Businesses face many challenges in the modern, dynamic, and linked business environments, which calls for worthwhile and wise decision-making. More significant concerns and negotiations between the objectives of numerous stakeholders are involved in business decision-making (Green & Clarke, 2003). For organizations looking to succeed in a complicated environment, the capacity to navigate the competing interests of critical shareholders, employees, and customers and make wise decisions is crucial. Shareholders own shares of a corporation and want monetary benefits from their investments. Employees are all members of the organization’s workforce and are interested in issues like fair pay, job security, and comfortable working circumstances. Customers stand in for the people who buy products or services from the business and have high expectations for the products’ quality, affordability, and level of customer service. Lastly, society includes all aspects of the larger community impacted by a company’s operations, such as the environment, ethics, and general welfare of society. However, in the modern business landscape, where the interests of primary shareholders, employees, and society come into a crush, finding an equilibrium of these varying interests is essential for ethical business decision-making and vital for businesses’ long-term viability and success. By effectively navigating these issues and considering the different concerns of stakeholders, businesses can nurture stakeholder trust, build their reputation and have a competitive advantage in a business landscape where openness and social responsibilities are highly valued.
Examining pertinent stakeholder ideas and theories that offer frameworks for understanding and resolving these conflicts is vital to comprehend how conflicting interests develop during business decision-making. One of the relevant theories is the shareholder theory. According to Danielson Morris & Shaffer (2008), shareholder theory primarily aims to maximize an organization’s monetary returns and wealth. According to this theory, the needs of shareholders take preference and are considered more vital than the interests of other stakeholders like workers, customers, and suppliers when making financial decisions. Mansell (2013) contends that an excessive concentration on shareholders risks ignoring more significant societal issues and moral concerns. For instance, profit maximization and favoring financial decisions to stakeholders may cause a feeling of exploitation to employees or other stakeholders, leading to potential conflicts within the organization. Stakeholder theory, in contrast to shareholder theory, encourages a broader evaluation of all parties who have a stake in or are impacted by an organization’s operations. According to the stakeholder theory, decisions must consider the needs and issues of communities, shareholders, employees, consumers, suppliers, and competitors while transforming business models and creating business value (Freudenreich, Lüdeke-Freund & Schaltegger, 2020). This theory offers a framework for understanding disputes and aiming toward stakeholder inclusion by acknowledging the connection between the business and its stakeholders. Finally, the triple bottom line offers frameworks for understanding and solving disputes in business decision-making. The triple bottom line theory argues that enterprises should assess their success regarding social, environmental, and economic variables rather than just concentrating on financial gains (Liang et al., 2018). According to the principle, corporate decisions may impact customers, employees, the community, and the environment. For example, the TBL framework is embraced by Unilever as a guiding concept for its corporate activities (James et al., 2015). The business is aware that its actions and decision-making may affect the economy, society, and environment beyond those related to financial performance. Unilever strives for an equitable strategy while considering various stakeholders’ interests to attain sustainable growth and favorable societal results.
