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

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.]