COMM1100 Chap.1 Stakeholders and Corporate Responsibility
Stakeholders and Corporate Responsibility
The opening week of COMM1100 sets up the lens used for the rest of the course. A business decision is examined three ways at once: through economics, through the law, and through corporate responsibility.
The concept that links them is the stakeholder, defined in the Week 1 lecture as anyone who can affect, or be affected by, an organisation’s decisions, policies or practices.
This chapter separates primary from secondary stakeholders and past, present and future ones, contrasts Friedman’s shareholder view with Freeman’s stakeholder view, and introduces the normative and instrumental approaches to deciding.
It closes with the reasons the lecture gives for corporate responsibility: a licence to operate, the economic power of large corporations, and a business case built on loyal customers, engaged employees and lower costs.
These ideas return in every later week.
When the course studies consumers, competitors, government and employees, each is a stakeholder group whose rights and interests you will weigh, and the case-study analysis asks you to examine a real business decision in exactly that way. Treat the definitions here as the vocabulary for the whole term.
What this chapter covers
- 01
Stakeholders as those who can affect or be affected by a decision
- 02
Primary and secondary stakeholders; past, present and future groups
- 03
The shareholder-centric view (Friedman, 1970)
- 04
The stakeholder-centric view (Freeman, 1984)
- 05
Normative and instrumental approaches to decision making
- 06
Why corporate responsibility: licence to operate and corporate power
- 07
The business case: customers, employees, costs and partnerships
Worked example · free
Mapping stakeholders for a rooftop solar installer
- +1Primary stakeholders have a formal, direct tie: the apartment owners who pay the levy and the installation crew employed by the firm.
- +1Secondary stakeholders are affected without a formal tie: tenants who live under the roof works, and neighbours whose views or light may change.
- +1Instrumental: the levy must cover panels, labour and insurance and still leave the firm a margin. Normative: tenants, who did not vote on the levy, deserve notice and fair handling of disruption.
- +1Ripple effect: lower power bills for some residents may raise rents later, shifting part of the benefit from tenants to owners.
Key terms
- Primary stakeholder
- A group with a formal and direct relationship with the company, such as employees, customers or investors.
- Secondary stakeholder
- A group without a formal, direct relationship with the company that can still be affected by its decisions.
- Normative approach
- Deciding by what is ethically right under widely accepted standards such as human rights, justice and fairness.
- Instrumental approach
- Deciding by how well a choice delivers business goals such as profit, an edge over rivals or meeting regulations.
- Licence to operate
- The acceptance from society that a business needs to keep operating, which depends on attention to stakeholders and the environment.
Stakeholders and Corporate Responsibility FAQ
Are shareholders also counted as stakeholders?
Yes. Shareholders can affect and are affected by the firm’s decisions, so they meet the definition. The debate between the shareholder and stakeholder views is about whose interests should come first, not whether shareholders count.
What is the difference between the normative and instrumental approaches?
The normative approach asks whether a decision is ethically right by accepted standards such as fairness and human rights. The instrumental approach asks whether it achieves goals such as profit, competitive advantage or compliance. The lecture recommends integrating both.
Why would a profit-seeking firm take corporate responsibility seriously?
The lecture gives a licence-to-operate argument, a power argument about very large corporations, and a business case: customer loyalty, employee engagement and lower turnover, reduced input and legal costs, and partnerships with suppliers, NGOs and government.
How should I list stakeholders in a test answer?
Name each group, classify it as primary or secondary, and state concretely how the decision affects it. Including a future-oriented group or naming who holds power over the decision usually strengthens the answer.
What is a ripple effect in a stakeholder analysis?
It is a knock-on consequence that spreads beyond the parties you first listed, often unintended. The Week 1 tutorial asks for one when evaluating a start-up idea: for example, a new venture taking customers from an existing local business, which then cuts staff hours in the community the venture depends on.
Assessment move
Learn the definitions word for word in meaning, because short-answer questions often turn on them: stakeholder, primary and secondary, normative and instrumental. Then practise on unfamiliar businesses. Pick a local cafe, a delivery app or a mine, list five stakeholders with their classification and stake, and write one instrumental and one normative consideration for a decision the business might face.
This is also the opening move of the case study, so the habit pays twice.
Working through Stakeholders and Corporate Responsibility in COMM1100? Sia is AskSia’s AI Economics tutor — ask any COMM1100 Stakeholders and Corporate Responsibility question and get a clear, step-by-step explanation grounded in how COMM1100 is taught and assessed. Read this chapter free, then take your hardest questions to Sia.
