It has become apparent that the accepted view of the role of corporations in society is evolving, and necessarily so. This is especially true after the recent corporate scandals in the USA involving multinational companies whose names have become commonplace in discussions of corporate fraud; such as Enron and Worldcom. (In fact, it was recently reported that a U.S. Senator had used one of these names as a verb; i.e.; to "enron" shareholders.) Corporate ethics and the role of business in society is under public scrutiny perhaps more than ever before in modern history, particularly in the USA.
Currently there are three predominate views on the purpose of business; the classic or stockholder approach already mentioned, the stakeholder approach, and the social contract approach. Each of these can be considered an evolutionary step forward from the previous theory in recognising and incorporating notions of corporate social and environmental responsibility. The following sections offer a brief review of these theories as they pertain to the current discussion.
Stockholder (Classic) Theory.
The "traditional" or "classic" view of business - that the sole purpose of corporations is to maximise profits - has been summarised by James W. McKie [12] along the following lines:.
1. Businesses do not serve the same goals as other organisations in a pluralistic society; they are distinct because their sole focus is on economic behaviour. .
2. Business performance is measured in terms of economic efficiency and growth in production of goods and services, including improvements in technology and innovations in goods and services. .
3. The primary goal and motivating force for business is profit. The aim is to make as large a profit as possible, thereby maintaining efficiency and taking advantage of available opportunities to innovate and contribute to growth. .
John Boatright points out that, "In the classical view, corporations should engage in purely economic activity and be judged in purely economic terms.
