Contextual Factors Influencing Business Decisions and Organisational Practices

This study examines the influence of contextual factors on business decisions and organisational practices. It covers topics such as organisational structures, environmental forces, risks, and business practices. The findings highlight the importance of considering contextual factors for effective decision-making and performance improvement.

MgMT20144 – Assessment
Item 1
Annotated bibliography
CQ University, Australia
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Table of Contents
Introduction......................................................................................................................................3
Organisational structures or governance.........................................................................................3
Environmental forces.......................................................................................................................4
Risks confronting the firm...............................................................................................................5
Organisation and business practices................................................................................................5
The functions of diverse firms.........................................................................................................6
References........................................................................................................................................7

Introduction
A context refers to any situation or circumstance which directly or indirectly affects an
organisation and specific characteristic of such context is known as contextual factor (Kronsbein,
Meiser & Leyer, 2014). According to Kamal et. al. (2015), adjoining environment significantly
influences the nature of decision-making which in turn reflect the significant role of contextual
factors in making business decisions. There are a variety of contextual variables under
subcategories of internal and external dimensions that a firm should analyse in order to take
efficient decisions to operate business processes. Decision making at all three levels i.e.,
individual, group and organisational, is highly influenced by the adjoining environmental factors.
Contextual factors such as environment, corporate governance, organisational practices, and
diversity affect the quality of decision making judgement. Thus, it is critical to analyse
contextual factors for investigating reasons for poor performance and diminishing those reasons
for enhancing the organisational performance (Ploesser et. al., 2009).
Organisational structures or governance
Barmeyer, C., & Mayrhofer, U. (2014). How has the French context shaped the organization of
the Airbus Group?. International Journal of Organizational Analysis, 22(4), 426-448.
This article investigates whether features of Airbus Group’s business structure reflects
French organisational structures’ attributes and the evolution of these characteristics over a
period comparative to German’s. Barmeyer & Mayrhofer used contextual approach to identify
influencing factors that affect the organisational growth. The analysis was based on five
contextual factors state regulation, corporate governance structure, professional network, career
patterns and culture. A longitudinal in-depth case analysis of Airbus Group has been carried out
using secondary source of qualitative and quantitative information as well as focus group
interviews. The main focus of the study was on identifying features of French organisational
traits in the Airbus Group while comparing them with German. The findings found French
organisations characteristics in the Airbus Group.
The results of the study implies that multinational company such as Airbus Group is
significantly affected by contextual factors and especially, organizational structures has critical

role in controlling intercultural relationships of encouragement, authority and concentration. The
close observation of the configuration of top management boards like Board of Directors and the
Executive Committee reveals that there used to be equal share of French and German influence
in top positions. Nevertheless the trend has been shifted from bi-national arrangements to
multinational composition of corporate structure. Still many senior managerial positions in the
Airbus Group belongs to French managers which confirms the maintenance of institutional
uniqueness despite globalisation. The contextual factor regarding corporate governance structure
pointedly affects organisational decision making as French characteristics encourage centralised
decision making.
Environmental forces
Papagiannakis, G., Voudouris, I., Lioukas, S., & Kassinis, G. (2019). Environmental
management systems and environmental product innovation: The role of stakeholder
engagement. Business Strategy and the Environment.
The purpose of this article is to analyse how stakeholder engagement influence the
relationship between EMS – environmental management systems and EPI – environmental
product innovation. EMS is adopted by several firms in order to realize high EPI level. However,
the impact of EMS on EPI is inconclusive. Therefore, the authors proposed that stakeholder
engagement is the contextual factor which significantly affects EMS to achieve intended EPI
levels. It has been argued that stakeholder engagement involves exchange of information and
knowledge with various stakeholders, reflecting a firm‘s trustful relationships, which is
necessary ingredient for innovation. The study was carried out taking ISO 14001 as EMS by
1,303 manufacturing firms and has been compared for the period of 2003-2014.
The effects of stakeholder engagement have been assessed by observing customers, local
community and suppliers as stakeholders. The findings of the study confirm that stakeholder
engagement is a significant condition for all three types of stakeholders to utilize the innovative
capacity of EMS in order to improve EPI. It has been observed that stakeholder engagement let
firms to use knowledge and critical resources as inputs in the EMS processes. For example,
strong engagement with customers and suppliers may lead organisations to reduce environmental
impact of production process while ensuring environmental friendly inputs. When EMS capacity

is effectively utilised, it helps firms to further improve product innovation performance. The
authors noted that co-developing new products with suppliers helps firms to gain product design
innovations.
Risks confronting the firm
Phillips, R. (2004). The global export of risk: Finance and the film business. Competition and
Change, 8(2), 105-136.
The article inspects the type of risk in the funding of the US film business by overseas
investors. Several case studies have been used to scrutinise motivations behind foreign financial
institutions funding the Hollywood businesses. Phillips observed that these foreign financing of
films business have resulted in negative outcomes like market collapse, bankruptcy and debt
redistribution at the cost of public money. The author argued that overseas investments form a
significant part of overall failures of the US film production. Examples of blockbusters films like
Batman, Forest Gump and The Matrix are cited which are financial failures but successful in
performance.
The article observed that tax-payer or insurance holders are mostly affected by exporting
of the risk globally. The debt is realized as a balance of risk and reward after fixing the
uncertainty. At this particular point, risk transfer takes place and the costs of financing the film
production moves out of film producer’s financial records and subsequently reassigned
elsewhere. The author observed that such risk transfer tools are nothing but diversion of debt into
people having money invested in public funds or insurance. When such mechanism of
transferring risk spreads beyond the domestic domain and foreign investors’ portfolio fails to
take burden of production financing, the situation of risk export arises. The article concludes that
prior assessment of risk sources and the limit alleviating the risk should be carried out for
financing Hollywood films.
Organisation and business practices
Svensson, G., & Wood, G. (2007). Ethical performance evaluation (EPE) in business practices:
framework and case illustrations. European Business Review, 19(5), 420-430.

