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Chapter 1
The Corporation and its Stakeholders
| Question | Answer |
|---|---|
| Business | any organization that is engaged in making a product of providing a service for a profit. |
| Society | human beings and the social structures they collectively create. Segments of humankind, such as members of a particular community, nation or interest group. |
| General Systems Theory | all organisms are open to, and interact with, their external environment. |
| Interactive social system | business and society each needs the other and each influences the other. |
| Ownership theory of the firm | the firm is seen as property of its owners. |
| Stakeholder theory of the firm | corporations serve a broad public purpose: to create value for society. |
| Descriptive argument | the stakeholder view is simply a more realistic description of how companies really work. |
| Instrumental argument | stakeholder management is more effective as a corporate strategy. |
| Normative argument | stakeholder management is simply the right thing to do. |
| Stakeholder | persons and groups that affect, or are affected by, an organization's decisions, policies, and operations. |
| Market stakeholders | those that engage in economic transactions with the company as it carries out its primary purpose of providing society with goods and services. Includes employees, stockholders, creditors, suppliers, customers, distributers, wholesalers, retailers. |
| Nonmarket stakeholders | people and groups who-although they do not engage in direct economic exchange with the firm-are nonetheless affected by or can affect its actions. Includes communities, governments, activist groups, media, business support groups, general public. |
| Stakeholder analysis | identifying relevant stakeholders and to understand both their interests and the power they may have to assert these interests. |
| 4 Questions of stakeholder analysis | 1. Who are the relevant stakeholders? 2. what are the interests of each stakeholder? 3. What is the power of each stakeholder? 4. How are coalitions likely to form? |
| Stakeholder interests | the nature of each group's stake |
| Stakeholder power | the ability to use resources to make an event happen or to secure a desired outcome. Includes voting power, economic power, political power, legal power. |
| Stakeholder coalitions | temporary alliances to pursue a common interest. |
| Stakeholder engagement | ongoing relationship building between a business and its stakeholders. |
| Inactive stakeholder engagement | companies simply ignore stakeholder concerns |
| Reactive stakeholder engagement | companies act only when forced to do so, and then in a defensive manner. |
| Proactive stakeholder engagement | Companies try to anticipate stakeholder concerns. |
| Interactive stakeholder engagement | companies actively engage with stakeholders in an ongoing relationship of mutual respect, openness, and trust. |
| Stakeholder dialogue | A business and its stakeholders come together for face-to-face conversations about issues of common concern. |
| Dynamic environment of business | the external environment of business is dynamic and ever-changing and there are 6 forces that powerfully shape the business and society relationship. |
| 6 Dynamic forces | 1. changing societal expectations. 2. growing emphasis on ethical reasoning and actions. 3. globalizatoin. 4. evolving governmental regulation of business. 5. dynamic natural environment. 6. explosion of new technology. |
Created by:
storino