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.. /93-global-responsability-efmd-2003 The European Foundation for Management Development GLOB AL RESPO NSIBILITY A N efmd INITIATIVE TOWARDS SUSTAIN A BLE SOCIETAL A ND BUSINESS M A N A GEMENT DEVELOPMENT Supported by The efmd President’s Task Force 1 ??? Foreword An open invitation by Eric Cornuel and Anders Aspling Chapter I Prospects for future action Chapter II What has efmd done so far in relation to the Global Responsibility initiative? Chapter III The efmd President’s Task Force Response to the Bangkok Manifesto:A position paper as real commitment Addenda Addendum (1) The efmd Bangkok Manifesto Addendum (2) The Survey Addendum (3) The Digital Library Addendum (4) The Articles Collection Addendum (5) A brief introduction to related work conducted by – The Bernheim Foundation – The Corporate Social Responsibility Europe – The European Academy on CSR Table of Contents 2 The world of today is getting smaller, the interdependence between people, nations, organisations, businesses and regions is more apparent than ever, and the responsibility for sustainable long-term development is recognised by many.A key word for long-term socio-economic and environmental sustainable development is trust. Trust between stakeholders is needed to ensure such development.
Without the trust factor, in the long run transactions and communication between the different stakeholders will neither be smooth nor efficient and will lead to social chaos, economic and environmental disaster combined with political disturbances. What if representatives from the leading Business Schools, Management Centres and Companies in Europe, – together with colleagues from other parts of the world – gather with regard to a long-term responsible action?A number of leading organisations are addressing issues related to Global Responsibility; sustainable development based on economic growth, social responsibility and environmental concern. The UN – with its Global Compact initiative today embracing more than 100 leading companies from all over the world, the World Bank, the International Monetary Fund, a large number of NGOs, proactive enterprises, etc…, are all clear in their strivings, although the way forward is complex and also disputed. fmd has the ambition to contribute as a catalyst with its specific resources and competencies and by that, support and complement the many activities that others are conducting around the world.
Gathering different stakeholders to develop a deeper understanding, a stronger involvement, relevant activities and learning for each of us, and as a community, with regard to long-term responsible action, is a challenging, but also a much needed initiative. Now is the time to investigate what activities are a priority, what impact we can expect from those activities and how we can be pro-active in this respect.An Open Invitation January 2003 3 efmd’s ability to contribute to the further development of responsible action is based on its unique qualities as a European organisation bridging the academic world and the business community, and its mission to continuously support the development of its stakeholders concerning the quality of education, learning and research on management and business development. The education, training and development of managers and leaders are crucial to the practice we believe should prevail in the organisations of the future. fmd’s engagement is underpinned by the initiative of a Manifesto on Global Responsibility taken by its General Assembly in June 2002.
This paper is a confirmation of the will to pursue this initiative, and clarifies the efmd position regarding issues addressed under the label of Global Responsibility. This position paper invites all Members and Stakeholders to come forward with their experience and knowledge in developing their own operations in line with long-term responsibility, and to join a process of global and sustainable development within an efmd context.Anders Aspling, Eric Cornuel, efmd Board Member, efmd Director General Chairman of the efmd Working Committee 4 Gerard van Schaik President efmd Former Chairman of the Executive Board of Heineken N. V. It is a gross misconception to think that all business is global. Most of it is local. That is not surprising as in most countries 90% of the business community is made up out of small and medium sized companies; of which a vast majority has the national market as its main hunting ground. To them the global operators in their markets are just local competitors.
Does that mean that the trend towards globalisation and the issue of Global Responsibility does not affect them? Far from it. The socio-economic and environmental issues they are confronted with, originate more and more from the on-going global debate and are often to be found in national and local rules and regulations. Is being confronted with the debate on global (social) responsibility a shock to the business world? Not at all. To varying degrees socio-economic and environmental issues have been on the agenda for a long time.The phenomenon is only new in the sense that it now crosses borders and interconnects countries, markets and companies. The information revolution has dramatically increased the transparency of markets and the insight of what happens in those markets.
Businessmen are focused on their companies not on the world. Their mission is to secure the corporate future and they all know such can only be done by positioning their company in a way that is acceptable to society at large. From that perspective the difference for a company between global and national responsibility is only a matter of scale.After all within a company there cannot be a different philosophy per market, only a different approach. Businesses – even the very large and influential ones – can not change the world, they can only make a difference in their own sphere of influence. Corporate policy in its widest sense – that means including the ethics around bringing their products to the market – should set objectives that take the corporation’s societal (global) responsibility into account. That will be less complicated for the marketers of baby-food than for those trading arms; but both will have to do it. Quotations from the efmd President’s Task Force* ” The impact of Globalisation on local competitors Not all business is global An innovative approach? The transparency factor Positioning More Interconnection A matter of scale Corporate policy Including ethics 5 Chapter I To our great satisfaction, the efmd Members present at the efmd Day 2002 within the context of the Bangkok Global Forum on Education last June 2002 demonstrated a strong interest in the discussed Global Responsibility theme acknowledging How significantly management professionals and educators (including the young generation) contribute to the issue of globalisation and the search for sustainable strategies; – That a European sustainable strategy very much depends upon the education of globally responsible leaders and decision makers and the development of responsible corporations and education institutions.
The efmd President’s Task Force has been invited by the Assembly to steer efmd initiatives that aim at – Developing a “ globally responsible code ” which would become part of efmd ‘s mission statement that all members will be asked to subscribe to; Supporting its members and partners in formulating appropriate strategies and developing a range of new capabilities that will help the current and new generation of leaders, managers and entrepreneurs acquire a globally responsible mindset; – Supporting members, partners and other stakeholders across cultures to inform, communicate, cooperate, and learn from each other; – Pooling members’, partners’ and other stakeholders’ efforts together in order to contribute to a constructive ethically founded globalization process and to the search for a more effective and equitable global society.Prospects for future action A TIMELY EVENT IN BANGKOK CHALLENGING THE EFMD PRESIDENTS TASK FORCE 6 Global Responsibility is a matter for governments, public and private institutions. But business is the work of men and although in some way each individual has social and environmental responsibility (be it local or global) some have more than others and some can do more than others about it. Businessmen certainly can play their part and corporate leaders can contribute by ensuring that the sense of Global Responsibility becomes an integrated part of the corporate culture.They should demonstrate their commitment by investing in it, by making both human and financial corporate resources available to give the aspect of Global Responsibility its proper place in the company’s business activities.
