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Social Responsibility in Business: Friedman Vs Drucker Essay

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Updated: Nov 15th, 2021

Introduction

Friedman and Drucker were confronted with a very important issue when it comes to the need for standards and rules that must govern how American society and its people must behave under different circumstances. Friedman focused on the role of corporations and business leaders when it comes to nation-building and how they are being pressured by expectations that they must be socially responsible entities. Drucker on the other hand was more ambitious that he proposed to go beyond the discussion of business ethics and to develop a system of thought that will help guide each person so that they will know what to do when faced with moral issues that may conflict with their needs and aspirations. Drucker also highlighted that it would be detrimental to have a separate set of rules for the leaders and the elite. Ethics must apply to all according to Drucker while Friedman argued that a business organization does not have to behave like an individual for it was created for a different purpose and so it must behave according to its expected output.

Doing the Right Thing

It does not require a social scientist to understand that the current global economic turmoil and the various sex scandals involving leaders and influential people are linked to the non-observance of ethical standards. The degradation of the environment as a result of the reckless exploitation of natural resources in the name of a corporate god is the reason why many people are suffering from the after-effects of climate change and pollution. It is time to stop the madness and it is time to have accountability in politics and in business circles. This is easier said than done and there is a good reason why many continue to violate ethical standards and are not mindful of the idea that corporations must give back to the community. Drucker and Friedman attempted to address these issues by writing separate articles that clarified what is going on within business organizations and why it is extremely difficult to do the right thing.

As mentioned earlier Drucker was more ambitious that he tried to cover everything. Friedman on the other focused more on social responsibility and why it is not possible to do it without violating the concept of free market, the idea that shaped America and made her one of the richest nations in the world. Friedman was very critical when it comes to the sincerity of those who preach about “social responsibility” without first finding out if their companies can support the initiative to give back to the community when the organization’s main goal is to achieve cost-efficiency and to make as much money for the various stakeholders supporting the said company (Friedman, 1970). Friedman challenged his readers to be a critical thinker and find out if the ideas embodied in standard “social responsibility” rhetoric is feasible or not.

Drucker on the other hand wanted to go beyond the superficial and made an interesting argument that if a society will not aspire to do the right thing and desire admirable behavior as opposed to merely looking out to pass the minimum standards required by law then the inhabitants of this planet will continue to suffer. Women will be exploited and poverty will not be eradicated because there will be unscrupulous politicians and business leaders who are experts when it comes to circumventing laws and getting away with crime because they are familiar with the system.

Business Ethics

Drucker did not beat around the bush and he immediately pointed out that “business ethics” as it is understood in the modern world is a world of compromise. It can be compared to a magician who uses misdirection to fool the audience into thinking that they saw an object disappear only to make it reappear in another nearby location. While this is magical, the way politicians and businessmen behave in the public arena is shameful and nothing to cheer about. Drucker proposed that the reason for all these scandals is the wrong understanding of what an ethical standard out to be.

Without belaboring the point it is easy to understand that there can be many factors that can lead to the creation of a corrupt society. But according to Drucker the blatant disregard for doing the right thing is the consequence of having the wrong foundation. In order to clarify this thought Drucker traced the development of Western civilization through the works of theologians like Calvin. European thinkers had to deal with the fact that kings and queens are mere mortals and yet they have to make judgments that will affect the whole nation. In this regard – according to Drucker’s interpretation of Calvin’s writings – the elite, the rulers and principalities are given the license to violate certain ethical standards.

There being leaders and the fact that they have tremendous responsibility forced them to think of social responsibility not their own morality. The famous example was the King of England forced to annul his marriage and to find a way to destroy her so that she can marry another woman who will produce for him a male heir. Henry VIII believed that he was justified because without a male heir the country can be subjected to a brutal civil war and the population decimated because of the absence of continuity in leadership. Based on Drucker’s ideas Henry’s sacrifice to save his country is not the main issue but the fact that he violated ethical standards. Drucker’s views were strengthened upon closer examination of Great Britain’s political history. When Henry died it was not a male heir that succeeded him but his daughter from the woman he wanted to die so he can remarry. This twist is one of the most convincing arguments that doing right will pay off in the end.

In order to provide a tangible system that can be used to develop ethical standards that are not only for show but can help in building a society where there is less corruption, less crime, less violence and more prosperity and peace, Drucker proposed that people should not only think about laws but desire to be a “superior man” and this is possible by following the ethics of prudence. Those who will follow “prudence” do not need to know the right thing to do all the time but this standard will help him or her to turn away from questionable activities. By following prudence the man or woman will have to find out the root cause of some of the most pressing concerns in American society for instance.

Social Responsibility

Drucker’s idea was like a breath of fresh air in a world full of compromises. But Friedman’s article provided a challenge that is difficult to ignore. While people should desire prudence and wise behavior it is difficult to reconcile these aspirations in the corporate world. This is crucial because as mentioned earlier the concept of corporations helped established America as one of the richest countries in the world. Without corporations, there are many things that will not be possible. Even Drucker acknowledged that there are a significant number of Americans who could not survive unless part of a business organization.

If the roles of corporations are seen to be a vital component of the economy then it is also important to acknowledge that corporations are unique entities. They are not like individuals but they are also unlike other organizations. A corporation is managed by business leaders but it is also considered as an entity separate and distinct from the members that comprise the board. Therefore social responsibility, according to Friedman – should not be ascribed to corporations. This means that if “social responsibility” is required by community then it could not be forced upon corporations. Friedman made it clear that the employees and even the business leaders of the said corporation can be asked to behave in accordance with the principles of social responsibility but not the whole corporation.

Summary

Due to the many problems and scandals that rocked the political and business world, there is a clamor for leaders who ascribe to an ethical standard that will allow them to do the right thing or make them do the right thing. This is easier said than done because of the many conflicting ideas that come from the pen of philosophers, theologians, and event management experts. Drucker proposed to go beyond the laws and the basic requirements of society and it is time to aspire to be a “superior man”; it is only through being idealistic that the common problems can be avoided. On the other hand, Friedman is saying that one has to be careful with what they are saying. It must be practical and applicable or else it will simply remain as rhetoric.

References

Friedman, M. Reprinted with permission from The New York Times Magazine, 1970, pp. 32-33, 122-, 124, 126.

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IvyPanda. 2021. "Social Responsibility in Business: Friedman Vs Drucker." November 15, 2021. https://ivypanda.com/essays/social-responsibility-in-business-friedman-vs-drucker/.

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IvyPanda. (2021) 'Social Responsibility in Business: Friedman Vs Drucker'. 15 November.

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