Chapter 2 - Stakeholder Relationships, Social Responsibility, and Corporate Governance
Legal
abiding by all laws and government regulations
Stakeholder model of corporate governance
broader view of the purpose of business. A company has responsibility for economic success and viability to satisfy its stockholders it also must answer to other stakeholders including employees, suppliers, government regulators, communities, and special interest groups with which it interacts.
Secondary stakeholder
do not typically engage in transactions with a company and thus are not essential to its survival, these include the media, trade associations, and special-interest groups
Ethical
following standards of acceptable behavior as judged by stakeholders
Corporate governance
formal systems of accountability, oversight, and control.
Shareholder model of corporate governance
founded in classic economic precepts, including the goal of maximizing wealth for investors and owners. For publicly traded firms, corporate governance focuses on developing and improving the formal system for maintaining performance accountability between top management and firms shareholders.
Philanthropic
giving back to society
Corporate citizenship
is often used to express the extent to which businesses strategically meet the economic, legal, ethical, and philanthropic responsibilities placed on them by their various stakeholders. Has four interrelated dimensions, strong sustained economic performance, rigorous compliance, ethical actions beyond what the law requires, and voluntary contributions that advance the reputation and stakeholder commitment of the organization.
Economic
maximizing stakeholder wealth and/or value
Reputation
one of the organizations greatest intangible assets with tangible value.
Stakeholder
provide resources that are more or less critical to a firm's long term success, in the business context, customer, investors, shareholders, employees, suppliers, government agencies, communities, and many others who have a "stake" or claim in some aspect of the company's products, operations, markets, industry, and outcomes
social responsibility
refers to an organizations obligation to maximize it's positive impact on society and minimize it's negative impact, business ethics embodies standards, norms, and expectations that reflect a concern of major stakeholders, including customers, employees, shareholders, suppliers, competitors, and the community.
Stakeholder orientation
the degree to which a firm understand and addresses stakeholder concerns. Comprises of (1) the organization wide generation of data about stakeholder groups and assessment of the firms' effects on these groups, (2) the distribution of this information throughout the firm, and (3) the organization's responsiveness as a whole to this intelligence.
Stakeholder interaction model
these are two way relationships between the firm and a host of stakeholders. Fundamental input of investors, employees, suppliers, this approach recognizes other stakeholders and explicitly acknowledges the dialogue that exists between a firms internal and external environments
Primary stakeholder
those whose continued association is absolutely necessary for a firm's survival, these include employees, customers, investors, and shareholders, as well as the governments and communities that provide necessary infrastructure