1. 1 The Stakeholder Approach to Business, Society, and Ethics Business and Society: Ethics and Stakeholder Management, 7e Carroll & Buchholtz Copyright ©2009 by South-Western, a division of Cengage Learning. All rights reserved Prepared by Deborah Baker Texas Christian University Chapter 3

2. 2 Quote of the Day  A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it. - Max Planck

3. 3 Extra Credit  Hands on Portland  http://www.handsonportland.org/ http://www.handsonportland.org/  Movies (Web Page)

4. 4 Introduction to Chapter 3 Stakeholders Individuals and groups with amultitude of interests, expectations,and demands as to what businessshould provide to accommodatepeople’s lives and lifestyles

5. 5 Origins of the Stakeholder Concept Stake An interest or a share in an undertaking and can be categorized as: An Interest A Right Ownership Legal Right Moral Right

6. 6 Origins of the Stakeholder Concept Stakeholder An individual or a group that hasone or more of the various kinds ofstakes in the organization

7. 7 Who Are Business Stakeholders? Business Stakeholder Groups Media Suppliers Special-Interest Groups Society General Public Competitors Customers Community Stockholders Employees

8. 8 DuPont’s Stakeholder Groups  Shareholders  Customers  Employees  Society

9. 9 Evolution of the Business Enterprise Production View Managerial View Stakeholder View

10. 10 Social Stakeholders Primary social stakeholders  Shareholders and investors  Employees and managers  Customers  Local communities  Suppliers and other business partners Secondary social stakeholders  Government and regulators  Civic institutions  Social pressure groups  Media and academic commentators  Trade bodies  Competitors

11. 11 Production and Managerial Views of the Firm Figure 3-2

13. 13 Nonsocial Stakeholders Primary nonsocial stakeholders  Natural environment  Future generations  Nonhuman species Secondary nonsocial stakeholders  Environmental interest groups  Animal welfare organizations

14. 14 Core, Strategic, and Environmental Stakeholders  Core stakeholders are essential for the survival of the firm  Strategic stakeholders are vital to the organization’s success and the threats and opportunities the organization faces  Environmental stakeholders are all others in the organization's environment that are not core or strategic

15. 15 Stakeholder Typology

16. 16 A Typology of Stakeholder Attributes Legitimacy refers to the perceived validityor appropriateness of thestakeholder’s claim to a stake Power refers to the ability or capacityof a stakeholder to producean effect Urgency refers to the degree to whichthe stakeholder’s claimdemands immediate attention

17. 17 Legitimacy – (accurate, truthful, of value)

18. 18 Power

19. 19 Urgency

20. 20 The Stakeholder View of the Firm Figure 3-3

21. 21 Strategic, Multifiduciary, and Synthesis Views Strategic Approach views stakeholders primarily asfactors managers should managein pursuit of shareholder profits Multifiduciary Approach views stakeholders as a groupto which management has afiduciary responsibility Stakeholder Synthesis Approach considers stakeholders as a groupto whom management owes anethical, but not a fiduciaryobligation

22. 22 1. Who are our stakeholders? 2. What are our stakeholders’ stakes? 3. What opportunities and challenges do our stakeholders present to the firm? 4. What economic, legal, ethical, and philanthropic responsibilities does the firm have to its stakeholders? 5. What strategies or actions should the firm take to best address stakeholder challenges and opportunities? Key Questions In Stakeholder Management

23. 23 Who Are Our Stakeholders? Figure 3-6

24. 24 What Are Our Stakeholders’ Stakes?  Identify the nature/legitimacy of a group’s stakes  Identify the power of a group’s stakes  Identify specific groups within a generic group

25. 25 What Strategies or Actions Should Management Take?  Do we deal directly or indirectly with stakeholders?  Do we take the offense or the defense in dealing with stakeholders?  Do we accommodate, negotiate, manipulate or resist stakeholder overtures?  Do we employ a combination of the above strategies or pursue a singular course of action?

26. 26 Diagnostic Typology of Organizational Stakeholders Stakeholder Type  Mixed Blessing Strategy: Collaborate Stakeholder Type  Mixed Blessing Strategy: Collaborate Stakeholder Type  Nonsupportive Strategy: Defend Stakeholder Type  Nonsupportive Strategy: Defend Stakeholder Type  Supportive Strategy: Involve Stakeholder Type  Supportive Strategy: Involve Stakeholder Type  Marginal Strategy: Monitor Stakeholder Type  Marginal Strategy: Monitor High Low Stakeholder’s Potential for Cooperation with Organization HighLow Stakeholder’s Potential for Threat to Organization ? Figure 3-9

27. 27 Summary of Four Stakeholder Types … managers should attempt to satisfy minimally the needs of marginal stakeholders and to satisfy maximally the needs of supportive and mixed blessing stakeholders, enhancing the latter’s support for the organization.

28. 28 Stakeholder Management Capability Transactional level Process Level Rational Level

29. 29 Stakeholder Engagement Stakeholder Engagement An approach by which companiesimplement the transactional levelof strategic management capability

30. 30 Principles of Stakeholder Management Key Words  Acknowledge  Monitor  Listen  Communicate  Adopt  Recognize  Work  Avoid  Acknowledge conflicts

31. 31 Principles of Stakeholder Management Figure 3-10

32. 32 Strategic Steps Toward Successful Stakeholder Management 2.Values Statement. Create a stakeholder-inclusive “values statement.” 2.Values Statement. Create a stakeholder-inclusive “values statement.” 1. Governing Philosophy. Integrate stakeholder management into the firm’s governing philosophy. 3.Measurement System. Implement a stakeholder performance measurement system. 3.Measurement System. Implement a stakeholder performance measurement system.

33. 33 Key Indicators of Successful Stakeholder Management Survival Continued acceptance and use Avoided costs Expanded recognition and adoption

34. 34 Library Research:  Web pages  MLA Citations  Articles  Refereed journals  www.lib.pdx.edu www.lib.pdx.edu  Best Practices – three: Social, Economic, People

35. 35 Next Time  Monday – MLK Day – GREAT DAY TO VOLUNTEER!!! (Extra Credit )  Chapter 4  Due next Wednesday: Grasso case  Due Jan. 26th – Best Practices Paper