Initial Question: Read the following article: Porter, Michael E., and Mark R. Kramer. "Strategy and Society: The Link between Competitive Advantage and Corporate Social Responsibility." Harvard Business Review 84, no. 12 (December 2006): 7892.

Comment on your evaluation of stakeholder theory in the context of the Porter & Kramer article. How does this compare to shareholder theory? As stated by Velasquez (2018), "The two theories are critical to one's view of the important question: What is the purpose of business?" (p 17).

Respond to 2 students:

Student 1:

The Porter and Kramer article puts much emphasis on the stakeholder theory. This is the theory that businesses operate for the benefit of the stakeholders. Stakeholders are defined by Velasquez as anyone that can harm, benefit, or influence the corporation, as well as anyone the corporation can harm, benefit, or influence. (15). Primarily based on the Stakeholder theory, the article frames CSR as the optimal plan for business credibility, longevity, and sustainability. Generally, the stakeholder theory does not equate to a profitable business but focuses on businesses making a positive contribution to society and concentrates on the value of the business instead of profits. For instance, one example used in the article was of a food distributor, Sysco. They have created an initiative to source locally grown produce from local family farms. (91). This results in the added value of business of small farms and creates a market advantage for Sysco with homegrown produce. CSR goes beyond making charitable contributions but choosing to make conscious decisions about what types of materials are used in manufacturing, how materials and goods are sourced, and employment in such as way as to not have a negative impact on the environment, economy, and other stakeholders. In comparison, the shareholder theory focuses on businesses making a profit, with the only obligation of a business being to make money for the shareholders.

Student 2:

According to our text, a stakeholder is any identifiable group or individual who can affect the achievement of an organization's objectives. A stakeholder is anyone that can harm, benefit, or influence the corporation. The article discusses how the government, media, and activists will hold companies accountable for the social consequences of their activities. Some companies are being held for their corporate social responsibilities. These rankings can sometimes persuade the public on whether or not they will be associated with a particular store or not. This has caused there to be business opportunities in every country.

It is important that managers try to balance the interests of stakeholders so that each stakeholder gets a fair share of the benefits that the corporation produces. The manager then has the responsibility of running the company in a way that serves the interests of all stakeholders, not just stockholders. The stakeholder theory does not claim that managers should make a profit. It doesn't even say that managers should try to maximize their profits. The stakeholder theory is about who should get the profits. The shareholder theory says that the managers should try to maximize what goes to other stakeholders. The stakeholder theory says that the manager should give stockholders a fair share of profits, but in a way that allows all other stakeholders to also get their fair share.

Obviously, the purpose of business is to make a profit. No company wants to lose money. I think it is a win/win situation when the company is able to make a profit. Everyone will benefit from it.