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Advances in Social Sciences Research Journal – Vol. 9, No. 9
Publication Date: September 25, 2022
DOI:10.14738/assrj.99.13150. Kwadade-Cudjoe, F. (2022). Efficient and Effective Management of Organizations Require Appropriate Ethical Relations Between
Stockholders and Stakeholders. An Evaluation of the Morality (Ethics) between Stockholders and Stakeholders on the Organization
and their Relationship with Employees. Advances in Social Sciences Research Journal, 9(9). 486-499.
Services for Science and Education – United Kingdom
Efficient and Effective Management of Organizations Require
Appropriate Ethical Relations Between Stockholders and
Stakeholders. An Evaluation of the Morality (Ethics) between
Stockholders and Stakeholders on the Organization and their
Relationship with Employees
Francis Kwadade-Cudjoe
Senior Lecturer, Knutsford University College
Accra and Adjunct Lecturer, Regional Maritime University
Tema, Ghana
ABSTRACT
Peaceful co-existence of stockholders and stakeholders, comprising customers,
consumers, employees, managers, suppliers/vendors, shareholders, etc. has always
been problematic for organizations to thrive. Stockholders and owners of entities
normally invest a lot of money into business with the sole aim of recouping their
funds, and with interest. However, managers and employees also accept to work in
organizations with the aim of earning good emolument to be able to live and
survive. For the organization to be able to achieve competitive advantage, there
should be understanding by employees to work hard and co-operate with
stockholders by observing the laid down rules, and the owners equally providing
good working conditions. This would enable managers and employees to give their
best for the success and sustenance of the organization. Unfortunately, the globe is
experiencing hard times due to the upsurge of Covid-19 which affected
development and destroyed lot of lives, and currently the Russia and Ukraine war,
which has also exacerbated the situation and escalated prices of goods. Both
stockholders and stakeholders have the moral rights to co-exist peacefully for the
success of organizations, which would benefit all parties.
Key words: Stockholders, Stakeholders, employees, managers, shareholders, consumers,
suppliers, morals, ethics and relationship.
INTRODUCTION
Stockholder is defined by Waingankar and Vaidya (n.d.) as a person, organization, or an
institution who is a shareholder and owns one or more shares of a company with the name- share-certificate issued by the company; they are the company owners, but their liability is
limited to the extent of their value of shares. Again, Indeed.com (2021) and
Accountingcoach.com (n.d.) identified a stockholder as the owner, company or an entity with
one or more shares/equity of a corporation’s capital stock; s/he is deemed to be separate from
the organization but, holds portion of ownership of the organization and therefore, has limited
liability for the company’s indebtedness.
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Kwadade-Cudjoe, F. (2022). Efficient and Effective Management of Organizations Require Appropriate Ethical Relations Between Stockholders and
Stakeholders. An Evaluation of the Morality (Ethics) between Stockholders and Stakeholders on the Organization and their Relationship with
Employees. Advances in Social Sciences Research Journal, 9(9). 486-499.
URL: http://dx.doi.org/10.14738/assrj.99.13150
Waingankar and Vaidya (n.d.) further mentioned that there are two (2) types of stockholders.
These are:
i. Equity, and
ii. Preference Shares
According to Thakur and Vaidya (n.d.), equity stockholders are the actual owners and members
of the company with voting rights and control over the company’s operations; they receive
dividend after the preferred stockholder is paid. In addition, the equity stockholder is the
leading investor of the company, whose stocks are natural source of funds; these stocks are also
known as ordinary shares (Thakur & Vaidya, n.d.).
Comparatively, preference shareholders have a preference over equity stockholders. They
generally receive a fixed dividend, and they are remunerated or paid before equity
stockholders. In an event of bankruptcy, preferred stockholders are entitled to be paid off from
company assets before equity stockholders. Preference stockholders do not have any voting
rights, unlike equity shareholders (Wainganker & Vaidya, n.d.).
On the other hand, Stakeholder, as defined by Landau (2022) is either an individual, group or
organization that has impacted by the outcome of a project or a business venture. Furthermore,
stakeholders have interest in the success of the business and can be within or outside the
organization that is sponsoring the project. Stakeholders are important because they can have
a positive or negative influence on the organization with their decisions; there are also critical
or key stakeholders amongst stakeholders, whose support is needed for the organization to
exist (Landau, 2022).
