The Purpose of the Corporation Essay Example | Topics and Well Written Essays - 2000 words

The Purpose of the Corporation - Essay Example The authors assert that although the diverse assumptions of each of the two groups tend to be "logically or intuitively connected to represent it coherent world view, favoring one [group] does not require that we exclude the other." A major purpose of stakeholder theory is to help corporate managers understand their stakeholder environments and manage more effectively within the nexus of relationships that exists for their companies. However, a larger purpose of stakeholder theory is to help corporate managers improve the value of the outcomes of their actions, and minimize the harms to stake-holders. The whole point of stakeholder theory, in fact, lies in what happens when corporations and stakeholders act out their relationships. To this end, we conclude this volume with our view of contributions that stakeholder theory can make to redefine the corporation through a focus on performance measurement. The criticism of stakeholder theory that it cannot define what or who is or is not a stakeholder, as well as the attempts to delimit stakeholders, is perhaps misplaced. In spite of the atomistic nature of early definitions, stakeholder theory embodies in its very nature it relational view of the firm which incorporates the reciprocal dynamics of community, and the theory's power lies in focusing management decision making on the multiplicity and diversity of the relationships within which the corporation has its being and the multipurpose nature of the corporation as a vehicle for enhancing these relationships in their various dimensions. Freeman holds that nothing less than a redefinition of the corporation is needed and, as seen earlier, he recognizes that a redefinition of the corporation requires a redefinition of the self. And, ultimately, such a reconstructed self requires a reconstructed philosophic context within which conceptually to locate its relational nature. Critical Analyses on Milton Friedman's Arguments on "The Social Responsibility of Business Is to Increase Its Profits" Friedman is therefore dismissive of any notion of corporate social responsibility: 'The doctrine of social responsibility is fundamentally subversive......there is one andonly one social responsibility of business- to use its resources and engage in activities designed to increase its profits so long as it engages in open and free competition without deception and fraud" (Friedman, 1970). Milton Friedman1, back in the early 1960s, argued that the one and only social responsibility of a company is to increase its profits He moreover equaled corporate donations with hypocritical window-dressing and tactics approaching fraud. According to his logic, social engineering is doomed to failure for several reasons: corporate managers do not have the necessary skills or expertise to arbitrate between competing claims of different sections of society - such competence is only given to an elected government; corporate managers are not elected and have therefore no political mandate to decide between competing claims for resources - again, such competence i