Marinel C.

Felipe January 17, 2018

BSA 4-1

Corporate and Social Responsibilities

Stakeholders theory and Shareholders theory is different when it comes to the

people they value. The shareholders theory focuses only to the owners and
shareholders of the company. They believe that those are the only important persons to
care for because they are the primary people behind the company and the company
has a binding fiduciary duty to put their needs first, to increase value for them. The other
one is the Stakeholders theory that argues that there are other parties involved in an
organization, including employees, customers, suppliers, financiers, communities,
governmental bodies, political groups, trade associations and trade unions. This theory
values all people who affect the firm. All of them have their own duties in an
organization that can positively or negatively affect the everyday operations of a
company. It is necessary for an organization to consider those people because of our
corporate and social responsibility.

Friedman’s Shareholders theory

Friedman doctrine focuses only to the shareholders or the people who took the
risk and invested in a firm. It talks about maximizing profits and returning its portion of
those profits to the shareholders. This doctrine advocates the social responsibility only
to the shareholders because its only concern is to increase profits for company and the
one who will give social initiatives are the shareholders in their private capacity. This
approach is controversial because of its inconsistency with the corporate social
responsibility. Friedman also repeatedly talks about the increasing of profits for the
shareholders without considering other people behind an organization. The shock
doctrine by Naomi Lein criticizes the theory because of the continuous poverty of most
citizens while the rich people are gaining enormous wealth.