GS4 · 10 marks · 150 words

Stakeholder Capitalism is suggested as a way forward in wake of social, economic and environment challenges posed by Shareholder Capitalism. Examine the relevant arguments in this debate.

Answered by 4 toppers · CSE 2021

Corporate GovernanceDimensions of EthicsEnvironmental Ethics

Syllabus: Public/Civil service values and Ethics in Public administration: Status and problems; ethical concerns and dilemmas in government and private institutions; laws, rules, regulations and conscience as sources of ethical guidance; accountability and ethical governance; strengthening of ethical and moral values in governance; ethical issues in international relations and funding; corporate governance.

How toppers approached it

From 2 of the 4 answers · about 180 words · 50% drew a diagram.

Opening

  • A date or context1 of 2
  • A definition1 of 2

Body

  • Points2 of 2

Close

  • A summary1 of 2
  • A way forward1 of 2

The toppers’ answers

Preetam KumarAIR 9 · CSE 2021 · 181 wordsTheir whole copy

Opening · a definition

Ans:- Stakeholder capitalism refers to giving equal attention to all the stakeholders of a corporate entity whereas shareholder capitalism is primarily about profit maximisation for the shareholders.

Body · points

Diagram
Stakeholders ├── Shareholders ├── Employees ├── Consumers or customers ├── Community └── Contractors

Pitfalls of shareholder capitalism

  1. It is premised on profit maximization so violation of norms and standards go unchecked.
  2. Externalities brought upon the community and the environment goes unchecked. eg - Mining issues in Tribal dominated areas.
  3. Resource utilisation is not done in a sustainable manner. eg:- Lack of drinking water in urban areas.

Benefits of Stakeholder Capitalism

  1. Stakeholder capitalism promotes the interests of all the stakeholders in an equitable manner. eg- Taking into confidence of the local community while investing in a project will foster cooperation.
  2. Stakeholder capitalism reduces skepticism by public and consumers. eg- Trust issues over privacy of individuals in big Tech platforms (Facebook, google etc.)
  3. Stakeholder capitalism reduces the inequality of financial remuneration to workers and its owners.

Close · a summary

eg- COSTCO owners paying well above statutory minimum wage to its employees.

Stakeholder capitalism thus have a clear edge over shareholder capitalism in fostering sustainable business practice.

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