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STAKEHOLDER THEORY AND CORPORATE SOCIAL PERFORMANCE

A Stakeholder framework for analyzing and evaluating corporate social


performance
In business society, there is never defined the exact definition of corporate social performance
due to changing the society behavior dynamics. In this article we shall discuss the three
principals which are,

A summary of the model, methodology.


Distinguish relationship between stakeholder issues and society issues.
Appropriate level of analyze and evaluate the level of Corporate social performance.

Three studies were conducted 1983 to 1993 to reach the right approach of CSP which are;

1983 to 1985
1986 to 1988
1989 to 1993

Research conducted in 1983 to 1985:


Before this Preston gave the concept of CSP in 1977 which is also called Prestons Matrix which was
1.
2.
3.
4.
5.

Awareness or recognition of an issue


Analyzing and planning
Response in terms of policy development
Implementation
The main points which were discussed in 1983 which were the corporation issues which were
Absenteeism, Communication with employees and, training and development, career planning,

retirement and termination counseling, stress and mental health, health and safety etc
6. The assumption were made that these are also social issues.
7. The next assumption was made that corporation and manager should be concerned about these
social issues.
8. The next assumption was how the corporation should behave and how to evaluate their
performance.

Research conducted in 1986 to 1988:


Carols model was advance as compared to Prestons model which were

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STAKEHOLDER THEORY AND CORPORATE SOCIAL PERFORMANCE

Reconcile the achievements of both corporate social and economic objectives.


To evaluate the CSR1 with CSR2.
Focus of the most important element of CSP.

This model was much defined and comprehensive because they defined CSR1 in term of principles or
category and CSR2 in term of process and strategies towards both social responsibility and
responsiveness.
The heading of the social responsibility in the Wartick and Cochran models defined as

Economic
Legal
Ethical
discretionary

By checking or collecting data about environmental or safety problems from the different govt.
departments, unions and municipalities , one thin was cleared that all the organization were fulfilling the
legal responsibilities.
Ethical issues were more difficult to test and define. There is no well-defined concept of ethical issues.
Companies were aware of social responsibilities but difficult to tell the researchers or maybe it was just
for window dressing. Many companies were really defensive to protect the premises and companies from
the employees.
It was also very difficult to define discretionary responsibilities except in term of the extent of
philanthropic activities and the nature of its involvement in the communities is to just do its business.

The process of social responsiveness:


The process of social responsiveness was defined by both models in terms of corporate strategy or
postures towards social issues. Carroll identifies these issued as reactive, defensive, accommodative and
proactive. Wartick and Cochran also used the same methods and defined that every organization has itself
a process of social responsiveness but actually indeed it does not a process.
The methodology was developed included in the following descriptions of the data to be gathered an
organizations statement of mission or purpose, its code of conduct regarding ethics, process of managing
issues, the integration of social issues into policy and planning etc.

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STAKEHOLDER THEORY AND CORPORATE SOCIAL PERFORMANCE

There was no satisfied answer of the management and other employee to leads the definition of social
responsiveness.

Framework is developed:
Data collected from more from more than 50 companies and all the tools and methods were failed to
specify the tem of CSR1 and CSR2 because more companies leads most difficult challenge.

Research design and data collection:


MBAs students of university of Toronto conducted research which was based on written and to the point.
It was essential for such a framework and guide to be expressed in terms that would be understood in a
corporation as well as in the classroom.

Discussion of conclusion from the research:

It is necessary to distinguish between stakeholder issue and social issues because managers and

corporation manage relationship with stakeholder not with society.


It is necessarily to conduct analysis at the appropriate level: institutional, organization as well as

individual.
Then it is possible to evaluate the response of social performance of a corporation and the
performance of the mangers in meaning of the corporation responsibilities.

Difference between Stakeholder and Stakeholder group:

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STAKEHOLDER THEORY AND CORPORATE SOCIAL PERFORMANCE

Different researcher presented different theories about stakeholder and stakeholder groups like Preston
established that stakeholders can be;

Customers
Shareholder
General public
Employees

After sometime a new researcher included public and managers in stakeholders group but the scientific
definition of stakeholders is
Stakeholders are people or group of people who can claims, ownership, right or interest in a corporation
and its activities past, present and future.
There are two types of stakeholder

Primary stakeholders
Secondary stakeholder

Primary stakeholders:
An individual without support, it would be difficult for the organization to continue its operation which
includes

Suppliers
Customer
Shareholders
Employees
Management

Secondary Stakeholders:
Secondary stakeholder can be defined as those individuals who affect or influenced or it can be
influenced and affected by the corporation.

Media group
Pressure group
General public

Proposition and issues for stakeholders:


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STAKEHOLDER THEORY AND CORPORATE SOCIAL PERFORMANCE

The corporation is the system of primary stakeholder group


To continue the operation which includes economic and social purposes, to meet the primary

stakeholder continues as part of primary stakeholder.


Failure of retain the participants of primary stakeholder leads to failure of the corporation.

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