ArticlePDF Available

Abstract

Purpose The purpose of this paper is to demonstrate that costs reduction is no longer a complete indication of performance and should not be attained at the expense of the firm’s sustainable social responsibility and environmental aspects. The question of whether outsourcing is a “blessing” or a “lesson” remains unresolved in the minds of practitioners and researchers alike. The literature is replete with the up- and down-sides of outsourcing, all going in different directions, making it very cumbersome particularly for practitioners to articulate when and what to outsource (if at all) and how to contain or mitigate outsourcing downsides. Design/methodology/approach Outsourcing as a two-edged sword can be value creating strategy or a firm’s soft spot. This paper focusses on the latter through a review of sourcing in two leading multinational companies: Benetton, in the fast fashion industry, and Nestlé, in the food industry. Findings Benetton experienced the biggest catastrophe in the garment industry, the Rana Plaza collapse. Nestlé went through the horse meat scandal, perhaps one of the most complex food crime cases in history. Both cases illustrated the strategic vulnerability that arises from the international outsourcing of production. Research limitations/implications Clearly, production costs are no longer a complete indication of performance as the two cases unveil. Management control systems should be especially vigilant when outsourcing transfers social and environmental responsibility from one contract to another in a global business context. Monitoring costs cannot be outsourced when it comes to sustainable social responsibility and environmental aspects. Practical implications Firms can leverage relationships with stakeholder groups, activists and NGOs to help them to monitor their international operations. Institution-based trust to protect brands, increased integration and control are necessary mechanisms. Originality/value Indeed, global outsourcing in any industry should transfer not only industrial operations but also credible and responsible social and environmental benchmarks.
*** Journal of Business Strategy ***
The ethics of outsourcing: when companies fail at responsibility
Journal of Business Strategy, Vol. 39 Issue: 5, pp.7-13,
https://doi.org/10.1108/JBS-03-2018-0037
Nelson Oly Ndubisi
King Fahd University of Petroleum and Minerals
College of Industrial Management
Dhahran, Eastern Province, Saudi Arabia
&
Arne Nygaard
Professor of Marketing,
Kristiania University College
Postboks 1155 Sentrum
Kirkegaten 24-26, 0107 Oslo, Norway
Phone 952 43 656
E-mail arne.nygaard@kristiania.no
&
Norwegian University of Science and Technology (NTNU)
Teknologivegen 22, 2815 Gjøvik, Norway
December 2016
ACKNOWLEDGEMENTS: The authors contributed equally to the article.
Introduction
Management literature suggests that outsourcing is an effective device to create
incentive collusion, which reduces opportunism, externalizes monitoring costs and
facilitates the competitive organization of supply chains. However, we argue that the
eagerness to outsource operations may cause an avoidable problem, and that ethical
behaviour may be reduced when the aim is to get rid of transaction or production
costs. Outsourcing through offshoring relates to the relocation of business to another
country. According to the Economic Policy Institute (Kimball and Scott, 2014), 3.2
million US jobs were outsourced to China between 2001 and 2013. New business
models and supply chain networks promote the outsourcing of domestic jobs in both
manufacturing and service industries. Some of the emerging market economies have
developed refined and effective systems for acting as offshoring destinations. Lower
international labour rates are financial incentives for outsourcing through offshoring.
An analysis presented by the Wall Street Journal concluded that thirty-five large
multinational US companies created new jobs faster than other US-based companies.
However, although the companies that outsourced jobs globally grew faster, three-
quarters of the jobs were created overseas (Thurm, 2012). In the US, the number of
workers in manufacturing dropped by 8 million over 30 years because many jobs
were outsourced to third world countries. Some large companies have outsourced all
of their manufacturing operations outside the US. For instance, Apple and Nike have
sub-contracted their manufacturing to independent companies and have been
innovators of outsourcing as a business model based on the foreign operation of
manufacturing processes (Roberts, 2016).
