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Issues in Business Ethics


Series Editors
Brian Harvey, Manchester Business School, U.K.
Patricia Werhane, University of Virginia, USA.

Editorial Board
Brenda Almond, University of Hull, Hull, U.K.
Antonio Argandona, IESE, Barcelona, Spain
William C. Frederick, University of Pittsburgh, U.S.A.
Georges Enderle, University of Notre Dame, U.S.A.
Norman E . Bowie, University of Minnesota, U.S.A.
Henk van Luijk, Nijenrode, Netherlands School of Business, Breukelen,
The Netherlands
Horst Steinmann, University ofErlangen-Nurnberg, Nrnberg, Germany

The titles published in this series are listed at the end of this volume.

Facing Public Interest

The Ethical Challenge to
Business Policy and
Corporate Communication

Chair of BusinessEthics,
Director of the Institute for BusinessEthics,
University of St. Gallen,
St. Gallen, Switzerland
Institute for BusinessEthics,
University of St. Gallen,
St. Gallen, Switzerland


A C L P . Catalogue record for this book is available from the Library of Congress.

I S B N 978-0-7923-3634-1
I S B N 978-94-011-0399-2 (eBook)
D O I 10.1007/978-94-011-0399-2

Printed on acid-free paper

A l l Rights Reserved
1995 Springer Science+Business Media Dordrecht
Originally published by Kluwer Academic Publishers i n 1995
Softcover reprint o f the hardcover 1st edition 1995
No part of the material protected by this copyright notice may be reproduced or
utilized in any form or by any means, electronic or mechanical,
including photocopying, recording or by any information storage and
retrieval system, without written permission from the copyright owner.


This volume has grown out of the seventh conference of the European Business
Ethics Network (EBEN) at the University of St. Gallen from September 14-16,
1994. On behalf of EBEN, the Institut for Wirtschaftsethik (Institute for Business
Ethics) at the University of St. Gallen has initiated and organized this international conference together with REs PUBUCA - Association for Responsibility
in Business, a group of Swiss entrepreneurs and managers who commit themselves to promoting an ethically based way of doing business. Three other
academic institutes cooperated in the organizing body of the conference: the
Institute for Social Ethics and the Institute for Research in Business Administration, both at the University of Zurich, and the Institute for Research in Marketing
and Distribution at the University of St. Gallen. Last not least, the conference
was effectively supported by the Swiss Federation of Commerce and Industry,
and by the former President of the Swiss National Assembly, Mr. Ulrich Bremi.
The name of the association Res Publica corresponds with the guiding
idea of the EBEN Conference '94 and also of this book: Nowadays, doing
business is never just a private matter but in many ways a public affair.
Free enterprise has to serve public purposes and to be accountable to the general
public as far as the public cause (res publica) is affected by the implications
and outcomes of business activities. In short: Responsible business of today
means Facing Public Interest. Under this general topic, the conference aimed
- first, at lighting up advanced conceptual ideas of how business policy and
<<public relations should respond to the public expectations of the time being
in an ethically and economically sound way, and at discussing such ideas
from different points of view (business leaders, representatives of concerned
citizens' groups, and academics from the fields of political philosophy, social
and business ethics);
secorully, at presenting and analysing practical experiences of companies and
Public Relations consultants with innovative approaches to business policy
and corporate communications in different branches facing a specially
concerned public (chemistry, banking, engineering and car industry, and
others) with respect to ecological or social challenges.


The present volume contains a systematically arranged selection of the most

topical and instructive speeches and papers given at the conference. The selected
contributions have been carefully revised. Our primary thanks go to the authors
for their pleasant cooperation and help to our editorial work.
Moreover, we are indebted to so many persons who gave strong support
in different ways to make possible the event of the conference and of this
volume that we cannot express our gratitude to all of them by personally naming
them. Therefore, we cannot avoid another selection as for some special acknowledgements. Let us begin with thanks to the members of the Programme
Committee: Marie Bohata (Prague), Sheena Carmichael (London), Hans Ruh
(Zurich), Alphons Schnyder (Zurich) as representative of Res Publica, and
Horst Steinmann (Nuremberg) for their support in the programme development
and paper evaluation. We also say thank you to Henk van Luijk, EBEN chair
(Nijenrode), and the entire EBEN Executive Committee for their help and their
confidence in our - maybe sometimes a little bit wilful - programmatic ideas
and organizational structures.
We address especially cordial thanks to all colleagues and friends of the
organizing institutions who did so much for the whole project, above all to Maria
Luise Hilber, President of Res Publica (Zurich), for her great and never-ending
commitment to our common cause, and to Bruno Staffelbach from the Institute
for Research in Business Administration (Zurich) who contributed much to the
evaluation of the papers. In this thanks, we include all the other members of
Res Publica and the whole organizing body who contributed with numberless
efforts and activities to the final outcomes. We cannot name every one of them
but we would like to render prominent two persons who took a special responsibility in the local organizing team: Susanne Zajitschek (St. Gallen) who kept
full of humour even in times of crash management, and last not least Margrit
Ruckstuhl, the secretary of the Institute for Business Ethics who mastered all
the technical and administrative tasks before, during and after the conference
as well as during the busy production of this volume in superior and always
pleasant style.

