discuss Milton Friedman's shareholder theory and Edward Freeman's stakeholder theory in detail. Friedman argued that “neoclassical economic theory suggests that the purpose of organizations is to make profits in their responsibility to themselves and their shareholders and that only by doing so can businesses contribute wealth to themselves and to society at large.” On the other hand, stakeholder theory suggests that an organization's managers do not only have duties to the firm's shareholders; rather towards the individuals and constituencies that contribute to the company's wealth, capacity and assets. These individuals or constituencies can be shareholders, employees, customers, the local community, and suppliers (Freeman 1984 pp. 409–421). Thus, stakeholders who are described as those who are affected by the performance, actions and duties of the organization and those Actions also include employees, customers, local community and investors. Stakeholder theory also suggests that it is the responsibility of the business to ensure that no rights of stakeholders are dishonored and to make decisions in the interests of stakeholders, which is also the aim of stakeholder theory to achieve greater profits and balance them by taking into account its stakeholders (Freeman 2008, pp. 162-165). In other words, the organization must also operate with a more socially responsible approach by carrying out corporate social responsibility (CSR) as an activity. In contrast, shareholder theory organizations or organizational decision makers only have accountability to their shareholders by increasing the organization's profits. and should only make decisions to increase as much as possible... middle of paper ......rcourt Brace Jovanovich.Gallagher, S.A. 2005. Strategic response to Friedman's critique of business ethics. Journal of Business Strategy, 26(6), 55-60.Shum, P. K., & Yam, S. L. 2011. Ethics and law: Guiding the invisible hand to correct corporate social responsibility externalities. Journal of Business Ethics, 98, 549-571.Sollars, G. C. 2001. An evaluation of proportional shareholder responsibility. Journal of Business Ethics, 32(4), 329-345.Wagner-Tsukamoto, S. 2007. Moral agency, profits, and the corporation: Economic revisions to Friedman's theorem. Journal of Business Ethics, 70, 209–220. Wolff, J. 2006. Libertarianism, utility, and economic competition. Virginia Law Review, 92(7), 1605-1623.Friedman, M. 1973. Interview. Playboy magazine, February. In M. Friedman. Brilliant promises, disappointing performances. An economist's protest. Harcourt Brace Jovanovich. 1983, 9-59.

Topic > discuss Milton Friedman's shareholder theory and Edward Freeman's stakeholder theory in detail. Friedman argued that “neoclassical economic theory suggests that the purpose of organizations is to make profits in their responsibility to themselves and their shareholders and that only by doing so can businesses contribute wealth to themselves and to society at large.” On the other hand, stakeholder theory suggests that an organization's managers do not only have duties to the firm's shareholders; rather towards the individuals and constituencies that contribute to the company's wealth, capacity and assets. These individuals or constituencies can be shareholders, employees, customers, the local community, and suppliers (Freeman 1984 pp. 409–421). Thus, stakeholders who are described as those who are affected by the performance, actions and duties of the organization and those Actions also include employees, customers, local community and investors. Stakeholder theory also suggests that it is the responsibility of the business to ensure that no rights of stakeholders are dishonored and to make decisions in the interests of stakeholders, which is also the aim of stakeholder theory to achieve greater profits and balance them by taking into account its stakeholders (Freeman 2008, pp. 162-165). In other words, the organization must also operate with a more socially responsible approach by carrying out corporate social responsibility (CSR) as an activity. In contrast, shareholder theory organizations or organizational decision makers only have accountability to their shareholders by increasing the organization's profits. and should only make decisions to increase as much as possible... middle of paper ......rcourt Brace Jovanovich.Gallagher, S.A. 2005. Strategic response to Friedman's critique of business ethics. Journal of Business Strategy, 26(6), 55-60.Shum, P. K., & Yam, S. L. 2011. Ethics and law: Guiding the invisible hand to correct corporate social responsibility externalities. Journal of Business Ethics, 98, 549-571.Sollars, G. C. 2001. An evaluation of proportional shareholder responsibility. Journal of Business Ethics, 32(4), 329-345.Wagner-Tsukamoto, S. 2007. Moral agency, profits, and the corporation: Economic revisions to Friedman's theorem. Journal of Business Ethics, 70, 209–220. Wolff, J. 2006. Libertarianism, utility, and economic competition. Virginia Law Review, 92(7), 1605-1623.Friedman, M. 1973. Interview. Playboy magazine, February. In M. Friedman. Brilliant promises, disappointing performances. An economist's protest. Harcourt Brace Jovanovich. 1983, 9-59.