If you’re new to this site, you’re probably wondering what it’s all about. What is the point of “The Maritime Site”? Honestly, I don’t know what the point is. I just write about maritime related topics that I find interesting. The following article is no exception, enjoy!
Over the last few decades, two competing theories of corporate social responsibility have gained prominence in both the academic and business worlds.
The first theory, as defended by Coelho, McClure and Spry (2003), is known as the Shareholder Theory or Stockholder Theory in which all corporate decisions, so long as they are legal and profitable, are made with the shareholders’ interests as the highest priority (the so-called “profits over people” mantra).
The second theory, as defended by Post (2003), is referred to as the Stakeholder Theory, in which corporate decisions are made with equal regard for all immediate stakeholders in the business’s environment including suppliers, customers, employees, management, shareholders, and the environment ships or mobile drilling units (MODUs) operate.
This article, the first in a series on The Maritime Site, analyzes these two different concepts of social responsibility as it relates to shipping companies and deepwater drilling contractors. The intent of the article is to offers advice for maritime and drilling crews, managers, and corporate executives to assist them in making their own ethical business decisions no matter what their roles are within the maritime industry so that the interests of all stakeholders are addressed in a responsible manner.
Whether deserved or not, shipping company, “Big Oil”, and oil drilling contractor executives are coming under an increasing amount of scrutiny over their presumed lack of socially responsible decision making. From the Exxon Valdez disaster in 1989, BP’s latest environmental and economic disaster in the Gulf of Mexico, and this week’s allegations that some of the world’s largest shipping companies have engaged in illegal price fixing, the past few decades have seen more than their fair share of leadership challenges. The demand for change and transparency in the maritime industry is great.
In 1970, economist Milton Friedman published an article for The New York Times Magazine in which he declared “there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud” (Friedman, 1970).
Commonly known as the “Shareholder Theory” or “Stockholder Theory”, Friedman’s paradigm of corporate social responsibility has served as an ethical baseline for multiple generations of maritime business leaders but critics argue it doesn’t go far enough in addressing the realities of the current maritime business environment.
Consequently, a growing number of individuals from within and outside the industry are leaning towards the stakeholder theory of social responsibility suggesting that it is a more comprehensive and thoughtful approach to making ethical business decisions when it comes to operation of ships and mobile drilling rigs. Predictably, the competing schools of thought frequently offer new perspectives on why their particular theory is superior to the other, and how the only way to move the interests of society forward is to adopt one comprehensive model.