Wednesday, August 10, 2005

Should shareholders matter more than employees ?

This is one of the things that puzzles me the most - that companies consider shareholder value more important than employee interests. Should a company consider exceeding the cost of capital given to it more important that the welfare of the employees who labor for it? Who is more important? Infact, this was one of the first questions I ever asked Prof. Mohanty... he just by-passed it saying shareholder value maximization is an assumption made in modern finance. I still haven't found the answer and continue to be puzzled by it. I guess at some stage these things lead to questioning the very nature of capitalistic thought now. I was pleasantly surprised when I came across this blog post (on bubblegeneration - through thyagi) on Sumantra Ghoshal's later work researching this very question.

Article: Bad Management Theories
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