Be Sure To Read 127 Business Ethics And Corporate Responsibi ✓ Solved

Be Sure To Read 127 Business Ethics And Corporate Responsibility

Be sure to read 1.2.7: Business Ethics and Corporate Responsibility. Using the Willey Library resources, access and read the article: Porter, Michael E., and Mark R. Kramer. "Strategy and Society: The Link between Competitive Advantage and Corporate Social Responsibility." Harvard Business Review 84, no. 12 (December 2006): 78–92. Comment on your evaluation of stakeholder theory in the context of the Porter & Kramer article. How does this compare to shareholder theory? As stated by Velasquez (2018), "The two theories are critical to one's view of the important question: What is the purpose of business?" (p 17).

Sample Paper For Above instruction

Introduction

The debate surrounding the purpose of business has largely revolved around two dominant theories: stakeholder theory and shareholder theory. Stakeholder theory emphasizes the importance of creating value for all parties affected by a corporation’s actions, including employees, customers, suppliers, communities, and shareholders. Shareholder theory, rooted in the works of Milton Friedman, argues that the primary purpose of a business is to maximize shareholder wealth. The article by Porter and Kramer (2006) provides a compelling exploration of how corporate social responsibility (CSR) and competitive strategy intersect, offering a nuanced perspective that aligns more closely with stakeholder theory.

Overview of Stakeholder Theory

Stakeholder theory advances the idea that companies should serve the interests of all stakeholders rather than focusing solely on shareholders. This approach recognizes the interconnectedness of societal and economic outcomes, advocating for responsible corporate behavior that considers environmental sustainability, social equity, and ethical conduct (Freeman, 1984). It advocates for a broader, more inclusive view of corporate purpose, where long-term sustainability is achieved through balancing diverse stakeholder interests (Clarkson, 1995).

Analysis of Porter and Kramer's (2006) Perspective

Porter and Kramer (2006) argue that integrating CSR into business strategy can generate a competitive advantage when aligned with core business objectives. They introduce the concept of creating shared value (CSV), which emphasizes that societal progress and economic gain are mutually reinforcing (Porter & Kramer, 2006). This concept dovetails with stakeholder theory by recognizing that addressing societal issues—such as poverty, education, and environmental degradation—can lead to business opportunities and sustainable growth. Their approach suggests that corporations should move beyond superficial philanthropy towards strategic initiatives that benefit both society and business—core principles of stakeholder theory (Kanter, 2011).

Comparison with Shareholder Theory

In contrast, shareholder theory centers on profit maximization for shareholders as the primary obligation of management. It assumes that economic efficiency and shareholder value are the ultimate goals, often at the expense of other stakeholders (Friedman, 1970). While this approach has historically shaped corporate objectives, critics argue it fosters short-term thinking and neglects broader social responsibilities (Porter & Kramer, 2006). Porter and Kramer’s emphasis on shared value challenges this narrow view, suggesting that focusing solely on shareholder returns may undermine long-term profitability and societal well-being.

Evaluation of Stakeholder Theory in Light of the Porter & Kramer (2006) Article

The Porter and Kramer article effectively highlights that stakeholder theory offers a strategic framework for sustainable business practices. By aligning societal needs with corporate strategies, businesses can achieve competitive advantage while fulfilling their social responsibilities. Their shared value approach underscores that stakeholder engagement is not merely charitable but integral to long-term profitability. This perspective enhances traditional stakeholder theory by integrating it within strategic management, emphasizing that responsible actions can serve as drivers of innovation, reputation, and market differentiation (Porter & Kramer, 2006).

Implications for Business Purpose

Velasquez (2018) underscores the significance of understanding the purpose of business through these contrasting theories. The insights from Porter and Kramer lend support to the view that businesses should aim to create value for multiple stakeholders, balancing economic and social objectives. This shift from shareholder primacy to stakeholder integration reflects an evolution towards a more sustainable and ethical model of capitalism, where long-term societal well-being underpins corporate strategy (Davis, 2012).

Conclusion

In sum, Porter and Kramer's (2006) article advocates for a strategic integration of CSR that aligns with stakeholder theory, emphasizing shared value creation as a pathway to sustainable competitive advantage. While shareholder theory remains influential, emerging perspectives underscore the importance of considering a broader stakeholder base to ensure both societal progress and business success. The evolution toward shared value signifies a paradigm shift in understanding the purpose of business—moving away from profit maximization alone towards a model where economic and social goals are mutually reinforcing.

References

Davis, G. F. (2012). Can Business Save the World? Harvard Business Review, 90(11), 22-25.

Friedman, M. (1970). The Social Responsibility of Business is to Increase its Profits. The New York Times Magazine.

Freeman, R. E. (1984). Strategic Management: A Stakeholder Approach. Boston: Pitman.

Kanter, R. M. (2011). How Great Companies Innovate. Harvard Business Review, 89(11), 66-73.

Porter, M. E., & Kramer, M. R. (2006). Strategy and Society: The Link between Competitive Advantage and Corporate Social Responsibility. Harvard Business Review, 84(12), 78-92.

Velasquez, M. (2018). Business Ethics: Concepts and Cases. Boston: Cengage Learning.

Clarkson, M. B. E. (1995). A Stakeholder Framework for Analyzing and Evaluating Corporate Social Performance. Academy of Management Review, 20(1), 92-117.

Friedman, M. (1970). The Social Responsibility of Business is to Increase its Profits. The New York Times Magazine.

Davis, G. F. (2012). Can Business Save the World? Harvard Business Review.

Porter, M. E., & Kramer, M. R. (2006). Strategy and Society.