Behaviour is one of the most difficult things to monitor in a corporation. Behaviour and responsibility are closely connected. Both are matters on which the corporation and its people are judged by the outside world, the latter taking into account its own objectives, which may not reflect with the corporation’s.In such cases compromises may be necessary. You may have to choose a route which you know is not the optimal route, but which is the only one to ensure the continuity of your freedom to act as a corporation. Fortunately, the shareholders’ hype is coming to an end; awareness is increasing that there is more in corporate life worth living and working for than a financial result. To create a culture in the corporate world that can cope with corporate responsibility in its widest sense: education is the name of the game! Education both through schools and within the company.Managers do not have to be wizards with the ultimate techniques.
Management is not about techniques. It is about leading warm blooded people, the talent to observe and understand the relevance of what happens in- and outside the company and relate that to objectives of the company. Then decide how to act in an effective but responsible way – from the general to the specific and not – as is usual – the other way around.
However large his corporation, the business leader is and will remain a “mini-actor ” on the global stage.If he decides his corporation and his people should work in a globally responsible way, then his best working motto – in my view – would be: “ if we want to change the world, let’s start with ourselves” . I am convinced efmd and its members can play a significant role in turning the matter of “Global Responsibility” from a corporate hype or “ lip service-item” into a corporate reality. Individual capabilities Global Responsibility Integrated In the corporate culture Responsibility and behaviour are closely linked Freedom to act s a corporation There is more in life than a financial result Back to Education Mini actors on the global stage Global Responsibility as corporate reality 7 Chapter I Our attention, said the Assembly, should be given to achieving the following five objectives 1. Generating and sharing knowledge and partnering with other organizations on issues related to Global Responsibility; 2. Developing new capabilities in schools and companies to deal with these issues; 3. Including Global Responsibility as a major thrust in management education; . Contributing to the development of a global management ethos and global governance; 5.
Maintaining respect for cultural diversity and including issues like Global Responsibility in the EQUIS assessment process. Within the above framework, efmd will be promoting Global responsibility issues in management education and development by working closely with its network and by using its unique ability to bring the academic and business world together. In doing so, the following four major aspects will be explored: 1.Globalisation and the implications it has and the responsibilities it casts on efmd and its Members as a result of them being global actors; 2. Economic growth based upon ethical behaviour, environmental concern and (corporate) social responsibility; 3. Management ethics and accountable leadership; 4. The role and responsibility of Europe. FOCUSING ON FIVE KEY OBJECTIVES PROMOTING GLOBAL RESPONSIBILITY ISSUES 8 Professor Carlos Cavalle IESE Business School, Spain Global responsibility is an elusive and complex concept in an increasingly complex world.
When social issues such as poverty, education, health and ecology, are viewed on a global scale, they entail a long list of shocking statistics that only demonstrate the lack of global responsibility and solidarity. Africa as a continent, as well as many emerging economies and marginal groups in the developed world are still waiting for responsible answers from the affluent countries. Hundreds of publications are now available on global responsibility, and a large number of initiatives are in place to contribute to sensitizing governments, corporations and individuals to the sad plight of much of humanity.The common ground seems to be the Universal Declaration of Human Rights (1948). It seems to me that such publications and initiatives should emphasize personal integrity, because if they do not, very little is likely to come out of them. Personal integrity is and should be the key and the most critical factor in global responsibility. No government or corporate responsibility programme is likely to effectively contribute to the benefit of underprivileged countries and people if it does not take into account personal integrity.Such integrity should go hand in hand with a spirit of service towards less developed countries and less privileged people.
At the end, compassion – a willingness to share in the problems, feelings and real needs of others – is more effective than increasing the percentage of GNP that rich countries commit to aiding the poor or to improving the environment. How many projects involving the handing out of large sums of money have failed to reach the poor – for example, in Ethiopia, Sudan, and many other African regions where half of the population lives on less than one dollar a day? Global esponsibility, with all its complexity, is not a technical or an economic concept. Neither is it a new one. If it is new, it is only because it has not yet been successfully applied. And this is so because most of those responsible for applying it are not yet ready to live up to the so-called “ golden rule ” – do unto others as you would have them do unto you. Poverty and ignorance are, and will continue to be the most destabilizing factors in the modern world. Much research needs to be conducted by business schools and through organizations like efmd to address the problem, and to avoid its consequences.
I believe that efmd is on the right track. But above and beyond these considerations, the developed world, its universities and its corporations must show in practice where the priorities lie. Foremost among them must be the need to bring global responsibility to the level of the individually educated person, which means committing the necessary resources to educating socially responsible citizens for a world desperately in need of them. It is my feeling and my hope that the developed world is now ready to meet the challenge.Complexity Lack of global responsibility and solidarity On-going initiatives Personal integrity plays an essential role Ineffectiveness of increased % of GNP to aid the poor What kind of concept is it? What can we do? Global responsibility integreted in education 9 Chapter I The requirement for more responsible Managers reflects on the growing need for management education that addresses the issues previously mentioned (i. e.
Ethics, Education Corporate Social Responsibility, Globalisation and Sustainable evelopment Strategies).Business Schools must address these issues because they are crucial for successful management. Schools that do not and will not incorporate Social and Global Responsibility issues in their curricula in the coming years, will be seen as old-fashioned and obsolete.
