Please enable JavaScript.
Coggle requires JavaScript to display documents.
Module 5: How should business act? - Coggle Diagram
Module 5: How should business act?
Instrumental vs. relational motives
Instrumental stakeholder theory argues that ethical treatment of stakeholders can improve firm performance by increasing trust, cooperation, knowledge sharing, and reducing transaction costs
Jones et al. extend this argument by claiming that strong stakeholder relationships can become a sustainable competitive advantage when they are valuable, rare, and difficult to imitate
Critique: Weitzner and Deutsch argue that this makes ethics too instrumental
If ethical behacior is justified only because it produces competitive advantage, then once the financial benefit disappears, the moral justification disappears as well
For relational motivation: firms should value relationships for their own sake rather than only for economic gain
CSRE model: emphasizes relational contracts, trust, joint value creation, and long term cooperation
Tension: i think relational motivation can be ethically attractive but difficult to sustain in business
Firms still require measurable performance, returns, and accountability
Stakeholders themselves may also be primarily profit-driven
Profit vs. stakeholder welfare
Efficiency in financial terms is not always equivalent to social value
In the Ottumwa case, debt, rent, feed ans sale-leaseback transactions increased financial pressure on the hospital
Apollo exercised substantial control over Lifepoint's board and policies while disputing responsibility for hospital-level outcomes.
In Goldman Sachs case, the debate is whether extreme hours are part of a voluntary, highly paid employment contract or whether they cross the line into exploitation
Market-contract view:
since employees are highly educated, they knowingly choose investment banking, also the compensation is high, so they should accept the fact as it is
Duty of care view:
consent does not automatically justify harmful working conditions. Power imbalance and organizational culture may make "choice" less meaningful
Palantir is deeply tied to government related work. Those commitments have contributed to strong gov relationships and business growth, but also employee leaves, customer resistance, investor concern, and reputational risk
Measurement & Performative Ethics
Measurement creates accountability, but metrics can also be gamed
B corp attempts to formalize stakeholder responsibility through measureable standards and certification, but they can also involved in public or environmental criticism.
Many DEI programs became more and more sumbolic, short-term interventions designed to signal concern rather than produce organizational change.
Responsibility has to be designed into the organization rather than left to the goodwill, incentives, or moral beliefs of individual managers.