The problem to be investigated in R. Edward Freeman’s “A Stakeholder Theory of the Modern Corporation” is the intrinsic relationship of a stakeholder and a stockholder to that of an artificial corporate entity and their resulting influences. As such, what problems did Freeman see with government regulations controlling corporate operations? Prior to this century, there were few constraints or roadblocks in the daily affairs of a corporation. Managerial capitalism was used as a large, wielding bat that could beat down, without discourse, any opponents that created obstruction to profit for the stockholders of the corporation. Suppliers and customers were managed in any fitting style for lack of common guidelines. Largely before managerial capitalism, a diversified stockholder ownership of a large managerial enterprise would give a blind thumbs-up on decisions across all levels. This was because the stockholders had neither the time nor the commitment to worry about such affairs. All they were concerned about was the revenue. (Church, 1986) The intervention of governmental rulings, such as The National Labor Relations Act and The Clean Air Act, to name a few, provided stakeholders a new status several rungs up on the priority ladder. No longer were they subordinate to stockholders. Due to government regulations over corporations, managers must first work within the law of protections put in place to benefit stakeholders before considering the desires of the stockholder. (Freemen, as cited in Jennings, 2009)
List the stakeholders of a corporation. Are government and competitors included?
Why or why not?
In addition to stockholders, a corporation is comprised of people or groups who have a
vested interest. They are...
... middle of paper ...
... readings (6 ed., pp. 79-85). Mason, OH: South-Western Cengage Learning.
Lee, E. (2010, November). Stakeholders airport expansion marketing will help Atlantic City take off. njbiz, 23, 11. Retrieved from web.ebscohost.com
Ponti, G. (2000). Splitting the baby in two solving Solomons deilemma with boundedly rational agents. Journal of Evoluntionary Economics, 10, 449. Retrieved from web.ebscohost.com
Rozario, K. (2006, July). Case study London City set to take off. Director, 59(12), 58. Retrieved from web.ebscohost.com
Surprenant, C. W. (2010, June). Kant’s contribution to moral education: The relevance of catechistics. Journal of Moral Education, 39, 165-174. Retrieved from web.ebscohost.com
Whitman, M. (1999, Spring). Global competition and the changing role of the american corporation. Washington Quarterly, 22(2), 59-82. Retrieved from web.ebscohost.com
Kant, Immanuel, and Mary J. Gregor. Groundwork of the Metaphysics of Morals. Cambridge, U.K.: Cambridge UP, 1998. Print.
Ralph Nader, Mark Green and Joel Seligman, in an excerpt from Taming the Giant Corporation (1976, found in Honest Work by Ciulla, Martin and Solomon), take the current role of the company board of directors and suggest changes that should be made to make the board to be efficient. They claim the current makeup of the board does not necessarily do justice to the company because “in nearly every large American business…there exists a management autocracy” (Nader, Green and Seligman, 1976, p.570). The main resolution they present is to make the board more democratic with the betterment of the company as its first priority. Currently the board no longer oversees operations, or elects top company executives and they are no longer involved in the business operations to the extent they should be. Nadar, Green and Seligman argue that that all of these things need to be changed. For a corporation so large to be successful there must be separation of powers just as there is in any current government system ( p.571). They claim this is the only and best way to success (Nader, Green and Seligman, 1976, p.570-571).
Johnson, R. (2013). Kant’s moral philosophy. The Stanford Encyclopedia of Philosophy (Winter 2013 Edition). Zalta, E. (Ed.). Retrieved online from http://plato.stanford.edu/archives/win2013/entries/kant-moral/
Kant, Immanuel. Groundwork of the Metaphysic of Morals. Trans. H. J. Paton. 1964. Reprint. New York: Harper Perennial Modern Thought, 2009. Print.
Immanuel Kant is a popular modern day philosopher. He was a modest and humble man of his time. He never left his hometown, never married and never strayed from his schedule. Kant may come off as boring, while he was an introvert but he had a great amount to offer. His thoughts and concepts from the 1700s are still observed today. His most recognized work is from the Groundwork of the Metaphysics of Morals. Here Kant expresses his idea of ‘The Good Will’ and the ‘Categorical Imperative’.
