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'''Corporate behaviour''' is the actions of a company or group who are acting as a single body. It defines the company's ethical strategies and describes the image of the company.<ref>{{cite book|title=Quality of life|year=1997|publisher=Philip Seed, Greg Lloyd|isbn=9781853024139|url=https://books.google.com/books?id=xPce-i2OO1AC&pg=PA171|access-date=8 Oct 2014}}</ref> Studies on corporate behaviour show the link between [[corporate communication]] and the formation of its [[corporate identity|identity]].<ref>{{cite journal |title=Corporate identity and corporate communications: creating a competitive advantage | year=2000 |url=https://www.emerald.com/insight/content/doi/10.1108/00197850010379811/full/html?fullSc=1&mbSc=1&fullSc=1&fullSc=1&fullSc=1&fullSc=1 |publisher=Emerald Insight | doi=10.1108/00197850010379811 |access-date=12 April 2023 | last1=Balmer | first1=John M.T. | last2=Gray | first2=Edmund R. | journal=Industrial and Commercial Training | volume=32 | issue=7 | pages=256–262 }}</ref> |
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{{POV|date=December 2007}} |
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''Corporate Behavior'' (or '''corporate behavior''') is the behavior of a [[corporation]] or corporations (or [[company]] or companies). |
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The corporate behaviour of for-profit ([[capitalism|capitalist]]) corporations and [[Not-for-profit corporation|not-for-profit]] (non-capitalist) corporations differ due to the fundamental drive for [[profit]] in for-profit corporations, compared to the non-monetary goals often held by not-for-profit corporations. |
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== Role == |
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== The Characteristics of for-profit (Capitalist) Corporate Behaviour == |
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Not only does corporate behaviour play various roles within different areas of a business, it also enables businesses to overcome any problems they may face. For example, due to an increase in [[globalisation]], language barriers are likely to increase for organisations creating major problems as day-to-day business may be disrupted. Corporate behaviour enables managers to overcome this problem by improving flexibility. Also, many businesses are struggling to remain competitive in terms of quality and productivity due to intense competition within markets. However, corporate behaviour is able to fix this issue by allowing managers to empower their employees as they are the ones who are able to make a change. |
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Positive corporate behaviour can result in employees feeling happy and content at work providing their best outcome. This is beneficial for management as it could lead to effective teams being created thus resulting in innovative ideas which is beneficial for the business. It also helps to decrease [[labour turnover]] enabling the organisation to retain its most valuable employees.<ref>{{cite web|title=Corporate behaviour and political risk|url=https://openaccess.leidenuniv.nl/bitstream/handle/1887/15900/risksbehaviourPUTTEN.pdf?sequence=1|access-date=9 Oct 2014}}</ref> |
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== Importance == |
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Corporate behaviour of for-profit corporations has characteristics. These characteristics are unlikely to remain fixed for various reasons, but key characteristics are discernable from the history of for-profit corporations. Some of the key characteristics may not apply to individual for-profit corporations at a point in time and space, though some key characteristics are probably present at all times. The best example is the drive for profit. The strength or importance of a key characteristic will also vary in time and space for many reasons. For instance a for-profit corporation may be able to grow at a faster rate if it has subsidiaries in other countries. |
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Corporate behaviour is important in strengthening relationships within organisations between individuals, teams, and in the organisation as a whole. It is important as it reflects the values of the business and the extent to which it is ethical.<ref>{{cite book|title=Organizational Behaviour|date=January 2010|publisher=Hellriegel, Don & Slocum, John|isbn=978-1111787998|url=https://books.google.com/books?id=aSQFAAAAQBAJ&dq=importance+of+organizational+behavior&pg=PA4|access-date=7 Oct 2014}}</ref> Corporate behavior refers to the company values that defines it and makes it different and better than other companies. Portraying positive corporate behavior within a company facilitates strong [[brand]] image creation; consequently branding then strengthens the importance associated with corporate behavior.<ref>{{cite news|url=https://www.theguardian.com/media-network/partner-zone-brand-union/does-culture-define-brand|title=Does culture define the brand?|work=the guardian|access-date=9 Oct 2014}}</ref> |
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== Influential factors == |
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Reasons are numerous as to why key characteristics are absent or vary in strength or importance. Some reasons could be as follows: |
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[[PESTLE]] factors influence corporate behaviour in many ways. They cause organisations to change the way they operate; however, the size and nature of change is dependent upon which factor is causing the change (political, economic, social, technological, legal, or environmental). External forces are a significant factor of influence over corporate behaviour, hence the term [[corporate personhood|corporate citizenship]].<ref name="CSR">{{cite web |title=Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility |url=http://www.guillaumenicaise.com/wp-content/uploads/2013/10/Strategy-and-Society-the-link-between-competitive-advantage-and-CR.pdf |publisher=Harvard Business Review |access-date=12 April 2023}}</ref> |
