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64 Cards in this Set
- Front
- Back
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Corporate Scandals variety of issues
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internal governance
human rights (labor/supply chain) client or consumer relations environment |
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Special conditions of big business
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perceived to have more resources and more influence over other sectors
scandals, ethical problems more visible able to attract larger social support and criticism perceived to have more power to change |
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Four components of macroenvironment
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social, economic, political, tech
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Business power - levels of power and influence
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Macro, Intermediate, Micro, Individual
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Spheres of power and influence
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economic, social/cultural, individuals, technological, environmental, political
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balance of power and responsibility 2 general methods
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1) regulation (laws)
2) Cultural understandings |
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Summary of Chapter 1
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-Business and society each have voice and control aspects of their interaction with each other
-Business sector wields certain kinds of power -Power has several levels, several spheres, and affects different stakeholders -Business is often criticized do to perceived abuse of its power, imbalance with responsibility -Social criticism comes from a variety of motivations -Criticism has several different levels of urgency, context, and ownership -Managerial approach - (stakeholders) |
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stake
claim right |
stake interest or share in undertaking
demand for something due or believed to be due often the basis for claim or stake |
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stakeholders
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those with stake in business must be seen as legitimate
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stakeholder approaches to decision making
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Strategic approach – stakeholders factor insomuch as they are obstacles or aiding a firm's operations
Multi-fiduciary approach – management has a fiduciary relationship to all. rough equal footing as shareholders Stakeholder synthesis approach – not fiduciary, but some moral responsibility exists |
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5 Key management questions in stakeholder management
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1 Who are our stakeholders?
2 What are our stakeholders' stakes? 3 What opportunities and challenges do our stakeholders present to the firm? 4 What responsibilities (economic, legal, ethical,and philanthropic) does the firm have to its stakeholders? 5 What strategies or actions should the firm take to best address stakeholder challenges and opportunities? |
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Corporate Citizen Concepts
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Corporate Social Responsibility – emphasizes obligation, accountability
Corporate social responsiveness – emphasizes action, activity Corporate social performance – emphasizes outcomes, results |
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4 parts of Corporate Social Responsibility (CSR)
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Economic responsibilities (price and market)
Legal responsibilities (implementing regulation) Ethical responsibilities (softer, “be ethical”) Philanthropic responsibilities (proactive, “be a good corporate citizen”) |
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Arguments against CSR
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Classical economics
Business not equipped Dilutes purpose Too much power already Global competitiveness |
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Arguments for CSR
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Enlightened self-interest
Warding off government Resources available Proactive vs Reactive Public support |
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Different Approaches to CSR
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Defensive approach (prevents pain)
Cost-benefit approach (measurable $ benefits) Strategic approach (esp emerging markets) Innovation and learning approach |
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Top 10 Reasons companies are becoming socially responsible
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Enhanced reputation
Competitive advantages Cost savings Industry trends CEO/board commitment Customer demand SRI demand Top-line growth Shareholder demand Access to capital |
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Drivers of corporate citizenship
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Internal motivators: Traditions and values, reputation and image, business strategy, recruitment and retention of employees
External motivators: Customers and consumers, expectations in the community, laws and political pressures |
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Corporate Governance
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Corporate governance is "the system by which companies are directed and controlled".[1] It involves regulatory and market mechanisms, and the roles and relationships between a company’s management, its board, its shareholders and other stakeholders, and the goals for which the corporation is governed
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Executive Compensation Problems
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Two main issues:
The extent to which CEO pay is tied to firm performance Use of stock options Problems with stock options The overall size of CEO pay Especially vs labor pay/layoffs Financial misconduct, outside directors, transparency |
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Hostile Takeover
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Poison pill
Golden Parachute |
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Improving corporate governance
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Sarbanes-Oxley Act 2002 focus on compiance/disclosure
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Corporate public policy
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“Corporate public policy is a firm's posture, stance, strategy, or position regarding the public, social, global, and ethical aspects of stakeholders and corporate functioning.”
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Corporate Strategy
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Hierarchical definition of strategy throughout the firm, from level of enterprise to functional level
Enterprise level: Asks what is the role of our company in society? How is our organization perceived by stakeholders? For what do we stand Corporate decisions and actions reveal the presence or absence of soundly developed enterprise-level strategy. |
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Strategic Management Process
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Six general steps:
Goal formulation Strategy formulation Strategy evaluation Strategy implementation Strategic control Environmental analysis |
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Two approaches to public affairs
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Two areas/approaches:
Issues management (82% of time with the public affairs function) Crisis management (50% of time with the public affairs function) |
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Approaches to issue management
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Issue-by-issue approach
Porfolio approach Provides focus and coherence to response Helps prioritize Allows for non-adoption of certain issues |
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Issue Development Lifecycle
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First 5 years – Nascent.
