Normative Ethical Theories

Improved Essays
In this paper, I will answer the following two quiz questions given below. The first question is to compare and contrast the stakeholders and stockholder theories. The second is to define the different types of Normative Ethics Theories.
1. Compare and contrast stakeholder and stockholder theories. Discuss how each relates to ethics and regulation.
There has been an ongoing debate on for answering the question, “for whose benefit and at whose coast the corporation should be managed?” (Saint & Tripathy). Therefore, to answer this question there are many researchers who provide different arguments to support their theories. Some of them, they argue that the merely purpose of a company is to maximize profit for the stockholders /shareholders.
…show more content…
Different business schools and researchers have been strongly arguing in favor of this theory. They express that the solely purposes of a business is to maximize profit and keep the interest and benefits of shareholders. (Admin, 2013) Managers are liable for profit maximization and keeping benefits of the shareholders. Hence, managers have fiduciary relationship with the shareholders. This implies that, managers’ objective is to run the business and to make profit by adhering to the basic rule of the society and law. In this case, shareholder theory emphasizes their profit making rather than societal interest or responsibilities.
Where as, stakeholder theory states that the purposes of a corporation have the broader aspect of serving the societal interest rather than focusing merely on maximizing the shareholder profit. (Saint & Tripathy). This theory suggests that managers are morally liable to balance and harmonize the benefits of stakeholders.
The primary objective of a corporation is “Corporate Social Responsibility” (Admin, 2013). This theory expresses that corporations are there to serve societal benefits, by prioritizing the legal and ethical aspect of the
…show more content…
Particular Moral Principles and Judgment: it is the third level of the normative theories; it emphasizes on moral judgment of a particular action based on their relevant ethical code.
Post defining ethics and level of normative ethics, then what are the different types of Normative Ethics Theories: (academicroom.com, 2016)
When we are talking about Normative Ethics theories, there has been debate and different opinions to answer moral questions. Among these different opinions on how answer these moral questions the most outstanding approaches are as follows:
2.1 Virtue ethics Theories: refers to ethical concerns about the individual characteristic of a person than on a specific action. It emphases on “what makes a good person rather than what makes a good action.” (Ethics explained)
2.2 Deontology Theories: These theories argue that the morality of an act is not judge by its consequences rather by the action itself. It focuses on the action itself “what is write” not on the consequence “what is good.” Hence it is concerned about the moral obligations and duties. Immanuel Kant has written the most remarkable deontological theories known as Categorical imperative. E.g. If Mr. A hide in his home Mr. B (Jewish Person) from the terrorist, and if the terrorist come and ask Mr. A, if there are any Jewish person in his house. So Mr. A want to save Mr. B’s life and said I don’t have anyone. In this context, a person lies to save someone’s life. Hence, in the Deontological theory

Related Documents

  • Improved Essays

    The Stakeholder Theory

    • 717 Words
    • 3 Pages

    The stakeholder theory is a theory of organizational management and business ethics that address morals and values in managing an organization. It addresses the importance of how companies and corporations should empower the stakeholders, not only the shareholders. The stakeholder perspective is used in developing particular guidelines for assessing human resource management effectiveness, and how that should treat the individuals that are shareholders or stakeholders. Freeman describes two definitions of what stakeholders are, a narrow definition and a wide definition. The narrow definition includes those groups who are vital to the success and survival of a corporation.…

    • 717 Words
    • 3 Pages
    Improved Essays
  • Improved Essays

    Carroll and Shabana (2010) retort that Friedman (1970) may believe in a business’ priority to make as much profit as possible but Friedman (1970) does say that this should be done within legal and ethical constraints and thus indicates that the only component of the pyramid that Friedman disapproves of is philanthropic responsibilities. In today’s business market engaging in philanthropic responsibilities is seen as the norm and comes under the stakeholder theory, where the business must take into account the interests of groups that have any sort of dealings with the business where they may be impacted; including customers, suppliers, communities and employers (Gibson 2000). Benefits that come about from employing CSR initiatives are that of reducing costs and risks not so much in the short time but the viability of the business in the long term, whereby volunteer initiatives of the company in social and environmental problems will allow positive impacts from society in effect flexibility from future governmental regulations, and any sort of tax disadvantages (Carroll and Shabana 2010). This benefit works like clockwork where reducing negative social impacts now will result in future positive effects, and in turn the viability of the…

