The Social Responsibility of Business:

In: Business and Management

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The Social Responsibility of Business:
A Review.

Maz Demosthenous

School of Commerce
The Flinders University of South Australia
GPO Box 2100
Adelaide South Australia 5001

Telephone: +61 8 82013896
Facsimile: +61 8 82012644
Email: Maz.Demosthenous@flinders.edu.au

SCHOOL OF COMMERCE
RESEARCH PAPER SERIES: 00-8

ISSN: 1441-3906

For many, the view that the main goal or purpose of business is to make as much money as possible is accepted as a matter of fact and is beyond debate. To go further and say that the social responsibility of a business is also just to make a profit is open to debate. The aim of this paper is to discuss the various views of the responsibility of business, and to consider where accounting fits in. In addition, to explore the ethical responsibilities that a corporation may have beyond making profits for its stockholders.

The Friedman view
Milton Friedman’s view is that in a capitalist economy, there is one and only one 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 (Friedman, 1983). When one is looking at the responsibilities of an individual or an organisation they must first examine their roles. The directors of companies have a fiduciary responsibility to act in the best interest of the shareholders. The managers are agents of the shareholders and therefore have a moral obligation to manage the firm in the interest of the shareholders, which obviously is to make as much money as possible and maximise shareholder wealth. The shareholders are the owners of the organisation and therefore the profits belong to them. However, does that entitle the directors and managers to act in an unethical manner to benefit the…...

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