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Csr theories & stakeholders

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  • Rakshit
  • Rakshit
  • Rakshit
  • Rakshit
  • Soumyajit
  • Soumyajit
  • Soumyajit
  • Soumyajit
  • Soumyajit
  • Soumyajit
  • Soumyajit
  • Soumyajit
  • Soumyajit
  • Soumyajit
  • SAXENA
  • SAXENA
  • SAXENA
  • SAXENA
  • SAXENA
  • SAXENA
  • SAXENA
  • SAXENA
  • SAXENA
  • SAXENA
  • GANDHI
  • GANDHI
  • GANDHI
  • GANDHI
  • Anand & Bhoomi
  • Anand & Bhoomi
  • Anand & Bhoomi
  • Anand & Bhoomi
  • Anand & Bhoomi
  • Anand & Bhoomi
  • Anand & Bhoomi
  • Anand & Bhoomi
  • Transcript

    • 1. Group 4_Section CAnand Kumar 12P127Bhoomi Ashwin 12P131Chirayu Gandhi 12P135Rakshit Sharma 12P160Saurabh Saxena 12P167Soumyajit Sengupta 12P171
    • 2.  Normative:Explains the logic as to why a manager should consider certain classes to be stakeholders Descriptive: Explains the conditions under which managers identify certain classes to be stakeholders
    • 3.  Primary v/s Secondary Owners v/s Non Owners Owners of Capital v/s Owners of Less Tangible Assets Actors v/s Those Acted Upon Voluntary v/s Involuntary Right Holders v/s Contractors v/s Moral Claimants Resource Providers v/s Dependants Risk Takers v/s Influencers
    • 4.  Broad: Attempts to specify the empirical reality that virtually anyone can attempt or be affected by an organization‟s actions Narrow:Specifies the pragmatic reality that managers cannot attend to all actual or potential claims. It also proposes a variety of priorities for managerial attention.
    • 5.  Freeman’s Definition of Stakeholder: Any group or individual who can affect or is affected by the achievement of the organization‟s objectives. Premise for the derivation of a broad definition:  Nostake-holder, potential or actual, is excluded from the analysis, arbitrarily or priori
    • 6.  Stakeholder‟s power to influence the firm Legitimacy of the stakeholder‟s relationship with the firm Urgency of the stakeholder‟s claim on the firm
    • 7.  Dynamic Model based on the identification typology Permits explicit recognition of situational uniqueness and managerial perception to explain how managers prioritize stakeholder relationships Allows predictions to be made about the managerial behavior with respect to each class of stakeholder Allowspredictions to be made regarding change of stakeholder from one class to another and its implications on the manager Managers do not pay attention to all stakeholder classes equally but attach special attention to certain classes to achieve organizational objectives
    • 8. 1. Review of Literature listing the various explicit and implicit positions on “The Principle of Who or What really counts”2. Present defense on the three key attributes: POWER; LEGITIMACY; URGENCY and examine major organizational theories to discern how these attributes are handled3. Introduction of managers and salience in to the discussions4. Presentation of Analysis of the Stakeholder classes and the implication of each on the manager5. Demonstration of shift of stakeholder from one class to another and the consequences of the shift on managers and firms6. Explore research questions and directions that consequently emerge
    • 9.  Stakeholder Approach to understanding a firm in its environment has been a powerful heuristic device, intended to broaden the management‟s vision of its roles and responsibilities beyond the profit maximization function to include interests and claims of non stockholding groups. StakeholderTheory attempts to articulate the fundamental question in a systematic way as to which groups are stakeholders deserving or requiring management attention and which are not?
