SOCIAL CONTRACT and 
  CSR
   • When looking at stakeholder theory as a 
   prelude to different approaches in different 
   parts of the world we encountered the ideas 
   of social contract and corporate 
   citizenship
   • A business just like individual people can be 
   considered to have a social contract with the 
   societies/states in which it is operating; and 
   as a good corporate citizen it will accept that 
   it has social responsibilities in that society.
  SOCIAL CONTRACT and 
  CSR
   • The Chicago economist Milton Friedman 
   thought that this social responsibility 
   consisted solely of maximising profits for 
   shareholders, a view which completely 
   overlooks the existence and the interests of 
   manifold other stakeholders.
   • If really necessary Friedman thought that the 
   state could intervene to protect the interests 
   of other stakeholders…but the very same 
   Friedman also argued repeatedly for minimal 
   government, for a minimal role for the state 
   in the economy.
  SOCIAL CONTRACT and 
  CSR
   • Hence in the end he is arguing that businesses 
    should concentrate on maximising profits and 
    thus shareholder wealth. As the title of his 
    influential article so succinctly put it FRIEDMAN 
    M (1970) “The social responsibility of 
    business is to increase profits” in New York 
    Times Magazine, 13 September 1970 .
  SOCIAL CONTRACT and 
  CSR
   • This view has been highly influential in the 
   theory and practice of Strategic Management 
   but it hollows out any real sense of corporate 
   social responsibility. A business is to pursue 
   its own narrow self interest and the interests 
   of other stakeholders may be ignored except 
   insofar as they contribute to profits.
   • This approach with company strategy based 
   solely on shareholder wealth maximisation is 
   manifestly inconsistent with the ideas of 
   social contract, corporate citizenship and 
   consequent social responsibilities towards 
   other stakeholders in the society or states 
   where it operates.
   SOCIAL CONTRACT and 
   CSR
   • Michael Porter and Mark Kramer argue that 
    not only is Friedman inconsistent with the 
    idea of social contract; the idea that business 
    should focus exclusively on profits while 
    ignoring the interests of other stakeholders 
    has contributed (especially since the financial crisis 
    of 2008) to an increasingly bad reputation for 
    business as socially dysfunctional and crudely 
    exploitative.
   • This leads us to discuss in detail their 
    important article PORTER M & KRAMER M (2011) 
     Creating Shared Value in Harvard Business 
    Review  January 2011