Global Responsibility 9781845444617, 9780861768349

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Table of contents Special issue: Global responsibility Guest editor: Yvon Pesqueux Volume 3 Number 3 2003

Departments

Feature articles

Access this journal online

2

Introduction

3

Yvon Pesqueux

Conference previews

136

Part 1: Investigating the concept of global responsibility Viewpoint: Global responsibility

10

Yvan Biefnot

Viewpoint: Questions on the theme of ‘‘global responsibility’’

21

Yvon Pesqueux

Viewpoint: Global responsibility and total freedom

39

Eric Cornuel and Pierre Kletz

Part 2: Global business means global responsibilities Research: Global strategies – contradictions and consequences

52

Eleanor R.E. O’Higgins

Research: Big business, big responsibilities

67

Louise Gardiner, Catherine Rubbens and Elena Bonfiglioli

Research: About ‘‘global responsibility’’ in management

78

Roland Pe´rez

Viewpoint: Global responsibility – vision from Central Asia/vision of Central Asia

90

Akmaral Altaliyeva

Part 3: Implications in management education Research: Global impact – global responsibility: why a global management ethos is necessary

95

Laszlo Zsolnai

Viewpoint: Foundations for a global management ethos

101

Nicholas Capaldi

Viewpoint: Global responsibility and individual exemplarity

114

Maurice The´venet

Case study: Global responsibility – business education and business schools – roles in promoting a global perspective

126

Peter Lorange

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Introduction The background to the global responsibility debate The European Foundation for Management Development (efmd), in the framework of its mission to generate new knowledge in its field of interest, has taken the initiative to open a debate on the concept of ‘‘global responsibility’’. The debate is meant to mobilize the interest of various providers and consumers of management education world-wide around this concept and trigger a reflection that contributes to the formulation and implementation of a global management ethos. We anticipate the concept of ‘‘global responsibility’’ will follow a developmental process comparable with the one experimented with, the notion of ‘‘sustainability’’ invented by the UN. Started in the 1990s, it led to the shaping of the concept – an empty shell at the beginning that gained content thanks to the interest raised among key actors: politicians, delegates of non-governmental organizations, corporate leaders, and other stakeholders. This collection provides an invitation to join efmd members in this debate about the concept of ‘‘global responsibility’’, covering as it does the separate but linked areas of globalization of business and economies, and the concept of corporate social responsibility, all converging towards the long-term sustainable development of society at large. The background to this debate was the efmd General Assembly’s meeting in Bangkok on 9 June 2002. The efmd proposed the following key points of principle: J The future prosperity of corporations and educational institutions strongly depends on the sound development of society at large. J Globalization is increasingly impacting on all of us while carrying many challenges and opportunities to learn and develop. J Turning opportunities into success stories implies accountability vis-a`-vis internal and external stakeholders – traditional and emerging new ones. J The process of internationalization/globalization is not a new phenomenon but it has increased in importance. J Global actors of today are developing in an environment over-regulated nationally and under-regulated globally; hence the importance of focusing our attention and our education on global governance and globally responsible leaders and decisionmakers; J The future is shaped by our mutual actions. 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. European scholars and managers have the responsibility to consider not only the European perspective but also others. J Management professionals and educators – including the young generation - can significantly contribute to the issue of globalization and the search for sustainable development. J A dialogue involving various players of society – across constituencies, cultures and generations – is of key importance.

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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 sustainable development strategy. Our next steps, which included the collection and publication of these papers, are to: 1. Develop a ‘‘globally responsible code’’ which would become part of the efmd’s mission statement to which all members will be asked to subscribe; 2. Support efmd 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; 3. Support members, partners and other stakeholders across cultures to inform, communicate, cooperate, and learn from one another; and 4. Pooling members’, partners’ and other stakeholders’ efforts together in order to contribute to a constructive ethically founded globalization process and the search for a more effective and equitable global society. The following five objectives must be sought: 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; 4. Contributing to the development of a global management ethos and global governance; and 5. Maintaining respect for diversity and including issues like global responsibility in the EQUIS assessment process. The authors of the papers included in this collection have worked independently in line with the overall brief as above. We acknowledge the support given to publication of these papers by the staff of efmd and the publisher, Emerald (formerly MCB University Press) of Bradford, UK; and by the editor of the Emerald Corporate Governance Journal, Dr Nada Kakabadse.

Papers and themes This collection of papers is clustered into three sections; the concept of global responsibility; the responsibilities of global business; implications for management education. Within these sections we have three types of papers. Those which are, essentially, essays, reflections and conceptual explorations on the broad theme of global responsibility, we have called Viewpoint. A number of the papers, grounded in empirical research or studies of the literature, we have categorized as Research. The collection ends with a Case study of the Swiss school, IMD, contributed by its President, Peter Lorange.

Part 1: Investigating the concept of global responsibility Yvan Biefnot (Cercle Europe´en des De´ontologues – Belgium) discusses founding influences on the concept of global responsibility, drawing on sources as diverse as the Dalai Lama, holocaust survivor Elie Wiesel and corporate literature from General Electric and Hewlett Packard. Viewpoint

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Yvon Pesqueux, Professor, CNAM (France), argues that ‘‘global responsibility’’ is an empty concept which has to be filled with meaning but that it is necessary to investigate it from its juridical and philosophical background. It may appear as a founding concept for managerial activity with an ideological function of sensemaking. Viewpoint Eric Cornuel, Director-General (efmd), Belgium and Pierre Kletz, Associate Professor of Human Resources Management at the University of Tours (France), have written a proposition for relations that could be established between global responsibility and a ‘‘real’’ freedom for business. They have proposed, first, to disconnect justice and freedom because of the incompatibility between freedom and rules which are necessary to build a political order and because freedom could end in injustice. They have then analyzed responsibility as external source for an increasing competitivity before quoting the debate on corporate governance and financial transparency. Their conclusion is a short reflection on ‘‘less freedom for more freedom: the role of state intervention’’. Viewpoint

Part 2: Global business means global responsibilities Eleanor R.E. O’Higgins, University College Dublin (Ireland), analyses the impacts of global strategies. Much of the debate on the alleged evils and merits of globalization has been based on after-the-fact argument. Depending on the protagonist’s viewpoint, the delights or, more often, the miseries of civil society, especially in developing countries, have been attributed to globalization, This paper takes a different approach to examine the effects of globalization. It starts by examining globalization as a corporate strategy. What is it? What is driving it? What practices characterize a globalization strategy? What advantages does it bring to the corporation? The implications of globalization practices are then examined to discover whether they necessarily cause good or harm to civil society, with particular emphasis on developing countries. It concludes that globalization can lead to benefits or harms, depending on the interrelationship of how it is practiced and the context of host countries. Globalization, like all strategies, is essentially amoral, concentrating on economic objectives. However, moral objectives and corporate social responsibility can become an inherent part of a globalization strategy if these social goods also satisfy corporate economic aims. Such a state of affairs should be encouraged since it would tip the balance in favor of beneficial effects of globalization strategies. Research Louise Gardiner, Catherine Rubbens and Elena Bonfiglioli, from Corporate Social Responsibility (CSR) Europe (Belgium), argue that being a big business means big responsibilities. Since the launch of the UN Global Compact in July 2000, hundreds of companies have signed up representing virtually all industry sectors on every continent. But why is this such an important topic for companies? Why are a growing number of business associations at national and international level promoting business responsibilities to society and the environment that go well beyond companies’ legal obligations? While critics of the field of corporate social responsibility have said that it is not part of business’ core purpose – i.e. to do business and make a profit – many executives no longer agree. The market is changing, and CSR is becoming a vital part of staying competitive, retaining talented staff, and satisfying customers’ expectations. Brand-name companies like Shell, Nike and Nestle´ have discovered through highprofile scandals concerning the environment, human rights, health and labor conditions, that they have to take society’s concerns seriously in order to preserve their license to operate. Global responsibility implies a global understanding of CSR, which in itself is elusive. The UN Global Compact principles, the OECD guidelines for

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multinational companies, the International Labour Organisation (ILO) standards and declarations, the Universal Declaration of Human Rights, the Global Reporting Initiative (GRI) for Sustainability Reporting Guidelines, the Global Sullivan Principles, the Social Accountability 8000 (SA 8000), are just some of the plethora of international standards that are being offered. Nevertheless, they show the growing spectrum of global issues with which companies are now engaging in earnest: health and safety, human rights, the environment, basic needs (water, sanitation, education, representation etc.), transparency, democracy, labor standards, exploitation, intellectual property rights, bribery and corruption, and much more. Research Roland Perez, Professor of Management Sciences, University of Montpellier (France), quotes an important difficulty with this concept of global responsibility for authors who are, at the same time, actors and observers of their reality. It is why this concept of global responsibility is an adequate sign of the ambiguity of management sciences. By investigating this concept only from a managerial position, he will link it with managerial action. Research Akmaral Altaliyeva, from the Central Asian Foundation for Management Development (Kazakhstan), presents the approach to this concept in Central Asia. She explains that global responsibility is not well-known as a concept in Kazakhstan or in other Central Asian states of the former Soviet Union. Environmental issues are the most popular component of the global responsibility concept among the Kazakhstani publishers and mass media. The issues of corruption, poverty, wars and terrorism are less popular. This paper is probably the most critical of the whole set, because it shows that, despite its positive connotations, the concept of global responsibility is largely situated in our Western culture. Viewpoint

Part 3: Management implications in management education Laslo Zsolnai, Professor of Business Ethics at the University of Budapest (Hungary), argues that today’s business has an undeniable global impact; it considerably affects the fate and survival of natural ecosystems as well as the life conditions of present and future generations in a global scale. According to the imperative of responsibility developed by Hans Jonas, business has a one way, non-reciprocal duty caring for beings which are subject to its impacts. Business should establish justice among nature, society and future generations to meet its global responsibility. However, this implies a deep transformation of business to be able to contribute to the preservation (and not to the destruction) of the ecological and cultural richness of the world. Research Nicholas Capaldi, College of Business Administration, Loyola University of New Orleans (USA), outlines an emerging global ethics that can serve as the foundation for a global management ethos. In so doing, in relation with the concept of global responsibility, he defines what a global management ethos is, discusses what would make it possible, and distinguishes between its benign and malignant forms. The ‘‘global management ethos’’ that he describes and advocates combines macro libertarianism and micro diversity. Viewpoint Maurice The´venet, Professor of Human Resources Management at CNAM (France), explains that global responsibility, sustainable growth and social responsibility are some of the concepts that have emerged as global concerns for modern societies, governmental and non-governmental bodies, international institutions as well as individual citizens at the beginning of this new century. Viewpoint

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Peter Lorange, President IMD (Switzerland), has analyzed the concept of ‘‘global responsibility’’ from the point of view of a leader of an international business school because business education and business schools have a major responsibility to promote a global responsibility perspective. Case study My thanks again, also expressed on behalf of efmd and Emerald, to all those who gave of their time and efforts to create these papers. I hope and believe that this collection will prove valuable in the debate in the years ahead. Yvon Pesqueux Professor CNAM Paris (France)

The authors Akmaral Altaliyeva became Director-General of Central Asian Foundation for Management Development (CAMAN) in April 2002. She is also teaching HRM and Organizational Behavior at International Academy of Business, one of the top educational institutions in the field of management in Kazakhstan. She has not only ten years’ teaching experience, but also managerial practice in local companies. She got her PhD from al-Farabi Kazak National University in the field of Political Economy in 1997. In 2001 she was a stipendiate of the Fulbright Program, one of the most prestigious programs of the US government for academia. Yvan Biefnot has a Master’s degree in Industrial Psychology and additional education in marketing, finance and international management. After an international career as internal business consultant and business executive, he is specializing in business ethics. He is an active member of several associations in Europe, USA and Canada. His particular subject of interest is the ‘‘Ethics Officer’’ function and its contribution to the ethical behavior of the enterprise. Elena Bonfiglioli holds a degree in economics from the University of Modena, Italy, and a Master’s degree in European studies from the College of Europe in Belgium. Since 1998, she has worked on behalf of CSR Europe as Programmes Director. In this position she designs the strategic development of CSR thematic projects, identifies CSR best practices from companies and stakeholders, explores the latest developments of the CSR agenda at policy level, and works with companies to integrate sustainability in their way of doing business. Elena has worked on issues such as social reporting, diversity, socially responsible investment, leadership and CSR. She is part of a group of professionals studying the impact of meditation on individual transformation and corporate performance. Tel: +32 2 541 1615. Mobile: +32 486 505110. E-mail: [email protected] Nicholas Capaldi is the Legendre-Soule´ Distinguished Chair of Business Ethics at Loyola University in New Orleans. He was previously the McFarlin Endowed Professor of Philosophy and Research Professor of Law at the University of Tulsa. His principal research and teaching interest is in public policy and its intersection with political science, philosophy, law, religion, and economics. He received his BA from the University of Pennsylvania and his PhD from Columbia University. He is the author of six books, over 50 articles, and editor of six anthologies. He is a member of the editorial board of six journals and has served most recently as editor of Public Affairs Quarterly. He is an internationally recognized Hume scholar and a domestic public policy specialist on such issues as higher education, bio-ethics, business ethics, affirmative action, and immigration. Tel: (h) (504) 486-5014. (o) (504) 864-7957. E-mail: [email protected] and www.cba.loyno.edu

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Louise Gardiner is Editor of the CSR Magazine – the Corporate Social Responsibility Magazine in Europe, which is published quarterly by CSR Europe. She holds a degree in Philosophy from the University of Stellenbosch, South Africa. Tel: +32 2 541 1624. E-mail: [email protected] Peter Lorange has been President of IMD since 1 July 1993. He is Professor of Strategy and holds the Nestle´ Chair. He was formerly President of the Norwegian School of Management in Oslo. His areas of special interest are strategy, global strategic management, strategic planning, strategic alliances and strategic control. In management education, Dr Lorange was affiliated with the Wharton School, University of Pennsylvania for more than a decade in various assignments, including director for the Joseph H. Lauder Institute of Management and International Studies, and The William H. Wurster Center for International Management Studies, as well as The William H. Wurster Professor of Multinational Management. He has also taught at the Sloan School of Management (MIT), IMEDE (now IMD), and the Stockholm School of Economics. Dr Lorange has written or edited 16 books and over 130 articles. He has conducted extensive research on multinational management, strategic planning processes, strategic control and strategic alliances. He has taught at the undergraduate, Master and Doctoral levels, and worked extensively within his areas of expertise with US, European and Asian corporations, both in a consulting capacity and in executive education. He serves on the board of directors of several corporations including: Christiania Eiendomsselskap A/S, S. Ugelstad Shipowners A/S, ISS-International Service System A/S, StreamServe AB, Intentia International AB, Preferred Global Health, and Zaruma Resources Inc. Dr Lorange is Norwegian. He received his undergraduate education from the Norwegian School of Economics and Business, was awarded a Master of Arts degree in Operations Management from Yale University, and his Doctor of Business Administration degree from Harvard University. Eleanor O’Higgins is on the Faculty of the Smurfit Graduate Business School at University College Dublin, where her teaching, research and publications specialize in the areas of strategic management and business ethics. She is a member of the UN Global Compact Learning Forum, and of the Board of Management of The Institute of Directors Centre for Corporate Governance at University College Dublin. She is Chairman of the International Theme Committee of the US Academy of Management. Yvon Pesqueux is Professor at CNAM (Conservatoire National des Arts et Me´tiers), Head of the Chair ‘‘De´veloppement des Syste`mes d’Organisation’’ since 1 January 2000. He has got a PhD in Economics, University of Paris 1 Panthe´on-Sorbonne (1975). His former positions were: Associate Professor at the University of Lausanne (Switzerland) in 1987, Economist (Ministry of Finances), Associate Professor at HEC (France) from 1988 to 2000. His special interest is focused on the relations between management, philosophy and ethics. Main courses taught: Business and Society, Organization Behavior, Books: La nouvelle comptabilite´ des couˆts, PUF, Paris, 1995; Controˆle de Gestion, Dunod, Paris, 1998; Mercure et Minerve: perspectives philosophiques sur l’entreprise, Ellipses, Paris, 1999 (with Alain Saudan, Bernard Ramanantsoa, Jean-Claude Tournand); Le gouvernement de l’entreprise comme ide´ologie, Ellipses, Paris, 2000. Organisations: mode`les et repre´sentations, PUF, Paris, 2002; Ethique des Affaires – Responsabilite´ sociale et management par les valeurs, Editions d’Organisation, Paris, 2002 (with Yvan Biefnot). Tel: 33-(0)1 40 27 21 63. Fax: 33-(0)1 40 27 26 55. E-mail: [email protected] and Web site: www.cnam.fr/ depts/te/dso Catherine Rubbens is Programme Manager for Social Reporting and Human Rights at CSR Europe. She has worked for the UN Conference on Trade and Development

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(UNCTAD) in Geneva and the UN Department of Economic and Social Affairs (DESA) in New York. She has also worked for Environmental Resources Management and the ethical communications consultancy C21 in London. Laszlo Zsolnai was born in 1958, in Szentes, Hungary. He has a Master’s Degree in Finance and a Doctoral Degree in Sociology from the Budapest University of Economic Sciences (BUES). He got his PhD in Economics from the Hungarian Academy of Sciences. Since 1995 he has been the Director of the Business Ethics Center of BUES. He is Chairman of the Business Ethics Inter-faculty Group of the Community of the European Management Schools (CEMS) in Paris. Laszlo Zsolnai is Editorial Board Member of the International Journal of Social Economics and Global Outlook: An International Journal of Business, Economics, and Social Policy.

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Part 1: Investigating the concept of global responsibility Viewpoint Global responsibility Yvan Biefnot

Yvan Biefnot has a Master’s degree in Industrial Psychology and additional education in Marketing, Finance and International Management. After an international career as internal business consultant and business executive, he is specializing in Business Ethics. He is an active member of several associations in Europe, USA and Canada. His particular subject of interest is the ‘‘Ethics Officer’’ function and its contribution to the ethical behavior of the enterprise.

Abstract This article describes the views expressed about global responsibility by a variety of reputed individuals or groups: academics, political and religious authorities, NGO, private enterprises, etc. If there is, in the main, a rather common understanding of the word ‘‘global’’ (universal, borderless), the definition of responsibility varies much more. The main dichotomy is to be found between the private/business and the non-private sector. The latter puts a humanistic dimension in the concept of responsibility, even if not always clearly defined. The private sector, clearly, thinks more in terms of business opportunities. The conclusion suggests that ‘‘man’’ should always be the center of the debate and the progress of mankind always the ultimate goal. Statements expressing this view and offering guidelines for action are already contained in the Universal Declaration of Human Rights, of which article 1 almost says it all. Keywords Globalization, Corporate responsibility

When I started preparing for this article, I had the impression that I was addressing a well-known subject about which a number of publications had already been issued, by different categories of authors: academics, public authorities, NGOs, private sector, etc. . . But once I started looking for information and references, it did not take long to realize that my first impression was unfounded, at least regarding the understanding of the concept. There are a number of texts, speeches, containing the words ‘‘global’’ and ‘‘responsibility’’ used separately, much less about ‘‘global responsibility’’ and, for those which address this concept, it is far from being evident that it is always used in the same accepted way. Before formulating a personal opinion, and instead of trying to reinvent the concept, let me modestly look first at what many others have thought and said. Let us begin with a review of the various comments, texts and domains in which global responsibility can be found.

Comments inspired by spiritual values The Dalai Lama addressed the subject of ‘‘universal responsibility’’ and ‘‘global responsibility’’ in the following terms:

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DOI 10.1108/14720700310483415

Now that the twentieth century is close to its end, we note that the world has shrunk. Its population has become almost a single community. Political and military alliances have created multinational groups, industry and international trade have generated a global economy. Communications at the planetary level have eliminated the old barriers of distance, language and race. We are also pushed to tighten our elbows by the serious problems we are facing: overpopulation, exhaustion of natural resources and the environmental crisis . . . I believe that, to take up the challenges of our time, human beings will have to develop an increased sense of universal responsibility. Each one of us has to learn to work not only for him or ourselves, our family, or our country, but for the benefit of the whole of humanity. Universal responsibility is the real key to human survival. It is the best basis for world peace, for equitable use of natural resources and, as a concern for the generations to come, for appropriate care of the environment.

Hans Kung, a widely published scholar, author, and Director of the Global Ethic Foundation, is an authority on world religions and their impact on society. In his book, Global Responsibility – In Search of a New World Ethic, which was part of the ground swell that led to a declaration ‘‘Toward a global ethic’’ at the 1993 Parliament of the World’s Religions, he reminds us of ‘‘what the world spends on military armaments, of children dying of hunger-related causes . . . of people detained, tortured, assassinated . . . or in other ways violated by acts of repressive regimes . . .’’ and concludes by saying that ‘‘. . . there can be no ongoing human society without a world ethic for the nations . . .’’

Declarations from public authorities The German government, in its Program of Action 2015, explains that: Poverty reduction is a global responsibility and a shared international responsibility. Over one billion people are living in extreme poverty. Their purchasing power is less than one US dollar per capita per day. The majority of them are women and girls. Some two thirds of the poor in developing countries live in rural areas, yet urban poverty is also on the increase. There is a consensus among the international community that poverty and growing inequality are among the fundamental problems of the new century, given a background of, among other things, advancing globalization of all aspects of life and inequitable starting positions of the industrialized countries and the developing countries. They are at the root of many other global risks and threats . . . Overcoming the gap between rich and poor is therefore a vital contribution towards a more peaceful and just world, and is also dictated by social responsibility and good sense. In an ever more converging world, global poverty reduction is also in Germany’s own interest.

Declaration of the Swedish government at the opening of the debate on foreign politics in Parliament, on 13 February 2002: Madam President, never has the world been so rich. The increase of commercial exchanges, the development of new technologies and the progress in sciences have generated growth and a new prosperity. At the same time, more than one billion human beings live in extreme poverty. Half of them are children. Never has the world counted more democracies. At the same time, many people have the feeling that the power has shifted to a world-wide level and has become more difficult to bend. Never has the world paid more attention to human rights. At the same time, human beings are oppressed everywhere in the world because of their religious or political affiliation, their sex or their ethnic origin. Every day, exactions and injustices are committed but, at the same time, globalization makes visible what occurs in the world and gives us increased means to remedy it. To arrive at results, international co-operation is necessary in all the fields of the policies.

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The Czech Republic’s Forum 2000 ends with an appeal for global responsibility, reported by Bob McMahon and Jeremy Bransten. In September 1997, in Prague, an extraordinary gathering of world thinkers ended with an appeal for global responsibility to help solve the problems that have haunted the twentieth century. The conference brought together about 60 leading thinkers from diverse backgrounds. There were Nobel Peace prize winners and laureates in chemistry and medicine. There were many former heads of state and some potential future leaders. Political scientists, authors, religious leaders and distinguished university professors also took part. Nobel laureate Elie Wiesel, a survivor of the Holocaust, addressed himself to future generations in his concluding address, saying: ‘‘We are here because I don’t want my past to become your future’’. Looking to the future, former Bulgarian President Zhelyu Zhelev said technological progress will likely tempt man to colonize space before earthly problems such as unemployment, crime, violence and ecological problems are resolved. UK scientific writer James Lovelock said that, instead of trying to make barren Mars an escape from overcrowded Earth, our science and efforts should go towards understanding Earth and improving life on it. A prominent US professor of humanities, Henry Louis Gates, said the challenge for the world’s most powerful democracy, the USA, is to overcome the racism that has created a huge black underclass. He said, up to now, society has been too weak to bring about change. He called for a ‘‘muscular humanism’’ in which well-meaning people are not afraid to act. In concluding the conference, President Vaclav Havel and Elie Wiesel repeated the importance of striving for a sense of global responsibility in solving the world’s many problems, and to keep alive a spark of hope. Wiesel said people and communities are united by questions but ‘‘find themselves divided by the answers’’. Opening remarks from Ruth Dreyfuss, President of the Swiss Confederation, at the Davos 29th World Economic Forum: Global responsibility, vis-a`-vis globalization, implies a multitude of actors. Barriers fall, roads open, communications accelerate. But the markets do not extend on virgin spaces . . . their principal characteristic is to shelter human beings, who recognize themselves in cultures of a formidable diversity. Human beings who are unequal in the world economy. . . . But I am persuaded that, from the point of view of total responsibility, the question which we must put above all is: How to preserve and even support the richness of human diversity? In this respect, the states have played a major role up to now. If the economic world – not without good reasons – mainly concentrated on growth and the creation of wealth, the states, then, took up the essential duty of redistribution of the wealth . . . But, vis-a`-vis the acceleration of the exchanges, this task sharing between economy and states is practically called into question . . . Vis-a`-vis that, I draw attention to two remarks: . . . the national states represent a too restricted framework for the answers which we must bring regarding the stakes of globalization . . . the need for confirming the task sharing such as I evoked is between economic world and states . . . There exists a narrow interaction between democracy and good economic health . . . Enterprises do not have as a prime role to conduct politics. But it must rest on their ethics to comply with the rules laid down by the international community.

At the conference on ‘‘The intercultural dialogue’’, in Brussels, on 20-21 March 2002, organized by the European Commission, Hartmut Kaelble, president of the scientific committee on the inter-cultural dialogue, states in his introduction:

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Europe is confronted with a new international challenge after the fall of the Wall (i.e. Berlin), after the end of European division . . . Europe is facing a new global shared responsibility . . . the Mediterranean (area) plays a special and crucial role in the shared global responsibility of Europe . . .

At the Society for International Development, in Amsterdam, on 30 October 2000, Peer Baneke, General Secretary, European Council on Refugees and Exiles, talked about ‘‘refugees and asylum: Europe’s global responsibility’’. His theory is that: Europe has a tremendous global responsibility and a tremendous global impact. Unfortunately at this moment it is a negative impact. Many of the negative developments have come about because European countries have not cooperated or shared the responsibility for refugees. Instead each of the countries has been worrying that they might attract more refugees than neighboring countries. In May 1999 the Amsterdam Treaty came into force, bringing a commitment of the EU to develop common, binding refugee policies. The situation at present can be compared with the Prohibition era in the USA. By erecting barriers, European states have helped to create new powerful networks of traffickers. It is a worrying fact that those traffickers have often become the last resort of asylum seekers.

From the private sector Some articles address the global responsibility of accountants to progress to a true transparency in their operations. Skandia, the international savings and insurance group, created an independent subsidiary: ‘‘Global Responsibility AB’’. One of Skandia’s main goals is to sustain earnings, by delivering shareholder value. It is believed that these objectives can best be achieved through sustainable business processes and products through a combination of economic and environmental performance, and social responsibility. ‘‘Global Responsibility’s mission is to provide products that will support companies and organizations and stimulate them to achieve greater profitability and continual improvement in the pursuit of a sustainable business.’’

ASTRAZENECA’s Global Business, Global Responsibility: this multinational pharmaceutical company talks about its global responsibility reflected in its Corporate Social Responsibility Policy. GE Financial Services talks about its ‘‘global social responsibility’’ by: serving communities around the corner and around the globe: GE Capital is committed to helping improve the quality of life in the communities in which we do business – around the corner and around the globe. We focus our people and our financial resources on improving education, empowering disadvantaged children and families, and building strong communities. Through this commitment to communities world-wide, schools are built, trees are planted, hope is nurtured, and dreams are realized.

GE encourage their employees to become involved, active in humanitarian projects. ‘‘. . . GE Capital is an involved corporate citizen because, simply put, it’s the right thing to do.’’ Hewlett Packard declares that: Today’s multinational corporations have the responsibility – and the imperative – to redefine their role on a world stage as they pursue business opportunities in developing nations. HP intends to be an exemplary corporate global citizen by engaging in unique

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public/private partnerships and modeling behavior and activities in our governance, environmental policy and practices, community engagement models and our e-Inclusion initiatives to bridge the digital divide.

The Global Responsibility, 6-18 November, 2000. Global Responsibility was recently incorporated as a holding company based in Copenhagen. ‘‘. . . Global Responsibility’s mission is to promote transparency and dialogue as catalysts for CSR . . . Global Responsibility articulates three guidelines for a sustainable economy: 1. do not use renewable resources faster than they regenerate; 2. do not use non-renewable resources faster than renewable substitutes are developed for them; and 3. do not release pollutants faster than natural systems can break them down.’’

Scientists Wolfgang Fisher is a biotechnology engineer. His view on global responsibility is expressed in his book New Orientation in Culture and Politics – Reflections on What it Means to be Human, a ‘‘plea for a civilization in accordance with nature that is not based on money and violence’’. Environmental crisis and war, economic and political crime, the global expansion of multinational corporations, the impoverishment of ever more sections of society, regression to religious interpretations reminiscent of the Middle Ages – all these characteristics of the present do not bode well for our future. The spreading of misinformation by the political and economic establishment reveals a lack of respect for the sovereignty of the people and the widespread political tendency to favor inherent necessities before the finding of fair solutions, the general denial of the effects of our way of life upon the environment as well as the vigorous defense of the status quo against any new ideas hinder the evolution of peaceful coexistence among humans. Will we fall victim to these developments or are there alternatives? Is there any hope left for us? If we ever want to solve the problems presently endangering all life on earth, we need to reflect with an open mind upon some so far unanswered questions as well as present abuses and grievances. The unbiased recognition of the features common to all life will inspire us to personally stand up and take action to promote the establishment of universal justice. This can then serve as a yardstick by which social systems and ideologies can be measured. Scientists for Global Responsibility. SGR promotes the ethical practice and use of science and technology: ‘‘We develop and support initiatives which make science more open, accountable and democratic. Our work involves research, education, lobbying and providing a support network for ethically-concerned scientists.‘‘ SGR is affiliated to the International Network of Engineers and Scientists for Global Responsibility. A number of scientists express their fear that ‘‘the use by humanity of the natural resources exceeded the capacity of the Earth to be regenerated . . .’’

Academia Universities are concerned, conscious that their teaching, especially if it is technical, must be centered on durable development.

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Students for Global Responsibility, homed at Montgomery Blair High School, see their mission as ‘‘. . . to promote social growth in our school and abroad. We fight for human rights and a sustainable environment.’’ Professor Frederico Mayor Zaragoza, who was for ten years head of Unesco, in his address to the European Ethics Forum, in Brussels, in August 2002, says that we have lost our landmarks, we are: . . . without compass, without compassion . . . in the global village, there are traffics of all kinds, it is a jungle . . . the rule of plutocracy prevails world-wide . . . there is a need for ethical principles at all levels, a need for a world-wide ethical code . . . the only pedagogy is the one of the example . . .

Professor Jan Wouters, from the Institute for International Law, K.U. Leuven, Belgium, at the same European Ethics Forum, delivered ‘‘Some reflections from an international lawyer’s perspective’’: In our increasingly interactive and interdependent world, we are confronted almost daily with issues in international law: think, for instance, of the 11 September attacks and their aftermath, the crises concerning Iraq, Kosovo and East Timor, the transatlantic tensions on the International Criminal Court (ICC), on the Kyoto Protocol on greenhouse gas emissions, or of the recurring trade disputes in the WTO, of which the US steel tariffs case is just one recent example. Add to this continual reports about the activities of international organizations, from the UN to the EU, and it becomes clear that international law is the order of the day. Whoever follows, as I do, these international developments and whoever is committed to the construction of a solid legal order for the international community, finds himself constantly torn between hope and despair. Signs of hope in recent years included the approval and rapid entry into force of the Rome Statute for the International Criminal Court; the Millennium Declaration adopted by the General Assembly of the UN on 8 September 2000; and the ever more important role of NGOs and civil society in international affairs, culminating inter alia in the early coming-into-force of the Ottawa agreement on anti-personnel mines in March 1999. Yet who could witness the course of events during the US military campaign in Afghanistan, during the NATO bombing campaign in Yugoslavia, and the long period of inaction of the international community in humanitarian crises from Sierra Leone to Sudan without feeling some sense of desperation? The mood of the present day, however, should not prevent us from taking a long-term perspective. Towards what kind of international legal order are we moving on the threshold of the twenty-first century? Building up a solid international legal order is probably one of the greatest challenges facing humanity at present. Our national legal systems are strongly developed and during the last 50 years Western Europe has succeeded in constructing an EU legal order which has made possible a peaceful society, welfare and the integration of peoples in Europe. But where do we stand on the world level? Is international law not all too slowly limping behind globalization?

The author reminds us that the twentieth century, although witnessing major milestones in the construction of a global world with the end of colonization and the adoption of the Universal Declaration of Human Rights, was also the bloodiest century in human history with more than 140 million dead from international and domestic conflicts. Jan Wouters sees three major challenges to be addressed, which are beyond any single state competencies: 1. Human interdependence: how to manage with a population expected to reach nine billion in 2050. 2. Financial and economic interdependence: the globalization of business is accompanied by increase in income disparity and social exclusion.

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3. Environmental interdependence with worsening pollution and increase and increasing threat to the world resources. Jan Wouters then describes how the signs of hope he sees must be accompanied by a global reconsideration of the foundation of international law and the law of international organizations: . . . At stake is the construction of a fully-fledged world legal order and, ultimately, nothing less than securing the future of humanity as a whole. If the world community fails to provide efficient and fair rules and structures for dealing with the numerous problems facing us, the consequences will indeed be dire.

Politics In his address ‘‘Europe’s global responsibility’’, Rudolf Scharping, Vice-President of the party of European Socialists (PES), emphasizes the role of Europe, which has a global responsibility due, among other things, to its global interests. The Green Party of Minnesota stresses that ‘‘There are many voices present in the community to create a more just and sustainable world. The ten key values of the US Green Movement are listed here. There may not be a tangible measurement of a value system, but the steps we take each day measure the distance we have come.’’ In short, these values are: 1. grass-roots democracy; 2. social and economic justice; 3. ecological wisdom; 4. non-violence; 5. decentralization; 6. community-based economics; 7. feminism and gender equity; 8. respect for diversity; 9. personal and global responsibility; and 10. future focus and sustainability.

Non-governmental organizations and civil society The Caux Round Table (CRT) has increasingly focused its attention on issues of global corporate responsibility in the context of the fundamental social, political, economic and technological changes taking place in the world. Excessive imbalances of trade, economic disparities between developed and developing nations, extremes between rich and poor, and differences in priorities and expectations between current and future generations, pose threats to peace and stability, and hence to the prospects for success of business. Framework of sound international practices, based on universally applied principles for business conduct, consistent values and standards, and responsible operation of business activity, has become imperative. The Aspen Institute convened a high-level dialogue on ‘‘Human rights and global responsibility’’ as part of its 50th anniversary celebration. The dialogue, which included a keynote address by Assistant Secretary of State Harold Koh and a round-table discussion with a distinguished panel of US and international experts, took place at the John F. Kennedy Center for the Performing Arts in Washington.

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‘‘The glass on human rights is half-full in the sense that the norm of human rights has been recognized as a global idea’’, said Kenneth Roth. ‘‘But it is half-empty in the sense of our failure to move beyond principles to a global human rights culture.’’ At the global youth reporters program, Dr Maritta van Bieberstein Koch-Weser, Director-General, IUCN – The World Conservation Union, states that: Without social justice there will be no environmental future – this is the tall task of our young generation. Today’s youth are the planet’s caretakers of tomorrow. They belong to a generation that will carry the responsibility for shaping the security and wellbeing of tomorrow’s world. Helping to create an environmentally sustainable society for the future means raising the awareness of young people today . . .

Another organization addresses more specifically ‘‘Civil society and global responsibility’’ about ‘‘the arms trade with East Timor’’. The World Consumer Rights Day campaign says that ‘‘Global market demands global responsibility’’ and lists a number of constructive approaches to advancing consumer rights and social justice: J Control of tobacco promotion. J Action on global price-fixing. J The dirty dozen, about a global ban on the use of persistent organic pollutants (POPs). J Genetically modified foods. A number of NGOs are urging citizens, young graduates, to take global responsibilty in the fields of human rights and environment. United Nations Secretary-General stresses global responsibility to work for more equitable world economy, in his message for the International Day for the Eradication of Poverty, which is observed on 17 October: Almost half the world’s population lives on less than two dollars a day, yet even this statistic fails to capture the humiliation, powerlessness and brutal hardship that are the daily lot of the world’s poor. Poverty on such a scale is unacceptable, not least because globalization has opened up vast avenues of wealth creation. Globalization can be a strong force in the fight against poverty. But globalization must mean more than creating bigger markets, and experience confirms that growth alone cannot reduce poverty and income inequality.

Personal opinion and tentative conclusions Attempt at defining global responsibility From the texts mentioned here, and from several others at which I looked, it appears that the expression ‘‘global responsibility’’ is used in a relatively small number of documents, in a variety of ways of acceptance, which could be condensed as follows: J a majority of references are clustering around subjects like: eliminating poverty, reducing social inequalities, respecting human rights and protecting the environment; and J the private sector differentiates itself by implying that doing good should also be good for the business.

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Although there is an inevitable fashionable aspect in such a new concept, it seems, however, that there is a sort of silent consensus about a ‘‘need for something’’, a genuine attempt to address a number of severe problems from which the world is suffering and which can no longer be ignored. Several declarations show that there is an increasing perception that nothing significant can be undertaken by any organization, public or private, without a ‘‘global scope’’, without taking into consideration its possible impact on the global scene. As everybody knows, trade and technology have helped to globalize a number of activities such as business and communications, but also revealed and sometimes generated a number of injustices, leaving humanity with an ethical vacuum. ‘‘Responsible’’ is an adjective that applies to anyone who is in charge of an endeavor or to whom a duty has been delegated, and who is subject to penalty or blame in case of default. For our purpose, I find ‘‘accountable’’ more appropriate as it has a more positive connotation than ‘‘responsible’’, suggesting that something has been entrusted to someone who will be called to account for how that trust has been carried out. Andre´ Comte-Sponville says that ‘‘To be responsible, it is to be able to take action and to have the duty of being accountable for it. It is thus to assume one’s capacity, up to its failures, and to accept their consequences . . .’’

Global responsibility would then mean that whoever takes an action has to evaluate the possible impact on the rest of the world and is accountable for it.

Ethics and responsibility (or accountability) go hand in hand Hans Jonas (‘‘Le Principe Responsabilite´’’) explains that close link: The Prometheus definitively unchained, on whom science confers forces never known till now and economy its unrestrained impulse, calls for an ethics which, by freely accepted constraints, prevents the capacity of man to become a curse for himself . . . Under the sign of technology . . . ethics deals with acts . . . which have an incomparable causal significance in direction of the future . . . All that places the responsibility in the center of ethics . . . No former ethics had to take into account the total condition of human life and the remote future and the existence of the species itself . . . the first obligation of the ethics of the future: to get an idea of the remote effects . . . the second obligation . . . the opportunity to let itself be affected by the salvation or the misfortune of the generations to come . . .

But when H. Jonas explains that what makes us responsible is ‘‘. . . the anticipation of the threat itself . . .’’ (‘‘heuristique de la peur’’), I must argue that, if the fear of consequences (punishment, retaliation) often acts as a preventive agent and discourages some wrongdoing, it is a too narrow view. It does not put a lot of trust in a rational and responsible approach, in true humanitarian values, respect, care for others, etc. We also need to refer to I. Kant’s categorical imperative, of which this particular version serves well our present purpose: Act in such a way that you always treat humanity, whether in your own person or in the person of any other, never simply as a means, but always at the same time as an end.

We should also be inspired by Max Weber’s ‘‘ethics of conviction’’ and ‘‘ethics of responsibility’’ which, as the authors suggest, need to be applied in combination.

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Are there examples of irresponsibility? Religious authorities: J Controversial attitude and lack of reaction of the Catholic Church about genocides. J Attitude of the current Pope who refuses to authorize birth control and AIDS prevention methods, which puts at risk a large proportion of the world population, the poorest, who prove to be unable to use the ‘‘natural’’ methods recommended by the Church. J Fundamentalism in Islam, e.g. vis-a`-vis women. Public authorities: J Unilateral attitude and decisions of the US government (G.W. Bush administration) in global domains such as the fight against terrorism, environment (opposition to the Kyoto Protocol), non-acceptance of the International Criminal Court (ICC). Not only do they not assume global responsibility of any kind, but also demonstrate an arrogant lack of interest for the consequences of their attitudes to other parts of the world. J Almost at the other extreme is the remarkable immobilism of the EU towards major crises such as regional conflicts and genocides. Private sector: J The lack of care for the environment of some chemical and oil companies and some producers of genetically modified products. J Indifference to abuses of basic human rights in remote production units. J Complete lack of interest for their employees by ‘‘robber barons’’ (Financial Times) ending in bankruptcy, leaving the employees without income, without pension funds, but having put aside for themselves colossal amounts of money. J Scientists, who develop research (e.g. on the human embryo) for the sake of research itself, to build their reputation, without considering the consequences for mankind. J Academia, especially Business Schools, which ‘‘produce’’ managers without consciousness, young wolves with sharp teeth, for whom profit (their companies’ and theirs) is the ultimate goal. They are not taught to say ‘‘no’’, to set limits to themselves, nor to be an example for their subordinates. (re-)Inventing a management ethos? Debates about ethics and responsibility are probably as old as mankind’s capability of thinking. Global is a more recent addition resulting from the globalization of many fields of activity, although one could argue that it is mainly the word itself which is new, not the concept. In ‘‘management’’ which has to be understood in a broad sense as the professional administration of an organization, private or public, for profit or not, there is the word ‘‘man’’. That ‘‘man’’ should always be in the center of the debate and the progress of mankind should always be our ultimate goal. If it is understood that there is an ethical gap to be filled, I would state that a prerequisite to any further development is that ethics and responsibility are indissociable. Do we have to create new values? Probably not, but we have to adapt, refine, our base values in order to respond to the new challenges such as biotechnology. It is not so much new principles which are in need, but rather, to make sure that they are effectively implemented. The management ethos program should not be destined only for private and commercial enterprises, it should apply to all domains of human activity as well: politics, health care, etc. It

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should not be limited to universities and management schools where we find already educated and trained people, some of them having already made up their mind; forming responsible citizens begins with schoolchildren (at school and at home). Being a practitioner, I cannot resist giving a few examples of practical actions: J As a general principle for all, let us refer to the Universal Declaration of Human Rights voted by the UN and adopted by almost all of them. Its article 1 already says it all, unless one has a particular conception of brotherhood! ‘‘All human beings are born free and equal in dignity and rights. They are endowed with reason and conscience and should act towards one another in a spirit of brotherhood.’’ J Avoid creating new ideologies and inventing empty slogans, let us be practical and meaningful. J In whatever is decided of significant importance, let us have a global vision, a sense of citizenship and think of the impact this decision will have on ‘‘the other’’. J Think global and act locally, as we often see or hear, customize the action so that they respond to the local needs and can be incorporated in the local culture. J Exemplarity is essential; in this area a genuine ‘‘top-down’’ would definitely not hurt! Religions should: J ‘‘Walk their talk’’ more and encourage all believers to behave according to their principles. J Preach that it is senseless to accumulate wealth to such a level that it will be impossible to use it all on Earth and that it will be of no use afterwards. Public authorities have a number of fields where to act, e.g.: J Ban corruption. J Apply (not just endorse) ILO conventions. J Produce and implement programs for education and development to reduce inequalities. J Conceive and adopt an international ‘‘global’’ law as proposed by Prof. Wouters. Private sector: J ‘‘Behave’’ as far as top executive income is concerned. J Give up any corruption practice and do not use the excuse that ‘‘it is part of the local way of doing business’’. J Apply ILO conventions at home and abroad and have them applied by their subcontractors. J Protect the environment. Academia: J Teach that economy is not an end per se, but a means to an end, which is to serve humanity. J Teach responsibility and global citizenship. J Demonstrate that good business can be done with integrity, and clean hands and a clear conscience.

