Society in Relation to Stakeholder Theory

Although capitalism is the favoured means of shaping the economy at the end of the twentieth century, significant disagreements concerned with the fundamental purpose of businesses still persist. The classical Friedmanite view of the profit-maximizing motive as the sole means of fulfilling 'social responsibilities' has been countered by Freeman's stakeholder approach. This new rationale advocates that all stakeholders have equal stake that decision makers have to consider. Freeman's stakeholder approach argues that the classical Friedmanite view violates Kant's categorical imperative (Freeman 247). However Freeman's proposed solution is also inadequate. This theory creates a paradox as a stakeholder can treat others as means only. The dilemma arises when management is unable to adjudicate between conflicting stakeholders. Freeman's stakeholder theory is a morally neutral theory. It does not adopt a normative stance. This neutral feature results in conflicting interests among stakeholders. To remedy this problem we propose a crucial modification of the stakeholder theory. This modified 'society-stakeholder theory' (SST) places society as the ultimate stakeholder. Initially, the framework of society in which businesses operate must be examined to ensure the practicality of SST.…