The Corporation and

Internal Stakeholders
Value-Based Moral Dimensions of
Leadership. Strategy, Structure, Culture,
And Self-Regulation

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 Chapter Topics
1. Stakeholder management and value-based
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

• 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

• 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.
– Phillip Morris
• The concept of creative destruction.

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Stakeholder Management and Value-Based
Organizational Systems
• 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.
– 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

• 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

• 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

• The 10-step assessment is as follows:

– 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

• From a stakeholder management, value-based assessment,

a CEO and other organizational leaders would demonstrate
the following skills:
– 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
• Leadership styles:
– Manipulator
– Bureaucratic
– Professional
– Transforming
• Seven symptoms of the failure of ethical leadership:
– 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

• Corporations formulate at least four levels of

strategies:
– Enterprise
– Corporate
– Business
– Functional
• The strategy management process involves:
– Formulating goals
– Formulating strategies
– Implementing strategies
– Controlling strategies
– Evaluating strategies
– Analyzing the environment
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Culture, Structure, and Systems

• Signs of cultures in trouble or weak cultures include:

– 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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