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Viewpoint Questions on the theme of ‘‘global responsibility’’ Yvon Pesqueux

Yvon Pesqueux is Professor at CNAM (Conservatoire National des Arts et Me´tiers), Head of the Chair ‘‘De´veloppement des Syste`mes d’Organisation’’ since 1 January 2000. He has a PhD in Economics, University of Paris 1 Panthe´on-Sorbonne (1975). His former positions were: Associate Professor at the University of Lausanne (Switzerland) in 1987, Economist (Ministry of Finances), Associate Professor at HEC (France) from 1988 to 2000. His special interests are focused on the relations between management, philosophy and ethics. Main courses taught: Business and Society, Organization Behavior. Books: La Nouvelle Comptabilite´ des Couˆts, PUF, Paris, 1995, Controˆle de Gestion, Dunod, Paris, 1998, Mercure et Minerve: Perspectives Philosophiques sur l’Entreprise, Ellipses, Paris, 1999 (with Alain Saudan, Bernard Ramanantsoa, Jean Claude Tournand), Le Gouvernement de l’Entreprise comme Ide´ologie, Ellipses, Paris, 2000, Organisations: Mode`les et Repre´sentations, PUF, Paris, 2002, Ethique des Affaires – Responsabilite´ Sociale et Management par les Valeurs, Editions d’Organisation, Paris, 2002 (with Yvan Biefnot). Tel: 33-(0)1 40 27 21 63. Fax: 33-(0)1 40 27 26 55. E-mail: [email protected] Website: www.cnam.fr/depts/te/dso

DOI 10.1108/14720700310483424

Abstract The ‘‘global responsibility’’ theme is today in the same state of affairs as the ‘‘sustainability’’ theme, devised by the UNO, was in the 1990s. From a meaningless compromise situation, it has gradually acquired some sense, due to the interest shown by the actors, whether these belong to the political scene, non-governmental organizations, enterprises, etc. Insofar as the ‘‘global responsibility’’ theme contains the word ‘‘responsibility’’, it is necessary to propose an understanding of it, with reference to the various areas supporting it (its use in law, in philosophy) before underlining the development of the theme of responsible enterprise and the search for an underlying concept. This text ends on an analysis of the ideological function of the ‘‘global responsibility’’ theme. Keywords Globalization, Corporate responsibility, Ideologies

The ‘‘global responsibility’’ theme is today in the same state of affairs as the ‘‘sustainability’’ theme, devised by the UNO, in the 1990s. From a meaningless compromise situation, it has gradually acquired some sense, due to the interest shown by the actors, whether these belong to the political scene, non-governmental organizations, enterprises, etc . . . The ‘‘global responsibility’’ theme is the result of an emerging perspective, which tends to account for what could give sense to a set of disparate practices linked to the theme of social responsibility of the enterprise. Indeed, since the 1990s, the link with the meaning of corporate action, whether it refers to themes or practices, has given rise to the succession/superposition of expressions such as business ethics, management by values, sustainable development and social responsibility of the enterprise. The ‘‘global responsibility’’ theme would therefore be able to account for an emerging meaning for this disparate set. The whole ambiguity assigned to the ‘‘global responsibility’’ expression is thus emphasized from the start. It could refer not only to defending the position of the multinationals’ managers, who are putting forward today the ‘‘corporate social responsibility’’ discourse, in a purely formal manner (let us remember that Enron had been rated as an ethical firm, even as one of the most ethical firms, by company-rating agencies and that, as a result, ethical funds had invested in the purchase of Enron shares), but it could also mean underlining the existence of some sort of incipient

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evidence in practice. It is possible not only to mention the ideological aspect of the theme but also to show that this is a truly structural evolution of managerial perspectives. Furthermore, given the polysemy of the word ‘‘global’’, which in English means both ‘‘world-wide’’ and ‘‘general’’, the ‘‘global responsibility’’ theme appears rich in possibilities from a sense-building perspective. This is the subject of this article, with the emphasis on the concept of responsibility, whereas the qualifying adjective ‘‘global’’ will, in most cases, be understood as ‘‘general’’.

Preliminary remark: the cynical ambiguity of the utilitarian perspective of the ‘‘global responsibility’’ theme ‘‘Global responsibility’’ is truly a ‘‘management theme’’ today, and it can somehow be placed in the continuity of the quality theme (1980s) and of the financial value theme (1990s); it can be in a dual relationship with the latter because, where the financial aspect is advancing, the societal aspect is being questioned. A ‘‘management theme’’ corresponds to a general way of qualifying a set of practices, with the purpose of giving them a meaning. From an orthodox point of view, it is about waiting for the spin-offs of a social responsibility policy, to which the ‘‘global responsibility’’ theme gives certain cohesion. But the utilitarian legitimacy which is prevailing today underlines the ambiguity of the ‘‘global responsibility’’ theme. It should also be noted that all these practices ‘‘contribute’’ to improving the corporate situation in a perspective which can only be that of a ‘‘winner-winner’’ game in its relationship with society. But the risk of having a meaning prescribed by the senior management of the biggest world enterprises entails the following dangers: J reducing the theme to a purely formal perspective; J bringing the responsibility practices back to an evaluation logic on the basis of a cost-benefits reasoning, i.e. a restricted utilitarian perspective; J imposing a ‘‘selection’’ between management stakes, with financial costeffectiveness at the top, of course, followed by environmental and social balance; J legitimizing the gerontocracy inherent in pension funds and, more generally, of actioning the ‘‘financialization’’ of society without being criticized, according to what is ‘‘politically correct’’; J justifying managers’ confiscation/retrieval of themes such as sustainable development, with a metaphorical ‘‘confusion’’ between ‘‘sustainable development’’ of the planet and ‘‘sustainable development’’ of the enterprise, and of justifying a search for the legitimacy of their interests, in the name of practices described as responsible; and J wanting to mix up a justification process with a rational process. Besides, the theme is not necessarily as new as it would seem. The policy led by Henry Ford in the USA, with its practice of $5 a day, the paternalism of the big industrialists in Europe and life employment in Japan were in a way already ‘‘global responsibility’’ mechanisms, before the word had even been invented. With these mechanisms, the leaders of the big enterprises would already have integrated societal perspectives into their actions, no doubt more societal than many of the measures ‘‘reported’’ today in ‘‘stakeholders reports’’. The debate generated by this is also a contradictory response to Milton Friedman’s statement that corporate responsibility is to make profits and nothing else. Nowadays, the discussion on the topic of ‘‘global responsibility’’ is first of all structured around the negative injunction to avoid social damages and make them good. From this point of

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view, it was the enterprise’s duty to ‘‘make good’’, for example, the environmental damages it was causing in the logic of compensation, which can be found in the concept of public responsibility in law. This injunction is based on a US ethical tradition of ‘‘moral minimum’’ (Simon et al., 1972), i.e. the impossibility of avoiding such a negative injunction, even if the concept of social damage is both imprecise and evolutive in time. This theme now tends to be filled with ‘‘positive’’ perspectives and it is possible to report on the enterprise’s contributions to society. The ‘‘global responsibility’’ theme considers the relationship between the enterprise and society as being (implicitly or explicitly) of a contractual nature (Dahl, 1972). The enterprise is therefore represented in relationship with ‘‘stakeholders’’, indicating thereby the existence of society-constituting communities. The commercial exchange would then be based on extra-economical ‘‘fundamentals’’, such as trust itself, which in the last resort is based on moral principles (in reference to market categories, we mention principles such as precaution, transparency and prudence . . .). Franc¸ois Le´pineux (2001a) mentions the ‘‘Hawthorne’’ effect of corporate social responsibility: The enterprise’s collaborators react positively to the fact that they can look after their neighbor to improve his situation. The societal involvement can therefore be a powerful lever to advance the corporate culture and group employees around a positive dynamics.

The ‘‘global responsibility’’ theme would then make it possible to draw full advantages from the positive connotation linked to the responsibility concept. Insofar as the ‘‘global responsibility’’ theme contains the word ‘‘responsibility’’, it is necessary to propose an understanding of it, with reference to the various areas supporting it.

The concept of responsibility First, we will take a diversion and examine more closely the concept of responsibility.

Its use in law The use of the word ‘‘responsibility’’ is recent and it has been increasingly mentioned since the end of the eighteenth century. From the time when codes – civil and penal responsibility – were drawn up, which were to radically orientate its content from a legal perspective. In this sense, responsibility implies both obligation and commitment. In law, responsibility can in fact take on many aspects, that of penal liability and that of public liability, and the latter can be divided into liability in tort and contractual liability. For Desportes and Le Gunehec (1997), the difference between civil and penal liability is based on three criteria: 1. the role played by each of these two responsibilities; 2. the generating deed involving responsibility; and 3. the conditions of implementation (with the question of competent jurisdictions). As far as roles are concerned, the first distinction concerns the difference between civil liability (duty to make good the damages done) and penal liability (duty to undergo a punishment). The concept of responsibility also contains a victim-compensation function based on the construction of a link between damage and compensation. The concept of responsibility in public matters fulfills not just one, but two functions: a disciplinary function towards the person responsible, on the one hand, by forcing this person to conform with the legal norm but, on the other hand, a function of compensation towards the victims. Damage and compensation (on the victim’s part) are therefore linked to the offence – penalty duality (on the liable person’s part). As emphasized by Franc¸oise Giraud (2000):

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one could be tempted to give a minimalist interpretation of this difference between compensation and penalty, by stating that the actions present some differences in their reversibility: in some cases, it is possible to come back, to compensate (. . .); in other cases, the damage is irreversible, and its ‘‘compensation’’ will consist in accepting a punishment which has been deemed to be proportional to the ‘‘damage’’.

But, in fact, the distinction goes beyond that. As far as what we are concerned with here, with regard to the ‘‘global responsibility’’ theme, we remember the interest represented by the first aspect, with the idea of compensation because of the irreversible destruction character of the nature of any economic activity. The objective pursued through the idea of committed responsibility is an objective of justice, in the context of an individual behavior management project. This ‘‘management’’ goes through the process of stating what is forbidden and of displaying the sanctions, in case of an infringement, by means of three functions: a ‘‘retribution’’ function in compensation for the damage done to society, a function of ‘‘eliminating’’ the harmful individual, and an ‘‘intimidating’’ function for all. The responsibility is therefore committed from a dual perspective: a repressive and a preventive one (cf. Michel Foucault (1975)). This is where the justice perspective is of interest to us, with regard to the ‘‘global responsibility’’ theme, but the perspective of a justice referring to self-prescription, the dangers of which have just been mentioned in the preliminary remark about the cynical ambiguity inherent in a utilitarian perspective on this subject. Responsibility in the legal sense of the word also implies the reference to a generating deed, being the triggering constituent, an essential constituent and a justifying constituent (on the socio-political level, this constituent indicates why the responsibility is fair). The behavior deemed as normal is that of a ‘‘good family man’’, a man who is normally cautious and well-advised, and the offence is defined as a failure in relation to the behavior which should have taken place. It is therefore valued in reference to a standard.

Valuation can be differentiated between valuation in abstracto (the reference standard is external to the individual) and valuation in concreto (which refers to the individual’s situation – his psychology and/or his skills). By extension, the ‘‘global responsibility’’ theme would inherit the attributes of corporate functioning as a ‘‘good family man’’ and it would be sufficient for him to demonstrate this in order to take advantage of his attributes. Franc¸oise Giraud (2000, p. 120) also states that ‘‘the evolution of public liability has answered a more pressing need to compensate victims’’; this need is linked to the working conditions of companies (accidents, future consequences, larger) and with regard to ideological aspects (compensation of the rulers’ interests). Penal liability itself has progressed towards a better protection for society. Even practices have progressed towards cases of responsibility ‘‘without’’ fault in civil matters, because the concept of risk is being taken into consideration. The two following concepts therefore coexist today: the concept of responsibility linked to a generating deed and the concept of responsibility for risks. We must therefore consider as follows: with respect to the question of responsibility, two rights are in opposition nowadays: the author’s right to act and the victim’s right to safety. In the same sense, the founding principle of penal responsibility today is wavering between guilt and danger. These dualities are also found in the ‘‘global responsibility’’ theme.

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More generally, the conditions of responsibility pose the problem of reference to the cause. There are two theories in conflict on this subject: the equivalence of conditions (one factor is considered as causal, if it is a necessary condition, even in relation to others, and if it leads to the selection of a condition to the nearest cause, to the efficient cause and to the perspective of the adequate cause), whereas the middle of the twentieth century is marked by the emergence of the concept of collective action and of foreign cause, to evade the boundaries of the concept of responsibility in solidum, also found in the ‘‘global responsibility’’ theme. This deviation from the legal responsibility helps us to better place the essential function of responsibility towards society (channeling of the individuals’ behavior) and the potential understanding it gives us with regard to the ‘‘global responsibility’’ theme, which consists of sending collective interest signs to the parties concerned who, in turn, are carriers of particular interests. The legal concept of responsibility, which has always carried the ambiguities of a behavior normalization project, does correspond to the concept at work in the legitimating process observed in the firm with the behavioral sanction-reward systems, which reappears in the ‘‘global responsibility’’ theme. The reference to responsibility also carries the legitimacy of contractualism, with relationships between individuals in the firm or between the firm and the parties concerned, as its applications.

Its use in philosophy The issue of responsibility appears, in philosophy, as a second-level issue, which indicates that there are ‘‘first-level’’ issues (action, freedom, causality, for instance). It forces a necessary reduction of the philosophical scope, without which the issue becomes unseizable (but, after all, can the issue be seized?). The qualification most commonly associated with the concept of responsibility is that of obligation. Responsibility would therefore depend on the combination of situations and entities holding them. Jacques Henriot who signs the article in Encyclopedia Universalis about the concept of responsibility, underlines that the concept of responsibility occurs at the dual junction between ethics and metaphysics, on the one hand, and of ethics and anthropology, on the other hand.

The first two philosophical references mentioned in the article are Kant (who proclaims the responsibility of the noumenal subject in the eyes of the evidence of a ‘‘moral law’’) and Nietzsche who, at the beginning of the ‘‘Second essay’’ in The Genealogy of Morale, evokes ‘‘the long history of the origins of responsibility’’ linked to the existence of society, which by training this ‘‘necessarily forgetful’’ animal imposes on him the discipline of duty and makes his behavior ‘‘calculable’’. For O. Abel (1994), the concept of responsibility has two poles: J an institutional pole, where obligation is transcribed in a standard or law; and J a subjective pole which corresponds in a way to the ‘‘sense of responsibilities’’. These poles are also complementary because neither is sufficient to exhaust the responsibility situations. The subjective ‘‘sense of responsibilities’’ guarantees in fact the existence of conditions of possibility to tackle new situations, where the subject no longer has ready-made answers. He is going to mobilize his own moral resources. Both poles may be complementary, but they can also be interpreted as contradictory, because logic differentiates between institutional responsibility (which causes the individual to expect a positive or negative sanction) and subjective responsibility (where no reciprocity can be assigned). The ‘‘global responsibility’’ theme is therefore

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tainted with the fault which consists of always wanting to give the sense of responsibilities an increased value, instead of taking account of the situations (and therefore of other people’s reactions). Acting responsibly, i.e. according to (or even in conformity with) a recognized reference would then make it possible to be cleared from certain consequences. According to Franc¸ois Ewald (1986) this division line differentiates between the various social diagrams, ever since codes have included the following phrases: J the predominance of the subjective ‘‘liberal’’ inspiration pole, at the time when codes were written, with the acceptance of poverty and adversity by morale, and foresight as a virtue corresponding to the exercise of responsibility; J the rising power of the institutional pole in the mid-nineteenth century, due to pauperism linked to the development of industry, with the notion of society’s responsibility and of an imposed duty of safety; and J the current crisis phase, characterized by the underlining of the boundaries of both poles; this makes prescription by such or such category possible (company managers, in this case, in the name of legitimacy, which is today the legitimacy of lobbying; company managers would then, in the name of their expertise, be the best judges of the responsibility to which they are committed and which they use in the name of their company).

This perspective is appropriate to the categories of communitarian liberalism, which makes the interest of each category present a legitimate reference, and proposes to the state that these interests be stated clearly. The ‘‘global responsibility’’ theme would then represent the corporate responsibility, as expressed by company managers.

The concept of responsibility also poses the problem of its conditions of possibility, combined with the question of charging and the charge-reward duality. Charging depends on the methods used to assign responsibility to the subject and on the methods used to judge the events (by physical causality, because of the association between the deed and the subject, forcing the subject to acknowledge the deed, the foreseeability of consequences, the intent, the justification linked to the deed). The strict attribution clashes with the limitations inherent in this determinism: human action itself is subjected to the laws of nature and these primary causes undermine the founding principles of the responsibility concept. An enlarged responsibility concept is then a concept of human causality with the defenders of free-will (Descartes and Kant). The reference to the agent’s responsibility supposes that it is possible to identify the motives for his action (anger, . . .) in order to assess these. These motives represent previous causes, thus necessary conditions. He must have a whole world for his freedom of action, in order to gauge the space available to exercise his responsibility, and not a theory about the freedom of will, the ‘‘global responsibility’’ theme being in a way the basis for an assessment method. The issue of responsibility therefore asks upon what the obligation to answer is based. We find the formal characteristics of obligation in the obligation to answer: the responsibility is aimed at a person responsible, without whom it would neither be meaningful nor real. But, in addition, the authority by which the agent is made responsible must be offered to him as a legitimate power proposing a method of assessment (Antigone, condemned on Creon’s order, wants to be liable in the eyes of

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the law). As underlined by Jacques Henriot, the obligor may force, but we must also consider the obligee’s attitude and the resulting construction of a joint obligation, even if we can conceive the idea of a responsibility towards oneself, wherein the other still has his place in the end. The responsibility relates to time, since the commitment is for the future as well as for what has been done. This is probably what the ‘‘global responsibility’’ theme means in its attempt to absorb and reformulate the theme of sustainable development. The concept of responsibility also leads us to examine the pseudo-responsibility (alienation of the subject’s will from the outside) and the responsibility (the game of a will which seems to be allowed to do anything). Responsibility frees one from the obligation. Both these perspectives make it possible to figure out, inversely, the idea of responsibility principle as a subject identification process (penal liability links today’s accused to yesterday’s culprit). Ethics is thereby implicated in the decision taking, which is used as a standard to concretize the exercise of the responsibility principle, to the point of being able to turn it into a ‘‘complete’’ principle. This is one of the sensitive points about the ‘‘global responsibility’’ theme, trying to impose itself on the corporate actors as well as on the city’s actors. Another debate concerns the link between cause and intent, which then raises the question of causality (the intent may be considered as the cause of the action, which is then external) and that of intent (the intent would be inherent in the concept of action itself). The intent then presents the risk of giving a sense of responsibility as well as of taking it away. Based on this, could not we say that hell would be paved with good intentions? You can indeed get bad results with good intentions! Are cause and/or intent then to be attributed to the person (him, her or them) who implements them? Another problem concerns the statute given to error, which must be considered as a deed (assignable to its author), although it might not be intentional. Another aspect of attribution concerns the value judgment. An attribution model must be added to the role concept (i.e. a judgment method in the eyes of the expectations of others). We must thereby satisfy the explicit expectations but also satisfy the broader obligations that go with the social character of role. Responsibility leads to the notion of duty, which presupposes a standard and a reference level. This is why the concept of responsibility is so difficult to base. If forced, ‘‘we then become responsible for everyone and everything’’, which led Hans Jonas (1995) to present responsibility as a principle. And this may also be the reason why it is possible to base the theme of ‘‘global responsibility’’ of the enterprise proclaiming itself responsible for everything and everyone, justifying thereby even better the fact that it is allowed to dictate the freedom of everything and everybody.

The development of the theme of responsible enterprise and the search for an underlying concept The theme of social responsibility of the enterprise was only given a true dimension at the beginning of the 1990s, and even more in the years preceding the year 2000. This new theme is ‘‘searching for its way’’ and this is witnessed by the diversity of topics touched upon. We could even be talking of ‘‘confusion’’, if we were to examine and compare the agendas of the many forums that have taken place on the subject recently (CSR – Europe or BSR in the USA). The topic arouses a lot of interest and a lot has been written about it: company managers (mainly the biggest of these companies), NGOs, trade unions (to a lesser extent), public authority officials are putting their perspectives forward. These participants have various motivations and they may not necessarily be disinterested. For political actors, this theme represents a new platform and develops into electoral possibilities. For company managers (again, we are talking

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mainly about multinationals), it is giving the sign that you are a ‘‘good citizen’’, because their actions are increasingly protested against, once word about the effects of their slip-ups gets spread around. For some NGOs, it is proving their credibility against a background of fighting for the power of representation in the eyes of their competitors . . . But the theme also covers ‘‘good’’ intentions: the answer to the growing demand from citizens and consumers for more transparency and more integrity on the part of enterprises. Actions themselves cannot avoid this ambivalence between the exploitation attempts of a carrier market, the modernized return of old paternalistic practices (philanthropy maintains dependency instead of solidarity, which promotes autonomy). The ‘‘leftist’’ answer is concretized by the conversion of the social economy theme into one of supporting economy. We are therefore witnessing the emergence of the expression of supporting economy, where local associations and non-governmental organizations can be found in a universe of ‘‘wild’’ creativity. The general movement can, however, be considered as significant, if we think about the achievements now financed by growing financial flows, due to the intervention of rich ‘‘sponsors’’ represented by large companies. One must bear in mind that, behind humanistic appearances, there are economic pressures limiting the answers provided. The observer must therefore be on his guard, especially in this field. The ‘‘global responsibility’’ theme then takes on a truly ideological dimension (that is, a simplification as well as an incantation) from the moment when one analyzes its aptitude to apply to what must today be referred to as organizations, i.e. all institutions reduced to this, whether they are public services such as schools, health or even prisons . . . When talking about organizations, we refer in fact to the enterprise, as if the organization model it covers had a universal application. This is at work, in a particularly significant manner, in the ability of the enterprises’ governing modes, and in particular of the control modes that go with it, to be applied to organizations. It is therefore not possible to look at this theme without examining what is assumed above. It is also the sign that enterprises, traditionally recognized as the place where individual initiative is exercised, would in fact no longer qualify as such, since they are obliged to justify their fundamentals. We must remind the reader here about the very special meaning given to the expression of responsibility in the case of enterprises, with responsibility as the core concept. It is a structural project issued from the division of enterprises into responsibility centers, and this causes a dual problem: 1. The responsibility (responsibilities) which will be attributed to the person(s) responsible concerns two levels at the same time. First of all, the level of skills and, on the other hand, the level of means combined in order to achieve goals. Are we really dealing with what we could call a responsibility? Then, the level of means striving sufficiently towards the achievement of goals, due to the need to ‘‘release’’ a certain cost-effectiveness. Once again, is it really a question of responsibility? 2. The structuring of responsibility centers on the basis of formal coordination procedures, together with an internal transfer price system, if required (therefore of an internal invoicing system), an administrative fee which should be easily managed with information and communication technologies, without incurring any administrative problem, and therefore with a minimal reduction of the costs associated. Is it sufficient to give enterprises and organizations the presumed efficiency attributes of markets?

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The will to expose a ‘‘structure’’ is therefore implemented with reference to governmentality criteria derived from the market (a regulation based on transactions, a coordination achieved by superposing the client-supplier relationship to the superiorsubordinate relationship, and an adaptation which must have the ‘‘invisible hand’’ attributes of the market, instead of an amendment obtained by reforming the rules and procedures. It is therefore on the basis of this government structure, offering a hybrid concept of agents’ control and of the exercise of power (hierarchy and market hybrid), that the enterprise, named organization, would offer a mode of government with a universal calling, built upon the primacy of economical values. And as a result, the ‘‘global responsibility’’ theme – we have just underlined its political dimension in fine – can prove fiercely efficient in its attempt to extend this model.

The ideological function of the ‘‘global responsibility’’ theme If we come back to the historical role of the enterprise, as it is in its present form after the industrial revolution, we must stress once again that its role is to produce rare goods and services and to create wealth and employment. The institution’s duty to generalize efficiency-oriented modes of government has led to a remarkable success in two of the three areas: the demultiplication of goods and services in a dynamics of material creativity, without any apparent limitation, and the creation of material wealth. Since work is seen as a cost element in the light of efficiency, it was normal to question it and to discuss its place gradually, together with the place assigned to work sense and work value. But the starting proposal for this reasoning (the aptitude of the enterprise categories to apply to all organizations) made it possible to give the enterprise a political dimension, and therefore to validate the use of the ‘‘global responsibility’’ expression, and we have just encountered a problem concerning its nature and its institutional justification, particularly from the contribution – reward equilibrium proposed to its agents and to society. The ‘‘global responsibility’’ theme is therefore anchored in the very object of the political philosophy categories, i.e. the issue of just (and fair). In the light of these categories of political philosophy we can discuss the ideological vocation of company managers to universalize efficiency logic to apply it to all the organizations. Its effects must be made politically legitimate; otherwise the enterprise’s position itself is questioned. This efficiency logic is then proposed as the logic to inspire the running of society as a whole, and the use of the ‘‘global responsibility’’ theme is therefore particularly convenient. This poses a collision problem between efficiency and the guaranteed political values of justice, in a democracy, because of the interaction between election and the existence of a state structure. The economical protest against the running conditions of the state structure are in fact an undermining of their legitimacy and existence. This protest is based upon the putting forward of the primacy of the efficiency logic which is not supposed to be at work in public services, or even not to be able to work. The protest against public organizations leads in a more general way to protesting against the state and the political values it supports. This is how the project of a community legitimacy develops, based on the absolute primacy given to the principle of freedom of action of communities (enterprises represent one of these communities) and this freedom belongs in a legalist framework. In this area, the legitimacy of economic logistics gradually spreads, to the detriment of collective values, and their political support is thereby disputed and must be replaced by an expression with legal connotations, such as ‘‘global responsibility’’.

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Moreover, a movement, which started in the USA and is now spreading in Europe, forces the judicial power to structure itself around judges and lawyers outside a doctrinal framework. It has been characterized by the explosion of the jurisprudential source of law, to the detriment of doctrinal sources, from the time when the legitimacy of the state structure was being contested. It is of course possible to put forward the jurisprudential tradition of US law, even if the political prudence of this jurisprudential development is characterized by the election of the judge and the requestioning of its legitimacy by vote. It is the jurisprudential genesis of law by lawyers which fundamentally changes the data by giving a second-row importance to the judge’s election and by creating a legal ‘‘apparel/structure’’ which takes up the area left somewhat unoccupied by the state structure and its doctrinal fundamentals. The characteristics of a ‘‘liberal-bureaucracy’’ dualism reappear here (this uses up resources without creating anything real in return), which sets up the framework for the exercise of a ‘‘global responsibility’’. In Europe, the absence of a true doctrinal basis in the EU allows law, as underlined by Laurent Cohen-Tanugi (1992), to become the basis and driving force of political Europe. The political dimension of the EU has developed on the basis of an ‘‘enlightened despotism’’, the source of the driving gear logic. The result was the edification of an unidentified political object. The particularity of the European construct is characterized by the development of two institutions which are independent from member states and placed on an equal footing with the Council, the Court of Justice and the Commission. In 1963, the Court stated the principle of ‘‘direct effect’’ of community law on citizens and, in 1964, the supremacy of community law on national law. This means that a citizen of a union’s member state may now go beyond the rules in application in that country to refer directly to the European Court of Justice. It is on the basis of this modality that legal Europe covers political Europe. The weak role assigned to the European Parliament is all the more revealing with regard to the democratic functioning of the whole unit. This construct is in a way similar to that of a ‘‘standard’’, therefore in the mainstream of an alternative to representative democracy. In a context where company managers put forward customer satisfaction, while generalizing, for example, quality politics developed from standards, it is obvious here that standards tend to replace law. The political crumbling of the legal sphere therefore leads to a social destructuring, linked to the generalization of conflicts of procedure and to the call for a meaning which company managers propose to carry through the ‘‘global responsibility’’ theme. Efficiency logic has in fact been the basis for material progress, to the advantage of consumers and wage-earners, under the Fordian regulation, with its truly political dimension, i.e. when wages were increasing as goods and services production and material wealth increased, thus ending in a continuous increase in life standards. This regulation sets up the framework for a just and fair society. Enterprises continue to deploy this efficiency by increasing quality and reducing costs and prices, but even more through the Fordian regulation. Efficiency logic developed from an ideological discourse on increased responsibility not just towards wage-earners, but also towards society (by integrating ecological and societal perspectives in the enterprises’ discourse, for example) but also from recognizing the importance to be given to shareholders. And this is why the ‘‘global responsibility’’ theme is destined to take over from the Fordian regulation, to support the meaning of the enterprises’ economic action. Against the ideological gap linked to the failing doctrinal logic of the state, the enterprise has become a meaning supported through efficiency logic, as a privileged place to express the legitimacy of economical values, which is a pressure:

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J inside the enterprise, towards a better economical performance; and J outside, towards a tendency to increase consumption. The joint achievement of both these aspects is supposed to lead to material wellbeing as the concretization of happiness, within a market which would replace a fair city. Because of this, enterprise agents have the duty to adapt permanently to market needs by forcing all – therefore customers as well – to accept market judgment, the primacy of the owners’ interests, and by giving public services the objective to be efficient, i.e. the prospect of a privatization, insofar as efficiency is better expressed in the categories of enterprise government. This is how the universality of enterprise government is developing in its ability to apply to all organizations. Within this ideology, with its truly political nature, the corporate modes of government are destined to apply to entities such as hospitals, communes, public services, etc. Management tools spread the categories of a managing ideology, due to the social interactions induced by them. Because of this it is possible to differentiate between management tools and management devices, i.e. what results from the interactions between the tool and its implementation in a given place and at a given time. Here too, there is a link to the ideological ‘‘global responsibility’’ theme. Completed by the duty of the accounting responsibility to account for the activity of all organizations, based on the transparency principle reduced to its financial dimension, the ideology of government modes is reinforced by the development of ‘‘legal beings’’ who, even if they are not public services, are not yet enterprises such as NGOs. In other words, due to the spread of the efficiency ideology and of the corporate modes of government, public services and social activities, which were until then outside the corporate field of activity, escape the legitimacy of political doctrine. Finally, these entities are de facto forced to conform with efficiency objectives: to multiply goods and services and to create wealth. For example, museums develop derived products and services and create strategic alliances with other museums and foundations, and the social judgment on this has to be positive. The state and public services have suffered from the application of this logic and have lost the legitimacy of the doctrinal logic, which they had been holding traditionally. For this reason, they appear more and more as being unable to offer an answer to the problems of society, thus giving free rein to the development of the legal sphere, which is then liberated from the doctrinal constraints previously experienced. The legal sphere is then able to propose an abstract and moving structure for the logic of standard. In the name of the subsidiary principle, public authorities are being asked to leave the running of these activities to entities, which either are enterprises or, failing that, are rather like them (but in any case not like public services . . .). This context sees the development of the ‘‘global responsibility’’ theme, as a carrier of meaning, correlatively with the political weight acquired by the enterprise in such a context. As the legal sphere is univocally influenced neither by the political sphere nor by the economical sphere, which had ignored states until then, except as a means in the context of its legal arrangements, it experiences an accelerated expansion of all its fields of application, included in the pseudo-legal shape of standard: J quality standards represent the structure for performances between enterprises, or between the enterprise and its customers, and form the basis of a good relationships chart or, another possible interpretation, they are the orders which its agents will have to obey; J environmental standards represent the acceptable limits for the economic activity;

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J safety standards are the same points of reference with regard to the societal impact of the enterprise’s activity, for example, in terms of risks; J design standards guarantee the validity of the performance achieved, both with regard to the principal and to the relationships with suppliers, and even after with the users, leaving room for the contractual legitimacy of the principal – contracting authority relationship; J information technology standards are the reference structure for the formal information system, whether inside the enterprise or in relationships between organizations (with the exchange protocols for computerized data); and J accounting standards guarantee the semantic orthodoxy of information between enterprises and the financial world . . . Yet, the all-out development of standards keeps removing the content, even from the concept of responsibility, which is then reduced to the dimension of conformity with procedures, but also it keeps creating the need for a generic term able to give them a ‘‘common meaning’’. The efficiency logic then leads to contradictory orders aimed at the enterprise agent and to the cynical exits that go with them (he is asked, in the name of efficiency and adaptation, for everything and its opposite). It is hardly surprising then to see that, because of the lack of doctrine, he reacts emotionally and appeals for a reference, whether implicitly or explicitly. For example, the ‘‘responsible persons’’ must react to the fluctuations in demand by mineralizing the time to answer and be flexible with regard to the change in the demand; they must be honest and increase the turnover. . . . Without a reference value system outside the economic value, this situation promotes the pursuit of individual interest as an anchoring point, and so of behaviors in the sense of what was referred to earlier as ‘‘cynical exits’’. This does not mean that certain responsible persons will be dishonest and will prefer to increase turnover, but it means that what they will be doing is unpredictable and that they are likely to be, in a totally normal way, honest and then dishonest . . . This is what also makes up the modalities of the utilitarianism-liberalism combination, from the point of view of a concretization, which is libertarian in fine, since the expression of its interest must be seen both in a totally contingent way and in an autonomous one. The ‘‘global responsibility’’ theme has therefore here the role of sense unifier. More radical consequences, in terms of criticism of the political order, have been drawn from this established fact by Cornelius Castoriadis (1998). In this article he refers to autonomy instead of freedom. To him, imposing one’s law on oneself means asking questions and refusing any authority. Autonomy leads men to create their own institutions. ‘‘This means that we must establish these institutions in an informed manner, with lucidity, and after collective deliberation. This is what I call collective autonomy, which has individual autonomy as its unavoidable complement (Castoriadis, 1998).’’ This explains the correspondence between a ‘‘free’’ society and an autonomous individual, where the former is the framework for the latter. He then poses the problem of representation as the basis for the collective demonstration of autonomy. The term of popular sovereignty in today’s democracies takes place within the context of a situation inherited from the previous parliament, which sets the conditions for discussion. Political representation is also expressed, in a way, through the alienation of the sovereignty of those represented in favor of the representatives who, by getting elected, give them a temporary blank signature. Cornelius Castoriadis also poses the problem of representatives’ corruption through the presence of pressure groups by electing some of them who in fact become life representatives for these pressure

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groups. ‘‘Lobbyism’’ has therefore become legitimate. Cornelius Castoriadis witnesses the development of ‘‘a type of individual who no longer is the type of individual from a democratic society or from a society where one can fight for more freedom, but a type of individual who is privatized, who is trapped in his own little personal world and who has become cynical as far as politics are concerned’’. In this context, the elector makes his choice in a negative way, in a utilitarian way, according to what he considers as being the lesser of two evils and not, in a positive way, by taking his principles into account. We are also talking here about ‘‘cynical exit’’ and about reference to ‘‘lobbyism’’, a problem which is indeed raised by a reference to the ‘‘global responsibility’’ expression.

The ‘‘global responsibility’’ theme as representative of a unified economy We must also note the clash occurring between the efficiency logic and the jurisprudential logic issued by the legal sphere. These two categories, freed from the constraints of political doctrines, become in themselves, ‘‘by default’’, political categories. Because of the lack of political response, the ‘‘private’’ initiative tends to develop, as a palliative, a humanitarian type of associations – managed in reference to the enterprises’ modes of government. This represents the outline of a supporting economy instead of a political solidarity. The legal forms are different (NGOs), the government modes inherited from enterprises but subjected to a humanitarian and social objective which the enterprise is lacking. However, humanitarian associations ask the public question about where private initiative is taking place: is it in the enterprise again, as was stated until now? Here, we can clearly see the counterweight role of ‘‘global responsibility’’ in its assigned duty to fund a doctrinal logic for the enterprise’s acts. These associations therefore represent a new institutional unit, which clearly has nothing to do with the categories of public services nor with the category of enterprises and, because of its importance in all society areas today, it is impossible to ignore them as a specific category. The ‘‘global responsibility’’ theme answers the requests addressed on behalf of the NGOs. Added to this is a moral judgment concerning the creation and development of humanitarian associations: Luc Ferry (1996) reminds us that, since the 1960s, the radical hint of morale had led us to reject moral standards, to refuse ideals beyond self-care. And yet, this is directed at the humanitarian infatuation based on the recognized causes deserving the sacrifice, which in a way is a proof that transcendence persists beyond the legitimacy context of utilitarian reason, associated with the development of enterprise government as an ideology. Sacrifice for others is voluntary in this case. Man would have become the object of transcendence on an individual basis, outside organizations and therefore outside enterprises. The duty of humanitarian aid is inspired by, and goes beyond, Christian charity because its universal dimension goes further. Indeed, the humanitarian aspect does not clash with the limitations of religious, national and ethnical appearance. And what is more, the humanitarian aspect as a mediator is popular with the media, because it carries an emotion which is then seized by television, able to provoke a mass emotion which leads to the ‘‘performance’’ humanitarian, likely to take on a political dimension. Is it not possible either to hide the removal of guilt it performs, with regard to states, enterprises and citizens, insofar as it would be ‘‘good’’ by nature. To show its achievement would then compensate for any effort. Humanitarian action therefore poses the problem of articulating the political and humanitarian itself, even if this humanitarian symbolizes self-sacrifice for others and is therefore a carrier of

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meaning. The humanitarian then brings the problem of its attempt to build a common meaning for lack of political universe and enterprises, since the ‘‘big men’’ have been absorbed by the concretization of power techniques associated with the government modes implemented by enterprise today. This is where the ‘‘global responsibility’’ theme can fully appear as a counterweight. Unified economy covers the semantic shift of what was, since 1945, the field of political solidarity. It is also the place of interference with the acts of concretizing the politics of social responsibility implemented by enterprises. It represents services offered as part of taking responsibility for the social needs of underprivileged minorities which, for example, do not have: J nearby services (child minders, community management teams . . .); J personal services (elderly people, handicapped . . .); and J environmental protection and valorization. It seems useful to specify first the principles of a unified economy: an alliance between the logic of market, redistribution and reciprocity in return for the primacy given to market logic? Would this be in a way the remains of a self-management inspiration? If so, the ‘‘global responsibility’’ theme seems all the more important. This is why we witness today an evolving representation of the associative sector in its principles and functions (Rebelle and Swiatly, n.d.)[1]. The authors of Libres Associations propose to list the existing associations from two constituents: J To identify associations as a ‘‘third sector’’, because they do not depend on the state, nor on the trade sector. Thanks to their flexible structure, they are able to solve problems of a scientific, educational, democratic and ecological nature, and problems associated with minorities. These organizations therefore take part in the elaboration of society. J To give a new meaning and, to do this, the authors propose to analyze the association on the basis of governance, in order to qualify its functioning. This means observing the various steps of building the association, drawing up statutes from their consideration to their implementation. Indeed ‘‘the associative mind’’ enables an association in ‘‘the mind’’, ‘‘the blossoming of individuals and everyone’s participation in the life of society’’. The number of associations created each year since the 1970s has tripled in France. It has risen from 20,000 in 1975 to 65,000 in 1995. The fields of intervention formerly reserved to the medical sector, to sports, agriculture and the workers now include culture, environment, immigration, international solidarity and humanitarian aid. Associations count a considerable number of active citizens whose expectations are to keep collective action and thinking going. A myriad groups with opposed interests are forming (hunters and the nature protectors, for example). Even local collectivities use the associative statute to promote and implement neighborhood politics. The benchmarks have, however, changed. The values contained in the ideology of progress and of a culture based on ‘‘good deeds’’ are being requestioned with the emergence of catastrophes (Chernobyl, genocides) and the globalization. What makes sense today is self-experience more than involvement in the public space. This crisis is characterized by the abandoning of the public side in favor of the political, the loss of electors’ trust and the depreciation of public service. Hence, the difficulty of promoting forms of public action, but also the potential of protest against the enterprise’s

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economic action, confronted as compensation by the ‘‘global responsibility’’ theme. We are therefore witnessing today a change in the enterprises – NGOs and associations relationship, with the whole problem of the NGOs’ diversity (set up in the perspective of community liberalism).

