Friedman vs. Drucker, Murphy

Topics: Business ethics, Ethics, Management Pages: 9 (2784 words) Published: May 1, 2013

Friedman vs. Drucker, Murphy

Compare and Contrast: Ethical Perspectives

Jennifer Mags

Social responsibility and business ethics are contentious issues widely debated by many scholars, business executives, political figures and average citizens. Three perspectives that examine social responsibility and business ethics are Peter Drucker, Milton Friedman and Patrick Murphy. Each author explores the purpose behind ethical behavior and social responsibility by stakeholders and corporations, debating on the relevance and implementation behind it.

Milton Friedman – The Social Responsibility of Business is to Increase its Profits

Milton Friedman provides an article portraying the social responsibility of business. He believes in social responsibility of business as a matter of “resources and engaging 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” (1970). He begins with explaining how a business cannot have responsibility, “only people can have responsibilities…a corporation is an artificial person and in this sense may have artificial responsibilities” (1970). Friedman explains how it could be presumed that the individual with responsibility could be referred to as the corporate executive (1970). The corporate executives main responsibility is to “conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom” (1970). Friedman clarifies how a corporation’s social responsibility in the capacity as a businessman possibly means “that he is to act in some way that is not in the interest of his employers” (1970).

In regards to stockholders and customers, Friedman claims “the whole justification for permitting the corporate executive to be selected by the stockholders is that the executive is an agent serving the interests of his principal” (1970). In this regard the corporate executive ends up being a person in his own right with his own social responsibilities that may not follow those of the owners of the corporation (1970). Friedman argues in cases where the ethical values of the corporate executive differ from that of the business he is in turn “spending the customer’s money” (1970). In this case the social responsibility of the executive is breached in turn making him a civil servant or public employee, rather than an employee of a private enterprise (1970). The result of this could potentially lead to a loss of both customers and employees and a decrease in company stocks and corporate profits (1970).

Friedman examines the usage of conformity and its relation to social responsibility. He believes conformity is an unavoidable entity, in which he states "conformity appears unavoidable, so I do not see how one can avoid the use of the political mechanism altogether" (1970). In a free society, Friedman claims "there is one and only one social responsibility of business - to use it 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" (1970).

Peter Drucker – What is “business ethics”?

Peter Drucker explores “business ethics” and the struggle with different approaches and conclusions being drawn towards business ethics (1981). He explains business ethics and social responsibility from the moralist of the Western tradition, in which they believe “there is only one ethics, one set of rules of morality, one code, that of individual behavior in which the same rules apply to everyone alike” (1981). However, he argues certain circumstances warrant an individual to break the rules. For example, Drucker contests clemency might be granted...
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