Friedman 1970 - Criticism on Friedman
6 important questions on Friedman 1970 - Criticism on Friedman
There are three points of criticism on the view of Friedman with regards to his CSR theory. What are the 3?
- Legal basis?
- Incentives aligned?
- Other stakeholders?
The first argument is that there is not a strong legal basis for Friedman's argument. What is this based on?
In addition to the first argument, managers are expected to make discretionary decisions. What does this mean in terms of their relationships with the shareholders according to critique?
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What is the most important notion when looking at the second point of critique? And what especially underlines this?
The third point of criticism is more normative. What is this point of criticism?
The second argument is that the incentives of a shareholder and a company are not always aligned, what is this based on?
- Shareholders can sell at any point, they do not have a long-term interest.
- They are also shielded by limited liability for debts and wrongdoings which can lead to indifference to long-term consideration.
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