Normative Decision-Making Model

One of the most important tasks during strategy making is the management of the interface between the many (often competing) demands of an organization’s different stakeholders in relation to its strategic goals. Most of the study done in the relationship between management and stakeholders and the motives of stakeholders and how they contribute to the success of firms and models that manager should focus on on managing stakeholders. In the trend, the stakeholder engagement and management function has moved from ‘nice to have’ to core business. Stakeholder theorists, like most strategists, are fond of telling managers what to do. Managers have moral obligations to stakeholders; managers should consider stakeholders’ well-being if they wish

Thus, firm establishes certain fundamental moral principles - the guide on how it does business - particularly with respect to the stakeholder treatment. In our model, these principles are examined within a strategic decision-making process framework which in turn impacts firm performance. Moral obligations, or what we call moral standards play a crucial role on firm performance, from moral obligations the manager expose themselves on the right track to ensure the financial health of the firm, and hence this play a role as the approach of ensuring the financial base of the firm is strengthened. This will also be elaborated more on the part of the commitment management of

Firms view their stakeholders as part of an environment that must be managed in order to ensure revenues, profits, and ultimately, to provide returns to shareholders. Attention to stakeholders issues my help a firm avoid decisions that might prompt stakeholders to undercut or thwart it objectives. This possibility arises because stakeholders can control resources that can facilitate or enhance the implementation of corporate decision (Pfeifer &Salancik, 1978): in short stakeholder management is means to reach an end: something what you have to do that you can achieve else. The end, or the ultimate results, is generally not the welfare of stakeholders. Instead the firm’s goal is the advancement of the interest of only one stakeholder group; its shareholders. Employing the terminology used by Donaldson and Preston (1995) and Quinn and Jones (1995), we see the concern of the form for stakeholder relationships as instrumental and contingent on the value of those relationships to corporate financial success. Quinn and Jones (1995), stated “instrumental strategic ethics enters the picture as an addendum to the rule of wealth maximization for the manager-agent to follow” (1995;