Ethical Decision Making for Business
8e Fraedrich/ Ferrell/Ferrell
C HAPTER 2
CHAPTER 2
Stakeholder Relationships,
Social Responsibility, and
Corporate Governance
Chapter Objectives
• To identify stakeholders’ roles in business ethics
• To define social responsibility
• To examine the relationship between stakeholder
orientation and social responsibility
• To delineate a stakeholder orientation in creating
corporate social responsibility
• To explore the role of corporate governance in
structuring ethics and social responsibility in business
• To list the steps involved in implementing a
stakeholder perspective in social responsibility and
business ethics
Chapter Outline
• Stakeholders Define Ethical Issues in Business
• Social Responsibility and the Importance of a
Stakeholder Orientation
• Social Responsibility and Ethics
• Corporate Governance Provides Formalized
Responsibility to Stakeholders
• Implementing a Stakeholder Perspective
Relationships and Business
• Building relationships is one of most important areas
in business today
• Stakeholder framework
– Helps identify internal and external stakeholders
– Helps monitor and respond to needs, values, and
expectations of stakeholder groups
What Is a Stakeholder?
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Customers
Investors
Employees
Suppliers
Government agencies
Communities
Primary vs. Secondary Stakeholders
• Primary stakeholders: Those whose continued
association is necessary for a firm’s survival
• Secondary stakeholders: Are not essential to a
company’s survival
Social Responsibility and Ethics
• Social responsibility can be viewed as a contract
with society
– Economic
– Legal
– Ethical
– Philanthropic
• Business ethics involves carefully thought-out
rules (heuristics) of conduct that guide decision
making
Corporate Governance
• Accountability
• Oversight
• Control
• Shareholder model
• Stakeholder model
Implementing a Stakeholder
Perspective
1.
2.
3.
4.
Assessing the corporate culture
Identifying stakeholder groups
Identifying stakeholder issues
Assessing organizational commitment to social
responsibility
5. Identifying resources and determining urgency
6. Gaining stakeholder feedback