Juxtaposing the “shareholder” and “stakeholder” views of corporate governance: a pedagogical structure for classroom discussion

Abstract

Purpose This study aims to present a pedagogical approach that allows students to discuss and debate the differences between two competing models of corporate governance – the shareholder primacy philosophy and the stakeholder value viewpoint. Design/methodology/approach This study first presents the conceptual bases for each framework, noting that while shareholder primacy is the historically dominant approach to corporate governance that guide strategic business actions in the USA, pressures from investor and societal groups and government agencies have forced publicly traded companies to recognize the need to take stakeholder interests into account in strategic decision-making, as is the dominant model in Europe and other parts of the world. This study then provides a pedagogical structure on how these opposing perspectives can be used to foster discussion, debate and reflection within the classroom. Findings This paper presents a pedagogical structure that allows students to recognize the competing pressures that businesses face of maximizing profits versus concerns over social causes. There are a number of positive pedagogical outcomes that can be realized from a classroom discourse on the differing perspectives on strategic management, corporate governance and social responsibility. Practical implications This pedagogical structure should help future business leaders throughout the world understand the differences between the two models of corporate governance. This study offers suggestions on how this pedagogical structure can be used in the student assessment process. Originality/value This study fills a gap in the literature by providing a pedagogical structure to guide discussion and debate on the competing theories of corporate governance and how organizational decision-makers can devise strategies to manage the potential competing demands that can arise from the shareholder versus stakeholder models. It is highly relevant and well-suited for courses such as Business Law, Business Policy, Business and Society and Ethics.