Social Responsibility of Business

Social Responsibility of
Business

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Critically discuss the statement “The social responsibility of business is to increase its profits”
using contrasting theories............................................................................................................1
Using an extended example that illustrates Socially Responsible behaviour..............................3
Evaluate the ethical and sustainability standing of a range of organisations..............................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Social responsibility or corporate social responsibility is the theory according to which every
organisation has a duty or responsibility towards the people associated with that company which
is required to be fulfilled (Crane, Matten and Spence, 2019). The main aim of this essay is to
analyse and understand the statement given by Friedman in 1970 in which he stated that the
social responsibility of business is to increase its profits. For this purpose, this particular essay in
divided into three sections which will articulate the contrasting theories to the theory of
Freidman and these theories will include stakeholder theory and triple bottom line theory. Along
with this, an example of a small medium company will be selected to analyse the practice of
social responsibility in this company. Lastly, ethical and sustainability standing of a range of
organisations will also be assessed.
MAIN BODY
Critically discuss the statement “The social responsibility of business is to increase its profits”
using contrasting theories
The statement stating the social responsibility of business is to increase its profits is given
by Friedman and this statement reflects the theory given by him named as shareholder theory.
This theory and this statement was highly engaged in arguments due to which to which it is
important to discuss this statement using contrasting theories. This statement is supported by the
shareholder theory of Friedman which considers that a business must only focus upon its
shareholders and earning profit but looking from a contemporary point of view, shareholders are
not the only stakeholder of a business, there are various other parties which are influence by the
decision of the company. So, it is not valid to consider this statement appropriate. In order to
counter argument this theory, it is important to understand its contrasting theories and few of the
contrasting theories are:
Stakeholder theory
This theory was given by Freeman and this a contrasting theory from the Friedman’s
theory of shareholders. There are various differences between these two theories; the Freidman’s
shareholder theory was devised for 20th century which stated that the most important social
responsibility of an organisation is against its shareholders and it is to increase their profits so
that shareholders can be benefitted (Cui, Jo and Na, 2018). On the other hand, Freeman’s
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