POWER AND INFLUENCE ON CORPORATE BEHAVIOR

Abstract

Determining ethical business situations may be challenging when companies come from diverse backgrounds. The Prestige Corporation has been fortunate to experience positive growth over the last decade. The company will need to continue this trend in order to remain successful. Because of the international and global expansion in the corporation, Prestige has requested assistance in finding approaches to gain a competitive advantage globally. What may seem as good ethical behavior for one country may be frowned upon by the other. The purpose of this assignment is to determine and understand the importance of the power and influence method among global corporations.

Part One: Identification of issue or problem

The need. The reason for investigating in this problem is to identify certain concerns associated with Prestige’s corporation and the global expansion. The CEO of Prestige
Corporation has requested assistance with finding approaches and options that will lead to the resolution of global problems.
Statement of the research problem. This research project will investigate the relationship between power and influence on corporate ethical behavior. Furthermore it will observe how these concepts can be applied in the Prestige Corporation.
Benefits of the research. This research project will benefit students and corporations with the need to understand the dimensions behind power and influence among corporate ethical behavior. Prestige will gain valuable knowledge by applying the concepts listed in this study.
Method for investigation and analysis. In order to find evidence that will support the clients need, I will use research studies and conceptual or theoretical writings. The validity and reliability of the client will be assured by using a test proposition. Other measures for determining validity will include a statement and explanation of the problem, description of the methods used to collect and analyze data, the results presented in tables and or graphs.
Part Two: Literature review
Research studies literature related to the issue/problem. The power and influence
method provides an important approach that demonstrates consistency (Cialdini, 2003). In order to influence the power within a corporate environment there are six principles that must be followed: 1) Reciprocity 2) Social Proof 3) Consistency 4) Authority 5) Scarcity 6) Liking. With these principles there are issues that can be beneficial and conditions that can go wrong. Reciprocity supports the notion of people do unto others as others do unto them and it can go wrong when people try to bend the rules for you so you’ll do the same for me. Social proof works well when people follow the example of their peers, but it can be detrimental when it focuses on the go along to get along. Consistency is an important concept when people try to behave consistently with their values and commitments. Authority allows people to defer to the expertise of others which can take on the do as you are told role. Scarcity involves wanting things that are rare, exclusive, hard to get. And Liking focuses on having people like those who like them (Cialdini, 2003).

The relationship between power and influence on corporate ethical behavior has several important values in which the Prestige Corporation can benefit from. First and foremost before corporate ethical Behavior is used on the outside it must start in the boardroom. According to an article titled “Corporate ethics should start in the boardroom”, focuses on the success and unlock the codes behind such ethics.
A company can learn how to maximize its own profit when it does it within the context of laws, customs and values that have come to embody the rules of the game for modern free enterprise capitalism (Bavaria, 1991). The concept of corporate ethics should start in the boardroom involves the behavior of executives as individuals in the network of relationships and responsibilities they have in their capacity as officers and directors. By starting within the boardroom CEO’s are able to define to the ethic codes of the corporation.
Prestige will need to determine if it is safer to bring in an outside or inside influence to help the company. An outside director may have great ideas; however these ideas may not fit the company’s best interests. Typically, outside directors are CEO’s there selves and have their own set of outside directors to work with on their boards (Bavaria, 1991). The best option for Prestige would use promote from within technique. This will help to influence power and make the corporation stronger from within.
Prestige can learn from other corporations and how to do business globally. It is important for any company to understand what is ethically acceptable when home and what causes conflict while in a host country (Birchard, 2002). This is perhaps one the problems that Prestige suffered from with the high freight fees. In one the Asian countries that conducts business with Prestige has stumbled into the problem of paying high freight-forwarding fees. This particular business “transports raw materials, parts, and finished products through local customs and uses a local freight-forwarding agent at the airport, seaport, or other points of entry” (Adler, 2002). The reason for the high fees is based on under-the-table payments to local customs officials. This problem with this concept is that it affects the cycle time for shipments.
This business practice has been conducted this way because” the government underpays local customs officials and offers them annual raises that do not keep pace with inflation” (Adler, 2002). This concept allows custom officials to receive part of their income from direct payments from companies and payments from freight-forwarding agents. The North American based company Prestige was disturbed once it found out the company conducted business this way. Business practices in the Asian country have been changed to allow under-the-table payments and Prestige’s employees that are working in this region believe that these practices are unacceptable and oppose the notion of having good ethical business behavior.
Another concern among global business is to understand the various practices in that country. For instance, in the 1990’s footwear and apparel manufactures, Nike and Levi Strauss had to implement a review system that would reward ethical behavior and set a more visible example of good corporate practices. This new rule was added to the company after harsh accusation of sweatshops and child labor were beginning to tarnish the reputation of the prestigious corporation. This experience caused CEO’s from around the world to examine their practices and learn how to mature a culture that involves good ethical decision making (Birchard, 2002).
Corporations can no longer benefit from the concept of “when in Rome do as the Romans do” (Birchard, 2002). This notion has become unacceptable among anti-globalization protesters. According to Birchard” the new CEO challenge is to act like an ethical leader for society as a whole, to act before crisis demands it, to engage outsiders in decision-making and to adhere to standards of behavior that local embrace. Another problem that may emerge is the zone conflict and issues in other countries. Ethical problems may arise among nations without independent judiciaries. This particularly may cause a conflict in practices, such as corrupt election processes and malfunctioning health services.
Cases literature related to the issue/problem.
Unethical behavior can be contagious if employees are not coached in the right direction. Companies can suffer when the power of influence is not correctly practiced and unethical behavior slips in. This is often a learned behavior that will eventually spread through out the company. For instance, “when we see other being less than truthful, bending or breaking rules, or cheating in various ways, it can sometimes make that behavior more acceptable to us as well” (Ciadldini, 2003). Prestige will want to make certain that it remains honest in its business dealings.
The following provides a table of the awareness of wrongdoing in the organization and the presence of corporate codes of ethics.

