The pros and cons of ranking shareholders over employees and other stakeholders

Advantages and Disadvantages of Stakeholders

Third, it is sometimes claimed that the shareholder theory prohibits giving corporate funds to things such as charitable projects or investing in improved employee morale. GE only made decisions based on what employees portrayed.

The pros of ranking shareholders over employees and other stakeholders would be that there is more money and profits. Should GE have rebalanced its priorities? A rule, natural law, or truth used as a standard and to guide conduct. Harvard Business School Press,7—8.

Instead, the company embarked on fighting the development of clean-up plan, litigating against the Superfund Law, as well as spreading propaganda through the media belittling the impact of cleanup.

Should GE have rebalanced its priorities? Still, even if one generously concedes that many recent linkages of executive misbehavior to the theory are misplaced, it is hard to claim that the shareholder theory has done anything to help the situation. The only aspect they did not meet for this principal is that they did not seek ways to solve social problems at a profit.

This is common but not exclusive to external stakeholders. This legislation empowered the Federal Authority to act on companies or individuals who releases hazardous substances that may affect public health or damage the environment.

If anything was to be fixed, it would have to be inequality. These are two very different concepts. GE clearly executed this inner circle of responsibility by being extremely profitable, paying taxes, enriching shareholders, and making many of its directors and managers multimillionaires in GE stock.

Like I said In the previous answers businesses will grow if you just allow them to. The view of corporate social responsibility was changing to a model more similar to the progressive business model yet Welsh adhered to a strict traditional business model.

Often, external stakeholders are community groups or political appointees who might not act in a company's best interest if the company is not offering anything that helps the stakeholder with his constituents.

However, experts dismissed this claim as lacking in facts. In fact, however, the shareholder theory supports those efforts — insofar as those initiatives are, in the end, the best investments of capital that are available.

Note that these are ethical rights. If anything was to be fixed, it would have to be inequality. The main responsibility for corporations is making profit.

It will also allow for more diversity at the top and would help prevent any once middle range managers from being cut.

Advantages and Disadvantages of Stakeholders

Corporate social responsibility is defined in chapter 5 as the corporate duty to create by using means that avoid harm to, protect, or enhance societal assets. Welch should have organized cleanup exercises in line with Superfund law. GE contributed to environmental degradation in areas where the company manufactured its products.

Another constraint of this move is that it hurts the morale of senior managers since they may have a feeling of inferiority when engaging with shareholders. However, the most recent writings by the leading proponents of the social contract theory — including T.

The Superfund Law passed by the Congress in introduced a tax on the dumping of toxic wastes from chemicals and petroleum industries.

Welch Case Study

One obvious way in which this can be done is for the board of directors to dismiss senior executives who do not maximize profitability.Pros And Cons Of Ranking Shareholders Over Employees And Other Stakeholder  Shareholder and Stakeholder Over the last decade, with the rapid development of business management, the Shareholders who are the effective owners of the company invest money into the business and want as much profit as possible as a return for their investment.

Although the definition of stakeholders is quite broad, there are five types of stakeholders that have been accepted widely, namely, shareholders, customers, employees, suppliers and.

4 What are the pros and cons of ranking shareholders over employees and other stakeholders? Is it wrong to see employees as costs of production? Should GE have rebalanced its priorities? 5 Was GE a more socially responsible corporation in the Welch era or the Immelt aftermath?

In which era did it give the most benefit to society? What Are The Pros And Cons Of Ranking Shareholders Over Employees And Other Stakeholders Is It Wrong To See Employees As Costs Of Production Should Ge Have Rebalanced Is Priorities to, protect, or enhance societal assets.

Both the shareholder1 and stakeholder theories are normative theories of corporate social responsibility, dictating what a corporation’s role ought to be.

Corporate social responsibility

By extension, they can also be seen as normative theories of business ethics, since executives and managers of a corporation should make decisions according to the “right” theory. Jun 29,  · Internal and external stakeholders have different roles and interests in a company.

Corporate social responsibility

Both types of stakeholders have advantages and disadvantages. How Are Employees Affected as Stakeholders.

Download
The pros and cons of ranking shareholders over employees and other stakeholders
Rated 4/5 based on 62 review