Employee reactions to leadership sources of power

Abstract:
Five different sources of power utilized by leaders in organizations: coercive, reward, legitimate, expert, and referent are examined and each power sources is distinguished as eliciting different reactions from employees. Examination of management of interpersonal conflict, subordinate compliance, and employee satisfaction indicate that employees react to the assertions of these different sources of power by being resistant, compliant, or committed to the leader and the organization.

Introduction:
Effective leadership mandates not only that the power exercised produce the desired behavioral results in subordinates but also achieves a lasting commitment to the leader and the organization from subordinates as well. The different types of power utilized by a leader produce different reactions from employees, eliciting responses that can be characterized as resistant, compliant, or committed. In The Art and Science of Leadership, Afsaneh Nahavandi examines the five different sources of power exerted by leaders in organizations that were first identified by John French and Bertram Raven in 1959, and also examines the reactions of employees to the exercise of these different sources of power.
Nahavandi distinguishes an individual’s organizational powers between those powers that are bestowed upon an individual by virtue of placement within their environment, and those powers which arise from an individual’s own characteristics, (p. 164). Position based power sources include legitimate power, reward power, and coercive power, while personal sources of power include expert power and referent power. Legitimate power is based upon the subordinate’s belief that the supervisor has the right to control their behavior by virtue of their position, while reward power is based upon the belief that the supervisor can bestow rewards for desired behaviors, and coercive power is the based upon the belief that the supervisor can punish employees for undesirable behaviors. Personal power sources, expert power and referent power, are influence related and derive out of the employees respect for the individual that wields the power. Expert power is based upon the subordinate’s belief that the supervisor has experience and ability, while referent power is based upon admiration for the supervisor and the supervisor’s likeability. Utilizing different power sources produces different expected results with employees either resisting the authority, complying with the authority or committing to the authority and the organization. Nahavandi maintains employees display resistance to reward and coercive power, compliance with legitimate power, and more readily display commitment to the influence of expert and referent power. Gary Yukl and Cecilia Falbe, agree with Nahavandi’s assessment, noting that subordinates rate the effectiveness of managers with personal power more strongly than the effectiveness of managers with position power, (1991). Additionally, Yukl and Falbe distinguish the effectiveness of power sources between managers and supervisors, (defined as lower level managers), indicating that position based power sources including legitimate power, reward power, and coercive power are more effective tools for managers than for supervisors. Yukl and Falbe also note that subordinates view reward powers and coercive powers are the least important sources of influence, while they view legitimate power as the single most important source of influence in lateral and downward relationships, (1991).
Influence Tactics for Operational Business Problems – Interpersonal Conflict
A major operational problem for an organization is how management chooses to handle interpersonal conflict. If managed incorrectly through poor leadership interpersonal conflicts can be prolonged and even exacerbated. Afzalur Rahim and Gabriel Buntzman identify five different tactics for handling interpersonal conflict: integrating, obliging, dominating, avoiding, and compromising, and maintain that leaders handle conflicts either by satisfying their own concerns, the concerns of others, or both, (1989). Integrating indicates a high concern for both self and others, it is identifiable by an open exchange of information to reach a mutually agreeable solution to resolve differences, and is most associated with a referent and expert sources of power. Obliging indicates a lower concern for self and a higher concern for others, attempting to play down differences between individuals and it is most often associated with a referent source of power. Dominating is considered a forcing behavior and indicates a high concern for self and low concern for others and, although it can be associated with expert power, it is primarily associated with legitimate power. Avoiding indicates both a low concern for self and for others and indicates management is withdrawing from the resolving interpersonal conflict, it is consequently not associated to a high degree with any source of power though it is linked to reward source of power to a lesser degree. Compromising indicates an intermediate concern for self and others, is identifiable by a mutual decision making process, and is associated exclusively with referent power. It is interesting to note that the coercive source of power is not identified with any of the tactics for successfully handling conflict. Clearly the leader utilizing legitimate, expert, or referent power sources will be the most successful when dealing with interpersonal conflict within an organization. Additionally, Nahavandi indicates that these same three power sources lead to compliance and commitment from employees, (p. 164). Ideally, leadership would utilize the integrating tactic, which indicates both a high degree of concern for self and others, and is most associated with expert and referent power sources.
Influence Tactics for Administrative Business Problems – Subordinate Compliance
Subordinate compliance indicates the willingness of employees to follow the instructions of their superiors. Subordinates that cannot be counted upon to conform to the influence of their leaders pose an intrinsic threat to the values to an organization’s administrative principles. Rahim and Buntzman write that the most effective evaluation of the use of power within an organization is the ability to measure the compliance of employees to leadership, (1989). In their study the highest correlation existed between referent power and subordinate compliance, and although the authors found a positive correlation between legitimate power sources and compliance they found that this was not correlated with the employee’s satisfaction with their supervisor. Clearly the leader that utilizes a referent power source has the greatest success of achieving organizational goals by ensuring that they influence their subordinates and their subordinates comply with their instructions.
Influence Tactics for Ethical Business Problems – Employee Satisfaction
Valentine, Varca, Godkin and Barnett indicate in their 2008 research study that there is a positive correlation between a positive employee job response, indicating job satisfaction, and higher levels of ethical behavior, (2010). Valentine et al measure 92 pairs of managers and subordinates responses and correlated between the employee’s positive job responses and their intention to stay with an organization and their manager’s evaluation of their ethical performance. Afzalur and Buntzman indicate that employee satisfaction is positively correlated to both expert and referent power sources, while it is a negatively correlated to coercive power sources, and there is no consistent correlation evident to either reward or legitimate power sources, (1989). Additionally the authors indicate that only referent power sources were positively correlated with employee satisfaction, behavior, and attitude. Clearly employees respond consistently positive when they are supervised by leaders with either expert or referent power sources, this is reflected in increased job satisfaction as evidenced by satisfaction with their supervisors and is most apparent when they are supervised by ethical leaders.
Conclusion:
Employees clearly react more positively when managers utilize personal power sources to solve conflicts between employees, provide instruction to them, and supervise them, rather than managers that rely upon organizationally conferred power sources. Managers that utilize referent, expert, or legitimate power sources more successfully manage their subordinates, with referent power sources clearly being the superior method for managing interpersonal conflict, promoting subordinate compliance, and increasing employee satisfaction. Additionally, leaders demonstrating leadership skills derived from personal power sources produce employees that are more committed to the leader and to the organization.















