1.6 Conclusion

Two management philosophies, or schools of thought, drive the discussion about why firms exist: 1) shareholder wealth or 2) stakeholder welfare. To be frank, owners and management of each firm will determine which paradigm they favor and by how much.

To achieve the firm goal, managers have a triad of logics in their arsenal. Managers should balance the ideas of the competitor, profit, and customer logics in an attempt to achieve firm goals. By keeping all three logics in mind, managers can avoid the weaknesses of each individual logic.

Corporate Social Responsibility argues that firms should take a stakeholder approach. Social initiatives are based on areas such as strategy, financial, customer/product, governance/stakeholder, and human resources.

The next chapter will discuss the role of the leader-manager in the firm and what characteristics, attributes, and skills are required to successfully run a firm in the modern business world.