St. Gallen, May 1995

Peter Ulrich
Charles Sarasin


Business in the Nineties: Facing Public Interest ..................... .
Peter Ulrich

Part I:
Facing Public Interest - Horizons of the Ethical ChaUenge on Business
Clash of Civilizations or World Peace through Religious Peace . . . . . . . . . . . 11
Hans Kung
The Responsibility Enterprises Have Regarding the Big Problems ......... 29
of Our Time
Hans Ruh
Public Expectations Toward Private Industry: Greenpeace's ............. 33
Expectations of Companies with Regard to their Ethical and
Political Responsibilities
Thilo Bode

Part ll:
Business in Response to a Concerned Public - Ethical Foundations
The General Public as the Locus of Ethics in Modem Society ............ 43
Adela Cortina
Business in Response to the Morally Concerned Public ................ 59
Ronald 1.M. 1eurissen
Entrepreneurial Performance and Public Accountability ................ 73
Peter Pratley


Part ill:
Business in Response to a Concerned Public - Corporate Policies
and Guidelines

The Concerned Public: A Management Challenge .................... 97

Andres F. Leuenberger
Business Policy and Corporate Dialogue in the Banking Field . . . . . . . . . . . 105
Walter G. Frehner
Customer Focus in ABB Switzerland's Communication Policy: .......... 113
An Ethical Challenge
Andreas Steiner
Business Policy and Corporate Dialogue: Future Challenges ............ 119
Gerry Wade
Part IV:
Corporate Dialogue and Public Relations - Critical Issues

What Happens if Small Challenges Big? . . . . . . . . . . . . . . . . . . . . . . . . . . 131

Maya Doetzkies
Corporate Responsibility and Reputation Management ................ 137
in Crisis Situations
Walter G. Pielken
Dialogue between Corporations: Ethically Conscious Public ............ 149
Relations Management as Promoter of Industry-wide Agreement
on Ethical Policies
Regine Tiemann and Susanne Zajitschek
A Survey of Moral Conflicts among Norwegian Public ............... 167
Relations Professionals
Johannes Brinkmann and Hans Gudmund Tvedt
Part V:
Ecological Challenges and Business Response - Examples and

Corporate Responsibility and Hazardous Technology: ................. 185

An Example of the Interaction Process Between Industry
and Society
Brian Harvey and Neil D. Stewart


Environmentally Responsible Business Strategy: .................... 199

Packaging Company's Response to a Critical Challenge
Minna Halme
Experiences with Corporate Dialogue: The Case of the ............... 213
Ciba-Geigy Incinerator for Special Waste
Ralph Saemann
The Marketing Dilemma: Marketers Between Consumer ............... 219
Wants and Ecological Requirements
Jost Wirz

Part VI:
Social Challenges and Business Response - Examples and
Are Economic Realities Forcing EC Europe to Abandon .............. 227
Social Democracy in the Workplace? Perspectives from
the Boardroom in Six Member States
David L. Mathison
Family Issues of Employees: The Case of Excel Industries, Inc. . . . . . . . . . 241
- A Conflict with Public Perceptions in
the United States
James S. O'Rourke
Responsibility in Management: An Issue for Personnel . . . . . . . . . . . . . . . . 251
Development in Major Companies?
Stefan Jepsen and Jiirgen Deller

Contributors ............................................ 267

Peter Ulrich

The relationship between private enterprise and public interest has always fonned
the core of business ethics, explicitly or implicitly. Even those who stick to the
most radical conception of private business will claim that this is just what serves
the public interest best - how else could they justify their position. Any guiding
idea of the business company as a societal institution is a normative idea, rooted
in a comprehensive social and political philosophy. And any possible legal design
of such an institution has to be constituted and legitimized by a public procedure.
Indeed, free enterprise may be private in a legal sense, as far as property
rights are concerned. However, most business activities have widespread and
far-reaching impacts upon society as a whole. Obviously, unintended implications
of entrepreneurial decisions - such as increasing unemployment because of
industrial productivity improvement, or environmental pollution resultant from
economic growth - tum business policy more and more into a public issue. This
leads to a growing public exposure of private business in our difficult decade. I
Today, companies are exposed to growing societal expectations and at the same
time to harsh economic requirements. Management finds itself in the limelight
of public criticism and in the centre of multiple conflicts of claims and values.
Which of them deserve to be preferred and which to be postponed? Who is
authorized to define the public interest? And how far is business morally obliged
to be engaged in social commitments?

T. DylIick (1989): Management der Umweltbeziehungen. Qffentliche Auseinandersetzungen

als Herausforderung. Wiesbaden: Gabler; R.E. Miles (1987): Managing the Corporate
Social Environment. Englewood Cliffs: Prentice-Hall.

