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Posts Tagged ‘Milton Friedman’

“I am not a product of my circumstances. I am a product of my decisions.”
~ Stephen Covey
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Decisions, decisions, decisions – and they don’t stop with Sustainability. In fact, they place executives and executive decisions on the carpet each time they make financial corporate decisions. Although the complexity of the enterprise can be simplified, decision-making that considers more than financial consequences can put social and environmental levels in a tug of war – moving away from a financial centric decision to a Sustainability decision that reflects a holistic perspective.

Most of today’s executives were indoctrinated under the economic doctrine of Dr. Milton Friedman. Friedman, who has argued that the primary responsibility of business is to make a profit for its owners, albeit while complying with the law. According to this view, the self-interested actions of millions of participants in free markets will, from a utilitarian perspective, lead to positive outcomes for society. If the operation of the free market cannot solve a social problem, it becomes the responsibility of government, not business, to address the issue.[1]

Friedman also argued against CSR. He believed that management is to make as much money as possible within the limits of the law and ethical customs. He argued that the primary responsibility of business is to make a profit for its owners, albeit while complying with the law. According to Friedman, an agency theory perspective implies that CSR was a misuse of corporate resources that would be better spent on valued-added internal projects or returned to shareholders. It also suggested that CSR was an executive perk, in the sense that managers use CSR to advance their careers or other personal agendas[2]. If the operation of the free market cannot solve a social problem, it becomes the responsibility of government, not business, to address the issue[3].

So why would any executive or owner want to take a journey that could be more complex, filled with harder decisions, juggle the tensions between stakeholders and shareholders and for what? I think Ray Anderson said it best; “And I have not mentioned the value of a tree and removing carbon dioxide, a greenhouse gas, from the atmosphere, sequestering carbon, and producing oxygen for us to breathe, nor the songs of birds that are heard no more where the forests used to be. Neither have I mentioned the disease spreading insects that now proliferate unchecked because of the birds, their predators are gone, resulting in an increase in encephalitis in the children of the region. So you see, there are serious questions to be raised about the traditional calculation a profit on the sale of timber harvested from clear-cut forest.”[4] So, we are all products of our decisions and Sustainability is a commitment to do the right thing.

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[1] CORPORATE SOCIAL RESPONSIBILITY, Reference for Business; Encyclopedia of Small Business; Retieved: 12 Sep 2011
[2] McWilliams, Abagail; Siegel, Donald S. and Wright, Patrick M.; Corporate Social Responsibility: Strategic Implications; Journal of Management Studies 43:1 January 2006
[3] Corporate Social Responsibility, Reference for Business; Encyclopedia of Small Business; Retrieved: 12 Sep 2011
[4] Anderson, Ray C.; Mid-Course Correction, Chelsea Green publishing Company, White River Junction, Vermont, 3rd printing September 2005

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Owners, Executive and other Leaders are investigating a global world concerned about Sustainability, that type of understanding can be difficult to obtain. In early December 2013, I published my second book entitled “Building a Bridge to Benefits”. If you are interested in reading about the book or want to purchase copies today, here is the link to CreateSpace, an Amazon company, go to: Building a Bridge to Benefits –  Password: book2013  Discount: A37ZVRKK
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