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ERIC Number: EJ834646
Record Type: Journal
Publication Date: 2009-Mar
Pages: 8
Abstractor: ERIC
Reference Count: 0
ISSN: ISSN-0037-7724
Do Businesses Have a Social Responsibility?
Social Education, v73 n2 p84-91 Mar 2009
Many workers are employees of companies. These workers agree to do what the companies' owners tell them to do. In return, the companies pay the employees a wage or salary. This relationship, or contract, is an example of a principal-agent agreement: The company is the principal and the worker is the agent. The principal-agent agreement is the most common employment contract in capitalist countries. It is the basis of the economic model for businesses, most of which consider their sole purpose to be maximizing profits for owners. Advocates of corporate social responsibility argue that profit is essential to a business's well-being and continued existence, but profit should not entirely define the business's purpose. These advocates believe the principal-agent agreement also has a trust or fiduciary aspect that includes a set of expectations related to honesty, loyalty, obedience and the full disclosure of relevant facts. Workers have a fiduciary duty to their employer, for example, to obey the firm's rules. Advocates of corporate social responsibility, however, believe that a firm's fiduciary duty extends beyond its shareholders to other stakeholders: employees, suppliers, customers, and the community. This article presents a lesson plan that allows students to debate whether a business best serves society's interests by maximizing profits or by pursuing policies it believes promote social justice, the environment, and other causes. The students read two viewpoints on the social responsibility of business: Milton Friedman, a Nobel laureate in economics, argues that businesses best fulfill their social responsibilities to society by focusing on increased profits. John Mackey, founder of Whole Foods Market, believes that a business's social responsibility goes beyond maximizing profits. The students evaluate these arguments and then decide whose opinion they support. (Contains 2 handouts.)
National Council for the Social Studies. 8555 Sixteenth Street #500, Silver Spring, MD 20910. Tel: 800-683-0812; Tel: 301-588-1800; Fax: 301-588-2049; e-mail:; Web site:
Publication Type: Guides - Classroom - Teacher; Journal Articles; Reports - Descriptive
Education Level: Higher Education
Audience: Students; Teachers
Language: English
Sponsor: N/A
Authoring Institution: N/A