Answer :
Final answer:
Corporations are bound by the law and the rules of 'Shareholder Interests'. This is justified by the concept of shareholder primacy, which states that a company's managers should act in the best interests of shareholders. Alternative viewpoint is the stakeholder theory that encourages balancing the interests of all vested parties. The correct option is 3.
Explanation:
Based on the options provided, corporations are bound by the law and the rules of 'Shareholder interests'. This mandate is corroborated by the concept of shareholder primacy, which posits that the fundamental duty of a firm's managers is to act in the interests of the shareholders. This standpoint arises from the understanding that shareholders invest capital into the corporation and thus own a part of the company. Hence, the executives and managers are assigned with the role of running the firm aligned with the shareholders' interests.
However, this perspective isn't the sole standpoint in corporate responsibility. An alternative viewpoint is provided by the stakeholder theory which suggests managers should strive to balance the interests of all stakeholders. Stakeholders can include anyone with an interest in the company, including employees, customers, suppliers, and the broader community.
While the shareholder theory focuses on augmenting shareholder wealth, stakeholder theory encourages the use of corporate revenue to benefit all stakeholders. This ethical consideration is a key component of business ethics, and their adherence is crucial to avoid anomalies like bribery, discrimination, and whistleblowing, thereby establishing trust across all levels of operation.
Hence, Option 3 is correct.
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