Lecture 2

Question 1

What are the key facts about corporations

Answer 1

Typically regarded as artificial persons in the eyes of the law
Notionally owned by shareholders but exist independently of them
Managers have a fiduciary responsibility to protect the investment of shareholders

Question 2

What does Friedman say about corporations ethical responsibilities

Answer 2

The social responsibility of business is to increase profits based on m

Only humans have a moral responsibility for others
Managers responsibility is to act solely in the interests of shareholders
Social issues and problems are the responsibility of the state

Question 3

Why is CSR justified?

Answer 3

More satisfied customers
Employer attraction
50% of businesses engage in CSR for brand reputation
CSR may forestall legislation
Long term investment that benefits the company

Friedman argues this is not CSR as they are carried out for profit maximisation purposes

Question 4

What are the elements of Carroll’s pyramid

Answer 4

Economic
Legal
Ethical
Philanthropic

Question 5

CSR and strategy

Answer 5

Reaction- deny responsibility
Defence- admit responsibility but fight it
Accommodation- do what is demanded
Proactive - go beyond the industry norm

Can shift responsibilities e.g tobacco companies

Question 6

What is the definition of a stakeholder

Answer 6

Any group or individual who can affect or is affected by the achievement of the organisations objectives

Question 7

What is the principle of corporate rights

Answer 7

The corporation has the obligation to not violate the rights of others

Question 8

What is the principle of corporate effect

Answer 8

Companies are responsible for the effects of their actions on others

Question 9

What are the forms of stakeholder theory

Answer 9

Normative- provides reasons as to why corporations should take into account stakeholder interests

Descriptive- attempts to ascertain whether corporations actually do take into account stakeholder interests

Instrumental- answers the question of whether it is beneficial for the corporation

Question 10

What are the main influence strategies?

Frooman

Answer 10

Who are stakeholders
What are their ends
What are their means

Question 11

Corporate accountability

Answer 11

Refers to whether the corporation is responsible in some way for the consequences of its actions

Become more vexed due to Privatisation, gov failure and rising power

Accountability should be more visible to those with a sake in the corporation e.g car manufacturers

Increasingly accountability and transparency are being treated as a necessity not just a normative point of view

Question 12

What are the 3 views of corporate citizenship

Answer 12

Limited- cc with philanthropy
Identifies the philanthropic role of business in community
Strong focus on local communities as main stakeholders

Equivilent- cc with CSR

Extended- acknowledges extended political role of the corporation in society
Social- providing
Civil- enabling
Political- channeling

Question 13

What is the descriptive stakeholder theory

Answer 13

Attempts to ascertain whether corporations actually do take into account stakeholder interests

Theory is used to describe and explain specific corporate characteristics and behaviour
May be used to describe
Nature of the firm 
The way managers think about managing 
How some corporations are managed

Question 14

What is instrumental stakeholder theory

Answer 14

Attempts to answer whether it is beneficial for the corporation to take into account stakeholder interest

Examines connections between stakeholder management and achievement of goals

Question 15

What is normative stakeholder theory

Answer 15

Used to provide reason why corporations should consider stakeholder interests

Used to interpret the function of the corporation, including the identification of moral and philosophical guidelines for the operation and management of corporations

Question 16

Stakeholder theory is useful for strategic but not moral thinking- what are it’s 3 mains problems

Answer 16

1) identification and definition
- narrow and broad
Broad can almost be anyone

2) vagueness and overbredth
Vauge in terms of how to identify and balance
Broad definition can help map stakeholders but what then

3) balancing interests
- unrealistic endeavour
- evil v good
- no common measure

Question 17

What are normative stakeholders?

Answer 17

The organisation has a moral obligation to

Question 18

What are derivative stakeholders

Answer 18

Can either harm of benefit the organisation but the organisation has no moral obligation

Question 19

Donaldson reading

Answer 19

Confusion about the nature and purpose of stakeholder theory
Much of what passes as stakeholder theory is implicit rather than explicit

Question 20

What is carols and buchholtz definition of CSR

Answer 20

CSR encompasses the economic, legal, ethical and philanthropic expectations on organisations by society at a given point in time

Question 21

What do Crane and matter identify as a potential limitation of CSR?

Answer 21

Doesn’t adequately address the problem of two responsibilities conflict e.g plant closure and balancing economic responsibility with ethical responsibility to provide secure jobs

Question 22

What is the definition of corporate social responsiveness

Answer 22

The capacity of a corporation to respond to social pressures

Question 23

What 3 elements presented by wood can be used to measure corporate social performance

Answer 23

Social policies- states the companies values, beliefs and goals
Social programmes- activities measures and instruments implemented to achieve social policies

Social impacts- can be traced by looking at concrete changes in the organisation

Question 24

Why do stakeholders matter?