It should also be noted that this need is also being expressed by a growing number of students who demand that such training is introduced into the curriculum. Some action in this area is already taking place but much more is required.It is within the educational institutions’ interest to respond to the growing demand for such training. efmd can serve as an excellent agent & catalyst,not only in promoting this important initiative, but also in mobilising an international network of key actors. Uniting under one roof nearly 500 business schools, management institutions and corporations from over 40 different countries – all stakeholders in the field of management and management education – efmd is in an excellent position to initiate and develop various projects related to Global Responsibility.IMPLEMENTING GLOB AL RESPO NSIBILITY INTO M A N A GEMENT EDUC ATIO N IS A N OPPORTUNITY TO BE SEIZED BY THE EFMD NETWORK! THE SPECIFIC ROLE EFMD C A N PLAY. M OBILISING A N INTERN ATIO N AL NETWORK OF KEY A CTORS 10 Willy De Clercq MEP, Minister of State, Belgium The restructuring of the world economy since the 1970s has brought about greater efficiency and productivity to the global market.
This evolution has seen rapid progress over the last 10 years, thanks to increasing technology, especially in the field of communication. The world has become ” one global village ” .We see a growing interdependence driven by economic globalisation, and the rise of threatening, transnational challenges which require greater effort and shared responsibility at a global level. The evolution of globalisation has brought with it lots of problems, for example social welfare, the fight against poverty, respect for human rights, protection of the environment, promoting equal chances, intensive cash and trade flows, monetary fluctuations, liberalisation of world trade, a growing importance of multinationals and stock markets.As a consequence, with globalisation comes an the crowd increasingly vocal concern from trade unionists, environmental and human rights campaigners, policy makers and business leaders that the situation was not sustainable either in terms of business objectives or human development. Global problems need global solutions. As a consequence, we need global responsibility. Responsibility implies governance and thus implies a society.
This society does exist within the European Union, within which governance can be discussed and improved.The EU created supranational institutions in order to battle the common problems EUmember states have faced. The European Union is based on the rules of law and democracy. It is neither a new State replacing existing ones nor is it comparable to other international organisations. On issues of joint interest the Member States delegate sovereignty to common institutions representing the interests of the Union as a whole. European integration has delivered half a century of stability, peace and economic prosperity.
It has helped to raise standards of living, built an internal market, launched the euro and strengthened the Union’s voice in the world. The European Union is ” a success story ” , and as an international body it has an important role to play in Global Responsibilty. Moreover, the EU, its institutions, its decision making process and its way to combat common problems, can be seen as an example to strengthen Global Responsibility. The European Union has a clear interest in promoting global governance as a means of achieving core objectives such as sustainable development, security, peace, equity.Within this unique framework, efmd is indeed functioning as a European organization, bridging the link between academia, business and politics and firmly believing that Europe plays an important role in advancing issues related to global responsibility.
Shared responsibilities in one global village Problems inherent to the globalisation process Voices from the crowd The strenght of responsible governance Impact of EU regulations the role of the EU in global responsibility Sustainable development – the battle horse of the European Union efmd seizes the challenge of global responsibility 1 Chapter II There was first the need for action. The idea to launch the Global Responsibility initiative had existed at efmd for quite a long time. Recent events have emphasized the necessity for action and led to the adoption of Global Responsibility as a key strategic issue for efmd. From the very beginning, it was clear that there is a mutual benefit in working jointly with other players such as NGOs, Governments, academies, corporations, trade unions, public opinion and consumer groups amongst other various pressure groups and the media, in order to make a substantial change. fmd contacted organisations and institutions that are stakeholders in the field such as (cf.
also addendum (5)) – The Bernheim Foundation – The Corporate Social Responsibility Europe – The European Academy for CSR Potential joint and coordinated action with these and other organisations should ensure a better use of the available resources and much higher prospects for success. The Global Responsibility survey was conducted during the first half of 2002 and was made available during the efmd day 2002, which took place in Bangkok on 9th June as part of The Global Forum 2002 on Management Development.The survey’s main goal was to generate knowledge and provide reliable data on trends and needs in the field of business and management ethics. In the context of the efmd day, it was meant to stimulate an open and fruitful discussion on management & ethics issues and, to assist in consolidating the concept of ‘Global Responsibility’ towards further action. During March 2002, a questionnaire was distributed among MBA Students and Alumni.
Response to the survey was overwhelming.Nearly 750 completed questionnaires werereturned, representing 46 nationalities from all five continents. The findings of the survey were presented in an article on the efmd day 2002 and were published in October 2002. A brief of the main results and conclusion from the survey are presented here in addendum (2). What has efmd done so far in relation to the Global Responsibility initiative? GIVING CONCRETE FORM TO AN EXISTING IDEA EFMD STARTED IDENTIFYING PARALLEL ACTIONS & PARTNERS TO PROMOTE THE INITIATIVE LAUNCHING AN EFMD SURVEY ON BUSINESS ETHICS 12 Although we do not suggest that the European model should be replicated, it does provide many useful pointers as to how parts of global responsibility could be further developed, for example as regards defining basic objectives, management of diversity and breadth of participation. efmd can play a leading role in this process. In Bangkok we took the first necessary steps. Based on this, it is now time to further develop our actions.
We can prove that positive transnational cooperation is possible, leading to a better world for everybody.Baron Daniel Janssen Chairman of the Board, Solvay, Belgium Let us prepare a better world with better managers! The world is changing but some behavioral principles still remain the same. Globalization has brought about a major change. All big businesses and many small/medium have been dramatically affected. With production sites on 3, 4 or 5 continents, business is different. Even when the production sites remain in Europe or in the US, the markets are affected by free trade: competition comes from everywhere and can be introduced everywhere.The protectionist (and protective) Nation State is less and less influential. The global world seems to many to be brutal, insecure and unjust.
