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Essay / Research Paper Abstract
This 6-page paper focuses on the business firm and its responsibility. Also discussed are shareholder and stakeholder theories. Bibliography lists 6 sources.
Page Count:
6 pages (~225 words per page)
File: AS43_MTbusifirm.rtf
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Unformatted sample text from the term paper:
bottom line - over the long term. If employees needed to be cut or suppliers dropped to help improve the balance sheet it was too bad - but all in
a days work. These days, however, firms are finding themselves with more than a responsibility to make money. Rather, theyre supposed to
be good corporate citizens as well. The problem is, however, the firm is finding it more and more difficult to be all things to all people. Responsibilities of
the Firm The shareholder theory, launched by economist Milton Friedman, is that businesses have one, and only one theory - to increase
profits, so long as it follows the rules (Carson, 2003). Friedman goes on to point out that a corporate executive is the employee of the business owners, and has direct
responsibility to his employers to make as much money as possible, while conforming to the rules of society (Carson, 2003). In other words, everything else can go hang - employees,
suppliers and the community - none of that is the concern of the firm. Making money is the only concern. However, the
problem with shareholder theory (at least according to a column written by Christensen and Anthony in 2007), is that it forces managers to make decisions that impact only the bottom
line. This means managers wont take risks on innovations; after all, such investments could hurt short-term financial performances (Christensen and Anthony, 2007). The problem with the shareholders today is impatience
- once shareholders were willing to wait years for their return on investments. But in this day and age, shares are held, on average, for less than 10 months -
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