Milton Friedman's Shareholder Theory

Milton Friedman's Shareholder Theory states that the primary responsibility of a business is to maximize profits for its shareholders, within legal and ethical boundaries. He believed that corporate executives should focus on increasing stockholder wealth because shareholders are the owners of the company and invest their resources expecting returns. Friedman's view emphasizes that the company's main goal is to generate profit, and other social responsibilities should be pursued only if they align with economic growth and legal standards. This perspective advocates for a business's core purpose as economic efficiency and value creation for its owners.