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=== Political === |
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* Economic decline |
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Political factors such as [[property rights (economics)|property rights]], the rule of [[law]] and the status of [[central government|governments]] influence corporate and economic landscapes.<ref name="CSR" /> Examples of political factors could be changes in government legislation. This could affect an organisation's corporate behaviour as they would have to change the way they operate in order to implement these changes; some employees may not like the new changes made.<ref name="test">{{cite web|title=THE MACRO ENVIRONMENT & PEST ANALYSIS.|url=http://www.learnmarketing.net/pestanalysis.htm|access-date=6 Oct 2014}}</ref><ref name="test1">{{cite web|title=PESTLE Analysis.|url=http://www.cipd.co.uk/hr-resources/factsheets/pestle-analysis.aspx|access-date=7 Oct 2014}}</ref><ref name="test 2">{{cite book|title=Organizational Behaviour and Management|year=2005|publisher=Martin, John|isbn=1861529481|url=https://books.google.com/books?id=BUDMDCAuRIoC&dq=PESTLE+company+behaviour&pg=PA30|access-date=9 Oct 2014}}</ref> |
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* Poor performance |
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* Size of for-profit corporation |
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* Management decisions |
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* Type of for-profit corporation |
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* Competition |
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Certain individuals and groups have proposed and described the characteristics of corporate behaviour. Read: [http://dieoff.org/page12.htm] & [http://reclaimdemocracy.org/pdf/primers/rules_corporate_behavior.pdf]. These attempts, whilst a useful contribution, are not objective and should be read with this in mind. |
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=== Economic === |
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===Key characteristics of for-profit Corporate Behaviour=== |
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Recession is an example of an economic factor. If the economy were to be in a recession, businesses may find they have to reduce jobs. This would affect corporate behaviour as business teams would be short of skills and ideas in order to operate effectively.<ref name="test" /><ref name="test1" /><ref name="test 2" /> According to the 2013 National Business Ethics Survey of the US workforce, economy and misconduct are not interdependent, which was the traditional view. The report suggested that even though the economy grew in 2011 and 2013, misconduct in businesses was at its lowest.<ref>{{Cite web|url=https://www.ibe.org.uk/userassets/surveys/nbes2013.pdf|title=National Business Ethics Survey|date=2013|website=IBE.CO.UK}}</ref> A [[mixed economy]] signifies intersections of interests between the private sector of corporations, and the public sector of government.<ref name="CSR" /> |
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=== Social === |
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The key characteristics of corporate behaviour are as follows: |
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Changes in trends and the market is a social factor which affects corporate behaviour. Organisations may have to change their products or services in order to keep up to date with new trends. In order to do this, employees may be required to learn new skills within a short amount of time to make these changes; relationships between employees and management could be at risk due to these changes.<ref name="test" /><ref name="test1" /><ref name="test 2" /> Moral imperatives and expectations are also taken into account. Where social issues are shared by many companies across multiple industries, it may often be addressed most effectively through cooperative models and initiatives.<ref name="CSR" /> |
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=== Technological === |
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'''Note: This section is under development.''' |
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Implementing technology within organisations could mean more virtual meetings and fewer face to face meetings. As a result, relationships between management and employees could weaken as a result of less face to face conversations.<ref name="test" /><ref name="test1" /><ref name="test 2" /> |
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=== Legal === |
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* '''[[Profit]]:''' Profitability is the ultimate driver of corporate decisions. Corporations prefer higher profits to lower profits, at least in the long-run. Profitability is not necessarily the same as community well-being, though a profitable company is more likely to, for example, employ more people than an unprofitable company. Conflicts can exist, however, between what's good for a corporation and what's good for the environment, for example, or its employees or even the good of the state. A corporation is a complex organism and there has been much debate about what drives it. There is an argument that the divorce of ownership from decision-taking means that profitability isn't the main drive - senior managers may have other imperatives like keeping their jobs and avoiding being taken-over (which might run counter to the interests of share-holders). Corporations often like to grow, if only because they fear a bigger competitor having cost advantages. This is not always true, however: there have been cases where corporations have been broken up into constituent parts. |
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Legislative rules such as tax may increase which would increase an organisations costs. Changes such as changing the way the organisation operates may have to be made in order to cover these extra costs.<ref name="test1" /><ref name="test 2" /> |
