Corporate Governance for Employee’s Welfare

Abstract

debate about Corporate Social Responsibility (CSR) to stakeholders is a fairly lengthy debate in the repertoire of the development of company law. At least there are two fundamentally different views to interpret the corporate social responsibility.The views, Firstly, cling to the belief that the concept of corporate social responsibility is counterproductive in the business world. According to Milton Friedman, a corporation are naturally only have a goal to generate economic objectives for shareholders. A prominent liberal economics is very pessimistic and tend to oppose any attempt to make the company as a social purpose. Furthermore, in Capitalism and Freedom (1962) Milton Friedman clearly states that in a free society there is one and only one social responsibility of businesses that utilize the company's resources and engage in activities that aim to maximize profits. If this goal is achieved by the company, it actually functions, and corporate social goals have been achieved, namely to improve the welfare of society.The doctrine of the social responsibility in business, damage the free market economic system.Acknowledging social responsibility that will lead to an economic system leads to the direction of the economic plans of the Communist Countries. In the writings, published in the New York Times Magazine on September 13th, 1970, with the title: The Social Responsibility of Business is to Increase Its Profits. This reasoning is supported by Joel Bakan, which teaches that if the company gives some of its profits to the community, the company has violated his nature. Business sustainability can take place in the long term if the company is able to provide an answer to the needs of stakeholders and give them what they need.Second views, with the increasing importance of the role and position of all stakeholders in the Good Governance management of the company, and surely, the second thought, extremely gave rise to the contradicts of the first view. second view was expressly acknowledged the existence of corporate social responsibility towards stakeholders. R. Edward Freeman in, “A Stakeholder Theory of the Modern Corporation”, offers an alternative to the theory of Friedman. On the view Freeman, Friedman wrong to assume that the main task is the company's executive moral fiduciary issue to their shareholders and that in fulfilling this obligation they act socially responsible. Freeman takes issue with dissention of opinion and the opinion: 1 That the company's managers have a duty to all groups and individuals who own shares (a stake) in or claim on the company (Freeman refer to groups and individuals as 'stakeholders');