Friedman’s Legacy How Milton Friedman’s Doctrine Affected How People Communicated with and Ran Their Business Alex Choi Korea International School

Abstract: When choosing the topic to fit under the theme, communication, there were a wide variety of topics and ideas to select from, and many questions I wanted to find the answer to and dive deeper into. One topic I was intrigued by was how businesses have evolved over time into what it is today. When I was conducting initial research just to decide on a final topic, I settled on Milton Friedman, specifically his Friedman Doctrine. I had been interested in business and economics for a long time, and Friedman is an important figure in business, so that is why I decided to use his doctrine for my topic. Friedman was an expert economist who was widely known for his economic theories and research on stockholders and consumption. When the brainstorming process was complete, the strategy was to find more broad sources about Friedman, as well as how businesses were being run at the time. After I found these broader sources from online databases and libraries, a lot of them had bibliographies with many other sources. These were sources specific enough to fulfill my needs and had what I was looking for, which was the connection between Milton Friedman, economics, and communi- cation, the theme of this year’s National History Day. It was overall a complicated but successful creation process and ended up well. For the communication angle of my paper, in the 1900s, there was a lot of com- munication happening due to the Friedman Doctrine when there were more discussions and debates between economists and business leaders when it came to Friedman's beliefs It was included in the paper that there were many discussions among economists about how the way businesses were being run could change in the future. Another important detail to acknowledge is that there were many economists that questioned and criticized his work, but still many others that supported it. Although there were disagreements, there was over- all a development of knowledge when it came to the importance of shareholders and how businesses should be managed. The main historical argument I was looking to argue was that the Friedman Doctrine greatly impacted the way that people ran their businesses, especially since it encouraged business leaders to focus on shareholder returns. These shareholders are people that can be considered a member of the business that legally owns shares of the corporation, and they can partially own a part of the corporation. My topic is espe- cially important in history because it is about how Friedman’s doctrine changed the world of economics and how businesses saw their shareholders, which is and has been a large part of lives throughout history.

merchants in Brooklyn, New York. He specialized in 1 Introduction mathematics and economics at Rutgers University Milton Friedman was a talented student born of and completed graduate work in economics at the Jewish immigrant parents who worked as dry goods University of Chicago. In an interview with the -1- American economist, it was not a difficult decision motivated to work for what they believed as the to pursue economics, given the state of the economy highest good, which is to ensure higher returns for in the 1930s. He explained that the circumstances shareholders of the time, such as unemployment, unused facto- ries, and economic difficulties baffled him (Fried- II. The McKinsey Global Institute man, 2009). As an economist, he is known to sup- The McKinsey Global Institute created a series of port free-market capitalism and developed various lectures that discussed the ideas that Friedman free- market and economic theories known today (Ip brought up in his doctrine. Since the founding of and Whitehouse, 2006). In the 1970s, he intro- the McKinsey Global Institute in 1990, it continu- duced the Friedman Doctrine, which supports his ously shares relevant and fact-based information belief that the social responsibility of business is that helps business leaders in making decisions and mainly to generate and increase profit (Friedman, managing businesses. The McKinsey Global Insti- 1970). This doctrine has greatly influenced how peo- tute discusses in particular how there were a lot of ple ran their business, as it encouraged business changes and expansions in the way economists leaders to focus more on the maximization of profit thought about the global economy. Because the and increasing shareholder returns while minimiz- Friedman Doctrine was so influential, it was very im- ing the use of resources for social purposes. Milton portant to economists especially at that time, and Friedman went against contemporary beliefs, which there was an expanded economic view of the whole were centered around Keynesian economics and world, instead of just looking at each country indi- government spending. His main stance was that the vidually. The people