Business theories guide enterprise administrators in developing strategic management techniques. Modern businesses face various challenges, such as reengineering, downsizing, economic value analysis, outsourcing, and total quality management. The theories guide managers on “how to” and “what to” do in organizations to maintain their success. Business analysts recommend the use of business theories to help organizations avoid frustrations, stagnations, and management crises that can negatively affect an organization’s capacity to generate profit and interact with its stakeholders.
Stakeholder Theory (ST)
The stakeholder concept is a 1963 concept that refers to the groups that are necessary for an organization to thrive, such as society, shareowners, lenders, employees, and customers. This theory is anchored on two crucial corporate principles: rights and effects. The corporate effects principle posits that a corporate and its administrators are liable for the outcomes of their actions on third parties. Similarly, the corporate rights principles argue that an enterprise and its administrators cannot infringe on the rights of others to decide their future. According to Greenwood and Cieri (2005), the stakeholder theory has garnered various criticisms. For instance, neoclassical economics hypothesizes that this premise weakens the property rights of business owners and undermines the free market mechanisms. Further, the principles of this theory obstruct the administration of businesses. One of the unique features of the ST is that the premise does not emphasize the issue of power distribution in an enterprise. Drawing on Gibson (2000), the stakeholder theory has different duties to distinct groups. Accordingly, the utilitarianism moral theory justifies the stakeholder business premise since it advocates that the management should implement actions that yield maximum benefits to the largest number of people. The actions of managers following the stakeholder business principle should favor decisions that would achieve maximum gain for the largest number of groups.
Political Corporate Social Responsibility (CSR)
Business supply chains often encounter challenges such as inadequate market regulation, social challenges with products, and an unsuitable environment to produce a given product. These challenges necessitate enterprises to assume political roles to influence the enactment of favorable policies and a suitable operating environment. Drawing on Tempels et al. (2017), modern corporations often adopt state-like duties since they protect human rights and offer public goods. Corporate businesses often encourage national governments to enforce political regulations that require coercion and often provide financial aid necessary to remedy societal problems. In case governmental actors required for resolving societal injustices are missing, corporate enterprises should advocate for the formation of administrative divisions. The main goal of firms participating in political CSR is to enhance their economic performance. Therefore, many organizations support political candidates and bribe different administrative officials to enact policies that would favor them. However, the majority of corporate businesses influence public policies for common good, on top of their economic benefit. For instance, corporate enterprises may lobby for the government to implement labor regulations that would ensure standard pay in businesses within a particular region (Tempels et al., 2017). The regulation would benefit workers in that they would get standard remuneration while businesses would compete fairly since each rival enterprise would incur similar expenses on labor. According to Edward and Willmott (2013), companies should engage in political CSR since the approach offers pragmatic solutions to challenges that businesses encounter in different environments. Overall, the political CSR theory offers the most reliable solution for solving firms’ operation and management difficulties in different environments.
References
Edward, P. & Willmott, H. (2013). Discourse and normative business ethics. Springer Science Business Media.
Gibson, K. (2000). The moral basis of stakeholder theory. Journal of Business Ethics, 26(3), 245-257.
Greenwood, M. & Cieri, H. (2005). Stakeholder theory and the ethics of human resource management. Working Paper, 47(05). Web.
Tempels, T., Blok, V. & Verweij, M. (2017). Understanding political responsibility in corporate citizenship: Towards a shared responsibility for the common good. Journal of Global Ethics, 13(1), 90-108. Web.