Stakeholder Theory and Business Ethics
Added on 2020-05-04
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REPORT2 | P a g eExecutive SummaryWhen it comes to making a decision between going forward with the profit maximization, where the company focuses purely on earning profits, or opting for stakeholder interests, where only the interests of the stakeholders are given supremacy, be it at a cost of the profits of the company, a debate is raised. This is because from different point of views, each of these points has merits and demerits. In this report, an attempt has been made to highlight the need of integrating between the two approaches. In this regard, the report would firstly present a literature review, where the proponents of each of these dissenting views would put forward their need to back a particularly concept. This would be followed by providing the manner in which the integration of these two concepts can benefit the society. Once this is done, the ethical theories, particularly presenting the theories of justness and normative morality would justify this integration. The two theories ofCSR and CSV would also be explained as both of these, support the integration of the two dissenting concepts. Lastly, the report would end by drawing conclusion and recommendations.
REPORT3 | P a g eTable of ContentsIntroduction......................................................................................................................................4Literature Review............................................................................................................................4Benefit to Society............................................................................................................................7Theories of Justice and Normative Morality...................................................................................9Other Theories...............................................................................................................................11Conclusion and Recommendations................................................................................................13References......................................................................................................................................14
REPORT4 | P a g eIntroductionEthics denotes the values and morality which is upheld by the people (Dewey, 2016). When it comes to the ethics of the companies, they are similar to that of the people, but are amplified, due to the number of stakeholders that are involved. When it comes to the companies, the application of the race horse metaphor presents contrasting views from the famous scholars (Grant, 2016). Friedman on one hand provides that the companies should only work on making the profit for the shareholders; and on the other hand, Freeman has the view that the businesses need to operate under the ethical basis. In the following parts, an analysis has been undertaken whereby the need for convergence of these two approaches has been highlighted. Literature ReviewWhen it comes to business ethics, stakeholder is deemed as a prominent contribution towards which the entire business revolves (Freeman, 2010). There are dissenting views on whether the business should be conducted for the stakeholders or whether the same should be undertaken for the bottom line, i.e., for earning profits. Friedman (1970) presented the view that the social responsibility of the businesses was only to increase the profits of the company. He disregarded the notion that the businesses were working towards profits along with promoting the desirable social ends. He stated that the businesses had only one social conscience and that was to earn profits, and that when any business was asked to speak the truth, they would clearly state that they work towards earning profits, instead of reasons like elimination of discrimination,employment, avoiding pollution and the like, which were just the catchwords of contemporary times. He further stated that in a free enterprise, the corporate executive was just the business
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