Business power

Ryan Fehr
Assistant Professor Michael G. Foster School of Business University of Washington, Seattle

Course Framework
Making Ethical Decisions
Context of business Business power Ethical decision-making (sessions 16) Topics

Managing Relationships
Ethical leadership Employees and customers Organizational cultures (sessions 711)
Not a Moral Person Hypocritical Leadership Unethical Leadership

Building Socially Responsible Systems

Business regulations/governance CSR and sustainability Globalization and MNCs (sessions 1221)

Teleology

Deontology Moral Management No Moral Management

Moral Person Ethical Leadership Moral Muteness

Symbols

Power Structures

Stockholders

Tools

Do it!

??

??

Stories & Formal Values & Myths Assumptions Structures Rituals & Routines Control Systems

Imprudent

Technology

Irresponsible
Governments Corporation Customers

Dont do it!

??

??

Ethics

Strategy
Communities Employee

Idyllic

Many forces influence and are influenced by business Business power produces business responsibility Think comprehensively to make optimal decisions

Be cognizant of and responsible for the ethical culture that you create for others Be mindful of stakeholder rights and interests

Organizations depend on stakeholders for their survival To navigate the business environment, organizations must know how to address their stakeholders needs

Key Points Principles

Critical Thinking Communication

Integrated Management Corporate Strategy

What is POWER?
The ability to exert influence and control over oneself and others -Can be a property of an individual or a group

Think of a time you had power over another individual or group of individuals. What happened? How did you feel?

81% increase in likelihood of being accepted for the job

Power Posing
Power is linked to two neuroendocrine hormones
High levels of testosterone (dominance hormone) Low levels of cortisol (stress hormone)

Power has important consequences for the power holder, too

Confidence increased self-esteem, agency, and control; less stressed-out by tough situations Disinhibition people feel less constrained by the situation Social attentiveness less dependent on others, and so pay less attention to their needs - When they are paid attention to, it is in self-interest Chance more tolerant of risk

Conclusions from both studies

Power is sometimes a perception that YOU can manipulate You and others will view you as more powerful You are perceived as more
Persuasive, confident, passionate, authentic, comfortable, captivating, enthusiastic

Important outcomes are linked with the expression of power

JOBS!!

Small things can make a big difference

Where do people get their power?

Coercive

Reward

Legitimate

Referent

Expert

5 primary sources of power

Coercive power entails forcing someone to do something that they would prefer not to do
Usually, this is for fear of punishment

5 primary sources of power

Reward power is derived from an ability to give someone something desirable

5 primary sources of power

Legitimate power entails feelings of obligation or responsibility. Typically, this is associated with a persons formal title
Requires a recognition of legitimacy by the person being influenced

5 primary sources of power

Referent Power is power from the other persons perception of your value. Can be altered through persuasion
Even if your coworker doesnt have formal authority over you, your admiration of him/her might lead you to do what he/she requests

5 primary sources of power

Expert power entails the utilization of knowledge or expertise
You might find that one of your group members attains power this way

In class exercise
Coercive power entails forcing someone to do something that they would prefer not to do Reward power is derived from an ability to give someone something desirable Legitimate power entails feelings of obligation or responsibility. Typically, this is associated with a persons formal title Referent Power is power from the other persons perception of your value. Can be altered through persuasion

Expert power entails the utilization of knowledge or expertise

In class exercise
1. Which kind of influence is most likely to immediately result in the desired behavior? Which will have the most long-lasting effects? What effect will using a particular base of power have on the ongoing relationship? Which form of power will others find most acceptable?

2. 3.
4.

Businesses can have power too

Businesses can exert influence on their own actions and the actions of others What gives a business power?

Businesses exert power at two different levels

On the surface, businesses determine what is bought and sold, who is hired, who is fired, the commercials we watch, the price of goods, etc.

Beneath the surface, businesses can influence the deepest levels of society, from the structure of government to our cultural values.

There are seven realms of business power

Economic Events, activities, and people by virtue of control over resources

Technological
Political Legal

The direction, rate, characteristics, and consequences of physical innovations

Governments The laws of society

Cultural
Environmental Individuals

Cultural values, habits, and institutions

Nature Employees, managers, consumers, etc.

The power of Wal-Mart

Economic Events, activities, and people by virtue of control over resources

Technological
Political Legal

The direction, rate, characteristics, and consequences of physical innovations

Governments The laws of society

Cultural
Environmental Individuals

Cultural values, habits, and institutions

Nature Employees, managers, consumers, etc.

Two perspectives on business power

o Dominance theory: The view that business is the most powerful institution in society, because of its control of wealth
o This power is inadequately checked and, therefore, excessive

o Pluralist theory: The view that business power is exercised in a society where other institutions also have great power
o It is counterbalanced and restricted and, therefore, not excessive

Legitimacy refers to the rightful use of power. Its opposite is tyranny

The social contract legitimizes business power by giving it a moral basis. Businesses violate the social contract when they stop acting in line with societys rules (i.e. laws) and values