Conclusion: why talk about ‘‘global responsibility’’ today? First we are faced again with the reasons associated with the context of social fracture, of globalization, of the search for a meaning, of the impact of information and communication technologies, but also because we are questioning the boundaries of enterprise responsibility. Internally, this theme is comparable neither with legal obligations on social law nor with human resource management. Therefore it is not a question of the ‘‘social’’ in the enterprise. Externally, this theme concerns not only the enterprise’s traditional negotiating partners (suppliers, customers, subcontractors, shareholders . . .) but also ‘‘community’’ as a whole. But what community are we talking about? Communities which are ‘‘close to’’ the enterprise? But then, what about its definition for multinational enterprises? We also face the problem of defining ‘‘global responsibility’’ in terms of enterprise size (would small enterprises be liable for a reduced ‘‘global responsibility’’?), in terms of exposure to international competition (would exposed enterprises then be exempt?), in terms of shareholding structure (can enterprises under the financial pressure from investment funds elude it or be content with a standardized response consistent with the agreed game of rating agencies?), in terms of capitalistic intensity (can enterprises implementing heavy and complex processes exempt themselves, due to the difficulty of deploying these processes?). The issue of ‘‘global responsibility’’ is therefore both a generic theme and a question relating to the nature and circumstances confronting enterprises. It is also the sign that management focus is shifting from tasks to persons. To concretize ‘‘global responsibility’’ by politics of social responsibility also questions the utilitarian prospect. Is it then just a question of implementing a communication policy similar to ‘‘corporate’’ politics? How does this theme cover the resort to external audits for a more targeted communication (destined to ‘‘ethical’’ pension funds, for example)? Franc¸ois Le´pineux (2001b) proposes a typology in order to place the theme (see Figure 1).

Figure 1 External orientation Community involvement Assistance to publics in difficulty Support for the social sector

Local development Creation of external jobs A helping start for enterprises

Social approach

Economic approach

Social management Provisional human resource management Limiting the effects of restructures on employment

Integration of societal objectives into enterprise strategy Creation of external jobs ‘‘Socially responsible’’ management

Internal approach

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In enterprise, in today’s practical meaning, the ‘‘Global Responsibility’’ issue is concretized through the ‘‘triple bottom line’’ concept: economic prosperity, respect for the environment, respect and improvement of social cohesion. It opens the stakeholder – shareholder debate. The stakeholders ‘‘theory’’ is a purely US approach which tends to assert itself in speeches and deeds through the mimetic of ‘‘global responsibility’’ policies, to the point of taking on today every aspect of an ideology. Its main ambiguity rests in the contractualist ideology it covers, the ‘‘non’’-stakeholders then being legitimately excluded, or residually classed as ‘‘diffuse’’ stakeholders. Is it a descriptive model of enterprise to which everything can be reduced, therefore tautological in fine, or a standard model outlining the ideal exploitation of enterprise (or both!)? Classically today, we differentiate as follows: J contractual stakeholders: these are agents in a direct relationship with the enterprise which is determined by a contract, as indicated by their name; and J ‘‘diffuse’’ stakeholders: these are agents based around the enterprise and in interference with the action of this enterprise, but without being bound by a contract; this expression may be convenient to understand what we are talking about; it is, however, difficult to figure out as far as the communities actually in question are concerned. Other classifications have been suggested, for example, the distinction between direct stakeholders and indirect stakeholders, and, in the case of the latter, between those who are concerned and those who are not. It is useful to examine the impacts of the ‘‘global responsibility’’ theme according to these two types of stakeholders: J Contractual stakeholders, for example: j For the shareholders and investors: what are the ethical-performance links? How do we define and apply the ‘‘societal’’ notation criteria? j For the wage-earners: how do we define the coherence between the position of wage-earner and that of citizen? How do we conceive personal commitment? j For the customers: how do we define and value ‘‘socially responsible’’ products? What links can be established with citizens’ consumption? What statute is given to the taking into account of the downstream side (after use, for instance)? j For the suppliers: What partnership-like relationships should be established for long-term respect and collaboration? What positions should be adopted when taking into account the upstream side (the origins of supplies, for instance)? J ‘‘Diffuse’’ stakeholders, for example: j For the public organizations: what policies are in place in terms of job creation, local development, regional development? j For the local communities: how do we outline the socio-economic impacts of the enterprise’s activity and how do we implement corrections, if necessary? j For groups and communities (NGOs, for instance): what recognition is given to ‘‘societal’’ labels and standards? What is the definition of ‘‘good practice’’? How is it implemented? j For public opinion: how do we define the requirement for the enterprise responsibility? What contents does it give to the ‘‘socially correct’’?

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The ‘‘global responsibility’’ theme is constructed as an answer to the pressures exerted on company managers by social groups (NGOs, citizens’ associations and, only partly, trade unions and political parties). This is also the content given by these managers to the concept of sustainable development and their contribution to the concept of ‘‘license to operate’’. If we come back to the three-component typology for the business ethics theme (‘‘lubricating’’ ethics; ‘‘antidote’’ ethics, and ‘‘integrative’’ ethics), the cynical-utilitarian perspective with regard to the ‘‘global responsibility’’ theme relates to the first two concepts. But company managers also refer increasingly to the third one when they have to give it content. Achievements inherent in the increase in power of this theme cover in fact ill-assorted practices stretching from fair trade to industrial ecology and voluntary initiatives: J we must solve and anticipate, and stop avoiding problems; J we must implement incentives for the staff; J we must integrate and internalize these perspectives; J we must develop audits by independent bodies; J we must integrate the perspectives of local communities into enterprise policies; and J we must introduce respect for the transparency principle with regard to the enterprise actions and therefore justify them. The ‘‘global responsibility’’ theme then appears as the concretization of the expression of corporate citizenship, which emerged after 1995. As far as ‘‘corporate citizenship’’ is concerned, we must underline its ambiguity: all we need is for the enterprise not to be a citizen! In fact, thanks to the importance given to enterprise commitment to ill-assorted stakeholders (as referred to above), it is possible to distinguish between formally responsible companies and ‘‘committed’’ companies. Thanks to this distinction probably, it is possible to outline the ‘‘global responsibility’’ theme better, an expression which would then only apply to enterprises which could be called ‘‘committed’’, if we value what appears beyond the cynical ambiguity mentioned at the beginning of this text.

Note 1 The author thanks Lionel Arsac, IESTO audience member listener, for the constituents of this text.

References Abel, O. (1994), ‘‘La responsabilite´ incertaine’’, Esprit, No. 11, November, pp. 20-7. Castoriadis, C. (1998), ‘‘L’individu privatise´’’, Le Monde Diplomatique, February. Cohen-Tanugi, L. (1992), L’Europe en danger, Fayard, Paris. Dahl, R. (1972), ‘‘A prelude to corporate reform’’, Business Society Review, No. 1, Spring. Desportes, F. and Le Gunehec, G. (1997), Le nouveau droit pe´nal, Economica, Paris. Ewald, F. (1986), Histoire de l’E´tat Providence, Grasset, Paris. Ferry, L. (1996), L’homme-Dieu ou le sens de la vie, Grasset, Paris.

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Foucault, M. (1975), Surveiller et punir, Gallimard, NRF, Paris. Giraud, F. (2000), Complexite´ et responsabilite´: a` la recherche d’un mode`le e´mergent, The`se Universite´ de Paris IX Dauphine, Paris, p. 109. Jonas, H. (1995), Le principe responsabilite´, Cerf, Paris. Le´pineux, F. (2001a), Papier de Travail, CNAM. Le´pineux, F. (2001b), Document de Travail, CNAM, Chaire DSO, Paris. Rebelle, B. and Swiatly, F. (n.d.), Libres associations. Simon, J.S., Powers, C.W. and Gunnemann, J.P. (1972), The Ethical Investors: Universities and Corporate Responsibilities, Yale University Press, Newhaven, CT.

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Viewpoint Global responsibility and total freedom Eric Cornuel and Pierre Kletz

Eric Cornuel is Director-General, efmd, Belgium and Pierre Kletz is Associate Professor of Human Resources Management at the University of Tours, France.

Abstract The notion of global responsibility is coming to light as it appears that the control of the economies by nation-states has proved inefficient. Therefore, solutions are often sought by appealing to responsibility (for enterprises, individuals, interest groups . . .). In particular, global responsibility calls for firms to limit their own activities when it opposes the general interest. But it is generally admitted in the firms that a condition to maximize their profits is all about allowing the laws of economy to express themselves, without any restraint, in order to give their whole potential. In this sense, it refers to ‘‘total freedom’’. This article tries to re-examine the very concept of global responsibility versus total freedom. For that it addresses the question through two major issues: (1) responsibility as an external constraint, a source of improvement; (2) the responsibility of corporate governance for financial transparency. Keywords Globalization, Social responsibility, Moral responsibility

In France, the Minister for Culture and Communication, Jean-Jacques Aillagon, gave the commission chaired by the philosopher Blandine Kriegel the assignment to report on violence on television. The thinking underlying the report, which was submitted to the Minister in November 2002, is based on one principle: ‘‘Keep everything for freedom and entrust everything to responsibility’’. The dilemma expressed by this statement becomes even more evident, when considering the fact that these concepts, which may seem antagonistic, are presented as linked to each other; this denotes a voluntaristic approach. The debate around ‘‘global responsibility’’ feeds on the same sources. Because it refers to the planet as a whole, but also because it has a general, globalizing connotation, the adjective ‘‘global’’ echoes the concept of political and economic freedom. It is about allowing the laws of economy to express themselves, without any restraint, in order to give their whole potential. However, to those striated spaces, induced by national borders controlling their territories by means of rules, social legislation and an institutional environment, economy prefers smooth spaces, because they are uniform, integrated and global (Cicurel et al., n.d.). For a long time already, theory has been taking this duality into account. As early as 1885, C.A. Michalet pointed out the central role of multinationals in this mechanism when he wrote:

DOI 10.1108/14720700310483433

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The multinational enterprise is both good and evil. On the one hand, it is considered as the cause of all evils: inflation, unemployment, pollution, speculation, political instability, crime . . . As such, it is considered as the most perfect form of cupidity and cynicism. On the other hand, it is presented as being to the service of humanity as a whole, caring for man’s happiness, the only hope of victory for a rational and fair order in a world destined for anarchy. These two antithetic faces – angel or devil – are reflected in governments’ attitude of mixed attraction and fear (Michalet, 1985).

Some of the factors underlying these facts were also presented: The multinational enterprise produces homogenization, indifference, ‘‘internationalization’’, while nation-states introduce breakdowns, disparities, obstacles. There is a significant difference between recognizing the dialectics between a multinational dimension and a national dimension, which we think generates a new reality – global economy – and brutally stating the disparity between the national spaces observed in the transnational space of enterprises (Michalet, 1985, p. 17).

Both these quotations lay down the stakes induced by globalization, which states that, if globalization is likely to bring wealth and development, it also requires safeguards, especially because of the fears they create, whether these are justified or not. For two decades, however, it has become apparent that the ‘‘breakdowns’’ introduced by the nation-states and conducive to opposing the harmful evolutions of globalization, have proved inefficient. Therefore, solutions are often sought by appealing to responsibility (for enterprises, states, individuals . . .) in the knowledge that this very concept has to be re-examined and rebuilt. The debate on globalization, in particular, starts by reflecting on the necessity to limit this phenomenon, in order to safeguard the individuals’ freedom or quality of life. For example, when Jose´ Bove´, leading a group of members from the Farmers’ Confederation, proceeded to attack a McDonald restaurant in Millau, he wanted to reinforce the right people have to preserve their lifestyle and traditional consumption habits. Similarly, when members of the same trade union start destroying genetically modified experimental fields, it is because they think the produce from these experiments will necessarily triumph over the more traditional produce for which they are fighting. The right to fight against such evolutions does not arise. On the contrary, the question about the fundamentals of the legitimacy to prevent globalization agents (individuals and enterprises alike) from taking their action further will be examined. Indeed, if we can easily conceive that the defenders of these limitations base their action on a certain conception of justice, they consider this action as legitimizing the freedom of others. But this question about the primacy of justice over freedom, of freedom limitation against justice, of their inseparable character, will be examined. This is why we will carry out an ‘‘archaeological’’ study of the responsibility concept, with the concept of freedom as a counterpoint, as the basis for a renewed reflexion. Human activity is finalized, it is oriented towards goals. The person trying to achieve these goals will always be subjected to an estimating judgement. If we never seek what we do not find desirable, honorable and good, responsibility will come into play when we are trying to assess the consequences of our action. For this reason, the distinction between reality judgements and value judgements is a classic one. The first type of judgements states facts, defines characters, states reports. For example, accounting in management sciences is entirely assigned to establishing the enterprise’s financial reality. The second type of judgements expresses what is desirable, honorable, good or bad. Corporate sponsorship is based on value judgements. Values guide the action. They govern the choice of what deserves to be chosen as an objective or ideal. Collection items, money and jewelry have a value. But when the

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value concept is used to qualify a work of literature or art, a scientific research or a search for truth, justice or even common good, devotion, love or truth, then we are talking about a different order. Pascal wrote: ‘‘the infinite distance between the body and the mind represents the infinite distance between the mind and charity’’ (Thought 793), indicating thereby that a hierarchy of values must be established, that there is an order among values; this highlights the difficulty inherent in any debate on corporate responsibility, as long as – even if we can consider as evidence the recognition that profit, growth and good management are corporate values – solidarity, loyalty and trust can also represent corporate values (which is often explicitly established in ethics charters). But the classic debate on what enterprises prioritize appears meaningless, insofar as these values depend on different order levels. Social responsibility and economic responsibility therefore do not have any reason to converge. However, when the World Trade Organization (WTO) formulates a directive in favor of freedom for men and goods, it does not formulate a simple request. Similarly, when the Kriegel commission (see above) proposes a ‘‘freedom and responsibility pact’’, with recommendations, for example, for the absolute interdiction to diffuse ‘‘violent or pornographic programs at times when children are likely to watch, from 6.30 a.m. to 10.30 p.m.’’, it formulates a demand. The demand is not supposed to remain an ‘‘idea’’; it implies implicitly that it must be carried out. If you demand freedom or justice, you do not adopt a Utopian perspective: these demands are legitimized because justice and freedom must be achieved (even if they ‘‘are to be’’, and are expressed in the future tense with reference to evolution). The demand for freedom appears today as an almost redundant expression, because we are so impregnated by the spirit of the Declaration of Human Rights, which treats freedom as ‘‘a natural right to protect by laws’’. But laws – positive law – are the objective expression and seem to have to go hand-in-hand with the demand for justice. However, political regimes such as dictatorships or totalitarian regimes have shown through history that justice, defined as legality, could actually suppress freedom. This leads to another question: are we allowed, in the name of a justice ideal, or in the name of the law, to demand the renunciation of freedom?

Separating justice and freedom Incompatibility of freedom and rules ‘‘I am free, I can do what I want’’, we often reply, when our acts are being criticized or condemned by others. We naı¨vely refer to freedom conceived as independence, i.e. the absence of any external constraint, whether legal, moral or physical. When teenagers demand their freedom, they care very little about morale, and even less about the law: they simply ask to be allowed to pursue their wishes and to do without parental supervision. It is obvious that in society, in an organized political community, such freedom cannot exist. Independence is indeed the freedom given to man in a natural state, a (hypothetical) state preceding the civil or social state. Man is then driven by his desire to survive, to ‘‘persevere in his being’’ (Hobbes). Owing to the absence of laws, nothing can limit his search for the goods to satisfy his needs. Natural freedom may be unlimited, but goods exist in a limited number. Men will inevitably meet and come into competition to obtain these goods. This leads to a generalized confrontation. This ‘‘war of all against all’’ (Hobbes) is a contradictory state: by wanting to ensure his existence, man constantly puts it at risk, because he is incessantly threatened by a violent death. Therefore he may calculate that, in order to preserve his life and safety, he must renounce his unlimited natural freedom to impose ‘‘barriers’’ and ‘‘artificial chains’’ to his freedom, i.e. laws (Hobbes, Leviathan).

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Law and political power as Leviathan According to Hobbes, the wish to survive therefore creates the demand for the existence of a law in order to limit natural independence. Here, the function of political power is to ‘‘maintain men’s respect’’, to prevent the return to a war of all against all. This absolute power to which Hobbes refers as ‘‘Leviathan’’ (in the Bible, this name refers to a monstrous and invincible animal) is now the only one that can use force. He is the only one to decide about what laws are required to define what is just, and what is unjust. No reference to a moral justice is acceptable here: what is just is what the sovereign has decided. Individual freedom can only be expressed where law has nothing to say. You are free to say whatever, to do whatever. . . , as long as it is not forbidden by law. The demand for individual freedom is therefore considered by Hobbes as a ‘‘seditious opinion’’, i.e. a rebellious one, therefore dangerous for peace, or even guilty. However, the demand for justice, which is understood here as the demand for laws, has in fact its source in an irrational principle: the desire to survive, the fear of a violent death. The demand for law is, in this case, only a calculation serving a desire. Freedom may lead to justice But it is not enough to turn the demand order upside-down to obtain conciliation between justice and freedom. A democracy where men demand, as a priority, the satisfaction of their freedom (to think, act, move about . . .) does not automatically lead to justice, which in this case is a virtue. For Plato, justice is a harmony of soul in the individual and, in the city, justice means for everyone ‘‘to do their work and not to interfere in the work of others’’ (Plato, The Republic). But in democracy, everyone is interested in everything, and no stability can therefore be established. Instability leads to decadence and, ultimately, to tyranny. The insatiable demand for freedom leads to the most complete form of injustice. For Plato, philosophers must therefore become kings, because they are the only ones to know the nature of true justice. But justice is to remain an ideal demand, insofar as it cannot be concretized adequately in laws, because ‘‘differences between men and their actions, the complete absence of immobility in human matters, refuse any simple rule applying to all cases and all times’’ (Plato, The Political). The demand for justice will be expressed through the philosopher-king who incarnates law: it can be compared with a doctor administering a ‘‘medication to his patients’’. The demand for justice and the demand for freedom are therefore completely separable for two reasons: either because law demands that we renounce our freedom, or because the unbridled demand for freedom leads to injustice. However, justice is not the only legality, we can form an opinion about the just or unjust character of laws, in the name of a rational principle. Would not a just law then be a law respecting the demand for freedom, so that the demand for freedom and the demand for justice would not be separable? For the enterprise, this would mean that it would never be as free to carry out its action, in order to obtain a profit, as when it accepts the limitations imposed by acknowledging its responsibility.

Responsibility as an external constraint, a source of improvement and competitivity Most authors wanting to state that there is a correlation between the level of responsibility and performance attach an enormous importance to the corporate image in the eyes of the public. This theme is mostly new because there was hardly any trace of it in management literature, some 15 years ago. In a first stage, we will merely deal with two different approaches to these problems:

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1. a passive approach whereby we insist on the necessity for the enterprise not to adopt an awkward place in respect of social expectation, so as to avoid any interference in corporate activities by pressure groups or legal bodies; and 2. a more active approach considering the constraints generated by the prevailing evolving social values, advocating activities in agreement with them, and highlighting the profit to be gained from publicizing it. A passive approach to social expectation The obligation to take into account the main social values in management is now largely accepted. J. Mousse stresses the necessity for a good manager not to limit himself to economic performance: It is the level of values which determines a new dimension for rationality (Wertrational). The decision maker who takes into account this second level acts according to a broader rationality, which includes the values of a society and, we may add, the constituents of culture, politics and macroeconomics (Mousse, 1992).

But a certain loss of the basic references for the societies in which we are evolving causes confusion in the possible apprehension of a moral behavior. There does not seem to be any absolute referent in this matter any more. In this context, some authors seem to share the same conviction as M. Le Net, according to whom ‘‘ethics is not at all an absolute value. It is data relating to the individual, to civil society, to enterprise (Le Net, n.d.).’’ Therefore, while social pressures are often described as the origin of a search for a superior ethics by enterprises, the same pressures sometimes cause a temptation to behave immorally or take an immoral decision. In less moving historical societies, where social regulation mechanisms are not subject to a permanent evolution and where social roles are more permanent, the opportunities of falling into immorality are less frequent. This is what is proposed in the reply given by J. Pasquero to the following question: What caused problems of an ethical nature to appear in enterprises? These are numerous: some market imperfections, namely the unequal access to information and the presence of externalities (enterprises imposing costs on third parties without any compensation); the constant uncertainty about the nature and legitimacy of ethical standards to conform to; some erroneous beliefs on the part of managers, for example, the belief that they are acting in the best interest of their enterprise, that they will never be discovered, or that the enterprise will protect them if they are caught in the act; the example given by peers or superiors; the pressure to produce short-term good results without any let-up; personal faults or frustrations among staff or managers (Pasquero, 1989, pp. 105-6).

The running of economic organizations, and more generally of society, would then create ‘‘gray areas’’[1], where the meaning of good is totally ambiguous. But at the same time, if the uncertain still has a greater share, it becomes less and less possible to consider enterprise as a closed and autonomous social system, as F.W. Taylor or H. Fayol were able to do. A multitude of intervening external factors are likely to reveal factors internal to the enterprise. The ‘‘damaging capacity’’ of these intervening external factors for the corporate image, and therefore the enterprise’s cost-effectiveness, is therefore recognized by many authors who are even suggesting models for releasing social pressures against an enterprise. These models agree on the hypothesis suggested by J. Pasquero, according to whom, very often, ‘‘the reaction to the external effects of corporate activity follows a progressive sensitization process by various groups of actors’’ where we first see ‘‘actors who are remote from the enterprise and recognize,

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then amplify, these negative externalities and cause the emergence of social pressures. Then, protagonists for the immediate corporate environment formulate intervention strategies and implement actions against enterprises (Pasquero, 1980).’’ These intervention strategies have been analyzed in studies on the links used to tell the widest possible audience about the supposedly true failures of an enterprise. The role of public organizations (political parties, national or European legal authorities, press, associations, etc.) which ‘‘because of the lack of answer (. . .) are going to prevent the enterprise from achieving its projects and objectives and will damage its image or, more generally, its legitimacy’’ (Boiral and Jolly, 1992) has been highlighted. R.E. Freeman has even presented, in a US context, a classification of social entities likely to have a powerful damaging effect on the activity of an enterprise picked out as being irresponsible (Freeman, 1984) (see Figure 1). Figure 1 illustrates a ‘‘passive’’ corporate behavior; the enterprise has allowed an activity to develop which is perceived by the environment as irresponsible. It is faced with the pressures of environment. It is, however, necessary to ask the question about the type of ethical practices that are likely to interest actors external to the enterprise. How does the enterprise’s environment take the problem into account? How can a standard about what should be done be imposed from the outside? In this regard, it is generally accepted, for example, that, even if failures to respect ethics, as far as staff management is concerned, are likely to cause demotivation among staff members, they will only cause hostile demonstrations from the outside in extremely serious cases, because the problem does not ‘‘go back’’ to the pressure groups, as classified by R.E. Freeman. R.W. Ackerman and R.A. Bauer have proposed a three-phase typology of hostile reactions to an enterprise due to an irresponsible behavior (Ackerman and Bauer, 1976): 1. Actors external to the enterprise do not carry out any important action. Those touching on the subject are considered as marginal, the regulating structure is only at an early stage, and problems of behavioral ethics relate to economic trade and staff management. 2. With the help of accidents or statistical observations, the intensity of social pressure increases. Customers, intervening members of associations or of the public and partner companies, start adopting common positions on the subject. The answers given by the various companies start to be rather discretionary. 3. Pressures on enterprises are regular and force these to integrate the environmental aspect even more in their activity. In their strategic decision-making process, enterprises are now considering ‘‘new standards for the moral conduct of their business’’.

Figure 1 customers consumers ecologists

consumerists shareholders

trade unions

employees

suppliers

local collectivities

administration media

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competitors other interest groups

In this respect, it must also be noted that environment incentives to have such or such practice adopted by enterprises and to banish another do not necessarily appear as negative measures. Invitations to boycott and denunciation campaigns in the press, etc. may attack a given enterprise, but, on the other hand, positive measures may give an enterprise the opportunity to highlight itself. As an example, let us remember that, in the USA, the Committee for Enterprises within the National Federation for Nature (National Wildlife Federation’s Corporate Conservation Council) has, since 1985, been rewarding enterprises respecting the environment. Similarly, standards set up by a recognized authority (but not necessarily a state authority) have the same consequences. In the environmental sector in France, Eco-audit, Eco-bilan and Ecol-label are being put forward by enterprises responding to these standards to their advantage. But inversely, this may cause the public to question enterprises which do not. Environment is then in a position to force enterprises to behave in an ethical manner, in order to satisfy the new social demand emerging in this field. This forces the enterprise to choose a more complete responsibility, not only in its attitude to staff, partner companies, the quality of its products, etc., but taking all that into consideration. G. Lodge and J. Rayport write that companies must from now on ‘‘take on the responsibility for the destiny of their products, from their conception until their death’’ (Lodge and Rayport, 1992). Enterprises may therefore no longer abstain from caring about the way in which their practices and products are socially perceived. In fact, should there be a divergence, they will not have to face one single ‘‘opponent’’, since that opponent will easily structure an opposition to them. They must ‘‘ensure that their practices are congruent with the emerging and future societal expectations’’ (Jolly, 1991).

An active approach to the constraints generated by the prevailing social values Taking into consideration the public’s social expectations and corporate environment standards in ethics does not only mean, for the enterprise, a passive attitude for the sole purpose of avoiding conflicts. On the contrary, just as in staff management or relationships with partner companies, as quoted by some authors, ‘‘ethics pays’’; they are trying to demonstrate that an enterprise accepting its social responsibilities will open up new markets for itself among those prospective customers approving its action. The idea that, in a market, economic themes are not the only determining factors and that coalitions, alliances are being formed between companies or even between a company and its customers, in order to defend ideas, is not very far away. Correlatively, there is a theory today that a trade relationship is not formed solely for economic reasons. This approach to business ethics is therefore similar to the researches made by authors studying the market’s political dimension. O. Gelinier wrote: A well-advised entrepreneur will follow the rigors of market, but also the signals of this ‘‘meta-market’’, which measures the satisfactions/dissatisfactions of the public and society and, should he be the first to propose a non-polluting product or represent an organization reintegrating and training young disqualified people, his efforts will pay: his customers will prefer to trade with him and his environment will support him . . . (Jolly, 1991).

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This conviction is widely shared by other management specialists who draw examples from precise areas to illustrate this statement by O. Gelinier. The field of ecology gives rise to a number of works; they all want to demonstrate that an enterprise which has its heart set on protecting the environment will be rewarded by signs of favor by many customers. P. De Backer outlines the context of constraints with which an enterprise has to conform in the field of environmental ethics; this must not be ‘‘the consequence of a will to dominate, destroy or antagonize’’, but ‘‘the logical consequence of collective economic responsibility, which is now the responsibility of all actors and participants to keep our planet balanced’’ (De Backer, 1992). But the possible repercussions an enterprise may expect from an irresponsible attitude is not limited to reaching customers. The acceptance of constraints is analyzed, from a managerial perspective, as the opportunity to improve corporate performance. From this point of view, any new constraint (external or internal) on an enterprise must be experienced as a new challenge to overcome, which will help the enterprise to become more competitive, more receptive, more ‘‘learning’’, etc. P.De Backer states: ‘‘For the economy, the environment is not a constraint, it is its chance’’ (De Backer 1992, p. 260). A. Etchegoyen writes in the same vein: ‘‘To have a good image, you must integrate morality; in the end, it is not possible to maintain this image without being effectively moral; communication would therefore drive the world along a moral path, almost against its better judgment’’ (Etchegoyen, 1995). A. Etchegoyen clarifies perfectly the underlying justification of all this: morale is only an a priori choice when hoping for a cost-effectiveness surplus; interest is therefore its motivation; it is also an a posteriori effect. If an enterprise communicates about its moral quality and its responsible behavior, it will be impossible for it not to translate this into its actions, or else it will have to pay dearly for this clash. The initial motivation then does not matter much: what matters is the result (financial and moral). It is indeed easy to state that corporate communication policies are now very marked with ethics and, more specifically, that the ecological concern is put forward. There are many examples: the enormous communication efforts made by Daimler-Benz which, when opening a model factory in Rastatt, the design of which had been exceptionally concerned with ecology (‘‘gutters collect rainwater, 2,500 trees have been planted (. . .), even lamps have been designed so that moths would not burn their wings’’ (Constanty, 1992)) ‘‘treated itself to a four-page insert in the German daily newspapers, printed on recycled paper, with a huge photograph of little ducks splashing about in the canal running through the site’’ (Constanty, 1992), and McDonald, abandoning the use of plastic for good to replace it with paper, and allocating a $400,000 budget a month, on US soil only, to tell its customers that a request made by ecological pressure groups has been accepted. Books and articles dealing with ethics are full of examples like these. The consideration given to the environment by enterprises, when determining their behavior, has therefore experienced a twist. At first, the objective was to avoid external pressures due to openly immoral practices, but now it is to use responsibility as an external communication vehicle. In this case too, certain financial dilemmas reveal the type of problems posed. J. Pasquero illustrates it with the case of mergersacquisitions; to start with, he reminds us that because of wild OPA (take-over bids) practices, which have a financial motivation only, and not an industrial one, ‘‘the enterprise runs a serious risk: that of losing control of the consequences of its actions and of allowing negligences to develop, which in the long run may turn back on it in a nasty way. One of these consequences is the risk of scandal . . .’’ (Pasquero, 1989, p. 98).

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It is therefore necessary to choose between the positive immediate financial consequences and the unfavorable effects in terms of image. But J. Pasquero adds immediately that this should help an enterprise to examine the consequences of these operations and, therefore, improve the knowledge it has about its environment: For an enterprise, to carry out an ethical analysis is primarily to be concerned about the consequences of its acts for others, and ultimately to ensure the quality of its future relationships with others. It is much more than a simple moral reflection. The ethical analysis is a real management tool. If done systematically, it is, in a way, the guarantee that all the aspects of a merger or acquisition operation will have been examined beforehand (Pasquero, 1989, p. 98).

In this context, it is easier to capture the managerial approach to responsibility: management is the art of transforming a constraint into an induced positive factor. By applying the same logic to interest, it is possible to capture part of the justification of the search for ethics: the conformity with the imperatives of good is justified by the positive effect induced, which is to improve corporate efficiency. Beyond that, there is a logic of procedures as opposed to a respect of duties: it is not about doing what morale dictates to me, without caring about the consequences my action will have for me but, on the contrary, it is about finding, through this, the ‘‘best’’ action (in the qualitative, and not moral sense of the word) to achieve my goal. It is therefore difficult to maintain that an enterprise (and therefore the people composing it) can be autonomously irresponsible: an external constraint (just like the famous phrase ‘‘let me teach you how to become free’’).

Corporate governance and financial transparency A huge aversion to risk can be perceived today among investors. This will disappear once the uncertainties concerning the consequences of enterprises’ past behaviors are lifted and trust is reinstated. For this reason, it is urgent to rethink corporate governance and financial transparency – the latter being one of the means of governance. A number of entities, both within the enterprise and outside, are competing for the production chain and for the control of financial information: auditors, rating agencies, stock exchanges, market supervision and regulation organizations, financial analysts, company managers and their board of directors. The deflation of the financial bubble that formed at the end of the last century has highlighted the weaknesses characterizing some of the links within this chain; these weaknesses are linked to badly gauged, even perverted, incentive mechanisms giving rise to conflicts of interest. The ‘‘film’’ starts within the organization of large enterprises, with the basic problem of motivation and remuneration for the shareholders’ agents, i.e. the managers. It was thought that a way of handling this was through the stock options. But these proved to have considerable adverse effects, which stained at least three professions: accountants, financial analysts, and commercial bankers. As the credibility of these ‘‘fuses’’ was seriously undermined, when the financial bubble burst, the boards of directors find themselves today, with the regulating authorities, back on the front line to restore trust. Stock options: the perversion of a good idea We remember the apocalyptic forecasts of two US advertising figures in the 1930s, Berle and Means, who popularized the concerns expressed by Schumpeter at the beginning of the last century on the future of capitalism: according to them, the latter is

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doomed to ruin because of the increasingly marked divergence, as enterprises grow, between the interests of managers, who apparently only hold a tiny proportion of the capital of the enterprises they manage, and the interests of shareholders. To attenuate these conflicts of interests, a solution was found: first used in the USA in the early 1980s, it then spread to all the capitalistic economies. The solution is to offer managers and an increasing fringe of employees some incentive payments based on the enterprise performance and measured according to the increase in stock exchange value. There are different types of incentive payments, among which are stock options; this has (unfortunately) become completely overwhelming since the end of the 1990s. With the stock options given to them at shareholders’ general assemblies, managers have the possibility, but not the obligation, to purchase company shares at favorable conditions and for a given term. As long as they are exercised some years later, they will help increase the number of shares issued and ‘‘dilute’’ the profit per share. The underlying idea is that this increase in the number of shares (the profit per share denominator) will be more than compensated by the increase in profits, due to the incentive character of this type of remuneration. This way, all shareholders get their money back, whether they are company employees or not. To align the interests of managers with those of shareholders (i.e. with the enterprise value) was a sensible idea, as long as it helped put an end to potential conflicts of interest between managers and shareholders, which could prejudice a fair allocation of resources in economy. But today, it is being questioned again for various reasons: J The indexing of the stock exchange performance of managers’ salaries is only a good incentive mechanism, if these managers (and employees alike) create this added value. Or from a perspective which is similar to the strategic and personal horizon of most managers, stock exchange performances are determined by factors external to their field of influence: particularly, interest rates, danger money and liquid assets premiums. With regard to this, the recipients of stock options should be those people creating value on the macro-economic and macro-financial level: central bankers and monetarists-economists who gave them the inspiration to eradicate inflation . . . J Moreover, variations in value over a certain period, which can be as long as a few years, also depend on anticipating the variations in the flows of a large number of future financial years, rather than on their reality during the said period. The holders will only be beneficiaries if the share price exceeds the financial year price. There is a great temptation to implement everything to make sure that the Stock Exchange price exceeds the financial year price over the duration of the plans. A number of enterprises have already crossed that boundary, making shareholders very angry in the process, on some occasions. Some managers have been forced to withdraw resolutions proposing new plans to their annual general meeting. This was the case in Europe between July 2001 and May 2002 for a number of companies, in particular Prudential, Vivendi Universal, Skandia, Nordea, DFS, Vodafone and Marconi. In fact, this reduction in financial year prices, to keep up with the drop in share prices, is just like a game of ‘‘heads I win, tails I don’t lose’’. It is clearly no longer an incentive remuneration mechanism . . . While this dangerous relationship was establishing itself between companies’ financial directors and financial analysts, some accounting practices were making profit manipulation easier.

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Financial analysts: a premium for schizophrenics Financial analysts have developed dangerously close relationships with companies’ financial directors. But due to the organization of their profession, they are exposed to even more formidable conflicts of interest. Most of them belong to planning offices within the capital markets departments of investment banks. Their ‘‘customers’’ within these organizations are people selling shares, but also specialists whose duty it is to counsel issuers, both on the primary market and on the secondary market for these stocks and shares. This is a first conflict of interests. Indeed, shares salespersons (referred to in English as ‘‘sell side’’ or ‘‘sales’’) must have stories to tell to their many institutional investors (unit trust managers, management companies, insurance companies . . .) whom they phone day after day to sell their daily ideas presented to them by analysts during ‘‘morning meetings’’. This advice will generate purchase or sales orders; therefore commissions on which analysts’ salaries are somewhat index-linked. But with regard to those whose duty within banks is to counsel issuers, it is for them that analysts are working when they are dealing with listings on the stock market, capital increases, merger-acquisitions, or any other operation on stocks and shares requiring a financial analysis or valuation work. But the companies they are analyzing are sometimes the best customers of the banks employing them.

Boards of directors: the key to trust Since the Enron case, the behavior of boards of directors has changed. The questions managers are being asked are getting more precise, the potential conflicts of interest are mentioned more often and meetings last longer. The boards are interested to know if they do receive, and in time, all documents required for their functions of control. But the collapse of Enron has made directors conscious about the limitations of their powers. Bill Ford, the owner of Ford, agrees: ‘‘The board meets once a month; it is therefore impossible for it to rationally guide the enterprise, its decision processes and its culture’’. Even if, from a legal point of view, the board of directors is in the front line to represent and defend the shareholders’ interests against managers’, it does not really have, and will never really have, the time and resources needed to fulfil this role directly itself. The board of directors must be accountable for the quality of the corporate information systems, just as in the external accounting and financial information control chain. In a film issued in 1987, ‘‘Wall Street’’, the financier Gecko expressed through Michael Douglas: ‘‘Greed is good, greed is right, greed works!’’ Of course, but as long as greed is correctly channeled towards common interests.

Conclusion: less freedom for more freedom: the role of the state versus economy If our freedom was simply independence, everyone would do what they feel like. But‘‘when everybody does what they feel like, they often do what others don’t like’’(Rousseau, Lettres e´crites de la montagne’’), so that our will clashes with the resistance of others. To be truly free, I must not be subject to anyone’s will, but also, by doing so, I must not interfere with the will of others: ‘‘no one has the right to do what the freedom of another prohibits him to do’’ (ibid.). This why everyone will only be free, when they obey the law prescribed by themselves. For everybody to be free, laws must emanate from the general will, i.e. from the will of the people, the only legal sovereign. ‘‘Legal’’, because the people will never lay down a law contradicting its fundamental rights; it will never force ‘‘useless chains’’ on itself: ‘‘there is no freedom

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at all without laws (. . .), it is through the strength of laws that the people do not obey men’’, i.e. tyrants, masters, monarchs . . . Therefore, demanding freedom is just the same as demanding the existence of laws to organize the life of the political community. These laws will, in turn, only be fair, that is legal, if they emanate from the people itself. This is the very condition of guarantee for a true freedom, a stable freedom, without any fear that the most powerful might come and reduce us to slavery. In this context therefore, laws do not have the only objective to punish attacks on private property; they do not simply protect civil society, but the existence of the people itself is based on them. They must also ensure citizens’ equality because, if the disparity in wealth is too wide, it could lead to the poorest being ‘‘in the hands of’’ (dependent on and obliged to) the richest. The demand for an equal freedom for citizens goes hand-in-hand with the demand for justice, understood as fairness.

Freedom and social contract Therefore, if the people only obey the laws they have demanded themselves, by doing so, they will reach freedom, because ‘‘the obedience to the law prescribed by oneself is freedom’’ (Rousseau, Du contrat social). This is the definition of autonomy (from the Greek word nomos, law). Here, the demand for freedom is not simply a wish for independence. On the contrary, it can be based on reason. This demand for freedom is nothing other than the moral requirement of reason: to act freely, we must act in an autonomous way, that is by obeying only the rational moral law which is in us. Kant formulates as follows the categorical imperative by which this law manifests itself in us: ‘‘Act in such a way that you always treat other people as an end, and never simply as a means’’. Reason therefore demands that we consider others as free beings, who are also capable of acting in a moral way, and not simply as an instrument serving our own goals, our own freedom. From a moral point of view, reason requires us, not only to be autonomous, but also to respect the freedom of others. In other words, the demand for freedom and the demand for justice are well and truly identical and their foundation can be found in reason.

Note 1 According to the expression by Alexandre Zinoviev in Les hauteurs be´antes, Robert Laffont, collection ‘‘Bouquins’’, Paris, 1990.

References Ackerman, R.W. and Bauer, R.A. (1976), Corporate Social Responsiveness: The Modern Dilemma, Reston Publishing Company. Boiral, O. and Jolly, Do. (1992), ‘‘Strate´gie, compe´titivite´ et e´cologie’’, Revue franc¸aise de gestion, No. 89, June-July-August, pp. 83-6. Cicurel, Klein, Michalet and Rachline. Constanty, H. (1992), ‘‘La face cache´e de l’Allemagne e´colo’’, l’Expansion, No. 435, p. 89-97. De Backer, P. (1992), Le management vert, Dunod, pp. 14-15. Etchegoyen, A. (1995), La valse des e´thiques, Franc¸ois Bourin, p. 15. Freeman, R.E. (1984), Strategic Management: A Stakeholder Approach, Pitman Publishing Luc., p. 55.

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Jolly, D. (1991), ‘‘Faut-il re´pondre aux pressions socie´tales?’’, Management France, No. 76, April. Le Net, M. (n.d.), Action Commerciale, No. 137, p. 30. Lodge, G. and Rayport, J. (1992), ‘‘l’Ame´rique submerge´e par les de´chets’’, Harvard l’Expansion, No. 65, Summer, p. 39. Michalet, C.-A. (1985), Le capitalisme mondial, 2nd totally revised ed., PUF, Paris, pp. 9-10. Mousse, J. (1992), ‘‘Le chemin de l’e´thique’’, Revue franc¸aise de gestion, March-April-May, p. 63. Pasquero, J. (1980), ‘‘L’entreprise face aux expressions sociopolitiques de son environnement’’, CERAG – University of Grenoble II, Research paper 80-10. Pasquero, J. (1989), ‘‘Fusions et acquisitions: principes d’analyse e´thique’’, Revue franc¸aise de gestion, June-July-August, pp. 105-6.

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Part 2: Global business means global responsibilities Research Global strategies – contradictions and consequences Eleanor R.E. O’Higgins

Eleanor R.E. O’Higgins is on the Faculty of the Smurfit Graduate Business School at University College Dublin, where her teaching, research and publications specialize in the areas of strategic management and business ethics. She is a member of the UN’s Global Compact Learning Forum, and of the Board of Management of The Institute of Directors Centre for Corporate Governance at University College Dublin. She is Chairman of the International Theme Committee of the US Academy of Management. Tel: +353 1 7168968. Fax: +353 1 7168954. E-mail: [email protected]

Abstract Much of the debate on the alleged evils and merits of globalization has been based on after-the-fact argument. Depending on the protagonist’s viewpoint, the delights or, more often, the miseries of civil society, especially in developing countries, have been attributed to globalization, This paper takes a different approach to examine the effects of globalization. It starts by examining globalization as a corporate strategy. What is it? What is driving it? What practices characterize a globalization strategy? What advantages does it bring to the corporation? The implications of globalization practices are then examined to discover whether they necessarily cause good or harm to civil society, with particular emphasis on developing countries. It concludes that globalization can lead to benefits or harms, depending on the interrelationship of how it is practiced and the contexts of host countries. Globalization, like all strategies, is essentially amoral, concentrating on economic objectives. However, moral objectives and corporate social responsibility can become an inherent part of a globalization strategy if these social goods also satisfy corporate economic aims. Such a state of affairs should be encouraged, since it would tip the balance in favor of beneficial effects of globalization strategies. Keywords Globalization, Corporate strategy

Global fragmentation J The richest 5 percent of the world’s people have incomes 114 times those of the poorest 5 percent. J During the 1990s, the number of people in extreme poverty in sub-Saharan Africa rose from 242 million to 300 million. J A total of 72 percent of Internet users, with 14 percent of the world’s population, live in high income OECD countries: 16.4 million reside in the USA.

