Humanistic Management in Latin America 0367367521, 9780367367527

Table of contents :
Contents
List of tables and figures vii Foreword viii DR PEDRO C. SOLÍS PÉREZ
1 Humanistic management: a history of a management
paradigm from the human dignity 1 OSMAR ARANDIA AND CONSUELO GARCÍA-DE-LA-TORRE
2 Humanistic management: a balancing act towards
a better world 21 MICHAEL PIRSON
3 Corporate social responsibility based on dignity and
well-being as keys to the humanistic management of
human capital 38 ALFONSO ERNESTO BENITO FRAILE AND BERTHA ELIZABETH
CÁRDENAS HINOJOSA
4 Targeting kids in the digital age: the ethics of online
marketing towards children 50 FLOR MORTON AND TERESA TREVIÑO
5 Government and public–private relationships: lessons
from the Odebrecht case 72 GLORIA CAMACHO AND MARIO VÁZQUEZ-MAGUIRRE
6 Supplychainmanagement,humanisticmanagement
and circular economy: fostering industry innovation
and decent work through responsible consumption and production through partnerships 83 EDUARDO AGUIÑAGA AND ANA ROSA LEAL
7 The impact of humanistic management in governance 99 AITZIBER MUGARRA-ELORRIAGA AND ARANTZA
ECHANIZ-BARRONDO
8 An exploratory study of the effects of socioemotional
wealth in the perception of humanistic management
and psychological ownership in family and non-
family members in Latin American family firms 111 SALVADOR S. GUAJARDO-TREVINO
9 Social responsibility of the university in the promotion
of more humane and sustainable enterprises 134 ALFONSO ERNESTO BENITO FRAILE, ANA MARIELA QUIROGA
TREVIÑO AND BERTHA ELIZABETH CÁRDENAS HINOJOSA
10 Conceptualisation of human dignity: the evolution of
the concept and its applicability in business through
a humanistic lens 144 DAVID CAPISTRÁN
11 A win–win perspective from the firms to the BOP:
a Latin American approach 167 JESÚS AVILA MARTÍNEZ
12 Understanding corporate sustainability through a
humanistic management lens 179 GLORIA CAMACHO
13 Humanistic management in Latin America: final remarks 189 MARIO VÁZQUEZ-MAGUIRRE
About the contributors 194 Index 198

Citation preview

Humanistic Management in Latin America

Humanistic management has been part of a growing conversation about a different approach to management that contributes to dignity in the workplace and better organisations overall. The theoretical concepts have mostly been derived from developed countries. This book seeks to redress the balance and looks at the development and application of the concepts, approaches and models of inequality, corruption, poverty and uncertainty in the context of Latin America. The book provides a comprehensive overview of what is happening in Latin America in terms of Humanistic Management and the promotion of the Sustainable Development Goals. The first section describes the development of Humanistic Management by reviewing two different schools that have strongly influenced the discipline: the Montreal School and the St. Gallen School. Humanistic Management is then presented as a model that can be used by scholars and practitioners in Latin America. The third part aims to explore how Humanistic Management has been, and could be, implemented across different organisations and business sectors in Latin America. Part four examines the implications of Humanistic Management for external stakeholders such as customers and consumers, suppliers, community, government and universities. Finally, the conclusion provides new approaches to Humanistic Management for Latin America. Humanistic Management in Latin America will serve as a key reference and resource for teachers, researchers, students, experts and policymakers, who want to acquire a broad understanding of social responsibility and business across the world. Consuelo García-de-la-Torre is Principal Professor of Management and Marketing at EGADE Business School, Tecnológico de Monterrey, Mexico. Osmar Arandia is Director of the administration postgraduate programs at the School of Business, Universidad de Monterrey, Mexico. Mario Vázquez-Maguirre is Professor of Management at the School of Business, Universidad de Monterrey, Mexico.

Humanistic Management Series Editors: Michael Pirson, Erica Steckler, David Wasieleski, Benito Teehankee, Ricardo Aguado and Ernestina Giudici

Humanistic Management draws together the concepts of social business, sustainability, social entrepreneurship, business ethics, conscious c­ apitalism and cooperative capitalism to present a new humanistically-based research paradigm. This new paradigm challenges the prevailing neo-liberal ‘­ economistic’ approach that dominates twentieth-century management theory and practice, and instead emphasises the need to protect human dignity and wellbeing as well as economic drivers. Aesthetics, Organization, and Humanistic Management Edited by Monika Kostera and Cezary Wozniak Motivation in Organisations Searching for a Meaningful Work-Life Balance Manuel Guillén Humanistic Management and Sustainable Tourism Human, Social and Environmental Challenges Edited by Maria Della Lucia and Ernestina Giudici Humanistic Tourism Values, Norms and Dignity Edited by Maria Della Lucia and Ernestina Giudici Humanistic Management in Latin America Edited by Consuelo A. García-de-la-Torre, Osmar Arandia and Mario Vázquez-Maguirre

Humanistic Management in Latin America Edited by Consuelo A. García-de-la-Torre, Osmar Arandia and Mario Vázquez-Maguirre

First published 2021 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 52 Vanderbilt Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2021 selection and editorial matter, Consuelo A. García-de-laTorre, Osmar Arandia and Mario Vázquez-Maguirre; individual chapters, the contributors The right of Consuelo A. García-de-la-Torre, Osmar Arandia and Mario Vázquez-Maguirre to be identified as the authors of the editorial material, and of the authors for their individual chapters, has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data A catalog record for this book has been requested ISBN: 978-0-367-36752-7 (hbk) ISBN: 978-0-367-77035-8 (pbk) ISBN: 978-0-429-35117-4 (ebk) Typeset in Sabon by Apex CoVantage, LLC

Contents

List of tables and figures Foreword

vii viii

DR PEDRO C. SOLÍS PÉREZ

1 Humanistic management: a history of a management paradigm from the human dignity

1

OSMAR ARANDIA AND CONSUELO GARCÍA-DE-LA-TORRE

2 Humanistic management: a balancing act towards a better world

21

MICHAEL PIRSON

3 Corporate social responsibility based on dignity and well-being as keys to the humanistic management of human capital

38

ALFONSO ERNESTO BENITO FRAILE AND BERTHA ELIZABETH CÁRDENAS HINOJOSA

4 Targeting kids in the digital age: the ethics of online marketing towards children

50

FLOR MORTON AND TERESA TREVIÑO

5 Government and public–private relationships: lessons from the Odebrecht case

72

GLORIA CAMACHO AND MARIO VÁZQUEZ-MAGUIRRE

6 Supply chain management, humanistic management and circular economy: fostering industry innovation and decent work through responsible consumption and production through partnerships EDUARDO AGUIÑAGA AND ANA ROSA LEAL

83

vi  Contents

  7 The impact of humanistic management in governance

99

AITZIBER MUGARRA-ELORRIAGA AND ARANTZA ECHANIZ-BARRONDO

  8 An exploratory study of the effects of socioemotional wealth in the perception of humanistic management and psychological ownership in family and nonfamily members in Latin American family firms

111

SALVADOR S. GUAJARDO-TREVINO

  9 Social responsibility of the university in the promotion of more humane and sustainable enterprises

134

ALFONSO ERNESTO BENITO FRAILE, ANA MARIELA QUIROGA TREVIÑO AND BERTHA ELIZABETH CÁRDENAS HINOJOSA

10 Conceptualisation of human dignity: the evolution of the concept and its applicability in business through a humanistic lens

144

DAVID CAPISTRÁN

11 A win–win perspective from the firms to the BOP: a Latin American approach

167

JESÚS AVILA MARTÍNEZ

12 Understanding corporate sustainability through a humanistic management lens

179

GLORIA CAMACHO

13 Humanistic management in Latin America: final remarks

189

MARIO VÁZQUEZ-MAGUIRRE

About the contributors194 Index198

Tables and figures

Tables 1.1 Humanistic management and the SDGs 17 4.1 Advertising formats on the online context targeting children and their main ethical concerns 65 5.1 Bribes paid by Odebrecht in Latin America 76 7.1 Corporate governance in Latin America 101 7.2 Evolution of CSR 103 7.3 2019 SDG index and dashboards 105 7.4 Evolution of Latin American countries in the SDG index (2015–2019)106 10.1 Structure of research for the analysis 160 10.2 Structure of research for the analysis 162 11.1 Triple bottom line of the presented cases 174 12.1 Viña Concha y Toro: sustainability aspects 182

Figures 1.1 The philosophical rhombus of humanistic management 1.2 Classification of the sustainable development goals into five main dimensions 2.1 Imbalances in human drives 2.2 Imbalances of market pricing 2.3 Balancing act 5.1 The bribery model 8.1 Psychological ownership scenarios for different levels of SEW and fairness 10.1 Four drives from the humanistic management model

10 15 31 34 34 76 127 154

Foreword

The Renaissance is a broad movement that comprises different philosophical, cultural, artistic and scientific doctrines that modify the conceptions of nature and humanity, commuting the theocentric vision of the Middle Ages with an anthropocentric vision, which extends throughout Western Europe in the 15th and 16th centuries as a period of change and transition between the Middle Ages and the Modern Age. The Renaissance recovers several aspects of the classical traditions of Greek and Roman cultures as the main reference of the human, of its essence and nature, as an expression of the virtues, philosophy and arts that lead to perfection and the eminence of civilized Homo, educated and improved, in contrast to the barbaric Homo, wild and ruthless (essentially inhumane). Paideia becomes the Greek reference of civility and education for the formation and socialisation of future members of the Polis based in the liberal and scientific arts, to achieve the intellectual, moral and physical capacities of a Human, qualities also acquired in the study of music, poetry and philosophy. Renaissance Humanism, as a rediscovery of Greco–Roman humanistic heritage, has as its main reference to human essence as cultured, virtuous, benevolent and compassionate and is deployed in a wide range of philosophical doctrines that reflexively address the questions relating to ethics and values that affirm and underpin the dignity, virtue and preciousness of individuals in the recognition of good and evil, appealing at all times to universal human reason and qualities. Humanism has been spreading since the 15th century in Italy, France, Spain, the Netherlands, Germany and England. The Renaissance and Humanism in the 16th century become, as a basic component of the new knowledge, the immediate precedent of European expansion towards the occupation of American territories and their Westernization, the European separation between Protestant Reform and Catholic Counter-Reformation, individualism and the consolidation of modern states, the birth of the bourgeoisie and the consolidation of capitalism. The Modern Age can be located between the 16th and 18th centuries or in terms of important events of the discovery of America (1492) to the French Revolution (1789). The Modern Age is characterised by the expansion of

Foreword ix capitalism worldwide and in the development of an Economy World. The move from mercantilist capitalism to industrial capitalism, as was the case with the First Industrial Revolution in England, allowed economic rationality and techno-scientific rationality to be consolidated as central elements of the thought of the time. An extensive and long global economy extends its influence and ties around the world. Changes in the Modern Age are slow in terms of transforming the economic, political and social structures of the Middle Ages into the Modern Age. The illustration, as a cultural and intellectual movement, occupied a space from the mid-17th century to the early 19th century, essentially European, was present in France, England and Germany. The Century of Lights raises the need to sweep away human ignorance and misery through the lights of knowledge and reason that built progress. The Enlightenment was carried more for reason than for humanism. In this case, the humanist ideal found shelter in the theory of art and in the philosophy of history by German classicism and the romantic movement in the 18th and 19th centuries, highlighting the wealth of the human individual and the need for a comprehensive education based on creative processes. In short, humanism has been a component of Western thought since the recovery of Greek and Roman traditions in the Renaissance and continues in Modernity in various philosophical systems and in several schools of religious thought. But the common features of humanism are expressed in a number of related cases so that man can find the freedom to build his humanity, as a central element of his dignity, respect for the power and sovereignty of human reason, the universality of human rights, tolerance for diversity, social justice, avoid exclusion and discrimination on sexual issues, racial or religious. All these aspects correspond to the development of ethical values and scientific knowledge fundamental to ensure human survival. The preceding paragraphs establish a brief reconstruction of humanism from Western philosophical systems and schools of thought, with the aim of highlighting the relevance and importance of this work relating to Humanistic Management and the works that make up it. Below are the arguments by which this work has great academic value. First, the work is solidly based on the evolution that Western humanist thought has had from Greco/Roman contributions to the present day. The vitality of philosophical systems and religious thoughts in Western humanist identity, the foundational basis of which is located in the Greeks, Romans and Christianity, has developed a historical narrative about human nature in which the construction of various humanisms is highlighted because of the circumstances and particulars of each era and place. The human being is a historical being culturally determined, where the narrative that is constructed from knowledge about the achievements of the past, is intended to place contemporary themes within a more complete perspective. The work presented in this book highlights the urgent and impossible task of reconstructing humanist proposals in relation to serious economic problems

x  Foreword and risks, social, political, cultural and environmental issues expressed in increasing extreme poverty, extreme concentration of wealth, increased conflicts and war zones, violence against racial minorities, gender-based violence, massive “illegal” immigration, fundamentalist terrorism, global warming and accelerated species extinction, to name a few. The human condition must be reinvented from the principles of greater freedom of individuals to build a humanity that dignifies them in respect of their rights as human beings. Second, the work is framed in management as a research space to foster humanist proposals. The Contemporary Age comprises the historical period between the Declaration of Independence of the United States of America (1783) to our present day. But more particularly, Management places the Second Industrial Revolution (full industrialisation) in the emergence of large American corporations (between 1880 and 1920) when economic activities reached a sufficient level so that coordination of the administrative hierarchy could be more efficient than market coordination. The internationalisation and globalisation of these companies make plans, formulas, rules, instructions and administrative models universally and in a sense universal. International companies have always been normally regarded as private areas of economic rationality (efficiency and profits) directed by technocratic means. Businesses and Markets are the main regulatory mechanisms of contemporary society, from which two non-existent players emerged in history, the modern American worker and the professional entrepreneur. The government and its administrative offices and other social institutions have become support for the unhindered deployment of economic processes. The great originality of the Humanistic Management proposal is to introduce administrative practices in companies, where workers, employees and managers can develop human talent, share economic performance, extend dialogue and communication, and develop moral values and practices that dignify and respect the freedom to assume their humanity. The growing space of professional preparation and work in the lives of individuals, on other family and social spaces, makes the company the privileged place of socialisation and integration of personal identities. Humanistic Management’s perspective already has strong theoretical and practical developments. Like the Montreal School that since 1980 reflects new trends emerging from contemporary society from philosophical, ontological, axiological, epistemological and practical perspectives. On the other hand, there is the St. Gallen University in Switzerland oriented to human development, human integrity, human dignity and human freedom. Third. A set of the works presented in this work relates to the concepts of Governance and Governance and Corporate Social Responsibility. Industrial modernity defines a new social order where scientific rationality will build a positivist order for the organisation of work and production, so that managers will manage things, artefacts, structures, norms, mathematical models of decision and procedures rather than governing men, conflicts,

Foreword xi relationships of interest and games of power. However, at Harvard University in 1911, a course called Business Policy was created in the Master Business Administration to train executives in the government of the company, with a practical approach of generalist orientation, an inclusive perspective based on the political and ethical criterion that guides a more humanistic approach to governing men. On the other hand, externally, governance emphasises decision-making among several actors with different priorities and complex relationships to work together for common and mutually beneficial objectives, so they must share values and standards, partner in groups and in stable organisations. These capacities consist of social and particular interactions that, among other things, promote mutual recognition, trust, reciprocity, solidarity and cooperation. The research papers presented raise Corporate Social Responsibility from a humanistic perspective based on the well-being and dignity of people. This way of orienting internal government towards more humanistic models of promoting social cohesion through decent standard living and security, which would imply that contemporary company oriented to the growth of profits was transformed into an institution capable of promoting, in the different international territorial spaces where it is located, the humanist values that allow internal and external cohesion in the different areas of global value chains. Fourth, the different researches carried out on Humanistic Management in this work propose theoretical developments, ethical and epistemological contributions that are analysed through the case studies that study and research. In particular, there is an orientation towards Latin American cases. All civilisations and in particular Western civilisation has raised their founding backgrounds and symbolic representations that define their identity, both territorial and social of belonging, so they develop alterities to define and establish who are “we” and who are the “others.” In Classical Greece, the humans par excellence were the Greeks “we” and the “others” were barbarians who by nature were not entirely human. The first expansion of the West takes place in the territorial occupation of the American continent, where the “otherness” of the original peoples who inhabited America is manifested. There are no precise Western borders, and there is now greater multiculturalism in contemporary countries, but it can be noted that the Western world is made up of Europe, the United States, Canada, Australia, New Zealand and South Africa. Latin America is not entirely Western, it was Westernised by territorial occupation, but has always been thought of from the outside, forming part of the Third World and developing countries. What is interesting about the studies carried out from the Humanistic Management approach is its constant reference to international integration and cooperation programmes such as the 2030 United Nations Agenda for Sustainable Development. This is because from a humanist perspective the human condition is universal, rights and values are universal, and being the problems and risks of a global nature, which can only be addressed by all nations, the definition of “we” implies all the inhabitants of the world, and

xii  Foreword the internationalisation of firms and companies, and thus humanistic management, are a vehicle for the incorporation of individuals globally. Finally, Humanistic Management has an important role in training and education in the schools and universities where students are trained in management, where the quality of teaching is oriented to the necessary skills and competencies to a globalized world governed mainly by principles of economic results. The necessary introduction of humanist formation based on ethical principles, respect for the dignity of human beings, freedom and human well-being is urgent in today’s times. Without a doubt, this work is an important contribution in the training of humanist managers. Dr Pedro C. Solís Pérez Professor at UAM-Iztapalapa Department of Economics

1 Humanistic management A history of a management paradigm from the human dignity Osmar Arandia and Consuelo García-de-la-Torre Introduction Humanistic management is an idea developed by many different scholars, from different perspectives and at different times through history. This idea pursues the well-being and respect for the people’s dignity. In this chapter, we will discuss how two similar currents of thought evolved at different times into what we know as humanistic management. Also, how both of them impacted the management thought by redefining the purpose of the firm and the management models within the firm The first current of thought appeared in the 1980s in Montreal, when professor Alain Chanlat took the ideas of Maurice Dufour and George Gusdorf about the human being and its relationship with society and businesses. The HEC Montreal school has undertaken the task since its creation to reflect on the new trends in management that arise in society and organisations, from philosophical and pragmatic perspectives. Of course, reflection is not only focused on the commercial sense but mainly on the actions of the human being (Bédard & Chanlat, 2000). For this group, the history of humanity is constantly being rewritten and, in it, humanity has witnessed events that determine the future of society. However, in this process, the human being has assumed behaviours that have even threatened his own existence and our social cohesion in a scenario of globalisation and profound transformations associated with greater fragmentation of the social fabric and absence of stable social ties; a complex reality that requires explanation and alternative proposals of order, which is no longer possible to leave only to the whim of the gods. For authors such as Alain Chanlat, Réene Bédard and Omar Aktouf, it is not possible to close our eyes to the erosion of the legitimacy of governments, the excessive economic rationalisation and its consequent widening of the social gaps, inequality and the tendency to individualisation. The Montreal group considers necessary for individuals to behave towards each other respecting their respective dignity, which in turn will adopt and favour daily humanistic practices and behaviours, rules of social,

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organisational and personal conduct that respect their physiological integrity, their physical reality and their social and cultural identity, life itself. The second current of thought considered in this chapter was developed by a group of young scholars from the St. Gallen University in Switzerland. Humanistic management from the point of view of these authors is a philosophy that poses humankind and human values above other values. The idea of humanistic management is centred on human development, human integrity, human dignity and human liberty. In the same vein, this approach considers that the term of humanism is related to the realisation of certain human ideals. The St. Gallen school of thought also pursues the idea of human dignity over financial and operational performance within the firm. Also, the group of young scholars considers human nature as given and the freedom of choice as a very important element in such nature. Both “schools of thought” conceive organisations from a humanistic perspective, and, in this sense, humanism is conceived as an outlook emphasising common human needs and concerned with human characteristics. Both schools also consider four key elements of humanism in business. The first one is the consideration that human nature is not given, but it can be refined by the learning process; therefore, education is a key element of humanism. The second one is the idea of reasoning as a human virtue. The third key element is universalism, which means that humanism addresses every person, and in this vein, there are no differences of ethnicity, nation, race, social status or culture. The last element is the idea of individualism; in this sense, humanistic values address the individual, not the collective. Thus, considering the latter, and looking for the 2030 agenda from the UN, Humanistic Management fosters at least the following sustainable development goals (SDGs): The end of poverty (SDG 1) due to the interest of fostering the well-being in humankind; Health and Well-being (SDG 3), Gender equality (SDG 5), Decent work and economic development (SDG 8) and reduction of inequalities (SDG 10). This chapter is structured as follows: first, a small context analysis to let the reader understand why a different approach such as humanistic management is needed; second, we talk about the fundamentals and the history of humanistic management for the Montreal School; third, we do the same analysis but for the St. Gallen School; and finally, we conclude why both schools are equal in essence and complementary in form, specifically regarding the SDGs.

The context; human and environment suffering because of predatory business practices Let’s do an “imaginary” exercise: Imagine then for a moment, a world where children can be kidnapped from their villages or towns. Suddenly, those kidnapped kids are taken to work as slaves in productive plantations. Now, let’s

Humanistic management

3

imagine that in that terrifying world, people with the capacity to stop such atrocities not only ignore the problem but also tacitly or explicitly encourage it. Well, those kinds of atrocities are happening in the chocolate industry in Africa; and sadly, big chocolate firms are aware of the problem and had done poor efforts to alleviate it, and, in some cases, they have tacitly encouraged these practices by not fighting against them (Mistrati & Romano, 2010). With cases like that is easy to realise that society has been suffering constant crises regarding its socio-economical activities. According to some scholars, these recurrent crises are caused from economical and managerial practices that traditionally have considered economic growth and the search for profits as the raison d’être of companies and firms. These authors argue that, when a firm designs its strategy and its managerial activities regarding the search for short-term profits in the first place, people within and around the firm suffer damages due to unethical behaviours from the firm’s managers. As a response for such non-ethical activities, different voices from different contexts have raised their voices and have proposed alternative management models that foster the respect for human dignity in the first place, in an attempt to enhance people’s well-being. One of those alternative models is known as humanistic management, and it is based on the assumptions of considering the firms as economic organisations created, developed and managed by people whose main goal is the well-being of the people (Llano Cifuentes, 1997; Escudero, 2010) and the consideration of management as a human practice designed to achieve the smooth functioning of a human organisation (Chanlat, 2011). In all sense, we argue that humanistic management is a conception of the firm and the way the firm is managed, that considers the human being as the core of an organisation, and thus it enhances the respect for the human being; it considers freedom as a fundamental value and it believes that the human being can achieve its well-being by the total development of its virtues. Therefore, humanistic management can be seen as an alternative management model that could probably enhance human well-being.

Humanistic management; the Montreal’s perspective The history of humanistic management in HEC Montreal starts with Alain Chanlat in the 1980s, as the main scholar who developed a school of thought where the human being is the centre of any social and economic activity. The thinkers of the Montreal school assume that a good leader is a person who knows how to manage the “government of the people” at the level of sophistication achieved by the “administration of things.” This position has the necessary implication of a deep understanding of what a human being is (Chanlat & Dufour, 1985). In this sense, knowing how the specificity of man is constituted is of great importance. To achieve this goal, Alain Chanlat, leader of the Montreal

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School, points out that it is necessary for a smooth management to adopt an interdisciplinary approach with a common thread that will allow us to choose the human sciences appropriate to our purpose and focus on the key notions. For Chanlat, every human being has biological, psychological and social components continuously interacting, and this constant interaction builds up the behaviour and beliefs of every person (Muñoz, 2011). For the Montreal school of thought of humanistic management, it is obvious that each person should continue to deepen this knowledge for themselves. The result sought in this task is to give each person, some important keys that will help him/her to be more autonomous in his/her personal and professional development (Chanlat, 2011). These thoughts forced the Montreal school scholars to propose the dissemination, training and consolidation of the premises on the vision of the human being. Thus, after several years of working in Colloquiums, Work Meetings, dialogues with students and scholars and members of the group, HEC in Montreal accepted that activities related to the subject of Humanism were held, this from the classroom at all three levels of higher education, undergraduate and graduate: master’s degree and doctorate. Throughout its history, which began in the 1970s, many conferences, forums and colloquia were held to form a solid group of students, teachers and thinkers who nurtured the idea of humanism in business and society. The very first group was known as the Group of Humanisms and Management of Montreal. Reneé Bedard and Omar Aktouf were part of its foundational members, first as doctoral students, then as professors at HEC in Montreal who welcomed new students, and provided the spaces to carry out its activities and spread its ideas among the academic community, first at HEC and later on in the rest of Montreal’s universities. The most influential thinkers of the group were the philosophers George Gusdorf and Maurice Dufour. Both thinkers emphasise the excess of overspecialisation in the industry, eliminating the human being’s ability to rationalise his/her daily life and thus turning him/her into a mere working instrument for the capitals owning business power. This perspective led Alan Chanlat to question himself: Why not approach the management problems, not with new techniques, but with a different perspective? (Muñoz, 2011). Members of France, Belgium, Morocco, other countries from Europe and Africa soon joined the movement, as well as members from Latin America: Mexico, Colombia, Peru and Brazil, all of whom are its active members. In 2001, an important Colloquium was held in Zacatecas, Mexico, which included members from Mexico, Canada, France, Belgium, Morocco and Algeria. In order to spread the word of humanistic management, Alain Chanlat designed a seminar that was offered through the HEC programs. In this seminar, significant premises were developed considering the philosophical ideas about the human being, the leadership of the people and the administration

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5

of goods. This position has the implication that, in such a perspective, one must have deeply understood what a human being is. In this seminar, Chanlat questioned his students about what constitutes the “specificity of human being.” To achieve this goal, the participants had to adopt an interdisciplinary approach with a common thread that will allow them to choose the human sciences appropriate to clarify the main purpose of the seminar and to focus on the key notions of humanism. The students of the seminar realised after this reflexive exercise that every human being has biological, psychological and social components that continuously interact among them. This exercise leads the students to think on the practical and ethical implications of that knowledge for a leader. After the seminar, it was obvious that each participant should continue to deepen this knowledge by him/herself. The result sought in this seminar was to give each student some important keys that would help him/her to be more autonomous in his/her personal and professional development, in understanding him/herself as well as other human beings. After all these years, and from a deep analysis of its history and seminars, it is possible to assume that humanistic management, conceived by the scholars from HEC, has two main guidelines (Bédard & Chanlat, 2000): First, recognise the person and his/her own characteristics  – language, psychic reality, the symbolic universe, moral conscience, play, friendship, a taste for the new, inventive capacity – the central place that you must maintain in the world of management and administration. Second, rehabilitate a truly interdisciplinary approach to human reality. Therefore, everyone is expected to participate – teachers, students, researchers, managers, employees, etc – and that they are interested in the humanity of man and that they wish to reflect on human beings and organisations. For HEC Montreal, the main purpose of humanistic management must be based mainly on the well-being of the human being and not on accessory management issues such as marketing, finances or strategy, which end up losing focus on human beings, or come to consider them as a simple instrument or means to achieve “organisational purposes” (Bédard & Chanlat, 2000). The main concern of the Montreal school of thought is the influence of management in today’s world and how this influence affects and displaces the notion of community. The scholars from Montreal believe that the discourse of modern management is to solve the problems of economic development, even at the expense of the invasion of personal and social privacy. The success of this discourse has allowed mastery of the administration of things, over the discourse of the government of the people. Therefore, Chanlat calls for the responsible transition from humanistic thought to management theories and practices (Chanlat, 2003). Finally, Chanlat asks by way of reflection if there is a humanism or several humanisms. Humanism in the singular deals with the research of human dignity, from a Western thought. On the other hand, humanism in the plural focuses on respect for existing human diversity, that is, it takes into account

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the existence of various civilisations, which have their own cultures, wisdom and language (Rotundo & Caldera, 2008). However, one of the most important contributions to humanistic management by the Montreal school was the possibility of analysing the concept of humanism and management in depth, incorporating the philosophical rhombus proposed by Rene Bédard (1996) as a tool for analysis. In this idea, Bedard mentioned that one resource for understanding humanism is identifying the modes of complex thinking (Bédard, 1996). According to Bédard (1996, 2003), complex thinking can be understood by analysing 4 dimensions: The Ontology, The Axiology, The Epistemology and The Praxis. The ontological dimension is the one that identifies the essential features of being, the characteristics, their own reality or activity; it differs from the accidental or contingent attributes. The axiological dimension is the means, the science and theory of values that underpin specific behaviours and practices. The epistemology dimension refers to all matters relating to knowledge in all its forms. The praxis or practical dimension refers to any activity that can be observed in a particular behaviour and reflects in a profound way the values embedded in the actors that perform the activity (Bédard, 1996). It is important to remember that the business case for humanistic management arises from two main assumptions according to Arandia (2012): The first one is considering the firm as an economic organisation created and shaped by people, whose goal is the well-being of its members and of the community in which it finds itself (Chanlat, 2002; Llano Cifuentes, 1997; Escudero, 2010). The second assumption is to consider management as a human practice designed to achieve the smooth functioning of a human organisation (Chanlat, 2002), and, in this sense, the “humanistic management” is a response to management practices based only on economic and financial indicators. Regarding the first assumption, it is sustained in a common feature from a historic analysis of economic organisations: “Cooperation among peers.” In this sense, some scholars assume that organisations were created since the beginning by people in order to pursue common goals (Boyer & Equilbey, 1990; Codoñer & Fernández-Corte, 1991; Sharma, 1977). Moreover, recently some scholars still consider the firm as an economic organisation; thus, it is possible to define it as a group of people that interact with each other and their environment in pursuit of a common economic purpose (Granovetter, 1992). Now, regarding the second assumption, Mintzberg (2009), for example, defines management as the action of helping people in organisations to get things done. In this vein, Mintzberg remarks: Managers deal with people who take the action, so they motivate them and they build teams and they enhance the culture and train them and do things to get people to take more effective actions. And two steps removed from that, managers manage information to drive people to

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take action – through budgets and objectives and delegating tasks and designing organisation structure and all those sorts of things. (Mintzberg, 2009, p. 15) Therefore, management has to do mainly with people, both inside and outside the company. In the same vein, and according to Freeman (1984), the managers of a firm must consider their stakeholders and their demands to achieve the firm’s objectives without affecting or being affected by them.

The ontological dimension of humanistic management according to the Montreal school As mentioned previously, the ontological dimension of a complex concept is in essence the nature of the concept (Bédard, 1996), the very roots of meaning, and as Bedard says the raison d’être of the concept itself. It contains the roots and the tools for a better comprehension of the mere concept itself. Thus, according to Aktouf and Holford (2009) in Spitzeck et al. (2009), humanistic management arose from the idea that managerial activities are indeed human activities embedded in human organisations. So, humanistic management refers to all activities and behaviours related to the people inside and outside the organisation. In the same idea, Melé (2009) states that the consideration of the human being in the administrative sciences, must be embedded in a humanistic perspective; thus, humanism in business requires treating every employee with respect, fostering an ethical climate and endeavouring to provide working conditions which would favour, as much as possible, the psychological and physical well-being of employees. Furthermore, the humanistic management nowadays, according to the Montreal scholars’ ideals, is to consider it as a complete philosophy that positions humankind and human values above other values; in this idea, the humanistic management proposed by Montreal scholars is completely centred on the human being and the significance to the human being with regard to whatever activity is undertaken (Fromm, 1961, in Aktouf & Holford, 2009). It is important to state that according to Chanlat (2002), one important characteristic of the human being is the use of language. For the Montreal’s scholars, language gives a framework to the human being for a better understanding of his reality and his relationship with the environment. Therefore, the ability to communicate in complex situations with peers gives the human being the possibility of a smoother interaction with partners, people and also the environment itself (Gusdorf, 1965). But humanism, according to the Montreal school of thought, is not an issue of self-interest or self-development, it also encompasses the idea of community. In this idea, according to some scholars, the human being is also social and capable of creating communities with real bonds (Melé, 2003). Human dignity and community bonds are indeed two ontological roots of humanistic management; both characteristics necessarily include the

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development of human equality, self-enrichment and freedom of choice (Savall, 1975; Fromm, 1992; Chanlat  & Bédard, 1990; Chanlat, 2002; Aktouf, 1992; Melé, 2009; Nida-Rümelin, 2009; Spitzeck, 2011).

The axiology of humanistic management The axiological dimension of a complex concept regards with the values associated with a philosophy or way of thinking. Those values come from the ontological dimension and represent the ethics and the moral guidance that rules the human activity (Bédard, 1996). In this idea, a firm managed in a humanistic way must consider human dignity, liberty of choice, integrity, self-enrichment and equality among every people as its ontological characteristics (Chanlat, 2002). In such a firm, the values associated with those characteristics are a strong respect for the people inside and outside the company, a great sense of empathy with people’s needs, a strong solidarity with people’s concerns, and trust in the human being (Melé, 2009). Also, a firm managed in a humanistic way must seek equality among its people and their needs, and must seek human development as its first goal (Aktouf, 1992). Thus, the axiological values related to humanistic management can be stated as: The respect for the people in all its extents, empathy, freedom, solidarity, trust, virtue development and transparency.

The epistemological dimension of humanistic management The epistemology of humanistic management is related to how this idea was built up. And in this sense, the starting point is the philosophical thoughts of Cicero, Seneca, Plato and Aristotle. Nida-Rümelin (2009) considers that these classic Greek authors have strongly influenced the humanistic attitude towards human activities, such as management. Later on, centuries passed and the Italian Renaissance became the cradle of what it is known in philosophy as humanism, and Italian Renaissance fosters the idea of considering all men as equals, with the same rights, the same responsibilities and the same capabilities. In this sense, contributions made by authors like Erasmus of Rotterdam and Machiavelli, proposed to define the human being as the wholeness of everything: “The man is as it is, and its main parcel is fully developed,” so that it defines the Renaissance man as a universal man, versatile and representative of all humanity (Fromm, 1997). On the other hand, ethics and morality (as philosophical subjects) created the bases for the managerial behaviour expected from humanistic managers and conceptions such as corporate social responsibility and sustainability linked such philosophical concepts to the managerial world (Arandia & Portales, 2015). However, it was not only the philosophy what contributed to the construction of humanistic management; several other disciplines have also

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contributed to the conception of these management models. For example, psychology had a strong influence in the early works of humanism in business during the first part of the 20th century. Mayo, Herzberg and Maslow, just to cite a few authors, were essential components in building up humanistic management (Savall, 1975; Arandia, 2012). Sociology also contributed by adding the conception of the firm as an organisation created by the people and for the people. In this vein, authors such as Weber and Granovetter have had a strong influence in the humanistic management by setting the basis of considering the firm and the work on it as just a mere means to develop the human being and not the end of the human work. Finally, stakeholder theory (Freeman, 1984) laid the foundation for defining the macro scope of humanistic management and moreover facilitated the design of a wider range of benefits from the humanistic management perspective. Thus, the epistemic foundations of humanistic management are Philosophy, Psychology, Sociology, Corporate Social Responsibility, Sustainability and Stakeholder Theory.

The praxis of humanistic management and its categories According to Bédard (1996), the praxeology of a complex concept is what we see and observe in a natural way. The praxis (actions) is based on the values (axiology) and is built upon the epistemology of the concept. Therefore, and considering the axiological values and the epistemology of humanistic management, the praxis of humanistic management could be found in a firm as follows: Freedom of choice is a value expected in a firm managed in a humanistic way, and, in this sense, we can expect that in such a firm, the people in the organisation participate in the company’s decision-making, whenever this is feasible. To avoid the conversion of people into mere production factors, the firm should consider the capability of the people to choose what they want to do (Nida-Rümelin, 2009; von Kimakowitz et al., 2011). Besides, in a humanistic firm, managers encourage and foster the development of people, not only expecting a fine result for the firm but also mainly because development itself is an end for the human being. Human development of the company’s personnel and their families is encouraged and facilitated. According to Melé (2003), Aktouf and Holford (2009), McFarland (1977) and Fromm (1992), the humanistic firm must enhance the capacity of every person related to the firm through constant education. In this sense, the authors assume the Kant’s posture of considering the human being as an end by himself. Communication is a characteristic that defines humanity and helps to achieve interaction between peers. Moreover, through communication, people can solve differences and also achieve complicated goals. In this sense, language and communication are considered as enhancers of human relations in the firm and as characteristics of humanistic management since these are essential in understanding what people may need (Chanlat, 2002; Aktouf, 1992; Gusdorf, 1952).

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In this idea, communication of complex concepts is possible, as Gusdorf (1952) mentions, only in advanced species such as the human being. Thus, language is a distinctive characteristic of human beings and helps the human being to learn and understand the natural and social environment. Therefore, humanistic management pursues the understanding amongst human beings by establishing Constant communication with people inside and outside of the organisation. The ultimate goal of a humanistic firm is the well-being of the people related to it, therefore, in a humanistic firm, A fair system of salaries and compensations is established (Aktouf  & Holford, 2009; González López, 2007; Melé, 2009). In this sense, and assuming that people in a firm decide under independent circumstances to offer their capabilities to a firm, the respect for the dignity of those people requires the recognition of a fair compensation system (Savall, 1975; Spitzeck, 2011). Thus, the philosophical rhombus of humanistic management, according to the Montreal School of Thought, is observed as follows:

Praxis

Axiological Dimension Respect Empathy Solidarity Trust Freedom Education

Human Talent Development Ethics of the Firm Environmental Stewardship Shared Economic Performance

Ontological Dimension

Epistemological Dimension Philosophy Psychology Sociology Stakeholder Theory Triple Bottom Line Sustainability Corporate Social Responsibility Accountability

Human Dignity Equality Among People Freedom Self-Enrichment Through Education

Figure 1.1 The philosophical rhombus of humanistic management Source: Created by the authors, 2020 based on Arandia (2012)

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Humanistic management, the St. Gallen school The second perspective on humanistic management discussed in this chapter arises in St. Gallen University, where a group of young scholars: Wolfgang Amann, Michael Pirson, Heiko Spitzeck, Shiba Khan, Ernst von Kimakowitz and Claus Dierksmeier conceptualised and spread what for them is humanist management defined from three primeval dimensions (von Kimakowitz et al., 2011). The first is unconditional respect for the dignity of every person. For these scholars, dignity is an intrinsic value of every people, and in this sense, the respect for the people’s dignity is the value surrounding the becoming of the human being. The second dimension is a profound ethical reflection that should be part of all business decisions. Ethics for the St. Gallen scholars is the common framework that helps organisations to achieve their goals without harming the dignity of the people within and outside the firm. The third dimension is a dialogical extension of the ethical reflection in the corporate activities that pursues a benefit for the society where the firm is embedded. It is important to mention that, considering the ethical framework, a strong regulatory legitimacy for responsible corporate activities should be sought by any firm that considers itself as humanist. For these academics, business organisations have had an emphasis on economic activities (Granovetter, 1992), and in this idea, organisations had adopted different business practices that favour the search for economic returns over people’s well-being. This idea can be conceptualised in the form of the “homo economicus” which is the consideration of the people as profit maximisers, materialists who value individual benefit over group and society (Pirson & Lawrence, 2010), giving an extrapolation where human beings are isolated, usable and substitutable resources (González López, 2007). As a response to the prevalent idea in business where the human being was transformed into this homo economicus, humanistic management is centred on human development, human integrity, human dignity and human liberty (Nida-Rümelin, 2009). One important academic who follows the St. Gallen school of thought is Domenec Melé, a Spanish priest, professor and researcher from IESE in Spain, who considers as well as the St. Gallen scholars, that humanism is related to the realisation of certain human ideals. More specifically, humanism is conceived as an outlook emphasising common human needs and concerned with human characteristics (Melé, 2003). In this idea, Julian Nida-Rümelin (2009) considers three key elements of humanism in business: 1

The first one is the consideration that human nature is not given, but it can be refined by the learning process; therefore, education is a key element of humanism at all times.

12 2 3

Osmar Arandia and Consuelo García-de-la-Torre The second one is the idea of reasoning as a human virtue. The third key element is universalism, which means that humanism addresses all persons, and in this vein, there are no differences of ethnicity, nation, race, social status or culture.

This is how, on the reflection made by the scholars belonging to the St. Gallen school, that the ideas of humanistic management arise, considering at least four ontological characteristics: Freedom of self-direction, equality among people, dignity for every person and self-enrichment through education. Considering the latter idea of freedom, McFarland (1977) states that humanism in business is a philosophy that asserts the dignity and worth of people and their capacity for self-realisation through reason; in the same perspective, Melé (2009) assumes that humanistic management is based on the consideration of the dignity and equality of the people within a firm. Moreover, the concept of human dignity and equality derives, according to Melé (2009), in self-determination for every person in a firm through reasoning and dialogue. Therefore, Humanistic Management must consider the human dignity, the possibility of self-direction, and equality for every person as well as the possibility to communicate to peers. As the reader may suppose, there is a strong need to make a transition towards humanistic management within organisations. However, it is not expected that this transition would not be embedded in some kind of sustainable economic thinking, because organisations need this economic thinking to survive (Elkington, 1998). The reference to this transition is the symbiotic union of the concepts of profitability and morality. Profitability is a necessary element within companies but not a sufficient condition for humanistic management (Spitzeck, 2011). Based on this morality, humanistic management intends to emphasise non-economic benefits, which could be reflected from a humanistic perspective, such as the search for respect, acceptance, communion and shared values, instead of increases in personal profit. (Tyler, 2006, cited by Pirson & Lawrence, 2010). Regarding this idea, Diener and Seligman (2004) found that a “meaningful life” is more satisfying than money, power or status (Pirson & Lawrence, 2010). Humanism, therefore, manifests the importance of the sense of belonging, which is contradictory to the individualistic aspects of economic theory (De Cremer & Blader, 2005, cited by Pirson & Lawrence, 2010). Finally, for Doménec Melé (2003), humanism arises from an ethical perspective, on the following concept, “Humanism emphasises common human needs and is oriented to the development of human virtue, in all its forms and all its extension.” From the humanistic management point of view, people need to autonomously assume their roles as a result of a self-determined process. If this

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happens in a firm, then people are not just instruments of production, but they are assuming an instrumental role within their job. Therefore, the utilisation of people must be limited to the role a person assumes, and never to the person himself (von Kimakowitz et al., 2011), the small difference between considering the people as just an instrument, and assuming an instrumental role by themselves, “lays the foundations that allow the alignment of business goals and societal aims by respecting each person as an end” (von Kimakowitz et al., 2011, p. 6). In this idea, authors such as Aktouf and Holford (2009), Freeman (1984), Melé (2009) and Spitzeck (2011) consider that a company driven by just the maximisation of financial returns is unlikely to have the capability for selfrestraint when pursuing an economic opportunity, by turning a blind eye to social, ethical and environmental concerns. As von Kimakowitz et  al. (2011) mention, a company that maximises profits will not be able to integrate ethical considerations into all business decisions, as the maximisation of the interest of the shareholders supersedes all other stakeholders and excludes equal respect for them. Finally, “The dialogical extension of managerial ethical reflection” seeks a normative legitimacy that is necessary to ensure the outcomes of a monological ethical reflection solely from the decision-maker. In this sense, the result obtained from such a practice is the trust and respect gained amongst the firm’s stakeholders. Hence, humanistic management is the pursuit of business practices that seek to create sustainable human welfare. Humanistic management derives its legitimacy from preserving human dignity in business through submitting its practices to societal critique (von Kimakowitz et al., 2011).

The expected impact of humanistic management and its alignment with the SDGs After discussing the idea of humanistic management as an alternative managerial perspective for firms, at least two other questions arise: What can be expected from a firm that is managed in a humanistic way? And, how humanistic management engages with the SDGs defined by the UN? In this sense, von Kimakowitz et al. (2011) consider that the earnings of healthy profits and the outstanding results to the stakeholders of a firm are some of the results expected from a firm managed in a humanistic way. From this assumption, the authors show how businesses can unite social and environmental values with financial success by respecting and foreseeing the dignity of the people around and within the firm. According to von Kimakowitz et al (2011, p. 10), “The fundamental reason why humanistic management is beneficial to all stakeholders is that it has a profoundly liberating effect on the company and, consequently, on all – internal as well as external – stakeholders.”

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In the same vein, authors from both schools of thought explained in this chapter, such as Chanlat (2002), Aktouf (1992, 2009), Melé (2003, 2009), Dávila-Gómez and Crowther (2016), Llano Cifuentes (1997), Pirson et al. (2009), Spitzeck et al. (2009), and Friedland (2009), consider that the benefit of humanistic management in the firms affects a wide range of stakeholders and it also looks for protecting the environment as the home of the people involved in the firm. Moreover, some of these authors consider that this type of management enhances the common good of the whole society. The common good is a complicated and elusive construct that can be observed from three main perspectives: economic, social and philosophical (Chomsky, 2001). Common good represents: “the well-being of those within the company and the community in which the company is located.” From the economic perspective of the common good, Samuelson (1954) proposes that the use of the common production goods should be such that their consumption by individuals should not diminish the availability of those resources for other individuals. So, we understand the common good, from the economic perspective, to be “the general wealth that enables the development of individuals.” From another viewpoint, the social perspective of the common good emphasises the condition of the community of a group of people who join forces and capabilities to achieve the well-being of the group above that of the individual. This type of well-being is what is considered a thirdgeneration ethics, due to the dialectic that is set out between the sustainable and the unsustainable (Portales & García de La Torre, 2009). Along this line of reasoning, we base this perspective mainly from the position of John Rawls (1971), who defines the conditions for a society that is freer and more just. From this perspective, the community is a “Unity of Will.” Therefore, from a social perspective, it is possible to define the common good as: “the well-being achieved by the union of individuals, and which is above the well-being aspired to by individuals.” Lastly, the philosophical perspective of the common good emphasises the condition of equality amongst human beings, defined in the proposal of this thesis as “the joining of those conditions of social life, with which men, families and associations may achieve their own perfection with more fullness and facility” (John XXIII). In this sense, the common good is a condition, from individuals to institutions, so that full development is achieved. Thus, the common good can be defined as “The balanced development of well-being of all members of a community, in equal circumstances, in balance with their environment and with the freedom to choose.” Balanced development of well-being refers to be the development of the economic situation, of health and of the intellect, without neglecting the wellbeing of other members of the community; thus, it is possible to define balance with their environment to be general development not placing the sustainability of the community at risk.

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And the freedom to choose is interpreted to be a community in which individuals are at liberty to decide whether or not to develop themselves within the terms defined here. It is easy to observe why humanistic management enhances the common good in a community where the firms are managed in such a way; but how the idea of humanistic management can relate with the SDG proposed by the UN?

Humanistic management and the sustainable development goals (SDGs) According to the United Nations web page, the SDGs are the blueprint to achieve a better and more sustainable future for all. They address the global challenges we face, including those related to poverty, inequality, climate, environmental degradation, prosperity and peace and justice. For a deeper analysis and a more profound and comprehensive integration of the SDGs in the managerial practices of the firms, it is possible to classify them into at least five different but correlated dimensions. As mentioned earlier in this chapter, a firm that pursues the development of the human being, above any other consideration, is in essence a humanistic firm and its managerial activities, as well as its strategic perspectives are the evidence of a humanistic management model. Considering the previous, the common good is natural and expected of managerial activities that considers the human being above any other factor. And in this sense, the common good from its three perspectives explained, previously in the chapter, must enhance people, must care for the

Partnership Planet

People

Prosperity Peace

Figure 1.2 Classification of the sustainable development goals into five main dimensions Source: Prepared by the author based on the UN SDG web page (2019)

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environment and should give all people the same opportunities despite their gender, race and socio-economic position. Therefore, we assume that humanistic management enhances the wellbeing of the stakeholders, and by doing that, and by protecting people’s dignity, humanistic management fosters the concern for people, considering its intrinsic value as human beings and protecting their dignity. Humanistic management also seeks the prosperity of people by developing fair compensation systems that reduce inequalities and by enhancing the search for benefits without damaging the environment, neither the stakeholders. Humanistic management also encourages the firm to foster the care of the environment since the environment is considered the home of the people involved with the firm. Therefore, in this analysis, we had found that humanistic management directly impacts the following sustainable development objectives: SDG 1 No poverty: Humanistic management seeks to alleviate some of the damages caused by traditional management. One of these damages derives from the fact that some companies that seek to improve their financial returns, decide to establish low or minimum wages to achieve greater profitability in their operations. Many of these companies even move their operations to regions where there is surplus of workforce, and where conditions do not protect workers’ rights (Savall, 1975; Aktouf, 1992; Arandia, 2012). SDG 3 Good Health and Well-being: A  characteristic of humanistic management is the protection of the health of company workers and the promotion of well-being among its stakeholders. Thus, we can define that humanistic management has a positive impact on the promotion of SDG 3 (Arandia, 2012; Arandia & Portales, 2015; Spitzeck, 2011). SDG 5 Gender Equality: Humanistic management is characterised by the promotion and protection of the dignity of the human being. In this sense, the promotion of gender equality is only one factor within the promotion of human dignity (Arandia & Portales, 2015, p. 5; Melé, 2003). SDG 8 Decent Work and Economic Growth: Like SDG 1, the promotion of decent work and equitable development is a praxeological characteristic of humanistic management. By developing decent work, the company contributes to the revaluation of the human being through work and participates in a community development process, where both the company and the employee share responsibilities and benefits (Dumezil, 1989; Chanlat, 2003; Chanlat & Bédard, 1990; Arandia, 2012). SDG 10 Reduced Inequalities: One of the expected results in a community where its companies are managed in a humanistic way, is the gradual reduction of inequities in the population. Establishing business development processes, which promote the dignity of individuals in society, will imply, at least in the short term, the reduction of inequalities typical of systems where financial performance is prioritised over people’s well-being (Aktouf & Holford, 2009; Chanlat, 2002; Pirson & Lawrence, 2010; Freeman, 1984).

