Should companies prioritize profit maximization or social responsibility?

The debate over whether companies should prioritize profit maximization or social responsibility has deep roots in the history of capitalism and corporate governance. Profit maximization is the idea that a company’s primary duty is to generate the highest possible returns for its shareholders. This principle became dominant in the 20th century, particularly after economist Milton Friedman’s influential 1970 essay argued that “the social responsibility of business is to increase its profits,” so long as it stays within the rules of the market. Social responsibility, sometimes called corporate social responsibility (CSR), emphasizes that businesses also have ethical obligations to employees, communities, and the environment. The modern CSR movement emerged in the post–World War II era and expanded significantly in the 1990s and 2000s as globalization and environmental awareness increased public pressure on corporations to consider broader impacts beyond the bottom line. Today, many companies adopt frameworks such as ESG (environmental, social, and governance) criteria to measure and report non-financial performance. These frameworks can include commitments to reduce carbon emissions, ensure supply chain transparency, promote diversity and inclusion, and support community development. The idea of stakeholder capitalism—serving the interests of all stakeholders, not just shareholders—has become a major theme at institutions like the World Economic Forum.