Shareholder (liberal market) vs stakeholder (cooperative market) views and economies ? review

Shareholder (liberal market) vs stakeholder (cooperative market) views and economies ? review

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This in recent times has often been referred to as the Friedman (shareholder) vs Freeman (stakeholder) debate (Freeman, 2008). Conversely, it is the classical model of the Friedman?s Shareholder Theory that is the most influential of theories in corporate social responsibility to date.

Nevertheless, with a dynamic business environment involving a vast growth of competitors, raising awareness and knowledge of customers about the environment and government intervention in markets forces, executives must consider all the interests of each group when establishing the business objectives.

Yet, in the 21st century a number of global corporate scandals such as Enron, Global Crossing, Xerox, Worldcom etc.

raises the question whether the shareholder theory of corporate governance leads to unethical behaviours amongst senior members of corporations thus ultimately leading to the failure of the fundamental role of maximising shareholder value.

Many experts now advocate the stakeholder approach with a wider perspective to management. The two theories are normative theories in the theme of ?Corporate Social Responsibility? and dictates the roles a corporation must fulfill (Smith, 2003, p.85).

Before proclaiming which of the two theories is most predominant at the present time, a thorough analysis of both theories would give a comprehending view of their fundamental involvement in the political and economic world. …

Through a utilitarian point of view, the firm takes measures that produce the most significant good over discontent for their shareholders.

Low costs is the main focal point and measures taken up such as limiting employee wages and benefits help contribute to the fiduciary duties to their shareholders.

Yet it can be argued that the constant pursuit of profits does not necessarily result in the greatest common good for society as a number of local businesses and their employees may start having financial difficulties and become insolvent.

It can be concluded that there can limits to……………………….