"Shareholder wealth maximization" should not be a company's sole objective for
several reasons. First, considering the perspective of stakeholders, a company holds
responsibilities toward everyone. When the sole focus is on maximizing shareholder
wealth, there is a risk of overlooking the interests and well-being of these
stakeholders, which can have detrimental long-term effects.
Moreover, companies that prioritize social responsibility are able to build a positive
reputation and gain the trust of customers, employees, and the public. By
considering broader societal impacts and implementing socially responsible
practices, companies can create a sustainable and ethical business model (Wang et
al., 2023). Conversely, companies that solely prioritize shareholder wealth without
considering wider consequences risk damaging their reputation and facing backlash
from stakeholders.
For instance, Disney demonstrates social responsibility through its commitment to
diversity and inclusion. They prioritize workforce diversity, foster an inclusive
environment, and feature diverse characters and stories in their content. By doing
so, Disney promotes inclusivity and plays a significant role in shaping cultural
perceptions (The Walt Disney Company, 2023).
The beneficiaries of social responsibility include various stakeholders. Employees
benefit from companies that prioritize social responsibility by providing better
working conditions, fair wages, and opportunities for growth. Customers benefit
from ethically produced products and services that align with their values (Wang et
al., 2023). Communities and the environment benefit from companies that engage in
philanthropic activities, support local initiatives, and adopt sustainable practices.
While social responsibility and ethics are related, they are not synonymous. Social
responsibility refers to a company's voluntary initiatives to positively impact society
and the environment, while ethics encompass a broader set of principles guiding
individual and organizational conduct. While social responsibility is one aspect of
ethical behavior, ethics encompass a wider range of considerations such as fairness,
honesty, integrity, and moral values in decision-making and actions (Kalita, 2022)
