Business and Society - Ethics and Stakeholder Management

 

Contents

 

Management Class for Learners is a free self-directed study support resource along with Chat Lines, Discussion Forums and Wikis and Learner Support units, designed for business, management, IT, English Language, and Research students and instructors intending to enhance their managerial or professional knowledge, understanding, skills and competence by open learning.

Apart from the web-based learning material, such as our adapted versions Wikipedia, on 'public domain' - used for a seamless integration of the modules to a Business or Management curriculum, we have also found other web sources and our own or the material created or 'acquired' from our colleagues.

Whilst we unable to accept any responsibility for the accuracy, views or opinions expressed in any of the third party material featured on our sites, please feel free to use it, and let us know if you do not find what you need or have any problems in accessing any of the relevant links on our pages.

In keeping with the ethos of the Internet, we respect the copyrights of the original owners/authors of the sites or material we have used, we also expect our users to respect our copyright and all the third party intellectual property rights when using any material found on Management Class or Finntrack sites.

For further details on all our web-based resources go here.

 

Business Ethics and Values

Check the availability and buy your books from our Bookshop.

Contact us here

Online Business School  for the delivery and management
of your own existing or the customised versions of our programmes
for in-class or global distance learning.

For further information

 

The Bookshop

Today's Videos Playlist

 

Loading

 

 

Facebook

Twitter

Rationale

Learning objectives and outcomes

Teaching and Learning Resources

 

Related Workshops

 

Case Studies

Learner Support

 

Recommended Texts

Resources

Assignments, Assessments

 

Learning Centres

 

Business and Society - Ethics and Stakeholder Management

 

 

Rationale

Social Responsibility is an ethical or ideological theory that an entity whether it is a government, corporation, organization or individual has a responsibility to society. This responsibility can be "negative," in that it is a responsibility to refrain from acting (resistance stance) or it can be "positive," meaning there is a responsibility to act(proactive stance). While primarily associated with business and governmental practices, activist groups and local communities can also be associated with social responsibility, not only business or governmental entities.

 

Corporate Social Responsibility - What does it mean?

 

 

There is a large inequality in the means and roles of different entities to fulfill their claimed responsibility. This would imply the different entities have different responsibilities, insomuch as states should ensure the civil rights of their citizens, that corporations should respect and encourage the human rights of their employees and that citizens should abide with written laws. But social responsibility can mean more than these examples. Many NGOs accept that their role and the responsibility of their members as citizens is to help improve society by taking a proactive stance in their societal roles. It can also imply that corporations have an implicit obligation to give back to society (such as is claimed as part of corporate social responsibility and/or stakeholder theory).

Social responsibility is voluntary; it is about going above and beyond what is called for by the law(legal responsibility). It involves an idea that it is better to be proactive toward a problem rather than reactive to a problem. Social responsibility means eliminating corrupt, irresponsible or unethical behavior that might bring harm to the community, its people, or the environment before the behavior happens.

 

See also

 

External links

 

Artists for Social Responsibility

 

 

Learning Objectives and Outcomes

This is a non-taught unit designed for self-directed study by those intending to enhance their professional or managerial competence, knowledge, understanding, and skills in business.

Knowledge

After completing the course, student will:

Knowledge

1. Understand the main concepts and principles of business management

2. Understand the fundamentals of business ethics and social responsibility

 

Skills

After completing the course, student will be able to

1. Participate in the firm's strategic and corporate stakeholder performance analysis.

2. Identify the firm's internal and external stakeholders and the differences between the two.

3. Discuss and, if necessary, offer solutions to any internal and external stakeholder issues.

 

 

Today's Videos

Teacher Tube

 

 

Teaching and Learning Resources

 

 

Click on the titles below

Learning Contents Tutorials Assignments Eecommended Texts Readings Learner Support Workshops Web Cases Resources Staff Development Discussion Forums Subject Reviews

 

Business, Society, and Stakeholders

Tutorials

 

Readings

A corporate stakeholder is a party that can affect or be affected by the actions of the business as a whole. The stakeholder concept was first used in a 1963 internal memorandum at the Stanford Research Institute. It defined stakeholders as "those groups without whose support the organization would cease to exist."[1] The theory was later developed and championed by R. Edward Freeman in the 1980s. Since then it has gained wide acceptance in business practice and in theorizing relating to strategic management, corporate governance, business purpose and corporate social responsibility (CSR).

The term has been broadened to include anyone who has an interest in a matter.

 

External Influences on Business

Larger Map

 

 

See also

 

Activities

 

Stakeholder analysis in conflict resolution, project management, and business administration, is the process of identifying the individuals or groups that are likely to affect or be affected by a proposed action, and sorting them according to their impact on the action and the impact the action will have on them. This information is used to assess how the interests of those stakeholders should be addressed in a project plan, policy, program, or other action. Stakeholder analysis is a key part of stakeholder management.

