Tag Archives: Stakeholder

Shareholder Or Stakeholder Supremacy – Know More

Milton Friedman claimed that companies have ultimate liability for increasing the shareholder interest (Friedman, 1970). Since then, we have come a long way and embraced a Stakeholder Paradigm that respects the needs of employees and their friends, the society, vendors, and consumers, and also rivals, government, and everybody in the area where the business is headquartered. For better tips visit difference between shareholder and stakeholder.

Henry Ford lost the case several years back in which some of his owners (in particular the Dodge brothers) sued for failure to allocate dividends to shareholders. The Supreme Court of Michigan ruled that Ford needed to allocate the earnings to its owners, rather than construct a smelting plant (Dodge v. Ford Motor Co., 204 Mich. 459 (1919)). Ford had said that “my goal … is to recruit many more people, to extend to the maximum possible number the advantages of this modern revolution, to help them create their lives and their houses” (ibid., 505).

The Michigan Supreme Court ruled, “A corporate company is formed and carries out solely for the profit of the shareholders,” and that “it was their responsibility to transfer a very large amount of money to the shareholders on or around the first of August 1916” (Id. at 505, 509). This directed Ford Motor Co. to shell out an annual payment of $19,275,385.96 (Id. 491) As a result, Henry Ford bought over the private business and acquired the other owners in order to gain full control — of course he will argue with Friedman.