Ethics, Governance and Sustainability Topic 1: Role of Business in Society (A) Nature of the firm (The Shareholder versus Stakeholder Approach) (Images from Google images)

http://filmplatform. net. access. library. unisa. edu http://filmplatform.net.access.library.unisa.edu.au/product/the-corporation/#streaming

A sustainable society and a fulfilling life © UniSA

Lung clearing holidays? School domes? Air purifying masks?

Under the dome https://www.youtube.com/watch?v=MhIZ50HKIp0

Shifting paradigms? Most management theory and research continues to proceed as if organizations lack biophysical foundations. *** Quite simply how many organizations could exist in the absence of oxygen production, freshwater supply or fertile soil? *** This disassociation leads organizational theorists to employ injudicious assumptions...and fallacies of misplaced concreteness. Gladwin, T. N., Kennelly, J. J., & Krause, T. S. 1995. Shifting paradigms for sustainable development: implications for management theory and research. Academy of Management Review, 20(4): 874-908.

Ecosystems services – who sustains whose development? http://climate.nasa.gov/climate_reso http://www.bloomberg.com/graphics/carbon-clock/

Shifting paradigms? Have the “iron cages” of institutional theory lead to constricted sensemaking?

Shifting paradigms? The techno-centric worldview (thesis). The eco-centric worldview ( antithesis). The sustain-centric worldview.

Techno-centric No limits to growth. Free-market. Nature is legitimately exploitable. Virtually inexhaustible resources, especially because of infinite human ingenuity in exploiting them. Population growth is a positive force of improvement rather than a driving force of environmental degradation.

Eco-centric Deep ecology movement. Web of life in which humans are but one strand (“Gaia”). Nonhuman nature has intrinsic value, independent of human values and human consciousness. Nature is fragile and vulnerable. Damage to human interests is essentially irreversible in case of biodiversity loss groundwater depletion and interference with biogeochemical cycles. Population and carrying capacity of the planet.

Sustain-centric Stewardship discourse. Humans are neither totally disengaged from not totally immersed in the rest of the nature. Humans are part of the biosphere in organic and ecological terms but above the biosphere in intellectual terms. “Humans have become, by the power of for glorious evolutionary accident called intelligence, the stewards of life on earth. We did not ask for this role, but we cannot abjure it. We may not be suited for it but here we are!”

Sustain-centric (homohonoris) Waste emissions should not exceed natural assimilative capacity. Harvest rates for renewable resources should not exceed natural regeneration rates. Population size must be stabilized through the comprehensive participation and equity of women in development. Consumption must be scaled down. Precautionary principle.

Shifting paradigms? “Business, has become, in the last century, the most powerful institution on the planet. The dominant institution in any society needs to take responsibility for the whole.” Gladwin, T. N., Kennelly, J. J., & Krause, T. S. 1995. Shifting paradigms for sustainable development: implications for management theory and research. Academy of Management Review, 20(4): 874-908.

So, shareholders to stakeholders…

Stakeholder theory “A stakeholder is any group or individual who can affect or is affected by the achievement of the organizations objectives”.

http://podcast.unisa.edu.au/…/Manageme…/Source/EdFreeman.mp4

Stakeholder salience - who counts and why? Power (“A relationship among social actors in which one social actor, A, can get another social actor, B, to do something that B would not otherwise have done”) Legitimacy (“A generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed systems of norms and values beliefs and definitions”) Urgency (“When a relationship or claim is of a time sensitive nature and when the relationship or claim is important or critical to the stakeholder”; time sensitivity and criticality) Mitchell, R. K., Agle, B. R., & Wood, D. J. 1997. Towards a theory of stakeholder identification and salience: Defining the principle of who and what really counts. Academy of Management Review, 22(4): 853-886.

Stakeholder salience - who counts and why? Stakeholder attributes are variable, not steady-state Stakeholder attributes are socially constructed, not objective reality. Consciousness and willful exercise may or may not be present.

Network depiction of firm stakeholder inter relationship Trade Associations Customers Shareholders Scientific Community Community Env NGO’s Competitors Employees Government Suppliers Firm Network depiction of firm stakeholder inter relationship (based on Rowley, 1997)

Is the firm dependent on the stakeholder? Resource dependence dynamics (based on Frooman, 1999). Is the firm dependent on the stakeholder? Is the stakeholder dependent on the firm?   Yes No High interdependence (direct-usage strategy) 1 Stakeholder power (direct-withholding strategy) 2 Firm power (indirect-usage strategy) 4 Low interdependence (indirect-withholding strategy 3

So, Who Counts and Why? © UniSA

Retrospective, Perspective and Prospective…