Transcript The Caux Round Table

National Values &
Corporate Social Responsibility
Stephen B. Young,
Global Executive Director
Caux Round Table
Portoroz, Slovenia
April 4, 2008
1
The Challenge:
What are the cultural foundations for CSR Management?
Does CSR Management fit within a national development strategy?
2
What is CSR Management?
• Business decision-making that includes anticipation
and measurement of a wide range of consequences
• Incorporates cultural and moral perspectives into the
financial metrics of successful firms
• Normative standards derived from global perspectives
(Caux Round Table, UN Global Compact, GRI, SA
8000)
3
What is National Culture?
• Customs, habits, values, priorities that create a
psychological comfort zone for individuals
• Predispositions and dispositions of personal character
• Core concepts – axial principles - expressed in language
and apprehended through language use
4
What Are Axial Principles?
• Core principles about human purpose and reality that
influence many attitudes, behaviors, and expectations of
right and wrong, good and bad, close and far
• Cultures have unique axial principles
• Axial principles shape national character
• Axial principles are expressed in language but carried out
in behavior
5
From Normativity to Facticity
(Jurgen Habermas)
The Moral Individua l
Leadership
Development
Personal Capacity
Mindfulness Practice;
Prayer, Zen Mind
Awareness
Discourse, Reading
Bill Sykes Workshops
Vision
(Religion)
Conscience
Moral sense
(A. Smith, Mencius)
Reflection
Virtues
Honesty
Compassion
Courage
Character / Identity
(Determination)
(Superego)
(External Pressures)
Trustworthiness
Feedback
Exercise self-control;
Form habits; Coaching
Goals
Management
Consider
Alternatives;
Mentoring
$
Career
Family
Education
Justice
Decision-Making
(Courage)
(Ego-id conflicts)
(External Pressures)
Skills/Competencies
Learning
Personality Style
(Myers-Briggs)
Training
Experience
Action
Judgment
Discernment
Accomplishment
6
FORCES AT WORK ON THE INDIVIDUAL
Symbolic universe;
legitimation
Well-grounded self; a calling;
Courage; clarify goals and
motivations; discernment; critical
reflection; narrative; metaphor;
wisdom; intuition; sense for the
aesthetic
Long time horizon; appreciation for the intangible;
personal character
Power;
domination/
control
strategies
Greed;
Manipulation
strategies
Fear;
Power
strategies
Rewards and punishments; moral
interactions are like commodity
transactions: reciprocity,
retribution, restitution, revenge
Uncertain self; objective factors, emotions; Short time
horizons; concern for the tangible; Problem solving;
habits;
7
Virtue
Other-Regarding
The Moral Sense
Self-Regarding
Self-Interest Considered upon
the whole
Self-Interest Narrowly
considered
Basic physical and Ego needs
Self Interest
8
Stewardship
Service
Power for common good;
Ethical leadership; Kyosei
Fear
The Moral Sense
Exploitation
Power only for self
Dysfunctional Leadership
9
Dominion
9
Cosmos
The
Basic
Self
10
Virtue
Self interest
11
Traditional Chinese Business Value
Ideal
order; peace; harmony
“T’ai He”
Principles
channel self-interest;
repress autonomy;
prevent anarchy
hierarchy; licenses; seek
permission; conform to
government policies and wishes
Standards
Stakeholder
Benchmarks
Customers
compete on
price; caveat
emptor
Employees
paternalism;
dependency;
low wages;
routine
tasks; follow
orders
Owners/
Investors
“quan xi”
cronies;
family; share
risks; no
transparency
Suppliers
low cost
Competitors
cartel;
Divide
markets
Communities
seek government
favors; “quan
xi”; responsible
only for assigned
duties; no
transparency
Outcomes
Steady sustained growth; little innovation; corruption
12
Proposed Chinese Business Value Pyramid
Mutuality/Reciprocity “Jen”/“Shu”
Social Office of Business;
lord lords; minister ministers;
father fathers; son sons;
CRT Principles
Personal responsibility;
concern for consequences; achieve goals
CRT Arcturus
Customers
Quality
Employees Agents
Owners/
Investors
Fiduciary;
Transparency
Suppliers
Share Risks
Competitors
Compete on quality;
No fixed markets
Community
No Corruption;
Good Environment
Sustained Social Justice & Wealth Creation
13
Japanese Corporate Value Pyramid
“Ninjo”
Ideal
Principles
“giri-on”
Keiretsu
Standards
group process; cross-holdings;
stability; inflexible strategy;
flexible contracts
Stakeholder
Benchmarks
Customers
market share
Employees
lifetime
employment
Owners
Suppliers
debt over
Keiretsu;
equity; low just in time;
margins; no
share risk
bankruptcy;
Japan, Inc.
