Freeman vs Friedman

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• Freeman Vs Friedman Essay

  ...Freeman and Friedman offering opposing views to answer the question “What is business’s responsibility?” Freeman puts forth what he calls the “stakeholder theory” while Friedman advocates for the “stockholder theory.” Freeman’s stakeholder theory identifies different “stakes” that influence an organization. Each of these parts is integral to the well-functioning of the organization. Included in these categorizations are employees, shareholders, communities, and customers. Freeman advises organizations to treat all of these groups with utmost respect and to regard them with equal importance. He believes that without any of these groups the organization would cease to exist. For example, if the organization mistreats the employees, the employees will not be motivated to provide good work and will thus trigger the demise of the organization. Friedman on the other hand believes the only group with an actual intrinsic value to the organization is the shareholders. He argues that the only respobility that business has is to make profit, and in order to do this the shareholders need to be treated as the most important part of the organization. Freidman says there is a contract between the executive and the shareholders since the executive is working for the shareholders and the shareholders have a lot of value at risk. These two opposing views are crucial for organizations to consider when...

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• Essay on Friedman vs Freeman

  ...Friedman: The purpose of a business is to maximize profits while adhering to law and ethics. Primarily, this argumentation is based on the notion that corporations, as legal persons, cannot have responsibilities like natural persons. Secondary, Friedman’s argumentation is based on the principle of ownership and employment. By not complying with the duty of serving the owners’ interest (maximum profit), a manager would allocate resources artificially and arbitrarily. This spending would be unjust and probably non-Pareto-optimal, because it is not democratically authorized. Assigning duties other than serving the owners to a non-democratically selected manager would result in abandoning parts of freedom and democratic achievements. Freeman: Management serving only the interest of stockholders is already significantly restricted by laws and economic logic. Freeman argues that the owners’ claim on a company is worth the same as employees’, suppliers’, customers’ and the local community’s claims. All stakeholders maintain a reciprocal relationship of rendering and receiving resources to and from the corporation. Managers must act as balance-maintainers of stakeholder interests to guarantee the sheer existence of the corporation and not out of altruistic reasons. Freeman’s approach is not static but comprises a constant reconciliation of stakeholder interests based on certain ground rules (“doctrine”) that is intended to guide the...

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• Friedman

  ...initiatives and laws (Cuizon, 2009). Friedman Vs Drucker Milton Friedman and Peter Drucker both were noted management authorities; Milton Friedman primarily was an economist and even won the Nobel Prize in economics in 1976 when the Nobel Prize held more honor than it does today. Both operated in a different time, however. Their views of ethical behavior and social responsibility cannot be seen as being complete in today's business environment. Milton Friedman Milton Friedman (2002) has maintained, since the 1960s, that the purpose of any business is to maximize profits and so return as much value for shareholders as possible. Friedman (2002) holds that the current trend toward greater corporate social responsibility is in direct opposition to this position: Woodbury (n.d.) quotes the 1970 article, "The social responsibility of business to increase its profits" that appeared in a compilation. In that article, Friedman (1991) states: 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, which is to say, engages in open and free competition without deception or fraud (p. 245). Friedman (1991) clarifies his position in saying that the pursuit of profits is not the game with no rules. Rather, it is the...

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• Friedman vs. Drucker Essay

  ...Business and Society Relationship Friedman v.s. Drucker Compare and contrast the two approaches to business ethics. After review of the two articles, there are some notable differences between Milton Friedman and Peter Drucker’s approach to business ethics. Friedman’s main point is the primary responsibility of a business is to its stockholders and increasing its profits. Moreover, Friedman (1970) indicated that there are both ethical and legal limitations on business operation, underscoring that the business should not deplete from its resources and/or customers. Drucker’s approach focuses on the ethics of prudence and the ethics of self-development from the times of Aristotle to Confucius respectively to modern business ethics. In view of both principles, the leaders don’t have to be in a functional leadership role to lead within the organization. This person(s) should lead by example, demonstrating ethical behavior and striving to avoid wrong behavior. However, it is incumbent upon managers to have an environment that allows for such performance along with “choosing the values for its employees.” (Drucker, 1981). In the practice of the ethics of interdependence, it covers both ethical and unethical behavior. The ethical behavior in business relationships works for the good of all individuals and place everyone in balance. In unethical behavior comes as a result of the misuse of power in business relationships,...

