Discussion post

Absolutely no plagiarism, must be original and very thorough. Please make sure everything is followed in the question and the grading rubric. Assigned textbook is attached but also must include one other academic relevant outside resource, total of at least 2 references. Must include in-text citations. Please include the free link to the relevant academic source. Textbook: Friedman, M. (1970). The Social Responsibility of Business is to Increase Profits. New York Times Magazine. Retrieved from http://www.umich.edu/~thecore/doc/Friedman.pdf (Links to an external site.)Links to an external site. Question:Abuse of Power in Corporate Management In one of this week’s assigned articles (The Berle-Dodd Exchange) (attached), Berle stated that “it must be conceded, at present, that relatively unbridled scope of corporate management has, to date, brought forward in the main seizure of power without recognition of responsibility – ambition without courage.” This statement was made in the early 1930s. How do you think this quote might apply to the financial crisis of 2007–2008? Please provide an example of corporate management that abused its power without recognition of responsibility to stakeholders. Supporting material: Please feel free to use these links…Must also include one other academic relevant outside resource. Please see grading rubric below. This assignment should be at least 5-6 paragraphs long and very thorough. Make sure you integrate real-life applications to support key points. Criteria Ratings This criterion is linked to a Learning Outcome Quality of Initial Response Initial response displays an excellent understanding of the course readings and underlying concepts and includes the correct use of relevant terminology. Initial response integrates specific real-life application (current events, work or personal experience, prior coursework, etc.) to support key points. Initial response is clear, concise, and compelling. This criterion is linked to a Learning Outcome Research Initial response contains at least one reference to a valid (recent, relevant, high-quality) external source of information pertaining to the discussion topic. Research is cited, in-text, to support key points. Integration of research in initial response exceeds expectations. (This should be along with the provided textbook, so a total of 2 references). This criterion is linked to a Learning Outcome Mechanics Entirely free of mechanical errors. These include: grammar, punctuation, spelling, and formatting (font style and size).
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DIALOGUE: TOWARD SUPERIOR STAKEHOLDER THEORY
Bradley R. Agle, Thomas Donaldson, R. Edward Freeman,
Michael C. Jensen, Ronald K. Mitchell, and Donna J. Wood
Abstract. A quick look at what is happening in the corporate world makes
it clear that the stakeholder idea is alive, well, and flourishing; and the
question now is not “if” but “how” stakeholdertheory will meet the challenges of its success. Does stakeholder theory’s “arrival” mean continued
dynamism, refinement, and relevance, or stasis? How will superior
stakeholdertheory continue to develop? In light of these and related
questions, the authors of these essays conducted an ongoing dialogue
on the current state and future of stakeholder thinking. Beginning with
a review of research and theory that has developed since the major
stakeholder theorizing efforts ofthe 1990s, the authors individually offer their perspectives on the key issues relevant today to stakeholder
thinking, and to suggest possible approaches that might lead toward and
enable the continuing development of superior stakeholder theory.
Editor’s note: The 2007 national meeting of the Academy of Management, held in
Philadelphia, featured an “All-Academy” symposium on the future of stakeholder
theorizing in business. In order to make the varying perspectives represented in that
symposium available to a larger audience, the symposium participants have provided
these short, thought-provoking essays, which Business Ethics Quarterly offers as
a dialogue on the current and future state of stakeholder perspectives. Symposium
organizer Bradley Agle and Ronald Mitchell provide an introduction to the issues
and perspectives under consideration. These comments are followed by essays by
Donna Wood, R. Edward Freeman, Michael Jensen, Thomas Donaldson, and Ronald
Mitchell, with concluding comments by Bradley Agle and Ronald Mitchell.
INTRODUCTION: RECENT RESEARCH AND NEW QUESTIONS
Bradley R. Agle and Ronald K. Mitchell
T
he stakeholder idea is alive, well, and flourishing. The relevant question now is not
“if,” but “how” stakeholder theory will meet the challenges of its success. A recent
random sample of websites (looking at statements about mission, vision, philosophy,
values, etc.) of 100 companies drawn from the Eortune 500 found that only ten companies espoused the “pure stockholder” focus of value maximization for stockholders.
© 2008. Business Ethics Quarterly, Volume 18, Issue 2. ISSN 1052-150X.
pp. 153-190
154
BUSINESS ETHICS QUARTERLY
and twenty-two espoused a “legally and ethically bounded” stockholder focus, while
sixty-four embraced approaches to “maximize the well-being of all stakeholders,” and
yet another two aimed at solving “social problems while making a fair profit” (Agle
& Agle, 2007). So the question now is whether stakeholder theory’s “arrival” means
continued dynamism, refinement, and relevance, or stasis. Will superior stakeholder
theory continue to develop, and if so, how? In this introduction to the following essays
adapted from the 2007 Academy of Management symposium on “superior stakeholder
theory,” we situate the overall symposium within the stakeholder literature that has
developed since the major stakeholder theory efforts ofthe 1990s, and offer a general
introducdon to the dialogue. Following the essays by each symposium panelist, we will
offer some concluding comments regarding possible avenues that niight lead toward
and enable the continuing development of superior stakeholder theory.
