1. Business Ethics: Ethical Decision Making and Cases, Seventh Edition
O.C. Ferrell
University of New Mexico
John Fraedrich
University of Wyoming
Linda Ferrell
University of New Mexico
For in-class note taking, choose Handouts or Notes Pages from the print options, with three slides per page.
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Chapter 2
Stakeholder Relationships, Social Responsibility, and Corporate Governance
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3. Stakeholders Define Business Ethical Issues
Customers
Investors
Employees
Suppliers
Government agencies
Communities
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4. Stakeholder Types: Primary
Absolutely necessary for survival
Employees
Customers
Investors
Shareholders
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5. Stakeholder Types: Secondary
Do not typically engage in transactions or title to the goods
Media
Trade associations
Special interest groups
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6. Stakeholder Orientation
The degree to which a firm understands and addresses stakeholder demands.
Consists of three activities:
Generation of data about stakeholder groups
Distribution of this information throughout the firm
The firm’s response to this intelligence
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7. Relationship Between Social Responsibility and Profitability
Social responsibility is the organization’s obligation to maximize its positive impact and minimize its negative impact on stakeholders.
Four levels of social responsibility:
Economic
Legal
Ethical
Philanthropic
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Corporate Governance
Consists of the formal systems of accountability, oversight, and control.
Accountability
Alignment of decisions with strategic direction
Oversight
System of checks and balances
Control
Auditing and improvement
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Corporate Governance
Shareholder model
Maximize wealth for owners and investors
Stakeholder model
Concerns of employees, owners, suppliers, government regulators, and communities taken into consideration
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Corporate Governance
Fiduciaries
Persons placed in positions of trust to act in the best interest of the organization
Both directors and officers of corporations are fiduciaries for the shareholders
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11. The Role of Boards of Directors
Ultimate responsibility for their firms’ success or failure, as well as their ethics and actions
Increased demands for accountability and transparency
Issues of executive compensation
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12. Implementing a Stakeholder Perspective
Step 1: Assessing the corporate culture
Step 2: Identifying stakeholder groups
Step 3: Identifying stakeholder issues
Step 4: Assessing organizational commitment to social responsibility
Step 5: Identifying resources and determining urgency
Step 6: Gaining stakeholder feedback
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