Varied views amongst businesses concerning the role of business organizations are in existence. Milton Friedman (1977) posits that the only responsibility that a business firm has is to its shareholders, that is, the corporate executives should strive to generate a lot of money in all possible ways but at the same time ensure that they work in conformation to the regulations that are set by the society. This is true since, in a free society, one is at liberty to do their business in a y way as long as it is within the confines of the law. Thus workers of an organization should ensure that their work within the market is to maximize the profitability of the business as desired by the employers since they are using employer money in any undertaking hence should consider the best interest of the employer. Friedman contends that there are possible ways to set up organizations for “social responsibilities” (Friedman, 1970). This paper critically analyzes the views of the purpose of business as expressed by Friedman and Kay.
Social responsibilities are not emphatically determined and thus it is better to leave it at that and let the government drive the tax imposition. As Friedman contends, there is no clear distinction of what social responsibility is and thus corporate executives may not use business money as within the same domain. On the other hand, Kay (1997) contends that businesses have a responsibility to stakeholders and in this perspective; stakeholders would encompass business owners, customers, the staff of an organization, as well as the community at large. The quest to create wealth and value should not be solely confined to the business as to the owners. Rather, as Kay posits, organizations should strive to undertake what is socially and morally right in undertaking their businesses (Kay, 1997). Businesses views should be a projection of long-term profitability over the short term ones. Drawing from Kay’s perspective, assuming a business disregards the community at large in pursuit of its profitability, what would be the effect if inflation affected the community? Then it is apparent that the business would fall.
The two views, of Kay and Friedman, can be reconciled. This is because Friedman’s argument does not entirely disregard the social responsibility that business as it recognizes that it should operate within the fundamental rules societal rules. Friedman apparently does is not opposed entirely to social responsibility but rather that the corporate executives may not exactly in their pursuit of this factor do what is right or expressed by the employers. Kay, on the other hand, recognizes that a business may not accrue as much profit if its mission expresses just the desires of the company to get profit and that if its vision reflects a business that will be profitable to all stakeholders; it has higher chances of gaining more clients. In conclusion, I argue that businesses should have social responsibilities but which are defined certainly in the laws and regulations to avoid pilferage or misappropriation of business funds in the name of social responsibility.