Oral exam Flashcards
What does the “descriptive” nature of stakeholder theory refer to?
It describes what the corporation is. It describes the corporation as a constellation of co-operative and competitive interests possessing intrinsic value.
What does “instrumental” stakeholder theory refer to?
It examines a framework for examining the connections between the practice of stakeholder management and the achievement of various corporate performance goals. The notion is that firms practicing stakeholder theory will be succesfsul
What is meant with the most important aspect of stakeholder theory, the normative aspect?
(a) Stakeholders are persons or groups with legitimate interests in procedural and/or substantive aspects of corporate activity. Stakeholders are identified by their interests in the corporation, whether the corporation has
any corresponding functional interest in them.
(b) The interests of all stakeholders are of intrinsic value. That is, each group of stakeholders merits consideration
for its own sake and not merely because of its ability to further the interests of some other group, such as the share owners.
Why is stakeholder theory managerial in the broad sense of the term?
It is not a framework that can be applied to every organization. It is more of an approach on how to properly manage stakeholders. Stakeholder management requires, as its key
attribute, simultaneous attention to the legitimate interests of all appropriate stakeholders, both in the establishment of organizational structures and general policies and in case-by-case decision making.
What is depicted by the “contrasting models of the corporation: input-output” model?
Input flow into the firm: Investors, Suppliers and Employees
Output flow from the firm: Customers
What is depicted by the “contrasting models of the corporation: the stakeholder model”?
both input and output flows from: Governments, investors, political groups, customers, communities, employees, trade associations, suppliers.
What is the neo-classical theory on the firm?
It attempts to explain the economic principles governing production, investment, and pricing decisions of established firms in competitive markets.
What is explained by the behavioral theory of the firm?
behavioral theory of the firm attempts to explain the process of decision making in the modern firm in terms of goals, expectations, and choice-making procedures.
How does stakeholder theory differ from other theories in this sphere?
The stakeholder theory is intended both to
explain and to guide the structure and operation of the established
corporation.
Stakeholder theory has been used to describe…?
a) the nature of the firm
b) the way managers think about managing
c) how board members think about the interest of corporate constituencies
d) how some corporations are actually managed
What are stakeholders?
those groups without whose support the organization would cease to exist.
Why is stakeholder theory practiced by firms?
There has been a paradigm shift from only focusing on shareholders interest to a more broad focus on more stakeholders. Regulatory pressure has also weakened the single-minded pursuing of shareholder value.
Why was CSR created?
As a defense against capitalism in the 1950’s USA. Unregulated capitalism and the great depression eroded trust. Regulation empowered labor and ended small government.
“Initial” CSR efforts were primarily aimed at…?
Keeping the government out of regulating firms. Firms themselves were best positioned to regulate the economy.
CSR can be defined as what?
Voluntary corporate practices aimed at furthering social goods, beyond the interest of the firm and that which is required by law.
What is corporate irresponsibility?
- Coercive pressured from outside stakeholders to be socially responsible
- Multinationals operating in contexts characterized by an absence of regulation
- A growing list of corporate scandals
- Mistrust in business
What are the pathologies of contemporary capitalism?
- Inequality
- Exclusion
- Failure to attend to local needs
How “voluntary” is CSR? make claims.
- A necessary part of corporate strategy is to appear legitimate and reduce negative externalities.
- An opportunity to create social and financial value
- A distinct mode of governance to address shortcomings of traditional regulation
What does agency theory suggest?
Agency theory believes that owners of the firm are the most important stakeholders. Owners give their money and have so called ‘residual’ claims. It does not believe in social responsibility above and beyond following the law.
Criticism on agency theory entails what?
Shareholder focus ignores legitimate claims of other stakeholders, hurting important agents in keeping the business alive.
What is the main criticism on stakeholder theory?
CSR enables managers to ‘waste’ other people’s money on pet projects without accountability.
What are some criticisms on CSR?
Business are owned by shareholders. Money spent on CSR initiatives is theft of the rightful property of the owner. CSR can impose inappropriate standars eliminating value creation resulting in business failure and job losses. Once exposed and positioned in the public minds, exposure can lead to the public scrutinizing every little mistake.