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DOI 10.1108/14720700310483442

J At the current rate, it would take more than 130 years to rid the world of hunger. J By the end of 2000, almost 22 million people had died from Aids. A total of 13 million children had lost their mother or both parents to the disease and more than 40 million people were living with HIV. Of these, 90 percent were in developing countries and 75 percent were in sub-Saharan Africa. J Every day, more than 30,000 children around the world die of preventable diseases. J Every year, more than 500,000 women die as a result of pregnancy and childbirth. J A total of 113 million school-age children are not in school – 97 percent of them in developing countries. J Nearly 3.6 million people were killed in wars within states in the 1990s. J Half of all civilian war casualties are children and there are an estimated 300,000 child soldiers world-wide. J A total of 90 countries are still heavily affected by land-mines and unexploded ordnance with 15,000 to 20,000 mine victims a year. J Only 82 countries, with 57 percent of the world’s population, are fully democratic. J A total of 61 countries, with 38 percent of the world’s population, do not have a free press (UNDP, 2002).

The advent of globalization In 1983, marketing Professor Theodore Levitt wrote a landmark article in the Harvard Business Review, entitled ‘‘The globalization of markets’’. Professor Levitt’s theory was that the future belonged to companies that make and sell ‘‘the same thing, the same way, everywhere’’ (Levitt, 1983). Such companies could take advantage of apparently global converging tastes and preferences, driven by world-wide media and marketing channels. Where tastes were not already converging, they could be made to do so by selling customers globally standardized forms of products and services that present superior value over local versions. Since Levitt’s article, many corporations have embraced globalization strategies with gusto. On the other hand, some critics believe that the fruits of globalization have not been fairly shared. The effects of this globalization approach by business have been blamed for many of the ills of the world, notably poverty, a growing gap between rich industrialized countries, and undeveloped poverty-stricken ones. Globalization is also held liable for corruption, environmental degradation and human rights failings. The spleen of anti-globalization protesters is vented against international financial and trade institutions (IFTIs) like the World Bank and the World Trade Organization (WTO), as well as governments and leaders, especially of the G7 countries. Particular anger is reserved for multinational corporations (MNCs), especially, but not exclusively US companies, which have a global footprint or global brands.

Working backwards: arguments against globalization Most of the expert commentators on both sides of the globalization argument appear to be economists making ex post facto arguments. One of the anti-globalization economists, Mark Weisbrot (2002) makes the point that the rate of growth in per capita GDP (which he regards as the most legitimate measure of economic growth) in all low and middle income countries in the last 20 years is less than half of the previous rate. For instance, in Latin America, per capita income grew by 75 percent from 1960

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to 1980. From 1980, it grew by 7 percent. In Africa, which grew by a modest but still significant 36 percent from 1960 to 1980, the last two decades have witnessed an actual decline of 15 percent in per capita income. Not surprisingly, claims Weisbrot, economic slow-down has been accompanied by social adversity as progress slows on indicators like life expectancy, infant and child mortality, literacy and education in the low and middle income countries. Allegedly, the mechanism through which globalization leads to poverty is via global capital flows into poor countries. Lenders, donors and investors then impose adverse conditions, such as high interest rates and increased reserves, that have the effect of dampening economic growth. Moreover, economic development strategies appear to have been replaced by unrestrained opening to trade and capital, along with enforcement of patent and copyright laws of the rich countries, much to the detriment of already fragile non-industrialized economies. The New Economic Foundation (2002) quotes Karl Popper in support of its stance against uncontrolled global free trade. ‘‘Unqualified freedom, like unqualified tolerance, is not only selfdestructive, but bound to produce its opposite . . . The paradox of economic freedom, which makes possible the unrestrained exploitation of the poor by the rich results in the almost complete loss of economic freedom by the poor’’ (p. 2). The IFTIs – the cuckoos in the nest of global governance, according to the New Economic Foundation – are reproached, because they are perceived as being heavily weighted in their structures and policies in favor of the rich versus the poor. The UNDP Human Development Report 2002 makes the argument that, although the IMF, World Bank and WTO deeply impact the developing countries, these institutions suffer from a democratic deficit. First, people affected by these institutions do not elect or eject their representatives, and developing countries and their interests are marginalized on these bodies. For instance, nearly half the voting power in the World Bank and IMF rests in the hands of seven countries – USA, Japan, France, UK, Saudi Arabia, China, and the Russian Federation. Informal influences and traditions also contribute to inequities. By habit, the top jobs in the World Bank and IMF are shared between Europe and the USA. An American heads the Bank and a European the Fund. Some critics would claim that an implicit racism exists whereby IMF staff act as if they are shouldering Rudyard Kipling’s ‘‘white man’s burden’’ (New Economic Foundation, 2002). The reasons for such concern about the nature of the IFTIs is that their power and influence on geopolitical and economic affairs is enormous and seems to be growing even more with globalization. This is seen to be at the expense of what is regarded as the more democratic and representative UN, which has become increasingly sidelined from involvement on key economic issues. It is claimed that the relative powerlessness of the UN in economic affairs is a legacy from Cold War politics and generally suits the richer countries (New Economic Foundation, 2002).

Working backwards: arguments in favor of globalization Pro-globalization pundits and lobbyists also resort to economics to prove their case (Centre for Economic Policy Research, 2002; Coyle, 2002). They deny the connection between poverty and globalization, citing the fact that the number of people living on less than $1 a day has not changed much since 1950, but it has fallen sharply percentage-wise from 55 to 24 percent as a proportion of world population, when we take into account the huge increase in population. Nor has the current surge

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in globalization contributed to inequality if we consider that total world inequality has been virtually stable since the Second World War. While it is true that average income disparities between the very wealthiest and poorest countries have increased, this is because OECD countries have grown at a disproportionately faster rate than the poorest and stagnating African countries. However, the causes of poverty in these countries are complex. They are too multi-faceted and complicated to be attributed to globalization alone in any straightforward cause-and-effect way. Meanwhile, argue pro-globalizers, some very large countries like China and India have grown rapidly, offsetting African stagnation. Globalization advocates deny that corporate power has led to a ‘‘race to the bottom’’ on taxes, labor or environmental standards. Moreover, they claim evidence of widespread sweat-shop labor is exaggerated. In fact, in the search for lower costs, most cross-border investment takes place between OECD countries, and almost none flows into sub-Saharan Africa, suggesting that factors other than cost govern global location decisions. Anyway, MNCs usually pay higher wages than local employers. MNC jobs tend to be eagerly sought, especially by women whose other prospects for earning income can be very unappealing. Moreover, it is maintained that MNCs transfer technology and expertise from rich to poor countries. Admittedly, there are some issues around intellectual property rights, as evidenced by the HIV/Aids drug controversy, but the defenders of globalization see these merely as issues to be resolved, rather than as a justification for throwing out globalization altogether. Champions of globalization also defend the IFTIs, like the IMF and World Bank, albeit that these institutions have their imperfections. They purportedly fulfill a vital role in transferring loans and aid from rich to poor countries, while encouraging private lenders to invest. The WTO is cited as a democratic institution with one-member, one-vote rule, and a majority of member countries with democratically elected governments.

Working forward: the features of a globalization strategy The debate by economists starts with the ills and injustices of the world and tries logically to show whether or not these adverse circumstances are attributable to globalization, and its handmaiden, free trade. As seen from the arguments and counter-arguments about globalization, the debate has been conducted mainly at the macroeconomic geopolitical level. Global fragmentation, some aspects of which are delineated in the introduction to this chapter, has been attributed to globalization on correlational rather than on causal evidence. The next section of this paper turns the question around to start with globalization as a corporate strategy, and to track whether and how it might lead to harms or benefits for mankind, and more especially for developing non-industrialized countries. Generally those who blame or exonerate globalization for the world’s injustices would be hard pressed to draw the causal chain of connections between globalization strategies by companies and its alleged dire results. It is only by following the causal paths, and seeing them in context that we can judge whether global MNCs are as culpable as alleged by some campaigners. If global MNCs do indeed play a part in injustice, are there any alternatives? A causal analysis could also throw up ideas for preventive and remedial measures.

Globalization strategy Figure 1 details the antecedents, mechanics and corporate benefits of a globalization strategy.

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Figure 1 Globalization strategy – antecedents and consequences

Globalization Drivers

Globalization Practices

Benefits to Corporation

• global market convergence • cost advantages • global competition • government influence

• major market participation • product standardization • uniform marketing • activity location/ concentration • coordinated competitive moves

• economies of scale • bargaining power • labor and other factor costs and availability • flexibility • improved quality • customer preference • enhanced strategic positioning

Globalization drivers Globalization in many industries is being driven by a number of interrelated structural factors. These break down under four main headings – global market convergence, cost advantages, global competition, and government influence (Johnson and Scholes, 2002): 1. Global market convergence – As mentioned, with many consumer goods, there is a growing homogeneity of needs and tastes. Moreover, globalization is intensified when global firms find it convenient to hire suppliers who are themselves globalized. For example, globalized advertising agencies are in a better position to run the world-wide campaigns for a global customer than a series of local advertising agencies could do. Generally, customers prefer to have the comfort of buying from companies with a global reputation and availability, knowing that they can expect the same standard and service world-wide. 2. Cost advantages – Standardization of fewer products, rather than a wide variety, offers economies of scale opportunities in all value chain activities, including product development costs. Economies of scale are also derived from central sourcing which gives the company buying muscle with suppliers who can be sought from all over the world. IKEA, the furniture company, sources its components world-wide, and passes its cost savings on to customers through reasonable prices. Also, value chain activities can be sited in the lowest cost location. For instance, until recently, Ireland has been a desirable location for electronics sub-supply manufacturers from the USA, due to the presence of an abundant, well-educated and young workforce, with relatively low labor costs, favorable tax rates, a high dollar versus Euro exchange rate, and the availability of incentive grants. Flexibility is also enhanced through a global strategy. Companies with multiple facilities in different locations can switch to the most advantageous ones very quickly. Yip (1995) describes how Dow Chemical uses linear programming to decide on the best mix of production volume by location for each planning period, depending on exchange and tax rates, and transportation and labor costs extant at the time. Moreover, Yip demonstrates how the availability of alternative capacity can be used as a bargaining lever with suppliers, workers and host governments. 3. Global competition – Globalization begets globalization. As stated, companies must emulate the globalization of their customers to serve them well. They must also emulate globalized rivals if they are to remain competitive themselves. The adoption of a globalization strategy offers a company more positions from which to attack

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rivals, if it already possesses a basis of sustainable competitive advantage with which to do so, especially an advantage built on unique talents or resources. Globalized companies can use their cost savings to attack non-globalized rivals who may not enjoy the same low cost base. Many globalized companies obtain higher profits in some markets than others, for various reasons. These are known as profit sanctuaries, where the company may hold a strong competitive position, sometimes due to some form of protection. Often profit sanctuaries are the home market, with actual and invisible barriers to entry to competitors. Many observers claim that the Japanese market is frequently closed to foreign competitors, commonly because of ‘‘unofficial’’ barriers like inaccessibility of distribution channels to outsiders. In any case, profit sanctuaries give companies a cushion of financial strength to wage offensives in other markets, where they can gain market share by price cuts – in short, cross-market subsidization. Domestic-only competitors are especially vulnerable. If they respond to price cuts by a global competitor who has profit sanctuaries, they may expose their whole enterprise and destroy themselves in the process. Thus, a global competitor will almost always defeat a domestic-only competitor (Thompson and Strickland, 2001). 4. Government influence – The dominance of the capitalist model has been accompanied by free trade policies and a lot more confrontation between competitors as they encounter one another in different markets. Tax treaties and international agreements on technical standards have also driven globalization. Governments indirectly encourage globalization when they actively court foreign direct investment and incentivize companies to locate global facilities, such as manufacturing plants in their countries.

Globalization practices J Major market participation – A global strategy entails certain practices related to major market participation, product standardization, activity concentration, uniform marketing and integrated competitive moves (Yip, 1995). The whole world is treated as one big market. As such, the greater the market share, the greater the potential for quality and cost benefits, through experience/learning and economies of scale. It is also important to be present in a number of key markets, achieving a balance that offers a robust overall position. For example, Japanese car producers (Honda, Toyota) who sell into the ‘‘triad’’ (Asia-Pacific, Europe and North America) are stronger competitors than US producers (GM, Ford) who sell into Europe and North America only, and European producers (Peugeot, Renault) who sell only into Europe (Johnson and Scholes, 2002). The Japanese advantage stems from a presence in all of the world’s largest car markets as well as the fact that Japanese MNCs sell into the home markets of their major competitors, who do not, in turn, sell into Japanese markets. J Product standardization – The more standardized the products produced by a company, the greater the scope for economies of scale and cost savings. Many companies cope with differing customer needs in different markets by local adaptations to what is a basic core product. For example, white goods manufacturers will sell the same basic washing-machine into different European countries, but may change the frame, since in some markets customers prefer top-loading and, in others, front-loading machines. J Uniform marketing approach – Insofar as is possible, the four marketing mix elements (product, place/distribution, price, and promotion) would be uniform in all markets. Again, some local adaptation in any of the four elements may be necessary. It is the uniformity in marketing that gives rise to global brands.

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J Location of value added activities – The idea is to break up the value chain and segregate the company’s activities. Then each activity is located geographically in the most advantageous country, to take advantage of cost, skills, knowledge, resources, exchange and tax rates, etc. Of course, natural resource-based industries have to site their extraction activities where the key resources are easily found. J Coordinated competitive moves – In a globalized company, tactics in different countries are coordinated. This is in contrast with a ‘‘multi-domestic’’ strategy, whereby each country follows its own tactical moves. For example, a company may forge a strategic alliance in a key market, not only as a way of entering that market, but to boost opposition to a strong global competitor. This occurred when US cereal company General Mills formed a venture, Cereal Partners with Nestle´ of Switzerland, to counter Kellogg’s advance in the growing market for breakfast cereals in Europe, a move that suited both General Mills with its expertise in cereal production, and Nestle´, with its extensive European distribution and established brand.

Challenges of a globalization strategy Of course, globalization poses challenges as well as advantages. One of the thorniest issues relates to the fact that the ‘‘one size fits all’’ approach does not always work. Sometimes, there are such big disparities among different countries in tastes, preferences and lifestyles, that it is impractical to adapt a standard product in such a way as to cater for all markets. For example, Ford has been singularly unsuccessful in its efforts to develop a ‘‘world’’ car. Even when a product can be adapted, other elements of the marketing mix might have to be tailor-made for each market. For instance, Heineken beer is regarded as a mundane everyday beer in its home country, The Netherlands, but in other countries it is promoted and perceived as an e´lite foreign beer and commands a premium price. Compared with a multi-domestic strategy, where each country market is managed discretely by its own separate locally based management structure, globalized company managers may lose touch with their multiple markets and diverse customers. This is because their attention is focused on coordinating activities from the center, rather than on local customers themselves. The last point raises potential difficulties with implementing a global strategy. The center must co-ordinate and integrate the company’s activities, to reap the rewards of globalization. This can be very complex and time-consuming, and it may well require additional staff at headquarters. An effectively managed global strategy implies much less autonomy for middle managers than a multi-domestic one. Thus, it may be demotivating for managers outside head office. It is exacerbated for managers based in markets which have been chosen as battlefields to attack other competitors by sacrificing margins through price-cutting tactics.

Implications of globalization strategies The outlined Globalization practices (Figure 1) are applied to maximize the competitive advantages to the corporation. In summary, the main corporate advantages should be cost reductions, due to economies of scale and bargaining power over trading partners and other stakeholders, flexibility in tactics, improved quality through focus on limited products and services, development of customer preference, and enhanced strategic positioning through world-wide co-ordination of activities and tactics. What are the implications for the poor and middle income countries of these globalization practices, which comprise corporate strategic imperatives of globalization? (See Figure 2.)

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Figure 2 The globalization strategy balance-sheet

Benefits

Harms

• cumulative trade benefits • economic and social reforms and improvements • wider availability of reasonably priced goods • FDI spin-offs – jobs – training – skills – technology – enterprise • provides host country infrastructure • provides host country services – health, education etc. • host country natural resource exploitation • environmental preservation • subsidize poor countries

• cumulative debt burden • subsidies and tariffs vs. developing countries • falling commodity prices • diversion of local food production • harmful product marketing • facilitating corruption • cultural domination • human rights abuses • sweat shops • rich-poor skills divide • worker and local population oppression • war • environmental resource and infrastructure degradation • insecurity of investment • unfair pricing • competitive manipulation • tax avoidance

Major market participation, one of the corner-stones of globalization, certainly depends on open markets and free trade. For many goods and services, major markets are not the poorest ones anyway. On the other hand, newly emerging markets like China and India have attracted a great deal of investment. This has coincided with dramatic economic growth. In the case of China, it is forcing social and democratic reforms as a condition of joining the WTO. According to economist Jeffrey Sachs (1999), trade is beneficial because, when countries open up to trade, it generates a virtuous cycle; they can sell more, and then they can buy more. However, the cumulative trade benefit can easily go awry when countries open up to financial flows in the form of short-term debt. Short-term loans make the borrowers vulnerable to default since the money is often invested in long-term projects. George Soros (Abrams, 2000) has remarked that the IMF steps in and forces these countries to repay the original loans by incurring further debt. In fact, for the very poorest countries, with no economic or social organization, trade is of little use. Basically, these countries live outside the world economy. Opponents of free trade observe that some countries, which are self-professed advocates of open markets, actually impose tariffs against the goods of developing countries, or subsidize their own industries. This is especially the case with respect to agricultural goods, upon which many emerging markets depend. For example, US subsidies per farmer average $20,803, and EU $16,028 (Oxfam, 2002). Other free trade opponents cite evidence that producers in developing countries work harder, only to find that prices fall as a result of oversupply, and they actually earn less than

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before. Moreover, the push for export-led growth results in food insecurity, as the best land is used for growing crops for consumption in rich countries, rather than to feed the local population (Regan, 2002). Another disadvantage to developing countries occurs when their markets are flooded with easily accessible but harmful goods. A glaring example comes from tobacco companies, which are offsetting falling sales in their home markets by locating in poor countries. There they market their products to vulnerable populations who do not have the information resources to resist the sales blitz. Often, governments collude for the sake of providing jobs and, all too often, are accompanied by corruption. Another manifestation of this phenomenon is the introduction and domination of western, mainly US brands and logos into emerging markets, as globalizing companies attempt to amortize their brands across as many markets as possible, and vie with one another to enter those with the biggest growth potential, such as China. Writers like Naomi Klein (2000) deplore the imposition of brands on an apparently mindless population in their home countries, as marketing replaces culture and education. Is it not even more deplorable in transition economies, when it becomes cultural imperialism, by kitsch marketing, when Mickey Mouse and McDonald’s become status symbols? Product standardization and uniform marketing, two other hallmarks of globalization, act to intensify the replacement of culture by marketed brands.

Activity concentration, whereby value chain activities are located in the most advantageous countries and regions, gives rise to various cost reduction benefits:

J Labor costs – Companies locate selected activities where suitable workers are available at relatively lower wages than elsewhere. Often, the wage rates, although cheap by the standards of the MNC home country, are very generous by local standards and have the effect of raising living standards overall. When this works well, the company provides jobs, training, skill and technology enhancement and contributes to the local economy, directly and indirectly, through purchase of local sub-supply and other goods and services. In many instances, local staff of MNCs develop the expertise and enthusiasm to start their own businesses, providing further stimulus to the local economy. These types of benefits have accrued in middle income rather than low income countries, where there was already a substantial level of absorptive capacity and infrastructure. Probably the greatest cause of opprobrium heaped on MNCs like Gap and Nike by anti-globalization protesters is the accusation of sweat-shop conditions in their factories in developing countries. The ingredients of labor oppression are subsistence wages, prison-like working and living conditions, no workers’ rights and inhuman and punitive treatment by factory bosses, etc. Companies often choose locations where governments enforce these miserable conditions and, some would claim, it suits their purposes, since the workers are so beaten down and docile that they will not offer any resistance (Klein, 2000). A variation on the theme occurs when MNCs choose not to operate their own factories. Instead local entrepreneurs set up production units. These enterprises can be even more oppressive than direct MNC-operated facilities. In fact, entrepreneurs in some initially low cost countries sometimes set up facilities in even lower cost countries with even worse conditions, to supply MNC customers. These independent operators are often incentivized by governments to set up in special ‘‘free-trade zones’’ in countries such as Indonesia, China, Mexico, Sri Lanka,

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Vietnam, the Philippines, etc. to produce garments, shoes, toys, electronics and machinery. By subcontracting the work (and this can result in a long chain of subcontractors), MNCs remove themselves from getting their hands dirty in the questionable production process, but they cannot absolve themselves of ultimate responsibility. Even where oppressive conditions do not exist, the nature of the work may be lowlevel, and does not really do anything to develop the intellectual infrastructure of the host country. If judicious location of different value chain activities is a principle of globalization, it is usually applied to keep high value activities, frequently, knowledgebased and intangible competencies, such as R&D, marketing and branding, at home, or at least in industrialized and advanced countries, perpetuating a skills divide between rich and poor countries. J Factor costs and availability – Companies source raw inputs in selected locations because they are easily accessible in natural resource-endowed countries. This covers extractive industries, such as oil and mining, and cultivation, like agricultural crops. The arrival of MNCs can enable countries, which lack the capital and expertise to exploit their resources. For example, Exxon, the much criticized oil company (2001 revenues $191.6 billion), has contracted to build a pipeline carrying oil from Chad, a central African country (2001 revenues $1.4 billion), to be exported via a port in Cameroon. In keeping with its mission of alleviating poverty, the World Bank will lend $93 million to the governments of Chad and Cameroon, so they can become equity participants. The deal includes an agreement with Chad’s President Deby, endorsed in a law passed by the country’s parliament, to set aside 10 percent of revenues from the project in trust for future generations. Of the remainder, 80 percent is earmarked for education, health and rural development, and 5 percent for the oil-producing regions. Execution of the whole project will be overseen by a nine-person committee, including four NGO representatives, and the World Bank will build a financial control system for Chad. Admittedly, these conditions, and others, regarding environmental preservation, and essential facilities for the inhabitants came about after pressure from up to 250 NGOs (Useem, 2002). The more local human input into the cultivation, logistics, etc., the more value the host country derives from the resource industry, especially if downstream processing and marketing activities are involved. Eventually, local enterprises/collectives may be set up to take advantage of the country’s own resources, sometimes with the backing of MNCs. This is attempted in the coffee industry in Costa Rica. The presence of MNCs may also have a favorable effect in stimulating adjunct enterprises and services, such as schools, health services, transport, etc., sometimes sponsored by a lead MNC, working with activist NGOs and aid agencies, as in the case of Exxon in Chad and Cameroon. It is an interesting irony that the most miserable countries in the world according to the UNHDP Index, many in sub-Saharan Africa, do not even seem to qualify as cheap labor foreign direct investment sites. Their contacts with globalization come through resource-based commodities. Often this is the very cause of their misery, due to a catastrophic combination of greedy MNCs, military spending, and corrupt, ineffective, authoritarian governments, usually dictatorships. An Oxfam study (Cobb, 2001) found that overall living standards in oil- and mineral-dependent states are exceptionally low, especially given their per capita incomes – no doubt, thanks to corruptive diversion of resource revenues. Higher levels of mineral dependence are strongly correlated with higher poverty rates, income inequality, child malnutrition and mortality, the virtual absence of health and education services and a vulnerability to economic shocks. It is

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no wonder when one considers Angola, a country rich in oil and diamonds. Last year, the IMF estimated that $1.2 billion out of $3.2 billion in oil profits simply disappeared in that country. The findings of a study detailing oil extraction activities in the Niger Delta typify the negative outcomes of natural resource dependency when things go wrong (Essential Action, 2000). Oil corporations in the Niger Delta (including Shell, Mobil, Agip, Elf) have created oil-generated environmental pollution, which has rendered farming and fishing virtually impossible and threatened the drinking water supply in neighboring communities. Additional adverse effects on the local economy and society include loss of property, price inflation, prostitution and irresponsible fathering by expatriate oil workers. Malnourishment and disease appear common. Organized protest and activism by affected communities meet with military oppression, sometimes ending in loss of life. In some cases, military forces have been summoned and assisted by oil companies. Reporting on the situation is extremely difficult, due to the existence of physical and legal restraints to freedom of movement and information. When World Bank researchers analyzed 47 recent civil wars, they found that the best predictor of war was whether the country depended heavily on the export of commodities like coffee, timber, gold, oil or diamonds (Rosenberg, 2002). Political disputes spill over into war when an organization with a cause thinks it can finance an armed movement. The easiest way to do this is by looting natural resources. When MNC buyers, seeking competitive advantage by purchasing the commodities, do not exert any discretion over the source of their purchases, they perpetuate the wars. For example, in Sudan, a civil war is being fuelled by oil revenues. Oil industry infrastructure – roads and airstrips – is used by the army as part of the war. Those corporations involved in buying oil in Sudan include BP, TotalFinaElf, Canada’s Talisman Energy, Sweden’s Lundin Oil and state-owned China National Petroleum Corporation. Meanwhile the government is adopting a scorched earth policy, clearing the land of civilians to make way for the exploration and exploitation of oil by foreign oil companies. This fulfills two purposes – depriving potentially rebellious peoples in oilrich areas of their land and homes, and grabbing oil revenues to finance the war effort. Oppressive, corrupt regimes in natural resource-endowed countries are even less accountable to their citizens, since they are not dependent on tax revenues. They have the income from their natural wealth, some of which is allocated to military expenditure to keep the masses in line, while the rest is appropriated personally and for cronies ((The) Economist, 2002). These egregious cases show that, while corporations may not be the direct causes of the deplorable conditions in which many citizens of resource-rich countries find themselves, they are a necessary part of a systemic process that gives rise to these morally unacceptable circumstances. J Flexibility – The capacity to transfer resources, purchasing decisions and locations provides the flexibility to find the lowest cost, best value combinations for the corporation. This can entail not only labor and factor costs, but also tax and exchange rate savings. Combined with concentration of activities, the country chosen as a main site can reap enormous benefits when the activities involved are sophisticated ones, or the site assumes ‘‘center of excellence’’ status. This can result in lucrative supply chain partnerships for local suppliers which service the needs of the MNC competitively. Such relationships may also be of long-term benefit to the host country suppliers in terms of upgrading skills and general learning. If this knowledge/expertise permeates the host country infrastructure, it is a win-win situation for everyone.

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Of course, like the other levers of globalization, flexibility can have its downside for some stakeholders. It means that MNCs can pull out overnight if they find a cheaper venue for their activities, or decide to rationalize several sites into one. This can cause economic mayhem, not only in jobs lost at the main MNC site, but in jobs in suppliers to the MNC and in the local economy as a whole. In Ireland, it has been estimated that, for every direct job by foreign investors, at least one other indirect job is created (O’Malley, 1995). Sub-suppliers who have adapted all their systems and processes to better serve one particular MNC buyer may be especially hard hit, since they will have diminished their own flexibility, becoming dependent on the particular customer. Thus, as globalized MNCs move their activities around like pieces on a chessboard, people in locations quite removed from the parent company may become unwitting pawns. It is accepted that the benefits to be gained in upgrading knowledge infrastructure are more usually achieved in countries that already have absorptive capacity and some technological infrastructure. This corroborates the finding that most foreign direct investment is by OECD country companies into other OECD countries. Therefore, the least industrialized countries are less likely to benefit from flexibility of activity location, because they are unlikely to receive high value added knowledge-intensive activities. Integrated competitive moves are available to globalized MNCs, so they can use tax havens, profit sanctuaries, etc. Global competition in some industries can be very intense. This may result in better value for consumers. Some pro-globalization pundits have pointed out that those who deplore the apparent domination of global superbrands and logos are mistaken, because severe global rivalry in many industries makes brands vulnerable to competition, and many have declined, as a result. Examples are Levi, Gap and Xerox. Even the Coca-Cola brand has lost some of its value in recent ratings (Coyle, 2002). Cross-subsidization can yield benefits when high profits earned in rich countries are used to subsidize the purchase of necessary items in poor countries, as has been forced on pharmaceutical companies in the case of Aids/HIV drugs for countries, especially in sub-Saharan Africa, which are devastated by Aids. However, the consequences of strategic manipulation available to globalized companies can be seen when such companies take advantage or pressurize governments into imposing barriers to other competitors, rendering certain markets anything but open or fair when it suits their purposes. This raises the prices for buyers in those markets, and especially penalizes those who cannot afford to travel to procure goods or services at other locations where they can be obtained at a cheaper rate. A casein-point is the decision by Pakistan International Airlines (PIA) to suddenly switch its intention to purchase a family of Airbus aircraft to Boeing after the US government placed the Pakistan government under pressure. Cross-subsidization can depend on differential tax rates in different jurisdictions, and countries compete successfully on the basis of low tax rates or tax credits to attract foreign direct investment. This raises issues of the morality of tax avoidance by MNCs and the diversion of tax money from countries that need the tax income. They are left with fewer choices. Moreover, companies which locate in a particular country for tax reasons may be very fickle to the charms of alternative suitor countries which woo them with even better tax deals.

Conclusions George Soros (2002), in his commentary on globalization, declares that markets may produce wealth, but they are amoral. What is missing is values, underpinned by politics. The dissection of globalization strategies by corporations shows that their

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overall economic objectives, like all business strategies, are also amoral. While their consequences for powerless stakeholders range from the beneficial to the dire, these are not a function of the globalization strategy per se, but rather of how it is implemented, who is implementing it, and criteria for success. This refers to how principled an approach the leaders of the corporation are prepared to take. What pressure are they under from shareholders and the markets to obtain certain financial objectives? Will this pressure provoke principled or unprincipled behavior with respect to powerless stakeholders in countries that are an inherent part of their globalization strategy? Other circumstances, such as the presence of armed conflict and corrupt and/or weak regimes where a company does business, are also critical factors in ensuing good versus wretchedness. Even if powerful MNCs are not the direct cause of the world’s ills, they can be part of the solution. In a review article on a book detailing the effects of voluntary codes of corporate practice in bringing down the apartheid South African regime, James Post (2002) makes the point that, by translating such codes into action, corporations can ameliorate some of the undesirable effects of globalization. In some respects, this is already happening through responsible globalization strategies, as seen in several of the examples cited in this paper. Citing adherence to international codes and principles of global business practice, Logsdon and Wood (2002) claim that corporations appear to be improving their standards in their interactions with humans and the natural environment.

How can those corporations practicing irresponsible globalization be stopped, and more corporations enlisted as part of the means toward a better, fairer world? A number of efforts are under way to find solutions, some instigated by the UN, some by the IFTIs and NGOs, and some by MNCs themselves.

It appears that enlightened self-interest governs the impetus of MNCs which have taken up the torch of global corporate social responsibility. An example is a diamond certification scheme whereby diamond traders and jewelers have signed up to buy only legally mined and certified diamonds, as a way of ending civil war in countries where revenues from ‘‘blood diamonds’’ are being used to finance civil war, with its devastating consequences on communities. The traders and jewelers were goaded into the scheme because they realize that the value of their products depends on consumer perception, so they were rather eager to get the protesters off the sidewalks outside Tiffany and Co. (Rosenberg, 2002). Another instance of enlightened self-interest by corporations is the establishment of the World Business Council for Sustainable Development (WBCSD), a group of 120 international companies from 36 countries representing over 20 industrial sectors. A subgroup of ten global mining companies has teamed up with 20 others in their sector to form the Global Mining Initiative. This group commissioned an independent $3 million study to analyze a broad range of issues such as waste management, power and water use, recycling, human rights, corporate governance and capacity building. The participants hope to learn how they can manage these issues more effectively. Their efforts were endorsed by the presence of UN Secretary-General Kofi Annan at a conference convened by them in Toronto in May 2002. In June 2002, George Soros in conjunction with 30 NGOs (including Transparency International, Amnesty International, Save the Children, etc.) launched a campaign, calling for rules to require transnational resource extraction companies to divulge all payments in tax, royalties and other remittances. This should be a condition of being

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listed on stock exchanges. It would force governments in developing countries to account for the allocation of their resource revenues. Other recommendations to relieve human misery involve reform of IFTIs to correct bias favoring the interests of developed countries. These are intended to complement the economic goals of the WTO with strong institutions that concentrate on social and political goals, and to promote democratic institutions and political freedom (Sachs, 1999; Soros, 2002; UNDP, 2002). Indeed, as seen in the Exxon-World Bank partnership example, IFTIs are working themselves to achieve their lofty aims. Like corporations, it may be enlightened self-interest to validate their legitimacy in the face of criticism, not only from anti-globalization protesters, but from convinced capitalists like George Soros. Probably the most ambitious initiative involving global MNCs is the Global Compact between the UN and business, strongly led by Kofi Annan himself. The Compact urges corporations to sign up and act on nine principles covering human rights, labor and environment. The Compact is open for adherence by any company, but companies are expected to demonstrate their commitment by taking concrete steps to support the principles. As of July 2002, the Global Compact included several hundred corporations, labor groups, academic institutions, and civil society organizations with dozens joining each week (Kell, 2002). UN statements make it clear that it regards itself as uniquely positioned to be the custodian of the Global Compact because of the power of the principles, the power to convene, the leadership of the Secretary-General and the capacity to network with important global, regional and national actors. The Compact may give the UN more influence on the economic stage, if corporations come to regard real adherence to the nine principles as making strategic sense. While it may be comfortable to believe that corporations will sign up to and act on the UN Global Compact principles because it is the right thing to do, it is more likely that they will sign up because it is strategically sensible. Research consistently shows that, when stakeholder issues impact financial performance, it forces management concentration and action on to these issues (Petrick et al. 1999). Although there may be striking idealistic exceptions, generally speaking, given the amorality of most corporations and the primacy of their economic goals, responsible globalization is most likely to become the norm if it appeals to the optimization of economic goal achievement. Post (2002) discusses the ‘‘iron law of business responsibility’’, whereby business organizations that fail to be accountable to society lose their legitimacy, or their ‘‘license to operate’’. The challenge of business today is to reconcile social and economic responsibilities. The more aligned these are, the more likely that we will see responsible globalization, as the following dynamic creates a virtuous cycle (Figure 3): Meanwhile, a responsibly enacted globalization strategy can enhance global leadership skills and reputational capital (Petrick et al., 1999), both of which should eventually contribute to the bottom line. As such, responsible globalization gives rise to virtuous means and ends alike.

Figure 3

Responsible Globalization

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References Abrams, S. (2000), ‘‘Globalization leaving many countries behind say George Soros and Jeffrey Sachs’’, Harvard University Web site, availlable on: www.ksg.harvard.edu/news/ soros_sachs_globalization.htm Centre for Economic Policy Research (2002), Making Sense of Globalization: A Guide to the Economic Issues, Policy Paper No. 8, Centre for Economic Policy Research, London. Cobb, C. (2001), Poverty, Oil and Mining Dependency Linked, Oxfam, Washington. Coyle, D. (2002), ‘‘What the protesters got wrong’’, The Observer, 21 July. (The) Economist (2002), ‘‘Oil in Chad, useful stuff, maybe, for once’’, 14 September, pp. 43-4. Essential Action (2000), Oil for Nothing: Multinational Corporations, Environmental Destruction, Death and Impunity in the Niger Delta, available on: www.essentialaction.org/shell/reports/ index.html Johnson, G. and Scholes, K. (2002), Exploring Corporate Strategy (6th ed.), Pearson Education, Harlow, Essex. Kell, G. (2002), The Global Compact: Report on Progress and Activities, Global Compact Office, New York, NY. Klein, N. (2000), No Logo, Flamingo, London. Levitt, T. (1983), ‘‘The globalization of markets’’, Harvard Business Review, May-June, pp. 92-102. Logsdon, J.M. and Wood, D.J. (2002), ‘‘Business citizenship: from domestic to global level of analysis’’, Business Ethics Quarterly, Vol. 12 No. 2, pp. 155-87. New Economic Foundation (2002), The Trouble with the Global Economy, the United Nations Lost Role and Democratic Reform of the IMF, World Bank and the World Trade Organisation, New Economic Forum, London. O’Malley, E. (1995), Analysis of Secondary Employment Associated with Manufacturing Industry, General Research Series Paper No. 167, The Economic and Social Research Institute, Dublin. Oxfam (2002), Rigged Rules and Double Standards: Trade, Globalisation and the Fight against Poverty, available on: www.maketradefair.com Petrick, J.A., Scherer, R.F., Brodzinski, J.D., Quinn, J.F. and Ainina, M.F. (1999), ‘‘Global leadership skills and reputational capital: intangible resources for sustainable competitive advantage’’, Academy of Management Executive, Vol. 13 No. 1, pp. 58-69. Post, J. (2002), ‘‘The ‘iron law’ of business responsibility revisited: lessons from South Africa’’ (Sethi, S.P. and Williams, O., Economic Imperatives and Ethical Values in Global Business: The South African Experience and International Codes Today). Business Ethics Quarterly, Vol. 12 No. 2, pp. 265-76. Regan, C. (Ed.) (2002), ‘‘80:20 educating and acting for a better world and teachers in development education’’, 80:20 Development in an Unequal World: A New Comprehensive Introduction to Development, Justice and Human Rights Issues, Bray, Co. Wicklow, Ireland and Birmingham, UK. Rosenberg, T. (2002), ‘‘Turn off the war tap’’, International Herald Tribune, July, Vol. 16 No. 6. Sachs, J. (1999), Interview by Frontline, available on: www.pbs.org/wgbh/pages/frontline/shows/ crash/interviews/sachs.html Soros, G. (2002), George Soros on Globalization, Public Affairs, Oxford. Thompson, A.A. and Strickland, A.J. (2001), Crafting and Executing Strategy, McGraw-Hill, New York, NY. UNDP (2002), Deepening Democracy in a Fragmented World, Human Development Report, Oxford University Press, Oxford. Useem, J. (2002), ‘‘Exxon’s African adventure’’, Fortune, April, Vol. 15, pp. 52-60. Weisbrot, M. (2002), ‘‘Why globalization fails to deliver’’, The Observer, 28 July. Yip, G. (1995), ‘‘Global strategy . . . in a world of nations?’’, in Bartlett, C.A. and Ghoshal, S. (Eds), Transnational Management (2nd ed.), Irwin, Boston, MA, pp. 353-67.

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Research Big business, big responsibilities Louise Gardiner, Catherine Rubbens and Elena Bonfiglioli

Louise Gardiner holds a degree in Philosophy from the University of Stellenbosch, South Africa. Between 2000 and 2003 she was Editor of the CSR Magazine. She currently works as a free-lance writer and editor in the field of corporate social responsibility and sustainable development. Tel: +32 (1)497 532 844. E-mail: [email protected] Catherine Rubbens is currently Manager for Human Rights and Social Reporting on behalf of CSR Europe. She has worked on policy making in the field of sustainable development, research and capacity building for the UN Conference on Trade and Development (UNCTAD) in Geneva and the UN Department of Economic and Social Affairs (DESA) in New York. She has also worked for Environmental Resources Management in The Netherlands and the ethical communications consultancy C21 in London. Tel: +32 2 541 1627. E-mail: [email protected] Elena Bonfiglioli holds a degree in Economics from the University of Modena, Italy, and a Master’s degree in European studies from the College of Europe in Belgium. Between 1998 and 2003, she worked on behalf of CSR Europe as Programmes Director. Elena has worked on issues such as Social Reporting, Diversity, Socially Responsible Investment, Leadership and CSR. She is part of a group of professionals studying the impact of meditation on individual transformation and corporate performance. Tel: +32 2 501 0869. E-mail: [email protected]

Abstract Focuses on ‘‘big business’’ and what is seen as its growing influence on the state of the world and argues that increasing globalization is posing significant challenges that require new thinking about global governance, particularly with regard to international trade. Businesses are required to operate within legislative and economic frameworks created by governments and should be helped to develop global, values-based systems of management rooted in internationally accepted principles. Concludes that corporate social responsibility will only make a visible difference if the concept is fully integrated into corporate principles and practices, and if progress is monitored over time. Keywords Corporate responsibility, Globalization, International business

‘‘Let us choose to unite the powers of markets with the authority of universal principles.’’ UN Secretary-General, Kofi Annan, on the launch of the UN Global Compact. Kofi Annan’s proposal in 1999 for a global commitment by business to make international trade ‘‘work for all the world’s people’’, came at a time when antiglobalization protests were demanding ever-greater attention outside meetings of bodies such as the World Trade Organization and the World Economic Forum. One of their top targets was and continues to be ‘‘big business’’ and what they see as its growing influence on the state of the world. The UN Secretary-General’s solution was to harness the increasing business trend towards ‘‘corporate social responsibility’’ and help companies develop a global, values-based system of management rooted in internationally accepted principles[1]. Since the launch of the UN’s Global Compact in July 2000, hundreds of companies have signed up representing virtually all industry sectors on every continent. But why is this such an important topic for companies? Why are a growing number of business associations at national and international level promoting business responsibilities to society and the environment that go well beyond companies’ legal obligations? While critics of this new field of corporate social responsibility (CSR) have said that it is not part of business’ core purpose – i.e. to do business and make a profit – companies

DOI 10.1108/14720700310483451

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no longer agree. The market is changing, and CSR is becoming a vital part of staying competitive, retaining talented staff, and satisfying customers’ expectations. Brandname companies like Shell, Nike and Nestle´ have discovered through high-profile scandals concerning the environment, human rights, health and labor conditions that they have to take society’s concerns seriously in order to preserve their license to operate. Increased scrutiny via the Web also means they have to be rigorous in the way they address these issues. ‘‘Greenwashing’’, or covering up their activities with symbolic gestures, will only go so far and be effective for so long before stakeholders, including their employees, demand greater transparency and more action. The initiatives we are seeing emerging at the moment are coming from front-runners in the field. The next wave will see CSR consolidated and integrated as a core business strategy. Those companies being left behind will be at a distinct disadvantage in the decade to come as CSR becomes firmly embedded world-wide. Global responsibility implies a global understanding of CSR, which in itself is illusive. A new book published by the World Business Council for Sustainable Development, entitled Walking the Talk, emphasizes that companies have again and again expressed the need to develop local interpretations of CSR – which complement local diversity and sector-specific challenges – using a backdrop of fundamental international standards and principles. The UN Global Compact principles, the OECD guidelines for multinational companies, the International Labour Organisation (ILO) standards and declarations, the Universal Declaration of Human Rights, the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines, the Global Sullivan Principles, the Social Accountability 8000 (SA 8000) international workplace standard, and soon a possible guide on human rights from the UN, are just some of the plethora of international standards that are being offered (CSR Europe, 2001). Nevertheless, they are outstripped by the growing spectrum of global issues with which companies are now engaging in earnest: health and safety, human rights, the environment, basic needs (water, sanitation, education, representation etc.), transparency, democracy, labor standards, exploitation, intellectual property rights, bribery and corruption, and much more.

