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Essay / have a detailed discussion on Milton Friedman's Shareholder Theory and Edward Freeman's Stakeholder Theory. Friedman argued that "neoclassical economic theory suggests that the goal of organizations is to make profits by being responsible to themselves and their shareholders and that only by doing so can corporations contribute to wealth for themselves and for society as a whole. On the other hand, stakeholder theory suggests that an organization's managers not only have duties to the company's shareholders; rather towards the individuals and groups who contribute to the wealth, capacity and activities of the company. These individuals or groups may be shareholders, employees, customers, the local community and suppliers (Freeman 1984 pp. 409-421). Therefore, the stakeholders who are described as those who are affected by the performance, actions and duties of the organization and those actions also include employees, customers, local community and investors. Stakeholder theory also suggests that it is the responsibility of the company to ensure that no stakeholder rights are dishonored and to make decisions in the interest of stakeholders, which is also the goal of stakeholder theory to achieve more profit and balance it while taking into account its stakeholders (Freeman 2008 p. 162-165). In other words, the organization must also operate in a more socially responsible approach by carrying out corporate social responsibility (CSR) activities. In contrast, shareholder theory, organizations or organizational decision makers only have responsibility to their shareholders by increasing the profits of the organization. and should only make decisions to increase as much as possible...... middle of article ......short Brace Jovanovich.Gallagher, SA 2005. Strategic response to Friedman's critique of the ethics of business. Journal of Business Strategy, 26(6), 55-60.Shum, PK and Yam, SL 2011. Ethics and law: guiding the invisible hand to correct the externalities of corporate social responsibility. Journal of Business Ethics, 98, 549-571.Sollars, GC 2001. An assessment of proportionate shareholder responsibility. Journal of Business Ethics, 32(4), 329-345. Wagner-Tsukamoto, S. 2007. Moral agency, profits and business: economic revisions of Friedman's theorem. Journal of Business Ethics, 70, 209-220. Wolff, J. 2006. Libertarianism, utility and economic competition. Virginia Law Review, 92(7), 1605-1623. Friedman, M. 1973. Interview. Playboy Magazine, February. In M. Friedman. Brilliant promises, dismal performance. An economist's protest. Harcourt Brace Jovanovitch. 1983, 9-59.
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