Four Principles Of Stakeholder Capitalism

Freeman, “Understanding Stakeholder Capitalism”

The concept of stakeholder capitalism has been misconstrued over the years because of misunderstandings about the “moral foundations” and fundamentals of stakeholder capitalism. The common ideal of capitalism is that business is an essential part of society rather than a separate entity. The primal question is if the responsibility of the business is to that to the stakeholders or shareholders. However, the goal of the company is actually to be profitable while maintaining a balance between shareholders and stockholders. The reading further goes on to illustrate the four principles of stakeholder capitalism: stakeholder co-operation, complexity, continuous creation, and emergent competition. The model behind stakeholder capitalism is that it aids the business in becoming an institution with morals and values; it goes beyond just earning profit. The central argument is that business and ethics must coincide with each other for a business to fully progress.

Gomory & Sylla, “The American Corporation”

We must realize that the market, state, and community are connected and these entities need each other to accomplish their goals. The community needs the market to provide good and services, simultaneously, the market needs to the community in order to provide moral values and judgment in the business world. Additionally, there are different forms of currencies in each sector. In the market, the primary goal is economic innovation and earning profits. In the government, the currency is power, and, in the community, the currency is morals and values. The main theme, though, is that despite the differences these sectors overlap constantly. For an example, Google is a company that supports its monetary goals as approved in the market place as well as its philanthropic goals in the community sector via