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The Social Responsibility of Corporate Management: A Classical Critique

Author

Listed:
  • Philip R. P. Coelho

    (Department of Economics, Ball State University)

  • James E. McClure

    (Department of Economics, Ball State University)

  • John A. Spry

    (Department of Economics, University of St. Thomas)

Abstract

Calls for corporate social responsibility are widespread, yet there is no consensus about what it means; this may be its charm. It is possible to distinguish the fiduciary duty owed to shareholders as expressed by Milton Friedman from all other paradigms of corporate responsibility. Friedman maintains that: “ . . . there is one and only one social responsibility of business- to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition, without deception or fraud.” Other paradigms argue that corporations have social responsibilities that extend beyond shareholders to stakeholders. The list of cited stakeholders is ill- defined and expanding, including non-human animals and non-sentient things. This paper defends the intellectual and ethical merits of fiduciary duty to shareholders, and compares and contrasts it to the stakeholder paradigm. The duty of managers to firms’ owners is the bedrock of capitalism, and capitalism will wither without it.

Suggested Citation

  • Philip R. P. Coelho & James E. McClure & John A. Spry, 2002. "The Social Responsibility of Corporate Management: A Classical Critique," Working Papers 200201, Ball State University, Department of Economics, revised Jan 2003.
    • Handle: RePEc:bsu:wpaper:200201
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    References listed on IDEAS

    as
    1. Preston, Lee E, 1975. "Corporation and Society: The Search for a Paradigm," Journal of Economic Literature, American Economic Association, vol. 13(2), pages 434-453, June.
    2. R. H. Coase, 2013. "The Problem of Social Cost," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 837-877.
    3. Andrews, Kenneth R, 1972. "Public Responsibility in the Private Corporation," Journal of Industrial Economics, Wiley Blackwell, vol. 20(2), pages 135-145, April.
    4. Ross, Stephen A, 1973. "The Economic Theory of Agency: The Principal's Problem," American Economic Review, American Economic Association, vol. 63(2), pages 134-139, May.
    5. Jensen, Michael C, 1988. "Takeovers: Their Causes and Consequences," Journal of Economic Perspectives, American Economic Association, vol. 2(1), pages 21-48, Winter.
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    Cited by:

    1. Manuel Suárez‐Cebador & Juan Carlos Rubio‐Romero & Joaquim Pinto‐Contreiras & German Gemar, 2018. "A model to measure sustainable development in the hotel industry: A comparative study," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(5), pages 722-732, September.
    2. Miriam Pedol & Elena Biffi & Simone Melzi, 2021. "Sustainability game," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(5), pages 1540-1548, September.
    3. Rayma Ireri Maldonado Astudillo & Yan Pallac Maldonado Astudillo & Juan Alfonso Méndez Zavala & Claudia Leticia Manzano Jiménez & María Xochitl Astudillo Miller, 2021. "Corporate Social Responsibility and Proenvironmental Behaviour in Employees: Evidence in Acapulco, Mexico," Sustainability, MDPI, vol. 13(9), pages 1-15, April.
    4. Thomas Laudal, 2011. "Drivers and barriers of CSR and the size and internationalization of firms," Social Responsibility Journal, Emerald Group Publishing, vol. 7(2), pages 234-256, July.
    5. Truscott, Rachael A. & Bartlett, Jennifer L. & Tywoniak, Stephane A., 2009. "The reputation of the corporate social responsibility industry in Australia," Australasian marketing journal, Elsevier, vol. 17(2), pages 84-91.
    6. Antonis Skouloudis & Konstantinos Evangelinos & Chrisovaladis Malesios, 2015. "Priorities and Perceptions for Corporate Social Responsibility: An NGO Perspective," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 22(2), pages 95-112, March.
    7. Jim Wishloff, 2009. "The Land of Realism and the Shipwreck of Idea-ism: Thomas Aquinas and Milton Friedman on the Social Responsibilities of Business," Journal of Business Ethics, Springer, vol. 85(2), pages 137-155, March.
    8. Codruţa Dura & Imola Drigă, 2017. "The Impact of Multinational Companies from Romania on Increasing the Level of Corporate Social Responsibility Awareness," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 11(1), March.
    9. Belkania, Davit, 2019. "Corporate social responsibility in controversial industries or how to fail spectacularly," MPRA Paper 97303, University Library of Munich, Germany.

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