In their article ‘Stockholders and Stakeholders’, Edward Freeman and David Reed (‘Stockholders and stakeholders: A new perspective on corporate governance’, 1982, in De Wit & Meyer, 2010, Reading 11.2) provide two definitions of a stakeholder. What is the major difference between the wide and narrow sense of stakeholder?
The wide sense of stakeholder provides a, too general, definition of various interest groups and individuals. As such, it is not suitable for use in the perspective of strategic management
The narrow sense of stakeholder does not include government agencies as important interest groups
The wide sense of stakeholder provides strategically more useful information, which is needed if corporations are to formulate and implement strategies in turbulent environments
The narrow sense of stakeholder is too exclusive. It does not include individuals, on which the organization depends for financial resources.
According to Freeman and Reed in their article ‘Stockholders and Stakeholders’ (1982, in De Wit & Meyer, 2010, Reading 11.2), the second level of stakeholder analysis considers the exploration of the stakeholder concepts, in strategy formulation processes. The authors identify two processes: the Stakeholder strategy process and the Stakeholder audit process. Stakeholder strategy process is:
A systematic method by which an organization can increase the involvement of stakeholder groups in its strategic decision-making
A systematic method for identifying stakeholders, and assessing the effectiveness of current organizational strategies
A systematic method by which an organization establishes negotiation processes with the most important stakeholders (coalition analysis, conflict management, etc.)
A systematic method for analyzing the relative importance of stakeholders, their cooperative potential and their competitive threat.
According to Freeman and Reed in their article ‘Stockholders and Stakeholders’ (1982, in De Wit & Meyer, 2010, Reading 11.2), who is the organizational stakeholder that, in the ‘real world’, can simultaneously have formal, economic, and political power?
Debt holders
Government and government agencies
Customers
Minority stockholders.
In their article ‘Stockholders and Stakeholders’, Freeman and Reed (1982, in De Wit & Meyer, 2010, Reading 11.2) discuss three different meanings of corporate democracy. How can corporations become more democratic?
By increasing the role of the government: by having public officials on the board of directors
By encouraging senior management to buy shares in the company
By democratizing organizational hierarchy
By establishing an employees stock-ownership plan.
Ackerman and Bauer (1976), as cited in Freeman and Reed (‘Stockholders and Stakeholders’, 1982, in De Wit & Meyer, 2010, Reading 11.2), developed a pragmatic model of social responsibility, called the ‘corporate social responsiveness model’. What does this model address?
The stakeholders perspective vs. the shareholders perspective
The democratization of corporate governance
Business responds to the increased pressure for social change
Business responsibility for social issues.
In their article ‘Stockholders and Stakeholders’, Freeman and Reed (1982, in De Wit & Meyer, 2010, Reading 11.2) discuss the generation of prescriptive propositions that articulate regulative principles, within the stakeholder perspective. As a guideline for strategy formulation, what is the major meaning of ‘generalization of the marketing approach’?
Involving secondary stakeholder groups (e.g., trade associations, political groups, unions) in strategic decision-making
Seizing the initiative from different stakeholders in governance decisions
Understanding the needs of each stakeholder, in a similar fashion to understanding customer needs
Allocating organizational resources according to needs of different stakeholders.