STAKEHOLDER APPROCH STAKEHOLDER MANAGEMENT: MANAGING FOR - PDF document

16/10/2013 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) 1

16/10/2013 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 21 th CENTURY (FREEMAN 2007) • 1) RESISTANT TO CHANGE • 2) NOT CONSISTENT WITH LAW • 3) FATAL IN BUSINESS WORLD OF THE 21 ST CENTURY 2

16/10/2013 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” 3

16/10/2013 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 • 4

16/10/2013 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) 5

16/10/2013 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 6