If you were a corporation who would you pay attention to?

What is a corporation?

They are not all psychopaths! 100 Best Companies to work for

Milton Friedman’s Stockholder Model “The Social Responsibility of Business is to Maximize Profits” (1971)

How's That Shareholdery-Valuey Stuff Working Out for Ya?  The purpose of a corporation is to maximize shareholder wealth. And a corporation's board of directors' chief fiduciary responsibility is to shareholders.  These are plain and simple facts — and have been so forever. Right?  No, and no, actually.

The Stakeholder Model  Appeals to utilitarian considerations of overall well-being + individual rights  Requires management to achieve balance

Who are stakeholders?  People and groups that affect or can be affected by an organization’s decisions, policies, and operations  Benefits v. risks

Primary + Secondary  Primary stakeholders are critical to company’s existence and activities  Secondary stakeholders are those people/groups that are affected directly or indirectly by a company’s primary activities and decisions Secondary DOES NOT = less important

Corporation Stockholders Customers Employees Communities Governments Educational Institutions Educational Institutions The Poor The Poor Future Generations Future Generations Earth’s Biosphere Earth’s Biosphere Religious Groups Religious Groups Political Parties Political Parties Creditors Political Interest Groups Political Interest Groups Trade Associations Trade Associations Suppliers Media Competitors Unions Primary Stakeholders Secondary Stakeholders

Prioritize your stakeholders

The Stakeholder Paradox An ethical problem will still exist whether or not management takes a strategic or multi-fiduciary position.

Some Problems and Concerns  Institutionalizing/Implementing  Conflicts between stakeholder groups  Efficiency  Turns the regulation of the market excessively inward  Not practical

But…  It helps rule out alternatives and can be tested in the marketplace.  Maybe it is practical enough?

For next class  Read Vermilion Iron Mining case  Take assessment  Interview questions due by 10pm