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Table 1.1 Humanistic management and the SDGs SDG

Humanistic management practices related to the referred SDG

SDG 1 No Poverty

A firm who is managed in a humanistic way ensures a fair salary for its employees and seeks to share the profits amongst the people within the firm Humanistic firms engage with the well-being of the people that work in it and foster healthy practices for the employees A humanistic firm does not allow any type of discrimination and fosters equality for all the people in and out of the firm The humanistic firm is always committed to generate decent jobs

SDG 3 Good Health and Well-being SDG 5 Gender Equality SDG 8 Decent Work and Economic Growth SDG 10 Reduced Inequalities

The respect for the people’s dignity considers the idea of a better richness distribution amongst the people within the firm

Source: Created by the authors 2020

Table 1.1 summarises how humanistic management fosters the achievement of the mentioned SDGs. At the end, with a strong emphasis in the humanistic perspective, a firm must ensure the welfare of people within the firm.

Conclusion Humanistic management flourishes as an almost natural response to management models where the main search for financial returns damages the well-being of people, both inside and outside the company. Thus, at different times and in different spaces, an alternative proposal to the management of companies arises, where the well-being of people is prioritised, above the achievement of merely financial value. Both proposals, the Montreal proposal as well as the St. Gallen proposal, assume that the human being must be free and dignified. Both proposals also assume that the purpose of the company, as the predominant economic organisation in our society, should be the search for the common good. In addition, both seek the promotion of dignity, and the management of the company based on a third-generation ethics that at the same time develops the human being achieves economic development. Both proposals, distant in space and time, have substantial communalities, and both have managed to exert an important influence on a group of academics and practitioners. There is still much to develop, and much to build, and so it is that we build bridges between both proposals, with which we hope to generate a

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critical mass, to promote a profound change in the way we conceive business and its relationship with human beings and the environment.

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Friedland, J. (2009). Doing well and doing good: The human face of the new ­capitalism. Information Age Publishing. Fromm, E. (1961). Marx’s concept of man. Open Road Media, 2013. Fromm, E. (1992). El Humanismo como utopía real. Paidos. Fromm, E. (1997). On being human. A&C Black. González López, L. (2007). Humanismo y Gestión Humana: Una perspectiva de interpretación para el trabajo social aplicado al campo laboral. Eleuthera, 42–63. Granovetter, M. (1992). Economic institutions as social constructions. Acta Sociologica, 3–11. Gusdorf, G. (1965). Speaking (La Parole). Northwestern University Press. Gusdorf, G. (1952). La Parole. Gallimard. Llano Cifuentes, C. (1997). Dilemas éticos de la empresa contemporánea. Fondo para la cultura Económica. McFarland, D. E. (1977). Management, humanism, and society: The case for macromanagement theory. Academy of Management Review, 613–623. Melé, D. (2003). The challenge of humanistic management. Journal of Business Ethics, 77–88. Melé, D. (2009). Current trends in humanism and business. In H. Spitzeck, M. Pirson, W. Amann, S. Kahn,  & E. von Kimakowitz (Eds.), Humanism in business (pp. 123–139). Cambridge University Press. Mintzberg, H. (2009, August 17). What managers really do. Wall Street Journal, 15–16. Mistrati, M.,  & Romano, R. (Dirección). (2010). The dark side of the chocolate industry [Movie]. Muñoz, R. (2011). Formar en administración: Por una nueva fundamentación filosófica. Siglo del Hombre Editores. Nida-Rümelin, J. (2009). Philosophical grounds of humanism in economics. In H. Spitzeck, M. Pirson, W. Amann, S. Khan, & E. von Kimakowitz (Eds.), Humanism in business (pp. 15–35). Cambridge University Press. Pirson, M.,  & Lawrence, P. (2010). Humanisim in business- towards a paradigm shift? Journal of Business Ethics, 553–565. Pirson, M., Von Kimakowitz, E., Spitzeck, H., Amann, W., & Kahn, S. (2009). Introduction: Humanism in business. In H. Spitzeck, M. Pirson, W. Amann, S. Kahn, & E. von Kimakowitz (Eds.), Humanism in business (pp. 1–11). Cambridge University Press. Portales, L., & García de La Torre, C. (2009, June). Evolución y Alcances del Concepto de Responsabilidad Social (Evolution and scopes of social responsibility concept). In Coloquio internacional y consorcio doctoral sobre los indicadores de valoración de la Responsabilidad Social Medioambiental de las empresas. Conferencia organizada conjuntamente entre el ISEOR y la Academy of Management. Rawls, J. (1971). A theory of justice. Harvard University Press. Rotundo, G. J. Z.,  & Caldera, J. (2008). La complejidad de las organizaciones: aproximación a un modelo teórico. Revista de Ciencias Sociales (Ve), 14(1), 46–62. Samuelson, P. A. (1954). The pure theory of public expenditure. The Review of Economics and Statistics, 387–389. Savall, H. (1975). Por un trabajo más humano. ISEOR. Spitzeck, H. (2011). An integrated model of humanistic management. Journal of Business Ethics, 51–62. Spitzeck, H., Amann, W., Pirson, M., Khan, S.,  & Von Kimakowitz, E. (Eds.). (2009). Humanism in business. Cambridge University Press.

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2 Humanistic management A balancing act towards a better world1 Michael Pirson

Introduction Management, organising or simply “getting things done,” is a universal human ambition. We have survived as a species because we can collaborate and solve common problems. Our brain has evolved to solve problems in communities. Yet we are in a situation where our species is facing de novo problems at an unprecedented scale, including climate change. How is it then, that we seem to have such problems to collaborate and find solutions? Why can we not manage better? If we assume for a moment that science is right and the predictions of the survival of our species are somewhat accurate, and if we want to overcome the many challenges confronting humanity, then we can benefit from a look in the mirror. Why did we get to where we are? Why did we take certain turns in the road? How can we possibly get back on the right track? Arguably, the ways we think about organising the world, and how businesses operate in our world, as well as how we organise our societies, have something to do with today’s challenges. In this chapter, I will lay out a short history of management thought that influenced business practice to a degree that is almost unfathomable. We live today in a world dominated by a set of ideas that shape our daily interactions, our world views, and our ideas about what our institutions, particularly our businesses, are and should be doing. These ideas, known as the neoliberal agenda, and manifested in the tenets of neoclassical economics, along with the rationalist approach to understanding humanity, have powerfully shaped how many people see their place in the world. Like fish living in water or humans breathing air, however, we hardly recognise that we are living in what amounts to a story that shapes our lives, values and behaviours in many ways. As William Allen (1992,1993), the former chancellor of the Delaware Court of Chancery, which rules on about 50% of American corporate judicial proceedings, noted, “[O]ne of the marks of a truly dominant intellectual paradigm is the difficulty people have in even imagining an alternative view.” As I will explore later, we live with that kind of dominant intellectual paradigm today.

22  Michael Pirson This paradigm, which has been labelled “economistic” (also known as the neoliberal agenda), was born in part out of conversations on the purpose of the public corporation and the difficulty to run it, especially given the new reality that owners were separate from managers. The solution to that question set off a cascade of new problems, which is so often the case. Later, I will shed light on what went wrong. In short, we suggest that it is a half-baked ontology: a half-truth about who we are as human beings, which informs our organising practices to this day. The prevailing assumption that we all are Gordon Gekko’s, aka self-serving greedy bastards, while sometimes accurate, fails us as blueprint for survival. Looking at the historic development of these ideas can provide a map to understand where our thinking and acting took turns to get to where we are and how we can get ourselves unstuck.

Short history of management theory The public corporation in the United States and its governance has had important implications and cascading consequences for management theory and practice all around the globe. Early on, the public corporation in the United States had access to capital markets and investors were tacitly supporting management. As public corporations became more prominent and more powerful, conflicts emerged between the investors and the managers running the company. The so-called separation of ownership and control, first documented by Berle and Means (1932) in the 1930s, has become an important problem ever since. This separation has forced new institutional arrangements, especially at the beginning of the 20th century. With the rise of the corporation, the question of who makes decisions for whose benefit became one of global importance. In a landmark 1919 Supreme Court decision, the Dodge brothers asked the Michigan courts to reign in decisions by Henry Ford and Ford Motor Company that would benefit the employees (5 USD minimum wage). The courts decided that shareholder concerns were equally if not more important, and that Ford management had to focus on shareholder interests first. This decision marked the beginning of the idea of the primacy of shareholders as owners and puts shareholder interests at least on par with the interests of other stakeholders, specifically employees. While many possible solutions to ensure that management operated in alignment with owners (shareholders) were discussed at the time, the view that most aligned with the assumptions of human behaviour in economics prevailed: a framework that we now often refer to as agency theory. In simplistic terms, agency theory argues that people are out for themselves, managers want to accrue the most power, status and salary, and investors want to do the same. In the early days of the public corporation, however, managers had an unfair advantage over owners/shareholders because managers possessed critical information (information asymmetry) that others

Humanistic management 23 did not. This information asymmetry would lead opportunistic managers to take self-interested decision at the expense of owners. The best way forward, therefore, so the arguments over time went, was to ensure that corporate governance had to focus on shareholder interests. We now call this focus on putting owner/shareholder interests ahead of the interests of other stakeholders “shareholder value maximisation.” The beauty of the agency model was that it was simple and it explained rather accurately some of the managerial misbehaviour witnessed up to the nineteen sixties, a time sometimes deemed as the highpoint of the public corporation (Davis, 2016). It was not difficult to find managers making decisions that increased their own fiefdoms, the amount of resources they could command, the number of people they had to manage and the size of their corner office. In a review of managerial decisions, such status games came under scrutiny for their effects on efficiency and value creation. It seems reasonable that this kind of managerialism would come under scrutiny, but up to that point there was no sufficient solution that would allow for control of management. Based on agency theory’s assumptions, however, some made a case to ensure that managers cannot operate against the investors’/owners’ interest. The silver bullet of agency theory seemed to shift the corporate objective function away from size and turnover towards profitability and shareholder value. To solidify that argument, the theory of the firm needed to state the goal of corporations explicitly as shareholder value maximisation. Aided by the then prevailing efficient market hypothesis, which is an investment theory that argues that it is impossible for investors to “beat the market” over time because market efficiency builds all relevant information in share prices, agency theorists argued that managers should get paid based on their performance. To align top managers’ interests with those of the owners, stock options became a tool of choice. Stock options represent the right for an employee, in these cases mostly chief executive officers (CEOs) and their top management team members, to purchase stock in their own company at a discounted (or specified) price for a certain period of time. The idea was that the options would motivate top management to improve share price, thereby benefitting the shareholders. Starting in the 1970s this thinking increasingly took over, first in academia, then slowly in business practice with then General Electric’s CEO “Neutron” Jack Welsh assuming a key role in increasing its popularity by laying off about a hundred thousand employees, including firing the bottom 10% of employees and managers, as a means to increase share price. By mid-1990s, the Business Round table had shifted the official goal of business as the creation of value to all stakeholders to the single most important stakeholder: the shareholder (Khurana, 2007). Incentive programs involving stock options for the CEO and other top managers became standard practice. Global corporations adopted them throughout their operations.

24  Michael Pirson Not only business corporations but also increasingly public administrations, universities, schools and even churches used these types of incentives. Similarly, during the 1980s and 1990s, business schools eagerly adopted agency theory as the theoretical foundation of their endeavours. Considered mostly atheoretical at the time, business scholars were happy to gain legitimacy within the academic university by adopting the “hard” pseudoscience of neoclassical economics and the quantitative approaches that supported it, in which agency theory played a major role. Agency theory, with its assumptions of human beings as singularly self-interest utility maximisers, lent itself to modelling. Accordingly, key departments in business schools, for example, Economics, Finance and Accounting, significantly increased their scientific reputation, lending the overall credibility to business schools, which had been roundly criticised for their lack of rigour in earlier decades (Khurana, 2007). Finance and financial models dominated many business schools. Simultaneously, the “softer” subjects of leading and managing, ethics, and broader business responsibilities were subordinated to the more “rigorous” quantitative approaches provided by economics, finance and, to some extent, accounting (Khurana, 2007), in what became known as the American business school model. The global spread of the American business school model, along with the standard setting power of American public corporations, further promoted the agency model. It became “performative,” meaning that the very concepts or words associated with agency theory influenced practice. Aided by new cohorts of MBAs, the influence of agency theory cascaded across the globe. It was particularly influential in global public corporations that either were American or were interested in being on the American Stock Exchange (therefore, having to comply with the U.S. Securities and Exchange Commission (SEC) rules on corporate governance). The performativity of agency theory made it the dominant paradigm of business, whether conducted in public, private, corporate and non-corporate structures, or family businesses. Agency theory became an overarching theory of organising and dominated not only business, economics and management but also had strong influences on other social sciences such as political sciences, psychology and sociology (Jensen & Meckling, 1994). Global economic policy further supported the growing influence of agency theory when the global institutes, IMF (International Monetary Fund) and World Bank, made their loans dependent on “modern” market economic institutional norms, that is, agency theory’s tenets.

The foundations of the economistic paradigm In an article, referencing the importance of agency theory to the social sciences, Michael Jensen and William Meckling, who pioneered the theory, felt compelled to specify the assumptions guiding this framework. They call

Humanistic management 25 their model of human behaviour the Resourceful, Evaluative Maximising Model or, for short, the REMM. Jensen and Meckling state that: REMM serves as the foundation for the agency model of financial, organisational, and governance structure of firms. The growing body of social science research on human behaviour has a common message: Whether they are politicians, managers, academics, professionals, philanthropists, or factory workers, individuals are resourceful, evaluative maximisers. (Jensen & Meckling, 1994) On this set of assumptions, economists developed the blueprint on which today’s business world is built, redesigned corporate governance, and developed motivational or incentive schemes for management. Harvard Business School’s Rakesh Khurana, who has written extensively about management education emergence, describes an event in the early 1980s. Corporate raiders linked to T. Boone Pickens, a well-known hostile takeover operator and corporate raider in the 1980s, provided regulators with copies of Jensen and Meckling’s papers when he wanted to convince them that his proposed takeovers would be the best way to deliver shareholder value maximisation (Khurana, 2007). Through such tactics, REMM thinking took a firm hold on corporate practice. REMM also became a cultural phenomenon when movie director Oliver Stone portrayed cut-throat corporate raiders in his movie Wall Street. In that movie, the main character, Gordon Gekko, uttered the famous line: “Greed, for lack of a better word, is good.” It is, therefore, difficult to understate the impact of Jensen and Meckling’s perspective on human nature, as it percolates tacitly throughout the social sciences and business culture. In a rough overview of their view on human nature, Jenson and Meckling articulate four guiding principles. Rationality Jensen and Meckling suggest that REMM is the product of over 200 years of research and debate in economics, the other social sciences, and philosophy. They provide a number of postulates that serve as a “bare-bones summary of the concept.” Their basic model assumes a rational actor, much in the tradition of economic research. Individuality Underlying REMM is the tacit assumption of methodological individualism, the perspective that, to study organisations, we only need to look at the individuals making up the organisation (not the organisation as a whole).

26  Michael Pirson Therefore, we can understand groups and organisations through the lens of individual maximisation without concern for the social context. Amorality Jensen and Meckling argue that humans are constantly evaluating options and are willing to make trade-offs and substitutions. They argue that REMM knows no commitments and has no needs, only wants. As a result, REMM-style people would be willing to sell their mother if doing so were profitable enough, as no emotional commitments are recognised and moral commitments are conceptually irrelevant. Maximisation Much in the tradition of economic thinking, Jenson and Meckling assume that human beings are out to maximise their own self-interest. Viewing human behaviour as a constant cost-benefit analysis, maximisers’ end goal is to obtain the most individual benefits. Although it seems obvious that humans care about many things beyond money, REMM assumes clear rational behaviour that can maximise the value of a set of opportunities that humans are able to accurately predict, assumptions that do not hold up in reality. REMM’s assumptions are in place for pragmatic theoretical reasons that allow simplification of reality, clarity of the problems and preferences, and relatively easy quantification of the model. The problem, however, is that they became increasingly performative: they created self-fulfilling prophecies. As these ideas spread globally, they engendered a global mindset that influenced management practice in unintended ways.

Paradoxical outcomes of agency theory As a consequence of attempting to solve the problem of managerial abuse by aligning incentives of managers to owners, the problem was exacerbated. Managerial abuse has arguably increased, and managers have even more control of shareholders’ resources (Davis, 2016). In fact, they have been using the narrative of shareholder value creation as a convenient argument to absolve themselves for any social responsibility, including long-term financial viability. Further, studies of company performance suggest that there is less relationship between performance and stock option incentives than might be desired, sometimes leading managers to take bigger risks and often delivering more losses than gains (Sanders & Hambrick, 2007). In turn, the institution of the public corporation has been losing societal legitimacy because the general public does not support managerial behaviour premised on the assumptions of REMM. As a result, trust in business leaders has generally decreased. Further, demands for more moral behaviour

Humanistic management 27 from companies, whether in the form of corporate social responsibility or environmental sustainability, have increased ever since the notion of shareholder value maximisation has become dominant. On top of the legitimacy crisis, the self-fulfilling prophecy of REMM has consequences for corporations that threaten their survival as a relevant societal institution. University of Michigan management Professor Jerry Davis argues convincingly that big corporations are the dinosaurs of our time as marketisation is occurring. He argues that corporations as hierarchies are being replaced by increasingly market-based organisations, such as platforms including Uber, Airbnb, and others.

Foundations of the economistic mindset2 In the following sections, we explore why the economistic mindset has become so dominant in today’s societies, and what some of its implications are. a)  Rationality vs. emotionality Much of the research in the psychology of decision-making of the past 50 years has questioned the extent of human rationality. Recent neuroscientific insights suggest that our brain developed by attaching a rationalising cortex to an otherwise amphibian brain that mostly reacts to intuitions, including emotions. Jonathan Haidt’s metaphor of the elephant (the emotional side) and the rider (the rational side) as how to think of our rational brain may best capture the latest findings. Showcasing evolutionary development, Frans de Waal writes that empathy is hard-wired in humans as well as in other animals, and that the emotional basis of empathy is critical for our sociality. We cannot live peacefully in families, communities, and tribes without having the tools to do so (de Waal, 2009). Hard-wired emotions representing the core of human nature, according to Charles Darwin, drive emotions such as empathy. In The Expression of the Emotions in Man and Animals, Darwin argues that empathetic instincts must have evolved from natural selection (Darwin, 1965). Similarly, biologist E. O. Wilson argues that humans are fundamentally emotional beings, because these emotions aided survival and reproduction (Wilson, 2012a, 2012b). Instinctive, emotional thinking is what psychologist Daniel Kahneman calls “fast” thinking, while rational, logical thinking is “slow”; hence, human beings have a tendency to rely on the “fast” way of thinking for more immediate responses to situations, decisions, and the like, rather than the slower, more rational approach (Kahneman, 2011) advocated by economism. The power of emotions, usually discounted by economism, is vitally important in shaping human cultures and societies – and emotions are part of human beings’ core nature. “Emotions humans experience today emerged (or were naturally selected) in our evolutionary history as rapid information

28  Michael Pirson processing systems that helped us to deal with the environment and events that occurred. That is, emotions evolved to help us cope with events and situations that had consequences for our immediate welfare. If humans didn’t have emotions, we wouldn’t know when to attack, defend, flee, care for others, reject food, or approach something useful, all of which were helpful in our evolutionary histories (as they are today). If we didn’t feel disgusted at spoilt food, we would eat it. If we weren’t outraged when rivals stole our food, resources, or mates, we wouldn’t defend them strongly. If we didn’t feel the joy in caring for a child, or the compassion in caring for a loved one, we wouldn’t enjoy the social bonds that make human cultures and relationships unique,” according to David Matsumoto. Research thus suggests that emotions are a feature, not a bug in the human operating system (Matsumoto, 2009). The so-called basic emotions, such as anger, contempt, disgust, fear, enjoyment, sadness and surprise, are experienced across different cultures in much the same way, indicating that these emotions are universal to human existence – and perhaps even associated with some animals (Matsumoto, 2009). These findings about the importance and universality of emotions fundamentally question the uniquely rational focus of Jensen and Meckling’s REMM propositions. b)  Individuality vs. sociality Underlying REMM is the tacit assumption of what scholars calls methodological individualism, the perspective that to study organisations we only need to look at the individuals making up the organisation. Therefore, organisational behaviour through the lens of individual maximisation without concern for the social context is possible. In contrast, biologist E. O. Wilson argues that homo sapiens along with a number of select other insects is a “eusocial” species, a truly social species. That means that the survival of one individual without others is highly unlikely (Wilson, 2012a, 2012b). Supporting this proposition, George Murdock (1945) combed through human behaviours shared by many hundreds of societies, which anthropologists studied in the past (Murdock, 1945). Murdock attempted to highlight social practices that are almost universal. A selection of these practices featuring human nature’s eusocial character includes community organisation, cooperative labour, courtship, dancing, gift-giving, government, hospitality, marriage, mealtimes, postnatal care, and the list goes on. This fundamental need  – Paul Lawrence calls it the “drive to bond”– is hard-wired. It serves an evolutionary purpose, which is the survival of the species, rather than individual benefit (Lawrence, 2010). Eusociality and its derivative – baseline empathy supported by emotions – lead to human behaviour that further questions REMM’s basic assumptions regarding the maximisation of self-interest. Fairness and the development of altruistic punishment uphold the tribe’s moral rules (Batson, 1998; de Waal, 2008; Fehr & Gächter, 2002).

Humanistic management 29 Fairness seems to be inherent to human nature – and perhaps beyond it as well. Research on both humans and some animals (e.g. some non-human primates and dogs) suggests that some of these species may well have a sense of fairness that is violated when unequal “rewards” are given (Brosnan & de Waal, 2012). Further, altruism, which has been actively studied in fields as varied as biology, economics, sociology, and game theory, differs from cooperation. Altruism requires no direct benefit or reciprocity. Emerging research suggests that altruism is a behaviour common to the human species, because group selection favoured those groups with altruists over those without (Wilson, 2012a, 2012b, 2015; Lehmann & Keller, 2006). Studies show that without the emergence of altruism, populations go extinct (Wilson, 2015; Wilson  & Wilson, 2007). Thus, altruism is apparently a key feature of functioning human groups (Wilson, 2015). REMM misses that important aspect of human nature. Interestingly, today organisations built to service REMM are apparently losing legitimacy as a result. c)  Amorality vs. morality/immorality Jensen and Meckling argue that humans are constantly evaluating options and are willing to make trade-offs and substitutions. They argue REMM knows no commitments and has no needs, only wants (Jensen  & Meckling, 1994). Because they pursue “opportunism with guile,” (Williamson, 1975) psychologists describe REMM’s as psychopaths (Hare, 2003). While there seem to be about 1% of the human population that operates under such premises, the vast majority of humanity is not psychopathic. Darwin observed “that any animal whatever, endowed with well-marked social instincts, the parental and filial affections being here included, would inevitably acquire a moral sense or conscience, as soon as its intellectual powers had become as well, or nearly as well developed, as in man. For, firstly, the social instincts lead an animal to take pleasure in the society of its fellows, to feel a certain amount of sympathy with them, and to perform various services for them” (Darwin, 1909). Joshua Greene writes, “Under ordinary circumstances, we shudder at the thought of behaving violently toward innocent people, even total strangers, and this most likely is a crucial feature of our moral brains” (Greene, 2014). In sum, Green says, we are a caring species, albeit in a limited way, and we probably inherited at least some of our caring capacity from our primate ancestors, if not from our more distant ancestors. We not only care most of all about our relatives and friends but we also care about acquaintances and strangers. In the same vein, Robert Wright argues that humans are moral animals. Both Wright and Greene suggest that we have a moral machinery in our brain originating from our hyper-social nature (Wright, 2010). According to Greene, “From simple cells to super social animals like us, the story of life on Earth is the story of increasingly complex cooperation. Cooperation is why we are here, and yet at the same time, maintaining cooperation is our

30  Michael Pirson greatest challenge. Morality is the human brain’s answer to this challenge. Such morality is derived from emotional baseline responses.” Greene argues that “for each cooperative strategy, our moral brains have a corresponding set of emotional dispositions that execute this strategy. Such strategies include concern for others, direct and indirect reciprocity, commitment to threats and promises, and reputation.” (Greene, 2014) Carrying similar ideas to their implications, E. O. Wilson writes that morality, conformity, religious fervour, and fighting ability, combined with imagination and memory, produced homo sapiens as a winner in terms of survival (Wilson, 2012a, 2012b). d)  Balance orientation There is also increasing evidence that “maximisation” is neither possible nor desirable in terms of survival. When people maximise, for example, their acquisition of food they become obese and risk their health. Life in general does not become enjoyable, because of social stigmatisation, physical inabilities, or inability to move by themselves. Psychology and neuroscience research challenge the belief that the human urge to satisfy wants is unlimited (Seligman, 2002) as the economistic perspective argues. Psychologists routinely find that people who balance choice options and satisfice, that is, accept available options as satisfactory, are happier than others attempting to constantly maximise their choices. Psychologist Barry Schwartz and colleagues report that “maximisers” are less optimistic, have less self-esteem, experience less life satisfaction, are more susceptible to social pressure, and are often more depressed than “satisficers” (Schwartz et  al., 2002). Increasing evidence shows that wanting less can be healthy (Kasser & Ahuvia, 2002), and that an increasing number of young people reject the notion that more is better (Gilbert, 2009; Lyubomirsky, 2007; Wrangham, 2009). Pursuing unlimited wants may be burdening and troublesome. “Affluenza,” the description of the constant pursuit of more, is considered a modern disease. According to REMM, affluenza should not exist; given that humans inherently want more, there can be no satiation. The ancient cultural wisdom traditions seem to concur that there is too much of everything, and as Aristotle suggested, there is a golden middle, a balance. This balance may often not be so clear, but throughout life, we seem to be able to intuit when we have gone off the rail. Like we seem to have currently done in the endless quest for the growth posited as both feasible and desirable by economism.

An alternative: humanistic management To find a way out of the mess we are currently facing as a species, we need to examine the foundations of our understanding of who we are as human beings. First, we are here because our species adapted to prevailing

Humanistic management 31 conditions, to become the epitome of survival. However, we might detect many flaws in ourselves and in others; we exist as the result of adaptations that allowed our parents to give us birth. In the following sections, I  present an alternative and more accurate understanding of human nature. Using a different blueprint of human behaviour is a crucial stepping stone in developing institutions that can help us humans survive and thrive in the future, not to mention all the other living beings in the world. Evolutionary biology points to four independent drives of human nature that are critical for the survival of the species. Darwin notes that we share an evolutionary background with many animals (Darwin, 1909), while neuroscience’s insights point to deeply rooted neural mechanisms that reward us when we acquire and defend what we deem necessary for survival. Lawrence and Nohria (2002) label two basic drives that we share with all animals as (1) the drive to acquire (dA) and (2) the drive to defend (dD). The novelty of recent evolutionary findings and their importance lies in the addition of two important and independent drives, which Lawrence and Nohria label (1) the drive to bond (dB) and (2) the drive to comprehend (dC). Based on these findings, Lawrence developed a renewed Darwinian theory (Lawrence, 2007; Pirson  & Lawrence, 2010), which rehabilitates Darwin’s ground-breaking insights into human behaviour, often overlooked or misunderstood (Lawrence, 2007). In Darwin’s own words, “The small strength and speed of man, his want of natural weapons, etc., are more than counterbalanced by his intellectual powers, through which he has formed himself weapons, tools, etc., and secondly by his social qualities which lead him to give and receive aid from his fellow-men.” (Darwin, 1909).

Drive to Acquire

Drive to Bond

Drive to Comprehend

Figure 2.1  Imbalances in human drives Source: Author creation, 2020

Drive to Defend

32  Michael Pirson This perspective suggests that human survival as a species depended on balancing these four independent drives. Unfortunately, economistic thinking has focused us on satisfying the drive to acquire over and above the other three drives. Consequently, we developed a theory of the corporate person, that is, public corporation that is supposed to maximise shareholder value (dA), but not take responsibility (dB), provide purpose above making money (dC), or provide a space where people feel safe (dD). The result is that we are currently experiencing an imbalance in how, at least in the developed world, people and the economies they have developed operate. The drive to constantly acquire (dA) more and more stuff, grow our economies bigger and bigger, and continually produce more and more revenue through our organisations, specially corporations, is manifested in materialism and consumption practices that threaten human civilisation and perhaps even survival, destroying the ecosystem and its capacity to support human civilisations on a global scale. The “Imbalance” diagram illustrates this imbalance. Among the outcomes of this extreme focus on the drive to acquire is lack of community and quality social relationships, lack of purpose, and a general inability for many people to make sense of the world, as well as a perceived lack of security, combined with increased fear and terror.

Imbalance in managing social relations The economistic view of human nature has led to another imbalance. The dominant form of organising under the prevailing economic framework is market-based. Alan Fiske, a prominent Columbia University anthropologist, argues that humans organise themselves according to four main frameworks. Market pricing, the way that today’s economies are mostly organised, is only one of these four mechanisms. Throughout human existence, human beings have organised using at least three other distinct organising forms: communal sharing, equality matching and authority ranking, each of which has been critical to human survival (Fiske, 1991). Communal sharing first emerged as an organising mechanism for social relations. Anthropologists argue that once our hominoid ancestors came down from the trees they lost protection and food supply (largely because of climate change turning forests into savannah). Most of our homo habilis forebears died out. The survivors were the ones who were able to bond as tribes and communities. Survival became feasible because these bonded groups could defend themselves against bigger predators and cooperate to hunt for food. On discovering how to generate fire, early hominids were able to further organise and thereby increase their chances of survival by many orders of magnitude. In these communal sharing contexts, community members shared everything with everyone else in the community, without counting or selling. Individuals who did not share in the cooking, hunting, and defence were soon kicked out of the community as free riders. Our current species, homo sapiens, is a descendant of these community-based

Humanistic management 33 hominoids. Just as they did, we too depend in large part on communal sharing practices, for example, in well-functioning families and communities that evidence civic behaviour. In addition to communal sharing, our ancestors quickly learnt that successful communities required division of labour and that there were benefits to hierarchical order. Anthropologist Alan Fiske labels this organising mechanism “Authority Ranking.” Authority ranking is a mechanism that works not only in terms of power but also in terms of expertise and knowledge. Not everyone in a given community has the same skills, abilities, interests, or expertise. Therefore, hierarchies in which authority is established and someone has more say than others develop into successful communities. The authority ranking mechanism is different from market pricing. Market pricing means that individuals with relevant market power and resources can enter and get whatever they desire. Often in such systems, the person(s) with most money or other resources dominate(s) the community or system. In contrast, in authority ranking relations, authority comes from skills or powers vested into the authority figure, that is, the chief, medicine man or woman, priest, landowner, leader, or king or queen for reasons that are not related to market power. The observation that we live in a market society (Sandel, 2012) would imply that many of such authority mechanisms are now superseded by markets, including democracy or the law. Equality matching is a third organising mechanism. Equality matching can roughly be described as reciprocity, though not reciprocity in terms of a market, but reciprocity over time as a mechanism of exchange that builds trust and requires trust. Our ancestral communities depended on the good will that equality matching created and used it for diplomatic purposes with neighbouring tribes to establish peace. Market mechanisms can undermine such trust because a trusting relationship between people or tribes is different from a simple market transaction, which can often be used to trick and cheat people. These three mechanisms, so shows Fiske, have been relevant in every society across the globe and still are relevant for societies to function well today. Unfortunately, economistic thinking, embedded with its rationalist orientation, has increasingly focused on market pricing as the proper or main organising mechanism, in part as a reaction to the dominance of authority structures before what is known as the Enlightenment. Today, there is a further imbalance (see Figure  2.2) that has shifted authority structures of all sorts, including not only companies but also religions, communities, and other institutions into markets, communities into markets, creating what many bemoan as a market society. The result of these shifts, away from multiple organising mechanisms towards a dominant focus on market pricing, is a transactional orientation in which people are viewed mostly as consumers or market actors, rather than as members of communities or social beings living in relationship to each other and to nature. The result is a missing sense of community, of direction, and of dignity for many people. At some level, the constant

34  Michael Pirson

Market Pricing

Authority Ranking

Equity Matching

Communal Sharing

Figure 2.2  Imbalances of market pricing Source: Author creation (2020)

Drive to Acquire

Drive to Comprehend

Drive to Bond

Communal Sharing

Authority Ranking

Drive to Defend

Equity Sharing

Market Pricing

Figure 2.3  Balancing act Source: Author creation (2020)

emphasis on markets has resulted in a crisis of meaning, since a good deal of research now suggests that more material goods, that is, more stuff and even greater wealth beyond the ability to support self and family, will not necessarily make people happy (Csikszentmihalyi, 1999). In sum, humanity seems to be facing at least two major factors that have resulted in severe imbalances. We have a misaligned understanding of who we are as human beings, focusing on the drive to acquire as our main motivator. We also focus excessively on market mechanisms, mainly to organise social relations at the group, organisation and society levels. These imbalances, driven by poor understanding of who we are as human beings, will not sustain our species going forward. The ongoing and constant degradation of the Earth’s resources, that is, the product of the constant quest for more, dramatically illustrates that reality. Today’s sustainability, climate change, inequality, energy, and political crises, among others, vividly

Humanistic management 35 demonstrate that these types of imbalances are harmful to our species, to the world around us, and, ultimately and possibly most significantly, to our children and their children. Clearly, rebalancing human beings’ relationships with each other and with nature is in order, and understanding how humans are actually constituted can help in that quest.

Moving towards a new story To organise better, we need a better metatheory or narrative of management. This narrative can be based on a different ontological perspective of who we are as human beings and how we organise. Management can then be seen as a balancing act between the various drives we need to satisfy and the task of organising social relationships. When we see the possibilities of balancing between various forms of market pricing, authority ranking, communal sharing and equity matching, we can move away from the tendency to solve problems mostly through markets. At the same time, we need to become more creative in ways in which we can honour our humanity and transcend dignity-denying organising practices. To understand and honour cultural differences, it needs to be clear that the balancing acts in different regions of the world could well look differently. There is no such thing as a “one-size fits all” approach to management, yet we can find patterns of what drives human excellence.

Notes 1 This chapter has been sourced from prior work including my book on Humanistic Management (2017). 2 This section has been adapted from Pirson and Steckler (2018).

References Allen, W. T. (1992). Our schizophrenic conception of the business corporation. Cardozo Law Review, 14, 261. Allen, W. T. (1993). Contracts and communities in corporation law. Washington & Lee Law Review, 50, 1395–1407. Batson, C. D. (1998). The psychology of helping and altruism: Problems and puzzles. Contemporary Psychology, 43(2), 108–109. Berle, A.,  & Means, G. (1932). The modern corporation and private property. ­Palgrave Macmillan. Brosnan, S. F., & de Waal, F. B. M. (2012). Fairness in animals: Where to from here? Social Justice Research, 25(3), 336–351. Csikszentmihalyi, M. (1999, October). If we’re so rich, why aren’t we happy? American Psychologist, 54(10), 821–827. Darwin, C. (1909). The descent of man and selection in relation to sex. Appleton and Company. Darwin, C. (1965). The expression of the emotions in man and animals (Vol. 526). University of Chicago press.

36  Michael Pirson Davis, G. F. (2016). The vanishing American corporation: Navigating the hazards of a new economy. Berrett-Koehler Publishers. de Waal, F. B. M. (2008). Putting the altruism back into altruism: The evolution of empathy. Annual Review of Psychology, 59(1), 279–300. de Waal, F. B. M. (2009). The age of empathy: Nature’s lessons for a kinder society. Harmony Books. Fehr, E., & Gächter, S. (2002). Altruistic punishment in humans. Nature, 415(6868), 137–140. Fiske, A. P. (1991). Structures of social life: The four elementary forms of human relations: Communal sharing, authority ranking, equality matching, market pricing. Free Press. Gilbert, D. (2009). Stumbling on happiness. Vintage. Greene, J. (2014). Moral tribes: Emotion, reason and the gap between us and them. Atlantic Books Ltd. Hare, R. D. (2003). The psychopathy checklist – revised. IDRlabs. Jensen, M. C.,  & Meckling, W. H. (1994). The nature of man. The Journal of Applied Corporate Finance Summer, 4–19. Kahneman, D. (2011). Thinking, fast and slow. Palgrave Macmillan. Kasser, T., & Ahuvia, A. C. (2002). Materialistic values and well-being in business students. European Journal of Social Psychology, 32, 137–146. Khurana, R. (2007). From higher aims to hired hands: The social transformation of American business schools and the unfulfilled promise of management as a profession. Princeton University Press. Lawrence, P. R. (2007). Being human–a renewed darwinian theory of human behavior. www.prlawrence.com Lawrence, P. R. (2010). Driven to lead: Good, bad, and misguided leadership (Vol. 168). John Wiley & Sons. Lawrence, P. R.,  & Nohria, N. (2002). Driven: How human nature shapes our choices. Jossey-Bass. Lehmann, L., & Keller, L. (2006). The evolution of cooperation and altruism – a general framework and a classification of models. Journal of Evolutionary Biology, 19(5), 1365–1376. Lyubomirsky, S. (2007). The how of happiness: A scientific approach to getting the life you want. Penguin Press. Matsumoto, D. (2009). The origin of universal human emotions. http://davidmatsu moto.com/content/NG%20Spain%20Article_2_.pdf. Murdock, G. P. (1945). The common denominator of cultures. Columbia University Press Pirson, M. A. (2017). Humanistic management – Protecting dignity and promoting well being. Cambridge University Press. Pirson, M. A., & Lawrence, P. R. (2010). Humanism in business–towards a paradigm shift? Journal of Business Ethics, 93(4), 553–565. Pirson, M. A., & Steckler, E. (2018). A humanistic ontology for responsible management. Business and Society 360, 3. Sandel, M. J. (2012). What money can’t buy: The moral limits of markets. Palgrave Macmillan. Sanders, W. G., & Hambrick, D. C. (2007). Swinging for the fences: The effects of CEO stock options on company risk taking and performance. Academy of Management Journal, 50(*5), 1055–1078.

Humanistic management 37 Schwartz, B., Ward, A., Monterosso, J., Lyubomirsky, S., White, K., & Lehman, D. R. (2002). Maximizing versus satisficing: Happiness is a matter of choice. Journal of Personality and Social Psychology, 83(5), 1178. Seligman, M. (2002). Authentic happiness: Using the new positive psychology to realize your potential to lasting fulfillment. The Free Press. Williamson, O. E. (1975). Markets and hierarchies: Antitrust analysis and implications. The Free Press. Wilson, E. O. (2012a). On human nature. Harvard University Press. Wilson, E. O. (2012b). The social conquest of earth. WW Norton & Company. Wilson, D. S. (2015). Does altruism exist? culture, genes, and the welfare of others. Yale University Press. Wilson, D. S.,  & Wilson, E. O. (2007). Rethinking the theoretical foundation of sociobiology. The Quarterly Review of Biology, 82(4), 327–348. Wrangham, R. W. (2009). Catching fire: How cooking made us human. Basic Books. Wright, R. (2010). The moral animal: Why we are, the way we are: The new science of evolutionary psychology. Vintage.

3 Corporate social responsibility based on dignity and well-being as keys to the humanistic management of human capital Alfonso Ernesto Benito Fraile and Bertha Elizabeth Cárdenas Hinojosa Introduction Humanity faces some of the greatest known challenges. They invite a change of business paradigm leading to a new way of doing business. Humanistic management proposes a business paradigm that is centred on the human being and based on the dignity and well-being of people. To implement such a paradigm, it is necessary for companies to take responsibility for the associates working for them. A responsibility implies that people are an end in themselves, that they develop through their work and organisations, and not the other way around. Companies will implement real change by successfully assuming social responsibility for their workers’ progress and well-being, recognising the dignity they deserve. Every turn of century and millennium entails a period of transition. New schemes and paradigms break apart and others breakthrough. So far, we have relied on an economist paradigm when it comes to understanding business. However, we need a paradigm shift to address the challenges facing society and humanity. In this sense, the sustainable development goals (SDGs) set a framework for the improvement of life on the planet. Amongst the 17 objectives that make up the SDG’s is Goal 8: Decent Work and economic growth. The proposal for this change of mindset, from an economic paradigm to a humanist one, is in the line of creating companies and organisations that contribute to the purpose of Goal 8, which is “to create decent jobs for all and improve living standards” (United Nations, 2020b). From humanism, a business paradigm focused on the person is proposed, where this is the end and not the means for the ends of other people or institutions. A paradigm that recognises the dignity of each individual and how to protect it. This requires the creation of business and working conditions that contribute to the well-being of people working in a company. In the case of enterprises, employment must be a means of enabling people to increase their potential and to cooperate with one another. Cooperation that

Dignity & wellbeing for HC management 39 leads them, outside the company, to the commitment to the social institutions necessary to build more humane societies. Therefore, the dignity of people and their well-being must be part of the concerns of the organisation and of the indicators of business success and health. For that reason, it should be part of its social responsibility, as it can be structured based on the relationships established with the different stakeholders of the organisation. Workers are one of the stakeholders mostly impacted by company decisions. On the other hand, when we speak about Corporate Social Responsibility, it often refers to the role business plays in society. In that sense, most people think about the external responsibility of organisations. Nevertheless, there is another great responsibility which is inside, towards the workers. In social responsibility, and in business ethics, congruity is very important. In the case of the organisations, the kind of relationship with their collaborators is the first indicator of congruity. The people employed at any organisation spend most of their time at work. This way, organisations and companies are a space of professional and personal development. We can see the values, personality, fears, qualities, etc. of the members of an organisation in their interactions and decisions. At the same time, recent studies (Deloitte, 2017) speak about the importance of turning organisations into positive experiences for workers. All that with the intention of attracting and retaining the talent and taking advantage of the coexistence of the diverse generations in the companies. The aim of this chapter is to examine, from a humanist perspective, the responsibility the company can have regarding the well-being and dignity of its collaborators. The purpose is defining a humanist ecosystem of well-being that contributes to the personal and professional development of the members of a company that likewise allows the continuity of the organisation. The reflection carried out in this chapter aims to promote, with the support of different authors and relevant documents, a shift in the paradigm. A necessary change for the construction of a more humane society. A social space where human beings flourish through the effective and real recognition of their dignity evidenced in the social, emotional and physical wellbeing of the people who inhabit this world. And, this thought is of greater importance for Latin America. Derived from the crisis caused by the global pandemic, the Economic Commission for Latin America and the Caribbean (ECLAC) affirms that: Based on the diagnoses of the business chambers in relation to the situation of MSMEs and the characteristics of the crisis, ECLAC estimates that more than 2.7 million formal companies in the region would close, with a loss of 8.5 million jobs, not including the job cuts made by the companies that will keep on operating. (2020, p. 6)

40  Alfonso Ernesto Benito Fraile and Bertha Elizabeth Cárdenas Hinojosa Therefore, in these contexts of uncertainty, greater vulnerability and risk, it becomes more necessary to speak of dignity and well-being. Situations, which although accentuated by the global health crisis of 2020, are not foreign to the usual situation in Latin America. However, as it also includes the perspective of the UN (United Nations, 2020a) to face the economic and social recovery, it is necessary to protect the most vulnerable companies and employees. “Economic recovery is about protecting jobs and workers; ensuring decent work; and protecting productive assets, productive units and productive networks during the crisis” (United Nations, 2020a, p. 17). The Humanistic Management approach is the paradigm from which to promote those decent jobs that allow the well-being of people, specially in territories such as Latin America.

Human dignity One of the key elements of humanistic management is human dignity. As a human-centred management, it must promote respect for human dignity (Camargo et al., 2020; Melé, 2003, 2013, 2016; Pirson, 2017a, 2017b). The issue of human dignity is a topic that has been discussed throughout history from a philosophical point of view. As Hodson (2001) states, there are two ways of understanding the concept of dignity: as an intrinsic characteristic of the human being or as a feature constructed by the actions of the individual. Even though it is considered an inherent characteristic of human beings (Camargo et al., 2020; Hodson, 2001; Melé, 2016), the concept of dignity remains theoretical when certain external conditions are not present. This demonstrates the vulnerability of people who are “physically, psychologically, economically and culturally dependent on others throughout their lives.” (Sayer, 2016, p. 568). Specially, when they are in a place or situation where their dignity is subject to the environment created by the decisions and actions of others, and how they are treated in said environment, where dignity consists and depends on being treated as “ends” and not as “means” for the ends of other people (Sayer, 2016). However, dignity also depends on the value and self-esteem people have for themselves, regardless of the circumstances. “In both cases, dignity has a bivalent character, dependent on both the actor and her others” (Sayer, 2016, p. 568). Work impacts the dignity of people in two different ways. On the one hand, in terms of the existing conditions for their dignified treatment within the organisation. For example, ensuring fair and trustworthy treatment by recognising their value as well as having morality and values as priorities are stimulators of a sense of dignity towards the people who work in said environment (Sayer, 2016, p. 571). On the other hand, work impacts people’s dignity to the extent that it represents an opportunity to fulfil their needs and have a decent life. Sharing what it is stated (Camargo et al., 2020) “decent jobs that would allow people

Dignity & wellbeing for HC management 41 to escape poverty and live a dignified life (e.g., formal work contracts, fair wages in relation to the local cost of living, job security, respect for workers’ rights, safety, and adequate time-off, so they have time to attend to their families and participate in community and cultural life, amongst other things)” (2020, p.  16). In that sense, work also represents an area where people can strengthen their dignity, as long as it allows the development of their autonomy inside and outside the work. In other words, by being autonomous, they become independent of those factors that may threaten their dignity. It is in both directions that the humanist paradigm seeks to generate an impact. This perspective is the “ethical component that attributes unalienable rights to everybody” and that makes human dignity “a universal baseline for the agreement of human rights for everyone” (Pirson, 2017b, p. 71) and that ensures the satisfaction of the four instincts of every human being: survival, preservation, social bonding and understanding, through which people fulfil their needs (Pirson, 2017a, 2017b). This satisfaction of needs is what, contemporaneously speaking, can be called well-being, which consists in “a decent standard of living, security, scope for developing and using their abilities, enjoyment and friendships” (Sayer, 2016, p. 578), amongst other elements and conceptions proposed by numerous authors (Avramchuk, 2017; Earle, 2003; Jain et al., 2011; Morales Gutiérrez & Cuervo Morales, 2017; Pirson, 2017a; Seligman, 2011).