The article defines a model of ethical performance evaluation (EPE) based on group of
key parameters which influences the business practices ethical performance. Svensson & Wood
proposed five parameters gap, consequence, time, outcome and context which affect ethical
values. Accordingly, the EPE framework examines to decide whether organisation’s business
processes are judged as ethical or judged as unethical. The findings show the impact of time
variable on ethical values. It has been observed that it significantly affect performance evaluation
of organisational processes in certain contexts.
The article observes that context is one of the prominent parameters on which ethical
principles are dependent. The author claims that the contextual situation in the business
environment affects the decision to consider business practices as ethically acceptable or
unacceptable. It has also been observed that with time and changing of contexts, the ethical
values of groups and individuals also evolve. The authors cited example of “bribery” which was
not used to be allowed by law, however, with time a new term “facilitation payment” emerged
with changing contexts. In this way, the dependence upon time increases the dynamic properties
of the impact of contextual factors.
The functions of diverse firms
Marques, J. F. (2010). Colorful window dressing: A critical review on workplace diversity in
three major American corporations. Human Resource Development Quarterly, 21(4),
435-446.
In this article, Marques attempt to audit diversity of three major US businesses, The
Coca-Cola Company, Wal-Mart, and Abercrombie & Fitch Co. (A&F). The three companies
were selected on the basis of diversity practices and share some common traits like same country
of origin, on-going accusations and lawsuits, racial and gender discrimination and highlighting
diversity statements. The author reviews the attention-seeking diversity statements which were
posted on these company’s official documents like Web sites in light of current issues with the
same subject. This audit was analysed along with company diversity audits by around 150
students of the university. It has been revealed that majority of the companies publish statements
regarding diversity to merely grab attention and to collect diversity-based awards. The study
found serious discrepancy between actual actions and statements.

The author further provided implications for HR professionals. He recommended
implementing and maintaining proper measures considering diversity for doing right things in
right way. He further observed that HR professional usually act only after the significant damage
of reputation has been done. He recommends to proactively reviewing diversity programs in
organisations. It will help in minimising negative perception of US companies by enabling
smooth diversity-focused communication between management and HR department. The article
advocates reforming HR department to have team member across several departments in order to
increase corporate diversity awareness.
Conclusion
This study helps to get an overview of contextual factors that influence the performance
of business decisions and organisational practices. A comprehensive analysis has been carried
out to selected types of contextual factors. The understanding of these factors may help
companies to determine context awareness as well as to take effective decisions. The corporate
governance structure influence the decision making judgement throughout the organisations at
all three levels strategic, group and individual. The second article highlighted the importance of
stakeholder engagement context for environmental management system which may further
influence the innovation capability of firms. The next article discussed about risk confronting the
foreign investments in film business. The failure context of big-budget blockbusters may
increase the financial burden on public funds. It has been recommended to take future investment
decisions while carefully examining risk appetite of investors.
The time and context have been identified as significant parameters deciding
acceptability or unacceptability of managerial decisions on ethical values and principles. It has
been observed that with time moves on, context also evolve which may affect the ethical
judgement of business practices. The last article discusses about importance of diversity
management to safeguard business reputation and recommends reformatting HR as cross-
functional unit.

References
Barmeyer, C., & Mayrhofer, U. (2014). How has the French context shaped the organization of
the Airbus Group?. International Journal of Organizational Analysis, 22(4), 426-448.
Kamal, M. M., Bigdeli, A. Z., Themistocleous, M., & Morabito, V. (2015). INVESTIGATING
FACTORS INFLUENCING DECISION MAKERS WHILE ADOPTING
INTEGRATION TECHNOLOGIES.
Kronsbein, D., Meiser, D., & Leyer, M. (2014). Conceptualisation of contextual factors for
business process performance. In Proceedings of the International MultiConference of
Engineers and Computer Scientists (Vol. 2, pp. 12-14).
Marques, J. F. (2010). Colorful window dressing: A critical review on workplace diversity in
three major American corporations. Human Resource Development Quarterly, 21(4),
435-446.
Papagiannakis, G., Voudouris, I., Lioukas, S., & Kassinis, G. (2019). Environmental
management systems and environmental product innovation: The role of stakeholder
engagement. Business Strategy and the Environment.
Phillips, R. (2004). The global export of risk: Finance and the film business. Competition and
Change, 8(2), 105-136.
Ploesser, K., Peleg, M., Soffer, P., Rosemann, M., & Recker, J. C. (2009). Learning from context
to improve business processes. BPTrends, 6(1), 1-7.
Svensson, G., & Wood, G. (2007). Ethical performance evaluation (EPE) in business practices:
framework and case illustrations. European Business Review, 19(5), 420-430.