bus101 paper2.docx - Reflection Paper for The Purpose of...

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Reflection Paper for “The Purpose of the Firm” According to Micheal, Shareholder theory is a theory which focus on create wealth for owners instead of interacting with constituencies and society. Shareholder theory is on capitalism side that shareholder theorists support free market, self-regulation and enlightened self-interest rather than encouraging government and regulatory intervention. Firstly, Micheal takes one of the proponents “Austrian School” to emphasis the statement which against government intervention. To be specific, some of the members from “Austrian School” such as Firedrich, Joseph Knight and so on are all support the idea of capitalism which focus on self-regulation and limit government intervention. Secondly, Micheal gives another example “Chicago School” of economics which is a form of shareholder theory to exemplify that the firm should minimizing interaction with constituencies. Milton Friedman and his colleagues are all encouraging maximum the wealth of owners. They do not advocate the firms to participate corporate philanthropy and other activities because they think it is unrelated to produce wealth for owners. Finally, as Micheal mentioned, although Milton Friedman believe firm is not responsible for development of society, he still claim that “maximum shareholder’ wealth must be done moral, ethical, and legal boundaries of society. That offers a transaction to two shareholder based
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  • Spring '08
  • Rollins
  • Business, Firm, Stakeholder theory, shareholder theory

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