Satisficing, a concept introduced by economist Herbert Simon, diverges from the traditional profit maximization theory in corporate management. While profit maximization focuses on achieving the highest possible profits, satisficing suggests that managers often aim to meet satisfactory thresholds rather than striving for absolute maximization.
In the context of satisfying stockholders, satisficing implies that corporate managers might prioritize meeting a certain level of profitability or shareholder expectations rather than relentlessly pursuing the absolute maximum profits.
This approach acknowledges various constraints and complexities within the business environment, such as uncertainties, ethical considerations, and multiple stakeholder interests beyond just shareholders.
Managers might set goals that balance the interests of stakeholders, including employees, customers, and the community, alongside shareholders.
This could involve decisions that prioritize long-term sustainability, ethical practices, or investments in employee welfare and innovation, even if it means foregoing potentially higher short-term profits.
Satisficing, therefore, doesn't discount shareholder interests but suggests that profit maximization isn't the sole driving force in managerial decision making.
It advocates for a more balanced approach, taking into account various stakeholders' needs and broader societal impacts while aiming to achieve acceptable outcomes for shareholders within these constraints.