Utilitarianism
Bachelor of Science (Hons) in Accounting and Finance
Module: MAN0812M – Ethics in Business and Society
Individual Assignment
Lecturer: Mr Darwin Joseph
Q1. Shareholder theory argues that maximising shareholder interest (typically profit maximisation) will, via Adam Smith’s “invisible hand” tend to maximise utility because it will result in the most favourable happiness/unhappiness ratio. (On the hand) Advocates of stakeholder theory argue that all stakeholders (shareholders, employees, customers, suppliers, society etc) should be taken into considerations directly in the utilitarian calculation and that this would be a more ethically defensible approach.”
Choose one side of this argument and use a utilitarian framework to argue in favour, using the framework to show the weakness in the opposite view
Introduction
Utilitarianism is a justification for free-market capitalism. It is a moral perspective that aims to achieve the greatest social benefit net of social cost or, more express informally as “one that maximizes utility”
Both shareholder and stakeholders are theories of Corporate Social Responsibility (CSR) and deciding the role of a firm. It can also be used as guidance for business ethics, because employees of a corporation should make decisions according to following theory “an action is morally right if the consequences of that action are more favourable than unfavourable” theory. Unfortunately, the theories are very much at odds.
Before choosing any side of argument, it is important for us to provide an outline of the theory, as we understand it.
The origins ideas of shareholder theory were started by Adam Smith’s (1776) from the book “The Wealth of Nations” more than 200 years old. In brief, it surrounded the idea that the firm’s main purpose of is to generate profit and thus increase shareholder wealth.
Freeman (1994) defined the term “stakeholder” as “any cluster or person that can influence or be
Module: MAN0812M – Ethics in Business and Society
Individual Assignment
Lecturer: Mr Darwin Joseph
Q1. Shareholder theory argues that maximising shareholder interest (typically profit maximisation) will, via Adam Smith’s “invisible hand” tend to maximise utility because it will result in the most favourable happiness/unhappiness ratio. (On the hand) Advocates of stakeholder theory argue that all stakeholders (shareholders, employees, customers, suppliers, society etc) should be taken into considerations directly in the utilitarian calculation and that this would be a more ethically defensible approach.”
Choose one side of this argument and use a utilitarian framework to argue in favour, using the framework to show the weakness in the opposite view
Introduction
Utilitarianism is a justification for free-market capitalism. It is a moral perspective that aims to achieve the greatest social benefit net of social cost or, more express informally as “one that maximizes utility”
Both shareholder and stakeholders are theories of Corporate Social Responsibility (CSR) and deciding the role of a firm. It can also be used as guidance for business ethics, because employees of a corporation should make decisions according to following theory “an action is morally right if the consequences of that action are more favourable than unfavourable” theory. Unfortunately, the theories are very much at odds.
Before choosing any side of argument, it is important for us to provide an outline of the theory, as we understand it.
The origins ideas of shareholder theory were started by Adam Smith’s (1776) from the book “The Wealth of Nations” more than 200 years old. In brief, it surrounded the idea that the firm’s main purpose of is to generate profit and thus increase shareholder wealth.
Freeman (1994) defined the term “stakeholder” as “any cluster or person that can influence or be
References: Website (8) http://www.cim.sfu.ca/folders/currentprojects/2-stakerholder-brochure.pdf (accessed on 18/07/2013) http://digitalcommons.liberty.edu/cgi/viewcontent.cgi?article=1229&context=honors (accessed on 20/07/2013) http://www.environmentalleader.com/2011/05/26/does-corporate-social-responsibility-increase-profits (accessed on 18/07/2013) http://www.economist.com/node/15954434 (accessed on 15/06/2013) http://www.enterpriseethics.org/Portals/0/PDFs/good_business_chapter_07.pdf (accessed on 16/07/2013) http://www.investopedia.com/terms/i/invisiblehand.asp (accessed on 20/07/2013) http://responsiblebusiness.haas.berkeley.edu/documents/FinalPaperonCSR_PDFII.pdf (accessed on 18/07/2013) http://sloanreview.mit.edu/article/the-shareholders-vs-stakeholders-debate/ (accessed on 16/07/2013) Others (5) Cooke, Philip, and Wills, David. (1999) Small firms, social capital and the enhancement of business performance through innovation programmes. Small business economics .13(3): 219-234 Collins, J.C Mathews R, Samouel P and Wheeler D. (1998) Supply Chain Alliances. In: A New Vision for business, Report of the Committee of Inquiry to the Prime Minister. Smith, H