PHI FPX 2000 Assessment 2 Deficiencies of Milton Friedman’s Shareholder Theory
The shareholder theory of Milton Friedman is extremely influential but flawed on several counts (Clarke, 2020). One serious allegation against this theory is that it promotes very narrow profit maximization, making a firm give up the long-term viability of survival and even public good for short-term gains. It is thus not very supportive of the interests of other key stakeholders such as employees, and customers, and possibly harming trust and reputation. Besides, it does not address major world problems, including environmental degradation and social inequality, for which businesses would be compelled to act responsibly beyond generating profit. The theory further presumes that market forces and legal regimes would ensure that ethical behavior could be relied upon, failing which may not provide adequate protection from harmful corporate activities. By disregarding the interconnectedness of business and society, Friedman’s approach risks creating negative externalities that undermine broader social and environmental goals. These deficiencies have led to calls for more inclusive models, such as stakeholder theory, which emphasizes balancing the interests of all affected parties.
Conclusion
In summary, business ethics and corporate social responsibility are the foundation of sustainable success, facilitating responsible behavior with a conscience towards society and the environment. The three normative ethical theories in consequentialism, deontology, and virtue ethics provide clear, structured rules for decisions in complex dilemmas of morality (Taggart & Zenor, 2022). A significant stakeholder theory developed by Milton Friedman advocates profit-maximizing company responsibility but has been criticized for disregarding other stakeholders and broader societal issues. These are important boundaries for the balance of profit with ethical practices, trust, and the needs of stakeholders. For a firm operating in an increasingly complex environment, the integration of ethical principles and stakeholder approaches shall thus be central to long-term growth and meaningful contributions to society.Also visit our site PHI FPX 2000 Assessment 1
PHI FPX 2000 Assessment 2 References
Clarke, T. (2020). The contest on corporate purpose: why Lynn Stout was right and Milton Friedman was wrong. Accounting, Economics, and Law: A Convivium, 10(3). https://doi.org/10.1515/ael-2020-0145
Geisslinger, M., Poszler, F., Betz, J., Lütge, C., & Lienkamp, M. (2021). Autonomous driving ethics: from trolley problem to ethics of risk. Philosophy & Technology, 34. https://doi.org/10.1007/s13347-021-00449-4
Morrell, K., & Dahlmann, F. (2022). Aristotle in the Anthropocene: the comparative benefits of Aristotelian virtue ethics over utilitarianism and deontology. The Anthropocene Review, 10(3), 205301962211050. https://doi.org/10.1177/20530196221105093
Poff, D. C. (2023). Social responsibility and business: the Milton Friedman position. Springer EBooks, 1681–1683. https://doi.org/10.1007/978-3-030-22767-8_755
