The paper "A Stakeholder Theory of the Modern Corporation by Edward Freeman" is a great example of an article on business. Edward Freeman in his article ‘ A Stakeholder Theory of the Modern Corporation’ , challenges the conventional assumptions on the primacy of the stakeholder. The author suggests an alternative stakeholder theory of the modern corporation. The article is based around the framework of managerial capitalism. The stakeholder theory suggested by the author defines the relationship between the stakeholders and the corporation beyond legal, economic, political and moral guidelines. A participatory approach in driving the corporation towards market success involving the stakeholders is the characteristic nature of the theory suggested.
The reader is taken through the legal protections offered by the law to the stakeholders. Further, the economic argument challenging the managerial capitalism has been discussed. The paper revolves around the question “ For whose benefit and at whose expense should the firm be managed? The author further explains the concept and the common perceptions on the term stakeholder. The contextual relevance of the term in the modern corporation has been explained. Different from the conventional concept that stakeholders are people, group of people or institutions affected by the management, the author sees the management as another stakeholder of the corporation.
The role of management in the stakeholder loop is compared by the author to that of King Solomon. In general, the theory talks of a holistic approach in managing the stakeholder relationship, including the relationship amongst the stakeholders. According the proposed stakeholder theory, six principles of fair contract amongst the stakeholders forms its foundation. These have been exhaustively explained in the article. The author argues that these principles will act as relationship guidelines amongst the stakeholders.