SSG_Chapter3 - Since the 1960s it has become commonplace in...

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Business Ethics, Canadian Edition © Oxford University Press Canada, 2013 Since the 1960s, it has become commonplace in the business community and beyond to use the term “stakeholder” in discussions of corporate social responsibility. Stakeholder analysis reflects the view, held by many, that corporations have obligations to a variety of constituencies other than just shareholders. There is, however, much disagreement concerning what this means in practice, and this chapter explores some of the problems and misconceptions surrounding stakeholder analysis. One central problem is defining who counts and what it means to be a stakeholder. According to Edward Freeman’s formulation, “a stakeholder is any group or individual who can affect, or is a f- fected by, the achieve ment of a corporation’s purpose . But why should those affected by corporate actions have a say in corporate decision making, and why should corporations strive to balance the claims of various stakeholders ? This question is especially pertinent given Milton Friedman’s conte n- tion that, because shareholders directly invest in a corporation as a risk and thus have much to lose in cases of corporate failure, a company “not only need not but should not ” have an interest in any co n- stituencies other than shareholders. If Friedman is right, attempting to balance the interests and claims of various stakeholders not only puts at risk the investment of those who own the company and whose capital is essential to any business success, it is also a form of shareholder theft and so unethical. However, as stakeholder theorists are quick to retort, privileging financer rights in this way
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Business Ethics, Canadian Edition © Oxford University Press Canada, 2013 runs the risk of treating other stakeholders as a means to the interests of shareholders and this is equally problematic given the significant stake certain stakeholders have in corporate decision- making. And so the debate goes on. Despite these problems there are virtues in the use of the term stakeholder and these are dis- cussed next. One virtue is reminding corporate decision-makers and others with vested interests in business that business operates on behalf of society, that many groups and individuals have a stake in business, and that the market is not the solution to all of societ y’s problems. Accordingly, a varie- ty of cases and examples are examined with a view to illustrating ways in which different stakeholder groups are vulnerable to corporate decisions. This is followed by a discussion of occupational health and safety, and random testing of employees. The testing of employees for drugs and alcohol poses an interesting question: should employees be subjected to random drug testing to ensure that mini- mum safety measures are being met, or does such testing invade an employee’s privacy and thereby run the risk of other harmful consequences. As is often the case in ethical matters, solutions are not easy. The chapter ends with the themes of corporate surveillance and consumer protection and
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