References:
Afzalur, R. & Buntzman, G. (1989 March). Supervisory power bases, styles of handling conflict with subordinates, and subordinate compliance and satisfaction. Journal of Psychology, 123(2), 195-210. Retrieved from EBSCOhost Business Source Complete.
Nahavandi, A. (2006). The art and science of leadership (4th ed.). Upper Saddle River, NJ: Pearson Prentice-Hall.
Valentine, S., Varca, P., Godkin, L., and Barnett, T. (2010, January). Positive job response and ethical job performance. Journal of Business Ethics, 91(2), 195-206. Retrieved from EBSCOhost Business Source Complete.
Yukl, G. & Falbe, C. (1991, June). Importance of different power sources in downward and lateral relations. Journal of Applied Psychology, 73(3), 416-423. Retrieved from APA PsychArticles.

Read More

Preparing to transition to self directed work teams, (SDWTS)

Abstract:
A self directed work team, (SDWT), initiative can effectuate a change within an organization from a traditional management controlled organization, to an environment where management develops leadership skills and act as team advisors to enable employee empowerment. Appropriate change management through training of managers in leadership skills is necessary to successfully implement this initiative. Additionally a credible commitment to the initiative from the CEO must be visible to all employees.

Introduction:
The implementation of a self directed work team, SDWT, can increase an organization’s flexibility by empowering employees and allowing them to make decisions that affect customers, however, an employee empowerment initiative such as this can be fraught with problems from an organizations management. Employee empowerment programs can fail due to managers feeling threatened when it is implemented and can ultimately result in a loss of productivity. It is up to the organization’s chief leadership to ensure that SDWT employee empowerment programs are implemented with appropriate training to ensure that all employees are comfortable with these transitioning responsibilities. If managers and their subordinates feel threatened rather than empowered by these responsibilities then an organization may not realize the productivity gains expected from these programs.
When attempting to empower the workforce, issues of trust can arise within the manager/subordinate relationship. Boggs, Carr, Fletcher, and Clarke state that it is not logical to suggest that supervisors empower employees by relinquishing their own control, they further state that managers would rather promise less empowerment than break promises to their subordinates to avoid encountering mistrust from their employees, (2005). This necessitates that a firm proceed cautiously when implementing an SDWT employee empowerment program in order to remain productive throughout the transition and to achieve the desired end result of increased employee productivity. The resulting employee resentment of the SDWT empowerment initiative can be successfully avoided through careful implementation of the program as well. In additional consideration is that managers may fear that increased employee decision making will reduce the need for management positions, (Peach, 2009). Managers must assured that they are in fact gaining leadership skills, rather than losing supervisory skills in order to thwart this. Managers, as opposed to leaders, will attempt to hold onto control of decision making by attempting to further restrict an employee’s involvement. The resulting implications within the context of an empowerment program can ultimately be destructive on an organization’s productivity by causing employees to distrust management and the organization. Pech elaborates that employees who are tightly controlled by management will feel threatened and will feel increasingly vulnerable. To avoid this scenario the manager must be trained to ultimately become team’s advisor and leader rather than a traditional authoritarian figure. Ceasar Douglas argues that managers must become leaders and must utilize leadership influence tactics to promote team member empowerment when transitioning to an SDWT model to avoid negatively affecting their subordinate’s productivity, (2002). When managers are fearful of losing the control that they have in the workplace, their behavior can result in employees losing their sense of security by feeling forced into making decisions they do not wish to make.
Stainer and Stainer take this concept further by postulating that employee empowerment can increase organizational productivity only if managers demonstrate confidence in their subordinates, (2000). An employee empowerment initiative can be perceived by employees as a device to manipulate them by management into performing increased workloads if they do not wish to participate. Employees can be resistant to empowerment programs for this reason alone and an actual shift in corporate governance must accompany employee empowerment programs for them to be ethical, (Stainer & Stainer, 2000). Such an important shift in corporate governance must necessarily be mandated by the firm’s chief leadership.
