Managerial Model:

- has put the shareholders in the center to be most important group of

managers
Dominant Model is resistant to change:
- Shareholders interest is more important than of those customer,
employees, suppliers when they have conflicting interests
- Hierarchical organization that only is put together for the
interests of shareholders
- Do what shareholders want you to do attitude
- Change only happens when shareholder want it to happen
- Difficult to adapt to this model as the world is changing the only
shareholders interest cant be weighed by itself
- Adapt to the change for better results

Arguments from Consequences:

- Adam Smith arguing the Dominant model with the invisible hand
Argument from Rights:
- Dominant theory is property rights exclusive to shareholders in
corp.
- Questions about rights of stakeholders
- If executives take the stakeholders seriously then the fairness
automatically comes in
Argument of Character:
-

Stakeholders own view about what they want to build

Aspiration is a must
Being ethical, loyal, committal, fair is important
Dominant model doesnt support being ethical, loyal, committal,
fair is important
How to create value for the shareholders vs. How we create
and sustain the creation of value for stakeholders
Taking a stakeholder approach helps people decide how
companies can contribute to their well-being and the kinds of
lives they want to lead
Clear expectations about ethics can help avoid bad faith

Managing for Stakeholders:

Theory about identifying the groups who are stakeholders in a

corporation and need to be managed

The Pragmatist Arguments:

- How to live together better
- Build better communities to value freedom and harmony
The Pragmatist View:
- Business is about collaboration, trades
- Achieving something bigger by collaborating
Managing for stakeholders makes this plain so that we can get
about the business of creating better selves and better
communities.
Pragmatists . . . hope instead that human beings will come to enjoy
more money, more free time, and greater social equality, and also that
they will develop more empathy, more ability to put themselves in the
shoes of others. We hope that human beings will behave more
decently toward one another as their standard of living improves.
The Argument from Consequences
Shareholder and stockholders interests should be regarded as joint
-Freeman would opt for having Subprime market setting to be implemented
- The subprime market will provide more leniencies towards the borrowers.
- Financial institute will be open to more profit
- Providing home ownership to the clients
The Arguments from Rights
If executives take managing for shareholder seriously, they will automatically think abut
what is owed to others.
Freeman would try to eliminate the screening rule that only permits loans to highly
qualified borrowers (pg5)
-

If one person has a right to X then all person has right to X (Freeman, pg28)
Finance management provided to these client would earn the bank loyal
customers
Bank can become a better member of the community promoted by happy
clients

Differentiating