The reason behind outsourcing
The increased globalization of outsourcing operations in recent years has been the
modus operandi of textbook models of competitive strategies. The received theory and
empirical evidence have pointed to core business, taxation regimes, regulations, the
costs of production, labour, resources and energy, and transaction costs as
motivations for offshore outsourcing. During the past decade, private equity
investors have put pressure on costs. Consequently, the cost focus is driving
outsourcing strategies. Although the production costs of outsourcing are pretty clear,
the true cost of the environmental and social impact of outsourcing is hidden behind
a complex network of contractual relationships, and arises through cultural,
geographical and system differences.
In the new world of globalism, sustainability should be an integrated platform
for future competitive business models (Porter and Linde, 1995). Steve Jobs and Elon
Musk provide benchmarks for this new wave of open, global and sustainable
strategies. The simplistic approach that only has an eye on production costs does not
only ignore the true costs of unsustainable global operations. It also prohibits firms
from making disruptive technological changes in the new world of zero emissions,
electrification and social evolution. The intertwined effect of these elements is
ultimately a precondition for long-term economic growth.
Fast fashion and the Rana Plaza collapse
In the 1960s about 95% of the clothes made for the American market were made in
the US. Today, about two per cent of the clothes bought in the US are made there –
98% of the production has been outsourced to the third world. Outsourcing as a
business model in the garment industry really took off in the 1980s, when chains like
Gap Inc. and J.C. Penney pioneered the strategy (Cline, 2012). The leading company
in the fast fashion industry, Inditex, now has 6,298 factories located in over 50
countries. The development means that production is outsourced from countries
with strong traditions of controlling social aspects through labour unions, media and
institutions to countries where this control system is not so strong. Outsourcing
production might therefore lead to operations with unintended high social and
environmental costs. In other words, cutting social and environmental costs through
outsourcing operations to the third world might have become an integrated part of
the business model branded as “fast fashion”. The reality is that the reduction of
these social and environmental costs might have led to deflation in product prices in
the market for fashion. This unfortunate development has pushed the costs of cheap
production to the weakest link in the supply chain – the female garment workers in
underdeveloped countries. No case describes the social costs of outsourcing better
than the Rana Plaza accident.
Rana Plaza was a location where clothes and other products for reputable
companies in the west were manufactured. Companies like Benetton, Wal-Mart,
Mango and El Corte Inglés had clothing factories in the building. Benetton proudly
announce that their sustainability label, Dress Safely, reflects:
“the ethical approach of Benetton Group, whose social commitment, concern for the
environment and transparency towards the consumer have for years been the key
values of a responsibility that goes beyond its commercial objectives.”
Nevertheless, the Rana Plaza tragedy in 2013, when 1,129 people were killed,
is the worst accident in modern industrial history. No doubt Benetton is now one of
the serious companies in the garment industry that have sustainability as an
everyday aspect of their operations. However, in the shockwave of the disaster they
denied that their factory supply came from Rana Plaza, and refused to support the
Rana Plaza Donors Trust Fund. Heavy protests in the aftermath of the tragedy
contributed to the closure of the Oxford Street shop in the UK (Butler, 2015). The
background is Benetton’s outsourcing strategy for benefiting from manufacturing in
Asia. Their production in India could reduce their production costs by 20%
(Procurement Leaders, 2007). From its cultural roots and production origins in north
east Italy, the company suddenly faced a complex network of manufacturing systems
that it handled with lower monitoring costs. The Rana Plaza disaster shows how
applying the textbook approach that we teach to our business school students can go
catastrophically wrong. The global supply chain network is seen as a physical
logistical chain, and the people operating it as cheap input factors. Conventional
textbook wisdom applauds the outsourcing of standardized technology and products
whenever zero-specific investments and zero switching costs characterize the
relationship. The market competition itself secures the interests of the principal – the
general and straightforward roadmap for business relationships that has been known
since Berle and Means’ work in 1932. The market as an institution is a disciplinary
device that controls opportunism, but will it fuel the success of globalism through
outsourcing? In the general literature on the strategic choice between markets,
contracts and hierarchy, the theoretical model of the perfect market may or may not
be an open and transparent marketplace. The monitoring of outsourced production is
complex, and observation is costly. Problems of safety, social security or
environmental hazards are typically difficult to discern. Benetton may therefore have
ignored the fact that aspects like geographical distance, cultural differences,
complexity and uncertainty raise the monitoring costs of choosing overseas
outsourcing.