of the McKinsey Global Insti- only social responsibility of business is to participate tute and other experts have been very critical but in activities in order to gain profit. The introduction still intrigued by the ideas shown in the Friedman of the Friedman Doctrine encouraged companies to Doctrine. They recognized that the Friedman Doc- focused more on maximizing shareholder value ra- trine has greatly influenced business leaders, in ther than upholding the company’s corporate social terms of management thinking, adoption of strate- responsibilities. The impact of the Friedman Doc- gies, and corporate governance (McKinsey Global trine became enormous, such that Dees (1998) Institute, 2020). The knowledge about how this doc- noted how even some nonprofit organizations have trine has influenced businesses is beneficial in many increasingly adopted business method strategies to ways, including the fact that countries always inter- generate revenue. Thisvalidates the near-universal act with each other, especially in modern times. As acceptance of the Friedman Doctrine, which is the countries began to rely on each other for goods eco- goal of maximizing profits and increasing share- nomic growth, it would be much more effective to holder value above all other organizational objec- look at the global economy as a whole rather than tives (Tepper, 2020). Many business leaders became each country on its own. In the midst of all the new

-2- and expanding ideas, a main focal point was to look social need (Holmes, 1976). Friedman came to the into the future. Note that in the past few years, there executives’ and business owners’ rescue when he appeared a shifting of global balance characterized published his essay which chastised the notion that by the rise of social challenges a populist politics af- business executives should concern themselves, not fecting the system of governance in different coun- only with generating profit but also in achieving so- tries across the globe. In an article published in the cial ends Harvard Business Review, Barton (2011) pointed The primary message of the Friedman Doctrine is out that with the impact of economic crisis, people for companies to focus more on increasing profit. It and businesses are more likely to experience geopo- caused the re-orientation of managerial focus to- litical rivalries, global security challenges, increased wards the maximization of shareholder value. Ac- tension in trade, migration, and resource competi- cording to Friedman, the CEO’s greatest responsi- tion. Business leaders today are pressured to articu- bility is to promote the shareholders’ best interest, late where their organization stands on critical issues and therefore, must always endeavor to use the com- such as striking a balance between increasing profit pany’s resources and engage only in activities de- and social responsibility. signed to gain profit (Friedman, 1962). While busi- nesses can have several goals, the Friedman Doc- III. The 1970s - Release of the Friedman’s Doc- trine, otherwise known as the shareholder’s theory trine suggests that businesses should focus more on profit The 1970s was a confusing era for business leaders, maximization. He further elaborated that business as public confidence in business was reduced as a people should not concern themselves with the com- result of criticisms against profit-oriented corporate munity and social issues as this may lead to totalitar- behaviors. The rise of advocacy groups such as con- ianism (Friedman, 1962). In line with this, business sumer advocates, environmentalists, and civil rights leaders and managers are bound to advance the best leaders strengthened the idea that the pursuit of interest of their employer, which is to earn more profits is immoral and must be controlled. Note that profit. This theory holds that businesses are arrange- during the1960s the dominant company leadership ments where “the stockholders, advance capital to image was for corporate managers to act in a socially another group, the managers, to be used to realize responsible manner (Cheffins. 2020). For example, specified ends and for which the stockholders re- the founder of Merck and Co, a manufacturer of ceive an ownership interest in the venture” (Hasnas, pharmaceutical drugs once said that medicine is for 1998). The managers are agents of the business own- the people and not for the profits (Merck, 1950). A ers, which means that their main responsibility is to 1976 survey on CSR showed that corporate execu- promote the best interest of the latter tives during the 1970s defined CSR partly as the This doctrine supports the belief that businesses ability to utilize the company to address a specific thrive mainly with the help of shareholders who are

