Stakeholder Theory • Goal : to maintain the benefits of the free market while minimizing the potential ethical problems created by capitalism (Phillips, Wharton School) • Primary difference from Classical Theory: elevation of nonshareholding interests to the level of shareholder interests in formulating business strategy and policy.
Stakeholder Theory • Stakeholder : an individual or group, inside or outside the organization, who has a meaningful stake in its performance. • Who are the stakeholders of a business? • Narrow view vs. Wide View
Stakeholder Theory • Some Possible Stakeholders of a Business: – Customers – Department/Employees – Owners/Shareholders – Creditors – Suppliers – Distributors – Competitors
Stakeholder Theory • Some Additional Possible Stakeholders: – Local Community – National Citizens – Global Inhabitants – Non-Human Life – the Environment
Stakeholder Theory • Corporate citizenship: the extent to which a business meets its responsibilities, to its various stakeholders, or to society at large.
Stakeholder Theory • Problems with wider view? – Discourages Investment - Undermines/Dilutes shareholder property rights – Interest Group Politics - Leads to waste and inefficiency
Corporate Social Responsibility Theory • Definition: A voluntary assumption of responsibilities, beyond the legal and economic, that take into account moral/ethical/socially desirable goals and outcomes. • Concept originated in the 1950’s and began to gain a significant following in the 1960”s.
Corporate Social Responsibility Theory • Possible Examples • Merck: moved to develop Mectizan, a drug that would treat river blindness, a disease that primarily affected the poor. Merck knew that it would cost millions to develop and that they would most likely not realize a direct profit from the effort. But this resulted in a public relations windfall!
Corporate Social Responsibility Theory • Merck’s project was followed by: • Pfizer: initiated a project to eliminate the eye disease trachoma.
Corporate Social Responsibility Theory • SmithKline Beecham (Now Glaxo SmithKline): developed a drug to eliminate lymphatic filariasis. • GlaxoSmithKline has also announced that it intends to launch a new drug to tackle a virulent form of Malaria in sub- Saharan Africa. The company announced that Lapdap will be made available at a cost of $0.29 per adult and half that amount for children, and will treat plasmodium falciparum malaria, the most life-threatening malaria parasite, which kills between one and two million people every year.
Corporate Social Responsibility Theory • Proctor & Gamble: developed a special nutrient product to address malnutrition.
Corporate Social Responsibility Theory • BP: gave solar powered refrigerators to doctors in Zambia to store malaria vaccines.
Corporate Social Responsibility Theory • UPS: was a key actor in delivering humanitarian aid to Kosovo.
Corporate Social Responsibility Theory • Intel: provides education in science & math in countries where it has plants.
Corporate Social Responsibility Theory • Citigroup: has provided significant funds to microcredit ventures.
- Summer '16
- DWI MARTANI
- Business, Ethics, moral principles, Responsibility Theory