Sundaram and Inkpen
Corporations should clearly pursue shareholder value maximisation among all other available options as it ultimately benefits most, if not all stakeholders.
Firstly, they argued that stakeholders will benefit from maximizing the value of shareholders because shareholders have the incentive to take risks and maximise total value of the firm as they are the residual claimants and have diversified risks. As a result, managers are forced put in the extra effort to maximize firm’s value to benefit themselves when shareholder view is employed, assuming that adding value to the firm will benefit the stakeholders and that managers will only put in the bare minimum effort under the stakeholder view.
Secondly, with managers being …show more content…
They believe that managers must build rapport, influence stakeholder and create communities where everyone strives to give their upmost effort as economic value is brought upon different stakeholders cooperating with the aim of benefiting everyone without making profit their motivation. They also argued that the issues that arose from stakeholder view also applies to shareholder view, in addition, stakeholder theory is a pragmatic approach and helps the firm thrive in a multiple-objective environment. They debunked Sundaram and Inkpen’s using reversed …show more content…
The Issues
I agree with the stakeholder view that managers with more than one objective in this complex world are able to make more morally and ethically sound decisions as they have a variety of potential outcomes to analyse before making one. (Freeman, Wicks, and Parmar 2004) However, decisions made by the manager can be rationalized by the interest of one stakeholder to another even if they are contrasting and thus, it is the manager’s duty to steer the interests of stakeholders to the same direction. When stakeholders’ interests are along the same lines, decision making will therefore be more objective.
Contrary to Sundaram and Inkpen’s view of the one-objective concept of shareholder value maximisation, it is not always the case that the shareholders’ interests are aligned. And if shareholders’ interests are contrasting, managers will still eventually need to review and evaluate them
Corporations should clearly pursue shareholder value maximisation among all other available options as it ultimately benefits most, if not all stakeholders.
Firstly, they argued that stakeholders will benefit from maximizing the value of shareholders because shareholders have the incentive to take risks and maximise total value of the firm as they are the residual claimants and have diversified risks. As a result, managers are forced put in the extra effort to maximize firm’s value to benefit themselves when shareholder view is employed, assuming that adding value to the firm will benefit the stakeholders and that managers will only put in the bare minimum effort under the stakeholder view.
Secondly, with managers being …show more content…
They believe that managers must build rapport, influence stakeholder and create communities where everyone strives to give their upmost effort as economic value is brought upon different stakeholders cooperating with the aim of benefiting everyone without making profit their motivation. They also argued that the issues that arose from stakeholder view also applies to shareholder view, in addition, stakeholder theory is a pragmatic approach and helps the firm thrive in a multiple-objective environment. They debunked Sundaram and Inkpen’s using reversed …show more content…
The Issues
I agree with the stakeholder view that managers with more than one objective in this complex world are able to make more morally and ethically sound decisions as they have a variety of potential outcomes to analyse before making one. (Freeman, Wicks, and Parmar 2004) However, decisions made by the manager can be rationalized by the interest of one stakeholder to another even if they are contrasting and thus, it is the manager’s duty to steer the interests of stakeholders to the same direction. When stakeholders’ interests are along the same lines, decision making will therefore be more objective.
Contrary to Sundaram and Inkpen’s view of the one-objective concept of shareholder value maximisation, it is not always the case that the shareholders’ interests are aligned. And if shareholders’ interests are contrasting, managers will still eventually need to review and evaluate them