What are the biggest obstacles keeping managers from running their companies in a way that produces value for society (rather than just shareholders)? Please also explain how each are used.

 

Most corporations prefer to concentrate on both shareholder and stakeholder approaches, as shareholders are actually stakeholders with an equity stake in the growth and profits of the company. And added expense by the business means less profit to the shareholders.

The cost of being social responsible can be an obstacle even for larger businesses and thats why a lot of stakeholders wants the business to do the bare minimum when it comes to being responsible socially. Some critics believe that an exercise in futility may be corporate social responsibility. The management of a corporation has a fiduciary responsibility to its shareholders, and social responsibility explicitly opposes this because maximizing income is the duty of managers to shareholders. A manager who forsakes profits in favor of certain social benefits will expect to lose his job and be replaced by someone who prioritizes profits. It can also clash the main purpose of having an business; profit. It is a well-established reality that the main purpose of a business enterprise is to generate income, which is why it provides consumers with different goods and services in order to be able to earn profits. Social Responsibility allows businesses to take into account the needs of individuals, which may clash with the company's corporate priorities when making important decisions. For instance, whether or not to purchase a property that is beneficial for business needs, but such a purchase would not be beneficial for the people living around that property.

Due to the reasons above, the operation costs tend to rise and such costs are obviously borne by shareholder funds, which is why this argument is often raised that the interests of an establishment's shareholders face disadvantage when the Social Responsibility practices are incorporated in the organic framework. So thats why the managers event they want the company to be social responsible, the shareholders will lost interest because they will lose a little bit of their profit.