Social Responsibility and Economic Theory

Social Responsibility and Economic Theory

Social Responsibility and Economic Theory

A business ethic must be compatible with economic theory, as well as economic ideology, to be widely accepted. The theory of the firm is the division of economic theory dealing with the motivation and behaviour of the firm and manager. In its traditional form it is not compatible with the doctrine and ethic of social responsibility.

Many economists are dissatisfied with the theory of the firm, however, because of the unrealistic assumptions upon which it is based. Modifications and revisions which put the theory into closer touch with reality are moving it toward a general theory of the firm in which the concept of social responsibility has a legitimate place.

This website analyzes two lines of thought that integrate social responsibility into the theory of the firm. The first views social responsibility in terms of utility maximization, and the second views it as a means of social control over the manager.


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