It is important to note that during an SDWT implementation period managers are in transition as much as subordinates. Transitioning from traditional management roles to the role of team leader, managers must learn to encourage interdependence among team members through advising and coaching, (Douglas, 2002). Afsaneh Nahavandi maintains that although the role of a leader and the role of a manager are different, effective and competent managers often also act as leaders within an organization. (2007, p. 25). The concept of managers acting as leaders is especially important when implementing an SDWT employee empowerment initiative. Appropriate leadership training is necessary to train the firm’s managers to act as leaders rather than in their traditional supervisory capacity to effect the change to an SDWT employee empowered firm.
SDWT initiatives transform the roles of both managers and employees in the workplace and can take up to 24 months to implement, (Douglas, 2002). This is substantial barrier to employee empowerment in that both subordinates and managers are required to act outside of their traditional roles. Managers may feel cautious about employees having to make difficult quality decisions. Additionally, an appropriate implementation period is needed so that all employees can be trained to access the necessary operational knowledge. Traditionally management controls the flow of information throughout a firm. In order to implement an SDWT empowerment program, management must be trained to freely share pertinent and important information with their team members so that appropriate decisions can be made by their subordinates. Ford and Fottler distinguish between content, or the tasks and procedures of a particular job, and context, or the reason organizations need the work performed; maintaining that content is more easily conferred upon workers than context, (1995). Both content and context indicate levels of shared information that management must be willing to confer upon their employees. Ford and Fotler further postulate that empowerment must be awarded incrementally to employees by leaderships who willingly give up their authority and trust their subordinates enough to empower them. This further demonstrates the need for an appropriate transitional period to accomplish the SDWT transition within the firm.
An additional consideration is that employees may feel during an SDWT transition that they aren’t being compensated to make management-type decisions and if those employees feel that the commitment from leadership isn’t genuine they will feel less empowered. Such employees can become increasingly dependent upon their managers and this can lead to an opposite end result. To realize a successful implementation, the transitioning of a manager’s role to leader is especially important as the team accepts more responsibilities and looks to management for cues on how to proceed, as the team is aware that their work environment is changing (Douglas, 2002). Management must be prepared, through thorough training, to accept and anticipate that they will have less decision making responsibilities and instead be prepared that they will be working to influence the decision making skills of their subordinates through advising and coaching.
One of the most important aspects of instituting an SDWT change is that both management and their subordinates must view the initiative as believable by observing a consonance of behavior throughout the firm, especially emanating from the CEO. Kouzes and Posner maintain that “credibility is the foundation of leadership” and if employees don’t see consistency emanating from leadership they conclude that a leader is at best not serious about the change and at worst hypocritical, (2003, p. 37). Managers and their subordinates within the firm will look for evidence that a real commitment to a forward seeking change such as an SDWT employee empowerment initiative is credible from the CEO. If evidence of credibility is lacking then leadership is found to be duplicitous while if evidence of credibility is found then employees are more willing to trust leadership with their careers.
Conclusion:
Managers attempting to empower their workers in an inconsistent manner, where management is not fully committed to the empowerment process, can cause misgivings and actually result in lost productivity rather than the anticipated gain. In order to fully commit the firm’s management to the process of an SDWT employee empowerment initiative it is contingent upon leadership that ample time and training be devoted to the endeavor, for both managers and their subordinates. Additionally this process should not appear to be forced upon them. It is especially important that the transition to an SDWT environment should be positioned to management as a growth opportunity, one that will enable them to develop real leadership skills. If appropriate change management through training is foregone, managers may feel the transition is forced upon them and the management team may instead feel threatened by the initiative. The managers ensuing reluctance to adopt the initiative will be apparent to their subordinates and the firm’s productivity will be decreased instead of increased. Appropriate leadership training should be provided to management to avoid this and to encourage this effective organizational change.

