BS3916 Thinking about Management 9:Ethics in Management Thought

BS3916 Thinking about Management 9:Ethics in Management Thought Classical ‘stakeholder theory’ of the firm

BS3916 Thinking about Management 9:Ethics 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’

BS3916 Thinking about Management 9:Ethics 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

BS3916 Thinking about Management 9:Ethics 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

BS3916 Thinking about Management 9:Ethics in Management Thought ‘New Labour’ and stakeholder theory… The Blair government was concerned that the de- industrialisation of the 1980’s 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

BS3916 Thinking about Management 9:Ethics 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

BS3916 Thinking about Management 9:Ethics in Management Thought The power of business 500 corporations, employing 0.05% of population control 25% of the world’s output Top 300 multinationals own 25% of world’s assets Asset of 50 largest commercial banks = 60% of world’s stock of productive capital

BS3916 Thinking about Management 9:Ethics in Management Thought Responsibilities Economic power over the lives of individuals and communities should be matched by corresponding responsibilities Can we say that 19 th C. capitalism was exploitative whilst 20 th C is socially responsible or the reverse ?

BS3916 Thinking about Management 9:Ethics 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

BS3916 Thinking about Management 9:Ethics 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)

BS3916 Thinking about Management 9:Ethics in Management Thought Modern agendas Conservation of non-renewable resources ‘Social agendas’ of gender;ethnicity; age; disabilities Health, safety and welfare are examples of ‘representative’ bureaucracy Part of the spirit of professionalism and responsiveness to pressure groups

BS3916 Thinking about Management 9:Ethics 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