Exxon Valdez
In a case such as with the Exxon Valdez, the company essentially saw the two arguments of shareholder value and ethics as mutually exclusive. To resolve the issue, the company chose to focus on shareholder value as a means of making its decision, and ultimately chose not to retrofit the ships. Thus, the company chose to look at the situation strictly from the shareholder model, where management is the agent of the shareholder only, and only seeks to increase shareholder wealth.
For many firms, this is not the normal approach. Many companies take different approaches to corporate social responsibility, perhaps with a stakeholder theory. Under the stakeholder theory, the environment and the citizens of the areas that could be potentially affected by a spill would be taken into account. This approach has an appeal because it forces managers to think about the broader implications of their actions, and to recognize that enhancing shareholder wealth at all costs is simply not a human value, comes with potentially tremendous costs (tragedy of the commons) and is not aligned with the interests of very many people at all in this world (Orts & Strudler, 2002).
There is no common ethical...
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