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21 Cards in this Set

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What are the responsibilities of corporate executive?
Corp. Executive is an employee of the owners of the business, therefore they have direct and primary responsibilities to his employer: to make as much money as possible, eleemosynary purpose.
"social responsibilities"-- uses his own time and money- these of a person not a business.
"social responsibilities" in his capacity as businessman: of not pure rhetoric, it means he is to act in some way that is not in the interest of his employer; he will be spending somebody's money for a greater social interest.
what is the morally appropriate way for corp. execs to address non-corporate social objectives?
In case a corporate exec. will decide to engage into exercising hiw social responsibilities in his capacity as a businessman, he would be spending somebody else's money, using his time which he, according to his employment contract, must use to increase the welfare of the stockholders, and so on. As long as his actions in accord with his social responsibilitie
How is the mngt's pursuit of "social responsibilities" similar to raising taxes and distributing the proceeds as one sees it?
If the executive is exercising a distinct "sr", rather than serving as an agent of the stockholders or the customers or the employees, spending money in a different way than they whould do it; than he is in effect of imposing taxes, on the one hand, and deciding how the tax proceeds should be spent on the other.
What is Friedman's PRINCIPLE-BASED objections to mngt's pursuit of social goals?
The process of exec's exercising a distinct "sr" raises political question on the principle level. On this level the imposition of taxes as well as the decisions on how to spent these money is a governmental function. Corporate executive's first and foremost responsibility is to serve the interest of the company's owners. He is the corporation's employee. If he will start start imposing taxes, etc. he will be acting as a civil servant, not a company's employee. This is a clear violation of the principle and it is intolerable because according to political principle if one to be a civil servant, he/she must be electect politically.
What is the Firedman's CONSEQUENCE-BASED objection to mngt's pursuit of social objectives?
Even if corp. executive can get away with spending company's money, how he would know how and on what to spend it. Presumably he is an expert on running a company but how would he know how to deal with inflation or taxes, ect.
what effect does the doctrine of "cr" have upon our political institutions?
Provide a brief critcism of Friedman's view from a feminist perspective.
The stockholder theory claims that the purpose of the firm of to maximize the welfare of the stockholders, holding their interests supreme to all others, subject to some moral and social constraints. From a feminist standpoint, the value-creating activity must be restucture along the principles of caring about people and connections between them.
What elements of Freeman's thesis show a Kantian influence?
In his definition of a stakeholder Freeman includes all those groups who have a stake in or a claim on the firm. He argues that unlike in managerial capitalism, each of these stakeholder groups have a right not to be treated as a means to some end, and therefore not only have a right but must participate in determining the future direction of a company.
Give the "narrow" and "wide" definition of stakeholder.
According to Freeman, the "narrow" definition of stakeholder includes those groups who are vital to the survival and success of the corporation. The "wide" definition includes any group or individual who can affect or is affected by the corporation.
What is the central question of this chapter?
what is the purpose of the corporation?
Consider the relations of each stakeholder to the corporation as described by Freeman. How does the Kantian directive " to respect others as ends in themselves" affect his view on how stakeholders are to be treated by corp. execs.
Owners have financial stake at the corporation (they invested their money, and have stake in the form of stock,bonds, and such); they rely on the corporation for their livelihood.
Employees ahve jobs and they require financial stability and security in return for their loyalty.
Supplers are vital to the success of the company; on the other hand, company is vital to the success of the suppliers. If the coproration will betreating suppliers as a valued member of the stakeholders network (decision making), the supplier will respond during the difficult times.
*Suppliers and Company can rise and fall together*
Customers are in a way a lifeblood of the corporation. They, in exchange for goods or services pay money, they bring corporations their revenues; therefore it is extremely important to pay close attention to customer needs and satisfaction.
Addressing customer's needs management automatically addresses the needs of suppliers and owners; as well as those of of community.
They are used as the means to the end, and therefore they must be aloowed to participate in decisions affecting such a use.
KAnt's dictum: "Treat persons as ends unto themselves". When doing this it should come as no surprise that persons will respond to such a respectful treatment, be they owners, employees, suppliers, customers, or local community.
Top management must look after the health of the corporation. Even thought stakeholders theory does not give primacy to one group over the other, there are might be times when one group will benefit at the expense of others. MAnagement must keeo the relationship among stakholders in balance.
How does Freeman's liberal version of the stakeholder theory promote the value of fairness, authonomy, and solidarity?
The normative core of Freeman's Doctrine of Fair Contracts assumes the required presumption of the equality among all stakeholders. It captures the liberal idea of fairness and ensures basic equality among stakeholders. The liberal idea of authonomy is captured by the realization that each stakeholder must be free to enter/exit agreemtns that create value for themselves, and solidarity is realized by the recognition of stakeholders' mutual interests.
Briefly describe what counts as a "fair contract" for Freeman.
According to Freeman, a contract if fair if all parties to this contract would agree to it in ignorance of their actual stakes. Threfore, the contract is like a fair bet, if each party is willing and able to turn their table to the other side.
Why does the "Doctrine of Fair Contracts" justify Freeman's three principles for the reform of corporate law?
1. Stakeholder Enabling Principle
Corporations must be managed in the interests of the stakeholders.
2. Principle of Dirct Responsibility
Directors of the corporations shall have a duty of care to use reasonable judgement to define and direct all affairs of the corporation.
3. The Principle of the Stakeholder Resourse. Stakeholders may bring an action agains the directors for the failure to perform the required duty of care.
The doctrine of Fair Contracts justifies those principles, holding that the stakeholders must be treaed fairly and with respect and have a right to participate in the sense of negotiating their contracts and participate in deciding what is good or bad for the corporation.
According to Friedman, what constraints must mangement abide by as it seeks to maximize stockholder profits?
Discuss the similarities and differences between an "enlightened" Friedmanite and a manager who operates on the stakeholder theory.
After the connection between the corporate philantropy and goodwill was acknowled,it was recognized that the act that supports public welfare can also be in the interests of the firm itself. Threfore, in terms of behavior there might be no visible difference between an "enlightened" Friedmanite and a manager who operates on the stakeholder theory. The difference is in the motive (Kant). The Friedmanite treats employees right to generate more profit. The non-Friedmanite treats them well because this is what corporations must do.
Present Friedmanite argunemts both for and against very generous compensation for high-level execs of publicly traded corporations.
pp. 49
WHy are "stakeholder" theorists critical of the "stockholder" approach?
The stockholder theory calims that the purpose of the firm is to max. the welfare of the stockholders, subject ot some moral and social constraints. According to the stakeholders theory, the purpose of the corporation is quite different. It claims that each of the stakeholders must be treated equally and fairly;
Stockholders: management could use employees, suppliers, and so on, if by doing so it can generate the profits of the corporation.
Why does the Friedmanite model of the corporation's purpose promote short-term decision making on the part of management?
Even thought, according to the Friedman's theory, the stockholders seem to be in a specail relationship with respect to profits, critics have argued that these relationship are not so special. Managers are forced to manage to please the Wall Street, which means they are forced to manage for the short term, which in the long run might not be in the best interests of the stockholders.
Why can't corporations have "real" responsibilities?
pp. 51
What are two main arguments for Friendman's version of the stockholder theory of the corporation?
1. Stockholders are the owners of the corporation, and hence corporation profits belong to the stockholders. MAnagers are agents of the stockholders and have moral and fiduciary obligation to manage a company in the best interests of the stockholders.
2. Stockholders are entitled to their profits as a result of a contract among the stakeholders.