  1187  Words | 4  Pages

• Friedman vs Keynes Essay

  ...Friedman vs. Keynes I. INTRO . II. Milton Friedman A. Historical Background B. View of Economy a. Early Views b. Later Views C. Influence on Policy Makers a. Richard Nixon b. Ronald Reagan III. John Maynard Keynes A. Historical Background B. View of Economy a. Trade b. Unemployment C. Influence on Policy Makers a. Prime Minister David Lloyd George b. Frank D. Roosevelt IV. Conclusion Friedman vs. Keynes The discipline of macroeconomics deals with the performance, structure, and behavior of a national economy as a whole. Macroeconomists seek to understand the determinants of aggregate trends in an economy with particular focus on national income, unemployment, inflation, investment, and international trade. Milton Friedman and John Maynard Keynes, who was both great economists, embraced the different challenges of the world by imposing their own philosophies. Although both Friedman and Keynes have some similarities, strong disagreements about the monetary arena set them apart. These two gentlemen traveled different paths of economics their whole life to establish ground rules for the government to follow. The first son of a working class Jewish...

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• Friedman vs Drucker Essay

  ...Friedman Vs. Drucker The concept of business ethics continues to spark wide and varied responses to its very meaning and to its practical application in the daily operations of the corporate enterprise as well. Two noted business authors and leaders, Peter Drucker and Milton Friedman, have expressed differing positions on the role of corporate social responsibility. From Drucker’s writings, it is abundantly clear he believes it is critically important not only how public and private enterprises manage their resources, but also how they operate morally and ethically within a social organizational structure. To this end, he championed the need for businesses to develop core values that emphasize a strong focus on corporate social responsibility, while still maintaining total accountability to the organization. Conversely, Milton Friedman held an opposing view and surmised that a businesses’ primary concern ought to be squarely focused on the maximization of profits, for a corporation cannot be capable of having any kind of social responsibility, as it is not an actual living entity able to entertain such ideals, rather, it exists purely as a mechanism to generate profits for its shareholders. Personally, while I find both views have solid merit, I also believe that between these two arguments are strong ideals that can be taken together from each premise, such that both corporate responsibility objectives can...

  1926  Words | 6  Pages

• Friedman vs. Duiker Essay

  ...Jake D. Professor Robert G. SSC 102 August 19, 2012 Paper 3 Thomas Friedman presented the “Dell Theory of Conflict Prevention” in his book, The World is Flat. Previously called the “Golden Arches Theory of Conflict Prevention”, the theory holds that no two countries involved in a major global supply chain, like Dell or McDonalds, will ever engage in a war with each other as long as they both remain part of the same chain (Friedman). So, any time a powerful corporation operates in countries other than its own home country, those countries will not go to war. Wealth and economic dependence make any such activity detrimental to progress and development. Inclusion and participation in the global market is too important for a progressive nation to risk. Though Friedman argues his “Dell Theory” with confidence, in his book, he also acknowledges that the mere presence of a global corporation in two countries could never guarantee unconditional peace. Moreover, it means that significant economic loss and the severe impact on reputation in the global market will factor heavily in a government’s decision to engage in conflict. Examples that support this theory are the avoidance of war between China and Taiwan as well as the volatile relationship between Indi and Pakistan. Both pairs of countries share strong political discontent but profitable supply and economic affairs make war less likely between them. Scholars believe...

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• friedman vs carroll Essay

  ...Unit III Assignment Friedman Vs. Carroll Responsibilities of Business Firms to Society MBA 5101 - Strategic Management and Business Policy February 1st, 2015 Friedman’s View of Business Responsibility Milton Friedman’s theory on business responsibility is grounded on his belief that the only social responsibility of a business is to use their resources and engage in activities that legally generate profit for shareholders. Friedman believes that: • Businesses should engage in “traditional” functions of business. • Businesses should not feel an obligation to engage in causes that promote social responsibility. • Businesses should engage in legal activities that produce profit for shareholders and promote business growth. • Businesses should not use resources to benefit social causes. • Business resources used for social interest will lead to increased business costs, and a reduction of resources needed for investment and research. Friedman’s View of Business Responsibility (cont.) • Businesses should solely focus on profits, as long as it is done in a legal and free market. • Businesses should focus on making profits, but their activities should remain within the bounds of the legal system. • Businesses should also follow the informal rules and ethics of business behavior. Milton Friedman was quoted saying: "There is one and only one social responsibility of business-to use its resources and engage in...

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