The Evolution of the Corporation

In a capitalist society where the growth and power of corporations are ever evolving it is critical to determine the effects and consequences this evolution brings upon the business world. The Stockholder Theory maintains that managers should act merely as agents to the stockholder and only serve their interests-the maximization of profits (45). Milton Friedman's argument being, they are the owners of the business, and hence they should be entitled to all profits (45). Although this simple profit-motive concept may achieve the desired result, and address all of the interests of the stakeholders it lacks compassion that is so prevalent, and in my opinion superior, in the following theory.

In Edward Freeman's A Stakeholder Theory of the Modern Corporation he suggests a transformation of the corporate system by replacing the notion that managers have a duty to stockholders with the...