Essay title: Robert Solomon’s Book a Better Way to Think About Business
Mr. Solomon believes that, indeed, a corporation is a member of society and has the moral and legal responsibilities that all members of society have and that is to promote the greater good.Nobel laureate Milton Friedman once wrote that the social responsibility of business is to increase its profits.This flies in the face of Solomon;s beliefs as well as others who believe that business is not concerned merely with profit but also with promoting desirable social ends.Business is not only about profits but includes many other activities as well.
Friedman woefully undersells the capitalism;s humanitarian dimension.So what exactly are the social responsibilities of businesses? A corporation should try to create value for all of its constituents.While an investor may state that the purpose of a business is to maximize profits, others such as customers, employees, suppliers, and the community may define the purpose of a business in terms of its own needs and desires with each perspective being valid and legitimate.The most successful businesses will put the customer first instead of the investor.
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If the business is profit centered customer happiness is a means to an end.If the business is customer centered, customer happiness is an end to itself and will be pursued with greater interest, desire, and empathy than the profit-centered business is capable of.Customers are the only stakeholders.The total of stakeholders includes: customers, team members (employees), investors, vendors, communities, and the environment.
Unfortunately, there is no magic bullet that determines how much value each stakeholder should receive since it evolves with the competitive marketplace.No stakeholder ever remains satisfied for long.Company leadership;s function is to develop solutions that work for the greater good. Some may argue that for the business to donate time and capital to philanthropic items is to steal from investors.Corporate assets legally belong to the shareholders, don;t they?One should be altruistic towards others with their own time and money, not with corporate assets that don;t belong to you.While this may be reasonable because management has a duty to manage assets responsibly, the narrowness of the argument is really the problem because business entrepreneurs have the right and responsibility.