Critical Review of Friedman's Essay on CSR: Business Development

This essay presents a critical review of Milton Friedman's essay on Corporate Social Responsibility (CSR). The essay begins by summarizing Friedman's central argument that the sole responsibility of a business is to increase its profits, and that CSR initiatives are a distraction from this primary goal. The review then delves into the arguments presented by Friedman, including his views on the role of executives, the nature of responsibilities, and the potential negative impacts of CSR on businesses and society. The essay then critiques Friedman's perspective, highlighting areas where his arguments are unpersuasive or lack logical efficacy, especially in the context of the modern business landscape. It explores alternative perspectives, such as the stakeholder theory and the triple bottom line approach, which emphasize the importance of ethical considerations, social responsibility, and the need for businesses to consider the impact of their actions on various stakeholders, including employees, customers, and the broader community. The essay concludes by emphasizing the relevance of CSR in today's market and the importance of businesses engaging in socially responsible practices to foster customer loyalty, maintain a positive public image, and contribute to the well-being of society.

Running head: CRITICAL REVIEW OF FRIEDMAN’S ESSAY ON CSR
Critical Review of Friedman’s essay on CSR
Name of the Student:
Name of the University:
Author Note:

1CRITICAL REVIEW OF FRIEDMAN’S ESSAY ON CSR
Corporate Social Responsibilities, also known as CSR is the integration of corporate
regulations in the business model to perform activities in proper compliance with the social,
legal, ethical, national and international norms. Corporate social responsibilities help the
businesses to increase their profits in the long-term by establishing positive relations with the
customers and the stakeholders that ultimately enables them to reduce business risks and raise
the ethical standards (Blowfield and Murray 2014). The CSR also helps the companies to
function without causing any negative impact on the society as well as the environment that
ultimately indicates a healthy economy. The essay critically analyzes the views expressed by
Friedman that deviates from the common notion of the CSR. It evaluates the idea with varying
perspectives and highlights the different aspects that serve to be the loopholes for Friedman’s
concept. The study on the alternative perspectives denotes the importance of CSR and connote
that companies today engage themselves in performing the CSR to proceed with their business
renderings in an effective way.
Milton Friedman’s essay on Corporate Social Responsibility is a very famous one that
completely deviates from the generally considered notion of every organization who has some
responsibilities to perform for the society. It argues that an organization, unlike a person cannot
have responsibility for the society. The essay is very simple and straightforward in its portrayal,
expressed in Friedman’s book Capitalism and Freedom, publishes in the year 1962. The essay
reached the larger population when it came as an article in the New York Times Magazine in
1970 (Orlitzky 2015). The onset of the essay clearly highlights the chief idea of the entire article,
which shows the utmost use of resources and aim of profit making to be the sole concerns of any
industry. Thus, according to Friedman, the only social responsibility of the operating industries is
to incur and increase profits in the businesses.

2CRITICAL REVIEW OF FRIEDMAN’S ESSAY ON CSR
Through his essay, Friedman wants to persuade every reader that socialism is necessarily
unethical and evil in all its forms. It is not something to be performed and justified for profit-
making companies (Bosch-Badia, Montllor-Serrats and Tarrazon 2013). Friedman wants
everyone to accept that responsibilities are something that the people have, be it legal, social,
moral, or ethical. He establishes that the only responsibility surfacing in the industries is the one
of the executive or managerial head towards the employees and shareholders. He strongly claims
in the essay that any industry is operational for getting economic returns that stands in sharp
contrast to the social returns. Friedman stresses that any company needs to deviate from
deception and focus more on the competition prevailing in the free market system that makes it
more profit-oriented. He views the concept of corporate social responsibilities to be irrelevant
considering the market structure of the various economies. He elevates the responsible attitude of
the businesses to adhere by the rules of the market in which it is operating and adopt new
technologies for greater production.
Friedman claims that a corporation can have responsibilities since it is viewed as an
artificial person. That automatically makes the responsibilities artificial. However, he calls it a
vague idea to consider businesses to have any responsibility. He says that it can be the business
operator and corporate head who can have certain responsibilities, which necessarily does not
impose that the entire business ahs any social responsibilities to perform. The corporate head
have responsibilities towards his employers since all his actions at work are in accordance to
their desires. He imbibes the connotation of making more profits as the only desire that any
business owner can have (Orlitzky 2015). He however, also hints at the other motives that can be
a driving force of many entrepreneurs as to serve the society through their business, as in the
case of schools and hospitals. In these cases too, the managers are only responsible to the

