Final answer:
Al Dunlap's focus on shareholders emphasizes financial investment, whereas stakeholder theory advocates for considering the wider impacts on all parties affected by a corporation. Differences between these perspectives reveal contrasting approaches to corporate responsibility and ethical considerations in business operations.
Step-by-step explanation:
The question centers around the claims made by former Sunbeam CEO Al Dunlap regarding the distinction between shareholders and stakeholders. Al Dunlap's perspective suggests that only shareholders, as the investors, should be the primary concern of a company's executives because they own a portion of the corporation through the financial capital they have invested, which entitles them to profits when the company is successful. This viewpoint is rooted in shareholder primacy theory, which is predicated on the duty of company managers to act in the best interest of shareholders and the assertion of rights associated with financial investment in the company.
However, stakeholder theory refutes this narrow focus on shareholders and advocates for a balance among the interests of all stakeholders, who may include employees, customers, communities, and others affected by the company's operations. Stakeholders, according to this theory, have a legitimate interest in the firm's activities even if they have not invested capital, because the business's actions can have significant impacts on their lives. Moreover, when corporate stock is bought and sold, the company typically does not receive any financial return from these transactions; the money moves between the current and the new shareholder, a concept that parallels buying a house wherein the builder does not profit from subsequent sales.
Reflecting on these differing perspectives, it is evident that while Dunlap highlights the financial investment aspect of shareholders, he bypasses the broader social and ethical implications that stakeholder theory brings to the forefront. The question of which approach is more appropriate depends on one's ethical standpoint and consideration of the broader impacts that a corporation has on society at large.