We have long known that ownership and control do, in fact, affect our
options, because of monitoring costs (Jensen and Meckling, 1976). This approach,
though, focuses on the potential observability of the concept of “performance”, so
that the principal company can write outcome-based contracts with the agent who
signs the outsourcing agreement. Today, this is seen as a far-fetched “old school”
strategy because “performance” is no longer only the “bottom line figure” but is
rather a construct of indicators of “sustainability”. As we know, the concept of
sustainability includes financial, social and environmental performance. In the Rana
Plaza case, it is obvious that the brands produced there were measured according to
only one of these dimensions – financial performance – and were motivated by cost
benefits. The companies survived the strategic shock after the disaster by following
the “walk the talk” procedure. They understood that sustainability was not just a few
nice lines on their webpage but was also a real, true, transparent and documentable
process. Their reputation depended on their ability to create credible sustainable
actions. Sustainable outsourcing is a multidimensional strategy that creates
performance ambiguity within the organization. Thus, in relation to monitoring
costs, outsourcing should be a much more integrated business than the markets can
normally offer. A company needs to develop strict control and reporting procedures
to allow continuous monitoring of their businesses and their contract manufacturers
abroad. Eco-brands, Eco certification systems and activists may provide valuable
control information. The Rana Plaza tragedy did not have to happen. The absence of
monitoring, combined with opportunism among the clothing manufacturers, forced
the garment workers into a building that was a death trap. Structural cracks in the
building had even been filmed and documented. The principal companies behind the
luxury brands probably did not know this, or did not wish to monitor the social and
environmental impact of their own production. The market itself did not provide the
information. This is an ethical market failure that could have been avoided through
old school monitoring. Outsourcing, therefore, may in general facilitate unethical
practice if the principal companies do not include their home-grown moral codes in
their foreign strategy. Ethics should not be outsourced to irresponsible
manufacturing in order to lower manufacturing costs. Ethics along the entire product
life cycle, from raw materials to recycling, is a signal part of the brands. Fast fashion
cannot eliminate its responsibilities through outsourcing production.
Food safety and horse meat
Another industry that has recently been studied through the lens of business ethics is
the food industry. Like the fashion industry, the ability of the food industry to access
global sourcing has become a major opportunity for reducing costs, enhancing
quality, innovating and differentiating products. Food safety, however, has been a
concern for a long time. Mad cow disease broke out in the UK in 1986 and caused
Creutzfeldt–Jakob illness, which probably killed 177 people in the United Kingdom
and 52 in other European countries. This disease made it clear how serious this
matter was. The control of all aspects of the entire food chain became critical. On the
other hand, the EU development of a common European market motivated
outsourcing and international supplies through access to fast-growing international
markets. In a new European order of food regulations and free trade, could we trust
the institutions that promoted outsourcing and market transactions in the food
markets? Prior business research has pointed out the essential nature of institutional
trust for emerging European markets if costly business-to-business relations are to be
supported and replaced (Dahlstrom and Nygaard, 1995). Institutional trust manifests
itself in a trustworthy legal system and policing that can safeguard contracts in the
market (Zucker, 1986). Consequently, the food market is essentially vulnerable to
institutional trust. Nestlé, the world’s largest food company, should therefore be
rational and sensitive about regulations affecting the outsourcing of the food supply
in its relationships with 165,000 direct suppliers and 695,000 individual farmers
worldwide. Its sustainability strategy states that: “Working alongside NGO partners,
we map our supply chains, and conduct supplier audits and farm assessments to
ensure the procurement…” (nestle.com). However, even in the largest and probably
the most professional food company in the world, the complexity of monitoring the
supply chain has created the potential for opportunism when taken alongside the
company’s intention to use supplier relationships to build a competitive global
advantage.