Kant, Immanuel, translated by Wood, Allen W. Groundwork for the Metaphysics of Morals. New Haven and London: Yale University Press, 2002. http://www.inp.uw.edu.pl/mdsie/Political_Thought/Kant%20-%20groundwork%20for%20the%20metaphysics%20of%20morals%20with%20essays.pdf
Kant’s moral philosophy is built around the formal principles of ethics rather than substantive human goods. He begins by outlining the principles of reasoning that can be equally expected of all rational persons regardless of their individual desires or partial interests. It creates an ideal universal community of rational individuals who can collectively agree on the moral principles for guiding equality and autonomy. This is what forms the basis for contemporary human rig...
This paper will have a detailed discussion on the shareholder theory of Milton Friedman and the stakeholder theory of Edward Freeman. Friedman argued that “neo-classical economic theory suggests that the purpose of the organisations is to make profits in their accountability to themselves and their shareholders and that only by doing so can business contribute to wealth for itself and society at large”. On the other hand, the theory of stakeholder suggests that the managers of an organisation do not only have the duty towards the firm’s shareholders; rather towards the individuals and constituencies who contribute to the company’s wealth, capacity and activities. These individuals or constituencies can be the shareholders, employees, customers, local community and the suppliers (Freeman 1984 pp. 409–421).
O’Neill, Onora. “Kantian Ethics.” A Companion to Ethics. Ed. Peter Singer. Malden: Blackwell Publishing, 1991. 175-185. Print.
Evan, W. M., & Freeman, R. E. (1988). A stakeholder theory of the modern corporation: Kantian
‘Kantian Ethics’ in [EBQ] James P Sterba (ed) Ethics: the Big Questions, Oxford: Blackwell Publishers, 1998, 185-198. 2) Kant, Immanuel. ‘Morality and Rationality’ in [MPS] 410-429. 3) Rachel, James. The Elements of Moral Philosophy, fourth edition. New York: McGraw-Hill, 2003.
Stakeholders are those groups or individual in society that have a direct interest in the performance and activities of business. The main stakeholders are employees, shareholders, customers, suppliers, financiers and the local community. Stakeholders may not hold any formal authority over the organization, but theorists such as Professor Charles Handy believe that a firm’s best long-term interests are served by paying close attention to the needs of each of these stakeholders. The modern view is that a firm has responsibilities to all its stakeholders i.e. everyone with a legitimate interest in the company. These include shareholders, competitors, government, employees, directors, distributors, customers, sub-contractors, pressure groups and local community. Although a company’s directors owes a legal duty to the shareholders, they also have moral responsibilities to other stakeholder group’s objectives in their entirely. As a firm can’t meet all stakeholders’ objectives in their entirety, they have to compromise. A company should try to serve the needs of these groups or individuals, but whilst some needs are common, other needs conflict. By the development of this second runway, the public and stakeholders are affected in one or other way and it can be positive and negative.
The Principle of Separate Corporate Personality The principle of separate corporate personality has been firmly established in the common law since the decision in the case of Salomon v Salomon & Co Ltd[1], whereby a corporation has a separate legal personality, rights and obligations totally distinct from those of its shareholders. Legislation and courts nevertheless sometimes "pierce the corporate veil" so as to hold the shareholders personally liable for the liabilities of the corporation. Courts may also "lift the corporate veil", in the conflict of laws in order to determine who actually controls the corporation, and thus to ascertain the corporation's true contacts, and closest and most real connection. Throughout the course of this assignment I will begin by explaining the concept of legal personality and describe the veil of incorporation. I will give examples of when the veil of incorporation can be lifted by the courts and statuary provisions such as s.24 CA 1985 and incorporate the varying views of judges as to when the veil can be lifted.
When the problem became serious two main views formed: the “narrow” view and the “broader” view, based on different ideas. The “narrow” view is based on the proposition that corporations have no social responsibility and they have only one main purpose, to make a profit (Friedman, 1970). So corporations should remain socially independent and all conflicts must be solved through the individual responsibility concept. On the contrary the “broader” view states that corporations have social obligations as all existing participants of market, persons and entities are tied together and are mutually dependent. So corporations cannot ignore some serious events or problems, which take place, and must help society, as profit is not their single purpose.
15. Hill, Charles W.L. International Business: Competing in the Global Marketplace. New York : McGraw-Hill, 2007.