Business Ethics and Stakeholder Relationships

Individuals or groups who have a stake or interest in a company's operations and performance, such as customers, employees, investors, and the community.

This view emphasizes maximizing shareholder value by focusing on profits and financial performance.

This view recognizes that businesses have a responsibility to consider the interests of all stakeholders, including customers, employees, suppliers, and the community.

These represent what stakeholders stand to gain or lose from a company's actions. These can include financial returns, job security, product quality, and environmental protection.

This describes the relationship between a company's actions and its stakeholders.

This refers to a company's commitment to operating in a socially responsible manner, taking into account the ethical and social impact of its decisions.

This refers to the idea that companies should operate in a way that benefits all stakeholders, not just shareholders.

This concept explores the relationship between a company's ethical behavior and its performance. It suggests that companies that act ethically are more likely to be successful.

A group or individual who can be affected by or affect an organization's goals, actions, or policies.

Primary stakeholders are crucial for the survival of an organization, directly participating in its activities. Examples include employees, customers, shareholders, and the government.

Secondary stakeholders may not engage directly with the business, but still have an impact. They include the media, trade associations, and special interest groups.

This model acknowledges that interactions between companies and stakeholders are not isolated. It recognizes the interconnectedness of internal and external parties.

Social stakeholders include both primary and secondary stakeholders, emphasizing their direct and indirect influence. This considers people and organizations involved in a business, from those with direct participation to those who might have a significant impact.

This emphasizes the importance of considering and integrating the interests of diverse stakeholders when making strategic decisions.

Shared understandings are informal agreements about how things should be done, which can lead to misunderstandings if not clearly stated. They act as a social contract within a business or organization, shaping interactions between employees, customers, and stakeholders.

A social contract outlines the responsibilities and expectations between a company and its stakeholders. It defines how the company interacts with its customers, employees, and the wider community. It's based on principles of sustainability, transparency, and accountability.

The social environment encompasses factors such as public opinion, media scrutiny, and regulatory frameworks that influence business practices and public perceptions of corporations. It's the backdrop against which criticism of business develops and flourishes.

The production view of a firm is a traditional approach that focuses solely on producing goods and services to satisfy customers. It primarily considers profit maximization and meeting the needs of suppliers and customers.

The managerial view of a firm acknowledges a more complex structure involving multiple stakeholder groups. It recognizes the separation of ownership and control, with stakeholders such as owners, employees, and customers having different interests and expectations.

Internal change refers to adjustments within the existing framework of a company, such as reevaluating goals, policies, or operations. These changes occur within the current system and don't fundamentally challenge the company's structure.

External change refers to factors from the outside world that affect a company's operations and environment. This includes things like government regulations, economic shifts, technological advancements, and social trends.

When external changes become significant enough, they can require companies to abandon their current business model and adopt a new one that better addresses the changing realities. This involves adapting to new challenges and opportunities that arise from the external environment.