Mindsets

A few days ago I watched a news contribution on a manipulated scientific medical study about a pill. It turns out that several employees of a pharmaceutical company where involved in the construction and completion of this study without disclosing this fact. The manipulation of the data led to positive outcomes of the study, helping to make this pill very popular and thus very lucrative. In this particular study some criminal intention was clearly at play. But many of these medical studies are financed by pharmaceutical companies, says the expert on the news report. This got me thinking about the influence of conflict of interest on the outcome of studies.

In a documentary on fracking I recently watched, I found a similar pattern. The people involved in making money or allowing this technique of oil production, conducted studies showing that this way of flowing oil is harmless to humans and nature. The NGOs concerned with the destruction of the environment found converse results. How can this be? Both parties have a big motivation to prove their arguments. Both parties have a specific mindset when constructing their study. This leads to a frame of thinking and a way of perceiving the world. I think every scientist should have a look at their basic motivation of research and their underlying assumptions of how the world works or ought to work in their eyes. It is very hard to fight one’s own frame of thinking, but by making these implicit assumptions explicit and communicating them, others can better understand your where you are coming from. If obvious conflict of interest is given as is the case in the example of the manipulated study and in my opinion also in the case of financing, I think it will prevent a scientist from performing rigorous research and should be excluded from the carrying out the study.

This is my mind frame and my motivation for this article: I am a psychologist and stakeholder theory enthusiast and think that explicating and communicating thoughts and assumptions helps to find common grounds. Further, I think the world is not black or white but should be looked at nuanced. Further we are working on a paper on mindsets and basic assumptions of different theories, which got me to pay more attention on this issue. So in this sense: Q.E.D.
 

Vanessa McSorley

 

 

Purpose matters

This weekend I was visiting my father who is spending four weeks in a little village in the Swiss mountains for recovery. When I entered the hotel I was pleased with the warmth of the receptionist. She gave me the feeling that I was really welcome and that she cares for me. It was not the usual customer orientation we experience in many hotels from employees who are trained to be customer oriented. It was an encounter between human beings. During the entire stay in this hotel I met various people who love their work because they like caring for others.

The hotel belongs to a foundation, which aims at providing services to human beings in all phases of life. Besides hotels they are engaged in child and elderly care.

In doing business we often have a weak connection to why we are doing this work. Rendering a good service is much easier when we know why we are doing it and what we stand for when providing these services.

This hotel stands for doing good to people. Whether we base this on Christian values or on a humanistic commitment in a philosophical sense does not matter that much. What matters is that we know with which purpose we are serving whom. Customer orientation in this perspective is not a mere technical term but a humanistic commitment in the broader sense.

Sybille Sachs

Changing from economic to political primacy: Why this is necessary

Recently many publications of economists and philosophers were released which question and want to contain the dominant role of the economy and the market in our societies of today (e.g. R. and E. Skidelsky, T. Sedlacek, L. Herzog, M. Sandel). They demand that the role of the economy has to be debated publicly. This corresponds basically to the demand for a primacy of politics over economy. But why is it important to contrast the primacy of politics with the one of economy?

 

First of all it is decisive to see that among all political views of a society also such exist according to which the economy and its material fruits indeed are not seen as an end in itself. In a society living the primacy of real democratic politics institutional conditions are in place which enable to include all (non-radical) political views and matters of a society. Of course, and this is fully clear, also in such case economy will play an important role simply because people want sustenance and wealth.

 

In a society in which the primacy of economy rules economic issues are basically considered as the most important ones. Principles like the market, growth or profit maximization become to end purposes of all existence. All forces which potentially constrain the forces of the pure market as the only regulative force will be fought. Factually (and although democratic institutions may still exist) this model of society shows fundamental and even totalitarian traits: everybody has to subjugate herself to the primacy of economy and its principles, if she wants or not.

 

Once established, to depart from this model is difficult: each concept of economy other than the one of a neoliberal economy acknowledges also other matters than pure economic ones to have a meaning or value on their own (e.g. stakeholders, society, environment). This of course endangers the economic primacy. But a society with e.g. a primacy of religion has similar problems: all its members have to subordinate themselves to religious principles if they want or not.

 

Only the primacy of politics which is committed to a democratic order can provide remedy: only in this way the full colourfulness of views of a society can be integrated. Despite this also caution has to be exercised: material power asymmetries between political actors e.g. can influence the formation of majorities. Moreover, it has to be acknowledged that politicians like R. Reagan or M. Thatcher which have contributed significantly to the primacy of economy were democratically elected.

