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Assigned Readings:

Chapter 1. The Business and Society Relationship

Chapter 2. Corporate Social Responsibility, Citizenship, and Sustainability

Chapter 3. The Stakeholder Approach to Business, Society, and Ethics

Initial Postings:

Read and reflect on the assigned readings for the week. Then post what you thought was the most important concept(s), method(s), term(s), and/or any other thing that you felt was worthy of your understanding in each assigned textbook chapter.Your initial post should be based upon the assigned reading for the week, so the textbook should be a source listed in your reference section and cited within the body of the text. Other sources are not required but feel free to use them if they aid in your discussion.

Also, provide a graduate-level response to each of the following questions:

Select a company and research recent news items that have been released regarding the company.  In a written response, note whether the articles were positive or negative for the company.  Describe how the company’s actions may impact an individual’s perception of business in the United States.  Identify responsibilities that the company has to various stakeholder groups mentioned in the articles.  Finally, note any sustainability issues that confront the company and provide suggestions for how the company should handle these issues.

Business & Society
Ethics, Sustainability & Stakeholder
Management
10th Edition
© 2018 Cengage
1
Chapter 1
The Business
and Society
Relationship
© 2018 Cengage
2
Learning Outcomes
1. Describe and explain business and society as foundational
concepts. Describe how society is viewed as the
macroenvironment.
2. Explain the characteristics of a pluralistic society. Describe
pluralism and identify its attributes, strengths, and weaknesses.
3. Define a special-interest society and describe how it evolves.
4. Identify, discuss, and illustrate the factors leading up to business
criticism and corporate response. What is the general criticism of
business? How may the balance of power and responsibility be
resolved? What is the changing social contract?
5. Highlight the major focuses or themes of the book: managerial
approach, business ethics, sustainability, and stakeholder
management.
© 2018 Cengage
3
Chapter Outline
•
•
•
•
•
•
•
•
•
•
Business and Society
Society as the Macroenvironment
A Pluralistic Society
A Special-Interest Society
Business Criticism and Corporate Response
Focus of the Book
Structure of the Book
Summary
Key Terms
Discussion Questions
© 2018 Cengage
4
Business and Society
Business • the collection of private, commercially oriented
organizations ranging in size from one-family
proprietorships to multinational corporations.
Society • a community, nation, or broad grouping of people with
common traditions, values, institutions, and collective
activities and interests.
Macroenvironment • the total environment outside the firm, the
comprehensive societal context in which the
organization resides.
Society
•
is the macroenvironment in which businesses operate.
© 2018 Cengage
5
Conceptualizing the
Macroenvironment
© 2018 Cengage
6
Segments of the Macroenvironment
© 2018 Cengage
7
A Pluralistic Society • Prevents power from being concentrated in the hands
of a few.
• Maximizes freedom of expression and action and
strikes a balance between monism, on the one hand,
and anarchy on the other.
• Is one in which the allegiance of individuals to groups is
dispersed.
• Creates a widely diversified set of loyalties to many
organizations, and minimizes the danger that a leader
of any one organization will be left uncontrolled.
• Provides a built-in set of checks and balances, in that
groups can exert power over one another with no
single organization (business or government)
dominating and becoming overly influential.
© 2018 Cengage
8
Business and Stakeholder
Relationships
© 2018 Cengage
9
Special Interest Society
Special Interest Groups • Make life more complex for business and
government.
• Can number in the tens of thousands in some
societies.
• Pursue their own focused agendas.
• Are active, intense, diverse, and focused.
• Can attract a significant following.
• Often work at cross purposes, with no unified
goals.
• A special-interest society is pluralism taken to
the extreme.
© 2018 Cengage
10
Social Environment, Business
Criticism and Corporate Response
© 2018 Cengage
11
Factors in the Social Environment
Affluence and Education •
Create higher expectations of major institutions.
•
Growing public awareness through television,
movies, the Internet, and social media.