3CRITICAL REVIEW OF FRIEDMAN’S ESSAY ON CSR
entrepreneurs who function according to their direction and orders, without performing any
responsibility towards the society. He in his analysis of the corporation head or the manager
claims that all the responsibilities that he performs towards his family or his will to choose
industry for working fall under his individual responsibilities that has nothing related to CSR.
Friedman argues that any business would make huge recruitment to eliminate unemployment,
decrease emissions from business to make a pollution free environment or decrease the prices of
their products with no profits in order to be socially responsible. He claims that the executive
would be engaging in performing such responsibilities with someone else’s money by lowering
wages of the present employees, reducing returns to stockholders, which together indicate a total
collapse of the business. He also addresses the taxation system of businesses and portrays the
corporate head to be the legislator, executive and jurist of his/her own business who can levy tax
according to will. He draws a parallel situation of the corporate executives with the political
machinery in order to distinguish the responsibilities that they both perform in respect to the
society. Friedman persuades the readers by bringing in the example of the unions in U.S who
have restricted the Government to interfere in the market scenario. He also says the Government
imposes rules on pollution control measures or use of resources that the businesses are bound to
follow. However, this does not coincide with the social responsibility of the companies. He
finally asserts that incorporating CSR seriously in businesses would lead to a greater integration
of political mechanisms in the business processes. Such connotation to the doctrine of
collectivism would harm the business in the long term with negligible or no profits. Thus,
Friedman identifies the CSR to be the garments that justify the actions of the businesses without
incurring anything that is productive for the industries.

4CRITICAL REVIEW OF FRIEDMAN’S ESSAY ON CSR
Having an elaborate idea of the main arguments that Friedman makes in his influential
essay, some parts of it are found to be unpersuasive. His claim of social responsibilities to be
unfair for businesses has not been properly proved. The essay has areas that are rich with
questionable paradigm that cannot be justified to the topic. It lacks logical efficacy in certain
claims that often make the entire essay disrupted. Friedman suggested that a business could
perform its operations adhering to the codified laws. However, he fails to assert their role in
cases where there is a lack of legal norms. In that case, he fails to address the ethical
considerations that even businesses are supposed to perform in order to sustain their position in
the market (Hartman, DesJardins and MacDonald 2014). Conforming to the sole legal limits
would keep the businesses out of legal issues but being accountable to the ethical norms would
help them to have a good will in the market. With the profit motive that Friedman claims to be
the sole aim of the businesses, he overlooked the need of them to adapt behaviors and manners to
meet the demands of the stakeholders. Friedman’s views also fail to assert that employees in any
company have various other requisites than the salary for their work. Is was found that the
Walmart shareholders voted against their leaders because of the poor working conditions in the
factories and the supervisors found to be holding bribery charges (Cbsnews.com, 2018). Thus,
Friedman overlooks the ethical responsibilities that the business operators have towards the
society that helps them to have good employees and retain their position in the market. The
communities also seek greater considerations from the successful business organizations that
help the society in various ways (Fleming, Roberts and Garsten 2013). Thus, it is expected that
the businesses have something to give back to the society. However, Friedman only emphasize
on business renderings and profits that completely deviate from the roles that businesses play as

5CRITICAL REVIEW OF FRIEDMAN’S ESSAY ON CSR
being socially responsible. Thus, the basic aspects that are unacknowledged by Friedman make
his essay often diverged and unconvincing for the readers.
The essay by Friedman was written decades ago but it never fails to attract the readers
from its extraordinary concept. However, the essay is often found to be vague and
inconsiderable. He portrays his ideas in a way that cannot be related with the present market
conditions in which the businesses operate. The essay is often connoted to be fictional that does
not pertain to the economic processes in market. The applicability of the main theme of the essay
is not found to be practiced by the businesses in the recent times (Golob and Podnar 2014). The
concepts seem to be focused on businesses that have a limited status. It is expected only in
communities where the society has no expectations from the business, which cannot be true for
the successful businesses. Customer loyalty and customer relations serve to be a very important
aspect for any business to be successful (Martínez and Bosque 2013). Thus, the businesses need
to perform certain responsibilities that would aid the society in some way influencing the
customers to a good extent. Friedman’s essay addresses to the competitiveness in market that
emphasize on their being solely profit driven. However, he fails to acknowledge the basic
requirement of businesses, which is to have a customer base that can be attained only if the
business performs some social responsibilities (Tai and Chuang 2014). Thus, Friedman’s essay
can have its application only in a changed market situation at a time that is completely different
from the present market scenario.
Friedman asserts that businesses are not meant to perform any social responsibilities
towards the communities in which it is functioning. He considers profit maximization to be the
sole concern for a business. However, the essay by Friedman has been criticized on various
grounds that claim it to be unacceptable. Thus, there are different alternative perspectives that

