What are company’s responsibilities? We all know they have to pay their labor, pay taxes, have a permission from government to exist, make an honest financial report to their stockholders, etc, but it’s because there’s already laws making them liable to do so. We all know that law is not perfect, if it is we certainly won’t see a multinational company like google paying that low for their tax, not to mention that all people have different standard of morality, making laws impossible to satisfy all people. There might be also laws which can’t be legal despite how it’s going to be good for society still hasn’t been legal yet. Knowing this, should a company go beyond the laws, to do things they don’t have to do for the sake of their business ethics?
Milton Friedman is one of the most influential people who supports the idea that companies should only abide to the laws and just maximize profit. It was written as an article in New York Times and still being discussed by economists and businessmen until now. His basic argument is that executives as agents of stockholders, should act for the interest of their shareholder only, which is usually seeking profits as much as possible. Doing social responsibilities for the society will be unethical since they are not acting in accordance to their own employer, it would also mean they used someone else’s money which has been trusted to them for things not desired to get and decreased the returns stockholder supposed to get. Just like what Friedman wrote in his article, “What does it mean to say that the corporate executive has a “social responsibility” in his capacity as businessman? If this statement is not pure rhetoric, it must mean that he is to act in some way that is not in the interest of his employers.”
Contrary to what many people might believe, Friedman did address the practice of generating goodwill for the interests of the company. He doesn’t denounce such an act of window-dressing their interest since it’s still in line of institution’s purpose. What he basically condemned are all acts which aren’t for the sake of making profit, he admitted that doing charity and all other philanthropic stuffs could lead to more profits and sustainability of a consumer, and he agrees to such acts. He wrote in his article :
It would be inconsistent of me to call on corporate executives to refrain from this hypocritical window-dressing because it harms the foundations of a free society. That would be to call on them to exercise a “social responsibility”! If our institutions, and the attitudes of the public make it in their self-interest to cloak their actions in this way, I cannot summon much indignation to denounce them. At the same time, I can express admiration for those individual proprietors or owners of closely held corporations or stockholders of more broadly held corporations who disdain such tactics as approaching fraud.
I believe this view is what most companies share in their works. Every expenditure should be observed if it’s doing its intended purpose of making profit. What people call “social responsibilities” should be seen pragmatically and analyzed based for its gains and losses. ISo do companies should do beyond the law, or like what Friedman likes to call, rules of the game? Yes, I think they should, but only if those actions can generate more profits in short or long terms for the company.