What effect does a stakeholder orientation have on business ethics and social responsibility?

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pohnpei397's profile pic

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In general, any firm that truly pursues a stakeholder orientation will be much more likely to act ethically and it will be more likely to act in ways consistent with the idea of corporate social responsibility. 

A stakeholder orientation exists in a firm when the firm cares about all of its stakeholders.  It does not just care about its owners and stockholders.  Instead, it cares about everyone from its customers to its employees to its suppliers.  It even cares about the community in which it operates.

Such a firm will be much more likely to act ethically and responsibly.  For example, let us imagine that a firm could increase profits by cutting benefits to its employees.  This would not be consistent with corporate social responsibility.  If a firm truly practices a stakeholder orientation, it will be less likely to take this step.  Instead, it will treat its employees as if they are important.  It will balance their needs against the need of ownership to make a higher profit.  The needs of the workers will be just as important rather than being something that is considered to be a mere afterthought.

Thus, a stakeholder orientation is more likely to lead to ethical behavior and to a concern for corporate social responsibility.

granny54's profile pic

Posted on

In general, any firm that truly pursues a stakeholder orientation will be much more likely to act ethically and it will be more likely to act in ways consistent with the idea of corporate social responsibility. 

A stakeholder orientation exists in a firm when the firm cares about all of its stakeholders.  It does not just care about its owners and stockholders.  Instead, it cares about everyone from its customers to its employees to its suppliers.  It even cares about the community in which it operates.

Such a firm will be much more likely to act ethically and responsibly.  For example, let us imagine that a firm could increase profits by cutting benefits to its employees.  This would not be consistent with corporate social responsibility.  If a firm truly practices a stakeholder orientation, it will be less likely to take this step.  Instead, it will treat its employees as if they are important.  It will balance their needs against the need of ownership to make a higher profit.  The needs of the workers will be just as important rather than being something that is considered to be a mere afterthought.

Thus, a stakeholder orientation is more likely to lead to ethical behavior and to a concern for corporate social responsibility.

 

I think that you are totally right about what you are saying.  Ferrel, 2011 stated that stakeholders provide both tangible and intangible resources that are more or less critical to a firm's long-term success,a nd their ability to withdraw - or threaten to withdraw - these resources gives them power. I think that Stakeholders define significant ethical issues in business. Thank you.

Ref.

Ferrell & Ferrell. (2011). Business Ethics, Ethical Decision Making and Cases

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