Competitors
Japan, Inc.;
divide
markets; live
and let live
Community/
environment
“tanin”/ low
value
Outcomes
Upmarket — Growth: 1954—1990
Downmarket — Stagnation: 1990—2002
14
One Suggested Value Pyramid for Japan
Mutuality: “kyosei”
Shinto: sincerity of mind/service
Mahayana: compassion
Confucian: “jen hsin”
Christian: love thy neighbor
Ideal
Principles
CRT Principles
for Business
Standards
CRT SAIP
Stakeholder
Benchmarks
Consumers
market
share
(no change)
Employees
autonomy;
mobility;
private
savings;
health care
Owners
ROI; share
profits;
transparency;
corporate
governance;
bankruptcy
Suppliers
Competitors
just in time; price/quality
share risk competition;
no fixed
market share
Outcome
Start an Upmarket Cycle — Sustained Growth
Communities
transparency;
no corrupt ties
to government;
protect
environment
15
Suggested Mexican Business Value Pyramid
Dominion
(“hacendado”; “patron” ideal)
Ideal
Honor;
respect
Standards
Position;
title
Benchmarks
Stakeholders
Consumers
compliant;
accept
product as
offered
Employees
paternalism;
obedience; no
responsibility;
low
productivity;
many positionstitles;
procedure
Personal
discretion
Ownership
prerogatives
Owners /
Investors
equity over
debt; few
trusted
insiders;
family
Property;
“territory”
Scope of
influence;
number of
“dependencias”
Suppliers
submissive
Competitors
enemies;
buy political
influence
Community
little or no value
or importance
except as
subordinates;
buy influence social and
political
Outcomes
Small entrepreneurial middle class; wide gaps in wealth/income;
capital flight; weak civil society; low social capital; high mistrust
16
Proposed Mexican Business Value Pyramid
Ideal
Honor;
Respect for human dignity
Standards
CRT Principles for Business;
fiduciary ideal
Benchmarks
SAIP 49 cell matrix
Stakeholders
Consumers
valued
clients;
service
orientation
Employees
colleagues in
common
effort
Owners /
Investors
sustained
returns; good
corporate
governance;
transparency
Suppliers
buy on
quality
Competitors
compete on
quality and
innovation
Community
pay returns on
social capital;
sustainability
Outcomes
Economic growth with social justice
17
COMMUNIST VIETNAMESE BUSINESS VALUE PYRAMID
Coercive Power
“Thé”
Money in the pocket; Regulatory
power; Deals they can’t refuse;
Manipulate fear and greed
Net worth; Diamonds and jewelry; Assets abroad;
Who asks for your permission
Customers
Take cash;
No warranties
Employees
abject
submission:
Paternalism
Owners/
Investors
Cheating;
False pretenses
Suppliers
Low cost;
Threats
Competitors
Monopoly;
Gov.
favoritism
Community
Buy influence;
Family
loyalties
Cash is king; Corruption; Favoritism; Personal
relationships; No large enterprises; High levels of mistrust
18
PROPOSED VIETNAMESE BUSINESS VALUE PYRAMID
Merit virtue
“phuc-duc”
Stewardship;
Quality of service and work
CRT Principles
Good reputation; Trusted with money and power; Always
welcomed; Treated with respect;
CRT Arcturus
Customers
Service;
Quality
Employees
Autonomy;
Respect;
Good wages
Owners/
Investors
Fiduciary;
transparency
Suppliers
Buy quality;
Share risk
Competitors
Compete on
quality
Community
No corruption;
Good environment;
Pay taxes
Sustained wealth creation; Many successful businesses;
Social justice
19
THAI BUSINESS VALUE PYRAMID
High Social Status
“baramee”
Gain high rank:
Dispense patronage and largess;
Accumulate visible signs
of wealth and success
Net worth; Number of clients;
Number of medals and awards
Customers
Welcome;
Well treated;
Take it or
leave it
Employees
Owners/
Unquestioning
dependency;
Loyal clients
Investors
Family; No
rights; don’t
question
Suppliers
Dependent
Competitors
Eliminate
through gov.
