Capitalism And Corporation
Capitalism And Corporation
Case study
The problem that is to be investigated in this case study is the different views regarding the meaning that the stakeholders have in the management philosophies of various businesses. Traditionally, American view stakeholders as the owners while social democrats view them as people who believe that they have a claim on another person’s property.
Existence of corporations
According to Novak, the existence of Business Corporation has been there in the entire world many centuries ago. Business corporations that existed in the early years tend to be considered as informal compared to those that do exist in the modern world. In United States of America, business corporations have been in existence since the 18th century. During the 18th century, there was a rapid growth and development in the different sectors of business including transportation and education. The rate of development in education in America, was extremely first, despite having borrowed the education structure from the English system. By the 19th century, the nation had quite a number of universities, which was greater than institutions in the European continent (Jennings, M 2009). The transportation system has also transformed the United States to what is now known. The transportation system in terms of the American railway system is large than for the entire European continent. The business corporations seem to have been in existence centuries ago that is likely to be traced to be back in the 18th century.
Difference between the British and European corporation and the US Corporation.
The British and European corporations and the US Corporation have some fundamental differences. One of the differences that can be noted within the corporations is the rate in which the corporations grew (Jennings, M 2009). The United States of America had a rapid growth in relation to business corporations during the 18th and the 19thcentury. US have also been able to rapidly grow and develop even in the recent times. This is different with the British, and the European continent as the nature of the growth of the corporations is by slow rates. Novak has been able to identify the development of US in the formation of higher learning institutions and the implementation of railways. By the 17thcentury, United States had established six universities while England had only established two.
Another difference between the corporations is the protection of the stakeholders. In the US, the stakeholders are usually given the first priority in the business corporations. This means that, during the period of sharing the accrued benefits or the profits, the business corporations have to first address the needs of the stakeholders first. In British and European corporations, the stakeholders are not given the first priority. This is because of the provisions of the corporation law, which these countries have. In the United States business ethics are extremely considered in the business corporations. This is not the same with the British and European corporations as they do not consider ethics in business. In the European countries, making profits is given the highest priority than business ethics.
Novak explains that the result of the difference between the British, and European corporations and the United States corporations is that there is the existence of a vast trade imbalance between them. The idea that the American currency has remained weak compared to the counterparts has helped in boosting the performance of business corporations in US as compared to Britain and Europe (Jennings, M 2009). Another difference is the fact that, in Britain and European continent, the government has total control over business corporations. This is not the same in US and is because of business corporations in US are owned by the general public through shares.
Stakeholder’s definitions
Michael Novak explains two contexts that the term stakeholder is held. The view of the traditional Americans is that all citizens in the republic have the stake in the validity and the success of the business corporations in America. This view means that, the private ownership of the property and management of the property individually can bring the greatest good of the public. It can be able to produce larger innovation than if it is owned and sponsored by the state. With this idea, the meaning of the stakeholders is the owner and the private risk taker. The purpose of the private stakeholder is to secure the larger public interest and the general welfare. This entails hard work, risk, investment, responsibility, reward, and sometimes personal failure. According to the view of the republican, man has rights that are given to him so that to protect him from the abuse of government.
The other definition of the stakeholder from the social democratic view state that all property, all privileges, and all rights are from the state, and they are to be revoked or granted by the government. This statement is almost the same to how things have always been done in the centuries prior to the beginning of innovation. According to Novak, the purpose of the government in the social democratic view of stakeholders is to provide protection to individuals from the evil corporations and from themselves. This is for the idea that the greatest good is not determined by an invisible hand, but by the government that owns all loyalty and faith. In the social democratic perspective, the stakeholder implies submitting demands in a particular system of an organization with the attempt of gaining from the same. The Britain and the European countries have this perspective where the citizens are entitled to press authorities for certain human needs.
Effects of social democracy
From the above definition of stakeholders, it is evident that social democracy has its own perspective about stakeholders. Social democracy has different consequences in both business corporations and also in other sectors (Block, F 2011). One of the effects of social democracy that can be determined is that it tends to make the society to lack responsibility. There tend to be a lack of responsibility because of the fact that everyone want their needs and want to be met, and their voices are heard. Because of this, no one take the responsibility of providing the wants and needs because everyone is demanding. This is different with the approach that views the stakeholders as the risk takers and owners in the business organization.
The effect of social democracy is that it tends to make people have the idea that they are not responsible and then make them believe that they have the right to get what they are entitled to. Another effect of social democracy is that the state usually gains the total control over the property and the efforts of people (Novak, M 1997). This means that what a person has earned does not belong to them. This somehow results to slavery or that relationship where a person has absolute power over the other person controlling their liberty, fortune, and life.The danger of perpetual demand without responsibility is that there is a high chance for the supply of the commodity to run out. The resources do not get replenished; therefore, will only be supplied for a short period of time. Another danger is that there is no wealth that is being generated with perpetual demand. Business corporations are known as a form of creation of wealth, but when there is no responsibility, no benefit is achieved.
Cold meteor
Novak means that, in order for the view of the republican concerning stakeholder to exist, freedom and liberty is needed. This statement means that the business corporations are not natural occurrence, but they are inventions that have been made by man. Therefore, people should strive to choose the best mechanisms that will maximize the positive benefit of corporations. People need to stop making excuses demanding the substances of others and start taking their responsibilities so that they can work to earn it on their own (Novak, M 1997). If there is the lack of responsibility, it is likely for the economy to collapse. Freedom need to be fought for, and the responsibility should be accepted. The innovation and corporation that made America did not happen by chance, but it happened because of the determination, inventiveness, hard work, and the drive of the responsible and free people.
Reference
Jennings, M (2009). Business ethics Cengage Learning
Novak, M (1997). Capitalism and the corporation Rowland and Littlefield
Block, F (2011). Reinventing social democracy for the 21st century Journal of Australian political economy (67)
Delios, A Yoshikawa, T, Obrien, P & David, P (2010). Do shareholders or stakeholders appropriate the rents from corporate diversities? Academy of management journal 53 (3)
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