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Entrepreneurship in Large Corporations: The Downside - Essay Example

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Introduction Corporations are powerful drivers of the economy at local, national and global levels. As Down (2010, p. 119) argues, the traditional bureaucratic and technocratic approach to running corporate organisations has proved unfeasible in the contemporary world…
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Entrepreneurship in Large Corporations: The Downside
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Download file to see previous pages In terms of entrepreneurship, the corporate disposition of firms seemed inhibitory to such ventures as corporations were largely divisional and highly bureaucratic. However, allowing for personal wealth accumulation, personal autonomy to spur innovation and cultural changes have all allowed the paradigm of corporate entrepreneurship to emerge (Down 2010, p. 120). Corporate entrepreneurship, hailed as new dawn to the power and performance of corporations, is defined as the establishment of novel business ideas and business opportunities within large corporations (Birkinshaw 2003, p. 47). However, the shift to entrepreneurial management of large corporations has been accompanied by numerous problems for corporations, which forms the focus of this study. One of the principal talking point and debated problem is the question of morality; corporations appear to justify dubiousness, grey practices and illegalities in the name of pursuit of entrepreneurship (Down 2010, p. 121). This problem raises the age-old question of the purpose of a corporate firm; should a corporation primarily seek profits first and other interests as by-the-ways? Should corporations seek to satisfy social good apart from profit seeking? Thus, a moral tension arises on the operations of entrepreneurial-based corporations as an extension to the debate on capitalism. When the stakeholder theory versus shareholder wealth maximisation concepts are applied to the purpose and obligations of corporations, the moral debate on entrepreneurial corporations is further illuminated. According to the stockholder wealth maximisation perspective, firms ought to primarily pursue maximisation of profits for the owners (Brink 2011, pp. 262-263). Hence, such firms are right in pursuing managerial capitalism to fulfil their fiduciary responsibilities to the stockholders of the corporation (Philips 2003, p. 36). However, the social contracts under which society operates translates to operating while keeping in mind the rights and interests of various stakeholders in the society. For a corporation, the stakeholders include the employees, suppliers, customers and the community within which the corporation operates (Freeman et al. 2010, pp. 164). The interests of all these groups should be taken into consideration when making critical decisions on the corporation’s future, for instance mergers, takeovers, closures and acquisitions. The shift towards entrepreneurial corporations has refocused firms towards their fiduciary wealth-making duties at the expense of the stakeholders. In true entrepreneurial fashion, modern corporations devise innovative ways to maximise profits which may contradict communities' interests. In a related way, the shift towards entrepreneurial corporations has adverse effects on the abilities of corporations to cater for the needs of the society in a moral and equitable manner. Under the social contract theory, states are established to cater for the needs and common interests of the citizenry, requiring that personal interests be ignored for the collective good. When a government privatises a public corporation responsible for the collective good of the society, the contract under which society operates is effectively broken. Privatising such services is usually undertaken for the pursuit of more efficiency and to lessen government interference in trade. However, such firms gain commercial interests and have the advantage of operating as monopolies; crucial services supposed to be equitably ...Download file to see next pagesRead More
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