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Stakeholder theory understands business in terms of relationships among stakeholders whose interests are mainly joint but may be occasionally conflicting. In the latter case, managers may need to make trade-offs between these interests. The purpose of this paper is to explore the nature of managerial decision-making about these trade-offs.

This paper draws on the ordonomic approach which sees business life to be rife with social dilemmas and locates the role of stakeholders in harnessing or resolving these dilemmas through engagement in rule-finding and rule-setting processes.

The ordonomic approach suggests that stakeholder interests trade-offs ought to be neither ignored nor avoided, but rather embraced and welcomed as an opportunity for bringing to fruition the joint interest of stakeholders in playing a better game of business. Stakeholders are shown to bear responsibility for overcoming the perceived trade-offs through the institutional management of social dilemmas.

For many stakeholder theorists, the nature of managerial decision-making about trade-offs between conflicting stakeholder interests and the nature of trade-offs themselves have been a long-standing point of contention. The paper shows that trade-offs may be useful for the value creation process and explicitly discusses managerial strategies for dealing with them.

Change management projects typically fail because they meet employee resistance created by emotional sensemaking processes. This paper aims to present an in-depth explanation for these failures and how change managers could avoid them.

This study presents an argument in the following three steps: it begins with an empirically well-established fact that attempts at change management often trigger negative emotional responses; the moral foundations theory is then used to identify the typical categories of emotional responses that may result in resistance to organizational change; and the ordonomic approach to business ethics is built upon to substantiate the diagnosis that, in many cases, emotional responses cause employees to behave in a way that is collectively self-damaging.

The core idea of the current study’s contribution is that emotionally driven processes of sensemaking can easily become dysfunctional, especially in situations that require extensive change. Consequently, it should be top priority for managers to engage in sensegiving, which comprises: narratives that explain what is going on against the background of relevant alternatives and appropriate discourses that guide how employees form their expectations. In a nutshell, sensegiving attempts to reframe sensemaking processes.

Even if a win–win potential already exists, it can still be misperceived. If employees are used to thinking within a trade-off framework, this might trigger trade-off intuitions and negative emotions, in effect leading to a situation that makes everyone worse off. Such mental models might become a self-fulfilling prophecy. To counter such a tendency, sensegiving aims at a professional management of sensemaking processes. The task of successful change management, properly understood, is to create and communicate win–win potentials, ensuring that all parties involved understand that they are not asked to sacrifice their self-interest, instead they are invited to participate in a process of mutual betterment.

The literature on sensemaking draws attention to the empirical fact that resistance to change is typically driven by emotions. The moral foundations theory helps in exactly identifying which emotional dimensions are relevant in times of organizational change. The ordonomic approach to business ethics points out that – owing to their emotional nature – processes of sensemaking might fail, that they may mislead employees into behavioral patterns that are collectively self-damaging. Therefore, a top priority for management is to engage in sensegiving, that is, in (re-)framing sensemaking processes.

Corporate social responsibility (CSR) is intimately related to culture and ethics of the country in which the company is located. It is difficult to define “culture.” It is a combination of values, belief, and morality law in a society. Society is a group of people who follow common set of values and norms. Usually individuals in a society are bounded with specific religion. This bondage depends on nature of the religion (e.g., Christianity, Hinduism, and Islam). The norms are inherent within the values which determine such items as individual freedom, democracy, women’s freedom, social justice, and collective responsibility. Sometimes culture and religion also determine the formation and break down of nation states. India-Pakistan and Rwanda-Burundi are examples. Social structure depends on religious values and occupational system.

This paper aims to show new ways of overcoming resistance during organizational change by applying insights from New Institutional Economics.

This is a conceptual paper that adapts findings from New Institutional Economics.

The paper highlights the relevance of interactions between managers and employees for value creation processes: interactions can generate either win–win or lose–lose situations. By altering the restrictions on managers’ and employees’ behavior, change managers can create mutual benefits for the staff and the firm. The paper thus explicitly considers the individual interests of employees and managers and highlights an approach to link individual interests with the collective interests of the firm by means of appropriate interactions. Additionally, the paper elaborates the relevant factors that determine the success of classical change management measures, like communication or participation, to overcome resistance during organizational change.

The developed framework also indicates important conditions where approaches inspired by management, psychological and sociological theories can be successfully applied and where change management will benefit from being complemented by New Institutional Economics.

Change managers can optimize inter-organizational competition or cooperation to generate a win–win situation by means of appropriate formal or informal restrictions (like incentives or binding mechanisms).

This paper applies insights from New Institutional Economics to show how organizational change can be facilitated by producing mutual benefits. This paper postulates that organizational change often fails or, at the very least, meets with stiff resistance due to dysfunctional interactions within the company. However, such interactions actually contain great opportunities for change managers: by shifting the focus of these interactions, they can generate the potential for win–win situations. In this approach, mutual benefits are a decisive factor in increasing the acceptance to organizational change and overcoming resistance.

The rise of the general systems theory in the twentieth century would not have been possible without the concept of feedback. Of special interest to the present paper is Niklas Luhmann’s reconstruction and critique of Wiener’s cybernetic approach to the feedback concept. Luhmann has suggested that the operation of the feedback-controlled systems potentially poses problems of sustainability. The purpose of this paper is to explore this suggestion in more detail.

