The Stakeholder View is a concept within corporate governance that emphasizes the responsibilities and obligations of management to the stakeholders in a company. This means that management must prioritize the needs of stakeholders, such as customers, shareholders, employees, suppliers, and creditors, before their own interests. In this article, we will discuss four of the main obligations that arise from the Stakeholder View.
1. Ensure Asset Protection
Under the Stakeholder View, management has an obligation to protect the assets of the company. This includes safeguarding the company’s physical and intellectual property as well as any other assets that are used in the operation of the business. This obligation means that management must ensure that adequate security measures are in place to protect the company’s assets and take appropriate legal action if an asset is misused or stolen.
2. Take into Account Social Responsibility
Management must take into account the impact of their decisions on society as a whole. This means that they should consider the company’s obligation to all of its stakeholders, including the environment and local communities, when making decisions. For example, management should not make decisions that would result in negative environmental effects, and should strive to make decisions that benefit the wider community.
3. Fulfill Legal Obligations
Management also has an obligation to comply with applicable laws and regulations. This includes laws and regulations relating to the environment, health and safety, labor relations, and corporate governance. Management should be familiar with applicable laws and regulations and ensure that the organization is in compliance with them.
4. Create Value for Stakeholders
Finally, management should strive to create value for the company’s stakeholders. This means that management should look for ways to maximize the return on investments for shareholders and to increase the value of the company for other stakeholders. This could include expanding into new markets, introducing new products and services, and finding new ways to reduce costs.
Ultimately, the Stakeholder View emphasizes the importance of managing the company in the best interests of its stakeholders. Management has a responsibility to ensure the protection of assets, take into account social responsibility, comply with legal obligations, and create value for stakeholders. By following these obligations, management can ensure that the company is successful and that its stakeholders benefit.