Stakeholders vs. Shareholders

Arthur T. Demoulas (recently fired by the Board of Demoulas Market Basket Supermarkets) is a wealthy entrepreneur who believes that caring for others should characterize a CEO, not just making a profit. His influence has extended beyond the employees whose loyalty has caused them to risk their jobs in protesting on his behalf. He has become a hero of a management philosophy that says the role of a business is much wider than making profits. A recent article in the Boston Sunday Globe, “Everybody Inc.” by Leon Neyfakh (August 3, 2014) describes the debate (long overdue) that has been developing about the social responsibility of corporations.

Prevalent thinking since about 1970 has been that the purpose of a corporation is to maximize profits and increase the stock price value, so that shareholders (and CEOs) receive the highest return. The focus on stock market success has the advantage of simplicity, but also has the shadow side of dubious accounting practices to inflate profits, corporate raiders exploiting vulnerable companies to make a quick profit, unscrupulous banking practices that set off the 2008 Recession, and off-shoring to avoid paying US corporate taxes (to name a few of the negatives). The American corporation in a global market is rapidly losing any connection to its homeland and any responsibility to the communities which help it make a profit. Also too many corporations have lost any sense of connection and responsibility to the Earth we call home. How many companies have closed their plants in our communities and left toxic waste for the government to clean up? How many show any real concern about the effects of climate change?

The opposing philosophy is stakeholder value, which says that the role of a corporation is much wider than profits for the few. Employees, customers, neighbors, communities, nations and indeed the whole Earth have a stake in the success of corporations. In his article Leon Neyfakh quotes Lynn Stout, a professor at Cornell University and author of “The Myth of Shareholder Value”: “Corporate social responsibility means running a business that contributes to public welfare – that’s the moral defense of capitalism. Business should be a force for good, not for the enrichment of a few small individuals.” The Hebrew prophets and Jesus would certainly agree: “what does the LORD require of you but to do justice, and to love kindness and to walk humbly with your God” (Micah 6:8); “You serve your own interest on your fast day and oppress all your workers … the fast that I choose … (is) to lose the bonds of injustice and let the oppressed go free” (Isaiah 58:3, 6); “Take care! Be on your guard against all kinds of greed; for one’s life does not consist in the abundance of possessions” (Luke 12:15).

So many modern trends undermine community and tear asunder the bonds that would unite people. Greed lies behind many of these trends. We need fewer examples of greed and more of generosity and reciprocity. Reciprocity teaches us that life is not about me getting more but about relationships and mutual respect and caring. This applies whether the context is a business, neighborhood, school, farming community or a rain forest. “Treat others the way you wish to be treated” (Luke 6:31) said Jesus.

About John Fisk

I am a retired pastor, who served churches in New England for 33 years. I emigrated to the USA from England in 1974 and completed two graduate degrees in theology and pastoral practice at Andover-NewtonTheological School. In retirement I am focused on the teaching of Christian meditation, providing spiritual guidance, leading retreats and occasional preaching. I am particularly interested in contemplation, the mystical path and social justice.
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4 Responses to Stakeholders vs. Shareholders

  1. Ray Scanlon says:

    Thank you so much for this thoughtful and informative post, John. This issue is near and dear to the hearts of many for whom the Market Basket saga dramatizes some of the most important issues facing American society today, including income inequality, the disappearance of the middle class, civic and social responsibility, and so many more…
    Well done!
    Cheryl Brooks

  2. Wendy Oliver says:

    Hurrah for the triumph of Artie T and all who risked so much to support him!

  3. Pingback: “The Still Point” Annual Review | The Still Point

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