capitalism

Shareholders vs Stakeholders: Who should companies focus on enriching?

When a company has a record year in its stock price, who wins? Frequently it is only a limited number of individuals as opposed to the greater society in which we all live. For public shareholders, a bump in stock price is a good thing but what history shows is that more often than not, the short-term jolts come at the expense of a more sustainable strategy towards success (VW, HSBC and other recent corporate scandals come to mind).

At Ethical Systems, in addition to taking a systems approach to corporate culture and ethics, we advocate for a stakeholder perspective towards business and profits. In contrast to a shareholder focus, which prioritizes the stock price over other factors, concentrating on stakeholders, i.e. those outside of the investor pool, yields a more ethically focused organization where leaders consider actions in the long term. While the latter strategy may forego the highs of the market, it can inoculate against the lows and downturns which can be more debilitating than heights reached at peak economic times.

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Featured Collaborator of July/August: David Mayer

Interview with David Mayer, associate professor in the Management and Organizations Area at the Ross School of Business at the University of Michigan

What are your main areas of research? 

I am an organizational scholar who focuses primarily on one fundamental question: When and why do individuals in organizations engage in unethical and prosocial behavior? More specifically, I am interested how the social environment in organizations (e.g., leadership, peers, organizational climate, organizational practices) impacts unethical and prosocial behavior.

I am also fascinated with the question of whether employees and leaders think that business and work are part of the moral domain of social life and I have worked on several papers that demonstrate that at times “business” and “ethics” are inseparable and at times they are, as the truism suggests, an oxymoron.

In contrast to the bulk of work taking a social science lens on ethics, I typically take a positive lens by not focusing solely on identifying pitfalls and biases that lead to unethical behavior, but by understanding how the context at work can improve prosocial behavior, how employees and leaders in organizations can influence others to do good, and when leaders and employees are most likely to act in ways that suggest they consider work to be a moral domain.

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