-3- considered as the backbone of the entity. For Fried- Jensen and Meckling (1976), “the firm is a black box man, advancing the best interest of business owners operated so as to meet the relevant marginal condi- and free-market capitalism are processes that also in- tions with respect to inputs and outputs, thereby crease social welfare (Dunn and Burton, 2006). For maximizing profits”. This relates to one of the sig- one, Friedman questioned the ability of business ex- nificant impacts of the Friedman Doctrine during ecutives in terms of their skills to discern and ad- the 1970s which was for business executives to focus vance the general good, thus they should not take it on a single goal, given that they can only choose one as their responsibility to promote CSR (Carson, variable, which is to prioritize shareholder value 1993). Rather than focus on corporate social respon- (Denning, 2020). This resulted in the rise of share- sibility, the company can best serve the owners and holder capitalism and the substantial transfer of the public by doing business in the most efficient business assets and resources to existing sharehold- way possible. Friedman’s expert perspectives on the ers. The goal to maximize shareholder value gained sole social responsibility of businesses to maximize momentum in the 1970s, with many executives who profit have greatly influenced businesses in the suc- considered it as the gospel of business ceeding decades (Jemielity, 2020). For instance, the The Friedman Doctrine greatly influenced the early stages since the publication of Frieman’s con- share-holder first mentality, which became prevalent troversial article reveal that his provocative theory in Corporate America. His writings on the share- reinforced a new phase in the American economy. holder theory were influential during the 1970s to The Friedman Doctrine received substantial sup- the extent that it helped shaped corporate govern- port from many business leaders and executives who ance in the country. There was an increased percep- found the doctrine extremely appealing (Poldre, tion that shareholders were the most important 2020). It provided managers with a clearer view of stakeholders among others. For instance, it paved how they will go about their business, which is to way for the explosion of employee stock-based com- focus solely on making profits. Executives often find pensation, which was expected, given the top execu- it challenging to strike a balance between different tives’ pursuit of shareholders (Rappaport, 2006). priorities, such that while balancing claims sounded Thus, the rise of hostile management takeovers, good in theory, it tends to cause inconsistencies and which was perceived to threaten the well-being of ill- defined priorities (Dennings, 2017). The doc- non-investors. In his argument, Friedman pointed trine has helped executives by freeing them from out that businesses lack the characteristics of a having to create a balance between making a profit moral person, and therefore are not capable of car- and catering to their social responsibilities. In 1976, rying out moral and social responsibilities (Dunn the doctrine received support from a publication, and Burton, 2006). Inherent in this notion is the which offered a quantitative economic rationale for belief that managers should work to achieve the de- shareholder value maximization. According to sire of the shareholders. That is, if the shareholders’

-4- desire profit, then it is the job of the manager to di- who pointed out that the acceptance of the share- rect and use the company resources for this purpose holder value theory became a double strategy for managers. For instance, managers can decide to IV. 1980s - The Expanded Global View shed off labor and sell off assets in cases where they The impact of the Friedman Doctrine during the deemed it necessary to meet the corporation’s obli- 1970s extended to the following decade with the rise gations and increase its stock’s market value. The of the corporate elite and the exclusive focus of cor- spread of the Friedman Doctrine in the 1980s porations on shareholder value (Mizruchi and placed managers in substantial control as they man- Kimeldorf, 2005; Lazonick and O’Sullivan, 2002). age corporations under the premise that enhanced The expanded view of the Friedman Doctrine paved market capitalization is the primary measure of per- way for the emergence of groups, who represent the formance. new business knowledge elites. The business leaders The impacts of the Friedman Doctrine became in the 1980s capitalized on the shareholder theory, prominent worldwide as the maximization of share- which states that as owners of the corporation, holder wealth is rarely disputed (Jackson, 2011). shareholders expect their employees to run the busi- Giving importance to shareholder value increased ness in their interest (Taylor, 2015). Thus, according with the emergence of institutions such as the to Dobbin and Zorn (2005), in their managerial ca- Council of Institutional Investors (2021), which was pacity, some members of this group manipulated established in 1985 with the goal to increase the large companies, engaged