Ethics Chapter 2

Corporate Governance

involves the development of formal systems of accountability, oversight, and control

Primary Stakeholders

those whose continued association and resources are absolutely necessary for a firm's survivial

Stakeholders

people who have a "stake" or claim in some aspect of a company's products, operations, markets, industry, and outcomes; customers, shareholders, employees, suppliers, govt agencies, and communities

Stakeholder model of corporate governance

adopts a broader view of the purpose of business

Secondary Stakeholders

do not typically engage directly in transactions with a company and are therefore not essential to its survival

Corporate Governance

focuses on developing and improving the formal system for maintaining performance accountability between top management and the firm's shareholders

Shareholder Model of Corporate Governance

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

Reputation

is one of the organization's greatest intangible assets with tangible value

Corporate Citizenship

often used to express the extent to which businesses strategically meet the economic, legal, ethical, and philanthropic responsibilities placed on them by various stakeholders

4 interrelated dimensions of Corporate Citizenship

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

Interlocking Directorate

the concept of board members being linked to more than one company

Stakeholder Orientation

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

Executive Compensation

biggest issue corporate boards of directors face

Stakeholder Interaction Model

conceptualization of the relationship between business and stakeholders