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How does a stakeholder orientation affect honesty and fairness?

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granny54 | Student, College Freshman | (Level 1) Valedictorian

Posted May 7, 2013 at 5:24 AM via web

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How does a stakeholder orientation affect honesty and fairness?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted May 7, 2013 at 5:56 AM (Answer #1)

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In general, any firm that truly pursues a stakeholder orientation will be much more likely to honestly and fairly in everything that it does.

In order to see why this is so, let us first look at what a stakeholder orientation is.  This is a commitment on the part of the firm to take into account the needs of all its stakeholders when it is deciding what to do.  That means that it will think about what its owners need, but it will also think about the needs of its customers, its suppliers, and its employees.  It may even think about the needs of the community as a whole.

If a firm has such an orientation, its executives are more likely to be honest and fair.  Let us say that the executives have a chance to save a great deal of money by bending the rules on their taxes.  If they have a stakeholder orientation, they will be less likely to do this.  They will realize that their tax dollars are important to their community and so they will not try to evade the taxes.  Similarly, let us say that a firm has an opportunity to make a better deal in negotiations with its employees if it gives them false impressions about the firm’s health.  The workers then give in on their salary demands to save (they think) the company.  If the firm has a stakeholder orientation, it will value its employees.  It will not see them as people to be exploited.  That means it will not deceive them.

Thus, a firm that truly follows a stakeholder orientation is more likely to be honest and fair in its dealings.

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