Personal well-being While dignity can be considered as an inherent quality of human beings (Hodson, 2001; Pirson, 2017a, 2017b), well-being is not. This is a construct (Seligman, 2011) that becomes an indicator of dignity in people’s lives. Therefore, the greater the degree of well-being they enjoy, the greater the possibilities they have to live more dignified lives. The notion of well-being is a broad concept that affects the human being as a whole, and it is composed of different dimensions (Avramchuk, 2017; Earle, 2003; Pirson, 2017a, 2017b; Seligman, 2011). It is a construct that takes into consideration psychological and physical aspects of individuals. Within these psychological aspects, some authors include as well “the quality of social relationships, good [. . .] mental health and a generally positive attitude towards life” (Pirson, 2017b, p. 9), and even happiness for life (Avramchuk, 2017). In the words of Seligman (2011, p. 24), well-being consists of five essential elements: “positive emotion (of which happiness and life satisfaction are all aspects); engagement; relationship; meaning [and] achievement. No one element defines well-being, but each contributes to it” (Seligman, 2011, p. 24). What these elements, proposed by different authors, have in common is the importance of psychological aspects related to one’s own mental health and the ability to generate relationships, even beyond the physical ones. Even the authors who include physical aspects (both of

42  Alfonso Ernesto Benito Fraile and Bertha Elizabeth Cárdenas Hinojosa the person and of the environment) as elements of well-being (Avramchuk, 2017; Pirson, 2017a, 2017b) consider that the psychological and emotional aspects are more important. In other words, people are able to feel comfortable, regardless of how they physically feel or of the environment they live in, as long as they have psychological tools that allow them to feel satisfied with their lives and make positive relationships and that can give meaning to their reality. These components of well-being can be analysed from the workplace view, since the environment of the organisation impacts the quality of life of people who work for them (Earle, 2003). In that sense, the labour factors that affect well-being, according to Avramchuk (2017, p.  25) are: “satisfaction or dissatisfaction with the job, the pay, the boss, co-workers, promotion opportunities, engagement and interest in assigned tasks, work environment, and employee general health.” Companies that truly understand the value of human dignity as something inalienable of their workers take their well-being seriously and work on their sustainability. Said sustainability relies on the personal development of the people who work in the organisation and who consider these companies as important work options; moreover, in the development of the social communities of which they are part, through the personal development of their employees (Jain et al., 2011). “In doing so, these companies go beyond their legal obligations in relation to the management of health and safety and view the promotion of well-being as part of their usual business practices” (Jain et al., 2011, p. 622). The promotion of workers’ well-being and dignity as the company’s social responsibility is necessary for the development of people and society. They are responsible for the wealth that allows people to fulfil their needs, get involved with society and contribute to the common good through work, which also involves the self-realisation of the human beings through themselves (García Echevarría, 2015; Laborem Exercens, 1981). This self-realisation, or personal fulfilment, is a two-way process. People can reach their self-realisation through work, but the “creation of work,” understood as innovation, occurs when they have the proper environment and the necessary conditions to grow both technically and humanly (Centesimus Annus, 1991; García Echevarría, 2015, 2016, 2017a, 2017b). The creation of this relational and cooperative environment is the foundation of the company’s corporate dimension. “The company cannot be considered solely as a ‘capital company’; it is, at the same time, a ‘society of people’, in which those [. . .] who contribute capital [. . .] and those who collaborate with their work become part” (Centesimus, 1991, p. 43). This relation between capital and work is where we can see the “integral development of the person and it is done through ‘cooperation’ with ‘the other’ and contributing to their development and the institution’s development (common good)” (García Echevarría, 2016, p. 1).

Dignity & wellbeing for HC management 43 It is in this cooperative and networking environment where the company must assume its responsibility towards development by “implying in the long term this person’s potential, making it sustainable, contributing to the future of the person and also to the future of the ‘Work Centre’ and the ‘Company’ ” (García Echevarría, 2015, p. 18). People’s development cannot happen without recognising their dignity and that recognition implies working conditions that are grounded on fairness, honesty and valued and meaningful work, amongst others. In addition, everything is materialised with the different actions and decisions made by all levels of the organisation in favour of dignity and well-being (Hodson, 2001). From a few years to the present, the economic results are not the only sustainability indicators relevant to companies. Increasingly, and in many cases, as a result of the pressure from public administrations, consumers or non-governmental organisations, the demand for greater commitment to companies and assuming greater social responsibility has increased (Lozano, 2009). A company can no longer afford to obtain good financial results at the cost of sacrificing the dignity of the people who work for them. “Indeed, the purpose of the company is not simply the production of benefits, but rather the very existence of the company as a community of men” (Centesimus Annus, 1991). And those social concerns that claim greater responsibility regarding the common good to companies, starting with the well-being and dignity of their workers, constitute the very core of what is corporate social responsibility (Avramchuk, 2017; García Echevarría, 2006, 2016, 2017c; Matten & Moon, 2008). There are several definitions of the concept of social responsibility, starting with its term. However, as stated by the Commission of the European Communities (2001), what most of them have in common refers to “the voluntary integration, by companies, of social and environmental concerns in their commercial operations and their relations with their interlocutors” (p. 7). One of the key dimensions of social responsibility is its relational aspect, which is materialised through the relationships established between different partners (García Echevarría, 2017c; Lozano, 2009). It is possible to assume that amongst those interlocutors, we find the external stakeholders, as well as the internal stakeholders, which include the people who work for the company (Commission of the European Communities, 2001; García Echevarría, 2017c). In that same document, the Commission of the European Communities (2001) distinguishes between an external and an internal dimension of Social Responsibility. The external dimension has to do with those stakeholders and problems not directly related to the activity of the company. On the other hand, in terms of its internal dimension, it refers to “responsible social practices affect workers first and refer to issues such as investment in human resources, health and safety, and change management” (Commission of the European Communities, 2001; Jain et al., 2011).

44  Alfonso Ernesto Benito Fraile and Bertha Elizabeth Cárdenas Hinojosa Within the internal dimension of corporate social responsibility (CSR), there are aspects such as those collected by Beti et al. (2007). These aspects are related to different realities of the individual: family, citizenship, rationality, values and beliefs and leisure. People tend to have multiple roles (father, mother, worker, son/daughter, consumer, citizen, friend, child) with multiple dimensions (rational, emotional, spiritual, etc.) that they need to integrate (García Echevarría, 2017b). All the CSR RSCi areas should be carried out in a responsible and honest way, so as to avoid any kind of abuses, inequities and poor management, which are aspects that undermine the dignity of employees (Hodson, 2001). In addition to acting in accordance with the first one, which is ethical orientation in management, “another negative influence on employee satisfaction and workplace wellbeing” (Avramchuk, 2017, p. 26) is avoided, which is “lack of managerial integrity” (p. 26). Likewise, all aspects related to health and safety in the workplace are factors that can impact the well-being of workers and, therefore, make them part of the social responsibility of companies (Avramchuk, 2017). These action areas of the RSCi allow to implement humanistic management internally. Camargo et  al. (2020) describe three steps to implement Humanistic Management in companies. On the one hand, there is respect for the dignity of people. For Humanistic Management, dignity is based on the balance of four drives typical of every human being (Pirson, 2017b; Pirson & Steckler, 2018): the drive to acquire, the drive to defend, the drive to bond and the drive to comprehend. And, for example, actions related to workers’ rights are focused on the drive to acquire and the drive to defend. These are actions aimed at ensuring that employees can have a job that allows them to support themselves and their families. On the other hand, the actions on Management and human resources systems impact the drive to bond; they are the mechanisms company has to be able to take care of its collaborators and allow them (such as ethical orientation or equal opportunities), in turn, to maintain their work and do it in a dignified and stable way over time (which is linked to the drive to defend). The second step to implement humanistic management (Camargo et al., 2020) is the integration of ethics as a business decision criterion, and this is one of the action areas found in RSCi, which is linked to Management and human resources systems. The first element there is an ethical orientation of the human capital systems of the company. And the last step is the bond with stakeholders, in this case, all RSCi actions seek to strengthen that bond of care, which would also be related to the drive to bond, which allows the organisation and workers to grow together. People are social beings that grow and develop in groups and whose development occurs through the protection of people’s dignity. The company where they work is considered a group as well, and so, a space for human development. Humanist management, aware of that reality, seeks

Dignity & wellbeing for HC management 45 “the protection of dignity and the promotion of well-being” (Pirson, 2017b, p. 21). This way, human beings can also grow and develop their different capacities (Maak & Pless, 2009). And not only for themselves but also for the organisation as a whole, since “factors that influence employee health and well-being can have a significant impact on the financial health and profitability of an organisation” (Avramchuk, 2017, p. 27). However, society increasingly demands more commitment from companies, not only with their employees, as their closest stakeholders, but also by committing, through the defence of the dignity and well-being of people, with the global problematics that affect humanity nowadays (Maak & Pless, 2009; United Nations, 2014, 2015).

The case of SEMCO An example that can be considered within humanistic management is the case of Brazilian businessman Ricardo Semler. In the 80s and at the age of 21, Ricardo Semler took over the family business, SEMCO. A company that started its management under the classic conception of administration, then changed to a humanistic management. It was a difficult change of organisational culture: in the beginning, not everyone was able to adapt to it, but in the end, it worked. Thanks to the firm conviction that Semler had about this new philosophy he was implementing (Montoya Mosalve & Montoya Naranjo, 2012; Semler, 1989, 1994, 2007). That philosophy can be defined in terms of trust, autonomy and coresponsibility. Those values are manifested in the absence of external controls for personnel, in sharing company information (budgets, results, etc.) with all workers, consensual decision-making, price-fixing by consensus amongst workers, general participation in almost all the meetings, etc. According to (Largacha Martínez et al., 2015), the success of SEMCO as a humanist company is based on the resignation of control. Ricardo Semler manages to create a culture of trust, based on listening to his collaborators. He manages to establish different channels of communication and decisionmaking that stop infantilising the employee as someone who knows nothing and depends on the CEO to make decisions. To do this, he works in creating a more horizontal organisation, where there is no hierarchical decisionmaking, but rather a more democratic and participatory process in which key values are transparency, accountability in a responsible and open way with collaborators. And, if on the one hand participation and transparency are promoted, on the other hand, creative thinking and questioning are promoted, which allows to strengthen relationships of trust and commitment. However, this is not achieved overnight (Maddux  & Swaab, 2014). It is a process that starts with the leader him/herself, who must be convinced of the values he/ she wants to promote (self-management, participation, creative thinking, etc.), so that they can permeate to the rest of the organisation: “I spent the

46  Alfonso Ernesto Benito Fraile and Bertha Elizabeth Cárdenas Hinojosa next two decades questioning, challenging, and dismantling the traditional business practices my father had spent the previous three decades instilling at SEMCO”(Semler, 2007, p. 14). A company that sees people as the centre of activity and not as resources. Nowadays, this same philosophy has been kept by SEMCO, as well as in a hotel, schools and business he has supported, that are, finally, co-­responsible with their workers (Maddux & Swaab, 2014).

Concluding remarks Our world today faces constant change and challenges such as “poverty, hunger, diseases and injustice” (Maak & Pless, 2009, p. 539) that prevent to “ensure human dignity, equality, environmental stewardship, healthy economies, freedom from want and fear, and a renewed global partnership for sustainable development” (United Nations, 2014, p.  11). Challenges that require a shift of paradigms, because things cannot be done the same way so far. A paradigm shift is needed both globally and at a business level, in order to learn to live according to a more humane, more sustainable and more responsible paradigm that can integrate “economic growth, social justice, and environmental stewardship” (United Nations, 2013, p. 3). An invitation to change the business paradigm that began early on the second millennium and hasn’t ended yet, since it is still necessary to “secure the well-being, dignity and rights of those still on the margins today, as well as of future generations” (United Nations, 2013, p. 2). From humanism, a paradigm shift is sought, where the purpose of the company is not its own benefit and maximisation, as it has been until now, but the balance in life (Pirson, 2017b, p. 29). This also implies reconsidering the ultimate goal of the organisation where it focuses on the development of technical and social skills in people through cooperation, the development of social institutions and the efficient use of resources (García Echevarría, 2016, 2017b). This implies that “the ‘objective of the economy’ [is] to satisfy the individual and collective needs of all the members of a Society to achieve human development; this is the ‘common good’, [placing] the person as the axis of all ‘economic action’ ” (García Echevarría, 2017a, p. 5). From that central position of the person is how we can also understand the company and its social responsibility in a relational key, where its structure is defined by the different stakeholders interacting with the organisation and who become the face of the company’s social responsibility (Benito, 2016; Lozano, 2009). A suffering face, which companies cannot turn their backs on, and that generally creates important challenges (Maak & Pless, 2009). Challenges that weren’t the result of fate or accidentally caused by some force of nature, but actually are a consequence of the actions and decisions taken as a society throughout history, in favour of the progress and improvement of the quality of life of certain groups and individuals. And

Dignity & wellbeing for HC management 47 companies, as part of the prevailing economic paradigm, have also played an important role in these challenges faced by humanity on a daily basis. That is why they “are being exhorted to pursue a broader range of human development objectives as part of their core business operations” (Maak & Pless, 2009, p. 539; United Nations, 2015). From the United Nations, it has been proposed “to promote sustained, inclusive and sustainable growth, full and productive employment and decent work for all” (United Nations, 2015, p. 22) as one of the SDGs to work on from 2015 to 2030. An objective that directly impacts the way of doing and being a company in the world and includes different aspects, such as decent work, equity, inclusion, fair and decent wages, fighting any violation of Human Rights, and minorities at risk, as well as “protecting labour rights and promoting a work environment to continue without risks for all workers”(United Nations, 2015, pp. 22–23). All elements are included one way or another in the different areas of the internal dimension of corporate social responsibility, since as can be seen in the different areas of CSRi, there is a whole set of actions aimed at the defence of human rights and the worker. Because only from a job that allows people to support themselves and their families (drive to acquire) in a sustained way over time (drive to defend) is how they will be able to be socially active and recognised subjects (drive to bond) and giving meaning to life through work that allows building a fairer society (drive to comprehend). All this should lead companies to question what quality of life they are allowing their workers to have. There are several challenges contributing to Humanistic Management in organisations: questions of worthy and equitable wages that break gender inequality; the life–work balance that allows people to have a quality of life, beyond covering basic needs; finally, human rights are other great challenges, avoiding human trafficking, exploitation or child labour among others.

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4 Targeting kids in the digital age The ethics of online marketing towards children Flor Morton and Teresa Treviño

Introduction In September  2015, the 2030 Agenda for sustainable development was adopted by more than 150 heads of State and Government. The agenda contains 17 universally applicable sustainable development goals (SDGs) which seek to promote prosperity while addressing climate change and environmental protection. The SDGs are a call for action by poor, middle income, and rich countries to achieve a sustainable world in the year 2030 through strategies that build economic growth and address a range of social needs (e.g. poverty, health, education, social protection, and job opportunities) and to protect the planet at the same time (United Nations, n.d.). This chapter addresses issues related to SDGs such as Good Health and Well-being (goal 3) and Reduced inequalities (goal 10), by presenting the ethical debate around advertising of products such as tobacco, food with high levels of sugar, and toys; as well as presenting emerging ethical issues regarding online marketing activities directed to children. This chapter proposes that dignity is essential to achieve well-being. Considering that human existence is fragile and fundamentally vulnerable, dignity of human beings requires universal protection (Pirson et  al., 2015), unconditionally (i.e. regardless the actions of the person). Unconditional human dignity is most salient when vulnerabilities call for protection of the human stakeholders of the firm (Pirson, 2017). The topic addressed in this chapter is relevant to the humanistic management research field because it analyses consumers – and particularly the children segment – as vulnerable stakeholders of the firm, susceptible to being harmed by the firm’s actions. Research concerning the ethical issues of advertising to children has largely focused on the age at which children have developed an acceptable degree of persuasion knowledge (Friestad & Wright, 2005; Moses & Baldwin, 2005). Additionally, an alternative perspective is presented suggesting the importance of considering not only the presence of persuasion knowledge but also the phenomenon of “implicit persuasion” in the ethical debate of evaluating the fairness of advertising directed to children (Nairn & Fine, 2008), particularly for advertising formats that blur the line between advertising content and entertainment.

Targeting kids in the digital age 51 It is well known that children and youth are heavy media users and early adopters of newer technologies (Dilci & Eranıl, 2019; Treviño & Morton, 2019). As a result, marketers of product categories, such as toys, food, video games, and movies, are now increasingly targeting children in the online context, causing even more concerns due to the blurred line between entertainment content and advertisements. However, research that presents, describes, and analyses the effects of the new online advertising formats still remain neglected. For these reasons, the objective of this chapter is to examine the concerns and ethical issues regarding marketing activities targeted to children through digital platforms from a humanistic management perspective. Particularly, it explores the ethical debate of marketing to children and analyses the different types of online advertising targeting children and the emerging concerns regarding these digital marketing strategies. This chapter intents to call for discussion regarding this topic, particularly focusing on the Latin American region, where children and young teens prefer Internet than any other medium. Furthermore, this region presents important challenges regarding children on the Internet, as differences in socio-economic status, cultural context, and technological background are very disperse amongst people in Latin American countries (Arribas  & Islas, 2009). All these variables contribute to make children an even more vulnerable online segment. This chapter is structured as follows: First, the topic of humanistic management, consumer’s dignity and vulnerability will be presented as a starting point for this conceptual research. Then, the chapter presents some ethical concerns regarding marketing practices directed to children. Furthermore, a comprehensive description and analysis of the different types of online advertisements targeting children will be discussed. Finally, this chapter concludes with some concerns about current marketing practices by discussing their implications, as well as offering insights for future research on the topic.

Literature review Humanistic management The economic paradigm by which most companies operate nowadays has been widely criticised because it privileges business profits and financial indicators instead of protecting the human dignity of each individual (in an unconditional manner), promoting human flourishing, and encouraging ethical development (Camargo  & Vázquez-Maguirre, 2020; Pirson et  al., 2017; Spitzeck, 2011). A more human-centred approach emerged to fill the void of the economic paradigm: the humanistic management approach. Humanistic management represents an alternative paradigm for organisations; this perspective considers human beings as both is the key to, and the ultimate end of, organisations; and it is centrally concerned with the unconditional protection of human dignity and the promotion of well-being

52  Flor Morton and Teresa Treviño (Pirson et al., 2017, 2019). Hence, organisations with a humanistic management approach recognise, respect, and value the individual qualities of each person involved in any of their processes or outcomes and base all their ­decision-making on the premise that human dignity must be prioritised above any other concern. Therefore, organisations with a humanistic approach to management encourage managerial practices that result in fairer outcomes for humanity (Camargo & Vázquez-Maguirre, 2020). However, for this to occur, an integration of ethical reflection into the managerial decision process is required (Spitzeck, 2011), specifically when vulnerabilities of any of the stakeholders make them susceptible of damage to their dignity as a result of the firm’s activities. Dignity and vulnerability The humanistic paradigm is centred in the protection of human dignity; therefore, understanding dignity is crucial for the topic of this chapter, because it is central to life and it should be considered by every area of business management, including marketing. Previous literature has defined dignity in terms of self-respect and appreciation of the respect of others. For instance, Hodson (2001) defines dignity “as the ability to establish a sense of self-worth and self-respect and to appreciate the respect of others” (p. 3). More specifically, Hurka (2010) states that all aspects of humanity that cannot be priced form part of dignity. Some examples of these aspects include virtue, character, integrity, love, trust, knowledge, and wisdom. Human dignity has been interpreted as either unconditionally or conditionally. On the one hand, an unconditional interpretation of dignity involves understanding this concept as an inherent attribute of human beings. On the other hand, considering dignity as conditionally assumes that dignity is an attribute that humans earn through their actions (Pirson et al., 2016; Pirson, 2017). Because the human existence has been considered fragile and fundamentally vulnerable, it has been argued that the dignity of human beings requires universal protection (Pirson et al., 2015). In this work, human dignity is understood from an unconditional perspective, considering that regardless of the actions of a person, his or her dignity should always be protected. Unconditional human dignity is most salient when vulnerabilities call for protection of the human stakeholders of the firm (Pirson, 2017). Vulnerability and dignity are descriptive features of humanity that serve as a frame for the ethical mandate of protecting them, but they are not ethical principles in themselves. Vulnerability is a complex concept; in general, it refers to the human condition of having to live with mortality, this means being susceptible to being wounded or physically hurt (Kottow, 2004). However, the concept of vulnerability is not limited to the physical harm that can occur to a person; humans are also susceptible to harms from actions or omissions that threaten a person’s well-being or interests (Brenkert, 1998). Vulnerability

Targeting kids in the digital age 53 has been treated as a matter of degree (i.e. the level of vulnerability may differ from one person to another) and as inherently object- and agent-specific. This means that some people are referred to or considered “vulnerable” as they are subject to some substantial level of harm due to their own specific characteristics that make them vulnerable to another agent with respect to some harm in a specific context (Goodin, 1985). In particular, this work analyses consumers – and particularly the children segment – as vulnerable stakeholders of the firm, susceptible to being harmed by the firm’s actions. The vulnerability of children as consumers Marketers have been considered as firm agents that have some advantages over consumers as a result of their greater knowledge of the products they offer; knowledge about consumers attributes the interests, fears, and needs that motivate market segments; and expertise and resources to market targeted groups and persuade them to buy a product. This position of advantage over consumers creates special responsibilities for marketers in the relationships they create with consumers (Brenkert, 1998; Wolburg, 2005). As previously mentioned, vulnerability is a matter of degree; therefore, Brenkert (1998) defines a “specially vulnerable” group of consumers as those who are particularly more susceptible to harm on their interests and identifies three conditions that characterise these specially vulnerable consumers. First, because of their particular characteristics (i.e. experiences, conditions, and/or incapacities), they are not able to participate in normal adult market activities and they suffer from at least one of the following vulnerabilities: (a) physical vulnerability (e.g. allergies or special sensitivity to chemicals), (b) cognitive vulnerability (e.g. cognitive immaturity, senility, lack of education), (c) motivational vulnerability (e.g. the grieving and the gravely ill), and (d) social vulnerability (e.g. the poor and single mothers in developing countries). Second, their vulnerabilities are a result of factors largely beyond their control. Third, they are significantly less able to protect themselves against potential harms to their interests, making them particularly susceptible to harm by various resources that marketers use but which do not similarly affect a normal adult. In fact, in some cases, these consumers may be unaware of their vulnerability(ies). Baker et al. (2005) offer a definition of consumer vulnerability that focuses on the experience of consumer vulnerability rather than on who is vulnerable as these authors state that everyone has the potential to be vulnerable at some point. These authors provide the following definition “Consumer vulnerability is a state of powerlessness that arises from an imbalance in marketplace interactions, or from the consumption of marketing messages and products. It occurs when control is not in an individual’s hands, creating a dependence on external factors (e.g., marketers) to create fairness in the marketplace” (p. 134). The authors propose a conceptual model of vulnerability arguing that it can be a result of the interaction of individual

54  Flor Morton and Teresa Treviño states (e.g. grief, mood, motivation, and transitions), individual characteristics (e.g. biophysical and psychosocial), and external conditions (e.g. discrimination, repression, stigmatisation, distribution of resources, and other conditions) within a consumption context (e.g. marketing mix, servicescape, and Internet) where goals may be hindered and the experience affects personal and social perceptions of self. Based on the former literature, this chapter focuses on a specific group of consumers considered especially vulnerable, children. Prior research recognises children as an important and valuable segment for marketers due to their increasing spending power, their great influence on the purchase decisions of their families in the selection of vacation choices, car purchases, meals, amongst other purchase choices. Also, for the potential brand loyalty that can be influenced by marketers since early ages (Ross & Harradine, 2004). Previous literature suggests that children are able to recognise brands since they are 3 or 4  years old, and by the time they reach 7–8 years of age their evoked set of brands is considerably wide, but until late childhood (10–12 years) they begin to understand brands as cues to form impressions of others, and, at this stage, there are greater opportunities for brands to make connections with them (Chaplin & Roedder John, 2005). However, children are recognised as a vulnerable market segment, particularly because of their cognitive immaturity. For instance, research on the effect of advertising on children has analysed changes in children’s ability to understand commercial messages at different ages, particularly the intent of those messages. Research in psychology, communication, and marketing often explains age-based differences in children’s comprehension of mediated content applying the three stages of the theory of cognitive development: preoperational thought, concrete operational thought, and formal operational thought. First, in the preoperational thought stage (ages 2 to 7 approximately), intelligence is demonstrated through the use of symbols, memory and imagination are developed, language use matures, but reasoning is still in a non-logical manner. At this stage, children focus on visual properties of the products and believe that imaginary events and characters can be real. Second, during the concrete operational thought stage (ages 7 to 11), children begin to understand their world in a more realistic manner, and they are able to make logical and systematic manipulations of symbols related to concrete objects. For instance, children at this stage can understand that perceptual manipulations do not change the underlying properties of objects. Children at the beginning of the concrete operational stage are still unaware that commercials are designed to persuade them to buy specific products and believe that their purpose is to assist them in their purchasing decisions. It is not until they reach the age of 8 that children begin to go beyond the information provided in a commercial and grasp that the intent of advertisers is to sell products. Finally, during the stage of formal operational thought (age 12 to adulthood) adolescents develop their abstract reasoning and understand the motives of advertisers (Calvert, 2008;

Targeting kids in the digital age 55 Huitt & Hummel, 2003; Robertson & Rossiter, 1974). The ability to recognise advertising and understand advertising’s true intentions is known as conceptual advertising literacy, and research has found that that is expected to increase as the child gets older (Vanwesenbeeck et  al., 2017). Yet the modes of thought before reaching adulthood put children  – ­particularly young children – at a disadvantage in understanding marketers’ intent. The ethical debate of marketing to children Nowadays, marketing and advertising activities are present in children’s daily lives. As previously mentioned, younger children are not able to understand the persuasive intent of advertisements, and considering that newer marketing techniques blur the line between commercial and programme content, even older children probably have difficulty understanding the purpose of these techniques. Hence, advertising to children has long been one of the most controversial areas of marketing. Most of the literature concerning the ethical issues of advertising to children has largely focused on the age at which children have developed sufficient cognitive resources both to understand the selling and persuasive intent of marketing messages and to critically evaluate the product or service based on their understanding of the intent. In other words, the debate has centred on the age at which children obtain an acceptable degree of persuasion knowledge (Friestad & Wright, 2005; Moses & Baldwin, 2005; Wright et al., 2005). However, contemporary advertising formats targeted at children are particularly likely to influence this segment by implicit affective associations, rather than via consciously persuasive information, and it has been found that older children with a higher degree of persuasion knowledge are no less influenced by advertising than are younger children (Nairn & Fine, 2008). Hence, some researchers argue that there is scarce empirical support for the assumption that persuasion knowledge enables children to make a practical independent and informed evaluation of the potential effects of advertising on their consumption behaviour (Livingstone & Helsper, 2006). An alternative perspective is provided by literature based on dual-­process attitude models. These models explain that, contrary to explicit mental ­processes – which are controlled, reflective, and deliberative – implicit mental processes are activated automatically, unintentionally, and without the person’s awareness. Therefore, implicit mental processes are difficult to control, and implicit attitudes may be formed as an automatic affective reaction resulting from the associations activated by a relevant stimulus (Gawronski & Bodenhausen, 2006). Research has shown that these implicit attitudes become better predictors of behaviour or judgement when there is lack of either ability or motivation to deploy cognitive control to make a correct assessment (i.e. judgement) or to overcome an automatic response (Payne, 2005; Govorun & Payne, 2006).

56  Flor Morton and Teresa Treviño Based on the literature earlier, Nairn and Fine (2008) suggest that it is important to consider not only the presence of persuasion knowledge but also the phenomenon of “implicit persuasion” as an ethical benchmark for evaluating the fairness of advertising directed to children. According to these authors, the age-stage approach of persuasion knowledge is useful for informative advertising formats; however, for those formats that use evaluative conditioning formats (i.e. when the brand or product is associated with rewarding stimuli) that manipulate consumer behaviour via implicit attitude change, the authors suggest that the appropriate ethical question should be: At what age children develop sufficient cognitive skills that enable them to resist implicit persuasion? The effects of advertising on children The effects of advertising on children have been highly debated amongst various groups, including researchers, parents, industry experts, and government agencies. These groups have discussed whether or not it is even ethical to advertise to this segment and the types of advertising practices as well as the products marketed to children that might be considered ethical (Calvert, 2008). Despite it might not be perceived as a form of advertising, the presence of tobacco in the cinema has been a constant. Research concerning the promotion of harmful products to children has analysed the relationship between the tobacco industry and the film industry and the effects on children’s attitudes towards smoking. For instance, a study that analysed the presence of tobacco in films produced in Mexico and Argentina found that 89% of the films showed actors consuming tobacco (Barrientos-Gutierrez et al., 2015). As tobacco exposure through movies is considered a contributing factor to youth smoking, because of the creation of laws that prohibit the indirect advertising of tobacco products in the entertainment products for young people, there has been a decrease in tobacco content in films produced in Mexico but not in those produced in Argentina where there is an average of 200 seconds of tobacco per film. In a study conducted in Argentina, adolescents in three cities (Buenos Aires, Córdoba, and Tucumán) answered surveys to determine the films they had seen and thus estimate the magnitude of exposure to tobacco products of each of the respondents, considering the number of tobacco appearances, amount of seconds per film in which tobacco products appeared, and the brands of cigarettes that appeared in each film. Findings of this study showed that 12-year-old children that were most exposed to tobacco products in films were significantly more likely to become susceptible to smoking, to try cigarettes, and becoming smokers (Mejia et al., 2018). Another category of product that has raised ethical issues is toys. It has been suggested that toys can be considered as a cultural product that can reinforce real-life conceptions and self-image; therefore, some literature

Targeting kids in the digital age 57 has focused on the effects of toys on stereotypes. Specialists agree on the influence of the existence of thin dolls as body models that generate stereotypes of beauty, leading both female and male children to take actions to obtain the proportions of the Barbie doll, and male children the hypermusculated body of Ken by either not eating or compulsively attending the gym (Morales, 2006). Moreover, literature on the creation of stereotypes through toys has discussed that there is a clear identification of the product and its advertisement with a particular sex, reinforcing the stereotypes that children will assume in the future. The difference between toys for boys and toys for girls is very marked through various elements such as the type of toys (e.g. dolls for girls and trucks for boys), the colours of the toy and the advertisement (e.g. dark colours for boys and rose-coloured or pastel blue for girls), the voice-over, the presentation form, and the discourse (e.g. boys play with their toys in the public space and girls in the private space) all of these elements reinforce gender stereotypes (Ferrer López, 2007; Luevano, 2013). Furthermore, until recent years, most of the children’s toys were not inclusive as there were no toys directed to children with disabilities. However, this is starting to change with brands such as Lego that in 2016 presented its first figure of a child in a wheelchair (CNNMoney, 2016) and recently has presented a new project “The Lego Braille Bricks” designed to help visually impaired children to learn Braille through play (Dixon, 2019). Similarly, Mattel has developed two new Barbies, one with a leg prosthesis and another with a wheelchair (Griggs, 2019). Furthermore, in the debate on the effects of advertising on children, special attention has been given to food advertising targeted at children because many of these products (e.g. sugar-coated cereals, fast food restaurants and candy) are not healthful and promote obesity (Bakir & Vitell, 2010). For instance, previous research has found that exposure to television ads directly influences children’s breakfast food and snack preferences (Goldberg et al., 1978) and also influences the frequency of snacking among children (Bolton, 1983). It is well known that the Latin America and the Caribbean (LAC) region faces a diet-related health problem that results in major economic and social costs (Popkin & Reardon, 2018). Despite that, some Latin American countries aiming at obesity prevention have made changes in norms and regulations such as increase in taxes, nutritional information in package labels, physical activity programmes, and school interventions (Cominato et al., 2018). Since advertising of unhealthy products may influence obesity rates among children, there is a need for more strict government regulation that protects children from marketing practices of companies selling unhealthy food products. Particularly in Mexico, relatively little government regulation protects children from the highly commercialised environment. A study conducted by the Federal Institute of Telecommunications in 2015 found that Mexican children watch TV more than children of any other country, they spend an average of 4 hours and 34 minutes watching TV; therefore, children’s exposure to advertising in

58  Flor Morton and Teresa Treviño this country is amongst the highest in the world. In Mexico, the regulation for publicity of the food and beverage industry was formulated in conjunction with the industry, under a strong conflict of interest; as a result, it has been criticised for being very limited and because it does not guarantee children’s protection (Macari et al., 2018). According to a study conducted by Théodore et al. (2014) in Mexico, amongst the barriers for the regulation of advertising of food and beverages aimed at children are: the conception of obesity as an individual problem, the minimisation of the negative effects of advertising on children’s health, and the definition of vulnerability limited to children’s cognitive development, without contemplating the protection of the children’s rights. However, the support of different sectors for regulation and the current scientific debate could serve as the foundation for the elaboration of a more extensive regulation for the protection of children in the Mexican context. Moreover, previous literature has focused on the traditional marketing techniques used in television commercials to attract children, which include branded characters, catchy and interesting production features, repetition, celebrity endorsements, and premiums. However, considering that children are early adopters and heavy users of newer technologies, marketers are reaching this segment online through social media, banner ads, advergames, branded apps and content that children can visualise in their mobile phones, iPods, game platforms, and other digital devices (Calvert, 2008). Therefore, it is important to discuss emerging ethical issues of marketing activities targeted to children through digital platforms. Emerging ethical issues in marketing to children in the digital age Nowadays, the time people spend consuming online content has increased, due to the availability of new digital technologies. This digital trend has reached many segments of the population, and children are no exception. It has been estimated that one-third of global users are children, with a higher proportion in lower-income countries where the Internet is rapidly penetrating. In fact, statistics suggest that children are starting to use the Internet at a very young age, and in some Latin American countries, it has been reported to be between 7 and 10 years of age (Byrne & Burton, 2017). Furthermore, a study in seven Latin American countries (Mexico, Argentina, Brazil, Chile, Colombia, Peru, and Venezuela) reveals that 42% of children at the age of 11 or under prefer Internet over TV, and this percentage increases up to 60% in older kids from 14 to 15 years of age (Arribas & Islas, 2009). Particularly in Mexico, the Mexican Internet Association (AMIPCI) found that more than 90% of Mexican children perceive the Internet as a necessary communication medium (Arribas  & Islas, 2009). So, as children are born into a digital world, and communication technologies and Internet are becoming more and more accessible, brands are finding it important to engage with children and are focusing their digital marketing efforts accordingly (Treviño & Morton, 2019).

Targeting kids in the digital age 59 There is scant literature that addresses children’s Internet use and online marketing; however, it has been suggested that their decision process as consumers can be influenced by digital marketing efforts. Particularly, children’s experiences are informed by their use of digital technologies, as their access to information, knowledge, and resources depend importantly on Internet use (Byrne & Burton, 2017). Regarding Internet use and activities, children have reported to use it for two main reasons: entertainment, mostly on social media sites such as Instagram, Facebook, and YouTube; and education (Byrne  & Burton, 2017; Treviño  & Morton, 2019). It is known that kids of young age prefer to consume video content rather than text, so it is no surprise that companies are using video marketing with the objective of influencing their preference and desire for products and brands. However, these practices are emerging ethical concerns to the debate, as online advertising on social media is disguised even more as entertainment content. In the past, research found that not all children are capable of recognising and distinguishing between a TV programme and a commercial (Bijmolt et al., 1998). Years of research on the topic have come to a consensus that, below the age of 12, children’s cognitive abilities are not well developed for them to distinguish between what is designed to entertain or to persuade. However, this phenomenon needs to be addressed in the light of new digital technologies, and particularly in the increased consumption of online video content by children, where the advertising intentions may be less apparent to this audience. As previously mentioned, conceptual advertising literacy is expected to increase as the child gets older (Huitt  & Hummel, 2003; Vanwesenbeeck et al., 2017). Recently, academics have argued that results from TV advertising might differ in the fast-moving world of Internet advertising, where children have less psychological protection from deceptive marketing practices (Nairn & Dew, 2007). This conceptual advertising literacy gets even more complicated as children’s exposure to online ads is usually prolonged and continuous, rather than sporadic like a commercial break, and it can also be interactive, engaging, and exciting (Nairn & Dew, 2007). Research on the topic has addressed how advertising embedded in an advergame or other websites activities can blur the lines between advertising and entertainment. Results suggest that, by doing so, children’s scepticism can be reduced and create more openness to the brands’ message (Moore & Rideout, 2007). This may occur because of the implicit attitudes formed by this type of stimulus, resulting in implicit persuasion. Research has addressed the effects of several variables of online advertising on kids; however, it is the intent of this chapter to fully present and describe the different ways in which brands reach children through this medium. In particular, there are different types of online advertisements targeting children, highlighted as particularly likely to confuse them: (a) traditional banner and pop-up advertising, (b) social media advertising, (c) advergames, and (d) in-app advertising.

60  Flor Morton and Teresa Treviño Traditional banner and pop-up advertising Banner advertising is one of the oldest and popular strategies of online advertising, as there are records that the first banner appeared on a website in 1994. In particular, banner advertising can be described as a form of online advertising which embeds an image-based banner into a web page, trying to get visitors from the host website and link them to the advertiser’s website. Banners typically occupy less than 10% of the area of a web page; thus, it is a challenge to grab the surfer’s attention and induce the surfer to click on the ad (Drèze & Hussherr, 2003). With time, banners have evolved as digital technologies have become more interactive. At first, banners were simple images in vivid colours that explicitly called for clicks or downloads. Then, banners incorporated animation GIFs (Graphic Interchange Formats) which allowed a more attractive design. Today, banners have become totally interactive; in fact, users can reproduce short videos, see different images, play small games, select items from drop-down menus, and they even have expandable banners, which expand over the webpage when consumers hover their pointer over them (Nairn & Dew, 2007; Chatterjee, 2008). Regarding banners targeting children, to date, there are no official restrictions regarding the number of advertisements that can be included on children’s websites (Drèze  & Hussherr, 2003). In fact, it has been estimated that two-thirds of children’s websites rely on this type of advertising as their main source for revenue (Nairn & Dew, 2007; Cai & Zhao, 2013). Marketers have been in an ongoing debate questioning the effectiveness of banners on websites, as consumers may ignore them. It is known that banners are more likely to be cognitively avoided as seeing the ad is an automatic and unconscious process that occurs while browsing. On the other hand, pop-up banners are a more intrusive ad format, considering that they interrupt the activity and require immediate action by the user (Chatterjee, 2008). Furthermore, it is now common that browsers block pop-ups from websites the user visits, making them the least common strategy used by brands. With respect to the effects of banners and pop-ups in children, it still remains unclear; however, it is evident that this type of advertising is still present. An online content analysis of the type of banner ads in children’s websites reported the top 5 ads categories were apparel, financial services, games, toys, and telecoms. Furthermore, some websites contain inappropriate advertising addressing sensitive topics for kids such as credit cards, dating services and cosmetic surgery (Nairn & Dew, 2007). Social media advertising From a marketing perspective, social media advertising is attractive, as the ads delivered are focused and segmented, allowing interaction that can build long-term relationships between brands and consumers (Chassiakos et al., 2016). Never before have advertising be so targeted, as ads can be shown

Targeting kids in the digital age 61 to people based on the interests, lifestyles, and even content that users have posted on their own pages. Considering this, social media ads can reach people who would be very interested and responsive. This phenomenon is known as profile targeting, which customises online advertisements based on knowledge of individual preferences expressed on profile pages of social media sites. These ads are present in popular social media sites such as Facebook, Instagram, and YouTube (Van Reijmersdal et al., 2017). Interestingly, children and teenagers aged 10 to 19 years are known for disclosing more personal information on their social media profiles than adults. The more information the user provides, the more personalised the ads can be on such sites (Walrave et al., 2018). Research addressing the effects of profile targeting on children found that online ads in social media that target children based on their favourite hobbies evoke positive brand attitudes and increase purchase intentions in children aged 9 to 13 years. Results differ significantly from the way adults process this type of advertising, since children are unable to recognise targeted online advertising as a marketing technique, as their level of cognitive skills is still under development (Van Reijmersdal et al., 2017). This leads to some questions regarding the ethics of using targeted online advertising with children. Based on such findings, it can be argued that kids are unable to recognise profile-based targeting on social media, and therefore, they need help understanding this new marketing technique. It is important to consider educational programs on online advertising, so that children can obtain information about online advertising on social media sites they use every day. Still talking about social media sites, one of the most popular websites reported by children is YouTube. Recent research has found that videos consumed by children as a form of entertainment can be classified into five categories, often a result of a direct (original branded content) or indirect (through paid “YouTubers,” influencers, or user-generated content) digital marketing strategy by brands. These types of videos are: (a) “Do-it-­ yourself” (DIY) videos, (b) toy-unboxing videos, (c) walk-through tutorials, (d) product reviews, and (e) store visits videos (Treviño & Morton, 2019). In all of these videos, brands and products are shown in creative and/or humorous ways that appeal to children. Considering the earlier, it is necessary to include this topic into the debate of new policies that contemplate marketing tactics on social media. Today, social networking sites are now replacing the traditional media influential role on young consumers, and marketers are spending more and more on social media and mobile technologies to market and promote their brands to children (Duffett, 2017). In fact, research found that both user-generated content and branded content positively affected brand awareness. Furthermore, it has been suggested that product placement on social media videos can result in favourable attitude and behavioural responses by young consumers (Duffett, 2017).

62  Flor Morton and Teresa Treviño In an attempt to launch a child-friendly version of its popular site, Google recently launched YouTube Kids for pre-schoolers. However, this site has proven not to be exempt of harmful marketing practices targeting kids. In this app, there are channels created by brands such as McDonalds, Barbie, Fisherprice, LEGO, and many others. The concern here is that the content appears to be user-generated, but the creators of these videos usually have interests based on relationships with the brand mentioned in the video. There is a concern that even though Google claims that it doesn’t accept food and beverage-related ads on this kid’s app, there are brand channels, such as McDonald’s, where content is shared around the happy meal product. Additionally, branded content disguised as user-generated is also shared around these topics. Advergames An advergame can be defined as a strategy that embeds marketing content into online games. These games typically include brand or product placements. There is no question that advergames provide a unique opportunity for marketers to target children; however, the appropriateness of the practice has brought up many debates. Despite there is still scant research addressing this issue, nascent research suggests that most of the children think that these advergames are just games, failing to understand their persuasive intent (Nairn & Dew, 2007). Furthermore, it has been found that children are subconsciously influenced by advergames, as they reported not being exposed to advertising, often not even recalling the brand placed in the game, but yet their opinions and behaviours around the brand were affected (Nairn & Hang, 2012). In addressing how children can be protected from this strategy, the Children’s Advertising Review Unit (CARU) guidelines state that, when an advertiser integrates an advertisement into the content of a game or activity, the advertiser should make clear that it is an advertisement. However, in an attempt to understand the effects of disclosing the advertisement to children, with an explicit ad break, research found that it failed to alert children as to the game’s sponsor and goals. Particularly, this experiment included a video and audio ad break before the game stating the following: “The games and other activities on this website include messages about the products Kraft sells.” However, researchers argue that this type of disclosure is not enough, as within the advergame, nothing is clear about products being sold, as there are no explicit persuasive appeals (An & Stern, 2011). This suggests that policymakers still need to investigate better ways to prepare children for their exposure to advertisement embedded in this type of content. In-apps advertising Today, there is an important penetration of wireless devices such as smartphones and tablets throughout the world. This trend has led to the emergence

Targeting kids in the digital age 63 of many mobile applications, also known as “apps,” which has created a new channel of marketing and advertising (Valvi & West, 2015). Apps can be described as pieces of software running on mobile devices that perform certain tasks and provide value to users. Users can download apps through The App Store from Apple and Google Play, two major platforms where developers sell or freely share their apps. Apps are classified by categories in such platforms, and the most popular categories are: Games, Business, Education, Lifestyle, Entertainment, Utilities, and Travel. Common app revenue models include free apps with in-app purchases, paid apps without in-app purchases, paid apps with in-app purchases, and free apps with advertisements (Statista, 2020). A recent study found that around 73% of apps in Google Play are free, which are expected to include advertisements (ads) embedded in the app and displayed at various points during its use (VallinaRodriguez et al., 2012). Talking about children, it is common that they engage in the use of mobile devices such as tablets and smartphones. Particularly, children enjoy using mobile apps in the game category; and in fact, there are many educational apps targeting children. Research has found that 95% of the most downloaded apps for kids five and under target them with in-app advertisements. Particularly, the type of advertising found on these apps includes several manipulative and disruptive methods, such as the use of commercial characters, full-app teasers, in-app purchases, prompts to rate the app, share on social media, banners, and hidden ads with misleading symbols or camouflage as gameplay items (Meyer et al., 2019).

Discussion and conclusion Questions and concerns about the quality and type of content available online emerge, as countries need to ensure that there is enough positive content that can stimulate children’s curiosity and thirst for knowledge, which can lead to positive online experiences (Byrne & Burton, 2017). Based on a European survey to 10,000 children, it was found that they recognise and have concerns about several risks they face on the Internet. Of all of the risks mentioned, more than half were related to “content risks” which positions the child as the recipient of mass-produced images or texts. Particularly, pornographic or sexual content, violent or aggressive content, scary content, commercial content, and information about drugs, self-harm, racism, hate, and other content harmful to self-esteem. Interestingly, children reported exposure to inappropriate content online as accidental, while looking for information about other topics they are interested in. Furthermore, marketing efforts, or commercial content, were also mentioned as a risk by children, in a way that they fear to fall for advertising or websites that give them false claims about products and services (Livingstone et al., 2014). Overall, online advertising to children is a sensitive topic for several reasons. First, the experience of online interaction is very different than

64  Flor Morton and Teresa Treviño exposure to television or print media. Most websites, online content, and ads targeting children are designed to be immersive, interactive, and playful. Furthermore, surfing the Internet requires attention and active participation rather than passive exposure like in TV. Finally, brands usually may have more time to engage with online users rather than the typical 30-second TV ads (Moore & Rideout, 2007). Digital marketing strategies in general lack regulations regarding the use of personal information, privacy concerns, and other issues. This is happening even more in some Latin American countries, such as Mexico. However, online marketing strategies targeting children is an area that requires immediate attention. The online spaces in which children are spending an increasing amount of time are unregulated, highly commercialised areas, where brands have open doors to speak directly to kids. The problem here is not that brands attempt to have relationships with children, the real problem is the hidden, manipulative and deceptive ways in which some brands intent to reach them. In this chapter, the different types of advertising formats on the online context were presented, in an attempt to understand the ways brands may target children. This chapter is one of the first resources to position the various forms of online advertising that target children and present the corresponding ethical concerns that emerge from such marketing strategies (see Table 4.1). For example, banner advertising and pop-ups, two of the oldest forms of online advertising, have proven not to be recognised as advertising by children, often confused as part of the content of the website they are browsing. Furthermore, social media advertising in popular sites, such as Facebook, Instagram, and YouTube, requires the use of personal information by children to deliver personalised ads based on their interests and previous interactions on the sites (i.e. liked posts). Additionally, brands heavily rely on video content to reach children, as this format is attractive to them. The problem arises when brands fail to disclose that the content provided is advertising, either when producing their own branded content or when working with known or unknown influencers to post content related to the brand. For the US market, the Federal Trade Commission requires social media posts that are paid promotions, promotion of products received for free, affiliate links and contests to be disclosed by a legend. This practice is difficult to regulate as the line between a paid promotion and a personal opinion is blurred with the rise of influencer marketing. However, popular disclosures used by influencers are #ad, #sponsored, or #spon, among others. There is little research on how these disclosures are processed by children, and whether or not they are effective. One research that addressed “ad breaks” or disclosures on children’s websites found that this type of disclosure is not enough, and that policymakers still need to investigate better ways to prepare children for their exposure to advertisement embedded in this type of content (An  & Stern, 2011). In some Latin American countries, such as Mexico, the panorama is still very different, as fewer

Targeting kids in the digital age 65 Table 4.1 Advertising formats on the online context targeting children and their main ethical concerns Name

Description

Ethical Concerns

Banner advertising

Embedded interactive image or video-based banner on a host website, linking to the advertiser’s website.

Pop-up advertising

Advertising in the form of a small window that suddenly appears on the screen.

Social media advertising

Targeted and personalised ads on social media sites (i.e. Facebook, Instagram, and YouTube) or User-generated content sponsored by brands. Online games with marketing content, advertising or product placement.

Highly interactive, calls for children action, usually camouflaged as part of the website’s content. Children do not recognise it as advertising. Interrupts natural browsing activity, requires action by children; most ads are of topics not appropriate for this segment. Use of personal information shared by the children to target them based on their interests. Camouflaged as entertainment content and/or user-generated content. Engage children with an interactive online game that uses product placement or explicit branding. Even in the cases where the brand is explicitly mentioned, children fail to recognise it as advertising and its marketing purpose. Ads that appear inside apps targeting children, usually educational games. They are camouflaged as gameplay items or next steps, can deceive children into download, buy, or visit another website or app.

