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ACCA Applied Knowledge · Business and Technology · Governance in business organisations

Zentra Co manufactures clothing. A director argues that the company's only social responsibility is to make profit for its shareholders within the law, and that spending on community projects wastes owners' money. Which view of CSR does the director hold?

The director holds the classical or shareholder view of CSR, associated with Milton Friedman. It says a company's responsibility is to maximise returns for its owners within the law, so discretionary social spending is seen as misusing shareholders' funds.

  1. AThe stakeholder view, which says all affected groups must be considered equally
  2. BThe sustainability view, which focuses on long-term environmental balance
  3. CThe classical (shareholder) view, associated with Milton FriedmanCorrect
  4. DThe pluralist view, which says management must balance competing unions

Explanation

The classical view, associated with Milton Friedman, holds that the business's social responsibility is to increase profits within the law and rules of society. The stakeholder view would reject the director's narrow focus, and the sustainability view would stress long-term environmental and social impact.

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