If a firm engages in activities that simultaneously are profit-optimizing and socially responsible:
A) Economists that adopt the stakeholder theory, but not the shareholder theory, will agree with its conduct
B) Economists that adopt the shareholder theory, but not the stakeholder theory, will agree with its conduct
C) Economists uniformly will criticize its claims of social responsibility as being highly unlikely, if not impossible
D) Its behavior is commendable in accordance with both the shareholder and the stakeholder theories

Question

Quizplus · Accepted Answer

The stakeholder theory emphasizes that the firm's responsibility goes beyond maximizing profits for shareholders, as it must also take into consideration the interests of other stakeholders, such as customers, employees, suppliers, and the community. On the other hand, the shareholder theory contends that the firm's sole obligation is to maximize profits for shareholders. Therefore, a firm that engages in profit-optimizing while being socially responsible will be commended under both theories, acknowledging that it is possible to create value for stakeholders while generating profits for shareholders.

If a Firm Engages in Activities That Simultaneously Are Profit-Optimizing