Question

Frank thinks that it is inappropriate for his company, BSD Corporation, to spend valuable company time and resources on meeting with stakeholder groups. He, and others who oppose stakeholder involvement, identify the following rationale(s):

a) Stakeholder engagement improves corporate reputation
b) Stakeholder engagement enhances decision-making
c) Stakeholder engagement is time-consuming and costly
d) Stakeholder engagement fosters innovation

Answer 1

Frank considers stakeholder engagement inappropriate due to its potential cost and time requirements, while others argue it can improve decision-making and innovation. This difference reflects the disparity between shareholder primacy, focusing on shareholder returns, and stakeholder theory, which values the broader interests of all stakeholders.

Step-by-step explanation:

Frank believes that stakeholder engagement is inappropriate for his company, BSD Corporation, as it can be time-consuming and costly. In contrast, others maintain that engaging with stakeholders can enhance a company's decision-making, drive innovation, and improve its reputation. The debate between shareholder primacy and stakeholder theory is central to this question. Shareholder primacy focuses on maximizing returns for shareholders, the individuals who have invested capital in the corporation. Stakeholder theory contends that a company should serve the wider interests of all stakeholders, which includes not only shareholders but also employees, customers, and the community, reflecting a broader responsibility that can lead to a variety of business benefits.