As stakeholder's are starting to hold companies up to maintaining corporate social responsibilities, more companies are being revealed as fraudulent. This specific article is a perfect example of this. The Internet firm Alibaba-Taobao has been a company that many people looked up to thanks to "its success and to it's brash, charismatic founder and chairman." Jack O' Ma started the online commerce company in the late 90s and has become one of the most prominent Chincese companies. They went on Hong Kong's stock exchange in 2007 and raised $1.7 billion right behind Google and eBay. This would be a sound of success for the company until the inner-workings of the company had recently been revealed.
Alibaba recent report: "2,326 high volume sellers who pay a fee to the company to peddle their wares on the site -- 'gold suppliers,' as they're called-- defrauded customers over the course of to years." These people could not have created such fraud to customers without the assistance of Alibaba employees. Once reported both the CEO, David Wei and COO, Elvis Lee, both resigned on the same day. It's unfortunate that neither leader of the company could accept the responsibility of their fradulent actions. Of course, the public needs to recognize that just like in Enron's case, fraud becomes a culture of an organization and it is more accepted by leaders who accept these behaviors. It has been known that business ethics in China are still being reviewed and going into progress, although not fully there yet. The fact that two years had passed without stakeholders nor employees reporting the fraud is astounding.
The article refers to the founder of Alibaba to be charismatic, as mentioned above. As we learned in class, a characteristic of a charismatic leader is "a special personality chqaracteristic that gives a person super human or exceptional powers and is reserved for few, is of divine origin, and results in the person being treated as the leader," (Northouse, 173). This idea sets the tone for the company. If leaders portray an unethical practice, the chances of the followers accepting this idea from a charismatic leader are high. According to House's charismatic theory, there are effects that show the direct result of charismatic leadership including; follower trust in the leader's ideology, similarity between the followers' beliefs and leaders' beliefs, unquestioning acceptance of the leaeder, expression of affection toward the leader, follower obedience, identification with the leader, heightened goals for followers, and increased follower confidence in goal achievement. Obviously, follower trust with a charismatic leader has led to his employees making unethical decisions. This also alighs with the similarity between the leader's beliefs along with the followers. Because he was accepting of exchanging inside information, his followers believed it was not only ethical, but accepted through the culture of the firm.
Do you guys believe that if Jack O' Ma's charismatic leadership offered it's followers a more ethical approach, this situation could have been avoided?
Also, what do you think about the CEO and COO resigning? Does this set yet another ethical dilemma for the company that shows they can't own up to their responsibilities?
http://tech.fortune.cnn.com/2011/02/22/why-alibabas-ceo-had-to-go/
-Lauren Mowers
This was an interesting article and good thoughts. The unquestioning acceptance of a charismatic leader is dangerous. It sounds that this company is more needed of a transformational leader. A leader to be concerned with the emotions, values, ethics, standards, and long term goals to keep their followers motivation up. I definitely think that this situation could have been avoided if the CEOs leadership offered its followers a more ethical approach. I think the first factor, Idealized Influence, in transformational leadership (Northouse, p177) that emphasize a leader who act as a strong role model for the followers, and have a high standard of moral and ethical conduct, would be better in the situation.
ReplyDeleteI´m not sure what I think about the CEO resigning, at first I thought that it sounded irresponsibility. They took the easy way, but at the other hand maybe the follower need a more ethical leader they really can trust.
- Eva-Lena Juhlin
I like what Lena has said here about transformational style leadership. I was looking through our textbook and noticed on page 179 the factor of Individualized Consideration. In this particular situation I feel that they could have used a leader who could coach and advise their followers through hard times. Through implementing the transformational style of leadership I think Jack O'Ma could have acted more ethically on this issue.
ReplyDeleteVery interesting article Lauren(I like the name).
I was doing some further research of my own on Individualized Consideration and this author stated, "it involves a leader cultivating relationships with and tailoring development opportunities to individual employees." I truly believe that if this factor was paid attention to more during Alibaba's situation it maybe could have been avoided.
Below is the article I found,
http://zumo-consulting.com/workplacehopeblog/?tag=individual-consideration
-Kyle Turner