Society In Relation To Stakeholder Theory

1170 words - 5 pages

Introduction:Although capitalism is the favoured means of shaping the economy at the end of the twentieth century, significant disagreements concerned with the fundamental purpose of businesses still persist. The classical Friedmanite view of the profit-maximizing motive as the sole means of fulfilling 'social responsibilities' has been countered by Freeman's stakeholder approach. This new rationale advocates that all stakeholders have equal stake that decision makers have to consider. Freeman's stakeholder approach argues that the classical Friedmanite view violates Kant's categorical imperative (Freeman 247). However Freeman's proposed solution is also inadequate. This theory creates a paradox as a stakeholder can treat others as means only. The dilemma arises when management is unable to adjudicate between conflicting stakeholders. Freeman's stakeholder theory is a morally neutral theory. It does not adopt a normative stance. This neutral feature results in conflicting interests among stakeholders. To remedy this problem we propose a crucial modification of the stakeholder theory. This modified 'society-stakeholder theory' (SST) places society as the ultimate stakeholder. Initially, the framework of society in which businesses operate must be examined to ensure the practicality of SST.Framework of Society:SST describes society as an enduring and cooperative group, which has both common needs and individual wants, whose activities are organized by a system of institutions designed to achieve them (Velasquez 13). Business is such an institution that supplies goods and services. Aristotle expands by pointing out that society consists of 'good people', possessing "phronesis", i.e. practical wisdom that enables them to adapt to changing situations while keeping in mind the ultimate goal. This ultimate goal lies in the pursuit of excellence. When extended to businesses, "this pursuit of goods and services contribute and advance the social good," (DesJardins 99) which is the ultimate end.Society - Stakeholder Theory:Mulligan and Simon et al state that decision-making is concentrated on three types of business activities, in order of priority: functional duties, negative injunctions, and affirmative duties (Simon, Powers, and Gunnemann 61).Functional duties are normal activities of a business dictated by a moral minimum, where the survival is imperative. Negative injunctions and affirmative duties are distinguished as not inflicting harm and supererogatory actions respectively. Simon et al argues that it is hard for society to impose legitimate affirmative duties on corporations with regards to the welfare of society. Instead it is easier to impose legitimately negative injunctions. Thus, it is morally acceptable for society to prevent companies from polluting than to impose obligations to donate to charity.The precedence of functional duties over others can be validated by Mulligan's case of a capable inventor whose efforts create a value that is...

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