Analysis Of Shareholder Primacy And Stakeholder Model

1612 Words 7 Pages
Can any business in the world act in everyone’s interests? The answer is no. Every individual in the world have different needs and wants, and it implies they all have different interests. This is why business cannot just act in every individual’s interests. This is the biggest issue that every corporation is struggling with. Should it be shareholders or stakeholders? There are quite few views to verify this question which are The Narrowest view, “Shareholder Primacy” and “Stakeholder Model”. The narrowest view says no matter what business does, the most important aim is to generate profit for business. However this essay will only discuss “Shareholder Primacy” and “Stakeholder Model”. Before discussing these views, do businesses really need …show more content…
Each individual, citizens in society have social duties. Before businesses to be considered as citizens, what is citizen? Oxford dictionary defines citizen as a legally recognized subject or national of a state or common wealth, either native or naturalized (“Citizen, n.”, 2014). Businesses are legal organization aiming to make profits. Thus in my point of view definition of a citizen meets the definition of a business. This implies businesses are citizens in a nation and therefore they do have civic duties to society. In support of this argument business has Corporate Social Responsibility. Mallen Baker defines corporate social responsibility as how companies manage the business processes to produce an overall positive impact on society (Baker, 2004). Corporate social responsibility supports these arguments by saying businesses have duty to have social responsibility and duty to act ethically. By saying businesses are citizens in a nation; committing corporate social responsibility is a very significant element to lead to sustainability and good corporate governance of a business. These ideas lead to the decision that businesses are citizens of society and therefore have duty to have social …show more content…
Businesses have power on stakeholders other than shareholders. Businesses have power to set prices for customers. Customers have expectation on business for their products. Good product quality at reasonable price is what all consumers are interested in business and businesses have power over it. Governments are also interested in businesses as they have to collect taxes from businesses and taxes are used to develop the nation. Another stakeholder that businesses have power over is employee. Employees receive wages and salaries from business and depending on how well the business is financially succeeding have huge influence on their salaries and wages. When someone has an extraordinary power compare to others, they have responsibility to care others. This applies to businesses as well. Businesses have extraordinary power over stakeholders, thus have extraordinary social responsibility.

However, Stakeholder Model does not mean businesses need to have main interest on stakeholders. Those arguments above regarding Stakeholder Model are to show businesses do have social responsibility to act in interests of stakeholders of

Related Documents