Milton Friedman said that companies’ sole social responsibility is to make profits and put their shareholders first. But fights for social and economic equality are playing out across the United States, and companies are finding it near impossible not to weigh in.
Chicago Booth’s Steven Neil Kaplan argues that the pursuit of profits has helped shareholders, but it has also played a part in lifting billions of people around the world out of poverty. It would be hard to measure companies’ performance by any other gauge, he notes.
But Chicago Booth’s Luigi Zingales, director of Booth’s Stigler Center for the Study of the Economy and the State, says that being a good steward of employees, communities, and the environment can help maximize shareholder value. But he further argues that shareholders are concerned about more than just making money, and that companies should focus on maximizing shareholder welfare, not shareholder value.
What looks like corporate altruism is frequently something else, finds Chicago Booth’s Marianne Bertrand. Her research demonstrates that corporate charitable giving is often designed to curry favor with influential politicians.
In this excerpt from the Capitalisn't podcast, Luigi Zingales describes the different ways in which we can view corporate responsibilities.
Luigi Zingales: If you think that a corporation is simply a group of individuals who decide together how they want their business to be conducted, going the direction of the shareholder primacy is pretty obvious.
If you think that the corporation is a superior entity that is given a superior power, the power of limited liability, by special permission of the state, then it's a completely different business because you can argue that the government has a right to demand some greater goal to a corporation, because with greater power comes greater responsibility.
Discover these stories and much more at Chicago Booth Review.
Shareholder value maximization has been extremely successful globally in the way that matters most because, in many cases, maximizing shareholder value is in harmony with delivering for stakeholders.
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Companies spend almost three times the amount on politically motivated charitable giving than they spend trying to influence politicians through PACs.
How Corporations Use Charitable Giving to Wield Political Influence
A year of crises has heightened the debate about what corporations owe society.
Is the Friedman Doctrine Still Relevant in the 21st Century?Through their data-driven insights, our researchers are tackling some of the world's biggest global issues. Explore more research from Booth.
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Booth researchers are questioning if our personal data is making tech giants too powerful.
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The Stigler Center promotes and disseminates research on regulatory capture, crony capitalism, and the various distortions that special interest groups impose on capitalism.
George J. Stigler Center for the Study of the Economy and the State
How has CSR changed since Milton Friedman ignited the debate 50 years ago? Watch what leading thinkers had to say during a global conference hosted by Chicago Booth.
Corporate Social Responsibility Revisited Highlights
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Booth in North America
Booth brings our MBA degree and Executive Education offerings and our own renowned faculty members to our new campus in London, the financial heart of Europe.
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Building Connections in AsiaThe Executive MBA Program is registered under the Hong Kong Education Bureau. Registration No.: 262427. It is a matter of discretion for individual employers to recognise any qualification to which this course may lead.
Professor Linda Ginzel shares her gratitude with her MBA students and offers advice upon their graduation.
Words of Wisdom to the Class of 2022
The former Chicago Booth dean is remembered for a lifetime of achievement in government, business and academia.
In Memoriam: George Pratt Shultz, 1920–2021
Chicago’s first leadership development program specifically for African American professionals, created in partnership with Chicago Booth, is training the next generation of civic and corporate leaders.
IMPACT that Endures
