Week 10, Monday Lecture Outline

Individual and Group Power

Week 10, Monday

Psychology 360
Outline

• I. Power and politics
• II. Individual bases of power
• III. Group bases of power
• IV. Power in action

• Power tends to corrupt, and absolute power corrupts absolutely -- Lord Acton
• Power, like a desolating pestilence
  Polutes whate'er it touches -- P.B. Shelley
• Those who have been once intoxicated with power can never willingly abandon it -- Edmund Burke

Power and politics

• power is the strength of a person's or a group's capacity to influence others
• politics is the self-interested use of power

Reward and coercive power


Find the source of power

• why do soldiers follow officers' orders?
• reward, coercive, legitimate
• why do students emulate faculty?
• referent
• why do CEOs listen to R & D directors?
• expert

Group bases of Power

• resource dependency -- power derived from control over critical resources (Pfeffer)
• strategic contingencies -- power derived from contingency of other units' actions on your actions (Lawrence & Lorsch)

The LS&A Budget Office

• what critical resource do they control?
• money!
• what critical contingencies do they control?
• financial planning

Power in Action

• Mergers and acquisitions: struggle for control over corporate assets
• How the game is played: look for target companies that are worth more broken up than together
• The players: financiers capable of raising enormous capital in a short amount of time

Some important terms

• LBO = Leveraged BuyOut (i.e., hostile takeover)
• greenmail = bids designed to inflate the value of stock held in a takeover target
• junk bonds = high risk securities used to rapidly mobilize capital
• white knights = "friendly" firms who pre-empt bids by hostile firms
• insider trading = illegal use of securities information for personal gain

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Revised - November 4, 1996