 

Stakeholder Analysis

 

 

 

Strategic Management for Corporate Stakeholder Performance

Tutorials

 

Readings

Strategic management is a field that deals with the major intended and emergent initiatives taken by general managers on behalf of owners, involving utilization of resources, to enhance the performance of firms in their external environments.[1] It entails specifying the organization's mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and then allocating resources to implement the policies and plans, projects and programs. A balanced scorecard is often used to evaluate the overall performance of the business and its progress towards objectives. Recent studies and leading management theorists have advocated that strategy needs to start with stakeholders expectations and use a modified balanced scorecard which includes all stakeholders.

Strategic management is a level of managerial activity under setting goals and over Tactics. Strategic management provides overall direction to the enterprise and is closely related to the field of Organization Studies. In the field of business administration it is useful to talk about "strategic alignment" between the organization and its environment or "strategic consistency." According to Arieu (2007), "there is strategic consistency when the actions of an organization are consistent with the expectations of management, and these in turn are with the market and the context." Strategic management includes not only the management team but can also include the Board of Directors and other stakeholders of the organization. It depends on the organizational structure.

“Strategic management is an ongoing process that evaluates and controls the business and the industries in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly [i.e. regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment., or a new social, financial, or political environment.” (Lamb, 1984:ix)[2]

 

 

Global Factors Influencing Business Strategy

Larger Map

 

 

See also

 

External links

 

Activity

Business Ethics and Management

Tutorials

 

Readings

What are business ethics?

Ethics are moral guidelines which govern good behaviour.

So behaving ethically is doing what is morally right.

Behaving ethically in business is widely regarded as good business practice.  To provide you with a couple of quotes:

Ethical principles and standards in business:

 

An important distinction to remember is that behaving ethically is not quite the same thing as behaving lawfully:

 

An ethical decision is one that is both legal and meets the shared ethical standards of the community

Read More ...

 

Stakeholder Theory

 

The stakeholder theory is a theory of organizational management and business ethics that addresses morals and values in managing an organization.[1] It was originally detailed by R. Edward Freeman in the book Strategic Management: A Stakeholder Approach, and identifies and models the groups which are stakeholders of a corporation, and both describes and recommends methods by which management can give due regard to the interests of those groups. In short, it attempts to address the "Principle of Who or What Really Counts."[2]

 

See also

 

External links

 

 

Business ethics (also corporate ethics) is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations.

Business ethics has both normative and descriptive dimensions. As a corporate practice and a career specialization, the field is primarily normative. Academics attempting to understand business behavior employ descriptive methods. The range and quantity of business ethical issues reflects the interaction of profit-maximizing behavior with non-economic concerns. Interest in business ethics accelerated dramatically during the 1980s and 1990s, both within major corporations and within academia. For example, today most major corporations promote their commitment to non-economic values under headings such as ethics codes and social responsibility charters. Adam Smith said, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."[1] Governments use laws and regulations to point business behavior in what they perceive to be beneficial directions. Ethics implicitly regulates areas and details of behavior that lie beyond governmental control.[2] The emergence of large corporations with limited relationships and sensitivity to the communities in which they operate accelerated the development of formal ethics regimes.[3]

 

External Influences

Larger Map

 

See also

 

External links

 

 

External Influences 2

Larger Map

Activities

 

External Stakeholder Issues

Tutorials

 

Readings

 

External Influences - Legal and Political

Larger Map

 

Corporate governance is "the system by which companies (sic) are directed and controlled" (Cadbury Committee, 1992). It involves a set of relationships between a corporation's stakeholders. The potential for conflict of interests between stakeholders can be prevented or mitigated by the processes, customs, policies, laws, and institutions that influence the way a corporation is controlled.[1][2] An important theme of discussions concerning corporate governance is the nature and extent of accountability of decision makers inside the corporation, and mechanisms that try to decrease the principal–agent problem.[3]

 

Internal & External Stakeholder Involvement

Internal or External Stakeholders

 

Corporate governance includes the relationships among the many stakeholders involved and the goals for which the corporation is governed.[4][5] In contemporary business corporations, the main external stakeholder groups are shareholders, debtholders, trade creditors, suppliers, customers and communities affected by the corporation's activities. Internal stakeholders are the board of directors, executives, and other employees. A sustained thread of discussion regarding good governance is the need for corporations to be directed in a responsible and transparent manner in the best interest of the corporation. For profit-oriented corporations with external shareholders, ensuring good governance is intended to increase the confidence of shareholders and capital-market investors.

A related discussion thread focuses on the impact of corporate governance systems on economic efficiency, with a strong emphasis on shareholders' welfare; this aspect is particularly present in contemporary public debates and developments in regulatory policy (see regulation and policy regulation).[6]

There has been renewed interest in the corporate governance practices of modern corporations since 2001, particularly due to the high-profile collapses of a number of large corporations, most of which involved accounting fraud. Corporate scandals of various forms have maintained public and political interest in the regulation of corporate governance. In the U.S., these include Enron Corporation and MCI Inc. (formerly WorldCom). Their demise is associated with the U.S. federal government passing the Sarbanes-Oxley Act in 2002, intending to restore public confidence in corporate governance. Comparable failures in Australia (HIH, One.Tel) are associated with the eventual passage of the CLERP 9 reforms. Similar corporate failures in other countries stimulated increased regulatory interest (e.g., Parmalat in Italy).

