![]() ![]() Managers who fail to maximize shareholder wealth are violating a moral property right by spending-if not stealing-shareholders’ money. ![]() Briefly, this posits that shareholders own a firm by virtue of owning equity shares, and, moreover, that they wish to maximize the value of those shares. The most convincing case is the property rights argument popularized by Milton Friedman. Are the ethics of business different from everyday ethics? If so, how and why?Īny convincing justification for maximizing shareholder wealth must, at its core, be a moral argument.How should managers prioritize among stakeholders?.Who are an organization’s stakeholders and what is the basis for their legitimacy?.Why should managers pay attention to stakeholders?.In this article, I will apply the principles of stakeholder theory to discuss questions that are central to the business ethics debate, specifically: This is why the time is ripe for an in-depth examination of ethics in business. ![]() Witness the number of organizations and executives that are being exposed for immoral and fraudulent conduct. ![]() It is not clear, however, that the business community has lived up to its obligations and responsibilities in proportion to its rapid increase in power. But at the dawn of the third millennium, the newest, grandest buildings are the corporate headquarters and facilities, an architectural phenomenon that neatly illustrates the transfer of power through history. For thousands of years, the church and its leaders were arguably the most powerful institution, but as the liberal notions of the Enlightenment supplanted church orthodoxy, the state supplanted religion as the more powerful institution. Corporations are relative newcomers to power, and for evidence of this we can look to Europe, where the oldest, largest, most elaborate buildings are the churches and cathedrals. In fact, he says, a corporation’s obligations to its stakeholders bind it to those stakeholders, in turn creating new and specific moral obligations.Īs businesses emerge as some of the most powerful institutions in the world, business ethics have never been more important, and given very recent history, more open to question. That should definitely not be so, argues this author. When it comes to ethics in business, many accept that standards can not only be different from, but even lower than, ethics in everyday life. ![]()
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January 2023
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