Although capitalism is the favoured means of shaping the economy at the end of the twentieth century, significant disagreements concerned with the fundamental purpose of businesses still persist. The classical Friedmanite view of the profit-maximizing motive as the sole means of fulfilling 'social responsibilities' has been countered by Freeman's stakeholder approach. This new rationale advocates that all stakeholders have equal stake that decision makers have to consider. Freeman's stakeholder approach argues that the classical Friedmanite view violates Kant's categorical imperative (Freeman 247). However Freeman's proposed solution is also inadequate. This theory creates a paradox as a stakeholder can treat others as means only. The dilemma arises when management is unable to adjudicate between conflicting stakeholders. Freeman's stakeholder theory is a morally neutral theory. It does not adopt a normative stance. This neutral feature results in conflicting interests among stakeholders. To remedy this problem we propose a crucial modification of the stakeholder theory.
This modified 'society-stakeholder theory' (SST) places society as the ultimate stakeholder. Initially, the framework of society in which businesses operate must be examined to ensure the practicality of SST.
Framework of Society:
SST describes society as an enduring and cooperative group, which has both common needs and individual wants, whose activities are organized by a system of institutions designed to achieve them (Velasquez 13). Business is such an institution that supplies goods and services. Aristotle expands by pointing out that society consists of 'good people', possessing "phronesis", i.e. practical wisdom that enables them to adapt to changing situations while keeping in mind the ultimate goal. This ultimate goal lies in the pursuit of excellence. When extended to businesses, "this pursuit of goods and services contribute and advance the social good," (DesJardins 99) which is the ultimate end.
Society - Stakeholder Theory:
Mulligan and Simon et al...