REFINING THE ROLE OF THE CORPORATION: THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON SHAREHOLDER PRIMACY THEORY

HUGH ALEXANDER GROSSMAN

Abstract


[Evidence indicates that we may be witnessing a redefinition of traditional theories of the role of the corporation. Traditional shareholder primacy theory contends that a corporation is primarily responsible to its share- holders to maximise wealth, consequently social factors should not inter- fere in a corporation’s business operations. In the modern business setting however, a company’s core objective of profit maximisation must be un- derpinned by a proactive approach to corporate social responsibility in order to manage and mitigate a broader array of risk factors. Managing risk via community engagement and the implementation of socially re- sponsible strategies is increasingly linked to business success and stake- holder confidence. Intangibles such as trust, ethics, corporate culture, employee satisfaction, environmental behaviour and community responsi- bility are increasingly relevant to consumers, business partners, govern- ments, special interest groups, existing and potential employees and investors.] 


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DOI: http://dx.doi.org/10.21153/dlr2005vol10no2art293

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