Chapter Four
The Corporation and
Internal Stakeholders
Value-Based Moral Dimensions of
Leadership. Strategy, Structure,
Culture, And Self-Regulation
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Learning
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Chapter Topics
1. Stakeholder management and valuebased organizational systems
2. A 10-step assessment of value-based
organizational systems and
stakeholders
3. Leadership and strategy
4. Culture, structure, and systems
5. Corporate self-regulation: Challenges
and issues
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Stakeholder Management and
Value-Based Organizational
Systems
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An organization’s enacted purpose, values,
and mission are central to its internal
alignment and external market effectiveness.
The stakeholders management approach
argues that organizations succeed in market
and nonmarket environments through open
dialogue and a duty to assist stakeholders.
The digital information technology revolution
has increased pressure on industries and
corporations to question to what extent
ethical and stakeholder value-based
management principles and practices still
work.
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Stakeholder Management and
Value-Based Organizational
Systems
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The visionary built-to-last companies are
premier institutions, widely admired by their
peers, and having a long track record of
making a significant impact on the world
around them.
Not all organizations have the characteristics
of built-to-last companies, nor would all
companies agree with or support some of the
ideologies, products, and strategies of
visionary firms.
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Phillip Morris
The concept of creative destruction.
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Stakeholder Management and
Value-Based Organizational
Systems
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Internal organizations are composed of
systems and stakeholders, regardless of
the nature of external environments.
An interesting concept, and counterpart
to the creative destruction argument is
creative reconstruction.
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Dot-com survivors
The internal dimensions of an
organization are illustrated in the
diagnostic contingency model in Figure
4.1.
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Stakeholder Management and
Value-Based Organizational
Systems
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The purpose and core ideology of
organizations are modeled by its leaders and
embedded in its enterprise strategy.
The culture of a company is at the center
spoke of the wheel of transformation.
The vision and strategy, people, systems,
structure, technology, and nature of work
comprise the internal operations of the
organization.
Stakeholder management theory, states that
an organization should treat its internal &
external stakeholders ethically to be
effective with its marketplace communities.
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Stakeholder Management and
Value-Based Organizational
Systems
 From a stakeholder management
perspective, it is the role of an
organization’s leaders, with the
support of each professional, to
ensure that the integration and
market effectiveness of a company
is based on the types of relationship
and values that embody trust,
collaboration, and a “win-win” goal
for stakeholders and stockholders.
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A 10-Step, Value-Based
Stakeholder Management
Assessment
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A stakeholder management approach that is
value-based is argued to be more effective in
implementing organizational change
programs that include ethics and compliance
training.
There are many stakeholder management
audits and assessment frameworks.
Companies can use management, human
resources, and ethics consultants to design
and deliver these types of assessments.
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A 10-Step, Value-Based
Stakeholder Management
Assessment
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The 10-step assessment is as follows:
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Determine the problem or opportunity and gain top
leader support
Review and develop the vision, mission, values, and
ethics code
Use a value-based stakeholder readiness checklist
Develop performance and responsibility measures and
get feedback
Identify stakeholder level of responsiveness and
responsibility in the corporate strategy
Determine the organization's systems alignment
Conduct baseline and gap analysis between current and
desired future states
Create benchmarks
Develop summary report with recommendations
Review results
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Leadership And Strategy
 Leadership is a shared process,
although the values and
behaviors of company founders
and CEOs often frame and set the
cultural tone for the
organizations.
 A starting point for identifying a
leader’s values is the vision and
mission statement of a company.
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Leadership And Strategy
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From a stakeholder management, value-based
assessment, a CEO and other organizational
leaders would demonstrate the following skills:
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Define and lead the social and ethical, as well as
the competitive, mission of organizations
Build and sustain relationships with stakeholders
Talk with stakeholders, showing interest and
concern for other’s need beyond the economic and
utilitarian dimensions
Demonstrate collaborations and trust in shared
decision making and strategy sessions
Show awareness and concerns for employees and
other stakeholders in the policies and practices of
the company
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Leadership And Strategy
 An emerging body of literature and
practice describes leadership from a
deeper spiritual and value-based
perspective.
 Theological and philosophical
literature has helped redefine
leadership to include new concepts
and vocabulary that capture the
human and spiritual domains from
which business leaders already
work.
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Leadership And Strategy
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Leadership styles:
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Manipulator
Bureaucratic
Professional
Transforming
Seven symptoms of the failure of ethical
leadership:
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Ethical blindness
Ethical muteness
Ethical incoherence
Ethical paralysis
Ethical hypocrisy
Ethical schizophrenia
Ethical complacency
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Leadership And Strategy
 Strategy influences the goals and
objectives of the company and its
stakeholders.
 Sets the overall direction of business
activities
 Reflects and models activities that
management values and prioritizes
 Sets the tone and tenor of business
activities and transactions inside the
organization
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Leadership And Strategy
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Corporations formulate at least four levels of
strategies:
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Enterprise
Corporate
Business
Functional
The strategy management process involves:
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Formulating goals
Formulating strategies
Implementing strategies
Controlling strategies
Evaluating strategies
Analyzing the environment
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Culture, Structure, and
Systems
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A corporation’s culture is the shared values
and meanings its members hold in common,
which are articulated and practiced by an
organization’s leaders.
Organizational cultures are:
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Visible and invisible
Formal and informal
Organizational cultures can be studied by:
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Observation
Listening to and interacting with people
Other ways
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Culture, Structure, and
Systems
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Signs of cultures in trouble or weak cultures include:
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An inward focus
A short-term focus
Morale and motivational problems
Emotional outbursts
Fragmentation and inconsistency
Clashes among subcultures
Ingrown subcultures
Dominance of subculture values
No clear values or beliefs
Many beliefs
Different beliefs
Destructive or disruptive cultural heroes
Disorganized or disruptive daily routines
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Corporate Self-Regulation:
Challenges And Issues
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Establishing codes of ethical and legal
conduct, implementing stakeholder
management assessments, and enacting
ethics programs can help a company
financially and morally.
Ethics codes
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Ombudspersons and peer review programs
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Value statements that define an organization
To manage the legal and moral aspects of
potentially problematic activities
Ethics programs
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Another method for handling moral questions
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