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• Chapter 2
  • Stakeholders: customers, shareholders, employees, suppliers, govt agencies, etc who have a claim in some aspect of a company’s products, operations, markets, industry, and outcomes.
    • Primary stakeholders: those whose continued association and resources are absolutely necessary for a firm’s survival.
    • Secondary stakeholders: do not engage directly in transactions with a company and therefore not essential to its survival.
      • Media, trade associations, special interests groups
      • May even have more power of influence than primary stakeholders
    • Stakeholder interaction model: reciprocal relationship btw businesses and stakeholders.
    • Stakeholder orientation: the degree to which a firm understands and addresses stakeholder demands
      • Activities and processes within a system of social institutions that facilitate and maintain value through exchange relationships with multiple stakeholders.
    • 3 approaches to shareholder theory
      • Normative: affirms that stakeholders have legitimacy and a right to engage organizations.
        • Identifies ethical guidelines that dictate how firms should treat stakeholders
      • Descriptive: focuses on the firm’s behavior and addresses how decisions and strategies are made for stakeholders relationships.
      • Instrumental: describes what happens if firms behave in a particular way.
    • Ethical misconduct is more difficult to overcome than poor financial performance
      • Ethical misconduct and decisions that damage stakeholders generally impact the company’s reputation in terms of both investor and consumer confidence
      • Energy, pharmaceuticals, and financial services have the lowest levels of trust
      • Technology, food and beverage, and consumer package goods have the highest levels of trust.
    • Ethical corporate cultures are important bc they are linked to positive relationships with stakeholders.
    • Social responsibility: contract with society
      • Economic, legal, ethical, and philanthropic
      • Econ: “maximizing stakeholder wealth and/or value
      • Legal: “abiding by all laws and govt regulations”
      • Ethical: “following standards of acceptable behavior”
      • Philanthropic: “giving back to society”
    • Business ethics: carefully thought out rules of business conduct that guide decision making
    • Corporate citizenship: extent to which businesses meet the economic, legal, ethical, and philanthropic responsibilities placed on them by various stakeholders.
      • Strong sustained economic performance, rigorous compliance, ethical, actions beyond what law requires, and voluntary contributions that advance the rep and stakeholder commitment of the organization.
    • Reputation: organization’s greatest intangible assets with tangible values
    • Customers are less knowledgeable about certain products, so companies must take precautions to prevent consumers from being harmed by their products
      • Products should have warning labels