Explain the difference between "Instrumental stakeholder value approach" and "normative stakeholder value approach". Outline the reasoning...

Explain the difference between "Instrumental stakeholder value approach" and "normative stakeholder value approach". Outline the reasoning behind the shareholder value approach.

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Expert Solution

Stakeholder value approach= Seeking to create value for stakeholder, without stakeholder companies are hard to succeed.

The instrumental stakeholder value approach

Profit maximization
Away from stakeholder relationship
Market place success
Target is a firm financial position.

The normative stakeholder value approach

Stakeholder has seen as possessing value despite profit maximization.
Moral commitment
Work on ethical principles which in turn help to maintain a good reputation

Shareholder value approach= It implies the ultimate measure of company success is the extent to which it enriches shareholders.

indicator of all future payments of company investments
Value of the company
The primary concept is to increase the wealth of shareholder of a company

REASONING behind the shareholder value approach is to attempt to increase organizational value by enhancing firm earning and market value of company share.

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keosha answered 1 year ago

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