Stakeholders have been known to include all those that matter in making the business gel, and
comprise customers, consumers, owners, employees, managers, suppliers/vendors,
shareholders, investors and government (Landou, 2022).
According to Hornby (2001), stakeholders are entities who are involved in a particular
organization or project, due to the fact of investing money and time in the project, and therefore,
have a common purpose. So, stakeholders are groups of people with common objectives,
whereby together they manage a project for success.
Stakeholders come together and make a business whole. The various functions carried out by
stakeholders of an organization go a long way to determine the profitability and sustenance of
the business, as all of them have vested interest in the entity (Kwadade-Cudjoe, 2020).
According to Hornby (2001), the different categories of stakeholders are defined as:
i. Customers: are persons or organizations that buy goods and services from a store, shop or
business; consumers are persons who buy goods and/or services, and use them for their
benefit;
ii. Owners: are people who have the custody or the custodian of the business, shop, store or
organization;
iii. Employees: are persons who work for somebody for pay;
iv. Managers: are persons who are in charge or supervise the running of businesses, store, shop
or organization and, as such, they are not the owners of businesses they supervise;
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v. Suppliers/vendors: are persons, companies or organizations that provide goods or services
for purchase by consumers or customers; and
vi. Shareholders (or stockholders): are owners of stocks and shares in a business, company
or organization (Hornby, 2001).
According to Landou (2022), stakeholders also include:
vii. Investors: they look for financial return and can be shareholders and debtholders. These
might have invested capital in the business and want a return on that investment, and
viii. Government: they get taxes and gross domestic product from an organization or project.
They are major stakeholders as they collect taxes from both the company on corporate level
and individually from those it employs (Landou, 2022).
Furthermore, Landou (2022) mentioned stakeholders can be divided into two groups. These
are:
i. internal, and
ii. external stakeholders
Landou (2022) elaborates that for (i), the stakeholders are within the organization and the
project directly impacts them as they serve and are also employed by the organization
managing it. Internal stakeholders are employees, owners, the board of directors, investors, etc.
The external stakeholders are outside of the organization and are indirectly affected by the
project. They are motivated by the organization’s work but are not employees of the
organization. These people can be suppliers, customers, creditors, clients, competitors, society,
government, etc.
Narveson (n.d.), with the help of Karl Marx who wrote in the mid-19th century, has distinguished
between the personnel in the business market as consisting of two (2) major groups - the
bourgeoisie and the proletariat. According to Karl Marx in Narveson (n.d.), those who own
the business are the bourgeoisie and those whose labour are purchased are the proletariat, and
these are exploited by the former. As such, the relations between these two (2) groups were
claimed by Marx to be essentially antagonistic. The bourgeoisie, he claimed, practised
capitalism to get richer and were less numerous as time went by, and the latter poorer and
more grew numerous.
Hornby (2001) distinguishes between the bourgeoisie and the proletariat, as those of the
middle class in society and the ordinary people who earn money by offering their services as
they do not possess any property, respectively.
Hasa (2020) also mentioned that the main difference between bourgeoisie and proletariat is
that bourgeoisie refers to the capitalists who own the means of production and most of the
wealth in the society whereas proletariat refers to a class of workers who do not own means of
production and must sell their labour to survive.
Furthermore, Hasa (2020) stated that the bourgeoisie and proletariat are the two (2) main
social classes Karl Marx identified in his theory of Marxism. The membership in these two (2)
social groups depends on the ownership of the means of production. Moreover, these two (2)
social groups are interdependent; for the bourgeois, proletariats are a source of profit while for
proletariats, the bourgeois is a source of employment.
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Kwadade-Cudjoe, F. (2022). Efficient and Effective Management of Organizations Require Appropriate Ethical Relations Between Stockholders and
Stakeholders. An Evaluation of the Morality (Ethics) between Stockholders and Stakeholders on the Organization and their Relationship with
Employees. Advances in Social Sciences Research Journal, 9(9). 486-499.
URL: http://dx.doi.org/10.14738/assrj.99.13150
Nevertheless, Narveson (n.d.), highlighted more on managers and described them as those who
have significant operational control over a business, and in particular control a type that
includes the direction and supervision of the work of others. Furthermore, Narveson (n.d.),
described managers as occupying important positions in the organization, and as such, what
they do, determines appreciably, whether the firm succeeds or not. Because of their position in
the organization, should they exercise their powers unfairly, to violate the trust the firm and its
employees put in them, they would in general do evil and jeopardise the business.
