Stakeholder can be defined as “any group or individual who can affect or is affected by the achievement of the organization’s objectives”. This theory focuses on wider aspect rather than only focusing on just the shareholder. Stakeholder theory is a fundamental theory about how business works at its best and how it could work. It is concerning on the value creation and trade on how to manage a business effectively. A consequences of focusing on organization or company’s stakeholder is that the shareholder value itself can be enhanced and improved when a wider stakeholder group-such as employees, provider or credit, customers, suppliers government and the local community is taken into account (Mallin, 2011). This theory also related to the organization management and business ethics that uphold moral and values in managing a company as it will covers the benefits to the society and other external parties as a whole rather than just for the internal parties. A very common way of differentiate the various kinds of stakeholders is by identifying groups of people who have direct or indirect relationships with the organization. Friedman (2006) mentioned that there is a clear relationship between definitions of what stakeholders and identification of who are the stakeholders for organizations. The examples of main stakeholders in organization are Customers, Employees, Local communities, Suppliers and distributors, Shareholders. Other than those main stakeholders, the groups and individual like the media, public in general, Business partners, Future generations, NGOs or activists, competitors, government, policy maker and regulators are also considered as stakeholder. According to Stakeholder Theory, companies and organization should d... ... middle of paper ... ...t in becoming more socially responsible corporations. For example, Pos Malaysia through their CSR practices, this corporation had focuses on a dual-pronged approach that is aimed at bringing value to the community and nation at large by the means of enhancing education particularly towards the enhancement of human capital development mainly in underprivileged areas and also Enriching Communities in which Pos Malaysia seeks to promote commerce and entrepreneurship within the communities they serve particularly in rural areas. The above CSR themes are aligned with Pos Malaysia mission to constantly strive to be a caring corporate citizen by supporting nation building and community services. This CSR will focused on the meeting the need and interest stakeholder of an organization by becoming more socially responsible and as well as to improve their image and reputation
Corporate social responsibility (CSR) invaded the corporate world over the last few decades. This concept has become an essential need for competitive advantage unlike its original role as a nicety. The companies have seen the business benefit of the initiative and stakeholders have appreciated the initiative. This has led to the wide application in the firm’s operational agenda.
Stakeholders are individuals or groups who affect or affected by a policy. Policies are result of negotiation of conflicting interests, so stakeholder analysis can be used by policy makers for decision making.
This paper will have a detailed discussion on the shareholder theory of Milton Friedman and the stakeholder theory of Edward Freeman. Friedman argued that “neo-classical economic theory suggests that the purpose of the organisations is to make profits in their accountability to themselves and their shareholders and that only by doing so can business contribute to wealth for itself and society at large”. On the other hand, the theory of stakeholder suggests that the managers of an organisation do not only have the duty towards the firm’s shareholders; rather towards the individuals and constituencies who contribute to the company’s wealth, capacity and activities. These individuals or constituencies can be the shareholders, employees, customers, local community and the suppliers (Freeman 1984 pp. 409–421).
In recent years, companies are becoming socially responsible and now stakeholders almost expect a company to have CSR policies. Therefore, in twentieth century, corporate social responsibility (CSR) became an important development in public life (Barnett, ND).Corporate social responsibility is defined as “the ways in which an organisation exceeds the minimum obligations to stakeholders specified through regulation and corporate governance” (Johnson, Schools and Whittington, N.D cited in March, 2012). Stakeholders can be defined as “those individuals or groups who depend on the organisation to fulfil their own goals and on whom, in turn, the organisation depends” (Johnson, Schools and Whittington, N.D cited in March, 2012). There are many purposes for this essay, the first purpose is to descried the key principles of corporate social responsibility and explain their importance for stakeholders. Secondly, is to show how far this company follows those principles in order to be accountable to at least three of its stakeholders. In this essay, three stakeholders, environment, customers and employees will be evaluated respectively and the key principles of the stakeholders will be examined.
The concept of stakeholder capitalism has been misconstrued over the years because of misunderstandings about the “moral foundations” and fundamentals of stakeholder capitalism. The common ideal of capitalism is that business is an essential part of society rather than a separate entity. The primal question is if the responsibility of the business is to that to the stakeholders or shareholders. However, the goal of the company is actually to be profitable while maintaining a balance between shareholders and stockholders. The reading further goes on to illustrate the four principles of stakeholder capitalism: stakeholder co-operation, complexity, continuous creation, and emergent competition. The model behind stakeholder capitalism is that it aids the business in becoming an institution with morals and values; it goes beyond just earning profit. The central argument is that business and ethics must coincide with each other for a business to fully progress.
Evan, W. M., & Freeman, R. E. (1988). A stakeholder theory of the modern corporation: Kantian
Corporate social responsibility (CSR) “calls for corporations to be more accountable to the multiple groups who constitute them and/or are directly impacted by their actions,” which aligns with Freeman 's view that managers are responsible to all groups that affect or are affected by the company 's actions (Menser, p60). There are three ways of being socially responsible: the stakeholder theory of corporate social responsibility (ST CSR), the civil society model of corporate social responsibility (CS CSR) and the solidarity economic view (SE). Although all these models will achieve CSR in different ways, the SE model will benefit more stakeholders than the other two, while the ST CSR fails in comparison to the other two.
