Title: Saving Today Saves Tomorrow
The paper views the issue of saving from the corporate perspective based on the number of relevant theories. The research proves that there is not a place for pure money-making (saving) in the contemporary world of socially responsible business.
Any resource equation activity and the entrepreneurial process are directed towards profit attainment. Within such pragmatic approach money is the core prerequisite of business success. In their essence, businesses are mainly profit-oriented striving to gain the most effective commercial benefit, maximally equate resources and advance the entrepreneurial process.
However, in their business operations the companies should consider social responsibility and community interests, which are different from their interests regarding profit (asset) increase. The approach to the importance of profit maximization coincides with the notions shared by traditional economic theory (neo-classical economics). However, in order to remain competitive the contemporary business companies should widely consider the community interests. In terms of stakeholder theory, corporations should bear social responsibility of their business.
Thus, stakeholders’ interests within such companies prevail over pure profit-maximising incentives. In this respect, previous theories put forward by William Baumol (1960) aimed at sales maximization, Marris (1964) aimed at growth as an ultimate goal, and Williamson (1965) aimed at the objectives of personal satisfaction of managers - cannot be applied within the current business environment since they put managers’ interests over those of stakeholders, give priority to managerial power rather than decision-making priority, and aim at the satisfactory profits regardless stakeholders’ and community interests (Baumol, 1960; Marris, 1964; Williamson, 1965). Such rejection of classical economic views also contradicts the viewpoint that the ultimate purpose of business consists in making profits (Adam 1989).
Overall, considering the marketing approach to profit maximization it is apparent that corporations should perform their activities grounding not only on profit interests but also on the priorities of social justice including moral responsibility, as well as public and environmental concerns of communities. This proves that the initial purpose of economic theory to maximize profits has been remarkably shifted towards the consideration of social-oriented purposes. Thus, marketing-oriented perception of business should be also undermined regarding the essence of the stakeholder theory.
In this connection, Peter Drucker (1993) claims that business purposes should coincide with the social ones since businesses (corporations) are social structures and exist within a society. Neither can be corporations regarded as the marketing structures established to create and keep customers (Levitt, 1983). To reach a reasonable balance in due discussion it would be noteworthy to apply Drucker’s viewpoint regarding the application of marketing as one of the basic functions of corporate business activity aimed at the satisfaction of stakeholder interests (Drucker (1993).
On balance, unfortunately there are plenty of corporations that have still not reached the critical comprehension of the stakeholder theory and its genuine essence. Attempting to maximize their profits, win more customers over their competitors, and take advantage over value-creation, they tend to disregard the surrounding processes developing within the immediate environment of their business operation.
Thus, in most instances such corporations include only primary stakeholders with pure business interests. Meantime, the concerns of the stakeholders-to-be, communities, public institutions are ignored due to prioritizing marketing ambitions. However, the thorough analysis of the contemporary implication and implementation of the stakeholder theory assumes that the future of the abovementioned corporations is dubious and uncertain since the global business environment is becoming more and more socially-oriented.
Adam J., 1989, Dictionary of Business English, Longman, York Press.
Baumol, W. 1960, Business Behavior, Value and Growth, The Journal of Political Economy, Vol. 68, No. 3 (Jun., 1960), pp. 314-315
Drucker, P, 1993, The post capitalist society, Collins.
Levitt T. 1983, The Marketing Imaginations, The Free Press, New York.
Marris, R. 1964, The Economic Theory of Managerial Capitalism. London: Macmillan.