Leadership

1.0 Executive Summary

With ethic and moral dilemma are more emphasized by people, moral management as a new norm is required to evaluate a business or an organization’s success or not.

Nowadays, in the wake of the development of Internet industry, more and more ethical issues and questionable management behaviors were exposed in our society. Baidu Inc. as an example that is now facing some serious ethical issues and reputation damage problems both in internal and external environment. This report is going to analysis the ethical issues and questionable management of Baidu Incorporate by using stakeholder theory and stewardship theory. Also, there will discuss how corporate governance and corporate social responsibility (CSR) influence the company’s long-term development and leadership. In addition, this report also shows the relationship between stakeholders and managers. Then according to the moral and ethical dimensions of organization theories, stakeholder theory and stewardship theory, there are some deeper and further recommendations will be given to help Baidu redeeming their public trust and corporate reputation. Lastly, report also going to provides the suggestion for Baidu’s executive manager who as an agent how to treat their stakeholders in a right way and lead or control their company in the moral method.

2.0 Background of the Company

Baidu Inc. is a Chinese web service company and it also as one of China’s biggest online network technology company, which was established by Robin LI and Eric XU in 2000. Baidu’s headquarter was located at Haidian District in Beijing (Baidu Inc. 2015). Baidu provides many different services such as research engine, music, movie and image services. It provides plenty of convenience and information to human beings’ daily life. Baidu is ranked the 4th in the Alexa Internet ranking in 2015, where shows Baidu occupied 82.7% of shares of in Chinese search engine market and 8.30% of shares in the global market (Alexa 2015). However, as the consequence of the increasing quantity of public trust scandal exposure (especially the health care and medical search scandal in recent) and lack of awareness of social responsibility and corporate governance, Baidu’s brand is suffering query and their company reputation is falling into an impasse in the worldwide. Otherwise, Baidu’s also face another issue is their higher mobility of employees, even senior managers. Because of the employees who work in Baidu, actually is working in a high-pressure work environment.

3.0 Questionable management of the Company

3.01 Stakeholder Theory

In the traditional management theory perception, manager as the agency who appointed by shareholders to controlling and managing the company, their mission is maximum shareholder’s interest. However, stakeholder theory argued that manager should be look after and increase other stakeholders interest as well (Donaldson & Preston 1995). According to Freeman’s perception, a company has lots of stakeholders who are associated with the company, including employees, shareholders, customers, communities, suppliers, political department and trade unions (Freeman 2010). Additional, in the Friedman’s research, he indicated that a business is not merely concerned on profit maximization, it also should take their social responsibilities for offering good working conditions, eliminating discrimination and protecting environment to seek corporate sustainable development (Friedman 2007). It means manager has the obligation to looking after and increasing vested stakeholders’ different interests, however those diversity interest may sometimes against with each other, it is hard for manager to balance the different interest (Freeman 2009). As the result, it may bring conflict when shareholder’s value is opposite to employees’ value, or when the corporate’s interest are completely collide public’s value system, it is difficult for manager negotiate with different groups to make a ‘win-win’ situation, even a balance protocol is reached it still a time consuming processes (Hartman 2011). Another limitation for stakeholder theory is the power discrepancies, it is unfair for the stakeholders who have low-level power they have less ability to influence the decision, even the have the ability to manage his interaction with this organization (Shankman 1999).

3.02 Stewardship Theory

Stewardship theory is different with agency theory, which is an individual who willingly to put others’ long-term well being in the first place instead of their personal interest (Hernandez 2012). This theory assumes managers are highly loyal to the company and they are pay attention on motivating their followers to achieve a high work performance.

Stewardship theory shows that manager has the duty to govern national interest and public trust and confidence (Hernandez 2012). A good stewardship can gain public trust. Corporates are encouraged to take social responsibility in order to build corporate brand and reputation.

Also, stewardship theory is a contingency approach or situational approach, it means managers are required to conduct the company depends on the current situation. Managers are required utilizing their power and authority in a reasonable way. By conducting the company manager should consider and judge their orders and decision before implement not just follow the order. Also, manager are suppose to coordinate not control their employees, it means more flexibility should given to employees (Davis et al. 1997).

3.03 Baidu’s Latest Scandal: Trust is an issue?

In 2008, CCTV has reported that Baidu took money from unlicensed medical organizations for allow their business upload advertising in their internal platform. And Baidu given the million dollars of fine to stopped this scandal, but they still not cease this ‘business’. Recently, Baidu web engine is encountering a medical scandal again, a student called Zhixi Wei, who die for Baidu’s irresponsible medical business. Wei search result let him go to the Beijing Armed Police Corps, which is a no license medical Corps, it cost his family around $ 31, 000, but he finally died in the morning of 12th April (Wang 2016). As the publics’ view, the Wei’s medical incident is really scared our community. By using moral and ethical dimension of organization theory to analysis, this company, give the platform to no medical license company to deceive consumers, they abandon moral response just for seek the illegal profit. (Youtube 2016)

Before Wei’s scandal, Baidu was