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How Should businesses act? - Coggle Diagram
How Should businesses act?
Who keeps businesses in check?
Richman & Scheffler
Hospitals bought by private equity often raised prices 7-16%, but overall policy changes were minor
Even if the system is broken, "a hole in a fence does not justify robbing the house"
Is the problem private equity as a whole, or is it a system that rewards anyone who is willing to exploit it
Senate Report
A bipartian report questions whether private equities profit model fits the role hospitals play in public health
Stakeholders
Employees, investors, and customers can push back like goldman analysts circulating their own slide deck, or like the investors who got rid of their shares of Palantir
Is looking good to outsiders the same as being good?
B corp
Nespresso, the coffee conglomerate, earned the same certification as a tiny mom and pop coffee roaster, despite having many claims about it speaking out about farmer poverty and waste from the capsules
Critics say B Corp makes big companies "less bad" instead of making them genuinely good. Firms have the ability to choose what criteria to meet, negating most of the impact of B Corp
BrewDog lost its certification after there was reports of a "culture of fear", so the label can still be taken away
Zheng
After the 2020 shutdowns, companies wanted quick 60 minute DEI trainings to look committed, and most never answered really any questions or had much follow through. It was just preformative for the most part
Research shows one-off trainings do not change behavior, and actually can even cause more backlash than not having any trainings at all
What actually works for this scenario is changing systems, measuring results, actually holding people accountable, and building meaningful groups to not let being feel excluded
Why should a business act ethically at all?
Jones, Harrison & Felps
Treating stakeholders with real trust builds a "close relationship capability" that is very valuable and hard to copy, so ethics can become a lasting compeitive advantage
It is not free: partners might not reciprocate, the firm might bargain too generously, or it might continue to be loyal to someone who is no longer providing value
It pays most in dynamic, knowledge heavy interdependent industries
Weitzner & Deutsch
If close relationships are rare and hard to imitate, the theory then tells most firms that they should not try to imitate this at all
Firms should build relationships because people matter, not because it creates a competitive advantage
Jones (reply)
If you frame ethics as profitable, that is what it takes to get bottom line managers to listen. The goal is a win-win where nobody ends off worse off than before
Who pays when a business does not act ethically or in the best interest of the shareholders?
Ottumwa (Apollo)
Patients absorbed the cost: 3+ hour ER waits, ambulances past 300,000 miles, and some of the worst patient ratings in the US
Apollo controlled the board, but told the Senate it was not liable for what happened in the hospital
Apollo loaded the hospital with debt and a $700MM sale-leaseback, then sold lifepoint between its own funds for a $1.6bn gain
Goldman Sachs
Thirteen first year analysts reported working about 100hr a week and rated their jobs a 2/10 on satisfactory scale
Is high pay a fair trade for those hours, or is it still abuse no matter the salary?
Palantir
An executives AI video caused an internal meltdown. An employee asked how to explain it to thier children hospital client
The cost came back to the company, lost talen, and suffered a falling stock price