Eugene Schlossberger

The paper suggests replacing the shareholder/stakeholder distinction with a “Dual-Investor” model of business: stockowners provide the specific capital for business ventures, while society provides the “opportunity capital.” Thus society is an investor in every business venture. Dual-Investor theory provides a response (based purely on the ethics of investment) to Milton Friedman’s arguments that executives should maximize profit by any legal means, avoids recent criticisms by Kenneth Goodpaster and Thomas McMahon, and suggests that the dichotomy between private and public ownership overlooks several important alternatives. Some consequences of the theory are detailed and a sketch of a theory of property, based on Dual-Investor theory, is appended.

Graduates of business ethics courses often fail to apply what they have learned to decisions in business life because, this study finds, neither stakeholder theory nor shareholder-oriented theories seem satisfactory – less than 7% of respondents felt either view achieved the best balance between social responsibility and making a profit. Dual-Investor theory offers students a framework within which to articulate and think through the ethical dimensions of business decisions, a framework 77.8% of respondents overall and 82.1% of business students claimed they were most likely to use in making their own decisions. The paper provides three sample cases illustrating the instructional advantages of Dual-Investor theory and points out several ways instructors might use Dual-Investor theory in business ethics courses.