BS3714 Thinking about Management

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BS3714 Thinking about Management
10 Ethics in Management Thought
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BS3714 Thinking about Management10Ethics in
Management Thought
Classical stakeholder theory of the firm
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BS3714 Thinking about Management10Ethics in
Management Thought

• In the classical stakeholder theory of the
  firm, Managers hold the ring between contending
  forces
• shareholders/workers
• customers/suppliers
• senior management/ junior management
• government/ society at large

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BS3714 Thinking about Management 10Ethics in
Management Thought

• Criticisms of this approach include
• It fails to explain how each stakeholder can
  be treated in an equitable fashion (e.g. who
  should suffer in a recession
• the shareholders through dividends
• The workers through a factory closure )
• in the last analysis, it depends on the
  relative power of the stakeholders who are
  anything but equal

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BS3714 Thinking about Management 10Ethics in
Management Thought

• Applying stakeholder theory to the government
• Governments role is to ensure a level playing
  field in which competition may occur (e.g.
  through legislation)
• Governments reserve the right to intervene on
  behalf of the social interest/society at large
  but in practice may be reluctant to do so
• Government itself becomes just another
  stakeholder e.g. regulation of the tobacco
  industry

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BS3714 Thinking about Management 10Ethics in
Management Thought

• New Labour and stakeholder theory
• The Blair government was concerned that the
  de-industrialisation of the 1980s had produced a
  dual economy
• some in secure, well paid jobs
• weakened unions and a flexible labour force
  had created many part-time and temporary jobs
  without worker protections

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BS3714 Thinking about Management 10Ethics in
Management Thought

• Ethics can be considered as a set of moral
  principles or values that act as an aid to
  conduct
• One major ethic (across all of the major world
  religions) is to treat others as you would wish
  to be treated
• But what might be ethical for one purpose might
  not be for another

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BS3714 Thinking about Management 10Ethics in
Management Thought

• The power of business
• 500 corporations, employing 0.05 of
  population control 25 of the worlds output
• Top 300 multinationals own 25 of worlds
  assets
• Asset of 50 largest commercial banks 60
  of worlds stock of productive capital

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BS3714 Thinking about Management 10Ethics in
Management Thought

• Responsibilities
• Economic power over the lives of individuals
  and communities should be matched by
  corresponding responsibilities
• Can we say that 19th C. capitalism was
  exploitative whilst 20th C is socially
  responsible or the reverse ?

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BS3714 Thinking about Management 10Ethics in
Management Thought

• No responsibilities
• The duty of the manager is to the owners
  (shareholders) alone
• Therefore it is not ethical to let other
  considerations come into play
• A free market has to play by free market
  rules

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BS3714 Thinking about Management 10Ethics in
Management Thought

• But is ownership a valid concept ?
• Split of ownership from control a feature of
  the modern corporation
• Modern managers are likely to be significant
  owners of shares
• Workers themselves (and communities) have few
  legal rights (and hence governments intervene
  in the case of major closures)

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BS3714 Thinking about Management 10Ethics in
Management Thought

• Modern agendas
• Conservation of non-renewable resources
• Social agendas of genderethnicity age
  disabilities
• Health, safety and welfare are examples of
  representative bureaucracy
• Part of the spirit of professionalism and
  responsiveness to pressure groups

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BS3714 Thinking about Management 10Ethics in
Management Thought

• Long-term interest
• Social responsibility can be seen as good
  business
• But in the short term can lead to lack of
  viability
• to ensure viability will an organisation always
  be tempted to act unethically
• Responsiveness to local/national community
  pressures the key to concerted action