The Contending Issue argues that the exercise of social responsibility should not be part of the responsibilities of those people who are responsible for decisions and actions in business. Instead, the increasing the profits for their companies should be the thing that they should concentrate and focus on. Friedman criticizes that if corporate executive exercises social responsibility that would be a.
Unreasonable – because it constitutes taxation without representation, b. Dictatorial – because it involves governmental power in a person, c. Unwise – because there are no checks and balances mechanism, the decision is all based on the executive’s discretion, d. Loss trust ?? because the executive is employed by the owners as an agent serving the interests of his principal, and e. Ineffective – because the executive is unlikely to be able to anticipate the social consequences of his actions.
Friedman uses examples to elaborate the exercise Of social responsibility in business typically costs money. He says “refraining from a price increase to help prevent inflation, reducing pollution “beyond the amount that is in the best interests of the reparation” to help improve the environment, and “at the expense of corporate profits” hiring ‘hardcore’ unemployed. “. In the above examples, Friedman assumes that the one who performs the actions deciding everything including what to do, when to do, and how to do.
The one does not involves any stakeholders in the business for the decision of exercising social responsibility. This is the basis that Friedman is holding that the one is imposing something on those other stakeholders. However, this may not hold true, if the one and the one’s employer has a mutual understanding and moon interest in exercising social responsibility and to consider the social responsibility is part of the company’s strategy, then the exercise of social responsibility in business would suffer nothing in meaning or merit.
Freeman (2006) States that “the conceptual scheme that separates the social responsibilities of a corporation from its business responsibilities has long outlived its usefulness. “, he assigns a different meaning to CARS that the CARS should stands for Company Stakeholder Responsibility, in his paper, he intro uses the Four Levels of Commitment to the Company Stakeholder Responsibility approach and also Ten principles for the Company Stakeholder Responsibility.
He advocates that “the very idea of managing for stakeholders is that the process of value creation is a joint process. In today’s world no one gets it right all the time. Whatever your interactions and strategies are with stakeholders, they can always be improved. “. The Four Levels Of Commitment and the Ten Principles Freeman proposed establishes a framework as governance that allows stakeholders to deal with changes in the external environment. In this way, it is particularly suited for the dynamic environments that are prevalent today.
And the central concern of the Freeman’s Company Stakeholder Responsibility approach is the achievement of the company’s objectives through the harnessing of support of all those who are affected by the company’s action, as well as all the stakeholders. Furthermore, the emphasis Page 2 Of 3 of the Company Stakeholder Responsibility approach is a diverse collection of stakeholders will cooperate with the company over the long term only if they share a core set of values. Taking the Freeman’s Company Stakeholder