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2. Chapter 3 The Stakeholder Approach to Business, Society, and Ethics
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3. Learning Outcomes
Define stake and stakeholder, and describe the origins of these concepts.
Differentiate among the production, managerial, and stakeholder views of the firm.
Differentiate among the three values of the stakeholder model.
Expound upon the concept of stakeholder management.
Identify and describe the five major questions that capture the essence of stakeholder management.
Identify the three levels of stakeholder management capability (SMC).
Describe the key principles of stakeholder management.
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4. Chapter Outline (1 of 2) 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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5. Chapter Outline (2 of 2) Principles of Stakeholder Management
Strategic Steps Toward Global Stakeholder Management
Summary
Key Terms
Discussion Questions
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6. Origins of the Stakeholder Concept
An interest or a share in an undertaking.
Can be categorized as:
An Interest
A Right
Ownership
Legal Right
Moral Right 6 6
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7. 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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8. Who are Business’s Stakeholders?
Business Stakeholder Groups
Media
Suppliers
Special-Interest Groups
Society
General Public
Competitors
Customers
Community
Stockholders
Employees 8
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9. Three Views of the Firm Production View Managerial View
Stakeholder View
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10. Production and Managerial Views of the Firm (fig 3-2 slightly different)
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11. Stakeholder View of the Firm
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12. 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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13. 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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14. Nonsocial Stakeholders
Primary nonsocial stakeholders
Secondary nonsocial stakeholders
Natural environment
Environmental interest groups
Future generations
Animal welfare organizations
Nonhuman species
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15. 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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16. Stakeholder Typology
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17. 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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18. Three Values of the Stakeholder Model
Descriptive Value
Instrumental Value
Normative Value
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19. Key Questions in Stakeholder Management
Who are our organization’s stakeholders?
What are our stakeholders’ stakes?
What opportunities and challenges do our stakeholders present to the firm?
What responsibilities (economic, legal, ethical, and philanthropic) does the firm have to its stakeholders?
What strategies or actions should the firm take to best address stakeholder challenges and opportunities?
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21. Who Are Our Stakeholders?
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22. 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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23. What Opportunities and Challenges do Stakeholders Present?
Build productive working relationships with stakeholders
The potential for cooperation
Challenges
Representative of how the firm handles its stakeholders
The potential for threat
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24. What Responsibilities Does a Firm Have to its Stakeholders?
Apply Corporate Social Responsibility -
Responsibilities are
Economic
Legal
Ethical
Philanthropic
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25. The Stakeholder Responsibility Matrix
Stakeholders
Economic
Legal
Ethical
Philanthropic
Owners
Customers
Employees
Community
Public at large
Social Activists
Other
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26. 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?
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27. Four Stakeholder Types -
The Supportive Stakeholder
High potential for cooperation, low for threat
The Marginal Stakeholder
Low potential for cooperation and threat
The Nonsupportive Stakeholder
High potential for threat, low for cooperation
The Mixed-Blessing Stakeholder
High on potential for threat & cooperation
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28. Effective Stakeholder Management
Stakeholder thinking -
The process of always reasoning in stakeholder terms throughout the management process.
Increases the complexity of decision-making, but most consistent with today’s business environment.
Is facilitated by
Stakeholder culture
Stakeholder management capability
Stakeholder corporation model
Principles of stakeholder management
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29. Developing a Stakeholder Culture
Stakeholder Culture embraces the believes, values and
practices that organizations have developed for addressing
stakeholder issues and relationships.
Moralist
Altruist
Instrumentalist
Corporate egoist
Agency
Little concern for stakeholders
Great concern for stakeholders
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30. Stakeholder Management Capability
3-Transactional level
2-Process Level
1-Rational Level
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31. Stakeholder Engagement -
An approach by which companies successfully implement the transactional level of strategic management capability.
Interaction with stakeholders must be integrated into every level of decision- making in the organization.
A ladder of stakeholder engagement depicts a continuum from low engagement to high engagement.
Transparency: working toward the open corporation.
Sustainability is the latest emphasis on engaging stakeholders.
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32. The Stakeholder Corporation
In the future, development of loyal relationships
with customers, employees, shareholders, and
other stakeholders will become one of the
most important determinants of success.
The central element:
Stakeholder inclusiveness
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33. The “Clarkson Principles” of Stakeholder Management
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34. Strategic Steps Toward Global Stakeholder Management
Values Statement
Create a stakeholder-inclusive “values statement.”
1. Governing Philosophy Integrate stakeholder management into the firm’s governing philosophy.
Measurement System
Implement a stakeholder performance measurement system.
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35. Continued acceptance and use Expanded recognition and adoption
Implementation
Indicators of successful stakeholder management
include:
Survival
Continued acceptance and use
Avoided costs
Expanded recognition and adoption
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36. Key Terms (1 of 2) Clarkson principles
descriptive value (of stakeholder model)
instrumental value (of stakeholder model)
key questions (in stakeholder management)
legitimacy
managerial view of the firm
marginal stakeholder
mixed-blessing stakeholder
multifiduciary approach (to stakeholders)
nonsupportive stakeholder
normative value (of stakeholder model)
Power
primary social Stakeholders
principles of stakeholder Management
process level
production view of the firm
proximity
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37. Key Terms (2 of 2) rational level secondary social stakeholders stake
stakeholder corporation
stakeholder culture
stakeholder dialogue
stakeholder engagement
stakeholder inclusiveness
stakeholder management capability
stakeholder map
stakeholder responsibility matrix
stakeholder symbiosis
stakeholder thinking
stakeholder view of the firm
strategic approach (to stakeholders)
synthesis approach (to stakeholders)
transactional level
urgency
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