When a firm earns lower-than-average returns, the highest priority is given to satisfying the needs of capital market stakeholders over the needs of product market and organizational shareholders.

Question

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When a firm earns lower-than-average returns, the priority is often to satisfy the needs of product market stakeholders (such as customers and suppliers) and organizational stakeholders (such as employees) to stabilize and improve performance, rather than focusing solely on capital market stakeholders.

When a Firm Earns Lower-Than-Average Returns, the Highest Priority Is