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Analysis of Normative Theories of Business Ethics

   

Added on  2020-03-07

4 Pages773 Words41 Views
Running head: NORMATIVE THEORIES OF BUSINESS ETHICSAnalysis of Normative theories of business ethicsStudent NameUniversity nameAuthor Name

NORMATIVE THEORIES OF BUSINESS ETHICSThe normative theories of business ethics are getting much importance as importantmanagement tool for business. The normative theories have been practiced since the ancienttimes. The normative theories provide solutions for various organizational and business problems(Crane & Matten, 2016). The analysis of normative theories in business practice helps to clarifycertain situation and assists with better understanding. The ethical aspect of the normativetheories guide the organizations and management to value human, which eventually leads to longterm profit. The three normative theories for business ethics are the stakeholder theory, the stockholder theory and the social contract theory. The stakeholder theory is based on themanagement’s responsibility to maintain the stakeholders (Harrison, Freeman & de Abreu,2015). The managers follow the organizational policies in order to protect every stakeholder’sright. In stockholder theory the management is responsible to maximize the stockholder value byany means. So here the ethical issues arise and the manager non-fraudulent actions and judgmentpower over shareholder’s interest in the long run benefit the organization. In the social contracttheory, the organization considers society’s needs. The management must work on the conditionsthat will allow the society to allow the project. As most business prefers maximum profit overanything the stakeholder theory appear to be challenging. The stakeholder theory focuses on thestakeholders’ interest. The scandal of Enron has brought forward the importance of ethicalpractice and stakeholders’ trust in organizational business (Jennings, 2014). So it is proven thatthe managers’ overemphasis on making profit in any way has resulted in business failure. Abovethat the misinterpretations of stakeholder theory also affect the business. Often the theory iscriticized as some claim that it gives less importance to profitability. However in reality the main

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