Assignment
EHTICS AND A MANAGER’S OBLIGATONS UNDER STAKEHOLDER
THEORY
Submitted by
Imran kamal khan
Roll no 13
BBA 8th (Finance)
Submitted to
Sir ghayur
lecturer(Business ethics)
ICMS hayatabad peshawar
ETHICS AND MANAGER’S OBLIGATIONS UNDER STAKEHOLDER
THEORY
A corporation’s obligations to the stakeholders binds the corporation to the
stakeholders, and thus it creates new moral obligations.
The stakeholder theory discuses some question regarding obligation which are
nessesary to understand the theory thoroughly they are as under.
Why pay attention to stakeholders?
Any convincing prove for increasing shareholder wealth must, at its center, be a
moral argument. shareholders own a firm by virtue of owning equity shares, and
they wish to maximize the value of there [Link] managers who not able to
maximize shareholder wealth are going against a moral property right by
spending-if not stealingshareholders' money.
Who are an organization's stakeholders and what is the basis for their
legitimacy?
At a minimum, stakeholders are those groups from whom the organization has
voluntarily accepted benefits, and to whom the organization has therefore
incurred obligations of fairness. Typically, this includes groups such as financiers,
employees, customers, suppliers and local communities.
But what about the more controversial candidates for stakeholder
status?
For example, most organizations have not accepted benefits from their
competitors or activist groups, although theories of strategic management would
surely grant these constituents some consideration because they can significantly
influence the organization's success. Stakeholder theory maintains that normative
or legitimate stakeholders are owed an obligation by the organization and its
leaders, while derivative stakeholders hold power over the organization and may
exert either a beneficial or harmful influence on it.
What do stakeholders want?
The fact that different people want different things from their relationships with
organizations makes it impossible to know with certainty what stakeholders want.
Stakeholder discussions often focus on allocating some measure of organizational
value or outcome (e.g., who gets how much money from the firm). The question
of how the organization creates this value usually gets less attention, but it is
certainly not less important. Not all stakeholders want a voice in organizational
decision making, but those who do desire a voice should have it. Too often,
managers sit in an office trying to divine what stakeholders want from their
relationship with the organization. Someone in Human Resources has the job of
finding out what employees want and then But stakeholder communication is
more than good for the organization. It is a matter of moral obligation.
Stakeholder communication is certainly good for the organization. Managers who
are in constant contact with stakeholders are in a better position to assess
organizational goals, to take advantage of unforeseen but mutually advantageous
opportunities (e.g., cost reductions throughout the supply chain), and possibly to
avert conflict before it reaches a critical stage
How should managers prioritize among stakeholders?
Another issue that has historically plagued stakeholder theory is the question of
how managers should allocate their limited time, energy and other scarce
resources to stakeholders. While there is no determinate algorithm, stakeholder
theory can provide some broad direction on making these decisions Certainly,
managers need to know what the stakeholders believe to be in their best
interests prior to trying to make this happen-a first priority of sorts. There is one
final way that stakeholder theory can provide some managerial guidance in
prioritizing stakeholders. Many stakeholder critics-and some advocates-have
interpreted the concept of "balancing" stakeholder interests as implying that all
stakeholders should be treated equally.