The impact of Johannesburg The 2002 World Summit on Sustainable Development in Johannesburg will be remembered for two defining moments: the appeal by UN Secretary-General Kofi Annan to business ‘‘not to wait for governments to make decisions’’ but to take a lead in pursuing sustainable development world-wide; and the identification of 220 innovative international partnerships for sustainable development – many of which involve the private sector. However, business initiatives in this field and partnerships between the private and NGO sectors are by no means new. What made this summit so different from its predecessor in Rio a decade ago was that business arrived with a bagful of best practices and partnerships already to their credit. Of some 60,000 participants that were expected to attend the summit in Johannesburg, some 700 delegates were there to represent companies – mainly multinationals. Even before the summit began, newspapers and TV were dominated by pessimistic predictions about the way in which big business aimed to hijack this crucial international meeting. Voices from the NGO sector in particular were extremely wary and accused companies of feigning commitment to environmental and social sustainability in order to cover up the negative impacts of their business activities.

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Despite this, businesses succeeded in changing the minds of their critics in a number of important respects. While social and environmental initiatives by companies should continue to be judged by their level of sincerity and real contributions, companies themselves showed in a significant way that corporate attitudes to sustainable development are evolving. Companies operating around the world realize they can no longer afford to ignore the global ramifications and responsibilities associated with their business activities. In August 2002, leading public opinion researchers Environics International Ltd conducted an online survey of 212 business leaders across 50 countries to find out what the captains of industry really think about sustainable development (Environics, 2002b). The response showed a strong consensus: 92 percent said the benefits of committing to sustainable development outweigh the costs, while 76 percent strongly agreed that global companies have a vital role to play in solving developing world problems. More telling of where CSR is heading is that 80 percent of the respondents to the survey said their engagement with sustainable development was about opportunity (profit and innovation), while only 20 percent said it was about avoiding costs (risk management or compliance with regulations). CSR – business’ role in ensuring sustainable development – has gone from being a knee-jerk reaction by companies to protect themselves from external pressure from consumers and activists, to being an integrated business approach that strengthens a company when it is successfully applied throughout its operations. This is by no means the norm yet. But it is an approach that is finding an increasingly firmer foothold in our global society. Another survey by Environics International, this time on the attitudes of citizens around the world on the changing role of companies, identified a ‘‘continuing upward trend in the public’s focus on the social responsibility of companies’’[2]. More significantly, the 2002 CSR Monitor found that an increasing number of people ‘‘self-reported punishing a company because of their perceptions that it wasn’t fulfilling its social responsibilities sufficiently’’[2]. Between 2001 and 2002 this number went from 43 percent to 58 percent in the USA, with similarly dramatic increases in Canada, the UK, Germany, Italy and France as well. As Environics International’s CEO Doug Miller points out, ‘‘this is something companies operating internationally can’t ignore anymore’’. And companies are showing they agree. A special business day organized during the World Summit aimed to create a space in which business could define its role in the mammoth project of sustainable development. What was significant about this meeting is it could never have taken place in Rio ten years ago. At the first World Summit on Sustainable Development in 1992, companies were the bad guys and were subject to attack by a wide range of stakeholders, including NGOs and civil society groups. The small delegation of business leaders that attended the meeting saw that something needed to change in business’ approach to this debate. They went on to form the World Business Council for Sustainable Development, which now comprises around 180 major multinationals. Another important difference between then and now is that the focus has shifted from purely environmental problems to the fundamental underlying issues of poverty and sustainable economic development. Part of this has been the formation of business networks like CSR Europe[3] in Europe and Business for Social Responsibility in the USA, which have succeeded in putting corporate social responsibility – as a term and a new way of doing business – on the world map (see www.worldcsr.com).

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A changing global context Business’ role at the global level has become increasingly important over the last decade. The world’s largest corporations now control about 25 percent of the world’s economic output. For several years, sales of large groups like General Motors and Royal Dutch Shell have outnumbered the GDP of countries like Malaysia, the Philippines and Venezuela. Increased influence by multinational enterprises through their purchasing, production and investment decisions and their development of new technologies has also produced a demand for increased accountability for their impact on society and the environment. This push towards greater responsibility has been driven by a variety of stakeholders, including national governments, consumers, non-governmental organizations and investors. However, an important feature of the growing range of CSR initiatives by business is that they are predominantly of a voluntary nature and based on self-regulation by companies. Corporate reporting in the field of CSR is an example. The number of companies producing an environmental, social or CSR report continues to increase. The KPMG International Corporate Reporting Survey 2002, which includes the Global Fortune 250 and the top 100 companies in 19 national industrialized country markets, reports that 79 percent of Japanese companies have published corporate social responsibility reports. Other countries that rank high for CSR reports included the UK (49 percent), the USA (36 percent), The Netherlands (35 percent), Finland (32 percent) and Germany. These percentages are significantly higher than those in previous years. According to a survey that compares Global 100 company’s reports and Web sites, about 64 percent of the world’s largest companies use their Web sites to disclose social and environmental activities and progress (Cutter, 2001). CSR Europe and Accountability recently teamed up to find out why companies report and what impact it is having on their internal management and stakeholder relationships. Through interviews with representatives of 11 multinational companies[4], the study found that, while for many companies reporting may have a shorter-term objective of reputation management, reporting on social and environmental impact is increasingly seen as integral to enabling engagement with stakeholders in understanding and shaping corporate long-term business strategy (Bonfiglioli et al., 2002). Since the 1990s, corporate codes of conduct have also proliferated. A 2000 OECD survey indicates that the leading sectors in terms of the number of firms who have implemented such codes are trade, textiles, chemical and extractive industries. The codes cover not only labor standards, but also environmental stewardship, consumer protection and bribery. More detailed studies indicate that codes of conduct addressing labor issues tend to be concentrated in sectors such as garments, footwear, sports goods, toys and retailing. These sectors supply consumer goods and usually involve well-known brand names (United Nations Research Institute for Social Development, 2001). Codes of conduct do not exist solely at industry level. There are a wide variety of codes designed to be universal, which apply to all firms across sectors and countries, including the Global Sullivan Principles and the Caux Principles. In response to increased importance of CSR and pressures by the investor community, the number and importance of specialized ethical investment funds has increased significantly. In January 2002, 279 green, social and ethical funds operated in Europe. From January 2000 until the second quarter of 2001, ethical financial products available to the private clientele had increased by 58 percent (Sustainable

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Investment Research International, January 2002). Moreover, the global demand for ethical investing opportunities is growing. This year, the FTSE4Good Index celebrated its first anniversary and announced that it would initiate its first venture with a developing country. FTSE is helping to set up a similar index in South Africa in collaboration with the Johannesburg Stock Exchange, and expects demand from other developing countries to bring about more such projects in the future.

Choosing the right approach National governments have responded to recent developments in the field of CSR in different ways. Some argue that CSR is by its very nature voluntary and that regulation and other governmental interventions would be counter-productive. In particular, they could threaten to ignore differences among companies and sectors and discourage new initiatives. However, there are also calls for governments to provide more clarity among the increasing variety of CSR initiatives by delineating, for example, on what companies should report and what their codes of conduct should cover. Existing international standards, such as the Global Reporting Initiative (GRI) and the UN Global Compact, already provide some help in this regard. But any understanding of the global responsibility of companies will reside somewhere in between. Companies do differ in terms of the industries in which they operate, the countries to which this takes them, and the nature of their corporate structure. No one CSR solution will work for all. At the moment, corporate responses to social and environmental issues have been tailored to fit specific circumstances. However, this presents its own challenges: how should companies transfer solutions they have developed in one place to their operations in other parts of the world where factors such as legislation and local community expectations differ? And how can companies operating in different industries and sectors share best practice? While each business still faces unique challenges, companies are increasingly finding they can learn from the manner in which their peers are developing approaches and solutions. This emerged from a recent study undertaken by CSR Europe of the experiences of 12 European companies[4] in mainstreaming CSR in their international operations (Boasson and Wilson, 2002). What all the companies had in common was a rich company culture, which they had drawn on to produce innovative practices in leadership, strategy and business management. It found that innovation and diversity are key to the adoption of CSR, and, as such, the potential role of legislation would be limited. However, this does not undermine the important role that improved legislation can play. At the World Summit, former Shell CEO Sir Mark Moody-Stuart was clear about the need for developing countries to catch up to higher levels of legislation on important issues such as human and labor rights, for instance. These would help companies which want to be more responsible by creating a level playing-field for private sector competition. At global level, the UN is currently exploring the possibility of developing a set of ‘‘Human rights principles and responsibilities for transnational corporations and other business enterprises’’. The UN Sub-Commission on the Promotion and Protection of Human Rights has finished the first round of discussion on the proposed regulatory framework to apply to all businesses operating internationally. According to an Amnesty International spokesman, ‘‘even though states have the primary responsibility to promote and protect human rights, transnational corporations and other business enterprises also have a responsibility to do so’’.

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Business is already obliged to respect generally recognized principles and norms in UN treaties and other international instruments, such as the ILO Declaration on Fundamental Principles and Rights at Work, and emerging guidelines, like the OECD Guidelines for Multinational Enterprises. However, the new human rights standard will fill the need for one single point of reference at global level. Based on recognized international standards, it will comprehensively address human rights, labor, environmental, consumer, bribery, and other concerns.

Rethinking global governance Ultimately, businesses are required to operate within the legislative and economic framework created by governments. However, increasing globalization is posing significant challenges that require new thinking about global governance, particularly with regard to international trade. The UN Conference on Trade and Development (UNCTAD) 2000 Action Plan, for example, draws attention to J The lack of integration of developing countries into the globalizing world economy. J The concentration of foreign direct investment (FDI) in only a few developing countries. J The reduction of developed country protection and subsidies. J Developing country’s special needs for trade liberalization.

Foreign direct investment (FDI), in particular, is one of the channels through which the business sector currently plays a role in enhancing growth and trade in developing countries. At the start of the 1990s, aid flows to developing countries were roughly equivalent to flows of FDI. By 2000, FDI in developing countries amounted to $240 billion, while official development assistance amounted to $56 billion (Oxfam, 2002).

Yet, despite the economic benefits associated with increases in trade world-wide, inequalities between rich and poor are widening, both between and within countries. According to Oxfam, with only 14 percent of the world’s population, high-income countries account for 75 percent of global GDP, which is approximately the same share as in 1990. According to the 2001 Human Development Report, 1.2 billion people world-wide live on less than $1 a day, and 2.8 billion on less than $2 a day. Of the 4.6 billion people living in developing countries, more than 850 million are illiterate, nearly a billion lack access to improved water resources, and 2.4 billion lack access to basic sanitation (UNDP, 2001). Inequalities in trade are reinforcing these wider inequalities: for every $1 generated through exports in the international trading system, low-income countries account for only 3 cents. Export success in developing countries has also been highly concentrated. East Asia accounts for more than three-quarters of manufactured exports, and an even larger share of high-technology products (Oxfam, 2002). SubSaharan Africa, on the contrary, has suffered from a dramatic decline in its share of world exports, which currently only accounts for 1.3 percent of exports of goods and services. This has resulted in an enormous decline in living standards and strong increases in poverty. While these challenges remain the primary concern and responsibility of the world’s governments, they are issues that involve, implicate and impact in a profound way

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on transnational corporations (TNCs). It is no surprise that they are coupled with concerns around diminishing control by national governments and international organizations over the activities of TNCs, which still mainly rely on voluntary selfregulation. In this climate, there is no longer any doubt that business has an important role to play in the international governance debate.

The EU: an example of CSR in international policy making ‘‘The societal benefits of CSR practices will remain limited unless they can be integrated into broader strategies, and public policies certainly have a role to play in this respect’’ (European Commissioner for Trade, Pascal Lamy, ‘‘Corporate social responsibility – beyond buzz words’’, August 2002). Recognizing the role that public policies can play in helping globalize CSR, the EU has recently started to invite business representatives, international organizations and other partners to discuss how today’s widely shared concerns around governance can be tackled. In a dialogue with business and civil society, the Commission is currently discussing the implementation of innovative tools such as sustainability impact assessments (SIAs) in the coming trade agenda, and ‘‘soft law’’ policy instruments as complements to hard law, including benchmarking and peer review, non-hierarchical governance, and co-regulation. More specifically, the Commission has recently started to link trade policy more directly with CSR. In its recently published communication on CSR ‘‘A business contribution to sustainable development’’ (July, 2002), it devotes a chapter to ‘‘External relations policies including development policy and trade’’. The chapter calls for CSR to be integrated into policy making, particularly with regard to the promotion of core labor standards, the improvement of governance in the context of globalization and the provision of capacity building and technical assistance to developing countries. It also mentions the importance of promoting awareness and application of CSR principles by both foreign and domestic investors and the need for a stronger promotion of the OECD guidelines for multinational enterprises in EU external relations agreements. The integration of CSR into EU processes and practices reflects both the organic global growth of CSR and the EU’s recognition that the field is consistent with many of its internal and external objectives and therefore should be brought into the policy fold, on ethical as well as strategic grounds. Trade Commissioner Pascal Lamy has stated the Commission’s intention to effectively promote CSR principles internationally through its foreign trade and co-operation agreements. Most prominent amongst these is the Cotonou Agreement (signed 23 June, 2000 and in force until 2020), a partnership agreement between the EU and the 78 developing and least-developed countries that constitute the African, Caribbean and Pacific Group of States (the ACP Group). Through Cotonou and other bilateral agreements, the EU aims to promote human rights, core labor standards, democratization and social governance in the context of globalization. This includes providing funds for capacity building towards those aims as well as trade incentives, which could be restricted in incidents of non-observation of minimum social and environmental standards. In particular, education and capacity building on CSR issues in developing countries will play a significant role as triple bottom line (economic, social, and environmental) concerns become further integrated into the practices and processes of European

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companies. This will help to streamline CSR measures globally and create a consistent overarching CSR environment within which firms have the flexibility to undertake effective voluntary measures that they can adapt to the varied country contexts in which they operate. While flexibility in approach is the current orthodoxy, there is pressure on business to take active steps. ‘‘Unless global companies take some proactive initiatives around accountability, the pressure to legislate certain elements of CSR will grow’’ (Doug Miller, CSR Magazine, October 2002). Public policy developed in partnership with business and civil society offers a way to ensure a nurturing environment for CSR. Thus the EU’s active championing of international frameworks to increase coherence in CSR approaches and simultaneously stimulate debates on innovating and mainstreaming CSR among its companies could help them to not only perform internationally, but also be a force for good.

How business can help the poor to benefit from trade CSR offers businesses a way to help make trade and globalization work for all levels of society. Business already makes important contributions to poverty alleviation in developing countries through the provision of access to finance, technologies and markets, as well as to the improvement of quality procedures, employment practices and working conditions in host countries. However, there remains room for improvement in several areas. Company cases show evidence of growing attention to balancing and optimizing the perceived benefits and drawbacks of foreign direct investment (FDI), especially with regard to knowledge and technology transfer, and the modes of interaction between the investor and the host countries.

Investing in a global knowledge society Knowledge remains a condition for allowing the socio-cultural development of a country and therefore also a balanced economic rebirth in the long term. However, insufficient protection of Intellectual Property Rights (IPR), infrastructure weaknesses, bureaucracy, and a generally low qualification level of the workforce are amongst the factors that foreign investors often put forward as arguments for why the knowledge intensity of FDI often remains limited. Intel’s investment in Costa Rica in the mid-1990s, as illustrated in Oxfam’s groundbreaking report ‘‘Rigged rules and double standards’’, is an example of how businesses can be motivated to invest in an environment that fosters the necessary transfer of knowledge and technologies. A clear commitment by the government to change the way in which it attracts investors and to go beyond ‘‘passive FDI policies’’ such as tax holidays, subsidies and other financial incentives plays an important role in this respect. In the case of Intel, this meant more than deciding to invest in the country and building a $300m semiconductor assembly and testing site in 1996. In fact, more recently Intel has invested in a new center for software development and the design of semiconductors. It has also invested heavily in staff training and developing teaching and research facilities in universities and the technology institute. In the health-care sector, companies investing in developing countries realize the essential role that education, training, and transfer of know-how have, not only for the development of the country, but also for the sustainability, profitability and growth of their own business. Johnson & Johnson promotes several initiatives inspired by the principle of ‘‘helping people help themselves’’. One example is the HOPE Project, a not-for-profit non-governmental organization active in training and education in health

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care on five continents, where J&J focuses primarily on supporting the education of health-care professionals in order to help them to improve their own country’s health-care system.

Innovative forms of investment The far-reaching effect of company’s investment in developing countries also depends on how they decide to run their businesses – using joint ventures, full ownership or other forms of partnerships. In the case of Unilever, in around 20 countries the company shares ownership with local partners and investors, itself directly owning between 40-90 percent of the equity. In nine of these 20 countries, including Ghana, Indonesia and Nigeria, shares in local Unilever Group companies are quoted on the national stock market. In India, Hindustan Lever Ltd is quoted on the Mumbai stock market and had 360,000 shareholders in 1999, with equity evenly distributed between individuals and institutions. Research shows that the extent of corruption in a host country affects a foreign investor’s choice of creating a joint venture or a wholly owned subsidiary.

Pricing and property rights Declining prices of commodities such as cocoa, coffee, minerals and metals are not a new phenomenon. Unfortunately, many of the world’s poorest people depend heavily on primary commodities. More than 50 developing countries depend on three or fewer such commodities for more than half of their export earnings. While low prices may seem attractive for multinationals, some businesses have started to consider different purchasing operations, whereby they get involved in long-term contract arrangements with farmers. Direct procurement, for instance, involves the roaster buying directly from the farmer so that the farmer gets the full value from his work. This not only allows the farmer to receive a higher price for his coffee, but also pushes him to expand his farming potential. It also induces quality improvement as payment is based on quality criteria. Other companies have joined international initiatives that attempt to tackle some of the negative aspects associated with commodity prices. Industry-led initiatives such as the Sustainable Agriculture Initiative (SAI) of the food industry, established by Danone, Nestle´ and Unilever, are innovative business-to-business ways for developing and communicating world-wide the challenge of sustainable agriculture and involving different stakeholders. Companies in the pharmaceutical and health-care industries face an additional challenge: how to improve access to health care and keep products affordable, yet continue to be profitable. In its battle against diabetes, Novo Nordisk decided in 2001 to adapt its pricing policy. It now offers its insulin products to the public health systems in the 49 least developed countries (as defined by the UN) at prices ‘‘not to exceed 20 percent of the average price in the industrialized countries of North America, Europe and Japan’’. However, the company realizes that the return on sales in wealthier countries cannot forever compensate lower profit on sales in developing countries (Boasson and Wilson, 2002).

A new diplomacy CSR and globalization create new opportunities for business to get engaged in a more transparent diplomacy characterized by a balanced representation in decision making at macro and micro levels of activities and communication. At the ‘‘macro’’ or

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international level, companies can follow and engage with existing CSR guidelines, such as the ILO’s ‘‘Code of conduct for multinational enterprises’’, and the UN’s Global Compact. The OECD, through its ‘‘Guidelines for multinational enterprises’’, engages with business via advisory bodies such as the Business and Industry Advisory Council and through the national contact points responsible for proper implementation of the guidelines. In addition, various international initiatives offer businesses the opportunity to engage with stakeholders on a range of specialized topics. Examples include the Global Reporting Initiative, the Fair Labour Association and the Ethical Trading Initiative. At the ‘‘micro’’ or national level, aligning business practices in host countries with corporate ethics represent a completely different challenge. Many companies face the reality of operating in countries with repressive regimes, where the rule of law is weak or absent, and where the independence of the judiciary is questionable. Positive case studies point out, however, that even in these conditions businesses can make a difference. Reebok has encouraged freedom of association in countries like Indonesia by implementing innovative communication systems through which workers can express workplace concerns. Pentland Group, faced with the option of pulling out of Sialkot in Pakistan, decided to stay in the area and succeeded in implementing a system to tackle child labor.

Diplomacy does not stop at the international level. Business can have an influence on governance in host countries. Whether this occurs through quiet diplomacy with relevant government officials, public condemnation of human rights abuses or advocacy for respect for human rights, multinationals are in a position to raise concerns about issues that adversely affect their reputation and business environment.

Integration and transparency However, with regard to all these aspects, CSR will only make a visible difference if the concept is fully integrated into corporate principles and practices, and if progress is monitored over time. Third-party involvement in this process is likely to improve credibility. The recent sustainability assessment, ‘‘Ten years after Rio’’, published by the UN Environment Programme (UNEP), emphasizes the need to integrate environmental and social criteria into mainstream business decision making, while at the same time improve the implementation and monitoring of voluntary initiatives and self-regulation. Reporting by companies is already playing a valuable role in this process. The recent study by CSR Europe and Accountability of the ‘‘Impacts of reporting’’ on 11 multinational companies (Bonfiglioli et al., 2002) found that the reporting process itself can have a transformational effect on a company’s internal management and strategy. Companies not only report to change external perceptions but also to engage in and learn from a two-way dialogue with stakeholders, not least from employees. Improved assurance mechanisms will create greater credibility and trust in this regard, and therefore a more sturdy foundation for change. As the world’s markets and societies become increasingly globalized, companies will be called on to be more decisive in their responsibilities to society and the environment. However, the evidence thus far indicates that all parties stand to benefit from this new way of doing business.

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Notes 1 The UN Global Compact’s nine principles are based on The Universal Declaration on Human Rights, The International Labour Organization’s (ILO) Declaration on Fundamental Principles and Rights at Work, and The Rio Declaration on Environment and Development. 2 ‘‘CSR is here to stay’’, CSR Magazine, October 2002. 3 BT, Danone, Ford, McDonald’s Restaurants, Manpower, Nike, Novozymes, Procter & Gamble, Royal Dutch/Shell, Unilever and Volkswagen. 4 BASF, BP, Coop Italia, Danone, Lafarge, Lloyds TSB, Johnson & Johnson in Europe, Monoprix, Novo Nordisk, Shell, STMicroelectronics, Storebrand.

References Ariel Aaronson, S. and Reeves, J. (2002), ‘‘The European response to public demands for global corporate responsibility’’. Boasson, C. and Wilson, A. (2002), ‘‘Decoding business dynamics: mainstreaming corporate social responsibility in a company’s strategy, management, and systems’’, CSR Europe and Entreprise and Personnel. Bonfiglioli, E., Monaghan, P., Rubbens, C. and Zadek, S. (2002), ‘‘Impacts of reporting: the role of social and sustainability reporting in organisational transformation (insights from recent business practices)’’, CSR Europe and Accountability, November. Chiovato Rambaldo, G. and Cramer, A. (2001), ‘‘Measuring and reporting corporate performance on human rights’’, CSR Europe and Business for Social Responsibility. Commission of the European Communities (2002a), ‘‘Communication from the Commission concerning corporate social responsibility: a business contribution to sustainable development’’, Brussels, July. Commission of the European Communities (2002b), ‘‘An EU contribution to better governance beyond our borders’’, White Paper on Governance, Working Group No. 5, June. Cutter (2001), ‘‘Benchmark benchmark.html

survey’’

available

on:

www.cutter.com/envibusi/reports/

Environics International Ltd (2002a), ‘‘2002 CSR Monitor’’, May. Environics International Ltd (2002b), ‘‘A GlobeScan survey of business leaders on sustainable development’’, August. KPMG (2002), International Corporate Reporting Survey. Sustainable Investment Research International (2002), ‘‘Green, social and ethical funds in Europe’’, January. OECD (2000), ‘‘Codes of conduct – an expanded review of their contents’’, OECD Working Party of the Trade Committee, TD/TC/WP(99)56/FINAL, Paris. Oxfam, (2002), ‘‘Rigged rules and double standards – trade, globalisation and the fight against poverty’’, April. United Nations Research Institute for Social Development (2001), ‘‘Corporate codes of conduct – self-regulation in a global economy’’, Rhys Jenkins, April. United Nations Development Programme (UNDP) (2001), ‘‘2001 human development report’’, New York, NY. World Bank (2000), ‘‘Rethinking development – challenges and opportunities’’, remarks by James D. Wolfensohn, President of the World Bank at the 10th Ministerial Meeting of UNCTAD, February. Worldbank (2001a), ‘‘World development report 2000/2001: ‘attacking poverty’ ’’, World Bank, Washington. Worldbank (2001b), ‘‘Global economic prospects and the developing countries 2001’’, World Bank, Washington.

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Research About ‘‘global responsibility’’ in management Roland Pe´rez

Roland Pe´rez is Professor of Management Sciences, University of Montpellier, France.

Abstract The concept of global responsibility (GR) was devised to extend the traditional set of references for management responsibility. In analytical terms, we are forced to take externalities into account in management behavior, in a way, to try and externalize them. Two reference models have been explored: on model is based on the principle of dissociation between business and non-business; the other model is based on the principle of their integration in the vision that managers have about their organizations’ strategy and in their concrete behaviors. However, some tendencies are emerging; they are common to both families of behavior models: the tendency to ‘‘legalize’’ contemporary companies, the increased constraint to ‘‘account’’ (accountability) and, finally, the risk of an increased risk aversion. Keywords Corporate responsibility, Globalization It is always a delicate task to have to express a point of view on a topic fixed in advance. The reply may look like an agreed exercise, in which ‘‘form takes precedence over substance’’ and the person asked often answers according to the assumed expectations of their listeners. This reply may, however, be the opportunity for a personal thought which, just like our grandmothers and their balls of wool, raises a series of successive questions and gradually challenges whole sections of our explicit knowledge, even of our implicit certainties. The ‘‘global responsibility’’ concept (hereafter referred to as GR) seems to illustrate this situation particularly well. We will discuss it in an international survey, without any other prejudice than that of an observer-actor, observing the behaviors of finalized organizations; this is the preferred topic, although not exclusively, of those sciences considered as management sciences. In this respect, we must make several observations, remarks and the usual reservations: J The ambivalent observer-actor situation poses some specific problems in terms of epistemology, methodology, and even deontology; these problems are particularly acute in management sciences, but they have little or nothing to do with the sciences dealing with man or society, disciplines for which Levi-Strauss states ‘‘when the observer is of the same type as the phenomenon observed, he is part of the field of observation’’ (Levi-Strauss, 1950).

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DOI 10.1108/14720700310483460

J We have found it necessary to restrict it to management disciplines, because these disciplines are complex enough, although they are rather recent in their academic expression, if not in their social practice, even though, in order to surround the theme studied, we should mobilize the related disciplines, especially law and political science, sociology and ethics . . . J In most cases, the examples used to support or illustrate the subject will be taken from enterprises – the most studied finalized organizations – from the contemporary period – for which the ‘‘clearing’’ need is the greatest – and considered in an ethnocentric context – the context of the author; these contingency factors should be considered separately in order to discuss the theme as fully as desirable. After these introductory remarks, we will now explore the concept of GR by asking the following questions: what is global responsibility? What are we responsible for and why? Who is responsible and to whom? How and by what procedures – ways and means – is global responsibility implemented? These simple questions require some answers but these are not always proper answers because they deal with the content and the actors of GR, on the one hand, and its implementation modalities, on the other hand, and, as far as possible, they try to clarify them and/or put them into perspective. This series of questions will structure the presentation.

GR – its content and its actors These two questions complement each other, and defining the content of GR will bring us back to the actors concerned, since we are studying the scope of their actions/interactions. For what are we responsible? First approach to GR The answer to this first question, derived from the general principles of law, is apparently clear: we are responsible for our actions – for ourselves and for those who are in our charge; more exactly, for the consequences of our actions. Every law student will be familiar with the famous civil code article ‘‘any deed by a person who causes damage to another person, will oblige the person who caused it, to compensate for it . . .’’ The general concept of responsibility may be easy to perceive, but the concept of ‘‘global responsibility’’ requires, first of all, an interpretation of the qualifying adjective used and of its context. The qualifying adjective ‘‘global’’ must be associated with the general trend towards ‘‘globalization’’, which characterizes the economies and societies of today and now refers to the whole planet. Without going that far, the idea of GR expresses an extended set of references for responsibility, which goes beyond its traditional acceptance’’. This extension, as will be seen later, can be considered on several levels, i.e. on the societal and environmental level. It is also expressed by time, by inserting collective deed and its consequences into a long-term prospect, as indicated, for example, in the principle of sustainable development. If the idea of GR is easy to perceive, it is more difficult to concretize. Where are its limitations? We live in a complex world, with increasingly interdependent, and sometimes unstable, components. If a cyclone bursts in the sky in China, must we blame the butterfly because, according to the theory of chaos, it could have been the cause of it? Of course not, and the caricature was given as an example on purpose. On the contrary, the problem is very concrete in the following cases: beekeepers having their beehives devastated by the use of a pesticide in a neighboring field; water-tables reached by waste material from intensive farming, and other matters such as asbestos, contaminated blood, animal flaws, GMOs . . ..

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The dual extension in space and time, implied by the concept of GR, reinforces this necessary question about limitations. A decision (e.g. establishment of a new factory) may have positive effects here (creation of new jobs, direct or induced purchasing flows, tax receipts. . .), but indirectly, it can have adverse effects somewhere else (reduction in activity, even closure of a site with its consequences). A decision taken today, in a given state of information available, may tomorrow reveal highly damaging consequences for the collectivity (as is the case for the ‘‘business’’ examples given above). The concept of GR therefore refers implicitly to the principles of ‘‘relevance’’ and ‘‘coherence’’, on which organizations’ piloting systems (ECOSIP), and therefore management systems, are based. GR expresses the idea that the management of an organization must remain valid – i.e. relevant and coherent – but with reference to a considerably larger number of factors, both in space (geographical and societal) and in time. That’s a tough one! Who is responsible? For human activities carried by a single person – the case of the individual enterprise, for example – the situation is simple: the person in question is responsible for his/her actions, except in those cases, of course, where his/her statute – e.g. nonemancipated minor – or a court decision – e.g. guardianship – decides otherwise. The situation is less trivial, when dealing with activities carried out within organizations which have the statute and attributes of a legal person. Here, we must make a distinction between legal entity, on the one hand, with its legal personality and the pertaining rights (e.g. right to contract, employ/dismiss, carry out commercial or financial operations, go to court . . .) and natural persons, on the other hand, who are entitled to talk and act in its name – i.e. its social representatives. The question is then: Who is responsible? The legal entity or its social representatives? The codes and jurisprudence of national legal systems offer various answers to these questions, but their general orientation is similar. As long as we consider material implications – the scope of civil responsibility – the legal entity can because of its statute be considered as a responsible actor, with all the consequences (e.g. payment of damages to a third person as a result of a lawsuit). Sometimes, social representatives are implicated, directly or through their mandate (e.g. the position taken by members of the board of directors in strategic decisions implicates the company). Finally, when faults committed, or considered as such, are of a penal nature, it is necessary to involve directly the persons concerned, whatever their status in reference to the legal entity (e.g. money-laundering operation within a network comprising both enterprises and private individuals). Moreover, the legal system normally comes with a hierarchical structure, a source of dependency (cf. the saying ‘‘in matters of disputes, the penal holds the civil responsible’’). To whom are we responsible? The question is also less simple than it appears. The management of an organization must account for its acts and their consequences to several types of authorities and categories of actors concerned: J first, to those who have appointed them and on whom they depend in fine (e.g. general assembly for companies and associations); J sometimes to specific authorities, whose function it is to analyze-value, and which are commissioned by the former authorities to help them in their management mission (e.g. audit committees, consultancy firms, rating agencies . . .);

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J also to public authorities – likely to have multiple representations – each of whom represents an expression of ‘‘general interest’’ which can be opposed to the entity concerned; and J more generally, to any actor (customer, supplier, competitor, employee, consumer . . .), represented by a natural person or any other legal entity, a third person who rightly or wrongly considers himself affected by the organization’s acts, may claim compensation, through arbitration or litigation. .

We then have a whole range of authorities and categories of actors surrounding corporate GR and its management, in a context of potential constraints, which is all the more complex since the set of references for GR has extended in time and space.

Outlining a typology of managerial behaviors in GR Owing to the lack of a systematic study (ref. Novethic survey), we will merely outline certain ‘‘stylized’’ situations, as highlighted not only by doctrines displayed but also by some behaviors we can observe. We can derive two conflicting models. Model based on dissociation The first type-ideal – this does not mean that it represents a model to be followed, but rather a point of reference, relatively easy to decipher – is the ‘‘pure’’ liberal model, as advocated both by liberal economists and by most of the business environments, especially in the so-called ‘‘Anglo-Saxon’’[1] societal and cultural context. As far as our discussion topic is concerned, this type-ideal, described hundreds of times in praise as well as contempt, is based on what we call ‘‘the principle of dissociation’’. What dissociation? Between the sphere – or rather the hemisphere – of economic activity and the rest; that is the other sphere which concerns not only private life (family, religion, ethics . . .) but also public life (local, national, international . . .); in short, between business and non-business. In this situation, the concept of GR is meaningless. Whether referring to natural persons as entrepreneurs, or to large enterprises as legal entities, through their social representatives, the alternative is clear: J In the ‘‘business’’ sphere, the objectives, and therefore responsibility, are strictly economical, as their efficiency is measured with reference to the amount of net income obtained or, for companies quoted on the Stock Exchange, with reference to the evolution of share prices (both these criteria are supposed to be congruent, at least in the long run, according to the fundamentals of financial assessment). There are no a priori limits, just respect for the law. In law, everything is permitted, even greed (‘‘greed business is good business’’ was once heard). J In the ‘‘non-business’’ sphere, the freedom principle again is the answer; it allows homo economicus to show himself, if he so wishes, to be as good a family man, a neighbor and/or a citizen, as he was a grasping entrepreneur or an unrelenting manager. This dissociation, which could be thought of as a source of schizophrenia, is very appropriate to some contemporary companies, especially in North America; we could give dozens of examples to illustrate this supposed duality. We will quote only one: when the big stocks and shares company Merrill Lynch reached the staggering amount of a trillion dollars of financial assets under management, a few years ago, the company’s chairman gathered all his managers to celebrate the event; he urged them

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to work twice as hard to reach double that amount in the next ten years, but he also encouraged them to get involved in philanthropic and charitable work during their weekends and holidays. This mixture of greed and fine feelings has been analyzed by many sociologists; it can be expressed, among other things, as the paths of life. Following a succession of selfactualization stages, as explained by Maslov, man – these paths are mainly male – tries to become ‘‘the richest’’, then ‘‘the most powerful’’ and finally ‘‘the most loved’’! From Rockefeller to Bill Gates, without forgetting Onassis and Soros, contemporary history is punctuated by these sagas, which are both unique and similar, and a certain J.M. Messier would have liked to have his name added to the list. GR is not very far: both business and non-business components may be totally dissociated, but they are linked at the end of a day, a week, a year or a life: I earned a lot of money, but I gave a lot away to my church’s charities, to a hospital or a university, or even by setting up a foundation bearing my name; this will tell posterity that I was not only a rich person, but also a generous being, therefore a globally responsible one. Model based on integration This second type-ideal is radically opposed to the first one, because its basic principle is not the dissociation between business life and professional life (private or public) but, on the contrary, their integration. The manager considers that his mission, and that of the enterprise he manages, is a multiple one: he must of course be competitive – to do otherwise would be suicidal – but also, as far as possible, be attentive to his internal and external partners, think about the environment and future generations, in short, be globally responsible, sometimes through the complementary nature of his professional and personal behaviors, but within the business sphere, which cannot be dissociated from the non-business sphere. The history of companies provides many examples of this type of behavior. The most common case is the so-called paternalistic management mode, in which the managing director behaves like a ‘‘family man’’ and/or a local lord; the components of the ‘‘non-business’’ sphere – private and public – are both embedded in the business component. Based on loyalties from one generation to the next – and sometimes these go back centuries – cf. the He´nokiens studied by Mignon (2000) – this management mode is still very popular in old industrialized regions (cf. the significance represented by Michelin in his employment area or, earlier, the importance of ironmasters in their employment areas); it was the basis for the Japanese development model until its recent crisis; it probably is the dominating mode in many emerging countries, especially where ethnical and/or religious factors remain important (for example, in diasporas). GR is inseparable from the social link associated with the economic deed. Relationships with employees, suppliers or local collectivities . . . imply this dual link which expresses the principle of integration. However, it can have various expressions: solidarities within networks, even Mafia systems, solidarities resulting from an ethical or religious commitment; there is an infinity of situations and they cannot be brought down to a single paradigm, like the previous model.

Evolution of GR in management Because of the previous summaries, we could think that the reference models both refer to historically different levels of development: the more ancient model, based on integration – going back to national pre-capitalism economies – representing

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an archaic form, destined to be replaced by the more modern model based on dissociation, on the same wavelength as the development of contemporary capitalism and the evolution of more urban, more fragmented, more individualistic societies. This is not what we think; more exactly, we think that, if ‘‘heavy tendencies’’ are directed at the progressive replacement of the traditional model outlined above by the liberal dissociated model, we also see this liberal model in crisis and the emergence of new ambitions to GR, inviting us to ‘‘revisit’’ the model based on integration. Tendencies to the primacy of the liberal model Liberal economy has made a lot of progress in the last few decades. This has been celebrated by liberal thought, sometimes without any restraint. For Francis Fukuyama, ite missa est, the fall of the Berlin wall was the collapse of hopes for an alternative world, signing ‘‘the end of History’’ and the arrival of the unshared reign of liberal society and market economy. For Jensen (2001), the latter is based on an economic science which ‘‘for the last 200 years’’ has demonstrated its superiority. In reality, the progress made by the liberal model can be observed throughout the second half of the twentieth century (setting-up of GATT, implementation of regional entities such as the EU and ALENA, development of international trade . . .). Its speed has increased in the last decade (setting-up of WTO, collapse of socialistic state regimes . . .) until the events that took place at the turn of the new millennium (open financial crisis in spring 2000, attacks of 11 September 2001 . . .). Weaknesses and limitations of the liberal model The liberal model has shown its power and capacity for adaptation, but it also has several major defects; unreserved satisfaction is therefore not possible. The main defect, which we think is both conceptual and factual, is the sometimes explicit, mostly implicit assumption (Jensen, 2001) about the absence of externality. The actions of economic agents, most of all companies, would have no other consequences than those contained in trade relations, structured by prices within their respective markets. There is no pollution, no carcinogenic asbestos, no health problems for people having lost their job, no disaster employment areas . . . However, once these negative external effects have been outlined, they can be incorporated in price systems in two ways: 1. relating to private initiative, through insurance premiums which enterprises are encouraged to take out or contingency provisions which they can implement directly; and 2. relating to public initiative, where the State (or social organizations) takes responsibility for the expenses caused by these negative externalities; these public (or government) expenses are covered by tax (or social contributions) and they will in turn influence, totally or partly, companies’ income and expenditure. The ‘‘polluter-payer’’ principle which has been the subject of so many discussions and, more generally, of conditional tax instruments such as ‘‘1 per cent accommodation’’ or training tax, refers to the will to force economic agents – companies in this case – to take into account externalities linked to their activities. The issues of externalities are all the more important to solve because the liberal market model produces inequalities, and these are negative externalities. Indeed, because of its dynamism, liberal capitalism creates strong disparities in individual income, as well as in the income appreciated by social groups or geopolitical areas. These differences are a source of tension and expenditure (social aid, security . . .) and

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these are not taken into account – except in some cases – in the economic calculations of actors. By doing so, these actors show a deficient GR and, because of their lack of consideration, the optimal character of a global system based on the aggregation of individual situations is questioned. New aspirations to GR Against the background of this indifferent or insufficient neo-liberal model, faced with the negative externalities it generates, we observe two classic attitudes: a more radical one and a more reformist one. The radical criticism of liberal capitalism has taken on new forms after the failure of the Soviet world marginalized the State socialism model. These new forms are those of the anti-globalization movement (illustrated in France by Attac and Jose´ Bove´), symbolized by the Porto Allegre meetings, as a counterpoint to the Davos meetings. If the criticisms against the dominating model are clearly identified, we see a wide disparity of proposals for alternative models, from the most Utopian constructions to a simple patching-up of what is already there. The reformist way comes from within the system of market economy itself and it does not dispute its main working principles but it attempts to lessen its adverse effects and to keep the positive aspects only. In analytical terms, this process widens the scope of GR, i.e. the set of references for global responsibility, by incorporating a maximum of externalities. This process sometimes came from the managers themselves: it was the case, for example, with the concept of ‘‘citizen enterprise’’, as advocated by the CJD (Centre des jeunes dirigeants d’entreprise – Centre for young company managers) or with the ‘‘double project’’ – economic and social – proposed by Antoine Riboud for his group and for French employers from the 1970s. More often, the evolution was not spontaneous, but resulted from pressures by society and by categories of actors concerned (employees, consumers, movements for the environment, local collectivities . . .); these pressures were transmitted by the media and sometimes translated into public decisions or legal disputes. Some significant examples come from environmental accidents, such as the Erika shipwreck. First of all, the oil group Total, cargo-owner but not ship-owner, not only considered itself as not responsible for the shipwreck and its consequences but, having lost its cargo, claimed to be one of the victims. The group had to change its position in order to accept a responsibility linked to its role as charterer, after its policy of outsourcing transport operations, centered too much on considerations of cost rather than safety, had been questioned. The set of references for management responsibility is indeed extended through the combined effects of opinion, public authority pressure and legal proceedings. Another set of examples illustrating the wider scope of corporate responsibility comes from the social field. The social division of the Supreme Court has increasingly adopted positions to promote a wider set of references for responsibility. This was the case, for example, with accidents at work or illegal work, which brings the principals into question through the subcontractors. We can also quote the positions taken with regard to decisions to close a site or to outsource (Perrier decree). In some other cases, the new orientations come from the shareholders themselves, which may seem paradoxical – we could talk about oxymoron with regard to the concept of ‘‘socially responsible’’ shareholder (Pe´rez, 2000). However, this movement has for some time ceased to be anecdotal to register as a consistent actor, recognized as such in the world of savings and financial investments[2]. It is indeed

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carried not only by minorities committed for ideological or religious reasons in an ethical position, but increasingly by more and more categories of savers, who are concerned about the guarantee of their savings – especially when these are linked to their wages and go towards a pension fund, as the main constituent or as complement – but they consider these as a long-term requirement, i.e. their concern is more about sustainable development. It is no surprise therefore that, contrary to widespread opinion, big pension funds such as Capers not only have been the origin of the corporate governance principles, but have also helped these to evolve, especially following the excesses and drifts experienced during the recent crisis in stock markets. The link to the GR debate is immediate: if shareholders become socially responsible, managers will no longer have to be torn between short-term cost-efficiency requirements and their possible ambitions to take externalities into account. For this very reason, the model based on the business-non-business dissociation loses its meaning and is replaced by an integration-based model. Difficulties and limitations of the integrated model New ambitions to GR may open interesting perspectives, but they are all the same, delicate to implement. The main difficulty no doubt concerns the criteria to use in order to obtain a satisfactory management (in the Simonian sense), both for the securities portfolios in question and for the corresponding companies. Interesting experiences are under way in this respect. They are based on the so-called concept of ‘‘stakeholders’’[3], implying multiple-criteria methodologies, not only in the control of enterprises (balanced scorecard)[4] but also in financial analysis (triple bottom line)[5].