 

Because today we know to what such primacy is able to do critic at it has become good form even in economic circles. But the voyage has not ended yet: the actual requirement is the return to the primacy of politics and also to stay there. To stay there it is also necessary to debate in Aristotelian manner what is good and hence moral. To think about the good helps preserving before leaving the primacy of politics: nobody will then voluntarily leave this primacy for a fundamental-totalitarian system, be it of religious, economic or of other character.

 

Claude Meier

Dare to be ethical?

Reading the book “Giving Voice to Values” by Mary Gentile corroborated a longstanding assumption of mine that acting out our sense of right and wrong is something that can be directly promoted by rehearsal. Her observation is that most “business ethics” courses tend to focus either on abstract ethical theory or then the analysis of specific cases, but neglect any sort of concrete training as to how, precisely, we would like to behave and what we should say in a specific situation where we intuitively feel that something is amiss. Knowing does not automatically lead to doing, much less to effective doing. And knowing without conviction can even lead to misuse and skillful self-justification. Indeed, she gives examples where managers whom she had interviewed expertly elaborated and adroitly rationalized their morally questionable behavior on the basis of ethical theories that they had previously been taught at University. Thus they simply picked and chose the ethical theory that best supported their particular behavior and prerogatives at that time and context, no matter how self-serving or cynical.

By rehearsing just how we would – in words and deeds – respond to something amiss, we simply do what any athlete does when training for the time when it really matters: flex the muscles and hone in their coordination in such a way so as to make their execution all but automatic during an athletic event. As to how to convince highly competitive individuals of the merits of revisiting their basic moral assumptions, she proposes that even they can be brought into the fold by a re-framing of their objectives as being “daring to be ethical”.

I am inspired by Ms. Gentile’s approach because I have personally witnessed with myself that I have on a good number of occasions failed to uphold my own deeper convictions when it mattered. Looking back, my failures had their root less in my believing myself to be powerless to change things on my own, than in having to decide on the spot and being unable to come up with a suitable alternative fast enough or being so caught up by my own social and cultural conditioning, that it was very difficult to change my “bad habits”. As individuals, organization and as a civilization we are all captive to some extent to the ingrained routines, traditions and culture we have been part of since childhood. Consequently, even if we rebelled on a number of occasions, we often find ourselves back in our previous, familiar path-dependent behavioral track, especially when we are intricately embedded in this social status-quo with all its rules, assumptions and subtle (or not so subtle!) peer pressure. We yearn for our place in this social context and thus we often inadvertently undermine our own best efforts at reform.

Concretely, what is to be done then? Whereas there is certainly some validity to the bromides that one can only change oneself or that all change begins with ourselves, the above analysis makes it clear that more is required. Individuals need to be supported in their efforts for change and this support includes creating concrete training grounds to hone in our abilities to deal with the wider social challenges we all face. Business Schools, as the premier forging grounds for future leaders in our economic institutions, are clearly indispensible in this respect.

Manuel Heer Dawson

Sustainability Reporting Today

Sustainability Reporting Today:

 With the advent of sustainability reporting, various indicators and standards have been developed to measure and evaluate sustainability and to anchor it in corporate reporting on value creation. A sustainable commitment to stakeholder relations on an economic, social and ecological level has a proven positive impact on value creation and ultimately also on the strategic success of a company. To make this transparent, the following principles for an integrated sustainability reporting - which are to a certain degree also part of standards such as the Global Reporting Initiative, Integrated Reporting and the European Foundation for Quality Management (EFQM) - can lead the way:

 

-         Strategic Focus: Sustainability should be embedded in a company’s purpose, in its derived vision and in its strategic objectives. This forms an essential basis for a periodic corporate sustainability reporting at a strategic level.

-         Embeddedness: Not only singular projects, but the entire strategy development and revision should be communicated comprehensively to make the company’s attractiveness visible for current and future partners. It is deliberately not about retaining information to calm down stakeholders and to secure competitive advantages over competitors, but about gaining strategic stakeholders for a mutual corporate value creation process.

-         Inclusion: When different stakeholders contribute to value creation, it is crucial to also recognize these stakeholders as owners of their contributed values. This is based on an extended understanding of ownership. Here, the concept of ownership refers not only to material goods or financial resources, but also to intangible issues such as knowledge and experience. With their knowledge and experience, stakeholders provide property for a company in a broader sense. Like the financial owners, they have therefore the right to be adequately involved in processes regarding their property and to be informed accordingly.

