Essay About U.S. Case Law And Main Reason

Management Production
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I argue that a business has a responsibility to maximize its profits and that for a business to maximize profits for its shareholders it must at least adopt a pseudo-stakeholder theory of operation representing social responsibility although it has no moral responsibility to be socially responsible. To facilitate this argument, I will use the definitions of those terms as presented by the authors in the book. The stockholders invested their money for the purpose of earning a return on that investment in the form of more money, not in the form of social and moral gratitude from every stakeholder involved with the corporation. Management must take that intention and do their best to see that it is realized. To do so they have to be concerned with the opinions and feelings of all of the stakeholders associated with their companies. If a management team operates a corporation in a way that they show the stakeholders that they are only concerned with the bottom line, then those same stakeholders, and more specifically the consumers, will react to that in negative ways. Theyll look for substitutes to the corporations products or determine that they can live without the products and thereby lower the corporations revenues. If the corporation is not run environmentally efficiently then the towns and cities that are home to the corporations factories and offices will no longer welcome them and may take measures to force the corporation out of their towns. If the corporation habitually takes advantage of its suppliers, theyll look for new customers and stop doing business with the corporation in question. This would force the corporation to expend resources and assets to find new suppliers or to fill the gap that the lost supplier once filled. These are merely three examples of why a corporation should be socially responsible when it conducts business, but by no means do they have an obligation to do so. While all three of the examples above will hurt a business and prevent profit maximization, none of them alone will definitively put a corporation out of business. R. Edward Freeman would disagree though. He would say that the corporation does in fact have a duty or obligation to all stakeholders involved with the corporation to act responsibly and that this is supported by the recent trend in U.S. case law holding corporations liable to more than just the stockholders. In my opinion this is an erroneous conclusion though. The main reason that this is an error is the underlying assumption that Freeman makes regarding law and ethics. In his argument he has equated law with equal and accurate ethical justice. Even though this is the intention of law, this is definitely not the case in practice. It is perfectly legal for a woman to have an abortion but is it the morally and ethically right thing to do? It depends by each persons beliefs and morals? There is no correct answer? Such ambiguity and circularism is the nature and scope of a corporations social responsibility. This is evidenced in Freemans article where he writes, The emergence of a body of administrative case law arising from labor-management disputes and the settling historic of discrimination claims with large employers such as AT&T have caused the emergence of a body of practice in the corporation that is consistent with the legal guarantee of the rights of the employees. (p. 57) At no time are ethics or morals mentioned, it is merely legalities. The second reason that this is erroneous is the fact that Freeman is using all of his legal examples to show that the law is slowly intervening to protect the rights of those groups