Price: A corporation's primary responsibility is to its shareholders. They are its most important constituency becau...

Facundo on August 28, 2015

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Explain answer


Melody on September 1, 2015

Price argues that a corporation's primary responsibility is to its shareholders since they take the greatest risks and if the corporation goes bankrupt, the shareholders lose their investment.

Albrecht argues that shareholders have diversified investment portfolios that spread the risk they take out on various companies so that all their stakes are not in one place. On the other hand, Albrecht points out, that a corporation's employees depend on the well-being of the corporation for their very livelihood. Thus, the corporation's primary responsibility should be to the employees.

So, as you can see, Price and Albrecht disagree over who has more at stake in a corporation: the shareholders or the employees, and, in so deciding, whom the corporation should have its primary responsibility be towards, i.e. answer choice (D): "a corporation's shareholders have more at stake than anyone else does in the corporation's success or failure.

Hope that clears things up! Please let us know if you have any other questions.