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Business & SocietyEthics, Sustainability & Stakeholder Managem.docx
- 1. Business & Society Ethics, Sustainability & Stakeholder Management 10th Edition © 2018 Cengage ‹#› 1 Chapter 3 The Stakeholder Approach to Business, Society, and Ethics © 2018 Cengage ‹#› 2 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 ‹#›
- 2. 3 Learning Outcomes 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 ‹#› 4 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
- 3. © 2018 Cengage ‹#› 5 Who are Business’s Stakeholders? © 2018 Cengage ‹#› 6 Origins of the Stakeholder Concept Stake - An interest or a share in an undertaking. Can be categorized as: © 2018 Cengage ‹#› 7 Three Views of the Firm © 2018 Cengage ‹#› 8
- 4. Production and Managerial Views of the Firm © 2018 Cengage ‹#› Stakeholder View of the Firm © 2018 Cengage ‹#› Missing Stakeholder Media → - Broadcast - Print -Social Media - Independent © 2018 Cengage ‹#› 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 ‹#›
- 5. Social StakeholdersPrimary social stakeholdersSecondary social stakeholdersShareholders and investorsGovernment regulatorsEmployees and managersCivic institutionsCustomersSocial pressure groupsLocal communitiesMedia and academic commentatorsSuppliers and other business partnersTrade bodiesCompetitors © 2018 Cengage ‹#› Nonsocial StakeholdersPrimary nonsocial stakeholdersSecondary nonsocial stakeholdersNatural environmentEnvironmental interest groupsFuture generationsAnimal welfare organizationsNonhuman species © 2018 Cengage ‹#› 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.
- 6. © 2018 Cengage ‹#› Stakeholder Typology © 2018 Cengage ‹#› 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 ‹#› Three Values of the Stakeholder Model Descriptive Value Instrumental Value Normative Value
- 7. © 2018 Cengage ‹#› Stakeholder Management: Five Key Questions Who are our organization’s stakeholders? What are our stakeholders’ stakes? What opportunities and challenges do our stakeholders present to the firm? What responsibilities (economic, legal, ethical, and philanthropic) does the firm have to its stakeholders? What strategies or actions should the firm take to best address stakeholder challenges and opportunities? © 2018 Cengage ‹#› Figure 3-5 © 2018 Cengage ‹#› Who Are Our Stakeholders? © 2018 Cengage ‹#› What Are Our Stakeholders’ Stakes? To identify them, consider - the nature and legitimacy of a group’s stakes.
- 8. the power of a group’s stakes. subgroups within a generic group. © 2018 Cengage ‹#› 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 © 2018 Cengage ‹#› What Responsibilities Does a Firm Have to its Stakeholders? Apply Corporate Social Responsibility - Responsibilities are Economic Legal Ethical Philanthropic © 2018 Cengage ‹#› The Stakeholder Responsibility MatrixStakeholdersEconomicLegalEthicalPhilanthropicOwnersC
- 9. ustomersEmployeesCommunityPublic at largeSocial ActivistsOther © 2018 Cengage ‹#› 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? © 2018 Cengage ‹#› Four Stakeholder Types - The Supportive Stakeholder High potential for cooperation, low for threat The Marginal Stakeholder Low potential for cooperation and threat The Nonsupportive Stakeholder High potential for threat, low for cooperation The Mixed-Blessing Stakeholder High on potential for threat & cooperation © 2018 Cengage ‹#›
- 10. 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 © 2018 Cengage ‹#› Developing a Stakeholder Culture Stakeholder Culture embraces the beliefs, values, and practices that organizations have developed for addressing stakeholder issues and relationships. © 2018 Cengage ‹#› Stakeholder Management Capability © 2018 Cengage ‹#› Stakeholder Engagement - An approach by which companies successfully implement the transactional level of strategic management capability.
- 11. 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. © 2018 Cengage ‹#› The Stakeholder Corporation In the future, development of loyal relationships with customers, employees, shareholders, and other stakeholders will become one of the most important determinants of success. The central element: Stakeholder inclusiveness © 2018 Cengage ‹#› The “Clarkson Principles” of Stakeholder Management © 2018 Cengage ‹#› Strategic Steps Toward Global Stakeholder Management Governing Philosophy Integrate stakeholder management into the firm’s governing philosophy. Values Statement
- 12. Create a stakeholder-inclusive “values statement.” Measurement System Implement a stakeholder performance measurement system. © 2018 Cengage ‹#› Implementation Indicators of successful stakeholder management include: Survival Avoided costs Continued acceptance and use Expanded recognition and adoption © 2018 Cengage ‹#› 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
- 13. © 2018 Cengage ‹#› 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 ‹#› BA 385—Homework #1 Template Instructions: Download this document, delete italics as you go (as it’s instructional), fill in name and date, save bold text as headers, and fill in your work under the headers.
- 14. Name: Section: Date: ISSUE IDENTIFICATION: This is researched and cited using APA citation methods. Give a history of the company; size, locations, revenues, competition, and any other facts you think are relevant to the issue. Describe the current moral/ethical dilemma the company is facing. Then, clarify the problem that you will be making recommendations to solve in the final section of this research project. IDENTIFY TRIGGERING EVENT: This is a recent occurrence that brought the issue to the public’s attention, putting the company in the spotlight and forcing them to reevaluate their current business practices. Some examples of triggers are: injury or death of a stakeholder, a lawsuit, or a news report. Cite any articles. Describe the events leading up to the triggering event and what’s happened since then. Explain how various stakeholder groups have reacted to the issue and triggering event. Relevance and importance of the issue to the company must be clearly established. This will require some research, and you will want to stay current with the issue as the term progresses, so you know what stakeholders are involved, and how the company is responding. SOCIAL SIGNIFICANCE: ECONOMIC SIGNIFICANCE: CULTURAL SIGNIFICANCE: MORAL SIGNIFICANCE: SAFETY SIGNIFICANCE: LEGAL SIGNIFICANCE: This is the meat of this assignment. Write at least 6 long, well developed paragraphs for each: economic, cultural, moral, safety, and legal significance of your issue. In this section, you will discuss the actual or future potential fallout from this issue.
- 15. Explore demographic trends related to this issue. Put the issue in context. Examining the significance will help you identify stakeholders as you think about who is currently involved, and who could be involved in the future. It will also help you to establish urgency as you think about how big of an impact this issue is (or potentially could be) if not addressed, which will be important when you consider the impact of your decisions in your final recommendations. References 1