P. Ulrich and C. Sarasin (eds.), Facing Public Interest, 1-8.

1995 Kluwer Academic Publishers.

To be able to cope with these fundamental challenges, entrepreneurs and

managers of today need an appropriate understanding of the relationship between
the firm and society as a whole, i.e. of the public relations of the company in
a genuine and undiluted sense of the term. The point of departure for obtaining
such an understanding is the basic conception of the company itself


The Company as a Quasi-public Institution

Traditional ideas of the free enterprise system are no longer sufficient as

guidelines for an ethically responsible as well as economically sound way of
doing business. If business activities usually have impacts on the quality of life
of many people in various aspects, the company can hardly be considered any
longer as a private arrangement that meets its public obligations only by maximizing its profits. This traditional philosophy of private enterprise presupposes
a basic harmony between private and public interest, which is not the case as
far as there are growing conflicts about the priorities of economic, social and
ecological ends. The invisible hand (Adam Smith) of the market is not an
adequate guarantor for fair and just solutions to societal conflicts of values,
because purchasing power, not moral reasons, decides about the socioeconomic
results of the market game.
Moreover, the free market system does not exist for its own purposes only;
it has to be embedded in the basic norms and rules of a free and democratic
society and to operate in the service of this society. Freedom of trade is not
a natural right of business but founded on the moral and legal constitution of
society. Accordingly, business depends on its public legitimation and acceptance.
There is no such thing as free enterprise without responsibility and accountability to the community. So, private business is only legitimate and granted
within a basic consensus by all citizens about the normative rules of the game,
i.e. the political framework of the market system. And this is on no account
a politically leftist vision but corresponds to an essential principle of a free
society as such, because free citizens do not have to put up with interferences
in their private lives by others as long as they have not approved of them, based
on a fair contract or agreement.
As a result, today's company or corporation has to be understood as a quasipublic institution2 which is
- expected to create values of different kinds according to a variety of societal
needs (as its public junction), and

P. Ulrich (1977): Die GrossunternehmWlg als quasi-o.ffentliche Institution. Stuttgart:


obliged to be responsible and accountable not only to its owners but to the
general public as well (as the way of its public legitimation).
This is why business policy cannot truly be judged socially responsible as long
as it responds only to market requirements but not to moral questions of the
concerned public. Corporate social responsibility cannot be separated from public
responsiveness, i.e. the willingness of the management to give good reasons
to all those affected by the company's decisions. Yet the question is: which are
good reasons in an ethical sense?


The General Public as the ultimate Locus of Morality for Business

Without doubt, the public responsiveness of the business company and, as a

result, its credibility and reputation have become a prerequisite as essential for
its long-term success as the cleverness of its market strategies. However, what
matters from an ethical point of view is to surmount a conventional management
view of the public as simply another - and mostly irksome! - stakeholder of
the company, beside other parties concerned, as owners and employees, customers and suppliers. Stakeholders usually defend only their particular interests,
whereas the role ofthe general public is quite a different one. It has to be seen
as the figurative place where, in principle, it is possible to find out what the
general interest really is. In a modem and democratic society of free citizens,
there is no other moral authority than the reasoning public itself, as Kant3
called it. In other words: The unlimited forum of the general public is the locus
of morality where free and mature citizens come together to argue about fair
rules and just standards of their living together. 4
This Kantian idea of the public use of reason is, of course, very different
from the common Hobbesian perspective of politics as a mere procedure of
bargaining for a mutually advantageous contract between all interested parties. 5
In this latter view, the individuals or groups act in a strictly strategic way to


I. Kant (1783): Beantwortung der Frage: Was ist Autkliirung?, in: Immanuel Kant Werkausgabe (1968), Vol. XI. Frankfurt: Suhrkamp, 53-61.
P. UlrichlU. Thielemann (1992): Ethik und Erfolg. BernlStuttgartlVienna: Haupt, 161ff.
The Hobbesian view, originated by Thomas Hobbes in his famous Leviathan (1651), forms
nowadays the paradigm of neoclassical economics and Institutional Economics, whose
axiomatic base is methodological individualism. The strictest elaboration of that (neoliberal)
paradigm of pure economic rationality has been achieved by 1.M. Buchanan (1975): The
Limits of Liberty. Between Anarchy and Leviathan, Chicago/London, and in his later books.
For a detailed critique of this way of politico-economic thinking cf. P. Ulrich (1995): Die
Zukunft der Marktwirtschaft: neoliberaler oder ordoliberaler Weg? Eine wirtschaftsethische
Perspektive. Archiv for Rechts- und Sozialphilosophie, 81, Beiheft 62.

maximize their self-interests, whereas the ideal of the <<reasoning public presupposes human beings arguing on an ethical basis, i.e., from a perspective of
mutual respect for the inviolable moral rights and duties of all persons, without
regard to their bargaining power or economic resources.
Thus, the notion of the general public as a locus of morality brings into
focus an advanced ethical point of view, reviving the philosophical tradition
of republicanism as it has been elaborated again by Immanuel Kant and his
scholars. 6 The core idea of republican philosophy is that politics has to be considered as res publica, as a matter of free citizens' public commitment in a spirit
of co-responsibility for the protection of human and civil rights, social justice
and the common weal. The unbiased, undistorted and unlimited pUblicity
(Kant) of all politically relevant activities is recognized as a conditio sine qua
non, an indispensable precondition of modem society.
Of course, this is - philosophically spoken - just a regulative principle and,
as such, not at all a statement of factual politics but rather a criterion for ethical
criticism against the usual political proceedings, which are nowadays frequently
dominated by an excess of special interests' lobbyism, far from any republican
ethos ... All the more, it is important that the reasoning public takes the
counterpart of exerting a certain moral pressure on all agents to care about the
legitimacy of their acitivities. Its peculiar power consists in nothing else than
moral reasoning. Again it was Kant who in his famous essay Beantwortung
der Frage: Was ist AufkUirung? (<<In answer to the question: What is Enlightenment?) made the point:
It is difficult for any single person to work his or her way out of the immaturity that has nearly become our nature ... But it is more likely that a
public enlightens itself. Indeed, this is almost inevitable if only the liberty
(of public reasoning, P.U.) is granted.7


