Academy of Management (II)

As the theme for the 73rd annual meeting of the Academy of Management is capital in question, most discussions and debates are about the cause-effect and impacts of capitalism in the contemporary economy. Many aspects of these debates are directyly relevant to the practice of management and therefore to our scholarship. Indeed, if, as researchers and teachers in international business (or community development), we assume the inevitability of the prevailing modern economic system which we are a part of as well as emerging issues posed by capitalism.

The theme is obviously appropriate with my research project since Mining MNCs, the theme of these project, focuses on behaviour, actions and contributions by the local community. I attended a number of CSR presentations since I need to make sense of what has been done in international business and business ethics areas. In particular, when we look at CSR from companies locating in different countries. It strikes my thought that CSR in developing countries can be regarded as distinct from CSR in developed countries for a number of reasons.

                 Capitalism in Question: Theme for the 73rd Annual Meeting in Orlando

First, developing countries represent growing economies and thus lucrative markets. At the conference, the power of emerging markets such as BRICS have been discussed widely and the practices and challenges of CSR were commonly discussed. Second, social and environmental crises are felt most strongly in the developing world. Third, developing countries are likely to experience the strongest environmental and social impacts. As a result, developing countries present companies with a unique set of CSR challenges that are different to those faced by MNCs in developed countries.

In the case of international mining industry, if we look at stakeholder theory (Freeman, 1984) that explains relationship among various institutions and suggests that the purpose of a business (in this case international mining) is to create as much value as possible for stakeholders. In order to succeed and be sustainable over time, executives must keep the interests of customers, suppliers, employees, communities and shareholders aligned and going in the same direction. We may argue that value-creation from mining to stakeholders can be different according to circumstances and needs or expectations from each stakeholder. Beside, I have made it clear in my paper that I presented at the academy that, in defining stakeholders, mining MNCs need to move beyond corporate-centric approach to community-centric system. If we take example of Lao PDR from this research, you will see the power of communitarian-base approach in doing corporate social activities.

                  Professor Ed Freeman, Father of Stakeholder Theory at 2013 AOM meeting

 I attended a few session by Professor R. Edward Freeman from the University of Virginia who argues that in the traditional view of the firm, the shareholder view, the shareholders or stockholders are the owners of the company, and the firm has a binding financial obligation to put their needs first, to increase value for them.

 However, stakeholder theory argues that there are other parties involved, including governmental bodies, political groups, trade associations, trade unions, communities, financiers, suppliers, employees, and customers. Sometimes even competitors are counted as stakeholders—their status being derived from their capacity to affect the firm and its other stakeholders. I also argue that, perhaps, in the mining context, stakeholders can and should be a part of value-creation in their own community, not only as consumers, or recipients of  the benefits of mining, but also the creators of value for themselves and the community.

References:

Freeman, R. Edward (1984). Strategic Management: A stakeholder approach. Boston: Pitman. ISBN 0-273-01913-9.

Academy of Management (I)

I am currently attending the annual Academy of Management (AOM) Conference in Orlando, Florida. One of the aims for this trip is to discuss the points from my research on sustainability and management by Mining MNCs in Thailand and Laos. As I did similar presentation for scholars from Mekong region last month at the International Conference on Sciences and Social Sciences, I plan to collaborate more with scholars from the Americas at AOM.

The Academy of Management's vision statement says that we aim "to inspire and enable a better world through our scholarship and teaching about management and organizations." The recent economic and financial crises, austerity, and unemployment, and the emergence of many economic, social, and environmental protest movements around the world have put back on the agenda some big questions about this vision: What kind of economic system would this better world be built on? Would it be a capitalist one? If so, what kind of capitalism? If not, what are the alternatives? Although most of our work does not usually ask such "big" questions, the assumptions we make about the corresponding answers deeply influence our research, teaching, and service.

Three features differentiate capitalism from previous economic systems in history: (a) market competition among profit-driven firms, (b) wage employment within these firms, and (c) limited government over them. Each of these features is associated with important benefits but also with important economic, social, and environmental costs.

Partly in response to these costs, some countries have evolved variants of capitalism that differ from the canonical "free market" form, and some people argue that these differences should be enlarged - broadening the objectives of the firm to encompass social and environmental goals, deepening the participation of employees in management decision-making, and strengthening government's regulatory role. More radical critics argue that these reforms are insufficient: they urge replacing competition with collaboration, wage employment with cooperative ownership, and limited government with economic planning. Proponents of free-market capitalism respond that such reforms, whether more modest or more radical, endanger both economic growth and individual liberty.

While some aspects of these debates may be beyond our professional expertise, much of our work on organization, strategy, human resources, and behavior is directly relevant. Conversely, many aspects of these debates are directly relevant to the practice of management and therefore to our scholarship. Indeed, if, as researchers and teachers, we assume the inevitability of the prevailing economic system, we blind ourselves to the important issues posed by that system and turn our backs on debates prompted by calls to change it.

An economy based on market competition also engenders some distinctive dynamics. Four stand out. First, competition often leads to concentration, as large firms achieve economies of scale and scope and accumulate market power. Second, competition paradoxically stimulates efforts among firms to cooperate in the race to develop new products and processes, in alliances, partnerships, industrial districts, and standard-setting bodies. Third, competition drives firms to expand regionally and internationally. This globalizes both the benefits and the costs of capitalism, and in the process, it pits nations against each other in economic rivalry, which is sometimes productive and sometimes not. Finally, recent decades have seen a dramatic shift towards a financialized form of capitalism. Scholars are still divided over whether this is a long-term, structural mutation of capitalism or a symptom of the decline of one world power awaiting the ascent of another. Nevertheless, financialization, like globalization, poses important questions in our field.

I hope that I will be able to share some points for discussion from this interesting conference.