    • 1433 Words
    • 6 Pages
    Improved Essays
  • Improved Essays

    The topic of “social responsibility of a business” has always been a debatable topic. Many argue that a business has much more responsibility than just focusing on the increase of profits. For example, the environment, the consumers, the employees etc. They think these factors should be some of the primary focuses of a corporation. In this research paper I am analyzing that businesses and corporation’s social responsibility is to be socially responsible while increasing profits because that is what they are developed to do.…

    • 1433 Words
    • 6 Pages
    Improved Essays
  • Improved Essays

    The business ethics perspective analyzes business ethics problems as a conflict between the prima facie duty of profitability and some other prima facie duty of corporate citizenship. This analysis identifies the profitability issue and the corporate citizenship issue, considers all relevant deliberation data, then arrives at a conclusion concerning the actual duty in this case. Marketing ethics is a major issue in the business. The product and promotion of the marketing 4Ps are the major concern for business ethics. It is very important the product should be beneficial to customers and fulfill their needs and wants.…

    • 758 Words
    • 4 Pages
    Improved Essays
  • Great Essays

    Despite the growing literature, CSR’s complex nature has resulted in a lack of a single definition; however, “at the core of CSR is the idea that it reflects the social imperatives and the social consequences of business success” (Matten p.405). Carroll states that CSR firms should, “strive to make a profit, obey the law, be ethical, and be a good corporate citizen” (Carroll 1991, p.43). For firms to be able to address and support societal needs they must have the monetary resources to put forth action plans; in another view, a profitable business aids society by contributing to the economy. Firms obeying the law ensures that they are abiding by the laws established to help protect the greater good, therefore, helping to keep societal order. On the other hand, an ethical corporation, abides by moral/ethical laws which makes certain that all business decisions are consistent with societal norms and are not likely to harm the community at large.…

    • 1417 Words
    • 6 Pages
    Great Essays
  • Improved Essays

    The concept of ethical relativism proves that morals and ethics are derived from one’s culture and society. When a company decides to expand from locally to globally most likely it will face ethical relativism. Corporations that enter the global market will face ethical environments that are different from other countries (Bowie, 2001). Ethical…

    • 769 Words
    • 4 Pages
    Improved Essays
  • Great Essays

    Corporate social responsibility (CSR) is the notion that corporations are expected to be as profitable as possible. True False 27. According to Friedman, the social responsibility of business is to make profits. True False 28. Sustainability is defined as economic development that meets the needs of the past without compromising the needs of the present.…

    • 1777 Words
    • 8 Pages
    Great Essays
  • Improved Essays

    The main point that the theorists disagreed on was as to who actually held stake in the business. According to Friedman’s classical beliefs, the only people that have stake in the business are the people who own stock in the business, or the owners. While Freeman recognizes that the owners are indeed vital to the corporation, and that they should be rewarded for this, he also points out that there are several other factors, or stakeholders that are vital to the success and survival of the firm. Friedman is interested in how much money the firm can make right now, he is interested in the current state of the firm; he talked nothing of the future – merely of current profits. Freeman, on the other hand, believes quite the opposite.…

    • 1866 Words
    • 8 Pages
    Improved Essays
  • Improved Essays

    However, “the welfare of shareholders should be the primary goal of the corporation stems from shareholders’ legal status as residual claimants” (De Kluyver, p3). Then he mentions that corporate law was designed to cope with the relationship between the officers, the board of directors, and shareholders (p6). Corporate law is considered part of private law that based on four key premises: (a)indefinite life, (b) legal personhood, (c) limited liability, and (d) freely transferable shares (De Kluyver, p6). Later, he introduces that the objective of the Securities and Exchange Commission is to protect investors and to maintain the markets justly and efficiently. He then gives a brief history of corporate governance in America, providing several evidences caused by corporate governance.…

    • 799 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    The responsibilities of a corporation are creating structure and function of its own organisation, providing continuity, effective management and increase of profit, and social responsibilities. Corporate responsibility is concerned with the sustainability of an organisation’s ethics over the long term. At its core, corporate responsibility seeks to add value to an organisation's activities by ensuring they have a positive impact on society, the environment and the economy. The corporate social responsibilities (CSR) can be categorized in philanthropic, ethical, legal, economic responsibilities along with maximising its own profit using “Pyramid of Corporate Social Responsibility”. The CSR can also be categorised in people (includes CSR), planet…

    • 1050 Words
    • 5 Pages
    Improved Essays