THEORIES AND THEORISTS
Milton Friedman came up with one of the most influential positions about businesses’ social responsibilities. Even though his theory has been frowned upon for decades by business leaders, it has seemingly been transformed to be a central facet of the modern day corporation. He believed and offered two sides, the stake holder theory and shareholder theory. Both sides of his theory are important because they affect all businesses including the healthcare industry. In general this theory comes up with the question, “What is the business of business?” Is it for business to concentrate on solving societal problems or rather focus on maximizing on shareholders’ wealth? (Lee, 2008).
Friedman’s stakeholder theory emphasizes the fact that leaders of organization should focus on the support and provision for society’s discretionary expectations. In obeying this theory, corporations have to be aware of the possible effects of organizational actions upon their clients including their suppliers, the general public, their workers, and any others with a stake or any form of interest in the company (Cheers, 2011). In general social actions may help foster an organization’s support from the public.
The shareholder theory advocates for obeying of the law and maximization of shareholder’s wealth by businesses. This theory is highly applicable in the healthcare sector particularly for the for profit hospitals. The theory argues that the provision of necessary products or services at acceptable pricing benefits society. In the healthcare field, corporations should strive to make sure services are affordable while making sure shareholders are getting a good return for their investment into the organization; therefore businesses that use shareholders’ investments unwisely for what may be deemed unnecessary social needs is against this theory. Businesses should be aware that maximizing profits via short term gains may not be the best for...