if a focus on stakeholders always or usually benefited shareholders, then there would be no reason to argue for a focus on stakeholders. Thus, one can reasonably assume that those who advocate a focus on “stakeholders” believe that such actions would make shareholders worse off, but that this social tradeoff is worthwhile.
I doubt that anyone says this out loud. In any case, Taylor links to a paper by Bebchuk, et al, that finds (as they and others have always found) that CEOs focus on shareholders.
Since the CEO’s job, at least as explained to me by a few MBA friends, is to provide value to the shareholders, finding out that CEOs focus on shareholders sounds like another “Water Is Still Wet” study.
And I disagree with the premise. It isn’t reasonable to assume that focusing on stakeholders is to the detriment of shareholders simple because it (potentially) doesn’t happen. Lots of things happen in business because that’s the way it’s done or because that’s what other businesses do. A third option is that there are ways to focus on both to the benefit of both, but because business practices evolve slowly they aren’t common.
Right. Even Friedman in his famous essay writes that corporate social responsibility may help a firm by helping it attract better (more productive) employees. Most (but not all) research shows that companies engaged in CSR have higher values than other firms. Most research shows that companies on a best place to work list outperform other companies. The problem is stakeholder theory, the “triple bottom line” (people, planet, profits), the balanced scorecard, and other such considerations are used as excuses by management for not creating value.
Public companies, including multinationals, have fiduciary responsibilities to shareholders to maximize profits. The only other obligation is to comply with law.
If a multinational maximizes profits in a way that undercuts US interests, that is too bad. Stakeholders can go rot.
We might as well resurrect this one. Is this really 2005? Jeez I’m getting old.
https://reason.com/2005/10/01/rethinking-the-social-responsi-2/
Stakeholders versus shareholders is one thing. Asset managers playing stakeholder with other peoples’ money is another. A strong case can be made that BlackRock is an existential threat to the American people and doing more damage than Biden, Russia, and China combined. https://www.cfodive.com/news/blackrock-losing-patience-pace-corporate-esg-disclosure/606720/