Corporate Communications as Corporate Dialogue

Now, what does that mean for business policy? The crucial point is, of course,
the growing public relevance of the corporation as outlined above. Consequently,
the reasoning public also proves to be the ultimate locus of morality for

Kant (1795): Zum ewigen Frieden, in: Werkausgabe (1968),Vol. XI, 191-251, especially
Kant (1783), Werkausgabe (1968), Vol. XI, 54 (own transl., P.U.).

business as well as for any other good citizen. 8 Therefore, managers should not
look any longer at the public, especially at those citizens who are concerned
about business' impacts on the res publica, as a mere stakeholder with special
interests that have or have not to be taken into account, just according to cost
and benefits for the company itself - this conventional stakeholder model is
exactly based on the Hobbesian concept of a purely strategic way of bargaining
and contracting. Instead, managers should learn to recognize concerned citizens
as indispensable partners to ensure the legitimacy of their business activities.
After all, concerned citizens who advance good moral reasons for or against
a business policy or strategy that is under consideration might tum out be true
friends who can help the managers to become fully aware of their moral responsibilities and thereby to preserve the company's public credibility.
This slight change of perspective will result in a major revision of the appropriate approach to Public Relations and Corporate Communications towards
an ethically enlightened conception of corporate dialogue. 9 By the way, this
guiding idea corresponds with the ethics of discourse, which represents a
continuation of Kantian ethics of practical reason after the language-pragmatic
turn in practical philosophy. 10
Here is not the place to start a discussion about the philosophical foundations
of discursive ethics and its importance for economic thinking. I I Let's take it immediately to the essential point concerning our common social behaviour: As
long as we look at other people who are concerned about our affairs only in
a strategic way, we will probably perceive them as our enemies because their
public criticism might damage the success of our private plans and, therefore,
we will try to reduce that criticism to silence, like an inconvenient noise or a
false alarm that, of course, we do not appreciate at all. Unlike that, we will look
in a completely different way at the criticism by good friends of ours, since



P. Ulrich (1993): Wirtschaftsethik als Beitrag zur Bildung mtindiger Wirtschaftsbtirger.

Zur Frage nach dem <Ort) der Moral in der Marktwirtschaft. Ethica, 1, 227-250.
H. SteinmannlA.ZerfaB (1993): Corporate Dialogue - a new perspective for Public
Relations. Business Ethics - A Europan Review, 2, 58-63. For the general idea of an
ethically based corporate dialogue cf. P. Ulrich (1981): Wirtschaftsethik und U ntemehmungsverfassung: Das Prinzip des unternehmungspolitischen Dialogs, in: H. Ulrich (ed.):
Management-Philosophie for die ZukunJt, Bern/Stuttgart: Haupt, 57-75; P. Ulrich (183):
Konsensus-Management: Die zweite Dimension rationaler Unternehmensfiihrung. BetriebswirtschaJtliche Forschung und Praxis, 35, 70-84.
K.-O. Apel (1973): Transformation der Philosophie, Vol. 2: Das Apriori der KommunikationsgemeinschaJt. Frankfurt: Suhrkamp; K.-O. Apel (1988): Diskurs und Verantwortung.
Frankfurt: Suhrkamp; 1. Habermas (1983): Moralbewusstsein und kommunikatives Bandeln.
Frankfurt: Suhrkamp; J. Habermas (1991): Erlauterungen zur Diskursethik. Frankfurt:
P. Ulrich (1986): Transformation der 6konomischen Vernunft. Bern/Stuttgart/Vienna: Haupt.
3rd. rev. edition 1993.

we have probably learnt from earlier experience that their critical questions or
comments, though not always quite comfortable for us, can be stimulating for
making up our mind and finally taking the right decisions.
The same is true for business policy and its relationship to a concerned
public. For that reason, Corporate Communications obtain a new and significant
function: They are no longer only a strategy of one-way communication from
the company's speaker to the public in order to put the firm's activities in
the best light, as it was the purpose of conventional PR. Now, corporate communications become a conceptual frame for undertaking a real dialogue between
the company and its concerned friends in the general public - for the purpose
that both sides of this dialogue can learn much about the problems and chances
of ethically based management. In the end, this might open a responsible as
well as practicable way of/acing up to public interest in business policy.


An Outline of tbe Present Volume

Part I of the book will take into consideration some essential dimensions of
the ethical challenge on today's business by public issues. First, the internationally known ecumenical theologian Hans Kiing, University of Tiibingen, argues
for his courageous project of a minimal world ethic between all cultures and
religions on earth - he proposes, so to speak, an urgent antidote against the
expanding cultural and ethical relativism, which is lastly incompatible with the
basic moral ideas of humanity. Hans Ruh, theologian and social ethicist at the
University of Zurich, works out the major human and social problems of our
time and what they mean as a fundamental challenge of business. Thilo Bode,
Executive Director of Greenpeace Germany, goes more in details with regard
to the ecological challenge and defines an advanced mental attitude of managers
to the environmentally concerned public.
In Part II, three academic teachers of political and/or business ethics throw
a light on the ethical foundations of a sound relationship beween business and
the concerned public. Adela Cortina, ethicist and political philosopher at
Valencia, elaborates the role of the general public outlined above as the decisive
locus of morality in modem society in general and its meaning for business
ethics in particular. She explains the Kantian roots of the regulative idea of the
public use of reason and discusses its interpretations by John Rawls and Jiirgen
Habermas. Then, Ronald Jeurissen, Tilburg University, gives a clear survey
of three different social philosophies of business and the corresponding perspectives of the relationship between corporate social responsibility and the public.
He argues for an interpenetration view of the business-society relationship
and shows its systematic consequences for a responsible business community.