Narveson (n.d.), added that some of the persons who have the major control of businesses and
act as managers, are also owners, but others, who are managers and probably most, do not have
major control of the business. These managers are the employees, workers employed by the
owners, even though, in the terms of labour and management, they are on the management side
of the divide, as they are the supervisors.
The rights and duties of managers therefore, as posited by Narveson (n.d.) arise from their
relations in both directions. On the one side, they are entrusted with major power to affect the
well-being or reverse of the business as a whole and under them are the shop floor workers,
who are also employees.
Narveson (n.d.), hammering on the importance of the employee (shop floor) mentioned that in
the free market society, every person is the possessor of a set of resources, and these resources
include our bodies and minds. Having the right to do as the employees wish with their
resources, make them have the right to offer their services they make possible to the highest
bidder.
Again, Narveson (n.d.), accentuated that employment is voluntary on both sides, as the
employer (the owner) is not obliged to hire services of employees, and the employees also do
not have to take up the jobs from the owners. Narveson (n.d.), finally declared that, often the
job the employee takes will be less than perfect from his/her point of view, and there will be
cases in which it is the very reverse of perfect - where the employee would not have taken the
job if he had had any alternative employment to choose from. But even in that case, since
nobody has the duty to offer any sort of job at all, the employee has no complaint than to take
up the job.
The illustrations by Narveson (n.d.), Hornby (2001) and Hasa (2020), on the bourgeoisie and
proletariat and what happens within the business environment, especially the exploitation
meted out to the employee, give a succinct overview of the functions of the stockholder and the
stakeholder.
WHAT IS MORALITY?
Hornby (2001) defined morality as principles concerning right and wrong or good and bad
behaviour. Similarly, the initial definition of morality in Narveson (n.d.) is about a set of rules
and ideas on what is good and bad, virtuous or vicious, that are reinforced in a society. He
continued that if virtually everyone tends to be angry or annoyed with people for doing a
particular thing, then you know that ‘thing’ is wrong in that society; however, if they smile and
cheer at doing something different, then you know that ‘different something’ is right.
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According to Morin (2020), morality refers to the set of standards that enable people to live co- operatively in groups. It is what societies determine to be right and acceptable. Sometimes,
acting in a moral manner means individuals must sacrifice their own short-term interests to
benefit society. Individuals who go against these standards may be considered immoral.
Morality has always been subjective, and though there may be rules and guidelines for a group
of people to observe, others may still think that doing things differently would be better for
them. However, once the rules are set, going against them will incur a displeasure from the
society and the offender may be punished for that behaviour.
DO STAKEHOLDERS AND STOCKHOLDERS HAVE THE SAME MORALITY ON THE
ORGANIZATION?
Stakeholders have been explained above as all those who contribute to making a business or
organization perform efficiently and effectively in carrying out their functions, and includes,
customers, consumers, owners, managers, employees, suppliers/vendors, government,
investors and shareholders of the enterprise (Waingankar and Vaidya, n.d.;
Accountingcoach.com, n.d.; Thakur and Vaidya, n.d.; Indeed.com, 2021).
On the On the other hand, Stockholders or shareholders are persons who own the stocks and
shares in the business or the enterprise (Hornby, 2001; Landou, 2022).
According to Narveson (n.d.), the stockholder is generally known to have a moral right to the
dividend to be paid, especially when there are dividends for payments. Furthermore, the
company cannot arbitrarily decide to pay all the dividends for a particular period to a special
group of stockholders, example, paying dividends to females only among the shareholders, and
leaving out males. Again, Narveson (n.d.) mentioned that the organization cannot decide to pay
an extra percentage to a particular class of people, example, Ghanaian descent, and leaving out
the rest of the stockholders.
It is a fact and morally too that, it is of course the stockholder who has the moral right to decide
to sell his/her shares to whom ever s/he wishes, and at whatever price they agree after
negotiation. However, most often, the stockholder would not sell his/her shares or stocks to
persons known to him/her, as a broker on an exchange often sells the shares. Really, in such
circumstances, it behoves on the brokerage and exchange system to be ethically sound and
dependable for patronage by stockholders and people looking for stocks to purchase.
