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Topic05: Purpose and Stakeholders
Transcript of Topic05: Purpose and Stakeholders
discuss why the
of the firm
to business ethics
consider the concept of "
" and its difference from "
", as well as the notion of "
gain an understanding of conventional views of the business corporation and its
three different proposals
about the conception and purpose of the firm in society.
the firm as a community of persons and the multi-ends of the firm. Three models for corporate governance.
1. Relevance of the purpose of business
of business in SOCIETY
relevant for business management ethics
assume that business exist
for the purpose
. But the
as institutions within society
is more complex
than the subjective motivation to make money.
: "A firm needs capital to build a business, customers with an interest in goods it offers, managers and employees to contribute with their work, suppliers of raw materials, loans and services. And in the end,
providing infrastructure and supporting the businesses
cannot be justified as
being good for business
, it can be justified only as
being good for the
for society" (Drucker, 2000).
, which we ought to consider their
contribution to the
1. Creating added economic
in accordance with
and human rights.
for the continuity and
MAKE OTHER ENDS POSSIBLE
Being a good
. Beyond its core activities,
being an agent for good within society
3. MISSION-DRIVEN MANAGEMENT.
" is from the Latin missum or "
It announces what the
intends to do
Some corporate mission
. Eg: IKEA's mission is to offer a wide range of home furnishing items of good design and function, excellent quality and durability, at prices so low that the majority of people can afford to buy them"
. Eg: Merck's mission is to provide society with superior products and services by developing innovations and solutions that improve the quality of life and satisfy customers' needs, and to provide employees with meaningful work and advancement opportunities, and investors with a superior rate of returns.
* Some corporate
. Eg: Ben & Jerry's, whose mission includes three interrelated missions: (1) product mission, (2) economic mission, and (3) social mission.
As we can see is not easy to find all the ends mentioned before on the mission of the best companies with the best practices
FOR WHOSE BENEFIT SHOULD A COMPANY BE MANAGED?
Definition of the purpose of business
* DEF: By the purpose of business, we mean
of business in society
of business, we need to
benefits several groups
, and that various factors must be present for a business to survive.
purpose is important
for at least
whether an organization's
2. It gives us
whether it is succeeding
the morality of the activities
and also with
criteria to evaluate
whether the firm is well designed
from a moral point of view.
2. Purpose and Common Good
DEFINE the PURPOSE
of the firm,
should be included in the
, at least implicitly. It leads us to define the
of the firm
through its multi-ends
Eg: PROCTER & GAMBLE presents some of the mentioned ends in its mission statement (called "Our Purpose"):
2. Purpose and Common Good
4. HISTORICAL OVERVIEW OF FIRMS
: A corporation is an
, invisible, intangible, and
existing only contemplation of law
. Being a mere
creature of law
it possesses only those properties which the charter of its creation confers upon it.
: Emerged another view influenced by a strong ideological individualism that emphasized individual freedom and saw it as a
mere aggregate of individuals
Late-1800's to late 1900's
: Emerged a large-scale of firms and huge bureaucracies, and a
collectivist view of the firm was fostered
. The firms were seen as
considering the compact and highly depersonalized structure
of the organizations. Individuals were regarded as subordinates of the firms
were treated as
in a machine
Many talents, skills and capabilities of people within the organizations also go to waste
. Only the whole was what mattered, and
it again reconciles the interest with other via "social contracts"
: The corporation as
analogous to a
inside another large community, with mind and will
. As with any organism or community, corporations have to be legitimated to operate, and
within it are its "
" with personal autonomy and real commitment with other.
AND EVERYTHING THEY DO HAS TO CORRESPOND TO HIS PURPOSE.
1. Fiduciary duties
3. Property right
4. Wealth creation
1. Managers bear duties
only to shareholders
2. Corporates are
seeks to maximize profits
and wrong when it does not.
, so they decide how to use their properties.
4. In a free market, individuals
pursue their own
, this also tends to promote the good of their community as a whole.
1. Bear to
2. The incurred investments are not directly related to short-term profits.
Law bestows rights upon employees and communities
3. Based on the principle of
4. Freeman: to maximize shareholder value over an uncertain time frame, managers ought
to pay attention to key stakeholder relationships
1. It is a duty
to act for the good of the
, for which one has been authorized to act.
Laws are not in themselves a moral justification
Ethics comes first
: "whatever the legality may be, a corporation is a member of the large community, which is inconceivable without it"
is not merely
, but rather a
is an integral part of the
of the firm and society. The goal is maintaining and improving the firm in the long term contributing to societal well-being and people development.
IMPLICATION OF THE FIRM'S PURPOSE FOR