Business Ethics Chapter 2

economic

maximizing stakeholder wealth and/or value

corporate governance

provides formalized responsibility to stakeholders

issues in social responsibility

social issues, consumer protection, sustainability, corporate governance

FSGO

Federal sentencing guidelines for organizations

directors and officers of corporations

fiduciaries for the shareholders

philanthropic

giving back to society

three aproaches to stakeholder theory

normative, descriptive, and instrumental

communities

When individual stakeholders share similar expectations about desirable business conduct, they may choose to organize into >>>?

legal

abiding all laws and government regulations

outside directors

are hired as they do not have vested interests

primary stakeholders

are those whose continued association is necessary for a firm's survival (employees, customers, investors, and stockholders. governments and communities that provide necessary infrastructure).

steps to implementing a stakeholder perspective

assessing the corporate culture identifying stakeholder groups and issues assessing organizational commitment to social responsibility identifying resources and determining urgency

stakeholders

customers, investors and shareholders, employees, suppliers. government agencies, communicties, and others who have a "stake" or claim in some aspect of a company's products, operations, markets, industry, and outcomes

accountability

degree to which workplace decisions align with a firms goals and its compliance with ethical and legal considerations

instrumental approach

describes what will happen if firms behave in a particular way

`Secondary stakeholders

do not typically engage in transactions and are not essential for its survival (the media, trade associations, and special - interest groups)

steps of social responsibility

economic , legal, ethical, philanthropic

four levels of social responsibility

economic, legal, ethical, and philanthropic

stakeholders power over business

ethical misconduct can damage a firm's reputation, causing stakeholder's to withdraw valuable resources

descriptive approach

focueses on the actual behavior of the firm and usually addresses how decisions and strategies are made for stakeholder relationships

ethical

following standards of acceptable behavior as judged by stakeholders

shareholder model

goal maximize wealth for investors and owners focusses on developing and improving the formal system for maintaining performance accountability between top management and shareholders

normative approach

identifies ethical guildelines that dicate how firms ought to treat stakeholders. Principles and values provide direction

stakeholder interaction model

indicates taht there are two way relationships between the firm and a host of stakeholders

business ethics

involves carefully though out rules or heuristics of business conducts that guide decision making

social responsibility

is an organizations obligation to maximize its positive impact on stakeholders and minimize negative impacts. it can be viewed as a contract with 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

a stake holder orientations is not complete until

it includes the activities that address stakeholder issues

responsive process of a stakeholder orientation

may involve the participation of the concerned stakeholder groups.

reputation

one of an organizations greatest intangible assets with tangible value. the value of a positive reputation is difficult to quantify, but is very important

corporate governance establishes systems and processes for

preventing and detecting misconduct, investiagting and disciplining, recovery and continuous improvement

stakeholders two categories

primary and secondary

difference between primary stakeholders and secondary stakeholders

primary groups may present more day to day concerns, secondary groups cannot be ignored or given less consideration in the ethical decision making process

board of directors

responsbile for the ethics of a firms actions assume ultimate authority for their organizations effectiveness and subsequent performance governed by the amendments fo the federal sentencing guidelines for organizations

friedman's view

stakeholders do not have any role in requiring businesses to demonstrate responsbile and ethical behavior

four interrelated dimensions of corporate citizenship

strong sustained economic performance ,rigorous compliance, ethical actions beyond what the law requires, voluntary contributions that advance the reputation and stakeholder commitment of the organization

stakeholders provide these two things

tangible and intangible resources

stakeholder orientation

the degree to which a firm understands and addresses stakeholder demands; involves activities and processes wihtin a system of social institutions that faciliate and maintain value through exchange relationships with multiple stakeholders

second set of activities for a stakeholder orientation

the distribution of this informtion through the firm

first set of activities for a stakeholder orientation

the organization wide generation of data about stakeholder groups and assessment of the firms effects of these groups

third set of activities for a stakeholder orientation

the organization's responsiveness as a whole to this intelligence

adam smiths view

values that a firm should adopt to produce in a more socially responsible way correlates with the needs and concerns of the stakeholders

stakeholders values and standards

working conditions, consumer rights, enviromental conservations, product safety, and proper information disclosure: that may not directly affect an individual stakeholder's own welfare

interlocking directorate

board member linked to more than one company

stakeholder model

company is answerable to its stakeholders, promotes stakeholder welfare along with corporate needs and interests

executive compensations

compensations paid to top executives of the company ratio between the salaries of the highest paid executives and the median employee wage should be less