As a perfect completion of this part, Peter Pratley from the University of

Groningen draws our attention to the strategic market activities as the field where
business responsibility must ultimately find its concrete manifestation. He exemplifies his perspective of corporate moral commitment and accountability
before the public on the basis of the Total Quality Management concept.
In Part III, three top managers of three Swiss-based multinational corporations respond to the public challenge from inside the boardroom, supported by
a former British top manager who has now specialized in advising his previous
colleagues with respect to corporate community relations. First, Andres F.
Leuenberger, Deputy Chairman of Roche and at the same time President of the
Swiss Federation of Commerce and Industry, makes clear that industry today
has recognized public acceptance as a prerequisite vital for the credibility of
any industrial acitivity; he affirms an open two-way communication between
industry and the concerned public. Walter G. Frehner, Chairman of the Swiss
Bank Corporation, agrees with that and presents four basic principles guiding
the concept of corporate dialogue in SBC's business policy. Andreas Steiner,
member of the executive committee and CEO of a major division of Asea Brown
Bovery Switzerland, underlines the ethical aspects of ABB's Customer Focus
philosophy and its corresponding communication policy. Finally, Gerry Wade,
Public Affairs management counsellor and former head of Public Affairs at IBM
(U.K.), deals with Corporate Community Involvement as one of the great
challenges in the near future. He discusses whether ethics has a constituency
among the corporation's stakeholders and how to make ethics a strong issue
in the boardroom.
Part IV brings into focus the consequences of the idea of corporate dialogue
for an advanced philosophy of Public Relations and Corporate Communications
and considers its bearing under several aspects. Maya Doetzkies, representative
of the Berne Declaration, a civil action group concerned with the behaviour of
multinational corporations in developing countries, points at the rhetorical use
of language in the business world and argues for the importance of a critique
of these business rhetorics from a holistic and moral point of view as a basic
task of concerned citizens' groups; otherwise an unbiased public reasoning cannot
take place. Walter G. Pielken, President of an international consulting group
specialized in Corporate Communications, draws from his rich experiences with
the handling of the critical public and the media by companies in crisis situations; his conclusions strongly support the advantages of an ethically sound
approach to corporate dialogue. Regine Tiemann and Susanne Zajitschek, both
doctoral students in the field of business ethics, take up discursive ethics as a
basic paradigm for responsible Public Relations and throw a light on the
especially important dialogue between corporations in order to promote industrywide ethical standards and policies. Finally, Johannes Brinkmann from the
Norwegian School of Management and Hans Gudmund Tvedt, Public Relations

Consultant at Burson-Marsteller, present fresh empirical results of a pilot survey

that tried to find typical moral conflicts of PR professionals as well as their
moral self-conception, which is obviously essential as a basis to put responsible
PR conceptions into practice.
The two remaining parts of the book present concrete examples and experiences with ethical challenges in different branches and fields. Part V concentrates on the ecological challenge. Brian Harvey and Neil D. Stewart, both
from Manchester Business School, focus on the highly topical problems of
corporate dialogue and responsibility in a case of hazardous technology and
develop five general principles for responsible management in this area. Minna
Halme, University of Tampere, examines how a Finnish company in the paper
and packaging industry mastered the environmental challenge and the public
scrutiny by way of a profound change of its business strategy and communication
policy. Ralph Saemann, former member of the executive board ofCiba-Geigy
and now Vice Chairman of the Swiss Academy of Engineering Sciences, gives
a first-hand report on the pioneer experiences with corporate dialogue concerning
the project of Ciba's newly erected incinerator for special waste in Basel. Jost
Wirz, president of a success full Advertising and Public Relations group, presents
his professional ethics regarding the field of tensions between consumer expectations and ecological requirements, which is certainly a key-point in order to
move ahead towards a sustainable market economy.
Part VI turns to social challenges in the external as well as the internal
relations of the company. David Mathison, Loyola Marymount University,
discusses the results of his interviews with top executives representing six major
European aircraft manufacturers about the question whether European companies,
facing global competition, can preserve or have to abandon traditional social
democratic values in the workplace. James S. O'Rourke, University of Notre
Dame, analyses the case of Excel Industries Inc., a supplier to the car industry,
dealing with community relations and corporate communications in a difficult
situation when the company's child-care center had to be closed. Last not least,
Jilrgen Deller, Manager of Corporate Executive Management Development at
Daimler-Benz, and Stefan Jepsen from the Institute for Economic and Social
Ethics in Rostock, present a pilot project at Daimler-Benz concerning the
question of how moral responsibility can finally become an integral and central
part in the career development of managers and in the overall personnel policy
of a corporation.




Hans Kung

It is a pleasure and an honour to give the opening address at such an important

congress of the European Business Ethics Network. Having said that, I have
to admit that this does not come easy to me at the present moment, right after
the international conference on global population in Cairo. Because here I stand
as a Catholic theologian, being asked to speak about world politics and world
ethos, but feeling compromised by the presentation of religion during just this
world conference. So, unfortunately, I cannot avoid a critical positioning.


