Cultural Encounters: A Journal For The Theology Of Culture Volume 10 Number 1 (Winter 2014) | Page 13
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- Metzger
in the divine image are valued for their inherent worth as those loved by God
rather than for how they benefit the free market’s shareholders.
This calls to mind a recent Economist article that explores the longstanding
debate on whether firms should focus their attention on shareholders or
stakeholders. The headline reads, “The economic crisis has revived the old
debate about whether firms should focus most on their shareholders, their
customers or their workers.” The essay includes the following:
In an article in a recent issue of the Harvard Business Review, Roger
Martin, dean of the University of Toronto’s Rotman School of
Management, charts the rise of what he calls the ‘tragically flawed
premise’ that firms should focus on maximising shareholder value,
and argues that ‘it is time we abandoned it.’ The obsession with
shareholder value began in 1976, he says, when Michael Jensen and
William Meckling, two economists, published an article, ‘Theory of
the Firm: Managerial Behaviour, Agency Costs and Ownership
Structure’, which argued that the owners of companies were getting
short shift [sic] from professional managers. The most cited
academic article about business to this day, it inspired a seemingly
irresistible movement to get managers to focus on value for
shareholders. Converts to the creed had little time for other
‘stakeholders’: customers, employees, suppliers, society at large and
so forth. American and British value-maximisers reserved particular
disdain for the ‘stakeholder capitalism’ practised in continental
Europe.5
Shareholders are stakeholders in corporations, but not all stakeholders are
shareholders. While shareholders own portions of companies through
ownership of stocks, stakeholders are concerned about the performance of
companies based on various factors, not just the appreciation of stocks.
Stakeholders can include employees, customers, suppliers, bondholders, and
the general public. According to a May 8, 2009, entry at Investopedia,
The new field of corporate social responsibility (CSR) has
encouraged companies to take the interests of all stakeholders into
consideration during their decision-making processes instead of
making choices based solely upon the interests of shareholders. The
general public is one such stakeholder now considered under CSR
governance. When a company carries out operations that could
increase pollution or take away a green space within a community,
5. “Shareholders vs. Stakeholders: A New Idolatry,” The Economist, April 22 , 2010.
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