Shareholders often tend to be biased in decision making, as they are aware that their wealth can be put at serious risk if they perform a wrong move. In contrast, stakeholders are more likely to behave objectively when they know that their decisions will not necessarily affect their social position. Thus, stakeholders can behave more ethically than shareholders, but the downside on this is that the former have more chances of performing mistakes, as they know that the risks involved in most conditions that they encounter are lesser on their side.
In particular situations, stakeholders can feel more inclined to behave unethically, as they know that the risks involved are not decisive on their part while the profits will pay off. Shareholders, on the contrary, might feel that it would be safer for them to behave ethically, as they will only profit if all the other stakeholders will. Thus, shareholders act based on the theory that they protect their own interests by protecting the interests of all the other stakeholders involved. Moreover, shareholders can look after the interested of other stakeholders because of their certainty that their efforts will pay of sooner or later.
V: Why some believe that ethical behavior is essential for the benefit of business
A sacrifice made by a shareholder at a certain moment can materialize into profits,...
Henry Ford's solution when he realized that people did not have enough money to buy the cars he produced seemed to be irrational and unethical at the time when he came up with it. However, the fact that he decided to pay his employees more money eventually proved to be beneficial for all stakeholders involved in the Ford Corporation, as people gained enough money to buy cars and the company gained more customers.
One of the best solutions to incorporate ethics into business would be for individuals to combine moral principles with profits in their practices, in an attempt to please all stakeholders, ranging from customers to shareholders. An action performed by a community in particular can have a lesser or a more intense effect on all stakeholders that are part of the respective community.
Works cited:
1. Klein, Linda S. "Ethical Decision Making in a Business Environment," Review of Business 13.3 (1991).
2. Sauer, Wolfgang "Also a Concrete Self-Interest," UN Chronicle Sept.-Nov. 2002.
Linda S. Klein, "Ethical Decision Making in a Business Environment," Review of Business 13.3 (1991).
Wolfgang Sauer, "Also a Concrete Self-Interest," UN Chronicle Sept.-Nov. 2002.