This gives the stockholder the moral right to determine how his/her dividends would be
disposed off, and when during the business year. Of course, the brokerage and exchange system
would also have to be sound and dependable before a stockholder would decide to trade
his/her stocks or shares through them.
Relatively, Narveson (n.d.), espoused that the shareholder may also have voting power in the
firm whose stock they hold but, firstly, they may not, as there can be non-voting stock as well
as voting stock. Again, Narveson (n.d.) explained that with voting stock, democracy, in the usual
sense of that word does not obtain, for votes are proportional to shares held, rather than
everyone who owns any share having an equal voice with every other individual who does.
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Kwadade-Cudjoe, F. (2022). Efficient and Effective Management of Organizations Require Appropriate Ethical Relations Between Stockholders and
Stakeholders. An Evaluation of the Morality (Ethics) between Stockholders and Stakeholders on the Organization and their Relationship with
Employees. Advances in Social Sciences Research Journal, 9(9). 486-499.
URL: http://dx.doi.org/10.14738/assrj.99.13150
Nonetheless, democratically, this still opens the door to a kind of politics, where a particular
group of shareholders, assume group A, could team up against other group of shareholders,
group B, to support candidates of their choice when it comes to filling managerial positions
within the organization. In such a case, there will be the usual opportunities to display political
virtues and vices, especially with the connivance of political parties existing within the business
environment. In this situation, people could fight dirty rather than clean, and act on irrational
whims and caprices instead of giving serious consideration to proposals, thoughts and
decisions (Narveson, n.d.).
Regarding the stakeholders, where the attention would be focused on investors, customers,
consumers, owners, supplier/vendor, government and employees, Narveson (n.d.) and Landou
(2022), wrote on how in the free business market society, each of the stakeholders has a set of
resources, and therefore should benefit from these resources to the fullest.
Moreover, Narveson (n.d.) hinted that at the barest minimum level, these resources include
their bodies and minds, which have been given to everybody by creation; in fact, even if we have
nothing at all, everybody has his/her body and mind in-tact. In addition, we have command of
air to breathe and ground to walk, stand and dance on. With these given resources, each person
has the moral right to do as s/he wishes with the resources given him/her by offering his/her
services as could be availed, possibly to the highest bidder.
Narveson (n.d.), continued that employment is voluntary on both sides; the employer does not
have to hire you, and you also do not have to take the job offered by the employer (or owner).
This is due to the reason that the job one takes will be less than perfect from his/her point of
view, and cases are, there are situations in which it is the very reverse of perfect - where the
employee would not have taken the job if he had had any alternative employment to choose
from. But even in that case, since nobody has the duty to offer any sort of job at all, s/he has no
complaint than to take up the job as it is. In this case, the employee’s moral right is dissolved
totally, and as such, does not have the right to dictate and choose what s/he prefers and would
befit him/her (Narveson, n.d.).
Furthermore Narveson (n.d.) informed that our societies have chosen to close off the necessity
of resorting to the latter possibilities, and have offered welfare assistance services, and publicly
supported medical services, and so on; our moral right has therefore, been eroded, as we do not
have the choice or moral right to dictate or determine what is good for us. This constitutes what
we might call the social minimum services in those societies.
In addition, Narveson (n.d.) mentioned how the business society does very well for the
successful, but at the same time is tough, on the unsuccessful. If those people have rights to
some level of welfare, then that will have to be provided for them, and it is of necessity that the
successful person provides this service. Narveson (n.d.) consequently, brought in the question
of exploitation, as the employee is exploited to the extent that s/he cannot determine what kind
of employment, at what kind of remuneration, and what sort of conditions of work s/he is
entitled to.
There is no answer in the business society to these questions, as the employee would then be
left to his/her own fate. In this case, the employee accepts whatever is given to him/her; the
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entitlement is poor, the employee deserves no merit in the job being done, as his/her
recompense is unpalatable, the salary is low, and with meagre pension to top it. Narveson (n.d.)
thus opined that the job s/he does is not his/her own, but only in the sense that the company
has a contract with him/her providing that it will pay him a certain amount of salary during a
certain period, whether specified or not, so long as he performs certain tasks during that period;
the contract may not say what happens if he does more than asked for – example, when an
exceptionally good job is performed.
Then, Narveson (n.d.) questioned what rights the buyer has, and what is the basis of those
rights? Based on the view advanced here, both the buyer and seller, we say, have a fundamental
right to liberty. But do they get it? The exchange between the two must be voluntary, as neither
has any antecedent duty to offer the item in question for sale, nor to buy it. This implies that the
correct terms of sale are simply those agreed upon, and both the buyer and the seller have to
take the agreed terms as good.
