The Five Factor Model

Topics: Management, Strategic management, Ethics Pages: 7 (2095 words) Published: October 24, 2012
James Baron and David Kreps had given the Five-Factor model, which is based on Michael Porter’s Five Forces model of business analysis (Porter, 1980). These factors will influence the Competitive Intelligence system in any organization. These factors are External Environment, Workforce, Organizational Culture and Structure, Organizational Strategy, and Technology of Production and Organization of Work (Baron & Kreps, 1999). Lack of correspondence between any one of these factors can lead the firm’s CI practices to the failure.

Figure 15.1 The Five-Factor model. (Source: Adapted from Baron & Kreps [1999]).

External Environment

The External Environment component takes into consideration social, political, legal, and economic forces. Social forces are based on society’s widespread norms and acceptances and consider the social responsibilities of the firm. Political forces are those forces that are enforced and expected by both the corporation and the government. Legal forces concern the lawful responsibilities of the organization and the rights that its workers hold, both individually and as a group. Finally, economic forces relate to conditions in the local labor market including the degree of labor mobility and the competitive economic pressures the organization may face (Baron & Kreps, 1999). These forces influence CI endeavor to collectively address the concern of corporate ethics and the maintenance of ethical standards. Social Forces

Employees misunderstanding can lead an effect on the organization, it is important that companies establish internal codes of conduct and outline ethical obligations. Unethical business practices can create undesired results in their employees such as confusion, misaligned judgment, and dissatisfaction. These employees may eventually leave the company or produce sub-optimal work. In both scenarios, the company will have wasted valuable resources. Political and Legal Forces

CI is governed by such legislation as the Economic Espionage Act (EEA), which prohibits illegal activities such as computer hacking, wiretapping, the use of bribery to obtain information, and the misrepresentation of identity (Pagell, 1998). It is difficult, however, for legislation to include all aspects of CI. This leaves room for a “gray area” of conduct, which often leads to unethical practices. An organization may choose to either enforce the use of unethical methodology or to provide guidance that supports ethical conduct (Trevino & Weaver, 1997). Whichever stance the corporation chooses will eventually have a direct impact on how the CI team member may perform. Where unethical practices are adopted, CI members often feel pressured to appease for fear of punishment, even when their own ethical standards are compromised (Trevino & Weaver, 1997). A rift between job obligation and loyalty to the company may soon induce the employee to depart on negative terms. Those employees in companies that address ethical issues, however, have been shown to take more pride in their work and provide more optimum results (Trevino & Weaver, 1997). Economic Forces

A competitive industry environment encourages the formation of an effective and well-maintained CI department. A well aware firm will often make the additional investment of providing sufficient training to its employees. Nonetheless, job mobility and turnover tend to be high in the CI industry. Many CI professionals quickly develop a certain degree of expertise in their field (Trevino & Weaver, 1997). It is not surprising, therefore, that competing companies may be quick to lure employees away to their own CI departments (Trevino & Weaver, 1997). This would obviously have a number of negative consequences on the original firm. The organization would have to reinvest resources to replace and train new staff and, more importantly, intelligence gathered by their former employees...
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