References:
Boggs, L., Carr S. C., Fletcher, R. B. & Clarke, D. C. (2005). Pseudoparticipation in
communication networks: the social psychology of broken promises. The Journal of Social Psychology, 145(5), 621-624. Retrieved from Business Source Premier database.

Douglas, C. (2002). The effects of managerial influence behavior on the transition to self-directed work teams (SDWTs). Journal of Managerial Psychology, 17(7/8), 628-635. Retrieved from ABI/INFORM Complete.

Ford, R. C. & Fottler, M. D. (1995). Empowerment: a matter of degree. Academy of
Management Executive, 9(3), 21-29. Retrieved from Business Source Premier database.

Kouzes, J. M. & Pozner, B.Z. (2003). The leadership challenge (3rd ed). San Francisco, CA: Jossey-Bass.

Nahavandi, A. (2006). The art and science of leadership (4th ed). Upper Saddle River, NJ: Prentice-Hall.

Pech, R. J. (2009). Delegating and devolving power: a case study of engaged employees. Journal
of Business Strategy, 30(1), 27-31. Retrieved from ABI/INFORM Global database.

Stainer, A. & Stainer, L. (2000). Empowerment and strategic change: an ethical perspective.
Strategic Change, 9(5), 287-296. Retrieved from Business Source Premier database.

Read More

What has happened to a brand you can trust?

In 1982 someone tampered with Tylenol capsules, resealed them after adding cyanide, and put them back on the shelves in pharmacies. The product tampering resulted in the murder of seven people, and many thought that would be the end of Tylenol. What happened instead became a casebook example of how a corporation should react. Although the murders happened in Chicago, Johnson & Johnson reacted quickly to recall the product nationwide and reintroduced Tylenol with tamper-proof packaging. The action cost the company $50 million, but within one year they had recaptured 80% of their pre-scandal market share. Due to recalling the product quickly, and an advertising campaign focused on regaining consumer trust, Tylenol remained one of the best selling pain relievers.

With the recent advent of some of the most severe corporate scandals ever perpetrated, specifically British Petroleum, Goldman Sachs, and Toyota; we are seeing an opposite reaction. All three of these corporations have denied culpability for their wrongdoings in multiple arenas. BP has pointed fingers at Halliburtan and TransOcean for their recent oil rig explosion, (who are pointing fingers back). Goldman Sachs is disavowing to congress their knowledge that housing prices were going to fall when they sold subprime mortgage products, even though they were in fact working at the same time to protect themselves from these very same products. Toyota, still in denial, denied for years that there were automobile acceleration problems.

