Corporate Management Theories - 1721 Words

Group 1 Corporate Governance Theories of corporate management and Process Definition:- According to the business directory, management theory is a collection of ideas which set forth general rules on how to manage a business or organization. Management theory addresses how managers and supervisors relate to their organizations in the knowledge of its goals, the implementation of effective means to get the goals accomplished and how to motivate employees to perform to the highest standard. Nexus-of-Contracts Theory Nexus-of-Contracts Theory argues that the firm, or the modern corporation, is a complex adaptive system comprised of definable subsystems, called stakeholders. A stakeholder is any individual or group of individuals†¦show more content†¦So the basic argument is that the various stakeholder groups come to the bargaining table with competitive disadvantages, and that Stockholder Theory often leads to the exploitation of employees, consumers, financiers, suppliers, and/or local communities. In other words Stakeholder Management implies a special moral obligation to advance the interests of the â€Å"least advantaged† (or the most vulnerable) stakeholders. Stakeholder theorists focus more on public property, economic security of all stakeholders, and follow their manta: â€Å"When in Rome do what’s right.† What role should government play? Stakeholder Theory seeks to empower government to protect the least advantaged stakeholders; usually employees and consumers. Hence Stakeholder theorists tend to support policies such as a social safety net and/or a living wage. However, Stockholder Theorists prefer to address the needs of the least advantaged via individual philanthropy and/or voluntary associations rather than government programs. Stockholder Theory of Corporate Management Leaders are morally and legally obligated to serve as agents of the stockholders, and advance their interests regardless of how those decisions might affect the other stakeholders. Whose Ends are Served by the Corporate Leaders? Stockholder Theory states that the CEO is an agent hired by stockholders (or owners), and therefore he/she is legally and morally obligated to serve theirShow MoreRelatedThe Theory Of Corporate Management2198 Words   |  9 Pages(Zahraa) Corporate management has evolved over the years becoming a complicated process even to the most refined managers. Classical management styles can no longer be relied upon to organize efficiently the several factors that come into play in the modern business world. 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