Lecture 2 Flashcards

1
Q

What are the key facts about corporations

A

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

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2
Q

What does Friedman say about corporations ethical responsibilities

A

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

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3
Q

Why is CSR justified?

A

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

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4
Q

What are the elements of Carroll’s pyramid

A

Economic
Legal
Ethical
Philanthropic

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5
Q

CSR and strategy

A

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

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6
Q

What is the definition of a stakeholder

A

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

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7
Q

What is the principle of corporate rights

A

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

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8
Q

What is the principle of corporate effect

A

Companies are responsible for the effects of their actions on others

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9
Q

What are the forms of stakeholder theory

A

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

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10
Q

What are the main influence strategies?

Frooman

A

Who are stakeholders
What are their ends
What are their means

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11
Q

Corporate accountability

A

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

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12
Q

What are the 3 views of corporate citizenship

A

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

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13
Q

What is the descriptive stakeholder theory

A

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
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14
Q

What is instrumental stakeholder theory

A

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

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15
Q

What is normative stakeholder theory

A

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

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16
Q

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

A

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

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17
Q

What are normative stakeholders?

A

The organisation has a moral obligation to

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18
Q

What are derivative stakeholders

A

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

19
Q

Donaldson reading

A

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

20
Q

What is carols and buchholtz definition of CSR

A

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

21
Q

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

A

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

22
Q

What is the definition of corporate social responsiveness

A

The capacity of a corporation to respond to social pressures

23
Q

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

A

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

24
Q

Why do stakeholders matter?

A

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?

25
Q

What is the new role for management

A

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

26
Q

What is stakeholder democracy

A

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

27
Q

What does hertz say about democratic power

A

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

28
Q

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

A

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

29
Q

What do Donaldson and Preston say about normative stakeholder theory

A

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

30
Q

What does Jamali (2008) say about CSR

A

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

31
Q

What does Jamali say about a stakeholder approach

A

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

32
Q

What does Jamali say about the benefits of a stakeholder approach

A

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

33
Q

Why does Jamali find organisations find themselves constrained

A

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

34
Q

What does Jamali say distinguishes CSR from st

A

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

35
Q

What does the stakeholder theory attempt to do?

A

Looks at various groups to which the corporation has a responsibility

36
Q

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

A

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

37
Q

What are the issues with identification and definition

A

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

38
Q

What are the issues with vagueness and overbredth

A

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

39
Q

What are the issues of balancing

A

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

40
Q

VW

A

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

41
Q

Why do stakeholders matter

A

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

42
Q

What’s the problem

A

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

43
Q

What are the managerial implications of ST

A

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

44
Q

What are the moral reasons for CSR

A

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