Corporate Ethics Theory And Stakeholder Theory - 1309 Words

One of many duties of a director is set under s131 of the Company Act 1993. This section of the act let know that directors must act in good faith and in what the director believes is the best interest of the company. Traditionally, the word company foretold under this section have been regarded to devote solely to the company’s shareholders. However, this notion is seen as immoral. This is because according to the notion of corporate social responsibility, business must behave ethically, represents a broader recognition of stakeholders and must take into account economic, social and environmental inputs in the way it operates. Hence, people against the notion of shareholder primacy suggest that the director should also take into account the interest of a wide range of shareholders (e.g. customers, employees, the society as a whole) in order to be deemed as moral. This conflicting opinion raised the question, â€Å"To whom are the directors responsible?† This paper will explore a number of corporate governance practices (i.e. agency theory and stakeholder theory) that are related to this issue. It begins with the explanation of each theory and the discussion of ethical and societal concerns they put forward, followed by the advantage of shareholders and the disadvantage of other stakeholders regarding remedies of director’s breach of duty from a legal viewpoint and ends with a recommendation that would best reflect a good governance practice that is consistent with the corporateShow MoreRelatedCorporate Social Responsibility1015 Words   |  5 Pagesa recent time companies are giving more attention to develop a CSR (Corporate Social Responsibility) and mainly their core values. Core values are used in marketing strategies (Berry, 1999) also in customer-retention management in order to create distinctive, long-lasting relationships with customers (Prahald and Ramaswamy, 2004; Normann, 2001) and stakeholders (Pruzan, 1998; Post et a, 2002). The interaction with a stakeholder and concerns a business operation use to understood CSR as the voluntaryRead MoreWhat is the Stakeholder Theory?1083 Words   |  5 PagesStakeholder can be defined as â€Å"any group or individual who can affect or is affected by the achievement of the organization’s objectives†. This theory focuses on wider aspect rather than only focusing on just the shareholder. Stakeholder theory is a fundamental theory about how business works at its best and how it could work. It is concerning on the value creation and trade on how to manage a business effectively. A consequences of focusing on organization or company’s stakeholder is that the shareholderRead MoreStakeholder Theory Vs. Stakeholder Thinking1160 Words   |  5 PagesStakeholder theory and definition Stakeholder is defined as â€Å"any group or individual who can affect or is affected by the achievement of the organization’s objectives† (Freeman 1984). Stakeholder theory, when introduced in the 1980s, signify a major change in how relationships within a business might coexist and benefit one another. The concept of â€Å"Stakeholder theory† or â€Å"stakeholder thinking† is about identifying groups who are stakeholder in a corporation and manage them. It states that organizationsRead MoreThe Evolution of the Corporation Essays830 Words   |  4 PagesStockholder Theory maintains that managers should act merely as agents to the stockholder and only serve their interests-the maximization of profits (45). Milton Friedmans argument being, they are the owners of the business, and hence they should be entitled to all profits (45). Although this simple profit-motive concept may achieve the desired result, and address all of the interests of the stakeholder s it lacks compassion that is so prevalent, and in my opinion superior, in the following theory. Read MoreThe Social Capital Theory ( Sct ) And Stakeholder Theory1168 Words   |  5 Pages Despite the conflicting nature between the social-capital theory (SCT) and stakeholder theory (ST), the role of ‘Corporate social responsibility’ (CSR) is a factor for a majority of organisations to gain an economic advantage amongst its competitors. Through globalisation, aspects involving profit maximisation and business reputation have become the primary influences of the ST. Alternatively, the minority of organisations engaging in CSR with the altruistic concern for the stability ofRead MoreLeadership Practices in The Post-Bureaucratic Era1575 Words   |  7 Pagessustainable development as development that satisfies the needs in the present as well as in the future (Bansal 2005). Business is considered as an aspect of the society as a whole (Evans 1992) and it can be seen that the society is more concerned about ethics,law and regulations,thus a more sustainable management style is widely applied in the post-bureaucratic era. In the first section,I draw upo n Cameron and Caza (2004),Mackey (2011),Bansal(2005) and Driscoll and Starik (2004) to present ideas on theRead MoreCorporate Management Theories1721 Words   |  7 PagesGroup 1 Corporate Governance Theories of corporate management and Process Definition:- According to the business directory, management theory is a collection of ideas which set forth general rules on how to manage a business or organization. Management theory addresses how managers and supervisors relate to their organizations in the knowledge of its goals, the implementation of effective means to get the goals accomplished and how to motivate employees to perform to the highest standardRead MoreDichotomy between Stakeholders and Management1425 Words   |  6 PagesIn light of recent global business scandals, corporate governance has become a significant topic. It can be understood as a dichotomy between the shareholders and the management of a company. Navigating this relationship is often problematic as the shareholders provide oversight while management makes daily executive decisions on their behalf. When managed appropriately, this balance between shareholders and management can result in improved efficiency, conflict resolution and a contribution to improvingRea d MorePublic Relations Institute Of New Zealand Essay1495 Words   |  6 Pagesexamine the PRiNZ definition of Public Relations against various models of both Public Relations communication and the ethics employed when exhibiting them. Examples from contemporary New Zealand will clarify critical assessment. The first part of the definition describes a â€Å"deliberate, planned and sustained effort†. This idea is best developed when looked at in terms of Systems Theory (Bertalanffy, 1968). This idea works around describing PR organisations as â€Å"open† or â€Å"closed† systems. These systemsRead MoreThe Maximisation Of Shareholder Value Essay1691 Words   |  7 PagesCorporate Finance Formative Assignment Joshua Lillis Seminar Group 001 Seminar Tutor: Maryam Alhalboni The maximisation of shareholder value is a corporate objective that has become increasingly popular since the 1980’s. Many companies explicitly state that maximising shareholder value is one of their key business objectives; an example of this is Coca-Cola, who state in their Coca-Cola Company Vision (2016) that â€Å"maximising long-term return to shareholders† is one of their business goals