Business Ethics in Financial Sector

Anton Jamnik

Economic Research-Ekonomska Istraživanja, 2011, vol. 24, issue 4, 153-163

Abstract: Proponents of the financial theory of the firm generally argue that other constituencies should either protect themselves (workers can bargain for safer working conditions, for example) or seek regulatory protection by means of occupational safety and health laws. On the financial theory of the firm, the responsibility for upholding ethical standards, forcing the internalization of costs, and so on, belong ultimately to government, not to corporate managers. The main argument for this position is that corporate managers have neither the right nor the ability to pursue multiple, nonfinancial goals.By contrast, stakeholder theory contends that the list of corporate constituencies includes all those who have a legitimate interest in the activities of a firm, regardless of any interest that the firm takes in them. Furthermore, the interests of these stakeholder groups merit consideration for their own sake, not because of their usefulness to the firm. Stakeholder theory has not been developed as a full-fledged alternative to the financial theory, and it is questionable whether it is necessarily incompatible with it. SWM is justified on the financial theory for its benefits to the whole of society, which includes all stakeholder groups. Corporate managers need not consider the interests of all stakeholders as long as these interests are adequately protected by some means, such as government regulation. In addition, managing a corporation with attention to stakeholder interests may be an effective means for maximizing shareholder value. Some very successful companies are driven by philosophies that put employees or customers first.

Date: 2011
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DOI: 10.1080/1331677X.2011.11517489

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