It is particularly egregious to me that each of these three firms specifically marketed their brands based on trust. BP’s “Beyond Petroleum” green campaign was designed to ensure consumers they were environmentally responsible, consumers pay a higher premium for investing through Goldman Sachs because they believed they were looking out for their interests, and Toyota had a long history of emotionally charged advertising focusing on dependability, safety, and quality.

Whatever has happened to corporate accountability and what effect will this have on consumers trusting a brand in the future? It actually appears that marketing and corporate accountability have come full-circle since the days of the Tylenol recall in 1982. Johnson & Johnson recently recalled 43 different children’s medicines, including Children’s Tylenol, due to product contamination and the FDA has charged that they knew about these issues for over two years and attempted to cover them up.

Read More

Personal Website - David Thibodeau

Personal Website - David Thibodeau

Read More

Recompute: the Cardboard Computer, (new product)

In the 1967 film “The Graduate” Dustin Hoffman’s character, Benjamin Braddock, is given the following words of advice regarding his career aspirations by a well meaning friend of the family, “plastics”… ”there’s a great future in plastics. Think about it. Will you think about it?” The family friend was correct, in 1960 less than 1% of municipal solid waste, (MSW), was plastic, while in 2008 the annual total of plastics in MSW was 12%, about 30 million tons, and this does not include all durable plastic waste products that were discarded, (EPA, 2009).

Plastics are manufactured in basically two different forms; thermoset plastics which are molded irreversibly and are used for their durability and strength and, thermoplastics which are non-durable and are easily recyclable. Although there is a market for recycling plastic, only about 6.8% of the plastics generated in 2008 were recycled, (EPA, 2009). According to the EPA the U.S. manufactured about 11 million tons of durable thermoset plastic materials and about 7 million tons of non-durable thermoplastics in 2008.

One use for these durable plastics is in the manufacture of electronic products. About 2% of the MSW in 2007 was comprised of used or end-of life consumer electronics, (EPA, 2010). In 2009 Brenden Macaluso introduced a computer manufactured in part of post-consumer recycled corrugated cardboard called the ReCompute, with the first of these computers manufactured by Montoroso and available for sale in April, 2010. Cardboard was chosen due to the fact that it is at the extreme end of the life-cycle amortization product sustainability spectrum, (L.A.P.S.), meaning that among the most sustainable of products, additionally it is a recyclable product, and is made out of brown kraft paper which utilizes recycled materials. In addition to cardboard being less energy intensive to produce than thermoset plastics and easier to manufacture, utilizing less manufacturing operations, and the computers are easier to disassemble at the end of their life-cycles. Cardboard is also safer as a material and is much less toxic and much more heat resistant than plastic, having an ignition point at 800⁰ Fahrenheit, while the plastics currently used in the manufacture of computer casings ignite at much lower temperatures, (additionally the cardboard utilized in the manufacture of these computers is treated with a non-toxic flame retardant), (Macaluso & Montoroso, 2010).

The EPA estimates that over 40 million computers became obsolete in 2007, approximately double the figure of a decade ago, and that figure is steadily increasing while recycling of consumer electronics is holding at about 18%, primarily as a result of mandatory state recycling initiatives, (EPA, 2010). As sustainability issues become of increasing importance throughout America and the world, the need to produce more environmentally conscious consumer electronics constructed of more sustainable materials is something that governments and consumers will demand. If The Graduate were made in 2010, one wonders if the family friend would have advised Benjamin Braddock that there is a great future in corrugated cardboard, “Think about it. Will you think about it?”

References:
Macaluso. B., & Motoroso. [2010, February 11]. Recompute: Sustainable Computer FAQ. Retrieved from http://www.sustainable-computer.com/faq/

Nichols, M. (Director), Willingham, C. (Writer), &, Henry, B. (Writer). (1967). The Graduate [Motion Picture]. United States. MGM/UA.