...es. I have done just that by refuting the two strongest arguments for Shareholder Primacy, by evaluating the two strongest arguments for the stakeholder model and rebutting any counter-arguments to them. The stakeholder model also allows for larger long term profits and potentially answers the discussion for corporate social responsibility in the academic realm.
Stakeholders are those groups or individual in society that have a direct interest in the performance and activities of business. The main stakeholders are employees, shareholders, customers, suppliers, financiers and the local community. Stakeholders may not hold any formal authority over the organization, but theorists such as Professor Charles Handy believe that a firm’s best long-term interests are served by paying close attention to the needs of each of these stakeholders. The modern view is that a firm has responsibilities to all its stakeholders i.e. everyone with a legitimate interest in the company. These include shareholders, competitors, government, employees, directors, distributors, customers, sub-contractors, pressure groups and local community. Although a company’s directors owes a legal duty to the shareholders, they also have moral responsibilities to other stakeholder group’s objectives in their entirely. As a firm can’t meet all stakeholders’ objectives in their entirety, they have to compromise. A company should try to serve the needs of these groups or individuals, but whilst some needs are common, other needs conflict. By the development of this second runway, the public and stakeholders are affected in one or other way and it can be positive and negative.
Although primary objective for managers is to maximise shareholders’ wealth, but many firms are started to focus on other stakeholders’ interests in recent years. Company can prevent transfer the damage of stakeholders’ wealth to shareholders when focus on stakeholders’ interests. In other words, “social responsibility” for the companies is to maintenance stakeholders’ relations in order to provide long-term interests to shareholders. By this way, conflict, turnover and litigation of stakeholders can be minimise. Obviously, company can achieve their primary objective by cooperation with stakeholders instead of conflict with stakeholders (Smart, Megginson, Gitman, 2002).
To address why companies need to practice CSR, Liu and Liu in their article, “Implementing Corporate External Social Responsibilities Strategies Through, Organizational Design and Operations”, the authors, Liu and Liu, discuss the need for CSR in corporations. The corporation’s moral standard determines its obligation to its stakeholders, external and internal, and its commitment to CSR. Three things compose CSR, “what these moral standards should be, who are the stakeholders, and what kind of responsibilities corporations should accept” (Liu and Liu, 2009, p. 79).
Stakeholders and stockholders are a group of individuals that can affect the company and also are affected by the company. In order to be a successful company needs to maintain their investor’s confidence. Stockholders are also able to develop value for the customer because they invest on ideas that will produce success for the company. Stakeholders are all the individuals that have an interest in the company such as employees, customers, and the surrounding community.
Business organizations regularly run into demands from various stakeholders groups when conducting day-to-day business. These demands are generated from employees, customers, suppliers, community groups, governments, and shareholders. Thus, according to Goodpaster, any person or group of people that can shape or can be shaped by attainment of the objectives by an organization is considered a stakeholder. Most business organizations recognize and understand their responsibilities to these groups and endeavor to honor and fulfill them. These responsibilities are often communicated to the public by a statement of principles or beliefs. For many business organizations, corporate social responsibility (CSR) has become an essential and integral part of their business. Thus, this paper discusses the two CSR views: the classical view and the stakeholder view. Furthermore, I believe that the stakeholder view has brought ethical concerns to the forefront of businesses, and an argument shall be made that businesses would improve both socially and economically if CSR, guided by God’s love, was integrated into their strategic planning.
The dependent variable of this study is awareness of CSR Planning. CSR awareness is about corporate responsibility in how the corporate inculcates knowledge and interest to ensure employees (Abdullah & Khairuddin, 2013) concern in the importance of CSR. Social awareness is seen as one of the key mechanisms of consciousness-raising, the other being social action (Greene & Kamimura, 2003). The meaning of planning is the process of making plans for something (Oxford Dictionary). According to the Bowen (1953) cited in Abdullah & Rashid (2012), social responsibility speak of to the responsibilities of businessman to pursue those rules, to make those conclusions or to follow those lines of action, which are necessary in terms of the objectives and values of our society. By having a CSR planning, a corporation can define what activities they have the resources to offer to be socially responsible and can choose that which will toughen their competitive advantage (Ballowe, 2009). Furthermore, a company can ensure that profits and growing shareholder value don’t dominate the need to behave ethically to their stakeholders as mentioned by Ballowe, 2009. CSR planning process is essential to have a clear agenda for long and short run CSR activities (Paul & Murthy). Furthermore it can clear out any form of confusion of the whole CSR approach in terms of its financial execution, assessment, and allocation (Paul & Murthy). CSR is not an “unreturned investment”, but rather a TBL investment, bringing positive outcomes or benefits to the profit, people and planet if it is managed strategically and systematically. People stand for determining organizational achievement on social issue (Goel, 2010). Social performance addresses connections between a bu...
Stakeholders refer to individuals or groups of people that have an interest in a business. Management argues that as long as there is wealth for shareholders, then anything is done in a responsible manner and things should be done to promote the interest of other stakeholders.