This document discusses stakeholders, ethics, and corporate social responsibility. It identifies key stakeholders like employees, customers, suppliers, and shareholders. It also evaluates stakeholder claims and identifies their ethical rights. The document outlines important business ethics principles and issues managers may face. It provides suggestions for behaving ethically and making ethical decisions. Finally, it discusses the concept of social responsibility and competing views like the Friedman Doctrine which argues a firm's main responsibility is to maximize profits.

1. Chapter
4
Stakeholders, Ethics, and
Corporate Social
Responsibility

2. 4 - 2
Stakeholders
The
Firm
Employees
Local communities
Customers Distributors
Creditors Suppliers
Shareholders

3. 4 - 3
Evaluating Stakeholders
Claims
Identify
Stakeholders
Identify
stakeholders
interests and
concerns
Identify claims
stakeholders
place on the
organization
Weight
stakeholders by
their importance
to the firm
Identify actions
to satisfy claims
of various
stakeholders
Take actions,
starting with those
that address the
claims of the most
important
stakeholders

4. 4 - 4
Question
Identify and evaluate
the stakeholder claims
for your university.

5. 4 - 5
Business Ethics
• Accepted principles of right or wrong governing the
conduct of businesspeople.
• Principles of right and wrong are codified into laws
- Tort law
- Contract law
- Intellectual property law
- Antitrust law
- Securities law
• Many actions, although legal, may not seem ethical

6. 4 - 6
Ethics in Management
Most issues arise due to potential
conflict between the goals and
the rights of stakeholders.
Stakeholders have basic rights
that should be respected, and it
is unethical to violate those
rights.

7. 4 - 7
Ethical Rights of
Stakeholders
• Shareholders – right to timely and accurate
information about their investments
• Customers – right to be fully informed about
the products and services they purchase
• Employees – right to safe working conditions,
fair compensation, and to be treated in a just
manner

8. 4 - 8
Ethical Rights of
Stakeholders (cont)
• Suppliers – right to expect contracts to be
respected
• Competitors – right to expect that a firm will
abide by the rules of competition and not
violate antitrust laws
• Communities – right to expect companies will
not violate the basic expectations of society

9. 4 - 9
Ethical Issues
of Managers
• Self-dealing
• Information manipulation
• Anticompetitive behavior
• Opportunistic Exploitation
• Substandard working conditions
• Environmental degradation
• Corruption

10. 4 - 10
Behaving Ethically
What managers can do to make sure that ethical issues
are considered:
1. Establish an ethics officer
2. Have leaders promote ethical behavior
3. Develop strong governance processes
4. Promote moral courage
5. Consider ethical aspects of business decisions
6. Promote an ethical organization culture
7. Hire and promote ethical individuals

11. 4 - 11
Ethical Decisions
It is considered ethical when a businessperson can
answer YES to each of the following questions:
1. Does my decision fall within the accepted values or
standards that typically apply in the organizational
environment?
2. Am I willing to see the decision communicated to all
stakeholders affected by it?
3. Would the people with whom I have significant
personal relationship approve of the decision?

12. 4 - 12
Social Responsibility
• A sense of obligation on the part of
managers to build certain social
criteria into their decision making.
• When managers evaluate decisions,
there should be a presumption in
favor of adopting courses of action
that enhance the welfare of society
at large.

13. 4 - 13
Arguments for SR
• Right way for a business to behave
• Need to give back to the society
that helped make their company
• It can lead to better financial
performance
• Ignoring this may generate ill will
and opposition

14. 4 - 14
The Friedman Doctrine
• What is it? In 1970 American
economist Milton Friedman wrote
a New York Times essay titled “A
Friedman Doctrine: The Social
Responsibility of Business is to
Increase Its Profits.” The theory
argues that the main responsibility
of a business is to maximize their
revenue and increase returns to
shareholders

15. 4 - 15
The Friedman Doctrine
• Rejects the idea that businesses should
undertake social expenditures beyond
those mandated by law
• The firm should maximize its profits
• If shareholders want to use proceeds
for social investments that should be
there choice; managers should not
make that decision for them