The new roles of stakeholders

The new roles of stakeholders

Stakeholders are becoming more interested in ethical management. The post Enron era has taught to stakeholders to pay a closer attention to organization ethical conduct more than it used to be before. Generally speaking, the stakeholders are defined as “a person, group or organization that has interest or concern in an organization. Stakeholders can affect or be affected by the organization’s actions, objectives and policies, Some examples of key stakeholders are creditors, employees, directors and government, shareholders, suppliers, union and the community from which the business draws its resources,” (business dictionary). However, after the Enron scandal, the organizations tend to imply more stakeholders in the board in order to collect opinion from a wider variety of groups and public interest in decision making. The importance of this extended group thinking is to prevent financial or ecological disasters that might be of great impact over the stakeholders and the community as a whole.

According to Jennings and Happel (n.d.), “At the outset, a review of the statements of ideals for business behavior that have been drafted over the years was conducted. For many companies, these are aspirational statements. For other companies, they are simply written versions of their own internal codes of ethics. Several documents and statements of social responsibility provide topical guidelines for stakeholder issues. For those in the field of business ethics, they are lists cited frequently as exemplars for behavior and form the basis of the clean yield, Kinder, Lydenburg and Domini (“KLD”) database,” (Jennings & Happel). The problem of shareholder’s theory has been a great deal of debate in the document produced by the aforementioned authors because of the limitative way stakeholders’ role was seen. The aspect of lobbying and supportive network in order to gain legal battle had denatured the true distinctive role of the stakeholders that can contribute to a greater level to make organizations more ethical.  Goodpaster (1984 ), has pointed out the same issue. The fiduciary role left to stakeholders instead of a real implementation of the ethical climate and the corporate ethical governance. Then, to him, “the basic normative principle is fiduciary responsibility (organizational prudence), supplemented by legal compliances,” (Goodpaster. 59).

From the definition of stakeholders theory as “following a prescribed political agenda as the following summary chart” (Jennings & Happel), hopefully things are moving in the right direction for the good of all, because when the organization and the stakeholders make of profit their priority, the community they are compelled to serve might lose faith in their way of doing business and might seek for more socially involved organizations to buy from. An example to retain is Wal-Mart that was called by the media as the most litigious company in America. Guided by excessive gain, the organization has been running ethically off-road in several cases. According to the course material,  “firms without fraud have boards with significantly higher percentages of outside members than did firms where fraud had occurred; the probability of fraud decreases with greater outside board membership and longer tenures on the board (Beasley, 1996),” (grand Canyon University, 2011). That is, the impact of stakeholders is non negligible to  the well being of the organization and to create a more harmonious relationship with the customers and the community as a whole. I think that Johnson (2011) has given the best advice to organizations to maintain a bond with the community through ethical conduct “to make ethical decisions in cross-cultural settings, take both local values and global principles into account. Follow community norms except when they conflict with universal moral standards. As a business leader, make the most of your company’s leverage in another country to improve local conditions," (p. 401).

References:

Grand Canion University (2011). Ethical Governance. Retrieved on November 17, 2012 from https://lc.gcu.edu/learningPlatform/user/users.html?token=xW1Nt33ROWrGmlxNHQRZ8RXHzk9yswEL7boZgTGKBZiRlT%2byZsa%2by7ksWqE1PKB1&operation=home&classId=905935#/learningPlatform/loudBooks/loudbooks.html?viewPage=current&operation=innerPage¤tTopicname=Ethical%20Governance&topicMaterialId=b2ac8d44-92ab-4157-bdb4-4cd1c8694e01&contentId=4163df6a-aad2-4835-a514-ef82c78ab83d&

Johnson, C. E. (2012). Meeting the ethical challenges of leadership: Casting light or shadow. Thousand Oaks, CA: SAGE

Kenneth E. Goodpaster. ( 1984). Businerss ethics and stakeholders analysis. Business ethics quarterly. Retrieved on November 17, 2012 from https://www53.homepage.villanova.edu/james.borden/vsb1001/Goodpaster.pdf

Marianne M. Jennings M. M. & Happel S. (n.d. ). The Post-Enron Era for Stakeholder Theory: A New Look at Corporate Governance and the Coase Theorem. Mercer Law Review,(Vol.54). Retrieved on November 2012 from https://www2.law.mercer.edu/lawreview/getfile.cfm?file=54302.pdf

Stakeholders definition. (n. d.). Business dictionary. Retrieved on November 17, 2012 from https://www.businessdictionary.com/definition/stakeholder.html

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