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What is meant the ‘stakeholder’ approach to corporate social responsibility?

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What is meant the ‘stakeholder’ approach to corporate social responsibility?

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  1. Stakeholder theory is a way of recognizing that other people besides those with voting rights are effected by decision making.

    In the typical corporate structure, management answers to a board of directors which are elected by shareholders -- the people who own stock in the company.

    Stakeholder theory says that you need to take account of other interests that are affected by your business -- your suppliers, your workers, your customers, the communities in which your company has facilities, etc.  In other words, the goal of the company in decision-making should not be based solely on what increases the dividends to the stockholders or the value of the stock.  Instead, in any major decision, you should consult with all the stakeholders and take their views and interests into account in making your decision.

    By adding in the interests of these other parties, in theory, this approach should increase corporate social responsibility by adding additional factors to be considered beyond mere profitability.


  2. It means you don't just consider the shareholders, you also consider the employees, vendors, suppliers, end users, those who live in the same community as the corporation, those affected by its products, etc.  Each has a "stake" in the corporation's business in one way or another.

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