In private sectors all over the world, the primary goal of a company is to maximize its profits. However, in the pursuit of profit, companies may take actions that harm their surrounding societies. Therefore, a question arises: if maximizing profits leads to a detriment in the well-being of communities, to what extent do businesses have a social responsibility while attempting to maximize its profits? Through examining Milton Friedman’s article, “The Social Responsibility of Businesses Is to Increase Its Profits”, and R. Edward Freeman’s explanation of Stakeholder’s Theory, it becomes prevalent that the ethical role of a business is to simply strive for profit while maintaining long term goals to thrive in the community they are in.

As long as a company has long-term goals to be successful in its society, it is fulfilling its social responsibility. A business’ role in a free-enterprise system is to maximize its profits and by doing so it benefits the society it belongs to. According to Stakeholder Theory, a business must create value for customers, suppliers, employees, communities, and financiers in order to be successful. If any of these stakeholders’ interests are not met, the business will collapse only by a matter of time. Therefore, a manager or entrepreneur’s duty for running a successful business is to align the interests of the listed stakeholders.  

In “A Seismic Shift in How People Eat”, Hans Taparia and Pamela Koch explain that big food manufacturers are reacting to the changing eating habits of consumers by “cleaning up their ingredient labels, acquiring healthier brands and coming out with a prodigious array of new products” [1]. Because consumers are opting for healthier foods, major food companies must react to the consumers’ healthier tastes to stay competitive for the long term. These food companies are spending enormous sums of money to create healthier products. For example, in an effort to promote a healthier brand, “General Mills purchased the organic pasta maker Annie’s Homegrown for $820 million — a price that was over four times the company’s revenues” [1]. This goes to show that companies, by pursuing to remain competitive to the changing marketplace, already contribute to social responsibility. This ties into the concept of Stakeholder Theory because companies must compromise their profits to financiers in order to balance the interests of consumers and communities.
The best way for a company to create profit is to aim to thrive in the long term because it is better for a company to have steady profits over a long period of time versus having a dynamic but short life span. This requires businesses not only to focus on profits, but to be sensitive to all five parties in Shareholder Theory.

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1. The New York Times

   Hans Taparia – Pamela Koch – http://www.nytimes.com/2015/11/08/opinion/a-seismic-shift-in-how-people-eat.html