The Evolution of the Corporation

The Evolution of the Corporation

The Evolution of the Corporation

In a capitalist society where the growth and power of corporations are ever evolving it is critical to determine the effects and consequences this evolution brings upon the business world. The Stockholder Theory maintains that managers should act merely as agents to the stockholder and only serve their interests-the maximization of profits (45). Milton Friedman's argument being, they are the owners of the business, and hence they should be entitled to all profits (45). Although this simple profit-motive concept may achieve the desired result, and address all of the interests of the stakeholders it lacks compassion that is so prevalent, and in my opinion superior, in the following theory.

In Edward Freeman's A Stakeholder Theory of the Modern Corporation he suggests a transformation of the corporate system by replacing the notion that managers have a duty to stockholders with the concept that managers bear a fiduciary relationship to stakeholders (56). In its narrow definition stakeholders refer to customers, suppliers, management, owners, employees and the local community- those that are vital to the survival and success of the corporation. This direct approach of focusing on the interests of all those that are vital to its survival embraces all of the elements that have evolved in our society as a result of the absence of direct concern or lack of morality for the stakeholders in the Stockholders Theory.

Over the years, the sole pursuit of managerial capitalism, the basis of the Stockholder Theory, in its unconstrained manner through deception and manipulation has resulted in the promulgation of laws to protect the interests of stakeholders...

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...others takes precedent over ourselves? Some of us would like to think so but this is a topic for another paper.

Works Cited

Beachamp, Tom L., and Norman Bowie (eds). Ethical Theory and Business. 7th edition. Upper Saddle River, New Jersey: Pearson Prentice Hall, 2004.

Freeman, Edward R. and William E. Evans, A Stakeholder Theory of the Modern Corporation: Kantian Capitalism. Business Ethics Quarterly 3/4. (1988 and 1993): 55-65. In Beachamp, Tom L., and Norman Bowie (eds). Ethical Theory and Business. 7th edition. Upper Saddle River, New Jersey: Pearson Prentice Hall,

Friedman, Milton. The Social Responsibility of Business Is to Increase Its Profits. New York Times Magazine, September 13, 1970: 50-55. In Beachamp, Tom L., and Norman Bowie (eds). Ethical Theory and Business. 7th edition. Upper Saddle River, New Jersey: Pearson Prentice Hall, 2004.