Revolution of rising expectations – creates a
social problem, a gap between societal expectations
for social conditions and social realities. This can lead
to:
• Entitlement mentality
• Rights movement
• Victimization philosophy
© 2018 Cengage
12
Society’s Expectations Versus
Business’ Actual Social Performance
© 2018 Cengage
13
General Criticism of Business:
Use and Abuse of Power
Business Power –
• the capability or ability to produce an
effect, have impact, or to bring influence
to bear on a situation or people
Iron Law of Responsibility • In the long run, those who do not use
power in a manner society considers
responsible will tend to lose it
© 2018 Cengage
14
Levels and Spheres of
Corporate Power
© 2018 Cengage
15
Elements in the Social Contract
© 2018 Cengage
16
Focus of the Book
© 2018 Cengage
17
A Managerial Approach
•
•
•
Managers are practical and have begun to
deal with social and ethical concerns in ways
similar to those they use to manage
traditional business functions such as
marketing, finance, operations, and risk
management.
As a result, managers have been able to
convert seemingly unmanageable concerns
into ones that can be dealt with in a balanced
and impartial fashion.
At the same time, managers have had to
integrate traditional economic and financial
considerations with ethical and social
considerations.
© 2018 Cengage
18
Urgent versus Enduring Issues
Short-Term • Issues or crises arise on the spur of the
moment and management must formulate
quick responses.
Long-Term • Issues or problems are a long-term
concern and management must develop a
thoughtful organizational response.
© 2018 Cengage
19
A Business Ethics Theme
Ethical questions •
inevitably and continually come into play
during business operations.
Ethics •
refers to issues of right, wrong, fairness, and
justice.
Business Ethics •
focuses on ethical issues that arise in the
commercial realm.
Ethical questions •
permeate business’s activities as it attempts
to interact with major stakeholder groups.
© 2018 Cengage
20
A Sustainability Theme
Sustainability – Has become one of business’s most
pressing mandates.
Sustainable development – is a pattern of
resource use that aims to meet current needs while
preserving the environment for future generations.
Sustainability embraces criteria which are:
•
•
•
Environmental
Economic
Social
Sustainability concerns the ability of businesses to
survive and thrive over the long term.
© 2018 Cengage
21
Stakeholder Management Theme
Stakeholders •
•
Individuals or groups with which business
interacts and who have a vested interest in the
firm.
In this text, we consider:
• External stakeholders, such as government,
consumers, the natural environment,
community members.
• Internal stakeholders, such as employees,
those involved in corporate governance, and
others.
© 2018 Cengage
22
Structure of the Book (1 of 3)
Part One: Business, Society, and Stakeholders
1. The Business and Society Relationship
2. Corporate Citizenship: Social Responsibility, Performance and
Sustainability
3. The Stakeholder Approach to Business, Society, and Ethics
Part Two: Corporate Governance & Strategic Management Issues
4. Corporate Governance: Foundational Issues
5. Strategic Management and Corporate Public Policy
6. Issue, Risk, and Crisis Management
© 2018 Cengage
23
Structure of the Book (2 of 3)
Part Three: Business Ethics and Management
7.
Business Ethics Fundamentals
8.
Personal and Organizational Ethics
9.
Business Ethics and Technology
10. Ethical Issues in the Global Arena
Part Four: External Stakeholder Issues
11. Business, Government, and Regulation
12. Business Influence on Government and Public Policy
13. Consumer Stakeholders: Information Issues and Responses
14. Consumer Stakeholders: Product and Service Issues
15. Sustainability and the Natural Environment
16. Business and Community Stakeholders
© 2018 Cengage
24
Structure of the Book (3 of 3)
Part Five: Internal Stakeholder Issues
17. Employee Stakeholders and Workplace Issues
18. Employee Stakeholders: Privacy, Safety, and Health
19. Employment Discrimination and Affirmative Action
Cases
© 2018 Cengage
25
Key Terms
•
•
•
•
•
•
•
•
•
•
•
•
•
•
affluence
business
business ethics
business power
economic environment
education
entitlement mentality
Iron Law of
Responsibility
macroenvironment
managerial approach
Nongovernmental
organizations (NGOs)
pluralism
political environment
revolution of rising
expectations
© 2018 Cengage
•
•
•
•
•
•
•
•
•
•
•
•
rights movement
social contract
social environment
social problem
society
special-interest
society
stakeholder
management
stakeholders
sustainability
sustainable
development
technological
environment
victimization
philosophy
26
Business & Society
Ethics, Sustainability & Stakeholder
Management
10th Edition
© 2018 Cengage
1
Chapter 2
Corporate Social
Responsibility,
Citizenship, and
Sustainability
© 2018 Cengage
2
Learning Outcomes (1 of 3)
1. Describe some early views of corporate social
responsibility (CSR). Explain how CSR evolved and
encompass economic, legal, ethical, and philanthropic
components. Explain the Pyramid of CSR.
