Corporations from a critical perspective

This blog will first explain what a corporation is and later there will be developed some critical thoughts. To get your own thinkings started, I can recommend to watch the movie "The corporation" by Mark Achbar, Jennifer Abbott and Joel Bakan.

The most common form of business organization, and one which is chartered by a state and given many legal rights as an entity separate from its owners. The corporation is seen as a person. This form of business is characterized by the limited liability of its owners, the issuance of shares of easily transferable stock, and existence as a going concern. The process of becoming a corporation, call incorporation, gives the company separate legal standing from its owners and protects those owners from being personally liable in the event that the company is sued This condition is known as limited liability. Incorporation also provides companies with a more flexible way to manage their ownership structure. In addition, there are different tax implications for corporations, although these can be both advantageous and disadvantageous.

There may be many advantages to using a corporation to carry on business depending on your circumstances.  Some of the main advantages of using a corporation to conduct business include the following:

• Limited Liability:  The owners, or shareholders, of a corporation are not liable for the debts and obligations of a corporation. This means that, as normal rule, creditors of a corporation can  not  hold the  shareholders responsible for the debts of the corporation.  If the corporation can not pay its creditors, then the creditors have no right to claim payment from the shareholders.  There are exceptions to this general rule either by statute or because of some act done by the shareholders to make them personally liable. If you concerns about these exceptions, you should seek legal advise.

• Ownership Easily Transferable:   Ownership of a corporation is transferred easily by transferring the shares.  It can be as simple as endorsing the back of the share certificate in favour of the new owner of the shares.  The change of ownership is then recorded in the records of the corporation.  However, if the corporation is actively carrying on business, the new owners will require various representations and warranties both from the seller of the shares and from the corporation.  The seller will also wish to exclude liability in certain areas and limit the representations and warranties given.  Also, certain technical requirements of the governing legislation must be met.

• Perpetual Existence:  Since a corporation is a separate legal entity from the shareholders, the corporation can have perpetual existence.  It continues as a corporation in law even if the ownership of the corporation itself changes. This provides for continuity for  the business of the corporation.
  
  
• Tax Advantages:  Under Canadian income tax laws, there can be a tax advantage to operating a business through a corporation as opposed to a sole proprietorship, a partnership or some  other form. If a corporation qualifies as a small business and has active income, then it can take advantage of the small business deduction and pay income taxes at a substantially reduced rate.  There can be a substantial tax saving compared to doing business outside of a corporation.

• Raising Capital: For a number of reasons, it can be easier to raise capital for a corporation than it is for a partnership or sole proprietor.  Lenders are more willing to lend capital to a corporation.  There are more sources of  capital for a corporation.

As explained before, a corporation is seen as a person. But the first critical question is: Should corporations be entitled to the same legal rights as individuals? My answer would be yes, if they could bear responsibility in the same way as individuals. And that not just in terms of money. But corporations cannot go to jail and they simply cannot take the same responsibilty as human beings. It is an artificial construct, a roboter. They cannot feel and know from the bottom of their heart what is wrong and what is right, neither what is fair. So they can never feel any guilt. So how can you give them all the same legal rights as to a real human person? That is insane somehow. Maybe it is like giving a monkey a gun. It might go right and it might go wrong- you never know, it is contingency.
So where should be drawn the line? I honestly do not know where. Because in my point of view. A corporation could not breath and work without the humans behind it making the decisions. Therefore the directors, officers and partly the employees and shareholders should take the rights and the responsibility. The directors and officers could share the risk, rights and responsibilty all equal. In that way, competition between them might lead them in the right direction. And then they should are held accountable as every other person in the whole wide world too. Through their own minds, and of course law and judges.


References:

http://www.investorwords.com/1140/corporation.html#ixzz1395HkK3k
http://www.e-law.bc.ca/art_corpstructure.html
http://www.cinemapolitica.org/files/cinemapolitica/imagecache/poster/files/cinemapolitica/films/The%20Corporation.jpg
http://www.horschamp.qc.ca/images/photos/Corporation.jpg

IOM

This weeks blog is about IOM and what specifically they do to improve conditions of women migrant workers.

