Reevaluating Corporate Responsibility: From Friedman’s Profit Maximization to Stakeholder Capitalism

Abstract

Milton Friedman introduced a provocative concept that reshaped the framework of corporate social responsibility (CSR). His assertion that a business's sole social responsibility is to maximize profits through legitimate competition, devoid of deception or fraud, set a new standard in linking business objectives with societal expectations. While Friedman's profit-centric view has historically driven economic growth and innovation, it has increasingly faced scrutiny amid evolving economic, social, and environmental contexts. This paper critically examines the limitations of Friedman's approach and explores broader CSR perspectives that encompass ethical, social, and environmental dimensions. It discusses the rise of stakeholder capitalism, which advocates for creating shared value by addressing societal challenges such as climate change, wealth inequality, and human rights. The analysis includes an evaluation of shareholder primacy, stakeholder theory, and enlightened shareholder values under Article 172 of the UK Companies Act, proposing a more holistic approach to corporate governance.