How and what are the three dimensions of stakeholder theory?
- Descriptive: allows us to identify different stakeholders, examine their influence and how they are affected by the firm’s actions
- Analytical/instrumental: allows us to think about how stakeholder and the firm affect/are affected by CSR
- Normative: allows us to make value statement about the claims of stakeholders and the responsibility of the firm towards them.
What is sociological institutionalism?
regulative, normative, and cultural-
cognitive elements that, together with associated activities and resources, provide stability and meaning to social life.
Why do agents respond to sociological institutionalism?
Central in this is isomorphism. that is, similarities across organizations in terms of both form and practice. The mechanism underlying this convergence is held to be social legitimacy—that is, actors adopt certain structures and practices not because they best serve their rational self-interest, but because they are seen as “appropriate”.
What is historical institutionalism?
Institutions here are seen as “humanly devised constraints that structure human interaction” (North, 1990, 3). These
come in both formal and informal shape. Unlike its sociological sibling with emphasis on similarities, historical institutionalism tends to focus on differences in practices across institutional contexts.
What is rational choice institutionalism?
rational choice institutionalists differ in that they conceive of institutions as social structures for solving market failures by lowering transaction costs (Hall and Taylor, 1996; Williamson, 1975, 1985). This arguably results in a functionalist tendency: institutions exist because they lower transaction costs. (eliminate trust and risk. Actions by individuals are controlled and thus become more predictable.)
What are some examples of formal institutions?
- Environmental regulations
- Labor standards
- Consumer or product safety
What are some informal institutions?
values, norms, culture
What are some informal institutions?
- Voluntary regulatory frameworks (united nations global compact)
- Ethics
- Cultural norms and institutional logics
- Industry norms
What are the 4 levels of institution?
- Industry
- Country
- International
- Multilevel
What is global governance?
global governance, seen as the process of defining and implementing global rules and providing global public goods, is a poly centric and multilateral process to which governments, international institutions, civil society groups, and business firms contribute knowledge and resources.
What is globalisation?
a process of intensification of cross-border social interactions due to declining costs of connecting distant locations through communication and the transfer of capital, goods, and people. This process leads to growing transnational interdependence of economic and social actors, an increase in both opportunities and risks, and to intensified competition
How did globalization happen?
1970: Industrial decline, rising unemployment. Heavily regulated and rigid economies. State regulated monopolies.
1980: Liberation of markets and finance. Deregulation. World trade agreements. Collapse of communism. Eastern Europe, China, South and East Asia and South America join the market
2000s: digitalization. Rise of mobile communication.
1970s > social-cultural improvements
What are issues of reduced effectiveness caused by globalization?
- Exploitation
- High investment cost when setting up international company
- Different laws in different countries. Can be confusing
- Weak regulation
- Immigration
What is Explicit CSR?
“corporate policies that assume and articulate responsibility for some societal interests. They normally consist of
voluntary programs and strategies”
What is implicit CSR?
“corporations’ role within the wider formal and informal institutions for society’s interests and concerns. Implicit CSR normally consists of values, norms, and rules that result in (mandatory and customary) requirements for corporations to address stakeholder
issues”
When is CSR a substitute?
CSR emerges in the absence of regulatory institutions,
whereby private governance fulfills functions of traditional governance:
• With less regulation, there are greater expectations by stakeholders
that firms are responsible for providing social goods
• But companies may also have greater discretion to provide CSR
• More “soft” or “symbolic” CSR?
• Expectations ≠ power
Comparative institutional analysis of CSR
When is CSR a complement?
CSR emerges in the presence of regulatory institutions, whereby CSR reflects stakeholder power on the firm level
• Stakeholders may be empowered to demand CSR practices for other
stakeholders(e.g., employees in other countries Nordic countries)
• More substantive CSR?
What are advantages of the complement-substitute view?
• Can account for home and host country institutions and their interactions • Allows for seemingly contradictory influences of institutions (substitute and complement, e.g. labor rights)