TABLE I
Awareness of wrongdoing in the organization and the presence of corporate codes of ethics

Corporate code of ethics



Yes
No
Don’t know
Percent unaware of wrongdoing
59.5
35
47.1
Percent aware of wrongdoing
40.5
65
52.9
X2= 13.05; p<0.05; N = 613. (Somers, 2001)
TABLE II
Awareness of wrongdoing in the organization and familiarity with professional codes of ethics
Professional code of ethics

Very familiar
Somewhat familiar
Not familiar
Percent unaware of wrongdoing
40.5
44.5
45
Percent aware of wrongdoing
59.5
54.6
55
X2= 2.77; p>0.05; N = 613 (Somers, 2001)

TABLE III
Comparisons of mean importance ratings of corporate value statement from MANOVA
Value Statement

Corporate code of ethics


Yes
n = 44
No
n =305
Don’t know
n = 264
1. Be as profitable as possible
2.61
3.06
2.89
2. Engage in charitable contributions
1.15
1.28
1.17


3. Abide by laws and regulations
2.68
2.55
2.67
4. Behave morally and ethically
3.25
3.06
3.25
(Somers, 2001)

TABLE IV
Reporting of observed wrongdoing and the presence of ethical codes of conduct


Corporate code of ethics


Yes
No
Don’t know
Percent who reported wrongdoing
44
35
35
Percent who did not report wrongdoing
56
65
65
X2 = 0.78; p < 0.05; N = 340





Professional code of ethics


Very familiar
Somewhat familiar
Not familiar
Percent who reported wrongdoing
38
32
40
Percent who did not report wrongdoing
62
68
60
X2= 0.45; p > 0.05; N = 340 (Somers, 2001)


Options identified in the literature for approaching the problem.

Some of the lessons learned from the various literature reviews included problems with ethics. One article focused on the reason as to why ethics can’t be compartmentalized. This type of behavior places pressures on the individual causing demanding strict adherence to high ethical standards which encourages less ethical behavior with customers and other outside stake-holders (Cialdini, 2003).

Creating the right environment for the organization provides another means of providing a successful step for the company. CEO’s will want to answer the following questions: “How far along are you on the slippery slopes?”
“Would most people in your organization agree that it is perfectly acceptable to present your products and services to customers in the best possible light?”
“Would they then agree that it is OK not to disclose shortcomings or defects to customers?”
“Would perhaps they go on to agree that it is acceptable to hide information about your products’ shortcomings?”
“Once they have agreed to that, would they consider it acceptable to lie to customers about your products and services?”
“And if they have taken that step, would they think twice about lying to people inside the company?”(Cialdini, 2003).

Within any successful organization it is important for leaders to pay attention to customers, clients, regulators, employees and the values in which the company is trying to display. Some of the other lessons learned focused on how to lower the ethical bar within the organization, doing business with repressive regimes and the CEO’s obligation to alleviate poverty.

One of the most important concepts a CEO can learn in business is how to handle human rights issues so that they are not abused. Also some CEO’s will need understand the importance of when and how to lower the ethical bar in various situations. Some of these rules to lowering the bar apply the following notions:
1) CEO’s might lower their ethical standards because, owing to the host country’s lower level of economic development, the reduction is the “caring” thing to do.
2) The second part consists of those cases where relative economic development fails to justify the decision.

Corporate ethics provides important development within a corporation. The idea of corporate ethics is a rather new phenomenon that has developed through the years (Enderle, 2005). “A crucial feature of corporate ethics is the understanding of the business organization as a moral implies that the company has a certain unity and idenitity with an explicit or implicit mission and has a certain autonomy with a more or less extended space of freedom” (Enderle, 2005).

