Final answer:
The CEO's statement about watching out for their own and their company's interests refers to the Principle of Long-Term Self-Interest, which suggests a focus on long-term benefits in a competitive business environment. This principle is part of business ethics and contrasts with stakeholder theory but aligns with the shareholder primacy model.
Step-by-step explanation:
When a CEO emphasizes the importance of vigilance for their own and their company's interests in a competitive industry, they are usually referring to the Principle of Long-Term Self-Interest. This principle suggests that actions should be guided by what is in the best interest of oneself or one's company over the long term, as opposed to short-term gains or purely altruistic actions. It is understood within the framework of business ethics that while focusing on self-interest in economic decisions is common, individuals often balance this by engaging in non-self-interested actions in other aspects of their lives, such as volunteering or philanthropy.
Stakeholder theory contrasts with this by advising a balance between the interests of all individuals and groups who have a stake in the company, not just the shareholders. Nonetheless, many business leaders, like the student in question, may still align more closely with the shareholder primacy model, which holds that the primary obligation of company executives is to the shareholders, by increasing the company's value.