World Ethos - The Opposite of Church Moralism

Who, like I am, is concerned about the credibility of especially the Catholic
church, cannot hide their shame when facing the Vatican's manoeuvres before
and during the conference in Cairo:
- the Vatican played down the importance of the globally urgent question of
population explosion in an incomprehensible way;
- that the Vatican - having only observer status at the UN - blocked a whole
conference for five days and turned it into a sterile debate on abortion;
- that the Vatican wanted to push through a rigoristic, one-sided point of view
concerning abortion that is unacceptable even within its own church;
- that even after the conference the Vatican dismisses just that method as immoral that could prevent abortion most effectively, namely contraceptive devices.
Is this supposed to be the new world ethos? No, this is only old church
moralism. Instead of distinguishing oneself in the middle of such a mass
agglomeration as Cairo with its approx. 15 million people through positive concepts of damming in the catastrophic population explosion, the conference was
intentionally pushed into the morally shady twilight. For many delegates, the

P. Ulrich and C. Sarasin (eds.). Facing Public interest. 11-27.

1995 Kluwer Academic Publishers.


argumentation of the papal delegates bordered on demagogy and brainwashing

of the people. Even when, after five days of discussions, the conference agreed
on a reasonable draft of a compromise for the EU which presented abortion
as an unsuitable method for family planning (and rightly so), the Vatican still
wasn't satisfied, but unable to block the conference any further. Worried over
the negative image and to veil its defeat, the Vatican formally agreed to the
paper in parts - different from the conference on population in Budapest 20
years ago and from the one in Mexico 10 years ago, but it still stuck unteachably
to its anachronistic views.
But the following question is more important: Why was the Vatican unable
to prevail? The factors are:
- The decision-making authorities of the UN, the US and of the EU were not
- The sanctimonious purposive alliance between the Vatican and the Islamic
world did not come off. The great Islamic nations like Indonesia, Pakistan, Iran
and Egypt wouldn't let themselves be put to the Vatican's carriage.
- Despite worldwide agitation, the Vatican diplomacy won over only a few
small Latin American countries and Muslim states, but not the big countries
like Brazil, Argentina and Mexico.
- Contrary to what had been expected in Rome, Catholic women ofthe various
delegations did not support the Pope.
- Long before, the Pope had lost the battle over sexual morals in his own
But how is it possible that a single man can think of having to oppose the
whole world, as his press spokesman, the Opus Dei-member Joaquin NavarroValls, wrote in the Wall street Journal (1.9.l992): though largely isolated and
alone, but courageous enough to be firm where everybody else makes compromises about the essential dignity of man. How can one man conceive of
the idea that he alone knows what truth, morals and the essential dignity of
man are, especially with regard to such difficult questions as contraception and
The real reason for such a conflict and for the defeat of the Vatican is the
Roman system itself: this absolutist medieval system, grown more inflexible
through Reformation and Counter-Reformation finally pushed itself into a corner
because of its permanent fight against the modern age. After the fall of Soviet
communism, this system has become the only dictatorial system in the Western
world, shaped by a specifically Roman moralism, dogmatism and authoritarianism.
But a Catholic theologian, having just spent a number of years to formulate
a critical evaluation of twenty centuries of Christianity, knows what he is talking
about: This Roman system with its monopoly on truth and morals theologically
stands on feet of clay! The Pope's exorbitant teaching authority cannot be justi-


fied through Biblical origins nor through the old Catholic tradition. And a Pope
who infallibly and unteachably means to keep this authority up against the majority of his own Catholic people and, finally, against the global community
itselfwill remain largely isolated and alone, will, in fact, become an originator
of schisms, will become a source for suspicion and anti-Catholic feelings inside
many non-Christian churches, will become a perpetual burden and block for
many of the global community's most urgently issues.
But let's be done with these critical, though unfortunately necessary, reflexions! If I am to present my own issues here in a credible way, I had to place
myself outside of this moralising abuse of religious authority that has devastating
consequences not only for the image of the Catholic church but for that of all
religions in the world. However, criticizing the Vatican's policy does not at
all justifY the world of politics in general. So now to:



We all know that in the course of the French Revolution, the wars ofthe princes
became wars of the nations. And with the end of modernity the wars of the
nations became wars of the ideologies. Just consider:
- 1918 had already offered our century afirst opportunity to replace the world
of nationalistic modernity which had collapsed with the First World War with
a new more peaceful world order. However, this was prevented by the ideologies
of Fascism, Communism, National Socialism and Japanism, all of which had
their foundations in modernity. In retrospect they proved catastrophic false
developments even for their supporters and set the whole world back by decades.
Instead of a new world order there was world chaos.
- Then in 1945 the second opportunity for a new world order was missed (because of the obstruction caused by the Stalinist Soviet Union). Instead of a new
world order there was a division of the world.
- In 1989 all these reactionary ideologies (including that of a self-righteous
anti-Communism) came to an end; the age of the great ideologies seems to be
over. Again a new world order was propagated, though nothing was done towards realizing it. The wars (the Gulf War followed by the war in the Balkans)
brought people back to earth. So has this third opportunity already been wasted?
Instead of a new world order do we now have a new world disorder?
Some say that a new world disorder can be avoided provided that we do
not act in an idealistic way. F or world order comes about only through a real
politics which coolly calculates and implements national interests, unhampered
by all too many moral feelings. Thus the undoubtedly knowledgable and
skilled politician and political theorist Henry Kissinger, who has already practised


