© 2015 Cengage Learning Chapter The Stakeholder Approach to Business, Society, and Ethics © 2015 Cengage Learning 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 © 2015 Cengage Learning 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 © 2015 Cengage Learning Chapter Outline (2 of 2) • • • • • Principles of Stakeholder Management Strategic Steps Toward Global Stakeholder Management Summary Key Terms Discussion Questions © 2015 Cengage Learning 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 © 2015 Cengage Learning 66 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 © 2015 Cengage Learning Who are Business’s Stakeholders? Stockholders Customers Employees Community Competitors Business Stakeholder Groups Special-Interest Groups Suppliers Society Media General Public © 2015 Cengage Learning 88 Three Views of the Firm © 2015 Cengage Learning Production and Managerial Views of the Firm (fig 3-2 slightly different) © 2015 Cengage Learning 10 What Opportunities and Challenges Stakeholders Present? © 2015 Cengage Learning 23 What Responsibilities Does a Firm Have to its Stakeholders? Apply Corporate Social Responsibility •Responsibilities are • Economic • Legal • Ethical • Philanthropic © 2015 Cengage Learning 24 The Stakeholder Responsibility Matrix © 2015 Cengage Learning 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? © 2015 Cengage Learning 26 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 © 2015 Cengage Learning 27 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 © 2015 Cengage Learning 28 Developing a Stakeholder Culture Stakeholder Culture embraces the believes, values and practices that organizations have developed for addressing stakeholder issues and relationships Agency Corporate egoist Instrumentalist Little concern for stakeholders Moralist Altruist Great concern for stakeholders © 2015 Cengage Learning 29 Stakeholder Management Capability 3-Transactional level 2-Process Level 1-Rational Level © 2015 Cengage Learning 30 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 decisionmaking 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 © 2015 Cengage Learning 31 The Stakeholder Corporation The central element: Stakeholder inclusiveness In the future, development of loyal relationships with customers, employees, shareholders, and other stakeholders will become one of the most important determinants of success © 2015 Cengage Learning 32 The “Clarkson Principles” of Stakeholder Management © 2015 Cengage Learning 33 Strategic Steps Toward Global Stakeholder Management © 2015 Cengage Learning 34 Implementation Indicators of successful stakeholder management include: © 2015 Cengage Learning 35 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 © 2015 Cengage Learning 36 Key Terms (2 of 2) • • • • • • • • • • • • • • • • • • • rational level secondary social stakeholders stake stakeholder 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 © 2015 Cengage Learning 37 [...]... Learning 32 The “Clarkson Principles” of Stakeholder Management © 2015 Cengage Learning 33 Strategic Steps Toward Global Stakeholder Management © 2015 Cengage Learning 34 Implementation Indicators of successful stakeholder management include: © 2015 Cengage Learning 35 Key Terms (1 of 2) • • • • • • • • • • • • • • • • • Clarkson principles descriptive value (of stakeholder model) instrumental value (of stakeholder. .. • • • Stakeholder culture Stakeholder management capability Stakeholder corporation model Principles of stakeholder management © 2015 Cengage Learning 28 Developing a Stakeholder Culture Stakeholder Culture embraces the believes, values and practices that organizations have developed for addressing stakeholder issues and relationships Agency Corporate egoist Instrumentalist Little concern for stakeholders... 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 © 2015 Cengage Learning 36 ... Learning 17 Three Values of the Stakeholder Model © 2015 Cengage Learning 18 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.. .Stakeholder View of the Firm © 2015 Cengage Learning 11 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 © 2015 Cengage Learning 12 Social Stakeholders Primary social stakeholders Secondary social stakeholders Shareholders and investors... Cengage Learning 15 Stakeholder Typology © 2015 Cengage Learning 16 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... stakeholders Moralist Altruist Great concern for stakeholders © 2015 Cengage Learning 29 Stakeholder Management Capability 3- Transactional level 2-Process Level 1-Rational Level © 2015 Cengage Learning 30 Stakeholder Engagement • • • • • An approach by which companies successfully implement the transactional level of strategic management capability Interaction with stakeholders must be integrated into every... 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 © 2015 Cengage Learning 31 The Stakeholder Corporation The central element: Stakeholder inclusiveness In the future, development of loyal relationships with customers, employees, shareholders, and other stakeholders... 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 © 2015 Cengage Learning 13 Nonsocial Stakeholders Primary nonsocial stakeholders Secondary nonsocial stakeholders Natural environment Environmental interest groups... Nonsupportive Stakeholder • High potential for threat, low for cooperation 4 The Mixed-Blessing Stakeholder • High on potential for threat & cooperation © 2015 Cengage Learning 27 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 .. .Chapter The Stakeholder Approach to Business, Society, and Ethics © 2015 Cengage Learning Learning Outcomes Define stake and stakeholder, and describe the origins of... 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. .. essence of stakeholder management Identify the three levels of stakeholder management capability (SMC) Describe the key principles of stakeholder management © 2015 Cengage Learning Chapter Outline