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 Business power 

Ryan Fehr Assistant Professor 

Michael G. Foster School of Business

University of Washington, Seattle

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Making Ethical

Decisions

Managing

Relationships

Building Socially

Responsible Systems

   T  o  p   i  c  s

• Context of business

• Business power 

• Ethical decision-making

(sessions 1 – 6)

• Ethical leadership

• Employees and customers

• Organizational cultures

(sessions 7 – 11)

• Business regulations/governance

• CSR and sustainability

• Globalization and MNCs

(sessions 12 – 21)

   T  o  o   l  s

 

   K  e  y   P  o   i  n

   t  s

• Many forces influence and are

influenced by business

• Business power produces

 business responsibility

• Think comprehensively

to make optimal decisions 

• Be cognizant of and responsible

for the ethical culture that you

create for others

• Be mindful of stakeholder 

rights and interests

• Organizations depend on

stakeholders for their survival

• To navigate the business

environment, organizations must

know how to address their 

stakeholders’ needs 

   P  r   i  n  c   i  p   l  e  s Critical Thinking

Communication

Integrated Management

Corporate Strategy

Course Framework 

Teleology Deontology

Do it! ?? ??

Don’t do it!  ?? ??

Moral Person  Not a MoralPerson

Moral

Management

Ethical

Leadership

Hypocritical

Leadership

 No Moral

Management

Moral

Muteness

Unethical

Leadership

Technology

Ethics Strategy

Idyllic

Imprudent IrresponsibleValues &

Assumptions

Symbols Power Structures

Control

Systems

Rituals &

Routines

Stories &

Myths

Formal

Structures

Corporation

Stockholders

EmployeeCommunities

Governments Customers

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The ability to exert influence and control over oneself and others

-Can be a property of an individual or a group

What is POWER? 

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Think of a time you had power over another 

individual or group of individuals. What

happened? How did you feel? 

81% increase in

likelihood of being

accepted for the job

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•Power is linked to two neuroendocrine hormones

− High levels of testosterone (dominance hormone)

− Low levels of cortisol (stress hormone)

Power Posing

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Confidence  – increased self-esteem, agency, and control;less stressed-out by tough situations

Disinhibition  – people feel less constrained by the situation

Social attentiveness – less dependent on others, and so pay less

attention to their needs- When they are paid attention to, it is in self-interest

Chance –  more tolerant of risk  

Power has important consequences for the

 power holder, too

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•

Power is sometimes a perception that YOU can manipulate• You and others will view you as more powerful

• You are perceived as more

− Persuasive, confident, passionate, authentic, comfortable, captivating,

enthusiastic

• Important outcomes are linked with the expression of power 

− JOBS!!

• Small things can make a big difference

Conclusions from both studies

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Where do people get their power?

Coercive

Legitimate

ExpertReferent

Reward

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Coercive power entails forcing someone to do something that theywould prefer not to do 

− Usually, this is for fear of punishment

5 primary sources of power 

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Reward power is derived from an ability to give someone somethingdesirable

5 primary sources of power 

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Legitimate power entails feelings of obligation or responsibility.Typically, this is associated with a person’s formal title 

− Requires a recognition of legitimacy by the person being influenced

5 primary sources of power 

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Referent Power is power from the other person’s perception of your value. Can be altered through persuasion

− Even if your coworker doesn’t have formal authority over you, your 

admiration of him/her might lead you to do what he/she requests

5 primary sources of power 

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Expert power entails the utilization of knowledgeor expertise

− You might find that one of your group members attains power this way

5 primary sources of power 

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 Coercive power entails forcing someone to do something that theywould prefer not to do

Reward power is derived from an ability to give someone something

desirable

Legitimate power entails feelings of obligation or responsibility.

Typically, this is associated with a person’s formal title 

Referent Power is power from the other person’s perception of your 

value. Can be altered through persuasion

Expert power entails the utilization of knowledge or expertise

In class exercise

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 1. Which kind of influence is most likely to immediately result in the

desired behavior?

2. Which will have the most long-lasting effects?

3. What effect will using a particular base of power have on the

ongoing relationship?

4. Which form of power will others find most acceptable?

In class exercise

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Businesses can exert influence on their own actions and the actions of others

Businesses can have power too

What gives a business

power?

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Businesses exert power at two different levels

On the surface, businesses

determine what is bought and

sold, who is hired, who is

fired, the commercials we

watch, the price of goods, etc.

Beneath the surface,

 businesses can influence the

deepest levels of society, from

the structure of government to

our cultural values.

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There are seven realms of business power 

Economic Events, activities, and people by virtue of 

control over resources

Technological The direction, rate, characteristics, and

consequences of physical innovations

Political Governments

Legal The laws of society

Cultural Cultural values, habits, and institutions

Environmental Nature

Individuals Employees, managers, consumers, etc.

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The power of Wal-Mart

Economic Events, activities, and people by virtue of 

control over resources

Technological The direction, rate, characteristics, and

consequences of physical innovations

Political Governments

Legal The laws of society

Cultural Cultural values, habits, and institutions

Environmental Nature

Individuals Employees, managers, consumers, etc.

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o

Dominance theory: The view that business is the most powerfulinstitution in society, because of its control of wealth

o This power is inadequately checked and, therefore, excessive

oPluralist theory: The view that business power is exercised in a

society where other institutions also have great power 

o It is counterbalanced and restricted and, therefore, not excessive

Two perspectives on business power 

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The social contract legitimizes business power by giving it a moral basis. Businesses violate the social contract when they stop acting in

line with society’s rules (i.e. laws) and values 

Legitimacy refers to the rightful use of power. Its

opposite is tyranny