Business has only one social responsibility -to make profit
Reply to the below post in 200 words. The reply must include at least 2 scholarly sources (published within the last 5 years) in addition to the course textbook (attached) and relevant biblical integration. All citations and references must be in the current APA format. Do not repeat the same sources as the original post; use the text or Biblical integration.
When contemplating a personal stance to agree or disagree with the discussion query, “Business has only one social responsibility -to make profit,” it requires a thorough examination from a global perspective because the results will vary from economy to economy. Ultimately, social responsibility decisions lie solely on managers and leadership within the organization. Managers have control and responsibility for their individual actions, along with the actions of employees and other inputs that occur within a business operation (Baye & Prince, 2022). Looking at the overall picture solely from a managerial standpoint, a manager’s main objective is to maximize profits, which in turn can easily translate to the business only having the one social responsibility of generating profits. Many could easily argue that creating organizational value is equally as important as generating profits. Profits cannot be the sole objective or purpose for a business. It is all about balancing the shareholder responsibilities (profit) and the responsibilities to society (value). Viewing this as a corporate social responsibility, yes, a business does have a social responsibility to increase profits, but is this sustainable and at what cost to the economy?
I would have to say that for larger corporations, their participation in “social responsibility” is based on a much more diluted version to fit their overall goal – profits. Additionally, it is important to consider societal changes that occur over time which impact the aphorism “the rules of the game.” In recent years, corporate involvement in establishing the rules of the game has increased control and market power which induces a decline in competition (Ramanna, 2020). This includes price hikes and product markups which have grown substantially over the years. To agree with the statement renowned statement of Milton Friedman, it would mean that the social responsibility of a business is to generate profits but focusing on the rules of the same which should not be determined by the corporate players in the market. This discussion goes to add that corporate taxation was not supposed to be a negotiable item in the theory. For example, previous studies have shown that over time, the collective share of capital returns has increased, but shares of return to labor decreased, and corporations are sanctioned to pay taxes at a lower rate now than decades ago (Ramanna, 2020).
In short, separating the ideal from a consumer perspective and thinking of the overall economic benefit, it makes it easier to agreement the Milton Friedman theory. For instance, capital returns are largely directed into investment activities which boost future economic growth and most innovations come from private firms rather than from public organizations (Ramanna, 2020). However, from a realistic point of view, that ideal alone does not provide satisfactory justification. For instance, the role of a business in creating the expectations of what “the rules of the game” are, makes this theory more of a self-interest gain rather than a societal benefit. With that, I personally would have to disagree with the statement due to the fact that I cannot bypass the fact that corporations create the rules in which the game they play in, and this is not a feasible objective to capture social responsibility.
Baye, M. R., & Prince, J. (2022). Managerial economics & business strategy (10th ed.). McGraw Hill LLC.
Ramanna, K. (2020). Friedman at 50: Is it still the social responsibility of business to increase profits? California Management Review, 62(3), 28-41.
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