Milton Friedman’s theory states that a company’s primary responsibility lies with its shareholders. This theory considers shareholders as the economic engine of the organization and the only group to which the company bears social responsibility. Therefore, the goal of each company is to maximize income for shareholders. However, in today’s world, workers, buyers, customers, and other aspects are critical for organizations. Business cannot act in isolation from society because it is a part of society. A large company is a socio-economic institution that occupies a leading position in countries with market economies. Unlike small and medium-sized businesses, large companies often act as city-forming.
The state of the environment and the quality of consumer goods largely depend on their activities. They group large masses of interested people inside themselves and around them, forming an interdependent system of relationships (connections) (Ashrafi et al., 2018). It is a kind of web that can either support a business in a difficult moment or, on the contrary, deprives the company of the opportunity to act. The presence of social ties once again confirms the fact that a corporation is a significant public institution (Ashrafi et al., 2018). It is included in the public relations system, which largely determines the socio-economic development of individual subjects of society. The corporate sector and the state share responsibility not only for social and labor relations but also for the community’s well-being as a whole.
In the modern world, the traditional approach to assessing a company’s competitiveness based on material and financial factors often leads to incorrect conclusions. It is due to an insufficient assessment of the ability of an economically successful company to neutralize the negative impact on its business from competitors, the state, and society in a timely manner (Ashrafi et al., 2018). Until recently, the idea that the main task of management was to extract maximum profit for the company’s shareholders dominated. Such a point of view is gradually being replaced today by the realization that socially responsible behavior becomes the key to the strategically sustainable prosperity of the company (Ashrafi et al., 2018). Implementing corporate responsibility strategies gives companies increased staff satisfaction, reduced staff turnover, and increased brand value. At the same time, other companies that do not implement such strategies miss business opportunities, lose competitive advantages, and lag in management.
Reference
Ashrafi, M., Adams, M., Walker, T. R., & Magnan, G. (2018). ‘How corporate social responsibility can be integrated into corporate sustainability: A theoretical review of their relationships.’ International Journal of Sustainable Development & World Ecology, 25(8), 672–682. Web.