Learning Activity 33 Discussion Forum Stakeholder Theory

Learning Activity 33 Discussion Forum Stakeholder Theorycollapsele

Learning Activity 3.3: Discussion Forum – Stakeholder Theory Watch the following video Corporateethics. (2009). What is Stakeholder Theory . YouTube. Retrieved from Once you have watched this video please reflect on the following questions: Why should managers pay attention to stakeholders and how can managers prioritise among stakeholders? What do stakeholders want? Are ethics in business different from everyday ethics? If so, how and why? Post your answers on the Discussion Forum and discuss further with your peers.

Paper For Above instruction

Introduction

Stakeholder theory has emerged as a fundamental framework in modern business ethics, emphasizing the importance of considering the interests of all parties affected by corporate actions. Managers are increasingly urged to pay attention to stakeholders beyond shareholders, recognizing that long-term success depends on managing a diverse array of relationships. This essay explores why managers should prioritize stakeholders, how to do so effectively, what stakeholders generally seek, and whether business ethics differ from everyday ethics.

The Importance of Stakeholders in Management

Managers should pay attention to stakeholders because their interests directly influence the company's reputation, operational stability, and financial success. Stakeholders include employees, customers, suppliers, communities, and shareholders, among others. Ignoring these groups can lead to conflicts, legal issues, and damage to the company’s reputation, ultimately jeopardizing its sustainability. Freeman (1984) argued that organizations have responsibilities to all stakeholders, and managing these relationships fosters trust and mutual benefit, which are crucial for long-term profitability.

Furthermore, stakeholder engagement can lead to innovative ideas, better risk management, and more sustainable practices. For example, employee engagement results in increased productivity and loyalty, while customer satisfaction can lead to brand loyalty and competitive advantage. Consequently, effective stakeholder management aligns business objectives with societal expectations, creating shared value (Porter & Kramer, 2011).

Prioritizing Stakeholders

Prioritizing stakeholders requires understanding their relative influence, urgency, and the potential impact of corporate decisions. Not all stakeholders hold equal power; some wield more influence over the company's success. Managers can use tools like stakeholder mapping or analysis matrices to identify key stakeholders who possess the power to affect organizational outcomes, or who are most affected by company actions.

Balancing conflicting stakeholder interests is a critical challenge. For instance, shareholders seek financial returns, while communities are concerned with environmental impacts. Managers must employ ethical judgment and strategic decision-making to reconcile these differences, often with a focus on sustainability and corporate social responsibility (CSR). Ethical frameworks such as consequentialism and deontology can guide these prioritization processes, emphasizing outcomes that maximize benefits or adhere to moral duties.

What Do Stakeholders Want?

Stakeholders want various things depending on their relationship with the organization. Shareholders typically seek profitability and return on investment. Employees desire fair wages, job security, and a healthy work environment. Customers demand quality, value, and ethical treatment. Suppliers look for fair transactions and ongoing partnerships. Communities expect responsible environmental practices and social contributions. Governments and regulators seek compliance with laws and regulations. Overall, stakeholders want organizations to operate ethically, transparently, and sustainably.

Understanding these diverse expectations helps managers develop strategies that satisfy stakeholder interests without compromising ethical standards. Ethical business practices foster trust, loyalty, and long-term success, fulfilling both organizational goals and societal expectations.

Ethics in Business vs. Everyday Ethics

Business ethics differ from everyday ethics primarily in scope, complexity, and the stakes involved. Everyday ethics concern personal conduct, such as honesty with friends, integrity in personal relationships, and adherence to social norms. Business ethics, however, extend these principles to organizational contexts, where decisions often impact broader groups, including employees, communities, and future generations (Trevino & Nelson, 2017).

The complexity of business decisions, conflicting stakeholder interests, and the need for compliance with legal and regulatory frameworks make business ethics more intricate. For example, a manager might face a dilemma between maximizing profit and avoiding environmental harm. While personal ethics may prioritize honesty and fairness, organizational ethics require balancing multiple interests and adhering to codes of conduct and legal standards.

Additionally, the scale and potential consequences of business decisions can be far-reaching, impacting not just individuals but entire communities and ecosystems. Therefore, ethics in business often demand a greater level of responsibility, transparency, and accountability compared to everyday ethical behavior. Ethical breaches in business can lead to disastrous consequences, such as financial scandals or environmental disasters, highlighting the importance of ethical standards in corporate conduct.

Conclusion

Managers should prioritize stakeholders to ensure the long-term success and sustainability of their organizations. Effective stakeholder management involves understanding stakeholder needs, influencing factors, and balancing conflicting interests through ethical and strategic decision-making. Stakeholders generally seek ethical treatment, value, and sustainability from the organizations they are associated with. While business ethics share foundational principles with everyday morality, they operate within a broader, more complex doctrinal framework necessitated by organizational stakes and societal impact. Recognizing these differences ensures that businesses operate responsibly, fostering trust and loyalty essential for long-term prosperity.

References

• Freeman, R. E. (1984). Strategic Management: A Stakeholder Approach. Boston: Pitman.
• Porter, M. E., & Kramer, M. R. (2011). Creating Shared Value. Harvard Business Review, 89(1/2), 62-77.
• Trevino, L. K., & Nelson, K. A. (2017). Managing Business Ethics: Ethical Decision Making and Cases. Pearson.
• Crane, A., Matten, D., & Capozzi, M. (2021). Business Ethics: Managing Corporate Citizenship and Sustainability in the Age of Globalization. Oxford University Press.
• Donaldson, T., & Preston, L. (1995). The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications. Academy of Management Review, 20(1), 65-91.
• Mitchell, R. K., Agle, B. R., & Wood, D. J. (1997). Toward a Theory of Stakeholder Identification and Salience. Academy of Management Review, 22(4), 853-886.
• Jones, T. M. (1995). Instrumental Stakeholder Theory. Academy of Management Review, 20(1), 22-42.
• Servaes, H., & Tamayo, A. (2013). The Impact of Corporate Social Responsibility on Firm Value: The Role of Customer Awareness. Management Science, 59(5), 1045-1061.
• Harrison, J. S., & Wicks, A. C. (2013). Stakeholder Theory, Value, and Practice. Journal of Business Ethics, 112(4), 641-658.
• Crane, A., Palazzo, G., Spence, L. J., & Matten, D. (2014). Contesting the Value of Business Ethics: Critical Perspectives and Future Directions. Business Ethics Quarterly, 24(2), 333-375.