Abstract
In a now infamous 1970 article in the New York Times Magazine, the late University of Chicago and Nobel laureate economist Milton Friedman spelled out this fundamental precept of the free enterprise system.1 “There is one and only one social 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,” he explained. “In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business.” Actions such as “providing amenities for a community … or reducing pollution … or hiring the ‘hardcore’ unemployed,” he decried as window dressing and, should these come at the expense of corporate profits, as tantamount to fraud.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Notes
For the infamous 1970 article, see Milton Friedman. “The Social Responsibility of Business Is to Increase Its Profits.” New York Times, September 13, 1970.
For agency theory, see Michael C. Jensen and William H. Meckling, “Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure,” The Journal of Financial Economics (1976) and Michael C. Jensen, A Theory of the Firm: Governance, Residual Claims, and Organizational Forms (Boston: Harvard University Press, 2000), online at SSRN: http://ssrn.com/abstract=94043.
“Global Survey of Business Executives,” The McKinsey Quarterly (January, 2006), online at www.mckinseyquarterly.
For the term “social responsibility,” see Frank Abrams in Anthony F. Buono, “Book Review: Corporation, Be Good! The Story of Corporate Social Responsibility,” Business and Society Review 111, no. 2 (2006): 235–40.
For it gained a following, see Howard Bowen, Social Responsibilities of the Businessman (New York: Harper and Brothers, 1953).
For some argue CSR is a function of regulation, see Michael Blowfield, “Does Society Want Business Leadership?” Center for Corporate Citizenship Working Paper. (December, 2005), online at bcccc.net.
For survey of professions, see The Gallup Poll, “Honesty/Ethics in Professions” (December 8–10, 2006), online at www.galluppoll.com.
For public opinion about company’s citizenship, see GolinHarris, Doing Well by Doing Good: The Trajectory of Corporate Citizenship in American Business, online at GolinHarris.com; Reputation Institute, RepTrak Pulse 2006: Social Responsibility Report, online at Reputationinstitute.com.
For punitive view of bad corporate behavior, see Cone, Inc., “2004 Corporate Citizenship Study” (December, 2004), online at Coneinc.com.
For citizenship programs effect on reputation, see Reputation Institute, RepTrak Pulse 2006: Social Responsibility Report, online at Reputationinstitute.com; also see Antonio Márquez and Charles J. Fombrun, “Measuring Corporate Social Responsibility” Corporate Reputation Review 7, no. 4 (January, 2005): 304–08.
Hill and Knowlton and Crown Ferry International, “Corporate Reputation Watch” (September, 2003). See also Return on Reputation: Corporate Reputation Watch 2006, online at HillandKnowlton.com.
For research by British Telecom, see “Just Values: Beyond the Business Case for Sustainable Development” (2003), online at BT.com.
Mirvis on B&J surveys, reported in Philip H. Mirvis,“Ben & Jerry’s: Team Development Intervention (A and B),” in Cases in Organization Development, eds. A. Glassman and T. Cummings (Homewood, IL: Irwin, 1991).
A comparison on total returns with DGSI data, reported in World Economic Forum Annual Report 2005–2006, Geneva, Switzerland. Online at Weforum.org.
For a compilation of studies by United Nations Global Compact, see Who Cares Wins: Connecting Financial Markets to a Changing World (December, 2004), online at Unglobalcompact.org.
For meta analysis, see Marc Orlitzky, Frank L. Schmidt, and Sara L. Rynes, “Corporate Social and Financial Performance: A Meta-analysis,” In Organization Studies 24, no. 3 (2003): 403–41; also see J. D. Margolis and J. P. Walsh, People and Profits? The Search for a Link between a Company’s Social and Financial Performance (Mahwah, NJ: Lawrence Erlbaum Associates, 2001).
Marjorie Kelley, “Holy Grail Found,” Business Ethics 18, no. 4 (2004): 4–5.
For antiglobalization rallies and anticorporate notes, see Naomi Klein, No Logo: Taking Aim at the Brand Bullies (New York: Picador, 2000); also see Paul Kingsnorth, One No, Many Yeses: A Journey to the Heart of the Global Resistance Movement (New York: Free Press, 2004); and Charles Derber, Corporation Nation: How Corporations Are Taking Over Our Lives and What We Can Do About It (New York: Griffin Trade Paperback, 2000).
For of the world’s one hundred economies, see the size of corporations in Medard Gabel and Henry Bruner, Globalinc: An Atlas of the Multinational Corporation (New York: The New York Press, 2003); and Sarah Anderson and John Cavanaugh, “Top 200: The Rise of Corporate Global Power,” the Institute for Policy Studies, December 2000.
For globalization issues such as income inequality, see World Bank PREM Economic Policy Group and Development Economics Group, “Assessing Globalization” (2000), online at worldbank.org; outsourcing, Forrester Research in Daniel Drezner. “The Outsourcing Bogeyman,” Foreign Affairs, May/June 2004; spread of democracy in Nayan Chanda, “Coming Together: Globalization Means Reconnecting the Human Community,” Yale Global, November 19, 2002; energy demand, in World Business Council for Sustainable Development, “From Challenge to Opportunity: The Role of Business in Tomorrow’s Society” (February, 2006), online at Wbcsd.org.
For the world’s worst problems, see Thomas Friedman, The World Is Flat: A Brief History of the Twenty-first Century (New York: Farrar, Straus, Reese, and Giroux, 2005).
For business challenges, see Ian Davis and Elizabeth Stephenson, “Ten Trends to Watch in 2006,” in The McKinsey Quarterly (March 30, 2006); also see “CEOs as Public Leaders: A McKinsey Survey,” The McKinsey Quarterly (April 24, 2007).
For government serves the common good poll, see Edelman Trust Barometer 2007, online at Edelman.com; also for data on cynicism see Donald L. Kanter and Philip H. Mirvis, The Cynical Americans: Living and Working in an Age of Discontent and Disillusion (San Francisco: Jossey Bass, 1989).
For business environmental agenda, see Daniel C. Esty and Andrew S. Winston, Green to Gold (2006); Stuart Hart, Capitalism at the Crossroads: From Obligation to Opportunity, 2nd Edition (Upper Saddle River, NJ: Wharton School Publishing, 2007).
Copyright information
© 2007 Bradley K. Googins, Philip H. Mirvis, and Steven A. Rochlin
About this chapter
Cite this chapter
Googins, B.K., Mirvis, P.H., Rochlin, S.A. (2007). Business and Society: A View from the Top. In: Beyond Good Company. Palgrave Macmillan, New York. https://doi.org/10.1057/9780230609983_3
Download citation
DOI: https://doi.org/10.1057/9780230609983_3
Publisher Name: Palgrave Macmillan, New York
Print ISBN: 978-1-349-54010-5
Online ISBN: 978-0-230-60998-3
eBook Packages: Palgrave Business & Management CollectionBusiness and Management (R0)