MGT 125 Lecture Notes - Lecture 13: Profit Maximization, Negative And Positive Rights, Homo Economicus

• School: Irvine Valley College
• Department: Management
• Course: MGT 125
• Professor: budgay

Document Summary

Social obligation: obligation of business to meet economic and legal responsibilities. Social responsibility: obligation beyond that of law and economics for a firm to pursue long term goals that are good for society. Management"s only social responsibility is to maximize profits (create financial return) by operating the business in the best interests of the stockholders (owners of the corporation). Expending the firm"s resources on doing social good unjustifiably increases costs that lower profits to the owners and raises price to consumers: socioeconomic/ sustainable view. Management"s social responsibility goes beyond making profits to include protecting and improving society"s welfare. Corporations are not independent entities responsible only to stockholders. Firms have a moral responsibility to larger society to become involved social, legal, and political issues To do the right thing : stages of social responsibility ( lesser to greater ) Stage4: broader society: arguments for/ against social responsibility. Public expectations - violation on profit maximization.