Organisational Values

Abstract

An ongoing debate in the private sector, stimulated in part by major financial scandals such as collapse of the Enron Corporation in the USA or the Royal Bank of Scotland (RBS) crisis in the UK, is whether the fundamental purpose of a firm is to maximise shareholder value. Those who oppose this perspective argue that managers have a wider responsibility, which should include a sense of social and moral obligation that meets the needs of all key stakeholder groups. Those who reject the stakeholder perspective usually argue that managers are agents of the shareholders and, in many countries, there is a fiduciary responsibility for organisations to ensure shareholders are rewarded by implementing actions which maximise the value of their investment. As noted by Smithee and Lee (2004), the prevailing view that the only goal of the firm should be to maximise its profits for the benefit of the shareholders denies the legitimacy of claims of customers, suppliers, intermediaries and employees, without whom the firm would not be able to exist.