Lecture Business and society - Chapter 3: The Stakeholder Approach to Business, Society, and Ethics

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Chapter 3
The
Stakeholder
Approach to
Business,
Society, and
Ethics
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Learning Outcomes
1. Define stake and stakeholder, and describe the
origins of these concepts.
2. Differentiate among the production, managerial, and
stakeholder views of the firm.
3. Differentiate among the three values of the
stakeholder model.
4. Expound upon the concept of stakeholder
management.
5. Identify and describe the five major questions that
capture the essence of stakeholder management.
6. Identify the three levels of stakeholder management
capability (SMC).
7. Describe the key principles of stakeholder

management.
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Chapter Outline (1 of 2)
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Origins of the Stakeholder Concept
Who Are Business’s Stakeholders?
Stakeholder Approaches
Three Values of the Stakeholder Model
Key Questions in Stakeholder Management
Effective Stakeholder Management
Developing a Stakeholder Culture
Stakeholder Management Capability
The Stakeholder Corporation
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Chapter Outline (2 of 2)
• Principles of Stakeholder Management
• Strategic Steps Toward Global Stakeholder
Management
• Summary
• Key Terms
• Discussion Questions

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Origins of the Stakeholder
Concept
Stake •An interest or a share in an undertaking.
Can be categorized as:
An Interest

A Right

Ownership

Legal Right
Moral Right
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Stakeholders
Stakeholder -

•Any individual or group who can affect
or is affected by the actions, decisions,
policies, practices, or goals of the
organization.

•Stakeholder is a variant of the concept
of stockholder– an investor/owner of
businesses.

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Who are Business’s
Stakeholders?
Stockholders
Customers

Employees

Community

Competitors

Business Stakeholder Groups

Suppliers

Special-Interest
Groups
Society

Media

General
Public
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Three Views of the Firm

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Production and Managerial
Views
of the Firm (fig 3-2 slightly different)

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Stakeholder View of the Firm

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Primary & Secondary
Stakeholders
Primary stakeholders •Have a direct stake in the organization
and its success.

Secondary stakeholders •Have a public or special interest stake in
the organization that is more indirect.

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Social Stakeholders
Primary social
stakeholders

Secondary social
stakeholders

Shareholders and

investors

Government regulators

Employees and
managers

Civic institutions

Customers

Social pressure groups

Local communities

Media and academic
commentators

Suppliers and other
business partners

Trade bodies
Competitors

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Nonsocial Stakeholders

Primary nonsocial
stakeholders

Secondary nonsocial
stakeholders

Natural environment

Environmental interest
groups

Future generations

Animal welfare
organizations

Nonhuman species

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A Typology of Stakeholder
Attributes
Legitimacy •Refers to the perceived validity or
appropriateness of the stakeholder’s claim to a
stake.

Power •Refers to the ability or capacity of a stakeholder

to produce an effect.

Urgency •Refers to the degree to which the stakeholder’s
claim demands immediate attention or response.

Proximity •The spatial distance between the organization
and its stakeholders.
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Stakeholder Typology

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Stakeholder
Approaches
Strategic approach •Views stakeholders primarily as factors
managers should manage in pursuit of
shareholder profits.

Multifiduciary approach •Views stakeholders as a group to which
management has a fiduciary responsibility.

Stakeholder synthesis approach •Considers stakeholders as a group to whom
management owes an ethical, but not a

fiduciary, obligation.
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Three Values
of the Stakeholder Model

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Key Questions in
Stakeholder Management
1. Who are our organization’s
stakeholders?
2. What are our stakeholders’ stakes?
3. What opportunities and challenges do
our stakeholders present to the firm?
4. What responsibilities (economic, legal,
ethical, and philanthropic) does the
firm have to its stakeholders?
5. What strategies or actions should the
firm take to best address stakeholder
challenges ©and
opportunities?
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Who Are Our Stakeholders?

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What Are
Our Stakeholders’ Stakes?
To identify them, consider •the nature and legitimacy of a group’s
stakes.
•the power of a group’s stakes.
•Sub-groups within a generic group.

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What Opportunities and
Challenges do Stakeholders
Present?

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What Responsibilities Does
a Firm Have to its
Stakeholders?
Apply Corporate Social
Responsibility •Responsibilities are
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Economic

•

Legal

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Ethical

•

Philanthropic

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The Stakeholder Responsibility
Matrix

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