05-27-2014, 04:37 PM
What is Social Responsibility?
Before the 1960s, few people questioned the role of business organizations in social responsibility. However, times have changed. Now it’s important to get an understanding of what social responsibility is.
There are two opposing views of what social responsibility is.
1. The classical view is the view that management’s only social responsibility is to maximize profits.
a. Milton Friedman is the most outspoken advocate of this view.
b. He argues that managers’ primary responsibility is to operate the business in the best interests of the stockholders—the true owners of the organization.
2. The socioeconomic view is the view that management’s social responsibility goes well beyond the making of profits to include protecting and improving society’s welfare.
a. The argument behind this view is that corporations are not independent entities responsible only to stockholders.
b. Also, modern organizations are no longer just economic institutions.
Before the 1960s, few people questioned the role of business organizations in social responsibility. However, times have changed. Now it’s important to get an understanding of what social responsibility is.
There are two opposing views of what social responsibility is.
1. The classical view is the view that management’s only social responsibility is to maximize profits.
a. Milton Friedman is the most outspoken advocate of this view.
b. He argues that managers’ primary responsibility is to operate the business in the best interests of the stockholders—the true owners of the organization.
2. The socioeconomic view is the view that management’s social responsibility goes well beyond the making of profits to include protecting and improving society’s welfare.
a. The argument behind this view is that corporations are not independent entities responsible only to stockholders.
b. Also, modern organizations are no longer just economic institutions.