Unique opposing interests may emerge in the company’s decision-making processes among shareholders, workers, consumers, and society. Shareholders may conflict with employees when they concentrate on maximizing their financial returns, resulting in reduced remuneration and benefits for workers, layoffs, and cost-reducing actions. On the other hand, workers’ concerns about job security, better working conditions, and fair wages can conflict with the profit-generating strategies of shareholders. For example, many people complained that Walmart was more focused on making profits than attending to better wages, treatment, and conditions of its workers (McMann, 2019). As the company’s workers argued for better wages and working conditions, the company kept its wages low, reducing worker benefits to increase its financial returns. Likewise, shareholders can push for price increases for products and services which result in additional organizational financial gains but may negatively impact customer satisfaction, affordable pricing, and high-value products. For instance, in growing economies like India, the pharmaceutical industry’s pricing strategies have impacted consumer healthcare and expenditure (Motkuri & Mishra, 2020). Shareholders claim that the pricing strategies are necessary to fund medical research and developments. At the same time, patients and healthcare givers argue that the pricing strategies are widening the gaps to afford and access affordable medications and pharmaceutical products. This may lead to conflict between the interests of shareholders in maximizing profits and those of the general public in providing healthcare. Additionally, conflicting interests of shareholders and the community can arise when shareholders can prioritize short-term monetary gains which conflict with more general societal issues like social responsibility, environmental sustainability, or moral behavior. Przychodzen & Przychodzen (2013) argue that, even if these activities may limit immediate financial rewards for shareholders, society expects businesses to consider their influence on the environment, favorably impact local communities, and respect ethical standards. For instance, shareholders in the oil and gas sectors can decide to exploit the available resources to maximize profits in their industries. However, the decision can lead to environmental and climate change concerns. Societysociety’s interests can conflict with the shareholders since it expects the industry to move towards more green and sustainable energy sources, reduce greenhouse gas emissions and reduce environmental impacts. This conflict of interest can pose imitations for shareholders primarily focused on short and long-term financial returns.
Organizations in today’s complicated business environment struggle to balance when making moral decisions between the opposing goals of shareholders, staff, consumers, and the community. However, companies may have various options for navigating these competing interests and coming to moral judgments that meet the needs of their stakeholders. One of the most effective strategies to strike a balance and make ethical decisions is stakeholder participation and communication. Stakeholder management plays a crucial role in ethical decision-making in the organization. Colle (2005) highlights that organizations can better understand their stakeholder needs, issues, and expectations by actively involving them in open and honest communication. This inclusive strategy promotes teamwork, enables a more comprehensive assessment of competing interests, and enhances decision-making with diverse viewpoints. Creating ethical frameworks and rules of conduct is another essential strategy in balancing conflicting interests and making moral business decisions. These frameworks offer a set of fundamental principles that give ethical issues a top priority during decision-making. Organizations can develop a unified understanding of ethical behavior by outlining these ethical and code of conduct ideals to all stakeholders (Pimentel, Kuntz & Elenkov 2010). These frameworks are regularly reviewed and updated to maintain their applicability and conformity with changing societal expectations. Organizations can use ethical frameworks as compass points to steer clear of competing agendas and make morally correct decisions. Finally, ethical decision-making models can provide organized business methods for analyzing conflicting interests and evaluating alternatives. For instance, Beauchamp and Childress propose an ethical decision-making model that promotes ethical principles of justice, beneficence, fairness, and respect for independence in decision-making (Knapp, Gottlieb & Handelsman, 2015). Organizations can examine competing interests, weigh prospective outcomes, and make morally sound decisions by systematically applying such models and concepts. These systematic approaches guarantee that moral issues are not disregarded and that organizational decisions are made in a clear and principled way and involve key stakeholders and shareholders effectively.
In conclusion, it is evident that business enterprises face a wide range of challenges in the modern business environment, which calls for wise decision-making. The interests of shareholders, employees, customers, and society conflict as parties seek to take advantage of the business. Shareholders may conflict with employees when they focus on maximizing their financial returns. At the same time, workers are concerned about job security, better working conditions, and good wages, which can conflict with the profit-generating strategies of shareholders. Pricing strategies can negatively impact customer satisfaction and affordability of high-value products. Conflicting interests of shareholders and the community can arise when shareholders prioritize short-term monetary gains over general societal issues. Organizations must navigate the competing interests of shareholders, employees, customers, and society to succeed. The stakeholder, shareholder, and triple bottom line theories can offer frameworks for understanding and solving disputes in business decision-making. It is, therefore, necessary for businesses to balance these varying interests in order to make effective and ethical decisions. Organizations must balance competing interests by involving stakeholders in open and honest communication and creating ethical frameworks and rules of conduct. These frameworks provide a unified understanding of what defines ethical behavior and should be reviewed and updated to maintain their applicability. Organizations can use ethical frameworks as compass points to steer clear of competing interests.
References
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