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Accounting Theory Stakeholders Essay

1239 words - 5 pages

Question: Taking into account Figure 3.4 on page 45 of your textbook (Stakeholder Typology: One, Two, or Three Attributes Present) discuss the ‘Ethics in Practice case’ on page 46 (Are Plants and Flowers Stakeholders? Do they have rights?)
Freeman (1984, P. 46) popularized the definition of a stakeholder as ‘. . . ANY group or individual who can affect or is affected by the achievement of the organization’s objectives’. This is a very broad definition meaning that in today’s global business environment any individuals and groups may be business’s stakeholders (Davey, 2015). This sparks the debate about whether or not the natural environment can be identifiable as a stakeholder. In the ...view middle of the document...

Now, the nation’s rivers, forests and air are right bearing entities with ‘the right to exist’, persist and regenerate(Davey, 2015). Although this can be viewed as being a step to promote a sustainable future it could also be viewed as being too extreme. One Swiss scientists exclaims…where should the line be drawn?…should the dignity of microbes be defended too? (Davey, 2015). One of the complications raised in considering the natural environment a stakeholder is that it does not have a mind and cannot have needs as humans understand them (Orts and Strudler, 2002)
Haigh and Griffiths (2009) review the debate about whether the natural should be regarded as a primary stakeholder. They contend that the natural environment can be viewed as a primary stakeholder by combining the stakeholder identification framework of Mitchell et al. (1997), suggesting that stakeholders have a mixture of legitimacy, power and urgency. They argue that the natural environment can be identified as a primary stakeholder when the potential strategic impacts of climate change are examined (Haigh & Griffith, 2009). Climatic changes are resulting in increasingly irregular weather patterns which can damage business infrastructure, resources, products and market resulting in power, legitimacy and urgency because business’ have a dependence on the natural environment(Haigh & Griffith, 2009). In addition Stone (1974) notes that although organizations as non-human entities they have been given many human rights. Therefore because organisations, including suppliers and competitors, are already stakeholders, it is only a short step to include other non-human entities such as the natural environment (Stone, 1974).
Legitimacy-
This perceives appropriateness or a shareholder’s claim to a stake. Stakeholder legitimacy is defined as a ‘desirable social good’, and legitimate stakeholders are those that ‘really count’ (Mitchell et al., 1997). Stakeholders with an obvious, formal and direct relationship to the company such as owners, customers, and employees have a high degree of legitimacy. Authors excluding the natural environment from being a stakeholder say the natural environment does not have a degree of legitimacy because of it lack of human characteristics and a lack of perceived obligation between it and organizations (Phillips and Reichart, 2000). However Haigh and Griffiths (2009) argue that the natural environment is a legitimate stakeholder because managers address environmental issues to maintain their ‘right to operate’.
Urgency-
Urgency is the degree to which an issue requires immediate action (Mitchell et al., 1997). Extreme weather, as a result of climate change fits this description because it can have devastating impacts. For example, major environmental disasters (e.g. storms and tsunamis) demand urgency and power as they often result in life threatening situations. This results in legitimacy as they require immediate reaction due to the nature of...

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