ETHICAL VIEW OF A

COMPANY ACCORDING
STAKEHOLDER THEORY

PHI4 01 (BUSI NESS ETHICS)

GRO UP-5
INTRODUCTION

Business ethics is a study of right or wrong of business situation, activities and decisions.

• Morality: Concerned with norms, values and beliefs of social processes, define right and wrong

• Ethics: Concerned with the study of Morality

• Ethical theory: the rules of principle of ethics

STAKEHOLDER

• A stakeholder is either an individual, group or organization who is impacted by

the outcome of a corporation.
• Some examples of key stakeholders are creditors, directors, employees,
government, owners, unions, and the community from which the business
draws its resources.
STAKEHOLDER THEORY OF THE
CORPORATION
Stakeholder theory: Interconnected relationship between a business and its
customer, suppliers, employees, communities, investors and others who have a
stake in the organization.

• principle of corporate right

• Principle of effect
WHY STAKEHOLDER MATTER

Freeman says-“all stakeholder have a legitimate claim on the corporation”.

• Legal perspective: Stake in corporation has already protected legally in some way.
(legally binding contract)

• Economical perspective: externalities of the corporation, agency problem(short term owner

VS long term owner)
A NEW ROLE OF MANAGEMENT:

• Shareholder democracy

• Corporate governance
INTERNAL STAKEHOLDERS

• Owners as stakeholders

• Managers as stakeholders

• Employees as Stakeholders
EXTERNAL STAKEHOLDERS

• Consumers as Stakeholders

• Suppliers as Stakeholders

• Competitors as Stakeholders

• Local community as stakeholders

DIFFERENT FORM OF STAKEHOLDER THEORY

• Descriptive Approach

• Instrumental Approach

• Normative Approach
ETHICAL ISSUES IN THE FIRM-
EMPLOYEE RELATION
• healthy working condition
• right to freedom from discrimination
• right to privacy
• to participation and association
• to fair wages
• to freedom of conscience and speech
• to work
ETHICAL ISSUES IN THE FIRM-
EMPLOYEE RELATION
DUTIES OF EMPLOYEES
• respecting the employer’s property
• complying with labor contract and with the law
ETHICAL ISSUES IN THE FIRM-
EMPLOYEE RELATION
• Migrant labor are often encountered with questionable social phenomena.
• Corporate citizen and employee relation: ‘co-determination’ describes
relationship between employees and shareholders.
• The regional differences make it difficult to determine their scope and
responsibility for protecting the rights of employee.
• John Ruggie- “protect, respect, remedy”
ETHICAL ISSUES IN THE FIRM-
EMPLOYEE RELATION
• Protect. Under international law, states have a duty to prevent abuses.
• Respect. Corporations have a duty to respect human rights.
• Remedy. It is general duty of state and corporation to create system to
remedy abuses.
TOWARDS SUSTAINABLE
EMPLOYMENT
• Re-humanized workplaces: the industrialized system brought humongous
efficiencies but created a dehumanized and deskilled workplace.
• Wilder employment: large number of unemployed people becomes a norm
for mechanization
• Green jobs: ‘Green jobs’ are making environment friendly products and
making the workplace and organization of labour more environmentally
sustainable. For example, hybrid car, paperless office etc.
Challenges in Providing the Stakeholders
Ethical Treatment:
Recommendations for Ensuring Fair Treatment
for Stakeholders
CONCLUSION

• Stakeholders holds the ability to affect the project largely. So the company
should co-operate them properly.
• If a company does not treat the stakeholders carefully, the stakeholders
may leave being unsatisfied.
• Indeed, the companies should try to satisfy stakeholders with new
strategies.