2. Articulate the traditional arguments both against and for
CSR. Explain how the business case for CSR has
strengthened the concept’s acceptance.
3. Describe how the concept of corporate social
responsiveness differs from CSR.
4. Explain how corporate social performance (CSP) became
more popular. Describe how it is different than CSR.
Elaborate on how it differs from corporate social
responsiveness.
© 2018 Cengage
3
Learning Outcomes (2 of 3)
5. Describe how corporate citizenship is a valuable way of
thinking about CSR. Explain its broad and narrow views.
Explain how corporate citizenship develops and
proceeds in stages.
6. Summarize the three perspectives on the relationship
between corporate social performance (CSP) and
corporate financial performance (CFP).
7. Explain how sustainability is a broad concept that
embraces profits, people, and the planet. Describe how
the triple bottom line is a vehicle for implementing
sustainability.
© 2018 Cengage
4
Learning Outcomes (3 of 3)
8. Elaborate on the ages and stages of CSR. Define CSR
Greenwashing and how it may lead to misleading
reputational profiles of companies.
9. Describe and characterize the socially responsible
investing movement. Differentiate between negative
and positive screens that are used in investments
decisions.
© 2018 Cengage
5
Chapter Outline
• The Corporate Social Responsibility (CSR) as a Concept
• Traditional Arguments against and for CSR
• Ages and Stages of CSR
• CSR Greenwashing
• Political CSR
• Corporate Social Responsiveness
• Corporate Social Performance
• Corporate Citizenship
• The Social Performance and Financial Performance
Relationship
• Sustainability—Profits, People, Planet
• Socially Responsible, Sustainable, Ethical Investing
• Summary
© 2018 Cengage
6
Allegations Against Business Business • Has little concern for the consumer
• Exploits employees
• Cares nothing about the deteriorating
social order
• Has no concept of ethical behavior
• Is indifferent to the problems of
minorities and the environment
• These claims have generated an
unprecedented number of pleas for
companies to be more socially
responsible.
© 2018 Cengage
7
Corporate Social Responsibility
As a Concept
Early Definitions –
• CSR means seriously considering the
•
•
impact of a company’s actions on society.
CSR requires the individual to consider his
or her acts in terms of a whole social
system, and holds him or her responsible
for the effects of his or her acts anywhere
in that system.
These definitions provide useful insights
into the concept of Corporate Social
Responsibility.
© 2018 Cengage
8
Business CriticismSocial Response Cycle
© 2018 Cengage
9
Corporate Social Responsibility
Related Concepts
Traditional CSR Patterns
Emphasize:
Newer Terms with Similar
Meanings
Corporate Social Responsibility
Emphasizes Obligation,
Accountability
Corporate Citizenship (CC) – Views
companies as citizens and all this
implies
Corporate Social Responsiveness
Emphasizes Action, Activity
Corporate Responsibility (CR) – Broadly
Focuses on all categories of corporate
Responsibility
Corporate Social Performance
(CSP) Emphasizes Outcomes,
Results
Sustainability (SUS) –
Emphasizes longer-term concern for
people, planet and profits
© 2018 Cengage
10
Historical Perspective on CSR
© 2018 Cengage
11
Adaptations of the Economic Model
Philanthropy
Community obligations
Paternalism
Motivation:
Keep government at arm’s length
© 2018 Cengage
12
Evolving Meanings of CSR
•
CSR:
•
…is seriously considering the impact of
the company’s actions on society.
•
… is the obligation of decision makers to
take actions which protect and improve
the welfare of society as a whole, along
with their own interests.
•
…supposes that the corporation has
economic and legal obligations as well as
responsibilities to society that extend
beyond these obligations.
© 2018 Cengage
13
A Four-Part Definition of CSR
While each definition is valuable, we will
focus on the types of social responsibilities
business has. Corporate social responsibility
encompasses the:
Economic
Legal
Ethical, and
Philanthropic
expectations that society has of organizations
at a given point in time.
© 2018 Cengage
14
The Four Components of CSR
Societal
Expectation
Examples
Economic
Required
Be profitable. Maximize sales,
minimize costs.
Legal
Required
Obey laws, adhere to
regulations.
Ethical
Expected
Avoid questionable practices.
Do what is right, fair, and just.
Philanthropic
Desired/
Expected
Be a good corporate citizen.
Give back.