influence
Community
Family and
clients only
Wealthy elite connected to government; Corruption;
Comfort and ease; Weak public services
20
PROPOSED THAI BUSINESS VALUE PYRAMID
“Chakravartin”
Dharma Ruler
10 kingly virtues
“Rajadharma”
CRT Principles
Open mind; Partnership; Respect; No pretence; Hard work;
Show appreciation; Humility; No excess luxury;
CRT Arcturus
Customers
Quality
service
Employees
Good pay and
working
conditions
Owners/
Investors
Fiduciary;
Transparency
Suppliers
Quality
Competitors
Compete on
quality
Community
No corruption;
Protect
environment;
Responsibility
Widely shared wealth creation; comfort and security
21
The American Ethic
The Moral Sense
Self-interest considered upon the whole;
Humility in the face of experience
Principles
Standards
Benchmarks
Outcomes
Just and prosperous
community; City upon a
hill; Adult maturity; Build
for the future
Government of the people;
By the people; For the people;
Citizenship; Patriotism;
Rule of Law; Democracy;
Equality of opportunity; Truth
subject to verification
Civic participation; Strong civil society;
Excellence in education; Work ethic; Respect for
all; Meet fiduciary responsibilities
Economic growth; Moral capitalism; Personal savings; Strong
institutions; High levels of participation; Well educated
populace; Low aversion to risk; Dense social capital; Strong
sense of personal responsibility; Tolerance; Integrity;
Transparency; Accountability; Powers of judgment; Patience;
Open Social Architecture
22
The Left
Infantile Individualism
(perfectibility of humanity)
Principles
Standards
Benchmarks
Outcomes
Entitlement to desires;
No authority over self;
No moral sense;
Authenticity define the elect
Sensual pleasure; Freedom of
thought; Material comfort; No
social standards for behavior;
Truth revealed
Feminism; Equality of results; Wealth transfers;
Government subsidies; Political correctness;
Multiculturalism; GLBtism;
Weak law enforcement
Moral relativism; Society subservient to government;
Class warfare; Philosophical nihilism;
Culture of addiction; Co-dependency; Reality TV;
Internet porn; Shallow culture; Let government do it;
Socialism; Closed social architecture
23
The Right
Survival of the Fittest
under God / Natural Law
Principles
Standards
Benchmarks
Outcomes
Aggressive individualism;
Only self and God / Nature;
God loves those who win;
Wealth defines the elect
Financial success; Authority of
family and church; Freedom
from government; Work ethic;
Self-reliance; Truth revealed
Low taxes; Personal wealth; Regulation of sexual
conduct; Political correctness; Private schools;
Networks of personal
Income equality; Corporate scandals; Brute capitalism;
“Money” and insider politics; Suburbs; Consumerism;
Low taxes; Small governments; Shallow culture;
High risk aversion; Closed social architecture
24
Crony Capitalism
Ideal
Social Dominance
Rent Seeking; Insider
Favoritism; Buy
Obedience; Use Police
State for Security
Principles
Insider Networks; Capture of State
Functions; Monopolies & Cartels;
No Accountability
Standards
Stakeholder
Benchmarks
Customers
Capture with
Monopolies
& Cartels;
Price at
Monopoly
Premium
Employees
Indentured
Retainers
Owners/
Investors
Families;
Political
Insiders; No
Corporate
Governance
Suppliers
Price
Takers;
Low
Quality
Competitors
Removed by
Government
Fiat
Communities
Maximum
Externalization
of Costs;
Corruption of
Politics
Outcomes
Mafia-style Administration; Kleptocracy;
Large Scale Transfer of Wealth to Elite Families
25
The Irresponsible Corporation—ENRON
Ideal
Greed; Social Darwinism
Principles
Maximize $
irrespective of
consequences to
others
Standards
Stakeholder
Benchmarks
ROI
Consumers
caveat
emptor
Employees
layoff 20%
a year;
lock in
401(k) stock
Total
compensation
Owners/
investors
“aggressive”
accounting;
conceal
liabilities
Suppliers
squeeze
and bully
Stock
price
Competitors
collude or
destroy
Communities
Maximize
externalities; seek
government
favoritism; no
transparency
Outcome
Destruction of equity investment
Financial loss for employees, creditors, suppliers
26
Moral Capitalism
World Religions
(Kyosei, Human Dignity, Stewardship)
Ideal
Sustain
Principles
Success Feedback
CRT Principles
for Business
Inform
Standards
CRT Self-Assessment Process
Elaborate and Quantify
Customers
Chapter 7
Employees
Chapter 8
Owners/ Suppliers
Investors Chapter
Chapter 9
10
Competitors
Chapter 11
Communities
Chapter 12
Stakeholder Benchmarks
Focus
Corporate Action
Management Decision Making
Accountable for
Outcomes
27
Moral Capitalism
Aspirations
(Kyosei, Human Dignity, Stewardship)
Core Behaviors
Creating New Markets, New
Consumer Paradigms
