Freeman vs. Friedman Essay

1866 Words Oct 5th, 2014 8 Pages
Freeman vs. Friedman In their theories of how a business should operate, R. Edward Freeman and Milton Friedman hold virtually opposite beliefs as to what businesses’ responsibilities should be. In favor of the Stakeholder theory, Freeman believes that any person or organization that has a “stake” in the business should also play a role of participation in the business’s actions and decisions. In the other corner of the ring stands Milton Friedman, who holds the belief that said business is only responsible for those that actually own stock in the business – the owners, or stockholders. A strong believer in his reconceptualized Stakeholder Theory of the Modern Corporation, R. Edward Freeman believes the key to success in business is …show more content…
This is why Freeman stresses the importance of customer service. Customers rely on the corporation to provide them with the goods and services that they want and need, and customers are loyal to those businesses that treat them well. A wonderful modern-day example of this situation is the software and electronic technology company Apple, Inc. Apple is known for their phenomenal customer service, and as a result, people are very loyal to this company. Customer loyalty is a big reason why Apple was named by Forbes as the number one most profitable company in the world last year. Freeman explains how corporations depend on the local community to grant them the right to build facilities. In effect, the local community benefits from the firm’s tax base and both social and economic contributions. The final group, management, must look after the health of the corporation. Part of this job is ensuring that the relationships amongst stakeholders in the business remain in balance, and in turn, management receives the same livelihood offered to the employees in the form of a contractual agreement with the corporation. All of these stakeholders working together and having a say in the business is, as Freeman concludes his argument, the proper way to run a corporation. Contrary to Freeman’s beliefs, Milton Friedman was a strong advocate of the stockholder theory. Stockholder theory is about one thing and one thing

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