Modern-Day Statement About the Friedman Doctrine

Modern-day statement about the Friedman Doctrine

Milton Friedman’s New York Times article is so inspirational and impressive that it is remembered until now. In the article, he argued that the only social responsibility of company is to maximize the profits. However, his doctrine is old fashioned and cannot work properly in modern society.

When Friedman announced his doctrine, the world was not intricately connected as now. In the globalized business environment, major brands try to buy their raw materials as cheaply as possible from abroad. Developed transportation makes widen the distance between suppliers and major brands. Under supranational complex supply chain, it is almost impossible to sustain a regulatory because of jurisdictional problem. Let’s take an example of pharmaceutical scandal. Heparin killed 80 people because of its ingredients. However, government cannot claim responsibility to the company because the main U.S pharmaceutical brand imports ingredients from other country. According to FDA, nearly eighty percent of medical ingredients come from sixty different countries. Can FDA conduct an investigation outside their jurisdiction? Even if they have an authority, is it possible to govern all the supply chain? Who should take the responsibility to govern this transnational issue? Here, we need a corporate social responsibility. Only business entity can cope with this issue and they have more responsibility than government.

In addition, Friedman doctrine is traditional “firm-centric” perspectives. In the internet age, consumers share information with others and try to co-create value with firm than ever before. Especially, consumers strongly response to the ethical issues. Most noticeable is there is a close relationship between consumer activism and profit. Let’s take another example. In 1994, a Swedish television documentary showed 9 years old boys weaving rugs working at unfavorable conditions. IKEA mentioned as main importer of the rugs in the documentary. The kingdom of furniture immediately responded to the problem. Consumers’ boycott expert pressure on IKEA to do their social responsibility. Business cannot neglect corporate social responsibility because major brands experienced relationship between unethical business behavior and downturn in sales. In other words, there is a strong relationship between corporate social responsibilities and company’s primary goal, profit.