Conceptual and theoretical literature related to the issue/problem.

The underlying assumptions found within the text that I read focus on various questions in which CEO’s must face such as: Do you support a repressive country’s national interests? Do you counter environmental degradation? Do you take a role in alleviating poverty? (Birchard, 2002).

Other global and ethical problems focus on the challenge of choosing between right and wrong. Often this is a real problem between corporations as within the case of Johnson & Johnson CEO Ralph made a decision that would involve ethical decision-making such as values and how to put it together in advance of crisis. Global ethics are decisions that must be used within the organization to alleviate misunderstandings.

Summary of the literature review.

Organizations will want to steer clear from unethical behavior practices as it can lead to a damaging reputation. It is vital that corporations learn how to gain the trust of its employees and customers. Power and influence can work well within any corporation that is driven to uphold good ethical practices. Incorporating a successful organization will learn how to find a balance between power and influence.

Part Three: Conclusions and recommendations

Conclusions. In order to be a successful organization, Prestige will need to use ethical
conduct in all business practices. The implications developed for a successful company
includes knowing how to use power and influence and have ethical behavior. A good leader within an organization will learn how his/her influence can mold and shape the organization for the better. A good corporation that learns how to use it correctly will not have to worry about resulting to unethical behavior. My recommendation for Prestige is to operate ethically according to the rules and regulations of the government. This corporation cannot afford to risk its name by operating unethically.

Approaches/Options.

The different models included involved six principles of influence.
Principle
How it works
How it can go wrong
Reciprocity
People do unto others as others do unto them
I’ll bend the rules for you so you’ll do the same for me
Social proof
People follow the example of their peers
Go along to get along
Consistency
People try to behave consistently with their values and commitments
It’s not as if you’ve never done anything wrong in your life

Authority
People defer to the expertise of others
Just do what you are told. That’s an order
Scarcity
People want things that are rare, exclusive, hard to get
Don’t make any waves and you’ll get that promotion
Liking
People like those who like them
We thought you were one of the gang
Source: (Cialdini, 2003).


What are the implications of your findings for the client CEO?

My paper added to existing knowledge that is always better to abide by ethical practices.
And that it is very important for a CEO to use his/her power and influence in the right way. The literature outlined in this report discussed the importance creating and using the power and influence concept in ethical relations. It is important for a leader to learn how to influence his/her power correctly and ethically. Once a leader learns how to implement the power and influence concept, employees will also learn how to carry out these demands.

What recommendations do you have for your client?
My findings can be used to assure clients that ethical behavior is always better and that it adds values to the organization that is represented. Prestige will need to develop a code of ethics that will suit the company’s need. Prestige must understand that each organization may have various differences and needs. It is recommended that Prestige follow the six rules of influence and implement these practices into the corporation. Prestige will also want to be particularly careful in handling human rights issue and assure that these rights are not abused.

Part Four: Annotated Bibliography.

Adler, N.J., (2002). International Dimensions of Organizational Behavior. McGill University.
South-Western. This book is broken up in several parts and discusses the international dimension of organizational behavior it challenges ones global perspective.

Bavaria, S. (1991). Corporate ethics should start in the boardroom. This article looks at the
importance of starting from the basics of using corporate behavior in the boardroom.
Retrieved November 10, 2005 from http://www.findarticles.com/p/articles/mi_m1038/is_v34/ai_10358503

Birchard, B. (2002). Global profits, ethical perils: the old adage, “When in Rome do as the
Romans do, “made decisions easy. This article discusses the importance doing business
globally and deciding what is ethically acceptable within an host country. Retrieved November 10, 2005 from http://www.findarticles.com/p/articles/mi_m4070/is_2002_June/ai_87430211

Cialdini, R. B. (2003). Leader to Leader. Creating an Ethical Environment. (28th ed.) This article
discusses the success of using power and influence and ethical behavior. Retrieved November 10, 2005 from http: www.influenceatwork.com

Enderle, G. (2005). Corporate Ethics at the beginning of the 21st century. This article discusses
the growing interest in corporate ethics. Retrieved November 10, 2005 from http://www.iadb.org/etica/documents/dc_end_etica-i.htm

Joyner, B.E. (2002). Building values, business ethics and corporate social responsibility into the
developing organization. This article discusses the development of business ethics and
corporate social responsibility in growing firms. Retrieved November 10, 2005 from http: www.findarticles.com/p/articles/mi_qa3906/is_200204/ai_n9050754

Somers, M.J. (2001). Ethical Codes of Conduct and organizational context: A study of
the relationship between codes of conduct, employee behavior and organizational values. This study describes in detail the importance of codes of ethics that are beginning to increase within organizations. Retrieved November 10, 2005 from http: www.cedha.org.art/does/ethicalcodes.pdf