In his paper, Carson points out 4 main arguments that we can derive from the recent corporate scandals (e.g. Enron, WorldCom). The arguments pointed out revolve around the flaws and inadequacy in current business approaches such as the stakeholder theory, shareholder theory and incentives system in corporations currently. In my response paper, I will make use of ethical theories such as Kantian ethics, Utilitarianism, Rawl’s theory of justice etc. to analyse the arguments made in the paper and to evaluate if some of the corporate acts mentioned in the paper are ethical.
Weaknesses in Stakeholder Theory
Carson pointed out that one of the most evident flaws in the stakeholder theory is that it is not does not show that fraud and deception should be prohibited explicitly. What it focuses on, as stated by Edward Freeman, is ensuring the rights of the various stakeholders and the management acting in the interests of the corporation to safeguard the long-term stakes of stakeholders.
I feel that the point about prohibiting fraud and deception need not be explicitly stated out in the shareholder theory itself. In my opinion, the harms which will be brought caused by fraud to the corporation and society is so great that there have been various laws such as Misrepresentation which have been set up to explicitly prohibit any form of fraud and deception. Furthermore, most if not all the ethical theories will disapprove against the action of fraud and deception. Using Kant’s Principle of Universality, fraud and deception definitely cannot be applied universally to all settings as the person committing the fraud himself would not want to be deceived in the same way which will affect his autonomy to make a rational decision if he were the one as a victim of the fraud. Therefore, in this case the maxim of the person committing fraud which is he should be entitled to commit fraud to bring in more profits is not applicable to the whole universe. Thus, it fraud and...
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