This argument gives rise to the thesis known as Adam Smith’s famous conception of the invisible hand. This theory offers the idea that some “invisible hand” serves as the conductor for a prosperous society ensuring resources are ideally allocated to all participants (Pfarrer, 2010). In brief, Friedman claimed that when businesses pursed only profits and was granted to do so under no restrictions, that they would inherently benefit the interests of others.
However, this presented argument faces serious objections to it. Despite the promotion of society though profit maximisation, the intention of businesses become under scrutiny as their motive is questionable to the point that their beneficiary behaviour is fact selfishness (Mintzberg & Simons, 2002). The only time a business will actively benefit society is when it is in their own self-interest. In other words, they expect society to contribute to their profit maximising scheme whenever they assist the public. But, to popular belief many people think that virtuous behaviour is born by the motivation of selflessness (Fieser, 2012). Our actions deserve praise only when they are done for the goodness of others …show more content…
As division of value depends on certain circumstances, namely the impact of each stakeholder’s contribution. The true difficulty a business faces under the stakeholder model is estimating the strength of each stakeholder’s interests. A manager will face a situation where two groups of stakeholders have opposing interests and the decision whether to favour one side or exercise some balance between the two. Furthermore, the long-term and medium-term must be constantly monitored as interests change with time. These challenges provide the business with daunting decisions to be made, however under this approach these shortcomings seem minimal in the long scheme of
However, this presented argument faces serious objections to it. Despite the promotion of society though profit maximisation, the intention of businesses become under scrutiny as their motive is questionable to the point that their beneficiary behaviour is fact selfishness (Mintzberg & Simons, 2002). The only time a business will actively benefit society is when it is in their own self-interest. In other words, they expect society to contribute to their profit maximising scheme whenever they assist the public. But, to popular belief many people think that virtuous behaviour is born by the motivation of selflessness (Fieser, 2012). Our actions deserve praise only when they are done for the goodness of others …show more content…
As division of value depends on certain circumstances, namely the impact of each stakeholder’s contribution. The true difficulty a business faces under the stakeholder model is estimating the strength of each stakeholder’s interests. A manager will face a situation where two groups of stakeholders have opposing interests and the decision whether to favour one side or exercise some balance between the two. Furthermore, the long-term and medium-term must be constantly monitored as interests change with time. These challenges provide the business with daunting decisions to be made, however under this approach these shortcomings seem minimal in the long scheme of