6CRITICAL REVIEW OF FRIEDMAN’S ESSAY ON CSR
make the essay on Corporate Social Responsibility by Friedman to be vague and undesired for
the success of any business. Considering the basic concept of CSR that all the businesses follow,
it is seen that there are four obligations that the companies follow to sustain their position in the
markets (Grayson and Hodges 2017). Starting from economic responsibility to make money that
stands to be the basic motive of the businesses, the companies need to follow some legal, ethical
and philanthropic responsibilities as well. The companies are bound to promote general welfare
in some ways, being responsible to the society for all the actions that they perform. The theory of
triple bottom line is another form of CSR that guides the businesses to be operational in a
sustainable way (Alhaddi 2015). Along the responsible attitude towards the economy and
environment sustainability, the businesses are also expected to perform in a way so that they also
consider social responsibilities to bridge the inequalities that prevail in the societies where the
rich get richer and the poor, poorer (Savitz 2013). The essay by Friedman also stands in sharp
contrast to the alternative Stakeholder theory. The stakeholder theory clearly affirms that every
individual or group of individuals who are affected by the functioning of any operating business
have the right to participate in directing it (Andriof et al. 2017). It connotes the stakeholder
ethics where profit making does not ascribe to money making but to human welfare (Deng, Kang
and Low 2013). Thus, there are many alternative theories and views that validate the need for
businesses to perform certain responsibilities for the society, besides being a profit-oriented
business that clearly oppose the views of Friedman as expressed in his essay.
In recent times, there is an essential need to have a good customer relation between the
companies and their customers. This acts as a very effective way to render greater business
outcome and sustain the good impression of the business in the market. Companies like Coca-
Cola and Amazon have been able to expand their business globally, well known for the

7CRITICAL REVIEW OF FRIEDMAN’S ESSAY ON CSR
tremendous customer loyalty they have achieved by developing effective customer relations
(Bowen 2013). These companies are equally known for the CSR activities that they are
performing to show their concern towards the society that has been leading to their glory and
success all round the world. Instead of being purely profit-oriented, companies are supposed to
work for the welfare of the society as well. It is very important for business to perform all its
activities free of any social obligation that helps it to achieve success. Along with the economic
and legal connotations that even Friedman points out in the essays that the businesses follow, the
philanthropic responsibility of them enables to participate in contributing to the projects of the
society (Flammer 2013). The businesses according to the CSR must be driven according to the
needs of the surrounding community that represent their generosity, which has been completely
overlooked by Friedman (Deegan and Shelly 2014). Working on the basis of rendering social
sustainability also promotes a balance between the working of the companies and the lives of the
people. For any development, there must be a good parity between the business processes and
the people in the area of their functioning. If a company works in a way that is negatively
affecting the people residing in the society, it can invite chaos and disorder leading to the total
collapse of the companies. Friedman’s concepts clearly eliminate the fact that not just the legal
laws, but society acts as a driving force for all the businesses operational in the market. Thus,
there needs to be a compatibility between the people and the business operating that would lead
to a complete development of the economy (Hack, Kenyon and Wood 2014). The alternative
concepts to Friedman’s essay logically depicts that all the companies have different obligations
that include the larger society apart from generating greater profits. They have the legal, social,
ethical and other aspects to address that help them to accelerate their business in the long-term
(Fernando and Lawrence 2014). A company cannot perform affecting the lives or creating

