Journal of Business Ethics 70 (2):209-220 (2007)

The paper reconstructs in economic terms Friedman's theorem that the only social responsibility of firms is to increase their profits while staying within legal and ethical rules. A model of three levels of moral conduct is attributed to the firm: (1) self-interested engagement in the market process itself, which reflects according to classical and neoclassical economics an ethical ideal; (2) the obeying of the "rules of the game," largely legal ones; and (3) the creation of ethical capital, which allows moral conduct to enter the market process beyond the rules of the game. Points (1) and (2) position the Friedman theorem in economic terms while point (3) develops an economic revision of the theorem, which was not seen by Friedman. Implications are spelled out for an instrumental stakeholder theory of the firm
Keywords active/passice moral agency  economic analysis  ethical capital  Friedman theorem  three levels of moral agency  Stakeholder theory
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DOI 10.1007/s10551-006-9106-5
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References found in this work BETA

Essays in Positive Economics.Milton Friedman - 1953 - University of Chicago Press.
Capitalism and Freedom.Milton Friedman - 1962 - Ethics 74 (1):70-72.
Business Ethics and Stakeholder Analysis.Kenneth E. Goodpaster - 1991 - Business Ethics Quarterly 1 (1):53-73.
The Constitution of Liberty.Friedrich A. Hayek - 1961 - Philosophical Review 70 (3):433-434.

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