These approaches enabling the selection (screening) of virtuous enterprises are completed by a ‘‘shareholding activism’’ of socially responsible funds, a pedagogic as well as civic position – with the aim to encourage the managers of the companies in question to evolve – representing in a way a GR expression, not only of management, but of this ‘‘management of management’’, i.e. corporate governance systems (Pe´rez, 2002, 2003a). Furthermore, without there being an a priori will to be ‘‘socially responsible’’, experience has shown – and the progress made by company performance analysis has confirmed it – that a determining part of these performance depends on intangible assets, such as the quality of relationships within the organization and between the organization and the environment: hence the attention given to reputation (for example, through trade names), trust, corporate history and culture, the social link . . . being constituents of the company’s competitive potential to be taken into account in strategic management models[6].

Some characteristics of the future . . . It is always risky to attempt to define the future shape of a research topic which relies so much on society evolution, such as GR in management. We can, however, outline it, because of this strong societal dependency; its factors – mutation and structuration – represent, as far as they are known to us, the keys for interpreting induced phenomena such as management modes and, more particularly, GR. At this stage, we will merely propose a few thinking routes, which are after all connected.

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The rise of society’s ‘‘legalization’’ This tendency in contemporary society has taken on exaggerated forms in the USA, but its effects are gradually being felt in other geopolitical areas, particularly in Europe. It is of course expressed by an extension of management GR, whatever the reference model is: J for the liberal model, it means introducing in the business sphere factors which were not there before (e.g. pollution, health damage . . .) as in the case of companies such as Monsanto, Philip Morris, even McDonald . . . , subjected to a legal guerrilla from people or collectivities of all kinds (ecologists, anti-tobacco groups . . .). J for the integrated model, it results from the sheer number of stakeholders and from the fact that, even if these are not able to have their point of view accepted directly by managers, they are tempted to resort to litigation (cf. the above-mentioned cases of social disputes reaching the Supreme Court of Appeal). The increased constraint of accountability ‘‘Accountability’’ is inherent in the principle of responsibility itself: the two go together; if you cannot account, you cannot be responsible; this evidence is more usually characteristic of governance systems, implying that representatives must be able to account for their actions (cf. Pe´rez, 2003a). The extended set of references for GR is bound to lead to an increased accountability constraint, whether it comes from the wish to take the various stakeholders into consideration, or from the need to face administrative requests or legal disputes. All company managers, from the smallest enterprise to multinationals, agree that, despite the possibilities offered by information and communication technologies, these ‘‘reporting’’ tasks represent an increasing cost, particularly in terms of time spent on them, to the detriment of design or even achievement activities. The risk of ‘‘no-risk’’ The extended set of references for GR is also an extension of risks, in terms of the items concerned, intensity, duration and financial amounts at stake (e.g. current asbestos matters). It is more and more obvious in some activities (air transport since 11 September, audit following the Enron case . . .). Even the fundamentals of insurance companies are being shaken, and risk management is after all the ‘‘heart of their business’’. This orientation feeds not only on the volatile character inherent in the increasingly material nature of company assets, but also on the increasing legalization of society, and it may lead many company managers to adopt a more cautious profile when taking risks. This ‘‘risk-averse’’ behavior is not a new concept in itself but, all things being equal, it may lead company managers to abandon projects which could be not only innovative but also growth-increasing. Therefore, a systemic risk must not be excluded.

Intermediate summary Instead of a conclusion, we give an intermediate summary of these preliminary thoughts: J The concept of GR was devised to extend – in terms of society as well as time – the traditional set of references for management responsibility. In analytical terms, because of this extended set of references, we are forced to take externalities into account in management behaviors, in a way, to try and externalize them. J Two reference models have been explored: one model is based on the principle of dissociation between business and non-business; the other model is based on

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the principle of their integration in the vision that managers have about their organization’s strategy and in their concrete behaviors. J The dissociation-based model is consistent with neo-liberal economic principles. Managers do not incorporate externalities in the business sphere, except through duties imposed by laws and regulations in force or by making provisions for the potential risk of a dispute. Indirect negative externalities, in particular those inherent in inequalities caused by the very dynamics of markets, are not taken into consideration, thereby securing the assumed optimality of the global system. On an individual level, GR is guaranteed only by completing both the business and the non-business spheres in terms of behaviors, even lifestyles. J The integration-based model, whether in the traditional forms of paternalism or in the more modern forms of ‘‘corporate citizenship’’, escapes this systemic suboptimality risk, but in return it must face the operationality risk, at least when the management’s aspiration to GR tries to express itself in explicit criteria for the running of the organizations in question. Owing to the multiplicity of stakeholders and evaluation criteria, the necessary trade-offs may become uneasy at the expense of the system’s global efficiency. J Insufficient consideration of externalities versus difficulties of a multi-criteria management; again, this is the fundamental justice-efficiency dilemma which keeps recurring in contemporary societal debates, in the field of GR as in many other fields. J However, some tendencies are emerging; they are common to both families of behavior models: the tendency to ‘‘legalize’’ contemporary companies, the increased constraint to ‘‘account’’ (accountability), and finally the risk of an increased risk aversion . . .; these collective social factors are linked to one another and, for this reason, we must consider the hypothesis of a systemic risk.

Notes 1 Inverted commas are necessary because a non-superficial observation of the so-called ‘‘Anglo-Saxon’’ universe shows that it is infinitely more complex and diversified – especially between the UK and the USA, even within both these countries – and that it is advisable to avoid hasty generalizations. 2 With the usual reservations associated with the definition criteria of socially responsible investment; we could put forward that this represented around 13 percent of the ‘‘professionally managed saving’’ in the USA (Novethic source) (cf. Pe´rez, 2002). 3 Literally ‘‘stake carriers’’ to enable a pun, as opposed to ‘‘share carriers’’ (stockholders or shareholders). Concept developed in a whole range of works, especially by R.E. Freeman (1984) and much more since (cf. Logsdon et al., 2000). 4 cf. works initiated by Kaplan and Norton (1996). 5 Expression referring to the place where financial profit is normally found: on the bottom line of a profit and loss account; process extended to environmental aspects, on the one hand, and social aspects, on the other hand, according to the ‘‘3P theory: profit, people, planet’’ proposed by its initiators (cf. J. Eklington). 6 From the numerous publications on this topic, often linked to the essential contributions of Schumpeter (1912), then Penrose (1959), and Perroux (1969), we would mention the wellknown contributions of Argyris and Scho¨n (1978), Wernerfeld (1984), Teece et al. (1997).

References Aglietta, M. (1976, 1997), Re´gulation et crises du capitalisme, Ed. O. Jacob, Paris, p. 486. Albert, M. (1991), Capitalisme contre capitalisme, Ed. Du Seuil, Paris.

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Argyris, C. and Scho¨n, D. (1978, 1996), Organizational Learning, Addison-Wesley, Reading, MA. Auberger-Barre´, M-N. – coord – (2002), ‘‘E´valuation globale et management responsable’’, Special No. Revue Cadres CFDT, No. 400, July, p. 124. Baillet, J. and De Bry, F. (2001), L’entreprise et l’e´thique, Ed. Du Seuil (Points), Paris, p. 437. Batsch, L. (2002), Le capitalisme financier, La De´couverte (Repe`res), Paris, p. 121. Braudel, F. (1985), La dynamique du capitalisme, Flammarion (Champs), Paris, p. 123. Capron, M. and Quairel, F. (2001), ‘‘Les dynamiques relationnelles entre les firmes et les parties prenantes’’ (rapport pour le Cº Gal du Plan), research notebook CREFIGE-ERGO, Paris, p. 165. Chevalier, J-M. et al., coord (2002), Les strate´gies d’entreprises dans les nouvelles re´gulations, PUF, Paris, p. 231. CJD (Centre des jeunes dirigeants d’entreprise) (1996), L’entreprise au XXI º sie`cle, Flammarion, Paris, p. 158. Charreaux, G. (to be published), ‘‘Le gouvernement des entreprises’’, Encyclope´die des ressources humaines, Paris. Charreaux, G. and Desbrie`res, Ph. (1998), ‘‘Gouvernance des entreprises: valeur partenariale contre valeur actionnariale’’, Finance-Controˆle-Strate´gie, Vol. 1 No. 2, June, pp. 57-88. Freeman, R.E. (1984), Strategic Management: A Stakeholder Approach, Pitman, Marshall, MA. Hawley, J.P. and Williams, A.T. (2000), The Rise of Fiduciary Capitalism, The University of Pennsylvania Press, Philadelphia, PA. Hoarau, C. and Teller, R. (2001), Cre´ation de valeur et management de l’entreprise, Vuibert, Paris, p. 217. Jensen, M.C. (2001), ‘‘Value maximization, stakeholder theory and the corporate objective function’’, Business Ethics Quarterly, Vol. 12 No. 1, January. Kaplan, R.S. and Norton, D.P. (1996), The Balanced Scorecard, Harvard University Press, Boston, MA. Levi-Strauss, C. (1950), ‘‘Introduction a` l’oeuvre de Mardel Mauss’’, in Mauss, M. (Ed.), Sociologie et anthropologie, PUF, Paris. Logsdon J.M. et al. (2000), Research in Stakeholder Theory, The Clarkson Center for Business Ethics, University of Toronto, p. 153. Maslov, A.H.G. (1954), Motivation and Personality, Harper, New York, NY. Mignon, S. (2001), Strate´gie de pe´rennite´ d’entreprise, Vuilbert, Paris, p. 232. Penrose, E.T. (1959), The Theory of the Growth of the Firm, Wiley & Sons, New York, NY. Perroux, F. (1969), L’e´conomie du XXº sie`cle, PUF, Paris, p. 764. Pesqueux, Y. (2000), Le gouvernement d’entreprise comme ide´ologie, Ellipse, Paris, p. 268. Pesqueux, Y. (2002), Organizations: mode`les et repre´sentations, PUF, Paris, p. 396. Pesqueux, Y. and Biefnot, Y. (2002), L’e´thique des affaires, Editions d’Organization, Paris, p. 239. Riboud, A. (1987), Modernization, mode d’emploi, Report to the Prime Minister, Paris, 10/18. Savall, H. and Zardet, V. (1987), Maıˆtriser les couˆts cache´s, Economica, Paris, p. 334. Schumpeter, J. (1912), Theorie der wirtschaftlichen Entwicklung, Dunker & Humblot, Leipzig. Scitovsky, T. (1954), ‘‘Two concepts of external economics’’, The Journal of Political Economy, April, pp. 153-5. Soros, G. (1998), The Crisis of Global Capitalism, Perseus Books, Reading, MA. Teece, D. et al. (1997), ‘‘Dynamic capabilities and strategic management’’, Strategic Management Journal, Vol. 18 No. 7, pp. 509-33. VA (2001a), ‘‘Mondialisation, e´thique, environnement . . . : de nouvelles re`gles pour l’entreprise’’, Revue Franc¸aise de Gestion, special issue coordinated by de Rochebrune, R. and Tietart, R-A., No. 136, November-December, p. 176.

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VA (2001b), ‘‘Loi sur les nouvelles re´gulations e`conomiques’’, Journal Officiel, Paris. VA (2001c), ‘‘ ‘Livre vert’, promouvoir un cadre europe´en pour la responsabilite´ sociale des entreprises’’, EU Commission, Brussels. VA (2002), Global Reporting Initiative (GRI), Sustainability Reporting Guidelines, Amsterdam. Wallerstein, I. (1974), Le capitalisme historique, La De´couverte (Repe`res), Paris. Wernerfeld, B. (1984), ‘‘A resource-based view of the firm’’, Strategic Management Journal, Vol. 5 No. 2, pp. 171-80. Williamson, O.E. (1999), ‘‘Strategy research: governance and competence perspective’’, Strategic Management Journal, Vol. 20, pp. 1087-108.

Main Internet sites used http://www.arese-sa.com http://bsr.org http://www.calpers-governance.org http://www.domini.com http://www.earthsummit2002.org http://www.globalreporting.org http://oecd.org http://www.orse.org http://www.novethic.fr http://sirigroup.org http://www.socialfunds.com http://sri-in-progress.com http://www.stakeholderforum.org http://www.terra-nova.fr http://www.unrisd.org http://worldcsr.com

Recent works by the author and his team on this topic or related topics ‘‘Management de la compe´titivite´ et emploi – MCE’’, 1998-2001, collective programme (coordinated by R. Pe´rez and J. Brabet), research notebooks ERFI Montpellier, No. 19, p. 102 and No. 20, p. 100, September 2001 (pre-publishing of a collective work with L’Harmattan). ‘‘Gouvernance d’entreprise, performances et de´veloppement durable – GEP2D’’, 1998-2001, research and experience network-forum (coordinated by M. Capron, R. Pe´rez and F. Quairel); U. Paris-Dauphine. ‘‘La gouvernance des entreprises europe´ennes entre syste`mes nationaux et globalization’’, Univ. Euro d’e´te´ (coordinated by R. Pe´rez), Montpellier, September 2001. ‘‘Mutation du mode de gouvernance, dynamique de compe´titivite´ et management strate´gique des groupes: le cas des firmes multinationales alimentaires en Europe’’, research convention Univ. Montpellier 1, Commissariat Ge´ne´ral du Plan, final report, January 2002, 260 pp. + appendices (coordinated by R. Pe´rez and F. Palpacuer). R. Pe´rez (2002), ‘‘L’actionnaire socialement responsable: mythe d’hier ou re´alite´ de demain?’’, RFG (file coordinated by G. Charreaux), November 2002. R. Pe´rez (2003a), ‘‘La gouvernance des entreprises’’, La De´couverte (collection: Repe`res), p. 124. R. Pe´rez (2003b), ‘‘La dimension ressource humaine des restructurations industrielles’’, article for L’Encyclope´die des ressources humaines (coordinated by J. Allouche), to be published.

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Viewpoint Global responsibility – vision from Central Asia/ vision of Central Asia Akmaral Altaliyeva

Akmaral Altaliyeva became Director-General of Central Asian Foundation for Management Development (CAMAN) in April 2002. She is also teaching HRM and Organizational Behavior at The International Academy of Business, one of the top educational institutions in the field of management in Kazakhstan. She has not only ten years’ teaching experience, but also managerial practice in local companies. She gained her PhD from al-Farabi Kazak National University in the field of Political Economy in 1997. In 2001 she was a stipendiate of the Fulbright Program, one of the most prestigious programs of the US government for academia.

Abstract Focuses on global responsibility (GR) in Kazakhstan. Asserts, from analysis of the literature and interviews with students from the Executive MBA Program of one of the leading national business schools, that the subject of GR is not popular among Kazakhstani writers, nor well developed. Notes that the Kazakhstani national position with regard to GR is passive. Discusses the business culture structure of Kazakhstan. Keywords Ethics, Kazakhstan Deciding to participate in the Global Responsibility Concept Book Project, I thought that readers would like to know the approach to this concept in various countries of the world. Central Asia, including Kazakhstan, is one of these countries. In addition to the cultural uniqueness of Central Asia, every nation has its own specific culture and there are a number of factors underlying the Central Asian uniqueness. These factors include two changes in social and economic structures, which affected society within a century. These changes radically affected the fundamentals of society. First, the Socialist Revolution of 1917, which formed the Soviet ideology for three generations, and second, Perestroika in 1985, which produced the generation which totally negated the moral values of the three previous generations. Following 11 September 2001, the world community started to pay more attention to Central Asia and one of the factors of this attention is the geopolitical location of the region. Therefore, I want to characterize the Kazakhstani society from the point of view of GR and present my own ideas on this issue as a person living in this country, i.e. to present the vision from Kazakhstan. Unlike Mr Biefnot, my counterpart and the author of one of the articles of this Journal issue, I have always believed that the subject of GR is not popular among Kazakhstani writers, and not well developed by Kazakhstani readers. I am quite sure that the situation is the same in other Central Asian states of the former Soviet Union. Not many people in Kazakhstan are fluent in lingua franca. Therefore, it is unlikely that, for example, English information sources are well-known to the Kazakhstani readers representing various social classes: scholars, public officials, NGO activists, entrepreneurs, etc.

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To confirm my assumption, I carried out a small analysis. The aim of the analysis was to answer the following question: ‘‘How actively do the local mass media cover the GR subject, whether the periodical press debate this issue and what the Kazakhstani nationals think about this issue?’’ To answer the first part of this question, I looked through the literature bibliography containing the list of all the new books, magazines, articles, etc. received by the National Library of the Republic of Kazakhstan. In 2001-2002, the largest library of the Republic of Kazakhstan did not receive any materials whether in Russian or in Kazakh covering GR as an integrated concept, although separate elements of this concept are discussed and covered. Environmental issues are the most popular component of the GR concept among the Kazakhstani publishers and mass media. The issues of corruption, poverty, wars and terrorism are less popular. I asked the students of the Executive MBA Program, one of the leading national business schools, to answer the second part of the question. Of course, the respondent selection does not represent the whole of Kazakhstani society. I do not claim that I carried out the full-scale scientific research. However, I intentionally selected the managers of the companies active in the Republic of Kazakhstan. First of all, the importance of understanding and accepting the concept by people making decisions in society is obvious. Company managers are in this category of people. The scale of impact of the decisions made by managers could vary. However, managers play an important role in forming the company morale climate and behavior of the company employees. As the result of the geometric progression of people involved in these relations, their numbers have already risen and are still rising. This majority is essential to form the critical mass of persons sharing the values of the concept, and without this critical mass the practical implementation of the concept is impossible. As another aspect, the opinion of this social group is interesting for me, since society traditionally considers this group as representing, at a minimum, the position not totally agreeing with the ethical values and, at a maximum, totally disagreeing with these values. A total of 35 people were polled, answering three questions: 1. Are you aware of the GR concept? 2. In your opinion, what is the core part of the problem? 3. In your opinion, what is the situation regarding the implementation of this concept in Kazakhstan? We did not receive any positive response to the first question. The second question was to clarify how each person could individually interpret the concept name, if he/she knows the concept meaning, and what meaning this person might attribute to the concept name, if he/she is not aware of the concept itself. The public, with whom we worked, applied the concept to company level and interpreted GR as what was expected and required from the manager’s readiness to solve any company problems, irrespective of in which department they arose. Probably, the polling environment of the managers, namely, the business-school, where they studied the MBA Program and where the management and company stability are core issues, formed this interpretation to a great degree. In other words, the selective perception effect took place. Following the brief explanation to the respondents, the core ideas and components of the GR concept, we asked them the third and final question: ‘‘In your opinion, what is

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the situation in Kazakhstan regarding implementation of this concept? What are prospects for its implementation in our country?’’ The responses to this question can be embodied in the following statements: J The main concept idea is clear and, most probably, the vast majority of modern Kazakhstani society will accept this idea. J However, the absence of opponents of this idea does not mean that the idea will have a lot of active proponents in modern Kazakhstan. An average Kazakhstani national or even company is too poor to solve such problems at this level. At the same time, the state encourages the local market participants to give preference, in decision making, to more responsible, from the global point of view, alternatives. Following the discussion of the vision of Kazakhstan from the point of view of global responsibility, let me make a couple more of my own comments. Our society debates actively the environmental and poverty issues. The mass media, films and TV-programs cover these issues and public movements and parties are created and work with these issues. However, in my opinion, the positions of Western and Kazakhstani societies are radically different even in respect of the environmental issues. The Kazakhstani national position is a passive position. We are against industrial environmental pollution, but we do not sort our own wastes into ‘‘recyclable’’ and ‘‘not-recyclable’’; while we are in the country, we litter terribly, we are concerned with the problems of ozone holes and the greenhouse effect, but for our own cars we use low-grade petrol. Unfortunately, there are a lot of such examples. We often refer to our economic situation and poverty as the justification of our position. However, our economic situation is not the only and primary problem underlying this situation; the most important point is our culture and our selfconsciousness. I would like also to touch on the problem that some persons consider GR issues as a fashionable concept. Maurice Thevenet raised this problem in his article. The ‘‘Kazakhstani’’ (or Post-Soviet) feature is that some people in Kazakhstan also regard these global issues as a fashionable concept, but the difference is that they regard them as a fashionable concept of rich societies. According to this, unfortunately, substantial part of our society, the GR issues will be relevant for us, only when we resolve our economic problems. Obviously, in the world of ‘‘poor and rich’’ nations, it is not easy to overcome the problem of neglecting the future more general problems for the sake of the present more specific problems. Discussing GR problems, we always touch on issues of culture, material and spiritual values. However, the importance of culture for the economic growth of society is difficult to realize. This is particularly obvious from the example of the countries with the transition economy; they have both abundant natural resources and an experienced labor force (literacy, education, readiness for training, etc.), they attract foreign capital and have their own investment resources. It would seem that they have all the necessary prerequisites for the economic growth, but the economic growth itself is not taking place. I sympathize with the idea expressed by my colleagues during one of the CEU seminars on business ethics. The idea that culture on the whole, and in particular its ethical element, is linked with the natural, human and capital resources is one of the most important factors of economic growth, which is an essential factor of harmonious market economy development. Possibly, the developing countries and the countries of the so-called former two-worlds lack exactly this growth factor. The lack of sufficient historic experience of market relations development, while the oneworld countries have several centuries of such experience, which means gradually

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realizing the necessity to observe and not violate the interests of other parties in order to reach your own aims, probably does not give some cultures the opportunity to understand fully the importance and value of ethical behavior, which are essential for the development of a progressive society. As for the business culture structure of Kazakhstan, I would like to discuss its two components: the culture, material and spiritual values of local companies, and the culture, material and spiritual values of foreign companies active in Kazakhstan. In our opinion, the importance of the second component enhanced by the undeveloped national business culture underlies the peculiarity of the Kazakhstani situation. The arguments supporting this thesis are the following: J the national business culture of Kazakhstan, due to the recent market economy transition, is at the initial stage of its formation; and J the following transition period factors negatively affected and are affecting the national business culture: unskilled state regulation at the first market transition stages, corruption penetrating all levels of public administration, private sector development politicization and absence of management professionalism due to lack of modern management education among the local company managers. Traditionally, Kazakhstani nationals rely on the Western experience in respect of the market economy, business and management, regarding the Western practice as the behavior model, if not at present, at least, in the future. Please note that, even at present, the Western company contribution to the Kazakhstani management, including issues of the development of the corporate culture, worthwhile both for the modern employees and customers, is substantial. There is no doubt that among the Western management a positive example, which is more and more popular among Kazakhstani managers, is the desire to harmonize relations between companies and their employees through the management democratization, social benefits restoration, personnel training and development, etc. However, we should bear in mind how negatively the unethical and socially irresponsible behavior of the Western companies active in Kazakhstan affects Kazakhstani nationals. Therefore, I characterize the situation, slightly simplifying it, as follows: failing to find among local companies persuasive examples that socially responsible behavior in business is not profusion, but the guarantee of future prosperity, our society turned to the major Western company practice, which is associated world-wide with success, hoping to find examples confirming the above thesis. However, if the Western companies working in the developed countries create the image of the socially responsible companies on the global scale, but working in the market of the developing countries and countries with a transition economy behave themselves unethically, the belief in ethical business will disappear, and only the impression of the PR campaign will be left. Starting work at our market, many Western companies used the granted ‘‘privileges’’, namely, liberal (low) environmental standards, bribery to secure ‘‘competitive edge’’, public official incompetence, civil society immaturity, etc. I remember how shocked I was when the first petrol station was opened in the city centre near the botanical gardens, the traditional city recreation place. The fruit tree alley was cut down for the petrol station site. It was a petrol station of the Chevron Company, establishing a precedent which served as an example for many other companies. At present, the petrol stations in the city centre, ‘‘sleeping’’ areas, near the hospitals, etc., are typical of Almaty, the city with the acute air pollution problem due to its lowland location (Almaty is situated at the bottom of a natural depression surrounded by the mountains) and insufficient ventilation of the urban-industrial environment.

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In the above cases, not only the environment and people’s health, but also the culture and its ethical component suffer. In my opinion, the weakness and immaturity of ethical norms and values are comparable with a mental illness of society. However, unlike mental illness, this illness is catching. Moreover, globalization creates ideal conditions for its further spread. Therefore, the social responsibility of business as well as environmental issues, particularly, in countries which, due to the state weakness or to the immaturity of civil society, are not able to secure them independently, should be the subject of global concern and care.

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Part 3: Implications in management education Research Global impact – global responsibility: why a global management ethos is necessary Laszlo Zsolnai

Laszlo Zsolnai was born in 1958, in Szentes, Hungary. He has a Master’s Degree in Finance and a Doctoral Degree in Sociology from the Budapest University of Economic Sciences (BUES). He got his PhD in Economics from the Hungarian Academy of Sciences. Since 1995 he has been the Director of the Business Ethics Center of BUES. He is Chairman of the Business Ethics Inter-faculty Group of the Community of the European Management Schools (CEMS) in Paris. He is an Editorial Board Member of the International Journal of Social Economics and Global Outlook: An International Journal of Business, Economics, and Social Policy.

Abstract Business activities considerably affect the fate and survival of natural ecosystems as well as the life conditions of present and future generations. Applying the imperative of responsibility developed by Jonas states that business has a one way, non-reciprocal duty caring for the beings which are affected by its functioning. To meet its global responsibilities business should become sustainable, pro-social and future-enhancing. Keywords Globalization, Corporate responsibility, Sustainability Today’s business has global impact. Business activities considerably affect the fate and survival of natural ecosystems as well as the life conditions of present and future generations. Applying the imperative of responsibility developed by Hans Jonas we can state that business has a one way, non-reciprocal duty caring for the beings which are affected by its functioning. To meet its global responsibility business should become sustainable, pro-social and future-enhancing. A deep transformation of business is needed in order to contribute to the preservation (and not to the destruction) of the ecological and cultural richness of the world.

The imperative of responsibility Since the impact of today’s business is global, business has global responsibility. In the terms of market capitalization or turnover transnational corporations are bigger than many national economies. They operate in different countries and regions while considerably affecting local ecosystems and cultures. Also, business organizations employ technologies which irreversibly change the life of communities world-wide (e.g. biotechnologies). To catalyze the development of a global management ethos it is necessary to study the nature of moral responsibility in the context of the ecological, technological and social reality of our age. The most comprehensive theory of moral responsibility was presented by the German-US philosopher, Hans Jonas, in his magnum opus, The Imperative of Responsibility (Jonas, 1979, 1984). Jonas was born in Germany in 1903. He was tutored under the guidance of Edmund Husserl, Martin Heidegger and Rudolf Bultman. Jonas began his philosophical work on Gnosticism and its role in the late Antiquity. In the post-war period Jonas was

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teaching philosophy at The New School for Social Research for decades. He published the German version of his theory of responsibility in 1979 under the title Das Prinzip Verantwortung. Versuch einer Ethic fu¨r die Technologische Zivilization (Jonas, 1979). The re-written and enlarged English edition was published in 1984 under the title The Imperative of Responsibility: In Search of an Ethics for the Technological Age (Jonas, 1984). In his book Jonas’s basic preoccupation is the impact of modern technology on the human condition. The major theses on which his theory of responsibility is based are as follows: J ‘‘The altered, always enlarged nature of human action, with the magnitude and novelty of its works and their impact on man’s global future’’. J ‘‘Responsibility is a correlate of power and must be commensurate with the latter’s scope and that of its exercise’’. J ‘‘An imaginative ‘heuristics of fear’, replacing the former projections of hope, must tell us what is possibly at stake and of what we must beware’’. J ‘‘Metaphysics must underpin ethics. Hence, a speculative attempt is made at such an underpinning of man’s duties toward himself, his distant posterity, and the plenitude of life under his dominion’’. J ‘‘Objective imperatives for man in the scheme of things enable us to discriminate between legitimate and illegitimate goal-settings to our Promethean power’’ (Jonas, 1984, p. x). Jonas argues that the nature of human action has changed so dramatically in our times that the changed nature of human action calls for a radical change in ethics as well. He emphasizes that in previous ethics ‘‘all dealing with the non-human world, that is, the whole realm of techne (. . .) was ethically neutral. (. . .) Ethical significance belonged to the direct dealing of man with man, including man dealing with himself: all traditional ethics is anthropocentric. (. . .) The entity of ‘man’ and his basic condition was considered constant in essence and not itself an object of reshaping techne. (. . .) The effective range of action was small; the time span of foresight, goal-setting, and accountability was short, control of circumstances limited’’ (Jonas, 1984, pp. 4-5). According to Jonas, new dimensions of responsibility emerged because nature became a subject of human responsibility. This is underlined by the fact of the irreversibility and cumulative character of man’s impact on the living world. Knowledge, under these circumstances, is a prime duty of man, and must be commensurate with the causal scale of human action. Man should seek ‘‘not only the human good but also the good of things extra-human, that is, to extend the recognition of ‘ends in themselves’ beyond the sphere of man and make the human good include the care of them’’ (Jonas, 1984, pp. 7-8). For Jonas an imperative that is responding to the new type of human action might run like this. ‘‘Act so that the effects of your action are compatible with the permanence of genuine human life’’. Or expressed negatively: ‘‘Act so that the effects of your action are not destructive of the future possibility of such life’’ (Jonas, 1984, p. 11). Since future human beings and non-human beings do not have rights, our duties to future generations and to nature is independent of any idea of a right of reciprocity. Human responsibility is basically a non-reciprocal duty to guarding beings (Jonas, 1984, pp. 38-9). Jonas states that the necessary conditions of moral responsibility are as follows. ‘‘The first and most general condition of responsibility is causal power, that is, that acting

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makes an impact on the world; the second, that such acting is under the agent’s control; and the third, that he can foresee its consequences to some extent’’ (Jonas, 1984, p. 90). Jonas underlines the fact that moral responsibility is never formal but always substantive. ‘‘I feel responsible, not in the first place for my conduct and its consequences but for the matter that has a claim on my acting’’. For example ‘‘the wellbeing, the interest, the fate of others has, by circumstance or by agreement, come to my care, which means that my control over it involves at the same time my obligation for it’’ (Jonas, 1984, pp. 92-3). Jonas summarizes the imperative of responsibility as follows. ‘‘The concept of responsibility implies that of an ought – first of an ought-to-be of something, then of an ought-to-do of someone in response to the first’’. This is the most evident in the case of a new-born baby ‘‘whose mere breathing uncontradictably addresses an ought-to the world around, namely, to take care of him’’. Not only does the new-born call us in this way but ‘‘the unconditional end-in-itself of everything alive and the still-have-tocome of the faculties for securing this end’’ (Jonas, 1984, pp. 130, 134).

Nature, society, and future generations Business activities produce pay-offs for nature, society and future generations. For this reason we should evaluate business activities from the perspective of nature, from the perspective of society, and from the perspective of future generations. From the perspective of nature integrity is a central value. The notion of ecological integrity was first introduced by the US naturalist, Aldo Leopold, in his environmental classic A Sand County Almanac. He wrote: ‘‘a thing is right when it tends to preserve the integrity, stability, and beauty of the biotic community. It is wrong when it tends otherwise’’ (Leopold, 1948). Business activities can be evaluated against sustainability indicators that operationalize the notion of ecological integrity (Azar et al., 1996). Let A be a business activity. Let E1, ..., Ei, ..., Em be sustainability indicators (m > 1). Ei( ) is an ecological value function defined as follows: Ei(A) =

1 if business activity A is good regarding sustainability indicator Ei; 0 if business activity A is neutral regarding sustainability indicator Ei; (1) 2 if business activity A is bad regarding sustainability indicator Ei.

Ei(A) reflects the ecological value of business activity A regarding sustainability indicator Ei. The following vector represents the ecological value of business activity A regarding the sustainability indicators E1, ..., Ei, ..., Em: E (A) = [E1(A), ..., Ei(A), ..., Em(A)]

(2)

To get an aggregate picture about the ecological value of a business activity we should define weights that reflect the relative importance of the sustainability indicators. Let w1, ..., wi, ..., wm be such importance weights. It is required that: P wi = 1

(3)

The aggregate ecological value of business activity A can be calculated as follows: P (4) E(A) = wi Ei (A) E(A) reflects the aggregate ecological value of business activity A (1  E (A)  2).

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A business activity can be considered as sustainable if and only if its aggregate ecological value is positive. That is: E(A) > 0

(5)

Evaluating business activities from a social perspective has been a long-lasting enterprise of welfare economics. Here human wellbeing is the central value. Amartya Sen proposed to understand human wellbeing in the terms of capabilities. Capability is primarily a reflection of the freedom of a person to achieve valuable functioning. Hence capabilities can be interpreted as substantive freedom that people enjoy (Sen, 1992). Let C1, ..., Cj, ..., Cn be capability indicators against which business activities can be evaluated (j > 1). Let Cj( ) social value function be defined as follows: Cj(A) = 1 if business activity A is good regarding capability indicator Cj; 0 if business activity A is neutral regarding capability indicator Cj; 2 if business activity A is bad regarding capability indicator Cj.

(6)

Cj(A) reflects the social value of business activity A regarding capability indicator Cj. The following vector represents the social value of business activity A regarding all the capability indicators C1, ..., Cj, ..., Cn: C(A) = [C1(A), ..., Cj(A), ..., Cn(A)] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7) To get an aggregate picture about the social value of business activity A we should introduce weights that reflect the relative importance of the capability indicators. Let u1, ..., uj, ..., un be such importance weights. It is required that: P uj = 1

(8)

The aggregate social value of business activity A can be calculated as follows: P C(A) = uj Cj (A)

(9)

C(A) reflects the aggregate social value of business activity A (1  C(A)  2). A business activity can be considered as pro-social if its aggregate social value is positive. That is: C(A) > 0

(10)

How can we evaluate a business activity from the perspective of future generations? We cannot know too much about future generations but freedom is a central value here. According to Edith Brown Weiss, the freedom of future generations can be assured by satisfying the following principles (Brown Weiss, 1989): 1. conservation of options; 2. conservation of quality; and 3. conservation of access. Considering principles (1), (2), and (3), future generations indicators can be generated. Let F1, ..., Fk, ..., Fp be such indicators against which business activity systems can be evaluated (p > 1).

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Future generations value function Fk( ) is defined as follows: Fk(A) = 1 if business activity A is good regarding future generation indicator Fk; 0 if business activity A is neutral regarding future generations indicator Fk; 2 if business activity A is bad regarding future generations indicator Fk. (11) Fk(A) reflects the future generations value of business activity A regarding indicator Fk. The following vector represents the future generations value of business activity A regarding future generations indicators F1, ..., Fk, ..., Fn: F(A) = [F1(A), ..., Fk(A), ..., Fp(A)]

(12)

To get an aggregate picture about the future generations value of business activity A we should introduce weights that reflect the relative importance of indicators F1, ..., Fk, ..., Fp. Let v1, ..., vk, ..., vp be such importance weights. It is required that: P vk = 1

(13)

The aggregate future generations value of business activity A can be calculated as follows: P (14) vk Fk (A) F(A) reflects the aggregate future generations value of business activity A. (1  F(A)  2) A business activity can be considered as future-enhancing if its aggregate future generations value is positive. That is: F(A) > 0

(15)

Transformation of business The old moral rule ‘‘Love your neighbor as yourself’’ can be reinterpreted for global business as follows ‘‘Love nature, society and future generations as your business’’. It can be realized if the inequalitities (5), (10) and (15) are simultaneously satisfied. That is E(A), C(A), F(A) > 0

(16)

Two basic principles emerge that can help business to meet its global responsibility (Robertson, 1990): 1. Business should be conserving, that is should contribute to the conservation and restoration of the ecology of the natural world. 2. Business should be enabling, that is should contribute to the enhancement of the capabilities of present and future generations. Conserving and enabling call for a radical transformation of business. Business should contribute to the preservation (and not to the destruction) of the ecological and cultural richness of the world. Otherwise there will be no future for business at all (Zsolnai et al., 2002).

References Azar, C., Holmberg, J. and Lindgren, K. (1996) ‘‘Socio-ecological indicators for sustainability’’, Ecological Economics, Vol. 18, pp. 89-112.

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Brown Weis, E. (1989), In Fairness to Future Generations: International Law, Common Patrimony, and Intergeneration Equity, The United Nations University, Tokyo & Transnational Publishers, Dobbs Ferry, NY. Jonas, H. (1979), Das Prinzip Verantwortung. Versuch einer Ethic fu¨r die Technologische Zivilization, Insel Verlag, Frankfurt am Main. Jonas, H. (1984), The Imperative of Responsibility: In Search of an Ethics for the Technological Age, University of Chicago Press, Chicago, IL and London. Leopold, A. (1948), A Sand County Almanac, Oxford University Press, Oxford. Robertson, J. (1990), Future Wealth. A New Economics for the 21st Century, Cassel. Sen, A. (1992), Inequality Reexamined, New York, Russell Sage Foundation and Clarendon Press, Oxford. Zsolnai, L. and Wojciech, G. (Eds) (2002), Ethics and the Future of Capitalism, Transaction Publishers, New Brunswick & London.

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Viewpoint Foundations for a global management ethos Nicholas Capaldi

Nicholas Capaldi is the Legendre-Soule´ Distinguished Chair of Business Ethics at Loyola University in New Orleans. He was previously the McFarlin Endowed Professor of Philosophy and Research Professor of Law at the University of Tulsa. His principal research and teaching interest is in public policy and its intersection with political science, philosophy, law, religion, and economics. He received his BA from the University of Pennsylvania and his PhD from Columbia University. He is the author of six books, over 50 articles, and editor of six anthologies. He is a member of the editorial board of six journals and has served most recently as editor of Public Affairs Quarterly. He is an internationally recognized Hume scholar and a domestic public policy specialist on such issues as higher education, bioethics, business ethics, affirmative action, and immigration.

Abstract An emerging global ethics is outlined that can serve as the foundation for a global management ethos. In so doing, what a global management ethos is is defined, what would make it possible discussed, and its benign and malignant forms distinguished. The global management ethos (GME) described and advocated combines macro libertarianism and micro diversity. Keywords Ethics, Management

Introduction I shall sketch what I believe to be an emerging global ethics that can serve as the foundation for a global management ethos. In order to do this we must first define what a global management ethos is, discuss what would make it possible, and distinguish between its benign and malignant forms.

What is a global management ethos? We need to begin by defining what we mean by GME. Practitioners in the field of GME aim to articulate and to apply ethical principles to problems that arise within management understood in the broadest possible sense. Advocates of GME believe that there are some ethical principles that are applicable universally. We shall distinguish between two varieties of GME, benign and malignant. Benign GME may be no more than the search to find whether there are such principles. Surely none of us is opposed to searching. Some even believe that they have found some principles that are both universal and sufficiently contentful to have practical application. The point about content is important, especially since professional philosophers and those involved in the related fields of social issues in management or corporate social responsibility have a penchant for formulating incontestable abstractions that are wholly vacuous. Advocates of benign GME may also fall in a wide spectrum, depending on just how much universality they find. There are three questions raised by our definitions. First, since there cannot be a global management ethos without a global ethics, we shall need to ask if there are

DOI 10.1108/14720700310483497

VOL. 3 NO. 3 2003, pp. 101-113, MCB UP Limited, ISSN 1472-0701

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global ethics? Second, what are the factors that promote either the search for or the formulation of GME? What is it that makes some versions of GME malignant?

