An explanation and reconciliation of the issues surrounding the Friedman/Freeman debate on corporate social responsibility

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Corporate social responsibilities commonly affect the various stakeholders directly. Many CSR models, adopted by various companies, focus on enhancing stakeholder participation in company activities. The concept of CSR has been argued and described differently by various economists such as, Friedman and Freeman. Milton Friedman first described the concept of CSR during the 1970s, where he appeared to discredit the concept. Friedman argued that corporates cannot have responsibilities, as only individuals can undertake responsibilities. Though the direct arguments presented by Friedman seem to discredit the CSR theory, they support the notion of stakeholder theory. Friedman describes stakeholders as the individuals who might be considered as employers of corporates in the long run. This could be identified as the beginning of stakeholder theory when it comes to corporate social responsibility discussions. Stakeholders’ interests are fundamental elements of business, as they continually affect numerous business activities. Though he presents stakeholders as important towards business success, Friedman’s support for the idea is not attached to CSR, but to capitalism. Friedman describes the purpose of business as that of utilising the available resources and engaging in activities aimed at increasing company profits. Though he presents the idea of social responsibility and stakeholders, the various activities must be aimed at increasing corporate profitability. The importance of stakeholders, according to this theory, does not lay on corporate social responsibility, but on enhancing profitability. The stakeholders and the community described by Friedman remains a resource which businesses should utilise in increasing profitability (Friedman, 1970). Though he discussed the importance of stakeholders to business, Friedman described stakeholders as individuals who could be affected directly by business activities, and not those involved within the various business activities. According to Friedman, profitability is the only reason and purpose of corporate social responsibility. He continues to indicate that corporates lack responsibility, but the people working within these corporates have responsibilities. His ideas negate the proposition of corporates being independent, entities which can be accorded responsibilities. The various individuals working within these corporates are assigned to the different responsibilities. hence, the corporates cannot be said to have any responsibilities. The activities undertaken by corporates as CSR, therefore, remain associated with the individuals undertaking them, rather than the corporates funding or employing the people. His theories present a corporate as being a virtuous body, whose activities and other functions are associated with the individuals working there. The identity of corporates, therefore, is seen through the presence of employees and other stakeholders. With the sole responsibility of making profits, corporates lack other responsibilities as presented by stakeholders and owners. Executing social responsibilities would become equivalent to failure in undertaking fundamental functions bestowed upon employees. Involvement in non-profit making activities could be viewed as seeking to completely eliminate the business by reducing business profitability. According to Fri