Advergames

In-app advertising

Advertisements (ads) that are embedded in apps of smartphones or tablets and displayed at various points during their use.

regulations exist around not only online advertising targeting children but also online advertising itself. Particularly, several entities are responsible to protect the Mexican consumer: The Organisation for Economic Co-­ operation and Development (OECD), The Federal Consumer Prosecutor’s Office (Profeco); and there are some points that address online advertising on the Federal Law for Consumer Protection; however, the issues it covers are still very general, and it focuses on the general market, not only on children. This situation requires immediate attention, as studies confirm that online advertising in Mexico is a trend that has increased during the latest years. Investment in this strategy has increased since 2011 from 4.6 to 19 million pesos (Palomera, 2017). Furthermore, children start using the

66  Flor Morton and Teresa Treviño Internet between 7 to 10 years of age (Byrne & Burton, 2017). It is important to reflect on the fact that these concerns require a constant dialogue between several entities, concerning government, industry, and society, in order to develop better practices, knowledge, and the implementation of better standards to regulate the information shared online. Furthermore, governments need to consider educational programs on online advertising so that children can obtain information about online advertising on social media sites they use every day. This chapter addresses issues related to the SDGs, in particular, the protection of children’s dignity, considered in this work as an essential aspect for well-being and the reduction of inequalities in a consumption context. Several implications for companies, marketing managers, and researchers can be identified from the topic of this work. Companies should develop policies and promote practices that ensure a human-centred approach in all areas of the firm to protect the dignity of all its stakeholders. Although there has been some advance in terms of inclusion with companies such as Mattel and Lego, there is still a need for a more inclusive offer of products and services to satisfy the needs of children with disabilities and to make more visible this segment that, until recently, has been almost neglected by firms. Also, companies should focus on the protection of children’s dignity and well-being by creating products that promote the interests and health of children. Marketing managers should be more aware of their responsibility with consumers  – especially with the children segment  – who are susceptible to harms caused by actions or omissions of marketing activities that can threaten their well-being or interests (Brenkert, 1998; Goodin, 1985). For instance, marketing managers should avoid the creation of stereotypes both in the products they sell and in how they promote those products. For example, it is considered that eliminating gender role stereotypes in toys could generate a more equal culture and opportunities for women by reducing gender inequalities at early ages. Moreover, because of the new interactions of brands with children through online platforms, the need for strict government regulation of current online advertising practices is imperative. According to the humanistic management approach, companies must unconditionally pursue the protection of human dignity above any other concerns (Camargo & Vázquez-Maguirre, 2020; Pirson et al., 2017, 2019; Spitzeck, 2011). Managerial practices, such as marketing addressed to children, raise important concerns due to the cognitive vulnerability of children in terms of their lack of awareness of persuasion intentions of brands. Particularly, when talking about children on the Internet, this vulnerability becomes more evident, as marketing tactics are usually located in ways that children may not understand them as a persuasive attempt, rather they are perceived as a form of entertainment. Furthermore, children in Latin American countries may be even more vulnerable if considering not only the lack of regulations but also the dispersion in socio-economic status, cultural

Targeting kids in the digital age 67 context, and technological background. Hence, from a humanistic management perspective, companies should engage in an ethical reflection in their decision-making processes when considering targeting their products, advertising, and any other marketing activities to children. Finally, this chapter calls for future research that responds to the following questions: Does implicit persuasion vary across different marketing stimuli (e.g. TV advertising vs. online advertising)? At what ages children have sufficient cognitive skills that enable them to resist implicit persuasion of online advertising? What motivates children to resist implicit persuasion in an online context and how these motivations can be triggered? Are there key elements that should be included in online advertising to help children both identify the persuasive intent and resist implicit persuasion? Also, although there have been some actions by firms, almost no research has addressed ethical issues concerning an inclusive marketing; researchers could answer new questions that arise from this, for example: should advertising of products include children with disabilities as a form of representation of this segment? What are the ethical concerns of creating ads with children with disabilities?

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5 Government and public– private relationships Lessons from the Odebrecht case Gloria Camacho and Mario Vázquez-Maguirre Introduction The current economic paradigm has led to unprecedented growth and increased levels of well-being throughout the world. Particularly, the theory of the firm has been recognised as a wealth generator and maximiser of individual utility, implying that the pursuit of personal benefit also ends up benefiting the entire society. However, the implementation of these ideas in organisations has also had negative impacts for societies: rising inequality and insecurity, corruption, stress and psychological illnesses for individuals, exploitation of human beings, lack of institutional legitimacy, pollution, and overexploitation of flora and fauna. The analysis of these issues has often been minimised by a rather dogmatic vision of the management discipline that has had a predisposition to technicality, efficiency, and productivity; undermining the spirit of exploration and creation (Bédard, 2003). Amongst the negative consequences of the current economic paradigm, particularly in Latin America, corruption seems to be one of the main problems that has slowed down regional development and the achievement of the Millennium Development Goals; 75% of the citizens in this region perceive that their countries are governed by a few powerful groups acting for their own benefit (OCDE, 2019). Corruption also affects countries of the region in their quest to accomplish the Sustainable Development Goals (SDGs). The perception corruption index published by Transparency International (2018), which covers 180 countries, shows that in Latin America only Chile, Costa Rica, and Uruguay rank among the 50 countries with the lowest perception of corruption in the world. The countries in the region with the highest perception of corruption are Venezuela (168/180), Nicaragua (152/180), Guatemala (144/180), Mexico (138/180), Bolivia and Paraguay (132/180), and Peru and Brazil (105/180). Corruption can be understood as dishonest or fraudulent behaviour by those in power; and in this sense, it accentuates in government institutions, public tenders, and public–private relationships. The current economic paradigm is probably not providing the necessary elements that discourage corruption, particularly in the case of

Government and public–private relationships 73 public–private relationships. On the contrary, profit-maximisation, individualism, and privileging economic outcomes could be contributing to exacerbate this problem. Also, there are institutional factors that are facilitating acts of corruption, such as weak institutional structures and regulatory frameworks that sanction potential conflicts of interest, scarce accountability mechanisms, and lack of an integrity system, transversal to all levels of government. As a response to this institutional environment, previously powerless stakeholders are now expressing their moral concerns and inflicting economic punishments to corporations and political institutions. They are also starting to build the necessary conditions to demand a different system that guarantees positive impacts on society. In this sense, humanistic management has positioned itself within the management discipline as an alternative paradigm that can provide the organisations with the principles and management models that generate better outcomes for society. Through the analysis of the poor management practices that led to the Odebrecht scandal, this chapter examines how a three-stepped humanistic management model (von Kimakowitz, 2017) may improve decision-making and stakeholder engagement based on human dignity protection and recognition.

Non-market strategies, public–private relationships, and humanistic management The financial success of a company depends not only on market strategies but also on how effectively it deals with the government and other stakeholders (Baron, 1995a). Some companies have the capacity to actively seek changes in these stakeholders (especially government) so that they can benefit from these new arrangements (Keim, 2005). The strategies that companies follow to achieve this are not considered market strategies but political strategies (non-market strategies). In some cases, political behaviour may predominate over market means of achieving competitive advantage (Boddewyn & Brewer, 1994). Hillman and Hitt (1999) identify three different mechanisms of influencing government and political actors: an information strategy (providing information to political decision-makers: lobbying, reporting research, commissioning reports, etc.), a financial incentive strategy (aligning the incentives of the decision-makers with those of the enterprise: funds to develop personal careers, having a representative of the firm in a political position, or hiring political decision-makers’ relatives or cronies), and a constituencybuilding strategy (influencing citizens who will ideally express their political preference to the relevant political decision-makers: grassroots mobilisation of employees, customers, and suppliers; advocacy advertising; public image or public relations advertising, and press conferences). The combination of these strategies may situate the firm in a friendlier context to maximise profits. An important aspect that firms need to consider is that these non-market strategies have ethical implications and may be accepted to a certain extent,

74  Gloria Camacho and Mario Vázquez-Maguirre depending on the country and region. However, most literature about nonmarket strategies are built on the market-based approach in which policies and regulation are the result of a market-like negotiation and do not examine such ethical component. This purely economic approach has profound implications since it seems to justify any action the enterprise may take to enhance its profits (Vázquez-Maguirre & Hartmann, 2013). One of the areas where non-market strategies have more impact is how public projects are assigned to firms and how public–private relationships are formed to develop such projects. These relationships, which can also generate inter-sectoral alliances, are necessary to solve complex social issues, to exchange information and resources as well as to develop innovative solutions (Wadell & Brown, 1997). However, there is increasing public concern about the outcomes of these partnerships. For example, cases documented in Latin America about firms employing non-market strategies in their interaction with the government provide evidence of ethically questionable behaviour (Vázquez-Maguirre & Hartmann, 2013). As a result, these cases highlight the necessity to explore how these strategies negatively affect other stakeholders such as the community, the direct beneficiaries of the projects, and other firms of the industry. In this sense, humanistic management, which currently constitutes an alternative view of the firm, may provide principles and models that better regulate public–private relationships. From a humanistic management perspective, the outcomes of some public– private cooperation schemes that seek mutual benefits at the expense of the rest of the society are just illegal, unacceptable, and illegitimate (Spitzeck, 2011). Humanistic management has a clear direction: to foster unconditional human dignity (Spitzeck, 2011) by serving the societies in which businesses operate and by increasing their citizens’ quality of life (Melé, 2003). This requires a continuous ethical reflection on management practices aiming for virtuous corporate decision-making (Sison, 2008). In this sense, von Kimakowitz (2017) suggests a three-step model that pursues humanistic management in organisations: (1) unconditional respect of human dignity, (2) integration of ethical reflection in management decisions, and (3) active and ongoing engagement with stakeholders. This approach might also be adequate to regulate public–private relationships. In this sense, humanistic management literature lacks works focusing on ­public–private relationships. Also, management studies lacked research about effective societal strategies on how to prevent non-humanistic organisations (Spitzeck, 2011), which also include these public–private relationships.

Methodology This chapter follows a case study research strategy. Most of the literature on the field of non-market strategies relies on cases because it lends itself better to analyse the significance of political events, processes, and interactions between governments and corporations (Baron, 1995b; Frynas et al., 2006;

Government and public–private relationships 75 Vázquez-Maguirre & Hartmann, 2013). Secondary data is the main source of information to support this analysis. Independent press in Latin America has offered ample documentation on this case since it has had important implications for relevant actors of the government. Also, the international press has covered the Odebrecht case, which constitutes an additional source of information. The case example was selected through purposeful sampling, based on the visibility of the case, the information available related to the phenomenon of interest, and the generalised impact in the region, since it has implications in at least nine countries. In this sense, the Odebrecht case seems to illustrate poor and unethical management decisions that oppose those resulting from a humanistic management approach in government and public–private relationships. This case also provides insights into the consequences of these practices amongst the stakeholders involved and the common good.

Odebrecht case Odebrecht is a Brazilian civil engineering and construction firm founded in 1944 (Douglas, 2019). For years, it was recognised as an important construction firm in Latin American countries. Some of its construction projects were a port in Cuba; trams in Colombia, the Olympic venue and the World Cup stadium in Brazil; a hydroelectric power station, a port as well as an irrigation project, among others, in Peru, and metro lines in Venezuela (Odebrecht, 2014; Rodriguez & Castro, 2019). In 2014, Brazilian authorities started a corruption investigation called “Lava Jato,” especially regarding money laundering. As a result, this investigation revealed a network of bribes between politicians and Petrobras to obtain contracts (Semana, 2017). In Brazil, Lula da Silva and Dilma Rousseff, his Minister of Energy, tried to create jobs and under their programme, Petrobras  – the Brazilian Oil Company  – tendered its works to the big engineering and construction firms in the country, such as Odebrecht (RPP Noticias, 2018). To assign the contracts, Petrobras asked for bribes, which went between 1% and 5% of the value of the contract (Semana, 2017). The money obtained with the bribe was distributed between politicians and businessmen, and it was reincorporated into the system through money laundering (i.e. hotels and gas stations); then, it was transferred abroad (RPP Noticias, 2018). In 2016, in the United States, Odebrecht recognised that it was guilty of paying bribes in some Latin American countries (cf. Table 5.1) to get multimillionaire contracts for public projects and of financing electoral presidential campaigns (i.e. Humala in Peru) and presidential candidates (i.e. Keiko Fujimori in Peru) in Latin America (Irujo & Gil, 2017). In addition, Odebrecht recognised the creation of the Division of Structured Operations, which was in charge of bribes’ payment (Shiel & Chavkin, 2019). CEO Marcelo Odebrecht was in charge of this division; however, Hilberto Mascarenhas

76  Gloria Camacho and Mario Vázquez-Maguirre

Odebrecht and other firms which pay bribes

Politicians and political parties who maintain Petrobras' directors and rceive bribes to financial their political campaigns

Petrobras' directors who receive bribes

Professional money launderers who pay bribes

Figure 5.1  The bribery model Source: Elaborated by authors with information from Semana (2017)

Table 5.1  Bribes paid by Odebrecht in Latin America Country

Bribes (in USD millions)

Argentina Brazil Colombia Dominican Republic Ecuador Guatemala Mexico Peru Venezuela

35 349 11 92 33.5 18 10.5 29 98

Source: Elaborated by authors with information from the United States Department of Justice as cited in Rodriguez and Castro (2019).

Government and public–private relationships 77 da Silva was in charge of its operation. Basically, his team paid the bribes according to the instructions of Marcelo Odebrecht (Rodriguez, 2017). Odebrecht illustrates that lobbying without regulation could lead to unethical practices in some countries of the region to get millionaire contracts for public works (López, 2017). Odebrecht’s case has implicated its CEO, employees, as well as politicians from different countries. Some consequences of the corruption scheme in Odebrecht were the imprisonment of the CEO, several employees of the firm, and politicians in Latin American. Also, the participation of citizens from different countries in the region in mass protests to urge authorities to act against corruption; the suicide of Alan Garcia, former Peruvian president from 1985 to 1990 and 2006 to 2011. In addition, two witnesses of the case and the son of one of them died in Colombia (Varela, 2019). Odebrecht case keeps on generating new evidence in the region; in 2019, the leaking of information has revealed new participants in illegal transactions with the Brazilian firm in Panama, Argentina, Dominican Republic, Peru, and Venezuela (Delfino, 2019).

Findings Regarding Hillman and Hitt’s taxonomy of non-market strategies, one of the preferred strategies followed by Odebrecht was a financial incentive strategy in the form of illegal financial contributions to politicians’ electoral campaigns. This scheme was repeated in various countries of the region. To this end, Odebrecht created a department specialised in lobbying with key political actors to generate the conditions to facilitate the acquisition of public projects. Thus, the firm also uses an information strategy. The result of these strategies in the short term was an increase in the number of projects Odebrecht was developing in Latin America, which also generated more economic resources for the firm. It also benefited political actors that participated in the corruption scheme, since they obtained the necessary resources to finance their political campaigns. The scheme seemed to benefit both the firm and the political actors in detriment of other infrastructure firms that could not bid for the projects; also of the common good, since it altered the principle of fairness in electoral campaigns. Once the corruption scheme was discovered by Brazilian authorities, the governments involved suffered institutional crises that diminished their legitimacy. Some of the projects awarded to Odebrecht were cancelled, causing delays and damages to their beneficiaries. NGOs and other members of the community showed their discontent on the polls and on the streets, demanding that both companies and government work for the common good and not for the personal benefit. In this sense, this case may be paramount in how public–private relationships are shaped in Latin America and provide an opportunity to search for alternative management models. Based on a three-step humanistic management model (von Kimakowitz, 2017),

78  Gloria Camacho and Mario Vázquez-Maguirre the Odebrecht case generates some lessons that could prevent corruption schemes and provide better outcomes for society. Unconditional respect for human dignity The recognition and respect of every individual and his/her dignity is the base of a democratic society (Taylor, 1991). Nowadays, it is expected that the role of government should be serving citizens and assuring that public interest predominates when it builds inter-sectoral alliances to contribute to society. Justice, fairness, and equity are important elements of the solutions to public problems. The government should focus on its citizens’ well-being rather than on the selfish and short-term interest of some individuals (Denhardt & Denhardt, 2000). Odebrecht case illustrates that public administrators in different Latin American countries seem to be the owners of public money (Denhardt & Denhardt, 2000); they forgot that resources belong to their citizens and that they should look for their citizens’ interests rather than their own interests. In addition, this case shows the problem of corruption that is present in this region of the world. Corruption represents the failure of institutions that should use their power to look for the well-being of society. Also, it is opposite to human dignity, because in a corrupted society there is no justice, or human rights protection (Kregar & Dzimbeg, 2008). Integration of ethical reflection in management decisions Humanistic management can provide a framework that guides managerial practices and decision-making towards fairer outcomes for society, especially minorities, such as indigenous groups in Latin America (Camargo & Vázquez-Maguirre, 2020). Human beings are social by nature (Melé, 2016) and when they face moral issues, they should consider that their decisions will have consequences for the others (Jones, 1991). For this reason, it is important to make decisions based on the consequences for stakeholders (von Kimakowitz, 2017). Odebrecht’s case reflects the lack of ethics in decisions made by participants because their decisions are considered morally unacceptable as well as illegal (Jones, 1991). In addition, it shows that corruption in public and private spheres represents a problem of values and norms (Kregar & Dzimbeg, 2008), as well as a result of selfish behaviour that will undermine society (Pirson  & Steckler, 2018) and damage citizens. Ethical reflection helps to prioritise the moral rights of those affected by the organisation over the potential economic harm that a decision may generate for the organisation. One strategy to pursue constant ethical reflection is through stakeholder dialogue, which allows the organisation to share responsibility with, and gain legitimacy from, their stakeholders (von Kimakowitz, 2018).

Government and public–private relationships 79 Active and ongoing engagement with stakeholders Under a humanistic management lens, stakeholder engagement is important to share responsibility, to get insights of stakeholders’ interests (von Kimakowitz, 2017), and to have legitimacy of decision-making (Spitzeck, 2011). Within this dialogue with stakeholders, transparency becomes an important issue. This concept is understood as “the perceived quality of intentionally shared information from a sender” (Schnackenberg  & Tomlinson, 2016, p.  1788). On the one hand, in the private arena, transparency is considered as an antecedent to stakeholder trust (Schnackenberg  & Tomlinson, 2016, p. 1794). On the other hand, in the public sector, transparency could enhance trust in government as well as diminish corruption and improve efficiency, democracy, and legitimacy (Piña & Avellaneda, 2019). From the Odebrecht case, we can learn the effects of lack of transparency by the government and firms, and, as a result, there is a lack of trust in democracy in Latin America (Angélico, 2019). As a result, a humanistic management approach to such public–private interactions should include independent supervisory boards constituted with different stakeholders that monitor the bidding and execution of the projects. When there are interests in conflict, these boards could be an instrument that allows for the power of the better argument to supersede factual power. This is also a mechanism to gain and maintain a high level of public legitimacy.

Contributions to specific SDGs Odebrecht, as well as other construction firms, contributes directly to improve infrastructure (SDG 9) in Latin American countries. The adoption of humanistic principles and models in these companies and governments could boost cooperation, transparency, and development of the infrastructure projects that communities in this region urgently need. A change in how public–private relationships are managed is necessary so that society has greater confidence in current mega-projects and does not judge them with mistrust and suspicion. Also, this chapter illustrates the importance of SDG 16 with the main focus on justice and strong institutions. The Odebrecht case is an example of the urgent need to end corruption and bribery, as well as promoting accountability and responsible decision-making (United Nations, 2015). The implications of the case suggest that governments in Latin America are trying to bring to justice those actors responsible for the corruption scheme. This may represent a new chapter in the history of the region where corruption and bribery are no longer tolerable and unpunished. Success in this area will only lead to stronger institutions with higher levels of legitimacy. In addition, this case shows the need for stronger partnerships (SDG 17) that look for the well-being of society rather than the self-interest of the participants. Society’s more complex problems are unlikely to be solved by

80  Gloria Camacho and Mario Vázquez-Maguirre single actors. Establishing humanistic management in public–private relationships should boost transparency and confidence in each other, which will facilitate building stronger inter-sectoral relationships that work for the common good and the SDGs.

Conclusions This chapter illustrates the need for a humanistic management approach to public–private interactions. It also explores how a humanistic management model (von Kimakowitz, 2017) may improve decision-making and stakeholder engagement based on human dignity protection and recognition. The analysis of the Odebrecht case suggests the importance of ethics in decisionmaking to prioritise the common good and accountability. It also shows the disastrous consequences of not incorporating a humanistic management approach in the operations and governance of firms and governments. In addition, this chapter highlights the importance of public–private interactions to solve some of the more complex social problems Latin America currently faces (which are also part of the global SDGs). The chapter also advances our understanding of how humanistic management could improve public–private relationships, currently contributing to fill an existing gap in the literature. From a humanistic management perspective, this work also poses new research questions: a purely moral approach to corruption and bribery present sufficiently convincing arguments for implementing humanistic management in institutions? It often falls in the domain of regulation to prevent alterations of business conduct. In some cases, illegitimate corporate conduct has led to new regulations. Empirical research suggests that it is unlikely that corporations and their managers will change their behaviour purely motivated by moral arguments (Spitzeck, 2011); therefore, future research should address how humanistic management may be implemented in public–private relationships, and how to introduce ethical aspects into corporate practice. As David Korten (2018) suggests, institutions should serve the ends we seek as a global community: earth balance, equitable distribution, life-­ serving technology, and democratic accountability. Relationships between public and private institutions to develop the necessary projects that serve these ends are fundamental for the sustainable future of Latin America.

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6 Supply chain management, humanistic management and circular economy Fostering industry innovation and decent work through responsible consumption and production through partnerships Eduardo Aguiñaga and Ana Rosa Leal In 1987, the World Commission on Environment and Development (WCED) defined sustainable development as a “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”(Brundtland, 1987, p. 43). Drawing from this definition, the term involves managing the impact of humans on their environment through their current actions to ensure the subsistence of society. Since then, the international community has held major conferences intended for governments to commit to act and address the most pressing problems in the world. More recently, the 17 sustainable development goals (SDGs) of the United Nations were presented as milestones for the advancement of humanity around the world and as a way to stimulate action over the next 15 years in areas of critical importance for humanity and the planet (United Nations General Assembly, 2015). However, greater market demand and escalating competition amongst firms have increased the pressure over society and the environment leading to unsustainable growth (Pirson, 2017b; Pishchulov et al., 2018). This has led to a growing interest in sustainable practices, specially within supply chain management since the late 1990s (Rajeev et al., 2017; Seuring & Müller, 2008). Thenceforward, it is possible to find a focus on the “green” aspect of the supply chain management through increasing environmental legislation and a pursuit of efficiency that allows a more efficient use of natural resources (Bansal & Roth, 2000; Dubey et al., 2017; Hall, 2000; Srivastava, 2007). Within an increasing call for attention on the social aspects of supply chain management by diverse stakeholders and academics, the subject of dignity and well-being of people arises as an important aspect that needs to be addressed (Dehghanian & Mansour, 2009; Rajeev et al., 2017; Pirson,

84  Eduardo Aguiñaga and Ana Rosa Leal 2019). These concerns over the human side of management paved the way for the humanistic management perspective (Kessler, 2013; Pirson, 2019; Pirson  & Lawrence, 2010; Spitzeck, 2011). This approach posits that humans must treat each other as humans and not as mere resources. Furthermore, this is an opportunity for inquiry as the empathic and collaborative nature of humans has commonly been an overlooked aspect of supply chains (Kessler, 2013). Despite recent research has been focusing on the humanistic management on different business topics (e.g. Kessler, 2013; Melé, 2016; Pirson, 2017a, 2017b), scant research has focused on the humanistic management on supply chains. Ideally, through concepts such as sustainable supply chain management (Linton et al., 2007), economic, environmental and social dimensions are integrated. However, although efficiency might be a convincing argument for a leaner, greener and more efficient supply chain, it is possible to find a greater challenge regarding humanistic management (Spitzeck, 2011). This has been partly because of the failure to recognise, measure and internalise the social negative externalities created throughout the supply chain (Webster, 2017). Luckily, a new business perspective called circular economy (CE) has seen the internalisation of both positive and negative externalities as one of the only ways to create a sustainable future (Ellen MacArthur Foundation, 2013a). The objective of this chapter is to provide convincing arguments on how it is possible to achieve a humanistic management perspective on supply chains by leveraging on the CE approach. The former argument is developed through the juxtaposition of CE principles applied by the industry regarding innovation and responsible production through partnerships with those of supply chain and humanistic management. Case studies of Latin American firms in Mexico and Brazil are examined to understand how the implementation of CE practices reconciles both humanistic management and supply chain objectives while positively influencing the SDGs. This is, to have a real impact on business practice.

Supply chain management A supply chain is a network of organisations or individuals that procures materials, transforms them into intermediate or finished products and distributes these products to customers (Ganeshan  & Harrison, 1995). On the other hand, supply chain management consists of the coordination of production, inventory, location and transportation amongst such network (Hugos, 2011). Hence, supply chain management involves the actions performed throughout the supply chain which can be either production, transportation or sales functions from a diverse set of stakeholders that range from suppliers to the final customer. Due to a faster changing business environment, the responsiveness of the supply chain has been increasing through new managerial practices. For

Humanistic management and CE in supply chain 85 example, while in previous time periods supply chain functions where integrated within conglomerates, firms now focus on their core competencies, specialising in different functions to give chance to greater flexibility, therefore, adapting faster to market demands (Hugos, 2011). This view drives the development of supply chains with multiple companies and stakeholders working together. Some of the key stakeholders within the supply chain are the following, according to Hugos (2011). 1 Producers. Manufacture products, components or intangibles such as services. Traditionally producers of tangible, industrial products tend to relocate to places with cheap labour. 2 Distributors, retailers and customers. Distributors are wholesalers and intermediaries taking the bulk of production and delivering it to customers that buy in large quantities. In contrast, retailers sell to the general public in smaller quantities. Meanwhile, the customers can be either other organisations or end users of products and services. 3 Service providers. Organisations that provide specialised expertise and skills in a particular activity needed by a supply chain. Either services can be financial, transportation, warehousing, within others, or they can be integrated into the ongoing operations of producers, distributors, retailers and consumers in the supply chain. These stakeholders are the foundation of the traditional supply chain management. However, the business and world dynamics have been recently changing, and with them the way supply chains must be managed. Therefore, in the following section, we describe the evolution of the supply chain management and the importance of the CE approach to supply management.

Evolution of supply chain management Several changes have occurred regarding how key participants interact within the supply chain to increase its efficiency. Since the dawn of the supply chain concept, those who looking for efficiency and lower cost in their production have turned their attention to their supply chain. These has led to an efficiency-based approach which eventually created negative impacts that cascaded down the supply chain. However, some firms started to incorporate non-financial measures that impact their supply chain to maintain a common good for all involved. These has given way to the rise of sustainable supply chain management (Carter & Rogers, 2008). Green supply chain management This paradigm, consolidated during the 1990s, assesses the environmental impact on supply chain operations from product design, up to end-of-life

86  Eduardo Aguiñaga and Ana Rosa Leal management of the product (Srivastava, 2007). This paradigm seeks efficiency while reducing the impact on the environment. It is also within this view that, increasing operational efficiency and reducing residues and pollutants, supply chain management can be more cost-effective. One of the criticisms of this view is that it fails to address social concerns by focusing on the environmental and economic aspects only. Sustainable supply chain management paradigm As the discussion regarding sustainable development grew during the 90s, the triple bottom line approach was introduced, helping to address some of the many critiques within green supply chain management (Rajeev et  al., 2017). The triple bottom line refers to the economic, environmental and social value a firm creates (Elkington, 1997). In contrast with the green approach, rather than focusing mainly on the environment, it also addresses the main SDGs by including a social dimension. This paradigm seeks to create coordinated supply chains through the integration of economic, environmental and social considerations by meeting stakeholders’ requirements (Ahi & Searcy, 2013). However, most of the efforts on these supply chain perspectives have been focused towards increasing efficiency while still being rooted in a traditional linear supply chain paradigm (Ellen MacArthur Foundation, 2013b). Fortunately, a relatively recent perspective has been gaining momentum amongst scholars, governments, companies and NGOs; it poses a different approach for production and consumption as well as how economy, nature and society interrelate. This perspective has been called the CE, which can promote a humanistic approach within supply chain management (Ellen MacArthur Foundation, 2013a, 2014; Webster, 2017).

Humanistic management Humanistic management arose as an alternative to the “mechanistic” management approach of Frederick Taylor back in the early 20th century, characterised by being focused on profit maximisation and where people were seen as a mere resource. Humanistic management is defined as a people-oriented management approach that seeks profits for human ends (Melé, 2016) and focuses on the ethical and humane side of business looking for a communion between people, profit and purpose. It aims at enhancing productivity while developing the human potential (Daley, 1986). This translates into protecting the dignity, well-being and purpose of people around the organisational activity including its supply chain (Pirson, 2019). Unfortunately, management practices and studies have been mostly approached within the perspective of an exploitative paradigm, focusing mostly on profitability (Pishchulov et al., 2018). Supply chain management

Humanistic management and CE in supply chain 87 is not the exception, as it generally deals with issues related to efficiency regarding production and logistics (Hugos, 2011), even within a sustainable supply management paradigm. Hence, one of the challenges of a humanistic perspective within supply management relates to the effectiveness that morality can have over managers’ decisions instead of the current paradigm (Spitzeck, 2011), and how to create well-being for every stakeholder above mere wealth creation (Pirson, 2017a). To do so, incorporating humanistic management to the CE approach to supply chain is a viable possibility. In the following cases, we illustrate how exemplary firms in Latin America have incorporated the principles of humanistic management in their supply chain management by following a CE model, addressing stakeholders’ needs by helping to restore their dignity and well-being (Schröder et al., 2020).

The circular economy Circular economy represents an industrial system that is restorative or regenerative by intention and design (Ellen MacArthur Foundation, 2013b). It addresses the value chain dynamics by focusing on maximising all that is already in use, from sourcing to consumption (Esposito et al., 2017). It seeks to replace a wasteful usage of resources based on the linear approach “take-make-dispose” with a “close-loop” usage of all resources in the entire value chain. Within this view, the society and the planet are considered as an ecosystem where a relationship between consumers and producers is acknowledged because consumers are also employed within the supply chain (Tang & Zhou, 2012). The concept of negative externality plays a paramount role within the CE framework, especially when talking about supply chain management. Negative externalities are a form of market failure that arise when the social or economic activities of one group of people have an impact on another, and when the first group fails to fully account for their impact (Eshet et  al., 2006). These are the “effects on the welfare of individuals caused by activities, which are not otherwise compensated” (MartinezSanchez et al., 2015, p. 354). Such negative externalities arise from various activities during the life cycle of a product in the supply chain. To eliminate them, CE encourages their internalisation by arguing that resource prices should reflect all these negative externalities in form of an added cost (Webster, 2017). By internalising negative externalities, companies would incur in higher product costs, and, therefore, prices. This fosters organisations to search for new ways to eliminate these negative externalities while promoting responsible and ethical sourcing, cleaner production and the regeneration of natural capital and amelioration of human well-being (Ellen MacArthur Foundation, 2013a). Part of the success and rapid adoption of the CE concept has been given the positive impact it has over the United Nations’ SDGs.

88  Eduardo Aguiñaga and Ana Rosa Leal

Sustainable development goals The international community has held major conferences intended for governments to commit to act and address the most pressing/urgent problems in the world, which refer not only to the environment but to the impact it has had on current society. The 2030 agenda for sustainable development was adopted by all United Nations Member States in 2015. Within the agenda, 17 SDGs were established (United Nations General Assembly, 2015). The SDGs seek the collaboration between all countries and stakeholders to act as partners to implement this plan and to balance the economic, social and environmental aspects of sustainable development with the vision of “a world free of poverty, hunger, disease and want, where all life can thrive” (United Nations General Assembly, 2015, p. 3). Fortunately, the CE approach has been regarded as a viable contributor to these SDGs and as a “toolbox” for their implementation. Several studies have found that CE has close relationship with various of these targets (Rodriguez-Anton et al., 2019; Schröder et al., 2019). Amongst the strongest relationship of CE is with the following. Decent work and economic growth This goal promotes sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all. It focuses on the wages paid to persons within the supply chain and promotes the development of activities that encourage dignity and equality. It promotes gender equality and labour rights, seeking a safe and secure working environment for all while eradicating forced labour, modern slavery, child labour, and human trafficking, amongst others. Industry, innovation and infrastructure It focuses in building a resilient infrastructure, promoting inclusive and sustainable industrialisation and fostering innovation. It seeks to support human well-being by increasing their skills and providing access to services such as roads, technology and financial services. It also includes integrating local and small enterprises into the value chain. Responsible consumption and production With a high environmental component regarding the use of natural resources, its aim is to ensure sustainable consumption and production patterns, reducing hazardous waste and increasing recycling. Also, it looks at how inefficiency in terms of food loss, waste and fossil fuels have adverse impacts, such as food security, on developing countries.

Humanistic management and CE in supply chain 89 Partnerships for the goals The 17th goal is to strengthen the means of implementation and to revitalise the global partnership for sustainable development. This goal focuses on the financial, technological, infrastructure, trade and systemic issues (policy and institutional coherence, multi-stakeholder partnerships and data, monitoring and accountability). These SDGs are strongly guided by a humanistic component that strengthens the social dimension of supply chains. In the next section, we present case studies in Latin America where, by relying on CE, companies have a more humanistic approach to supply chain management.

How firms in Latin America can have a more humanistic supply chain management Although Latin American is not commonly considered a world reference in sustainability, there are, however, companies that have been recognised as leaders in their industries. These companies have managed an integral approach to supply chain management, able to positively impact the SDGs through a humanistic management, leveraging on CE principles.

PetStar PetStar, a 100% Mexican company located in Toluca de Lerdo, Mexico is the World’s Largest Food Grade PET Recycling Plant (PetStar, 2016) PetStar collects and recycles PET containers through a successful business model based on a “bottle-to-bottle” strategy inspired on the principles of a CE (Cámara-Creixell & Scheel-Mayenberger, 2019), where the complete PET-bottle value chain is fully integrated and redesigned from the collection activities of post-consumer bottles, until final production. Its final aim is “closing the loop” of PET plastic. At the heart of this successful business model lies its most important stakeholder and supplier: the waste picker. PetStar realised the importance waste pickers had and how precarious their working conditions were (Dias, 2016). High health risks, lack of social security and formality are amongst the most alarming of these conditions which threaten their well-being and dignity. Consequently, the company incorporated a humanistic approach by working closely with them to understand their needs through PetStar’s “gatherer partners” programme. PetStar created stronger bonds with waste pickers resulting in a more secure supply of its main feedstock (PET bottles), therefore, creating a constant and secure income for the suppliers. Their programme impacts the “Decent work and economic growth” as well as “No poverty” SDGs. This way, it has been able to create conditions for flourishing (Melé, 2016) and to increase the livelihood of a commonly marginalised population, providing

90  Eduardo Aguiñaga and Ana Rosa Leal an opportunity for them and their families to overcome poverty and promote social mobility. With more than 1,186 collecting partners, in 2018, PetStar created more than 24,000 jobs for waste pickers. However, this has not been easy as there is widespread malpractice of involving child labour in PET picking. To overcome this, PetStar leveraged on the SDG of Partnerships for the goals, by creating an alliance with community development centres where the most vulnerable, the waste pickers’ children, receive education services, medical care and nutrition. Consequently, it also contributes to the Zero Hunger, Good health and well-being SDG as well as quality education. So far, more than 250 waste picker’s children have improved living conditions. The successful implementation of this programme at Centro de Desarrollo Infantil Comunitario (CEDIC) (Community Child Development Centre) located in Chimalhuacán, Mexico, paved the way to replicate this initiative in other community development centres such as Mayama in Guadalajara, Jalisco that provides equivalent services for 240 additional children. On the environmental side, PetStar has managed to recycle 64,722 tonnes of PET bottles while creating 3,181  million recycled bottles. This means closing the loop of 66% of their stakeholder’s sold PET bottles while creating new ones containing from 30% up to a 100% of recycled content by following both a CE business model and a strong humanistic management approach. This way, the company contributes to the Life below water and Life on Land SDGs, and fulfilling the stewardship-sustainability principle of humanism (Melé, 2016). Without a doubt, PetStar is an example of the Responsible consumption and production SDG that, by operating a circular business model with strong commitment to humanistic management in its value chain, received, in 2019, the C2C (Cradle-to-Cradle) Bronze level certification. This certification recognises the extraordinary efforts companies make on material health, and reutilisation, usage of renewable energy, water stewardship and social fairness.

HEINEKEN Mexico HEINEKEN Mexico is a brewing group in Mexico. Starting its operations 125 years ago as Cuauhtémoc Brewery, it operates seven breweries across the country with more than 16,000 collaborators. It has a long history of sustainability, and, recently, it was the first company in Mexico publicly committing to transition towards a CE by incorporating diverse strategies and projects along its supply chain (Ellen MacArthur Foundation, 2016). Furthermore, in retrospective, it embodies a reference regarding humanistic management as well, given its focus on collaborators, suppliers and stakeholders. As we will see in the following sections, HEINEKEN transitioned from focusing on the personal needs of its stakeholders onto also taking into account the well-being of their community.

Humanistic management and CE in supply chain 91 The first of these remarkable humanistic endeavours was the construction of the Cuauhtémoc y Famosa Society Clinic in 1918, which since then has provided free healthcare to its employees and collaborators. This clinic not only preceded the creation of the Mexican Institute of Social Security (Cázares Puente, 2014) but also served as inspiration. Years later, the company created Sociedad Cuauhtémoc y Famosa (SCyF), a centre to promote the educational and economic development of employees. SCyF currently provides services to meet the social development needs of its associates, such as medical, sports, cultural, legal, patrimonial and savings. In this way, the company recognised, long before the Mexican government, the wholeness, integrity and well-being of its collaborators (Pirson, 2017b) while creating conditions for human flourishing and development (Melé, 2016). Recently, through its “Brewing a better world” strategy, the company explicitly focuses on three pillars, namely humanity, habitat and holism (Heineken México, 2018) keeping its pro-humanistic and environmental heritage through several initiatives. Knowing that 77% of water consumption in Mexico is used by agriculture, and that 40% of its domestic barley comes from a “hydric-stressed zone”(CONAGUA, 2011; FAO, 2013), HEINEKEN Mexico started to focus on creating a harmonious relationship between the consumption of water and its ecological and social impact, reinforcing its stewardshipsustainability (Melé, 2016). A process by which the company realised that many other benefits could be achieved for its barley farmers, its main suppliers. Agriculture in Mexico not only employs approximately 10% of the population but also represents a marginalised sector (Negrete, 2014). In order to counteract this reality, and by focusing mainly on the Decent work and economic growth and Responsible consumption and production SDGs, the company deployed a series of strategies focusing on its supply chain and collaborators. Smart Farming: Based on the Industry, Innovation and Infrastructure and Partnership for the goals SDGs, this project encompasses the implementation of technology in farming operations with local farmers. By collaborating with the International Maize and Wheat Improvement Center (CIMMYT), farmers have successfully implemented more sustainable and profitable methods, such as drip irrigation, crop rotation and the usage of Internet of Things for precision farming. This way, the company provided the material and knowledge to local farmers to create appropriate conditions for their development (Melé, 2016). Conservation Agriculture: In 2018, HEINEKEN Mexico inspired by the Quality Education and Climate Action SGD, developed a conservation agriculture manual for barley farmers. Crop management, irrigation methods and agrochemical usage are amongst the most important topics addressed. Farmers receive the manual during the contract signature; this way, the company ensures that all farmers acquire the knowledge and skills needed to promote sustainable development on the one hand, and on the other create

92  Eduardo Aguiñaga and Ana Rosa Leal awareness on climate change mitigation (United Nations General Assembly, 2015). Results have been numerous. So far, over 922 hectares have implemented conservation agriculture, reducing 3% of water consumption and 28% in fertiliser application, and an increased yield on average from 1 to 3 metric tonnes per ha. These has translated into better farming practices that reduced the need for agrochemicals and pesticides that deteriorate croplands and secured the supply of hydric resources while increasing the yields and profits for farmers. This way, creating a conscious and free association ruled by civic friendship and acting in reciprocity for a common good for the farmers, community, environment and the company (Melé, 2016). Local Sourcing: In order to empower economic inclusion and sustained income growth (SDG Reduced inequality), HEINEKEN México increased its local sourcing of barley by buying directly to local farmers. Locally sourced barley results on more opportunities for Mexican farmers to grow and sell their products while at the same time the company becomes more self-sufficient and decreases the carbon footprint of imported raw material (Quiroga, 2018). A pilot in the state of Oaxaca created an opportunity for 42 new farmers sowing 498 hectares of barley fields, boosting the development of farmers’ incomes. Likewise, on the states of Puebla, Tlaxcala and Hidalgo, there are other pilots focused on increasing barley yields from 1.8 to 3.5 t/ha through sowing high potential barley varieties with proper technical support by HEINEKEN Mexico experts (Whelan & Fink, 2016). This has a positive impact on the Decent Work and Economic Growth SDG by boosting productivity through innovation and, therefore, creating shared value (Porter & Kramer, 2019). This strategy has brought a sense of development and creation of common good amongst the different communities of barley growers (Melé, 2016). Financing: Lack of financial inclusion is a serious situation impacting thousands of small barley suppliers throughout Mexico. Without access to credit, it becomes more difficult to cope with vulnerability (Bouquet et al., 2015). Therefore, for more than 50 years, HEINEKEN Mexico has served as lender for farmers by financing the cost of seed, agrochemicals and an insurance payable until the harvesting season. This means that there is a shared commitment and cooperation of both parties. Given the company size and its bargaining power (Porter, 2008), it is able to negotiate lower prices for all inputs required, therefore, making it more feasible for small farmers to become suppliers. This way, the company has eliminated discriminatory practices and fostered equal rights to economic resources access, therefore, contributing to the Reduced inequalities and no poverty SDGs. This has created conditions for integral development and common good through cooperation while empowering their economic transcendence (Melé, 2016). All these initiatives have been fueled by the CE commitment of the company, aiming to regenerate the environment through an efficient usage of raw materials, hydric resources, as well as to contribute to society by implementing humanistic management principles.

Humanistic management and CE in supply chain 93

Natura Founded in 1969, Natura is a global group headquartered in São Paulo, Brazil, which manufactures and sells personal care cosmetics in America and Europe. It operates through an eco-efficient production and distribution system that has a special focus on generating positive socio-environmental impacts, and local development in its value chain (Sehnem et  al., 2019). Based on the CE and with over 7,000 employees and over 1.9 million consultants worldwide, it embodies genuine humanistic values in its vision and doing (Sehnem et al., 2019; Spitzeck, 2011). However, although the context under which Natura operates in Brazil represents a challenge for business and sustainable development, it is also an opportunity for implementing a humanistic management approach. Given that this country is rich in natural resources, over 20% of the workforce rely on agriculture for their livelihoods (Bugge et al., 2016). Sadly, this has eventually created several harmful negative externalities for the region, such as environmental degradation and the emergence of middlemen called “atravessadores.” They are people constantly looking for acquiring raw materials at the lowest price possible, incurring in several unethical practices in the supply chain such as child labour and unfair prices which threatens the dignity and well-being of producers and their communities. Knowing these challenges, Natura launched the “Amazon Program” which is designed to curb deforestation while at the same time collaborating with indigenous Amazon communities to create a sustainable supply chain that is both fair and transparent, contributing this way towards the Climate action and No poverty SDGs, respectively. For example, in 2007, Natura partnered with 120 small cocoa growers to train them in organic farming, which enabled growers to sign contracts with European chocolate manufacturers as well. It is a virtuous cycle developed by partnerships, and reciprocal education where communities source the raw material and knowledge on the use of local plants, and Natura acquires the products and fosters local development by eliminating these middlemen (UNEP, 2018). These successful collaborations were possible given the shared set of assumptions about human nature between Natura and the Amazonian communities as well as their collaborative capability and attitude (Rocha & Miles, 2009). Natura’s CEO Alessandro Carlucci is convinced that an educational strategy focused on entrepreneurship is key for the community and suppliers to grow. He further adds that, by investing on education and leadership development, talented individuals will develop and grow and that will enhance the production chain and create prosperity for all involved. These statement goes in line with both SDGs and the principles of humanism as it encourages human development, transcendence, while continue being sustainable (Melé, 2016). Aligned with the CE’s framework (The Ellen MacArthur Foundation, 2013a), Natura has made great contributions to several of its principles by

94  Eduardo Aguiñaga and Ana Rosa Leal improving the bio-capacity of the habitats from which it draws resources, reducing waste production and creating a reverse logistics for packaging, to mention a few. For all its impact, Natura’s business model received in 2014 the Benefit Corporation (B Corp) sustainability certification (UNEP, 2018), which is one of the highest recognitions on sustainability a company can receive. The B Corp community leveraging from the power of business, focuses on the creation of more high quality jobs with dignity and purpose, to reduce inequality, stronger communities as well as lowering levels of poverty (Halebsky, 2018; Pirson, 2017b). Furthermore, in 2019, the company received the “Sustainable Development Goals – SDG Brazil” award granted by the Brazilian Federal Government (Bloomberg, 2019) for promoting ethical sourcing and fair trade with supplier communities, making Natura a reference of humanistic management and sustainable development in Latin America.

Conclusions Humanistic management and CE are two sides of the same coin. Although CE has stronger foundations on the economic, production and environmental sciences, it has also great impact on the humanistic development as “humanism also cares about sustainable development” (Melé, 2016, p. 12). Despite CE may focus more on the supply chain, looking for innovative ways of regenerating the natural capital while at the same time making economic sense, the social and humane side is also heavily involved in this relatively new business philosophy. CE, by decoupling finite resource extraction activities from profit generation, has not only fostered new business models based on the reuse, redistribution, refurbishment, amongst other, but also it has increased, at the same time, the need for new types of suppliers of a diverse range of services, processes and technologies. It is not only environmentally sound but also makes social sense. The analysed cases of study of Latin American companies, such as PetStar, HEINEKEN Mexico and Natura, provide evidence of the alignment between humanistic management and CE principles and its deriving business models. By working closely with the suppliers and looking for a common benefit, these companies have strengthened their competitive advantage. Creating decent work opportunities and economic growth for suppliers has helped these companies to secure their raw material input. For this, all three companies have invested time, resources and efforts to create the proper conditions and infrastructure to foster innovation and human flourishing throughout the supply chain. Whether focused on technology, relationships, products or sourcing methods, these innovations promote responsible consumption and production which has a beneficial cascading effect on suppliers and consumers in Latin America. Humanism is present in Latina America, as it can be argued that companies using CE as a guiding framework for sustainable development have

Humanistic management and CE in supply chain 95 directly or indirectly created a significant impact to their suppliers. Whether explicitly stated in the company’s business model or directly related to the business operation, all three companies analysed are examples of the high importance of suppliers for their business success. Success which could not be attained without following the principles of humanistic management.

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7 The impact of humanistic management in governance Aitziber Mugarra-Elorriaga and Arantza Echaniz-Barrondo

Introduction The Latin American Economic Outlook 2018 highlights the growing disconnect between citizens and public institutions in the region. Confidence in the latter is being eroded away. Two main reasons are mentioned: (1) “The growing aspirations of a larger middle class”; (2) The persistence of socioeconomic challenges such as “middle-income trap”1 or the vulnerability of certain sectors. Rethinking and strengthening institutions are the great challenge (OCDE et  al., 2018). This challenge could be extended to business organisations. Micro, small and medium-sized (MSME) enterprises represent 99.5% of all formal businesses in Latin America and the Caribbean (LAC). And the vast majority, 84.5% of them, are microenterprises. Microenterprises represent the overwhelming majority of business enterprises in all sectors (In the trading sector, it reaches 90%). In terms of formal employment, 1 in 3 people work in an SME. However, large companies account for 80% of sales abroad (Correa et al., 2018). Pirson (2017), talking about humanism in business, compares the dominant narrative, economic perspective (operating logic: homo economicus, wealth, power, status), with the humanistic narrative (operating logic: well-being, protection of dignity). Pirson (2017, p. 88) suggests “that organisations are better seen as communities. The perspective of organisations as communities transcends the economistic perspective of organisations as hierarchies, or a market-based set of contracts.” He points out that both paradigms have consequences on different organisational aspects: business strategy, leadership, motivation and engagement, organisational culture, practices to maintain societal legitimacy and corporate governance. Corporate Governance is an instrument to achieve a truly, not instrumentalising, Humanistic Management in which profit is a means to create social value (Spitzeck, 2011). In this chapter, we will focus on the latter and relate it to sustainable development goals (SDGs) in Latin America.