Is there a global ethics? There are three possible ways of arguing for a global ethic: empirical, rational, or historical-developmental. Let us look at the empirical argument first. At first sight, the answer to this question is an obvious ‘‘yes’’ because prominent international institutions and individuals keep assuring us that this is the case and producing lists of example of global ethics[1]. On second thoughts, these lists can be summarily dismissed as no more than ritualistic. The main philosophical argument for dismissing them is that these lists consist of procedural norms rather than substantive norms. It is not enough for ethicists to agree on a procedural norm, like respect for the the individual’s autonomy, when there are underlying disagreements about the substantive meaning of a norm. Would ‘‘autonomy’’ mean the same thing in different cultures? It clearly does not mean the same thing to everyone who invokes it even in our own culture! This is why it is so easy to agree on a list and then apply it in conflicting ways. These lists reflect the fullflowering of intellectual platitudinarianism whose best counterpart is the language of professional diplomacy. The empirical argument for dismissing these lists is that there are major violent conflicts shaking the world at present wherein the main protagonists of those conflicts espouse different (primarily) religious and moral outlooks. A final argument for dismissing these lists is that they are often examples of intellectual imperialism, that is, self-proclaimed universalists too often turn out to be de-racinated intellectuals from the West or those who have been educated in the West or who teach in the West and reflect a kind of rent-seeking by a particular class interest[2]. Finally, there is the point that even the existence of universalist moral conviction does not entail a detailed code of management having global reach. A further important distinction has to be made between ethics and politics. Even if we confine ourselves to the Western World, we can see the historical evolution of different concepts of the relationship among religion, ethics, and politics. The Greeks and Romans ‘‘lumped’’ all three together and subordinated everything to politics, which is why there was a state religion. By this ‘‘lumping’’ together I mean that classical secular writers believed that ultimate human consummation came through participation in and subordination of the individual to a larger and more encompassing political agenda. For these theorists, the role of the state was positive, that is to make human beings good or ‘‘help’’ them to become good. Christianity, specifically in the works of St Augustine, de-divinized the state, that is, it maintained that personal fulfillment came with membership in a religious or other community. The role of the state was negative, to punish wrongdoing. It was held that the state was inherently incapable of making human beings good. These two conflicting views, despite ongoing contextual permutations, continue to dominate the intellectual landscape. Why is this distinction important? If you adhere to the view that the state or political institution has a positive role, then your conception of global ethics has one set of political implications. If you adhere to the view that the state has a negative role, then your conception of global ethics will have a completely different set of political implications. Since I have defined malignant GME as having a political component, it should be clear why I think that some versions of alleged global ethics are benign and some are potentially dangerous. In any case, the conclusion is that de facto there is no global ethics. Moreover, if there is no global ethics, there can be no simplistic conception of GME.

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A second approach to a global ethic is rational, but it too will fail. It is not simply the case that there are significant moral disagreements about substantive issues in management. Many if not most of these controversies do not appear to be resolvable through sound rational argument. Many of the controversies depend upon different foundational metaphysical (world outlook) commitments, for example, as with respect to the environment, the role of the WTO, etc. As with most metaphysical controversies, resolution is possible only through the granting of particular initial premises and rules of evidence. Even when foundational metaphysical issues do not appear to be at stake, the debates turn on different rankings of the good. Again, resolution does not appear to be feasible without begging the question, arguing in a circle, or engaging in infinite regress. One cannot appeal to consequences without knowing how to rank the impact of different approaches with regard to different moral interests (with respect to liberty, equality, prosperity, and security interests). Nor can one uncontroversially appeal to preference satisfaction unless one already grants how one will correct preferences and compare rational versus impassioned preferences, as well as calculate the discount rate for preferences over time. Appeals to disinterested observers, hypothetical choosers, or hypothetical contractors will not avail either. If such decision makers are truly disinterested, they will choose nothing. To choose in a particular way, they must be fitted out with a particular moral sense or thin theory of the good. Intuitions can be met with contrary intuitions. Any particular balancing of claims can be countered with a different approach to achieving a balance. In order to appeal for guidance to any account of moral rationality, one must already have secured content for that moral rationality[3].

The emergence of global ethics Can there be a historical-development argument for global ethics? Might there be a global ethics in the making? That is, might the evolution of various practices lead in time to a global ethics? My speculative empirical and historical case for an emerging global ethics is as follows. Since the Renaissance, the modern western world has endorsed the technological project. By the technological project I mean the view expressed by Rene´ Descartes in the Discourse on Method when he proclaimed that what we seek is to make ourselves the ‘‘masters and possessors of nature’’. Instead of seeing nature as an organic process with which we as individuals conform, Descartes proclaimed the modern vision of controlling nature for human benefit. It is the same project that Bacon had in mind when he observed that knowledge is power. The technological project has so far been described in simple fashion. A detailed account would have to take seriously questions and criticisms about the viability of the project and some of the serious ethical questions embedded within it. For the moment I beg the reader’s indulgence that we can temporarily bracket off those concerns. The technological project has been a success in two senses: first, remarkable technological advantages have been achieved; second, those advantages have enabled subscribers to the project (mostly Western European and American) to ‘‘impose’’ this project on the entire globe. The imposition has not been a simple matter of the powerful imposing on the weak; the weak have come to embrace the project on their own. The mother in Africa who accepts western medication to save her sick child is not imposed upon, rather she has made a significant moral choice. There is an air of unreality if not hypocrisy among those who pretend to question whether we should embrace the technological project. There is no going back. We understand ourselves to be living in a world which has accepted or is in the process of

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accepting and coming to terms with the technological project. The issue of GME would not have arisen outside of the context of the technological project. As a second matter of fact, it has been discovered that a free market economy is the most effective means of carrying out the technological project. What the technological project calls for is constant innovation. Markets have been around for a long time, but the concept of the free market did not become an important theoretical construct until the modern period and the rise of the technological project. The crucial theoretical argument for the centrality of a free market was made by Adam Smith in the Wealth of Nations. His example of the manufacturing of pins explains how an assembly line of narrowly focused specialists is far more productive. Specifically, forced to focus on one part of a process leads creative individuals to invent labor-saving devices. Another way of putting this point is that the market economy provides the context and the incentives for maximizing creative activity in the technological project. The practical or empirical argument for the advantages of a free market economy is 1989, the collapse of the Soviet empire. Everywhere it is now conceded that a free market economy is the most efficient method for conducting the technological project. Economists might give more complex arguments of a purely technical kind, but the fact remains that the market is what works vis-a`-vis the technological project. Again, the idea of a free market economy is a complex one that needs qualification. However, for our purposes a free market means that there is no central allocation of resources and tasks, that resources remain largely in private hands (i.e. private property), and that the government’s role with regard to the economy is carefully circumscribed. Rather than employ misleading ideological slogans like the nightwatchman state or the minimal state, it is more advantageous to recognize that the extent of state action (e.g. legal system to enforce contracts and resolve disputes, as well as a legislative system) is always a matter of prudential judgment in specific contexts, but should always be justified in terms of whether it serves the interests of the technological project. So, for example, the break-up of monopolies is allegedly advantageous to both business and technology.

This leads us to our third important discovery. A free market economy flourished best under limited government[4], where limited means restricted to actions that enhance the technological project. The most successful instantiations of limited government have come about because of the rule of law and the promotion of individual ‘‘rights’’[5], where rights are understood to be restrictions upon government action, and religious toleration. The rule of law, which is not to be confused with the rule of laws, usually means that there is a constitution which embodies the fundamental values of a polity, that the role of the higher courts or some other body is to review new legislation and lower court decisions to ascertain their consistency with those fundamental values, that the norms of due process are not violated. Specifically, in the most successful examples of limited government the constitution embodies the notion of individual rights. In Oakeshott’s terminology (Oakeshott, 1996), in a modern state that is a civil association in which there is no collective good, only the goods of individual members, the laws are not instruments for some collective good or purpose but rather prescribe conditions to be observed by individuals who pursue their own purposes, alone or with others. The laws are neutral or indifferent with regard to whether the purposes are achieved. In its original Lockean context, these rights (e.g. life, liberty, property, etc.) are qualified as ‘‘natural’’ or ‘‘human’’. Rights, so understood, are absolute, do not conflict, and

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are possessed only by individual human beings. Rights are morally absolute or fundamental because they are derived from human nature and God (or later the categorical imperative), and as such cannot be overridden; the role of these rights is to protect the human capacity to choose. Finally, such rights impose only duties of noninterference. So understood, these individual rights limit the government, especially with regard to a market economy. Pure democracy is looked upon as a potential threat, for it harbors within it the formal notion that what is right is what the majority decides. The majority can clearly redefine the fundamental values. Two ways are available for preventing the misuse of democratic procedure: one is the political doctrine of checks and balances and the other is a larger cultural context in which the fundamental values are somehow safeguarded or maintained even in the process of change and reform. Political machinery ultimately depends for its proper use on the larger cultural context. We are, therefore, brought back to the need for a public ethic that preserves something like the doctrine of individual rights. The notion of individual rights has historically and logically depended upon a larger cultural context in which a substantive ethical consensus has operated. The substantive ethical consensus contains a commitment to personal autonomy. By autonomy is meant self-rule[6]. An individual is free to the extent that they impose order upon themselves. Personal autonomy is lacking in cases of heteronomy, including the exploitation of others. Although the concept of autonomy is classical in origin, its Christian roots are most relevant for the modern period. It is the culmination of the Christian doctrine of free will and responsibility transposed to the civil sphere and as guaranteeing the coincidence of individual good and the common good. Precisely because my autonomy requires recognition (Hegel), I am obligated to promote yours as well. Autonomy is not a zero-sum game. The basic ethical concept that emerges is the concept of personal autonomy. The concept of autonomy presupposes that human beings are in some non-trivial sense possessed of free will; the possession of free will is not an obvious fact but something we come to discover about ourselves. This discovery is only possible for those who learn to control their impulses and who reject the idea that standards are external. Autonomy is the key moral concept[7]. It is clearly not the only moral concept to form part of a global ethics. It is beyond the compass of this essay to do anything but identify the centrality of autonomy. I might suggest, however, that whatever else emerges in subsequent analysis it will not take the form of a rigid deductive system of ethics. Two important features of autonomy are worth noting. First, to govern oneself is not to be confused with arbitrarily defining oneself. Autonomy is often misrepresented by its critics (usually advocates of teleology) as a form of self-indulgence. Although it is true that advocates of autonomy deny an intrinsic teleology and recognize an enormous number of ways in which we pursue fulfillment, all of these ways avoid heteronomy and therefore any notion of imposing on others[8]. The usual litany of counter-examples always turn out to be forms of heteronomy. Second, recognizing, pursuing, and sustaining autonomy are the spiritual quests of modernity and the technological project. The ultimate rationale for the technological project is not material comfort or consumer satisfaction but the production of the means of accomplishment. To discover that our greatest sense of fulfillment comes from freely imposing order on ourselves in order to impose a creative order on the world is perhaps the closest way of coming to know God. Although I have told the story somewhat differently, in the end we discover that the technological project is not just for the pursuit of creature comforts but is itself the highest expression of human autonomy.

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Implications for a global management ethos What are the implications of the foregoing view for a management ethos? First, this is not an exercise in triumphalism or a denigration of the cultures of developing nations. It is an attempt to explicate and capture what I take to be the dominant norms of evolving practices in a world increasingly defined by the technological project. Second, this account permits diversity within unity. Short of rejecting the technological project, which is highly unlikely, all cultures will soon find themselves committed to personal autonomy. This commitment to personal autonomy, however, is not a commitment to a specific set of guidelines. The precise content of one’s autonomous decisions is not dictated by the principle of autonomy itself. For example, in any culture decisions may be made in a variety of ways including collective ways as long as the individuals involved have voluntarily chosen to be part of that cultural-matrix. The wonderful thing about autonomy is that it is compatible with a great variety of ethical practices. Oakeshott’s distinction between a civil association and an enterprise association will be helpful here. As long as the larger social context is a civil association (and therefore does not have a collective good) any number of enterprise associations (which can have a voluntarily chosen collective good – family, religion, etc.) may flourish within it. We may have rival religious and, I would add, metaphysical, views but these are all acceptable as long as they admit the principle of autonomy – whatever specific content they want to add on. That is why we need not fear the western conception of ‘‘autonomy’’ as I have described it because it makes room for voluntary cultural diversity. I take it that the very existence of human freedom (and therefore of autonomy) means that experience does not come to us in pre-packaged units. Rather, we are not constrained in how we interpret our experience. What distinguishes us from animals is that we are free to choose how we interpret experience. To be human is to be free; our freedom is employed in our imagination and intelligence; these faculties are used in defining ourselves as individuals and in giving meaning to our experience of the world we inhabit. It is this fact about ourselves that defeats every coercive moral epistemology. Autonomy is the root of the limits of discursive moral epistemology. Third, I want to stress the extent to which respect for autonomy should lead to a search for the solution of problems that looks for voluntary organizations first rather than governmental ones; although even this recommendation needs to be qualified by what we shall say in the next paragraph. ‘‘At one extreme is the temperament which feels, if it’s wrong, we must legislate at once. Let us forbid it in the Penal Code, or at least write it into the Civil Code and, if we can’t do either of those, then let us outlaw it in some other code or body of law, such as the Public Health Code. The British think that is the French way . . . At the other extreme is the temperament which feels: if it’s wrong, let us educate everybody to know that it is wrong, and that will surely solve the problem. At the very most, let us hope the professionals will regulate it in their own codes of practice . . . Above all, no new law. The French think that is the British way[9]’’. Finally, we must distinguish among three different inter-cultural settings: simple diversity, a developing culture, and a corrupt culture. By simple diversity I mean the existence of two or more cultures that share a basic commitment to autonomy but because of historical and other reasons express that autonomy in different ways and in somewhat modified contexts. The clearest example would be the difference

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between say a North American expression of autonomy and a European expression of autonomy, or even the differences between a French and Italian expression of autonomy. GME exercised in this context would probably involve no more than good etiquette (not condescension) of respect for local differences. Here much might be learned from cultural comparativists, such as those who work in the field of comparative law. The latter often find analogues between seemingly different systems that allow that same thing to be accomplished in an ethical and legal manner but in different ways[10]. GME applied to a developing culture (i.e. a culture that is in the process of coming to terms with the technological project, a market economy, limited government, rule of law, personal autonomy, etc.) is much more complex. Here the challenge is not just respect for local customs but polite resistance to practices incompatible with market efficiency and personal autonomy. For example, ‘‘bribery’’ is unacceptable even if rooted in past cultural practice. ‘‘Bribery’’ as a practice reflects a traditional feudal organization of economic and political institutions that is ultimately incompatible with market efficiency and personal autonomy. Moreover, to acquiesce in the practice of bribery is to risk compromising and losing one’s integrity and autonomy. To offer a bribe under the best of circumstances is to perceive oneself as dealing with an inferior; to deal with a perceived inferior is to revert to the mentality of a ‘‘master’’ in which there is no room for autonomy. It is a first step toward engaging what Conrad called Heart of Darkness. Not only must individual firms resist the practice but they will have to find nonconfrontational and imaginative means of communicating its unacceptability. One possibility is a joint and concerted effort by all firms involved. This more than anything else highlights the necessity for GME. A third potential context is that of an outright corrupt culture, that is, one which is openly hostile to the complex of values associated with the technological project, a market economy, rule of law, personal autonomy, etc. In such a context, it will probably be best to withdraw and refuse to engage in economic practices at the level of the individual firm.

Malignant GME A variety of very different circumstances is behind the move toward GME. Above we have sketched a positive and benign vision emanating from the fact that economic factors are creating a global economy. This does not mean a more homogenized world. We can envisage a richer world in which a multiplicity of cultures each evolves in a way that reflects hybrid vigor. On the other hand, there is a dangerous form of GME. By malignant GME we mean the following: J the attempt to formulate international management policy at the exclusively governmental/political level; J by the application of universal moral rules; J as formulated by ‘‘professional’’ ethicists; and J who claim access to legitimating philosophical principles, both metaphysical and epistemological. National management ethos involves the same elements only confined to one modern sovereign state. What is asserted here as true of both benign and malignant GME is also true of a national management ethos.

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One source of pressure for GME is governmental. Since the function of government is to ensure the conditions for the smooth operation of a market economy (which in turn serves the larger technological project), and since the logic of the technological project and its accompanying market economy is an international division of labor, governments have increasingly assumed the burden in their international role. As a consequence, management has been bureaucratized, and this leads inevitably to the call for uniform policies. Uniform policies inevitably raise ethical issues, and so governments are forced to ponder those issues. Governments, or bureaucrats, would love to believe that there are experts on these issues who can arrive at ‘‘objective’’ (‘‘scientific’’?) answers to their questions[11]. A second source of pressure comes from self-styled ‘‘experts’’ who have a vested interest in promoting the notion of either national or GME. These experts, the usual academic suspects, are rent-seekers all too willing to accommodate the bureaucratic need to formulate uniform policies. The third source of pressure dovetails with the third, just as the third dovetails with the second. The fourth source comes from individuals or groups with a specific ethical agenda who seek to impose their own ethical views by seizing control of the government-appointed committees. There is a broad spectrum of such hidden agenda groups. Very often, these self-styled experts have been unsuccessful in imposing their views on a national level and seek to achieve on a global level what they have failed to achieved locally. The ultimate intellectual justification for global bioethics is philosophical. The latest and most powerful and ambitious expression of the philosophic impulse is to be found in the Enlightenment Project[12]. The Enlightenment Project is the attempt to define and explain the human predicament through science as well as to achieve mastery over it through the use of a social technology[13]. This project originated in France in the eighteenth century with the philosophes, promoted by positivists in the nineteenth century, and has come to dominate the intellectual world in the twentieth century. The notion that one can formulate an ethical ‘‘theory’’ and then apply that theory as a form of ‘‘applied’’ ethics is a notion derived from and promoted by contemporary analytic philosophy. Its analogue is the commonly accepted view that engineering is applied physical science or that medicine is applied biology.

Because this view of philosophy dominates the profession of philosophy it is uncritically accepted by many outside the profession. Unfortunately for those who take this position, the Enlightenment Project has been intellectually discredited[14]. The Enlightenment Project presupposes that physical science is the whole truth about everything and the ground of its own intelligibility. Further, it presupposed that there could be a social science modeled after physical science such that this social science could be the basis of a social technology. Many people in the field of management still cling to this notion of social science. Unfortunately, physical science does not have the intellectual virtues claimed for it, for science is not self-certifying. Science cannot provide a naturalistic account. If physical science cannot certify itself, still less can social science. All those who recognize that the Project has failed may be called postmodern, although how they respond to the recognition of the failure varies widely. More important are the implications of the collapse. Science presupposes the human frame of reference. Any attempt to render the human framework itself intelligible requires a hermeneutical account. Ethics in general and management in particular are part of the human framework and therefore can only be explicated hermeneutically.

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Any hermeneutical account is ultimately circular. Circularity is both its virtue and its vice. One can explicate one’s ethical presuppositions and, while the presuppositions may evolve and change and one can explicate those changes, there is no external position from which one can do this. Simple observation of the current world reveals a plurality of ethical positions, something we have already noted in conjunction with global ethics. Each of those positions can explicate itself, but there is no independent intellectual location from which to evaluate or meta-critique those positions. In short, there is no consensus narrative, not religious, metaphysical, or epistemological, from which to resolve ethical and management issues. It is important to recognize that there was, allegedly, an intellectual foundation for GME and that it has been discredited. There is now no independent ‘‘intellectual’’ basis for GME. The way out is not to look for a theory but to look to evolving practices in the manner we have described above.

What makes for malignant GME? The Enlightenment Project in general and the advocacy of GME raise significant liberty issues. The axiology of the Enlightenment Project is as follows. The Enlightenment Project asserts the primacy of theoretical knowledge. As a consequence of scientism, theoretical knowledge is primary and practical knowledge has a secondary status. The philosophical challenge is not merely to identify the realm of the practical but to explain it theoretically. This leads to a dichotomy of fact and value: only factual judgments can be true. Value judgments are not truths because they do not refer to structures independent of the observer or agents. This does not preclude a science of ethics. Values are a kind of epiphenomena. Given the primacy of theoretical knowledge and the derivative nature of the social sciences, there can be a physicalscientific and/or social-scientific factual account of the sub-structure of the context within which values function. This is how the realm of the practical will be explained, ultimately, in theoretical terms. There is a two-tier view of human psychology in which values are epiphenomena with a materialist sub-structure. The relevant explanatory constituents of the sub-structure are physiological drives; that is, there is no real freedom of the will[15]. Liberty is compatible with sub-structure determinism only if liberty is construed as the absence of arbitrary external constraints, and where restraints are determined to be arbitrary relative to the fundamental drives. The fundamental drives alleged to exist in the substructure are neither culture-specific nor conscious level-specific but physiological (e.g. seeking pleasure), and therefore more universal. The fundamental drives also seek, it is presumed, some kind of homeostasis or maximization that permits negotiation or overruling specific rules (utilitarianism). The foregoing conception of liberty leads to a political conception of ethics based on external social sanctions instead of morality (which involves the inner sanction of autonomous agents). This sub-structure allegedly allowed for a social technology in which cognition can control volition because this sub-structure is not dependent upon a perspective; it is a structure that reveals our allegedly basic and universal drives so that we respond automatically (causally) to any information about this structure. This is the science of ethics which philosophers seek, i.e. this is the level at which we shall find explanations that exhibit realism, causality, and empirical verifiability. Knowledge of this sub-structure is what presumably justifies social and political planning. Many forms of Liberalism, Socialism, and Marxism subscribe to the two-tier view of human psychology in which values are epiphenomena with a materialist substructure that is trans-cultural, timeless, and allows for a social engineering that renders human

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beings compatible and cooperative (homeostasis). This substructure can be appealed to in order to correct surface disagreements and overcome relativism. The ultimate implications of the Enlightenment Project are totalitarian. To what the political agenda of the Enlightenment Project amounts is the following: J human beings are, basically, good, not sinful, and the ultimate goal of human existence is happiness in this life; J human beings are to be understood mechanistically; hence evil behavior is exclusively the result of external forces (scientization); J social technology can create a Utopia by the control of external forces (scientization); and J society is a hierarchical structure best served by a powerful and authoritarian state supervised by the new clerisy, namely the philosophes, or applied ethics experts in our case. What we see in so much US and EU public policy based on the misguided belief in the Enlightenment Project is the natural progression from centralization to secularism to materialism to a social-collectivist conception of human welfare, which considers that inequalities are bad in themselves. The subsidiary notions of a science of ethics and ethical expertise, when conjoined with the field of management where presumably we have scientific information about humanity, help to promote a notion of GME which is malignant. Management as a field of inquiry would lay claim to a universal account of proper moral deportment, including the foundations of law and public policy as well as the moral authority for national and international institutions to guarantee uniformity of practice. Consequently, a great deal of management theory has come to have a national-socialist or liberal, statist character. The latest example is ‘‘Rights-Talk’’, which invariably leads to statist solutions; what I would add is the identification of the Enlightenment Project as the defective intellectual underpinning of such rights-talk. In its Enlightenment Project form, rights are means to the achievement of the ends. As such, rights are only prima facie, may be overridden, and may be possessed by any entity, not just individual human beings. Such rights can be welfare rights, i.e. they may be such that others have a positive obligation to provide such goods, benefits or means.

Autonomy By ‘‘liberty’’ we understand the absence of arbitrary external constraints. ‘‘Liberty’’ refers to external conditions over which individuals do not always have control. By ‘‘freedom’’ we understand personal autonomy or self-rule. ‘‘Freedom’’ is an internal condition for which individuals are responsible. Individuals may be ignorant of their freedom, they may choose to abdicate their freedom, but freedom as an internal state is something over which they always exercise control if they so choose. Freedom is not something that can be controlled from the outside. This is what is meant by saying that individuals have ‘‘free will’’, and we maintain this as a fundamental truth about the human condition, a truth that defies any naturalistic-scientistic explanation or reduction. If asked to account for this freedom, our only recourse is to appeal to introspection, to point out that it is a fundamental presupposition of all meaningful human action, and that no meaningful human activity has ever been or can be explained without appeal to it at some level[16]. The existence of such freedom is incompatible with the views that human beings can be explained either mechanically or organically, that human beings have a telos, or that human desires form a homeostatic system about which it makes sense to talk in terms of maximizing its

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welfare. Finally, it is not possible to exercise this freedom in a manner that is deleterious to others. The reason for this is that any action which requires the unwilling subordination of another human being is in itself a heteronymous act. So understood, the strongest and most fundamental argument for liberty is the existence of freedom as autonomy. It is important to see the grounding of liberty in freedom. All meaningful human action is to be justified as an expression of human freedom or autonomy or as contributing to conditions for the exercise of such freedom and the responsibility for it. Liberty is a good thing insofar as it permits individuals to realize and exercise their freedom. Any attempt to manage the lives of responsible adults from the outside is a violation of and a denial of their freedom. It is not possible for others to make a responsible adult do or impose what is good for that adult, for, by definition, what is good for an individual in the ultimate sense is that the individual has freely chosen it. Freedom is thus the basis for liberty. Malignant GME substitutes a political process for both a market process and for the moral choices of individuals. As such it attempts to determine from the outside what is good for individuals. For that reason, malignant GME is a potential threat to all forms of liberty and a denial of human freedom. There is, thus, a foundational contrast between accounts of GME that understand the actual freedom of individuals to have priority over concerns with equality, versus those that hold the opposite.

GME for a world and/or society of free and responsible individuals There are four possible positions in the contemporary context: 1. Hand-wringing obscurantism: there are individuals who want to use ethical terminology to discuss global management issues but are blind to the fact that they live in a postmodern world and refuse to articulate the framework from within which they carry on the discussion. 2. Enlightenment Project: GME based on alleged social science. ‘‘Moral’’ decisions are made within an unacknowledged private-agenda political framework. 3. Religious fundamentalism: the moral (religious) dimension is prior to the political dimension. There will be an official and specific moral or religious vision that dictates a specific management ethos enforced by the government. 4. Pluralism: the moral (religious, cultural, metaphysical, etc.) dimension is prior to the political dimension, but the moral dimension is framed in terms of autonomy. Management is subordinated to the pursuit of autonomy with maximum feasible privatization and with diversity based upon autonomy.

Summary For those who like the idea of GME, I have sketched a scenario in which it might be possible, diverse, and politically benign. The GME that I describe and advocate combines macro libertarianism and micro diversity. For those who are working toward a grand meta-narrative, I have provided one sample. It is important to provide a narrative of some kind. In some sense or other we are going to have to face the issue of GME, and the claim that GME must be local in all senses is itself a kind of policy calling for some sort of account. To avoid giving some sort of account is to invite either a dangerous skepticism or statist resolutions posing as ethics. What we need is some account of how to agree to disagree. I have provided such an account and invite response to it.

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Notes 1 For example, Declaration of the Rights of Man and of the Citizen (1789); United Nations Universal Declaration of Human Rights (1948); Kung, H. (Ed) (1996), Yes to a Global Ethic, Continuum Publishing, New York, NY, available at: www.uni-teubingen.de/stiftungweltethos/dat_eng/st_3_htm; InterAction Council (1996), ‘‘In search of global ethical standards’’, available at: www.asiawide.or.ip; Commission on Global Governance (1995), ‘‘Our global neighborhood’’, available at: www.cgg.ch. 2 In other contexts I have identified intellectuals as those who (a) believe there is objective normative knowledge that is (b) apprehended exclusively by members of their own cognitive community and (c) which gives them legitimate claim to direct the various institutions of the world. 3 I am indebted for this formulation to H.T. Engelhardt. 4 ‘‘Liberty’’ is the absence of arbitrary external constraint. To have political liberty is to be able to restrain or limit the government. ‘‘Freedom’’ (hereafter, autonomy) is an inner condition, the condition of imposing order on oneself. Liberty is a means to freedom. Liberty degenerates into license only when it is not in the service of freedom. 5 For reasons that will become progressively clear, I would like to avoid or do away with ‘‘rights’’ talk altogether. It appears as if this can be best done by absorbing what I want to say about ‘‘rights’’ into the discussion of the rule of law, especially as formulated by Hayek. Locke’s formulation of a doctrine of ‘‘rights’’ is an example of the kind of theorizing that seeks to transcend practice, something I criticize in the latter part of the essay. That what Locke wanted to say about ‘‘rights’’ takes on the exact opposite meaning in contemporary contexts is the inevitable fate of such abstractions. Hume, Burke, Bentham, and Hegel all criticized Locke’s doctrine. 6 One of the reasons I insist upon using this concept is that it is an example of how the evolution of a concept deepens our understanding of its meaning. The ancients found the locus of autonomy in the Polis. It was the Polis that was to be free by governing itself. It is part of the glory of Christianity that it transferred the locus of freedom from the Polis to the individual. It is not an accident that Christianity is a significant contributor in the history of liberty. 7 We must distinguish between ‘‘ethics’’ and ‘‘morals’’. Ethics applies, strictly speaking, only to teleological systems; moral philosophy (deontology) denies the existence of teleology. From Kant onward, however, a number of theorists including Hegel and Mill combine both by making autonomy our ultimate ‘‘end’’. 8 I believe there is a serious misunderstanding of ‘‘autonomy’’ in Maritain (1951), Man and State, pp. 83-4, that reflects a failure to understand fully both Kant and Hegel. 9 Lord Kennet in an unpublished paper, quoted from: Sev S. Fluss, ‘‘An international overview of developments in certain areas, 1984-1994’’, in Cosimo Marco Mazzoni (Ed.) (1998), A Legal Framework for Bioethics, Kluwer, The Hague, p. 13. 10 See, for example, Nadia E. Nedzel (1997), ‘‘A comparative study of good faith, fair dealing, and precontractual liability’’, Tulane European & Civil Law Forum, Vol. 12, pp. 97-158. 11 Otherwise, different regimes are forced to select committees of ‘‘eminent authorities’’ to arrive at ‘‘political’’ resolutions of these issues. 12 See N. Capaldi (1998), The Enlightenment Project in the Analytic Conversation. Alasdair MacIntyre, in his enormously important and influential book, After Virtue (1981), identifies the ‘‘Enlightenment Project’’ as the ‘‘project of an independent rational justification of morality’’ (p. 38). While we use the same expression as MacIntyre, namely ‘‘Enlightenment Project’’, and while we agree that part of that project was to establish the authority of Judeo-Christian morality by reason alone, that is to secularize morality, we propose to give a more systematic account of that project. We further suggest that the attempt to secularize morality antedates the Enlightenment; finally we would disagree with MacIntyre’s analysis of specific figures such as Hume and Kant. MacIntyre’s own agenda to defend an Aristotelianized version of Christianity obscures important differences between the philosophes and their critics. Nevertheless, what is important here is our agreement with MacIntyre’s recognition that contemporary moral discussion is rooted in something we can all identify as the

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‘‘Enlightenment Project’’. See also W. Barrett (1978), The Illusion of Technique; A. Bloom (1987), The Closing of the American Mind (1987), pp. 243-312; Adorno, T.W. and Horkheimer M. (1990), Dialectic of the Enlightenment; J. McCarthy (Ed.) (1998), Modern Enlightenment and the Rule of Reason. 13 See C.L. Becker (1962), The Heavenly City of the Eighteenth Century Philosophers, Chapter Four, for an exposition of the position that the dream of a technological Utopia is the common inheritance of liberals, socialists, and Marxists. 14 See R. Rorty (1979), Philosophy and the Mirror of Nature, Margolis (1995), and Capaldi (1998). 15 Habermas’ refusal to embrace the full Kantian position including freedom of the will allows him to arrive at similar conclusions even though he rejects the positivism of analytic philosophy. 16 See Nicholas Capaldi (1998), The Enlightenment Project in the Analytic Conversation, for a rebuttal of all extant versions of the claim that meaningful human action can be explained naturalistically.

Reference Oakeshott, M. (1996), On Human Conduct, Oxford.

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Viewpoint Global responsibility and individual exemplarity Maurice The´venet

Maurice The´venet is Professor of Human Resources Management at CNAM (France).

Abstract Discusses the concepts of global responsibility, sustainable growth and social responsibility. Concludes that key to the issue of global responsibility will be behavioral responsibility from people and notes that this is an issue not only of belief but of competencies and skills. Keywords Corporate responsibility, Social responsibility, Sustainability Global responsibility, sustainable growth, social responsibility are some of the concepts that have emerged as global concerns for the modern societies, the governmental and non-governmental bodies, the international institutions as well as, last but not least, the citizens at the beginning of this new century. From a historical point of view, it is pretty understandable that those major threats for the future that everybody is experiencing, wherever he or she lives, will lead him or her to new approaches to the social life. Major environmental catastrophes, terrorist attacks, major criminal charges against business people make more and more crucial the need for any kind or model of management of society at the top level. The general interest for these global issues may also appear as a positive signal in the sense that more and more people agree, if not about a diagnosis and an effective action plan, at least upon the necessity to think about it. Some people will talk about a fashionable concept. They may be right and that is a positive critique: whenever concepts become fashionable, it generally means that something important is happening. At least, people recognize the importance of some problems, the symptoms of which they share. Three main ideas arise from these diverse references to the concepts of sustainable growth and social responsibility for companies: 1. There is a general and broad concern for environment. There are fewer and fewer areas of our life that are not part of the environment. The quality of air and water, the characteristics of products, the quality of life at work, the respect for the future of the planet and its future inhabitants. The scope of what has to be preserved is wider and wider and it may look impossible to preserve everything, the current standard of life included. The major conventions such as Rio in 1992 and

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DOI 10.1108/14720700310483505

Johannesburg in 2002 constitute milestones for the progress of such notions. The generalization of a global model of demonstration has emerged in Seattle, Porto Alegre or Genoa that illustrate this concern and its possible consequences upon the political life of our countries and regions. Not only have the areas of concern extended but also the political players and organizations that feel concerned by these issues: governments, rating agencies, professional unions or communities want to have their own say about the stakes and the potential courses of action. 2. Business and companies are also most concerned by this evolution. They produce items that may be considered as a threat for the people. We are no longer talking about weapons only but chemical products, items that could hurt the environment or the person, activities that endanger the health of people, the working conditions, and the impact of the economic activities upon the local communities through employment or tax payment. Thus, it appears that, in any activity, the company may be concerned by the consequences of its actions. That is why some have been talking of the responsibility of the company without limits[1]. Whatever the problems are it may be more and more predictable that people will look upon companies, acting and existing institutions, as potentially responsible for what is occurring. 3. If the human activities are potentially dangerous for the people, and especially those that are related to business, it is very clear that some actions should be taken. There is a high level of competition between all those who would like to make or influence decisions. All propositions, ideas, and actions refer to a need for some universal values and principles that should be respected by all players. Respect for the future generations or caution for risks that are not totally under control still are some of the instances of these principles. Just as the international community is acting about war crimes, there is a kind of a consensus about some common values that should be ‘‘decided’’ concerning all that may impact the life of mankind. These evolutions are global and the imminent risks look pretty big; companies will be under pressure, whether they like it or not. However, is there anything new in the process out of a new set of imminent rules that governments will impose upon the companies as they have been doing for decades? Of course some academics and media gurus assess that it is not a new problem that is arising but a new approach to business. Is it really true? Several issues need to be addressed in this respect: J What is really new in this emerging evolution towards more global responsibility? For decades some assumptions have been made concerning the supposed harmony of economic and social concerns (there was a recent re-assessment of this harmony in managerial terms (Martin, 2002)[2]. For decades companies have been experiencing the change in the system of rules with which they had to comply. Obviously, the current concerns are specific, the topic is of a general interest and companies will have to adapt once again. But does this really impact management practices? J What kind of attitudes could the corporations have as a response to the pressures of their environment? If we consider that global responsibility as a global concern will impact companies, it is necessary to discuss the possible attitudes that companies may have towards this pressure coming from outside. It can be a reactive defensive attitude or a proactive one. Most authors are affirming that it should be the second one. But it is generally meant that broad and vague universal values should reign in the new corporation. It may be helpful to question this approach and wonder how new external values could really change companies’ behaviors.

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J If we buy into the idea that corporations, as other players, should behave differently and if we try to avoid the illusion of ‘‘values management’’ it is finally necessary to question what an exemplary behavior really means for a corporation. If companies, as crucial players, should be exemplary in their behavior, we shall need to clarify what exemplarity means for a corporation. Is it only the naı¨ve statement that the company should behave with responsibility according to any kind of readymade ethics or is it more serious and compelling as an issue of management? Exemplarity needs to be discussed as a collective behavior of an institution but more importantly as a set of individual behaviors because organizations do not exist – persons do. In the history of business, companies have been regularly requested to modify their practices according to new demands of the community. The global responsibility would be one of these regular periods when companies have new obligations imposed upon them. Put differently, that would be a new period when players will struggle in order to modify the behavior of companies. Companies have always been forced to manage the relationships with the workers and their unions. Even though it is pretty different from one country and industry to another, given the historical culture and the economic conditions of the market, industrial relations are a traditional reality of company life. In the 1970s, the consumerist movement was very powerful and, even though it has disappeared from the headlines, companies still continue to experience the power of some associations and bodies that regularly sue them with a pretty good success: the implementation of quality processes, the reaction of the company from a legal and organizational point of view demonstrate the effects of these movements that have forced companies to change. Thus, it is not so extraordinary that the concerns of society as a whole impact the companies and their traditional way of doing business. The novelty would only reside in the pressure that is exerted by society globally for everything that may concern life for current or future generations. The scope of the pressure is no longer restricted to the products that are sold to customers or the working conditions of workers. It is now possibly extended to the responsibility of the company towards the local communities and human life in its broader definition. The pressure is also exerted from society, being represented by workers, customers, investors, neighbors, and future generations. The scope of the stakeholders is thus dramatically extended. Moreover, the courses of action proposed look very familiar too. The French regulations, for example, invite companies to produce a yearly report upon the initiatives that they are taking in terms of global responsibility. It is already a practice that some players are working at producing ratings that encompass the companies’ achievements in this area. New rules, new laws should follow, as we have been accustomed, when it was considered that some practices of companies were unacceptable: the legislators then took action to forbid some behaviors. Reports, laws, evaluations are, at the end of the day, the common package that has traditionally been imposed on companies in order to influence their behavior. However, some aspects of this movement look more novel than appears at first glance. First of all, the concern for global responsibility arises from all sides of society but the companies and the business look particularly at the center of the grievances. Of course, business is at the core of all human activities. They use resources, produce things, employ people and contribute to the community through the tax system. When people look at the damages caused to the environment, when they look at the big slump in their pensions and investments due to the criminal behaviors of some business people, when they suffer from major downsizings, the cause of which always

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looks so unfair, it is very understandable that companies may become a kind of scapegoat for all the difficulties of life and all the dangers in the future. Of course the link between the problems of global responsibility and the business life are obvious but the responsibility of the people themselves is more rarely mentioned, not even in a way of balancing the reality. The situation is also less familiar because the scope of this global responsibility looks ‘‘boundaryless’’. The behavior of a company may concern so many people for so many reasons; the feeling of the community for the intolerable situations can be so unpredictable and the political reactions so quick, the pace of emergence for these critical situations is so rapid that the ground for responsibility looks now unlimited and the feeling of not knowing exactly what may happen is bigger than ever. This trend may be more important still when companies, at other times, have appeared as a kind of savior. That was the case in some European countries during the late 1980s, when the economic crisis was so fierce that governments acknowledged the impossibility of acting against the economic events. Companies were then considered as the only players that could create employment and save people from the economic downturn. Business people then became ‘‘stars’’, and management and investment one of the best accepted ‘‘arts’’ of society. Nowadays, companies seem sometimes to have to pay for these illusions and, even though the reputation of companies may vary from one country to another, it is clear enough that it is no longer as high as it has been in the past. From a French perspective, some recent evolutions demonstrate that the conditions of life have regained the first rank of political concerns against the business concerns. The recently elected President declared that his three prominent goals and areas of political action would be the enhancement of traffic safety, the fight against cancer, and the improvement of living conditions for handicapped people. Nobody will deny the importance of these issues but the absence of any objective concerning directly economic and business life can be considered as an interesting signal. By the way, the Ministries related to business life have also disappeared from the first positions in the ranking of the protocol . . .

The more socialized a society is, the more accurate the problem of responsibility. It would be nonsense for the business community to try to escape it. But it is understandable that some tended to mention the ‘‘risk’’ for an unlimited scope of responsibility that would make it responsible for everything, without even an idea of sharing it . . . Anyway this last comment is a sociological or political one and the business life is still stuck with the problem with which others will confront it. And two main attitudes, as always, will come up. The first one consists of reacting as well as the company can to the new regulations that will come, from wherever they originate. Companies will wait and see and adapt to new constraints concerning their products, processes, contracts, etc. The second attitude would be to consider that the scope of the coming definition of responsibility is so broad and unpredictable that it will not be enough to respond to the events. Without sharing the somehow naı¨ve approach, according to which a new management model would be arising, it is not possible to ignore that many are claiming for a new approach to business life just as other people are asking for a new model of international relationships or international criminal law.

