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CS Professional · CSR and Social Governance · CSR and Sustainable Development Goals

Mehta Textiles Ltd, a profitable Indian company, adopts a view that its only duty is to maximise returns to shareholders within the law, and that spending on social causes is the government's job. Which school of thought on corporate responsibility does this view reflect?

The view reflects the classical shareholder approach associated with Milton Friedman, which says a company's main responsibility is to maximise shareholder returns within the law. Social spending is seen as the state's role, unlike stakeholder theory or triple bottom line thinking, which widen the responsibility.

  1. AStakeholder theory
  2. BShareholder (classical) view associated with Milton FriedmanCorrect
  3. CTriple bottom line approach
  4. DCorporate citizenship view

Explanation

The classical or shareholder view, associated with Milton Friedman, holds that the business of business is profit within legal limits. Stakeholder theory and the triple bottom line extend responsibility to wider groups and to people, planet and profit, so they do not match the stated view.

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