Bus Ethics Ch 1
Nonmarket stakeholder of business
Community, government, business support groups: people/groups who (although they do not engage in direct economic exchange with the firm—are affected by or can affect its actions. (Example: The Media)
How can customers exercise economic stakeholder power?
Boycotting products if they believe the goods are too expensive.
The business-society interdependence?
Business is a part of society, the two have clear boundaries, and business activities impact other activities in society. They need each other to work together. (INTERDEPENDENT)
The stakeholder theory of the firm
Corporations serve a broad public purpose: to create value for society. Profit is necessary for survival but other values drive the firm's purpose. Corporations have multiple obligations and need to consider all stakeholders. "A firm's sole purpose is to create value for its shareholders." (FALSE)
Stakeholder groups
Often have common interests and will form temporary alliances to pursue these common interests. "Can include: Stockholders, The media, and Environmental activists."
What kind of power might a local community use to influence a company's decisions?
Publicizing an issue, Lobbying government policy makers for regulations, Challenging whether a business activity should continue to operate.
Fiduciary argument
Required to act in the best interest of the person or party whose assets they're managing. "Benefit a firm's: Stockholders, Customers, and Employees."
When something stands out from a background, is seen as important, or draws attention, it could be?
Salient
The ownership theory of the firm
Sees the firm as property of owners (shareholders). Owners' interests take precedence over interests of others. The purpose of the firm is to maximize its long-term market value and money for its shareholders.
Market stakeholder
Shareholders, suppliers, employees, etc: They engage in economic transactions with the company as it carries out its primary purpose of providing society with goods and services. (Does not include nongovernmental orgs. & media)
Normative argument
Stakeholder management is the right thing to do "the stakeholder view is simply a more realistic description of how companies really work." (FALSE)
The main reason a number of European countries require public companies to include employee members on their boards of directors.
Their interests will be explicitly represented.
The five types of stakeholders' power recognized by most experts are:
Voting Power Economic Power Political Power Legal Power Informational Power
Descriptive argument
realistic description of how companies really work
Instrumental argument
stakeholder consideration key for effective corporate strategy "companies perform better if they consider the rights and concerns of multiple groups in society." (TRUE)
