Social Responsibility Perspectives: The Shareholder and Stakeholder Approach
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- เผยแพร่เมื่อ 26 ส.ค. 2024
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An outline of the two perspectives related to corporate social responsibility: the shareholder model and the stakeholder model. The discussion also includes support for each perspective, including that of famous Nobel prize winning economist Milton Friedman.
Such a great video, thank you! Damn, I was in middle school when the video came out and it is helping me in university to prepare an exam in 2021... what a time to be alive
I knew you’d need it eventually. 😃
same here, LOL
Samee jajaja hope you did well in your exam!
Same
I think it is totally related to the objectives of the business and the nature of the business as well as the size of the organisation. CSR is an expensive commitment for an organisation where a small company that is not achieving profit, CSR might not be an ideal commitment for them and only obey to the basic rules of ethics. While a MNE or big companies that are able to maximise their profit in a long run, CSR will add more value to their business and increase their reputation in the marketplace and society. To sum up, companies could move from a shareholder model to the stakeholder model in a long run to to be able to compete in the competitive marketplace.
right said. I agree with your statement
I strongly disagree. Stakeholder approach is absolutely critical for small local businesses. If a small local business treats a customer or employee poorly, or pollutes the local lake, that could easily destroy them completely, since they are fully dependent on their reputation in the local community.
Big companies can get away with breaking a lot of the social responsibility everyone expect them to uphold. If someone complaints loud enough to damage their reputation, they can counter it with large donations to charities. This is much cheaper than actually treating their stakeholders decently, and in my view has nothing to do with actual CSR.
A lot of companies today put way too much money and effort into this. They give millions of dollars to different causes, often political activist organizations, and are actually delusional enough to believe that that money is going to bring them even more than the millions they spent. The typical consumer only cares about getting the best quality product or service for the best price possible. Think of any company you want and ask 100 random people if they can tell you what causes that company donate to. Assuming none of those people work for the company or have family working there, I’d bet none of them could tell you.
The stakeholder model has now won the debate. Thank you for this video
Have a test tomorrow, wish I have had seen this before... loved it, good speech pace and well described. Thanks
How you make out?
I agree with Friedman that profit for the shareholder is the only purpose and goal of a company, but I also think that pleasing stakeholders is an important means to that end. If the company loses its reputation with customers, government or the wider public, this could lead to it losing revenue, and therefore hurt the profits of shareholders. To avoid this, a company ought to factor in the reactions of stakeholders to decisions and how that will impact the profitability of the business. They key point here, however, is that the good of the stakeholder is not an end in itself, but rather only a means to the ultimate end of bringing profit to the owners. If pursuit of "social responsibility" will ultimately lead to less profit in the long term, it ought to be rejected, since the end goal of business is the benefit of the owner, not charity.
I love this. Very simple and easy to follow. The Stakeholder Approach is the best. A win-win for all
For the stakeholder model, there are internal (Employees)and external stakeholders (PESTLE), it's improved terminology compared to primary and secondary.
Shareholders is the greatest good. That does not mean there have not been failures with it. But those failures are by far outweighed by the failures of the other model: Soviet Union, Cambodia, Cuba and Canada to name a few.
I agree with Friedman's position - "The business of business is business". Investors, when they are looking to buy shares, want to get the most profitable ones. It should not be CEO's responsibility to spend investors' potential profit. Shareholders should decide themselves what to do with it.
Stakeholder model will give long term positive impact; profit, employee commitment to job especially as the company having difficulty (like now : pandemic) & business can used it as marketing strategy to increase profit margin, +ve impact to brand as responsible company. Stakeholder = profitable in long term
SOCIAL RESPONSIBILITY IS GIVEN BACK TO THE SOCIETY. SAYING THANK YOU TO YOUR VALUE CUSTOMERS. APPRECIATING THE INDIVIDUALS WHO HAVE MAKE YOUR BUSINESS OPERATION PROFITABLE DURING THE YEARS OR OPERATION... I LOVE THIS LECTURE
Thanks Jeri!
always mr matt
very clear cut explanation... thank you for simplifying things
The question really boils down to who decides what’s in the best interests of “community” ? You as an individual shareholder and who you vote in to manage or external pressure from organizations, governments and individuals that may or may not share your values....
