Do Corporations have a responsibility to give back to the society that helps them make their profits? It is an interesting question and one that will elicit different responses depending on a persons station in life. Some will say yes these companies should give back to the communities that help then make so much money, while others will say why should companies have to donate their money to communities, that it doesn't make sense. According to businessman Keith Davis, companies do have the obligation to donate part of their money to the very community that helps them make them prosperous.
Under the Ethical philosophy John Mill's Principle of Utility, Keith Davis is correct. That theory in the most basic form says the greatest good for the greatest number of people. The best description comes from the paper “Mill: The principle of utility determines the rightness of acts (or of rules of action) by how they affect the total happiness in the world” in which it says that “Total happiness, not just one’s own, is the standard of right action”
Look at Bill Gates and his company, Microsoft. Recently they donated 2,500 of their Kinect sensor kits to FIRST robotics team, and from that they got articles everywhere including Marketwatch.com. A simple act of kindness brought to them the kind of publicity that other companies only dream of getting. Applying Mill's principle here, the greatest number of people were made happy. The people of FIRST robotic got equipment that they sorely needed and Microsoft, and the shareholders are enjoying great press. In this scenario everyone turned out to be a winner, and this is what John Mill and Keith Davis believe.
People who oppose social responsibility, like Milton Friedman argue that corporations need not worry about anyone but the shareholders. If Friedman's policy sounds a lot like Nietzche, which in essence says that people only seek to exert power, that is because they are very much alike. Friedman says that the only responsibility that a company has is to maximize profits for shareholders, and in society the more money you have, the more power you have. This very much fits in with the Darwin theory of survival of the fittest. There is some merit to this philosophy, especially when it comes to creating wealth for shareholders. If the shareholder decides to donate then that should be their choice, however there is a point that is being missed here.
What Milton Friedman and the the Nietzche philosophy take for granted is the publicity that comes from the kind deeds of companies. Again let's look at Microsoft, their donation of those kinect sensors may seem to impact the bottom line, but the free publicity and goodwill it generates will help lessen the impact. Leaders of the FIRST robotic will be much more apt to recommend Microsoft products to friends and family, and so on so forth. Mr. Friedman fails to see the power of the word of mouth, which is why his position is very flawed. Think of movies, specifically the original “Paranormal” activity. It was made on a shoestring, less than $12,000 and made nearly $100 million. How did this movie make so much money, with very little promotion and no big movie stars in it? Because of word of mouth, likewise Microsoft will likely enjoy a bump in sales thanks to their philanthropy.
A question should be posed to everyone: Would you feel this same way if you went into a room to build policy, but in that room you lost your identity completely? You wouldn't know if you were male, female, shareholder or stakeholder. Would you still hold the same position that is being held in the real world? People may claim that they would but as is evidenced in politics and business everyday, humans rely on their own background and their own ethics to make decisions. Without those, there is no doubt that the policies would be far more fair and advantageous for everyone, rather than just a select few. That is why Keith Davis is on the right path by saying that corporations have a responsibility to all of the stakeholders, not just to shareholders.
Businessmen like Milton Friedman need to think about all of the consequences before pronouncing that companies should not donate a portion of their profits to help communities. Instead they need to be more open to the idea like Bill Gates and Keith Davis, who are very open to helping out, even if by doing so it may compress their bottom line initially. However the good publicity will reverse that and bring the bottom line higher.