Reference no: EM132214949

Read through the below post and provide any on of the following: APA format 300 Words.

. Ask a probing question, substantiated with additional background information, evidence or research.

· Share an insight from having read your colleagues' postings, synthesizing the information to provide new perspectives.

· Offer and support an alternative perspective using readings from the classroom or from your own research.

· Validate an idea with your own experience and additional research.

· Make a suggestion based on additional evidence drawn from readings or after synthesizing multiple postings.

"The social responsibility of Business is to increase its profits"

Stockholder Theory

Some believe organizations should channelize their efforts to increase organization's profits, whereas some believe that organizations have an ethical responsibility toward the environment in which it operates. (Hunsaker, 2018 )

Milton Friedman's statement saying "The social responsibility of Business is to increase its profits" depicts a Stockholder/Shareholder theory. (Hunsaker, 2018 ) Every action taken by the managers should be to increase the profits for stakeholder's or investors of the organization.

Shareholders approve the salary of a corporation's business managers, who in turn, oversee the corporation's business managers, who, in turn, are in charge of the corporation's spending, which should also be in line with the wishes of the shareholders. (Hunsaker, 2018 )

An antithesis to the Stockholder theory is the "Stakeholder theory", which states that the organizations respect the interests of its stakeholders such as employees, vendors, customers, creditors etc. Managers should consider stakeholders interests while making any decisions. (Hunsaker, 2018 )

Common misconceptions

1. Stockholder theory is often misunderstood that business managers must do anything to maximize business profits. Anything done by managers should be legal and through non-deceptive measures. (Hunsaker, 2018 )

2. Stakeholder theory is often misunderstood that profit must be completely disregarded when adhering to this theory. (Hunsaker, 2018 )

What is your opinion about the aforementioned misconceptions? How can organizations still make profits by following the stakeholder theory?

3. Hunsaker, E. (2018 , December 10). Stockholder Theory Vs. Stakeholder Theory .