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Title: Moral Agency, Profits and the Firm: Economic Revisions to the Friedman Theorem
Authors: Wagner-Tsukamoto, Sigmund
First Published: 2007
Publisher: Springer
Citation: Journal of Business Ethics, 2007, 70 (2), pp. 209-220
Abstract: The paper reconstructs in economic terms Friedman’s theorem that the only social responsibility of firms is to increase their profits while staying within legal and ethical rules. A model of three levels of moral conduct is attributed to the firm: (1) self-interested engagement in the market process itself, which reflects according to classical and neoclassical economics an ethical ideal; (2) the obeying of the “rules of the game,” largely legal ones; and (3) the creation of ethical capital, which allows moral conduct to enter the market process beyond the rules of the game. Points (1) and (2) position the Friedman theorem in economic terms while point (3) develops an economic revision of the theorem, which was not seen by Friedman. Implications are spelled out for an instrumental stakeholder theory of the firm.
DOI Link: 10.1007/s10551-006-9106-5
ISSN: 0167-4544
eISSN: 1573-0697
Version: Post print
Status: Peer reviewed
Type: Article
Rights: © Springer 2006. Deposited with reference to the publisher’s archiving policy available on the SHERPA/RoMEO website. The original version is available at
Appears in Collections:Published Articles, School of Management

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