Democracy still runs on the basis that the only articulation of people’s will are votes. Elections are held based on the ideas that our politicians embody, where they come from and what they represent. Furthermore it becomes clear that the political and social inclinations differ from one executive manager to another. For instance, while a more liberal manager may want to impact society as a whole, another more conservative one will likely be more focused on value creation rather than social responsibility. In his paper Jost (2006) portrays the ideologies of CEO’s in the United States and explains that their party-political penchants have very little chances of changing during one’s life time especially as he or she climbs the corporate social ladder.
(Jennings, 2009) Unfortunately, there was a darker side to the FM story. Corporate executives choose to focus on corporate goals and meeting the market expectations, ignoring any moral issued witch conflicted with the attainment of their goal. (Jennings, 2009) To understand the reasons the reader needs to be aware of several pieces to the FM situation including: 1) ethics and social responsibility, 2) the importance of devolution, 3) the power and value of incentive plans, 4) the rational for... ... middle of paper ... ...be it Enron or Nazi Germany, can be a result of individuals that do not question authority. Conclusion It is clear in reviewing the FM case that the corporate executive’s personal morals were overrun by their desire to attain personal incentives and bonuses. Lack of internal controls allowed the executives to control what was reported to ensure the goal was attained.
The second group underlines the role of markets and competition. The new public management can be seen as a process of transition from an extreme, mostly managerialist, to another extreme, based purely on capitalization that is, marketization and competition. The advocates of the new public management argue the idea that the difference between the management of the public sector and that of the private sector will disa... ... middle of paper ... ... through a merit system designed by the government personnel agency and often enacted in law. A merit system is designed to prevent partisan political interference in the implementation of policy. The hallmark of such a system is neutral competence, with competence achieved through a system of hiring the most qualified workers for the positions.
They view American business officials to be greedy and many of their jobs just consist of helping businesses find their way around the laws. Frohnen and Clarke then conclude their essay with suggestions on how to change business ethics with education and simply being honest (113-119). Then, in Jeffrey L. Seglin’s essay, “Just Because It’s Legal, Is It Right?” he reveals his perspective on corporate America. Seglin argues that different sides give way to different views of the law. Then, he goes on to emphasize that laws are just pardon from having to think and do your job right.
Furthermore, the prospect of deregulation and liberalization can possibly continue independent of the private sector. “For example, there could be a level of liberalisation if limitations on imports are lifted and regulations are removed that had previously delayed competition,” (Boardman, 2013, p. 30). Which ties in very well with the citation in the introduction by Robinson (2006) that points out that if an item or assets is owned by everyone, then it is really owned by no-one. Forth reason is that politicisation existed where there was corporate managers. Government will be responsible for those enterprises which leads to lasting political influence over the corporation`s management, therefore, lobbying is a constrain for efficiency maximisation.
QUESTION 1 Assuming that managers don’t make the same decisions as shareholders/owners, the conflict between shareholders and managers is identical to conflict arising when a principle hires an agent to take actions on the principal behalf, but these decisions are not profit maximizing for principals but are based on opportunistic (self-interest) behavior of agents. In public corporations we face an additional agency problem, in which top executives are not hired by shareholders but by a board of directors who is elected by, and not perfect substitutes of, shareholders/owners. Well functioning remuneration policy can align the interests of shareholders and managers and mitigate the agency problem by including in the remuneration of managers equity based pay, which will allow a company to share ownership with them and mitigate the conflicts with shareholders. Additionally, a solid remuneration policy, which takes into account performance and results, both in the short and in the long term, can effectively reduce conflicts between shareholders and executives, giving compensations and annual bonuses as a reward for correct behavior, performance thresholds reached and corporation’s goals fully achieved. At the same time in public companies, well-designed corporate governance policy can soften the problem by defining rules, processes, checks and balances.
Drucker (2009), mentions that “business ethics” very origin is political rather than in ethics (p. 23). “It expresses a belief that the responsibility which business and the business executive have, precisely because they have social impact, must determine ethics-and this is a political rather than an ethical imperative” (Drucker, p.23). Lastly, we can mention the unethical practices like bribery, hiring minors or taking advantage of the less fortunate. Corruption is prominent in the Asian market due to a lot of family-owned business groups. Corruption is generally defined as ‘behavior which deviates from the formal duties of a public role because private-regarding (private clique, or personal close family) pecuniary or status gains; or violates rules against the exercise of certain types of private- regarding influence’ (Nye 1967, p. 419).
Businesses and their legitimacy are now viewed as part of the problem. CSR is considered as a scheme to make money and an area which is separate from its core business. Economists believe we should raise the bar and embed the concept of creating shared value on the core strategies of business. CSR activities are externally determined whereas, Creating Shared Value (CSV) activities are more company specific therefore understanding and legitimacy of value chain is needed for sustainability, for example the products and customers being served. CSR activities are limited to CSR budget whereas Creating Shared Value is mobilizing the entire budget of corporation to impact social issues.
Running Head: Business Ethics Business Ethics name school The modern theory of the firm, which is central to finance and corporate law, views the corporation as a of contracts among the various corporate constituencies. Upon this foundation, finance theory and corporate law postulate shareholder wealth as the objective of the firm. Research in business ethics has largely ignored this contracts theory of the firm except to reject the financial-legal model as normatively inadequate. Philosophers generally bring philosophical theories of ethics to bear on problems of business, and they regard the contractual theory of the firm primarily as a subject for criticism using the resources of philosophical ethics. In particular, stakeholder theory, which stresses the importance of all groups that affect or are affected by a firm, has been proposed as a more adequate theory of the firm for studying business ethics.
In fact, the main difference between public and private personnel administration is the political context and the intervention of politicians and their supporters in decisions affecting public employees. Efficiency, on the other hand, is the practice of basing appointments on ability and performance, rather than politics. The individual rights of employees are often preserved by national and regional laws, such as the Constitution in the United States; merit systems; and collective bargaining systems, if applicable. Social equity guarantees that groups that cannot compete fairly are given preferences in job selection and promotion decisions.