    • 10.  WHO is a stakeholder?  Entities like persons, groups, neighborhoods, organizations, institutions and natural environment generally qualify as actual or potential stakeholders WHAT is a stake?  Jones definition of CSR(1980): Notion that corporations have an obligation to constituent groups in society other than stockholders, indicating that a stake may go beyond mere ownership  Alkhafaji definition of Stakeholders(1989): Groups to whom a corporation is responsible  Thompson,Wartick,Smith‟s definition of Stakeholders(1991): Groups in a relationship with an organization
    • 11.  Windsor(1992) pointed out that stakeholder theorists differ considerably depending on the approach they take to define a firm‟s stakeholder universe: broad or narrow Broad Definition(Freeman,1983): Attempts to specify the empirical reality that virtually anyone can attempt or be affected by an organization‟s actions(CLASSIC DEFINITION, Broadest Definition) Narrow Definition(Freeman & Reed,1963): Groups on which an organization is dependant for its continued survival
    • 12.  Basis of Stake in Freeman’s Definition: Can be unidirectional or bidirectional- “can affect or be affected by” and there is no implication or necessity of reciprocal impact as definitions involving relationships require Excluded from having a stake are only those:  Who cannot affect the firm(no power)  Who are not affected by the firm(no claim)
    • 13.  Stakeholders are Voluntary or Involuntary risk bearers, as there is no stake without risk Voluntary stakeholders bear some form of risk due to the invested capital Involuntary stakeholders are placed at risk due to the activities of the firm Thus, a stake is something which can be lost Use of Risk to identify stakeholders is very narrow as it allows only for legitimate claims, regardless of the power to influence or relationship with the firm
    • 14.  Based on Empirical  Based on Practical Reality that a firm can Reality of Limited vitally affect or be Resources, Time, affected by anyone Attention Very complex for  Defines groups based on managers to apply the direct relevance to Comprehensive the firms‟ core economic identification of interests stakeholder types leads  Searches for a to equipping the “normative core” of managers with the ability legitimacy: to help to recognize and managers focus on the respond to a set of claims of a few entities who may not legitimate stakeholders have legitimate claims but can affect the firm
    • 15. Claimants Influencers• Claim • Ability to influence firm• Groups that have legal, • Groups that have ability moral, or presumed claim to influence the firm‟s on the firm behavior, direction,• May or may not have process or outcome power to influence • Have power over the firm• Have legitimate or • May or may not have a illegitimate claims over valid claim or any claim at the firm all over the firm
    • 16. Actual Potential• Are influenced • Might be by the influenced by the organization organization• Are the • Potentially may influencers of be influencers of some some organization organization
    • 17.  Firm‟s dependency on stakeholder‟s for its survival Stakeholder‟s dependency on firm for upholding its rights Mutuality of power dependence relations
    • 18. A Relationship exists The firm and stakeholder are in relationship The stake holder exercises voice with respect to the firm Power Dependence: Stakeholder Dominance The firm is dependent on the stakeholder The stakeholder has power over the firm
    • 19. Power Dependence: Firm Dominant The stakeholder is dependent on the firm The firm has power over the stakeholder Mutual Power-Dependence Relationship The firm and the stakeholder are mutually dependent
    • 20. Basis of Legitimacy of Relationship The firm and stakeholder are in contractual relationship The stakeholder has a claim on the firm The stakeholder has something at risk The stakeholder has a moral claim on the firmStakeholder‟s Interest: Legitimacy notimplied The Stakeholder has an interest in the firm
    • 21. Shows how power and legitimacyinteract and when combined withurgency create different type ofstakeholders with different expectedbehavioral patterns
    • 22.  Agency Theory: How principals control the behavior of their agent to achieve their interest Resource Dependence Theory: Power accrues to those who control resource needed by the organization, creating power differentials Transaction Cost Theory: power accruing to economic actors with small numbers bargaining advantages will affect the nature of governance and firm
    • 23.  Institutional Theory: „Illegitimacy” results in isomorphic pressures on the organization that operate outside of accepted norms Resource Dependence Theory: Power accrues to those who control resource needed by the organization, creating power differentials
    • 24.  Identification of attribute which profoundly influences managerial perception e.g.  Agency/Transaction theory: contribution and cost  Behavior Theory: consequence of unmet demands Urgency adds a catalytic component Tell us about the role of power and legitimacy Helps in understanding “Who and What Really Counts”
    • 25. POWER“ A relationship among social actors in which one social actor A, can get another social actor B, to do something that B would not otherwise have done”Types of PowerA) Coercive Power : based on the physical resources of force, violence or restraintB) Utilitarian Power: Based on material or financial resourcesC) Normative Power: based on symbolic resources“ A party to a relationship has power, to the extend it has or can gain access to coercive, utilitarian, or normative means. To impose its will in the relationship. “
    • 26.  “ A generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions ” Davis – “ In long run, those who do not use power in a manner which society considers responsible will tend to lose it.” Legitimacy is a desirable social good, that is something larger and more shared than a mere self – perception. Moreover the meaning of legitimacy is defined and negotiated differently at various levels of social organization.