in hostile take- overs, and power of shareholders. Nonetheless, the diverse cul- enriched themselves in the process by skimming ture and global views also paved way for the emer- from employees’ pension reserves and investments gence of arguments with regards to the managers’ of unknowing investors. ethical responsibilities. While it is the company’s The Friedman Doctrine became more applicable in primary objective to maximize shareholder value, it the 1980s with the emergence of a few giant corpo- is also important for managers to adhere to laws and rations that dominated the US economy. With their observe the highest ethical standards (Pontefract, enormous resources and capabilities, these corpora- 2016). In addition, the majority of corporate execu- tions became influential and known for their ‘retain tives today supports that the creation of value in- and reinvest’ corporate governance principle (La- cludes understanding the different factors that zonick and O’Sullivan, 2002). This was based on the drives the company’s business (Dobbs, Huyett and reasonable assumption in a capitalist economy “that Koller, 2011). A recent report published in The shareholders have an implicit contract that the man- New York Times reveals that top chief executives agement will maximize their interests” (Vermaelen, share the common opinion that shareholder is no 2012). An additional support for this concept was longer everything (Gelles and Yaffe-Bellany, 2019). presented by Heilbron, Verheul and Quak (2014) Amazon, for example, started off with the business

-5- model of obsessive attention to customer experience profit maximization, while finding ways to reduce (Bezos, 1999). In contrast to the age-old notion of costs. It motivates business leaders to develop ways profit maximization, top corporate CEOs recog- to generate revenue, mainly with the goal to increase nized that serving the corporate purpose includes shareholder value. According to this doctrine, the delivering value to all stakeholders (Fitzgerald, managers are employees of the business and their 2019). For instance, Schultz(2019) expressed that greatest responsibility is to improve shareholder sat- not all business decisions are economic, and that isfaction. Therefore, they are required to perform companies have responsibilities to multiple constit- and deliver according to the employers’ expectations. uencies. This highly relates to the theory of business, In addition, this doctrine suggests that unless de- which states that there are “assumptions that shape cided upon by the shareholders, business entities are any organization’s behavior” (Drucker, 1994). The not obligated to carry on any social responsibility. Father of Management further expressed that the es- The shareholder theory has a significant impact in sence of a business organization is social and it must the business sector, with many business leaders who be analyzed in terms of the society it serves (Drucker, believe in the supremacy of shareholder value maxi- 1993). According to Drucker (2007) the specific pur- mization rather than the company’s corporate social pose of a business enterprise is economic perfor- responsibility. Nonetheless, recent developments in mance, but a modern business is also expected to the business sector showed that business leaders produce results for society and its people. According should balance their priorities. Rather than single- to Nilsson and Robinson (2018), businesses have mindedly focus on generating profit, businesses en- gone against what Friedman advocated and most deavor to create a balance to promote the best inter- have turned into socially responsible businesses. A est of different stakeholders. A balanced perspective recent TED Talk speech shows that in order to earn with regards to the stakeholders will give businesses profit, businesses are forced to care about society the opportunity to reach its potential in both the so- (Edmans, 2015). Tim Cook emphasized this in his cial and economic sphere. MIT Commencement address where he explained that Apple Inc company does not rely on ROI in the ANNOTATED BIBLIOGRAPHY: delivery of social services and said that “we do these PRIMARY SOURCES things because they are the right thing to do” (Cook, Bezos, J. (1999) On Amazon’s plans before the dot- 2018). That is, rather than solely pursuing profit, com crash. YouTube. businesses are working towards promoting social https://www.youtube.com/watch?v=GltlJO56S1g good even as they seek financial gains. This Youtube video shows Jeff Bezos’ explanation on focusing on good customer service. This strategic V. Conclusion approach used by Bezos helped me understand truly The Friedman Doctrine is a theory that supports how influential the beliefs of Milton Friedman were,