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* '''[[Amorality]]:''' Not being human, corporations as such do not have [[Morality|morals]] or [[Altruism|altruistic goals]]. Neither, though, does any other organisation. Corporations are, though, run by people who are subject to law and rules of morality. |
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* '''[[Hierarchy]]:''' Corporations are usually hierarchical, though the structure of the hierarchy varies. Some are relatively flat with a wide layer of middle managers answerable to a few individuals while others are like a pyramid. A very few corporations have a great degree of democracy to them. Ricardo Semmler owns corporations in Brazil but allows all his staff to pick managers and decide strategy. He puts himself up for election as a chief executive. |
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=== Environmental === |
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[[Corporate environmental responsibility|Corporate Environmental Responsibility]] aims to create goodwill for corporations in various ways, with regards to society.<ref name="CSR" /> Environmental factors could be any factors which prevent damage to the environment. For example, [[remote work]] may be required to reduce the number of employees physically travelling to offices thus reducing [[greenhouse gas emissions]]. However, this may lead to isolation as communication is reduced, weakening corporate behaviour within firms.<ref name="test1" /><ref name="test 2" /> |
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== Stakeholder influence == |
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===The "Profit Frame" for Organizations=== |
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Businesses have many [[stakeholder (corporate)|stakeholder]]s who influence corporate behaviour. However, businesses who adopt the [[stakeholder theory]] are likely to appeal more to their stakeholders as they are showing their care and commitment towards them. This helps to strengthen the corporate behaviour within a firm and reduces the need for stakeholders to demand change.<ref>{{cite book|title=Strategic Management: A Stakeholder Approach|date=11 March 2010|publisher=Freeman, R.Edward|isbn=9780521151740|url=https://books.google.com/books?id=NpmA_qEiOpkC&q=stakeholder+approach|access-date=6 Oct 2014}}</ref><ref>{{cite book|title=Strategy for Sustainable Competitive Advantage|date=4 May 2012|publisher=Chaston, Ian|isbn=9781136325694|url=https://books.google.com/books?id=H6DcuJNr79YC&dq=stakeholder+influence+on+organisational+behaviour&pg=PA120|access-date=7 Oct 2014}}</ref> With the various factors affecting society and economy in modern times, stakeholders are increasingly showing an interest in [[Corporate Social Responsibility]] (CSR). ''Strategic CSR'' is also considered a [[marketing strategy]] and therefor a potential source of [[competitive advantage]].<ref name="CSR" /> |
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==See also== |
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The mandate of a for-profit organization is to maximize profits. Behind every organization's products, processes and strategies are its people. It is ultimately the people that determines the level of creativity, innovation, energy, focus and commitment that drives profits and profitability. However, even hiring the best individuals does not assure success. People join companies but leave because of bosses and colleagues--the people factor. The secret to organizational success lies in evolving the people factor which eventually cultivates the profits. |
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* [[Business ethics]] |
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* [[Corporate crime]] |
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* [[Corporate culture]] |
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* [[Corporate governance]] |
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* [[Corporate law]] |
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* [[Corporation]] |
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* [[Normative ethics]] |
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* [[PESTLE]] |
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* [[Shareholder]] |
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* [[Stakeholder concept]] |
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==Notes== |
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According to James Leong Chan Foo, creator of the "Profit Frame" for organizations, understanding the psychology that drives group dynamics coupled with a "Profit Frame" mindset empower people to make the most rational, team-aligned and financially sound decisions which contribute to profitability. The psychology element multiplied by the "Profit Frame" mindset would unleash previously latent energy and creativity which could exponentially transform human capital into potential profits. |
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{{reflist}} |
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{{Social accountability}} |
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Characteristics of organizations with a "Profit Frame" concides with the Directive Communication Psychology five pillars of transformational groups, Plus the additional "[[Financial intelligence]]": |
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{{Anthropogenic effects on the environment}} |
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[[Category:Corporate governance]] |
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* Greater purpose |
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[[Category:Corporate conduct]] |
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* Unified identity |
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[[Category:Corporate personhood]] |
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* A methodology that can make a difference |
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[[Category:Management cybernetics]] |
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* Common language |
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* Mutually supportive environment |
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* Financial intelligence |
