Stakeholder Theory Assignment | CSR Assignment
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Added on 2020-05-16
Stakeholder Theory Assignment | CSR Assignment
Added on 2020-05-16
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Running head: STAKEHOLDERS THEORY1Stakeholders TheoryName:Institution:Date:
STAKEHOLDERS THEORY2IntroductionStakeholders TheoryMilton Friedman took the shareholders approach in dealing with social responsibility of a company. He was of the opinion that a company should have nothing to do with social responsibility to the society or the public because the only responsibility of the company is to increase its profit and increase the shareholders wealth (Haerens&Zott, 2014). The economistfurther suggested that the shareholders in their private capacity are the ones responsible for the social responsibility. In his book called Capitalism and Freedom. He introduced the concept of totalitarianism where he argued that when a company concerns themselves in community development rather than making profits, the company suffers.Friedman suggests that the business has only one social responsibility and this is to use its resources to make engagements that increase its profits and increase the shareholders wealth. However, the business must stay within the rules of the game and those are to engage in openand super free competitive business model without fraud and deception (Hunnicutt, 2009).The stakeholder’s theory is inconsistent with corporate social responsibility. Some argue that the theory is contradictory as in an instance of a disaster like flooding or hurricane, the company is obligated to provide goods and services to help the same stakeholders it is required not to help according to Milton Friedman. This will moreover bolster a better relationship between the company and the stakeholders and it would be in its best interest.According to freeman and Evan, they advanced the Rawlsian social contract in stakeholder’s theory. It has three main parts which fails to specifically bolster the theory of stakeholders and fails to demonstrate any rationality of institutional rules adaptation (Business Case for Corporate Social Responsibility, 2009). It argues on only competitive and profitable
STAKEHOLDERS THEORY3companies are able to contribute in the long term to sustainable development by creating wealth and employment without endangering the social and environmental needs of society. In fact, only profitable companies are sustainable and have the capacity to carry out socially responsible practices. Traditionally this responsibility has been translated into the search for maximum benefit and maximum value for the shareholder as well as optimal efficiency and productivity(Corporate Social Responsibility, Corporate Restructuring and Firm's Performance, 2010). In other words, maximize profits and production with the resources that are available.Stakeholder’s analysis as a process of ethical valuesA lot has been written about stakeholder analysis as a process in which ethical values are introduced into decision making by the management. According to Goodpaster and Mathews a company is morally obligated to provide CSR activities to its stakeholders.CSR is related tothe "business ethics" movement and that of fair Trade.However, the philanthropic actions of a company or a entrepreneur are related to their core activities, while CSR is one of the dimensions of the main activity of the company. CSR is founded on ethics in business, but it is not confused with it because it goes beyond the mere formulation of values and ethical postulates (CSR is the implementation of a business ethic, generally associated with strategic business purposes). What is known as fair trade is a type of business activity that vindicates the fact of being socially responsible, but not the only one.The concept of socially responsible investment (SRI) is related to that of CSR, but focused onthe investor's decision, not the entrepreneur's. The concept of socially responsible innovation is the convergence of philanthropic ends with needs for the development of new technologies and products (for this, donations of the company also serve as low-cost tests or tests).
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