100  Aitziber Mugarra-Elorriaga and Arantza Echaniz-Barrondo

Literature revision The Institute of Chartered Accountants in England and Wales (ICAEW, 2019) recognises that “corporate governance is the system by which companies are directed and controlled,” in order to “facilitate effective, entrepreneurial and prudent management that can deliver the long-term success of the company.” We want to underline the references to “long-term success” in a context where “governance structures favour the shareholders’ drive to acquire, and leaders’ success is measured largely by shareholder value creation” (Pirson, 2017, p.  107) and “ ‘shareholder value’ thinking (.  .  .) leads managers to increase share price at any cost” (Birchall, 2017, p. 15), with dramatic consequences. If we look over the last 20 years in terms of economic disasters, we find the largest bankruptcy in US history in 2001, when Enron collapsed (Worldcom took over the year after). Or the Global Financial Crisis, in 2007, recognised as the worst since the Great Depression of the 1930s. Those are the most famous, but there are a lot of worldwide examples of failures in enterprise governance. We can find the origin of the governance issue in the Agency Theory, developed when the firms became bigger and under a diversified ownership, and the shareholders (principals) had to hire managers (agents). And “the main goal of the governance structure is to control managers so they cannot harm the fulfilment of whatever goal the owners, as principals, intend to fulfil” (Pirson, 2017, p. 103). But this theory assumes that the managerial agents are “opportunistic and self-serving” individuals who “respond predominantly to monetary incentives” (ICA, 2015). “In contrast, humanistic governance theories, such as the stewardship theory, focus on reinforcing the other-regarding positive aspects of human nature” (Pirson & Lawrence, 2010, p. 557). In fact, cooperatives recognise three main characteristics of cooperative governance: humanism, joint (distributed) ownership and control and democracy as self-governance (ICA, 2015), which puts them in line with humanistic management. Back to the crisis, the resulting crashes and bankruptcies have increased the interest in “good corporative governance” and the onset of Corporate Governance Codes, providing guidelines and establishing controls to prevent repeating the same governance breakdowns. The first documentary reference appears in the Cadbury2 Code, published in 1992 as a two-page voluntary code of best practices, proposing changes in the “way of doing things” in the listed companies in the UK in response to the lack of investor confidence in those big firms’ accountability. This was an inspiring example to other governance codes (Cadbury et al., 1992). The OECD Principles of Corporate Governance, first launched in 1999, established the starting point for tailored developments around the world. In this sense, the Latin American region has been very active. Thus, in 2000 the Latin American Roundtable on Corporate Governance was founded, with the goal of “tailoring and adapting global recommendations to local circumstances, starting with the Roundtable’s first initiative to build consensus around a set of recommendations and priorities adapted to the characteristics of the

Humanistic management in governance 101 region, issued in 2003 as the White Paper on Corporate Governance in Latin America.” In 2005, they launched The Roundtable’s Companies Circle, to support the company implementation of best corporate governance practices, and this Companies Circle produced for 2009 a Practical Guide to Corporate Governance as a “step-by-step guide, providing access to the experiences and knowledge of key actors in the implementation of governance reform in Latin America.” And in 2010, the Roundtable shared the White Paper on Strengthening the Role of Institutional Investors in Latin American Corporate Governance as a product of the discussions at the Roundtable meetings from 2006 (Latin American Corporate Governance Roundtable, 2010). Within the framework of the Roundtable annual meetings, the heavily discussed topic was “the existence, usefulness, and shortcomings of corporate governance codes in the region.” It should not be forgotten that, prior to the works of the Roundtable from 2000, only Brazil and Mexico had codes. But since then, as shown in table 7.1, “most countries in the region have issued a code, either by the regulatory body, by a business-affiliated institution, or by a not-for-profit corporate governance institute; and many of these have undergone repeated revisions to enhance their utility and relevance” (Latin American Corporate Governance Roundtable, 2010). Table 7.1  Corporate governance in Latin America Country

Code

Year

Latin America Argentina

Latin American Corporate Governance White Paper Código de Mejores Prácticas de Gobierno de las Organizaciones para la República Argentina Argentinean Governance Code (updated in 2012) Código Brasileiro de Governança Corporativa – Companhias Abertas Code of Best Practice of Corporate Governance (5th edition) Code of Best Practice of Corporate Governance3(1st edition) Chilean Governance Code (updated in 2015) Colombian Corporate Governance Code for Listed Companies Colombian Governance Code (updated in 2014) CONASSIF Corporate Governance Regulation Costa Rican Institute Code4(updated in 2014) The Costa Rican Stock Exchange Code Código de principios y mejores prácticas de gobierno corporativo Código de Mejores Prácticas Corporativas 2010 Mexican Code of Corporate Practices (1st) Código de Buen Gobierno Corporativo para las Sociedades Peruanas Principles for Good Governance of Peruvian Corporations (1st)

2003

Brazil

Chile Colombia Costa Rica Mexico

Peru

Source: Author creation (2020)

2003 2007 2018 2015 2001 2012 2003 2007 2016 2011 2007 2018 2010 1999 or 2001? 2013 2002

102  Aitziber Mugarra-Elorriaga and Arantza Echaniz-Barrondo Those national codes have been updated according to the new G20/ OECD updated version in 2015 (OCDE  & G20, 2015). Nevertheless, as the Roundtable White Paper recognises, “building corporate governance is always a work in progress” (Latin American Corporate Governance Roundtable, 2003). The good governance codes are mainly drawn up thinking in the big firms listed, but as the ICAEW (2019) pointed out, “good governance can have wider impacts to the non-listed sector because it is fundamentally about improving transparency and accountability within existing systems.” Good governance concerns have also extended to the cooperative area, particularly in large cooperatives. Birchall (2017, p. 38) identifies “three design principles that lie behind all governance systems”: member voice, representation, and expertise (as managers). And it reminds us that “we have to listen to the voice of the members, find an effective way of representing them, and find the expert help they need. Only when all three types of authority are present can a co- operative be governed effectively.” As example of a “good device for ensuring quality of governance in cooperatives that makes all this systematic,” he proposes the Co-operatives UK’s Corporate Governance Wheel (Birchall, 2017, p.  39). But governance is not only a challenge for large cooperatives5: the International Co-operative Alliance (ICA) has fixed five critical questions for cooperatives all over the world for 2020, and the first of them is to “elevate participation within membership and governance to a new level” (ICA, 2013, p. 6). But corporate governance is more than rules and processes because it explains how the company board sets the firm’s values. What is the ultimate goal of the company? As Freeman (2017a, p. 464) remarks, “we need business organisations to inspire us. We need business to become an institution of hope. We need business executives to try and remake their organisations to be places we want our children to live in.”

Results and discussions CSR in corporate and cooperative governance Corporate governance and corporate social responsibility (CSR) are positively associated (Stuebs & Sun, 2015). And, as long as CSR is not a mere “Would-be” narrative (Dion, 2017), it is a good starting point for Humanistic Management. Since the Global Financial Crisis, Freeman (2017a), main driver of the stakeholder theory, admits that there are many new ideas and proposals to make capitalism more responsible. With his theory, he upholds a “more responsible capitalism” and deepens the concept of the accountable company: responsible not only to its owners but also to every stakeholder. “We need to see people and companies as responsible for the effects of their

Humanistic management in governance 103 actions on others. That is the moral cornerstone of the stakeholder idea” (Freeman, 2017a, pp. 462–463). According to this theory, “business can be understood as a set of value-creating relationships among groups that have a stake in the activities that make up the business” and the managers need to understand “how these relationships work” (Freeman, 2017b, p. 3). In this sense, he ties in with the humanistic management as long as the “managers are not agents, but stewards guided by the intention to serve all stakeholders. They demonstrate a high level of commitment to total value creation, a focus on long-term results, and an equitable distribution of rewards to all stakeholders” (Pirson, 2017, p. 97). This theory connects with the CSR concept in the 90s and takes off in the new century,6 with the UN Global Compact call. The Triple Bottom Line (economic, social and environmental consequences) needs to be taken into account in a balanced way so that progressively governance issues raise their prominence. In this sense, for responsible investment decisions, environmental, social and governance (ESG) criteria are already in use. There is a wide variety of CSR definitions, also developed in Latin America (see table 7.2). Visser (2008, p. 474) defines CSR in developing countries as “the formal and informal ways in which business makes a contribution to improving the governance, social, ethical, labour and environmental conditions of the developing countries in which they operate, while remaining sensitive to prevailing religious, historical and cultural contexts.”

Table 7.2  Evolution of CSR Stage

1953–1975 Birth and conceptualisation

1975–1990 Proliferation of definitions and models

1990–2000 Linkage with stakeholders

2000–2010 The CSR boom: new actors in the arena

Focus on Reason to exist. How it is Linkage with CSR as means Impact of the carried out administrative of sustainable companies’ theories development actions is Triple bottom and human perceived. What line: social, development companies economic and promoter should take on environmental Authors/ Bowen, Davis, Sethi, Carroll, Wood, Inter-American Actors Johnson Drucker Donaldson y Development Friedman Preston, Porter Bank (IDB) (against) y Kramer, Global Reporting Elkington Initiative (GRI) International Standardisation Organisation (ISO) Source: Authors’ elaboration based on Portales & García de la Torre (2012)

104  Aitziber Mugarra-Elorriaga and Arantza Echaniz-Barrondo Following up the United Nations International Year of Co-operatives, 2012, the International Co-operative Alliance set a global strategy of and for cooperatives, Blueprint for a co-operative decade, whose starting point is that “they have a way of doing business which is both better, and brings a more effective balance to the global economy than the dominance of one single model as now” (ICA, 2013, p. 4). As a matter of fact, “co-operative governance emerges on balance as healthy and effective compared to investor-owned business” and the key advantage lies in “being member-centred” (Birchall, 2017, p.  3). Cooperatives have their own reporting tool, Sustainability Reporting for Co-operatives: A Guidebook (ICA, 2016). SDGs in corporate and cooperative governance Governance is a basic condition to foster development, and a fundamental challenge is the role of citizenship in global governance (Páez Vieyra, 2015). Following up the Millennium Development Goals, United Nations (UN) set in 2015, the 2030 Agenda for Sustainable Development; in its core, the 17 SDGs. UN calls on both the public and private sectors (business sector, NGOs and the associative sector and civil society) to work together to achieve them as soon as possible. In fact, it is widely recognised that companies that do not align with SDGs face important risks: risks to their operations; risks to their reputation, and regulatory risk (Sachs et al., 2019). Amongst those goals, number 17 is cross-cutting, and it can help to achieve the others. Although at first glance it would seem that this objective implies targets and indicators directly addressed to the Public Administrations, they also require a leading role of the business sector to carry them out successfully. At Latin American level, the Economic Commission for Latin America and the Caribbean (ECLAC) takes into account four trends related to the private sector: (1) The increase in the number of domestic and international companies involved in the Agenda 2030 processes; (2) The number of companies in the region adopting social and environmental responsibility and governance measures; (3) The extension of development financing instruments is fostered by improved financial and non-financial performance reporting mechanisms in line with the SDGs; (4) Public–private partnerships and specific initiatives, specially in energy and transport (ComunicaRSE, 2018).7 One of the greatest difficulties in linking companies to Agenda 2030 in LAC is the lack of awareness of the SDGs. The greater the progress in the Agenda 2030 of the country in which they operate, the greater the involvement with the SDGs (Kowszyk et al., 2019). In LAC, 80% of the signatory companies of the Global Compact progress globally in the SDGs (37% in the case of SDG 17). The alliances they establish are: 39% with the Academy, 43% with companies, 46% with NGOs and 53% with governments (UN Global Compact, 2018).

Humanistic management in governance 105 As we can see in table 7.3 regarding SDG 17, Argentina is in group A and Guatemala in group D (and decreasing trend). Costa Rica and Brazil are in group B (and moderately increasing trend). As we can see in table 7.4, the LAC countries have been improving their score (except Cuba, Haiti and Venezuela, RB), although not their position. Some countries, such as Costa Rica, Dominican Republic, El Salvador, Honduras and Peru, have had significant improvement in their scores. Later, we revise some tools to assist companies in aligning strategies and operation with SDGs. The SDG Compass “provides guidance for companies

Table 7.3  2019 SDG index and dashboards Country

2019 SDG Index Rank

Chile Costa Rica Uruguay Argentina Ecuador Peru Cuba Brazil Dominican Republic Colombia Jamaica Mexico Bolivia Nicaragua Paraguay El Salvador Panama Honduras Venezuela, RB Guatemala Haiti A–SDG achievement B–Challenges remain C–Significant challenges remain

SDG 17 Score

31 75.6 33 75.0 43 72.6 45 72.4 46 72.3 51 71.2 56 70.8 57 70.6 64 69.8 67 69.6 74 68.8 78 68.5 80 68.4 82 67.9 86 67.5 89 66.7 90 66.3 107 63.4 108 63.1 122 59.6 156 48.4 D–Major challenges remain E–Data not available

Actual

Trend

C ∙ B ↗ B ∙ A ∙ B ∙ C ↗ E ∙ B ↗ B ∙ B → B → C ∙ B ∙ C ↗ C ∙ B → C ∙ B ∙ B ∙ D ↓ B ∙ ↓Decreasing → Stagnating ↗Moderately Increasing ↑On track ∙ Data not available

Summary statistics for SDG 17 indicators: ‒ Government Health and Education spending (% GDP) ‒ For high-income and all OECD DAC countries: International concessional public finance, including official development assistance (% GNI) ‒ Other countries: Government Revenue excluding Grants (% GDP) ‒ Tax Haven Score (best 0–5 worst) ‒ Financial Secrecy Score (best 0–100 worst) Source: Authors’ elaboration based on Sachs et al. (2019)

106  Aitziber Mugarra-Elorriaga and Arantza Echaniz-Barrondo Table 7.4  Evolution of Latin American countries in the SDG index (2015–2019) Country

Argentina Bolivia Brazil Chile Colombia Costa Rica Cuba Dominican Republic Ecuador El Salvador Guatemala Haiti Honduras Jamaica Mexico Nicaragua Panama Paraguay Peru Uruguay Venezuela, RB

2015 (of 34)

2016 (of 149)

2017 (of 157)

2018 (of 156)

2019 (of 162)

Rank

Score Rank Score Rank Score Rank Score Rank Score

– – – 31 – – – –

– – – – – – – –

43 89 52 42 91 53 – 92

– – – – – – 34 – – – – – –

– – – – – – – – – – – – –

71 94 106 144 102 77 56 90 70 75 81 40 62

66.8 57.5 64.4 67.2 57.2 64.2 – 57.1

41 90 56 44 88 53 29 70

60.7 60 55.6 99 50.0 112 34.4 152 51.8 104 59.1 74 63.4 58 57.4 97 60.7 96 59.3 75 58.4 79 68.0 47 61.8 82

72.5 64.7 69.5 71.6 64.8 69.8 75.5 67.2

53 66 56 38 74 33 42 75

70.3 68.1 69.7 72.8 66.6 73.2 71.3 66.4

45 80 57 31 67 33 56 64

72.4 68.4 70.6 75.6 69.6 75.0 70.8 69.8

69.0 46 62.9 92 58.3 117 44.1 145 61.7 96 66.6 81 69.1 84 63.1 76 63.9 86 66.1 72 66.0 64 71.0 49 65.8 93

70.8 64.1 58.2 49.2 63.6 65.9 65.2 66.4 64.9 67.2 68.4 70.4 64.0

46 89 122 156 107 74 78 82 90 86 51 43 108

72.3 66.7 59.6 48.4 63.4 68.8 68.5 67.9 66.3 67.5 71.2 72.6 63.1

Source: Authors’ elaboration based on www.sdgindex.org/reports/

on how they can align their strategies as well as measure and manage their contribution to the realization of the SDGs” (GRI et al., 2016). One section of the website8 is dedicated to business tools and another to business indicators. GRI et al. (2018, p. 4) points out that effective reporting is “a strategic tool that: engages stakeholders; supports sustainable decisionmaking processes at all levels within a company, shapes business strategy, guides innovation and drives better performance, and value creation attracts investments.” That is why they propose a practical guide to do so in three steps: (1) Define priority SDG targets; (2) Measure and analyse; and (3) Report, integrate and implement change. A very interesting approach is the sustainable communities of RedEAmérica9 (whose bases are participation, democracy and agreements). They have developed their own tool to assess the process of creating these communities (Trujillo & Mosquera, 2018). In July  2016, Co-ops for 2030, an online platform, was launched for cooperatives “to learn more about SDGs, commit to pledges to contribute to achieving the SDGs, and report their progress” (www.coopsfor2030. coop). As they say in their first Annual Report: “Only the surface has been

Humanistic management in governance 107 scratched of what the cooperative movement can achieve. Through increased support and awareness, we can fully mobilise cooperatives’ power to act, for even greater contributions to the SDGs” (ICA, 2017, p.  32). Regarding SDG 17, partnerships belong to the DNA of cooperatives: “The founding principle of co-operation amongst co-operatives ensures that the global co-operative movement is a vast network with shared goals” (ICA, 2013, p. 30). ICA’s 2019 Global Conference on “Cooperatives for Development” will be held in Rwanda. If we look at the Social Solidarity Economy, which includes cooperatives, it has great potential to bring SDGs to the local level, thanks to its economic actions, its mechanisms of democratic governance, community participation (based on top–down approaches) and its mechanisms of planning and implementation (OBIESCOOP, 2018, p. 159). UN Global Compact (2017) identifies five qualities of SDGs’ leadership: (1) Intentional (deliberate part of business’s strategy); (2) Ambitious (no matter the business size, it focuses on long-term outcomes and inspires others); (3) Consistent (what the company says and what it does matches); (4) Collaborative (with other businesses, government, civil society organisations, investors, academia and local communities); and (5) Accountable (transparency, risk management and engagement with stakeholders). Related with Goal 17, five business actions are proposed in support of this Goal (and example practices are given): (1) Lead on partnerships to improve domestic resource mobilisation through responsible tax practices; (2) Galvanise private sector finances to support sustainable development initiatives in developing countries; (3) Lead on partnerships to develop and share new and existing technology, knowledge and business models; (4) Build regulatory, organisational and staff capacity in developing countries; and (5) Lead on partnerships that address systemic challenges for achieving the SDGs. As we can see, all kinds of companies are called to contribute to the SDGs and this call is being answered both by capital companies (whether listed or not) and by cooperatives and social solidarity economy organisations. This task also involves the governance systems of every organisation that must evolve to respond to this new context posed by the SDGs and bring them closer to humanistic management. Thus, the SGDs are a stimulus for companies to be located in what Spitzeck (2011, pp. 56–57) has defined as the “humanistic management” quadrant that “encompasses all organisations which manage profitably as well as humanistic ally.” At first, it may be somewhat instrumental but it makes possible the transition to truly humanistic business.

Conclusions Economic crises have increased the importance of good governance in business organisations to avoid the same mistakes and as a complement to good governance also in public organisations and civil society organisations.

108  Aitziber Mugarra-Elorriaga and Arantza Echaniz-Barrondo The relevance of good governance is a global phenomenon that not only extends to companies listed on stock markets but also is already an issue on the agenda of all types of business organisations (regardless of the country, size or legal form adopted). Corporate social responsibility has gradually incorporated interest in governance issues into its agenda, so that today, the triple bottom line (economic, social and environmental) is enriched with a fourth pillar that is increasingly strategic around the governance of the process. Nowadays, business strategy cannot be apart from the SDGs, which have become elements of the Global Agenda, with an express call to the public– private–civil alliances as a cross-cutting objective to them all. There are great synergies between the progress in CSR, SDGs and good corporate governance, as well as links to the tools and good practices that are being developed in each of these areas. All these developments are aligned with placing the person at the core of management and preservation of dignity, essential elements of Humanistic Management, which is extending the impact of this way of understanding management, although this term is not always used.

Notes 1 Middle-income countries cannot compete in two directions: upwards, because their productivity is too low, and downwards, because their labour costs are higher than those of other countries. 2 Sir Adrian Cadbury was the chairman of the committee established in 1991 with the formal denomination of Committee on the Financial Aspects of Corporate Governance. 3 Created by the Brazilian Institute on Corporate Governance, Instituto Brasileiro de Governança Corporativa (IBGC). 4 Created by Instituto de Gobierno Corporativo de Costa Rica (IGC-CR). 5 In fact, the ICA-Americas office has designed a methodology for evaluating good cooperative governance. 6 For further information, see Mugarra Elorriaga (2001, 2005). 7 The report includes a summary of how the SDGs Agenda has progressed in the LAC countries. 8 https://sdgcompass.org. 9 It is a network of more than 80 business organisations in 14 countries in LAC.

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8 An exploratory study of the effects of socioemotional wealth in the perception of humanistic management and psychological ownership in family and non-family members in Latin American family firms Salvador S. Guajardo-Trevino Introduction A family firm is a business governed and managed by a dominant coalition, the family, which is potentially sustainable across generations (Chua et al., 1999). The study of family firms is significant as family firms are the world’s most predominant form of organisational structure (Claessens et al., 2002; Faccio & Lang, 2002; Gómez-Mejía et al., 2007; Porta et al., 1999; Poza & Daugherty, 2013), and they are relevant to the growth and well-being of the economy (Astrachan & Shanker, 2003; Chirico & Nordqvist, 2010) and for the wealth and employment they generate (Matthews et al., 2012). Specifically, in Latin America, family businesses constitute the backbone of the economy, comprising more than 80% of the economic activity of the private sector in the continent. They generate 60% of Latin America’s GDP and employ 70% of America and the Caribbean. (EY Family Business Yearbook, 2015). There is high concern that businesses in the region have a development consistent with the sustainable development goals (SDGs) established by the United Nations, decent work for all among others. This chapter could serve the purpose of exploring the conditions under which the SDGs are more prone to be really practised and prosper. Research in family business has focused on areas such as corporate governance, succession, entrepreneurship, management, and internationalisation. However, there are other aspects that have been isolated and will require more attention in the coming years, such as the relationship between socioemotional wealth (SEW) and humanistic management. According to Parada et al. (2016), in the Latin American context, the review of the literature indicates that 78% of the papers have focused on the following five themes: succession (20%), strategic direction (18%), performance (14%),

112  Salvador S. Guajardo-Trevino entrepreneurship (13%), and corporate governance (12%). These data seem to indicate and be in line with the need to stimulate research related to other aspects of the family firm in Latin America, such as the role of women, the dynamics, heterogeneity, humanistic management, and SEW of family firms. Family businesses have a high degree of complexity derived from their special characteristics, such as their SEW. As we want to verify in this work, the concept of the SEW is a key factor in understanding an administration more in line with humanistic management. To the best of our knowledge, this work is the first one that tries to analyse the relationship between humanistic management approaches, along its principles, with the SEW construct of the family firm literature. Furthermore, we have not even found many works trying to link the humanistic management literature with that of family firms. The few works that have done so are Amann and ­Stachowicz-Stanusch (2013), Cunningham (1983), Dessì and Floris (2013), and Sharma and Taneja (2013). However, it is important to mention that in family business, there are a number of studies that have focused on the value systems of family firms (e.g. Zapatero  & Jiménez, 2013; Koiranen, 2002), a topic related with the one this paper studies and, therefore, should be considered for any further researches. There is a clear understanding that, amongst the singular characteristics of family firms, is that they have an increased significance for the value system inherited from their founder. Also, scholars have found that in some cases a value system or a family firm SEW could be counterproductive for its profitability (Goel et al., 2013, p. 113). The main research questions that this chapter seeks to answer are: In which circumstances the application of humanistic management principles is more beneficial to the family firm? What are the outcomes of applying different standards of humanistic management principles to different groups within the same family firm (e.g. family members vs. non-family members)? Therefore, the main objective of this chapter is to understand under which circumstances the application of humanistic management principles in the family firm is either more helpful or harmful to generate a sense of fairness amongst all employees, which in turn should have an impact on the organisational climate and in consequence on the firm’s performance. We later explain in detail that, since family firms could apply its value systems in different levels of intensity and throughout different people, or extend them, then four scenarios can be considered, some of which are advantageous to the firm and some others are detrimental to its performance. Some of the questions we have asked ourselves are: Do family firms with high humanistic values strive more than those with low humanistic values? How does humanistic values in management affect SEW or is it the opposite? Are humanistic values in management applied to all members of the firm, or only to family members? How does the intensity of the family business values moderate or mediate the relationship between the level of humanistic values and SEW or performance? Some of these questions are

Humanistic management in family firms 113 answered in this chapter, while others remained unanswered, and this could be addressed on future researches. The chapter is organised as follow: first, we describe the concept of Humanistic management, then we describe how humanistic management and family business are connected, through concepts such as SEW, family values, and distributive and procedural justice; second, we discuss the sample and the methodology we followed, which is a comparative analysis of six cases of family firms. Then, we describe our findings from our case comparison across the relationships we were looking to explore in accordance to what theory and the literature review suggested; finally, we discuss the results of our findings, the limitations of this study, and some ideas for future research. Humanistic management In this section, we briefly review how humanistic management has evolved throughout history. Also, we discuss and define what scholars mean by humanistic management. Then, we explore which key elements, ideas, and values should guide managers who try to apply a humanistic management approach. According to Melé (2016), the Humanistic Management Movement has significant precedents in the 20th century, but really emerged in the first decade of the 21st century, gaining momentum since 2010 due to an increasing interest of scholars and business executives. Scholars such as Maslow, McGregor, Herzberg, and Lickert started to stress the importance of human needs and motivations, in opposition to the prevalent view at the time, the mechanistic management. Therefore, humanistic management started from the very beginning as an alternative perspective of management. In 1967, David E. Lilienthal published a book titled Management: A Humanistic Art (Lilienthal, 1967), which could be perhaps the first time the terms humanistic and management appeared together (Melé, 2016). Basically, humanistic management is about the concerns for human and person’s aspects in managing organisations (Melé, 2016). This perspective of management puts showing care for the flourishing and well-being of people above any other objective. Hence, obtaining results for the shareholder through the firms’ employees is secondary and not crucial. Melé (2016) affirmed that humanism consists in taking the human being seriously. With the purpose of providing grounds for humanistic management, Melé (2016) recommends to consider the following seven propositions for humanism: (1) wholeness, taking into account the wholeness of the person (variety of possible motivations, capacity of learning and sociability, openness to transcendence, with spirituality and/or religiosity, and a deep tendency to personal growth) without reducing the human being to a few aspects in contrast with some mainstream economic and management theories in which the human being is only seen as a self-interested individual

114  Salvador S. Guajardo-Trevino with a main preference on maximising his/her resources; (2) comprehensive knowledge, which differentiate human beings from animals and make us capable of making moral judgements; (3) human dignity, being worthy of honour and respect; (4) permanent development to flourish as a human; (5) common good, working for living together harmoniously and pursuing a common good for all; (6) transcendence; and (7) a sense of stewardship and sustainability. Deriving from the previous ideas, it is important to know which key elements, ideas, and values should guide managers who try to apply a humanistic management approach. Based on the ideas from Melé (2016) and Arnaud and Wasieleski (2014), and taking into account the family aspect, we ended up with the following seven elements of humanistic management or as Melé (2016, p. 45) called it a “humanistic ethos for management”: 1 Firms should give employees the opportunity to make decisions and take initiatives in their work, employees should be seen as free beings, endowed with dignity and, therefore, called to flourish as human beings. 2 In order to facilitate the development of the employees’ talents, potential, work skills, and to feel satisfaction, firms should make use of a great variety of tools and practices such as empowerment of work, continuing education and professional training, granting of responsibilities, and quality and regularity of supervisors’ comments. 3 Social relationships, including family and non-family members, are based on trust, mutual respect, and mutual recognition; everyone should see the firm as a community of persons with a common purpose. 4 Firms should seek at all costs to prohibit discrimination at the recruitment stage and during the employment contract. 5 Firms should seek at all costs to protect and preserve the right to privacy of employees. 6 Firms have a purpose in the society and should contribute to the common good, and, therefore, firms should have a policy in favour of sustainable development, and in consequence, a responsible use of natural resources, maintaining a clean environment, seeking harmony with nature, and preserving the heritage for the future. 7 Firms should be interested in the well-being of all the stakeholders and not only in general profits for shareholders; that is, to ensure the interests of employees, customers, suppliers and local communities, and creating value for all these interested parties. As seen with the ideas earlier, humanistic management in general is concerned with a “management oriented towards people while still seeking profits for higher human ends” (Melé, 2016, p. 51). The previous view is quite opposite to the mainstream management perspective which is essentially oriented towards generating profits for shareholders at any expense, and where employees are considered as means for this ultimate goal.

Humanistic management in family firms 115 Humanistic management and family business In order to demonstrate the need for a reversal of unethical business behaviour, which could be argued to be predominant in many industries and countries, Amann and Stachowicz-Stanusch (2013) list a series of relatively recent well-known scandals from industries such as financial, oil, mobile phone, internet, food sector, and even from non-profits. For instance, one of the most illuminating and well-documented examples they give is the one about the investment firm Goldman Sachs, which sold out to a large number of their clients investment ideas that the bank’s executives themselves bet against after the idea was given to the clients. Fortunately, the humanistic vision is gaining drive, and the idea of doing business in a mechanical, individualistic an unscrupulous way seems to start becoming outdated. Humanistic management scholars can leverage on the vast amount of literature on family businesses. In these types of businesses, scholars can find an ideal and unique type of organisation where they could analyse how humanistic principles are transmitted and to what level they do proliferate in these organisations in contrast to other type of firms. As we have mentioned earlier in this chapter, family businesses have a unique set of characteristics that set them apart from other types of organisations. Some unique traits of family firms are the incorporation and involvement of family members into the company, a high level of nepotism, a longer time span of business objectives, and greater loyalty of the employees (Habbershon et al., 2003; Zahra et al., 2004). Furthermore, many scholars have stressed that family businesses behave differently regarding topics such as implementation of innovative strategies, survival, cultural orientation, and value-creating entrepreneurship (Heck et  al., 2001; Rogoff  & Heck, 2003; Zahra et al., 2004). Other scholars have even given a term for what make family firms distinctive, they called “familiness” (Habbershon et al., 2003). Dyer (2003) argues that mainstream management literature should include the family as a variable because not doing so will neglect important implications in organisational research. Another aspect where family business is argued to be distinct from other firms is in the transmission of family values to the business, something that could be influenced and stimulated by the pervasive presence of the family in the firm. In this way, the values that prevail in the family tend to become the values that prevail in the family firm; contributing in consequence to the design of the organisational climate (Dessì  & Floris, 2013). In other words, “Values are the bedrock of any corporate culture” (Deal  & Kennedy, 1988, p. 21). Cunningham (1983) proposed that a family value-based management could be a better form of management than the military dehumanised mechanical model. Since then, the humanistic management movement has gained much track and followers in academia. The need and benefits of having a more humanistic management and social-responsible behaviour have

116  Salvador S. Guajardo-Trevino been exposed in the academic literature, among many, by Dessì and Floris (2013) and Amann and Stachowicz-Stanusch (2013). When values really prevail in the family and then are transmitted to the firm, then they become important in uniting the family and the business since they construct a common ground for “ideas about what is desirable,” which in turn, provides simultaneous benefits to the family and to the business and balances the contrasting perspectives of business and family (Aronoff & Ward, 2000; Athos & Coffey, 1968, p. 100). For instance, in Tabacalera A. Fuente y Cia1 values inherited from the founder have been transmitted and institutionalised from the first to the third generation so well that they have become for many of the family members what has helped them in defining their mission in life and how it should be lived (Iluminada Severino Bueno et al., 2018). Also, values have become a strategic advantage for the firm, since they are lived daily. To illustrate this, Cynthia Fuentes, third generation, mentioned that “our family has always taken great pride in the quest for true originality in everything we do. That’s why no one can ever honestly imitate our passion for perfection” (Iluminada Severino Bueno et al., 2018, p. 76). Another aspect that makes values important in the relationship between the family and its firm is that the family must agree on the dilemma between “business as an end vs. business as a means” (Garciá-Álvarez  & LópezSintas, 2000, pp. 68–84). If the family decides that the business was created as a means to achieve superior goals, then it should be clear which types of terminal values they will pursue (e.g. happiness, recognition, professional excellence, prosperity, and a greater quality of life). Here, all the resources of the family and its business are used to achieve the selected terminal values2 as the ultimate goal. After terminal goals are selected, then they must decide how resources should be used to achieve the ultimate goals; therefore, instrumental values must be selected (e.g. honesty, sincerity, ethical or unethical, loyalty, and ambitious).3 In this way, it becomes clear how values are important in the relationship between the family and its business, and how values act as a glue between both elements, providing a common ground. Although a bit unrelated to the last two ideas, but equally important, is to differentiate between explicit (open) vs. implicit (hidden) values (Bjerke, 2001, p. 35). Therefore, this special characteristic of family firms, the transmission of family values, could make them an ideal candidate for transmitting the humanistic management principles with greater success rate. Moreover, another important aspect to consider regarding family firms is the preponderant philosophy in the firm. Family firms could have a family first, a business first, an ownership first, or a balanced philosophy. Therefore, it should be considered how each of the philosophies affects the values of the firm, and in consequence the incorporation and transmission of the humanistic management principles.

Humanistic management in family firms 117 Linking humanistic management to SEW: family values So far, we have explained how humanistic management is related to the literature of family business throughout a common conceptual denominator, family values. However, there is still one more link to discuss, that between humanistic management with a very specific theory of family business, the SEW.4 As we have mentioned earlier in this chapter, family businesses have a unique set of characteristics that set them apart from other types of organisations, their familiness. In addition, family businesses have a high degree of complexity derived from their special characteristics. Many researchers have taken up the task of analysing and demonstrating these unique characteristics. One aspect of this familiness is contained and explained in the concept of SEW (Gómez-Mejía et al., 2011). In recent years, special attention has been given to the concept called SEW, amongst other ideas. As we want to verify in this work, the concept of SEW is a key factor in understanding an administration more in line with humanistic management. The SEW maintains that family businesses seek, in addition to improving their results, other non-economic objectives that are critical in their management (Tagiuri & Davis, 1992; Zellweger et al., 2013). Amongst these noneconomic objectives, the preservation of SEW stands out (Berrone et  al., 2010; Glover & Reay, 2015). The SEW, which represents a new perspective in the research of family businesses, analyses the non-economic rewards that family owners obtain from their businesses (Gómez-Mejía et al., 2007). The importance of SEW lies in the fact that this has been proposed as a unique characteristic of family businesses that distinguishes them from other types of organisations, and it is also a relevant factor for strategic decisions in these companies (GómezMejía et al., 2011). Family firms with a high level of SEW could behave in a counterintuitive way from what the humanistic management literature predicts, since a firm with the mentioned characteristics has the benefit of the family members over any other group as its main objective. Our literature review indicates that there is a large amount of research on SEW and a large number of papers analyse its role in explaining the behaviour and decision-making of family firms. The SEW can explain various aspects in family businesses, such as: 1 The social responsibility of the company and the social commitment behaviour of family businesses (Miller et  al., 2013; Marques et  al., 2014; Cruz et al., 2014). 2 The internationalisation strategies of family businesses (Kao et  al., 2013; Liang et al., 2014). 3 Its relationship with interest groups (Cennamo et al., 2012; Kellermanns et al., 2012; Hauswald & Hack, 2013; Fernando et al., 2014; Marques et al., 2015).

118  Salvador S. Guajardo-Trevino 4 R&D strategies of family businesses (Chrisman & Patel, 2012; Sciascia et al., 2015; Gomez-Mejia et al., 2014). 5 The diversification of family businesses (Kraiczy et  al., 2015; Schmid et al., 2015). To the best of our knowledge, this work is the first one that tries to analyse the relationship between SEW and humanistic management, specifically measured as distributive and procedural justice,5 and we also examine how these aspects are related to psychological ownership. As mentioned before, we have found few works trying to associate the humanistic management literature with that of family firms (Amann and Stachowicz-Stanusch, 2013; Cunningham, 1983; Dessì and Floris, 2013; Sharma and Taneja, 2013). One of the links between humanistic management and SEW is family values, since family values could be one form of SEW, one of the types of non-economic objectives, just as mentioned by Gómez-Mejía et al. (2007). Therefore, some family firms could have a humanistic style of management as part of their values and traditions, where humanistic principles are also greatly valued by the firm. In this sense, when we analyse SEW, specifically for its values and traditions, then we could also look whether these values and traditions are or not in line with the principles of humanistic management. In case they are in line, then it will be interesting to see how humanistic principles are applied in the firm (we specifically studied the principle of fairness and equality in the form of distributive and procedural justice), to see if they are applied with equality and fairness to all employees, or if they are applied in favour of the family members over the non-family members. Also, it will be interesting to see how SEW is related with fairness concepts, such as distributive and procedural justice, which we talk about some paragraphs later. Finally, it will be interesting to know how these three concepts (SEW, distributive, and procedural justice) are related with psychological ownership. As we have mentioned earlier, our research question tries to understand the circumstances in which the application of humanistic management principles is helpful to the family firm, as well as those in which it is harmful. It is with that research question as our main objective that we developed this chapter, and how we analysed our sample study to generate some propositions and a conceptual model that is in line with the theory and the literature review presented in this chapter.

Methodology This chapter uses a comparative analysis of cases of family firms in Latin America as its methodology. The six firms selected, all located in Mexico, could be considered successful as they have survived at least one generation, or they are at least 25 years old. Using the theory and the literature review as our backup, by making comparisons between the selected cases,

Humanistic management in family firms 119 we seek to identify some patterns and regularities across them to generate some propositions. The six cases selected could be compared between them since they are all of a similar revenue size, age, and employ a similar number of employees. Since this chapter seeks to be an exploratory study in a topic that seems to be scarcely researched and not yet well-understood, our intention is that the propositions generated here could later be tested as hypotheses by future research. According to Miles and Huberman (1994) and Yin (1984), in order to produce new understanding from complex phenomena that involve longterm dynamics, the use of comparative analysis of cases can be useful. Case descriptions could allow recognition of unanticipated patterns that might not be captured by more constrained methodologies that could not provide so richly sources of information. However, that richness of information comes with its own limitation, which is an increased difficulty in making organised comparisons and drawing clear conclusions. To develop this chapter about family business and humanistic management, we sought cases with enough complexity (size of the firm, generation, and a number of family and non-family employees) and family involvement so that we could evaluate the variables of interest for this research. Because SEW, justice perception, and psychological ownership need time to properly develop in the minds of the family and employees of a firm, we looked for firms that have survived at least one generation, or that are at least 25 years old, a period of time considered by scholars the mean for a generation. With these criteria in mind, we selected six cases. There are clearly some limitations in using a comparative analysis of cases as a sampling approach. For instance, by selecting firms that have survived a generation or at least a quarter of a century, we are somehow selecting firms with a certain success rate, thus avoiding less successful firms. Therefore, our sample is skewed on this aspect of successes and failures, limiting our capacity for performing a comparison of a random sample that could be representative of the population. To our favour, we observed some variance in our sample with respect to success in financial performance, SEW, perception of fairness, and psychological ownership, while variables such as size, age, and industry were relatively similar, somehow letting us infer that comparisons between them are valid. Our data comes from existing accounts from family and non-family members and from the use of questionnaires of pre-existing scales (SEW, distributive and procedural justice perceptions, and psychological ownership) and open-ended questions in a structured interview. We first used these data to identify patterns amongst the different cases related to our areas of interest and compared those patterns with what the theory and literature review suggested. Comparison across cases was done by using tables and matrices (Miles & Huberman, 1994; Yin, 1984). Since most of the comparison was done between the different pre-existing scales found in the literature and we already had formed our own predictions, the

120  Salvador S. Guajardo-Trevino patterns were easier to be found. Because we make use of a very small number of cases as the sample to formulate our propositions and obtain the findings on this chapter, the results of this work should be considered tentative propositions, even though we believe that we have based our arguments on very strong premises that have come from trusted sources from the existing literature, increasing the plausibility that our results should be valid for the general population. Measures We relied on several measures to get the data used in this chapter. Using the back-translation technique, all measures were translated into Spanish from the original version. After translating the scales into Spanish, an independent bilingual expert who did not know the original scale, retranslated it into English. Together with a native English speaker, we compared the English version of the scale with our translation. No major differences were found. All items in the study were rated from 1 = strongly disagree to 5 = strongly agree on a seven-point Likert-type scale. Both distributive and procedural justice were measured using Colquitt’s (2001) widely applied measure. According to Colquitt (2001), distributive justice exists to the extent that the allocation of an outcome (e.g. pay or promotions in a field study, a reward in a lab study, and a grade in a university setting) is consistent with the goals (maximising productivity or improving cooperation) of a particular situation. Following Sieger et al. (2011), who adapted the measure used by Colquitt (2001) for a family firm context, distributive justice is referred in this chapter as the outcome non-family employees receive from their work (pay, promotion, and/or any other important reward) based on their last appraisal interview. Procedural justice is here referred to as the process applied in that interview. Both of the previous two measures were based following Sieger’s et al. (2011) adaptation, which pre-tested and validated the adapted scale. Sample items were: “Is your outcome of the appraisal interview (e.g. salary, promotion, and raise) appropriate for the work you have completed?” (distributive justice) and “Have you had influence over the outcome (e.g. salary, promotion, and raise) arrived at by the appraisal interview?” (procedural justice). For psychological ownership, we relied on a seven-item measure developed by Pierce et al. (1992), with additional validation provided by numerous scholars such as Mayhew et al. (2007), Pierce et al. (2004), and Sieger et  al. (2011). Sample items for this measure included “I  sense that this organisation is OUR company” and a reversed item such as “It is hard for me to think about this organisation as MINE.” Regarding humanistic management, we needed to develop our own scale since no other was found. As mentioned earlier, our scale is based on the ideas from Melé (2016) and Arnaud and Wasieleski (2014) and considers the family aspect. The final measurement ended with the seven elements of

Humanistic management in family firms 121 humanistic management, or as Melé (2016, p.  45) called it a “humanistic ethos for management.” Sample items for this measure included “In order to facilitate the development of the employees’ talents, potential, work skills, and to feel satisfaction, firms should make use of a great variety of tools and practices, such as the empowerment of work, continuing education and professional training, the granting of responsibilities, and the quality and regularity of supervisors’ comments” and “Firms should seek to protect and preserve the right of privacy of employees at all costs.” Socioemotional wealth was measured using the widely applied measure of (Berrone et  al., 2010) commonly known as the “FIBER model.” This measure is formed by five dimensions: family control and influence, identification of the family with the firm, renewal of family dynasty, emotional attachment, and family bonds. 27 items form the measure. Sample items for this measure included “Preservation of family control and independence are important goals for my family business” and “Successful business transfer to the next generation is an important goal for family members.”

Patterns in the cases and propositions formulation This section examines the patterns identified across the theory, literature, and the six cases on three aspects: inequality of humanistic values applied to family and non-family employees, relationship between the SEW of family members and perceived fairness of non-family members, and relationship between the SEW of family members and perceived psychological ownership of non-family members. We briefly discuss how our data and our analysis support, or not the arguments that we have built from exiting literature, and from this we formulate some propositions. Inequality of humanistic values applied to family and non-family employees When dealing with family values in the firm as a type of non-economic objective (SEW), it is important to determine whether family members are favoured or not over non-family members. The idea of incorporating humanistic values as part of the family values might seem a good thing to do at first, for academics and practitioners; however, in the practice, it might carry more disadvantages and affect the firm in the long term, since some of the family values transferred by the family to the firm might suggest that family members are favoured over non-family members (Beehr et al., 1997); the value of equality and others that could be inspired by the ideals of humanistic management might just apply between family members. The idea in this paragraph is in line with what Gómez-Mejía et al. (2007) argued, that in some instance a rise in the level of SEW in the family firm may lead to a suboptimal performance of the business in the long run, harming the monetary wealth of the business and sometimes even of the family

122  Salvador S. Guajardo-Trevino as well, something that we have considered as part of our propositions and research question. From what we understand about SEW, values, and humanistic principles, we see that there is some fundamental opposition between them. For instance, SEW is more concerned about the non-economic goals in favour of the family. Those non-economic goals can be visualised under five dimensions: family control and influence, identification of the family with the firm, renewal of family dynasty, emotional attachment, and family bonds (Berrone et al., 2012). In essence, SEW will be at a high level when the family has control of the firm, is identified with it, has future plans for succession, and the family members have a psychological appropriation of the firm. From one perspective, these non-economic goals of the family members might mean that somehow the family is one of the priorities for the firm and, therefore, give room for unfair practices with non-family members. These unfair practices non-family members have to tolerate if the firm wants to have a high level of SEW have a price on applying humanistic management in the firm. After all, how could a non-family member have dignity if he/she is not treated equally and do not have all the same opportunities to flourish in comparison to a family member with equal personal capacities? Trust, prohibition of discrimination, mutual respect, and mutual recognition could not be applied at full capacity in a family firm with a great level of SEW; therefore, it appears to be a trade-off between these two concepts, and the family firm could be at a dilemma: how to incorporate the humanistic management principles for all the members of the firm without diminishing its SEW. Looking at the six cases analysed in this chapter, we found a clear pattern that on all of them, except Case B, there is an evident perception of distinction of the type of treatment received by the family employees and that received by the non-family employees, which support the idea of inequality between these two groups of employees. We know this because there is an explicit question included in our questionnaire that was administered to the non-family employees and asked them how they felt in regards to treatment, if there was bias or impartiality, between family and non-family members in a scale from 1 to 5. To add further validity to this asseveration, we also asked some family members of each of the cases to either deny or agree to the overall results of this point, and just in one of the cases the results were not totally confirmed, while in the other five they totally agreed with them. Also, another pattern showed by our cases is that the level of SEW is negatively related with that of the application of humanistic management principles. Cases A, B, C, and F have all high levels of SEW, while having low levels of the application of humanistic management principles. Cases D and E show exactly the opposite relationship. One point to clarify is that we are not arguing that all the dimensions of SEW will diminish a correct application of humanistic management. What we are trying to clear out is to determine how SEW affects humanistic management, specifically fairness, and justice perception.

