Insofar as his actions raise the price to customers, he is spending the customers’ money. Insofar as his actions lower the wages of some employees, he is spending their money…[I]t may well be in the long‐run interest of a corporation that is a major employer in a small community to devote resources to providing amenities to that community or to improving its government.
Friedman viewed all these expenditures as being entirely justified in the company’s own self-interest. And he stressed that companies should “make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom.”If the purpose of a company is to create value for its system of stakeholders, then its executives should be able to measure and manage progress toward that purpose.
Rather than embracing this complex reality and working to measure and manage it more effectively, some managers have turned to simplistic thinking. They are hoping that a complex system of stakeholders can be managed by focusing on value creation for a single stakeholder — which might be employees, customers, environmentalists, or some other constituent. Most often they continue to fixate on the one that is easiest to measure and control: shareholders.