Stakeholders
Customers, shareholders, employees, suppliers, government agencies, communities, and many others who have a "stake" or claim in some aspect of a company's products, operations, markets, industry, and outcomes.
Approaches to stakeholder theory
1. Normative
2. Descriptive
3. Instrumental
Normative stakeholder approach
A stakeholder approach that identifies ethical guidelines that dictate how firms should treat stakeholders.
It affirms that stakeholders have legitimacy and a right to engage organizations.
Principles and values provide direction for this approach.
descriptive stakeholder approach
A stakeholder approach that focuses on the actual behavior of the firm and usually addresses how decisions and strategies are made for stakeholder relationships.
instrumentalist stakeholder approach
A stakeholder approach that describes what happens if firms behave in a particular way.
Examines relationships involved in the management of stakeholders including the processes, structures, and practices that implement stakeholder relationships within an
Primary stakeholders
Those who continued association and resources are absolutely necessary for a firm's survival.
Eg. Employees, customers, and shareholders, as well as the governments and communities that provide necessary infrastructure.
Secondary stakeholders
Those that do not typically engage directly in transactions with a company and are therefore not essential to its survival.
Even though primary groups may present more day to day concerns, these groups cannot be ignored or given less consideration in the
Stakeholder interaction model
A conceptualization of the relationship between businesses and stakeholders.
In this model, there are reciprocal relationships between the firm and a host of stakeholders
Stakeholder orientation
The degree to which a firm understands and addresses stakeholder demands.
It involves "activities and processes within a system of social institutions that facilitate and maintain value through exchange relationships with multiple stakeholders"
Comprises
Activities in stakeholder orientation
1. The organization wide generation of data about stakeholder groups and the assessment of the firm's effects on these groups
2. The distribution of this information throughout the firm
3. The responsiveness of the organization as a whole to this informat
social responsibility
An organization's obligation to maximize its positive impact on stakeholders and minimize its negative impact.
Levels of social responsibility
1. Economic
2. Legal
3. Ethical
4. Philanthropic
Corporate citizenship
Often used to express the extent o which business strategically meet the economic, legal, ethical, and philanthropic responsibilities placed on them by various stakeholders.
Has four interrelated dimensions:
1. Strong sustained economic performance
2. Rig
Reputation
One of an organization's greatest intangible assets with tangible value.
Although an organization does not control its reputation in a direct sense, its actions, choices, behaviors, and consequences influence stakeholder's perceptions of it.
Issues associated with social responsibility
1. Social issues
2. Consumer protection
3. Sustainability
4. Corporate governance
Social issues
An issue associated with social responsibility. They are associated with the common good. Common good is idea that because people live in a community, social rules should benefit the community.
Also involves the loss of privacy for marketing purposes.
consumer protection
An issue associated with social responsibility.
This often occurs in the form of laws passed to protect consumers from unfair and deceptive business practices. Issues involving this usually have an immediate impact on the consumer after a purchase.
Intern
sustainability
An issue associated with social responsibility. IT is the potential for the long-term well-being of the natural environment, including all biological entities, as well as the mutually beneficial interactions among nature and individuals, organizations, an
Corporate governance
AN issue associated with social responsibility. It involves the development of formal systems of accountability, oversight, and control.
This has a positive relationship with social responsibility.
fiduciaries
Persons placed in positions of trust that act on behalf of the best interests of the organization.
Both directors and officers are these for the shareholders.
They have a duty of care (duty of diligence) to make informed and prudent decisions.
duty of care
Means that directors have the duty to make informed and prudent decisions.
Duty of loyalty
Directors share this, which means all their decisions should be in the best interests of the corporation and its stakeholders.
Accountability
An important part of corporate governance. It refers to how closely workplace decisions align with a firm's stated strategic direction and its compliance with ethical and legal considerations.
Oversight
This provides a system of checks and balances that limit employees' and managers' opportunities to deviate from policies and strategies aimed at preventing unethical and illegal activities.
Control
The process of auditing and improving organizational decisions and actions.
Approaches to corporate governance
1. Shareholder model
2. Stakeholder model
Shareholder model of corporate governance
A model for corporate governance. It is founded in classic economic precepts, including the goal of maximizing wealth for investors and owners.
For publicly traded companies, corporate governance focuses on developing and improving the formal system for m
stakeholder model of corporate governance
A model for corporate governance. It adopts a broader view of the purpose of business. Although a company certainly has a responsibility for economic success and viability to satisfy its stockholders, it must also answer to other stakeholders, including e
board of directors
For public companies, they hold the ultimate responsibility for their firms' success or failure, as well as the ethics of their actions.
They are held responsible by FSGO.
Inside directors
Corporate officers, consultants, major shareholders, and others who benefit directly from the success of the organization.
Outside directors
Those who have little vested interest in the firm before assuming the director role. The trend today is toward this.
They are thought to bring independence to the monitoring function because they are not bound by past allegiances, friendships, a current r
interlocking directorate
The concept of board members being linked to more than one company.
Not illegal unless it involves a direct competitor.
executive compensation
One of the biggest issues that corporate boards of directors face. How executives are _________ for their leadership, organizational service, and performance has become a controversial topic.
Steps to implementing a stakeholder perspective
1. Assessing the corporate culture
2. Identifying stakeholder groups
3. Identifying stakeholder issues
4. Assessing Organizational commitment to stakeholders and social responsibility
5. Identifying resources and determining urgency
6. Gaining stakeholder