Global Business Citizenship: A Transformative Framework for Ethics and Sustainable Capitalism

A Transformative Framework for Ethics and Sustainable Capitalism

Donna J. Wood, Jeanne M. Logsdon, Patsy G. Lewellyn, Kimberly S. Davenport

• Publisher: Routledge
• Year: 2015
• Print ISBN: 9780765616265
• eBook ISBN: 9781317469780
• Topic: Business
• Subtopic: Business General
• Index: Business

This practical and engaging book provides a coherent approach to global business responsibility and ethics based on the latest research, theory, and practice. The authors incorporate numerous interesting and current real world examples to support the argument that corporations need to - and can - identify and implement processes that foster ethical conduct, ensure basic human rights, protect the natural environment, and enhance social justice wherever businesses operate around the globe. "Global Business Citizenship" combines elements of political theory, stakeholder relationships, business ethics, corporate social performance, accountability and measurement, and organizational change. Its practical approach encompasses "best practices" in stakeholder management, experiments in applying corporate values to local conditions, and social environmental auditing and reporting. Focusing on the strategic alignment and change management process for implementing business citizenship principles and practices, it is an essential supplement for any course concerned with ethics and social responsibility in today's global business climate.

1

An Invitation to Global Business Citzenship

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“You want me to do WHAT???”

For today’s manager, just getting through the workday can be tough enough. The pace is implacable; there is extraordinary pressure for performance in a risky, turbulent, globalizing environment. This requires difficult trade-offs and good explanations for the paths taken and not taken. Dangers loom large, and rewards sometimes seem distant. Increasing demands and higher risks, decreasing time and head count, hypercompetition, and always the pressure to meet earnings projections—all these challenges can make many managers’ lives something less than truly satisfying.

Scared yet? You should be. Yet fear can be a friend if it steers us away from disaster. A wise and courageous person is not unafraid.

Now add in new demands for stakeholder accountability, global social responsibility, ethical conduct, and transparency, spurred in large measure by globalization and communications technology. Then consider how much weaker many governments have become in regulating conduct for the safety and well-being of citizens, both individual and corporate. Next, contemplate the vast economic and social inequities among the world’s nations and the derivative threats and opportunities. Finally, reflect for a moment on what all this might mean for your work life, your chances of having a happy retirement, and the prospects for your children and grandchildren.

If you’re like most managers, you face competing stakeholder demands, you’re up against ethical problems regularly, and you may lack a framework or a language to address them. Like people anywhere, managers are self-interested and concerned for others. They want to do good and they are very practical. They have big dreams and irksome constraints. Herein lies the biggest dilemma of modern global management.

Exhibit 1.1

What Is a Global Business Citizen?

A global business citizen is a business enterprise (and its managers) that responsibly exercises its rights and implements its duties to individuals, stakeholders, and societies within and across national and cultural borders.

The good news is that most people—managers certainly included—want to do the right thing. The desire for ethical conduct and ethical treatment is built into the fabric of human character. The bad news is that so far there has not been a good template for incorporating ethics and responsibility into the fabric of management practice—at least not a model that the average manager feels can be “worn out of the store” and put into action.

This book offers you a beacon through the fog surrounding responsible management practice via the process of global business citizenship—a new way of thinking about ethical and responsible global management.

In practical terms, we want to help you negotiate the rapids of the social, cultural, and political change that accompanies globalization. We want to give you good reasons for making the effort to do the right thing every day in every way. We offer a framework for seeing that ethical, responsible business practices transcend cultural and religious boundaries, and that such practices are good for the firm and good for business as a whole. The global business citizenship process will help you design your organization and your worklife in a more sustainable—and personally sustaining—way.

Linking Ethics to Business Practice

Here’s a little quiz to test your motivation to manage ethically. You leap out of bed in the morning and go off to work, thinking with great enthusiasm:

A. Hey, I’m going to do a lot of good for a lot of people today!

B. Maybe I’ll get lucky and won’t have any big problems today!

C. Wow, this looks like a great day to exploit some workers!

Sure, there are some “immoral” or sociopathic managers, the ones who look for new ways to cheat, lie, and steal, and who don’t seem to care who gets hurt in the process. We see their handiwork in some of the big scandals and disasters of the corporate world. And there are some managers who thoroughly infuse their business practices with deeply held religious or philosophical principles—the founding executives at Johnson & Johnson or Levi Strauss might come to mind. In the middle, however, are the managers who lack the awareness, the vocabulary, or the framework for relating what they believe is right to what they believe is necessary in business.¹ Not having good tools can make even the best-intentioned manager frustrated, ineffective, and distrustful.

These “amoral” managers do have values, and typically very good ones. But for a variety of reasons, those values are difficult for the managers to apply to and implement in business practice:

• They may separate their private behavior from their business behavior, believing that business is a “game” with its own rules and that “real-life” rules do not apply.

• They may be afraid for any number of reasons to raise ethical issues, to expose problems, or to champion social responsibility.

• They may not be sufficiently tuned into the long-term and broad-based consequences of business decisions, focusing instead on the narrow, short-term performance goals that are familiar and comfortable.

• They may lack the analytical skills, the experience, and the vocabulary to conduct ethical analysis alongside economic or technical analysis.

• Responsibility and accountability in organizations are so often diffused across levels and functional silos; the process of how work actually gets done often “hides” any real sense of control or impact for managers.