Established in 1951, IOM is the leading Inter-governmental Organization in the field of Migration and works closely with governmental, intergovernmental and non-governmental partners.

With 127 member states, a further 17 states holding observer status and offices in over 100 countries, IOM is dedicated to promoting humane and orderly migration for the benefit of all. It does so by providing services and advice to governments and migrants.

IOM works to help ensure the orderly and humane management of migration, to promote international cooperation on migration issues, to assist in the search for practical solutions to migration problems and to provide humanitarian assistance to migrants in need, including refugees and internally displaced people.

The IOM Constitution recognizes the link between migration and economic, social and cultural development, as well as to the right of freedom of movement.

IOM works in the four broad areas of migration management:

• Migration and development
• Facilitating migration
• Regulating migration
• Forced migration.

Through its worldwide network, IOM activities include these areas: the promotion of international migration law, policy debate and guidance, protection of migrants' rights, migration health and the gender dimension of migration. With their network and expertise they can help also women worldwide. Read more on their website about specific countries, e.g. Women in Haiti.

References:

http://www.iom.int/jahia/Jahia/about-iom/lang/en

http://www.tunisiaonlinenews.com/wp-content/uploads/2008/11/iom_logo.jpg

Different Culture could lead to competitive advantage

According to the article from Mangaliso, M. about Ubuntu which is a humanist philosophy of Southern Africa, combining different cultures with your management style can lead you to a competitive advantage. This blog should explain how cross-cultural managers can be aware of cultural philosophies and use them as benefit.

Ubuntu are the beliefs, values and behaviors of a large majority of the South African population. It is invariably invoked as a scale for weighing good versus bad, right versus wrong and just versus unjust. It can guide, as other cultural philosophies as well, development of managerial practices for healthy competitive advantage. Ubuntu can be defined defined as humaneness which means a pervasive spirit of caring and community, harmony and hospitality, respect and responsiveness that individuals and groups display for another. It is the foundation for the basic values that manifest themselves in the ways African people think and behave toward each other and everyone else they encounter. There is a high degree of harmony and continuity existing throughout the system. The following will explain various aspects of ubuntu how to deal with them in order to get a competitive advantage.

Relationship with others

The individual is a member not just of the nuclear family, but also of the extended family or clan. Hiring of relatives could be a very positive decision because of ties within the organization. It is important to understand that the individual is predicated on belonging to collective. A team might accomplish more than if ech individual works alone. Organizations can ensure that individuals uphold this spirit by linking their reward systems to team performance. Regarding cultures with high collectivism, people are intrinsically motivated to contribute more when they are valued members. Mutual respect and empathy are advantages. The management style "fusion" offers a view of others as part of the same whole, recognition of similarities rather than differences, and an identification of common ground and a sense of community with shared vission, norms and outcomes. Another example could be the Matsushita Case.
While treating others with kindness, compassion and humility, people will always help you to succeed in your management task. It is about respect, deference and compliance. If people sense that they are being treated with respect and dignity, they will respond by showing greater commitment to organizational goals.

Language and communication

The importance of language in establishing a sense of community, belonging, shared heritage and common welfare is emphasized. Traditional ,management training places greater emphasis on the efficiency of information transfer. Ideas must be translated quickly and accurately into words, the medium of the exchange must be appropriate and the reciever must accurately understand the message. In ubuntu the social effect of conversation is emphasized. In ubuntu's oral tradition the meaning of words is strongly related to context. Poetic expression and the ability to play with words are signs of wisdom. The focus is more on oral words than on written pieces. Shared understanding of deeper meanings supports complex consensus. Ubuntu communication means concerted action that is adaptable.
Concerned more with efficiency than with healthy relationships, supervisors may discourage conversation and other forms of socializing in the workplace. Isolation results. One way to break this psychological impasse is to periodically hold company sponsered events and ceremonies. Allowing workers to establish relationships even when not required by the task structure, improves effevtiveness and decreases pessimistic feelings toward the organization.
Those organizations that provide an opportunity for their employees to give expression to their values and beliefs in the course of carrying out their corporate responsibilities are likely to gain competitive advantage over those that do not. It is important to provide opportunities for self-expression, achievement and self-fulfillment, consistent with employees values.