such real politics for many years and is now eloquently propagating them
again in his most recent book, Diplomacy.1 Indeed this former Security Adviser
and Secretary of State to President Nixon does not admire American politicians
like Jefferson and Franklin, who aimed at a balance of ideals and interests, as
much as European power politicians like Richelieu, Metternich and Bismarck.
Kissinger ironically remarks: No other nation (than the United States) has ever
based its claim to international leadership on its altruism.2 Moreover President
Nixon, whom he advised, is praised as the first realistic president since
Theodore Roosevelt (the main representative of American expansionist policy!),
while even now derogatory remarks are made about the peace movement against
the Vietnam war.
But has not the real politics practised by all the historical figures mentioned above also long faded into the twilight? At any rate, Nixon's real
politics led not only to a long overdue openness towards China but also to
the prolongation of the Vietnam War by four years (at the cost of20,492 American and around 160,000 South Vietnamese lives) and to its extension to
Cambodia (with countless deaths). 3 The consequence was increasingly vigorous
public protests, and paranoia in the White House - ending in Watergate and
Nixon's impeachment... So we can follow Walter Isaacson, Kissinger's critical
biographer, when on the one hand he emphasizes his respect for Kissinger's
brilliance as an analyst but on the other expresses his reservations about
the lower priority which Kissinger attaches to the values which have made
the American democracy such a powerful international force. 4 By Kissinger's
new book Isaacson sees his conclusive evaluation of Kissinger's Realpolitik
Kissinger's power-oriented realism and focus on national interests faltered
because it was too dismissive of the role of morality The secret bombing
and then invasion of Cambodia, the Christmas bombing of Hanoi, the destabilization of Chile - these and other brutal actions betrayed a callous
attitude toward what Americans like to believe is the historic foundation
of their foreign policy: a respect for human rights, international law,
democracy, and other idealistic values. The setbacks Kissinger encountered
as a statesman, and the antagonism he engendered as a person, stemmed
from the perceived amorality of his geopolitical calculations. - Kissinger's


Kissinger, H. (1994): Diplomacy. New York.

Kissinger (1994).
Sheehan, N. (1994): Nixon's 'Peace' Strategy had a Heavy Price in Blood. International
Herald Tribune, 30 April; Lewis, A. (1994): 20492 Reasons Kissinger Was Wrong. International Herald Tribune, 7 June.
Isaacson, W. (1994): How the World Works. Time Magazine, 2 May.


approach led to a backlash against detente; the national mood swung toward
both the moralism of Jimmy Carter and the ideological fervor of Ronald
Reagan. As a result, not unlike Metternich, Kissinger's legacy turned out
to be one of brilliance more than solidity, of masterful structures built of
bricks that were made without straw.5
But has not the American democracy in particular shown that it has always
combined the pursuit of national interests with the propagation of values and
ideals? Has American foreign policy ever been completely detached from moral
values and ideals which are ultimately anchored in religion? So need interests
and ideals necessarily be opposites? Indeed, it is in the interest of a realistic
policy for this real world to find through ideas and visions a way out of the
crises which it has itself produced. This is valid also for the Balkans, where
the moral tragedy of the two-tongued Western Realpolitik severely shook
the political credibility of the EU, the USA and the United Nations, a policy
which is unnecessarily prolonging the suffering of hundreds of thousands of
people. But will not wars also be inevitable in the future?


War of Civilizations?

Certainly, but the wars in a new world epoch will no longer be wars of ideologies, but primarily wars of civilizations. This at any rate is the thesis of the
Director of the Institute of Strategic Studies at Harvard University, Samuel P.
Huntington, which is being much discussed at present. It is developed in his
striking article The Clash ofCivilizations?6 (By civilizations Huntington, following Arnold Toynbee,1 understands the cultural groupings which extend
beyond regions and nations. These are defined both by the objective elements
of language, history, religion, customs and institutions and by the subjective
self-identification of men and women). According to Huntington there are today
eight civilizations (with possible sub-civilizations): Western, Confucian, Japanese, Islamic, Hindu, Slavic-Orthodox, Latin American and African. So in the
future we are to expect political, economic and military conflicts, say, between
Islamic civilization and the West or Confucian Asiatic civilization and the West,
possibly combined with an Islamic-Confucian connection of the kind that
can, already be seen in the constant flow of weapons from China and North


Isaacson, W.lKissinger, A. (1992): Biography. New York, 766.

Huntington, S.P. (1993a): The Clash of Civilizations? Foreign Affairs, 72, 22-49.
Toynbee, A.: The Study of History. Yols. I-XII, Oxford 1934-61.


