Shareholder and stakeholder views

Shareholder and stakeholder views

topic : Shareholder and stakeholder views

Differences between shareholder and stakeholder views of the firm are significant and consequential. As future business leaders, you are inheriting the debate about them as alternative purposes of the firm and will make critical decisions about which predominates in the companies you own or work for.

1. The article, “Some Thoughts on the Business Roundtable Statement,” provides strong arguments in favor of shareholder primacy. The article claims the BRT’s decision to abandon the shareholder for the stakeholder view was “wrong-headed,” “misguided,” “incorrect,” and “erroneous.”

a. What are the key arguments used by George Schultz and colleagues to rdefend shareholder primacy (Article #7).

b. Critique those arguments.

c. What is your reaction to Schultz’ position?

2. In contrast, defenders of the stakeholder view of the firm, as represented in articles #3, 4, 5 and 6, applaud the BRT for r revising its stand on the purpose of the firm, but are skeptical.

a. What are the key concerns about and criticisms of the BRT Statement found in those articles?

b. What does Jeffrey Sachs mean by describing BRT member’s devotion to shareholder primacy as “destructive” and “self-serving.” What are at least five examples he provides to defend those assertions?

c. What is your reaction to his position?

3. React to the presentations by Mayor Duggan, Reverent Anthony and the 9 CEOs who participated in the Detroit press conference on social justice in Detroit a year ago. Most, if not all of them are members of the Business Roundtable. Did any of the speakers “speak” to you? Why or why not? Or was this an exercise motivated by public pressure? Explain your position.

4. From your perspective, has the about-face by the BRT ended the decades-old debate about the purpose of the firm? Are its members sincere converts to stakeholder capitalism? Or, as some critics claim, is the Statement “an attempt to obscure reality,” while “heading off growing public pressure” to behave more responsibly? (In other words, is the statement a response to a growing “performance-expectation gap”?) Explain your position based on takeaways from this course and your personal experience.

5. Informed by the views expressed in the article “Corporate America Has Failed Blacks, (#8), articles #9 and 10 and the results of the study reported in the article “Corporate Stakeholder Capitalism Gets a Report Card. It’s not good” (#13), what ideas would you offer the 9 Detroit CEOs about implementing the commitment they made to further diversity and inclusion in their organizations and in the Detroit community?

6. Comment on what you have observed or experienced in your professional life (organizational policies, behaviors, events, culture, etc.) that align with either (or both) shareholder or stakeholder theories and your responses to them.\

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