Likewise, Skenderi and Skenderi (2013) narrated how customers and consumers are exploited
and influenced by the information that they receive from sellers and organizations through
their advertisements. There are two (2) types of interest here, where sellers protect the interest
of the shareholders, while the law protects the customers, but an ethical issue exists regarding
the consumer.
Narveson (1988) cited in Skenderi and Skenderi (2013) mentioned that there is supposed to be
a fundamental right to liberty for all, as the exchange is voluntary. Whereas in the case of the
seller the exchange is voluntary, in the case of the buyer there are cases of compulsion imposed;
in purchasing a vehicle, the buyer must voluntarily choose an insurance company, but are
legally forced to purchase insurance for the vehicle. This information is normally hidden from
the buyer, as s/he must find additional resources to pay for the insurance cover before s/he can
use the vehicle, indicating ethical problems in the transactions (Narveson, 1988 cited in
Skenderi & Skenderi, 2013).
However, sometimes it is just not so obvious what has been agreed to, and in other cases it is
not so clear that it has been really agreed to by all concerned. These and many others are the
problems confronting employees, customers, and consumers. Though there are some few moral
rights ascribed to the employee and the consumer, unfortunately, neither of these groups of
people have the moral rights as compared to the stockholder, who is privileged to dictate what
s/he earns.
Nevertheless, the owner, as a stakeholder and the custodian of the business is special and
different from the customer, consumer and employee. This is due to the fact that the owner has
the moral rights to dictate who s/he wants to work with, what market of business s/he would
like to trade in, and even when s/he would like to do business, in terms of when to open the
business and close the business for the day.
Narveson (n.d.), helped us to draw lines to appreciate that the class of people on the ownership
side of the business is not so easy to determine. According to Naveson (n.d.), the whole thing is
a lot more complicated than Marx's picture depicts. At the earlier part of this script, it was put
up as portrayed by Karl Marx in the 19th century that there are only two (2) classes of people in
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Kwadade-Cudjoe, F. (2022). Efficient and Effective Management of Organizations Require Appropriate Ethical Relations Between Stockholders and
Stakeholders. An Evaluation of the Morality (Ethics) between Stockholders and Stakeholders on the Organization and their Relationship with
Employees. Advances in Social Sciences Research Journal, 9(9). 486-499.
URL: http://dx.doi.org/10.14738/assrj.99.13150
the business market, the bourgeoisie and the proletariat; where the bourgeoisies are the
owners and therefore, capitalist, and the employees, as the proletariat offering their labour for
payment.
It should be noted that Naveson (n.d.) pointed out that the people who are said to own a
business are normally taken to be its investors. These are the stockholders, in the case of
corporations, the proprietor in the case of a small one-person-owned business, and the partner
in the case of businesses with a few owners. According to Narveson (n.d.), in the normal case,
sole proprietors would be able to fill the Marxian theory pretty well, except that they are likely
to be little wealthier than the proletariat.
Narveson (n.d.) and Narveson (1988) cited in Skenderi and Skenderi (2013) believed that
farmers, shopkeepers, and people with home-made businesses, and innumerable other sorts of
owners rarely live in palaces or drive Benz vehicles, as they do not have the means. Narveson
(n.d.), added that to own is to have the right to determine what happens to the business, as the
means would be there to turn things around. This makes the owner quite different from the
other stakeholders, as s/he is comparable to the stockholder.
Therefore, the stakeholder and stockholder do not have the same moral rights on the
corporation, except the owner, who is a stakeholder and can be stockholder too, and as such,
could be comparable to have similar moral rights as the stockholder. The moral rights of the
customer, consumer and employee in the business market are comparably minimal to the
moral rights associated with the stockholder and the owner of the organization.
SHOULD STAKEHOLDERS AND STOCKHOLDERS HAVE THE SAME MORAL RIGHTS ON
THE ORGANIZATION?
Narveson (n.d.), earlier in this script has explained how the free business market society should
be, where each of the stakeholders has a set of resources, and therefore should benefit from
these resources to the fullest. Furthermore, at the barest minimum, these resources include our
bodies and minds, which have been given to us by creation; in fact, even if we have nothing at
all, everybody has his/her body and mind in-tact (Narveson, n.d.). In addition, we have
command of air to breathe and ground to walk, stand, sit, lie and dance about. With these given
resources, each person has the moral rights to do as s/he wishes with the resources given
him/her by offering his/her services as could be availed, possibly to the highest bidder.
