Business Ethics

Stakeholders

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

Interlocking directorate

Most boards are not true democracies, and most shareholders have a minimal ability to impact decision making because they are so dispersed. The concept of board members being linked to more than one company is know as interlocking directorate.

Stakeholder interaction model

Offers a conceptualization of the relationship between businesses and stakeholders. There are reciprocal relationships between the firm and a host of stakeholders.

Executive Compensation

One of the biggest issues that corporate boards of director face is executive compensation. Most boards spend more time deciding how much to compensate top executives than they do ensuring the integrity of the company's financial reporting systems.

Stakeholder orientation

The degree to which a firm understands and addresses stakeholder demands. Orientation comprises three sets of activities: 1) the organization-wide generation of data about stakeholder groups and assessment of the firm's effects on these groups; 2) the distribution of this information throughout the firm; 3) the responsiveness of the organization as a whole to this information

Secondary Stakeholders

They do not typically engage in transactions with a company and therefore are not essential to its survival. They include the media, trade associations, and special interests groups like the American Association of Retired People, a special interest group that works to support retirees' rights such as health care benefits.

Corporate Governance

To remove the opportunity for employees to make unethical decisions, most companies have developed formal systems of accountability, oversight, and control that are known as corporate governance.

Stakeholder model of corporate governance

adopts a broader view of the purpose of business. Although, a company certainly has a responsibility for economic success and viability to satisfy its stockholders, it must also answer to other stakeholders, including employees, suppliers, government regulators, communities, and special interest interest groups with which it interacts.

Primary Stakeholders

are those whose continued association is absolutely necessary for a firms' survival. These include employees, customers, investors, and shareholders, as well as the governments and communities that provide necessary infrastructure.

Shareholder model of corporate governance

is founded in classic economic precepts, including the goal of maximizing wealth for investors and owners.

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

Reputation

is one of the organization's greatest intangible assets with tangible value. The value of a positive reputation is difficult to quantify, but it is very important.