Stakeholder of The Modern Corporation

The Attack On Managerial Capitalism

The legal argument : management can pursue market transactions with suppliers and customers in an unconstrained manner. But since the corporation is a legal person, exiting in contemplation of the law, managers of the corporation are constrained by law. The changes of legal system giving some rights to those groups that have a claim on the firm, example customers, suppliers, employees, local communities, stockholders and management. The law also has been progressively circumscribing the idea of managerial capitalism that propose interest and benefit should the firm be managed for the stockholder.

The economic argument : Managerial capitalism seek to maximize the interest of stockholders. Management espouses the invisible hand doctrine, therefore do not need intervene of government. But in fact, a lot of externalities, moral hazard, and monopoly power effect by this. Other side we can see many pollution of water and air. It effected by the firm that no one has incentive to incur the cost of clean-up or the cost of non pollution since the marginal gain of one firm’s actions small. Of course those problems can give bad impact for society. So the intervene of government is need as controller and regulator both business and market transactions.

Stakeholders Of The Modern Corporation

Of course we know that corporation have stakeholders , that is , group and individuals who benefit from or are harmed by and whose right are violated or respected by, corporate actions. The narrow definition includes those groups who are vital to the survival and success of the corporation. While the wide definition includes, individual ,any groups and any party also external environment who can effect or effected by the corporation.

In typical corporation we can see many stakeholders of this condition, i.e. owners, suppliers, employees customers, local community, and management.

· Owners have financial stake in the corporation in the corporation in the form of stocks, bonds, and so on, and they expect some kind of financial return from them.

· Suppliers, interpreted in stakeholder sense, are vital to success of the firm, for raw material will determine the final product’s quality and price.

· Employees have their jobs and usually their livelihood at stake, they often have specialized skills for which there is usually no perfectly elastic market.

· Customers exchange resources for the product of the firm and in return receive the benefits of the product.

· Local community grants the firm the right to build facilities and, in turn, benefit from the tax base and economic and social contribution of the firm.

· Management plays a special role in the modern corporation. Management, especially top management , must look after the health of the corporation, and this involves balancing the multiple claims of conflicting stakeholders.

Corporation and stakeholders is related each other. Very important to managing relation with stakeholders. One of the reasons is that managing can effect to the result of corporation like innovation that more success, rate of truth is wider among stakeholders, and the flexibilities of corporation is better. Other reason is the manage influencing performance of corporation.

The simple example, can we see at television channel like “RCTI”, why this channel can be liked. The reason is that channel know how important managing relation with stakeholders that is beholder or audience, celebrities, advertiser, subsidiaries of television station, also common/public group. Else example, when “Nike” want to resolve the condition of work problems at its factory branches, Nike work with many stakeholder like customers, suppliers, government, and compressor group in society.

The conclusion is the corporation or organization are not enough with corporation or organization itself. Corporation have interaction and influenced by its environment include stakeholders. Corporation depend on its environment as input sources, and as customers of its output.