8CRITICAL REVIEW OF FRIEDMAN’S ESSAY ON CSR
negative consequences to the society (Servaes and Tamayo 2013). It must perform the basic
corporate responsibilities and work in collaboration with the people. This would enhance their
relation with the customers, promoting greater business and leading to a complete development
of the entire society.
The essay clearly envisions the view of Friedman on Corporate Social Responsibilities
that is unique in its own way, differing from the commonly considered concept of the theory. His
simple and straightforward idea of discarding the notion in businesses to have certain social
responsibilities has been very famous. However, his ideas have been criticized on various
grounds to be unjustified and vague and have been opposed with other perspectives on CSR as
well. The views that Friedman expressed in the essay are not spoken of in the markets in recent
times and mostly all the corporations engage themselves in performing certain responsibilities
for the societies. Thus, it can be concluded that no matter the strong statements that Friedman has
made in the essay, corporate social responsibilities are something that has turned out to be crucial
for the better functioning and development of the businesses. It aids to incur greater profits with
a huge customer base and helps them to attain success in the future.

9CRITICAL REVIEW OF FRIEDMAN’S ESSAY ON CSR
References:
Alhaddi, H., 2015. Triple bottom line and sustainability: a literature review. Business and
Management Studies, 1(2), pp.6-10.
Andriof, J., Waddock, S., Husted, B. and Rahman, S.S., 2017. Unfolding stakeholder thinking:
theory, responsibility and engagement. Routledge.
Blowfield, M. and Murray, A., 2014. Corporate responsibility. Oxford University Press.
Bosch-Badia, M.T., Montllor-Serrats, J. and Tarrazon, M.A., 2013. Corporate social
responsibility from Friedman to Porter and Kramer. Theoretical Economics Letters, 3(03), p.11.
Bowen, H.R., 2013. Social responsibilities of the businessman. University of Iowa Press.
Cbsnews.com. (2018). Walmart shareholders vote against CEO. [online] Available at:
https://www.cbsnews.com/news/walmart-shareholders-vote-against-ceo/ [Accessed 23 Mar.
2018].
Deegan, C. and Shelly, M., 2014. Corporate social responsibilities: Alternative perspectives
about the need to legislate. Journal of Business Ethics, 121(4), pp.499-526.
Deng, X., Kang, J.K. and Low, B.S., 2013. Corporate social responsibility and stakeholder value
maximization: Evidence from mergers. Journal of financial Economics, 110(1), pp.87-109.
Fernando, S. and Lawrence, S., 2014. A theoretical framework for CSR practices: integrating
legitimacy theory, stakeholder theory and institutional theory. Journal of Theoretical Accounting
Research, 10(1), pp.149-178.

10CRITICAL REVIEW OF FRIEDMAN’S ESSAY ON CSR
Flammer, C., 2013. Corporate social responsibility and shareholder reaction: The environmental
awareness of investors. Academy of Management Journal, 56(3), pp.758-781.
Fleming, P., Roberts, J. and Garsten, C., 2013. In search of corporate social responsibility:
Introduction to special issue. Organization, 20(3), pp.337-348.
Golob, U. and Podnar, K., 2014. Critical points of CSR‐related stakeholder dialogue in
practice. Business Ethics: A European Review, 23(3), pp.248-257.
Grayson, D. and Hodges, A., 2017. Corporate social opportunity!: Seven steps to make
corporate social responsibility work for your business. Routledge.
Hack, L., Kenyon, A.J. and Wood, E.H., 2014. A Critical Corporate Social Responsibility (CSR)
Timeline: how should it be understood now. International Journal of Management Cases, 16(4),
pp.46-55.
Hartman, L.P., DesJardins, J.R. and MacDonald, C., 2014. Business ethics: Decision making for
personal integrity and social responsibility. New York: McGraw-Hill.
Martínez, P. and del Bosque, I.R., 2013. CSR and customer loyalty: The roles of trust, customer
identification with the company and satisfaction. International Journal of Hospitality
Management, 35, pp.89-99.
Orlitzky, M., 2015. The politics of corporate social responsibility or: why Milton Friedman has
been right all along. Annals in Social Responsibility, 1(1), pp.5-29.
Savitz, A., 2013. The triple bottom line: how today's best-run companies are achieving
economic, social and environmental success-and how you can too. John Wiley & Sons.

11CRITICAL REVIEW OF FRIEDMAN’S ESSAY ON CSR
Servaes, H. and Tamayo, A., 2013. The impact of corporate social responsibility on firm value:
The role of customer awareness. Management science, 59(5), pp.1045-1061.
Tai, F.M. and Chuang, S.H., 2014. Corporate social responsibility. Ibusiness, 6(03), p.117.