Humanistic management in family firms 123 All previous ideas have conducted us to propose that: Proposition 1a. Family firms with a high level of SEW are negatively related with the incorporation of humanistic principles in general. Proposition 1b. When incorporating humanistic principles as part of family values, they are mostly applied to family members and not so much to non-family members. Specially in family firms with a high level of SEW. Relationship between SEW and perceived fairness There are two concepts that have been well studied by numerous researchers that could be related with some of the principles of humanistic management, specifically with fairness and equality. Equality is about minimising disparities between two or more persons, regardless of their contributions (Cohen, 1987). Equality involves being objective about any assessment and implies that all individuals receive the same treatment (Samara & Arenas, 2017). Similarly, fairness in the workplace involves the existence of respect, expectations, and commitment that need to be considered (Arnold & Bowie, 2003; Moriarty, 2014). Another aspect that is related with fairness and equality in the workplace is the perception of injustice. In their literature review, Sieger et al. (2011) mention some documented instances that might lead to perceptions of injustice amongst non-family employees, perhaps caused by the specific peculiarities of the family business. These perceptions of injustice have been found to be caused by nepotism, authoritarian leadership style, human resources practices generally biased against non-family members, ingroup–outgroup perceptions of non-family employees, founder-centric cultures, and lack of delegation (Sieger et al., 2011). Empirical research on justice perceptions by non-family employees is found to be scarce (Barnett & Kellermanns, 2006; Sieger et al., 2011). Barnett and Kellermanns (2006) speculated how the level of family involvement could influence non-family employees’ justice perceptions through fair or unfair human resources practices. The exhaustive literature review on non-family members in family firms done by Tabor et  al. (2018) reveals that, among other things, although researchers have found studies that demonstrate the negative implications of perceived injustice (e.g. Guidice et al., 2013; Madison et al., 2017; Sieger et al., 2011), there are other scholars who have found that such perception may not be as prevalent or problematic as assumed (e.g. Daspit et al., 2017; Jennings et al., 2017). Therefore, these findings should serve us as a guide in our assumptions and findings in this work. Just as noted by Sieger et al. (2011), even if perceived injustice has not been extensively researched in the family business literature, the literature on organisational behaviour has rich numbers of research in organisational

124  Salvador S. Guajardo-Trevino justice, which is mainly concerned with employees’ subjective fairness perceptions in their employment relationship. Organisational justice is composed of four dimensions: distributive, procedural, interpersonal, and informational perceptions (Sieger et al., 2011). According to some scholars, employees mainly used distributive and procedural justice perceptions when determining how to respond to the organisation as a whole; meanwhile, when they need to react to authority figures such as their superior, then they tend to make use of interpersonal and informational justice perceptions (Colquitt et al., 2001; Walumbwa et al., 2009). Distributive justice refers to the perceived level of fairness regarding outcome distributions, such as salaries, benefits, or promotions (Colquitt et al., 2001). In regards to procedural justice, this refers to the perceived level of fairness of the distribution process that leads to outcomes (Walumbwa et al., 2009). Some researchers have found that the ability to influence or control the distribution process (i.e. procedural justice) positively influences employees’ perceived fairness, regardless if the outcome itself is in favour or against them (Thibaut & Walker, 1975). Additionally, Sieger et al. (2011) have found that distributive justice can induce ownership feelings (i.e. psychological ownership) towards the family firm, and ultimately positive attitudinal outcomes (e.g. job satisfaction). According to Sieger et al. (2011), distributive and procedural justice has been linked with affective commitment, job satisfaction, trust in the organisation, organisational citizenship behaviour, and more recently, to psychological ownership. We argue that since SEW is more concerned about the non-economic goals in favour of the family, then a high level of SEW might polarise the perception of fairness between family and non-family members, negatively affecting it for the non-family side. Comparing the previous ideas with our six cases from our sample study, we found that a pattern is formed from all of them, although this is merely a result from observation, descriptive statistics, and some confirmation from qualitative data. In this sense, we observed that cases D and E are the ones with the lower levels of SEW and greatest levels of Humanistic Management. On the other hand, cases A, B, C, and F are the ones with the higher levels of SEW and lowest levels of Humanistic Management. Additionally, we sought further validity to our previous observations by asking some key family employees if they felt that the results reflected the general perception of all the employees at the firm, or just an isolated opinion that didn’t reflect reality; and in all the cases, they confirmed the validity of the results. Furthermore, because it is a limitation of questionnaires that respondent might not really understand one question of a concept, we explained in detail each of the key concepts so that we could eliminate any error in this aspect. In addition to the closed–ended questions of the questionnaire and the structured interview, we made note of another pattern that emerged spontaneously through the interviews. In cases A, C, and E, some of the key

Humanistic management in family firms 125 respondents mentioned that they felt that some executives in the company applied some norms, values and principles with more frequency than others, and that the frequency and the intensity of the application of those values impacted in the fairness perceived. Therefore, we propose the following propositions: Proposition 2. SEW is negatively related with the humanistic management principle of fairness (measured as distributive and procedural justice). Proposition 3. SEW is positively related with the perception of discrimination. Proposition 4. The intensity of the application of the family values in the firm will moderate propositions 1 to 3. It is important to mention that proposition 2 is supported by Cruz et al. (2011), who also proposed that in general, family-owned firms that use SEW as a frame of reference will tend to have poorer perceptions of distributive and procedural justice amongst family and non-family employees. The main difference between their proposition and ours is that their proposition focusses in comparing family firms with non-family firms, while our proposition focusses in comparing family firms with different levels of SEW and related them with their levels of perceived justice. Relationship between SEW and psychological ownership The concept of psychological ownership has been studied by a considerable number of scholars for quite some time, but only until relatively recently the interest on it has increased considerably (Avey et al., 2009; Pierce & Jussila, 2009; Pierce et al., 2003; Sieger et al., 2011). People tend to develop feelings of ownership for a diversity of objects, material and immaterial, including an organisation, and psychologists have termed this process as “psychological ownership” (Pierce et al., 2003). An interesting aspect of ownership is that it is a “dual creation, part attitude, part object, part in the mind, part ‘real’ ” (Etzioni, 1991, p. 466). In an organisational context, psychological ownership is understood as the “employees’ ownership feelings toward the organisation they work for” (Sieger et al., 2011, p. 80). When employees perceive ownership of the firm they work for, then it becomes part of the psychological owner’s identity and is felt as an extension of the self (Belk, 1988). Generally, the existence of psychological ownership is independent of the existence of a formal ownership of the firm; therefore, employees and owners alike could have different levels of it regardless their levels of ownership (Pierce et al., 2001). According to Pierce et  al. (2003), Pierce et  al. (2001), and Sieger et  al. (2011), psychological ownership can satisfy three underlying human motives: (1) feelings of efficacy, worth and value, since possession is the

126  Salvador S. Guajardo-Trevino definitive form of control, then being in control leads to the perception that one has altered or is able to alter the circumstances; (2) express their selfidentity to others, help people define themselves of what they are in regards to others and in society; and (3) the need for territoriality and security is nurtured by having a place or the possession of a firm. We argue that the SEW of the firm is positively related with the psychological ownership of the family members, since a greater level of SEW will imply that family members are more socioemotionally involved in the firm, which should be related with a greater sense of ownership. Conversely, we argue that the SEW of the firm is negatively related with the psychological ownership of the non-family members, since a greater level of SEW will imply that family members are appropriating more of the firm in a socioemotional and psychological manner, giving less room for non-family members to have a sense of ownership. The comparison of the six cases from our sample study gives some support to what past literature could have suggested. We found that cases B, C, E, and F show an inverse relationship between SEW and psychological ownership, which will be in line with the literature, while cases A  and D show a positive relationship. When personally interviewed some of the key members of the family to further validate the answers given on the questionnaire, we became aware that the results given by the non-family employee for case D were not recognised as valid, removing some noise from our analysis and interpretation of the data. Therefore, we propose the following propositions: Proposition 5a. SEW is negatively related with non-family employees’ psychological ownership. Proposition 5b. SEW is positively related with family employees’ psychological ownership. Proposition 5c. Non-family employees’ psychological ownership is negatively related with family employees’ psychological ownership. Proposition 6. Fairness and the application and incorporation of the humanistic management principles are positively related with nonfamily employees’ psychological ownership. Constructing a model that represents all of our propositions We construct figure 8.1 to give some sense of how all of our propositions are related and can come together in a single model.

Conclusions and limitations This chapter studies how the level of SEW in a family firm affects the application of humanistic management principles, perception of fairness, and how it influences psychological ownership in non-family members. Figure  8.1

Humanistic management in family firms 127

Level of SEW

High

Low

+ Psychological ownership Family Members

+ Psychological ownership Family Members

- Psychological ownership Non-Family Members

+ Psychological ownership Non-Family Members

- Psychological ownership Non-Family Members - Psychological ownership Family Members

- Psychological ownership Family Members + Psychological ownership Non-Family Members

High

Low

Level of Intensity of using Family Values and distributiv e and procedural justice

Equality: Degree of fairness (distributive justice), transparency (procedural justice)). Family members Non-family members Psychological ownership

Figure 8.1  Psychological ownership scenarios for different levels of SEW and fairness

was developed after performing a comparative analysis of six cases of Latin American family firms. The data gathered from our sample study show how all the elements studied in this chapter are related to each other, just as exposed in figure  8.1, which is presented here as a mere suggestion of a model. All our propositions presented here as well as the proposed model need to be further tested by wider empirical studies. We believe that this chapter accomplishes its initial purpose of understanding some specific circumstances where applying humanistic management principles in the family firm could prove to be problematic, such as applying the principles unequally across family and non-family employees and showing how SEW negatively affects these types of principles. Another main contribution of this chapter, specifically for humanistic management literature, is to propose a scale of how to measure it. The findings and contributions of this chapter are important because it shows how humanistic management literature and family firms could complement each other. As mentioned at the beginning, studying family firms is significant as this type of organisations is the world’s most predominant form of organisational structure, and in Latin America, family businesses constitute the backbone of the economy. Applying the “familiness” dimension, here specifically targeted to the SEW aspect, to humanistic management proves to be illuminating and helpful in better understanding the high degree of complexity of firms and their challenges. Since Humanistic Management is about management concerned and oriented towards the human being and the person’s aspects in organisations that still seek profits for higher human ends, then the cases in this chapter show that it is important not only to apply humanistic management principles to employees of the firm but also to do it in a fair manner, without favouritisms for any particular type of employees, such as family ones. The humanistic ideal where management should put showing care for the flourishing and

128  Salvador S. Guajardo-Trevino well-being of people above any other objective should be applied impartially and homogenously to all employees, or not be applied at all. For a correct incorporation of humanistic management principles into the firm, we observe from our analysis and the literature review that, in family firms, the best way to guarantee that those principles will be applied and prevail in the long term is to first make them part of the family values and then transmit them to the firm. This since the literature shows that this process makes those values to become important in the family and the firm in uniting “ideas about what is desirable” in both systems. Also, in order for humanistic management principles to be correctly incorporated into the firm, it must be clear about the dilemma between “business as an end vs. business as a means.” Just in the latter is where the mentioned principles have more chances of prevailing and flourishing. This chapter has its own limitations. First, by using a comparative analysis of cases as a sampling approach, the validity and generalisability of our results are constrained and need further validation by other studies. Also, the sample selected is not random and is somehow skewed since we have selected firms that have survived a generation or at least a quarter of a century. Therefore, we have selected firms with a certain success rate, thus avoiding less successful firms. Future samples should consider firms that are less successful, and more variability should be looked for in this manner. An opportunity for future researches is to compare the differences between family firms that have strong religious roots against those firms that do not have these types of inclinations. We will expect that such a study will find that family firms with religious backgrounds in their culture will tend to present a lower amount of inequalities of the humanistic management principles applied to family and non-family members and thus will constitute an interesting benefit from such types of family firms. Without further research and a proper hypotheses testing, the propositions and the model here proposed could not be considered as a correct representation and depiction of the more general population of family business.

Notes 1 Tabacalera A. Fuente y Cia is a Cuban American company well known for making some of the best Cuban cigars in the world with production of about 30 million cigars a year. 2 Terminal values, that is, to what ends resources are used; and instrumental values, that is, how resources are used to reach the goal (Rokeach, 1973, pp. 11–12). 3 Examples of family business values that scholars have studied are: accountability, austerity, consideration, communication, continuity, quality, commitment, excellence, diligence, honesty, initiative, integrity, loyalty, respect for the founder, risk avoidance, simplicity, trust, and valuing stakeholders (Dessì & Floris, 2013). 4 We have already introduced the concept of socioemotional wealth at the beginning of this chapter, but in the next section we explain it in greater detail. 5 Later in this chapter, it is explained how humanistic management is related with these two constructs.

Humanistic management in family firms 129

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9 Social responsibility of the university in the promotion of more humane and sustainable enterprises Alfonso Ernesto Benito Fraile, Ana Mariela Quiroga Treviño and Bertha Elizabeth Cárdenas Hinojosa Introduction University emerges as the successor of medieval monasteries that were in charge of protecting and transmitting knowledge throughout generations; knowledge that would define the world view of the societies they belong to. Additionally, University has also contributed to breaking obsolete paradigms to propose new ones that better correspond with the evolution of humanity at its different epochs. To achieve this, universities worked through dialogue and the discussion of ideas, theories and general knowledge. This influence, of the construction of the dominant world view of society, is what demands universities to assume their responsibility in the dissemination of the knowledge they create. And specifically, for the purpose of this chapter, their responsibility in the generation and transmission of knowledge regarding business administration. In that sense, a serious concern present in most of the business schools is the matter of the ethical education of their students. Especially since Ethics, understood as the moral reflection of actions and decisions, is the key to humanistic and sustainable management.

Ethical formation in business schools In developing countries, constant efforts have been made to create a new framework for quality education focused on globalisation and competitiveness. Work competitiveness requires more academically prepared people to raise the remuneration of talent, reflected in better salaries and benefits, based on their specialisation (Lundavall, 2000). Regarding the earlier, we must not forget what Bauman (2011) warned us about how the attributes of the liquid modernity are now present in universities and deep-rooted among their students. Those attributes benefit from the diminished strength of permanent responsibilities, which means

USR in promotion of human business 135 that the interest in social convictions is rejected. This leads to a professional entity solely focused on the financial aspect, leaving aside both personal and organisational social responsibility. On top of that, the requirements demanded by an organisational population are fulfilled by the mere process of obtaining a “medal” or badge, and nothing more. Similar to the issue of environmental responsibility, it is nothing else but a matter of being part of the game, without knowing the reason behind it. Building quality human capital is not an easy task for educational institutions. This difficulty arises from the skills required from professionals in this 21st century (Hirsch, 2001). Nowadays, hand in hand with the demands for observable and technically applicable competencies, more specific competencies are required, such as adaptability, responsibility and ethics (Holland & Vasquez, 1999, p. 415). The ethical behaviour involved in the management and participation of professionals within their organisations has been a subject of analysis and discussion in different spheres of society throughout history. Following the concept of Cortina (2000), every profession reaches its legitimacy in several ways. It is no longer enough to master skills in the technical dimension, which result is economic income, but also through the foundation of social authentication. Therefore, the administration professional must compensate society for providing the benefit of having attended a higher education institution. It has been proved that companies that include an ethical model of social responsibility within their processes, generate benefits and more competitive advantages over those that do not. In other words, companies that follow the principles of corporate social responsibility (CSR) not only characterise their organisational culture, but they also generate value, improve internal processes, reduce management costs and increase their reputation by achieving more credibility and trust in their customers (Arbaiza, 2010). Consequently, this fact has led to increasingly considering the need for the creation and implementation of an academic space, within the framework of the curricular proposal, that interprets, analyses and addresses the phenomenon of business ethics from approaches such as the humanist and the social one. This implementation is proposed to favour proactive, inclusive and diversity-respectful thinking and to promote personal development amongst students through theoretical and methodological tools that allow them to be projected from professional practice towards an ethical commitment with social responsibility. Regarding this idea, Comenius, in the 17th century, conceived education as a “workshop of humanity,” where human beings must be educated to become erudite, virtuous and pious people. The ethical urgency in today’s society becomes noticeable by the huge gap between the richest and the poorest; where the poorest become poorer every day due to corruption and discrimination, despite the efforts made by different organisations and institutions around the world.

136  Alfonso Ernesto Benito Fraile et al. This is the reason why universities must take social responsibility seriously to guarantee society an integral and humanistic educational model. A model that promotes the necessary conditions so that, through critical thinking and reflection, it replies with attitude and personal and professional commitment. For example, by taking those professionals – educated in these universities – to oppose to any kind of structure that breaks the law; also seeking to dignify humanity and the community in which it is expected to take place and to lead organisations or institutions of all kinds (Zavala, 2013). Therefore, universities are responsible for trying to encourage innovation, not only from a business point of view but also from an ethical point of view. As a result, society in general will have human capital capable of making the right decisions from a strategic sustainability perspective (financial, social and ecological) and of having access to positions of responsibility both in their own country and abroad. Moreover, this learning process has to be understood as the process of constructing the learning subject of knowledge, skills, techniques and motives for action, which take place in conditions of social interaction in a specific environment, based on individual and group experience, leading to both personal and professional development. It is undeniable that our future requires humanist leaders seeking to change the current economic paradigm; a future that allows us to acknowledge that ethical and socially responsible behaviour plays a decisive role in the good practices of any organisation or institution. Laszlo et al. (2017) state that a new narrative is being generated without being consolidated, which contrasts with neoliberal narrative and resonates widely in academic society. This new narrative has not yet been completely incorporated into the study and research programs of business schools, despite the evident need, for some, for a systemic change. Nowadays, only a few business schools gather some of the elements of this new narrative. However, business schools, in general, remain stuck in the neoliberalism paradigm, without recognising the imperative need for a significant change in the system. For instance, when it comes to the general mindset, we find that there is a major focus on an old-fashioned way of thinking with academic courses, research agendas and students’ and teachers’ beliefs that rely on an obsolete narrative. The most complex narrative, the one that involves well-being, dignity and economy as a path to life, and which could potentially influence the theory and practice seen in business schools, is still emerging. This brings us to the dilemma of determining the best proposal for ethic business education in graduate schools. On the one hand, we can find those who agree that ethics can be taught in specific academic courses. Regarding this position/argument/point of view, the work developed by Kohlberg suggests that specific education is one of the several possible ways to improve moral reasoning but its effectiveness and the most desirable methodologies have not yet been identified (Wymer & Rundle-Thiele, 2017).

USR in promotion of human business 137 Hirsch (2001) states that the main purpose of this matter is for students to question themselves about the implications of their decisions, and the obligations and responsibilities they have towards the stakeholders that could be affected by the results of these decisions, financially, socially and ecologically. The other perspective can be explained through the work of Sims (2002) who argues that the true meaning of ethics education should not be to induce behavioural changes in students. Rather, it should focus on the development of an examination of their skills and competencies that will prepare them to live responsibly by expressing concern for their serious and prudent performance. Cornelius et al. (2007) argue that ethical education is necessary to create some kind of balance that is congruent with the assumptions about human behaviour, according to the economic theory that predominates over business education. Consequently, classrooms can become a space for awareness and reflection on ethical dilemmas that may arise, both in their professional and in their personal lives. It’s also important to remember that, since the turn of the century, entrepreneurial education has been constantly changing, requesting more transformation initiatives. The millennial generation, an important group of stakeholders, seems particularly interested in being employed by responsible organisations and companies oriented towards sustainable objectives. A 2015 global survey of 3,700 business school students conducted by the Yale Center for Business and the Environment and the World Business Council for Sustainable Development, along with the Global Network for Advanced Management (Franceschini et al., 2015), revealed that 44% of the students were willing to work for a lower salary in a company with a strong ­sustainability-based performance. Twenty per cent of the students said they did not want to work for a company with no environmental awareness, regardless of the economic incentive. More than two-thirds of the participants expressed that they wanted environmental sustainability to be included in their study programs. Eighty-four per cent of the students said they would choose to work for a company with good environmental practices. Additionally, business students even considered that their schools should take a bigger role in environmental issues and practices. 61% believed that their schools should hire more professors and staff with experience in sustainability, while 64% requested more professional services and advice on sustainability jobs. It was also found that students in the best business schools prefer to work for companies that take action against climate change (Laszlo et al., 2017).

University social responsibility All of the above is related to ethical formation in business schools. Formation that is considered part of the social responsibility of companies. In other words, by educating professionals who can properly reflect in how to behave in a responsible and humane way.

138  Alfonso Ernesto Benito Fraile et al. However, unlike CSR, which is already on the agendas of most of the organisations and business forums, university social responsibility (USR) is just beginning. It is in this 21st century where higher education is reflecting on itself and on its social function, especially in Latin America (Vallaeys & Álvarez Rodríguez, 2018). In the case of Europe, a clear example of this is the entire European Higher Education Area formed in 1999 through the Bologna Declaration. This reflection has not been, or it is unrelated to, the responsibility that universities have towards society, together with the pressure exerted from CSR to which different sectors are also related, such as public administration and universities. This discussion is even more important in areas such as Latin America where societies are particularly affected by poverty, corruption and lack of ethics in many areas. On the other hand, the fact that more and more people have access to universities in most of the Latin American countries leads to an increasing debate about what the ultimate goal of Universities is (Vallaeys & Álvarez Rodríguez, 2018). A debate that is divided between the commercialisation of education and its contribution to society. If we want to define USR, we must look into the work of Vallaeys, one of its most recognised theoreticians in Latin America, who defines it as: the management of the four main impacts that a higher education institution (hei) causes just by existing: the impacts that come from the organisation itself [.  .  .] the impacts that come from the education it provides to its students; the impacts that come from the knowledge it builds from its research centres and its epistemological premises [. . .] and finally, the impacts that come from its relationships with the social environment. (Vallaeys & Carrizo, 2006; Vallaeys et al., 2009, in Vallaeys, 2014, p. 107) Likewise, the Association of Universities Entrusted to the Society of Jesus in Latin America (AUSJAL, in Spanish) has been working since 2006 on its own concept of social responsibility, as well as on indicators and instruments for its evaluation. AUSJAL defines USR as “the ability and effectiveness of the university to respond to the transformation needs of the society in which it is immersed, through the exercise of its substantive functions: teaching, research, extension and internal management” (AUSJAL, 2019). This definition becomes more interesting from the point of view of the diffusion of humanistic management as a way to contribute to some of the targets of the sustainable development goal (SDG) 4. This goal is about Quality Education and on its target 4.7 says: “By 2030, ensure that all learners acquire the knowledge and skills needed to promote sustainable development, including, among others, through education for sustainable development and sustainable lifestyles, human rights, gender equality, promotion of

USR in promotion of human business 139 a culture of peace and non-violence, global citizenship and appreciation of cultural diversity and of culture’s contribution to sustainable development” (United Nations, 2020).

Initiatives in Latin American universities In terms of developing new initiatives, different universities in Latin America are aiming to provide proper academic education within a more responsible and humane management. By following this proposal, the Principles for Responsible Management Education (PRME) were released in 2007. Supported by the United Nations and the Global Compact, they seek the commitment of universities to offer responsible and ethical education of both undergraduate and graduate students in administration schools. The six principles of PRME are the following: 1 Purpose: Universities that adopt PRME principles are committed to the ethical and responsible education of future graduates in the administration field, so that wherever they are, they promote businesses’ sustainability. 2 Values: Social responsibility, understood as a value that triggers other actions or decisions, must be included in USR. 3 Method: The teaching–learning methodology seeks to generate experiences that encourage students’ social responsibility. 4 Research: Research represents another impact element on USR and, from there, PRME participants commit themselves to carry out research projects that lead to a greater understanding and practice of sustainability in companies. 5 Partnership: In order to have an impact, it is necessary to take organisations through the forums in which universities participate. It is also important to form alliances between corporations and universities that promote social responsibility. 6 Dialogue: The university is and must be a forum for open debate on these issues, in order to encourage the critical thinking and commitment shared/found/of different stakeholders. Every university that participates in PRME must write a letter to ensure the strict commitment to these principles and report periodically on the actions taken to fulfil said provisions. Among some Latin American countries (Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay and Venezuela (Bolivarian Republic of)), there are 106 educational institutions1 that work under the PRME initiative (PRME Secretariat, 2009a). Moreover, 25 institutions out of those 106 are PRME Champion, which means that they are in charge of leading and promoting both reflection and change processes that contribute

140  Alfonso Ernesto Benito Fraile et al. to enhance the Global Compact and the social responsibility within different organisations (PRME Secretariat, 2009b).

Universidad de Monterrey and the AUSJAL network In order to ground these ideas on specific examples, there are two cases that can be interesting: Universidad de Monterrey The first of these cases is Universidad de Monterrey. Located in the city of Monterrey, Nuevo Leon, Mexico, this university celebrated its 50th anniversary in 2019. It is an institution known for the service it provides to society, since it engages in multiple activities in favour of social transformation and social entrepreneurship. For instance, we can take a look at the implementation program of the “Service-Learning” methodology executed in some of its subjects. In the curriculum of all Business School students, there is a subject called “Sustainability, Ethics and Social Responsibility in Business.” This subject is taught by using the “Service-Learning”2 methodology, which consists of combining the theoretical–practical learning of the subject with a service project that contributes, with the application of the theory, to make a change needed in a community. As a result, students not only learn through the subject, but they become aware and contribute to the solution of a social problem. Throughout the course, students go through different stages: 1 Awareness: They become aware of the reality and the social problems existing within the community they seek to support. 2 Diagnosis: The first step is to approach the community so as to diagnose the situation and discern the problem that will be analysed throughout the semester, making sure that it is linked to the theoretical content of the course. 3 Design and Planning: Once the diagnosis has been made, the intervention is designed while the students, guided by their professor, plan how to properly develop the project. 4 Execution: Finally, the project and the intervention are carried out according to the planning, and with the adjustments that arise during the implementation of the project. 5 Closure: There must be a proper closure of the project, both with the community and with the class. On the other hand, there are, transversally, in all stages: 1 A process of reflection about what they experienced throughout the project.

USR in promotion of human business 141 2 The progress made is recorded as a log or project diary. 3 Finally, the results of each stage are evaluated based on the desired academic and service objective. This type of projects and methodologies contribute, on the one hand, to the development of professional competencies necessary for students so that, upon graduation, they can perform their professions (target 4.4 of goal 4), at the same time that they promote social and sustainable awareness; on the other hand, by they being able to contribute in another way to society (target 4.7 of goal 4). Association of Universities Entrusted to the Society of Jesus in Latin America (AUSJAL) network AUSJAL is a network of 30 universities all around Latin America (Argentina, Brazil, Colombia, Chile, Dominican Republic, Ecuador, El Salvador, Guatemala, Mexico, Nicaragua, Paraguay, Peru, Uruguay and Venezuela). These institutions are entrusted to the Society of Jesus (Jesuits), a Catholic religious order. This network has been working on USR since 2006 and is one of the few efforts made to generate instruments that allow the progress of USR. Through a network of peers in each university, they have developed different instruments for self-evaluation and evaluation of the USR that allow them to know the progress and impacts they are achieving. Therefore, in 2014, AUSJAL published the second edition of the Policies and system of self-evaluation and management of USR in AUSJAL. These policies entail five axes: 1 2 3 4 5

Students’ formation Creation and dissemination of knowledge Outreach and social projection programs University management University management in relation to its environment (Gargantini, 2014, p. 3)

AUSJAL’s contribution is in the document itself, which provides these self-evaluation indicators of social responsibility practices. This allows universities to become aware of what they are doing in their different areas of influence, and for the education of more humane professionals, with the ability to make responsible and sustainable decisions, supporting the achievement of target 4.7 of Goal 4, of the SDG.

Conclusions The ethical formation of undergraduate and graduate students in administration is a concern that has preoccupied business schools for many years.

142  Alfonso Ernesto Benito Fraile et al. In education, universities have a vocation of service to society, since they form the professionals who will occupy different positions in the organisations of its community. A vocation that implies a responsibility about what is the profile of the professional of the company that joins society protected by a university degree. A professional who is increasingly expected to act hand in hand with work ethic and responsibility, by taking into account the social, economic and environmental impacts of their decisions. For this reason, and together with the increasing relevance of social responsibility in other guilds, different universities in Latin America and other parts of the world must become aware and reflect on their social responsibility. A reflection that leads to the development of self-evaluation instruments and learning methodologies to experience responsibility and sustainability in the professional development of the institution itself and its students. On the other hand, the initiatives of Latin American universities that were presented, seek to give students not only technical training. They seek to sensitise future professionals with the value of the human being. Open the eyes of the students so that, putting the dignity and well-being of people at the centre (Pirson, 2017), they work to create a society and companies that generate the necessary structures for this – a dignity and well-being, not at any price, but in a sustainable way and in harmony with the planet.

Notes 1 The list of PRME supporting institutions is available at the following link, retrieved August  26, 2019: www.unprme.org/participation/search-participants. php?search=Search&nameparent=&country%5B%5D=Argentina&country%5 B%5D=Bolivia+%28Plurinational+State+of%29&country%5B%5D=Brazil&co untry%5B%5D=Chile&country%5B%5D=Colombia&country%5B%5D=Cost a+Rica&country%5B%5D=Ecuador&country%5B%5D=El+Salvador&country %5B%5D=Guatemala&country%5B%5D=Honduras&country%5B%5D=Mex ico&country%5B%5D=Nicaragua&country%5B%5D=Panama&country%5B %5D=Paraguay&country%5B%5D=Peru&country%5B%5D=Uruguay&countr y%5B%5D=Venezuela+%28Bolivarian+Republic+of%29&from=&to=&utype= sig&sort=cp&dir=desc 2 Projects carried out with the “Service-Learning” methodology in different subjects are available at the following link: www.udem.edu.mx/Esp/Vida-Estudiantil/ Documents/aprendizaje-en-el-servicio.pd

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USR in promotion of human business 143 Cortina, A. (2000). Ética mínima. Tecnos. Franceschini, L. et  al. (2015). Rising leaders on environmental sustainability and climate change: A global survey of business students. Yale Center for Business and the Environment, Global Network for Advanced Management, and World Business Council for Sustainable Development. http://cbey.yale.edu/sites/default/files/ Rising%20Leaders%20on%20Environmental%20Sustainability%20 and%20 Climate%20Change%20Nov_2015.pdf. Gargantini, D. (Coord.). (2014). Políticas y sistema de autoevaluación y gestión de la responsabilidad social universitaria en AUSJAL. Editorial de la Universidad Católica de Córdoba. Hirsch, E. D. (2001). Seeking breadth and depth in the curriculum. Educational Leadership, 59(2), 22–25. Holland, N., & Vasquez, G. (1999). The internationalisation of an undergraduate program using reciprocal distance education. Journal of Engineering Education, 4, 415–419. Laszlo, C., Waddock, S., & Sroufe, R. (2017). Torn between two paradigms: A struggle for the soul of business schools. AI Practitioner, 19(2). Lundavall, B. A. (2000). Understanding the role of education in the learning economy. In OECD (Ed.), Knowledge management in the learning society. OECD. Pirson, M. (2017). A humanistic perspective for management theory: Protecting dignity and promoting well-being. Journal of Business Ethics, 159(1), 39–57. doi: 10.1007/s10551-017-3755-4 PRME Secretariat (2009a). UNPRME: Participation. UNPRME. Retrieved August 26, 2019, from www.unprme.org/participation PRME Secretariat. (2009b). UNPRME: How to engage. UNPRME. Retrieved August 26, 2019, from www.unprme.org/how-to-engage/index.php Sims, R. R. (2002). Business ethics teaching for effective learning. Teaching Business Ethics, 6(4), 393–410. United Nations. (2020). Education  – United Nations sustainable development. United Nations. www.un.org/sustainabledevelopment/education/ Vallaeys, F. (2014). La Responsabilidad Social Universitaria: un nuevo modelo universitario contra la mercantilización. Revista Iberoamericana de Educación Superior, v, 105–117. doi: 10.22201/iisue.20072872e.2014.12.112 Vallaeys, F.,  & Álvarez Rodríguez, J. (2018). Hacia una definición latinoamericana de Responsabilidad Social Universitaria. Aproximación a las preferencias conceptuales de los universitarios. Educación, XXI, 22(1), 1–26. doi: 10.5944/ educxx1.19442 Wymer, W., & Rundle-Thiele, S. R. (2017). Inclusion of ethics, social responsibility, and sustainability in business school curricula: A benchmark study. International Review on Public and Non-Profit Marketing, 14(1), 19–34. Zavala, R. L. (2013). Ética profesional en la formación universitaria. Perfiles Educativos, 35(142), 15–24.

10 Conceptualisation of human dignity The evolution of the concept and its applicability in business through a humanistic lens David Capistrán Human Dignity is a construct that has been studied by many authors and viewed from different angles. Still, it seems to be an ambiguous term that it is rarely defined (Colle et al., 2015; Lee, 2008; Mattson & Clark, 2011). Mea and Sims (2019) defined Human Dignity as the idea that every human being has a transcendent value that resides within his or her essence. They see it as an indispensable aspect of humanity. For them, humans are the ends in themselves, and as individuals, they have a right to treatment that reflects a deep respect for their human rights. Human Dignity is defined as the ability to establish a sense of self-worth and self-respect as well as the ability to respect others (Pirson, 2014; Hodson, 2001). Similarly, Lee (2008) sees dignity as the state of being treated with respect or honour, with a sense of selfworthiness and self-esteem. Pirson (2014) explains that the concept arises from the universal vulnerabilities human beings experience through life, and that people will earn dignity through their actions. Later, Pirson et al. (2016) state that human dignity is inherent and universal. Kipper (2017) sees human dignity as a matter that affects every human being. This issue transcends all other levels of social analysis, as being an equal member in the realm of subjects and authorities of justification. Melé (2015) explains that human dignity is the idea that every human person is worthy of esteem, honour, and respect. Bolton (2007) and Sayer (2007) share ideas about dignity; their concept of human dignity is an ultimate value for understanding the conditions of work and labour. Mattson and Clark (2011) defined human dignity as a subjective experience of well-being, contingent on the collective sum of (inter) individual experiences of values. They also stated that it serves as a common ground in our efforts to identify and secure humanity’s local to global common interests in an increasingly interconnected world. Finally, the International Labour Organisation (ILO, 1974) defines dignity as a fundamental human right. ILO states that all human beings, irrespective of race, creed, or sex, have the right to pursue both their material wellbeing and their spiritual development in conditions of freedom and dignity, of economic security, and of equal opportunity.

Conceptualisation of human dignity 145 Dignity is the ability to establish a sense of self-worth and self-respect and to appreciate the respect of others (as expressed before), Randy Hodson (2001) wrote this statement on his book: Dignity at Work; he states that dignity exists in different spheres. The first one is the political sphere, which involves striving for democracy and justice; the second one is the economic sphere, which refers to the demand for a living wage and equal opportunities; and the last one is dignity in the workplace, through acts of resistance against abuse and an equally strong drive to take pride in one’s daily work. He further states that dignity is the ability to establish a sense of self-worth and self-respect to gain others’ recognition and respect to ensure well-being. Sayer (2007) thinks that being dignified is about to be in control of oneself, competently, appropriately exercising one’s powers and autonomy. Other authors (Lucas et  al., 2013) defined dignity as an ultimate value that has long been called upon – both explicitly and implicitly – to understand the conditions of work and labour. They went farther and secure that the workplace dignity is a central concern for workers, scholars, activists, global business partners, and leaders. In their study, and based on Bolton (2010), Lucas et al. (2016) see that dignity is achieved in the workplace when individuals are treated as valuable rather than as a means to an end. They define workplace dignity as the ability to establish a sense of self-worth and self-respect of others. They divide the construct of workplace dignity as a dignity happening in work and the dignity happening at work. Dignity in work includes subjective factors such as autonomy, meaningful work, and respectful social relations; these factors form the deep meaning and esteem that are gained by engaging in labour. It also includes objective factors such as secure terms of employment, safe and healthy work conditions, rewards, and equal opportunity; these conditions provide material and symbolic recognition to workers, acknowledging their inherent humanity and instrumental value. During 1985, Donald Kirby wrote an article on employee rights and human dignity. He stated that employee rights could be approached in many different ways (legal, scientific, political, economic, theological, and philosophical). Kirby describes dignity (in a theological way) as something that is structured (either in a good way or in a bad way). To determine what should be moral or not, individuals have to realise that human dignity always has a social context (Kirby, 1985). The task, to Kirby, was to restructure the status quo that was happening in those years (1980s) by being an instrument of creative change and doing whatever was possible to enhance the good of both individuals and society. Similarly, Hicks (2011) wrote, “individuals wanted to establish a culture of dignity in which everyone would be aware of how easy it is to inflict painful wounds on others’ dignity, people look forward to being together because they felt valued.” In 1986, Judith Buber Agassi wrote about how current jobs were considered harmful or “alienating work.” She refers to “alienating work” as jobs that cause mental, psychological, and/or psychosomatic damage to the

146  David Capistrán employee. Buber explained the alienating characteristics of work in terms of the ways employees reacted to these alienating characteristics. The forms that Buber described are: • • •

the dissatisfied employee (normally seen as a bored, limited, frustrated, and neglected employee; he or she reacts with absenteeism or sabotage), the monotonous employee (his/her principal characteristics are psychosomatic fatigue, insomnia, nervousness, gastric disorders, apathy, and/ or aggressiveness), and the instrumental adaptation to work (resigned) employee (he or she sees the job as an instrument of survival; he or she is characterised with mental stagnation, low self-esteem, social passivity, and inactivity).

Buber described organisations’ disregard for the common person’s basic psychological needs in many jobs. At that time, a violation of dignity was not a topic for discussion. Today, Buber’s ideas, compared to Hicks’s ideas (2011), show that a major source of anger, resentment, and bad feelings amongst people who had to work together could be traced back to incidents where individuals felt that their dignity had been violated. This is a good segue into digging deeper into the main ways to operationalise dignity in organisations. Another way to see dignity is to glance at culture, Lucas et  al. (2013) contrasted the Asian context and the Western context about their concept of dignity and how dignity is achieved. In the Asian context, achieving dignity depends upon the relationships that individuals have with others in the workplace; dignity is not guaranteed. Normally, denial of dignity results in shame or self-disappointment for not earning respect from others. On the contrary, Western cultures have a sense of entitlement for dignity at work (it is subjectively and individually perceived). Hodson (2001) specifies that working with dignity entitles two different meanings: the first one is that people have inherent dignity as a result of being human; the second one is that people earn dignity through their actions. Hodson’s declaration can be considered a basis for what Lucas et al. are discovering in their research. One important statement was expressed by Sayer (2007), to have dignity is to be treated as an end in oneself and not merely as a means to someone else’s ends or as a substitute for someone else. Sayer (2007) stated that, by definition, employees are hired as a means to their employers’ ends, not out of a sense of benevolence or respect. Both employees and those with whom we do business may also be substitutable by others. Not directly as a response, Hicks & Waddock (2016) concluded that it is not just the dignity of people what matters, but equally importantly, the dignity of our enterprises, institutions, nations, and the very planet itself. In some way, individuals needed to be aware that, at certain jobs, the main cause for struggle might be for a community instead of their own dignity, just because they already have it, it is inherent.

Conceptualisation of human dignity 147 Doménec Melé (2013) developed the notion of “Human Quality Treatment” (HQT). He suggested five degrees or levels of HQT, which can be distinguished within organisations. It entails acting with respect for human dignity and rights, caring for individuals’ problems and legitimate interests, and fostering their personal development. These five levels are: (1) maltreatment (blatant injustice through abuse of power or mistreatment), (2) indifference (disrespectful treatment through lack of recognition of people’s personhood and concern), (3) justice (respect for persons and their rights), (4) care (concern for people’s legitimate interests and support for them in resolving their problems), and (5) development (favouring human flourishing, mutual esteem, and friendship-based reciprocity). In 2014, Melé and Ogunyemi defined the term “organisational humanising culture” as those organisational cultures which were appropriate to the human condition and fostered human fulfilment; he presented four attributes that conformed to the construct “organisational humanising culture”: (1) recognition of the person in his or her dignity, rights, uniqueness, and sociability capacity for personal growth, (2) respect for persons and their human rights, (3) care and service for persons around one, and (4) management towards the common good. Pless et al. (2017) tried to define dignity in terms of arts and ethics. In their research, they gathered the opinions and results of philosophers and researchers about dignity. They proposed to open the door to a broader discussion of human dignity in business, suggesting that visual and performing arts can play a vital role in promoting dignity. They see the concept of human dignity as playing a prominent role in debates on poverty alleviation, welfare reform, and well-being at work; for them, dignity has an essential role as a moral source and as the ultimate objective of humanising organisational cultures, workplaces, and relationships. They understand dignity as an unconditional feature of the human condition, inherent in and owed to every human being, irrespective of race, gender, age, status, profession, or nationality. Another conclusion from Pless et al. (2017) confirms that human dignity involves recognition of a person’s excellence. The authors propose that the radical mutuality and reciprocity of the concept, and its bivalent character as both moral source and objective, are best explored through an ethics of recognition. Also, they describe dignity through the lens of social science, “dignity is a word that is continually used to express concern about various aspects of work” (Bolton, 2007, p. 3). And finally, the authors implement a classification based on three approaches to describe dignity: concerning status, as inherent to the human condition, and as the dignity of action. As it has been read, dignity has a close relationship with the term values; several authors discuss this relation. Pirson (2014) relates human dignity to all the priceless aspects of humanity (character, virtue, integrity, moral, physical, psychological, knowledge, wisdom, love, trust, and forgiveness). Mattson and Clark (2011) considered dignity to be an antecedent,

148  David Capistrán a consequence, a principle, and an experience of both a contingent and a non-contingent exhibition. They see human dignity as a conception in value terms, understanding values as power, wealth, well-being, respect, integrity, skill, enlightenment, and affection, which are sought and shared by people through cultural and institutional arrangements.

Approaching and owning dignity Different approaches to reaching dignity have also been discussed through literature. Lasswell and McDougal (1992) thought that the commonwealth of human dignity was achieved when as many people as possible were involved in deciding what the community ought to produce, in terms of both welfare and deference values. Also, the community is successful in producing these outcomes when the people of that community share broadly in the benefits. Nussbaum (2006) defended the idea that multiple capabilities were needed to lead a life with dignity, in which human beings find fulfilment in relations with others, and where people cooperate, not just because of mutual interests and advantage but because it is the only way to lead a fully human life of dignity. Finally, she added that some living conditions provide people with a life that is worthy of human dignity while others do not. Hicks (2011) stated that dignity entailed the recognition of others, a view of social life that was inclusive and safe for all, a commitment to the independence of others, as well as to accountability. Hodson (2001) identified four categories of dignity-diminishing practices that contributed to the experience or denial of dignity at work: mismanagement and abuse, overwork, incursions on autonomy, and contradictions of employee involvement. Lucas et al. (2013) saw the achievement of dignity at work as essential for the overall self-worth as a result of the larger proportion that work would occupy in people’s lives. Achieving this sense of dignity might not be easy. They thought that the achievement of dignity becomes inherently problematic in employment relationships because people are hired to fulfil an instrumental role. Forst (2013) and Kipper (2017) specified that possessing human dignity meant being an equal member in the realm of subjects and authorities of justification. To act with dignity means being able to justify oneself to others; to be treated in accordance with dignity means being respected as an equal member, and to treat others in ways that violate their dignity means regarding them as lacking any justification authority. Kipper (2017) thought that Human Dignity is respected and appropriately considered when the actual participants of a particular discourse concerned with an issue are fair representatives of arguments that even those not participating, yet affected, would bring forward. Kipper said that those without a voice are categorically excluded as discourse participants; thus, their dignity is not granted. De Colle et al. (2015) found two connected uses of dignity: treating others with dignity and acting with dignity. They thought dignity was connected

Conceptualisation of human dignity 149 with our humanity in a holistic sense. Treating someone with dignity is not to treat them as a purely economic or a purely political being. Treating someone with dignity means to treat them as fully human, capable of body, mind, spirit, emotion, or whatever set of categories one uses to define humanity. They determined how to promote the idea of human dignity in organisations, encouraging leaders to see organisational members and stakeholders as capable of living lives of dignity, of being more fully human inside the organisation. These ideas made them believe that we are more likely to build organisations that can enable us to live lives worth leading. De Colle et al. (2015) shared the idea that, at a certain point, organisations will become much more human, more authentic, and simply better places worthy of human beings. In another vein, Sison et al. (2016) thought that dignity was developed to fullness when human beings could exercise reason and free choice through competent and skilful action. Donaldson and Walsh (2015) defined the construct “dignity threshold” as the fulfilment of human needs; they denoted that, to ensure human survival at the individual level as well as at the group level, a model of human nature needed to be integrated with a universal dignity threshold. Pirson (2020) expressed that the dignity threshold represented a moral claim but functioned as a key survival mechanism; he thought that a humanistic model needed to include a conceptual baseline to ensure basic human dignity as a matter of balancing four drives (drive to acquire, drive to bond, drive to comprehend, and drive to defend). Pirson et al. (2019) argue the need to recognise the concept of dignity as a category of unconditional and intrinsic value for every human being, expressing that pursuing different dignity thresholds should be a part of every business activity that seeks to improve human conditions within their facilities. Human Dignity has been seen as a deep emotional appeal to people’s daily experiences through notions such as honour and respect (Kamir, 2002), meaning that dignity is an important aspect of people’s lives. The notion of dignity represents a missing link in the quest for social welfare (Pirson, 2014). Human Dignity has been seen through time as an idea often included in human affairs (Howard & Donelly, 1986) and as an emotional link with diverse cultures worldwide (Donelly, 1989). Rosen (2012) said that dignity had been used (mostly) in the political theory, especially in the area of human rights in general and in the United Nations Universal Declaration of Human Rights. Hicks (2011) thinks that by assuming that all humans have dignity, we are much likely to solve our conflicts in a way that is positive for all, and see dignity violations as a permanent source of conflict. Pirson et al. (2016) related the meaning of dignity to business ethics. Mattson and Clark (2011) developed four conceptions of Human Dignity to achieve enhanced common ground and improve policies: a metaphysical justification for human rights and duties, a virtuous comportment or behaviour, a socially and psychologically rooted perspective of other, and a subjective and felt experience. Dignity has been viewed as a justification for rights. It is

150  David Capistrán based on two constructs: (1) the bestowing of rights (simply by being human we are all special, we deserve rights: entitlement), and rights are a means to the end of realising human dignity (rights enable us to fully develop those human traits of reason, morality, and autonomy); (2) on the other side, there is an emphasis on peoples’ duties and obligations rather than on their rights (Howard & Donelly, 1986). Dignity arises from fulfilling these obligations, which involves acknowledgement from others, so personal dignity could be constructed around the notions of honour. The second view of dignity from Mattson and Clark is dignity as a virtuous comportment, in which dignity has been identified with certain behaviours, or comportments, as well as with certain roles and identifications. Therefore, dignity might be earned or expressed in terms that are socially and culturally relevant to others. Mainly, dignity is socially constructed around the presentation of the individual’s self, and the reciprocal response of others; the fulfilment of dignity will make a better world for all in this vein. The third view of dignity from Mattson and Clark is dignity as a perspective of other people. This is more about granting dignity to others; this perspective of others shapes social interactions and has significant implications for how people treat each other. In this view, the concept of dignity is related to group dynamics and stereotyping. Finally, the fourth view of dignity from Mattson and Clark is dignity as a subjective experience. Dignity is the subjective integration of many facets of human life; it is something to be realised through the individual human experience of autonomous choice in the political area; of happiness, well-being, self-esteem, and psychological integrity in the psychological area; of belonging to a group or culture, and adhering to a set of norms in the social area; and of access to security, food, shelter, and physical integrity in the material area. Donna Hicks, a psychologist who dedicated her life to the resolution of conflicts at an international level, started to see some patterns at her workshops or sessions. What she saw was that many, or at least one, of the parties involved felt diminished or outraged; they felt anger and confusion over the situation. That was when Donna realised those individuals felt their dignity was violated. As mentioned throughout this chapter, dignity as a concept has many theoretical definitions. This work prioritised on Donna Hicks’ (2011) definition from her book, Dignity: the essential role it plays in resolving conflicts: “Dignity is an internal state of peace that comes with the recognition and acceptance of the value and vulnerability of all living things; it is the feeling of inherent value and worth.” Much of her research derives from the question: what it meant to be a human? She answers that one of the humanity’s defining characteristics is that we are feeling beings, and we can easily affect how others feel. Humans have an inborn desire to be treated well because we are psychologically programmed to believe that our lives depend on it. Domènec Melé (2013) has a similar thought: human dignity expresses the idea that every human individual is intrinsically worthy; therefore, everyone deserves respect and consideration. Thus, a person can never be treated as a thing or a

Conceptualisation of human dignity 151 commodity. The difference with Hicks is that she notices a difference between dignity and respect, in which we are born with dignity, but we earn respect. In her book, Hicks (2011) referred to the research of Evelin Lindner and Linda Hartling, who saw that some humans turned others into tools (people experiencing humiliation by having their dignity violated). With this idea, Hicks noted that being treated with dignity triggers the limbic system to release pleasant feelings of being seen, recognised, and valued and that experiencing a violation of dignity defined the individual as someone who was highly charged emotionally. Hicks found that, importantly, the brain usually does not know the difference between a wound to our dignity and a physical injury. To our brain, it is still a wound, and it gives the perfect support to her research. Within their research, conducted over time, Pirson and Hicks developed (both) their model to describe (each) their understanding of their respective interests: dignity for Donna and well-being for Michael. The dignity model will function as a basis for this research (strengthened by the four drivers from Pirson) and will give the needed characteristics to describe and operationalise dignity in organisations through a humanistic lens.

The dignity model Donna Hicks (2011) stated that leading with dignity means leaders need to be aware of the emotional volatility that comes with experiencing an assault on one’s self-worth. Leaders must demonstrate that they know how to treat others with respect, to approach people whose dignity has been infringed, and take steps if their transgressions have affected the dignity of others, and how to maintain personal dignity. “The Dignity Model,” as Donna Hicks calls it, helps individuals understand the role dignity plays in their lives and relationships. Her model explains why there are physical and psychological injuries when others infringe our dignity. With her model, Hicks gives individuals the knowledge, awareness, and skills to avoid unknowingly harming others. Also, the model guides individuals on how to rebuild a relationship after a conflict and how to reconcile. It is a guideline to learn how to honour the dignity of others to demonstrate the care and attention for themselves and others. Being aware of dignity takes time and practice. Donna believes that the more we deliver dignity (respect the dignity of others), the more dignified we become (receive more respect for our dignity). Donna Hicks’ model is based on ten essential elements of dignity, which function as a guide to learn how to honour the dignity of others. These ten elements are:   1 Acceptance of identity: this element explains that an approach to people needs to be as being neither inferior nor superior; it gives others the freedom to express their authentic selves without fear of being negatively judged. It tells us to interact without prejudice or bias, accepting

152  David Capistrán how race, religion, ethnicity, gender, class, sexual orientation, age, and disability may be at the core of other people’s identities; basically, to assume that others have integrity.  2 Inclusion: its importance relies on making others feel that they belong, whether they are part of one’s family, community, organisation, or nation.   3 Safety: means to put people at ease at two levels: physically, so they feel safe from bodily harm, and psychologically, so they feel safe from being humiliated; also, it is important to help individuals to feel free to speak without fear of retribution.   4 Acknowledgement: it is giving full attention to people by listening, hearing, validating, and responding to their concerns, feelings, and experiences.  5 Recognition: it refers to validate others for their talents, hard work, thoughtfulness, and help; to be generous with praise, and show appreciation and gratitude to others for their contributions and ideas.   6 Fairness: implies treating people justly, with equality, and in an evenhanded way according to agreed-upon laws and rules. Usually, people will feel that their dignity has been honoured when they are being treated without discrimination or injustice.   7 Benefit of the doubt: it suggests treating people as trustworthy. It means to always start with the premise that others have good motives and are acting with integrity.   8 Understanding: stands for believing that what others think matters. Basically, it refers to giving individuals the chance to explain and express their points of view and to listen actively to understand them.   9 Independence: it encourages individuals to act on their own behalf so that they feel in control of their lives and experience a sense of hope and possibility. 10. Accountability: indicate individuals to take responsibility for their actions. If someone has violated another’s person’s dignity, the important thing to do is to apologise to others and commit to changing hurtful behaviours. The Dignity model (Hicks 2011) will be the lamp to shed some light on practical dignity. It will be strengthened by Pirson’s (2017) four drives because of their similarities. Based on the description and theory of dignity, the dignity model will promote more structural research and will help to delineate the research area.