The Food Safety Authority of Ireland (FSAI) revealed in 2012 that horse meat
was mixed into the beef food chain. In January 2013 it became known that retailers
like Tesco, Dunnes Stores, Aldi and Lidl were selling beef products mixed with horse
meat. As a result of the scandal, Nestlé withdrew the pasta products Buitoni beef
ravioli and beef tortellini from the Italian and Spanish markets, as well as lasagne
produced in France. The complexity of international sourcing created a vacuum for
international opportunism that turned out to be difficult to control. The horse meat
scandal involved more than 7,000 firms. The police found that the complexity
included “post office” firms and dummy companies that further complicated the
investigation. The question raised in Zucker’s classic article is whether we should
trust the regulatory system offered by the EU and the national food control regimes
to produce food safety. Nestlé as a brand signals food quality of a particular standard
to consumers all around the world, but the horse meat case demonstrates that brands
cannot live without a regulatory system to support them. We see, in the
underdeveloped market economies, that “lemons” eliminate trust and in that way
undermine the entire market. Through the lens of Akerlof’s (1970) article, brands
may serve as a signal of quality and thus develop market growth. In the context of
outsourcing in the food market, it is also crucial to understand the institutional trust
that supports the brand signals that are sent to consumers. The nutrition and food
businesses have a strong impact on sustainable development. Nestlé’s marketing of
breast milk substitutes in underdeveloped countries led to boycott actions back in
1977. Today, stakeholder groups and NGOs are integrated into the strategic planning
process to “create shared value”. Sourcing therefore is a defined strategic goal,
manifested in the Nestlé Responsible Sourcing Guideline, where a commitment related
to responsible sourcing is specified in every area (nestle.com):
• Nestlé Supplier Code
• Nestlé Policy on Environmental Sustainability
• Nestlé Commitment on Climate Change
• Nestlé Commitment on Deforestation and Forest Stewardship
• Nestlé Commitment on Child Labour in Agricultural Supply Chains
• Nestlé Commitment on Rural Development
• Nestlé Commitment on Farm Animal Welfare
• Nestlé Commitment on Water Stewardship
• The International Bill of Human Rights
• The 8 ILO Core Conventions
• United Nations Global Compact Principles
However, sustainability is a multidimensional performance construct based on
social, environmental and financial aspects. Sustainability therefore affects the
measurement ambiguity inherent in business-to-business relationships. Although
Nestlé shows professionalism and has experience in the governance of global
relationships, the horse meat scandal illustrates the immense complexity of
multinational sourcing in international markets.
Conclusion
Our review has looked at sourcing in two leading multinational companies:
Benetton, in the fast fashion industry, and Nestlé, in the food industry. Benetton
experienced the biggest catastrophe in the garment industry, the Rana Plaza collapse.
Nestle went through the horse meat scandal, perhaps one of the most complex food
crime cases in history. Both cases illustrated the strategic vulnerability that arises
from the international outsourcing of production. What strategic lessons can we learn
from these cases?
Sustainability contributes to performance ambiguity. Production costs are no
longer a complete indication of performance. Management control systems should be
especially vigilant when outsourcing transfers social and environmental
responsibility from one contract to another in a global business context.
Monitoring costs cannot be outsourced when it comes to sustainable social
responsibility and environmental aspects. Management information systems and
reporting processes might curb opportunism. The problem, though, is that there are
no contracts that can address every aspect of a future uncertain and global world.
That is why stakeholder groups, activists and NGOs might help companies to
monitor their international operations. Business research has for a long time argued
that if there are many managerial tiers, long distances and many cultural contexts,
this might complicate the monitoring of sustainable operations. Transparency might
therefore produce a satisfactory background from which host country stakeholder
groups can follow and control social responsibility and environmental performance.
Contracts in general, and outsourcing in particular, thrive in countries with
institutional trust. A new global business world can only grow when business-to-
business contracts are safeguarded through the legal system and international trade
agreements. The protected development of brands, trademarks and company names
is the best shield against “lemons” contractors (Akerlof, 1970). Without being able to
navigate through institution-based trust to protect brands, it is difficult to make
rational outsourcing decisions.
Global sourcing adds uncertainty to business-to-business relationships.
Management can only confront these complex problems by increased integration and
control. Social, cultural, legal and technological change directly affects potential
inter-organizational uncertainty and opportunism (Achrol et al., 1983). However, we
can sometimes see that norms might affect behaviour. For instance, leading by
example probably also facilitates a culture in which sustainability can be developed.