I believe that there should be a balanced point between shareholder primacy model and stakeholder value model. Having said that, whenever a 50:50 situation arise, stakeholder value model should be inculcated.
it is very wonderful and accurate in empirically. this beautifully explains its practical aspects. Please request to do more explain about strategy, resource based and shared value perspectives of CSR.
Saminda Kodithuwakku(MBA).
Saminda Kodithuwakku Thank you Saminda!
Great job you've done for me.thank you very much. I am grateful.
With regards to public companies, Shareholders do not own anything. To state that shareholders are the owners of a company perpetuates a common fundamental misunderstanding of corporate law(at least in America). Companies own themselves. Shareholders have contracts with companies. It is a very important distinction.
Was Too nice for my Course unit in Business Ethics and corporate Responsiblity Thanks Team
Very helpful. My lecturer at the university showed this video to us. Like the way you speak. Thank you.
I know this video is from 2014 so maybe I won't get a reply but it seems to me that the shareholder approach of profit maximization is what produces social responsability. In order for you to maximize profits you need to fullfil both the primary and secondary stake holders wants and needs in order to maximize your profit. Seems to be that the stakeholder theory is sort of a demand side economics approach and the shareholder theory in line with supply side economics.
It is very important for the business to optimize their profit for its shareholders. However, when the business focuses on only profit, they might lose big one in the long-run. By contributing a manageable amount of its profit to the society, they can build a good reputation, earn a favor from the stakeholders, and eventually they would increase more profit. I don't think that a business is only a money maker. Business and society are interdependent. When society survives, so does business.
Sharon Yang But who would by shares in a company that is not going to give the highest rate of return?
People who have a lot of money to begin with and aren't only concerned about maximizing profit
Well said Sharon. I would also simply add that if we making profit then we have socially and environmentally responsibilities.
I concur with you Sharon, your position is correct.
Very Informative we're watching this in my online Behavioral Management class. At the end of the video I actually understood what you were talking about so it was very helpful with the topic we're on.
I definitely to choice the stakeholder approach for long term and shareholder one for short term.
The primary and utmost important of a business is making profits as a prerequisite for survival!
Without profits there were no resources, no resources means no any impact could be!
Yes! I believe "If managers only consider the interest of stakeholders for the benefit of profits" that alone will create a win-win solution. The other needs of Stakeholders should be met by other means & with the assistance of government.
your video is so helpful
Those explanations seem misleading. Friedman said that the objective of a business is to make profit by using legal means. So, if giving to some charity is a way to satisfy stakeholders and to maximize profits, then giving to that charity would absolutely be what Friedman's model would recommend the business to do. Friedman never said to never give to charity under any circumstance, he just said the goal was to maximize profits.
The alternative to that is NOT the "stakeholder model" as you presented it, because it overlaps the Friedman model. The alternative would instead have to be a business who gives to charity while diminishing its profits. And obviously, it would make absolutely no economical sense.
Conclusion: the stakeholder model is in fact a poorly worded model: either its goal is to maximize profits, and then it means it's equivalent to the Friedman model, or its method consists in sometimes diminishing profits to please customers (i.e. while not being compensated by better profits at the end), which means it would be an objectively inferior model to the Friedman model. In both cases, the Friedman model is equal or superior to the stakeholder model.
So apt and easy to understand. Thank you.
I think that the shareholder model inevitably leaves social responsibility in the hands of the Government. If all companies focus only on profits, only the Government can focus on society, thus leaving the decision-making process on what's good and bad for society in the hands of the Government. Therefore, focusing only on profits, ironically, leads to bigger government. With the stakeholder model, that responsibility is carried largely by the corporate sector and Government does not need to intervene as much.
I appreciate this lecture as it has help me greatly in understanding the concept of CSR
If Shareholders may not have the education, background or expertise to know what's best for the company can you tell me some issues that could occur when they elect the Board of Directors with their own agendas or motives taken into consideration? What if they haven't taken the time to do their due diligence about the company, their background, sales strategies, etc?
Definitely. I am watching this video tonight as a part of homework for my "Introduction to Business" (BUS100) class and believe the answer to your question is, if the Shareholders perform poorly in electing a Board of Directors, it could set into motion a chain of events [also] leading to the appointment of "less qualified" Corporate Officers, which in turn will directly impact the performance of the corporation. This is if we believe leadership in fact happens at the "top" and flows down in a typical manner, or the examples set by the Corporate Officers are actually viewed by the employees on a daily / weekly / monthly basis. Something that may also be related to your question is, where did the corporation arise from? Was it a simple company before growing into a larger organization? Did it "spring up" overnight by way of being "spun off" from another business Enterprise? Did one corporation "dissolve" and the remnants of it form into a new corporation, barely taking the time to move office locations, change the letterhead and erect a new sign on the building? - And finally, how often do these things happen?
