I have to say that my first post on the business of business has little to do with the Friedman proposition, it was more an anecdotic way for me to express myself on the business of business to maximize profit. However I expressed my opinion in a strong way and I have to revoke or re-discuss some of the earlier statements after reading the Friedman article.
First of all, I stated that investing in smaller, local facilities (workshops, art galleries) may socially be more rewarding than for example investing in a fund, where the money is untraceable and thus impssible to assess the social gains as a result from the investment (unless if the companies attached to the fund are 100% transparent). However, possible profit from investing in the fund may be of much larger capital than an investment in small local facility. If this profit is used to support a social goal, the effects may be very powerfull as a result from a larger investment.
Secondly, it is indeed very difficult to define "social responsibilities" of companies. Say a director would spend money that belongs to the company on social ends, what ends should this be? Should this be something related to the company? Or can this be random? How can a director justify this choice? And how would this money be spread equally? So it is too easy to say that companies should respond to their social responsibility, without presenting a system that would actually work, both socially and economicaly.
However, there are examples to be named where companies externalize their costs. The most famous example is ofcourse exploding factories in India, owned by western companies. Or CO2 production in developing countries as a result from industrial activities by western companies. I personally feel that these go in the category "social responsabilities" of companies. And actually, these externalizations are very easy to trace, when these externalizations are defined. Defining them is more difficult though.
First of all, I stated that investing in smaller, local facilities (workshops, art galleries) may socially be more rewarding than for example investing in a fund, where the money is untraceable and thus impssible to assess the social gains as a result from the investment (unless if the companies attached to the fund are 100% transparent). However, possible profit from investing in the fund may be of much larger capital than an investment in small local facility. If this profit is used to support a social goal, the effects may be very powerfull as a result from a larger investment.
Secondly, it is indeed very difficult to define "social responsibilities" of companies. Say a director would spend money that belongs to the company on social ends, what ends should this be? Should this be something related to the company? Or can this be random? How can a director justify this choice? And how would this money be spread equally? So it is too easy to say that companies should respond to their social responsibility, without presenting a system that would actually work, both socially and economicaly.
However, there are examples to be named where companies externalize their costs. The most famous example is ofcourse exploding factories in India, owned by western companies. Or CO2 production in developing countries as a result from industrial activities by western companies. I personally feel that these go in the category "social responsabilities" of companies. And actually, these externalizations are very easy to trace, when these externalizations are defined. Defining them is more difficult though.
Indeed it seems that the definition of profit can be expanded to investments that benefit both socially and economically, it far bigger than the superficial explanation of Friedman. I think there is a lot more too this, that could use further explanation. Perhaps use an example here to strengthen your point.
BeantwoordenVerwijderenI like the rhetorical questions posed about decisionmaking. However, as a CEO or director, it is not only social responsibility that they need to make their choices on. He or she is the representative of the firm, and therefore has the tasks of making decisions. From my perspective, social responsibility is not only an ethical and moral choice anymore, it is a part of business goals, and those that do not incorporate it in their firms will lag behind. It is a strategy.
Again defining the boundaries of what is socially responsible, is an important aspect. We can throw those words around, but to what extent would a company have true social responsibility?