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