Chapter 3 Study Guide

non-supportive stakeholder

A stakeholder has a high potential for threat but a low potential for cooperation.

production view of the firm

In this view, owners thought of stakeholders as only those individuals or groups that supplied resources or bought products or services.

Clarkson Principles

Named after the late Max Clarkson, a dedicated researcher on the topic of stakeholder management. The principles are intended to provide managers with guiding precepts regarding how stakeholders should be treated.

instrumental value (of stakeholder model)

Portrays the relationship between the practice of stakeholder management and the resulting achievement of corporate performance goals. The fundamental premise here is that practicing effective stakeholder management should lead to the achievement of traditional business goals, such as profitability, stability, and growth.

normative value (of stakeholder model)

Stakeholders are seen as possessing value irrespective of their instrumental use to management. This is often considered the moral or ethical view because it emphasizes how stakeholders should be treated.

transactional level

The highest goal for stakeholder management—the extent to which managers actually engage in transactions (relationships) with stakeholders.

rational level

The introductory level of SMC simply entails the company identifying who their stakeholders are and what their stakes happen to be.

Business managers would be most inclined to give time and attention to the Nature Conservancy because the group possesses the following attribute:

power

At the _____ of stakeholder management capability, management must take the initiative in meeting stakeholders face to face and attempting to be responsive to their needs.

transactional level

Which statement by Mark Tercek would do the most to convince business leaders that the Nature Conservancy is a "supportive stakeholder"?

"We looked for business opportunities that made business sense and that were also good for the environment."

stakeholder map

A chart of a firm's stakeholders.

stakeholder responsibility matrix

A template that managers might use to systematically think through its various responsibilities to each stakeholder group.

stakeholder engagement

An approach by which companies successfully implement the transactional level of strategic management capability.

stake

An interest in or a share in an undertaking.

stakeholder management capability (SMC)

An organization's integration of stakeholder thinking into its processes and it may reside at one of three levels of increasing sophistication: rational, process, transactional.

stakeholder culture

Embraces the beliefs, values, and practices that organizations have developed for addressing stakeholder issues and relationships.

secondary social stakeholders

Extremely influential stakeholders, especially in affecting reputation and public standing, but their stake in the organization is more indirect or derived.

supportive stakeholder

Has a high potential for cooperation and a low potential for threat.

Stakeholder Synthesis Approach

Holds that business does have moral responsibilities to stakeholders but that they should not be seen as part of a fiduciary obligation. As a consequence, the management's basic fiduciary responsibility toward shareholders is kept intact, but it is also expected to be implemented within a context of ethical responsibility.

stakeholder management

It is to see to it that while the firm's primary stakeholders achieve their objectives, the other stakeholders are dealt with ethically and are also relatively satisfied. At the same time, the firm's profitability must be ensured.

urgency

It refers to the degree to which the stakeholder's claim on the business calls for the business's immediate attention or response. Urgency may imply that something is critical—it really needs to get done.

stakeholder view of the firm

Major internal and external changes occurred in business and its environment, managers were required to undergo a radical conceptual shift in how they perceived the firm and its multilateral relationships with constituent or stakeholder groups.

marginal stakeholder

Marginal stakeholders are low on both potential for threat and potential for cooperation.

principles of stockholder management

Provide managers with guiding precepts regarding how stakeholders should be treated.

descriptive value (of stakeholder model)

Provides language and concepts to describe effectively the corporation or organization in inclusive terms.

proximity

Proximity refers to the spatial distance between the organization and its stakeholders.

Stakeholder Symbiosis

Recognizes that all stakeholders depend on each other for their success and financial well-being.

stakeholder corporation

Recognizes that all stakeholders depend on each other for their success and financial well-being.

stakeholder inclusiveness

Recognizes that all stakeholders depend on each other for their success and financial well-being.

power

Refers to the ability or capacity of the stakeholder(s) to produce an effect—to get something done that otherwise may not be done.

legitimacy

Refers to the perceived validity or appropriateness of a stakeholder's claim to a stake. Therefore, owners, employees, and customers represent a high degree of legitimacy due to their explicit, formal, and direct relationships with a company. Stakeholders that are more distant from the firm, such as social activist groups, NGOs, competitors, or the media, might be thought to have less legitimacy.

process level

Stakeholder management capability Level 2, at which organizations develop and implement processes—approaches, procedures, policies, and practices—by which the firm may scan the environment and gather pertinent information about stakeholders, which is then used for decision-making purposes. An applicable stakeholder principle here is "constantly monitoring and redesigning processes to better serve stakeholders.

mixed-blessing stakeholder

Stakeholders that are high on both potential for threat and potential for cooperation.

primary social stakeholders

Stakeholders that have a direct stake in the organization and its success and, therefore, are most influential.

managerial view of the firm

The separation of ownership from control, business firms began to see their responsibilities toward other major constituent groups to be essential if they were to be successful.

Which of the following is true regarding stakeholders?

The term stakeholder is a variant of the traditional concept of stockholder or shareholder.

primary nonsocial stakeholders

These include the natural environment, future generations, and nonhuman species.

secondary nonsocial stakeholders

These include those who represent or speak for the primary nonsocial stakeholders.

stakeholder thinking

Undergirds stakeholder management and is the process of always reasoning in stakeholder terms throughout the management process, and especially when organizations' decisions and actions have important implications for others.

stakeholder utility

Value to the stakeholder.

multifiduciary approach

Views stakeholders as more than just individuals or groups who can wield economic or legal power. This view holds that the management has a fiduciary responsibility toward stakeholders just as it has this same responsibility toward shareholders.

stakeholder mindset

Whereby managers look at the world if they start with a stakeholder "script" to create value for a wide array of stakeholders within their value chain.

key questions

Who are our organization's stakeholders? What are our stakeholders' stakes? What opportunities and challenges do our stakeholders present to the firm? What responsibilities (economic, legal, ethical, and philanthropic) does the firm have to its stakeholders? What strategies or actions should the firm take to best address stakeholder challenges and opportunities?

The Nature Conservancy is best characterized as a:

a special-interests group

Which statement in the clip helps explain why some business leaders might restrict their companies to lower levels of stakeholder engagement?

all of these

According to Nature Conservancy CEO Mark Tercek, why should companies invest in environmental causes?

because it will help them be better stewards of the natural resources businesses need

Which stakeholder groups does CEO Mark Tercek identify as potential partners in advancing environmental causes?

businesses, governments, and environmental groups

Once the responsibilities of a firm towards its stakeholders have been assessed, the firm must next:

contemplate strategies and actions for addressing its stakeholders.

In the traditional production view of the firm, owners considered ____ as stakeholders.

customers and suppliers

The three values associated with the stakeholder model of the firm are:

descriptive, instrumental, and normative values

The stakeholder model has a(n) _____ because it is useful in portraying the relationship between the practice of stakeholder management and the resulting achievement of corporate performance goals.

instrumental value

Which of the following is considered the first level of stakeholder management capability?

rational level

The Nature Conservancy is a:

secondary stakeholder

Which of the following are considered as primary social stakeholders?

shareholders and investors

The primary element of the concept of "stakeholder corporation" is:

stakeholder inclusiveness

Once a firm identifies its stakeholders, it has to next identify the:

stakeholder's stakes

Which of the three stakeholder approaches would grant the Nature Conservancy the greatest amount of influence on businesses?

the multifiduciary approach

Based on the discussion shown in this segment, the panelists' view of corporate responsibility is congruent with following historical perspective:

the stakeholder's view of the firm