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According to this second attitude, a new set of universal values should exist and underline business practices wherever they take place. These universal values basically concern a general care for the existence and conditions of life not only of people today but also of future generations. This concern is vaguely but broadly defined and it is clear that nobody knows exactly what could be the perimeter of this responsibility, even though nobody knows whether this responsibility can be questioned. The famous and old example of Nestle´ in the 1970s is highly revealing. The company was accused of killing the babies that were fed with Nestle´ products. The inquiry showed that the product was often not used properly or with the addition of water that did not meet the conditions of cleanliness. However, from this case new norms were established from the WHO talking about a responsibility of the company for information and training concerning the use of the products. The same kind of legal debates about responsibility is appearing when a boat is sinking with oil and polluting the beaches of a country: who should be responsible, the owner of the ship of the final owner of the oil? If we consider the current practice that consists of financing the settlement of a new company in a city, it is predictable that the responsibility of the company will be more often questioned when the company is not doing well and not meeting the expectations of the local community. Given the fact that the perimeter of this global responsibility cannot be defined precisely, the idea comes up that companies should behave according to a set of universal values with which they would comply. That raises the managerial question of values. What are they? Is it possible to implement them? How can these values modify the way companies are doing business? It has been a current dream for managers to create values, to impose them, to get people converted to the ideal values. In the area of organizational culture, charts, missions that were very popular in companies, top managers imagined these values that they wanted to be implemented. Once again, it is a very human dream to have but it does not fit totally with the reality. Actually we should distinguish two different categories of values[3]. On the one hand, we have the ideal values that correspond to the intended strategy, the own values of the top management, the kind of values that describe the ideal company of which these managers are dreaming. On the other side we have the operating values, the values that actually operate in the day-to-day business. A genuine study of the organizational culture will decipher these values by interpreting what people do, which references operate that explain the actual organizational behaviors. Two different sets of practices are of the utmost importance in this respect. First, the systems help to evaluate the effectiveness of the activities: management control, reporting systems, etc. The interesting piece of information is not the systems themselves but the way they are actually used by the people. For instance, what are the differences between the actual and the forecast that really make any difference to reactions from the company? Everybody knows that there are some kinds of objectives, the completion of which are more or less accepted by the company. Second, the practices of human resource management also clearly illustrate the operating values. The kind of people that are recruited, the reality of career management, the sanctions which are taken – all these real decisions and actions express the operating values. In one company, an analysis had been conducted about the managers that had been fired. It appeared that they all had in common one characteristic: they had jeopardized or taken risks of hurting the quality of the products. Obviously major mistakes in launching a new product, social problems in a plant, ineffective investments had real consequences upon the career of the

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managers concerned but they would not have been fired. In this situation you can truly say that quality is an operating value . . . At the time when corporate culture was a fashionable subject, a study had been conducted[4] in order to find out the links between values and corporate success. People were interviewed in the successful companies about the values of their companies. The results were somehow disappointing about these values as they were expressed when asked. People basically said that close attention to customers, employees and shareholders was the basic value. Needless to say, these results are not very helpful: who could say the opposite? But the real piece of learning is elsewhere. When we talk about values, when people within companies answer questions about values, frequently answers are so uninteresting and poor. Namely, values are not a matter for discussion; they are operating unconsciously when people act, when they make decisions, when they decide how to apply rules and procedures, how they imagine an appropriate course of action when facing a critical situation. It is now more understandable how naı¨ve it may appear to create and impose new values, even though the dream for other values is so human. There are so many periods in history when leaders have struggled so hard in order to impose a ‘‘cultural revolution’’ and new values. Generally speaking, the casualties have been immense but the values have never reached the expected. Thus, it is pretty understandable that many people may expect some conversion to universal values that would lead companies to act according to a vague sense of global responsibility; however, we may doubt that it is a reasonable course of action or a useful piece of advice. Given the new situation of permanent risk for companies, probably another approach would be more effective and realistic. It would consist of being permanently aware of the potential risks as far as the company can anticipate them, and of being more conscious about the real operating values that can be used and reinforced in order to confront effectively the situations that can arise. Instead of dreaming of non-existing values, it would be more realistic to permanently reinforce those values that fit with the existing problems in order to be stronger when a problem arises. When a big problem comes, those companies which have a strong sense of their common values generally resist the difficulties better. Their major strength in these situations is not only this strong level of consistency and the sharing of values; it is also a lucid approach to and awareness of the environment in which they exist. A strong culture and the reinforcement of strong values should not be a way of protecting oneself from the external world, of removing oneself comfortably from the reality of the risks. It would rather be a way of being more able to cope with the situation. That should be the first target of corporate policies related to the social responsibility. If I cannot predict everything that may occur, I can at least make the company stronger. That is obviously not what companies will be asked to do by the external world, but that is the post-realistic course of action they can take from a managerial point of view. If the external world will require specific behaviors from the company as they would do from an individual, the company will not react as an individual. It is the real mission management of knowing what managers should do in order to act responsibly in these situations: it is not enough to duplicate individual reactions at the collective level just as if the corporation was a person. Reinforcing these relevant operating values may become more concrete if we discuss three policies that prepare the company to act more relevantly when confronted with these difficult situations. The first policy should consist of attracting and retaining ‘‘good’’ people. This policy will look pretty mundane but it is not. First of all, this is a concern which generally

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appears in companies when the job market is difficult and when they cannot succeed in having the necessary talents for the job which has to be done. But as soon as the market is smoother, the concern tends to disappear – needless to talk about the periods when layoffs become necessary and when these quick decisions impose the difficulty of retaining staff for the morrow. Attracting and retaining people are not only a problem of communication with immediate effects. All companies know that it takes time and effort to create a reputation that will make a company for which people would like to work. One problem is that the reasons why a young graduate would like to join are not the same as the reasons why a mature mid-career professional would like to stay. Attracting and retaining people, as research and common sense confirm, mean to work with perseverance and consistency with the issues related to human resource management and the day-to-day working life of the people. Generally people will leave because they can no longer identify themselves with what the company is doing: it means that, if you tend to be more and more globally responsible, your own people could be the better sensors of what is happening. It is frequent to hear the criticism about a subordinate that she or he is unpredictable but this same criticism could be addressed to top-managers as well and there is nothing more disturbing and demotivating. Before being responsible for the external world, it is necessary to be so for the people inside the company if you want to keep them. A second policy is about coherence. Being globally responsible requires a high level of coherence in the way the company operates and in the perception that the people inside the company will have of this coherence. Coherence is a very vague concept unless it is described in two different fields. On the one hand, we talk about the coherence between words and deeds, between speeches and actions. In any organization there is a lot of talking and a lot of doing and it is not always clear that both match. Is there any coherence between what the CEO is saying inside and outside of the company on the one side, and what the first line managers are saying themselves? Is there any connection between what managers are saying in September and what they will say the next term? Is there any connection between what the boss is saying and what he is doing? Such questions seem to be related to some kind of basic honest instincts that should be fostered in any course in ethics in a business school. It is not that simple. The difficulty of conveying a message of coherence across an organization derives from the changing strategies, the new guidelines, principles, references, and strategies that are regularly diffused and that create at the bottom of the company an impression of confusion. Even though the problems a company is facing look more and more challenging (is there a period in time when that has not been the case?), it does not mean that the necessary reactions are so different and diverse. The importance of problems should not mean for the people a form of chaos that does not help any process of a solution. In order to achieve that, companies need the conscience of the principles that will guide their actions and reactions. The first level of action when you want to become globally responsible is probably internal, being more aware of who you are. On the other hand, coherence should be present in any course of action at the three levels that need to be addressed: values, rules, and managerial relationship[5]. Change processes do succeed when these three levels of action are concerned and when there is a high level of coherence in the way they are addressed. The involvement of managers is crucial to any process of change; it must be backed up with appropriate and relevant rules, systems and procedures. These systems should reinforce existing operating appropriate values. Companies have learned that the

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solution to problems is located in the coherence of their action plan rather than in any peculiar course of action. The third policy concerns a revision of what change is. Change is too often considered as a kind of mechanical process based upon two underlying assumptions. The first one is that it is enough to describe the ideal world and picture of the company that we want to achieve. It is obviously not the case: the real problem of change, once this easy stage has been achieved, is to define the first steps of the process. That should be remembered when companies are supposed to be more and more globally responsible: their problem becomes to know how to start the process, the first courses of action to make. The second assumption is that change is a mechanical process. It should be enough to have good rational reasons for change in order to get people convinced and willing to change. Change would thus appear as a rational process; the rationality of methods, action plans, techniques would be sufficient to make it effective. This assumption appears in the importance generally given to communication and training in the process of change. Training and communication too often rely upon the fact that it will be enough to demonstrate the necessity of change and the rationale of the processes to create adherence from the people and manage the change process successfully. The claim for new universal values that should constitute a basis for global responsibility should not result in a kind of naı¨ve reaction according to which these values are so necessary that nobody could escape and everybody should buy into them. We should not forget that the change processes, even though they look imperative for the others, are never easy. Change is difficult because, whatever the processes are, they remain a human process. Individuals resist, individuals act, and individuals make organizations that do not exist by themselves. If companies should demonstrate exemplarity, that remains above all a process that involves individuals and not organizations only. Exemplarity of the company is thus a matter of individuals. In a recent book, Christian Morel[6] analyzes some decisions that happened to become catastrophic even though the external observer cannot understand why such unrealistic decisions may have been made. Actually, across the various explanations, Morel relates the importance of the individual factor when individuals use their own freedom to act. That is normal life in organizations. Becoming globally responsible means that individuals will act according to a set of values that match the request for global responsibility. The problem is that it is the task not only of a few people in the company but of most of them. It is not only major strategic decisions that are concerned with global responsibility. The behaviors of employees that are in contact with the customer, the driver, the person that manages the waste, the first-line manager who manages the person and may impact his or her own way of life – all these people will impact this responsibility. We can understand that the external stakeholders and constituencies require ‘‘behaviors’’ from the company but the latter has to make sure that it complies with the rules and procedures that have been imposed upon it. However, it is another problem to make sure that these correct behaviors really emerge. There is a difference between the sociological or political perspective that requires relevant behaviors from the company and the business approach that makes one wonder how it can make sure that these individual and collective behaviors will occur. It would be nonsense to

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consider that the strength of these universal values will be sufficient to create these behaviors. An interesting characteristic of our society is to live with many expectations and needs that are not always coherent when it is difficult to satisfy all of them; moreover, the same people may have needs and expectations that cannot be fulfilled altogether. Many individuals are at the same time a producer and a customer: their expectations are not bound to be consistent. For instance, the customer requires total safety and health conditions for the products he will buy and the employee needs to make sure that the prices are low enough and the goods easy enough to produce in order to continue to work. The extended range of working hours does not match the legitimate expectations of family life; the need for cheap consumer products does not always match the possible cost of labor in the country and the compliance with legal rules in terms of work conditions for children, or pollution. Moreover, there can be some big difficulties in matching the requirements for a sound life and quality of air and the personal interests of millions of workers that earn their living from the automotive industry. That should lead us to avoid underestimating the importance of conflicts of interests that may arise when companies will have to modify their processes and regulations for the sake of a community with which people will not identify themselves. Namely, global responsibility is related to too many different topics and everybody has his own sense of what it is and his own sense of protection of his standard of life. As a matter of consequence nobody in a company should be naı¨ve enough to imagine that the social correctness of global responsibility would convince everybody. When people in companies reach the point where they have to change their behaviors and sometimes put into serious question their own standard of life, reactions may be difficult. Moreover, the pressure will be higher and higher as soon as some problems have been identified as being related to their action. Everybody could have a sense of the reaction of the media and of public opinion when some accident happens . . .

Ethics Ethics is often presented as the solution to this problem. Companies should have an ethical behavior. They should set up charts, codes of conduct; define values to which all people would adhere. It is probably good policy on the side of external parties to insist upon the necessity of ethical behaviors for companies but it is naı¨ve to consider that the mention of ethics will be enough to change individual behaviors. Ethics is not the solution but the problem. The discussion about ethics generally prompts two wrong directions. The first one is to consider that values are such that everybody will obviously act accordingly. Many references to global responsibility could fall into this trap. A second wrong approach consists of considering that systems, rules and procedures are sufficient to change behaviors inside the company. Nowadays, companies write up ethical values, codes of conduct, with the same motivation as they defined their missions and charts of corporate values some years ago. There is no problem with this kind of actions if we believe that the definition of these codes, once it has satisfied any process of certification or accreditation, will be sufficient to mould behaviors. A third way of approaching ethical questions is to remember that ethics is related to behaviors. As Barocco[7] says, the problem of ethics is not choosing between right and wrong but between right and right. That requires more than a set of clear-cut rules. You need a capacity for thinking over the reality, reflecting on it and developing

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appropriate behaviors. People need to become personally aware of the ethical issues and they need to follow the personal evolution that will lead them to a better behavior. That is not something you can do on your own but it becomes a genuine process of personal and organizational development. Special attention must be paid to the leaders and managers of organizations. To what extent do the current processes of career management allow them to improve their sense of ethical behavior in organizations? The recent changes in organizational design and in demography have led to faster career tracks which allow people to take responsibility earlier than before. The large number of skilled and experienced people who will go for retirement in the future will still increase this pace. Younger and younger professionals will take charge with a shorter experience and maybe a shallower understanding of situations where this ethics is learned. It is a big challenge for companies to make sure that those people coming to responsibility will be trained and mature enough to confront these ethical questions. Ethics is not a matter of personal conviction, of discipline, of compliance with rules. It is above all a matter of personal reflection and maturity that has developed in a positive and supportive organizational climate. In organizations where rules, systems and procedures are so lean, in organizations where such a great part of the performance depends upon the initiative of the people, the exposure of people to basic ethical approaches, concerns and reflections will become crucial. In this instance, not only are the recruitment and training of these new managers concerned but also the management of careers, the processes of mentoring and coaching of the new managers. Human resource management in this situation is more and more people management. Exemplarity of the company derives from individual behaviors. Is it possible to train people to them? There may be a risk today, or an illusion to consider that the company could (should?) do what the rest of the society has not been able (willing?) to do. The training of the individuals to responsible behaviors may belong in this category. If companies should comply with universal values, we could expect from the rest of the society that people do know these values, and practice them in their behaviors. If society as a whole is considering new behaviors in order to make collective life possible, we could expect this society to make the necessary decisions, whatever the level, in order to achieve it. It is difficult to say how a company could or should fulfill the duty of the society (family, school, etc.). What can be presented is how a company could enhance the level of consciousness of the people when they are acting in the course of their professional experience. If we consider that ethics is not just the learning of codes of conduct, whatever they are, but if we approach it as a more conscious and effective way of questioning, reflecting and elaborating appropriate and relevant behaviors, then there is some necessity for companies to enhance the level of people in all areas, behaviors included. The problem is to have a clear picture of what can be acted upon in this matter. Obviously, it is impossible just to generate appropriate behaviors for people (that is sometimes the illusion of those who promote the code of ethics). You never can change behaviors in the sense that you are always unsure of the reaction to a stimulus: people are free. The only thing you can do when confronting such a problem of preparing people for global responsibility is to make them more conscious of their own action.

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In that respect, three main competencies should be developed, generally speaking. These competencies are not useful only within companies. These competencies do not need to be developed within companies either but companies will need to address the issue because nobody else in society will do it: J First of all, companies should train people to become more aware about the way they behave. Curiously, people are never conscious enough of what they do. They know their intentions but not the way they behave. As you can realize in your personal life, there often is a discrepancy between what you intend to do and what you actually do. As a matter of instance, the reaction of people to the playing of a video of their behavior is a good illustration of the astonishment at one’s own behavior. It is not easy to be aware of one’s own behavior but it is a necessary step if we want people to be able to question these behaviors. The most ancient traditions of education had set up exercises in order to facilitate this process. They are generally based upon a second ‘‘reading’’ of one’s own behaviors in meetings, during an interview, in the process of making a decision, of working on a project: J Second, people should learn to explain why they behaved in the way they did. This explanation can be of course facilitated by some knowledge in psychology but that should not be an impeding difficulty. Out of expecting something from the psychological side of knowledge, people could be wise enough to relate their reaction to past experiences, to establish relationships between reactions, emotions, behaviors of their own. There is so much to do in order to understand one’s behavior better before abandoning oneself to psychological theory. A good way to start this permanent process of understanding one’s behaviors better is to be aware of one’s emotions. Why do I feel the way I feel? Why do I have this feeling during a meeting or any interaction? Why am I happy, why do I feel uncomfortable? Why has this interaction been pleasant or unpleasant? Emotions generally are good sensors of one’s own way of behaving because emotions are a major determinant of behaviors. Of course people in sales and marketing discovered that before HR and management people but it is never too late to learn: J Third, people should learn to become aware of the consequences of their own behaviors. That is probably the competency that is most related to our concern for global responsibility but it cannot be developed without the first two. Interactions, meetings, negotiations generally are relevant concrete situations to examine the consequences of one’s own behavior. It is sometimes fascinating to observe how unaware people are of the consequences of what they are doing: just look at marriage and the family to have a pretty good illustration. If it is so difficult, it is obviously because people will not tell you but you should not expect that they will do so; the first move must come from one’s own behaviors. Once again, a good way to start is to ask. But you should not ask about these consequences when the situation is difficult but rather in pretty smooth situations. Second, you should ask people you trust. The key to global responsibility will be, at the end of the day, behavioral responsibility from people. It will be a long and difficult path for companies to make sure that their people are not organization-determined, that they are not only obeying rules and values that they impose upon themselves. They should not be mission-determined either. They should not be determined eventually by the influence of any charismatic or effective leader. People should be self-determined in companies for the sake of these organizations. Self-determination makes unavoidable a confrontation of the rules of

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collective life, self-determination prevents one from hiding behind any rules of the market, of the competition, or of the economy to circumvent one’s own personal responsibility. There cannot be any kind of global responsibility of the company if we do not think in terms of responsibility of the individuals. There cannot be a sense of responsibility for the individual if he or she is not trained to increase his or her level of maturity. The only difficulty in implementing these ideas which look more like common sense relies in two main ideas. First, it will be necessary to admit that global responsibility, just as with human aspects of the organizational life, is an issue not only of belief but of competencies and skills. Second, companies will be in charge, like it or not, of the enhancement of these competencies and, given the pace of these issues of global responsibility, in terms of action for companies, the sooner the better.

References Barocco. Hesket, Organizational Culture and Performance. Igalens, J. and Joras, M. (2002), La responsabilite´ sociale de l’entreprise, Les Editions d’Organisation, Paris. Martin, R.L. (2002), ‘‘The virtue matrix’’, Harvard Business Review, March, pp. 69-75. Morel, C. (2002), Les de´cisions absurdes, Gallimard, Paris. The´venet, M. (1993), Culture d’entreprise, PUF, Paris. The´venet, M. and Vachette, J.L. (1992), Culture et comportement, Vuibert, Paris.

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Case study Global responsibility – business education and business schools – roles in promoting a global perspective Peter Lorange

Peter Lorange has been President of IMD since 1993. He is Professor of Strategy and holds the Nestle´ Chair. He was formerly President of the Norwegian School of Management in Oslo. He was affiliated with the Wharton School, University of Pennsylvania for more than a decade in various assignments. He has also taught at the Sloan School of Management (MIT), IMEDE (now IMD), and the Stockholm School of Economics. Peter Lorange has written or edited 16 books and over 130 articles. He has conducted extensive research on multinational management, strategic planning processes, strategic control and strategic alliances. He has taught at the undergraduate, Master and Doctoral levels, and worked extensively within his areas of expertise with US, European and Asian corporations, both in a consulting capacity and in executive education. He serves on the board of directors of several corporations including: Christiania Eiendomsselskap A/S, S. Ugelstad Shipowners A/S, ISS-International Service System A/S, StreamServe AB, Intentia International AB, Preferred Global Health, and Zaruma Resources Inc. Peter Lorange is Norwegian. He received his undergraduate education from the Norwegian School of Economics and Business, was awarded a Master of Arts degree in Operations Management from Yale University, and his Doctor of Business Administration degree from Harvard University.

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Abstract This article is based on the author’s experience as head of a leading international business school, with strong embedded values in providing the highest level of quality business education within a global perspective. The scope of the article is one of focusing on a global business school, i.e. one which is able to draw on professors and students to come together for teaching and learning in a ‘‘global meeting-place’’ from all over the world. The article provides the following results, conclusions and recommendations: first, a distinction is made between local business schools, serving typically a national market, regional business schools, typically serving a number of national markets, but within the same language area, and global business schools, typically serving the entire world community. Then the content of a global curriculum is reviewed, and five items are being identified: a strategic competence, a partnership competence, a staffing competence, a learning competence, and an organizational competence. In order to pursue global growth and to develop the capabilities for this, a conceptual model by Chakravarthy and Lorange is then being introduced, where one’s strength will be the starting-point/basis for further global expansion, either by leveraging one’s capability vis-a`-vis new markets, or by building a new business by adding new competences to the existing ones, or as a next step by combining the two leveraging and building dimensions into a transform strategy. Four managerial challenges are then being reviewed for the leading global business school, namely the issue of language, the mix of the student body, the degree of internationalization of the teaching and administrative staff, as well as the global marketing challenge. The article concludes with a discussion regarding an optimal location for the global business school. It is argued that perhaps many of today’s leading business schools, being located in major markets, will not have an optimal location, due to the fact that these major markets can more or less explicitly lead to a nationally based bias of the teaching and research being undertaken, i.e. obstructing the globality focus of the business school. A small country location might therefore be preferable. Keywords International business, Business education, Globalization

VOL. 3 NO. 3 2003, pp. 126-135, MCB UP Limited, ISSN 1472-0701

DOI 10.1108/14720700310483514

Introduction ‘‘. . .global 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 decisionmakers . . .’’ (efmd, 2002). In this chapter we shall focus on roles of the modern business school in addressing these issues. Partly we shall address what might be particularly relevant curriculum content issues – topics that should be covered in order to promote global responsibility. Partly we shall examine what would be some key managerial facts for the school’s leadership to address when pursuing globalism. Finally, we shall address some location issues that might be observed when promoting this cause. The chapter will conclude with an epilogue, written by Professor Roger Schmenner, which summarizes global responsibility in the most elegant way I have seen. Global responsibility is an important concept for many today. Within areas as diverse as politics, culture and cross-country relationships it is an ongoing challenge. For corporations of all sizes and in almost all industries, the quest to build a strong global position is no longer an option – it is a necessity. For human resource management, the issue of the global challenge is just as much a reality. Global thinking – truly acting across all borders – is becoming the fact of the day. What is the role of business schools relative to globalism? How can business schools, through their executive development activities, their teaching and research, provide a more realistic global perspective? Why should business schools do this? At the outset we might consider three general types of business schools in the context of understanding the international dimension: 1. The local business school. Most business schools compete in local markets. They typically serve the local community. This will be based on offering their programs in the local language. They recruit their students from the local market. The placement of their graduates will be in the local market. For these local schools, the international dimension will be one of ‘‘teaching about’’ the international paradigms, i.e. how international business can be done, the importance of thinking global, crosscultural issues, etc. It is, however, difficult to gain a deeper understanding of the issues, given that the activities of the school are entirely local. 2. The regional business school. This category of schools would serve a regional market. An example might be the St Gallen Business School in St Gallen, Switzerland, which serves the German market, i.e. Germany, Austria and Switzerland. Another example might be leading business schools in large countries such as France and the UK, which draw students from all the French-speaking regions or from all of the former Commonwealth, respectively. For these schools, the international dimension becomes one of not only teaching about what it is – reviewing international business theories, international culture axioms, etc. – but also drawing on the multicultural realities that are now present at the school. Such schools can, thus, take a more hands-on approach to concretizing what international responsibilities and challenges might mean. 3. The global business school. This category would be the truly international business schools. Examples would be some of the leading US schools, such as Harvard, Stanford, Columbia, Northwestern, Wharton, etc. In Europe London Business School, INSEAD and IMD would fall into this category. Schools on both sides of the Atlantic would draw students from all over the world. Further, the faculty is typically

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also more international. International business concepts and international cultural challenges can indeed be experienced in the classroom by drawing on the real life examples represented in the student body. The issue of promoting a global perspective, thus, is dramatically different for these three types of contextual settings – the local, the regional, and the global. In the rest of this chapter we shall primarily focus on the global business school. We are aware that many business schools may, in reality, have to take a narrower point of view towards internationalism than what will be discussed.

Curriculum content issues and global responsibility The efmd Bangkok Manifesto on global responsibility recommends the objective of ‘‘Developing new capabilities in schools and companies to deal with these [global responsibility] issues’’ (efmd, 2002, p. 2). So – what are the key curricular challenges? We shall claim that perhaps the most critical consequence of global responsibility will be to promote business growth in the global commercial context. Business schools should therefore 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. We shall claim that this is partly an issue of developing a global mindset among the school’s students. Then we shall build on five specific competence dimensions developed by Rosenzweig et al. (2001). Let us first discuss the issue of why a global perspective is becoming increasingly critical. Global thinking can, above all, have to do with acknowledging the importance of eclecticism, i.e. bringing people together with different perspectives, different backgrounds, different cultures, different consumer understandings, different geopolitical viewpoints, etc., in a way in which they will benefit from one another. This breadth can create a wider range of thinking, a more expansive dynamism when it comes to pursuing ideas, a truly creative new approach! Globalism, eclecticism and creativity thus typically go hand in hand. The antithesis of this would be short-sighted, nationally oriented thinking – ‘‘we know best based on what works at home’’ attitudes. Many companies are struggling with international growth. They may intuitively understand the need for growth and be convinced of its importance. But still they may find successful international growth elusive. The reason can often be that they are facing today’s global challenges with yesterday’s national capabilities. Still, there are many examples of companies that are succeeding at rapid international growth. They include not only prominent companies in high-tech industries such as Cisco, Nokia and Sony but also companies from more mature industries such as Nestle´ and Unilever. What do these companies have in common? Above all, they seem to be practicing what can be labeled internationalism in their ways of managing. More specifically, successful rapid international growth may call for these five capabilities, according to Rosenzweig et al. (2001): J A strategic capability, involving an ability to think strategically on a global basis, and scan the globe for opportunities’’ (Rosenzweig et al., 2001). Seeing new business opportunities before they are obvious to everyone else can best be practiced with a global perspective. Innovations are of course at the center of promoting growth internationally. How can innovations be made more ‘‘acceptable’’ from a crosscultural point of view? How can one break down nationalistic ‘‘not invented here’’ tendencies? Business schools can have a positive impact here – promoting openness in seeking out new growth ideas from wherever they can be found.

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Seeing business opportunities before they are obvious to everyone else is a matter of having an entirely open mind, not narrow nationalistic thinking. J ‘‘A partnership capability, involving the effective management of alliances and acquisitions’’ (Rosenzweig et al., 2001), in order to add new capabilities to be able to serve the multitude of needs across the globe and/or gain more rapid access to new markets. Partly this will mean knowing how to analyze the opportunities for geographic expansion by acquiring or entering alliances with business entities that possess relevant market positions elsewhere, thus allowing one’s own firm to expand faster – and hopefully with less risk of failure than there would be with greenfield market entry. The capability to assess customer loyalty issues will be important here. Partly also, new know-how and technology might be accessed via alliances or acquisitions. The key here will be to assess how this new know-how will add to one’s business. For all acquisitions and/or alliances the interpersonal chemistry issue will be vital. The global dimension certainly does not make it easier for such acquisitions/alliances to work (Contractor and Lorange, 2002). J ‘‘A staffing capability, involving rapid staffing through expatriation and localization’’ (Rosenzweig et al., 2001), so that the best talents, the best qualified people – irrespective of nationality – are always assigned to the task, wherever it may be (Evans et al., 2002). Issues such as human rights, women in management, race, etc. can perhaps be sensitively handled if lifted out of particular local contexts. Business schools can play an important role in promoting more global norms for such critical value-driven issues, to achieve more flexibility. An open international dialogue is probably at the center of this – allowing participants from certain countries to see how their own particular country-based cultural norms may need to be broadened. It is, of course, not the role of the business school to promote changes in natural cultures per se. Rather, the role must be to broaden the participants’ mindsets, to open up their views to be more tolerant, to listen better, and to interact based on genuine interest. Thus, the role of the business school must be to develop the capabilities of its students to work together more effectively. The key is to be able to create groups of executives that can work together dynamically and productively, irrespective of nationality, race and/or gender differences. There are also national political barriers that can create a lack of flexibility. Business schools should have a role here – to promote mobility in the human talent workforce. J ‘‘A learning capability, involving both the creation of new knowledge and the ability to transfer it effectively through global management processes’’ (Rosenzweig et al., 2001). Again, global learning takes place in the global melting pot. The competence to experiment will be part of effective learning – to try things out faster, perhaps experience a setback, then to learn from it and, in the end, advance faster. Such experimentation is, of course, particularly demanding in an international context, dealing with cross-cultural feedback and response challenges. Promoting dramatically new business solutions that challenge one’s established way of operating might also be an effective way of learning. It can be particularly difficult in a global firm to break down conservative norms of the type: ‘‘this is the way we do it here – and we have always done it this way!’’ The key is to learn from best practices globally by challenging local conventions. J ‘‘An organizational capability, involving the continual adaptation of organization design to meet shifting needs’’ (Rosenzweig et al., 2001), typically based on heavy

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use of ad hoc project teams put together on a global basis. The organizational resources are thus global and must allow themselves to be mobilized globally. To break down local kingdoms – local silos – will be key here. How can the firm function as a truly global entity, not only a collection of local kingdoms? How can teams and task forces be established that draw on the most appropriate competences from across the firm globally, rather than focusing more narrowly on one specific group or nationality? Further, how can creative think-tank forces be created that would draw on – and take advantage of – the firm’s global position, rather than focusing on specific nationalities to do the creative thinking – say, stemming from the headquarters country? The key is the capability to mobilize the organization globally. All of these capabilities are thus probably necessary – to a greater or lesser extent – to be able to pursue growth successfully – the challenge that is becoming so critical for corporations today. Figure 1 gives a model for growth, developed by Chakravarthy and Lorange (Chakravarthy et al., 2001), based on the thinking that one’s established strengths provide the best basis for growth. Global responsibility plays an important role in operationalizing the growth challenge. For instance, in order to take a workable business idea from one situation and leverage it by putting it into another market, a solid cross-cultural understanding is needed. How do we go from the established market to the new one? How do we understand the local conditions in a new market? How do we understand the specifics of what the consumer can accept in a new market? How do we line up relevant local competences in a new market in order to achieve successful delivery, etc.? How do we leverage the business? Growth can also happen by adding new competences to one’s already established strengths, i.e. building a new business. This new business, which now differs from the one in the past because new competencies have been added, can subsequently be repositioned in new markets. How can such a transformation be meaningfully

Figure 1 Build on established strengths: basic competence-based framework for internally generated growth

Leverage New

Markets

Established

Entering new industries, product categories or geographies

Protect & Extend Improving market position through product extensions and new product introductions. Strengthening existing competencies

Transform

Build Building new competencies throughout the value chain

In Place

Need to Add

Distinctive Competencies Source: Chakravarthy et al. (2001)

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achieved? Again, a strong cross-cultural understanding is a must. How can one understand the market? How can one have a feel for which local dimensions to emphasize in order to secure smooth distribution and rapid penetration for the new business, etc.? In total, growth means a strong cross-cultural understanding, based on an insightful global perspective.

Managerial challenges for the global business school Let us now focus on managerial challenges that would be particularly critical for the global business school (Lorange, 2002). How can business schools develop a profile to promote global responsibility, i.e. stimulate a more global point of view? Let us point out five issues. First, it seems important that the teaching language should be English. It is the only global language that exists today. This will most effectively allow for a ‘‘global meeting place’’ to be developed, where students and executives from all over the world can interact on important issues. One might argue that those cultures that have English as a mother tongue may have an advantage in such a global meeting-place context. This is definitely true. Thus, English-speaking participants may end up dominating the discussions. Still, to have a global language to facilitate communication is of such critical importance that there may be no way around this potential source of bias. Second is the international mix of the student body. Learning must take place with an internationally balanced student body, and ‘‘in the large and in the small’’. Certainly, learning takes place in the classroom, where – hopefully – globalization in terms of global examples from all over the world, including case studies, are highlighted, analyzed and discussed. The diverse backgrounds of the students contribute to the understanding of the international viewpoints. It is important that not all cases, for instance, come from the USA or Western Europe. The teaching materials must be globally balanced. It is further important that the participants form small, cross-cultural discussion groups to enter into more detailed discussions of relevant topics. Some participants may be culturally inclined to be rather quiet in large gatherings. They must thus be given a chance to be active in smaller group settings, to interact ‘‘in the small’’. At the opposite extreme, it may also be important for executives from various programs to get together ‘‘in the large’’ sometimes, in order to network in the broadest sense. A truly eclectic ‘‘global meeting-place’’ may have strong merits. Such broad interaction, based on the discussion of a given topic, might bring out differences between younger students and older students, between MBA students and executive students, between students from specific company-based programs and students on open-enrollment programs, and so on. In total, the global approach to learning can be enhanced by having learning networks, which go from small – in group study rooms – to medium – in the classroom – to large – where all classes get together – and all consisting of the broadest possible mix of international backgrounds. A third important issue will be to have a truly international professorial staff. Most academic institutions have their professors predominantly from their home country, perhaps with a ‘‘sprinkling’’ of international professors as add-ons. This is not acceptable if one wants to push a global setting. Here it is critical to have a mix of professors from many nationalities, from many backgrounds, thus representing truly diverse cultural settings. Only then can the teaching side bring out a broad multitude of issues and thereby promote a more global understanding and sense of responsibility.

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Fourth, the marketing side will be critical. Typically, business schools tend to be comparatively strong in their home market. This is perhaps comparatively easy to understand, given that one’s local language, one’s local network, and one’s local reputation tend to enhance localism rather than globalism. Marketing must therefore explicitly be done globally in order to bring an international student body together to create a true ‘‘global meeting-place’’. Only aggressive marketing on a global scale can ensure the crucial international mix of students. Such global marketing can, however, be expensive and energy-consuming, particularly since one has to develop markets that are far away from one’s home location. This is, however, necessary in order to develop a global perspective. Last, but not least, modern technology will increasingly allow the business school to create a ‘‘global meeting-place’’ via Webcasting. One can, for instance, have a Webcast offered at a given time that is followed by executives and students from all over the world. One such Webcast is offered every Wednesday at 16:00 from IMD’s location in Lausanne. This means that it can be followed online at 07:00 in Los Angeles and simultaneously at 23:00 in Tokyo. Needless to say, it will be relatively more convenient for participants who can see it at 10:00 in New York or at 21:00 in Singapore. The point is, however, that globalism via modern communication technology is increasingly becoming a reality. The global meeting-place has become virtual.

Business school location and global responsibility Where should the globally responsible business school be located? Might it best be located in larger markets? Or would location in a smaller country have its advantages? What would be the roles of particularly strong cultures within today’s global society? Might such cultures, perhaps by themselves, provide guidelines for global growth and delineation of innovation? It is a fact, for instance, that in today’s global society the USA plays a particularly important role. When it comes to military power, for example, no country in history has ever been as strong as the USA is now, even going back to the Roman Empire, and to the very beginning of civilized society. Paul Kennedy (2002), for instance, points out that this puts the USA in a truly unique position of political dominance within world society. However, such strong military power does not necessarily translate into equally strong cross-cultural power. USbased corporations are likely to be just as dependent on adapting to the myriad consumer directions globally, the various trends of thought that span the world, the many value systems, etc. – all in order to be globally successful. It would be a fallacy to believe that any country’s particular business practices – including those of the USA – would take on universal validity. This would certainly not follow from the fact that a given country might have a particularly strong political power. In a strong home market, such as the USA, however, it may thus be an easy, but erroneous, approach to make the equation, ‘‘what works at home, should also work world-wide’’. US-based businesses that recognize that this is a false assumption, however, have a good chance to achieve effective globalism. They, too, need to build a global capability that is eclectic – not driven by home country idiosyncrasies and the strengths of the home market. Similar arguments can be made when it comes to other traditionally prominent countries throughout history: for example, the UK, which perhaps even today has a propensity to hark back to ‘‘the good old days of Empire’’; France, living on ‘‘La Gloire’’; Japan, still referring to the period when its particular economic model had hegemony; etc. For all such large countries with a strong-to-idiosyncratic past, true global flexibility may come hard. It may be particularly hard for them to avoid thinking

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that the home country culture should have a more prominent place within the global society. One might thus argue that smaller countries with their less dominant cultures might be well positioned to take on lead roles when it comes to developing global managerial responsibility. It is interesting to see, for instance, that small countries such as Sweden, Switzerland, The Netherlands, Korea and Singapore have all developed strong international, even global, business activities. Often such countries can be seen to play roles within the global society that are much larger than their geographic population would indicate. It can perhaps be easier for such countries, given their lack of a dominant home country base, to develop a global position. They will simply have no option. Much debate has centered on the short-term financial orientation of a large number of corporations, coupled with the focus on large bonuses and parachute contracts by considerable segments of senior executives. Companies such as Enron, Tyco, and AOL exemplify this. The very capitalistic system that has been so central to economic development in the USA and elsewhere is indeed under siege. Perhaps the root of all this has to do with the fact that values and norms have been allowed to develop within rather local contexts – such as, for instance, with a US focus – rather than being promulgated with broader, more global values. Perhaps a more global notion of values and ethics can promote more realism and stability. The dilemma of short-term focus versus longer-term focus can perhaps be better handled with a more global perspective. Perhaps this can best be dealt with if there is a certain distance from specific market arenas.

No dominant culture at IMD Professor Roger Schmenner (2002) has described the inner workings of one leading international business school – IMD – in an excellent way. IMD prides itself on being a truly global business school. Its ‘‘real world, real learning’’ global meeting-place is perhaps rather unique. Professor Schmenner shares with us how value creation in a global context takes place – indeed, I know of no better way to capture the essence of global responsibility within a business school: ‘‘As business schools go, it is hard to find a more international place [than IMD]. Some 90 MBAs come from 37 different nations. The geographic breakdown includes 38 percent from Western Europe (excluding the Nordic countries), 16 percent from Asia, 12 percent from North America, 1 percent from Latin America, 9 percent from Africa and the Middle East, 8 percent from the Nordic countries, 4 percent from Eastern Europe, and 2 percent from Oceania. (. . .) Many students speak three or four languages. The full-time faculty of just over 50 comes from 20 different countries. ‘‘The MBA is but a small part of IMD’s mission. The vast majority of the school’s revenues come from either open enrollment executive courses or company-specific courses. Most of these are of one or two weeks’ duration, with some longer and some merely a day or two. The executives who turn up for the courses come from all over the globe, with rather few from the USA. ‘‘Given this diversity, and our location in Switzerland, a country of four official languages for its 7 million residents, the most salient characteristic of the place is that there is no dominant culture. Everyone here is a minority. The working language is English, and native speakers have some inherent advantages that way, but the English here is as likely to be spoken with a South Asian accent as a US one. US

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multinationals are among the companies that form the backbone of IMD’s network of sponsoring companies, but they are a minority as well. ‘‘Over the years, IMD has developed some traits that make it easy for the various minorities to feel comfortable and productive. IMD is a big proponent of the case method and it has written a host of the very best teaching cases set internationally. Thus, the spotlight for any day’s classes is constantly shifting from one area of the world to another. Increasingly, many of the cases have associated videos so that everyone can take a brief tour of the case setting and see the managers at the center of the case on their home turf. ‘‘Often, before a case is discussed in class, it is the topic for small group study. These small groups are typically very heterogeneous, and commonly it is in these small groups where the different cultures collide. Much is learned by participants as they try to argue their points with others of a completely different turn of mind. [. . .] ‘‘Is globalism something for all? Should all business schools push for globalism? Clearly not, most business schools have to cater for their local markets. This will be based on local languages and local networks. A total of 99 percent of today’s business schools are set up to cover the needs of their students within a relatively small, well defined geographic environment. Only a few students move outside of this local geographic environment. Some business schools, while still being predominantly anchored in their local cultures, have smaller or larger groups of international students, creating more of an international atmosphere at their campuses. A very small part of the schools are truly international, catering for students from all over the world, attempting to create a global meeting-place. These schools do not have a predominance of local students on their campuses, but truly a mix of people from all over the world. A pre-eminent example of this is IMD; other examples might be London Business School and INSEAD. Are these schools better than the local schools? I do not think this is the right question to ask, given the fact that the schools are perhaps catering to different roles. The international schools – and the local schools – complement one another; they do not compete with one another. For instance, the USA has some of the best business schools in the world. They are at the cutting-edge when it comes to the teaching and research within many fields of business. Still, they are in general rather focused around the local market in which they are located, namely the strong US home market. This is true both when it comes to professors, how students are educated as well as their nationalities, the teaching materials, examples used and where the bulk of the students are coming from. These schools offer education which complements what schools such as IMD can provide. It is a matter not of either or, but of both. Schools such as IMD accelerate the development of a global responsibility, based on a symbiotic interlink with the strong local educational tradition’’.

References Chakravarthy, B., Lorange, P. and Cho, H.-J. (2001), ‘‘The growth imperative for Asian firms’’, Nanyang Business Review, Vol. 1 No. 1. Contractor, F.J. and Lorange, P. (Eds) (2002), Cooperative Strategies and Alliances, Pergamon, Oxford. efmd (2002), Bangkok Manifesto on Global Responsibility, European Foundation for Management Development, Bangkok, June, p. 1. Evans, P., Pucik, V. and Barsoux, J.L. (2002), The Global Challenge: Framework for International Human Resource Management McGraw-Hill/Irwin, New York, NY. Kennedy, P. (2002), ‘‘US – The strongest world power ever’’, Financial Times, 26/27 January.

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Lorange, P. (2002), New Vision for Management Education: Leadership Challenges, Pergamon, Oxford, pp. 116, 314-17. Rosenzweig, P., Gilbert, X., Malnight, T. and Pucik, V. (2001), Accelerating International Growth, Wiley, Chichester, p. 15. Schmenner, R. (2002), ‘‘No dominant culture’’, International Teaching Resources for Business, Indiana University CIBER, No. 19, Spring.

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Conference on Corporate Social Responsibility 3-5 September 2003 This is to announce an international interdisciplinary conference to be held at London Metropolitan University North Campus. Delegates will be attending from over 25 countries from around the world. Selected papers will be published in a Special Issue of Corporate Governance. It is supported by MCB/Emerald who will make an award for the best paper presented at the conference. The venue for the conference is: Stapleton House, 277-281 Holloway Road, London N7 8HN. Full details can be found at the conference Web site: www.davideacrowther.com/csrhome.html The organising contact is Professor David Crowther ([email protected]) and the conference fee is £250, which will include all lunches, evening meals and refreshments. Anyone wishing to attend should visit the conference Web site. Conference on Corporate Social Responsibility London Metropolitan University 3-5 September 2003