    • 27.  Urgency is defined as “ Calling for immediate attention or pressing. Urgency exists under 2 conditions A) When a relationship or claim is of time sensitive nature B) When the relationship or claim is important or critical to stakeholderTime Sensitivity: The degree to which managerial delay in attending to the claim or relationship is acceptable to the stakeholderCriticality: The importance of the claim or the relationship to the stakeholder
    • 28.  It is not sufficient to identify a stakeholder‟s claim or “manager relationship” as urgent. It should also be Critical.Examples of a stakeholder viewing its relationship with the firm as critical:A) Ownership : The stakeholder‟s possession of firm-specific assets making it very costly for the stakeholder to exit the relationship.B) Sentiment: Stock that is held by generations of owners within a family. Regardless of the stock‟s performance.C) Expectation: The stakeholders anticipation that the fir will continue providing it with something of great value.D)Exposure: The importance the stakeholder attaches to that which is at risk in the relationship with the firm.Thus the presence of both these factors TIME SENSITIVITY and CRITICALITY together captures the multidimensional attribute of URGENCY
    • 29.  Managers are the only group of stakeholders who enter into a contractual relationship with all other stakeholders. Managers are also the only group of stakeholders with direct control over the decision-making apparatus of the firm. (Hill & Jones, 1992) Firm‟s managers determine which stakeholders are salient and therefore will receive management attention.
    • 30. Proposition 1: Stakeholder salience will bepositively related to the cumulative numberof stakeholder attributes – power,legitimacy, and urgency – perceived bymanagers to be present.Based on this proposition, stakeholdershave been divided into various classes asshown in Fig. 1.1, 2, 3 – Low Salient Class (Latent)4, 5, 6 – Moderate Salient Class (Expectant)7 – High Salient Class
    • 31. 1 Power 5 4 7 2 3 6 Legitima Urgency cyQualitative Classes of Stakeholders
    • 32.  Latent Stakeholders are those possessing only one of the three attributes, and include dormant, discretionary, and demanding stakeholders Latent Stakeholders are not likely to give any attention or acknowledgement to the firm Proposition 1a: Stakeholder salience will be low where only one of the stakeholder attributes – power, legitimacy, and urgency – is perceived by managers to be present
    • 33.  Expectant Stakeholders are those possessing two attributes, and include dominant, dependent, and dangerous stakeholders Level of engagement between managers and expectant stakeholders is likely to be higher Proposition 1b: Stakeholder salience will be moderate where two of the stakeholder attributes – power, legitimacy, and urgency – are perceived by managers to be present
    • 34.  DefinitiveStakeholders are those possessing all three attributes Managers have a clear and immediate mandate to attend to and give priority to the Definitive Stakeholders Proposition 1c: Stakeholder salience will be high where all three of the stakeholder attributes – power, legitimacy, and urgency – are perceived by managers to be present
    • 35.  Dynamism in Stakeholder-Manager Relations: Managers should never forget that stakeholders change in salience, requiring different degrees and types of attention (Eg: ANC) This stakeholder approach can improve upon existing theories, which emphasize on power and interests This model enables a more systematic sorting by managers of stakeholder-manager relationships The given model permits managers to map the legitimacy of each stakeholder & become sensitive to the moral implications of their actions

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