Values -Driven
Business Case
Leadership
Styles
Transforming
Integrated
Innovative
Social License to
Operate
Engaged
Legal Compliance,
Short-termism
Basic
Visionary
Values
Champion
Value Steward
Supportive
Disconnected, Erratic,
Reactive
28
Conclusion:
CSR Management will be most successful when CSR
norms are integrated with axial principles of a national
culture
29
The Cultures and Axial Principles
of Southeastern Europe:
•The past controlling the present
•We live our lives walking back and forth on the Value
Sediments left by History
30
Value Sediments Left by Conflict
Living At the intersection of value empires:
• Between Rome and warrior tribes
• Between Slavs and Ural-Altaics
• Between Roman Catholicism and Eastern Orthodoxy
• Between Islam and Christianity
• Between Turks and Slavs (with Albanians as well)
• Foreign Rule from Venice, Budapest, Vienna, Istanbul
• Smaller Imperial visions: Greater Serbia, Greater Bulgaria, Greater Romania
31
Value Sediments left by Family Structure
• Dinaric family system – the Kuca (Dinko Tomasic,
Personality and Culture in Eastern European Politics, G.W. Stewart, NY
1948)
• Patrivilocal house cycle with complexity (Karl Kaser,
Introduction: Household and Family Contexts in the Balkans, The History
of the Family, Vol. 1, No.4 1996)
32
• Daughters-in-law and granddaughters-in-law come to live with
husband’s family; multigenerational household cycle
• Sons stay together as an economic/social unit; paternal
property (the ocevina) not divided with marriage or death, but
only after generations when the family group divides.
• Kuca ruled by the Starjesiva – domineering head male elder
• “Where the elder is not obeyed, God does not help.”
• “The young to obey; the elder to command.”
33
Family Dynamics within the Kuca
• Oscillation between overindulgence in affection and
over strictness in punishment
• Ambivalence between love/hatred; submission/defiance
• Desire for self-maximization coupled with keen
resentment of accepting dictation from others
• Frequent conflicts: Father/son & Parent/child
34
One Consequence:
• Too good an opinion of oneself; pride can become
quite boundless
• Desire to win a place of their own in the world can lead
to unjustified personal and national claims
35
Second Consequence:
• Alternate between activity and passivity
• Lack of emotional balance
• Hope and Despair equally excessive
36
Third Consequence:
•Rivalry and Antagonism
•Cunning manipulation of others admired
• Submission yet waiting to exert own power
• Mistrust from fears of disloyalty on the part of others
•
“He who does not trust will not be duped.”
•
“Woe to him who trusts a man.”
•
“He who has force has justice.”
•
“Force is stronger than a kind word.”
•
“He who knows how will gain double.”
37
Value Sediment Left by History
• Power is not accepted as automatically legitimate
• Determination to preserve core values against rulers
• National/linguistic/ethnic/religious sub-cultures in the
region most important for sustaining individual identity
and family solidarity
38
Turning Lead into Gold
• Every value has its good and bad aspects
• What is a strength can become a weakness
• What is a weakness can become a strength
• Yin/Yang approach to the flow of power and circumstance
39
• Self-assertion side of Dinaric family pattern
• Keen Awareness of self and values held dear by self
• Deep respect for importance of values
• Search for value-based solutions in the face of power,
cruelty and cynicism
40
Positive CSR Management Orientations:
• Predisposition to please customers, to innovate, to seek quality
• Role as favored suppliers in global supply chains
• Provide employees with opportunities to excel
• Employees willing to step up to challenges if they get personal freedom and
recognition
• Emphasis on training and workforce development
• Respond avidly to competition in free market setting
• Concern for quality of life in local community
• Resistance to abuse of political authority
41
Less Positive CSR Management Orientations
• Less concern for quality of public goods provided by the state
• Less concern for far-off environmental issues
• Mistrust of investors, partners, suppliers
• Mistrust of government
• Need to be powerful and arbitrary in dealing with customers
and employees, rivals and outsiders
42
CSR Management Advantages in
Southeastern Europe Value Sediments:
Recognition of importance of individual achievement
use this to promote human capital formation
• Education
• Training
• Inventions and innovations
• Hard work
• Easy ability to articulate thoughts and feelings
• Respond quickly to opportunities
43