Environmental Protection Agency. (2009, November 23). Plastics. Retrieved from http://www.epa.gov/osw/conserve/materials/plastics.htm

Environmental Protection Agency. (2010, March 1). Statistics on the Management of Used and End-of-Life Electronics. Retrieved from http://www.epa.gov/osw/conserve/materials/ecycling/manage.htm

Read More

Global Brand Challenges

There are numerous examples of companies attempting to sell products in foreign markets without doing their appropriate due diligence concerning language, from Chevrolet selling Novas in Spanish language countries when the words “no va” translates as “doesn’t run”, to Gerber marketing baby food in French speaking countries when the word “gerber” translates as “to vomit”. While language errors represent marketing failures, and can be quite costly to companies, they essentially are little more than humorous anecdotes when compared to some of the truly inept blunders that some major global companies have made when introducing brands into foreign markets. This paper examines the three tenets identified in the article How Global Brands Compete, published in 2004 in the Harvard Business Review, of Quality Signal, Global Myth, and Social Responsibility through examining new product development challenges, technology challenges, and accompanying legal and ethical implications. Starbucks, Toyota, Google, and Proctor & Gamble have all recently witnessed various levels of success or failure through their adherence to these three tenets.

Challenges in New Product Development
Douglas Holt, John Quench, and Earl Taylor discuss in their article How Global Brands Compete, that multinationals have three distinct phenomena that work in their favor when consumers select global brands; 1. Quality Signal, consumers attach an ideal of quality to global brands, 2. Global Myth, consumers look to global brands as cultural ideals, and 3. Social Responsibility, consumers look to global companies for solutions to problems that influence society. Through anecdotal examples we can see how these same phenomena can also work against companies in the global market.

Challenges: example number 1.
Consumers choose global brands, even though they can be substantially more expensive than comparable local brands, because they expect a level a quality that they feel they do not get from local brands. Marketing in a global arena however can backfire when there is a demand for products and consumers are unwilling or unable to pay the premium price. Notably, Starbucks attempted infiltration into markets where coffee is plentiful and less expensive has met with limited success as their profit margins from foreign markets were only 8.1%, compared to 14% from their U.S. stores, even though consumers in these markets may enjoy the product, they are less willing to pay a premium price for it, (Matlack, 2008). Alternatively and more notably is when the consumer expects quality and the company fails to deliver as is the case with the recent recalls of cars made by Toyota due to manufacturing defects. The company now faces multiple class action and individual law suits in the U.S. and Canada as a result of these defects and the company’s reputation with consumers will suffer as a result. Expectations are that perceptions concerning Toyota’s quality will fall by at least 5% with consumers over the next three years as a result of these product defects, and could potentially fall as much as 20%, (Jackson, 2010).

Challenges: example number 2.
Global companies introducing a new product into the global market face a myriad of challenges but no challenge can doom a new product to failure more than a display of cultural insensitivity and the inevitable reactions of consumers. Cultural insensitivity can cause consumers to necessarily choose between the global myth and their own cultural identity. A recent example included the use by Google of culturally insensitive maps to be overlaid on the current satellite street maps of Tokyo, Kyoto, and Osaka used in the product Google Earth, (Lewis, 2009). Google unknowingly tapped into bigotry within Japan against its Burakumin citizens by using older maps. The name Burakumin translates into the words “filthy mob” and the names used to describe their neighborhoods on Google Earth loosely translate into the words “scum town” and the descendents of these citizens still live in these neighborhoods. Through their insensitivity they have reignited a deep rooted prejudice that is still in existence and has existed in the country for nearly four centuries. Blunders such as Google’s continually plague multinational corporations as they attempt to do business abroad as companies struggle to understand cultural sensitivities. Repercussions can be enormous in terms of lost trade opportunities, not only due to consumers reacting negatively, but also foreign governments have intervened in some cases and prohibit these companies from distributing their products.

Challenges: example number 3.
Finally, multinational companies must continually demonstrate a commitment to social responsibility, an onus that local brands do not face, or they must suffer the effects of this criticism. An additional difficulty is that most consumers react to social responsibility initiatives from multinational corporations with skepticism and regard these initiatives as opportunistic. Holt et al describe in their article an initiative by Proctor & Gamble seated in entrepreneurship as an example of a social responsibility initiative that indicated an actual interest in the welfare of people and could be viewed without skepticism, (2004). P&G identified that a billion people use unsafe drinking water daily which leads to 2 million deaths per year. They subsequently identified a process within their scope of expertise to develop a water purification technique that could be easily and inexpensively deployed throughout the world. P&G harnessed their own resources to credibly solve a global sanitation problem.

