The Friedman doctrine, also called shareholder theory is a normative theory of business ethics advanced by economist Milton Friedman which holds that the social responsibility of business is to increase its profits. This shareholder primacy approach views shareholders as the economic engine of the organization and the only group to which the firm is socially responsible. As such, the goal of the firm is to increase its profits and maximize returns to shareholders. Friedman argues that the shareholders can then decide for themselves what social initiatives to take part in, rather than have an executive whom the shareholders appointed explicitly for business purposes decide such matters for them.The Friedman doctrine has been very influential in the corporate world from the 1980s to the 2000s. However, it has attracted criticism, particularly since the financial crisis of 2007–2008, caused by various financial institutions which engaged in excessive risk for profit maximization, causing the bubble and collapse of the American real estate market that triggered the crisis throughout the wider global economy.
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