The article “Boards of Directors and Stakeholder Orientation” was published in the Journal of Business Ethics back in 1992. The article is written by authors Jia Wang and Dudley Dewhirst. This article is written based on the survey from 291 of the largest corporations in the United States. The research article conveys the relationship that exists between the board of directors and stakeholders. The board of directors is a great business innovation that ensures effective management of businesses. Alongside other duties, the board should prioritize enhancement of shareholders’ welfare and ensure that a company meets its social obligations. The main objective of the article is to analyze whether most directors prioritize responding to shareholders questions on business operations.
Stakeholders are simply individuals that are affected by operations of an organization directly or indirectly. Stakeholders influence the operations of an organization and are key determinants in the achievement of mission and goals of the organization. The authors state that there are inside and outside directors in an organization who are entitled to the duty of managing the organization. Conflict of interest is likely to occur between outside and inside directors since they tend to have different objectives and goals at times. The board of directors ensures that it oversees the operations of both inside and outside directors to ensure that they work towards common goals. Outside directors help an organization in accessing external resources. External resources supplement the internal resources that an organization has. When studying stakeholders, it is important to differentiate the roles of C.E.O managers and non C.E.O managers. C.E.O managers ensure that an organizations performance is at its best while non C.E.O managers are not involved actively in the daily operations of an organization.
The article applies two types of research techniques in the collection of information on the research topic. The authors analyze literature on the topic from other researchers. Through the literature review, it is evident that most managers have common goals. Managers rate shareholders low while they rate the company’s clients highly. The attitudes of the managers towards the organization’s customers and shareholders influence their ratings.
Alongside the literature review, the authors apply a mail survey to collect more data on their topic of research. This technique of research is appropriate in the collection of data relating to the topic of research since it is inclusive of views from a high number of directors who constitute an organization’s board. The inclusion of most of the board of directors reduces biases in the research since it is not only the Company Executive Officers that are involved. In the mail survey, the response from the participants was low since it was ascertained to be 24.3%. The low response level was due to the selected participants declining to respond to questions provided and the returning of letters that were wrongly addressed.
The findings of the research study imply most directors in an organization are focused on responding to the questions of stakeholders that relate to business operations. The directors prioritize stakeholders’ matters since stakeholders are a major pillar of an organization and they contribute greatly towards the achievement of organization’s mission and goal. The research findings indicate that customer and government influence in the operations of an organization increases the focus that directors have towards shareholders. The government provides various requirements for organizations towards handling their stakeholders, and this obliges directors to prioritize stakeholders’ matters. The level of customer experience is influenced by how an organization handles its shareholders and this obliges an organization to prioritize shareholders’ matters. The ANOVA technique of research applied in the study focuses majorly on the impact of directors’ roles on the directors’ interaction with shareholders. Through the statistical technique, it is evident that non-C.E.Os are focused on satisfying shareholders and enhancing their welfare more than the C.E.O directors.
Stakeholders’ orientation is high in many organizations, but the level differs in different organizations. An organization has to put the interest of stakeholders first to ensure that it maintains stakeholders’ welfare. An organization should establish quality standard systems to ensure that customer satisfaction is upheld. Provision of quality services and products will ensure that an organization’s clients are satisfied. An organization ensures that shareholders earn sufficient dividends from the organization by ensuring that it involves itself in the most profitable transactions and operations possible. Stakeholder orientation is important in enhancing the welfare of stakeholders and the general operations of an organization.
Stakeholder orientation influences the operations and sustainability of an organization. The article’s findings show that stakeholder’s orientation and achievement of social obligations by the board of directors has great influence on an organization’s financial and social status. Organizations’ customers and the government determine the level of stakeholder orientation in an organization. Most directors are focused on improving the welfare of stakeholders of organizations.
- Wang, Jia, Dewhirst, H Dudley (Feb 1992). Boards of Directors and Stakeholder Orientation. Journal of Business Ethics: JBE; Dordrecht Vol. 11, Iss. 2:115