January 10th, 2018
Ethical outcomes of stakeholder treatment in Mondragon Cooperative Corporation and Microsoft
The MCC approach to business enables it to balance different stakeholder interests to achieve sustainable growth (Macleod 1997). For instance, the corporation was rated among the 10 best places to work in in Europe by Fortune magazine in 2003 and has consistently featured in that list (Cited in Fordacell 2005, p. 256) Through its approach to business operations, the entity has met its moral responsibilities towards the individual employees, its component cooperatives and society in which it operates (Macleod 1997). This has been achieved through the commitment to business ethics as espoused in its corporate values such as respect for members, personal development, educational programs, social security, and distributive justice (Macleod 1997).
Accordingly, ethical outcomes of treatment of stakeholders in MCC can be identified with respect to different stakeholders. In respect to employees, their involvement in the corporation’s decision-making processes and fair participation in profit distribution encourages them to commit to the entity’s values and culture, thus avoiding cases of imprudent practices (Fordacell 2005). In respect to shareholders, the fair distribution of profits among all members and the equal opportunities for engaging in the entity’s management avoids the establishment of predominant shareholder group that engages in self-serving control of the entity’s operations (Fordacell 2005). Commitment to social responsibility does not only ensure the entity provides good quality products to its customers, but also alleviates the economic situation of the society in which it operates (Fordacell 2005; Flessati 1982).
On the contrary, the capitalistic pursuits of Microsoft have had various negative effects on the entity’s outcomes. For instance, despite the entity’s continued profitable run (Microsoft Corporation 2011, p. 13), its implication in anticompetitive practices and massive relocation of jobs to off-shore low-cost countries have dented its reputation (Terris 2005; Ferrel & Fraedrich 2011). Conversely, despite its numerous philanthropic programs in its recent history (Ferrel & Fraedrich 2011), the inability to generate comparable profitability to its competitors such as Apple has seen it lagging behind in attracting investors (Datamonitor 2011).
In Microsoft, ethical outcomes in respect to employees are thus evident in respect to two aspects. Firstly, by lacking adequate representation in ownership of the organization, the employees may not commit to prudent business practices thus enhancing the vulnerability of the entity ethical pitfalls (Heineman 2007). With the lack of commitment to the corporate values, employees may for instance result into imprudent practices to sabotage the entity’s reputation. Secondly, Microsoft’s profit-maximization focus, which has led to the movement of various jobs offshore as a cost cutting measure, adversely affects the economic wellbeing of the individuals whose jobs have been outsourced. Such a scenario implies that the organization focuses more on meeting the interests of the investors at the expense of the other stakeholders, an aspect that leads to social inequality in society.
Even with its focus on shareholders, Microsoft may fail to attract such shareholders with lapses in other social aspects that might influence the entity’s profitability in future. For instance, with customers being mindful of the ethical practices of the entities they purchase from (Heineman 2007), aspects such as Microsoft’s anticompetitive practices could deter potential investors from investing in its shares. Establishing a balance of conflicting stakeholder interest in Microsoft thus becomes challenging since, in a capitalistic economy, investors will be seeking profit maximization, a goal that would be negated by acceding to employees’ need for higher remuneration. Go to part five here.