Philosophy 2074F/G Study Guide - Open-Question Argument, Fallacy
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14 Apr 2012
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Stakeholder Theory 4/13/2012 11:29:00 AM
Stakeholder Theory
The basic idea is that businesses, and the executives who manage
them actually do and should create value for customers, suppliers,
employees, communities, and financiers (or shareholders)
Two kinds of stakeholders:
o Primary/definitional – these are the stakeholders that have
direct, explicit contracts or relationships with the business
o Secondary/instrumental – these are the stakeholders without
a direct, explicit contract or relationship with the business
that nonetheless have an effect on the business or that the
business has an effect on
The Dominant Model is Wrong
The dominant model is resistant to change
o Freeman argues that Friedman's view makes stock value the
only real measure and promotes only immediate stock value
gain as a managerial goal – this is impractical
The dominant model is not consistent with law
o The laws that are relevant to business have evolved
differently around the world, but they have evolved to take
into account the interests of groups other than just
shareholders
Unions formed, Equal Pay Act, Age Discrimination in
Employment Act
The dominant model is not consistent with basic ethics
o No actions are actions to which ethics may not apply so any
action can be morally evaluated
o Separation Fallacy – business decisions are separate from
ethical decisions
Rejection of the separation fallacy:
The open question argument – businesses must
answer questions like “who will benefit” and
“whose rights are involved” when making
decisions which is why this fallacy is wrong
o The integration thesis – includes not just the application of
ethics to business, but the application of business to ethics