In September 1970 Friedman wrote: "The social responsibility of business is to increase profits" in, New York Times Magazine. In this paper, convincingly argued that social responsibility was so Twaddle, socialism in the packaging business undermining a free society. The companies that practice responsible companies playing Robin Hood with the money of another person.
"Discussion of 'Corporate Social Responsibility," wrote Friedman, "is characterized by imprecision and lack of analytical rigor. What I mean to say that business" has responsibilities? Only the people have responsibilities. "
Instead, companies must maximize their profits and capital to its shareholders so that individuals could donate to any cause they want, or no. For companies to do more than maximize profits is simply immoral, "writes Friedman.
As Friedman wrote in 1970, corporate donations to charitable organizations only a few decades, and basically amounting to a mess of pottage. Though it has been authorized in 1917 in the State of Texas (a number increased to 26 states in the 1950s), there was a court in New Jersey in 1952 which sponsored the decoration of modern business. In 1950, New Jersey passed a law that allows companies to provide the education institutions. But it was unclear whether the law allowed companies to charter before 1950 to make donations to nonprofit organizations. In a test case a New Jersey manufacturer of valves and hydrants named AP Smith Manufacturing Company made a gift of $ 1,500 to University Princeton. Group stockholders challenged the donation in the courts of New Jersey.
The court ruled that the law was legal and has been applied retroactively. The court held that institutions of higher education are essential to democracy and free enterprise system. Companies are increasingly aware of this fact and therefore The case, called the AP Smith Manufacturing Company v. Barlow change the landscape of corporate in the United States forever.
But a kind of dead Sorry intellectual dead-end was the result. Friedman and Hayek argued that social responsibility other trackers undermined free institutions. And argument against Smith stop-AP and others that have improved conditions for business. In fact, the last argument prevailed. Dar U.S. American companies reportedly contributed 12.72 billion dollars to charity in 2006.
But to see how hard Friedman article, Google the title. On the first page of everything that will come in PDF format article published by the business schools in the nation!
Increasingly, scholars addressed the issue and find that firms view corporate social responsibility for business. I have highlighted in search of Raymond Fisman and Geoffrey Heal of Columbia Graduate School of Business and Vinay Nair, from the Wharton School, suggesting that companies that announce a large number of acts of corporate philanthropy as a signal to the consumers that the products of a company or service is reliable. They found an positive relationship between corporate philanthropy and profitability in the industries of advertising in height. But in the industries of advertising under the reverse was true.
Recently I took a presentation by Professor Paul Godfrey, then spoke briefly about their roles in 2006 the Academy of Management Review, "The relationship between companies philanthropy and wealth of shareholders: a Risk Management Perspective. "Godfrey teaches at Brigham Young University but as yours is really a former University of Utah.
The article presents a theoretical basis to suggest ingenious companies can use philanthropy to the willingness of banks and, indeed, trust him when the caves of mines
His theory has 14 motions and mathematics could not begin to explain. But his hypothesis is as follows:
Corporate sponsorship can generate positive moral capital among communities and stakeholders.
moral capital can offer to shareholders to cover insurance-like relationship based on a company's intangible assets.
Protection contributes to wealth for shareholders.
What I said after the presentation, the data is first referred to the theory and hypothesis. Of course, theories Godfrey have not yet been tested by himself and others. But it is clear that Friedman's complaint is not mandatory for those who advocate for corporate social responsibility is no longer the case.
Paul Jones is the principal of Alden Keene & Associates, a consultancy specializing in integrating marketing and communications, market research, and internal and external communications. One of Alden KeeneÂ’s especialidads de la casa is cause-related marketing. That is, helping businesses and nonprofits come together in ways that profit both. Check his blog at http://causerelatedmarketing.blogspot.com . Copyright 2007 Alden Keene & Associates.
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