Question

In: Economics

Definitions Freeman Dominant Model Stakeholder Model Stakeholder (narrow) Anyone who’s actions are central to the function...

Definitions

  • Freeman
    • Dominant Model
      • Stakeholder Model
        • Stakeholder (narrow)
          • Anyone who’s actions are central to the function of the corporation. (Vital to the success of the corporation.)
            • Stockholders, employees, and the suppliers and customers.
        • Stakeholder (broad)
          • If the actions of the corporations benefit you or harm you in any way, then you are also a stakeholder.
        • Separation Fallacy
          • Integration Thesis
            • Priority Problem
              • Invisible Hand

              Principles of Right Action

              • Freeman
                • Obligatory
              • Forbidden

              Explain why Friedman’s Stockholder theory is a teleological theory and not an aretelogical theory

              Solutions

              Expert Solution

              Shareholders are always stakeholders in a corporation, but stakeholders are not always shareholders. A shareholder owns part of a public company through shares of stock hence the name, while a stakeholder has an interest in the performance of a company for reasons other than stock performance or appreciation.The thesis defends the stockholder theory as envisioned by Milton Friedman, that the only social responsibility of corporations is to increase its profits, while staying within "the rules of the game" which are a set of side-constraints on profit-maximization.Stakeholder Theory vs. Shareholder Theory. ... Also called the “Friedman doctrine,” shareholder theory, outlined in Friedman's book “Capitalism and Freedom,” states that a company has no real “social responsibility” to the public, since its only concern is to increase profits for the shareholders.Shareholder Theory: Given that businesses are moral individuals—or at least can
              be treated as if they were—we can now ask: What moral obligations, if any, do
              businesses have? This week, we will look at one answer to that question: “None!”
              Martin Friedman believes that businesses do not have any moral obligations or
              social responsibilities at all, other than to maximize their own profit. This view is
              called “Shareholder Theory”.
              Stakeholder Theory: Next week, we will look at a different view: One which states that businesses DO have social responsibilities; for instance, businesses have a responsibility to not detract from the well-being others, and perhaps they are even obligated to charitably PROMOTE the well-being of others. This view is called “Stakeholder Theory”, and is held by philosophers such as R. Edward Freeman.


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