-6- as Friedman focused on shareholder and customer includes analysis of the General Motors company value. and analyzes what the company is doing well. This Cook, T (2018) Tim Cook clip about empathy and source helped me get a good idea of what makes a environment. YouTube. successful company. https://www.youtube.com/watch?v=x3nFe7Ep- Drucker, P (1994) Theory of the business, Harvard WAY Business Review, This Youtube video of Tim Cook’s commencement https://hbr.org/1994/09/the-theory-of-the-busi- address where he discusses an instance where he ness told shareholders that they should not invest in Ap- This article from the Theory of the Business maga- ple if their values don't align with Apple’s. This zine in September 1994 discusses a variety of differ- video helped me better understand the impacts of ent topics that includes explanations of past in- the ideas Milton Friedman’s ideas had on modern stances of successful companies. This article helped companies. me get an idea on what makes a successful business, Council of Institutional Investors (2021). About and gave me some more background information as CII. well. https://www.cii.org/about Drucker, P (1999). Management: Tasks, responsi- This article is about CII, the Council of Institu- bilities, practices. Taylor & Francis tional Investors. It describes what CII is and is a use- This book by Peter Drucker explores what modern ful topic in my paper as it was created to give share- day business leaders should do to have an effective owners more say in corporate decisions and get and successful business. The book also talks about more power and control. different management issues in different countries Dobbs, R., Huyett, B., and Keller, T. (2011) The around the world, and gives his view on how the CEO’s guide to corporate finance. problems could be solved. This book helped me get This article is the CEO’s guide to corporate finance. some more information on what writers thought This article goes in depth into the four principles about how a business should be run compared to that should help you make financial decisions when Milton Friedman. running a business. This source was useful as it gave Drucker, P. (2007) Managing in the next society: me more details and information on what makes a Lessons from the renown thinker and writer on business run successfully and what business leaders corporate management. St. Martin’s Publishing should responsibilities are. Group Ducker, P (1993) The concept of the corporation. This book by Peter Drucker talks about the future Routledge of businesses in future societies. The author gives his This book by Peter Drucker explores the structure opinions and thoughts on the constantly expanding and functions of a business enterprise. This book business world and the higher roles the business

-7- leaders have in the future. This source helped me his statement that competitive capitalism serves as get a better understanding of how businesses should both a tool for economic and political freedom. This be handled in the future, as the world of business helped me gain more knowledge about Friedman’s would be much different then. beliefs and was a very influential piece of writing. Edmans, A (2015) The social responsibility of busi- Friedman, M. (1970, September 13). A Friedman ness. TEDx Talks. doctrine-- The social responsibility of business is to https://www.youtube.com/watch?v=Z5KZhm19E increase its profits. The New York Times - Break- O0 ing News, World News & Multimedia. This YouTube video of a TED Talk by Alex Ed- https://www.nytimes.com/1970/09/13/ar- mands discusses social responsibility, and challenges chives/a-friedman-doctrine-the-socia l-responsibility- the idea that caring for society would lead to a de- of-business-is-to.html crease in profit. This source helped me better under- This article that includes the Friedman Doctrine dis- stand the importance of shareholders and that pri- cusses Friedman’s idea of shareholder importance oritizing shareholders doesn’t mean profit would de- and how business leaders should run their busi- crease. nesses. The doctrine is a theory that supports profit Fitzgerald, M (2019) The CEO of nearly 200 com- maximization, while finding methods of reducing panies just said shareholder value is no longer their costs. This source helped me understand the Fried- main objective. CNBC News. man doctrine and its ideas, as well as Friedman’s be- https://www.cnbc.com/2019/08/19/the-ceos-of- liefs. nearly-two-hundred-companies-say-shareholder- Friedman, M. (2009). Milton Friedman and his value-is-no-longer-their-main-objective.html start in economics [Video]. Interview by Young This article explains how many business leaders American's Foundation. YouTube. have rethought the importance of shareholder value. https://www.youtube.com/watch?v=EhY- The article mentions that many of these leaders have OtG2pt3w rethought the importance of shareholder im- This YouTube video shares Milton Friedman’s story portance to companies and that they are no longer on how he became an economist, and he explains a main focus. This helped me gain a better under- how he started up in economics. The anecdote from standing of people thinking differently from Fried- the video gave me more background information man’s ideas, and rethinking some of his ideas. It also about Friedman, as well as his journey to become an let me gain an understanding of people with differ- economist. ent and opposing viewpoints from Friedman. Gelles, D., and Yaffe-Bellany (2019) Shareholder Friedman, M. (1962). Capitalism and Freedom. value is no longer everything. The New York University of Chicago Press. Times. This book written by Milton Friedman writes about

