Business and service organizations exist to create valued goods and services that people need or desire. Organizations may have either a profit or nonprofit orientation for the creation of these goods or services. But who decides which particular goods and services an organization should provide, and how do you divide the value that an organization creates among different groups of people such as management, employees, customers, shareholders, and other stakeholders? If people primarily behave self-interestedly, what mechanisms or procedures govern the way an organization uses its resources, and what is to stop the different groups within the organization from trying to maximize their own share of the value created, possibly at the detriment or expense of others? At a time when the issue of corporate ethics and management dishonesty and greed has come under intense scrutiny, these questions must be addressed before the issue of designing an organization to increase its effectiveness can be investigated.

Contributors: Texas A&M University
Categories: Whitepaper
SRC Type: Sourcing Management, Stakeholder Engagement