Two main issues need to be dealt with: the environment and social justice. The ecological equilibrium of the planet is a major issue: global warming, food toxicity, landscape deterioration, urban chaos, should and can be avoided by environmental planning. Social justice should progressively be improved because it is unbearable on a planet of 6 billion inhabitants to have half living so poorly.In this new global world in evolution and hopefully in progress, we, corporate leaders, have the responsibility to run our businesses to favour economic growth but also social and environmental progress globally. Although our business role is to promote long term shareholder value, it is not enough; we should also promote long term stakeholder value for our own region but also for the planet. Business leaders should act ethically with global corporate social responsibility. Future managers should be trained for it by good corporate governance examples and by appropriate business school courses.Indeed, let us prepare a better world with better managers! Defining basic objectives Developing actions now About global corporate social reponsibility Decentralizing operations Business is still over-regulated nationally and yet under-regulated globally Corporate leaders strategies must be sustainable development strategies The need to promote long term stakeholder value Appropriate education & training 13 Chapter II An on-line library of books and data on Global Responsibility and Business and Ethics related issues has been initiated by efmd in partnership with Cyberlibris and will be accessible in the Spring of 2003, Cf.
ddendum (3). Global Responsibility was chosen to be THE theme for the efmd Day 2002. This day being an integrated part of The Global Forum on Management Education held in Bangkok on 9-13 June 2002, further emphasises the importance and priority given to this issue. The day was divided into two main parts. The morning session was the convening of the General Assembly. Speakers present ed their personal views and perspectives concerning Global Responsibility. The speakers were: Carlos Cavalle, Dean of IESE Business School; Willy De Clercq, Minister of State & Member of the EuropeanParliament; Jagdish Parikh, Managing Director LEMUIR Group of Companies & Managing Trustee; Thomas Sattelberger, Executive Vice President Lufthansa; Gerard van Schaik, President of efmd.
In the second part of the day, participants were divided into working groups in which they discussed the different aspects and implications of Global Responsibility and came up with a shared declaration of commitment and ideas for further actions for efmd. Those are summarised in the Global Responsibility Manifesto which is presented in Addendum (1).Prof. Yvon Pesqueux, from the Conservatoire National des Arts et Metiers, Chaire ‘Developpement des Systemes d’Organisation’, in Paris, compiled on behalf of efmd – a series of topical articles written by key experts. For more details, we refer you to Addendum (4). CREATION & DEVELOPMENT OF AN EFMD VIRTUAL LIBRARY ON GLOBAL RESPONSIBILITY THE EFMD DAY 2002 THE BANGKOK MANIFESTO – A SHARED DECLARATION OF COMMITMENT THE EFMD BOOK « GLOBAL RESPONSIBILITY” 14 Professor Peter Lorange President IMD, SwitzerlandGlobal actors of today are developing in a still over-regulated nationally and underregulated globally environment; hence the importance of focusing our attention and our education on global governance and globally responsible leaders and decisions makers, … I think and trust that efmd can face the challenge and promote Global Responsibility issues by acting within and with the help of its network to strengthen the role of modern business schools in a new age addressing issues inherent to global governance and globally responsible leaders and decision makers.I believe that business schools can and should develop a profile to promote Global Responsibility.
Perhaps the most critical consequence of Global Responsibility will be to promote business growth in the global commercial context. Therefore, I think that Business Schools should cover the topics of how corporations with their executives might achieve international growth both by generating it internally as well as via acquisitions or alliances. I think that Global Responsibility plays an important role in operating the growth challenge.I think that our schools can accelerate the development of Global Responsibility, based on a symbiotic inter-link with a strong local educational tradition. Roger Wippermann Corporate Vice President, Arthur D. Little, Belgium I think that there are two issues worth considering – Firstly, the need to understand the cultural & social economics differences between developed and developing countries – Secondly, how can efmd and Business Schools help ? The first issue is very interesting as nowadays the developed countries evaluate other societies in the light of where we are today.Many developing countries are 50 if not 100 years behind the developed countries in terms of socio-economic progress.
We have a tendency to forget under what harsh conditions most of the populations of Europe and the US lived early last century. Developed countries have made great progress and our views are expressed based on what we have achieved and this does not transfer easily to a developing country where due to their development stage priorities are quite different.I have the impression, having been brought up in Brazil in the 40 and 50ies and having spent a considerable time in Africa in the 60 and 70ies that imposing our rules, expecting our standards and forcing accelerated development, even with the best of intentions, often has the opposite of the expected results. Globally responsible leaders and educational needs Enhancing the role of business schools through the efmd network-a new age challenge Global responsibility vs. business growth Acting as catalyst How can we help Rules and standards – a metter of eography and evolution in the time 15 Chapter III Today, the President’s Task Force Members are more than pleased to propose constructive answers to the reader in the form of this position issues paper which aims at laying out the fundamentals for efmd in the field of Global Responsibility.
The members of the President’s Task Force commit themselves to – Drive and monitor the process of initiating activities where efmd – by its constitution and outreach – is a well-suited agent; thus complementing those of its members and collaborating partners. Pursue a thorough follow-up on the initiative and the actions that will have been taken up at the Annual Conference 2003. – Encourage the expansion of the initia tive to include more members and a wider range of activities.
– Drive the preparation of a short report on the education and development of globally responsible managers. This would help to identify the type of education and training requirements that are required to respond to the specific ne eds of today’s and tomorrows’ managers and leaders and change mindsets. Support the Management efforts in identifying, promoting and sharing information on the initiatives of its Members in related areas. – Pro-actively work towards closer collabora tion with other organiz a tions and associa tions world-wide. As repe a t edly mentioned by participants of the efmd Day, one of the problems of promoting ethical issues is the lack of a global code of conduct and cle ar crit eria to evalua t e companies or educa tional institutions’ performance with regard to social and ethical issues. efmd could contribute to work on a shared global code of conduct in the business and academic world.
Recommend that the EQUAL Members and the EQUIS Team incorporate clear criteria for Global Responsibility in the context of a sustainable development policy to be implemented in the accreditation system . – Endorse efmd’s efforts in supporting major and critical educational projects world-wide and linking them with the Global Responsibility concept. The efmd President’s Task Force Response to the Bangkok Manifesto: A position paper as real commitment THE BANGKOK MANIFESTO RAISED IMPORTANT COMMITMENT AND DRIVING FORCE 16A small and diminishing share of the world population in the northern hemisphere practically jumped, during the 20th century, from the agricultural to industrial and to the service age. A few countries in the southern hemisphere such as (the South of) Brazil and the Asian Tigers managed to move from the agricultural to the industrial age while most of the world population continue to live in the agricultural age, where survival is the sole concern. How does this relate to Management Development – one of the key issues is that Managers need to be more sensitive to cultural and development differences.More and more business schools focus on companies in the West and what they need – nothing or very little is provided for NGOs or the developing markets. How would things be applicable in the developing markets – the issue of culture comes out and we need to understand a region and be sensitive to its needs.
