THE EVOLUTION OF MANAGEMENT THOUGHT, 6TH EDITION

Electronic Resource by:Regina Greenwood and Julia Teahen

Management Thought in a Changing World

Chapter Twenty-Two

Obligations and Opportunities Individuals, Organizations, and Evolving

Expectations Ethics Business and Society

Management Opportunities in a Global Arena

The Globalization of Business Managing Across Cultures

Individuals, Organizations, and Evolving Expectations Ethics

“The moral ‘oughts’ that sustain a civilized society.” Business ethics is an ancient issue:

St. Thomas Aquinas – the “just price” as the market price without collusion, fraud, and coercion

Johannes Nider (from Chapter 2) and the quest for ethical business practices in the early fifteenth century.

Joseph Wharton, founder of the first collegiate school of business, was specific about including ethics in the business school curriculum.

Business Ethics

Johnson and Johnson’s credo is illustrative of both ethical and social responsibility issues (ex: Tylenol crisis).

Agency Theory – considered new, but an old issue relative to principal-agent relations. As the ownership of firms was separated from its management, there was heightened interest in this notion of agency.

John Shad – donation of $23 million to the Harvard Graduate School of Business to teach business ethics.

Can business schools make a difference in society by teaching about ethics? Do we expect business schools to do this?

Business Schools and Ethics

Source: http://blog.lib.umn.edu/mose0169/architecture/2008/03/blog_prompt_5_the_built_enviro.html

Business Ethics

Individual and corporate wrong doing is typically followed by legislation.

Examples: Securities

Exchange Act of 1934

Sarbanes-Oxley Act (2002)

Business & Society

Ethics – individual moral conduct Social Responsibility – expectations by

others about the conduct of the firm Business leaders are long-standing

patrons of the arts. Example: Carnegie gave $480 million

during his lifetime

Business & Society

The Federal Revenue Act of 1935 was a step toward corporate philanthropy—but it became law during an economic depression.

A. P. Smith Manufacturing Company vs. Barlow established the precedent for modern corporate philanthropy

See Morrell Heald’s quote about business people and philanthropy. Do you agree with this point of view?

Morrell Heald regarding Social Responsibility

Business & Society

Donna Wood’s findings concerning the Meat Inspection Act (1906) and the Pure Food and Drug Act (1906) show the positive role of business leaders.

Howard Bowen provided one definition of social responsibility and observed that business firms alone could not solve the problems of economic life.

Business & Society

Keith Davis suggests an interesting maxim: “If you mess it up, you clean it up.”

“Stakeholder” – a term that has come into use to describe those others who are affected by business decisions (originated by the Stanford Research Institute)

Ansoff’s distinction between “objectives” and “responsibilities” – secondary responsibilities cannot be met unless economic objectives had been achieved. (Ideas taken from Peter Drucker).

Business & Society – Archie Carroll Archie Carroll’s

categories of responsibilities: Economic - primary Legal – regulations

& rules Ethical –

expectations of how the firm should conduct its business

Discretionary – voluntary choices.

Archie Carroll

Courtesy of Professor Carroll

Business & Society – Archie Carroll

Archie Carroll was a student in Dan Wren’s first doctoral course on management history at Florida State University.

Notes from that first course became the foundation of Dr. Carroll’s own management history course at the University of Georgia.

The notes from that course would also be the foundation for Dr. Wren’s first edition of this book.

Dr. Daniel A. Wren

Management Opportunities in a Global Arena: Globalization of Business

Trade – political strategy Example: policy of

mercantilism Adam Smith advocated a

market economy to replace mercantilism and the wars fostered those policies.

David Ricardo (an early 19th century economist and advocate of free trade with each nation) – finding its comparative advantage.

David Ricardo

How might the scarcity of resources, such as water and oil, be a factor in trade relations?

Trade Relations

Management Opportunities in a Global Arena Advances in transportation and

communication technology enabled a new era for multinational business.

The U.S. was an importer of capital until about 1914, i.e., the U.S. was a debtor nation.

The tire and rubber industry is presented as one example of the disappearance of U.S. firms in the global market. Are there other industries? Where does the U.S. have comparative advantage?

What do these metaphors mean for business?

What is the Lexus? What is the Olive Tree?

Source:http://peakenergy.blogspot.com/2008_06_01_archive.html

Managing Across Cultures

“Culture” is hard to define but is used here as a set of beliefs held in common by a group of people about economic, social, and political behavior.

Bernard Bass noted differences between cultures in the leadership literature in Bass and Stogdill’s Handbook of Leadership

Managing Across Cultures

“Hypernorms” are certain rights that are respected across cultures:

freedom of movement, freedom from torture ownership of property physical security a fair trial freedom of speech and association subsistence minimal education political participation nondiscriminatory treatment on the basis of such

rights as gender or sex.

Managing Across Cultures

A variety of international groups agreed upon:

adequate health and safety standards; the rights of all persons to life, liberty,

personal security, and privacy; environmental standards regarding

pollution. For managers and employees, this suggests

expectations about certain behaviors that exist across cultures, but vary within particular cultures.

Managing Across Cultures

Bill England and his colleagues focused on differences in the meaning of working.

The “centrality of work” notion affects how leaders would motivate in different countries.

Managing Across Cultures

Geert Hofstede (1928 - ) describes cultural differences in different countries. Individualism vs. collectivism

(group orientation); Power Distance: The level of

preference for equality or inequality within groups:

Uncertainty avoidance: The preference for risk vs. structure.

Masculinity (assertiveness) vs. femininity (tender values).

Long term vs. Short term orientation.

GeertHofstede

Courtesy of Prof. Hofstede

Hofstede maintained that U.S. management theories are culturally constrained because management is different in every country. Do you agree?

U. S. Management Theories

U.S. Foreign Corrupt Practices Act of 1977

Amended in 1988 Forbade publicly traded U.S. companies

from making illicit payments to officials of foreign governments or to foreign political parties, their officials, or intermediaries for the purpose of acquiring or maintaining its business

Controversy arises over distinction between “grease” and bribery

“Good business and good ethics go hand in hand” (Enderle). Do you agree?

“Good Business and Good Ethics”

Last Thought from Peter Drucker

“I would hope that American managers—indeed, managers worldwide—continue to appreciate what I have been saying almost since day one: that management is so much more than exercising rank and privilege; it’s so much more than ‘making deals.’ Management affects people and their lives, both in business and in many other aspects as well. The practice of management deservers our utmost attention; it deserves to be studied” (Drucker, 1995, p. 351-352).

Summary

Ethics, codes of moral conduct, have long been a concern of history, but people still struggle to make the right decisions.

Managers’ responsibilities are more complex with the introduction of stakeholders.

Advancements in transportation and communication have made the world a closer place and accelerated the pace of change.

Global markets bring new opportunities, yet jingoism threatens the prospects of more open markets.

END OF PART FOUR