...Chapter 8 – Systems oriented theories 1. Introduction Rationale: Why corporate management might elect to voluntarily provide particular information to parties outside the organisation. (Page 250 & 251) Gray, Owen and Adams (1996): Legitimacy Theory and Stakeholder Theory are two theorietical perspectives that have been adopted by a number of researchers in recent years. The theories are sometimes referred to as “systems-oriented theories”. Within a systems-based perspective, the entity is assumed to be influenced by, and in turn to have influence upon, the society in which it operates. Within both legitmacy theory and Stakeholder theory, accounting disclosure polices are considered to constitute a strategy to influence the organisation’s relationships with the other parties with which it interacts. 2. Political Economy Theory According to Gray, Owen and Adams (1996), Legitmacy Theory and Stakeholder Theory are both derived from a broader theory which has been called “Political Economy Theory”. “Political Economy” as defined by Gary and Owen as the “social, political and economic framework within which human life takes places”. The perspective embraced is that society, politics and economies are inseparable, and economic issues cannot meaningly be investigated in the absence of considerations about the political, social and institutional framework in which the economic activity takes place. Gurthrie and Parket (1990) states that corporate reports cannot...
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...Chapter 8 – Systems oriented theories 1. Introduction Rationale: Why corporate management might elect to voluntarily provide particular information to parties outside the organisation. (Page 250 & 251) Gray, Owen and Adams (1996): Legitimacy Theory and Stakeholder Theory are two theorietical perspectives that have been adopted by a number of researchers in recent years. The theories are sometimes referred to as “systems-oriented theories”. Within a systems-based perspective, the entity is assumed to be influenced by, and in turn to have influence upon, the society in which it operates. Within both legitmacy theory and Stakeholder theory, accounting disclosure polices are considered to constitute a strategy to influence the organisation’s relationships with the other parties with which it interacts. 2. Political Economy Theory According to Gray, Owen and Adams (1996), Legitmacy Theory and Stakeholder Theory are both derived from a broader theory which has been called “Political Economy Theory”. “Political Economy” as defined by Gary and Owen as the “social, political and economic framework within which human life takes places”. The perspective embraced is that society, politics and economies are inseparable, and economic issues cannot meaningly be investigated in the absence of considerations about the political, social and institutional framework in which the economic activity takes place. Gurthrie and Parket (1990) states that corporate reports cannot...
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...Essay Maximizing shareholder value versus meeting the needs of all stakeholders. I did not grow up in New England and have only lived here for 10 years so Market Basket was relatively new to me. I certainly didn’t know about the higher wages and benefits the employees have enjoyed nor the family dynamics that operated within the company. It does seem odd that a company could have 2 cousins with the same first and last name wrestling for control of a multigenerational business, but truth can be stranger than fiction. After reading the article and watching the video, it reminded me that the Market Basket battle played out right here in our local community. In particular I remember going into the Market Basket in New Bedford last summer and seeing all the shelves barely stocked and speaking with a few employees about their fervent support of the ousted CEO. As an aside, we have many Market Basket employees that receive their medical care throughout the Southcoast system so I certain can see the interconnectivity between a corporation and the community. It’s been my experience that there are quite a few companies that do believe in meeting the needs of stakeholders and not just shareholder value. One in particular was Anheuser-Busch. When I lived in St. Louis, AB was an integral part of the community and its offices and original brewery anchored the southern section of the city. They paid higher wages, had generous benefits and even allotted 2 cases of beer per week to...
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...effectiveness (OE) has evolved during the past three decades and to provide examples how firms are using HRM to improve their OE today by addressing several challenges that result from a broader stakeholder model. Design/methodology/approach – This paper reviews the past and current work on the relationship between HRM and OE. Findings – This findings indicate that the relationship between HRM and OE is very different when comparing the past with the current work on the relationship between HRM and OE. A major reason for this is the current work on OE uses the multiple stakeholder model that accounts for many more stakeholders than the past work. Practical implications – Human resource (HR) professionals have the opportunity to demonstrate many ways by which HRM can influence OE, and not just solely on the basis of firm profitability. Thus the use of the multiple stakeholder model today offers the HR professional and the HR profession many more opportunities to demonstrate their importance and impact. Originality/value – A systematic review and comparison of the past and current relationship between HRM and OE using the multiple stakeholder model have not been using both the viewpoints of both academics and practitioners. Keywords Human resource management, Organizational effectiveness, Multiple stakeholders Paper type General review HRM and OE...
