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Stakeholder approach toStakeholder approach toCorporate governanceCorporate governance
Jana KlokočníkováJiří Brejcha
FSV IES 2007
ContentContent
Bit of Definitions
Historical development of the stakeholder approach
Classification and Division of stakeholders
Core questions when applying the stakeholder model
Conclusion
Bit Bit ofof Definitions Definitions
Stake= an interest or a share in an undertaking
(i.e. legal right, moral right, ownership)
Stakeholder= A group or an individual, that has either a
material or immaterial stake in the corporation
(R. Freeman (1984): Strategic Management. A Stakeholder Approach)
Historical development of the Historical development of the stakeholder approachstakeholder approach
Production view of the firm resources or bought products or services
Managerial view of the firmownership vs. control
Stakeholder approachshareholders vs. stakeholders
CorporationSuppliers Customers
The The production view of the firmproduction view of the firm
The The managerial view of the firmmanagerial view of the firm
Employees
Corporation
Shareholders
Suppliers Customers
The stakeholder view of the firmThe stakeholder view of the firm
Enviromental groups
Localcommunities
CreditorsGovernment
Suppliers Customers
Employees
Corporation
Shareholders
Classification and Division of Classification and Division of stakeholdersstakeholders
Classification Generic groups of stakeholders
Specific groups of stakeholders
Division Internal vs. External stakeholders Primary vs. Secondary stakeholders
Internal vs. External stakeholdersInternal vs. External stakeholders
Enviromental groups
Localcommunities
CreditorsGovernment
Suppliers Customers
Employees
Corporation
Shareholders
Enviromental groups
Localcommunities
CreditorsGovernment
Suppliers Customers
Primary vs. Secondary stakeholder Primary vs. Secondary stakeholder groupsgroups
Employees
Corporation
Shareholders
Core questions when applying the Core questions when applying the stakeholder modelstakeholder model
Who are our stakeholders?
What are their stakes?
What opportunities and challenges are presented to our firm?
What responsibilities does our firm have to all its stakeholders?
What strategies or actions should our firm take to best deal with stakeholder challenges and opportunities?
EmployeesEmployees
Stake livelihood in the present day pensions ensured by the company’s pension scheme
whistle-blowing procedures
training programs, working conditions, equal opportunities, employees share scheme
trade unions
CreditorsCreditors
Stake the company’s ability to repay their debts
to maintain the confidence of these providers
SuppliersSuppliers
Stake to be paid in a timely fashion for the goods and services
they supplied
interest in the continuance of the company
treat their suppliers with understanding and ensure that they settle their debts on time
Local communitiesLocal communities
Stake - in the companies which operate in their region in the interest of sustained employment levels act in an environmentally friendly way
Environmental groupsEnvironmental groups
Stake the companies operate to both national and international
environmental standards (CERES Principles and the Global Reporting Initiative (GRI) Sustainability Guidelines)
environmentally responsible company will not subject its workers to potentially hazardous processes without adequate protection, will not pollute the environment, and will, where possible, use recyclable materials or engage in a recycling process
GovernmentGovernment
Stake to make sure the companies act in a socially responsible
way taking account of socially, ethical and environmental considerations
to analyze corporate trends for various purposes such as employment levels, monetary policy, and market supply and demand of goods and services
looking at various aspects to do with fiscal policy such as capital allowances, incentives for investing in various industries or various parts of the country, and of course the taxation raised from companies
Conclusion Conclusion
Three values of the stakeholder model
Descriptive
Instrumental
Normative
ConclusionConclusion
the involvement of shareholders and/or stakeholders depends on national laws and customs
‘…directors as a board are responsible for relations with stakeholders; but they are accountable to shareholders…’
(Hampel, R. (1998): Committee on Corporate governance: Final report,Gee & Co. Ltd.)
References References
Carroll, A.B.: Business and society. Ethics and stakeholder management. South-western publishing Co. 1989, Ohio.
Colley, J.L., Doyle, J.L., Logan, G.W., Stettinius, W.: Corporate governance. The McGraw-Hill Companies, Inc. 2003, the United States of America.
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