In our preparatory review of recent stakeholder-based literature, we (the symposium
participants) noticed three strands in the works reviewed: (1) works concerning the
basic debate (stakeholder vs. stockholder), (2) works that focus on the instrumental
development of stakeholder approaches, and (3) works that generate new questions
in stakeholder theory research. Table 1 presents representative articles from these
three strands of recent stakeholder thinking. It was immediately evident to us that the
primary objective of the “debate” strand of stakeholder-theory research has been to
address assertions about the relative contributions or privileges of stakeholders and
stockholders. Table 1 provides examples of several articles that have taken on this task
with rigor and thoughtfulness (e.g.. Freeman, Wicks & Parmer, 2004). We also note a
sub-theme within the debate literature, whereby authors have worked to advance the
theoretical specificity and clarity of the two theories in juxtaposition (e.g., Phillips,
Freeman, & Wicks, 2003; Smith, 2003). In the instrumental development strand of
recent research, we note the underlying premise being considered: if stakeholder sensitive management is better, stockholders should do better (e.g., Berman, Wicks, Kotha,
& Jones, 1999; Hillman & Keim, 2001). A primary and consistent finding within this
strand of research—that with or without a stakeholder focus, corporate performance
is very much the same—suggests room for stakeholder focused management that
does no harm to stockholder interests while also benefiting a larger constituency (e.g.,
Moneva, Rivera-Lirio & Munoz-Torres, 2007). In the third research-agenda-focused
strand of recent work, four areas of new inquiry include: (a) how the normative
underpinnings of stakeholder theory can help the business ethics field by providing
ethical insights useful in the processes of managing; (b) how alternatives to the stakeholder/stockholder debate can provide normative reasons for stakeholder-responsive
action where the market fails society (e.g., a market failures/government response
approach in circumstances wherein the pursuit of private interest does not lead to an
efficient use of society’s resources or a fair distribution of society’s goods (Heath,
2006; cf. Jensen’s cotnments below)); (c) how stakeholder theory can provide ideas
and frameworks that managers can use to run organizations better; and (d) how better
theory and methods—whether borrowed from other fields or indigenous to the world
of stakeholder scholars—can serve stakeholder theory development.
DIALOGUE: TOWARD SUPERIOR STAKEHOLDER THEORY
155
Table 1. Superior StakeholderTheoery: Some Contributions 1999-2007 (arranged chronologically by major
theme)
Normative Stakeholder
vs Stockholder Theory
Year
Outlet
Some Key Ideas
Marens & Wicks
Author(s)
1999
BEQ
“This fiduciary duty requires the exercise of care,
loyalty, and honesty with regard to the financial
interests of stockholders. Such obligations do not
conflict with the normative goals of stakeholder
theory.”
Palmer
1999
BEQ
“First, 1 show that utilitarian considerations
clearly favor the stakeholder theory. I then argue
that though Hasnas rightly accents the basic deontological constraint at the core ofthe stockholder
theory, he is wrong to think that acknowledging
such a constraint necessarily counts against the
stakeholder theory.”
Hendry
2001
BEQ
“The paper identifies three distinct kinds of
normative stakeholder theory and three different
levels of claim that can be made by such theories,
and uses this classification to argue that stakeholder theorists have consistently pitched their
sights too high or too low to engage effectively
with the rival shareholder theory.”
Jensen
2002
BEQ
“Since it is logically impossible to maximize in
more than one dimension, purposeful behavior
requires a single valued objective function. Two
hundred years of work in economics and finance
implies that in the absence of externalities and
monopoly (and when all goods are priced), social welfare is maximized when each firm in an
economy maximizes its total market value.”
Marcoux
2003
BEQ
“I advance an argument that seeks to demonstrate
both the special moral status of shareholders in
a firm and the concomitant moral inadequacy of
stakeholder theory.”
Phillips, Freeman &
Wicks
2003
BEQ
“The goal of the current paper is like that of a
controlled burn that clears away some of the
underbrush of misinterpretation in the hope of
denying easy fuel to the critical conflagration that
would raze the theory.”
Smith
2003
Sloan Mgt
Review
“Should companies seek only to maximize shareholder value or strive to serve the often conflicting
interests of all stakeholders? Guidance can be
found in exploring exactly what each theory does
and doesn’t say.”
