Stakeholder Ethics


A shareholder is a common example of a company stakeholder, but many other people and groups have interests in businesses. The interests of other stakeholder groups often come in conflict with the main interest of shareholders, which is making money. Company boards and executives must balance the often competing interests of all stakeholders to operate a business that is profitable and ethical.


Top CEOs have stated that the primary goal of public companies is to maximize shareholder value. It makes good business sense to invest in companies that operate in a way that makes you money. However, in his January-February 2010 "Harvard Business Review" article "The Age of Customer Capitalism," Roger Martin points out that 30 years of executive thinking on making profits must change in the 21st century business arena. Treating customers and other stakeholders with respect actually appears to be the best formula for long-term business success and profits.


Fair pay and reasonable working conditions are the main expectations of employees of a business, notes Tutor2u. Companies that have a narrow view of profits often make business decisions to restrict labor costs and even lay off employees. Downsizing is sometimes necessary, but routine layoffs to put more dollars into the pockets of shareholders is typically viewed as unethical by the public. Another major ethical consideration for businesses is how to manage increased diversity among workers. Diversity training, equal employment opportunities and diversity outreach are ways companies support a diverse work force.


In the Survival Insight article "Create a Conscious Business for Success Beyond Success," Aeyne Schriber addresses common business decisions that affect customers. Offering quality to build reputation and then cutting back to save money is one common practice. Others include inflating the true merits of products and services and unfairly discrediting competing solutions.

Community and Government

In the early 21st century, the concept of corporate social responsibility, referred to as CSR, has taken hold of the marketplace. Generally, CSR describes a heightened level of expectations for businesses from the public. Companies are expected to participate in community activities and abide by legal and social business standards and government regulations. Additionally, environmental responsibility is required. This means making business decisions that balance profitability with care for the environment. Tutor2u lists the environment as a separate stakeholder and calls pollution one unacceptable byproduct of business.

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