Chapter Four

The Corporation and

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

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ern, a division of Thomson Learni
 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
 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:
 Visible and invisible
 Formal and informal
 Organizational cultures can be studied by:
 Observation
 Listening to and interacting with people
 Other ways

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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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Corporate Self-Regulation:
Challenges And Issues
 Establishing codes of ethical and legal
conduct, implementing stakeholder
management assessments, and enacting
ethics programs can help a company
financially and morally.
 Ethics codes
 Value statements that define an organization
 Ombudspersons and peer review programs
 To manage the legal and moral aspects of
potentially problematic activities
 Ethics programs
 Another method for handling moral questions
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