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Stockholder management versus stakeholder management

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Company pays its dues to the society by paying taxes and whatever societal ills and deficiencies there are; i is the responsibility of a government. I Edward Freeman (1999) criticizes Friedman and his school’s arguments that a corporation must only take into consideration the profit of the stockholders because they own the company. Hs most important point is that the stockholder is not the only party who has a stake in the company and, hnce, pacing these other parties’ interest subordinate to those of the stockholders’ is unethical and bad management practice.

Tis was called the stakeholder concept where a company stakeholder is not only confined to those who have financial stakes on the organization but cover those groups and individuals who “benefit from or harmed by; ad whose rights are violated or respected by corporate actions. Athough Freeman acknowledges that the classic view on management - the stockholder management - is sound and that it has shaped the US corporations in previous years, i pointed to the changing business landscape that calls for a transformation on the perspective.

Acording to the author, mnagerial capitalism can be revitalized “by replacing the notion that managers have a duty to stockholders with the concept that managers bear a fiduciary relationship to stakeholders. ”(Freeman p. Bsically, Feeman is in agreement with Friedman’s views in the context of his treatment of the stockholders as a stakeholder in the company. Fr instance, h did not assail the basic idea of managerial capitalism where the management vigorously pursues the interest of stockholders, bcause he also believes that the management must advance the interest the stakeholders.

Caiming that his views are just a modification of the classical management practice, Feeman supports Friedman’s basic assumption that the management must look after the health of the corporation which is the primary interest of its owners. Mreover, i the words of Freeman, hmself, h outlined similarities between his stakeholder concept and the stockholder management. Acording to him, tey both either explicitly or implicitly recognize the preeminent moral value of individual consent. Fr instance, i the stockholder theory, te ethical obligation is derived from the voluntary agreement a manager makes on accepting his position to use the stockholder’s resources.

Fr the...

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preview essay on Stockholder management versus stakeholder management
  • Pages: 6 (1500 words)
  • Document Type: Essay
  • Subject: Unsorted
  • Level: Ph.D.
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