When top management does not take social responsibility and the environment
seriously, a laissez faire culture that creates opportunism develops easily.
Reversed globalism encourages 3D-printing and the automization and
robotization of production. Thus, technological development might curb these ethical
concerns in the long term. Furthermore, information technology and social media
provide additional transparency in the system. As a conclusion, however, global
outsourcing in any industry should transfer not only industrial operations but also
credible and responsible social and environmental benchmarks.
References
Achrol, R., Reve, T., and Stern, L. (1983), “The environment of marketing channel
dyads: A framework for comparative analysis”, Journal of Marketing, Vol. 47 No. 4,
pp. 55-67.
Akerlof, G. A. (1970), “The market for ‘lemons’: Quality, uncertainty and the market
mechanism”, Quarterly Journal of Economics, Vol. 84, pp. 488-500.
Berle, A.A. and Means, G.C. (1932), The Modern Corporation and Private Property,
Macmillan Publishing Co, New York, NY.
Butler, S. (2015)Rana Plaza disaster marked by Oxford Street demonstration”, The
Guardian, Thursday 24 April.
Cline, E.L. (2012), The Shockingly High Cost of Cheap Fashion, Portfolio/Penguin.
Dahlstrom, R. and Nygaard, A. (1995), “An exploratory investigation of interpersonal
trust in new and mature market economies,” Journal of Retailing, Vol. 71 No. 4, pp.
339-361.
Jensen, M. C. and Meckling, W. H. (1976), “Theory of the firm: Managerial behavior,
agency costs and ownership structure”, Journal of Financial Economics, Vol. 3 No. 4,
pp. 305-360.
Kimball, W. and Scott, R.E. (2014), “China trade, outsourcing and jobs; Growing U.S.
trade deficit with China cost 3.2 million jobs between 2001 and 2013, with job losses
in every state”, Briefing Paper #385, Economic Policy Institute.
http://www.nestle.com/aboutus/suppliers Responsible Sourcing.
Porter, M.E. and Linde, C. van der (1995), “Green and competitive: Ending the
stalemate”, Harvard Business Review, Vol. 73, No. 5.
Procurement Leaders (2007),Indian outsourcing helps Benetton lower production
costs” http://www.procurementleaders.com/news-archive/news-archive/indian-
outsourcing-helps-benetton-lower-production-costs
Roberts, P.C. (2016), “The offshore outsourcing of American jobs: A greater threat
than terrorism, Global Research, 13 March.
Thurm S. (2012), “U.S. firms add jobs, but mostly overseas”, The Wall Street Journal,
Business Section, 27 April.
Zucker, L.G. (1986), “Production of trust: Institutional sources of economic structure,
1840-1920”, Research in Organizational Behavior, Vol. 8, pp. 53-111.
... The global trend of outsourcing and offshoring continues to evolve along with changes in the business and technology environment. Economic, technological, and policy changes greatly influence the global dynamics of outsourcing and offshoring (Mihalache & Mihalache, 2016;Ndubisi & Nygaard, 2018;Sayed & Agndal, 2022). Analysis of trends in bibliographic data shows several significant shifts. ...
... Based on the literature review we conducted, the difference is from the governance and geographical aspects (Handley & Benton, 2013;Wieland et al., 2020). Outsourcing is a strategy that leads to a decision to buy governance that a third party already owns, for example, buying from a third-party provider or an offshore provider (Ndubisi & Nygaard, 2018;Nujen et al., 2018). While insourcing is a governance policy that leads to creation, for example, creating subsidiaries, acquiring, and establishing branch offices, and creating a local presence in a region (Hätönen, 2009;Iqbal & Dad, 2013). ...
Article
Full-text available
This paper aims to contribute to a better understanding of the relatively comprehensive breadth of information on outsourcing-offshoring from existing and open-source research articles. A systematic literature review was carried out on 700 articles related to global outsourcing to obtain results of scientific studies. The PRISMA method is used to get relevant articles that meet the quality control aspects of the article data used. Research on global outsourcing and offshoring showed significant progress from the start until its peak in 2008. In 2000 global outsourcing was in the implementation stage, requiring a lot of basic and conceptual research to develop global outsourcing activities. After 2008 the topic of global outsourcing research studies decreased. This was because research on global outsourcing became more specific. The 32 topic items grouped into 4 clusters are state-of-the-art research on global outsourcing-offshoring topics in the last 20 years.
