Milton Freedman

Are Milton Friedman’s 1970 opinions about corporate social responsibility appropriate for businesses operating today in New Zealand?

CORPORATE SOCIAL RESPONSIBILITY IN NEW ZEALAND TODAY

Corporate social responsibility or CSR has been considered in the business industry for many years. Most agree that there is no single established definition for CSR (Mark Shwartz and David Salla). Therefore it can be defind as, but not limited to, how companies manage business processes to produce an overall postive impact on society.  Fourty-three years ago, famed economist, Milton Friendman wrote the article “ The Social Responsiiblity of Business Is to Increase Its Profits.”(1970) Milton Friedman expanded on the theory that a businesses sole purpose is to maximise profit. Even fourty-three years on,  Friedman’s views still relate to society today.  It is therefore appropriate that New Zealand businesses should be primarily focussed on maximising profit >>> but should be finding ways to turn other forms of corporate social responsibility into a factor of profit maximising.

  Milton Friedman’s (1970) view is that there is one and only one social responsibilty of a business-to use it’s resources and engage in activities designed to increase profits. It is important to realise that at no point does Freidman indicate that business has no social responsibilities ( Mark Shwartz and David Salla __).  Friedman does however indicate that firms can engage in so called broader “social responsible” activities but only if it maximises the shareholders wealth (Friedman cited by Mark Shwartz and David Sella).

Friedman’s point of ‘self interest’ examines the theory that in a system of free enterprise the business has a social responsibility. However, businesses are artifficial persons and do not belong to society, only members of society should enact themselves if they wish to. (1970) While it is to be agreed upon that a business is an artificial person,  the idea that an employees action or inaction won’t directly effect the businesses profitibility should be dismissed.  A band is made up of a singer, drummer, base player and someone on guitar as such, collectively they are called a band with their desired name, and so forth, employees collectively, like a band, make up a business. Therefore will have impact as individuals on the business.

As Friedman states,_____. No matter what, if a business believes that CSR is neccesary, they are still doing it, whether they mask it as charity work and such forth, to gain revenue. Businesses that do charity work or are seen in society acting ethically will establish a reputable name. A reputable name establishs trust with it’s stake holders. And what do these two factors combined return? Profit. It is enevitable that behind every CSR related action that a business takes, its main goal is to return profit.  Therefore reitterting which was previously stated that New Zealand businesses should use CSR to their benefit as a way of maximising their profits.

New Zealand does have a reputation of being ecologically friendly. We pride ourselves on our “clean and green” image. New Zealand’s mission statement is “To provide business leadership as a catalyst for change toward sustainable development, and to promote eco-efficiency, innovation and responsible entrepreneurship.” (nz blah). New Zealand companies such as Icebreaker have grasped this eco-efficienty and incorporated it into their business strategy. Their manufactoring company has recently been moved to China, which would usually be a risky move as manufacturing bulidings in China are well renowned for their heavy waste and pollution. However, Icebreaker pride themselves on their machinary being one of the most high-tech, eco-friendly operators in the world. This eco-friendliness contradicts Friedman’s views as he states (____)  However even though this move for Ice breaker is not directly maximising their profits in the short term, they still in the long term are establishing a reputable brand which  This move for icebreaker may not be the cheapest option for the company but they wanted their image to remain relaible in the customers.