Do Stakeholders Count?
Do Stakeholders Count?
Table of Content
1. Introduction p.2
2. Shareholder-value and stakeholder-approach - the broad concepts p.2
3. Who is a stakeholder? p.3
3.1 The Broad and the Narrow View p.3
3.2 Power, Legitimacy and Urgency of Stakeholders p.4
4. Different Approaches of Justification p.5
4.1 Descriptive Justification p.5
4.2 Instrumental Justification p.6
4.3 Normative Justification p.7
5. Evaluation of the Stakeholder Theory p.8
5.1 Stakeholder Theory as an Approach to Management p.8
5.2 Stakeholder Theory as a Societal Theory p.10
6. Conclusion p.12
1. Introduction
According to Milton Friedman (1970), "in a capitalist economy there is one and only one social responsibility of business - to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud". With respect to corporations, this view is known as the shareholder-value approach, which defines a corporation′s main objective as maximising the shareholders′ wealth and management′s main responsibility as acting in the shareholders′ interest.
In contrast to this strictly economical goal approach, various scholars have since long questioned the shareholder value approach, emphasising that management is not only responsible to shareholders, but also to other entities inside and outside the corporation, called stakeholders, which might be employees, customers, suppliers, government or the environment. However, stakeholder theory has many advocates and the views what stakeholder theory really means are multifaceted. Especially the question as to how far management is responsible to various stakeholders, and if this even means that profit should...
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