... Indeed, political entities such as the U.S. federal government or the European Commission argue that relocating some industries within their borders would make supply chains less reliant on external sources for critical materials, technologies, food, infrastructure, security and other strategic areas (Chen et al. 2020;Kim & Chung, 2022;The White House, 2021). In addition to revitalizing local industries and economies, relocating activities can hold producers more accountable to ensure a stronger social and environmental sustainability, whereas offshoring can outsource sustainable responsibility (European Economic and Social Committee, 2014;Ndubisi & Nygaard 2018). ...
Article
Full-text available
Controlled environment agriculture is developing rapidly to shorten supply chains and reduce the energy and greenhouse gas intensity of products transportation to consumers. However, compared to conventional value chains, these benefits are counter-acted by a higher energy consumption at the farm stage. Few studies have addressed this trade-off because of the novelty of controlled environment systems and the lack of suitable data to assess them. Benchmarking this new industry against its current counterfactuals is nevertheless critical and may point to potential options to mitigate its impacts. This study aimed to bridge this gap by evaluating the environmental performance of an urban vertical, indoor farm through life-cycle assessment. The farm, located near Paris, France, uses aeroponic towers to grow plants usually sourced from tropical countries for use in high-added-value cosmetic products. The analysis covered the whole production cycle up to the processing plant gate and involved three species: Ocimum sanctum, Centella asiatica and Coleus forskohlii. Climate change impacts amounted 9.7 kg CO2-eq./kg of plant biomass, as averaged across all crops, with large differences between species. These emissions were 4-fold larger than those of the air-imported, conventional chain for Centella Asiatica. On-farm electricity consumption contributed 60% of the carbon footprint. Sensitivity analysis showed that optimal farming processes could significantly reduce environmental impacts. Other beneficial trade-offs associated with local production, such as national employment, easier supply chain management, and quality of active ingredients, should be factored in for a comprehensive assessment of indoor farms.
... Although production expenses are 20% cheaper in India, Vietnam, and Bangladesh, the longer lead times caused by supply chain disruptions neutralize the cost-benefit (Ndubisi & Nygaard, 2018). The company aimed to reduce its production in Asia by 50% by the end of 2022. ...
Research
Full-text available
The evolution of the fashion industry has been significantly influenced by the second and third industrial revolutions, enabling mass production and technological advancements. Prominent fashion brands such as H&M, Zara, and Benetton have adopted the fast fashion business model, characterized by rapid production cycles and affordable pricing to meet dynamic consumer demands. This case study provides an in-depth analysis of the supply chain management strategies of these brands, focusing on design, manufacturing, sourcing, and distribution processes. It examines the challenges faced during international expansion and market adaptation, highlighting the impact of digitalization on optimizing supply chain operations. Additionally, the study explores the integration of sustainability practices within the supply chain models and the ongoing efforts to address environmental and ethical concerns. Through a comparative analysis, this study aims to offer a comprehensive understanding of how H&M, Zara, and Benetton navigate the complexities of the global fashion market, leveraging technology to enhance efficiency and responsiveness.
... Yönetim literatürü, dış kaynak kullanımının, fırsatçılığı azaltan, izleme maliyetlerini dışsallaştıran ve tedarik zincirlerinin rekabetçi bir organizasyonunu kolaylaştıran bir araç olduğunu ileri sürmektedir. Ancak operasyonları dışarıdan sağlama isteği, önlenebilir sorunlara yol açabilir ve tek amaç işlem veya üretim maliyetlerinden kurtulmak olduğunda etik davranışlar da azalabilir (Ndubisi ve Nygaard, 2018). DKK, hem küresel ekonomi hem de sürekli değişen çevre koşulları nedeniyle temelde maliyet azaltma stratejisi ile yola çıkılan bir uygulama olmakla birlikte, beceri geliştirme, özyeteneklere odaklanma ve kalite artırma gibi yan amaçlarla da tercih edilebilmektedir. ...
