L3: Shareholder to Stakeholder

1. Just cosmetic / inconsistency

   • green washing

   • just as little as they have to

2. Market transaction as a poker game

   • Bluffen vs. Spekulation

   • Gegner lesen vs. Marktsentiment verstehen

   • Risikomanagement

3. The only business of business is business

THE ONLY RESPONSIBILITY OF BUSINESS IS TO MAKE PROFIT

(”SEPARATION THESIS”)

Friedman’s sub-arguments

1. Only individuals have moral responsibility of their actions

2. Managers have one responsibility: Act in the interests of shareholders

3. Social Issues should be analyzed only by the Government

1. Rechtliche Identität: Unternehmen besitzen eine eigene Rechtspersönlichkeit, die es ihnen ermöglicht, Verträge zu schließen, Steuern zu zahlen und rechtliche Verpflichtungen zu erfüllen.

2. Agentur: Sie verfügen über einen organisierten Entscheidungsrahmen, der einen expliziten oder impliziten Zweck verfolgt.

3. Organisationskultur: Unternehmen haben eine Reihe von Werten und Überzeugungen, die definieren, was intern als richtig oder falsch betrachtet wird.

4. Funktionale Identität: Sie agieren gegenüber Kunden und der Gesellschaft als eigenständige Einheiten und streben danach, als verantwortungsvolle „Unternehmensbürger“ zu handeln

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1. egal Identity: Companies possess their own legal personality, which enables them to enter into contracts, pay taxes, and fulfill legal obligations.

2. Agency: They have an organized decision-making framework that pursues an explicit or implicit purpose.

3. Organizational Culture: Companies have a set of values and beliefs that define what is internally considered right or wrong.

4. Functional Identity: They act as independent entities towards customers and society and strive to act as responsible "corporate citizens."

R.E. FREEMAN

Business and Capitalism are about how HUMAN BEINGS create value for each others

1) Fallacy of separation thesis.

It is not true that discourse of business and the discourse of ethics can be separated so that sentences like “x is a business decision” have no moral content, and “y is a moral decision” have no business content

2) Many stakeholders have a moral claim on the corporation because the corporation has the potential to harm or benefit them.

3) We are required to treat people as ends undo themselves. Thus managers should make corporate decisions respecting stakeholders wellbeing rather than treating them as means to a corporate end (Evan and Freeman, 1993)

1. The primary responsibility of a manager is to create as much value as possible for stakeholders.

1. Stakeholder theory explains how value is created and distributed among different legitimate stakeholders.

   
   

2. Distribution involves more than just financial resources (Freeman et al., 2003)

Friedman: Managers have one responsibility:

Act in the interests of shareholders BUT

Freeman (1984) Organizations rely on the contribution of a much wider set of constituencies rather than just shareholders (Strategic argument)

Organization have the power to affect a much wider set of constituencies rather than just shareholders and have the duty to address their ethical expectations (Ethical argument)

• Descriptive level: the social reality that corporations affect and are affected by

• Instrumental level: sound management takes the linkages to all those groups in society into account

• Normative level: the rights of those groups provide them with some legitimate“stake”in how the firm is run

Stakeholder theory suggests a business has multiple reasons to exist beyond making money:

• Descriptive level: This is about how a business really interacts with people and organizations in society.

• Instrumental level: It tells us that a business should manage its relationships with different groups smartly because it can help achieve business goals.

• Normative level: This level says that a business has an ethical duty to do right by these groups because they have a true stake in what the business does.

Normative: Stakeholders have legitimate and intrinsically important interests. Each stakeholder merits consideration for its own sake.

Instrumental: It establishes a framework for examining the connections between the practice of stakeholders management and the achievement of various corporate performance goals

Descriptive: It describes the corporation as a constellation of cooperative and competitive interests

It establishes a framework for examining the connections between the practice of stakeholders management and the achievement of various corporate performance goals

stakeholders are persons with legitimated and intrinsically important interests. Each stakeholder merits consideration for its own sake

1. UNETHICAL BEHAVIOR CAN BECOME ILLEGAL BEHAVIORS

2. stakeholder theory

3. COUNTER ARGUMENTS AGAINST FRIEDMAN’S ONES (MORAL AGENCY, FUNCTIONALITY, POWER ETC.)