Could Business Schools help with programmes? In my view efmd and business schools not only could but should, as part of their social responsibility, be actively involved in solving the problem. Their contribution could be in two areas: Fostering a better understanding of the above mentioned differences and their impact on future developments could certainly contribute to a more balanced and equitable global development. – Providing an adapted Business School training to those leading (or joining) NGOs dedicated to the third world, could further contribute to improve the performance of the NGOs and better integrate them into our Western business world, thus avoiding the ‘Us’ and ‘Them’ syndrome This of course is not as easily done as said since the resources available to the NGOs are in no relation to those of the regular MBAs and their employers.On a practical level could Business Schools offer, for instance, a (subsidized) summer programme for NGOs? Feasible but difficult as: – A new “ business” environment must be studied and understood; – New teaching methods developed; – A new client base developed, which most likely will not be able to afford the fees required; – New sources of remuneration identified. While from a business point of view such an initiative might at first sight not look attractive, the real questions are – Do we feel responsible as global actors? Do we take the issues inherent to Global Responsibility seriously and are we in a position to be pro-active? – Do we want to implement new responsible practices or are we only going to talk about it ? What should business schools focus upon What efmd and business schools should do What can be done in practice Questions 17 Gerard van Schaik, President efmd Carlos Cavalle, Former Dean, IESE Business School, Spain Willy De Clercq, Minister of State & Member of the European Parliament, Belgium Baron Daniel Janssen, Chairman of the Board of Directors, Solvay S.A. , Belgium Peter Lorange, President IMD, Switzerland Roger Wippermann, Corporate Vice President, Arthur D.
Little, Belgium Their specific expertise originates from the academic, industrial, governmental and consultancy sectors. The efmd President’s Task Force supported the launch of the efmd Global Responsibility initiative and invited the efmd Members to address and debate about the subject. An important step was achieved in Bangkok during the 9th June 2002 Annual General Meeting. The efmd President’s Task Force fully endorses the Bangkok Manifesto Cf.Addendum (1), thus encouraging efmd and its Members to carry on with a well-defined strategic action plan. (*) The efmd President’s Task Force consists of a group of prominent and respected leaders 18 The efmd Working Committee on Global Responsibility would like to sincerely thank all those who directly or indirectly contributed to the creation of this project With special thanks to Pierre Kletz, Christophe Terrasse, & Gil Eiges for having conducted the Survey Eric Briys for having made possible the preparation of he first digital “Ideal Library” on Global Responsibility Yvon Pesqueux for having accepted the responsibility of inviting a selected number of experts to write on Global Responsibility and for supervising the publication of a book compiling all related articles and Very Best Wishes for all on-going and future efmd initiatives related to Global Responsibility in Europe and beyond Anders Aspling Eric Cornuel Liliana Petrella Jean-Francois Poncet Christiane Vander Motte 19 Addendum (1) The efmd Bangkok Manifesto Addendum (2) The Survey Addendum (3) The Digital LibraryAddendum (4) (to be inserted) The Articles Collection Addendum (5) A brief introduction to related work conducted by – The Bernheim Foundation – The Corporate Social Responsibility Europe – The European Academy on CSR ADDENDA 20 Addendum (1) The efmd General Assembly met in Bangkok on June 9th, 2002, at the occasion of the 2002 Global Forum on Management Education. There are a number of interpretations of the concept of Global Responsibility. They all seem to converge towards ensuring long-term sustainable development of society at large.
The Assembly acknowledged that The future prosperity of corporations and educational institutions strongly depends on the sound development of society at large; – Globalisation is increasingly impacting on all of us while carrying many challenges and opportunities to learn and develop; – Turning opportunities into success stories implies accountability vis-a-vis internal and external stakeholders – traditional and emerging new ones. The Assembly further acknowledged that – The process of internationalisation/globalisation is not a new phenomenon but it has increased in importance; Though what is new is that global actors of today are developing in a still over-regulated nationally and under-regulated globally environment; hence the importance of focusing our attention and our education on global governance and globally responsible leaders and decision-makers; – The future is shaped by our mutual actions and Europe has a role to play in this context because of the recognized influence (socio-political, economic, technological and cultural) it exercises on the global scene; it has the responsibility to not only consider the European perspective but also others’; – Management professionals and educators – including the young generation – can significantly contribute to the issue of globalisation and the search for sustainable development; – A dialogue involving various players of society – across constituencies, cultures and generations – is of key importance.Hence, the Assembly reviewed the role of management development in the global context and, more specifically, the contribution of efmd members and of efmd itself as a network. The Assembly recognised that The education of globally responsible leaders and decision-makers and the development of responsible corporations and education institutions are sine qua non conditions for a European sustainable development strategy. The Assembly hence invited the efmd President’s Task Force to steer efmd initiatives that aim at 1. Developing a “ globally responsible code ” which would become part of the efmd ‘s mission statement that all members will be asked to subscribe to; 2.
Supporting its members and partners in formulating appropriate strategies and developing a range of new capabilities that would help the current and new generation of leaders, managers and entrepreneurs acquiring a globally responsible mindset; The efmd Bangkok Manifesto on Global Responsibility Published in Bangkok on 9th June 2002 21 Addendum (1) 3. Supporting members, partners and other stakeholders across cultures to inform, communicate, cooperate, and learn from each other; 4. Pooling members’, partners’ and other stakeholders’ efforts together in order to contribute to a constructive ethically founded globalisation process and the search for a more effective and equitable global society. The Assembly recommended that the following five objectives are taken into consideration: 1.Generating and sharing knowledge and partnering with other organisations on issues related to global responsibility; 2. Developing new capabilities in schools and companies to deal with these issues; 3.
