1 - Challenges for a new paradigm in strategic management

Summary

The future of business in society: social and economic changes

During the last decades, both business and the society have undergone enormous changes. A few key examples may illustrate this: technological and scientific progress, changes in social structures and mindsets, globalization, development of new players in the world economy such as Brazil, China and India, and the downturn of Communism. This has opened new horizons for firms but also for customers, suppliers, citizens, and for many other kinds of stakeholder groups.

However, there have also been fundamental challenges and negative effects caused by these changes that also impact the firm and its stakeholders. The rising defaults on subprime mortgages in the United States illustrate such a fundamental challenge, as these defaults triggered a global crisis in the financial system. As a result, leading investment banks collapsed and the US government carried out massive bail-outs. Similar observations can be made for Europe and Asia. Even national economies have encountered serious difficulties. Greece and Ireland, for example, have had to be bailed out by the European Union and the International Monetary Fund (IMF).