Stakeholders

Question 1

Business ethics according to Crane and Matten

Answer 1

Is the study of business situations, activities and decisions where issues of right and wrong are addressed.
Where the law ends.
Grey areas of business

Question 2

Grey areas emerge

Answer 2

Globalisation - different countries, cultures, laws, regulations and systems, geographical barriers
Different ideas of what is right/wrong

Question 3

Morality

Answer 3

Concerned with the norms values and beliefs embedded in social processes which define right and wrong for an individual / community

Question 4

Friedman’s three part argument

Answer 4

1 only human beings have a moral responsibility for their actions
2 corporation managers responsibility is to act solely in the interest of shareholders
3 social issues and problems are the proper province of the state rather than corporate managers

Question 5

Business reasons for CSR

Answer 5

Extra and/or more satisfied customers
Employees may be more attracted/ commutes
Legislation
Long term investment that benefits Corp

Question 6

Moral reasons for CSR

Answer 6

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

Question 7

CSR - carol pyramid

Answer 7

Carroll’s CSR pyramid

Top
Philanthropic responsibilities - desired by society
Ethical responsibilities - expected by society
Legal responsibilities - required by society
Economic responsibilities - required by society

Question 8

CSR criticism

Answer 8

Vague - ill defined - (Votaw)
Elusive concept -(Preston)
Lacking dominant paradigm (jones)

Question 9

Stakeholder theory

Answer 9

Any group or individual who can affect or is affected by the achievement of the orgs objectives (Freeman)

Question 10

Firm stakeholders

Answer 10

Gov 
Shareholders 
Competitions 
Customer
Employees
Civil society
Suppliers

A network approach follows this - where it’s in larger scale and customer 1 more affected ban customer 2 etc

Question 11

Forms of stakeholder theory

Answer 11

Donaldson and Preston
Normative
Instrumental
Descriptive

Question 12

Normative

Answer 12

Provide reason for why corps should take into account stakeholders interest
Interprets the function at the corporation, including the identification of moral or philosophical guidelines for the operation and management of corps
Without normative claims stakeholder theory collapses
Stakeholder is anyone with interest, identified by their specific interest and interests are of intrinsic values

Question 13

Descriptive

Answer 13

Ascertains whether and how corporations actually do take into account stakeholders interests
Describes and explains specific corporate characteristics and behaviours: eg describes the nature of the firm, the ways managers think about managing, how board members thinks about interests of Corp and how some corps are actually managed

Question 14

Instrumental

Answer 14

Attempts to answer the question of whether it is beneficial for the corporation to take into account stakeholders interests
Examines connections between the practice of stakeholder management and the achievement of various goals
Statistics etc - instrumental studies have tended to generate ‘implications’ suggesting that adherence to stakeholders principles and practice achieves conventional corporate performance objectives as well or better than rivals

Question 15

In order to manage stakeholders you must find out

Answer 15

Who are they
What are their ends
What are their means
Froman

Question 16

Corporate accountability: firm as political actor

Answer 16

Corporate accountability refers to whether a Corp is answerable in some way for the consequences of its actions
Firms have begun to take on role of political actors - taken up role of previous done by govs cause of - gov failure - increased power and influence of corps

Problems: who controls corps? Who are they accountable to? Key to this is transparency

Question 17

Corporate citizenship (CC) - three perspectives

Answer 17

The limited view equates CC to corporate philanthropy (Carroll pyramid)
The equivalent view of CC equates to CSR
The extended view of CC acknowledges the extended political role of the Corp in society

Question 18

Limited view

Answer 18

Main stakeholder- local comms, employees
Motivation - philanthropic and economics where citizenship is strategic
Moral grounding - reciprocity - putting something back

Question 19

Equivalent view

Answer 19

Main stakeholder - broad range
Motivation - mixed economic, legal, ethical, philanthropic
Moral grounding - duty of responsibility and avoid hard to society

Question 20

Extended view

Answer 20

Main stakeholder - broad range of citizens, society in general
Motivation - political
Moral grounding - grounding is not moral, but comes from the changes in the political arena