Including global responsibility as a major thrust in management education; 4. Contributing to the development of a global management ethos and global governance; 5. Maintaining respect for diversity and including issues like global responsibility in the EQUIS assessment process. With the above recommendations in mind, the efmd Management is providing below – as part of a long term project – a list of actions that the Brussels office will support in priority: 1. The efmd 2003 Annual Conference will follow up on the recommendations and related initiatives; 2.A high-level committee will be set up to prepare a short report on the education and development of globally responsible managers; 3. A virtual library will give on-line access to a glossary and related database on “Global Responsibility”; 4. Articles from selected experts and authorities in the field will be commissioned; 5.
The outcome of the above activities will feed the work of ongoing efmd programmes for academic and corporate members; 6. The efmd will identify, promote and share information on initiatives of its members in related areas; 7. The efmd will pro-actively work towards closer collaboration with other organisations and associations worldwide.
22 Addendum 2Business and Ethics – A Presentation of Survey’s Results Ethical issues are gaining an increasing importance in the business and management education world as expressed in this survey of managers and management students conducted by the efmd in March 2002. The purpose of this survey was to estimate the role that ethical issues play in today’s business world, and to gain insight regarding the impact of corporate cultures upon ethical conduct. We also examined various characteristics of corporate cultures and their respective influences on ethical behaviour. This was done in order to identify potential ways to promote ethical behaviour in the working place.In sections 1 and 2, we present the survey’s primary results while also reviewing previous studies and additional surveys relating to the issues examined in our survey. In addition we present the findings of a factorial analysis and inter-group comparison that we have conducted.
The factorial analysis was performed in order to get simplified description of the dimensions of ethical issues measured in the survey. Its results are presented in section 3. Using X2 tests, we have conducted a comparison between groups of participants distinguished by specific criteria in order to identify possible inter-group differentiation. Conclusions from these comparisons are presented in section 4. Survey participants 50 Business school students and alumni, representing 46 nationalities from five continents, took part in this survey. The very high number of participants indicates on the importance that this issue is gaining in recent years. Of all respondents, 65. 12% were alumni and 34.
88% students. According to the survey, management remains a ‘men dominated field’ – Nearly three quarters of survey’s respondents were men. Although among students, women’s share was slightly higher. Around 40 academic institutions are represented in the survey however a smaller number of around 15 represent the vast majority of respondents.
Section 1. Does ethics matter?First, we wanted to estimate the importance that subjects saw in ethical issues in the framework of their work. According to the survey, 88.
4% of respondents supported the claim that ‘Investing in ethics is a good investment for the company’, less than 2% disagreed. The rate of support was slightly higher among alumni with 90% compared with 86% among students. It should be emphasized that subjects were not asked whether investment in ethics is an issue important to them personally but rather whether it was important for the firm’s success and profitability. These findings correlate with the results of a survey of 500 CEO’s, conducted by PricewaterhouseCoopers in January 2002.
In this survey 68% of participants agreed that ‘Corporate social responsibility is vital for the profitability of any company’, only 14% disagreed. It should be mentioned that the rate of agreement in the PWC’s survey is more moderate than The Survey 23 Addendum 2 in our survey yet it is still high. Thus responses were not directed by subjects’ own moral conscience but were made according to an economical calculated reason. Current and future managers believe that moral led management is not only the ‘right’ thing to do morally, but also the more lucrative option for the company and indeed a necessity for its growth. It seems that managers are very aware of the importance for corporations to have a responsible and ethic image in the public’s view.It could be a result of a growing public awareness of these issues, awareness provoked by stakeholders such as environmental, human rights, and labour rights groups, which have been very active in promoting corporate social responsibility issues in recent years.
P. Lynn Turnball (2001) presents data that supports the notion of growing public awareness to social issues as reflected by consumers’ behaviour. She cites that ‘one in every five people worldwide has punished a specific company for its perceived social performance’. In the Western Hemisphere, the numbers are even higher. In Canada for example, more than 50% of people surveyed have indeed ‘punished companies’ in past years. Turnball also stresses the importance of a company’s reputation as a condition for its survival and economic success.According to her survey, people saw ‘ethical conduct’ as being a crucial aspect in a company’s profile for the creation of its good reputation in the public’s view, second only to ‘customers’ service’.
Company’s reputation in the context of social responsibility could also influence their ability to recruit professional and high quality employees as shown in a survey of students in the UK. In this survey that was held by ITM Communications in March 2002, 79% percent of those surveyed declared that they would not apply to work for a company with a poor CSR record. This is indeed a survey of students who did not yet face the hardship of job finding, still this survey along with other surveys recently published, implies on a trend of growing attention to companies’ performance according to social and ethical criteria.One of the problems of promoting ethical issues is that there is no clear definition agreed upon concerning ‘what is ethical’ and thus ‘what should be promoted’. Philosophers agree that there isn’t a one universal definition.
Still there are two main approaches. The teleological approach, which considers that the real end is the ‘bona vita’ and that any action should be judged as a way to reach this end, and the deontological approach, which claims that no matter what the consequences are, moral should always be taken into considerations. The reason why managers and management specialists would like to find one clearly agreed upon definition is possibly because that management science generally assumes that the ethics of the firm contributes to its economic performance.
Therefore following the ‘correct ethical path’ would increase profits. Contrary to the preceding paradigm, others believe that managers in light of their practical experience develop their ethical attitude as they confront concrete dilemmas in real life situations. In our survey, 64.
4% of participants agreed to some extent that ‘A corporate culture that fosters ethical behaviour encourages managers to pursue the profits of their company’ (12. 5% disagreed). A wider agreement was to the statement that ‘A corporate culture that fosters ethical behaviour encourages managers to pursue the profits of society ‘ (73% agreed to some extent, 8.
7% disagreed to some extent). 24 Addendum 2 Section 2.Corporate cultures effects on individuals and ethical behaviour promotion The questionnaire’s findings suggest that corporate culture have a profound effect on individual’s moral behaviour therefore ethical behaviour should be created and promoted in the context of a corporate culture. Subjects in the survey were quite optimistic concerning the prospects to create the right corporate culture, which will enhance ethical conduct in companies. 91% of them agreed to some extent that ‘It is possible to create an ethical corporate culture’. But what kind of corporate culture would be best? After analysing the responses to the survey, we find that ethical behaviour would be positively enhanced by organisational cultures of trust and promoted first and foremost by individuals in the company.We also find that ethical behaviour is not dependent on structural aspects of the organisation but is however harmed by over bureaucracy. This section attempts to lend support and provide a greater insight into these findings by examining previous studies related to the issues examined in the survey.
