Management Assignment Help
Author:
Genre: Management

Write a 3000 word academic essay providing critical debate of the following question:Should the primary objective of management be to increase the wealth of shareholders and owners?

About the Book

Management Assignment Help

Introduction

In the most layman’s terms what Milton Friedman said about business can be interpreted as is – the business of business is only to do business. Business and profit maximization are considered synonymously by the followers of Friedman and is considered the basic stone of foundation for any business. Unlike the current trends of business honchos focusing on corporate social responsibility, the business concept as explained by Friedman (1970) was that the social obligation of a business was to increase profits for the society (investors). This was pretty much in line with the Agency theory which clearly explains that the primary responsibility of the managers of a business is to maximise the profits of the shareholders and they are to act accordingly. However, this has been challenged by a number of noted researchers and theorists that a business is obliged to act in a manner that benefits the society at large and not only focus on maximizing its wealth. Businesses do not exist in vacuum and though wealth maximization is a primary driver for any business, they should do some good for the society in which they exist (Jonathan and Guay, 2006). Each business has some positive and some negative impacts on the society in which it exists and it should focus on minimizing the negatives. It has been challenged that corporate social responsibility acts performed by companies affect the bottom lines adversely and thus should not be enforced upon them. There exist organizations that are focused on benefitting the society like not-for-profit organizations which give prominent focus to social welfare over profits. In today’s world there exist a large number of successful business houses that stand tall in the society for their dedicated efforts towards societal welfare and an equivocal focus on wealth maximization. Reputed forms bring changes in the marketplace through innovative products and services and thus lead to growth. It is through growth and innovation that businesses generate employment opportunities which in turn lead to bettering the life of people in the society. Through dedicated efforts towards economic growth companies are in essence contributing towards increasing the per capita income of every individual and hence working towards the greater good of the society. Considering these arguments in the light it could be evaluated if firms should actually go for corporate social responsibility as ways and means towards societal welfare and hence greater acceptance or should only focus on maximizing the profits for the shareholders.

Disclosure of Material Connection: Some of the links in the page above are "affiliate links." This means if you click on the link and purchase the item, I will receive an affiliate commission. I am disclosing this in accordance with the Federal Trade Commission's 16 CFR, Part 255: "Guides Concerning the Use of Endorsements and Testimonials in Advertising."