Chapter 2: Business Ethics - Ethical Decision Making and Cases 10th Edition

1. Stakeholder
Relationships,
Social
Responsibility,
and Corporate
Governance

2. • Identify stakeholders’ roles in business
ethics
• Define “social responsibility”
• Examine the relationship between
“stakeholder orientation” and “social
responsibility”
• Delineate a stakeholder orientation in creating corporate social
responsibility
• Explore the role of corporate governance in structuring ethics and
social responsibility in business
• List the steps involved in implementing a stakeholder
perspective in social responsibility and business ethics

3. Who are the stakeholders?
Two Type of Stakeholders:
1. Primary Stakeholders
2. Secondary Stakeholders

4. Three Approaches to Stakeholder Theory:
1. Normative
2. Descriptive
3. Instrumental

5. Employees
- Compensation and benefits - Ratio of lowest wage to national legal
minimum or local cost of living
Customers
- Product safety and quality - Number of product recalls over time
Investors
- Transparency of shareholder - Availability of procedures to inform
communications shareholders about corporate activities

6. Suppliers
- Encouraging suppliers in developing - Prices offered to suppliers in developed
countries countries in comparison to other countries’
suppliers
Community
- Donations and support of local - Annual employee time spent in community
organizations service
Environmental Groups
- Minimizing the use of energy - Amount of electricity purchased; percentage of
“green” electricity

7. Three Sets of Activities:
1. The organization-wide generation of data
about stakeholder groups and assessment of
the firm’s effects on these groups;
2. The distribution of this information
throughout the firm; and
3. The responsiveness of the organization as a
whole to this information.

8. What is Social Responsibility?

9. Steps of Social Responsibility:

10. saved an equivalent of
almost 37,000 seven
year old trees
SM and UNICEF
- helped more than 113,000
school children across the
country.

11. portion of the
proceeds go to WWF-
Philippines'
conservation and
climate adaptation
programs

12. Project
H.E.L.E.N.
Health
Education
Livelihood
Environment
Nurturance

15. 2016 – 131 Honorees

16. 1. Social Issues
Four General Categories:
i.e. Obesity, Smoking, Exploitation, Internet Tracking for Marketing
Purposes, etc.

17. 2. Consumer Protection
i.e. Advertising, Disclosure, Financial Practices and Product Safety
Mattel Recalled 19 Million Toys Sent
From China

18. 3. Sustainability

19. 4. Corporate Governance
- new governance standards
for board conduct to ensure
that directors are aware of
and accountable for the
financial condition of the
companies they manage

21. A. Views of Corporate Governance
Two Major Approaches:
1. Shareholder Model
2. Stakeholder Model

22. B. Role of Board of Directors
• Ultimate responsibility for the firm’s success or failure
• Fiduciary Duty
• Monitoring decisions made by executives on behalf of
the company
Ethical Issue: Compensation the directors themselves receive

23. C. Greater Demands for Accountability
and Transparency
• Inside Directors
• Outside Directors

24. D. Executive Compensation
• Relationship between the highest-paid
executives and median employee
wages
• High levels of executive
compensation only when directly
linked to strong company
performance

25. Basic Steps:
1. Assessing the Corporate Culture
2. Identifying Stakeholder Groups
3. Identifying Stakeholder Issues
4. Assessing Organizational Commitment to Social
Responsibility
5. Identifying Resources and Determining Urgency
6. Gaining Stakeholder Feedback

26. Thank you!

27. Videos

28. Activities:

29. Activities:
1.There is nothing wrong in
providing a legal service
many people desire.
VS.
2. From a stakeholder
perspective, it is wrong to
provide socially
irresponsible services.

30. Activities:
Walmart Manages Ethics and Compliance
Challenges
Pages 407 - 419
1. Do you think Walmart is doing enough to become more sustainable?
2. What are the ethical issues Walmart has faced?
3. How is Walmart attempting to answer concerns regarding misconduct?

31. Activities:
Sustainability Challenges in the Gas and Oil
Industry
Pages 424 - 431
1. How does managing ethical risk in the oil and gas industry relate to reducing
accidents?
2. Compare the risks that BP, Exxon, and the fracking industry continue to face in
providing
an adequate supply of energy?
3. How can ethical leadership help the oil and gas industry to manage risk?

32. References
Business Ethics: Ethical Decision Making and Cases (10th Edition) by O.C. Ferrell, John Fraedrich and Linda
Ferrell
https://corpgov.law.harvard.edu/2016/01/06/ten-topics-for-directors-in-2016/
http://www.csrquest.net/default.aspx?articleID=13197
https://www.researchgate.net/publication/261595746_STAKEHOLDER_MANAGEMENT_PARADOXES_FROM_THE
_PERSPECTIVE_OF_NORMATIVE_DESCRIPTIVE_AND_INSTRUMENTAL_APPROACH
http://worldsmostethicalcompanies.ethisphere.com/honorees/
http://smallbusiness.chron.com/four-types-corporate-social-responsibility-54662.html