Explain the concept of stakeholder theory and its significance in business ethics.
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Business Ethics & ValuesSubjectiveQuestion 5795 of 6
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Detailed Solution & Explanation
Stakeholder theory proposes that a company's performance should be measured by its ability to satisfy the needs of all its stakeholders, including shareholders, employees, customers, suppliers, and the community. This theory is significant in business ethics as it emphasizes the importance of considering the interests of all stakeholders, not just shareholders, in business decision-making. By prioritizing stakeholder interests, companies can promote long-term sustainability, social responsibility, and ethical business practices.
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