How does Friedman explain the importance of philanthropy and social responsibility in the business?
Focusing on the economic responsibility alone can backfire to a huge loss of profits instead. Additionally, in order for theories and assumptions to be valid, empirical evidence is needed and a recent report by the S&P 500 companies shows an increase of sustainability and CSR projects reported from 20% to 82% in 2011 to 2016, indicating that stockholders view CSR as an opportunity. It is no longer seen as additional work for the company but its guide, which can be Frederiksen`s hybrid approach of ethical and instrumental. Though philanthropy is voluntary, it is an investment that allows firms to gain competitive advantage, increase its chances of long-term survivability and meet all of its shareholders` objectives by being an all-around company through its products and consumer expectations which creates a win-win situation for the company and directly or indirectly the stakeholders ` interests as well.
The philosophy of CSR can be narrowed down to Carroll`s 4 dimensions: economic, legal, ethical and philanthropic. This, however, can be practiced by companies for a variety of reasons according to Fredericksen motivational approaches. Friedman`s view on CSR appear partially-compatible; however, with the changing social and business trends of the 21st century, Friedman would have acknowledged that his own quote may need re-evaluation for businesses to survive based on consumers` expectations. His views on businesses` one and only social responsibility to maximize profits also could have been better expressed as the major responsibility of business based on the other provisions mentioned that businesses must take part in as well. His view on ethical and instrumental approaches may seem contradictory at times, nevertheless, he supports the invisible hand and the free market, which can suggest that if the times have truly changed, his views would as well.