theory Stockholders are ‘sacred’ because they own shares in the firm. They have certain rights and privileges. FREEMAN SEES ALL STAKEHOLDERS AS EQUAL Stakeholder Theory Premise: Implementation of stakeholder management principles, in the long run, mitigates the needd for an increasing role for government intervention and regulation. Business – Any organization engaged in created a product for product Society – Human beings that live in a community that creates Both are interdependent. Businesses are always within society “Own...
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