Chapter
Full-text available
Bu bölümün amacı DKK uygulamasının ortaya çıkardığı etik sorunları literatür incelemesi yoluyla ele almaktır. Bu amacı gerçekleştirmek üzere öncelikle DKK hakkında temel kavram ve tartışmalara yer verilecek, ardından DKK türleri açıklanacaktır. Daha sonra işletmelerin faaliyetlerini etik bir çerçevede sürdürebilmesi için çoğulcu perspektif olarak tanımlanan Kurumsal Sosyal Sorumluluk (KSS) ele alınacaktır. KSS yaklaşımından yola çıkılarak DKK uygulamasının ortaya çıkardığı ve etik bir iş hayatını sürdürmeyi zorlaştıran sorunlara değinilecektir. Sonuç ve öneriler kısmında yüksek rekabet ve küreselleşmenin de etkisiyle neredeyse stratejik bir tercihten ziyade norma dönüşmekte olan DKK uygulamalarının etik bir şekilde nasıl sürdürülebileceği kurumsal sosyal sorumluluk piramidi çerçevesinde cevaplanacaktır.
Article
Artificial intelligence (AI) is disrupting industry and potentially threatening to replace humans at work. In this article, we offer a strategy to ensure that executive decision-makers are given the tools to combine the best of human skills with AI, both preserving human dignity and enhancing organizational achievement. We propose a decision-making framework, the Arbitrage-Enhancement Decision Grid (AEDG), that enables organization leaders to determine the optimum human and intelligent machine collaboration to improve workforce performance. The framework recognizes the inevitable adoption of technology innovation, in conjunction with an organization’s need to balance human performance and competitive objectives. The authors then advance an actionable roadmap for developing human workforce and intelligent machine competencies and skills, the Human Resource-Artificial Intelligence Collaboration (HRAIC) framework that complements the decision-making outcomes of the AEDG.
Article
Full-text available
The outsourcing practice has increased tremendously over the recent years owing to its positive financial and operational benefits for organizations. However, there are legal and ethical aspects of outsourcing that have garnered a lot of attention. Failure to address the legal and ethical aspects that arise from outsourcing can have far-reaching ramifications including legal battles and losses that may put organizations in difficult situations especially as pertains to accountability to shareholders and customers. This research was aimed at providing comprehensive examination of legal and ethical implication of outsourcing, with key focus on operational optimization. To achieve its objectives, the study employed qualitative and quantitative means to collect data from its sources. The qualitative component utilized interviews and case studies. The quantitative component utilized the survey approach to collect data from professionals in the area of outsourcing. The thematic and statistical analysis of data indicated that there is a strong association between legal and ethical factors on outsourcing. For the outsourcing process to be streamlined, the study recommends that the legal and ethical considerations should be intensified, with emphasis stressed on international legal frameworks and business ethics.
Chapter
In the face of multifaceted global disruptions, including geopolitical instability, the pandemic, economic turmoil, and climate change impacts, businesses and their supply chains must conduct comprehensive analyses to anticipate and prepare for future challenges. This necessitates leveraging tools like the SWOT analysis framework, which systematically evaluates internal strengths, weaknesses, external opportunities, and threats. Through SWOT analyses, organizations can identify their capacities, constraints, growth prospects, and risks, enabling the formulation of proactive green marketing strategies. Embedding sustainability objectives into these strategies aids in enhancing resilience and adaptability in an evolving landscape. Over time, the traditional SWOT analysis has evolved to integrate sustainability considerations, offering a holistic evaluation of a company's sustainability landscape. By utilizing green SWOT analysis as a guiding framework, businesses can strategically incorporate sustainable practices, leading to improved performance and a positive societal and environmental impact.
Chapter
This chapter emphasizes the critical need for a textbook on sustainable marketing, entrepreneurship, and strategy in the contemporary business landscape. It highlights the importance of incorporating the 17 United Nations (UN) sustainability goals to foster sustainable change processes. The interconnectedness of social, environmental, and economic factors is emphasized, stressing the significance of synergizing these dimensions for long-term sustainability. The chapter underlines the textbook’s aim to guide readers in formulating strategies that integrate internal and external factors, culminating in a holistic approach to sustainability. Its inclusion in educational curricula is deemed essential for preparing future leaders to contribute to a sustainable future.
