STAKEHOLDER APPROCH STAKEHOLDER MANAGEMENT: MANAGING FOR - - PDF document

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SOME INSIGHTS ABOUT STAKEHOLDER THEORY

STAKEHOLDER APPROCH

• STAKEHOLDER MANAGEMENT:

MANAGING FOR STAKEHOLDERS = PRODUCE VALUE (WHAT?)FOR STAKEHOLDERS INTRODUCTION

• OVER THE PAST THIRTY YEARS

FROM SCHOLAR OF VARIOUS DISCIPLINES (finance, management, accounting , philosophy and so on): STAKEHOLDER THEORY/IES)

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INTRODUCTION

• PAY ATTENTION TO HOW

RELATIONSHIPS WITH VARIOUS CONSTITUENTS (NAMED STAKEHOLDERS AND NOT STOCKHOLDERS) ARE MANAGED IN ORDER TO CREATE VALUE FOR ALL STAKEHOLDERS

INTRODUCTION

• ACCORDING TO THE DOMINANT

(FREEMAN 2007, PAPER QUOTED IN OUR PROGRAM) MODEL :

• A MANAGER HAS TO PURSUE A

BENEFIT ONLY FOR SHAREHOLDERS, BENEFITS FOR OTHERS ARE INCIDENTAL

LIMITS OF THE DOMINANT MODEL IN THE WORLD OF 21th CENTURY (FREEMAN 2007)

• 1) RESISTANT TO CHANGE
• 2) NOT CONSISTENT WITH LAW
• 3) FATAL IN BUSINESS WORLD OF

THE 21ST CENTURY

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THE DOMINANT STORY

• A VERY SHORT HISTORY OF CAPITALISM :
• 1) LITTLE FAMILY BUSINESS
• 2) MANAGERIAL (LAISSEZ FAIRE) CAPITALISM
• 3) SHAREHOLDER CAPITALISM
• 4) BUREAUCRACY IN THE BIG CORPORATIONS
• INCREASE SHAREHOLDERS VALUE
• PROBLEMS: (stock option, shortermism (quarter over

quarter increase): PUSH TO “INCREASE SHAREHOLDERS VALUE, SOMETIMES IN OPPOSITION TO ACCOUTING RULES AND LAW”

RESISTANT TO CHANGE

• 1) TAKING ACCOUNT OF OTHER

STAKEHOLDERS’ INTERESTS [NDA: ONLY INTEREST?] “AS IF THESE INTERESTS MUST CONFLICT WITH EACH OTHER”

• 2) IF YOU HAVE BETTER FINANCIAL RESULT

NO PROBLEM AT ALL

• 3) THE ONLY REQUESTED CHANGE IS THAT

ORIENTED TOWARDS SHAREHOLDERS VALUE

RESISTANT TO CHANGE

• IN TO-DAY’S WORLD THERE IS JUST TOO

MUCH UNCERTAINTY AND COMPLEXITY TO RELY ON SUCH A SINGLE CRITERION (DIFFERENTIARION FROM JENSEN 2002)

• “SHAREHOLDER VALUE MAY NOT CAPTURE”

THE GLOBAL DYNAMISM OF 21TH CENTURY”

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RESISTANT TO CHANGE

• THE DOMINANT MODEL IS ABOUT THE STRICT

AND NARROW ECONOMIC LOGIC OF MARKETS, AND THE “MANAGING FOR STAKEHOLDERS MODEL IS ABOUT HOW HUMAN BEINGS CREATE VALUE FOR EACH OTHER”

NOT CONSISTENT WITH LAW

• “THE LAW [USA, OF CORPORATIONS] HAS EVOLVED OVER

THE YEARS TO GIVE DE FACTO STRANDING TO THE CLAIMS OF GROUPS OTHER THAN STOCKHOLDERS”

• EXAMPLES:
• Caveat emptor in part to caveat vendor
• Employees: Equal pay Act (1963), age discrimination

employment act 1967

• Pollution ‘s laws
• Different regulations in various countries (India, China, US

law)

NOT CONSISTENT WITH BASIC ETHICS

• THE SEPARATION FALLACY- THE OPEN QUESTION ARGUMENT- TH

INTEGRATION THESIS-THE RESPONSIBILITY PRINCIPLE (see Freeman 2007, in the bibkiography of the course )

• “ALMOST ANY BUSINESS DECISION HAS SOME ETHICAL BASES”
• Only value for shareholders counts? Is it ethics for a manager or

an entrepreneur? Also Friedman [this paper is in Donaldson and Werhane 1988, 1999, 2008, available in our University Library] goes out of this (law and ethical customs)refusing of ethics in business

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NOT CONSISTENT WITH BASIC ETHICS

• ACCORDING TO STAKEHOLDER

MANAGEMENT, BUSINESS AND ETHICS ARE “WITHIN A COMPLEX SET OF STAKEHOLDER RELATIONSHIPS RATHER THAN TREATING ETHICS AS A SIDE CONSTRAINT ON MAKING PROFITS (like in Friedman and others).

• THE INTEGRATION THESIS AND THE

RESPONSIBILITY

IDEAS OF MANAGING FOR STAKEHOLDERS TO SOLVE SOME OF THE PROBLEMS OF THE DOMINANT MODEL

• 1) MORE DIFFICULT TO IGNORE MATTER OF

IDEAS

• 2) EXECUTIVE HAS TO CREATE VALUE FOR

STAKEHOLDER AS POSSIBLE

• 3) NO STAKEHOLDER INTEREST(note of the

lesson: stake is not the same of interest, problem of right or not legitimate interests) IS VIABLE IN ISOLATION OF THE OTHER STAKEHOLDERS

“STAKEHOLDER CAPITALISM”

• “CAPITALISM IS ON THIS VIEW [NDA:

STAKEHOLDER CAPITALISM] A SYSTEM IF SOCIAL COOPERATION AND COLLABORATION, RATHER THAN PRIMARILY A SYSTEM OF COMPETITION” (FREEMAN)

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MANAGING for STAKEHOLDERS

• STAKEHOLDERS= GROUPS WHICH HAVE A STAKE

IN THE ACTIVITIES THAT MAKES UP THE BUSINESS

• TO UNDERSTAND BUSINESS IS TO KNOW HOW

THESE RELATIONSHIP WORK AND TO MANAGE THESE RELATIONS IN ORDER TO HAVE MORE VALUE FOR STAKEHOLDERS

• [NDA]WHAT IS THIS VALUE?

STAKEHOLDERS’ DEFINITIONS

• FIGURE 1, COMMENTS
• THE DEBATE ABOUT STAKEHOLDERS

DEFINITION: RESTRICT OR WIDER? A LONG DEBATE ABOUT STAKEHOLDERS’ DEFINITION

• VERY FEW PRINCIPLES AND

DEFINITIONS TO APPLY TO ALL BUSINESS ALL OVER THE WORLD