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...SUSTAINABILITY AT TELSTRA Bigger Picture 2014 Sustainability Report Sustainability at Telstra Contents CONTENTS About us Chairman and CEO message Sustainability scorecard Sustainability highlights Our approach Strategy infographic 03 04 05 06 07 08 Stakeholder engagement Key issues 09 10 11 Click on page links Transparency and accountability Bigger Picture 2014 Sustainability Report 2 Sustainability at Telstra About us ABOUT US Our business Telstra is Australia’s leading telecommunications and information services company, offering a full range of communications services and competing in all telecommunications markets. We employ close to 32,000 people directly, facilitate access to more than 1,900 points of presence across the globe and have one of Australia’s largest shareholder bases, with 1.4 million shareholders. We have a diverse range of customers, including consumers, small business, large enterprises and government organisations, and we strive to put them at the centre of everything we do. In Australia, our services are offered through 362 Telstrabranded retail stores, 90 Telstra Business Centres, 127 Telstra business and enterprise partners and are distributed by over 15,000 retail points of presence managed by our partners. In Australia we provide 16 million mobile services, 7.5 million fixed voice services and 3.7 million fixed data services. Telstra’s international businesses...
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...The stakeholders, designated as “interest groups” or “constituencies”, are “any individual or group who can affect or is affected by the actions, decisions, policies, practices, or goals of the organizations “persons or interests that have a stake, something to gain or lose as a result of its (the organization’s) activities” . The stakeholder is “an individual or group that has some kind of stake in what business does . The question is what a stakeholder is. The typical stakeholders are customers, suppliers, employees, owners, competitors, governments and their institutions, communities, media, . environmental groups and consumer protection groups stakeholders include not only actual stakeholders but also .potential stakeholders The question of what a stakeholder is may be determined by the users’ concept In our opinion, the subjects that can be considered as the relevant stakeholders are those representing certain opportunities or threats for the organization. From the point of view of universities, they are their students, their graduates, the course applicants, their employees, the Ministry of Education,, the sponsors, other educational institutions, businesses, suppliers, the governments , the public authorities (e.g., health insurance companies, social security administration, etc.), all stakeholders benefit from the actions of the business entity is even more difficult. A stakeholder is anyone who is affected by your business in one way or another. Stakeholders...
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...Running head: Medium-Sized Corporation Wings to Fly Tour and Travel Aldo M. Raffo Business and Society – BUS 475 Strayer University Prof. Dr. James Ruether October 27, 2013 Running a business appropriately can be challenging especially in this dynamic digital world since one negative move attracts negative publicity. The acceptable business behavior is dictated by competitors, government regulators, shareholders, interested investors as well as individual principles. It is important for businesses to realize their social implications on the various activities they get involved in other that just aiming to maximize profits (Chambers, 2008). Being the Chief Execute Officer (CEO) of Wings to Fly tour and travel company, it is evident that the social performance of the company I great but some changes need to be implemented in order to improve the general performance of the company. The social responsibility of any business should be to maximize the positive side of its operations and minimize the negative implications on the society. Although these two words are always used interchangeably; social responsibility and ethics, they imply different meanings. Ethics captures the relationship between an individual and that which is right or wrong, legal or illegal, good or evil. Social responsibility on the other hand evaluates a broader context of the impact of a business...
