Exert Governments Power Over Businesses
Governments say to business, we are going to curb your decision making by enacting regulations that are designed to serve society's and not just your interest
Governments Exert Power Over Businesses
We replace the invisible hand of the market in certain areas with the visible hand of government But we just established last class that this is no panacea. For the government itself can fail in its mission... we discussed non-market failures
Interest Groups Exert Power Over Businesses
What if non-governmental groups of people with a common interest (community members, workers, consumers) band together to influence business behavior?
Interest Groups Exert Power Over Businesses
Walmart Video
Interest Groups Exert Power Over Businesses
Why not just rely on these groups to pop up to shape business behavior?
Interest Groups Exert Power Over Businesses
The notion is that companies also will anticipate a reaction from some group in the public and they comply in the face of or with the expectation of being held accountable by this group
Interest Groups Exert Power Over Businesses
Pepsi Handout
Interest Groups Exert Power Over Businesses
What options do these groups have to alter business behavior? What are the limitations of these groups to extract "socially-desired" responsiveness from business?
Interest Groups Exert Power Over Businesses
Saipan Video
Interest Groups Power Exert Over Businesses
The Conceptual: Options All Groups Have For Power over Business: Hirschman
Quality Exit Voice Loyalty
Interest Groups Exert Power Over Businesses
Quality
Quality is as much about an interest group perceives how something is produced than what is produced
Interest Groups Exert Power Over Businesses
Exit
Consumers may discontinue buying the product, Shareholders may dump shares Employees may quit jobs... This "exiting" will send a signal to management to get it right or alter its behavior.
Interest Groups Exert Power Over Businesses
When will Exit Work
PERFECT INFORMATION- that would include knowledge of the "imperfections' (which didn't exist in the Saipan, according to our video) and of alternatives PERFECT MOBILITY- there are choices out there. I can find a another product, another retailer or another job
Interest Groups Exert Power Over Businesses
Voice
Voice is an attempt to change, rather than escape from an objective state of affairs whether by individual or collective petition The incentive for individuals and groups to rely on voice feeds off inelastic demand, where no alternative to the product or service or job exist
Interest Groups Exert Power Over Businesses
Loyalty
The reluctance to exit in spite of disagreement with the organization of which one is a member (or a constituent) is the hallmark of loyalist behavior Loyalty makes exit less likely