A vast majority of respondents (89%) either agreed or strongly agreed that ‘corporate cultures have a profound effect on individuals’. And indeed it does, norms established in a company shape and determine the behaviours of its employees, who are subject to these norms. A strong influence over individuals’ behaviours may very well lead to unethical behaviour. This phenomena, becomes quite evident when it comes to the pursuit of financial goals and profits.
According to 54. % of participants ‘Corporate cultures often pressure employees to compromise on their integrity in order to achieve financial objectives’, 27% said that no such pressure exists. The outcome of an overemphasis of economic values in firms is the creation of a system, which pressures employees to conform to organisational desires. Employees’ ambition to succeed in the organisational context requires being a part of a system, which is not based on moral principals but rather on purely economic ones. Taking this approach into consideration, to do otherwise would lead to organisational and personal failures. Posner and Schmidt (1984), Laczniak, Lusch and Murphy (1979), and Laczniak (1983) supported this point of view.These researchers suggest that although managers may view ethical decisions through the perspective of their own values, the pressure from superiors and the organisation to conform to economic objectives at the expense of ethical consideration is strong.
Other members of an organisation who view their superiors as succumbing to economic pressures perceive this as an acceptable behaviour and thus, perpetuate this pattern throughout the entire organisation. Self interest and a lack of balancing ethical concerns to pure economic way of thinking becomes the norm. The danger for ethical issues is even stronger when the company faces financial difficulties. 51.
% of survey respondents admitted that ‘Corporations which are struggling financially are likely to encourage unethical behaviours’, 25% disagreed. Although corporate culture has a profound effect on individuals’ ethical conduct, 25 Addendum 2 according to survey participants, the company’s structure will not have such an effect. However, an over bureaucratic environment will serve as a discouraging factor to the promotion of ethical behaviour.
This is in fact strongly related to subjects’ belief that managers and employees, as autonomous individuals, are at the focal centre and are personally responsible for promoting ethical behaviour and conduct within the organisation.There was no general agreement among those surveyed regarding the statement that ‘Causes of unethical behaviour are structural problems, not necessarily unethical individuals’ (An average of 0. 2 and variance of 1. 35 – the highest variance in the survey). They expressed indifference in their response when asked to express their opinion about the importance of a specific inner organisational structure. Nearly half of respondents were indifferent (49% replied 0) about ‘A corporate culture, which fosters working in small vs.
large groups helps in promoting ethical behaviour’ (Average response equaled 0. 19 with a relatively low variance of 0. 67). Thus structural issues are not perceived as important factors influencing ethical ehaviour within the organisation.
Bureaucracy on the other hand, does undermine ethical issues in the organisation. 54. 3% of respondents agreed to some extent that ‘over bureaucratic corporate cultures promote a depersonalized environment which does not foster ethical behaviour’ while 22. 5% disagreed to some extent with that statement. This de-personalized environment makes employees feel like ‘a link in a chain’ and discourages them from taking initiatives and feeling personally responsible for their actions. This could indeed be destructive to any organisation’s functioning in various aspects but especially in the ethical front. With respect to that, 58. % of respondents agreed to some extent that ‘a “ flatter ” organisation with little distance between management and subordinates is an effective means for enhancing ethical corporate culture’ only 11.
3% disagree. Thus, shortening the distances between management and employees and simplifying the hierarchical pyramid could better enhance ethical issues. To counterbalance the tendencies toward bureaucratic expansion, many firms are attempting to disengage managers’ base-pay levels from the size of staff reporting to them (Parkinson, 2nd principle). “They are also seeking to increase the role of incentives pay tied to measured performance, for example through management by objectives plans, where control of staff costs are explicit goals figuring into the determination of the bonus” (Milgrom and Roberts, 1992).Some authors claim that it is much harder to lie or be unfaithful to a co-worker who is on the same hierarchic level as you, than to one who is in a higher position, because the latter only presents abstract hierarchy where as the first still represents a human counterpart. To that extend, it is reasonable that people would want less hierarchy to promote ethical behaviour. Merton (1957) has also demonstrated that bureaucratic companies lead their members to devote a lot of attention to the inside of the organisation and as a result to neglect the outside activities, by doing that, they do not provide proper service to their clients, suppliers, and sub contractors.
In fact, because their career depends only on their superiors they would rather invest in that relation and the result is indeed an unethical culture. If the organisation were flatter this risk would be avoided. A strong message coming from the survey is that individual responsibility and role modeling are crucial ingredients in creating an ethical corporate culture. When participants were asked to indicate the ‘3 qualities best describing ethical behaviour’, Personal qualities such as 26 Addendum 2 Integrity, honesty, fairness, respect, loyalty, transparency and responsibility were the most common answers.
A very strong sense of personal responsibility is reflected from the survey. 83. % of respondents agree that ‘Creating an ethical corporate culture is one of the senior managers primary roles’ (5. 8% disagree). This also illustrates once again the high importance that respondents attribute to ethical issues when considering them to be one of their primary roles.
It is interesting to notice that experienced managers tend to feel even more responsible than their fellow students – relating to the last statement rate of agreement amongst managers was nearly 86% while amongst students it was 79. 5%. Respondents may have overlooked an important structural obstacle in creating an ethical corporate culture and this is the inevitable tension that exists between managers and employees. This could be exemplified by frictions over fair rewarding.The Pfan Consulting Corporation researched opinion on salary distributions in companies and concluded that two thirds of the employees surveyed thought that CEOs received too large a share of corporate profits, whereas a half of the CEOs surveyed believed that their share was fair.