-         Commitment: In a purely economic view, profit distribution (residual profit) primarily targets shareholders. This is also predominantly reported on. Especially because the management has to make discretionary decisions about the shareholders’ compensations, e.g. how much of the profit is being distributed and how much is being retained (pay-out-ratio). When other stakeholders, in the sense of a broader concept of ownership, contribute significantly to the corporate value creation process, these stakeholders should also be a compulsory part of the distribution of tangible and intangible values as well as receive information accordingly.

 A sustainability reporting based on these principles suggests that companies can create more values with and for stakeholders.

 Sybille Sachs

 

Personal thoughts on a keynote speech on social business

Last week I attended the Social Business Conference 2013 organized by the Swiss-based think tank ‘Social Business Earth’ in Lugano. The keynote speaker was none other than Muhammad Yunus, pioneer behind the microcredit movement and the idea of social business as well as Nobel Peace Prize Laureate in 2006 for his achievements in this context.

I have been told that the economics professor from Bangladesh is renowned for his vivid, inciting and authentic narrative speeches about the early days of microcredit. And indeed, Yunus first told the enthralling personal story of how it all began and how he came across the idea to grant a few dollars to a group of women in his hometown in the mid 1970s. At the center of his keynote speech were, however, a few more general arguments that sounded very familiar to me as a stakeholder theorist. Therefore, I would like to reflect on three basic thoughts raised by Yunus in this blog post, which I believe are universally valid and very much in line with the underlying aspiration of our ‘people for people’-initiative.

First, Yunus mentioned that it was a live-changing moment for these women to be able to lend money at reasonable interest rates in order to engage in income-generating activities. In this way, they became independent from loan-sharks and felt as equal business partners, respected and formally credit-worthy. According to him, their appreciation in return was the most rewarding part. This made me think; isn’t it essentially much more rewarding to make people or the natural environment a bit better off at the end of the day, rather than dedicating your time to the sole pursuit of money?

Against this background, the second central question raised by Yunus was about the purpose of business in principle. To put it simply, does society serve economy or does economy serve society? In this regard, I agree with Yunus that everyone needs to ask themselves the fundamental question of whether they want to work for a profit-maximizing company or engage in a business that is committed to solve a social or environmental issue, but like any other business is run financially sustainable. In simplified terms, the bottom line of this dilemma is the personal preference between worshiping financial enrichment versus social wealth. Having said that, attention needs to be drawn to the fact that most of the world’s population is not in a position to have this personal choice.

Finally, a crucial aspect with a look into the future is how we can promote the infiltration of the social business rationale in today’s economic system. Yunus argued that the vision should be to set up a social business sector parallel to the established, and currently transforming, capitalistic system, so that people are able to make their choice. However, I argue that the ultimate goal should be an economic system, which is based on a dual value proposition, insofar as it combines profit-seeking business with a positive impact on society and the natural environment.

Marc Moser

 Capitalism in Question

The Academy of Management (AOM) is a professional organization that strives to further the scholarship of management. It comprises twenty-five professional divisions and interest groups focussing on management problems. Examples of these divisions are „Business Policy and Strategy“, “Entrepreneurship“, “Human Resources“, or „Social Issues in Management“. Every year, the AOM carries out an Annual Meeting. Last year, more than 10,000 participants – primarily university professors – took part from all over the world. In numerous events, such as the Professional Development Workshops, Paper-Sessions, Panels and All Academy Symposia, the newest research and teaching methods were discussed. Also Switzerland was well represented, coming in at 10^th place with respect to the number of participants.

For each of the AOM annual meetings a theme is selected. For this year’s meeting that takes place between the 9^th and 13^th August in Orlando, Florida, the theme will be “Capitalism in Question”.  Indeed, following the financial crisis of 2008, the business schools are challenged to review the foundations and assumptions upon which their research and teaching are based on. Currently, this is the neo-liberal economic theory and the corresponding theory of the firm. Questions and problems that the organizers have put in the center are for example:

·        While it is recognized that the market competition during the last decades brought great benefits, material prosperity and much innovation, it has also become clear that there are serious down sides: economic, social and ecological “costs”.

 

·        Research questions are called for that deal with the question if and how the capitalistic economic system can and should be further developed.

·        In need are also contributions that elucidate what alternatives there are to the current system and what would subsequently change in a social, economic and ecological context.

·        Connected with the above is also the question of by what social and ecological components the objective of shareholder value maximization by firms need be complemented and what this means for the role and self-conception of managers and leaders.

·        Also the question how true innovation can be upheld in firms – as for example via a shift of focus from rivalry to cooperation with stakeholders – has been included in the call for papers.

It will be interesting to see what an event of this size and scientific reputation will bring forth in terms of insights and impulses for the academic research and teaching in the area of management. I hope to be able to report some of these interesting news in a later blog post.

Edwin Rühli