Decision making

Decisions by consensus. Process is circular. Polycular vision. Dispute resolution to restore harmony and unity. Ubuntu might be slow to action, but greater commitment to goals means more long-run effectiveness and efficiency.
Before a closure of a decision considerable time should be considered to assure all voices have been heard and the consensus has been reached. The goal of decision making in this context is to preserve harmony. A decision that is supported by most of the staff as the right decision is resisited by many.
Also if those decisions of Consensus are quite costly in terms of time and effort, their result can be seen in improved commitment to organizational goals, reduced supervisory requirements, decreased turnover and absenteeism. So effeciency will increase.

Time

Time is not a finite commodity under ubuntu's vision. It is considered as a healer. Allowing enough of it for important issues will ensure a good decision. Time is a reference that locates communities with respect to their collective past and their shared future. It assigns significance to patterns of events and it orders relationships and affairs. In the context of ubuntu time is reflected as a unifying and integrating construct that emphasizes interdependence, shared heritage, regularity and congruity. It is all about accepting the validity and reseonableness of a different worldview. This seams as a hidden competitive advantage.

Productivity and Efficiency

Productivity must be optimized. Ubuntu considers solidarity and social harmony important. So are rewards and suffering are shared. The competitive advantage lies here in the loyality to group goals and so it is for the good of the company. In a culture that is high on collectivism as ubuntu, across-the-board pay reductions would be much preferred to targeted layoffs. If important changes have to be introduced, this must be done using consultation and inclusive decison process. Sometimes with the strength fo a group there can be other soluitions be found than the traditional ones according to theory.

Age and Senority in Leadership

Age is an ongoing process of maturing and acquiring wisdom. Older people are respected. Older workers hiring experiences, wisdom, connections and informal networks can help you and in this way, your knowledge can lead to a competitive advantage. Hiring an older person who will face respect and trust of his staff is better than an expert who fails just because of his age. This approach to managing is gaining acceptance in more contemporary management thinking. More successful managers are seen to act as coaches rather than as experts or cops. But age can be messured in different ways, e.g. chronological age, service to the company or the experience in the position. The importance is to explain everybody why somebody is the best for this job.

Belief systems

In some countries and cultures, belief systems are quite different than ours. Some are into spirituality or others in different religions. Try to get to know the certain system you dealing with and you might be able to get out a competitive advantage as well. Show acceptence and interest. But another caution is against the assumption that culture is static and that there is a one-way causal relationship between culture and behavior. Changing behaviors also causes changes in culture through feedback and reinforcement over time. Differences between the behavior of younger and older generations contribute to the generation gap. So sometimes it is very useful to introduce different e.g. payingsystems or shift systems. In that way the people can make their own choice and feel respected and you are able to avoid gender problematics.

The company should also consider which manager is the best for another countries operation. Depending on the country and its culture, there are 3 different types to choose. The ethnocentric, polycentric and geocentric manager. It needs to be considered to either hire a local with all its expertise regarding the culture or a manger from the company's home country who is familiar with the corporate culture or somebody from a third country who is an expertise in his field.

Overall it is very important to say, that you should treat others with dignity and respect. Care and share with your employees. Be willing to negotiate and take your time for that. Be a good listener and try to understand your employees culture and values. Therefore don't judge. There is no right or wrong. Honor the work and loyality which is given to the company and everbody's good. Promote equity in the workplace. Be flexible and accomodative. Try to find the right balance of host country's culture and corporate culture. This challenge will lead you to success. Organizations infused with humaneness, a pervasive spirit of caring and community, harmony and hospitality, respect and responsiveness will enjoy more sustainable competitive advantages.

References:

Mangaliso M. P. (2001), Building competitive advantage from ubuntu: Management lessons from South Africa, Academy of Management Executive, Vol. 15 No. 3.

Hill, C.W.L. (2005), International Business: Competing in the global market place, 5^th international edition, MacGraw- Hill: Boston etc.

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