According to Narveson (n.d.), Marxists think there is an intrinsic unfairness in the situation
between workers and owners of businesses, as workers own nothing but their bodies and
minds, whereas the owners own the means of production and all the assets. Consequently,
owners are able to exploit the workers by buying their worktime cheaply than what it is really
worth. The worker produces much, and the owners earn most from the production, leaving only
little for the worker. Karl Marx in Narveson (n.d.), gave the illustration of bodies and minds of
human beings as the fundamental of all means of production, and that the value of one's body
and mind, even in the absence of any other capital, should depend on supply and demand of the
resource, just as the value of any other kind of capital will.
Furthermore, Karl Marx in Marveson (n.d.), mentioned how the demand for the services which
ones body and mind are capable of performing will depend on just which services they could
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offer, and how many people would want/need them badly; there is no inherent reason why
someone with only his/her labour to offer should not do very well (but rather suffer), nor why
someone with only money to invest should not do rather poorly (but rather prosper). However,
the body and mind are resources which are in vogue just before one decides to enter the
business market to look for employment, as at that stage the future employee, stockholder,
manager and owner is the custodian of his/her own resources in-tact.
Nevertheless, when one enters the business market, and purchases stocks, for example, of an
organization, s/he becomes a stockholder, and gains additional resources in terms of investing
hard money acquired through hard work into the business. At this stage, you do not expect the
stockholder and the other stakeholders to be equal. In any case, the stockholder must defend
and protect his/her money, by not losing his/her resources. We should also not forget the fact
that the employee has his/her original resources of mind and body in-tact, and not obliged to
offer his/her services to the owner of a business, if and only if, s/he can fend for him/herself.
But when s/he offers his/her labour to the owner of a business for payment, s/he must work
under the instructions of the owner and manager of the business. In terms of success of the
business, the agency theory puts a lot of strain and workload on the manager who must make
sure he turns the business around; s/he has to use his/her knowledge and entrepreneurship to
bear on the uncertainties in this ever-changing world, and decisions based on expectations of
future uncertain events to turn the business around (Klein, 1999; Linder and Foss, 2015).
The manager would also encounter threat and stiff opposition from business rivals, as Porter’s
five (5) Forces Model suggests – threat of supplier, buyer, intense competition, new entrant and
substitute, as being the competition managers of businesses go through to achieve the best for
their organization (De Wit and Meyer, 2004; Daft, 2003; Kotler, 2003; Thompson & Strickland,
2001). So, the function of the manager becomes very important as the business hinges on the
entrepreneurial skills, including bearing of uncertainty – in the Misesian sense (as the
entrepreneur must purchase factors of production in the present, in expectation of revenues
from the future sale of the products), which would be exhibited by the manager (Klein, 1999).
The manager, therefore, though not the owner of the business, deserves better treatment and
should have the moral rights of determining his/her conditions within the organization by
bargaining with the owner for his condition of service.
With regards to the employee, though the business market does not favour him/her for any
good remuneration from the business owner, the International Labour Organization has the
labour laws to protect him/her by forming/joining a union and articulating his/her views (ILO,
2019). S/he could then negotiate on his/her conditions and moral rights with managers of the
organizations, who represent the board of directors.
The consumers and customers also, now have associations which champion their cause and
needs so that the other stakeholders, example the manager and the owner do not take them for
granted, and his/her moral rights trampled upon. This gives all the stakeholders – the customer,
consumer, owner, manager and employee, the opportunity to sit down together, and reach
amicable settlement/solution to their problems so that none of the stakeholders has
overbearing privileges over the other.
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Kwadade-Cudjoe, F. (2022). Efficient and Effective Management of Organizations Require Appropriate Ethical Relations Between Stockholders and
Stakeholders. An Evaluation of the Morality (Ethics) between Stockholders and Stakeholders on the Organization and their Relationship with
Employees. Advances in Social Sciences Research Journal, 9(9). 486-499.
