Cultural Encounters: A Journal For The Theology Of Culture Volume 10 Number 1 (Winter 2014) | Page 13

UNCOMFORTABLY NUMB - 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. 9