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...Systems to Involve Stakeholders in the Planning of Change Posted on December 24, 2012 by John Dudovskiy Organisational stakeholders of business need to be involved in planning strategic changes. The extent of involvement of each type of stakeholder in the planning of the change depends on a range of factors such as their influence, their importance, and the degree to which changes are going to affect them. The extent of involvement of each type of stakeholder in the planning of the change is best explained by referring to the following graph. Figure 1 Stages of stakeholder involvement in change processes Source: Change Management Toolbook (2010) On the basis of graph above, employees and managers as the main internal stakeholders at Company need to be involved in change planning process to the extent of ‘co-creating’. The degree of involvement of company’s main external stakeholders – customers, on the other hand has to be limited to ‘testing’, whereas the company’s suppliers and shareholders need to be involved in the planning of change to the extent of ‘selling’ Additionally, “decision – makers may commission market surveys or mandate market research institutes so as to early perceive emergent stakeholder groups and their claims” (Zimmermann, 2011, p.225) in order to reflect their viewpoints regarding the change initiatives. It is important to note that the system to involve...
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...THE EFFECT OF AGENCY PROBLEMS IN VALUE MAXIMIZATION Siti Balkish Roslan ZP01796 Financial Management 2/2013 According to HBS Professor Michal C. Jensen, many managers are caught in between the desire to maximize the value of their companies and the demands of “stakeholder theory” to take into account the interests of all the stakeholders in a firm. It is already agency problems arise within a firm whenever managers incentives to pursue own interests at the shareholder expense. This is common knowledge in the business world. There have also been devises and mechanisms that have been created to reduce these problems such as managerial shareholdings, concentrated shareholdings by institutions or by block holders, which can increase managerial monitoring and with that improve performance. The use of debt financing can improve performance by inducing monitoring by lenders as well. The labor markets for managers are motivation for managers to attend to their reputations among prospective employers and in improving their performance. The threat of displacement imposed by the market for corporate control can create a powerful discipline on poor performing managers. (Anup Agrawal and Charles Knoeber, 2001) These are some of the known and common incentives. Professor Michael C. Jenson wrote that “The way out of the conflict, lies in a new way of measuring value.” "At the economy wide or social level," he continues, "the issue is the following: If we could dictate the criterion...
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...When embarking on any change effort, be prepared for some resistance that you will inevitably encounter. While this is true, the degree of turmoil and personal heartache can be minimized. Why invite lightening and thunder, when a light rain and cool winds is all you need to face! One of the ways by which you can reduce the drag and conserve energy in planning and executing change is to enlist supporters to the envisioned change early on. Creating a momentum and support for change by mobilizing key stakeholders is in essence very much like lobbying. This mostly happens behind the scenes, through phone conversations, one-on-one interactions and small group discussions over coffee, in informal settings. The effort is designed to get the main players on the same page about your planned change initiative. By consulting with them you gain their buy-in. Once you have sufficient advocates around you, you can move forward with greater confidence. Having the blessings of your key stakeholders of the business will ensure swift achievement of desired goals. Building such an alliance is perhaps one of your most important challenges. Managing and executing change demands a high order of...
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...A Critical Examination of the Impact of Section 172 of the Companies Act 2006 There has been a plethora of debate surrounding the approach to directorial decision making in the scheme of corporate governance. A divergence has emerged between numerous schools of thought as to whose interests the directors are to consider in conducting the company’s management. The approach under English law is codified under section 172 Companies Act 2006 (‘CA 2006’) which professes an ‘enlightened shareholder value’ approach to corporate governance. This has given rise to scrutiny and challenge from numerous critics but most notably from proponents of the ‘stakeholder management’ stance. The aim here is therefore to evaluate the scope and impact of section 172 and consider the possible alternatives whilst seeking to establish whether section 172 can be considered a positive development within company law. 1. Previous approach Under the common law, directors were required to act in good faith in what they believed to be in the company’s best interests. The main problem was that the company is a legal abstraction and acting in the ‘company’s interests’ is a fairly obscure and elusive concept; thus reform was necessary so that directors could ascertain what the ‘company’s interests’ actually entails i.e. whose interests it is referring to[1]. Moreover, under section 309 Companies Act 1985, directors were to have regard to the ‘interests of the company's employees in general...
