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Keywords:
Profit maximization Business ethics Corporate social responsibility (CSR) Jel codes: D63, M14

Why Firms should not always Maximize Profits

Ivar Kolstad (2006)

Bergen: Chr. Michelsen Institute (CMI Working Paper WP 2006: 11) 7 p.

Though corporate social responsibility (CSR) is on the agenda of most major corporations, corporate executives still largely support the view that corporations should maximize the returns to their owners. There are two lines of defence for this position. One is the Friedmanian view that maximizing owner returns is the corporate social responsibility of corporations. The other is a position voiced by many executives, that CSR and profits go together. This paper argues that the first position is ethically untenable, while the latter is not supported by empirical evidence. The implication is that there may be good reason for firms to deviate from a maxim of profit maximization.

Project/programme:

Business ethics for multinational corporations in developing countries
Start: Jan. 2005 (Completed)
Keywords: Business ethics, corporate social responsibility, multinational corporations
Geography: Africa: Angola.

Publications with similar keywords:

Journal Article (Peer-Reviewed)

Why firms should not always maximize profits

Ivar Kolstad (2007) in Journal of Business Ethics vol. 76 no. 2 pp. 137-145

CMI Brief

Corporate Social Responsibility of Multinational Corporations

Ivar Kolstad (2007) Bergen: Chr. Michelsen Institute (CMI Brief) 4 p.

CMI Working Paper

Corporate Social Responsibility in the Angolan Oil Industry

Arne Wiig (2005) Bergen: Chr. Michelsen Institute (CMI Working Paper WP 2005: 8) 29 p.

Author:

Ivar Kolstad

Economist whose current research focuses on poverty dynamics, natural resources and development, and corporate social responsibility.

By the same author:

Resource curse
Ivar Kolstad (forthcoming)

Returns to education among entrepreneurs in Bangladesh
Ivar Kolstad, Arne Wiig and Khondaker Golam Moazzem (2014)

Diversification and democracy
Ivar Kolstad and Arne Wiig (2014)

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