227). Hudson argues that the pluralist theory is wrong and that pluralist group theorists would make people believe, the groups’ representativeness instead, it is the extent to which they represent one societal interest: business (Hudson,2013 pg. 227). There are many interest groups but the majority of them are participating in lobbying for business. An example of this would be ,200 largest American corporations have worked effectively to promote the business-friendly policies of tax cuts, reduced business regulations, globalization and put to barriers to the union Hudson,2013 pg.
John Muir, a pioneer in naturalist, once quoted that “when you tug at a single thing in nature, you find it attached to the rest of the world.” This meaningful quote can be applied to business management, which is a subject that has interconnected relationships with different stakeholders. While people generally perceive the purpose of doing business is to maximize the return on investment for their shareholders, Professor R.E. Freeman believes on conscious business, which is also known as conscious capitalism. Conscious business emphasises on its ecosystem. It aims to create and optimise value for all stakeholders of the business, where this act is suggested to be able to lead a healthy, sustainable and resilient business, thereby to maximise the shareholders’ wealth.
He mentioned that just individuals have responsibility and a corporation is an artificial person and so it has artificial responsibilities, however the similar situation cannot be obtained for whole business. He says that, firstly, we should ask what it refers for whom to examine the doctrine of social responsibility of business. He believes that a corporate executive is an employee of the business in a private property sys¬tem and his employers are his re¬sponsibility and says “That responsi¬bility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while con¬forming to the basic rules of the society, both those embodied in law and those embodied in ethical custom.” The primary responsibility of corporate executive is as an agent for owners of corporation or individuals who constitute charity
It also presents and critiques the argument in favour of the stakeholder model that claims that contributions are made by all stakeholders and therefore businesses should act in everyone’s interest. It demonstrates the flaws and strengths surrounding each argument and ultimately establishes the more favourable model and through this answers the questions as to in whose interest to act when faced with a conflict of interest. The first argument in favour of Shareholder Primacy claims that businesses that seek profit above all else, businesses that prioritise the interests of its shareholders, benefit
I will be unpacking its various stakeholders through aligning them in to the stakeholder salience model as well as the stakeholder map and discussing key stakeholder concepts. Community development is a process where community members come together to take collective action and generate solutions to common problems. Community wellbeing (economic, social, environmental and cultural), in this aspect we are dealing with community development in terms of job creation. ORGANISATION-FOCUSED AND ISSUE-FOCUSED STAKEHOLDER MANAGEMENT From the analysis of the role of companies in multi stakeholder networks and a critical review of the stakeholder theory. It is evident that companies practice two types of stakeholder management.
Soon, trusts became a new form limiting competition. Trust was created to decrease competition and increase prices. The company will have control of the stocks of several companies and make decisions for them. When a company owns all or almost all of the companies, it becomes a monopoly. A monopoly had many negative effects on consumers and the workers.
The corporate citizenship theory This theory argues that corporations are responsible and liable to help solving the social problems in their society. Furthermore, it argues that business owe a duty to promote and develop their society same as individuals, this duty arises from the social power granted by the society to business, so that corporations should use this power in doing good for their society (Matten & Crane, 2003). The corporate citizenship theory rest on three key dimensions, those are the legal, ethical and philanthropic responsibility. The legal responsibility is that to corporations should be abided by the laws and regulations. The second responsibility is the ethical, where corporation is responsible to do what the right, just, and fair action, even though it is not liable to do so.
A business’ ethical responsibility clarifies the principles, norms or expectations that have to deal with the employees, consumers or the host community affected by a business’ activity. Carroll expresses the importance for a corporation to adjust to their host community. The actual societal and ethical customs of the given host may in fact go beyond what is at present required by law – making it vital to know that the corporate integrity and ethical conduct may possibly go beyond law and regulations of the given host country (Ibid: 42). In the case of MNCs, this type of situation can happen when conducting business in a country where its legal systems are non-functioning and likely suffers from oppressed regimes and corrupted government officials
Trying to ignore the social responsibilities might stain an organization’s image and reputation. Thus, performing social responsibility is not simply a choice; it is a need of any corporation. In the twenty-first century, businesses are in the bottlenecks where globalization, science and technology advancement and integrated knowledge are taking place in today’s society (Chan, n.d.). To gain a foothold in this economy, image and reputation play an important role to differentiate a company from one another. With good reputation, it helps firms to create competitive advantage in the business environment.
Introduction In an incorporated company, the interests of shareholders are often at odds with the interests of other stakeholders. When making a decision under such circumstances, I will show that the business should balance each group’s interests equitably in order to determine how to act, as a result of a duty owed to each group for their contributions to the company. I will also critique some popular arguments in favour of the commonly held belief that a business should act primarily in its shareholders’ interests. The two competing models The debate about whose interests businesses should act in is dominated by two theories: Shareholder Primacy, and the Stakeholder Model. Under the Stakeholder Model, to answer the question of whose interests