The Traditional Stakeholder Model

Figure 2.3, the traditional model (Primary stakeholders) of managerial capitalism, where the firm is related to four groups, such as suppliers, employees, customers and shareholders that provide the basic resources for the corporation had to change, to encompass the emergence of environment list, consumer advocates, media, government and global competition.

Traditional stakeholder model In Figure2.4, that shows, the stakeholder view of the firm, the firm has obligations not only to one group but also to a whole variety of other constituencies that are affected by its activities (secondary stakeholders). The corporation is thus situated at the centre of a series of interdependent two-way relationships (Judith, el al., 2006). Stakeholder

Fombrun, et al., (2000) uses the stakeholder theory when managing the upside and downside reputational risk of a firm. Various opportunities of the firm are referred by the upside and the downside constructs a safety net for when risks occur.As exemplified in the CSR Cycle, there are enhanced opportunities of increased trust or partnership, if this model is applied to the firm’s partners and suppliers. The downside that has to be taken care of could for example be that suppliers are using child labour and that bad reputation will spill over from the supplier to the firm as in several acknowledged cases. (Fombrun, et al., 2000) It is given that firms have limited financial, human, and physical and natural resources and it isn’t seen as efficient or effective to deal with all stakeholders equally. The question that regards how individual firms formulate their CSR strategy should reflect an understanding of whether and why greater attention to CSR is warranted by a particular organization (Lee,

Multinational corporations have to face with various problems concerning diverse socio-economic conditions, languages,legal systems,governments,expectations regarding business conduct and value systems which renders business ethics more complexity. What isconsidered normal and legal in one culture might beunethical and illegal in another. Multinational firms face the ethical dilemma of accommodating to local practices and customs while adhering to thelaws and theethical standards of their native countries. Carroll and Buchholtz, (2003) state that “perhaps one of the greatest challenges that face business operating in foreign countries is achieving some kind of reconciliation and balance in honouring both the cultural and moral standards of their home and host countries”. Their further argument is that culture has become one of the manycensorious factors which influence the success of multinational corporations.As differences inlanguages,customs, cultures,institutions and attitudes cross countries can serve as overwhelming barriers to their