Issue is low key and flexible Issue noted, but no action necessarily taken yet. May begin action to “shape the issue” Years 5-6 – Mature. Stronger response needed Begin stage of legislation, regulation |
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Types of Crises
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Economic
Physical Personnel Criminal Information Reputational Natural disasters |
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3 step crisis management
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Quickly do this:
Identify Isolate Manage |
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5 step crisis management
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Identifying areas of vulnerability
Developing a plan for dealing with threats Forming crisis teams Simulating crisis drills Learning from experienec |
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6 step crisis management
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Avoiding the crisis
Preparing to manage the crisis Recognizing the crisis Containing the crisis Resolving the crisis Profiting from the crisis |
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Components of crisis plan
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Media communications
Employee communications Crisis management team Communications with elected officials (local, state, national) CEO/senior leadership involvement, participation Documentation/written policy or handbook Website communications |
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Descriptive vs Normative
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Descriptive: how systems work
Normative: what should be or how to fix systems |
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3 major approaches to business ethics
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Conventional approach – based on how normal society today views business ethics
Principles approach – based upon the use of principles or guidelines Ethical tests approach – intervention steps to help get to a “right” answer |
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3 models of management ethics
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Immoral management
Operating strategy: exploiting opportunities for corporate or personal gain Moral management Operating strategy: live by sound ethical standards, seeking out only those economic opportunities within the confines of ethical behavior Amoral management Intentional vs unintentional Unconscious bias Operating strategy: Compliance (contrasted with Integrity) strategy Can be a serious organizational problem Are these 3 models about different kinds of managers, time- or circumstance-bound situations, or |
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External/INternal sources of values
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External: religious, philosophical, cultural, legal, professional
Internal: loyalty to cause, to bosses, conformity, performance, results, efficiency |
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Principle approach to ethics
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Teleological theories: something is right or wrong based on the results the action produces
Teleological (EXAMPLE: Bentham/Mill's Utilitarianism) Deontological theories: something is right or wrong bound up with one's duties Deontological (EXAMPLE: Kant's duty-based categorical imperative) Aretaic theories: something right or wrong is determined by practice of habits or traits that are both socially and morally valuedAretaic (EXAMPLE: Plato/Aristotle's virtue ethics) |
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Ethical Tests Approach
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Test of common sense
Test of One's Best Self Test of making something public (disclosure) Test of ventilation (seeking opinions) Test of purified idea (authority has ethical weight) Test of the Big Four (greed, speed, laziness, and haziness) Gag test |
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Improving Ethics in Organization
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Compliance vs Ethics
Moral person vs Moral manager Raising status of Ethics officer Developing ethics policies and codes of conduct Discipline for violators: Hotline and whistle-blowing Training Audits and risk assessments |
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Challenges of Global Ethics
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Challenges in relationships between host countries and MNCs:
Cultural differences Business and government differences Management within MNC varies Role in developing markets (local, global) |
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Improving Global Business
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Balancing and reconciling the ethics traditions of home and host countries
Approaches: Foreign (conform to local customs), Empire (applies home based to new world), Interconnection (not home vs new, only what is best for business) Global (what is good for world rather than local) Concept of Integrative Social Contracts Theory – concentric norms Global codes of conduct Network governance |
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Government and Business in History
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Mid- to late-19th century – government stimulates business
Late 19th century – government regulates and passes anti-trust measures Depression and New Deal – government provides employment, more control over conditions Mid-1950s – government in safety/quality issues, but free market context |
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Role of Government to Business
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Prescribes rules of the game for business
Is a major purchaser of business's products and services Uses its contracting power to get business to do things it wants Is a major promoter and subsidizer of business Is the owner of vast quantities of productive equipment and wealth Is an architect of economic growth Is a financier Is the protector of various interests in society against business exploitation Directly manages large areas of private business Is the repository of the social conscience and redistributes resources to meet social objectives regulator stimulus public good |
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Government Nonregulatory vs. Regulatory
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NON-REGULATORY
Central planning: industrial, tax, or monetary policies Privatization Stimulus, loans Competitive offerings REGULATORY Controlling natural monopolies Controlling negative externalities Achieving social goals Others: controlling excess profits, excessive competition |
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Definition of sustainibility