Humanism, now and then In his chapter, Melé (2003) explains that management could be called humanistic when its outlook emphasises common human needs and it is oriented to the development of human virtue. He defines that humanistic management should motivate people taking into account the need for growing as a person through human virtues, and that it strives to build up a community of persons.

Conceptualisation of human dignity 153 Later, also Melé (2009) expresses that humanism in business requires treating every employee with respect, fostering an ethical climate, and endeavouring to provide working conditions which would favour the psychological and physical well-being of employees. Fromm (1961) defines humanism as a system centred on man, his integrity, his development, his dignity, his liberty. On the principle that man is not a means to reach this or that end, but that he is himself the bearer of his own end. Not only on his capacity for individual action but also his capacity for participation in history, and on the fact that each man bears within himself humanity as a whole. Neilson (1950) drawing on Gerald Walsh, thinks that the root idea of humanism is that everyone has the right, if not the duty, to seek human happiness in a human way. Aktouf (1992) believes that a human being should be considered as inseparable from speech, symbols, meaning, society, emotions, and free will (even if relative) before becoming a resource for the firm and the “maximum production of exchange value.” Such a person surely comes closer to his or her humanity; finally, Fromm (1961) thinks of human nature as a result of self-development through education and freedom. All these definitions lead me to try to think of individuals in organisations and ask myself if employees really look/feel happy with their way of working. Do business models of organisations involve as part of their objectives to centre on their employee’s integrity or on their development? Nida-Rümelin (2009) thinks that humanistic management is centred in human development, human integrity, human dignity, and human liberty. Chanlat and Bédard (1997) and Melé (2009) agree in considering that communication is an essential tool of humanistic management, specifying it for the communication process of the company. Aktouf and Holford (2008) see humanistic management as an approach that needs to take into consideration the relationship between language and work, while Von Kimakowitz et al. (2010) define humanistic management on the basis of three interrelated dimensions: unconditional respect for human dignity, an ethical reflection in all of business decisions, and a dialogical extension of ethical reflection on corporate conduct. For them, humanistic management is the pursuit of business practices that seek to create sustainable human welfare. Pirson and Lawrence (2010) suggest new ways to understand humans, specifically renewing leadership and management theory to design organisations and formulate business strategy: they call it humanistic theory. We as individuals, need to rethink about how people are understanding their rights and who we are inside organisations as human beings. The main questions that researchers from the humanistic management paradigm need to ask themselves are: how do organisation care about humans? How do organisations preach human dignity? My intentions with this chapter are to answer these questions by analysing best practices from different companies with a humanistic view, to clarify and obtain the perspective of human dignity by both employees and employers, and to see how organisations are managing and treating their employees.

154  David Capistrán

Dignity as a part of the humanistic management model One important group of scholars who are currently studying dignity is the humanistic group, specifically Michael Pirson. Pirson and Lawrence (2010) suggest new ways to understand human beings, specifically renewing leadership and management theory to design organisations and formulate business strategy: they call it a humanistic theory. Pirson’s (2017) model (Figure  10.1) is based on the four human drives that need to be balanced to ensure basic human dignity through the dignity threshold. These drives are: • the drive to acquire (dA), which is more related to life-sustaining resources. It explains that humans have a fundamental drive to acquire what they need to survive; • the drive to defend (dD) against all threatening entities, focusing not only on physical necessities but also on relationships, cooperative efforts, and world views; • the drive to bond (dB), which describes the need to form long-term, mutually caring relationships with other humans; and • the drive to comprehend (dC), which is more related to understanding or making sense of our environment regarding our existence.

Wellbeing

Dignity Threshold

dA

dD

dB

dC

Figure 10.1  Four drives from the humanistic management model Source: Pirson (2017)

Conceptualisation of human dignity 155 The first two (dA and dD) are founded in all basic instincts (needs) with some capacity to sense and evaluate their surroundings, and the last two drives (dB and dC) are newer ones that evolved to an independent status only in humans. These two bonds differentiate humans from other species and made the model important because they represent the motives that underlie all human decisions. To protect dignity, fulfilment of basic needs regarding the four drives needs to be included through a dignity threshold. This model is an opportunity to know what it means to be human. Pirson (2020) stated that reaching the dignity threshold represents a key survival mechanism for human beings, and it serves as a basis for organisational leaders and managers to develop new business models. As Pirson et al. (2016) confirm, many organisations lack meaning and purpose; rethinking management should be based on a humanistic management paradigm that focuses on the notion of human dignity and the promotion of well-being. For Pirson et al. (2019) humanistic management prioritises dignity to promote societal flourishing, as in fact they confirm that HM has the protection of dignity and the promotion of well-being as its main concern. Pirson’s humanistic management model is an exemplary guideline for companies to find, promote, and protect human dignity inside organisations. The problem here lies in a lack of literature on practices based on the humanistic model and on the lack of awareness to protect, promote, and recognise dignity. One of the main objectives of this work is to see the dignity model, strengthened by the four drives from the humanistic management model, as a way to discover practices that lead to reach the dignity threshold, orientate organisations to some practices that let them be more “human,” and dignify their practices.

Analysis of the data To analyse and encounter the actual status and perception of dignity in Mexican business structures, two types of information were analysed: primary information (in-depth interviews and surveys) and secondary information (database from AIM2Flourish). The main objective of this work is delimitated to the secondary information research, which involved searching for practices performed by organisations in northern Mexico that are working to fulfil any of the sustainable development goals (SDGs). I aligned Hicks’ dignity model and Pirson’s four drives of the humanistic management model, the five approaches of the 2030 agenda, the objectives of the SDGs, and the Global Compact principles, to the companies’ overall activities to deliver a guide for companies so they could have a clear definition of dignity and a broader way to reach well-being. The 2030 agenda of the ILO covers the three dimensions of sustainability: economic, social, and environmental. It has 17 SDGs based on the progress made through the Millennium Development Goals (MDGs).

156  David Capistrán In 2015, all member states of the United Nations adopted the 2030 Agenda for Sustainable Development, which is a plan of action for people, planet, and prosperity that has as its principal objective and as a requirement for sustainable development, to eradicate poverty in all its forms by year 2030. The tactic was (and is) to gather stakeholders from around the world to work as partners to fulfil this agenda. We as individuals are bound to secure our planet and make of it a sustainable and better place to live, the 2030 Agenda tries to fulfil this objective by creating 17 objectives that have as their principal care the main approaches to people, planet, prosperity, and the actions for completing and bonding the objectives between them. Based on the MDGs and in completing the goals that weren’t achieved, 17 objectives and 169 targets were developed as a manner to demonstrate the seriousness of the 2030 agenda. The 2030 agenda considers people and the planet at its centre. It provides the international community with the impetus it needs to work together to face the problems of humanity, including those related to the world of work. The 17 objectives are: GOAL 1: No Poverty, GOAL 2: Zero Hunger, GOAL 3: Good Health and Well-being, GOAL 4: Quality Education, GOAL 5: Gender Equality, GOAL 6: Clean Water and Sanitation, GOAL 7: Affordable and Clean Energy, GOAL 8: Decent Work and Economic Growth, GOAL 9: Industry, Innovation and Infrastructure, GOAL 10: Reduced Inequality, GOAL 11: Sustainable Cities and Communities, GOAL 12: Responsible Consumption and Production, GOAL 13: Climate Action, GOAL 14: Life Below Water, GOAL 15: Life on Land, GOAL 16: Peace and Justice Strong Institutions, and GOAL 17: Partnerships to achieve the Goal. Specifically, objective 8 has to do with decent work and economic growth, and its objective is to promote economic growth, sustained, inclusive and sustainable, full and productive employment, and decent work for all (stakeholders). This objective is designed to eliminate poverty through stable and well-paid jobs. The question is: how is it that organisations will design stable jobs since around 470 million jobs are needed (with the previously mentioned characteristics) in order to eradicate poverty? Ultimately, thinking about this goal (on the part of governments) is a win to win with society and organisations since full and stable employment contributes to the growth of a country. Following the guidelines of the 2030 agenda will help to establish how decent jobs for individuals are going to be developed within organisations and will confirm that companies can think on the promotion and protection of well-being of their employees. The United Nations: Global Compact, a voluntary initiative based on CEO commitments to implement universal sustainability principles and to take steps to support UN goals, identifies itself like “the world’s largest corporate sustainability initiative.” It is a call to all companies to align strategies and operations with universal principles on human rights, labour, environment, and anti-corruption; it also takes action to advance societal

Conceptualisation of human dignity 157 goals. UN Global Compact’s main objective is to help organisations to see them as a force for good by committing to sustainability, taking shared responsibility for achieving a better world. Its vision is aimed to mobilise a global movement of sustainable companies and stakeholders to create the world we all want. Global compact support companies to: a Do business responsibly by aligning strategies and operations with ten principles concluded by Global Compact (human rights, labour, environment, and anti-corruption). b Take strategic actions to advance in completing and actioning societal goals, by collaborating and innovating. The ten principles of the UN Global Compact are derived from the Universal Declaration of Human Rights, the ILO’s Declaration on Fundamental Principles and Rights at Work, the Rio declaration on Environment and Development, and the United Nations. By incorporating the ten principles of the UN Global Compact into strategies, procedures and policies, and establishing a culture of integrity, companies are not only upholding their basic responsibilities to people and planet but also setting the stage for longterm success. These ten principles are divided into four categories (human rights, labour, environment, and anti-corruption): Human Rights: Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; Principle 2: make sure that they are not complicit in human rights abuses. Labour: Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; Principle 4: the elimination of all forms of forced and compulsory labour; Principle 5: the effective abolition of child labour; Principle 6: the elimination of discrimination in respect of employment and occupation. Environment: Principle 7: Businesses should support a precautionary approach to environmental challenges; Principle 8: undertake initiatives to promote greater environmental responsibility; Principle 9: encourage the development and diffusion of environmentally friendly technologies. Anti-Corruption: Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery. The aforementioned research is a clear view to re-indicate how countries around the world are trying to do something to fulfil SDGs main objectives. At this thesis, prior research works as a basis to understand how the analysis was made and why it was important to the results found at the end. One of the main intentions of this work is to help in some way organisations to plan and organise their future activities, projects, programs with a sense of

158  David Capistrán well-being, and as a way to raise awareness amongst organisations to work in the direction of compliance with the SDGs. I decided to look only for organisations located in Mexico and specifically those in Nuevo León at the AIM2Flourish database. This study will be important for practitioners and researchers who want to develop new ways to measure or to perform (protect and promote) dignity in organisations. The scope of the research is restricted to companies in northern Mexico (Nuevo León) because the behaviour of organisations in this sector of the country will affect how other companies could incorporate dignity into their business models. The selected companies demonstrate how they are fulfilling dignity, theoretically, and practically. The aforementioned research is a clear view of how countries around the world could help to fulfil human dignity. In this thesis, prior research will form a basis for understanding how the analysis was made and why it was important to the results presented at the end. One of the main intentions of this work is to help organisations to plan and organise their future activities, projects, programs, with a sense of well-being, and as a way to raise awareness amongst organisations to set goals for establishing human dignity. I only used stories analysed by students at the EGADE Business School (one of the most important business schools for graduate students in Mexico). A master’s degree student in business develops a better understanding of actual industry behaviour as well as a better understanding of northern Mexico. From the 2625 stories around the world, 151 met this study’s requirements, specifically the ones developed by students of EGADE Business School. Of those 151 stories, only 27 were developed in Nuevo León. These 27 innovations were analysed and distributed in a structure created based on the SDGs, the approaches to the 2030 UN agenda, and the global compact principles, all guided by the four drives of Pirson’s humanistic management model. The four drives (drive to acquire, drive to comprehend, drive to bond, and drive to defend) function as a basis to divide the SDG objectives to achieve a dignity threshold, and the global compact principles to work as a “law.” These organisations and their principles, mission, objectives, and structure work as a mandatory line to do better in a community, organisation, environment, etc. The principal objective is to give companies a guideline of activities that will bring them closer to promoting and protecting dignity inside organisations through a humanistic lens. Tables 10.1 and 10.2 indicate how the SDGs, the global compact principles, and the approaches to the 2030 agenda were divided and classified into the four drives of the humanistic management model. All activities were derived from the 27 innovations chosen from the AIM2Flourish platform, and demonstrate how, at a certain level, many of the companies in northern Mexico are working to demonstrate how dignity can be fully achieved by their practices to gather a sense of well-being. The main purpose of this analysis was to find a guideline that will follow what international organisations do/define to achieve dignity and well-being. This stage of the research

Conceptualisation of human dignity 159 focuses on delivering new ways to look for and fulfil dignity inside organisations. Those practices were gathered from questioning the 27 innovations already analysed about their actions and practices. Examples include: the drive to acquire will be activities of recycling and reusing materials, which are empowering employees, creating more job opportunities, giving women the opportunity to grow professionally, giving more flexitime to all, and offering mentoring and healthcare programs. The drive to defend will be activities in family–friendly companies that focus on making sure all people matter, regardless of disability; doing networking events, giving the opportunity to use digital platforms at the daily work, offering local employment, training programs, sustainable activities, and alternative fuels for production. The drive to bond will be activities that form partnerships with governments, non-profit organisations, universities, and communities. The drive to comprehend will be activities that transform residues into something useful, reduce gas emissions, use of materials that do not damage the environment, and avoid overproduction. One major overview of this analysis is that some companies were working on 16 of the 17 SDG goals. The only exception was number 16: Peace, Justice, and Strong Institutions. This stage of the analysis demonstrates that companies try to perform activities that have fundamental dignity, yet there is uncertainty about the meaning of dignity. At some point, companies are trying to fill the voids left behind by society or other companies. Tables  10.1 and 10.2 demonstrate the alignment of practices Mexican organisations already do with the SDGs goals, the principles from Global Compact, the UN approach following from the 2030 agenda, and the way activities are being classified into the four drives.

Conclusions Human Dignity has been a very sensible subject to practice but a controversial one in theory. Nowadays, practitioners are looking for new ways to operationalise their businesses, what they need to know and not forget is that their actions, and the way they handle organisations, will have a serious effect on communities and their employees. Due to the many definitions of dignity that exist throughout the literature (authors), any manager who seeks to carry out practices that safeguard the dignity of their employees, finds it challenging to understand the term and then search for the best approach so that their employees can realise that, in turn, their decisions and actions also affect others and, therefore, affect organisational dignity. Mexican organisations need to develop more practices with characteristics on defending their employees to reach the dignity threshold and achieve a balance between the four drives at a minimum level. Based on the functionality of the humanistic management model (four drives), there should be a balance between the four drives of the model

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Table 10.1 Structure of research for the analysis 4 drives MP

DRIVE TO ACQUIRE

Approach to PEOPLE the 2030 agenda SDGs

1: No Poverty

2: Zero Hunger 3: Good Health 4: Quality and Well-being Education

5: Gender Quality

*Affordable *Maximise *Reducing garbage *Teach how *More education land fields *Recycling to recycle employment (primary and *Empowering *Lower price *Teach basic opportunities financial) food banks supplement and survival for women *Sustainable *Empowering abilities *Teach *Business homes *Low food banks sustainability projects interest rates to *Security in *Affordable made only start a business and out of education for women *Empowering the company *Financial *Diverse communities *Healthcare education workplaces treatment *Mentoring *More centre for *Guidance flexitime jobs underprivileged Mexicans *Facilitate medical processes

Global Compact Principles

HUMAN RIGHTS 1: Businesses should support and respect the 2: Businesses need to make sure that they protection of internationally proclaimed are not complicit in human right abuses human rights

Source: Prepared by the author (2020)

Conceptualisation of human dignity 161

DRIVE TO DEFEND PROSPERITY

7: Affordable 8: Decent Work and 9: Industry, 10: Reduced and Clean Economic Growth Innovation, Inequalities Energy and Infrastructure

11: Sustainable Cities and Communities

*Processes *More flexitime jobs *Cloud *Buildings for *Cloud computing that recover *Family–friendly computing all types of to measure energy org *Stable tools disabilities use of water and fair income *Innovative *Mix-used *Construction (wages) *Training system to reuse buildings of sustainable and inclusion and recycle (footprint) buildings initiatives *Impulse *Adding new *Technology *Awareness of to local supply technology for easiest ecological footprint chain *Develop equipment to a communication *Sustainable ways competence and regular activity with all *Lowand activities leadership programs *Events for cost solution to *Sustainable *Security in and networking fight diseases areas *Better out of the company (propitiate *Solidarity infrastructure *Work–life balance collaboration) groups for pedestrians, *Empowerment to *Digital *Flexitime as cyclist, and vehicles employee activities platforms a strategy for *Creation of *Creation of giving job to all third parties to local employment create jobs *New *Technology (apps technologies as problem solving) training *Education that *Alternative fuels works also for for production activities outside the company LABOUR 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining

4: The elimination 5: The effective of all forms abolition of of forced and child labour compulsory labour

6: The elimination of discrimination in respect of employment and occupation

162  David Capistrán Table 10.2  Structure of research for the analysis 4 drives MP

DRIVE TO BOND

Approach to the 2030 agenda

PEACE

SDGs

16: Peace, 17: Partnerships for the Justice, goals and Strong Institutions -

Global Compact Principles

*Alliances with municipalities, associations, communities, schools, etc that ensure other activities at this model *Business models based on partnerships with governments, non-profit organisations, universities, and communities *Share best, legal, and fair experiences *Alliances that connect stakeholders

ANTI-CORRUPTION 10: Businesses should work against corruption in all its forms, including extortion and bribery

Source: Prepared by the author (2020)

Conceptualisation of human dignity 163

DRIVE TO COMPREHEND

ALLIANCES

6: Clean Water and Sanitation

12: Responsible Production and Consumption

13: Climate Action

14: Life below water

15: Life on land

*Innovative *Production out *Create *Create *Create technology processes to of residues technology technology in line with control water *Transform in line with in line with a sustainable *Having a residues into a sustainable a sustainable mission mission in something mission mission *Donations line with the useful *Use of *Recycling *Biodegradable to nonprotection materials that in avoiding products governmental of the do not damage pollution *Minimal organisations environment the environment *Reduction of environmental *Reforestation *Recycling *Obtaining gas emissions impact by *Use of materials ingredients or *Creation of production that do not materials in a green areas *Do not damage the sustainable way *Reduce overproduce environment for production the use of *Business *Obtaining *Awareness vehicles models that ingredients or of responsible protect the materials in a processes *Ask oceans sustainable way themselves if for production their processes *Biodegradable do not affect the products environment *Minimal *Create technology environment in line with a impact by sustainable mission production *Use of alternative *Encourage sources of energy planting trees *Friendly with *Research nature *Reuse of equipment (second use of life) *Circular economy *Sustainable production chains ENVIRONMENT 7: Businesses should support a precautionary approach to environmental challenges

8: Undertake initiatives 9: Encourage the to promote greater development environmental and diffusion of responsibility environmentally friendly technologies

164  David Capistrán (acquire, share, understand, and defend) at a minimum level so that the threshold of dignity for people can be reached. Establishing and developing a practical guide for the various activities/ practices needed to reach the threshold of dignity will give nearly every administrator a clearer path. The guide will show what to do or various activities to carry out. The best one would be the most helpful for fulfilling employee needs. These tables show the alignment between objectives, principles, and the four channels of the humanistic administration model applied and seen through different practices and actions. It helps confirm the main objective’s feasibility. There must be a culture in which everyone assumes that, as long as the others have integrity, employees must be able to recognise themselves as individuals. There must be a culture of inclusion, where others are involved in different decisions and in providing justice within the organisation; there must be respect and trust amongst all employees. Finally, employees must have complete freedom and confidence to apologise when they have made a mistake. The main question of this chapter is based on knowing Mexican employees’ perceptions of the recognition of their dignity through the organisation’s actions; also to focus on how these organisations manage to recognise dignity amongst their employees. The analysis indicated favourable results. The concept of dignity can be based on the fulfilment of certain SDG goals and the global Compact Principles, based on the interaction of four drives for individuals (acquire, bond, comprehend, and defend). The declarations and actions from the SDGs and the Global Compact principles will legitimise several organisational practices and classify them into the four-drive (Pirson, 2017) description to offer a guide for practitioners about reaching the dignity threshold. Linking these practices with the goals of the SDG’s and the global compact principles validates and gives strength to several organisations’ practices.

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166  David Capistrán Melé, D. (2015). Three keys concepts of Catholic humanism for economic activity: Human dignity, human rights and integral human development. In D. Melé & M. Schlag (Eds.), Humanism in economics and business. Perspectives of the Catholic social tradition (pp. 113–136). Springer. Mele, D., & Ogunyemi, A. O. (2014). Human quality treatment in SMEs run by Christian owner-managers. In Academy of management proceedings (Vol. 2014, No. 1, p. 16741). Academy of Management. Neilson, F. (1950). Humanism, yesterday and today. American Journal of Economics and Sociology, 9(2), 177–189. Nida-Rümelin, J. (2009). Philosophical grounds of humanism in economics. In H. Spitzeck, M. Pirson, W. Amann, S. Khan, & E. von Kimakowitz (Eds.), Humanism in business (pp. 15–25). Cambridge University Press. Nussbaum, M. (2006). Frontiers of justice. Harvard University Press. Pirson, M. A. (2017, September  14). Humanistic management: Protecting dignity and promoting well-being. Cambridge University Press. Pirson, M. (2020). A humanistic narrative for responsible management learning: An ontological perspective. Journal of Business Ethics, 1–19. Pirson, M. A. (2014). Reconnecting management theory and social welfare: A  humanistic perspective. In Academy of management proceedings (Vol. 2014, No. 1, p. 12245). Academy of Management. Pirson, M. A., & Lawrence, P. R. (2010). Humanism in business–towards a paradigm shift? Journal of Business Ethics, 93(4), 553–565. Pirson, M. A., Goodpaster, K., & Dierksmeier, K. (2016). Human dignity and business. Business Ethics Quarterly, 26(04), 465–478. Pirson, M., Vázquez-Maguirre, M., Corus, C., Steckler, E.,  & Wicks, A. (2019). Dignity and the process of social innovation: Lessons from social entrepreneurship and transformative services for humanistic management. Humanistic Management Journal, 4(2), 125–153. Pless, N. M., Maak, T.,  & Harris, H. (2017). Art, ethics and the promotion of human dignity. Journal of Business Ethics, 144, 223–232. Rosen, M. (2012). Dignity: Its history and meaning. Harvard University Press. Sayer, A. (2007). Dignity at work: Broadening the agenda. Organisation, 14, 565–581. Sison, A. J. G., Ferrero, I., & Guitián, G. (2016). Human dignity and the dignity of work: Insights from catholic social teaching. Business Ethics Quarterly, 26(4), 503–528. Von Kimakowitz, E., Pirson, M., Spitzeck, H., Dierksmeier, C., & Amann, W. (Eds.). (2010). Humanistic management in practice. Springer.

11 A win–win perspective from the firms to the BOP A Latin American approach Jesús Avila Martínez

Introduction The United Nations developed a plan to build a better world for the people and the planet by 2030. In order to achieve this plan, the 17 sustainable development goals (SDGs) emerged (United Nations, 2019). According to the United Nations, the SDGs are “a call for action by all countries – poor, rich and middle-income – to promote prosperity while protecting the environment” (United Nations, 2019). One of these SDGs is ending poverty, and to do so, one can look to those living in poverty with charity or, on the other hand, one can try to do business with them in a win–win approach, since firms can seek fortune doing businesses with this segment of the population, called from this approach, the base of the pyramid (BOP) that is composed by the 4 billion people with lower income around the world (Prahalad & Hart, 2002). Remarkably, the United Nations takes into consideration this approach by mentioning to ending poverty as one of their tasks, to “ensure significant mobilisation of resources from a variety of sources, including through enhanced development cooperation, in order to provide adequate and predictable means for developing countries” (United Nations, 2019). This cooperation includes governments, NGOs, firms, and the BOP itself (Prahalad & Hart, 2002). Even though the BOP is not homogeneous, it still has certain common characteristics amongst its members (Chikweche & Fletcher, 2012). These characteristics, as revealed by Mahajan and Banga (2005), are youthful populations, limited income, weak infrastructure, markets changing rapidly, small-size homes. Assuming that BOP behaviour is the same as that of the middle class could cause businesses to fail in catering to this market; even some people believe that the only thing the BOP cares about is price, and “that they will buy anything as long as it is inexpensive” (Ahmed, 2013). When approaching the BOP, both researchers and practitioners should not treat BOP consumers as homogeneous, but “acknowledging common constraints that can be found in these environments” (Chikweche et  al.,

168  Jesús Avila Martínez 2012). Chikweche and Fletcher (2012) also propose the previous characteristics based on Mahajan and Banga (2005), and consider informal economy, gender discrimination and the nature of BOP rural and urban locations; they also remark that “The BOP market is not one huge homogeneous entity, but it is made up of different segments which have different needs and system requirements.”

BOP in Latin America While there is still a homo economicus approach in business, which means a view of human beings as self-interested who focus on profit maximisation (Pirson, 2017). Fortunately, there is a tendency in firms regarding doing business while contributing to the solution of global problems, such as poverty and environmental (Waibel, 2012). This is particularly important in regions such as Latin America where, besides a problem regarding poverty, Latin America has an inequality problem. Actually, the Economic Commission for the Latin America and the Caribbean (ECLAC) recognised this region as the most inequal in the world (De Ferranti et  al., 2003). Even though there has been an improvement on the reduction of inequalities from 2002–2014, still 10% of the people are gaining 70 times higher income that the 10% of the people with the lowest income (ECLAC, 2019). One way of measuring such inequality is through the Gini index, which measures range from 0 (no inequality) to 100 (total inequality); in this measurement, Latin American countries range from 44 to 59 with countries such as Mexico, Brazil, Chile, and Argentina with a Gini index of 44, 51, 50, 41, respectively (Reynoso & Cabrera, 2018; The World Bank, 2014). Luckily, there have been some efforts in the region to overcome the poverty and inequality problems. For instance, in Mexico, there have been various initiatives to provide housing for the BOP. This is a problem since people at the BOP do not qualify for traditional loans to acquire a house. To solve that problem, the multinational firm CEMEX developed a programme called Patrimonio Hoy where the firm provided building materials for selfconstruction, at an affordable price, for those with a low income. Moreover, the programme also provides for technical assistance and tips on how to “do it yourself” with qualified technicians (Prahalad, 2005). Even though the previous example of housing might be one of the more widely known in Mexico; there are other initiatives, such as Casa para Ensamblar, which can be translated as “House to Assemble,” that are innovating the housing options for the BOP. Casa para Ensamblar is a housing solution for those at the BOP; its main innovation is being a prefabricated housing model (Palomares-Aguirre et al., 2018). On the other hand, the Brazilian BOP represents almost 70% of the country’s population, and this segment has recently becoming more important from a business perspective (Barki & Parente, 2010). A good example of how to create a business with the BOP is Banco do Brasil, which strategy

Firms and BOP: A win–win perspective 169 follows a triple bottom line approach taking in consideration the economic, social, and environmental aspects (Elkington, 1998). The bank does it by focusing on three aspects of sustainability, economic, social, and environmental (Filardi et al., 2018). In order to achieve its strategy, Banco do Brasil is opening new agencies in BOP communities; where there are no agencies, the bank offers mobile units. Also, the bank tries to hire people from the community and tries to engage with the community by providing them with financial advisors. Meanwhile, in Chile and Argentina, MASISA, one of the Latin American leaders in the production of wood products, also follows the triple bottom line approach. One of the company’s goals is to generate 15% of its revenues from their inclusive business with the BOP. The company also expects to empower the BOP by including them at different levels of the supply chain, not just giving them products but also helping them to improve their economy by generating employment. Later, the reader will have a description of each case, then the common characteristics amongst the three cases for a win–win approach will be presented. The main characteristics might be summarised as: A triple bottom line approach (economic, social, and environmental), Innovation, and Value co-creation. These characteristics are going to be explained and exemplified in the cases from Mexico, Brazil, Chile, and Argentina. Finally, a brief conclusion of the cases and some suggestions on doing business with the BOP in Latin America will be presented. Casa para Ensamblar Casa para Ensamblar is a firm founded by Adolfo Anguiano in 2009. Adolfo’s main motivation was to provide a solution for the housing problem of the people at the BOP by giving them a good, nice, and inexpensive house. The mission of the company states that “it is a project focused on lowincome families, so they can afford a decent, good, nice, very low-cost, modular house, and without maintenance investments” (Casa para Ensamblar, 2019). The firm builds prefabricated houses using scrap wood and a polymer, and do not require cement for its construction, making it not just a lowcost alternative but also an environmentally friendly solution. Moreover, the material components do not require water in the building process, unlike traditional building. Another good advantage is that the materials are nonflammable, have thermal insulation, do not require painting, and are waterproof (López Argueta, 2018). Also, traditional construction requires an investment of at least 145,000 Mexican pesos (around 7,500 dollars) at a raw structure stage while a Casa para Ensamblar’s house is around 85,000 Mexican pesos (around 4,400 dollars) at an already habitable stage and without additional costs, such as painting or waterproofing. Since the houses are prefabricated, the firm can

170  Jesús Avila Martínez deliver up to 15 houses on a single truck, which reduces the firm’s transportation costs; hence, it has a positive impact on the sales price. Being a prefabricated housing solution, and since the houses are built-in modules, the Casa para Ensamblar’s houses can be built in 4 days versus the traditional building that is at least 3 weeks. And for the Casa para Ensamblar’s houses construction, only three untrained persons are needed, while traditional housing needs builders and supervisors. Casa para Ensamblar has been working on constructing partnerships with the government so the government can subsidise part of the house cost for the people needing it. After some negotiations, the firm has achieved some agreements, such as having funds to build houses in disaster-affected zones (Palomares-Aguirre et  al., 2018). It is remarkable that the firm has been growing and replicating the model in different geographic points; that is possible, thanks to their low transportation costs. Because of their low cost and their expansion strategy, the firm passed from sales of 600,000 Mexican pesos, around 30,000 dollars in 2011, to almost 30 million Mexican pesos, around 1,500,000 dollars in 2015 (Palomares-Aguirre et al., 2018), and continuous growing is expected because of their expansion strategies. Banco do Brasil Banco do Brasil is a financial institution founded in 1808, headquartered in Brasilia, Brazil. It provides various banking and financial services and it is the biggest bank in Brazil (Forbes, 2019). According to their mission, it is “a bank committed to excellence with social conscience, serving our diverse communities with innovative financial solutions” (BB Americas Bank, 2019). The bank commitment is reflected in different ways, starting with its Letter of Principles, which encompasses its values amongst its different stakeholders, comprised in the following 14 principles (Banco do Brasil, 2019a):   1 To act in harmony with Universal Values, such as Human Rights, Fundamental Labour Principles and Rights, and Environmental and Developmental Principles.   2 To recognise that all beings are interconnected, and all life forms are important.   3 To ward off prejudice and discrimination regarding gender, sexual orientation, ethnic status, race, and creed of any nature.   4 To strengthen the view of Socio-Environmental Responsibility as a permanent, necessary investment for the future of humanity.   5 In relationships with Government, Market and Civil Society, to have the BB corporation’s strategic position of adopting its own model of Socio-Environmental Responsibility management at the level of the corporation’s standing, and the challenges of contemporary Brazil both perceived and appreciated.

Firms and BOP: A win–win perspective 171   6 To use transparency, ethics, and respect for the environment as the ballast of the company’s administrative and business practices.   7 To conduct relationships with third parties using criteria that observe the principles of Socio-Environmental Responsibility and foster economic and social development.   8 To foster, disseminate, and implement sustainable development practices.   9 To view clients and potential clients, above all, as citizens. 10 To establish and disseminate good corporate governance practices, preserving commitments to shareholders and investors. 11 To contribute in such a manner that the intellectual, professional, artistic, ethical, and spiritual potential of employees and collaborators can be fully used by the company. 12 To base relationships with employees and collaborators on ethics and respect. 13 To contribute towards universalising social rights and citizenship rights. 14 To contribute towards the inclusion of people with special needs. Amongst its different people-related strategies, Banco do Brasil has presence in pacified communities in Brazil, and tries to mobilise resources, both financial and human, to improve the quality of life in those communities. When it is not possible to have an agency, the bank has mobile units that provide customer service. Also, the bank shows its commitment with its community by prioritising hiring people from the community where the agency is located (Filardi et al., 2018). The bank innovates from the Grameen bank model  – where loans are given to a group of people – to a more trust-based model. In this trust-based model, loans are given to individuals and it relies on the individual’s informal statements and his or her personal references. When a loan is already approved, the bank provides the persons with a guide that helps them to invest their microcredits in a rational and profitable way. On the other hand, when there are community projects, the bank serves as an advisor to the community, even if there is no loan involved (Filardi et  al., 2018). Also, the bank supports the community by partnering with NGOs. For instance, the bank developed a joint project with local NGOs to help waste pickers by providing financial guidance and credits for equipment purchase. As it can be seen, the bank recognised that as a win–win business model by the economies of scale; it is true that they are not getting high profits from the microcredits to the people at the BOP; however, they focused on the amount of people who are receiving the loans and to ensure that they will pay for them; the firm helps them through financial guidance. From the environmental perspective, Banco do Brasil has been involved in different initiatives such as Programa Água Brasil, which promotes awareness and investment in water resource preservation and conservation (Banco do Brasil, 2010). Also, the bank promotes the investment on renewable energy, sustainable construction, sustainable agriculture, waste

172  Jesús Avila Martínez management, among others, through credits (Agência Brasil, 2019). The bank also created a team focused on analysing different initiatives and on spreading them among the entire organisation, telling the benefits for the initiatives the bank is involved on (Banco do Brasil, 2019b). MASISA MASISA is a Chilean firm founded in 1960 with a core business on the elaboration of wood boards for furniture and interior architecture in Latin America. The firm looks for brand differentiation by having a diverse geographic presence amongst different countries in Latin America, while having a sustainable development by taking care of the forest and industrial environment (Rankia, 2016). According to Masisa, their mission is “To bring design, quality and sustainability to each piece of furniture and interior space, improving the quality of life of the people” (MASISA, 2019a). The firm expects to increase its business with the BOP at such point that it becomes at least 15% of its total revenues. To do so, MASISA has been working on different strategies, such as organising meetings and programs for valuing carpenter’s ideas and incorporating their ideas into MASISA’s business, making the carpenters not only customers but also co-creators of MASISA’s products and services (Filardi et al., 2018). By doing this kind of efforts, the firm expects to help improving the living for low-income people by facilitating their participation in the value chain as suppliers, distributors, or other elements of the chain, not just as consumers. Also, by providing them with access to products and services that can help them improve their socio-economic condition (Pitta et al., 2008). In Argentina, MASISA’s goal was to have at least 10% of its revenues from business with the BOP. MASISA Argentina is a subsidiary of MASISA with headquarters in Chile, and the subsidiary was founded in 1992 (Gardetti & D’Andrea, 2006). In 2003, MASISA Argentina launched a contest amongst its employees, their goal was to create a business plan for the people at the BOP considering specific criteria such as the projects had not to focus on philanthropy but on a business consistent with the company’s strategy, and to be innovative. Finally, all projects had to offer goods and services that would improve the quality of life for the people they were designed. From that contest, a business plan for the BOP emerged, one that focus on furniture for social housing. A furniture formed by ten pieces which can be assembled in different ways to get a piece of furniture as required for the consumers, according to the space available in their homes. Other MASISA’s initiatives include training for carpenters who were frequent buyers of the firm’s products. The company provided training, and by 2008, there were over 12,000 who completed the training (Gardetti & D’Andrea, 2006). This initiative was a big success and it expanded to a programme for low-income people with no access to job opportunities. The training consisted of providing them with skills to assemble furniture as well

Firms and BOP: A win–win perspective 173 as to work with board; for example, cutting and iron-fitting. To manage the initiatives, the firm created a position called Head of Channels and Inclusive Business as part of the firm’s strategy to attend this segment. On the other hand, MASISA has ratified its ISO 14001, related to standards of environmental management. More precisely in 2013, the firm achieved its goals of adequate use of energy, waste management, and reduced CO2 emissions (MASISA, 2019b). It is remarkable that the firm goes beyond the environmental regulations and has goals for 2025 related to the strategic use of energy and waste management.

Doing business with the BOP There are some lessons that can be learned from the previous Latin American cases. The cases present some common characteristics despite of the firm’s industry or the country where they are located. In those cases, the firms focused on what they were good doing business; it is not a matter of philanthropy but of doing business in a win–win approach. In order to achieve that win–win goal, the firms focused on sustainable business models that incorporate economic, social, and environmental variables, or in other words, a triple bottom line approach. This approach is part of the success of the firm cases. Triple bottom line approach The triple bottom line is an approach that has been getting more attention from a business perspective. Currently, more than 150 of the world’s largest companies operate using this approach (Wheeler et al., 2003). This approach considered the business from three perspectives: economic, social, and environmental (Elkington, 1998). Following this approach, the firms focus not just on the economic part, with short-term oriented indicators such as stock value, but taking in consideration the social and environmental part, which actually can make a big difference because of the influence on the firm’s reputation by taking in consideration the firm’s different stakeholders (Carrol, 1991). Table 11.1 summarises how Casa para Ensamblar, Banco do Brasil, and MASISA are following this approach. Innovation According to Antúnez-de-Mayolo (2012), firms must focus on innovation when serving the BOP markets. In the previous cases, those innovations are presented in different ways such as costs, materials, and models, which in some cases are interrelated, meaning that one kind of innovation might have an impact on other kind of innovation. Casa para Ensamblar reduced its costs by using recycled materials and having a model of prefabricated houses which can be easily transported

174  Jesús Avila Martínez Table 11.1  Triple bottom line of the presented cases Firm

Economic

Social

Environmental

Casa para Ensamblar

• Reducing its production costs • Economies of scale

• Decent and affordable housing for those at the BOP • No need for trained people

Banco do Brasil

• Economies of scale • Ensure payment through financial guidance.

MASISA

• Strategy of certain % of revenues from the BOP • Increase repurchase of current customers

• Prioritising hiring people from the community where the agency is located • Guidance to invest the microcredit granted in a rational and profitable way. • Incorporating carpenters in the supply chain • Training for people with no job access. • Adequate furniture for homes.

• Uses scrap wood and a polymer • Materials favour thermal insulation, reducing the amount of energy to cool or heat the house. • Involvement in environmental initiatives • Credits to invest in environmental related issues. • Creation of a team to analyse environmental initiatives. • Efficient use of resources • Waste management • ISO 14001

Source: Created by the author (2020)

from one place to another. The innovation of using non-traditional materials helps both to reduce their cost and to help the environment. It also turns into a benefit for the final user who can have an affordable, water-proof, thermal insulated, decent house. Moreover, the process of building a house is faster than traditional building, which translates into having more houses to sell in less time. Even if the marginal income might be lower than with the traditional building, because of economies of scale, producing more houses reduces the marginal cost per house produced by the firm; beneficiating both the BOP people and the firm. Economies of scale is a strategy also followed by Banco do Brasil that focused more on the amount of people the bank is given loans to rather than on the amount of the loan. Hence, the company is given by volume,

Firms and BOP: A win–win perspective 175 and having a specific strategy to serve to BOP simplifies the process, making it not so costly compared with traditional loans for the BOP, which are focused on a group rather than an individual loan. The model followed by the bank privileged trust on the individuals, and to enhance that trust, the bank is embedded in a close relation with their BOP clients. This relation is developed through the guidance from the bank to the people at the BOP, so they can invest their loan in an affordable way. MASISA’s strategy to the BOP is so embedded in the company that having a percentage of their income from business with the BOP is part of their goals. The company has developed an innovative model where the previously just consumers had evolved into a part of the firm’s supply chain, giving them access to job opportunities and giving them the chance to co-create new products that are valuable for them. To have a closer relation, MASISA trained the carpenters to develop new skills that are valuable for both the firm and the carpenters, in order to add value to the final product. A product that might be later purchased and used also by the carpenters. It is important how the innovation can be viewed from multiple perspectives, and they are interrelated. For instance, the innovation in the materials used by Casa para Ensamblar leads to innovation in the model itself, which at the same time leads to a reduction of costs for the firm and a reduced price for the final client. Hence, the innovations shouldn’t be seen as independent among them. Banco do Brasil guidance for microcredits is a must for ensuring the payment of the loans given by the bank. Likewise, the involvement of the carpenters in MASISA’s supply chain is imperative if the company wants to achieve its goal of doing business with the BOP. Value co-creation Value co-creation is a way that companies have to develop a business model that generates value for a community, while the firm is also gaining from doing business with that community (Nahi, 2016). There is a difference between doing business at the BOP and doing business with the BOP, and that difference is through value co-creation. For instance, MASISA is working with carpenters to design the kind of furniture appropriate for their houses. Casa para Ensamblar model considers the partnership with the government to subsidise the houses for the people. Banco do Brasil is in constant communication with its clients through guides in the communities, to understand what the community needs and to develop together a plan to solve those needs. Also, the bank has partnered with NGOs to better satisfy their clients’ needs through loans for investment. In all the cases, the participation of the people at the BOP is not just merely as customers but as part of the supply chain. Having people in the supply chain helps the firm to better satisfy the BOP needs, since they have incorporated their knowledge in the supply chain. Who can know better their needs than the persons who have the needs? This approach helps them

176  Jesús Avila Martínez not just as a means to satisfy the needs of the people at the BOP but to empower them and give them the importance they have in the creation of solutions.

Conclusion Developing a better understanding of doing business with the Latin American BOP, how the firms can do business while helping and empowering the BOP through a win–win perspective and, by doing so, contributing to one of the SDGs. As it has been seen, despite the different industries and countries, when doing business with the BOP in a win–win approach, there are some common characteristics. Those characteristics can be summarised as having a triple bottom line approach, focusing on innovation and value co-­creation. And all of them taking in consideration the different parts of a triple bottom line approach, the economic, social, and environmental value, that leads to a sustainable development for both the firms and the community.

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Firms and BOP: A win–win perspective 177 Chikweche, T., Stanton, J., & Fletcher, R. (2012). Family purchase decision making at the bottom of the pyramid. Journal of Consumer Marketing, 202–213. De Ferranti, D., Perry, G. E., Ferreira, F. H., Walton, M., Coady, D., Cunningham, W., . . . Wodon, Q. (2003). Inequality in Latin America and the Caribbean breaking with history? The World Bank. www.cepal.org/ilpes/noticias/paginas/7/29107/ Inequality_Latin_America_complete.pdf ECLAC. (2019, June  27). Press release: Broadening fiscal space is vital to financing development and the 2030. Agenda: ECLAC. Economic Commission for Latin America and the Caribbean www.cepal.org/en/pressreleases/ broadening-fiscal-space-vital-financing-development-and-2030-agenda-eclac Elkington, J. (1998). Partnerships from cannibals with forks: The triple bottom line of 21st-century business. Environmental Quality Management, 37–51. Filardi, F., Barros, F. D., & Fischmann, A. A. (2018). Business strategies for the bottom of the pyramid: Multiple case studies of large companies in the pacified communities of Rio de Janeiro. RAUSP Management Journal, 63–73. Forbes. (2019). Banco do Brasil. www.forbes.com/companies/banco-do-brasil/# 113e1a3851c3 Gardetti, M. Á., & D’Andrea, G. (2006). Masisa Argentina and the evolution of its strategy at the base of the pyramid: An alternative to the BoP protocol process? Greener Management International,(56), 75. López Argueta, E. (2018, October  20). Construyen casas económicas con piezas tipo Lego. https://docs.wixstatic.com/ugd/a2f16d_ef0acf78293643918dc976bb76a1501f.pdf Mahajan, V., & Banga, K. (2005). The 86 per cent solution: How to succeed in the biggest market of the twenty-first century. Wharton School Publishing. MASISA. (2019a). Nosotros/Visión, Valores y Propósito. www.masisa.com/ nosotros/nuestra-empresa/principios-y-valores/ MASISA. (2019b). Responsabilidad ambiental. www.masisa.com/eng/nosotros/ desarrollo-sostenible/responsabilidad-ambiental/ Nahi, T. (2016). Cocreation at the base of the pyramid: Reviewing and organizing the diverse conceptualizations. Organization & Environment, 416–437. Palomares-Aguirre, I., Barnett, M., Layrisse, F.,  & Husted, B. W. (2018). Built to scale? How sustainable business mode ls can better serve the base of the pyramid. Journal of Cleaner Production, 4506–4513. Pirson, M. (2017). Humanistic management: Protecting dignity and promoting wellbeing. Cambridge University Press. Pitta, D. A., Guesalaga, R., & Marshall, P. (2008). The quest for the fortune at the bottom of the pyramid: Potential and challenges. Journal of Consumer Marketing, 393–401. Prahalad, C. K. (2005). La oportunidad de negocios en la base de la pirámide: Un modelo de negocio rentable, que sirve a las comunidades más pobres. Grupo Editorial Norma. Prahalad, C. K., & Hart, S. L. (2002). The fortune at the bottom of the pyramid.­ Strategy + Business, 54–67. https://people.eecs.berkeley.edu/~brewer/ict4b/FortuneBoP.pdf Rankia. (2016, December  24). Masisa: historia y cotización. www.rankia.cl/blog/ analisis-ipsa/1608891-masisa-historia-cotizacion Reynoso, J.,  & Cabrera, K. (2018). Evolución hacia la lógica de servicio en los negocios de países emergentes: Reflexiones sobre América Latina. In C. Lovelock,

178  Jesús Avila Martínez J. Reynoso, G. D’Andrea, L. Huete, & J. Wirtz (Eds.), Administración de Servicios Estrategias para la creación de valor en el nuevo paradigma de los negocios (pp. 539–554). Pearson. United Nations. (2019, January 30). Sustainable development goals. www.undp.org/ content/undp/es/home/sustainable-development-goals.html Waibel, P. (2012). Putting the poor first: How base-of-the-pyramid ventures can learn from development approaches. Greenleaf Publishing. Wheeler, D., Colbert, B., & Freeman, R. E. (2003). Focusing on value: Reconciling corporate social responsibility, sustainability and a stakeholder approach in a network world. Journal of General Management, 1–28. The World Bank. (2014). GINI index (World Bank estimate). https://data.world bank.org/indicator/SI.POV.GINI?locations=MX-AR

12 Understanding corporate sustainability through a humanistic management lens Gloria Camacho

Introduction Latin America and the Caribbean are formed by diverse countries. According to the Economic Commission for Latin America and the Caribbean (ECLAC), the region is suffering environmental degradation (ECLAC, 2018); 30.2% of the population is living in poverty (ECLAC, 2019) and income disparity makes difficult the access to basic services, such as electricity, drinking water, as well as health and education for some inhabitants (UNESCO, 2017). These conditions show the necessity to build a society with a balance between environmental, economic, and social needs (Székely & Knirsch, 2005). Given this situation, the United Nations Sustainable Development Goals (SDGs) is the latest framework created to end poverty and hunger, to protect the environment against climate change, to protect human dignity of all individuals, and to promote peace (United Nations General Assembly, 2015). This framework is aligned with humanistic management, which considers that sustainability in its three dimensions (i.e. economic, social, and environmental) will allow businesses to contribute to mitigate social and environmental problems (Pirson & Lawrence, 2010). Thus, the purpose of this chapter is to explore how the adoption of corporate sustainability initiatives promotes stakeholders’ well-being and contributes to the achievement of some of the SDGs under a humanistic management perspective. This chapter is structured as follows: firstly, I present corporate sustainability from a humanistic management perspective; secondly, I  show the methodology, and then the case of Viña Concha y Toro. Afterwards, I discuss how the chosen firm illustrates some elements of humanistic management in its sustainability initiatives, which promote well-being for different stakeholders and also contribute to the achievement of some of the SDGs; and finally, I present a conclusion.