Responsibility
© 2018 Cengage
15
The Pyramid of CSR
© 2018 Cengage
16
The CSR Equation
A stakeholder perspective focuses on the CSR
pyramid as a unified whole.
© 2018 Cengage
17
Top 20 Activities or Characteristics of
a Socially Responsible Company
•
•
•
•
•
•
•
•
•
•
•
Makes products that are safe.
Does not pollute air or water.
Obeys the law in all aspects of
business.
Promotes honest or ethical employee
behavior.
Commits to safe workplace ethics.
Does not use misleading or deceptive
advertising.
Upholds stated policy banning
discrimination.
Utilizes “environmentally friendly”
packaging.
Protects employees against sexual
harassment.
Recycles within company.
Shows no past record of questionable
activity.
•
•
•
•
•
•
•
•
•
© 2018 Cengage
Responds quickly to customer
problems.
Maintains waste reduction program.
Provides or pays portion of medical
costs.
Promotes energy conservation
program.
Helps displaced workers with
placement.
Gives money toward charitable or
educational causes.
Utilizes only biodegradable or
recyclable materials.
Employs friendly or courteous or
responsive personnel
Tries continually to improve quality.
18
Arguments against CSR • Classical Economics: The classical economic
view is that business’s only goal is the
maximizing of profits for owners.
• Business Not Equipped: Business is not
equipped to handle social activities.
• Dilutes Business Purpose: It dilutes the
primary purpose of business.
• Too Much Power Already: Businesses have
too much power already.
• Global Competitiveness: It limits the ability
to compete in a global marketplace.
© 2018 Cengage
19
Arguments in Support of CSR • Enlightened self-interest: Businesses must
take actions to ensure long-term viability.
• Warding off government regulations. This
is one of the most practical reasons.
• Resources Available: Business has the
resources and expertise. Let it try.
• Pro-action is better than Reaction. Proaction is also less costly.
• Public supports: the public strongly
supports CSR.
© 2018 Cengage
20
Business Responses to calls for CSR
Make the Business Case for CSR
Defensive approach
Cost-benefit approach
Strategic approach
Innovation and learning approach
© 2018 Cengage
21
The Business Case for CSR
6 Reasons for Embracing CSR
1.
2.
3.
4.
5.
6.
Innovation
Cost savings
Brand differentiation
Long-term thinking
Customer engagement
Employee engagement
Business Benefits of CSR
1.
2.
3.
Win new business
Increase customer retention
Develop and enhance
relationships with customers,
suppliers, and networks
4. Attract, retain, and maintain a
happy workforce and be an
Employer of Choice
5. Save money on energy and
operating costs and manage risk
6. Differentiate oneself from
competitors
7. Improve business reputation and
standing
8. Provide access to investment and
funding opportunities
9. Generate positive publicity and
media opportunities due to
media interest in ethical business
activities.
© 2018 Cengage
22
Ages and Stages of CSR
• Visser’s Five Stages of CSR
• Age Of Greed – CSR practices are undertaken when
companies’ shareholder value needs to be protected.
• Age of Philanthropy – Emphasizes charitable CSR
when companies support social causes through
donations and sponsorship.
• Age of Marketing – CSR is used as a public relations
approach to enhance the company’s brand, image, or
reputation.
• Age of Management – CSR activities are linked to
the company’s core business (e.g., Coca-Cola and water
quality/management).
• Age of Responsibility – Identifying and remedying
the root causes of irresponsibility and unsustainability.
© 2018 Cengage
23
CSR Greenwashing
• Some companies convey an image of responsibility
when in fact they are conducting business as usual.
• Companies attempt to make the public believe
they are “green”—environmentally friendly—when
they are not.
• CSR Greenwashing is intentionally seeking to
convey the image of a socially responsible firm
when the evidence of their practices does not
support this conclusion.
© 2018 Cengage
24
Political CSR
Gaining attention and application especially in
European or similar contexts where the
government historically has assumed a larger role
in providing societal benefits.
“PCSR entails those responsible business
activities that turn corporations into political
actors, by engaging in public deliberations,
collective decisions, and the provision of
public goods or the restriction of public bads in
cases where public authorities are
unable or unwilling to fulfil this role.”
© 2018 Cengage
25
Corporate Social Responsiveness
Corporate Social Responsiveness • An action-oriented variant of CSR.
Responsibility –
• Implies a state or condition of having
assumed an obligation.
