Social Responsibility And Shareholder Theory

808 Words Dec 12th, 2015 4 Pages
In recent years, society insistently demands from corporations actively participate in his life. The main idea is next, inasmuch as corporation is extracted from society a certain income, they therefore obliged him to pay. What is a social responsibility of business today? What should do executives only satisfy shareholders or they have also obligations to society?
One of the most famous studies about social responsibility and shareholder theory presents in the article of economist Milton Friedman named “The Social Responsibility of Business Is to Increase Its Profits”, which has been published in 1970n. In this article author, who has subsequently rewarded with the Nobel Prize, was formulated main points of shareholders theory and denounced the whole concept of socially responsible business. Friedman declared, “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game” (214). He defenses his view using next arguments. First, he pointed that the primary responsibility of managers is the fulfillment of desires owners of the company, hence shareholders. The wishes of shareholders are reduced mainly to one thing, namely to bring the company the highest possible income. In this case executive’s “responsibility is to conduct the business in accordance with their [shareholders] desires, which generally will be to make as much money as possible…
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