 

See also

 

External links

 

Pressure Groups

Larger Map

 

 

 

 

Activities

 

 

 

Orange Juice

Image: Is this glass of orange juice really all that it seems?
How do you know it hasn't had sugars or water added?
Copyright: Adam Ciesielski, stock.xchng

 

Internal Stakeholder Issues

Tutorials

 

Readings

Introduction to stakeholders

Let’s start with a definition of stakeholders, which are:

Groups / individuals that are affected by and/or have an interest in the operations and objectives of the business

Most businesses have a variety of stakeholder groups which can be broadly categorised as follows:

 

Introduction to stakeholders



Stakeholder groups vary both in terms of their interest in the business activities and also their power to influence business decisions.  Here is a useful summary:

Stakeholder

Main Interests

Power and influence

Shareholders

Profit growth, Share price growth, dividends

Election of directors

Banks & other Lenders

Interest and principal to be repaid, maintain credit rating

Can enforce loan covenants
Can withdraw banking facilities

Directors and managers

Salary ,share options, job satisfaction, status

Make decisions, have detailed information

Employees

Salaries & wages, job security, job satisfaction & motivation

Staff turnover, industrial action, service quality

Suppliers

Long term contracts, prompt payment, growth of purchasing

Pricing, quality, product availability

Customers

Reliable quality, value for money, product availability, customer service

Revenue / repeat business
Word of mouth recommendation

Community

Environment, local jobs, local impact

Indirect via local planning and opinion leaders

Government

Operate legally, tax receipts, jobs

Regulation, subsidies, taxation, planning

 

Read More ...

 

An Introduction to Stakeholder Management

 

The importance of stakeholder management is to support an organization in achieving its strategic objectives by interpreting and influencing both the external and internal environments and by creating positive relationships with stakeholders through the appropriate management of their expectations and agreed objectives. Stakeholder Management is a process and control that must be planned and guided by underlying Principles.

Stakeholder management, within business or projects, prepares a strategy utilising information (or intelligence) gathered during the following common processes:

Stakeholder identification - Interested parties either internal or external to organisation/project. A stakeholder map is helpful for identifying the stakeholders.[1]

Stakeholder analysis - Recognise and acknowledge stakeholder's needs, concerns, wants, authority, common relationships, interfaces and align this information within the Stakeholder Matrix.

Stakeholder matrix - Positioning stakeholders according to the level of influence, impact or enhancement they may provide to the business or its projects.

Stakeholder engagement - Different to Stakeholder Management in that the engagement does not seek to develop the project/business requirements, solution or problem creation, or establishing roles and responsibilities. It is primarily focused at getting to know and understand each other, at the Executive level. Engagement is the opportunity to discuss and agree expectations of communication and, primarily, agree a set of Values and Principles that all stakeholders will abide by.

Communicating information - Expectations are established and agreed for the manner in which communications are managed between stakeholders - who receives communications, when, how and to what level of detail. Protocols may be established including security and confidentiality classifications.)

Stakeholder agreements is a collection of agreed decisions between stakeholders. This may be the lexicon of an organisation or project, or the Values of an initiative, the objectives, or the model of the organisation, etc. These should be signed by key stakeholder representatives.

Contemporary or modern business and project practice favours transparent, honest and open stakeholder management processes.

 

Problem solving is a mental process which is the concluding part of the larger problem process that includes problem finding and problem shaping where problem is defined as a state of desire for the reaching of a definite goal from a present condition that either is not directly moving toward the goal, is far from it or needs more complex logic for finding a missing description of conditions or steps toward the goal [1]. Considered the most complex of all intellectual functions, problem solving has been defined as a higher-order cognitive process that requires the modulation and control of more routine or fundamental skills.[2] Problem solving has two major domains: mathematical problem solving and personal problem solving where, in the second, some difficulty or barrier is encountered.[3] Further problem solving occurs when moving from a given state to a desired goal state is needed for either living organisms or an artificial intelligence system.

While problem solving accompanies the very beginning of human evolution and especially the history of mathematics,[3] the nature of human problem solving processes and methods has been studied by psychologists over the past hundred years. Methods of studying problem solving include introspection, behaviorism, simulation, computer modeling and experiment.

 

 

See also

 

External links

Computer skills for information problem-solving: Learning and teaching technology in context

Problem solving - Elementary level

Substepr - A collaboration tool for problem-solving

 Managing issues in future

 

 

Recommended Readings

 

 

Business and Society - Ethics and Stakeholder Management

Business and Society - Ethics and Stakeholder Management
(with InfoTrac)
6th Edition
Archie B. Carroll - University of Georgia
Ann K. Buchholtz - University of Georgia
0324225814

Check the availability and buy your books from our Bookshop.

 

 

Resources