Evaluation of Friedman and Freeman’s Theories for Use in This Century

In the two articles of Friedman and Freeman, both authors had two conflicting opinions on the goals and responsibilities of a business. Friedman believed that the only group that has a moral claim on the corporation is the shareholders. In opposite, Freeman’s stakeholders theory of management said that stakeholders can be anyone like employees, customers, community and competitors who are affected by business operations, procedures or policies in either positive or negative way. Thus Friedman and Freeman differ in analyzing a case. When making company decision, Friedman said that the primary job of a business is to make money for the stockholders and the company will identify relevant laws, regulations, ethics customs and not cheating as business have no responsibility for those who not own the company and the only goal is to use company resources to maximize its profits in order to compete in free market.
On the other hand, Freeman argued that primary job of business is to create value for all stakeholders while making balance and managing relationships with them. When company making decision, it will identify all stakeholder groups with available options, then determine the effect they will have on the stakeholders, and finally to determine the best one by applying ethical theory to the options.
Friedman always said if business taking also other responsibilities, such as employee, it may hurt benefit or increase the cost of other aspect, which will hurt business own profit. It is not always true. Friedman overlooked employees an important party to consider. Many studies performed researches proved that if a firm treats its employees well; their satisfaction will lead to better productivity which can generate better profits. Therefore the groups are all interrelated which ignored by Friedman.   Foxconn International Holdings treated their China employees badly and after reported by media its stock price dropped 40% for a year and threatened by their largest buyer...