More than one-half of CEOs surveyed also believed that the percentage of corporate profits going to stockholders, the community, and for reinvestment is about right. Alan Farnham (1989) suggests that this data substantiate the hypothesis that employees mistrust executives’ distribution of wealth and rewards. At the very least, it does not enhance moral behaviour. In addition, Farnham asserts that not only are monetary rewards causing mistrust and notion of injustice but so are the arrogant and capricious attitudes of corporate executives regarding risk and consequences.Not so long ago executives could tell employees to trust them because the decisions made at the top were for the employees’ well being. But employees are becoming more and more suspicious of executives going off on their own strategies. When these strategies fail, it is the employees who are blamed (Farnham, 1989). D.
Kanter and Philip Mirvis (1989) also lend support to the notion that “cynicism” is prevalent in the workforce and that it contributes to the demise of moral behaviour in business. A national survey of some seven hundred workers from various ranks in their respective organisations suggests that about 43% of those surveyed are deemed “cynics” , they mistrust management’s motives as well as the motives of their co-workers.Many reasons are given to explain this prevalent cynicism such as organisational injustice, hypocrisy, dehumanisation (which, as we mentioned, could be the result of over bureaucracy), disillusionment and disrespect. These cynical attitudes are disruptive regarding the enhancement of quality relationship and productive cooperation in an organisation. Cynicism breeds introverted self–concerning and defensive behaviour patterns. As previously mentioned, in this survey there is no alignment between respondents to a vast majority opinion about the importance of structural aspects as causes for unethical behaviour (about half support the existence of structural problems beyond individuals’ powers).They neither relate to these aspects as ‘structural problems’, nor see these issues as inevitable problems. In order to overcome the various issues handicapping managers in the creation of corporate ethical culture, respondents widely and passionately agree about the need for role modeling within the organisation itself.
27 Addendum 2 Commenting to the following statement that ‘executives can serve as role models as an effective means for creating an ethical corporate culture’, 93% percent of respondents agreed (the highest rate of agreement in the survey – the only question where the most common answer was ‘strongly agree’) and less than 6% disagreed.By this they, being themselves managers or future managers, are expressing a strong sense of responsibility and commitment towards the promotion of ethical issues. This idea is strongly supported in academic literature. K.
E. Goodpaster and J. B. Matthews (2002) describe moral leadership as one that creates an ethos of trust in an organisational culture by providing meaningful work, employee autonomy, opportunities to flourish, empowerment in decision and policy making and enhanced communication and dialogue. Other studies have taken similar positions regarding the importance of moral leadership emanating from the top of an organisation.
R. Baumhart (1961°), S. Brenner and R. Molander (1977) and R.Fulmer (1971) conclude that the top management must lead the way if moral behaviour is to be enhanced and unethical practices are to be minimized.
How do individuals become ethical? A Platonic model of the human personality suggests that it is made up of three integral dimensions: thinking, feeling and acting. Others have refined these three categories into knowing, being, and doing. Moral reasoning, which is a component of the model’s knowing (or thinking) dimension, has been given much attention and focus regarding matters of moral education in schools or the institutionalisation of ethics in business. It is an indisputably important ingredient of any meaningful consideration of ethics, regardless of the professional context.Moral reasoning is anchored in a set of defensible moral principles such as: Kant’s categorical imperatives; Bentham’s, Mill’s utilitarism; Fletcher’s situationalism; biblical standards; or any other recognized moral basis.
Moral bases like these are essential for the reasoned component of ethical conduct. But the dynamics of moral behaviour should not be limited to simply moral reasoning. Chewning (1984) has suggested a model derived from the thinking/feeling/acting model.
This model indicates the elements that comprise ethical behaviour: 1. Intellectual processes (ontological beliefs, epistemological methods, and moral reasoning) 2. Felt needs (unconditional acceptance, significance and belonging) 3. Voluntary actions.The key for ethical conduct is embodied in one’s innate ability to believe, know and reason on the one hand, and one’s deepest felt identity needs which are unconditional acceptance (security, love, significance, self esteem) and kindred associations (membership, community), on the other. Chewning’s model further suggests that an internal monitoring process operate both consciously and subconsciously in everyone. This process seeks to harmonize the intellectual facets and the felt-identity needs in a manner that elevates one’s sense of importance, selfesteem and respect. When the intellectual and identity needs are in agreement, ethical decisions are easy to make, and individuals comfortably stand on their principles.
However, when there is a conflict between people’s normative moral reasoning and their desire for something that, if it were done or possessed, would enhance their personal prestige, they begin to rationalize in an effort to justify the unethical resolution they have made. This model seems to be compatible with the general findings of the questionnaire. It explains 28 Addendum 2 respondents’ wide rejection of the claim that ‘An authoritative corporate culture fosters ethical behaviour’ (nearly 54% disagreed while only 13. 6% supported it). One’s own identity needs (sense of worth and self-esteem) are undermined by an authoritative culture and as a result, ethical conduct is discouraged.On the contrary, respondents actually appreciate a ‘friendlier’ environment as more adequate scenery for ethical behaviour promotion. This is shown by the wide agreement (88.
5% of respondents, 2. 5% of respondents disagreed) that ‘A corporate culture which gives managers the opportunity to correct their mistakes is effective in promoting ethical behaviour’. Managers feel more secure and thus are able to behave more according to their conscience. Respondents were generally indifferent when asked what they thought about the statement ‘A corporate culture which gives employees the freedom to determine their own values is effective in promoting ethical behaviour’.
People are not sure whether ethical behaviour comes from freedom and autonomy could come, or not. For some individuals unethical comportment in the marketplace is not so much governed by individuals’ intellectual processes, as from their attempts to satisfy their own needs. When people identity needs and ethics are ignored they will move to self-centred, apathetic, uncaring, non-cooperative and even destructive behaviour in the long run. In the same manner these undesirable behaviour would cancel any global responsibility consideration. This once again explains the subjects’ responses when asked about over bureaucratic cultures as previously described (they claimed that bureaucratic cultures damage ethical behaviour promotion).It could be suggested that these undesirable behaviour patterns are an attempt on the part of individuals to satisfy their own identity needs, or at the very least to protect or defend themselves against the pain and disappointment of not having them satisfied.
Section 3. Factorial analysis In order to get a simplified description of the dimensions of ethics, measured through our sixteen items (questions), we made a factorial analysis (principal component analysis). This procedure allowed us to identify five main composite dimensions altogether r