Technology and New Product Development

Technology is of the utmost importance in all three of the phenomena described by Holt et al. As a Quality Signal consumers look to global brands to develop new products and technologies faster than local rivals, corporations use technology to communicate locally through virtual teams to learn cultural sensitivities to determine the effectiveness of advertising and marketing campaigns for global brands therefore propelling the Global Myth, and finally Social Responsibility initiatives can be developed and implemented through the increased access global companies have to advanced technology and social welfare therefore can be improved.

Technology: example number 1.
Part of the quality problems witnessed recently by Toyota could have easily been avoided if the company had utilized the immeasurable technological resources at their disposal to track and diagnose the problems consumers were experiencing with their automobiles. Toyota initially rejected consumer accounts of their product defects; this ultimately led to the lack a consumer confidence that will be reflected in sales for years to come. Toyota’s investigation of consumer complaints ultimately led to the recall of the defective automobiles, but the company’s delay of appropriate action to remedy problems was due to a failure on management’s part, (Jackson, 2010). Inevitably, Toyota will lose customers in the ensuing years to their chief competitors, including Ford and Honda, due to this delay.

Technology: example number 2.
Google, a technology company, did use technology to correct the cultural insensitivity problems they had with their Google Earth problem in Japan. Responding to customer complaints, the old maps were removed within two weeks of their implementation, thereby mitigating some of the damage that had been done to their reputation, (Lewis, 2009).

Technology: example number 3.
Proctor & Gamble’s Social Responsibility initiative was rooted in the advanced technological expertise in which that company excels. P&G effectively turned a Social Responsibility initiative into an entrepreneurial success through their use of technology demonstrating an undeniable interest in the social welfare of the global community and an extraordinary social impact, (Holt et al, 2004).

Legal and Ethical Implications in New Product Development
A company’s action, or in some cases non action, in the global arena can have dire legal and ethical implications. Consumers rely upon Quality Signals from global brands and products that do not deliver on this implicit promise, that can potentially damage the health and well-being of the global consumer, indicate serious ethical lapses in management and can result in serious litigation against the firm. Additionally, as companies that enter the global market are entrusted with local identities and take on the responsibility of shaping global identities through Global Myth, they have an ethical responsibility to proceed with cultural sensitivity. Finally, as companies enter the global arena they wield extraordinary influence in these markets both positively and negatively; they should be expected to address social problems ethically through Social Responsibility initiatives and should be held legally accountable for any negative consequences resulting from their involvement in these markets.

Legal and ethical implications: example number 1.
Toyota’s lapses were the most egregious ethically and legally. A total of 18 people were killed and 304 were injured as a result of the manufacturing defects. Additionally there are hundreds of class action and individual law suits pending against the companies in addition to government actions. Overall, Toyota is expected to recall over 5 million automobiles due to the defects, (Jackson, 2010).

Legal and ethical implications: example number 2.
Google’s actions, while having no legal ramifications, indicate an ethical lapse in that they maps they used were significantly out of date and were offensive to the community that they were seeking to engage. The maps that they used were not properly vetted and demonstrated a cultural insensitivity. Although they reacted quickly to remove these maps it remains to be seen if any permanent damage is done to Google’s reputation and brand in Japan.

Legal and ethical implications: example number 3.
Proctor and Gamble not only behaved ethically in their Social Responsibility initiative, they did so without any profit motive and they have witnessed some criticism for doing so. The initiative that they introduced was a result of their utilizing their resources to solve a problem that have plagued governments and non-governmental organizations for years. However, as global consumers actually believe that multinationals have a greater responsibility for social welfare and towards solving social problems, then a humanitarian endeavor such as that accomplished by P&G should ultimately be rewarded by global consumers.

Conclusion
Increased participation in global markets is fraught with complications in new product development, technology, and legal and ethical issues. In order for companies to compete successfully in these global markets they must ensure that they sell quality products, engage local consumers in their brand, and participate in social responsibility initiatives. The challenge remains for global brands to demonstrate that they are neither a force for good of for evil but are in fact ethically neutral.

