Differences and Conflicts between Owners and top Managers in the Context of Social Responsibility

Külliki Tafel-Viia, Ruth Alas

Abstract


Management and organization literature has treated conflicts in numerous times and from various perspectives. Still, the theoretical literature holds different views about the essence of owner-manager relationship, including the view that the top manager and the owner are seen as subjects with different goals and interests. And these differences may cause conflicts created within this relationship.The research question here is about the subject of CSR as an enhancing factor in the deepening of special interests of the owners and the managers, as well as in emphasising their different roles.The in-depth interviews contained 60 questions and were recorded. With nearly all questions, two aspects were addressed: on the one hand, the difference between the periods 1995–1999 and 2000–2004, and on the other, between enterprises based on foreign and domestic capital. By the beginning of the former period – that is 1995 – the privatisation period in Estonia was predominantly over and the first legislative framework concerning the operation of corporations in the Western sense started to develop. The second turning point is represented by the year 2000, when the “purge” following the Asian and Russian crises presented new demands on economic activities and economic thinking as a whole. A total of 25 individuals were interviewed: 7 owners, 12 top managers and 6 of those who had been both as owners and top managers. This article concentrates on the results that concern the possible sources of conflict between the managers and the owners and their perception of social responsibility and the links between those questions.When summing up the opinions of the interviewees it should be admitted that the responses reflected the insignificance of the conflicts issue rather than their serious topicality. As the respondents remarked on several occasions, the existence of owner-manager conflicts is not considered normal or built-in; as the respondents added, this should not be considered such. Thus the claim of built-in conflicts in the owner-manager relations, derived from the agency theory (at least the classical agency theory) should be questioned according to the responses of the Estonian owners and managers. At the same time this does not mean that the responses coincide with the standpoints of stewardship theory, because the results of the interviews do not enable to make general conclusion that Estonian managers tend to act in the best interest of their principals.The results of the interviews lead us to conclude that the difference between the way top managers and owners understand ideas and activities is quite clearly presented in the context of social responsibility; despite the fact that the respondents usually do not admit the existence of conflicts when discussing them in general.When comparing the opinions of the owners and top managers about social responsibility, considering the theoretical literature, we may claim to certain extent that owners and managers have a different perception of social responsibility and this leads to the conflicts between them.To conclude, the authors present the understanding that the context of CSR brings out the conflicts between managers and owners more clearly, or even intensifies the conflicts between them. Results from an empirical study, undertaken in Estonia, are used.


Keywords


conflicts, owners, top managers, corporate social responsibility, Estonia, transition.

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Print ISSN: 1392-2785
Online ISSN: 2029-5839