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Brundtland Commission: “business that meets the needs of the present without compromising the ability of future generations to meet their own needs”
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Top 10 Environmental Issues
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Climate change
Energy Water Biodiversity and land use Chemicals, toxics, and heavy metals Air pollution Waste management Ozone layer depletion Oceans and fisheries Deforestation |
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Government and Environment
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1970 passage of National Environmental Policy Act (NEPA)
Calls for Environmental Impact Statements to be done for any legislation proposals 1970 federal Environmental Protection Agency (EPA) created |
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Ways business can engage community
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Community involvement: donating time and talents of managers and employees
Financial contributions Volunteer programs Resource-based giving Managing community involvement strategy: Understanding business stake in the community Developing Community Action program |
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Corporate Philanthropy
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Giving to the “third sector”
Strategy and philanthropy Opportunities for cause-marketing and cause-branding |
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Negative perceptions in community caused by
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Especially, JOB LOSSES
Outsourcing Business/plant closings |
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Outsourcing
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Challenges of oversight and cultural differences
Suggested best practices: Go offshore for the right reasons Choose your model carefully Get your people on board Be prepared to invest time and effort Treat your partners as equals |
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Two critical moments of business plant closing
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BEFORE a decision to close is made
Responsibility to study whether closing is the only option available Critical and realistic investigations of alternatives, including: Diversification New Ownership Employee Ownership AFTER a decision to close is made Company should seriously attempt to mitigate the social and economic impacts of its decisions and actions POTENTIAL TOOLS: Community-impact analysis Advance notice Transfer, relocation, outplacement benefits Phasing out Assisting in attracting replacement industry Format of impact analysis is flexible Legislation guides advance warning (Worker Adjustment and Retraining Notification Act) Relocations, phaseouts are subject to negotiation “Survivors – The Forgotten Stakeholders”: this group will need support to get back to optimal performance and productivity |
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Social Investing
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Investing in companies that pass social screens
Screens set by research companies Kinder, Lydenberg & Domini (KLD) Can be incorporated into corporate social performance reports to “score” a company |
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Social Entrepreneurship
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What is it?
How did it develop? What are the benefits? What are the risks? |
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B Corporations
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Based on historical idea that companies were chartered to carry out a particular directive
Now, companies can be formed without reference to any or no particular purpose April 2010, Maryland first state to pass law concerning “benefit corporations” Now, 11 states + Washington, DC have B Corp laws Purpose Shall create general public benefit Shall have right to name specific public benefit purposes (e.g. 50% profits to charity) The creation of public benefit is in the best interests of the benefit corporation Accountability Directors and officers shall consider effect of decisions on shareholders and employees, suppliers, customers, community, environment (together the "stakeholders") |
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Production view of the firm
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owners thought stakeholders as only those individuals or groups that supplied resources or bought products or services
(suppliers --> firm --> customers) |
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managerial view of the firm
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growth of corporations and resulting separation of ownership from control, busines firms began to see their responsibilities toward other major constituent groups if they were to be managed successfully
suppliers, customers, owners, employees all give/take to corp/management |
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stakeholder view of the firm
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major shift how managers perceive firm and multilateral relationships with constituent or stakeholder groups
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Primary social stakeholders vs secondary
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PRIMARY:
shareholders/investors employees and managers Customers Local communities Suppliers and other business partners Secondary gov't regulators civic institutions social pressure groups media/academic commentators trade bodies competitors |
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Primary nonsocial stakeholders vs. secondary
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Primary nonsocial
natural environment future generations nonhuman species Secondary environmental interest groups animal welfare organizations |
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Clarkson Principles
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1 acknowledge, monitor
2 listen communicate 3 adopt 4 recognize interdepence 5 work cooperatively 6 avoid anything that jeopardizes rights 7 acknowledge potential conflicts |
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Four Strategy Levels
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Enterprise - For what do we stand
Corporate Level - What businesses should we be in Business Level - How should we compete in an industry? Functional Level - How should a firm integrate its various subfunctional activities and how should these activities be related to changes taking place in the diverse function areas? |
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Issue Managment Process
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1) Identify Issue
2) Analyze 3) Prioritize 4) Develop plan 5) Implement plan 6) Evaluate |
