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Social Responsibilities in Companies

Autor:   •  March 8, 2011  •  Essay  •  2,056 Words (9 Pages)  •  1,809 Views

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Every company interacts with other members of its environment. A company might have several environments. One of the environments which are closely related to the company is shareholders, which refers to any individual, institution, firm, or other entity that owns shares in a company (Mallin 2007). Moreover, in a broader context, every company also has stakeholders. Stakeholders refer to any actor (individual or group) that is vital for the success and survival of the company (Hatch and Cunliffe 2006). Stakeholder does not recognize only the shareholders but also those actors with less direct political influence. Some people argue that companies are considered to become only responsible to their shareholders and they do not have social responsibilities. On the other hand, as an opposed to the previous idea, the other people think that companies are considered to have responsibilities to society beyond making profit. As a result, the social responsibilities have been an important issue that emerge among the companies nowadays. This essay will discuss about the Milton Friedman's view about the social responsibility of the company. Moreover, as an opposed to Friedman's view, the idea of social responsibility of the companies and its roles will be explained as well.

Some people might think that companies' main focus is to achieve the organisational goals and become responsible to their shareholders. In addition, Milton Friedman argues that essentially companies had no social responsibility beyond making profits (Feldman 2007). He believes that companies do not have the right to become responsible to the society by spending shareholders', customers', and employees' money (Mallin 2007). In other words, companies exist just to make profit for shareholders, employees, and customers. They do not have such things as social responsibility. Moreover, he thinks that social responsibility actions by the company will result in inefficiency and lost production. In other words, he considers the company's social responsibility actions is costly and reduce profits. However, he stated that if a company desires to engage in actions that might be considered as responsible, it should be done through the activities that seek to increase profit, such as image marketing and so forth.

However, Milton Friedman's argument, which stated that the only social responsibility of a business is to maximize profits, is no longer universally accepted, particularly after the cases of Enron and WorldCom (Ramasamy, Ng, and Hung 2007). As a matter of fact, the business environment began to consider that the value of the company does not represented only by its prosperity, profitability, and shareholder value. Other factors, such as its ability to grow and to improve continuously, become more important and those factors are determined by its social competences, ethical responsibility and environmental contributions (Hardjono


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