Responsiveness –
• Connotes a dynamic, action-oriented
condition.
© 2018 Cengage
26
Corporate Social Performance:
Carroll’s Model
© 2018 Cengage
27
Corporate Social Performance:
Wartick & Cochran’s Model Extensions
© 2018 Cengage
28
Corporate Citizenship (1 of 2)
Corporate citizenship • Embraces all the facets of corporate
social responsibility, responsiveness,
and sustainability.
• Corporate citizenship is not a new
concept, but one whose time has come.
• Corporate citizenship serves a variety of
stakeholders.
© 2018 Cengage
29
Corporate Citizenship (2 of 2)
Broad View
•
A reflection of shared moral and ethical
principles.
•
A vehicle for integrating individuals into the
communities in which they work.
•
A form of enlightened self-interest that
balances stakeholders’ claims and enhances a
company’s long-term value.
Narrow View
•
Corporate community relations
© 2018 Cengage
30
Stages of Corporate Citizenship
© 2018 Cengage
31
Global Corporate Citizenship • …and Global CSR are topics in which there has
been an explosion of interest.
• Multinational enterprises are expected to:
• be good corporate citizens in the countries in
which they do business.
• tailor their initiatives to conform to the cultural
environment.
• International academics and business people
around the world are now researching and
advocating CSR and corporate citizenship concepts.
• Convergence in global CSR approaches will
continue as the world economic stage becomes
the common environment within which
businesses function.
© 2018 Cengage
32
Corporate Citizenship Awards
by Business Press
• Fortune’s ranking of “Most Admired” and
“Least Admired” corporations
• Conference Board’s Ron Brown Award
for Corporate Leadership
• CRO Magazine Awards
• Chamber of Commerce of the U.S.
Corporate Citizenship Awards
© 2018 Cengage
33
The Social and Financial Performance
Relationship
© 2018 Cengage
34
One Bottom Line, or Many?
• The stakeholder-bottom line perspective –
• Impacts or benefits of social
performance cannot be fully measured
or appreciated by considering only the
impact on the firm’s bottom line.
• CSP cannot be fully comprehended
unless it includes impacts and measures
on consumers, employees, the
community and other stakeholder
groups.
© 2018 Cengage
35
Sustainability—Profits, People,
Planet
Sustainability derived from sustainable
development—a pattern of resource use that
aims to meet human needs while preserving
environment so that these needs can be met not
only in the present but also for future
generations.
Earlier versions of sustainability focused only on
the environment. Recently it has become clear
that it pertains to the natural environment, and
other business environments as well.
© 2018 Cengage
36
The Triple Bottom Line
Perspective
Business Must Attend to Three Key
Spheres of Sustainability –
• Economic
• Social
• Environmental
The goal is corporate sustainability.
© 2018 Cengage
37
Creating Shared Value and
Conscious Capitalism
CSV (Creating Shared Value)
•
Business and society could be brought back
together if business redefined the basic
purpose as creating shared value—generating
economic value in a way that also produces
value for society.
Conscious Capitalism
•
•
A more complex form of capitalism that
reflect and leverages the interdependent
nature of life and all of the stakeholders in
business.
Higher purpose, Stakeholder orientation,
conscious leadership, conscious culture.
© 2018 Cengage
38
Socially Responsible, Sustainable,
Ethical Investing (1 of 2)
Socially Responsible Investing • Emerged in the 1970s
• Nearly $7 trillion in socially
responsible investments in the U.S.
Social Screening • A technique used to screen firms for
socially-responsible investment
purposes.
© 2018 Cengage
39
Socially Responsible, Sustainable,
Ethical Investing (2 of 2)
• Total dollars invested in SRI has grown
exponentially over past twenty years.
• Council on Economic Priorities suggests 3
reasons:
1.
More reliable research on CSP
2.
Investment firms using social criteria have
solid track record
3.
The socially conscious 1960s generation is
making investment decisions
© 2018 Cengage
40
Key Terms
• business for social
responsibility
• conscious capitalism
• community obligations
• corporate citizenship
• corporate social
performance model
• corporate social
responsibility
• corporate social
responsiveness
• corporate sustainability
• CSR exemplar firms
• CSR Greenwashing
• created shared value
• economic responsibilities
© 2018 Cengage
• environmental, social, and
governance investing
• ethical responsibilities
• global corporate citizenship
• impact investing
• legal responsibilities
• mainstream adopters
• paternalism
• philanthropic responsibilities
• philanthropy
• pyramid of CSR
• social entrepreneurship
• social intrapreneurship
• socially responsible,
sustainable or ethical investing
• stages of corporate citizenship
• stockholder-bottom line
• sustainability
• sustainable development
• triple bottom Line
41
Business & Society
Ethics, Sustainability & Stakeholder
Management
10th Edition
© 2018 Cengage
1
Chapter 3
The Stakeholder
Approach to
Business,
Society, and
Ethics
© 2018 Cengage
2
Learning Outcomes
1.