URL: http://dx.doi.org/10.14738/assrj.99.13150
As a matter of fact, if you are a stakeholder, and the business or organization where you have
invested does not employ workers to produce for consumers, your money would be wasteful,
and should rather have been invested in a different and a better project to yield the needed
profits; similarly, a person with an employable skills which is not utilized in a useful venture
becomes wasteful, as then it does not bring any income. This therefore, makes all the
stakeholders to have some level of moral rights, though not the same. However, there is the
hope that the system would evolve gradually over the period to make the stakeholder and the
stockholder to have comparable and same moral rights, since they all work from the same
business market.
WHAT SHOULD BE THE PROPER RELATIONSHIP OF STAKEHOLDERS AND
STOCKHOLDERS WITH EMPLOYEES?
Narveson (n.d.), specifically informed that the free-market society accepts each of us as the
possessor of a set of resources. These resources include our bodies and minds, and the
command of air to breathe and ground to walk, sit and lie down. Since we have the right to do
as we wish with these resources, it is then our bona fide right to offer the services they make
possible to the highest bidder.
Again Narveson (n.d.), mentioned that nobody owes anybody a job, even if it is accepted that
society in general owes us a living, but nobody owes anybody a specific wage in return for
whatever services may be extended for employment. When one does not like what the
organization offers, s/he must go elsewhere. However, if s/he accepts what the organization
offers, then the set of rules and duties defining the job become reasonably to him/her and
further s/he becomes subject to those duties. One may take it or leave it, as the choice is the
individual’s option to make.
Consequently, and based on the above analysis expounded, the employee is a master of
him/herself and, as such, individually can dictate their own situations. Each is therefore, master
of him/herself, and nobody controls anybody. However, when the employee takes/offers
his/her labour to somebody, then the rules pertaining to that institution applies to him/her.
This is where and when the other side of the coin, of course, comes in, as at this stage you are
offering your services to the employer at some proposed price. But, if s/he does not like the
offer, s/he does not have to take it.
However, according to Narveson (n.d.), the employer can make a counter-offer, which the
employee may or may not accept, and therefore, still not take it. However, the employee can
make/offer a counter-proposal which the employer may not accept. Everyone, therefore is free
to do whatever s/he judges to be right and best for him/herself. Nobody can decide for anybody,
as everybody is free to take the best decision that would give the maximum results to him/her
as an individual. When one therefore, takes the offer to give his/her services to another, be it
an organization or project, the relationship should be cordial, and according as agreed for
harmony and good productivity.
Unfortunately, as lamented by Narveson (n.d.), many philosophers have claimed that the
business market exploits people. There is the likelihood that the Marxists, though they are by
no means alone, have this view. However, most people also think that in one or another case,
people are being exploited. As it is not easy for this claim of exploitation to be verified, it may
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be assumed that one becomes exploited if s/he is being treated shabbily, and in a manner worse
than s/he deserves. In the law of justice, one is treated justly if s/he is treated as one deserves.
Narveson (n.d.), gave an illustration with ones entitlement which is basically a matter of
qualifying for something by virtue of certain reasonable rules that apply, and desert (or merit)
being rather different; these are set of qualities, variable in degree, such that the higher one is
rated in some respects, the stronger the case for giving it to the one, or the more of it s/he
should have. But what you should have and what you could possibly get, there is a rule in force
that awards you accordingly, as they are different things.
Narveson (n.d.), again used the example of wage contract of employment of poor Smith to
explain his position that though poor Smith, who has been working diligently away for the
company for thirty years, deserves a higher salary or a better pension. But the job he worked
at and the company for, were not his in the sense that he owns it, but only in the sense that the
company has a contract with him, providing that the company will pay him such-and-such
remuneration during a certain period, specified or not, so long as he performs certain tasks
during that period (Narveson, n.d.).
In short, the complaint that workers in a free market are necessarily exploited in a sense that
implies being paid less than they deserve is completely untenable, as once you sign a contract
to offer your labour at a certain cost that is what you earn, period.
Narveson (n.d), added that the potential employee has no duty to take any particular job in the
first place, and may decline it for any reason or, indeed, for no reason at all, that puts the charge
that working for the owner of a business involves exploitation, which is termed as ‘capitalism’.
Of course, for such a situation, there would be no good relationship between the employee and
the owner of the business.