Answer 24

Freeman
Legal perspective
Sake can be legally protected

Economic perspective
Externalities- problems outside contractual relationships e.g those whose business activity may rely on the existence of another firm e.g a local shop

Agency problem
Why should short term interests prevail over those with long term stakes?

Question 25

What is the new role for management

Answer 25

Managers have to take into account the rights and interests of all legitimate stakeholders Managers must balance the fudicary relationship of shareholders with stakes of other actors Stakeholder democracy corporate governance

Question 26

What is stakeholder democracy

Answer 26

Supported by freeman Stakeholder board of directors who’s can influence corporate decisions German model- 50% of board are representatives of employees

Question 27

What does hertz say about democratic power

Answer 27

There is more power in an individuals choice as a consumer than an ballot box

Question 28

What is the definition of transparency and why do corporations need to become more trnnsparent

Answer 28

The degree to which corporate decisions, policies, activities and impacts are acknowledged and made visible to relevant stakeholders

Question 29

What do Donaldson and Preston say about normative stakeholder theory

Answer 29

Provides the fundamental basis for stakeholder theory and includes the acceptance of the following ideas - stakeholders are persons or groups with legitimate interest The interests of all stakeholders are of intrinsic value - each stakeholder group merits considereation for its own stake and not merely because of its ability to further the interests of some other group

Question 30

What does Jamali (2008) say about CSR

Answer 30

Highly subjective and does not allow for a universally applicable definition Vauge and intangible term that can mean anything to anybody

Question 31

What does Jamali say about a stakeholder approach

Answer 31

Orgs are expected to manage responsibly an extended web of stakeholder interest across increasingly permeable organisation boundaries and acknowledge a duty of care for traditional interest groups and silent stakeholders

Question 32

What does Jamali say about the benefits of a stakeholder approach

Answer 32

Makes commercial sense, allows he firm to maximise shareholder wealth while also increasing total value added - Friedman and stark myopia Instrumental stakeholder theory assumes the corporation is an instrument for wealth creation with CSR conceived as a strategic tool to promote economic interests

Question 33

Why does Jamali find organisations find themselves constrained

Answer 33

Limited resources and bounded rationality and thus prioritise stakeholders by instrumental and normative considerations

Question 34

What does Jamali say distinguishes CSR from st

Answer 34

CSR identifies what responsibilities to fulfill, stakeholder theory addresses the issue of whom a business should be accountable to

Question 35

What does the stakeholder theory attempt to do?

Answer 35

Looks at various groups to which the corporation has a responsibility

Question 36

What do Orts and Strudler (2009) say about stakeholder theory

Answer 36

ST has become a vampire in the field of business ethics Claims that stakeholder theory is providing a framework for business ethics are seriously overblown At most stakeholder theory may prove useful for identification of some relevant interests that maybe a source of ethical claims

Question 37

What are the issues with identification and definition

Answer 37

If one can not define stakeholder then any coherent theory collapses Stakeholder is used to mean almost anything the author decides Neither broad or narrow are helpful in the realms of business ethics Broad versions are unworkable Narrow don’t include key stakeholders

Question 38

What are the issues with vagueness and overbredth

Answer 38

Stakeholder theory argues interests must be balanced Having ones interests balanced are simply a matter of degree Vaugeness impedes rather than advances progress Broad versions may include people that should not be considered

Question 39

What are the issues of balancing

Answer 39

What advice is given to help balance interests... none Must assign stakeholders equal weight What about those that have larger stakes The idea of balancing interests is too thin and unrealistic

Question 40

VW

Answer 40

CSR mask for hostility CSR parades. Virtue but internal standards slup Is CSR just a smokescreen

Question 41

Why do stakeholders matter

Answer 41

Legal perspective - stake can be protected Economic perspective - externalities- outside contractual relationships Agency problem- short term interests of owners v long term interests of managers

Question 42

What’s the problem

Answer 42

Most of us have a tendency to assume too quickly that a group had a particular attitude or set of values

Question 43

What are the managerial implications of ST

Answer 43

Responsibility of managers to select activities and direct resources to obtain benefits for legitimate stakeholders Who are the legitimate stakeholders? Firm as a contract view excludes those that may hold quasi contracts Excessive tendency to adopt definition such as anything influencing or influenced by has resulted in excessive breadth of identification

Question 44

What are the moral reasons for CSR

Answer 44

Corporate activity has social and environmental impact Corporations are powerful and should use this power responsibly Corporations rely on the contribution of a wide set of stakeholders not just shareholders