Summary All concepts for the exam explained

Key themes week 2
❑ Ethics and business
❑ Why companies go green
 Competitiveness: improves profitability, reduce costs, brand
reputation, differentiation, innovation etc.
 Legitimation: align with societal expectation and external
pressures form stakeholders, NGOs and governments
o Ecological responsibility: Reflects internal values and
leadership philosophy. Do it because it is ethically right

Contextual Factors Influencing Responsiveness

The motivations are influenced by three key contextual factors:

 Field Cohesion – The degree of cooperation or rivalry within an
industry.

 Issue Salience – How visible and urgent the environmental issue is
perceived to be.

 Individual Concern – The level of personal environmental
awareness among decision-makers.

❑ Corporate social responsibility : A concept whereby companies integrate
social and environmental concerns in their business operations and in their
interaction with their stakeholders on a voluntary basis and in a context
specific way.

 Inside out linkages: how firm’s operations affect society and
communities: emissions, labor practices, pollutions
 Outside-in linkages: how social conditions affect business: legal
systems, infrastructure, education
 Strategic CSR: focus on where you can have the most impact.

❑ Corporate sustainability: CS means managing a firm in such a way that
its activities meet the needs of the present, without compromising the
ability of future generations to meet their needs”.

❑ Perspectives and critiques on CSR:

 The distinction between motivations (especially competitiveness and
legitimation) may blur in practice.
 Too little focus on shareholder value
 Impact hard to measure

❑ Shareholders, stakeholders and the purpose of business
 Shareholders: were tradtitionally most important stakeholders. Main
purpose of business used to be maximizing shareholder value. They
care about profit and dividend, typically not caring about other
stakeholders, as long as it does not matter for profitability.

,  Stakeholders: all things that can affect or are affected by the
business operations of a company.
 Purpose of business:
o Friedman: profit maximization
o Porter-Kramer → CSR can be a source of strategic
advantage.

o Bansal-Roth → CSR can be motivated by profit, societal
expectations, and ethical concerns. All are important

o Freeman and elms: businesses must create value for all
stakeholders. It is an ethical obligation.


Key themes week 3
❑ Stakeholders and sustainability
 Identify, map, and prioritize stakeholders.
 Normative – prescribe the role/purpose of the firm
 Descriptive – map critical relationships

 Instrumental – connections between stakehodler management and
performance
❑ Stakeholder theory & focus areas
 Stakeholder theory: Firms are accountable to all stakeholders (not
just shareholders). Business decisions should benefit customers,
employees, and communities, to create long-term value. Shared
value

 Salience: The degree to which a firm positively responds to a
specific stakeholder request.

 Framework: Stakeholder salience is defined by three attributes:

o Power: The ability of a stakeholder to influence the firm.

o Legitimacy: Perceived validity of the stakeholder’s claim.

o Urgency: Time sensitivity of the stakeholder's claim.

 Different combinations of these attributes create different types of
stakeholders:

o Definitive stakeholders: High power, legitimacy, and
urgency.

o Expectant stakeholders: Two of the three attributes present.

o Latent stakeholders: Only one attribute present.

 Limitations:

o Hard to measure stakeholder value.