Why Firms Should Not Always Maximize Profits

Journal of Business Ethics · 2007 · Volume 76 · Issue 2

Abstract

Though corporate social responsibility (CSR) is on the agenda of most major corporations, corporate executives still largely support the view that corporations should maximize the returns to their owners. There are two lines of defence for this position. One is the Friedmanian view that maximizing owner returnsisthe social responsibility of corporations. The other is a position voiced by many executives, that CSR and profits go together. This article argues that the first position is ethically untenable, while the latter is not supported by empirical evidence. The implication is that there may be good reason for firms to deviate from a maxim of profit maximization.

Keywords

business ethics, corporate social responsibility (CSR), profit maximization, special duties

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