The Debate over Corporate Social Responsibility

The Debate over the Appropriateness of Corporate Social Responsibility

Based on articles by Philip R. P. Coelho, James E. McClure, and John A. Spry from Ball State University and Frederick R. Post from the University of Toledo. Articles published in the Mid-American Journal of Business, Vol. 18, No. 1. Also referenced the Sixth Edition of Business and Its Environment by David P. Baron.

In his response to Coelho, McClure & Spry’s defense of the primacy of the Friedman paradigm (shareholder theory), Frederick Post condenses the debate down to a simple question of whether a corporation should place the interests of its shareholders first or include them in a much larger universe of stakeholders.

Coelho, McClure & Spry maintain that Friedman’s definition of social responsibility is clear and concise compared to the ambiguous and varied definitions under the stakeholder theory. The shareholder theory embraces a true form of capitalism which in turn promotes an economic reality that serves the public interest through the pursuit of profits. Serving the public interest is an essential component of social responsibility. Therefore, corporate management is acting in a socially responsible manner by maximizing profits for the benefit of the shareholders.

Post offers a closer examination of the stakeholder theory which negates many of Coelho, McClure & Spry’s criticisms. He goes on to challenge many of the BSU authors’ arguments in support of Friedman’s paradigm, including the legal foundation in which its assumptions are built.

Friedman’s belief that corporations exist to maximize shareholders profits has some merit to it. Without profits, a corporation would not be sustainable. Post’s arguments that a corporation should make decisions with a broader constituency in mind hold merit as well. The solution is the complex task of balancing the traditional idea of profit motive with that of social responsibilities.

The BSU authors acknowledge...