References
Holt, D.B., Quelch, J.A., & Taylor, E.A. (2004, September). How global brands compete. Harvard Business Review, 82(9), 68-75. Retrieved from EBSCOhost Business Source Premier.

Jackson, K. (2010, February 1). Toyota’s crash and burn. Automotive News, 86 (6397), 1-26. Retrieved from EBSCOhost Business Source Premier.

Lewis, L. (2009, May 22). Google follows ghetto maps and ends up in class war. The Times (London), Edition 1, 43. Retrieved from Lexis/Nexis Academic.

Matlack, C. (2008, July 3). Will global growth help Starbucks. BusinessWeek Online, 13. Retrieved from EBSCOhost Business Source Premier.

Read More

Formal Research vs. Business Proposal

In his 2007 article, Jeffrey Pfeffer identified a “preoccupation with theory and an interest in novelty”, (p. 1338), as a significant problem plaguing formal research in business schools. Describing this phenomenon as a “quest for ‘what’s new’ rather than ‘what’s true’, (p. 1339), Pfeffer argues, that competition in business schools has produced uniformity and stifled innovation. Pfeffer notes that rather than build upon the evidence-based knowledge that has furthered other disciplines, the pressure to publish in ranked journals has forced researchers to disdain work that informs professionals. Researchers prefer to concentrate on idiosyncrasies of previously published theoretical work that has little effect on real underlying processes in the business world noting that “superficial aspects are imitated that have little effect on underlying processes”, (p. 1341). Additionally while research in academia focuses on what works, it neglects what doesn’t work, when knowing what doesn’t work can be as important as knowing what does, (p. 1338).

Buckley, Ferris, Bernardin, and Harvey, (1988, p.36), identified the same problem when they stated that teaching in business schools has become more theoretical and less applied. Buckley et al. also stated that “HRM practitioners are relatively familiar with research performed in this area, but they fail to see many practical applications in it”, (p. 32), when analyzing the results of a survey they gave to 113 human
Both articles postulate that corporations and universities need to become more adept at forming partnerships so that the research generated at business schools focuses more on real world applications and is therefore directed to a broader audience. Buckley et al., (1988, p. 31), explicitly stated that there is a “lack of follow through in developing business-university partner relationships”, while Pfeffer states that management has failed to follow evidence based practice resulting from academic professional practice relationships that exist in other disciplines noting, “the closer connection with professional practice – not from occasional lecture or executive program but from coproduction of teaching and research and more regular interactions – are features that I see, at least to a somewhat greater extent, in engineering, medicine, and education.” (p. 1342).

According to Bezerman & Moore, (2009), “researchers have found that people rely on a number or simplifying strategies, or rules of thumb, when making decisions”, (p. 6). Managers in business situations rely upon heuristics as well when adopting solutions. In the real world, a business proposal must be viewed, above all things, as feasible. An idea that hasn’t been successfully implemented previously in another setting has little chance for serious
consideration by a firm. Generally corporations seek to implement strategies that correct observed problems or strategies that gain a competitive advantage. These strategies can be surveyed internally, documented, and then presented in a business proposal. They inevitably choose practical real-world applications that have been tried by other firms and have been proven successful for implementation. More often than not these applications do not come from research by academic researchers as their works appear to be predominantly directed towards a scholarly audience. Although they may be influenced by academic research, real-world solutions are more likely to come from books and journals marketed towards business managers. These books and journals may actually even be written by the same academicians engaging in formal research who are merely directing their research towards a difference audience.

References:

Bazerman, M. H., & Moore, D. A. (2009). Judgment in Managerial Decision Making (7th ed.). Hoboken, NJ: Wiley and Sons.

Buckley, M.R., Ferris, G.R., Bernadin, J. & Harvey, M.G. (1998). The disconnect between the science and practice of management. Business Horizons, 41(2), 31-38. Retrieved from Business Source Premier database.

Pfeffer, Jeffrey (2007). A modest proposal: how we might change the process and product of managerial research. Academy of Management Review, 50(6), 1334-1345. Retrieved from Business Source Premier database.

Read More