-8- https://www.nytimes.com/2019/08/19/busi- This speech by George Merck talks about how “med- ness/business-roundtable-ceos-corporations.html icine is for the patient, not for the profits”. This fa- This article’s main purpose is to talk about how mous quote included in his speech signifies that in many business leaders and executives, including a business, the products and services are meant for leaders of large brands such as Pepsi and Apple, the customers and consumers, not for the sole pur- were rethinking whether or not shareholders should pose of getting money. This helped me get a better be the main focal point of a successful business. An- idea of a different perspective on how businesses other important detail included in the article was should prioritize their customers. that these executives argue that companies should Pearlstein, S. (2013). How the cult of shareholder invest in employees as well. value wrecked American business. The Washing- Holmes, S (1976) Executive perceptions of corpo- ton Post. rate social responsibility. Business Horizons, 19(3) This article from the Washington Post gives a back- This except from the book, Business Horizons dis- ground and history of shareholders, and discusses cusses the topic of social responsibility. This source whether or not companies should be run in a man- helped me better understand corporate social re- ner that maximizes the shareholder value. This arti- sponsibility, which is an important business princi- cle helped me gain a view and understanding of a ple that I needed to know when writing my paper as different side that is critical of Friedman’s idea of a it is a topic covered in the Friedman Doctrine. high shareholder value. McKinsey Global Publishing. (2020, September Schultz, H (2019) My take on corporate social re- 11). From there to here: 50 years of thinking on sponsibility-clip #1. YouTube. the social responsibility of business. McKinsey & https://www.youtube.com/watch?v=CBipA4p1FO Company. 4 https://www.mckinsey.com/featured-insights/cor- This YouTube video showcases Howard Schultz’s porate-purpose/from-there-to-here-50-years-of-think- story of joining Starbucks early in his career, and ing-on-the-social-responsibility-of-business later creating a very iconic brand and shares about This McKinsey Global Institute article discusses the his childhood and past experiences. An important lectures about corporate social responsibility and topic that was covered in this video was the instance how businesses should be managed before the Fried- of Schultz gaining profit without sacrificing any in- man Doctrine was released. This was an important tegrity of the company. This source helped me un- source as a big topic in my paper is about the McKin- derstand what business leaders go through, and gave sey Institute, and this article helped me better un- me another viewpoint of a successful business leader. derstand the institute. Vermaelen, T. (2012). INSEAD Professor Theo Merck, G (1950) Medicine is for the patient, not Vermaelen on maximizing shareholder value for the profits. Medical [Video]. Interview by A. Dearnell. YouTube.

-9- https://www.youtube.com/watch?v=MIBbOLJkz40 Corporate Governance. This YouTube video talks about financial scandals https://corpgov.law.har- and them being blamed on the high focus of share- vard.edu/2020/04/16/stop-blaming-milton-fried- holder value. This video includes Professor Theo man/ Vermaelen talking about maximizing shareholder This Harvard Law School forum defends Milton value. This source helped me understand and get de- Friedman and his beliefs and talks about the article, tails for more different perspectives on the im- “The Social Responsibility of Business is to Increase portance of shareholder value. This is important as its Profits” which was criticizing Friedman. The au- Friedman’s doctrine and ideas were based around thor of the forum page, Brian Cheffins, goes into his idea that shareholders are extremely important great detail about reasons why we should stop criti- to a business. cizing Friedman’s work. This source helped me un- derstand what critics’ reasons were behind discon- SECONDARY SOURCES tent with Friedman’s ideas. Barton, D. (2011, March 1). Capitalism for the Dees, G. (1998, January 1). Enterprising nonprof- long term. Harvard Business Review. its. Harvard Business Review. https://hbr.org/2011/03/capitalism-for-the-long- https://hbr.org/1998/01/enterprising-nonprofits