In my class, the question was to compare "Internal stakeholders" and "External stakeholders", but this video appears to draw a more relevant distinction between Shareholders and Stakeholders; even though all groups are related to the existence of the corporation. In my "My Thoughts" notes I began asking myself which parts of the American government were equivalent to the parts of these corporate structures. If the President is the CEO, is their Cabinet the "Board of Directors" and the Legislative branch of government the "Corporate Officers"? In our government model, the entire structure is related to Social Responsibility (and not profit) in providing all the basic needs of society at large such as roads, clean drinking water, national security, sanitary sewers, police forces and natural disaster response services; all these "services" essentially have a "charter" to use taxpayer money wisely and follow the direction [of society's elected leaders? - group think] in a advancing society.
So, my final question is 'How is the American government NOT a model of Socialism?'
Can you pls give a brief description about priority shares and priority shareholders???
Thank you ....like the way it makes you think critically
Appreciated, great explanation and love it.
+Christyn Dalle Glad to hear that Christyn. Thanks for watching!
Seems like it will make it harder to compete. It’s sounds like self-regulation and unionization. If I was an investor, I would likely not want to invest in a model with more boundaries between myself and my investment return. Greed is not something that can be regulated in a free market. Our responsibility is to make sure we shame and praise the greedy accordingly, until they feel that it’s culturally unacceptable to buy another car instead of feed more mouths. If you want to fix the global greed issue, create a secret task force, specifically for investigating gross violations of corrupt business practices and let them punish those who attempt to control others with abusive financial power. Essentially, if tyrants are the issue, get rid of the worst ones. Some kings bring despair, some kings bring prosperity. We need to do better at electing and monitoring our kings.
I enjoy the video...I think it make good business sense to work with the stakeholder model...
Love it. Thank you. Explained clearly and to the point.
Lovely video. Summed up everything nicely. Thank you.
Great video. What tool or software do you use for the blackboard? Works really well
Thank you so much this made it so much easier to understand!
I need to look into this more. Thank You.
Stakeholder capitalism is the future. Corporations are becoming more and more powerful and soon the concept of nation states will be obsolete. Individuals will owe allegiance not to a country, but to a corporation. That's why corporations are adopting the stakeholder model to make us believe that they care about us, at least until they have grown powerful enough to crash any dissent.
great video it helped me understand my course literature
what about the slack theory? would you please share about it if dont mine thankyou
Great video
Yo I’m constructing a paper in this subject. Where can I find your sources.
Cool.. it helps me a lot on my paper.
Glad I could help, Bryan! Hope it goes well.
Thank you..
wonderful done :)
Thank you!
I just subscribe to your channel
Is this stakeholder corporation are realistic model for business firm?
thank you so much for the video)
Very helpful :)
Amazing! :)
at 6:33-6:35 what did you mean by BP? Thanks.
I was referring to British Petroleum. Sorry for the confusion.
British Petroleum
It absolutely is socialism
your are good.
.
That was amazing. I agree with everything you've said.
There is one fundamental flaw in the shareholder approach: It assumes that governments will make and enforce rules to protect all stakeholders. With the amount of pressure international companies can put on the government of a single country, this assumption is no longer true.
In our current situation, the Shareholder approach is hugely damaging, since it dictates that huge international companies are morally obliged to pressure governments into changing the rules to benefit their shareholders at the expense of all other stakeholders.
It kind of makes sense. Its a empirical theory that assumes the inneficiency of the corporations when turning the eyes to social problems. Ok ! But how can we deal with the fact that the laws are made by those who are elected with the money from those who play by the rules?
the whole social responsibility thing is just basically a disguised advertisement.
or even the case where you see inferior quality products with some good Edward Bernay style paint.
Nice vedio
stakeholder model >
IMO donating to charities, whether from the company itself or the shareholders, is a shitty imitation of actual CSR. It is almost exlusively used as a cheap solution to pretend you care, after making huge profits by screwing over employees, customers, environment and local communities.
The problem is: BP didn't act within the rules, and therefore your example makes no sense.
gmgt gang :)
Intertement Bennefet mest be balss