Article
The political economy framework for the comparative analysis of marketing channel dyads proposed by Stern and Reve (1980) focused mainly on relationships between channel members. This article extends the political economy framework by indicating how environmental factors (i.e., factors external to a dyad) might influence and affect the structure and processes of the dyad. When combined with the original article by Stern and Reve, the resulting overall perspective should provide a comprehensive basis for theory development and research in the marketing channel area.
Article
The study evaluates the positive effect of long-term oriented marketing relationship on ethical conduct from the perspective of the service provider (i.e., the agent-firm), by integrating the relevant literature from relationship marketing, ethics, and long-term orientation domains. The paper proposes that service providers that build relationship quality with their clients will display increased ethical conduct toward them. Specifically, the study examines the positive influence of the dimensions of relationship quality (that are relevant to the offshoring services context) that the service provider firm's employees undertake and their impact on ethical conduct. Overall, the results indicate that the commitment-only full mediation model of relationship marketing variables on ethical conduct is a better representation than both direct-effects model and other competing mediating models examined in this study. Fundamentally, it means that customer service officers should incorporate long-term orientation and commitment in their principal-agent relationships that will provide the impetus for undertaking ethical behavior. The article concludes with a discussion and implications of the findings.
Article
In this paper we draw on recent progress in the theory of (1) property rights, (2) agency, and (3) finance to develop a theory of ownership structure for the firm.1 In addition to tying together elements of the theory of each of these three areas, our analysis casts new light on and has implications for a variety of issues in the professional and popular literature, such as the definition of the firm, the “separation of ownership and control,” the “social responsibility” of business, the definition of a “corporate objective function,” the determination of an optimal capital structure, the specification of the content of credit agreements, the theory of organizations, and the supply side of the completeness-of-markets problem.
Article
This paper relates quality and uncertainty. The existence of goods of many grades poses interesting and important problems for the theory of markets. On the one hand, the interaction of quality differences and uncertainty may explain important institutions of the labor market. On the other hand, this paper presents a struggling attempt to give structure to the statement: “Business in under-developed countries is difficult”; in particular, a structure is given for determining the economic costs of dishonesty. Additional applications of the theory include comments on the structure of money markets, on the notion of “insurability,” on the liquidity of durables, and on brand-name goods.
Article
This study investigates antecedents and consequences of interpersonal trust in new and mature market economies. The authors present a model which suggests that interpersonal trust emerges as a consequence of the legal environment and the extent of interfirm managerial control. The model also suggests that interpersonal trust and managerial controls influence performance. Hypotheses are tested in retail petroleum channels in Poland, (former East) Germany, and Norway. The results indicate that the production of trust and performance varies by country. The paper concludes with a discussion of the implications for franchise management and theory.
Article
The political economy framework for the comparative analysis of marketing channel dyads proposed by Stern and Reve (1980) focused mainly on relationships between channel members. This article extends the political economy framework by indicating how environmental factors (i. e., factors external to a dyad) might influence and affect the structure and processes of the dyad. When combined with the original article by Stern and Reve, the resulting overall perspective should provide a comprehensive basis for theory development and research in the marketing channel area.
Article
This paper integrates elements from the theory of agency, the theory of property rights and the theory of finance to develop a theory of the ownership structure of the firm. We define the concept of agency costs, show its relationship to the ‘separation and control’ issue, investigate the nature of the agency costs generated by the existence of debt and outside equity, demonstrate who bears these costs and why, and investigate the Pareto optimality of their existence. We also provide a new definition of the firm, and show how our analysis of the factors influencing the creation and issuance of debt and equity claims is a special case of the supply side of the completeness of markets problem.The directors of such [joint-stock] companies, however, being the managers rather of other people's money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own. Like the stewards of a rich man, they are apt to consider attention to small matters as not for their master's honour, and very easily give themselves a dispensation from having it. Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company.Adam Smith, The Wealth of Nations, 1776, Cannan Edition(Modern Library, New York, 1937) p. 700.