term This Harvard business review article by Gregory This article by Dominic Barton discusses how after Dees talks about the American Medical Association the Great Recession, business executives might have leaving a deal with the Sunbeam Corporation, been tempted to return to normal business, and that which caused a feeling of discontent throughout the this would be a big mistake for their businesses. I got members of the AMA. This instance is one of many to get a better understanding of an economic crisis, where nonprofits strive to become more like a busi- and how business leaders reacted to it. ness. This article was useful as I gained more Carson, T. (1993). Friedman's theory of corporate knowledge about how businesses should keep the social responsibility. Business and Professional people supporting it satisfied. Ethics, 12(1). Denning, S. (2017). Making sense of shareholder This journal article by Thomas Carson is a “peer re- value. Forbes. viewed forum” for research that discusses the causes https://www.forbes.com/sites/steveden- and effects of challenges when running a business. ning/2017/07/17/making-sense-of-shareholder- This source was useful because I got to know more value-the-worlds-dumbest-idea/?sh=37f6edac2a7e about the challenges and decisions business leaders This Forbes article by Steve Denning explores the have to face throughout their careers. idea of shareholders being the priority of a success- Cheffins, B. (2020, April 16). Stop blaming Milton ful business. The article talks about multiple in- Friedman! The Harvard Law School Forum on stances where professionals claimed that the

-10- shareholder idea is not ideal and is not the way to This paper by Craig Dunn and Brian Burton dis- run a successful business. This source helped me cusses the topic of Milton Friedman’s article, “The gain an understanding of opposing viewpoints from social responsibility of business is to increase its Friedman, as well as seeing how influential the profits”. The authors talk about the debate of Friedman doctrine was as many economists after whether Milton Friedman is actually correct or not Friedman talked about the ideas mentioned in his in his beliefs and if they are actually effective. This doctrine. source was helpful to me when I needed to know Dennings, S. (2020). Forbes. more information about the Friedman debate. https://www.forbes.com/sites/steveden- Hasnas, J. (1998). The normative theories of busi- ning/2020/01/05/why-stakeholder-capitalism-will- ness ethics: A guide for the perplexed. Business fail/?sh=6f5ff6a0785a Ethics Quarterly, 8(1). This Forbes article by Steve Dennings talks about This paper by John Hasnas gives a guide for business why stakeholder capitalism will fail. This article is ethics and how the stockholder theory is out of favor mainly against Milton Friedman’s beliefs that share- in the business ethics community. The paper also holders should be the priorities of each successful mentions that the stockholder theory is neither and growing business. The article does a good job of flawed or outdated. This paper helped me gain more defining stakeholder capitalism as well as helping knowledge on people who believed that Friedman’s me get a better understanding of why this would be theory was correct. such a bad idea, which helped me when writing my Ip, G., & Whitehouse, M. (2006, November 17). paper. How Milton Friedman changed economics, policy Dobbin, F., & Zorn, D. (2005). Corporate malfea- and markets. WSJ. sance and the myth of shareholder value. Political https://www.wsj.com/arti- Power and Social Theory, 17. cles/SB116369744597625238 This paper by Frank Dobbin and Dirk Zorn dis- This article talks about how Milton Friedman cusses why shareholder value is not the most im- changed the world of economics. It mentions what portant part for businesses to focus on when grow- Friedman did so well, as well as his impact on the ing their business to be successful. This source was future of economics. This source was useful because useful as I needed to know what other viewpoints I needed to know what the Friedman Doctrine did were when not agreeing with Milton Friedman’s the- to influence business leaders in the future of eco- ory of shareholder value. nomics. Dunn, C., & Burton, B. (2006). Friedman's "The Jemielity, S. (2020). Milton Friedman, Revisited. social responsibility of business is to increase its Chicago Booth Stories. profits": A critique for the classroom. Interna- This article by Sam Jemielity discusses Milton Fried- tional Association for Business and Society. man and the impact of his article, where Friedman

