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Essay on Friedman vs Freeman

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What is ethically responsible management? How can a corporation, given its economic mission, be managed with appropriate attention to ethical concerns? These are central questions in the field of business ethics. There are two approaches to answering such questions. The first one is Milton Friedman’s shareholder theory of management and the second one is Edwards Freeman’s “Stakeholder” theory of management, two different views about the purpose and aims of a business. Milton Friedman’s shareholder theory of management says that the purpose of a business is to make money for the owner or the stockholders of the business. Friedman says that there is only one social responsibility for the business: to use its resources in order to increase…show more content…
It says that you cannot look at any one of those stakes / stakeholders in isolation. Their interest has to go together, and a job of a manager or an entrepreneur is to figure out how the interest of customers, suppliers, communities, employees and financiers go in the same direction. Each of these groups is important for the business to be successful and if one of the groups is having problems to associate with the rest then it has a negative impact to all the rest.
In my opinion I believe that both theories have their own advantages and disadvantages and every business has to follow a theory that complies with its goal, when in my case I would rather follow the theory of Freeman in one extend. Friedman’s position we can see it as a theory for short term investment and businesses, while Freeman’s theory targets businesses that are planning to stay for a longer term. Also I believe that Friedman’s theory affects society in an inefficient way when costs are not really paid, as for example pollution, traffic congestion, no taxes, and poorly educated workforce. Another problem with Friedman’s position is that it assumes that forces of competition are sufficiently vigorous, but they are not. In addition the distribution of income that results from profit maximization is very
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