Forces outside the firm’s traditional boundaries are increasingly important in determining the firm’s success. These forces in “the environment of business” differ among nations and over time, continually confronting the firm with new issues that require modifications in strategies and management practices. Managing in the context of turbulence has become an ongoing reality. Readers will learn how to modify their strategies and management practices and adapt to this new reality.
SOCIAL FORCES
The subject of ethical codes and CSR crystallizes many social challenges. At the one extreme are those who, like Milton Friedman (1970/2001), advocate the guiding principle of shareholder value maximization as the sole determinant of managerial decisions. At the other extreme are those who expound an altruistic philanthropy based on philosophical beliefs concerning universal ethics, such as those related to human rights. Within this range of perspectives, many authors offer distinct typologies for analyzing social forces and for developing appropriate firm responses to each set of social forces. Meanwhile, the rise of activist groups who threaten public criticism and boycotts means that even Friedman’s dictum of maximizing shareholder value now requires a wide range of CSR strategies.
Some analysts, such as Porter and Kramer (2006), believe that each firm should create a competitive advantage through appropriate CSR strategies. From this perspective, CSR morphs into political strategies through which a firm’s reactions can be designed in order to achieve desirable government decisions. For multinational enterprises (MNEs), it is clear that CSR has become a subject of major importance, but the complexity of dealing with social forces that differ among nations has created uncertainties about the optimal strategies. The pursuit of least-cost alternatives in each country