Stakeholder Theory Flashcards
A stakeholder is
A person or group that effects or is affected by an organization’s decisions, policies, and operations.
Market stakeholders are those that
Those that engage in economic transactions with the company as it carries out its primary purpose of providing society with goods and services.
Non-market stakeholders are those that
those that do not engage in economic exchange with the firm, but are still affected by its actions
What type of power can a stakeholder have?
- Voting power
- Economic power
- Political power
- Legal power
What are the interests of shareholders?
Profits
What are the interests of customers?
Better service availability
What are the interests of employees?
Jobs
What are the interests of suppliers?
Protect/increase business
What are the interests of the community?
Economic impact at the local level
What does it mean to have a stake?
To have:
An interest, a right, or a claim on the operations of the firm
What is a primary stakeholder?
Someone who has a direct stake in the organization’s success:
Shareholders
Employees
Business partners
Local communities
What is a secondary stakeholder?
Someone who has an indirect stake in the organization:
Government
Special interest groups
Competitors
What three things should we consider before addressing a stakeholder’s claims?
Legitimacy
Power
Urgency
What types of stockholders are there?
Individual investors
Institutions (such as pension funds or mutual funds)
Major legal rights of stockholders are
To receive dividends, if declared
To vote
To receive annual reports on the company’s financial condition
To bring shareholder suits against the company and officers
To sell there own shares of stock to others
