Chapter 7: Beyond The Bottom Line: A Shifting Paradigm for Business?

When it comes to the proper role business should play in society, a range of possibilities exist. One of the more influential positions comes from Nobel prize winning economist Milton Friedman.¹ His oft-quoted statement from his 1970 New York Times Magazine article that the sole responsibility of business “is to increase its profits within the rules of the game”² continues to prevail within the business community³ along with the support of many academic scholars.⁴ Friedman’s position, sometimes referred to as the “stockholder” or “shareholder” model, in many respects underlies the basis of the capitalistic market system. His view essentially suggests that managers of firms, as agents of their shareholders, should only focus on maximizing their firm’s bottom line. The only constraints would consist of merely abiding by the law as well as “avoiding deception and fraud” while following “ethical custom.” According to Friedman, the resolution of social problems is more properly the concern of governments, as opposed to business. While Friedman represents what many would consider to be one end of the spectrum in terms of the role that business should play in society,⁵ as discussed below, others in both academia and business have suggested that Friedman’s view may be too narrow. In this essay, five other business and society frameworks that have emerged over the years are discussed which counter or broaden Friedman’s position and thus represent a possible paradigm shift for the business world. These frameworks include: (1) corporate social responsibility [CSR]; (2) business ethics [BE]; (3) stakeholder management [SM]; (4) sustainability [SUS]; and (5) corporate citizenship [CC]. After briefly discussing each of the five frameworks, a new model is proposed that attempts to tie together the core elements from each of these five frameworks, and thus propose a new role for business in society.