Freeman, Wicks &
Parmer
2004
Org Science
“This paper offers a response to Sundaram
and Inkpen’s article ‘The Corporate Objective
Revisited’ by clarifying misconceptions about
stakeholder theory and concluding truth and
freedom are best served by seeing business and
ethics combined.”
156
BUSINESS ETHICS QUARTERLY
Velamuri &
Venkataraman
2005
JBE
“The normative foundations of the investor centered model of corporate governance, represented
in mainstream economics by the nexus-of-contract
view ofthe firm, have come under attack, mainly
from the proponents of normative stakeholder
theory. We argue that the nexus of contracts view
is static and limited due to its assumption of priceoutput certainty.”
Heath
2006
BEQ
‘The question posed in this paper is whether the
stakeholder paradigm represents the most fruitful
way of articulating the moral problems that arise
in business. By way of contrast, I outhne two other
possible approaches to business ethics: one, a
more minimal conception, anchored in the notion
of a fiduciary obligation toward shareholders; and
the other, a broader conception, focused on the
concept of market failure.”
Agle, Mitchell &
Sonnenfeld
1999
AMJ
“We found strong support for the attribute-salience
relationship and some significant relationships
among CEO values, salience, and corporate social
performance but found no support for a saliencefinancial perfonnance link.”
Berman, Wicks, Kotha
& Jones
1999
AMJ
“The results provide support for a strategic stakeholder management model but no support for an
intrinsic stakeholder commitment model.”
Luoma & Goodstein
1999
AMJ
“This study examined the relationships between
institutional influences and stakeholder representation on boards of directors.”
Ogden <& Watson 1999 AMJ "This study examined a major contention of stakeholder theory: namely, that a firm can simultaneously enhance the interests of its shareholders and other relevant stakeholders... . We interpret this finding as being consistent with stakeholder theory." Hillman & Keim 2001 SMJ "We . . . find evidence that stakeholder management leads to improved shareholder value, while social issue participation is negatively associated with shareholder value." Omran, Atrill & Pointon 2002 Business Ethics: A European Review "The overall conclusion is that there is no significant difference in shareholder returns between stakeholder-oriented and shareholder-oriented companies." Bartkus, Glassman & McAfee 2006 EMJ "Mission statements that include phrases that refer to what many may view as the fundamental rules of business have a significant positive relationship with financial performance: be concemed with your employees, be responsible to the society in which you do business, and emphasize and communicate your value system." Moneva, Rivera-Lirio & Munoz-Tbrres 2007 Industrial Management and Data Systems "[T]he main conclusion drawn from the analysis shows that the financial performance of the sectors or organizations with a greater stakeholder strategic commitment, is not inferior to that of the sectors or organizations with a shareholder approach." Instrumental Stakeholder Theory DIALOGUE: TOWARD SUPERIOR STAKEHOLDER THEORY 157 New Questions: Further Development Stakeholder Theory Cludts 1999 BEQ "While we do not challenge the principle of fairness itself, we claim that when this principle is applied only to those who invest in the corporation, it cannot serve as the ground for an ethical stakeholder theory." Donaldson 1999 AMR "The most interesting question in stakeholder theory today is whether a conceptual glue can be found that is strong enough to bind the separate methodological strands of stakeholder theory into a whole." Donaldson & Dunfee 1999 HBS Press "Our aim is to extend significantly the application of social contracts to business... .Business ethics, we assert, is more a bundle of shared understandings than a set of fixed pronouncements." Frooman 1999 AMR "When seeking to influence firm decision-making, what types of influence strategies do stakeholders have available and what determines which type the stakeholders choose to use?" Jones & Wicks 1999 AMR "Since neither approach is complete without the other, we propose a new way of theorizing about organizations: the development of normatively and instrumentally sound convergent stakeholder theory." Trevino & Weaver 1999 AMR "We disagree with Jones and Wicks' contention that they have developed a 'convergent stakeholder theory' that moves stakeholder research toward theoretical integration." Scott & Lane 2000 AMR "We develop a model of organizational identity construction that reframes organizational identity within the broader context of manager-stakeholder relationships and more effectively integrates theory on organizational identity and organizational identification." Van Buren 2001 BEQ "In this essay, I propose that a reconstructed principle of fairness can be combined with the idea of consent as outlined in integrative social contracts (ISCT) to bring about a more normative stakeholder theory that also has ramifications for corporate governance." Jawahar & McLaughlin 2001 AMR "We integrate theory and research from disparate areas to develop a descriptive stakeholder theory." Kochan & Rubinstein 2000 Org Science "The idea that the firm should be accountable not only to shareholders but also to a broader set of stakeholders is 'in the air.' But what would such a firm look like?" Post, Preston & Sachs 2002 Stanford University Press "This book presents a stakeholder view of the corporation in both theoretical and practical terms. Its central proposition is that organizational wealth is created (or destroyed) through a corporation's interactions with its stakeholders." 