allows an organization to identify, monitor, and respond to the needs, values, and expectations of different stakeholder groups.

In a business context, customers, shareholders, employees, suppliers, government agencies, communities, and many others who have a “stake” or claim in some aspect of a company’s products, operations, markets, industry, and outcomes are known as

is a function of its ability to create value for all primary stakeholders and its attempt to do this fairly, not favoring one group over the others.

identifies ethical guidelines that dictate how firms should treat stakeholders

focuses on the firm’s behavior and usually addresses how decisions and strategies are made for stakeholder relationships.

to stakeholder theory describes what happens if firms behave in a particular

The Rise of Social Issues in Business

Business Ethics as an Emerging Field

Business Ethics Reaches Maturity

Institutionalization of Business Ethics

is acceptable behavior as defined by the company and industry.

is a global compliance management standard that addresses risks, legal requirements, and stakeholder needs.

is to create openness and alignment among business, government, society, labor, and the United Nations.

The more a company is dedicated to taking care of its employees, the more likely the employees will take care of the organization.

Ethical conduct results in shareholder loyalty and contributes to success that supports even broader social causes and concerns

a company continues to develop and adapt products to keep pace with customers’ changing desires and preferences, it must also develop long term relationships with its customers and stakeholders

Ethical conduct toward customers builds a strong competitive position shown to positively affect business performance and product innovation

is a factor in consumers’ perceptions of product attributes and corporate image also can lead to consumer willingness to purchase goods and services at profitable prices.

Shareholders, for example, supply capital; suppliers offer material resources

example of

knowledge; employees and managers grant expertise, leadership, and commitment; customers generate revenue and provide loyalty with word of-mouth promotion; local communities provide infrastructure; and the media transmits positive corporate images

are those whose continued association and resources are absolutely necessary for a firm’s survival.

do not typically engage directly in transactions with a company and are therefore not essential to its survival.

takeholders are anticipated to be fair, loyal, and treat the corporation in a responsible way

there are reciprocal relationships between the firm and a host of stakeholders. In addition to the fundamental input of investors, employees, and suppliers, this approach recognizes other stakeholders and explicitly acknowledges that dialogue exists between a firm’s int

The degree to which a firm understands and addresses stakeholder demands can be referred to as a stakeholder orientation.

is an organizations obligation to maximize its positive impact on stakeholders and minimize its negative impact.

refers to activities that are not required of businesses but that contribute to human welfare or goodwill; Ethics, then, is one dimension of social responsibility. Ethics, then, is one dimension of social responsibility..

is often used to express the extent to which businesses strategically meet the economic, legal, ethical, and philanthropic responsibilities placed on them by various stakeholders.

is one of organization’s greatest intangible assets with tangible value. The value of a positive reputation is difficult to quantify, but it is important.

are associated with the common good. The common good is the idea that because people live in a community, social rules should benefit the community.

The second major issue is consumer protection, which often occurs in the form of laws passed to protect consumers from unfair and deceptive business practices.

the potential for the long-term well-being of the natural environment, including all biological entities, as well as the mutually beneficial interactions among nature and individuals, organizations, and business strategies.

is the fourth major issue of corporate social responsibility. Corporate governance involves the development of formal systems of accountability, oversight, and control.

responsibilities are generally accepted as the most important determinants of performance.

which means all their decisions should be in the best interests of the

corporation and its stakeholders.

refers to how closely workplace decisions align with a firm's stated strategic direction and its compliance with ethical and legal considerations

provides a system of checks and balances that limit employees’ and managers’ opportunities to deviate from policies and strategies aimed at preventing unethical and illegal activities

is the process of auditing and improving organizational decisions and actions.

establishes fundamental systems and processes for preventing and detecting misconduct, for investigating and disciplining, and for recovery and continuous improvement effective corporate

of corporate governance is founded in classic economic precepts, including the goal of maximizing wealth for investors and owners

corporate governance adopts a broader view of the purpose of business. Although a company certainly has a responsibility for economic success and viability to satisfy its stockholders

The purpose of this first step is to identify the organizational mission, values, norms, and behavior likely to have implications for social responsibility.

In managing this stage, it is important to recognize stakeholder needs, wants, and desires.

Together, steps 1 and 2 lead to the identification of the stakeholders who are both the most powerful and legitimate.

Steps 1 through 3 are geared toward generating information about social responsibility among a variety of influences in and around an organization.

The prioritization of stakeholders and issues and the assessment of past performance lead to the allocation of resources.

Stakeholder feedback is generated through a variety of means. First, stakeholders’ general assessment of a firm and its practices can be obtained through satisfaction or reputation surveys.