StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Stakeholder Theory of the Modern Corporation - Essay Example

Cite this document
Summary
The essay "Stakeholder Theory of the Modern Corporation" states that the followers of the Stakeholder Theory view business as “the creation of value for stakeholders and the trading of that value with free consenting adults” (Freeman, Wicks, Parmar 2004, p. 369). …
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER93.4% of users find it useful
Stakeholder Theory of the Modern Corporation
Read Text Preview

Extract of sample "Stakeholder Theory of the Modern Corporation"

The paper shows that not only stockholders should complete control over a firm, while investors, employees, and suppliers also take part and risks in the creation of the business’s success. Stakeholder theory is based on the doctrine of Fair Contracts, Feminist Standpoint Theory, and ecological principles. R. Edward Freeman shares his observations concerning business ethics, pointing out to the facts that: “organizations without a history of mutually accepted shared values tend to come apart during stress”, while “people in touch with core values can deal with change, ambiguity, stress, and tough times”.

He also suggests that “people tend to avoid the ambiguous yet that is what tends to be the most rewarding” and that “individuals need organizational support to act morally” (Freeman 1984). Freeman, Wicks, Parmar (2004) state that capitalism should be understood as “creating value for stakeholders” (p.366). At that “the goal of creating value for stakeholders is decidedly pro-shareholders”, while a manager creates shareholder value through creating quality products and services for customers, offering excellent jobs for employees, building favorable relationships with suppliers and competitors, and being a good citizen in the community.

Finally, under such conditions, an organization is not likely to have problems with governments. Creating stakeholder value managers are able to assume potential entrepreneurial risks. First of all, considering all the possible interests and stakeholders you avoid potential conflicts. Further, it is possible to cooperate with suppliers and customers to jointly test new products and services. Working in the name of increased profitability for the shareholders managers can easily implement practices that harm nonshareholder stakeholders.

When the financial and amoral view of business prevails, an organization is likely to end with ethics disasters like those of Enron, WorldCom, and many others. Finally, keeping to ethical standards offered by the stakeholder theory, an organization avoids state punishment and fines, which have been enhanced in the USA and European countries. The rights of stakeholders are defended by legislative acts, such as the Fair Labor Practices Act, the National Labor Relations Board, and so on, with the recent Sarbanes-Oxley Act entailing the most serious consequences for the violators (pp.366-67). Robert Phillips (2004) suggests that business organizations should be considered as “entities unto themselves, capable of bearing legal obligations” and thus capable of bearing moral obligations either.

Stakeholder communication is not simply beneficial for the organization, but it is “a matter of moral obligation.” “Individuals and groups who contribute to the organization should be permitted some say in how that organization is managed”, concludes Phillips (2004). Today the reputation of the firm is its major value. People tend to pay much attention to the ethical standards of corporations. The lightest shade of mistrust may cause huge losses for the organization. Unfortunately, the notion of business ethics continues remaining an oxymoron.

Yet it has become a matter of survival. Everything in this world is interconnected. When managers think of nothing but money, they condemn the whole world to a life of low quality. Considering stakeholders, business is of benefit for everybody and provides grounds for its successful functioning.

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(Stakeholder Theory of the Modern Corporation Essay, n.d.)
Stakeholder Theory of the Modern Corporation Essay. Retrieved from https://studentshare.org/management/1544116-manager-should-be-considered-a-stakeholder
(Stakeholder Theory of the Modern Corporation Essay)
Stakeholder Theory of the Modern Corporation Essay. https://studentshare.org/management/1544116-manager-should-be-considered-a-stakeholder.
“Stakeholder Theory of the Modern Corporation Essay”, n.d. https://studentshare.org/management/1544116-manager-should-be-considered-a-stakeholder.
  • Cited: 0 times

CHECK THESE SAMPLES OF Stakeholder Theory of the Modern Corporation

Business,society and policy

This involves discussing the structure and infrastructure of multinational companies, their responsibilities and duties as set by many codes and instructions by authorities, the methods of their operations concerning outsourcing in other countries, a look at the stakeholders theory and the risks that Panther Sports runs....
4 Pages (1000 words) Case Study

Role of Stakeholders in Multinational Company

hellip; When asked as to what one thinks a stakeholder is, s/he invariably replies that a stakeholder is someone who holds stocks or shares in a company.... This is the general view of who a stakeholder is.... It is definitely a fact that a person who holds stock in a company is a stakeholder and he is affected financially by the performance of his company.... The stakeholder: The Merriam Webster online dictionary defines a stakeholder as "a person entrusted with the stakes of bettors" and "one that has a stake in an enterprise"....
7 Pages (1750 words) Case Study

The Purpose of the Corporation and Stakeholder Theory

The development of stakeholder theory has marked an important turning point in increasing an analytical framework to assess the effects of a firm's activities on a variety of corporation.... However, the articles on stakeholder theory, is a very useful concept in describing the firm outward perspective, of Friedman, Freeman, Hasnas and Boatright point to the importance of philosophic underpinnings in rethinking the nature of the corporation.... A major purpose of stakeholder theory is to help corporate managers understand their stakeholder environments and manage more effectively within the nexus of relationships that exists for their companies....
8 Pages (2000 words) Essay

Businesses and Social Sustainability

As the paper "Businesses and Social Sustainability" outlines, socially sustainable company will outperform in the industry along with the competing firms.... For maintained growth and development, there is a need for social sustainability along with economic and environmental sustainability.... hellip; Social sustainability is a very vast spread term, which covers a variety of areas, or we can say fields of interest....
8 Pages (2000 words) Assignment

Business Ethics and Society

The author states that increase in the welfare of the stakeholders is possible only when the cycle is been completed that is the company also in return does help the stakeholders in their growth and for having a good and happy life.... The owners of the company have a financial stake in the company....
8 Pages (2000 words) Assignment

Flexible Scheduling at WalMart: Good or Bad for Employees

the modern day, particularly in the west, has been characterized by an increased rate of technological innovation and invention; this technological revolution has had many effects on the employment patterns and financial systems of many nations in the west, particularly the… Many workers in the contemporary American society have been lastingly wiped out of the economic sets of procedures that take place in the American economy because machines have taken their place....
6 Pages (1500 words) Case Study

Reaction paper

In his article ‘A Stakeholder Theory of the Modern Corporation', Edward Freeman raises a discussion on mechanism that guarantee the primary position of stakeholders in corporate activity.... In his article ‘A Stakeholder Theory of the Modern Corporation', Edward Freeman raises a discussion on mechanism that guarantee the primary position of stakeholders in corporate activity.... “A Stakeholder Theory of the Modern Corporation.... Finally, Freeman defines his stakeholder theory by providing its definition, finding out its actors, and evaluating their influential potential on managers of corporations....
2 Pages (500 words) Assignment

The Role of Stakeholders in the International Business

The aim of this research is to discover how does stakeholder theory help in managing such a business.... This research presents a detailed overview of the International Business stakeholders and the stakeholder theory that helps to manage such a business.... In the stakeholder review, I will carry out a more detailed investigation of the concerns, the situation and the society scope per stakeholder grouping, through relation to the purpose of the movement with consideration to the conclusion of business....
13 Pages (3250 words) Term Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us