Case Study “Al Dunlap at Sunbeam”
Case Study “Al Dunlap at Sunbeam”
Response to Dunlap’s view of shareholder privacy
I don’t agree with Dunlap’s view that shareholders are the only constituencies about which corporate directors and executives should be concerned. In light of agents’ obligations to principals, managers are supposed act in the best interest of the company’s shareholders, the major capital providers, when making decisions; however, as shareholders and stakeholders interests are to a large extent compatible, especially from a long-term perspective, managers should also take into consideration the interests of multiple constituencies when operating a company. For example, both shareholders and customers may benefit from a company’s successful research and development (R&D) projects on cutting-edge products as customers can have high-value products while shareholders may profit considerably from the sales. Meanwhile, like shareholders, stakeholders also have their rights that managers should not treat with negligence. Below are some examples: customers have the right to receive safe products that they purchase; lenders have the right to receive interests at a negotiated rate and principal at maturity; employees have the right to work in a safe environment and be treated with respect for their dignity and human rights; competitors have the right to be treated fairly without groundless slanders or violation of their intellectual properties. Some of stakeholders’ rights are stated clearly in different laws and regulations, which aim to protect stakeholders and reinforce a business entity’s accountability to its multiple constituencies. Also, stakeholders can earn some rights due to their initiative positions in market. For instance, given the lenders’ finite resources for lending, lenders enjoy the right to acquire further disclosure regarding borrowers’ business or other concerns because they can decide whether or not to lend money to a certain prospective borrower. Likewise, customers
Response to Dunlap’s view of shareholder privacy
I don’t agree with Dunlap’s view that shareholders are the only constituencies about which corporate directors and executives should be concerned. In light of agents’ obligations to principals, managers are supposed act in the best interest of the company’s shareholders, the major capital providers, when making decisions; however, as shareholders and stakeholders interests are to a large extent compatible, especially from a long-term perspective, managers should also take into consideration the interests of multiple constituencies when operating a company. For example, both shareholders and customers may benefit from a company’s successful research and development (R&D) projects on cutting-edge products as customers can have high-value products while shareholders may profit considerably from the sales. Meanwhile, like shareholders, stakeholders also have their rights that managers should not treat with negligence. Below are some examples: customers have the right to receive safe products that they purchase; lenders have the right to receive interests at a negotiated rate and principal at maturity; employees have the right to work in a safe environment and be treated with respect for their dignity and human rights; competitors have the right to be treated fairly without groundless slanders or violation of their intellectual properties. Some of stakeholders’ rights are stated clearly in different laws and regulations, which aim to protect stakeholders and reinforce a business entity’s accountability to its multiple constituencies. Also, stakeholders can earn some rights due to their initiative positions in market. For instance, given the lenders’ finite resources for lending, lenders enjoy the right to acquire further disclosure regarding borrowers’ business or other concerns because they can decide whether or not to lend money to a certain prospective borrower. Likewise, customers