Questions and Answers of Philosophy

Running Head: PHILOSOPHY 1
IMPATCTS OF MORAL
OBLIGATION TO MAKE A
CHANGE IN THE ATTITUDE OF
THE STAKEHOLDERS

PHILOSOPHY 2
The complex matrix of Moral Obligations, Business,
Stakeholders, Social Responsibilities
The views to define the role of moral obligation with regard to the corporation of the
stakeholders can be broadly divided into three major schools of thought. Milton Friedman
described it with a narrow vision where he stated that “the management of the firms should
be done on the merits of the interests of the stakeholders. Evans and Freeman presented a
broader picture where they imbibed the moral obligations of the company along with the
interests of the possible stakeholders along with the regular shareholders. Goodpaster took
this debate near the conclusion by defining the fact that the corporate executive is responsible
for fiduciary duties for the shareholders and moral duties for all the stakeholders. The present
essay is an attempt to examine the strength and weaknesses of these three viewpoints that
have an evolutionary co-relation while examining their worth as the most convincing
approach to address the issues of handing social responsibility of the business. (William and
freeman, 1993)
The relationship between a business and the corresponding society is equivalent to a social
contract. Corporations are duty-bound to provide necessary services and goods of business
whereas the societies are duty-bound to support the cause of profits and longevity for the
corporation. As a stakeholder, society acts as a morale booster by allowing different
privileges and benefits to strengthen the corporation. For instance, organizations secure a plan
to come up with behaviour and the implementation of the set of actions with an intention to
ensure the wellbeing and protection of their rights is ideal conduct. Strategy to come up
with operations to protect the local environments and the relationship between the

PHILOSOPHY 3
components of the society is an apt practice to ensure mutual trust and benefits for all the
stakeholders (Friedman, 1993)
In his doctrine, Friedman also advocated a balance among the fiduciary arrangements to
ensure a relationship between shareholders and societies to mitigate immoral practice and
possible conflicts of the interests. The clash of the fundamental duties versus the profit is a
primary concern. The definition of the fiduciary arrangement refers to a person who is having
an entrusted status with money or property to serve the interests of the others. The executives
and agents hired by the shareholders fall in the same category. In case of a non-delivery or a
contrived delivery by the fiduciary affects the relationship between the company,
shareholders and stakeholders. The deontological perspective on the issue ensures a middle
path between profits and ethical practices.
Friedman presented an explanation for the deontological concerns when he said that a
corporate executive cannot deliver the desired outcomes without considering the best or
optimum interests of the shareholders. For instance, he presented the example of inflation,
price inflation can put extra pressure on the society, however, at the same time, keeping the
prices low can affect the financial health of the shareholders and the sustainability of the
corporation can face some problems. Instead of bringing down the prices the executives
should try to divert the financial pressures to other quarters and safeguard the interests of the
shareholders at an optimum level (Friedman, 1993). A balance between the interest of the
stakeholders and stockholders should be maintained because price is crucial when it comes to
profits. The optimization of the price to serve the interests of the both the parties can be
treated as the right approach.
The theory that deals with the behavior of the shareholders to constantly create conflicts to
challenge the customs of the society underlines a wrong practice; the impacts become even