According to Friedman's doctrine (1970), companies bear no responsibility to society; instead, their sole obligation is to their shareholders, so the CEO has no right to spend on something that is not profitable.
Pros:
This doctrine adopts the actual basis of any for-profit organization, which is to obtain profit for the organization's survival in the market. This doctrine also includes executive compensation and its connection to shareholders' rights. Its advantage is also a significant increase in stock-based compensation (Merrick, 2021).
Cons:
According to (Krishnan (2020), Friedman's doctrine places the utmost importance on shareholders and neglects society, but it is evident that the company needs a community to succeed; another disadvantage is that this theory leads to significant administrative fatigue to increase profits for shareholders. As a result, it leads to many disadvantages, such as racial inequality, economic inequality, hostile takeovers, and also the random dismissal of employees when needed. Finally, this doctrine does not cover the consequences of deviating executives and breaking the law to maximize shareholder value.
Contemporary Ethical Theory in Business:
According to (Immanuel, Jeremy & John, 2013), Ethical theory aims to provide guiding principles; these principles recognize that any decision must be valid when settling human disputes; there are several approaches to understanding ethical theory, such as the doctrine of utilitarianism based on the benefit of all, or the application of ethics as a universal law that everyone is bound by, or the establishment of justice among all according to certain broad lines, or the theory of rights that defines the rights of individuals inside and outside work and finally, ethical relativism, which is based on the ethics accepted in each society separately.
Relationship of Ethical Theory to Friedman's Doctrine:
Friedman's doctrine does not agree with any of the contemporary ethical theories, as it mainly neglects society and does not give value to the people in it, the important thing is just to increase profits only, (Vorster, 2010).
Conclusion
In agreement with the author's point of view, I do not see that Friedman's doctrine can be applied as it is in the present era because all companies now have societal duties; the least of these duties is not to harm others, and the highest one is to preserve the environment and help society, but this doctrine can be a motive for the continuation of for-profit organizations, and not to give up its profits to remain operating in the market and maintain its continuity.
References
Friedman, M. (1970). The social responsibility of a business is to increase its profits. New York Times Magazine, September, 13, 32–33, 122–124.
http://umich.edu/~thecore/doc/Friedman.pdf (Seminal Document)
Immanuel, K, Jeremy, B & John, S (2013). Ethical theory and its application to contemporary business practice. Retrieved
https://ncys82.wordpress.com/2013/03/15/ethical-theory-and-its-application-to-contemporary-business-practice/
Krishnan, R. (2020). Time to abandon the Frithe Edman Doctrine?
https://www.thehindubusinessline.com/opinion/time-to-abandon-friedman-doctrine/article32670806.ece
Merrick, A. (2021). Is the Friedman Doctrine Still Relevant in the 21st Century?
https://www.chicagobooth.edu/review/friedman-doctrine-still-relevant-21st-century
Vorster, N. (2010). An Ethical Critique Of Milton Friedman's Doctrine On Economics And Freedom. Journal for the Study of Religions and Ideologies, 9(26), 163-188.