Business and Society Review 119 (1):37-59 (2014)

Authors
Ignacio Ferrero
University of Navarra
Abstract
Milton Friedman famously stated that the only social responsibility of business is to increase its profits, a position now known as the shareholder model of business. Subsequently, the stakeholder model, associated with Edward Freeman, has been widely seen as a heuristically stronger theory of the responsibilities of the firm to the society in which it is situated. Friedman’s position, nevertheless, has retained currency among many business thinkers. In this article, we argue that Friedman’s economic writings assume an economy in which businesses operate under the protections of limited liability, which allows corporations to privatize their gains while externalizing their losses. By accepting limited liability, Friedman must also accept a view of business as embedded in social interdependency, which serves as the logical and moral foundation for corporate social responsibility (CSR). To achieve consistency with his economic principles, Friedman must either abandon limited liability or modify his doctrine on CSR and his related shareholder model of business.
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DOI 10.1111/basr.12024
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References found in this work BETA

Capitalism and Freedom.Milton Friedman - 1962 - Ethics 74 (1):70-72.
Ending the so-Called 'Friedman-Freeman'debate.R. Edward Freeman - 2008 - Business Ethics Quarterly 18 (2):153-190.

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Citations of this work BETA

Shareholder Primacy and Deontology.Hasko von Kriegstein - 2015 - Business and Society Review 120 (3):465-490.

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