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Exam Question 1:
Professor Joseph fStiglitz has called the current global financial meltdown the ‘worst economic crisis since the great depression’. This global financial crisis has three main contributing factors. The first is corporate behaviour and the responsibility organisations have for their decisions and actions towards society, known as corporate social responsibility. The second contributing factor centres on business ethics; the underlying organisational integrity of organisations and the third is accountability which links to how organisational performance is measured and reported.
An important issue for not just governments and organisations but the whole of society is to be able to understand why this crisis occurred. This essay will use concepts of organisational sustainability and seek to outline a number of contributing factors for the ‘worst economic crisis since the great depression’ and also consider how Wilson’s (2003) model of organisational sustainably can help explain this crisis.
One of the contributing factors for this crisis focuses on corporate behaviour. Due to increased competition in the globalised world many organisations focusing on just short-term shareholder returns have in effect contributed to this crisis. This is because such cultural management practices have been allowed to operate in unsustainable ways, in fact, in ways that display levels of ‘Machiavellianism’ (Petrick et al 1991, p. 30). An example whereby such unsustainable practices have taken place can be demonstrated by the large compensation and payouts of executives. A culture such as this fosters gaming and short-term decision making; with anecdotal evidence suggesting incentives such as these are associated with impaired organisational performance and provide barriers to sustainability. (Beer & Katz 2003)
Conversely, Smith (2003) argues for short-term reductionist thinking approaches in...