Question 21

3 main problems of ST as an ethical theory

Answer 21

Identification and definition
Vagueness and over breadth
Balancing of stakeholder interests in decision making

Question 22

Identification and definitions (orts and strudler)

Answer 22

If one cannot define stakeholder then any coherent theory collapses
Either broad/ narrow are helpful
Broad been criticised on grounds of unworkability
Narrow definitions of stakeholder - consistent with expanded theory of the firm
- people considered inside the boundaries of business
- purpose: to contest the strict financial ownership theory of the firm
- who is the stakeholder? Shareholders employees creditors

Broad -
- potentially useful approach to business strategy
- what groups of people are to be considered outside business boundaries
- purpose: invoked for strategic reasons, instrumental management approach
Who is a stakeholder - everyone

Question 23

Vagueness and over breadth (Orts and Strudler)

Answer 23

Stakeholder theory’s as a business ethics approach requires to identify stakeholders and to balance their interests:
- vague concepts - being a stakeholder is a matter of degree - having one interests balanced is a matter of degree

Vague in terms of how to identify and balance goals for success
Inclusive(broad) definition of stakeholders can help mapping stakeholders and their interests

Question 24

Balancing shakeholder requests

Answer 24

• unrealistic endeavour
• no common measure, no quantifiable information (shareholders wish to retire in wealth versus employees wish to feed children)
• how to balance interest according to which criteria
• it requires more than balancing interests

Question 25

Stakeholder management approaches (Mitchell et al)

Answer 25

Power - ability of one entity to influence behaviour of another
Legitimacy - generalised perception or assumption that actions of an entity are desirable, proper or a appropriate within some socially constructed system of norms values and beliefs
Urgency - calling for immediate or pressing attention

Legitimacy + power = authority

Question 26

Stakeholder ambiguity and complexity

Answer 26

A situation where various stakeholders (ie greater complexity) with disparate goals demand and opinions interpret the same
Situation differently (ie ambiguity)

Question 27

Shell example

Answer 27

Wanted to dispose obsolete lol storage facility in Atlantic after detailed environmental impact assessment
Protest from green peace (with questionable science); boycotts, political instability in UK
Eventually recycled onshore after pressure, bad publicity for management/ policy makers

Question 28

Myopia of moral philosophy - Stark

Answer 28

2 problems
1 disagree ethical behaviour is always in the companies best interest
2 acts motivated by self interest cannot truly be ethical

Question 29

Jamali

Answer 29

CSR highlight subjective and doesn’t allow for a universallyo applicable modification
Because of the level of abstraction if the word social, managers have problems evaluating how their organisation can contribute to the well being of society as a whole

Question 30

Corporations must be viewed as operating at the centre of a “Network of interstellar stakeholders that create, sustain and enhance value creating capacity”.

Answer 30

Jamali

Question 31

Org factors affecting ethical behaviour

Answer 31

Crane and Matten
Organisational culture (influences values and beliefs, set out right from wrong)
Corporate internal decision structure (directs corporates decisions with predetermined goals

Question 32

gsk philanthropic

Answer 32

Biggest philanthropic biggest donation
£500 million worth of drugs
£500 million to distribute

Question 33

Affects and affected by stakeholder theory (freeman)

Answer 33

Principle corporate rights - corporations has the obligations not to violate right of others
Principle of corporate effects - companies are responsible for the effect of their actions on other

Question 34

Corporate social responsiveness

Answer 34

Reaction (Corp denies any responsibility) 
Defence (admits responsibility but fights it, doing least possible)
Accommodation (accepts responsibility and does what’s demanded)
Pro action (go beyond industry norms and anticipates future expectations)

Question 35

Why business ethics is needed

Answer 35

Business has significant societal power
Businesses have resources that can contribute to society
Mispractice has potential to inflict tremendous harm
Demands for business ethics are increasing
Few businesses are knowledgable about business ethics
High profile ethical violations