So, if you find yourself among or reporting to or supervising that large middle of “amoral” managers, how’s that workin’ for ya?²

Here are just a few examples of the difficulties that managers have stumbled into for lack of skill—or will—to act upon values they already hold:

• A young engineer hesitates to tell his boss about a design problem he believes can lead to great customer harm; he is afraid of his boss’s temper, or he just doesn’t know how the information will be received. And he is concerned about what his expression of concern might mean to his own job security.

• A CPA is told by her managing partner that her client demands that his gambling wins and losses not be recorded on his personal tax return, even though the law requires reporting. It’s a wash; there’s no tax liability anyway, so what’s the problem?

• A federal contracts manager is told by superiors that if prototype testing doesn’t entirely pan out, he should “smooth the curves” on the report to avoid raising questions about potential product limitations.

• Threatened with job loss if her unit doesn’t cut costs, a manager chooses to overlook safety violations and routine maintenance of security systems.

• A newly minted MBA is promoted too fast. Flattered, he fails to see that he has been chosen because he is inexperienced and will be set up as the fall guy if the major corporate fraud is discovered.

• Forced to downsize, a manager is tempted to place older employees on the lay-off list, given they lack “runway” potential.

Almost all of the thousands of managers we have met intend to do the right things for their families, communities, employees, and companies, as well as for themselves. They mean to cause no harm, and they feel good about helping those in need. They obey the law (most of the time) and keep a wary eye out for those who don’t. They participate in community affairs and societal governance, and they “give back” in gratitude for what they have been given. In short, they are good folks.

But—and isn’t there always a ”but”—the new realities of global business are presenting managers with problems and dilemmas they never dreamed about. It’s more than the common (and false) wisdom that business and ethics are unrelated—it’s a whole new world of challenges for the manager.

Globalization and the New Pressures on Managers

The pressures on managers haven’t changed so much because of globalization, but they have become much more intense and time-constrained. There are huge pressures to ensure company financial performance and success. There are equally strong pressures for individual managers to get good evaluations, bonuses, and promotions, enabling them to experience personal success.

But managers today are between two worlds in terms of knowing how to achieve these goals. What worked well 10 or 20 years ago doesn’t work so well anymore; the standards of success for the organization and individuals may be similar, but the paths to achieving them are not clear. New stakeholder expectations and processes for meeting them are not yet well defined. It may seem at times unrealistic to expect ethical conduct of oneself, much less of colleagues, business partners, and competitors. Indeed, in some situations, it seems impossible to even understand what the right course of conduct is. Consider these examples:

• Marlene arrives in Haiti where her company contracts with a local supplier who subcontracts with small manufacturers. She meets with the supplier’s senior executives and requests a final schedule of the previously arranged tours of production facilities. She is told that unfortunately, because of local flooding, the facilities are undergoing renovation and cannot be toured at present, and she is then urged to approve the anticipated three-year supply contract quickly, before competitiors move in to appropriate the supplier.

• Stefan from Internal Audit at headquarters discovers that his company’s Pakistani chemical factory is surrounded not by the required buffer zone, but by makeshift neighborhoods of workers and their families living in shacks of tin and cardboard. Following the plant disaster in Bhopal, India, in the mid-1980s, Stefan’s company developed detailed standards to prevent exactly such an occurrence. He finds, however, that local plant managers, workers, and officials seem to have only a vague awareness of Bhopal or of the company’s safety standards.

• Jim has been sent by his company to a Middle Eastern country where he is to investigate some new business opportunities. After settling into his hotel, he decides to take a walk. Within a few blocks he comes upon a woman being assaulted by a group of men. He tenses, looks around for help, and finding none, moves to intervene. As he steps in to offer assistance, Jim is grabbed by two of the men and soon realizes that he is being arrested. His passport is taken and he spends the night in jail, missing an important business meeting. Released the next day with stern warnings not to interfere with local Islamic law, he must explain to his boss and ask for guidance.

Most managers are familiar with the language of costs and benefits, and are typically able to decide which of several courses of action is economically best for the firm. But what can a firm-centric economic analysis tell us about how a manager should behave in situations like those above? Instead, the broader ethical language of harms and benefits, voluntary versus involuntary participation, rights and duties, just processes and fair distribution is required.

• Marlene has to be aware that the supplier may be trying to manipulate around her company’s express desire to uphold workplace safety and labor standards. Will she offend the local supplier if she refuses to sign until the inspection has been done? What will happen to the subcontractors’ workers if her company cuts its ties with the supplier? What if she signs, and the subcontractors are exposing their workers to very hazardous chemicals?

• Stefan is faced with implementing headquarters standards in a situation that is, in utter contradiction, both unthinkable and locally acceptable. He knows all too well what happened at Bhopal, but if no one at the Pakistani plant seems to know or care, how is he going to enforce required safety standards? What if he enforces the standards strictly and is accused of cruelty to poor workers just looking for a place to live? What if ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Preface
• Acknowledgments
• 1. An Invitation to Global Business Citzenship
• 2. What’s Wrong with the Status Quo?
• 3. The Lens of Global Business Citizenship
• 4. Principles, Codes, and Policies: The Guidance System for Global Business Citizenship
• 5. The Principle of Accountability and Processes of Stakeholder Engagement
• 6. Cases in Implementing GBC Stakeholder Engagement
• 7. Building the Citizen Company: The Principles of Organizational Change (Nice Theory, But Will It Work?)
• 8. Organizational Change the GBC Way: Cases in Implementation
• 9. The Practice of Accountability: GBC Measurement and Reporting
• 10. Cases in Implementing Stakeholder Accountability
• 11. System-Level Learning and the Payoff in Reputation
• 12. The Promise of Global Business Citizenship
• Notes
• Bibliography
• About the Authors
• Index