Discussion Question 1 – CLO

 

Discussion Question 1 – CLO 7

Milton Freeman believed that the shareholder approach to social responsibility. 

He believed that shareholders were the only ones who should be socially responsible. The firms should maximize profits, and what each shareholder does on his or her own is their own responsibility. Apple Inc. followed this for many decades, as its largest shareholders are some of the most philanthropic people in the world.

R. Edward Freeman believes in stakeholder theory. He believes that companies have a moral responsibility in their business practices. He believed that companies had an obligation to invest outside of the immediate inside stakeholders and should invest in society at large. Excess profits should go to society.

Both men believed in higher ethics; i.e., obeying the spirit of the law, as well as the letter of the law.

If you owned a company, which of the two men’s principles do you believe you would follow? Why?