Question

According to Milton Friedman, when is it acceptable to engage in corporate social responsibility?

a. Never, a firm should only focus on profits.
b. When it's a justification for actions that are in the long term interest of the firm.
c. When the firm's managers really believe in the cause.
d. When it takes funds equally from stockholders, employees and customers

Answer 1

Milton Friedman believed it is acceptable to engage in corporate social responsibility only when it serves the long term interests of a firm, primarily through profit maximization, as the firm's primary responsibility is to its shareholders.

Step-by-step explanation:

According to Milton Friedman, corporate social responsibility is acceptable when it is a justification for actions that are in the long term interest of the firm. This perspective aligns with Friedman’s view that the primary responsibility of a firm is to its shareholders, and therefore any socially responsible actions should ultimately serve the goal of maximizing profits. From Friedman’s viewpoint, outlined in his 1970 essay, he believes that the obligation of corporate executives is to conduct business in accordance with the desires of the firm’s owners, which generally implies a focus on profit maximization. He saw government regulation, rather than corporate conscience, as the means to ensure businesses do not harm society, proposing that businesses should be motivated only by a desire to benefit themselves and their shareholders unless regulatory frameworks dictate otherwise.