Furthermore, according to Narveson (n.d.), critics of the free market often point to the
deplorable working conditions, as they think about what were faced by workers in the dreary
factories of the early Industrial Revolution in England and elsewhere, where questions, such as,
‘Is the place safe? Is it odour-free? Is it comfortable for work?’ were always being asked. Other
questions too, for example, ‘how about the hours of work? the distance from home? and, the
attitudes of one's co-workers?’ were also being asked (Narveson, n.d.).
At their best, work-places will be so pleasant and stimulating that the employee will regard that
fact as part of the reward for working there, along with the wage offered. However, cheating
could not be excluded as some managers do indeed cheat their company’s own employees. They
could divert money that is supposed to be held in pension funds, medical or withholding taxes
for their own benefit or spend time on the golf course or hotels with girl friends that was
supposed to have been spent in the office, and so on. Clearly, this is morally wrong, as it is
basically, theft, and of course white-collar workers are often able to commit this kind of theft.
In this case, the relationship of the employees with their superiors would surely be strained,
and not augur well for the organization.
Narveson (n.d.), also mentioned that some managers are good, and they do their best by
motivating and encouraging their employees to give their best in service for their companies.
Moreover, it is generally in their interests to do their best and set good examples for the
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Kwadade-Cudjoe, F. (2022). Efficient and Effective Management of Organizations Require Appropriate Ethical Relations Between Stockholders and
Stakeholders. An Evaluation of the Morality (Ethics) between Stockholders and Stakeholders on the Organization and their Relationship with
Employees. Advances in Social Sciences Research Journal, 9(9). 486-499.
URL: http://dx.doi.org/10.14738/assrj.99.13150
employees to see, as they boost the morale of their workers through these activities for the
workers to work harder to produce more. In that case, the employees should be regarded as
partners, and good relationships would then be established with their superiors for enhancing
productivity and the good name of the company.
CONCLUSION
To promote the good relationships for good moral rights among stakeholders and stockholders,
Gewirth cited in Narveson (n.d.), proposed a very good and moral law in the business
organization setup by making sure there is a business rule that prohibits killings which was
rampart in the early days of business market; this was in the specific case of cancer; he
therefore, proposed an absolute moral right to the non-infliction of cancer.
Gewirth cited in Narveson (n.d.) invoked a principle of mutual trust, taking into consideration
the mutual respect for certain basic rights; those persons will not, in the normal course of life,
knowingly inflict physical harm on one another.
Narveson (n.d.), furthermore, mentioned the moral law of ‘Blowing the Whistle’, which helped
the employee to know what to do when a colleague employee within the corporation did
something morally wrong. The possibilities offered for an employee to do, was to:
a. first, discuss it with the relevant superiors in the corporate structure;
b. if (a) does not work, then there is the political route. Marshal support for your view:
i. among fellow employees
ii. among the public, and thus try to bring pressure to bear on relevant corporate
officials
iii. finally, there is The Law, which may or may not support you. If it does not, then of
course there is the question whether to try to get the law changed, and so on
(Narveson, n.d.).
For the good of a decent modern working society, Narveson (n.d.), mentioned many specific
liberties of civil rights among employees that go with citizenship, or indeed with membership
in the business market and humanity. Civil rights issues, such as:
a) what does this imply regarding the workplace?
b) what about such rights as that of privacy or of freedom of speech, of due process when
accused of some culpable act, and so on?
c) does the employer have an obligation to continue these rights while on the job, in all
respects?
Finally, the benefits that would accrue to the stakeholders (including the employee) and
stockholders have also been mentioned by Narveson (n.d.), and because of this, many
philosophers nowadays seem to think that there is natural moral rights of employees to expect
pension plans, seniority, tenure, et cetera, within the organization. But these things are all
negotiable benefits, in general, and they are part of the package of remuneration the employee
gets for his/her services.
It is of importance that the business relationships among all the stakeholders – customers,
consumers, owners, managers, suppliers/vendors, investors, government and shareholders -
within the business organization would continue to be refurbished/overhauled, until there is
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the total togetherness, cordiality, oneness and good relationships among all for the
advancement, good performance and good name of the organization.
McCann (2004) hammered on organizational effectiveness which measures how successful
organizations can achieve their missions/visons through core strategies. Furthermore, the
working environment would be structured to cater for development through agility and
resiliency for growth of the systems within the organization. This hopefully would help the
human resource department of organizations to apply systems theory concepts to revamp the
working environment of the organization to make it conducive, harmonious and acceptable to
both the stockholder and stakeholder (McCann, n.d.).
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