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A basic introduction to the topic
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Stakeholder TheoryA very brief overviewDr. Randy Richards, Ph.D.St. Ambrose University
Development
Descriptive As a strategy As an ethical approach
Who are the stakeholders?
Shareholders/ownersEmployeesSuppliersCustomers“Community”
In whose interest should a corporation be managed?
Traditional answerThe stake holder alternative answerWho are the stakeholders?What are the stakes and expectations of each?
In whose interest:The Traditional Answer
The shareholders/owners Managers have a fiduciary relationship to the owners to look after their interests
Legal constraints on this duty Problems with this understanding of single view of responsibility
A shareholder mission statement
From Coca-Cola: We exist to create value for our share owners
on a long term basis by building a business that enhances the Coca-Cola company’s trademark. This is also our ultimate commitment.
Discussion
In whose interest: the stake holder alternative
Stockholders are one group among many.Stakeholders are those groups that have a “stake in” or claim on the resources / activities of the company.Each has a right to be treated as a end itself not just means for enrichment of the stockholders.
A stakeholder mission statement
Cadbury Schweppes Our task is to build upon our tradition
of quality and value and to provide brands, products, financial results and management performance that meet the interest of our shareholders.
Discussion
Resource Base Stakeholders
InvestorsEmployeesCustomers
Owners / Shareholders
Their stake: stocks, bonds, equity, etc.
Their expectation: some ROI
Stakes and expectations:Employees
Their stake: jobs, livelihood, career, human capital investments
Their expectation: decent wages, security, benefits and meaningful work
Stakes and expectations:Customers
Their stake: need for / purchases of products and services
Their expectations: honesty, quality goods, fair pricing
Stakes and expectations:Suppliers
Their stake: income from goods and services
Their expectation: fairness, mutual prosperity,
honesty
Stakes and expectations:the community
Their stake: the environment, taxes, payroll, infrastructure improvements
Their expectations: good citizenship, open partnership
How to decide in cases of conflicting interests?
The traditional answer simple
The stakeholder model much more difficult
The web of stakeholder relationships
Can you serve the long term interests of the shareholders without paying attention to the others? The interconnectedness of wealth creation Long term relationships are source of wealth not individual transactionsThe key to organizational long term viability is manage the entire web of interconnected stakeholder relationships for everyone’s mutual benefit as much as possible.