Corporate sustainability and humanistic management According to von Kimakowitz et al. (2011, p. 10), “Humanistic management is the pursuit of strategies and practices that seek to create sustainable

180  Gloria Camacho human welfare.” From this perspective, the purpose of a firm is to promote an integral development of humans and to contribute to the common good (Sison, 2007). For example, in business, the implementation of humanistic management requires the respect of all employees (i.e. human dignity), an ethical atmosphere, and working conditions that promote employees’ development and well-being (Melé, 2009; Melé, 2016). Also, it is fundamental to be committed to value creation, to establish a dialogue with stakeholders, and to have a balance between stakeholders’ needs and short and long-term interests (Pirson & Lawrence, 2010). A stakeholder is understood as groups or individuals who affect or are affected by firm’s performance (Laplume et al., 2008). Stakeholder theory looks for understanding on how stakeholders influence the decision-making process and how firms understand and balance stakeholders’ demands through stakeholder management (Mainanders et al., 2011). Thus, stakeholder theory is accurate to explore humanistic management. Furthermore, “humanism promotes harmony between humans and nature” (Melé, 2016, p. 44), which means that it is also concerned about sustainable development and its three dimensions (i.e. social, environmental, and economic) (Melé, 2016). Sustainable development is defined as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (WCED, 1987, p. 43 as cited in Bansal, 2005, p. 197). Firms have an important role in achieving sustainable development (Elkington, 1994; Bansal, 2002); thus, this concept can be applied at an organisational level through corporate sustainability. For instance, Bansal (2005) analysed how firms apply the principles of sustainable development (i.e. environmental integrity, social equity, and economic prosperity) in their policies, strategies, and practices. Bansal (2005) translated the environmental integrity principle into corporate environmental management, the social equity principle into corporate social responsibility (CSR), and the economic prosperity principle into value creation. Corporate sustainability has important elements, such as: (a) the adoption of business strategies (Labuschagne et  al., 2005; Lozano, 2011); (b) stakeholder’s needs (Labuschagne et  al., 2005; Bansal, 2005; Székely  & Knirsch, 2005); (c) time, which means acting in the present, but considering what will happen in the future (Labuschagne et al., 2005; Lozano, 2011); (d) taking care of the resources that will be used in the future (Labuschagne et  al., 2005); (e) economic, environmental, and social dimensions of sustainability (Bansal, 2005; Lozano, 2011; Searcy  & Elkhawas, 2012); and (f) participation of the different areas of the firm to achieve sustainability, such as operations, procurement, marketing, logistics as well as management (Lozano, 2011). Given these elements, stakeholders are present in corporate sustainability as well as in humanistic management; thus, I will use stakeholder theory to explore corporate sustainability through a humanistic management perspective.

Corporate sustainability through humanism lens 181 When firms implement corporate sustainability initiatives, they are making efforts to create jobs and to take care about the environment (Linnenluecke  & Griffiths, 2010), incorporating ethics in business activities and creating value for the stakeholders of the firm (Székely & Knirsch, 2005). Corporate sustainability has become important for different stakeholders, such as investors. For this reason, it is important to identify and rank those firms committed to innovation, governance, shareholders, leadership, and society (Knoepfel, 2001). In 1999, Dow Jones Indexes and SAM Sustainability Group launched the Dow Jones Sustainability Group Index (DJSGI) – the first global sustainability index – to identify and rank firms according to their corporate sustainability performance (Knoepfel, 2001). In 2017, the Dow Jones Sustainability MILA Pacific Alliance (DJSI MILA Pacific Alliance) was launched by S&P Dow Jones Indices (S&P DJI), International Finance Corporation (IFC), RobecoSAM and the Exchanges of the Mercado Integrado Latinoamericano (MILA), which is formed by Chile, Colombia, Mexico, and Peru (RobecoSAM, 2018). From a Humanistic Management approach, DJSI monitors firms in four categories: (a) illegal commercial practices, (b) human rights issues, (c) conflicts with employees, and (d) accidents (e.g. at the workplace) or disasters (e.g. ecological) (Knoepfel, 2001).

Methodology For this chapter, I  used a case study research strategy to understand the dynamics within the firm (Eisenhardt, 1989) regarding its sustainability initiatives. As data collection method, I analysed secondary sources, such as sustainability reports of the chosen firm. Viña Concha y Toro was chosen by judgement (Marshall, 1996) because it is a Latin American firm that is part of the DJSI MILA Pacific Alliance, and it is also recognised by its sustainability initiatives. Being part of this index means that its corporate sustainability performance has been monitored through different sources, such as a corporate sustainability assessment questionnaire, public documents, media screening, stakeholder relations, and interviews in firms (Knoepfel, 2001), and also that it has integrated sustainability in its business activities, and it is a leader doing it (Searcy & Elkhawas, 2012).

Case: Viña Concha y Toro Company profile Viña Concha y Toro was founded in 1883 by Melchor Concha y Toro. It is recognised as one of the most important wine producers in Latin America (Concha y Toro, 2019a), and it has presence in more than 140 countries (Empresas Sumando Valor, n.d.). It has more than 3000 employees in the

182  Gloria Camacho three countries in which it operates (Chile, Argentina, and the USA), but its headquarters are located in Santiago, Chile (Viña Concha y Toro, 2017). In 2011, Viña Concha y Toro acquired Fetzer Vineyards in California, USA, which employs wine sustainability practices, and in 2013, it obtained the Sustainability Certification by Wines of Chile. In 2015, Viña Concha y Toro entered into the Dow Jones Sustainability Chile Index, a couple of years later, it became part of the top 10 of the global DJSI Beverages category (Concha y Toro, 2019a). Currently, Viña Concha y Toro is also part of the DJSI MILA Pacific Alliance (RobecoSAM, 2018). Sustainability strategy Viña Concha y Toro has integrated sustainability into its DNA because it wants to maintain the leadership in its industry with sustainable operations and a balance between economic, environmental, and social issues. For this reason, in 2012, it developed a sustainability strategy (El Ovallino, 2016), which is based on six pillars: products, customers, society, environment, employees, and suppliers (Viña Concha y Toro, 2017). Viña Concha y Toro built an innovation centre to improve its productive process, increase the quality of its products as well as its relationship with its stakeholders (Villalobos, 2016). According to Viña Concha y Toro, its main stakeholders are: suppliers, community, employees, civil society, government and authorities, clients, and shareholders and investors (Viña Concha y Toro, 2017). Along its supply chain, which considers the growth of vineyards, its harvesting, wine production, bottling and packaging, and distribution of the

Table 12.1  Viña Concha y Toro: sustainability aspects Economic aspects

Environmental aspects

Social aspects

Product Supply chain Customers

Resource management (Efficiency in water and energy use, protection of biodiversity) Externalities management (Reduce emissions, eliminate the disposal of waste to landfill, use agrochemicals in a responsible manner)

People (labour relations, work environment, talent management, promoting well-being, health, and safety) Society (support for local development, improve the quality of life in communities through infrastructure and social programs, commitment with education through scholarships)

Source: Elaborated by author with information from Concha y Toro (2019c, 2019d, 2019e) and Viña Concha y Toro (2017).

Corporate sustainability through humanism lens 183 final product, Viña Concha y Toro focuses on: (a) efficient use of water, (b) employee training, (c) safety and working conditions, (d) energy efficiency, (e) waste recycling, (f) information on responsible drinking, and (g) use of lightweight bottles to reduce carbon footprint. In addition, it has local suppliers, representing 89% of the total. Furthermore, since 2014, Viña Concha y Toro developed a programme with the National Institute for Agricultural Development to provide grape producers with technical, business, and sustainable practices (Viña Concha y Toro, 2017). At the beginning, this programme benefited 18 grape producers (Viña Concha y Toro, 2014). Viña Concha y Toro has its own code of ethics and conduct, and it is moving towards certification of its ethical management system, following the SA8000 standard. This firm is working to prevent any violation of human rights with particular interest in temporary workers (Viña Concha y Toro, 2017). These initiatives could be considered humanistic management, because they are focused on employees’ well-being through the respect of human dignity and the creation of favourable working conditions (Melé, 2009, 2016). This firm is committed to improve its relationship with its stakeholders (e.g. suppliers, community, employees, civil society, government and authorities, clients, and shareholders and investors) (Viña Concha y Toro, 2017); to work with respect to the environment and in a socially equitable way to its employees and the communities in which it operates (Concha y Toro, 2019b). Each installation has a Delegate for Community Relations who receives the requests of the neighbours from the surrounding communities and offers a formal answer no later than five business days. Moreover, it has installed solar panels in some rural schools, and it has promoted sports by leasing a space to the Idahue Sports Club. In addition, Viña Concha y Toro has developed two scholarship programs for students with limited resources, and also in 2017, it created the programme Cultivate Yourself (Cultivate) to offer job opportunities such as internships for students in local districts where Viña Concha y Toro operates (Viña Concha y Toro, 2017). Viña Concha y Toro works for the creation of an inspiring workplace for its employees, promoting their personal development, equal employment opportunities, as well as better health and safety conditions (Concha y Toro, 2019b). For example, it offers training for its temporary workers (e.g. Pre-harvest Training Program; People Supervision and Leadership; Quality, Safety, and Efficiency), as well as it does with its permanent employees. Moreover, it has created joint committees, made up by employees and firm’s representatives to have a safe and healthy work environment (Viña Concha y Toro, 2017). The implementation of these initiatives illustrates how Viña Concha y Toro promotes the development of its employees (Sison, 2007). In 2019, Viña Concha y Toro became the first Latin American firm to sign Science Based Targets to reduce its emissions (compared with 2017) on 40% from direct operations and 17% from indirect operations in its supply chain by 2030 (Diario Sustentable, 2019). Also, this firm has represented Chile in

184  Gloria Camacho international conferences for its efforts to mitigate climate change (Packaging Chile, 2019). Caring about environment, it is also important to promote a good relationship between humans and nature (Melé, 2016).

Discussion This case illustrates sustainability initiatives in their three dimensions (i.e. economic, social, and environmental) as well as some elements of humanism, such as respect for human dignity (von Kimakowitz, 2017; Spitzeck, 2011; Melé, 2016); stakeholder orientation, and the balance of interests of multiple stakeholders to promote their well-being (Pirson & Lawrence, 2010). Respect for human dignity Human rights are the conceptual basis of unconditional dignity, which means that they are for all people regardless of race, religion, or other characteristics (Pirson, 2017). Viña Concho y Toro is working to avoid violations of human rights in its supply chain, particularly in the case of temporary workers (i.e. migrants). In order to achieve this goal, Viña Concha y Toro makes internal and external audits. Stakeholder orientation Stakeholder orientation is understood as the process to identify relevant stakeholders for the firm, to understand their needs, and to implement activities to address their demands (Maignan & Ferrell, 2004) to establish and maintain long-term mutual relationships with them (Maignan et al., 2005; Morsing & Schultz, 2006; Mainanders et al., 2011). Stakeholders are defined by the firm (Jurgens et al., 2010). In 2017, Viña Concha y Toro updated and prioritised its stakeholders to have better management of its relationship with them. For its internal stakeholders, there are specific mechanisms for communication, such as an internal magazine, breakfasts with employees, as well as the publication of the sustainability report. In the case of external stakeholders, such as communities, Viña Concha y Toro is making an effort to listen to its stakeholders’ needs through its Delegates for Community Relations in each of its installations. This initiative shows the commitment of this firm with its stakeholders and their well-being. Balance of interest of multiple stakeholders From a humanistic management perspective, Viña Concha y Toro aligned its mission, vision, strategic objectives, and its policies in different areas of operations, such as supply chain and human resources, to contribute to the

Corporate sustainability through humanism lens 185 common good (Sison, 2007), which includes a balance between value creation for stakeholders, economic growth, and the implementation of environmental practices.

Contribution to specific SDGs In Latin America, Chile is the country with more participation of the private sector within the national strategy to achieve SDGs (ComunicaRSE, 2018). In this context, Viña Concha y Toro is working to align its strategy to different SDGs, such as SDG 4, SDG 8, SDG 13, SDG 15, and SDG 17. Viña Concho y Toro has developed two programs to offer the opportunity to study to young people with limited resources in local communities where it operates. The implementation of this initiative is an example of its support to the achievement of Quality Education (SDG 4). In addition, it has been promoting decent work conditions across its supply chain that reflects its commitment with SDG 8: Decent work and economic growth (Viña Concha y Toro, 2017). In 2018, only 2% of Latin American firms which are part of Global Compact are committed with Climate Action (SDG 13) (ComunicaRSE, 2018). Viña Concha y Toro is one of the exceptions, because it has been measuring its carbon print for over 10 years, as well as working to reduce its emissions through its supply chain, especially in transportation, using lightweight bottles for its products (Viña Concha y Toro, 2017). In 2019, it signed Science Based Targets to reduce its emissions by 2030 (Diario Sustentable, 2019). Regarding Life on Land (SDG 15), Viña Concha y Toro works to preserve the native forest that surrounds its installations (Viña Concha y Toro, 2017). Also, it contributes to SDG 17: alliances and partnerships, through the development of alliances with different organisations to promote sustainable practices within the industry (e.g. Vinos de Chile; Carbon Pricing Leadership Coalition  – CPLC; Accion Empresas; INDAP; the Carbon Disclosure Project – CDP; Instituto Nacional de Desarrollo Agropecuario – INDAP; American Chamber of Commerce of Chile – AMCHAM Chile, and Global Compact) (Viña Concha y Toro, 2017).

Conclusion This chapter illustrates the respect for human beings and nature (Arandia & Portales, 2015); the need to improve social and environmental performance, including the supply chain, by implementing corporate sustainability initiatives regarding economic, social, and environmental dimensions, as well as the alignment of these sustainability initiatives with SDGs. Putting sustainability initiatives into practice, Viña Concha y Toro also implements elements of humanistic management, such as respect for human dignity, when it makes audits to avoid human rights violations in its supply chain; stakeholder orientation when it listens to its stakeholders’ needs and

186  Gloria Camacho evaluates them to take actions, and a balance of interests of multiple stakeholders between value creation for them and economic growth in short and long term. The case presented in this chapter exemplifies that “organizational success is part and parcel of personal and stakeholder development” (Pirson, 2017, p. 12).

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188  Gloria Camacho Sison, A. J. G. (2007). Toward a common good theory of the firm: The Tasubinsa case. Journal of Business Ethics, 74, 471–480. Spitzeck, H. (2011). An integrated model of humanistic management. Journal of Business Ethics, 99, 51–62. Székely, F.,  & Knirsch, M. (2005). Responsible leadership and corporate social responsibility: Metrics for sustainable performance. European Management ­Journal, 23(6), 628–647. UNESCO. (2017). Challenges for sustainability in Latin America and the ­Caribbean. www.unesco.org/new/en/santiago/education/education-for-sustainable-­ development/challenges-for-sustainability-in-latin-america-and-the-caribbean/ United Nations General Assembly. (2015, September). Transforming our world: The 2030 Agenda for sustainable development. www.unfpa.org/resources/ transforming-our-world-2030-agenda-sustainable-development Villalobos, F. (2016, September 19). Por qué Concha y Toro apostó por un innovador centro para la industria vitivinícola. Emol. www.emol.com/noticias/ Economia/2016/09/19/822440/Por-que-Concha-y-Toro-aposto-por-un-centrode-investigacion-e-innovacion-para-la-industria-vitivinicola.html Viña Concha y Toro. (2014). 2014 Reporte de Sustentabilidad. https://conchaytoro.com/ content/uploads/2018/04/REPORTE-SUSTENTABILIDAD-CyT_2014_web.pdf Viña Concha y Toro. (2017). Sustainability report. https://conchaytoro.com/content/ uploads/2018/04/VCT-2017-Sustainability-Report.pdf von Kimakowitz, E. (2017, April 19). An introduction to humanistic management. www.soka.ac.jp/files/ja/20170419_140205.pdf von Kimakowitz, E., Pirson, M., Dierksmeier, C., Spitzeck, H.,  & Wolfgang, A. (2011). Introducing this book and humanistic management. In E. von Kimakowitz, M. Pirson, C. Dierksmeier, H. Spitzeck,  & A. Wolfgang (Eds.), Humanistic management in practice (pp. 1–12). Palgrave Macmillan. WCED. (1987). Our common future. Oxford University Press.

13 Humanistic management in Latin America Final remarks Mario Vázquez-Maguirre

Since the 1980s, Humanistic Management has evolved to become a primary, urgent approach for organizations before the current challenges faced by humanity. HEC Montreal and St. Gallen’s schools of thought set the principles of this approach that aims to generate and manage dignity-based organizations. Humanistic Management has been the response to an economist paradigm that has focused on the primacy of shareholders as owners of the company, often at the expense of other relevant stakeholders. Michael Pirson describes in Chapter 2 that management theory, based on the agency model, took over in the 1970s and by the mid-1990s it was generally adopted by corporations, public administration, and universities (business schools). Its main notion was that the ultimate goal of any organization was shareholder value maximization; its main principles were rationality, individuality, maximization, and amorality, with the implicit idea that what is good for business must also be good for society. The managerial practices derived from this paradigm spread around the world and especially in Latin America. Academics and practitioners obtained postgraduates degrees from business schools in the United States and Europe and later brought this “better practices” to Latin America. The expansion of U.S. corporations throughout the region also contributed to the adoption of these practices. Although this paradigm has created unprecedented wealth and prosperity worldwide, it has also created rising inequalities (of opportunity, wealth, power, gender, etc.), menial work, unemployment, and ecological disaster. As a consequence, billions of people still live in poverty and are denied a life in dignity (United Nations General Assembly, 2015). These dehumanizing, alienating experiences that humanity is facing have urged academics to rethink modern organizations and its principles to generate better outcomes for society. In this sense, Latin America is still struggling with most of the issues described earlier. It is the most unequal region on earth, 30% more unequal than the world average (Lustig, 2015). This region has also high corruption levels, as the continent has failed to make significant progress in the fight against this problem (Transparency International, 2020). In this sense, the Odebrecht case example (Chapter  5) provides an illustration of how the

190  Mario Vázquez-Maguirre lack of humanistic principles can generate corruption schemes that end up producing negative impacts on society at large. The lack of transparency and the lack of a framework for ethical decision-making have contributed to the loss of legitimacy that public institutions and private organizations have experienced in the region in recent decades, which further exacerbates the region’s social issues. As a result of this case, millions of people organized major protests to demand justice, transparency, and institutions that serve society (Watts, 2017); the search for alternative models of organizing that are centred on the dignity of individuals and the common good can no longer be postponed in Latin America. Before this context, one of the obvious questions that arise is where to start? In this sense, the sustainable development goals (SDG) offer guidance about the most urgent issues that each region is facing and currently represent a global effort that has gathered private and public organizations that are trying to generate impacts that target these goals. The SDGs are intertwined with humanistic management in the seek of better organizations that generate positive impacts in society. The importance of the SDGs is such that, organizations that do not align with them face important operative, reputational, and regulatory risks (Sachs et al., 2019).

Actions towards a more humanist approach in organizations The context in the region, although difficult and challenging, also poses an opportunity for organizations that want to bring more prosperity to society. One of the main questions that need to be addressed is how to shape organizations in Latin America that aim to remedy dignity violations which ultimately affects the self-determination, autonomy, freedom, identity, and well-being of the individuals. One of the first insights is to focus on creating better jobs. The report about the SDGs’ challenges for organizations in Latin America (ComunicaRSE, 2018) highlights some issues where organizations can work together toward a stronger impact. The first dimension is decent employment, which is affected by the large share of informal jobs in the region, the lack of talent that organizations often report, and also the challenge of incorporating women to organizations. The creation of integrated value chains may also be fundamental to achieving decent employment in the region. In this sense, Benito and Cárdenas, in Chapter 3, focused on the internal dimension of corporate social responsibility to suggest more dignity-oriented actions toward employees. The authors emphasize an ethical orientation that leads to a decision-making process in sensitive areas such as control of subcontracted personnel and management style (e.g. collaborative management may lead to higher empowerment of employees). Also, employees may be able to flourish in organizations that have permanent training and learning options, equal opportunities, work-family conciliation, labour integration, and social benefits such as daycare centres, pension plans, health care, and

Humanistic management in Latin America 191 vacations. Menial and informal work has a cost on society and represents dignity affronts for individuals that are denied the basic tools to increase their well-being. The second and third dimensions suggested in the report are transparency (the evasion of the corporate income tax reached 70% in some countries of the region) and financing the implementation of the SDGs, especially infrastructure projects that may generate more sustainable markets. In addition, Latin America may benefit from a different kind of leadership, one that fosters a new model of doing business that sets the incentives for investing in the common good and protecting the dignity of individuals (ComunicaRSE, 2018). One example of a different leadership model is Social Capitalism; an initiative that seeks to promote dignity-based organizations in Latin America. In September 2020, the largest corporations of Monterrey, the main industrial city of Mexico, signed this initiative that seeks a new economic system, one in which the economy is subordinated to the demands of ethics, the environment, and the common good (Iniciativa Capitalismo Social, 2020) The initiative aims (1) to research good practices in companies that have promoted the common good; (2) to develop high impact content on social capitalism; (3) to disclose the main findings; and (4) to train a new generation of entrepreneurs and businessmen with a humanistic perspective. The four principles of Social Capitalism resemble those of humanistic management: respect for human dignity as the essence of organizations; social commitment (benefits must be generated for every stakeholder); humanist leadership (a spirit of service that contributes to human development); and free entrepreneurship (entrepreneurship that is good for the community, ethical, legal, transparent, and that promotes fair competition) (Iniciativa Capitalismo Social, 2020). Such an initiative is a major paradigm shift from the traditional form of doing business in this city. Monterrey is located in the most unequal state of the country, where the distance between the poorest decile and the richest is 34 times (México ¿cómo vamos?, 2017). This initiative is inspired by the industrial founders of the city, which in the early and mid-20th century created organizations that ultimately sought common good and community development. Also, Alicia Bárcena, Executive Secretary of the Economic Commission for Latin America and the Caribbean (CEPAL, 2018), proposed three regional pacts with the business sector during the second meeting of the Forum of the Countries of Latin America and the Caribbean on Sustainable Development: one on responsible and sustainable food production that will contribute to preserving the region’s ecosystems; a second on sustainable energy that accelerates the transition to the use of renewable energies; and finally, a pact for the transition from the material to the digital world, which will probably be also propelled by the Covid-19 pandemic. These actions will facilitate the achievements of the SDGs in the region and its transition to more sustainable organizations.

192  Mario Vázquez-Maguirre In this sense, Mugarra-Elorriaga and Echaniz-Barrondo described, in Chapter 7, four trends in the private sector that may indicate Latin America is exploring new models to generate better outcomes for society: (1) an increase in the number of companies involved in the processes of the 2030 Agenda for Sustainable Development; (2) the increasing number of entities adopting social and environmental responsibility and governance measures; (3) improved financial and non-financial performance reporting mechanisms associated with the SDGs and financial instrument for development; and (4) Public–private partnerships to mitigate the effects of climate change and to build resilient infrastructure and energy (ComunicaRSE, 2018).

What can Latin America contribute to the humanistic management approach? Latin America has a wide variety of dignity-based organizing models in its indigenous communities, which can constitute a template for humanistic management. Yásyana (2020) argues that governments in the region have historically promoted the democratic nation–state, which is also related to the prevailing productive paradigm: capitalism based on the maximization of utility. But democracy and capitalism constitute only one of the possibilities of organizing life in society. Historically, indigenous communities have created different forms and means of organizing (communal assembly, classical societies, and horizontal nomadic organizations) which are based on values such as equality, equity, transparency, accountability, social justice, sustainability, and respect for the dignity of individuals. These forms of organizing have been reduced to “uses and customs,” assuming that they are all similar and inferior to the Western form of organization (Yásyana, 2020). However, some of them can still be studied and evaluated in the most marginalized regions of Latin America (see Camargo & Vázquez-Maguirre, 2020; Vázquez-Maguirre, 2020a). These communities represent a great opportunity for humanistic management to examine these dignity-based organizing models in the region and contrast them with the models created by scholars based on humanism principles. Early work in this subject (Vázquez-Maguirre, 2020b) indicates that common business strategies in these indigenous ventures are: low CEO pay ratio, flat structure that promotes democratic and participatory decision-making, equal opportunities for women and young people, protection of minorities, stakeholder engagement, and accountability. Latin America has also a broad range of organizations that somehow seek to integrate humanist principles to their operations: cooperatives, social enterprises, indigenous ventures, and benefit companies (Empresas B). Their local economic actions, mechanisms of democratic governance, and community participation constitute an effort to create new models of management that deliver better outcomes for society. The success stories of these entities constitute a micro-laboratory to explore how humanist

Humanistic management in Latin America 193 organizations, and their “organizational humanizing cultures” (Melé, 2003, 2014), can solve the challenges posed by the sustainable development goals in the most unequal region of the world.

References Camargo, B.,  & Vázquez-Maguirre. (2020). Humanism, dignity and Indigenous justice: The Mayan Train megaproject, Mexico. Journal of Sustainable Tourism. Advanced online publication. https://doi.org/10.1080/09669582.2020.1758707 CEPAL. (2018). Modelo de negocios de las empresas debe cambiar para adoptar patrones de consumo y producción sostenibles. https://foroalc2030.cepal.org/2018/ es/noticias/modelo-negocios-empresas-debe-cambiar-adoptar-patrones-consumoproduccion-sostenibles ComunicaRSE. (2018). El reto de los ODS para las empresas de América Latina: Informe 2018. ComunicaRSE. www.comunicarseweb.com/noticia/una-guia-sobreods-para-las-empresas-de-america-latina Iniciativa Capitalismo Social. (2020). Acerca del capitalismo social. Retrieved September 18, 2020, from www.capitalismosocial.mx/acerca Lustig, N. (2015). Most unequal on earth. International Monetary Fund. Retrieved February 12, 2019, from www.imf.org/external/pubs/ft/fandd/2015/09/lustig.htm Melé, D. (2003). Organizational humanizing cultures: Do they generate social capital?. Journal of Business Ethics, 45, 3–14. https://doi.org/10.1023/A:1024112226673 Melé, D. (2014). Human quality treatment: Five organizational levels. Journal of Business Ethics. https://doi.org/10.1007/s10551-013-1999-1 México ¿cómo vamos?. (2017). El ingreso de un hogar promedio en NL es 4 veces mayor que uno de Chiapas. Retrieved September 16, 2020, from https://mexicocomovamos.mx/?s=contenido&id=853 Sachs, J., Schmidt-Traub, G., Kroll, C., Lafortune, G., & Fuller, G. (2019). Sustainable development report 2019. Bertelsmann Stiftung and Sustainable Development Solutions Network (SDSN). www.sdgindex.org/ Transparency International. (2020). CPI 2019, Americas. Retrieved September 16, 2020, from www.transparency.org/en/news/cpi-2019-Americas United Nations General Assembly. (2015). Resolution adopted by the general assembly on 25 September  2015. United Nations. Retrieved January  16, 2020, from www.un.org/ga/search/view_doc.asp?symbol=A/RES/70/1 Vázquez-Maguirre, M. (2020a). Restoring, protecting, and promoting human dignity through indigenous entrepreneurship. International Journal of Entrepreneurship, 24(3), 1–12. Vázquez-Maguirre, M. (2020b). Building sustainable rural communities through indigenous social enterprises: A  humanistic approach. Sustainability, 12(22), 9643. https://doi.org/10.3390/su12229643 Watts, J. (2017). Operation car wash: Is this the biggest corruption scandal in history? The Guardian. Retrieved September 16, 2020, from www.theguardian.com/world/2017/ jun/01/brazil-operation-car-wash-is-this-the-biggest-corruption-scandal-in-history Yásyana, E. A. (2020). Jëntsë’ëk, democracia y pueblos indígenas. El País. https:// elpais.com/mexico/2020-08-09/jentseek-democracia-y-pueblos-indigenas.html

About the contributors

Editors Consuelo Garcia-de-la-Torre has a doctorate in Management from the HEC of the University of Montreal, Canada and holds a master’s degree from the University of Louvain-la-Neuve in Belgium. She is a professor and researcher at EGADE Business School, Tecnológico de Monterrey, Mexico. Member of the National System of Researchers of Mexico, (SNI1), Researcher of the Strategic Research Group in Social Innovation, EGADE Business School. International Network of Humanistic & Management. She is a member of the Champions PRME advisor Committee. She received recognition as a Pionner PRME at the UN. She has diverse publications among books, book chapters, and articles in leading journals. Osmar Arandia is the director of the administration posgraduate programs at UDEM’s Business School, he is also a professor of management and strategy at the same University. He has a master’s degree in marketing and a PhD in management from EGADE Business School. Osmar has held different positions in different universities such as Strategic Vicepresident at Universidad Cristóbal Colón in México. He is the former chair of the Management department at UDEM. Nowadays, he is also part of the strategic transformation teams at UDEM and is in charge of the design and implementation of the new curricular model. His research interests are humanistic management and strategy. Mario Vázquez-Maguirre is an associate professor of management and social entrepreneurship in the Universidad de Monterrey (UDEM). He received his MSc in economics and public policy from Tecnológico de Monterrey and his PhD in management from EGADE Business School. His research focuses on social entrepreneurship, Indigenous social enterprises and sustainable development, humanistic management, and corporate social responsibility. He has documented cases of Indigenous Social Enterprises in Latin America and published his findings in leading journals and book chapters.

About the contributors 195

Chapter authors Eduardo Aguiñaga is the national director of the Master in Business Management program at EGADE Business School. He holds a PhD in Business Administration and a master’s in Management from EGADE Business School where he is also a professor on Corporate Sustainability and Circular Economy courses. As a member of the National System of Researchers and active fellow of the SWIT research group focused on Innovation and Sustainable Wealth Creation, Eduardo’s research revolves around circular economy, industrial ecology, and systems thinking as enablers for the creation of both self-sustaining communities and non-usual business models based on waste and residues. Previously, as Circular Economy Leader of HEINEKEN Mexico, he was responsible for the transition of the company to this new economic model. Gloria Camacho is currently a marketing professor at Tecnologico de Monterrey. Dr  Camacho earned her PhD in Management Sciences and her master in marketing from EGADE Business School. Her research focuses on sustainable marketing and related topics such as sustainable supply chains, corporate sustainability, corporate social responsibility, and humanistic management. Bertha Elizabeth Cárdenas Hinojosa has an MBA from EGADE Business School and holds a PhD in Economic and Administrative Sciences by the University of Deusto. She has more than 17 years of experience as a full-time professor of the Academic Department of Management and Leadership, at Tecnologico de Monterrey teaching and researching subjects related to Human Resources and Management. She has participated as speaker in national and international conferences and collaborated as consultant, designer, and instructor in executive education projects. Arantza Echaniz-Barrondo has spent her entire professional career at the University of Deusto (Spain) where she teaches courses in economics, business, ethics and communication. She is also the coordinator of the Bachelor’s Degree in Tourism and the Teaching Innovation Coordinator of the School of Social and Human Sciences. PhD in Business Administration. Her doctoral dissertation was on Female Leadership. She is a member of the Social Development, Economics, and Innovation for People research team (EDISPe), focused on social and solidarity-based economy, entrepreneurship, and social innovation for sustainable development. She is an external advisor to the Bilbao City Council’s Ethics and Good Governance Commission. Alfonso Ernesto Benito Fraile is a professor at the University of Monterrey (UDEM). His teaching and research subjects are about Humanistic Management, Social Responsibility, Human Capital and Organisational

196

About the contributors

Development. He has graduated in Humanities: Business with a Master in Executive Development and Leadership, both at the University of Deusto (Spain). His PhD is about the Corporate Social Responsibility and the Values Development, at the same university (Spain). All his studies are aimed at supporting the development of people in organisations, to enhance teamwork and leadership. Salvador S. Guajardo-Trevino is currently an assistant professor of the Management Department at Universidad de Monterrey. His research is tied to the Family Business Center of the University of Monterrey and is focused on dynamic capabilities in SMEs and on strategy-related issues of family firms. Dr  Guajardo received his doctoral degree in Business Administration from EGADE Business School, Mexico, and his MBA from the University of Edinburgh Business School, UK. Ana Rosa Leal is an assistant professor of Management of the Business School in Universidad de Monterrey, México. She received an MA in future Studies from Tecnológico de Monterrey and her PhD in EGADE Business School. Her research focuses on non-market strategies and regional methods applied to corporate social responsibility and entrepreneurship. Her work has appeared on the Journal of Management Studies and Sustainability and has also published chapters about research methods and sustainable business. Jesús Avila Martínez is currently a marketing professor at Tecnologico de Monterrey and a professor at the School of Accounting and Business Management UANL. He has a bachelor’s degree in Business Administration from Tecnologico de Monterrey and a PhD in Business Administration with a major in marketing from EGADE Business School. He is a member of the Strategic Research Group in Social Innovation at EGADE Business School. His research focuses mainly on consumer behaviour at the Base of the Pyramid and corporate social responsibility, which has been presented at several national and international conferences. Flor Morton is currently a research professor at Universidad de Monterrey. She graduated of a major in Marketing from Tecnológico de Monterrey and holds a PhD in Management Sciences from EGADE Business School, Tecnológico de Monterrey. She has collaborated as a marketing consultant in diverse projects for national and international companies. Her research interests focus on consumer behaviour and the use of digital technologies, as well as sensory marketing and e-commerce. She is currently a member of Mexico’s National Researchers System (CONACyT). Aitziber Mugarra-Elorriaga is a professor in Economics & Business Studies at the Faculty of Law; coordinator of University Social-Responsibility & Service-Learning and member of Loiola Legal Clinic team in the Faculty of Law. PhD in Economics & Business in University of Deusto, she is expert in social responsibility, indicators and auditing, starting with her doctoral thesis which proposed a battery of indicators for the co-operative

About the contributors 197 audit of Mondragon Cooperative Group, later adapted to co-operatives for the International Co-operative Alliance. Lead researcher of Social Development, Economics and Innovation for People (EDISPe) team, which research in social and solidarity-based economy, entrepreneurship and social innovation for sustainable development, combining legal, economic and social perspectives, specially focusing on the European zone. As researcher, she works with organisations and projects linked to innovation at regional, national and European level. Michael Pirson holds a PhD in Organisational Behaviour from the University of St. Gallen, Switzerland. He is an associate professor of Management, Global Sustainability, and Social Entrepreneurship at Fordham University and a research fellow at Harvard University. He co-founded the Humanistic Management Network and is the editor of the Journal of Humanistic Management. Michael is a full member of the Club of Rome, an international think-tank which acts as “a global catalyst for change.” Ana Mariela Quiroga Treviño is currently a professor at ITESM, Campus Monterrey. She has a bachelor’s degree in Economics and Marketing from Tecnológico de Monterrey, Campus Monterrey and a PhD in Economics  & Business at the University of Deusto, Bilbao, Spain. She has collaborated as a management consultant in diverse projects for national and international companies. Her research interests focus on corporate social responsibility as well as strategic planning. Teresa Treviño is currently a professor of Marketing at Universidad de Monterrey. She holds a PhD in Management Sciences and a master’s degree in Marketing from EGADE Business School, Tecnológico de Monterrey, Mexico. Her research interests focus on online consumer behaviour and digital marketing, specifically consumer-brand relationships on the Internet, motivations and uses and gratifications of different online segments when using social media, e-WOM, and the impact of online marketing strategies on consumers. She is currently a member of Mexico’s National Researchers System (CONACyT). David Capistrán Wah is a current professor at the business school in the area of “management and leadership” and coordinator of projects with student groups at Tecnológico de Monterrey, Campus Monterrey; he graduated from the Bachelor of Business Administration at the Instituto Tecnológico y de Estudios Superiores de Monterrey and a master’s degree in marketing from EGADE Business School. Dr Capistrán currently has a PhD in management science with a focus on organisational strategy. His research focuses on issues of humanistic administration and the search for dignity within organisations. His main areas of focus are human development within organisations, business models, the administrative model, and the importance of the individual to the organisation. Dr Capistrán has presented papers, researches, and workshops in several national and international congresses with his various focus topics.

Index

Note: Page numbers in italics indicate a figure and page numbers in bold indicate a table on the corresponding page. 2030 Agenda for Sustainable Development 2, 50, 88, 104, 155 – 162, 192 advergames 62 advertising to children, effects of: food 57; Mexico 57 – 58; targeting children 64, 65; tobacco exposure 56; toys 56, 57; traditional marketing techniques 58 affluenza 30 agency theory 22 – 24, 26 – 27, 100 Aktouf, O. 1, 7, 14, 153 “alienating work” 145 – 146 Allen, W. T. 21 Amann, W. 115, 116 “Amazon Program” 93 American business school model 24 Antúnez-de-Mayolo, C. 174 apps, advertising 62 – 63 Association of Universities Entrusted to the Society of Jesus in Latin America (AUSJAL) network 138, 141 “atravessadores” 93 authority ranking 33 Avramchuk, A. S. 42 axiological dimension 6, 8 Baker, S. M. 53 balancing act 33, 34 Banco do Brasil: Grameen bank model 171; Letter of Principles 170 – 171; Programa Água Brasil 171 – 172 banner advertising 60, 64 Bárcena, A. 191 base of the pyramid (BOP) 167 – 168; Banco do Brasil 168 – 169, 170 – 172; business innovation 173 – 175, 174, 175 – 176;

Casa para Ensamblar 169 – 170; homo economicus approach 168; MASISA 172 – 173; Patrimonio Hoy 168; triple bottom line approach 169; value co-creation in business 175 – 176 Bauman, Z. 134 Bédard, R. 1, 4, 6 – 7, 9, 153 Benefit Corporation (B Corp) 94 Bolton, S. C. 144, 145 Brenkert, G. G. 53 Buber, J. 145, 146 business schools, ethical formation in: behavioural changes 137; CSR 135; entrepreneurial education 137; ethical urgency 135; liquid modernity 134; neoliberalism 136; social responsibility 136 Carlucci, A. 93 Casa para Ensamblar 169 – 170, 173, 175 case and propositions patterns: inequality of humanistic values 121 – 123; non-economic goals 122; psychological ownership and SEW 125 – 126, 127; SEW 122; SEW and perceived fairness 123 – 125 Chanlat, A. 1, 3, 4, 14 children as consumers: adolescents 54; cognitive immaturity 54; conceptual advertising literacy 55; visual properties 54 Children’s Advertising Review Unit (CARU) 62 Chile 185 circular economy (CE) 84, 86, 87; negative externality 87; sustainable development goals (SDGs) 88 – 89

Index  199 circular economy SDGs: decent work and economic growth 88; industry, innovation and infrastructure 88; partnerships for the goals 89; responsible consumption and production 88 – 89 Clark, S. G. 144, 147, 149 Colquitt, J. A. 120 Commission of the European Communities 43 communal sharing 32 – 33 communication 9 – 10 complex thinking 6 conceptual advertising literacy 55, 59 consumer vulnerability 53 control, separation from ownership 22 cooperative governance SDGs: index and dashboards 105, 105; Latin American countries 106, 106; practical guide 106; Social Solidarity Economy 107; UN Global Compact 107 corporate governance 99, 100; corporate social responsibility (CSR) in 102 – 104; in Latin America 101; SDGs in 104 – 107 Corporate Governance Codes 100 corporate social responsibility (CSR) 8, 39, 44; Blueprint for a co-operative decade 104; evolution 103; overview 38 – 41; SEMCO case 45 – 46; stakeholder theory 102, 103 corporate sustainability: DJSI 181; elements 180; and humanistic management 179 – 181; investors 181; stakeholder theory 180; sustainable development 180 Cortina, A. 135 Crowther, D. 14 Cunningham, M. E. 115 Darwin, C. 27, 29, 31 Dávila-Gómez, A. M. 14 de Waal, F. B. M. 27 Diener, E. 12 digital marketing strategies 61, 64 dignity approach: dignity as humanistic management model 154 – 155; dignity threshold 149; dignitydiminishing practices 148; human rights 149 – 150; limbic system 151; in organisation 149 Dignity at Work (Hodson) 145 dignity model 151 – 152

Dignity: the essential role it plays in resolving conflicts (Hicks) 150 dignity threshold 149 distributive justice 120, 124 Donaldson, T. 149 Dow Jones Sustainability Group Index (DJSGI) 181 drive to acquire (dA) 31, 32 drive to bond (dB) 31, 32 drive to comprehend (dC) 31, 32 drive to defend (dD) 31, 32 Dufour, M. 1, 4 Dyer Jr, W. G. 115 Economic Commission for Latin America and the Caribbean (ECLAC) 39, 104, 168, 179 economic paradigm: corruption 72; Latin America 72; profitmaximisation 73 economic recovery 40 economistic mindset: amorality vs. morality/immorality 29 – 30; balance orientation 30; individuality vs. sociality 28 – 29; rationality vs. emotionality 27 – 28 economistic paradigm 22, 25 – 26 emotions, power of 27 – 28 empathy 8, 27 – 28 Enlightenment 33 epistemology dimension 6, 8 – 9 equality matching 33 evolutionary biology 31 Expression of the Emotions in Man and Animals, The (Darwin) 27 “familiness” 115, 127 family firm 111, 112, 115; business as an end vs. business as a means 116, 128; “familiness” 115, 127; preponderant philosophy 116 family firm methodology: backtranslation technique 120; case and propositions patterns 121 – 126; case descriptions 119; FIBER model 121; procedural justice 120; sampling approach 119 Federal Consumer Prosecutor’s Office (Profeco) 65 FIBER model 121 Fiske, A. P. 32 – 33 Ford management 22 Forst, R. 148 Freeman, E. 7, 13

200 Index Friedland, J. 14 Fromm, E. 153 Fuentes, C. 116 Gekko, G. 25 Gini index 168 global community 80 Global Compact Principles 158, 160 – 161, 162 – 163 good governance 102, 107 – 108 Goldman Sachs 115 Greene, J. 29 – 30 Gusdorf, G. 1, 4, 10 HEINEKEN Mexico 90; agriculture conservation 91 – 92; financing 92; local sourcing 92; SCyF 91; smart farming 91 Hicks, D. 148, 149, 150, 151 Hillman, A. J. 73 Hirsch, E. D. 137 Hitt, M. A. 73 Hodson, R. 40, 52, 145, 146, 148 Holford, W. D. 7, 9, 13, 153 homo economicus 11, 168 Huberman, A. M. 119 Hugos, M. 85 human dignity 12 – 13, 40 – 41, 52, 144, 147, 159; alienating work 145; data analysis 155 – 159; HQT 147; ILO 144; and vulnerability 52 – 53; workplace dignity 145 human drives imbalances 31, 32 humanism 5, 11 – 12, 152 – 153 humanism elements: human rights 184; multiple stakeholder 184 – 185; stakeholder orientation 184 humanistic management 7, 86 – 87, 189; approach 51 – 52, 66, 190 – 192; axiology of 8; context 2 – 3; dignity model 155; economistic paradigm 25 – 26; ethical decision-making 190; ethos for 114; expected impact of 13 – 15; and family business 115 – 116; history of management theory 22 – 24; humanistic ethos for management 114; linking to SEW 117 – 118; literature review 51 – 52; Montreal’s perspective 3 – 7; ontological dimension of 7 – 8; overview 1 – 2; philosophical rhombus of 10; Pirson’s model 154, 154 – 155; praxis of 9 – 10; propositions for humanism

113 – 114; socioemotional wealth (SEW) 121; St. Gallen school 11 – 13; and sustainable development goals (SDGs) 2, 15 – 17, 190 “Human Quality Treatment” (HQT) 147 implicit persuasion 50, 56 in-app advertising 62 – 63 International Co-operative Alliance (ICA) 102 Italian Renaissance 8 Jensen, M. C. 24 – 26, 29 Kahneman, D. 27 Khurana, R. 25 Kipper, K. 144, 148 Kirby, D. 145 Korten, D. 80 Lasswell, H. D. 148 Latin America: dignity-based organising models 192; initiatives in Latin American universities 139 – 140; organisational humanising cultures 193; private sector 192; SDGs’ challenges 190; Social Capitalism 191 Lava Jato 75 Lawrence, P. R. 28, 31 Lego Braille Bricks 57 life–work balance 47 Llano Cifuentes, C. 14 management theory: public corporations 22; status games 23 marketing managers 66 marketing to children, ethical issues in: contemporary advertising formats 55; digital age ethical issues 58 – 59; dualprocess attitude models 55; implicit persuasion 56, 67 market pricing 33, 34 MASISA 172 – 173, 175 MASISA Argentina 172 Matsumoto, D. 28 Mattson, D. J. 144, 147 McDougal, M. S. 148 McFarland, D. E. 12 Meckling, W. H. 24 – 26, 29 Melé, D. 7, 11, 12, 14, 113, 114, 121, 144, 147, 152, 153 Mexican business structures 155; 2030 agenda 156; AIM2Flourish platform

Index  201 158; family-friendly companies 159; Global Compact Principles research structure 158, 160 – 161, 162 – 163; ILO 155; MDGs 155, 156; Pirson’s humanistic management model 158; research structure 158, 160 – 161; SDGs research structure 158, 160, 162; UN Global Compact 156, 157 microenterprises 99 micro, small and medium-sized (MSME) enterprises 99 middle-income countries 108n1 Miles, R. 119 Millennium Development Goals (MDGs) 155 Mintzberg, H. 6 – 7 Monterrey corporations 191 Montreal group 1 Montreal school 5 – 6 Montreal’s perspective: Group of Humanisms and Management 4; HEC programs 4; humanism and management 6; modern management 5; own characteristics 5 morality 12, 30 Murdock, G. 28 Natura 93 – 94 negative externality 87 Neilson, F. 153 neoliberal agenda 21 – 22 Nida-Rümelin, J. 8, 11, 153 Nohria, N. 31 non-market strategies: government and political actors 73; humanistic management in organisations 74; methodology 74 – 75; Odebrecht case 75; political behaviour 73; public– private relationships 74 Nussbaum, M. 148 obesity 57 – 58 Odebrecht case/scandal 73, 75, 79; bribery model 76; bribes paid 75, 76; findings 77 – 79; Lava Jato 75; SDGs 79 – 80 OECD Principles of Corporate Governance, The 100 ontological dimension 6, 7 – 8 organisational humanising culture 147 organisational justice 124 Organisation for Economic Co-operation and Development (OECD) 65 ownership, separation from control 22

Patrimonio Hoy 168 personal well-being 41; management and human resources systems 44; RSCi 44; self-realisation or personal fulfilment 42; social responsibility 43 PetStar 89 – 90 philosophical rhombus 10 Pirson, M. A. 147, 152 pop-up advertising 60, 64 Practical Guide to Corporate Governance 101 praxis/practical dimension 6, 9 – 10 Principles for Responsible Management Education (PRME) 139 – 140, 142n1 procedural justice 120, 124 profile targeting 61 profitability 12 psychological ownership 125 public corporation 22 public–private relationships 72 – 74, 79 Rawls, J. 14 Resourceful, Evaluative Maximising Model (REMM) 25; amorality 26; individuality 25 – 26; maximisation 26; rationality 25 Rosen, M. 149 Roundtable’s Companies Circle, The 101 Samuelson, P. A. 14 Sayer, A. 144, 145, 146 Schwartz, B. 30 self-realisation/personal fulfilment 42 Seligman, M. E. 12 SEMCO case 45 – 46 Semler, R. 45 “Service-Learning” methodology 140, 142n2 shareholder value maximisation 23 Sims, R. R. 137 social media advertising 60 – 62, 64; personal information 64; profile targeting 61; video types 61; YouTube Kids 62 social relations, imbalance in: balancing act 33, 34; communal sharing 32 –3   3; equality matching 33; market mechanisms 34; market pricing 32, 33, 34 social responsibility 43, 138 socio-economical activities 3 socioemotional wealth (SEW) 117, 128n4; family businesses 117 – 118; family values 117 – 118; noneconomic rewards 117

202 Index sociology 9 Spitzeck, H. 7, 11, 13 – 14 Stachowicz-Stanusch, A. 115, 116 stakeholders 184 stakeholder theory 9 St. Gallen school 2; humanism in business 11 – 12; monological ethical reflection 13; ontological characteristics 12 St. Gallen University 2 stock options 23 supply chain management 84; green 85 – 86; key stakeholders 85; sustainable supply chain management paradigm 86 sustainable development 180 sustainable development goals (SDGs) 2, 38, 47, 179; balanced development 14; CE approach 88 – 89; classification of 15; common good 14, 15; Compass 105; humanistic management practices 17; index and dashboards 105; SDG 1 No Poverty 16; SDG 3 Good Health and Well-being 16; SDG 5 Gender Equality 16; SDG 8 Decent Work and Economic Growth 16, 38, 88; SDG 10 Reduced Inequalities 16; stakeholders 13 sustainable supply chain management 84 “Sustainability, Ethics and Social Responsibility in Business” 140 Tabacalera A. Fuente y Cia 116, 128n1 triple bottom line approach 86, 169, 173, 174

UN Global Compact 156 – 157; anticorruption 157; environment 157; human rights 157; labour 157 Universidad de Monterrey 140 – 141 university social responsibility (USR) 137 – 139 U.S. Securities and Exchange Commission (SEC) 24 Vallaeys, F. 138 Viña Concha y Toro case: company profile 181 – 182; SDGs 185; sustainability initiatives 181; sustainability strategy 182, 182 – 184 von Kimakowitz, E. 13, 74 vulnerability 52 – 53; of children as consumers 53 – 55; consumer 53; dignity and 52 – 53; specially vulnerable 53 Wall Street (film) 25 Walsh, J. P. 149 well-being 41; balanced development of 14; good health and 16; personal 41 – 45 White Paper on Strengthening the Role of Institutional Investors in Latin American Corporate Governance 101 Wilson, E. O. 28, 30 win–win approach 167, 169, 176 World Commission on Environment and Development (WCED) 83 Wright, R. 29 Yásyana, E. A. 192 Yin, R. K. 119