Utilitarianism & Stockholder Theory
Utilitarianism & Stockholder Theory
There are many theories when it comes to business ethics and what approaches to take. Two of these leading theories today are Stakeholder Theory and Stockholder Theory. But how does a business executive decide which theory to use when approaching business ethics? This could be determined by the choice of ethical decision-making model by the individual executive. In this essay, I will attempt to provide a basis for which a utilitarian thinking business executive will lead to approaching business ethics by using Stockholder Theory.
Utilitarianism tells us that in order to make the most ethical decision, one must choose the path that will result is maximizing utility, defined as maximizing happiness and reducing pain. A utilitarian will make their decision based on what outcome produces the greatest good for the greatest number of individuals, where “good” is usually defined as the net benefit (the good minus the bad) for each party affected by the decision. This is also conveyed in the often-stated expression of utilitarianism “the end justifies the means”. A utilitarian will look at all options and select the option that attempts to maximize the overall utility.
However, we are not talking about just any individual off the street. How does a business make ethical business decisions? Since a business or corporation itself cannot make decisions – it cannot be humanized – we look to the business executives to make such decisions. These are the individuals we are interested in. So how does a utilitarian executive make an ethical business decision?
In his own day-to-day life, a business executive may be able to make any ethical choice he chooses – donate to a charity, recycle, contribute to society in a beneficial way – he can choose to do whatever he pleases with his money to maximize utility in the world around him. However, at his place of business, he is not his own person anymore. The business executive is but an agent of his
There are many theories when it comes to business ethics and what approaches to take. Two of these leading theories today are Stakeholder Theory and Stockholder Theory. But how does a business executive decide which theory to use when approaching business ethics? This could be determined by the choice of ethical decision-making model by the individual executive. In this essay, I will attempt to provide a basis for which a utilitarian thinking business executive will lead to approaching business ethics by using Stockholder Theory.
Utilitarianism tells us that in order to make the most ethical decision, one must choose the path that will result is maximizing utility, defined as maximizing happiness and reducing pain. A utilitarian will make their decision based on what outcome produces the greatest good for the greatest number of individuals, where “good” is usually defined as the net benefit (the good minus the bad) for each party affected by the decision. This is also conveyed in the often-stated expression of utilitarianism “the end justifies the means”. A utilitarian will look at all options and select the option that attempts to maximize the overall utility.
However, we are not talking about just any individual off the street. How does a business make ethical business decisions? Since a business or corporation itself cannot make decisions – it cannot be humanized – we look to the business executives to make such decisions. These are the individuals we are interested in. So how does a utilitarian executive make an ethical business decision?
In his own day-to-day life, a business executive may be able to make any ethical choice he chooses – donate to a charity, recycle, contribute to society in a beneficial way – he can choose to do whatever he pleases with his money to maximize utility in the world around him. However, at his place of business, he is not his own person anymore. The business executive is but an agent of his