Taking Friedman Seriously: Maximizing Profits and Social Performance

Authors: Husted, Bryan W.; de Jesus Salazar, José¹

Source: Journal of Management Studies, Volume 43, Number 1, January 2006 , pp. 75-91(17)

Publisher: Blackwell Publishing

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Abstract:

This paper examines the situation of firms that have two objectives: profit maximization and social performance. By looking comparatively at the cases of altruism, coerced egoism, and strategy, this paper uses the tools of microeconomics to define the optimal level of social output that should be produced in each case. We show that it is wiser for the firm to act strategically than to be coerced into making investments in corporate social responsibility. In addition, we argue that greater overall social output will be achieved by the strategic approach, than by the altruistic approach.

Document Type: Research article

DOI: 10.1111/j.1467-6486.2006.00583.x

Affiliations: 1: Tecnológico de Monterrey

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