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== The Characteristics of not-for-profit (non-Capitalist) Corporate Behaviour == |
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As non-capitalist corporations such as [[NGO]]'s or [[charitable trust|charities]] are not driven by the fundamentals of profit and economic growth, these do not show many of the characteristics of capitalist corporations. The behaviour of non-capitalist corporations is however often influenced by these characteristics of capitalist corporations, in similar ways to the influence of [[Corporate behaviour#The Influence of Corporate Behaviour on Individuals & Society|corporate behaviour on individuals]]. Due to this influence non-capitalist corporations can sometimes be seen to exhibit the characteristics of hierarchy, competition and ephemerality. |
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== The Influence of Corporate Behaviour on Individuals & Society == |
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Due to the dominance of capitalist corporations in [[Western world|Western]] societies the behaviour of corporations can be seen to have significant impacts on individuals and society. A person or group of people can have links to a corporation or corporations that range from weak to strong, if a person or group of people exhibit corporate behaviour that does not mean the person or group of people is employed by a corporation or corporations. A person or group of people may show corporate behaviour for different lengths of time, for some people they exhibit this behaviour at their place of work; for others it is exhibited at work, home and outside the home. Many people display corporate behaviour but do not agree with actions and outcomes that result from it. |
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The fact that individuals may not agree with the outcomes of corporate behaviour is central to the concept in itself, the characteristics of capitalist corporations do not reflect the characteristics of any individual or group of individuals but are the characteristics required for the survival of capitalist corporations ''due to the nature of the system within which corporations operate''. |
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==Ethics== |
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{{main|Ethics}} |
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Under the law, corporations are treated in many ways as persons in order that corporations can conduct business as if the corporation were a person. Since corporations are not actual people, corporations do not have ethics as such. The people within the corporation provide the ethical framework for a corporation. The ethics of a corporation is the combined ethics of the people working in the corporation always keeping in mind that power differences among people means that some people and their ethical framework, influence the behavior of the corporation more than others. |
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The people within the corporation operate from two major ethical dimensions, the personal dimension which involves a particular individual's ethical framework guiding their behavior and the organizational dimension which involves not only the official ethical policies of the corporation but also the [[organizational culture]] which influences the behavior of the people within the corporation. The official ethical policies of a corporation would be congruent with the organizational culture in an ideal world but in reality there can be startling differences between the official ethics and the ethics as provided by the organizational culture. Large corporations, especially corporations that span several industries or markets or have offices in multiple locations operating in different geographical regions may have divisions or subgroups that will have significantly different cultures from each other. |
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Because of the large influence of organizational culture on the behavior of people within a corporation, many ethical lapses within corporations happen not from planning but more from step by step down a slippery slope with small incremental decisions that combine into a total mess. While there are obviously people with little or no discernable ethics, most people are reasonably law abiding, reasonably spiritually healthy, and have a reasonable ethical framework. However, the people who occupy positions of power within corporations are in those positions because their behavior and beliefs are close to those of other people of power. This leads to a kind of [[groupthink]] within the corporate management. People in power have a habit of either ignoring or dealing harshly with [[whistleblower]]s or troublemakers. For individual people to object to a decision or to actually refuse to carry out an action is an act of [[insubordination]] and courage that is difficult for most especially when there is not a crisis and where the action lies in the gray area of not really wrong and not really right. |
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== See also == |
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*[[Business ethics]] |
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*[[Corporate crime]] |
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*[[Corporate law]] |
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*[[Corporate personhood]] |
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*[[Corporate governance]] |
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*[[Corporate social responsibility]] |
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*[[Corporation]] |
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*[[Normative ethics]] |
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*[[Sarbanes-Oxley Act | Sarbanes-Oxley Act of 2002]] |
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*[[Shareholder]] |
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*[[Stakeholder concept]] |
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*[[Whistleblower]] |
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== References == |
