Milton Friedman - A Theory of the Firm

Milton Friedman’s “A Theory of the Firm” suggests that the primary goal of a company is to maximize its profits within legal and ethical boundaries. Friedman argues that the managers’ primary responsibility is to serve the interests of shareholders, who own the company. By focusing on profit maximization, businesses efficiently allocate resources, contribute to economic growth, and benefit society indirectly through increased goods, services, and employment. The theory emphasizes that corporate social responsibilities beyond profit, such as social or environmental goals, should be left to individuals or government, rather than corporate management, to avoid diluting the firm’s economic efficiency.