158 BUSINESS ETHICS QUARTERLY Schneider 2002 Org Science 'The stakeholder model of organizational leadership helps to predict leader effectiveness In organizations characterized by fuzzy organizational boundaries, flattened hierarchies, and work relationships sometimes brought about through contracts instead of employment." Wolfe & Putler 2002 Org Science "We argue that a powerful implicit assumption within the stakeholder literature—that priorities within rolebased stakeholder groups are relatively homogeneous—blurs our understanding of organization-stakeholder relationships." Phillips 2003 Richards 2004 Journal of Mass Media Ethics "A further concept from business and management that appears to be directly applicable to the news media is the notion of stakeholders." Hall & Vrendenburg 2005 Sloan Mgt Rev "Stakeholder management—especially that of secondary stakeholders—is becoming increasingly important in many industries." Pajunen 2006 Journal of Management Studies "This paper provides a theory and a historical case study that show how the most influential stakeholders can be identified and managed during an organizational survival." Bamet 2007 AMR "I argue that research on the business case for corporate social responsibility must account for the path-dependent nature of firm-stakeholder relations, and I develop the construct of stakeholder influence capacity to fill this void." Vilanova 2007 EMJ "This paper proposes an alternative theory on the role of management in corporate governance, the so-called short term salient stakeholder theory, and illustrates it with a longitudinal case study of Eurotunnel." Berrett-Kohler "[OJbligations of stakeholder fairness create direct moral (normative) obligations." This research and theory provided the common foundation for the interaction among the symposium participants. As will be seen in the panelists' remarks, an openness to lively debate and to some disagreement characterized this exchange. Nevertheless, a genuine spirit of building bridges of understanding, and where possible, agreement, for the common good guided the discussion, and we hope this sets the tone for further developments in this area. Picking up on the stakeholder vs. stockholder debate. Donna Wood first focuses our attention on foundations: the assumptions and justifications for a theory that provides credible alternatives to certain received economic thought. Ed Freeman then asks us to move beyond the well-worn "Friedman vs. Freeman" arguments to look collaboratively and operationally at the pragmatics of better stakeholder theory. Michael Jensen addresses some of these issues by arguing for the compatibility of a superior stakeholder theory, ethics, fair distribution, and good management with long-term value maximization, and in the process considers other relevant issues ranging from the role of government to the non-rationality of much human behavior. Then, placing this debate into a larger context, Tom Donaldson suggests a lens whereby the emergence and influence ofthe stakeholder idea can be seen—in DIALOGUE: TOWARD SUPERIOR STAKEHOLDER THEORY 159 comparison to the Copemican Revolution—to be the Normative Revolution, which preserves valuable ideas from the past, while progressing toward ideas that can add more value in the future. Responding to the need for the instrumental vision of stakeholder utility to be enacted, Ron Mitchell engages in a thought experiment to sketch the outlines of, and the kind of thinking required for, the new-type entity that might result from superior stakeholder theory, which he calls the "joint-stake" company (in contrast to the joint-stock company), focusing specifically on the role of notions and practices of accountability in such a company. Each of their essays—capturing their remarks at the symposium—now follows. I. CORPORATE RESPONSIBILITY AND STAKEHOLDER THEORY: CHALLENGING THE NEOCLASSICAL PARADIGM Donna J. Wood I n January of this year, Nobel-Prize-winning economist George Akerlof gave his presidential address to the American Economic Association. Akerlof called for a new emphasis on sensible, pragmatic economics: "You think about problems in the world," he advised, "and you ask: can government do something about that? At the same time, you maintain your skepticism that government is often inefficient" (Uchetelle, 2007). There certainly is no shortage of "problems in the world." Globalization has made it very clear that multinational corporations have no master, and it has brought into sharp focus income inequities, dire poverty, human rights abuses, environmental degradation, and so much more (Sen, 1997; Wood, Logsdon, Lewellyn & Davenport, 2006). In addition, the ascendancy of neoclassical economics into the Anglo-American public pohcy sphere from the 1970s onward has devastated the ability of government to contain corporate abuse or to ameliorate the desperation of the poor (Phillips, 2006). The evidence is all around us that strict free-market policies work wonderfully well for the rich and powerful, but for many others, life has become harder (Ehrenreich, 2001). It has also become clear, as cognitive linguist George Lakoff (1996) has masterfully laid out, that Chicago School neoclassical economics is a socio-political agenda based upon values that emphasize self-rehance over community health, discipline over nurturance, and suffering consequences over creating opportunities. In effect, this worldview is a modem-day return to social Darwinism (Hofstadter, 1944). In his AEA presidential address, Akerlof pointed to some false assumptions upon which neoclassical economic theory is based. In particular he mentioned people's frequent tendency to behave "irrationally," in the narrow ... Purchase answer to see full attachment