If you would like information about this content we will be happy to work with you. We strive to provide individuals with disabilities equal access to our website. Our knowledge of the problem-solving process enables us to contribute disproportionately to the welfare of our communities. Outside the service for which we are compensated, each of us has an opportunity, through the firm, to serve the society of which a part. Marvin Bower-McKinsey’s managing director from 1950 to 1967, who remained a vocal leader even after stepping down-also continued to emphasize the importance of enduring business values, which could be translated into societal as well as business impact: A 1971 statement of the firm’s goals highlights the role of profitability but acknowledges that it isn’t the sole social responsibility of business consultants can also “do worthwhile things for society as well as to earn substantial financial rewards.” Like many businesses and thinkers, McKinsey has grappled with such ideas over the years. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to their basic rules of the society, both those embodied in law and those embodied in ethical custom. He has direct responsibility to his employers. In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business.
On September 13, 1970, when Friedman published his landmark piece, “The social responsibility of business is to increase its profits,” in the New York Times, he wrote:
Please email us at: Friedman’s seminal 1970 essay Many of those talks became books that addressed the issues Friedman would soon take on.
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The discussion of corporations’ role in society continued to unfold in the 1950s and 1960s, when Columbia University and McKinsey presented a lecture series in which executives discussed the challenges of large organizations. The firm’s earliest formal expression of its objectives spoke of the value of “advancing the profitableness and welfare of American business and hence the welfare of the country as a whole” (1937). McKinsey, for example, was part of the early conversation about corporate purpose, which centered on the idea of improving performance and a belief that healthier corporations meant a healthier society. The pre-1970 conversationĮven before Friedman’s essay published, the social responsibility of business was a topic of discussion. On the 50th anniversary of Friedman’s landmark definition, we look at how the conversation on corporate purpose has evolved. The statement outlined a modern standard for corporate responsibility. In 2019, Business Roundtable released a new “Statement on the purpose of a corporation,” signed by 181 CEOs who committed to lead their companies for the benefit of all stakeholders-customers, employees, suppliers, communities, and shareholders. But more recently, many leaders have sought to expand that definition to consider all the stakeholders who stand to gain-or lose-from organizations’ decisions. It has now been 50 years since economist Milton Friedman asked and answered a fundamental question: What is the role of business in society?įriedman’s stance was plain: “There is one and only one social responsibility of business-to use its resources and engage in activities designed to increase its profits.” That view has long influenced management thinking, corporate governance, and strategic moves.