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Mander J (1991). ''In the Absence of the Sacred: The Failure of Technology and the Survival of the Indian Nations''. [[Sierra Club]] Books, San Francisco. |
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Milchen J (2002). ''Inherent Rules of Corporate Behavior: A Primer''. ReclaimDemocracy.org, Bozeman, Montana, USA. |
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[[Category:Corporate_governance]] |
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[[Category:Business_ethics]] |
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Corporate behaviour is the actions of a company or group who are acting as a single body. It defines the company's ethical strategies and describes the image of the company.[1] Studies on corporate behaviour show the link between corporate communication and the formation of its identity.[2]
Not only does corporate behaviour play various roles within different areas of a business, it also enables businesses to overcome any problems they may face. For example, due to an increase in globalisation, language barriers are likely to increase for organisations creating major problems as day-to-day business may be disrupted. Corporate behaviour enables managers to overcome this problem by improving flexibility. Also, many businesses are struggling to remain competitive in terms of quality and productivity due to intense competition within markets. However, corporate behaviour is able to fix this issue by allowing managers to empower their employees as they are the ones who are able to make a change. Positive corporate behaviour can result in employees feeling happy and content at work providing their best outcome. This is beneficial for management as it could lead to effective teams being created thus resulting in innovative ideas which is beneficial for the business. It also helps to decrease labour turnover enabling the organisation to retain its most valuable employees.[3]
Corporate behaviour is important in strengthening relationships within organisations between individuals, teams, and in the organisation as a whole. It is important as it reflects the values of the business and the extent to which it is ethical.[4] Corporate behavior refers to the company values that defines it and makes it different and better than other companies. Portraying positive corporate behavior within a company facilitates strong brand image creation; consequently branding then strengthens the importance associated with corporate behavior.[5]
PESTLE factors influence corporate behaviour in many ways. They cause organisations to change the way they operate; however, the size and nature of change is dependent upon which factor is causing the change (political, economic, social, technological, legal, or environmental). External forces are a significant factor of influence over corporate behaviour, hence the term corporate citizenship.[6]
Political factors such as property rights, the rule of law and the status of governments influence corporate and economic landscapes.[6] Examples of political factors could be changes in government legislation. This could affect an organisation's corporate behaviour as they would have to change the way they operate in order to implement these changes; some employees may not like the new changes made.[7][8][9]
Recession is an example of an economic factor. If the economy were to be in a recession, businesses may find they have to reduce jobs. This would affect corporate behaviour as business teams would be short of skills and ideas in order to operate effectively.[7][8][9] According to the 2013 National Business Ethics Survey of the US workforce, economy and misconduct are not interdependent, which was the traditional view. The report suggested that even though the economy grew in 2011 and 2013, misconduct in businesses was at its lowest.[10]Amixed economy signifies intersections of interests between the private sector of corporations, and the public sector of government.[6]
Changes in trends and the market is a social factor which affects corporate behaviour. Organisations may have to change their products or services in order to keep up to date with new trends. In order to do this, employees may be required to learn new skills within a short amount of time to make these changes; relationships between employees and management could be at risk due to these changes.[7][8][9] Moral imperatives and expectations are also taken into account. Where social issues are shared by many companies across multiple industries, it may often be addressed most effectively through cooperative models and initiatives.[6]
Implementing technology within organisations could mean more virtual meetings and fewer face to face meetings. As a result, relationships between management and employees could weaken as a result of less face to face conversations.[7][8][9]
Legislative rules such as tax may increase which would increase an organisations costs. Changes such as changing the way the organisation operates may have to be made in order to cover these extra costs.[8][9]
Corporate Environmental Responsibility aims to create goodwill for corporations in various ways, with regards to society.[6] Environmental factors could be any factors which prevent damage to the environment. For example, remote work may be required to reduce the number of employees physically travelling to offices thus reducing greenhouse gas emissions. However, this may lead to isolation as communication is reduced, weakening corporate behaviour within firms.[8][9]
Businesses have many stakeholders who influence corporate behaviour. However, businesses who adopt the stakeholder theory are likely to appeal more to their stakeholders as they are showing their care and commitment towards them. This helps to strengthen the corporate behaviour within a firm and reduces the need for stakeholders to demand change.[11][12] With the various factors affecting society and economy in modern times, stakeholders are increasingly showing an interest in Corporate Social Responsibility (CSR). Strategic CSR is also considered a marketing strategy and therefor a potential source of competitive advantage.[6]
