Stakeholder Theory : Managing A Firm Essay

1285 WordsSep 11, 20166 Pages
During the late twentieth century, different ideas became popular about how best to manage a firm. The first theory which emerged was Stockholder theory, which encouraged managers to act as agents for the company’s legal owners: it’s stockholders. This theory held that it was the function of a firm to act in the best interests of its owners by focusing on maximizing profits. Ensuring that the stockholders’ investments paid off was the fiduciary duty of the managers of this firm. However, some managers did not feel this style of management was best for their firms. There were other kinds of value that a firm could want to maximize, not just profits. A new theory emerged, called Stakeholder Theory, which completely altered how managers did business. Stakeholders were those who affect or are affected by a firm, and they fall into two categories: market stakeholders, who exchange money like employees or customers and nonmarket, like the environment. It can be challenging for managers to decide which stakeholders to prioritize, but a firm which uses Stakeholder Theory can effectively earn profits as well as generate a positive value to the community and environment in which it resides. One firm which has made stakeholders a focus is Salesforce. The chief executive officer of Salesforce is Marc Benioff, who has been outspoken about how important managing with the best interest of stakeholders in mind. First, when he launched his firm, he also created the Salesforce Foundation,
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