Question

“The proliferation of the corporation as a framework to organize business is an unfortunate development; it shifted the beneficiaries from society’s stakeholders to corporate shareholders”. Having watched the documentary “The Corporation”, do you agree with this statement? Why, why not?

Answer 1

Since M.Friedman (year 1970)attention on shareholder worth has risen. Influences like capital markets’ globalization , more activism by the shareholders , proliferation of the institutional financiers & the increasing significance of corporate governance concerns have all been identified as determinants in augmentation of shareholder wealth. The conventional Anglo-American framework for corporate governance concentrates on maximising of the shareholder wealth, with hardly any interest for the requirements of the stakeholders. The directors of MNCs require ethical decision-making which takes into consideration global-stakeholders. Just transferring works from one part of the world to another in the best interest of shareholder value can’t resolve the rising global-stakeholders concerns. A board which overlooks the welfares of its stakeholders can’t maximise its shareholder worth. The relevance of teleological & deontological ethical models to corporate ethics decision-making, that take account of the firm’s global-stakeholder concern’s could aid such firms maximise their shareholder worth & go a long way in satisfying stakeholder interests. This is achievable if directors are able to take drastic corporate ethics decisions which permit them to see worldwide-stakeholders as assets & as ‘market winners’ & not simply means for expenditure reduction & saving millions of funds for the shareholders.

Keeping in mind the above explanation we agree with the given statement.