Question

Shareholder value versus stakeholder value, profitability versus market share, guilt culture versus shame culture, are said to be derivatives of individualism and communitarianism respectively. Discuss the business implications of these value differences.

Answer 1

1. If shareholder values are considered, a company might do anything to maximize profits, even undertaking unethical practices like cheating customers. If stakeholders are considered, all parties affected by the company's operations will be considered and hence the company is more likely to undertake ethical measures. This will also be beneficial for shareholders as they are also a stakeholder.

2. A similar implication applies when profitability and market shares are considered. Drive for profitability might exclude certain segments of customers or may lead to unethical practices. Focus on market share will lead to a more balanced business, keeping in mind different types of customers. A classic example is Apple vs Lenovo or Hp when it comes to notebooks Apple has a smaller market share but higher profitability.

3. Guilt involves a person himself realizing mistakes and correcting them or not doing them in the first place to avoid feeling guilty. It is highly dependent on individual characteristics. Shame culture is more community-based. Even if someone is not feeling guilty, he can be coerced into not doing unlawful or unethical deeds by shaming by the community. In businesses, a shame culture can ensure more ethical practices on the part of the companies.