Ethical Decision Making for Business

8e Fraedrich/ Ferrell/Ferrell

C HAPTER 2 CHAPTER 2

Stakeholder Relationships, Social Responsibility, and Corporate Governance

Chapter Objectives
To identify stakeholders roles in business ethics To define social responsibility To examine the relationship between stakeholder orientation and social responsibility To delineate a stakeholder orientation in creating corporate social responsibility To explore the role of corporate governance in structuring ethics and social responsibility in business To list the steps involved in implementing a stakeholder perspective in social responsibility and business ethics

Chapter Outline
Stakeholders Define Ethical Issues in Business Social Responsibility and the Importance of a Stakeholder Orientation Social Responsibility and Ethics Corporate Governance Provides Formalized Responsibility to Stakeholders Implementing a Stakeholder Perspective

Relationships and Business

Building relationships is one of most important areas in business today Stakeholder framework Helps identify internal and external stakeholders Helps monitor and respond to needs, values, and expectations of stakeholder groups

What Is a Stakeholder?
Customers Investors Employees Suppliers Government agencies Communities

Primary vs. Secondary Stakeholders

Primary stakeholders: Those whose continued association is necessary for a firms survival
Secondary stakeholders: Are not essential to a companys survival

Social Responsibility and Ethics

Social responsibility can be viewed as a contract with society Economic Legal Ethical Philanthropic
Business ethics involves carefully thought-out rules (heuristics) of conduct that guide decision making

Corporate Governance
Accountability
Oversight

Control
Shareholder model

Stakeholder model

Implementing a Stakeholder Perspective

1. 2. 3. 4. Assessing the corporate culture Identifying stakeholder groups Identifying stakeholder issues Assessing organizational commitment to social responsibility 5. Identifying resources and determining urgency 6. Gaining stakeholder feedback