Stakeholder vs. Shareholder: The Debate on Corporate Social Responsibility

The debate surrounding the social responsibility of businesses has been ongoing for decades. The two journal articles, 'Stakeholder Theory of the Modern Corporation' by Freeman and 'The Social Responsibility of Business is to Increase its Profits' by Milton Friedman, present two contrasting views on the topic.

Freeman's article argues for the stakeholder theory of the modern corporation. This theory suggests that businesses should not only consider the interests of their shareholders but also the interests of all stakeholders involved in the business, including employees, customers, suppliers, and the wider community. Freeman argues that businesses have a responsibility to contribute to the social and environmental well-being of society and that this can ultimately benefit the business in the long run.

On the other hand, Friedman's article takes a shareholder-centric view of business responsibility. He argues that the sole responsibility of businesses is to increase profits for their shareholders, and any other social responsibility should be left to the government or individuals. Friedman believes that businesses should prioritize their economic goals and that any attempt to pursue social responsibility would be a misuse of company resources.

Both articles present valid arguments for their respective positions. Freeman's stakeholder theory recognizes the importance of considering the impact of business decisions on all stakeholders and the wider society. This approach can lead to greater long-term success for the business, as it fosters positive relationships with all parties involved. However, Friedman's argument for prioritizing shareholder value can also be justified, as businesses are primarily established to generate profits for their owners.

In conclusion, the debate on the social responsibility of businesses is complex and multifaceted. Both Freeman and Friedman's articles provide compelling arguments for their respective positions, and the ultimate decision on how businesses should approach social responsibility lies with the individual business and its stakeholders. Ultimately, businesses should consider the impact of their decisions on all stakeholders and strive to balance the interests of their shareholders with their wider social responsibilities.