-11- declared that the social responsibility of a business Nilsson, A., & Robinson, D. (2017, December 27). is to maximize profits, and revisits this topic in the What is the business of business? Innovation policy future to assess the impacts and success of this the- and the economy: Vol 18. The University of Chi- ory. This source helped me understand the impacts cago Press: Journals. Friedman and his ideas had on the future and world https://www.journals.uchi- of economics. cago.edu/doi/full/10.1086/694408# Jensen, M., & Meckling, W. (1976). The theory of This paper is about socially responsible firms and the firm: Managerial behavior, agency costs and entrepreneurs. It analyzes the conditions where or- ownership structure. Journal of Financial Eco- ganizations come first in place of normal charities. nomics, 3(4). This source was useful to me because It talks about This paper discusses many theories such as the the- how the world of business had moved to the oppo- ories of agency, property rights, and the ownership site direction of what Friedman was suggesting, structure of a firm. This paper also provided a defi- which was useful information to me when I was writ- nition of a firm, and was useful to me as I needed to ing my paper. know more about the leadership structure of busi- Poldre, T. (2020, September 10). The Friedman nesses and corporations. doctrine at 50: Happy birthday and R.I.P. Me- Lazonick, W., & O'Sullivan, M. (2002). Maximiz- dium. ing shareholder value: A new ideology for corpo- https://medium.com/reinventing-business/the- rate governance. In Corporate Governance and friedman-doctrine-at-50-happ y-birthday-and-r-i-p- Sustainability Prosperity. 77ae5a86340c This written excerpt discusses how shareholder This article gives an overview on Milton Friedman’s value has become an important topic and debate in life and legacy. It talks about who Friedman was, the business world. This source was useful to me as and what his main beliefs were that made him such it provided data and evidence to why Friedman’s an important figure in the world of business. This ideas were so important and influential. was an important source to me when conducting my Mizruchi, M., & Kimeldorf, H. (2005). The histor- initial research and getting general information ical context of shareholder value capitalism. Polit- about Friedman and his beliefs. ical Power and Social Theory, 17. Pontefract, D. (2016). Should companies serve This paper gives the history of shareholder value. It only their shareholders more broadly? Forbes. gives a summary and overview about American firms https://www.forbes.com/sites/danponte- and changes on how they are being run. This paper fract/2016/05/09/shareholders-or-stakehold- was useful to me because I needed to expand my ers/?sh=6a58d2e913d2 knowledge on how businesses were different back This article talks about whether or not we businesses then and in modern times. should serve and prioritize their shareholders, or

-12- also serve their stakeholders. The article gives many Economic History Working Papers. examples of different companies and industries that This paper talks about and analyzes different data to have shifted and expanded their beliefs on their con- help come up with a definition of shareholder value. sumers, and the author suggests that we continue This was a useful source to me because I could see going towards that direction. This source was im- financial data and analysis from past years. portant to my understanding of stakeholders vs Tepper, T. (2020, September 16). Milton Fried- shareholders, as well as understanding the con- man on the social responsibility of business, 50 stantly changing economy. years later. Forbes Advisor. Rappaport, A. (2006, September 1). Ten ways to https://www.forbes.com/advisor/investing/mil- create shareholder value. Harvard Business Review. ton-friedman-social-responsibility-of-business/ https://hbr.org/2006/09/ten-ways-to-create-share- This article revisits the topic of Friedman on social holder-value responsibility. The article talks about how Milton This article talks about different methods for busi- Friedman’s article, “The social responsibility of a nesses to create shareholder value. The article goes business is to increase its profits”, and how it was into detail about how America’s business leaders are influential. This source helped me understand more so invested into the present, but failing to prepare about Friedman and his beliefs in a recent, modern for the future. This article was useful to me because perspective it emphasizes the importance of shareholders, which are details that I need when writing my paper. Strain, M. (2020). Bloomberg. Bloomberg - Are you a robot?. https://www.bloomberg.com/opinion/arti- cles/2020-09-18/milton-friedman-was-right-about- shareholder-capitalism This article talks about how Friedman was correct in his theory about the importance of stakeholders. This article also talks about what Friedman was re- ally trying to say in his 1970 admonition, and that critics misunderstood him. This source helped me understand how Milton Friedman’s theory was mis- understood by people and what Friedman truly meant at the time. Taylor, B. (2015). Reconsidering the rise of share- holder value in the United States, 1960-2000.

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