Stakeholder Analysis Paper

“I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. … corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed.“

— U.S. President Abraham Lincoln, Nov. 21, 1864 (letter to Col. William F. Elkins)

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Corporations, Society, & Stakeholders
I Societal Spheres of Influence

II Does business have a social responsibility?
stockholder model
social responsibility model
stakeholder model

Spheres of Influence

Well-Functioning Society

Economic
Political
Social
Ecological

Economic Political Civil Society
Make a Profit Serve the Public Build Strong Community

Nature (Ecology)
Subsist and Succeed

Bottom Lines in Spheres

Influence Among the Spheres
Business
Civil Society
Government
Lobbying
Regulations
&
Persuasion
Advertising
Public Relations
Political Process
Voting
Contributions
Consumption
Choices
Legal System
Public Service Provision

Economic Political Civil Society
Economizing Power Aggrandizing Relationship
Efficiency Collectivity Care
Self-reliance Equality Connectedness
Growth Power system Community
System integrity equilibrium Civility

Nature (Ecology)
Ecologizing
Linkage
Diversity
Homeostatic succession

Positive Values in Spheres

Economic Political Civil Society
Economizing Power Aggrandizing Relationship
Greed Hierarchy Power Struggles
Materialism Fascism Disorganization
Inequality Oligarchy Groupthink/Cultism
Exploitation Physical Force Isolation

Nature (Ecology)
Ecologizing
Eco-terrorism
Radical Ecology

Dark-Side Values in Spheres

Government Sphere

Common good
public interest–in the interest of society
Public Goods
shared, generally indivisible, external benefits accruing to all citizens from actions by others
Externalities
shared, indivisible, costs that accrue from deleterious actions of others

Civil Society Sphere: Bowling Alone?
Symptoms
fewer people vote or become actively involved in public life
fewer people take part in public meetings
less attendance at political events, less political participation
less religious affiliation, union membership, parent teacher association, volunteering

Factors of Influence
pressure of time and money
changing role of women
technology

Spheres of Influence

Current Society?

Public

Private

Economic
Political
Social
Ecological

According to the individuals interviewed in “The Corporation,” the problem is with corporations themselves, not necessarily with the people who run them. What evidence does the film use to make this point? Do you agree or disagree?

How is a corporation like or unlike a person? How does the status of the corporation as a legally recognized “person” correspond with other attempts to answer this question? How does the notion of “externalities” relate to the ethical status of the corporation as a “person”? If they are persons, could they be diagnosed as psychopaths?

Does business have a social responsibility?
Stockholder Model: NO

Corporate Social Responsibility Model: YES

Stakeholder Model: YES, but…

BUSINESS
Stockholder Model of Business

(Classical Economic Model)
Sole purpose of business
is to make a profit

Stockholder Model
the responsibility of business is to maximize the financial interests of its owners
a corporation is a piece of private property
based on the Classical Economic Model:
Adam Smith’s invisible hand (the marketplace will take care of society)
perpetuated by Milton Friedman:

“management should make as much money
as possible while conforming to the basic
rules of society, both those embodied in law
and those embodied in ethical custom”

BUSINESS
Stockholder Model of Business

(Neoclassical Economic Model)
Business should make a profit while:
Honoring the moral minimum
Respecting individual rights and justice

r > g
leads to
wealth
concentration

“Business has become, in the last half century, the most powerful institution on the planet. The dominant institution in any society needs to take responsibility for the whole. . . . Every decision that is made, every action that is taken, must be viewed in light of that kind of responsibility.”
– Dr. Tom Donaldson

Corporate Social Responsibility Model of Business

Discretionary
Responsibility
Ethical Responsibility
Legal Responsibility
Economic Responsibility

CSR Perspective
A corporation should be held accountable for any of its actions that affect people, their communities, and their environment.
Harm to people and society should be acknowledged and corrected.
Means that a company may be required to forgo some profits if its social impacts seriously hurt some stakeholders or if its funds can be used to have a positive social impact.
History of the concept:

Philanthropy/Charity  Paternalism  Employee Welfare  Corporate Stewardship  Corporate Social Responsiveness  Corporate Social Performance Corporate Citizenship  Sustainability  Creating Shared Value

FOR CSR AGAINST CSR

Rise of the modern corporation has created many social problems. Therefore, corporations should assume responsibility for these problems. Taking on social issues is not economically feasible. Corporations should focus on earning profits for shareholders.

In the long run, it is in corporations’ best interest to assume social responsibilities. It will reduce the chances of increased governmental regulation. Assuming social responsibilities places those corporations doing so at a competitive disadvantage relative to those who do not.

Large corporations have huge reserves of human and financial capital. They should devote at least some of their resources to addressing social issues. Those who are most capable should address social issues. Those in the corporate world are not equipped to deal with social problems.

Stakeholder Model of Business

BUSINESS

Stakeholder Model
the responsibility of business is to promote and protect the rights of its various internal and external stakeholders
stake – an interest, right, or ownership in an undertaking
primary stakeholders – those with a formal, official, or contractual relationship with the firm
secondary stakeholders – those without a formal relationship, but who interact with or influence the firm
challenge is to ensure that the firm’s primary stakeholders achieve their objectives and that other stakeholders are satisfied and dealt with in an ethical manner

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different stakeholders make different demands on business
employees want stable employment & fair pay
owners want satisfactory ROI and stock appreciation over time
customers want value & quality for dollar spent
suppliers want regular s for goods & prompt pay
competitors want to gain market share and see industry grow
community wants to employ local residents, develop land, and protect environment
media wants to keep public informed about health & well-being
social activists want to monitor company actions and ensure that they comply with ethical and legal standards
government wants to raise revenue through taxes and promote economic development
general public wants to protect societal values and minimize risks, achieve prosperity

reciprocal duties exist among business’s stakeholders (if business is to act responsibly, consumers have an obligation to make consumption choices based on social responsibility, and employees must make career choices in a responsible fashion) – arrows in BOTH directions

Creating Shared Value

http://craneandmatten.blogspot.ca/2014/03/four-big-problems-with-creating-shared.html
CSV = CSR Stakeholder Model

Reciprocal Stakeholder Model of Business

BUSINESS

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different stakeholders make different demands on business
employees want stable employment & fair pay
owners want satisfactory ROI and stock appreciation over time
customers want value & quality for dollar spent
suppliers want regular s for goods & prompt pay
competitors want to gain market share and see industry grow
community wants to employ local residents, develop land, and protect environment
media wants to keep public informed about health & well-being
social activists want to monitor company actions and ensure that they comply with ethical and legal standards
government wants to raise revenue through taxes and promote economic development
general public wants to protect societal values and minimize risks, achieve prosperity

reciprocal duties exist among business’s stakeholders (if business is to act responsibly, consumers have an obligation to make consumption choices based on social responsibility, and employees must make career choices in a responsible fashion) – arrows in BOTH directions