session 8 - stakeholder management

Question 1

Should companies be socially responsible? what are the two opposing views?

Answer 1

Only focus on profits vs collaborate with stakeholders

Question 2

why does the agency theories have flaws)

Answer 2

1. shareholders are not owners and managers are not agents (SH only investors)
2. inexistent incentives to exercise care in managing the coproration of SH (anonymity and often just short term)
3. moral hazard: SH are not accountable
4. too much alignment between SH and managers might shift company’s focus
5. inexistient SH uniformity

Question 3

What is the nature of social responsibilities? (pyramid)

Answer 3

1. economic responsibility
2. legal responsibility
3. ethical responsibility
4. philanthropic responsibility

Question 4

when can true social responsibility be reached?

Answer 4

If all four levels of the pyramid are met

Question 5

what are stakeholders?
(narrow definition)

Answer 5

groups without whose support the business would cease to be viable

Question 6

what are stakeholders in the broad definition?

Answer 6

any group that can affect or be affected by the reliaztion of the orgnization’s purpose

Question 7

what is the stakeholder theory by freeman? (three points)

Answer 7

1. fallacy of seperation thesis
   - disocurse of business and discourse of ethics cannot be separated
2. moral claim
   - StH have moral claims on company because they have the potential to harm or benefit them
3. people as ends, not means
   - managers hould make decisions respeczing StH well being rather than treating them as means to a corporate end

Question 8

What are ethicals arguments in favor of stakeholder theory (think of theories learned)?

Answer 8

Question 9

what is cirtics abotu the stakeholder theory?

Answer 9

1) identification of stakeholders
- multitude of definitions (there is not required ethical content to define them)
2) vageuness and over breadth
- good for everyone and no one
3) balancing without objectives
- impossible, as not all StH interest align

Question 10

what is the definition of stakeholder theory?

Answer 10

corporation as orgnaizational entities through which numerous and diverse participants accomplish multiple, and not always congruent purposes

Question 11

what are the three emerging forms to approach stakeholder theory?

Answer 11

1. descriptive
2. instrumental
3. normative

Question 12

what is the descriptive form to approach stakeholder theory?

Answer 12

-examines the importance of each stakeholder group to a company
- acknowledges that every stakeholder group has its own interests that affect the company in various ways

Question 13

what is the instrumental approach to stakeholder theory?

Answer 13

using data to determine the appropriate stakeholder management method/framework to achieve the company’s financial goals

Question 14

what is the normative approach to stakeholder theory?

Answer 14

• follows the principle that the interests of all stakeholder groups have value outside of benefiting the company and shareholder’s interests. - establishes corporate ethical guidelines
• most closely aligns with R. Edward Freeman’s initial description of stakeholder theory

Question 15

what are the three criterias to assess the moral claims of stakeholders?

Answer 15

1. legitimacy
   - does compan think StK’s actions are desirable/ appropriate
2. urgency
   - degree for immediate attention
3. power
   - perceived ability to influence organizational action

Question 16

how can you prioritze stakeholder engagement? (Matrix)

Answer 16