Essay by EssaySwap ContributorUniversity, Master's February 2008

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View stakeholder The strategic, conventional view of business sees stakeholders as resources to be managed in the interests of the 'prime beneficiaries' of the business - the owners (shareholders). In this view, the managers who run the businesses for the owners have a main obligation to maximise shareholder wealth. Those people who believe in this view argue that companies are established to serve the purposes of their owners, and it is in the best interest of a company's shareholders to see the value of their shares increase through the organisations pursuit of profitable business strategies.

The stakeholder (also known as 'multi-fiduciary') view states that managers have a primary moral obligation to all stakeholders, that is employees, suppliers and communities etc. In this view, the shareholder's special status is questioned and other stakeholders' claims are given greater importance. From an ethical standpoint, the other functions of an organisation's activity (provision of employment, service to dependent customers, pollution control) are just as significant as profit created for the shareholders.

People who believe that business should adopt a stakeholder perspective argue that corporations should be seen as joint ventures between all groups involved - that the modern business should have a 'social service' as well as a profit-making function. Groups that hold a stake in the organisation can therefore expect that the company will take on its responsibility to develop business strategies that are in line with their interests and values.

If managers of business accepted this view as their moral duty, then they would face ethical dilemmas at work: no longer could they refer solely to shareholders' financial interests as the basis for establishing business decisions. Managers would have to exercise caution in identifying any one group that, from a moral point of view, would have a primary claim to the corporation's...