2.
3.
4.
5.
6.
7.
Identify origins of the stakeholder concept by explaining what a
stake is and what a stakeholder is.
Explain who business’s stakeholders are in primary and secondary
terms.
Differentiate among the three stakeholder approaches—strategic,
multifiduciary, and synthesis.
Identify and explain the three values of the stakeholder model.
Name and describe the five key questions that capture the
essence of stakeholder management.
Explain major concepts in effective stakeholder management to
include stakeholder thinking, stakeholder culture, stakeholder
management capability, and stakeholder engagement.
Describe the three strategic steps toward global stakeholder
management.
© 2018 Cengage
3
Chapter Outline
• Origins of the Stakeholder Concept
• Who Are Business’s Stakeholders?
• Stakeholder Approaches
• Three Values of the Stakeholder Model
• Stakeholder Management Five Key Questions
• Effective Stakeholder Management
• Strategic Steps Toward Global Stakeholder Management
• Summary
• Key Terms
• Discussion Questions
© 2018 Cengage
4
Origins of the Stakeholder Concept
• Stake • An interest or a share in an undertaking.
• Can be categorized as:
© 2018 Cengage
5
Stakeholders
Stakeholder –
• Any individual or group who can affect or
is affected by the actions, decisions,
policies, practices, or goals of the
organization.
• Stakeholder is a variant of the concept of
stockholder—an investor/owner of
businesses.
© 2018 Cengage
6
Who are Business’s Stakeholders?
© 2018 Cengage
7
Three Views of the Firm
© 2018 Cengage
8
Production and Managerial Views
of the Firm
© 2018 Cengage
9
Stakeholder View of the Firm
© 2018 Cengage
10
Primary & Secondary Stakeholders
Primary stakeholders • Have a direct stake in the
organization and its success.
Secondary stakeholders • Have a public or special interest stake
in the organization that is more
indirect.
© 2018 Cengage
11
Social Stakeholders
Primary social
stakeholders
Secondary social
stakeholders
Shareholders and investors Government regulators
Employees and managers
Civic institutions
Customers
Social pressure groups
Local communities
Media and academic
commentators
Suppliers and other
business partners
Trade bodies
Competitors
© 2018 Cengage
12
Nonsocial Stakeholders
Primary nonsocial
stakeholders
Secondary nonsocial
stakeholders
Natural environment
Environmental interest
groups
Future generations
Animal welfare
organizations
Nonhuman species
© 2018 Cengage
13
Important Stakeholder Attributes:
Legitimacy, Power, Urgency
Legitimacy •
Refers to the perceived validity or
appropriateness of the stakeholder’s claim to a
stake.
Power •
Refers to the ability or capacity of a stakeholder to
produce an effect.
Urgency •
Refers to the degree to which the stakeholder’s
claim demands immediate attention or response.
Proximity •
The spatial distance between the organization and
its stakeholders.
© 2018 Cengage
14
Stakeholder Typology
© 2018 Cengage
15
Stakeholder Approaches
Strategic approach •
Views stakeholders primarily as factors
managers should manage in pursuit of
shareholder profits.
Multifiduciary approach •
Views stakeholders as a group to which
management has a fiduciary responsibility.
Stakeholder synthesis approach • Considers stakeholders as a group to whom
management owes an ethical, but not a
fiduciary, obligation.
© 2018 Cengage
16
Three Values
of the Stakeholder Model
Descriptive Value
Instrumental Value
Normative Value
© 2018 Cengage
17
Stakeholder Management: Five
Key Questions
1. Who are our organization’s stakeholders?
2. What are our stakeholders’ stakes?
3. What opportunities and challenges do our
stakeholders present to the firm?
4. What responsibilities (economic, legal,
ethical, and philanthropic) does the firm
have to its stakeholders?
5. What strategies or actions should the firm
take to best address stakeholder
challenges and opportunities?
