Stakeholder Theory Synopsis
Before it was thought that business and ethics were an oxymoron, two terms that could never coexist together in our society, however this video on Stakeholder Theory has proven otherwise. The video talked about various ideas/topics concerning Stakeholder Theory from what is a stakeholder to the effects of technology in our fast paced society today. R. Edward Freeman started the video by explaining how stakeholder theory started off. He gave an example early in the video of himself and few colleagues who wanted to put out an article around 30 years ago presenting the idea of Stakeholder Theory through a local newspaper. The newspaper editor called back and advised Freeman he had a typo in the title from “Stakeholder” to “Shareholder.” At that time the newspaper editor had no idea there was a difference between the two. Well what is the difference? A shareholder owns part of the company through stocks, or other various forms. Stakeholders are not products, or accounts, or assets, but rather they are actual living, breathing humans with faces. Since they are actual humans they are also customers who are directly affected by the behavior of an organization and they hold a stake in its performance. The job of a stakeholder is to find an approach to value creation. In order to do so, they must find an intersection of interests; almost like a graph you would draw in economics where the supply and demand curve intersects creating equilibrium. To find intersects of interest it involves finding and searching for opportunity, or essentially the art of not having to make tradeoffs. Freeman gave us an example of tradeoffs and searching for opportunity. It involved a chemical company who was notorious for an extreme amount of pollution. The CEO had a change of heart and wanted to completely eliminate pollution and advised his engineers that they needed to figure out a way to end it. The engineers immediately responded and...
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