MANAGEMENT THEORY

Management Theory and Environmental Forces Term Project

Management Theory and Environmental Forces Term Project

Introduction

Modern management theories are focussed on how individuals contribute to organisation and corporate performance while the performance of the chief executive is dictated by the organisation's financial returns and share price. While organisations espouse the principles associated with total quality management, learning organisations, high performance organisations and implement balanced score cards, the chief executive's primary focus is fixated on retaining control of the organisation to meet shareholder expectations. (Meredith 1998, 441-454)

As we enter the new millennium the corporate world has been rocked by the scandals involving Enron, Worldcom and Adelphia in the USA and in Europe by Parmalat and Mannesmann. These, and a host of other organisations, have been publicly criticised for fraudulent accounting practises or excessive personal gain for the chief executive and senior members of the administration while creating a financial catastrophe for employees and shareholders. The public no longer trusts the corporate world. The World Economic Forum's (2004) global surveys on trust in 2004 and 2002 indicate that people's trust levels in global and large domestic companies remain very low with less than 10 per cent of respondents reporting “a lot of trust” in these institutions operating in the best interests of society. (The results for 2004 show some improvement over 2002.)

Literature Review

In Europe, the concept of corporate social responsibility (CSR) is the subject of many boardroom discussions and in the USA the Dow Jones publishes a CSR index on the premise that many investors believe firms who practice social responsibility provide better long term financial returns. The intent of CSR is to add value to society, to leave the world in a better position for our grandchildren by building environmental and social responsibilities into the traditional economic equation. Proponents of CSR claim that this approach will restore public trust and respectability in the corporation, while the “non-believers” state that the concepts of CSR only reflect appropriate standards of corporate governance and there is no need for CSR as a separate movement. Twenty years ago similar sentiments were expressed about “quality” but the quality movement ensured that the concept is now a necessary but not sufficient condition for effective competition.

As we enter the twenty-first century the concept of corporate citizenship has captured the attention not only of corporate leaders but also society. The corporate scandals associated with Enron in the USA and Parmalat in Europe together with the collapse of Arthur Anderson, the respecting accounting, auditing and consulting global giant, has significantly reduced worldwide public trust in the corporate community. In the recent World Economic Forum (2004) survey on trust, only 7 per cent of respondents reported that global companies operate in the best interests of society. While this figure is a small improvement over the 2002 survey public trust in the corporate community is low. Organisations are seen as profit generating and wealth enhancing for the select few. The scale of the public outcry against unethical behaviour has turned the spotlight towards the importance ...