T he notion of stakeholder is one of the most prom Essays - Economy

T he notion of stakeholder is one of the most prom Essays - Economy T he notion of stakeholder is one of the most prominent contributions to recent business ethics. This theory expressed that managers, in making decisions, ought to consider the interests of all stakeholders This theory is one of the major influences on CSR. CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis." More locally the definition is concerned with the relationship between a corporation and the local society in which it resides or operates. The central tenet of social responsibility however is the social contract between all the stakeholders to society, which is an essential requirement of civil society. This concept therefore implies a recognition that the organisation is part of a wider societal network and has responsibilities to all of that network rather than just to the owners of the organisation Since the introduction of this concept by Edward Freeman in 1984, a concern for the interests of all stakeholder groups has become a widely recognized feature of ethical management and it has been employed in order to give an explanation to the general idea, supported by economists, according to which the main responsibility of businessmen was tied to profit maximization S takeholders could be defined as any group or individual who can affect or is affected by the achievement of a corporation purpose, but also as people holding specific r ights I n order to determine how a firm should behave in specific situations, it is necessary to identify the parts that interact with the firm . Normally, the stakeholder group includes workers, managers, shareholders, consumers, customers and the local community. For instance, a firm has some duties towards its workers as they are both workers and human beings. Workers, on the contrary, have some obligations that derive from the role they play within the firm, in addition to the general moral obligations that bind the relations between individuals and between workers and firms . The stakeholder theory develops a thick grid of relations based on trust that binds the firm towards its stakeholders and both inside and outside the firm. As a simple example, when a factory produces industrial waste, a CSR perspective attaches a responsibility directly to factory owners to dispose of the waste safely. By contrast, a stakeholder theorist begins with those living in the surrounding community who may find their environment poisoned, and begins to talk about business ethics by insisting that they have a right to clean air and water. Therefore, they're stakeholders in the company and their voices must contribute to corporate decisions. It's true that they may own no stock, but they have a moral claim to participate in the decision-making process. This is a very important point. At least in theoretical form, those affected by a company's actions actually become something like shareholders and owners. Because they're touched by a company's actions, they have a right to participate in managing it. T he theory demands that all those who may be affected know what's being dumped, what the risks are to people and the environment, and what the costs are of taking the steps necessary to dispose of the chemical runoff more permanently and safely. stakeholder theory obligates corporate directors to appeal to all sides and balance everyone's interests and welfare in the name of maximizing benefits across the spectrum of those whose lives are touched by the business. The stakeholders' theor y is based on the idea that the firm gives some value to stakeholders, just like each group of stakeholders attributes value to the firm, and this mechanism of mutual exchange enables the firm to grow in a safe way