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...“Analysis of charcoal value chains general considerations” Steve Sepp – Eco Consulting Group - Germany On behalf of 1 Table of Content Introduction............................................................................................................................................. 2 Importance of promoting the charcoal value chain ................................................................................ 3 Common issues characterizing the charcoal value chain ........................................................................ 3 Analyzing the charcoal value chain ......................................................................................................... 4 Building a roadmap for charcoal value chain upgrading ......................................................................... 7 Conclusions............................................................................................................................................ 10 References ............................................................................................................................................. 11 Introduction Charcoal is a prime source of energy in most African country, as well as a driving force of their economies with estimated annual growth rates of around 3.7 percent [1]. Surprisingly enough, policy makers pay little attention to the ways in which charcoal is produced and sold – e.g. the question as to whether wood used for charcoal burning is harvested...
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...Northampton Group Inc. – Case Study Analyses: How to increase shareholder value Nicole Arends, Jenny Feng, Laura Tromp & Zilha Wever FHTMS University of Aruba Mr. Don Taylor Corporate Finance FTS 2415 March 26, 2013 Introduction This Corporate Finance paper focuses on analyzing the challenges that Northampton Group Inc. (NGI) is facing as it tries to increase shareholder value. In the case study it is stated by the firm’s major shareholders, that they believe NGI is currently undervalued. In connection with this, the management of NGI is considering several means of increasing the shareholders value. Due to difficult economic conditions resulting from the Global Economic Crisis, there are both many opportunities as well as many risks to the alternatives that NGI’s management is considering. This paper will provide both the opportunity to use different valuation methods that will determine the value of the assets of NGI, as well as a discussion of different possible alternatives to increase shareholder value. Furthermore alternative solutions for NGI’s problem will be provided. NGI needs to elaborate by starting an active acquisition strategy or re-organizing its corporate structure with either an updated capital structure or converting to a real estate income trust. The last part of this paper will conclude with several remarks and recommendations for the Chief Financial Officer of Northampton Group Inc., Mr. Patel. These final analyses...
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...Chapter 1 The Corporation and Its Stakeholders McGraw-Hill/Irwin Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. Ch. 1: Key Learning Objectives Understanding the relationship between business and society, and the ways in which they are part of an interactive system Considering the purpose of the modern corporation Knowing what is a stakeholder and who a corporation’s market and nonmarket and internal and external stakeholders are Conducting a stakeholder analysis, and understanding the basis of stakeholder interests and power Recognizing the diverse ways in which modern corporations organize internally to interact with various stakeholders Analyzing the forces of change that continually reshape the business and society relationship 1-2 Introduction – The Business and Society Relationship Business: Any organization that is engaged in making a product or providing a service for a profit Society: Human beings and the social structures they collectively create Business and society are highly interdependent 1-3 Introduction – The Business and Society Relationship We borrow “General Systems Theory (GST)” from biology to explain this relationship; first introduced in 1940s Theory posits that organisms cannot be understood in isolation, even though they have clear boundaries; they can only be understood in relationship to their surroundings Adapted to management theory means that business ...
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...Virtual Class ~ PutraLMS http://lms.upm.edu.my/ • Notes • Announcement • Assignment 1-3 1-3 Chapter 1 The Corporation and Its Stakeholders McGraw-Hill/Irwin Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. Ch. 1: Key Learning Objectives Understanding the relationship between business and society Considering the purpose of the modern corporation Knowing what is a stakeholder and who a corporation’s market and nonmarket and internal and external stakeholders are Conducting a stakeholder analysis, and understanding the basis of stakeholder interests and power Recognizing the diverse ways in which modern corporations organize internally to interact with various stakeholders Analyzing the forces of change that continually reshape the business and society relationship 1-5 Introduction – The Business and Society Relationship Business: Any organization that is engaged in making a product or providing a service for a profit Society: Human beings and the social structures they collectively create 1-6 Figure 1.1 Business and Society: An Interactive System 1-7 Introduction – The Business and Society Relationship We borrow “General Systems Theory (GST)” from biology to explain this relationship; first introduced in 1940s Theory posits that organisms cannot be understood in isolation, even though they have clear boundaries; they can only be understood in relationship to their...
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