© 2018 Cengage
18
© 2018 Cengage
19
Who Are Our Stakeholders?
© 2018 Cengage
20
What Are
Our Stakeholders’ Stakes?
To identify them, consider •
the nature and legitimacy of a group’s
stakes.
•
the power of a group’s stakes.
•
subgroups within a generic group.
© 2018 Cengage
21
What Opportunities and Challenges do
Stakeholders Present?
Opportunities
• Build productive working
relationships with stakeholders
• The potential for cooperation
Challenges
• Representative of how the firm
handles its stakeholders
• The potential for threat
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What Responsibilities Does a
Firm Have to its Stakeholders?
Apply Corporate Social Responsibility • Responsibilities are
•
Economic
•
Legal
•
Ethical
•
Philanthropic
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The Stakeholder Responsibility Matrix
Stakeholders
Economic
Legal
Ethical
Philanthropic
Owners
Customers
Employees
Community
Public at large
Social Activists
Other
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What Strategies or Actions
Should Management Take?
• Do we deal directly or indirectly with
stakeholders?
• Do we take the offense or the defense in
dealing with stakeholders?
• Do we accommodate, negotiate,
manipulate, or resist stakeholder
overtures?
• Do we employ a combination of the above
strategies or pursue a singular course of
action?
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Four Stakeholder Types 1. The Supportive Stakeholder
•
High potential for cooperation, low for threat
2. The Marginal Stakeholder
•
Low potential for cooperation and threat
3. The Nonsupportive Stakeholder
•
High potential for threat, low for cooperation
4. The Mixed-Blessing Stakeholder
•
High on potential for threat & cooperation
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Effective
Stakeholder Management
Stakeholder thinking •
•
•
The process of always reasoning in
stakeholder terms throughout the
management process.
Increases the complexity of decision-making,
but most consistent with today’s business
environment.
Is facilitated by
• Stakeholder culture
• Stakeholder management capability
• Stakeholder corporation model
• Principles of stakeholder management
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Developing a Stakeholder Culture
Stakeholder Culture embraces the beliefs, values, and
practices that organizations have developed for
addressing stakeholder issues and relationships.
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Stakeholder Management Capability
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Stakeholder Engagement •
•
•
•
•
•
An approach by which companies successfully
implement the transactional level of strategic
management capability.
Interaction with stakeholders must be
integrated into every level of decision-making in
the organization.
A ladder of stakeholder engagement depicts a
continuum from low engagement to high
engagement.
Transparency means working toward the open
corporation.
Sustainability is the latest emphasis on engaging
stakeholders.
Dialogue is primarily focused on exchanging
communications with stakeholder groups.
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The Stakeholder Corporation
The central element: Stakeholder
inclusiveness
In the future, development of loyal
relationships with customers, employees,
shareholders, and other stakeholders will
become one of the most important
determinants of success.
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The “Clarkson Principles” of
Stakeholder Management
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Strategic Steps Toward Global
Stakeholder Management
1. Governing Philosophy
Integrate stakeholder management into the firm’s
governing philosophy.
2. Values Statement
Create a stakeholder-inclusive “values statement.”
3. Measurement System
Implement a stakeholder performance measurement system.
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Implementation
Indicators of successful stakeholder management
include:
Survival
Avoided costs
Continued acceptance and use
Expanded recognition and adoption
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Key Terms (1 of 2)
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Clarkson principles
descriptive value (of stakeholder model)
instrumental value (of stakeholder model)
key questions (in stakeholder management)
legitimacy
managerial view of the firm
marginal stakeholder
mixed-blessing stakeholder
multifiduciary approach (to stakeholders)
nonsupportive stakeholder
normative value (of stakeholder model)
power
primary social Stakeholders
principles of stakeholder management
process level
production view of the firm
proximity
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Key Terms (2 of 2)
• rational level
• secondary nonsocial
stakeholders
• secondary social stakeholders
• stake
• stakeholder
• stakeholder corporation
• stakeholder culture
• stakeholder engagement
• stakeholder inclusiveness
• stakeholder management
• stakeholder management
capability
• stakeholder map
• stakeholder mindset
• stakeholder responsibility
matrix
• stakeholder symbiosis
• stakeholder thinking
• stakeholder unity
• stakeholder view of the firm
• supportive stakeholder
• synthesis approach to
stakeholders
• transactional level
• urgency
© 2018 Cengage
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