Chapter 2 Flashcards
True or false: Building effective relationships is one of the most important areas of business today.
True. Business ethics is a team sport and few decisions are made by only one individual
The relationship between companies and their stakeholders is a (one/two way) street
Two-way street. Not just about what you do to them, but what they do to you.
What does the stakeholder framework do?
-identify internal and external stakeholders -Helps monitor and respond to needs, values, and expectations of stakeholder groups
Define Corporate governance
The formal system of accountability and control of ethical and socially responsible behavior
Give four examples of stakeholders
Customers employees government agencies investors suppliers communities
Define stakeholders
Those who have a stake or claim in some aspect of a company’s products, operations, markets, industry, and outcomes
Define the Descriptive approach to stakeholder theory
Focuses on actual behavior, addressing decisions and strategies in stakeholder relationships
The three approaches to Stakeholder theory (IND) are
Instrumental Descriptive Normative
What is the normative approach to stakeholder theory?
Principles and values help identify ethical guidelines that dictate how to treat stakeholders
Difference between primary and secondary stakeholders?
Primary: those whose continued association is absolutely necessary for a firm’s survival Secondary:do not typically engage in transactions with the firm and are not essential to a firm’s survival
What is the instrumental approach to stakeholder theory?
Examines stakeholder relationships and describes outcomes for particular behaviors
Media, trade associations, and special interest groups are examples of (primary/secondary/neither/both) stakeholders
secondary
What are four levels of social responsibilty?
Economic Legal Ethical Philanthropic
Define the Stakeholder Orientation
The degree to which a firm understands and addresses stakeholder demands.
Give two examples of primary stakeholders
Employees, customers, investors, governments, and communities
Peta is an example of a Trade association. True or false?
False, PETA is a special interest group
The Legal step of social responsibility is “following standards of acceptable behavior as judged by stakeholders”. True or Fale?
False. Legal is “abiding by all laws and government regulations. See the steps of social responsibility in picture attached (slide 9)
Where are primary stakeholders arranged on the Stakeholder interaction model?
Around the Company, with arrows between each other showing dependence upon one another.
An organization’s obligation to maximize its positive impact on stakeholders and minimize its negative impact is known as its
social responsibility
Businesses can (continue to/no longer afford to) ignore the natural environment as a stakeholder
no longer afford to. This is known as Sustainability, a social responsibility issue.
True or false: Caring about stakeholders has no effect on profits
False. Can lead to increase profits. The purpose of a stakeholder orientation is to maximize positive outcomes that meet stakeholder’s needs
The extent to which businesses strategically meet their economic, legal, ethical, and philanthropic responsibilities is known as
Corporate Citizenship
Define Consumer Protection, a social responsibility issue.
The company has the responsibility of taking precautions to prevent consumer harm
True or false: Reputation is one of an organization’s greatest intangible assets with tangible value
True. Although difficult to quantify, important because a single negative incident can influence an organization’s image and reputation instantly and for years afterwards
Research shows corporate governance has a strong negative relationship with social responsibility. True or false?
False - Research shows corporate governance has a strong POSITIVE relationship with social responsibility
Just incase, see list of World’s most ethical companies.
(slide 11)
The four interrelated dimensions of Corporate Citizenship are
Strong sustained economic performance Rigorous compliance Ethical actions beyond what is legally required Voluntary contributions to advance reputation and stakeholder commitment
Social responsibility issues deal with concerns that affect the welfare of our entire society, associated with the common good. True or false?
True
Accountability, a component of corporate governance, is defined as
How closely workplace decisions align with a firm’s strategic direction
Are Executive Compensation, Strategies, Shareholder Relations considered corporate governance topics?
Yes, see list attached (slide 17)
Corporate Governance is defined as
Formal systems of accountability, oversight, and control
Stakeholders support companies they perceive to be socially responsible, enhancing profitability. True or false?
True.
Just incase, see list of best corporate citizens
(slide 15)
Difference between Oversight and Control, two aspects of Corporate Governance
Oversight: A system of checks and balances to minimize opportunities for misconduct Control: The process of auditing and improving organizational decisions and actions
True or False: Boards, on average, are getting larger
False. Boards are getting smaller, with an average of 11 members ( 5 : 1 ratio independent: non-independent)
True or false: less than half boards conduct annual board performance evaluations
False. Almost all boards conduct annual board performance evaluations
True or false: the majority of boards have mandatory retirement rules for directors.
True. 74 % of boards have mandatory retirement rules for directors
Many boards spend (more/less/no/all of their) time discussing compensation than ensuring integrity of financial reporting systems
More. Ask questions like: How closely linked is executive compensation to company performance? Does performance-linked compensation encourage executives to focus on short-term performance at the expense of long-term growth?
Define the interlocking directorate
the concept of board members being linked to more than one company
True or false: Important characteristics in directors: strong financial background, industry background, and international experience
True
See picture attached for changes in corporate governance
(slide 18)
Difference between the Shareholder Model and the Stakeholder Model
Shareholder model: Founded in classic economic precepts Maximizing wealth for investors and owners. Stakeholder model: A broader view of the purpose of business. Includes satisfying concerns of primary stakeholders including employees, suppliers, regulators, communities and special interest groups
true or false: The global financial crisis motivated many to demand greater accountability from boards
True.
Define the Role of Board of Directors
Holds final responsibility for its firm’s success, failure, and ethicality of actions. In reality, boards rarely manage but instead monitor executive decisions.
True or false: Stakeholders demand that boards are accountable and transparent
True. Directors offer expertise, competence, and diverse perspectives to strategic decisions. Qualified, knowledgeable, diverse, unbiased boards can prevent misconduct.
Executive compensation is a (stable/growing/declining) ethical concern in the role of board of directors
growing ethical concern
What are the six steps towards implementing a stakeholder perspective?
- Assessing the corporate culture 2. Identifying stakeholder groups 3. Identifying stakeholder issues 4. Assessing organizational commitment to social responsibility 5.Identifying resources and determining urgency 6.Gaining stakeholder feedback