The reconstruction of the arguments of Luhmann and Wiener shows that both scholars approached the feedback concept from the “system-environment” perspective. Luhmann takes system-environment relations to be inherently precarious. Wiener underscores the importance of the sensitivity of the feedback-controlled systems to their environment.

Drawing on Norbert Wiener’s and Niklas Luhmann’s ideas, the paper shows that every specification of the feedback mechanism implies the drawing of the moral boundary that demarcates those parts of the environment to which the relevant system is sensitive from those to which it is not. A likely outcome of this boundary drawing is the maintenance of intra-systemic complexity at the cost of the deteriorating sustainability of the system in its environment.

Until today, the general system theory has sought to explain organized complexity and rightly underscored the role of feedback in maintaining it, thereby inadvertently creating the chasm between the complexity and sustainability dimensions of human civilization. The present paper pleads for reorienting of the systems-theoretic analysis of the feedback concept toward closing this chasm.

This paper aims to conceptually analyse the role of speculation in society to determine whether agricultural commodity index funds, a new form of speculation, contribute to sustainable development.

The theoretical arguments justifying the value of the market economic system for generating sustainable development and the positive contribution speculators make too in this context are elaborated. It is then considered whether the arguments justifying traditional speculation hold for agricultural commodity index funds.

Traditional forms of speculation contribute positively to sustainable development; primarily due to the information they uncover on demand and supply factors which affect prices. Agricultural index funds are a danger to sustainable development, as their transactions are not based on demand and supply factors but simply represent demand for the diversification effect which commodities generate when added to an investment portfolio.

The article offers a new approach to assessing whether agricultural index funds contribute to sustainable development. Empirical research has been conducted on whether speculation via index funds has unjustifiably affected commodity prices. However, results of these investigations have been inconclusive due to stark limitations in data availability. By approaching the issue from a conceptual point of view, the article delivers theoretically sound arguments as to why agricultural commodity index funds are likely to have an unjustifiable effect on prices and, hence, are a danger to sustainable development. This has strong implications for finance practice and regulation.

This paper aims to contribute to the understanding of the mechanisms that evolve during reputational scandals and lead to changes in industry regulation. It explores the processes by which a demand for external industry regulation evolves, also addressing the consequences of firms’ competitive behaviors which lead to substantial misbehavior and the destruction of reputational capital. The authors are interested in whether and how regulatory activities – in the case analyzed here, changes in insurance regulation regarding sales commissions for insurance brokers – are used as a costly, external behavioral control mechanism (third-loop learning) to terminate a reputational scandal that cannot be stopped by internal controls at a firm level (first-loop and second-loop learning) anymore.

The paper explores a real-life case in the German insurance industry that peaked in 2012 and has been well documented by broad media coverage, complemented by interviews with leading industry representatives. Using causal process tracing as a methodology, the authors study the factors in the case that led to an industry scandal. The authors further analyze why the insurance firms involved were not able to limit the scandal’s impact by internally controlling their behaviors, but had to call for external regulation, thus imposing costly restrictions on sales and contract processes. To identify the mechanisms underlying this result, theories from the fields of economics (game theory) and sociology (vicious cycle of bureaucracies), as well as organizational learning theory, are used.

The authors find that individual rationality does not suffice to prevent insurance firms from scandalous business practices, e.g. via implementing appropriate internal behavioral control measures within their organizations. If, as a result, misbehavior leads to reputational scandals, and the destruction of reputational capital spills over to the whole industry, a vicious cycle is set in motion which can be terminated by regulation as an externally enforced control mechanism.

This study is limited to the analysis of a single case study, combining published materials, e.g. broad media coverage, with interviews from representatives of the insurance industry. Nevertheless, the underlying mechanisms that have been identified can be used in other case studies as well.

The paper shows that if firms want to avoid increasing regulation, they must implement strong reputational risk management (RRM) to counteract short-term profit pressure and to avoid restrictive regulation imposed on the industry as a whole. Furthermore, it sheds light on the relevance of spillover effects for RRM, as not only employee behavior within an organization might lead to the destruction of reputational capital but also that from other firms, e.g. from elsewhere within an industry.

The paper contributes by emphasizing a direct causal link between corporate scandals, loss of reputation and regulatory change within the insurance industry. Furthermore, the paper contributes by combining economic theories with organizational theories to understand real-life phenomena.

The purpose of this paper is to shed new light on the issue of preference heterogeneity in cooperatives.

Drawing on the ideas of Habermas and Luhmann, this paper interprets preference heterogeneity of cooperative members in terms of the precarious relationship between the categories of “system” and “lifeworld.” The argument is buttressed with a case study of an agricultural cooperative recently founded in Central Greece.

The sensitivity of cooperatives to the lifeworld contexts of their members exacts the price in the form of the member preference heterogeneity problem. If this sensitivity is taken to be the constitutive characteristic of cooperatives, then the proposed argument hammers home their fundamental ambivalence, as they are necessarily fraught with the potential for internal conflict.

The paper urges for a radical rethinking of Georg Draheim’s thesis of the “double nature” of cooperatives. “Double nature” is shown to aggravate the member preference heterogeneity problem.

The results of this study inform the cooperative leaders’ quest to strike a balance between the interests of their members and the demands of the external socio-economic environment.

This research contributes significantly to the literature on collective decision-making costs incurred by cooperatives. The failure of cooperatives to balance the sensitivity to members’ interests and to the external environment is exposed as the root cause of the divergence and heterogeneity of member preferences. This heterogeneity is shown to boost collective decision-making costs.