5 Trust. The stakeholder theory suggests that companies should consider all interests when making decisions. One con of stakeholder capitalism is that the interests and goals of the various stakeholders often conflict. It is often assumed that shareholders are the most important stakeholder group in any business. The corporation as a private association in a market economy. The Disadvantages of Being a Stakeholder | Bizfluent Pros And Cons Of The Shareholder And Stakeholder Debate | ipl.org This is a principal reason why shareholder value theory emerged in … The theory provides an … The first step is to acknowledge that shareholder value theory is financially, economically, socially and morally wrong. The business sells its products and services to the community. It has been described as an ethical approach to managing companies. Friedman Doctrine - Overview, What It Says, Influence [ 124] There are three aspects of the theory: 1) instrumental power, 2) descriptive accuracy and 3) normative validity. Other than shareholders or owners, customers, government, employees, and suppliers are some examples of stakeholders. Why Maximizing Shareholder Value Is Finally Dying - Forbes advantages and disadvantages of shareholder theory The shareholder primacy and stakeholder theories are two outstanding theories of corporate objective, which have far-reaching of corporate governance and management. So the attention of the management should be to protect the wealth of shareholders. Thereby, the stakeholder theory holds that the cardinal responsibility of a corporation should not solely maximize shareholder wealth as with the contribution towards companies, the stakeholders deserve protection, their interests should be taken into account by managers (Keay A, at [42]). According to Berens (2012), the stakeholder theory suggests that the company must consider the customer needs. The only business of the business is to do business and make money.
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