Profit Maximization, Social Welfare and Creating Opportunities for Corporate Social Responsibility in Slovakia

Matej Valach
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Matej Valach: University of Economics in Bratislava, Slovakia

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Abstract: The efficiency argument for profit maximization says that corporations and their managers should maximize profits because this is the course of action that will lead to an ‘economically efficient’ or ‘welfare maximizing’ outcome (see e.g. Jensen 2001, 2002). However, economic activity unilaterally focused on maximizing profits for the owners respectively a disproportionate distribution of constructed value among the participants of its creation caused in the economy and society conditions of imbalance and social inequality. Income inequalities result in inequalities in consumption and retroactively rise the pressure on the economic sphere in the form of insufficient demand. Strong unilateral focus on profit maximization and maximization of market value for owners neglects thorough identification of all entities involved in the formation of values in the company and follows their interests in the process of distribution of constructed values is contrary to the idea of corporate social responsibility and causes of socio-economic inequality.

Keywords: social welfare; social responsibility; sustainable development profit maximizing (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:tkp:mklp15:1703-1710

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