Korea to the Middle East. The next world war, if there is one, will be a war
between civilizations.8
In the discussion9 which has taken place so far, especially in America, Huntington has been accused of interpreting political and economic conflicts a priori
as ethnic and cultural conflicts and giving them a religious charge (as the un-religious Saddam Hussein attempted retrospectively to do in the Gulf War, adopting
a cynical tactic). Here a distinction must be made: of course most conflicts, from
Berg Karabach through the Gulf War and Bosnia to Kashmir, are not primarily
about civilization and religion but about territories, raw materials, trade and
money, in other words are for economic, political and military interests. But
Huntington is right: the ethnic and religious rivalries form the constant underlying structures for territorial disputes, political interests and economic competition, structures by which political, economic and military conflicts can be
justified, inspired and intensified at any time. So, while the great civilizations
do not necessarily seem to me to be the dominant paradigm for the political
controversies of the new world epoch, which Huntington thinks has replaced
the Cold War paradigm and the First-Second-Third World scheme, it is the
deeper cultural dimension to all antagonisms and conflicts between peoples
which are always there and are in no way to be neglected.
But when it comes to this cultural dimension, we would do better to begin
from the great religions (and their different paradigms) instead offrom civilizations, which are often difficult to define. In fact even Huntington is using
the religions to define civilizations when he speaks of an Islamic, Hindu,
Confucian or Slavic-Orthodox civilization. But can one separate Orthodox
Christianity as a distinctive civilization from Western Christianity, as Toynbee
already did? And can one distinguish Western North American and Latin
American civilization so sharply? However, Huntington must be said to be right
on two decisive points:
- As Toynbee already noted, contrary to all superficial politicians and Political
theorists, who overlook the depth-dimension in world political conflicts, the
religions are to be given a fundamental role in world politics. 1O
- Religions are not growing (as Toynbee thought) into a single unitary religion
with Christian, Muslim, Hindu and Buddhist elements in the service of a single
human society. It is much more realistic also to take into account their potential
for conflict as rivals: Nation states will remain the most powerful actors in



Huntington (l993a), 39.

Cf. the critical responses to Huntington by Ajami, F.lBartley, R.L.lBinyan, L./Kirkpatrick,
J .1lMahbubani, K. (1993), Foreign Affairs, 72, No.4 (September/October) and Huntington's
(1993b) Response, No.5 (November/December), 186-94.
Huntington (I993b), 191f., 194.


world affairs, but the principal conflicts of global politics will occur between
nations and groups of different civilizations.!!
Indeed, it will strike anyone who is not blind to history that the modem
state frontiers in Eastern Europe (and in part also in Africa) seem to pale in
comparison with those age-old frontiers which were once drawn by peoples,
religions and confessions: between Armenia and Azerbaijan, between Georgia
and Russia, between the Ukraine and Russia, and also between the different
peoples in Yugoslavia. According to Huntington, we shall also have to reckon
in thefoture with conflicts between civilizations. Such conflicts also threaten
in the future; indeed, we must fear that the most important conflicts of the future
will occur along the cultural fault lines separating these civilizations from one
another.!2 Why? Not only for geopolitical reasons: because the world is
becoming smaller and smaller, the interactions between people of different civilizations are becoming increasingly numerous, and the significance of the regional economic blocks is becoming increasingly important. But also for reasons
of culture and religiOUS politics:
1. because the differences between the civilizations are not only real but
fundamental, often age-old and all-embracing, from the upbringing of children
and the constitution of the state to the understanding of nature and God;
2. because many people are once again reflecting on their religious roots
as a result of the cultural alienation and disillusionment with the West brought
about by the process of economic and social modernization;
3. because human cultural characteristics and differences are less variable
and dispensable than political and economic characteristics and differences (an
Azerbaijani cannot become an Armenian and vice versa) and even more because
religion divides men and women even more sharply and exclusively than
membership ofa people: A person can be half-French and half-Arab and simultaneously even a citizen of two countries. It is more difficult to be half-Catholic
and half-Muslim.13 Particularly among peoples who are related in religion (what
H.D.S. Greenway calls the kin-country syndrome), e.g. between Orthodox
Serbs, Russians and Greeks, religion plays a role which cannot be neglected.
Countries where large parts of the population come from different civilizations, like the former Soviet Union or former Yugoslavia, can disintegrate
in such conflicts. Other countries like Turkey, Mexico and Russia, which are
culturally to some degree a unity but are inwardly at odds over which civilization
they belong to (<<tom countries), will be caused the greatest difficulties in any
cultural reorientation that is necessary. And in view of the possibility of such


Huntington (1993a), 22.

Huntington (l993a), 25.
Huntington (1993a), 27.


conflicts between civilizations and religions, does not the future of humankind
look extremely gloomy? How are we to react to this situation?


The Alternative: Peace Between the Religions

Not without justification, Huntington has been accused of a deep pessimism

and even an irresponsible fatalism; if conflicts in the future are to be primarily
conflicts between civilizations, then these are as it were given by nature and
therefore even unavoidable; in that case the future of humankind will be constant,
endless war. Indeed, in that case, there would ultimately and inevitably be a
Third World War of civilizations which would necessarily lead to the end of
our human race. Is there no alternative to this?
Huntington, too, is of the opinion that these conflicts of civilizations must
be avoided. Not just by short-term strategies. In the longer term it is necessary
to accommodate those non-Western civilizations which are preserving their traditional values and cultures and yet want to modernize themselves, and whose
economic and military power will doubtless further increase. Huntington calls
for this long-term strategy not only to maintain the economic and military power
of the West in order to protect its own interests. Rather, his whole analysis
culminates in a demand which is unusual for a political theorist (it was then
taken up by Jacques Delors, then President of the EC Commission 14), to develop
a deeper understanding of the basic religious and philosophical assumptions
underlying the other civilizations and the ways in which people in those civilizations see their interest. It will require an effort to identifY elements of
commonality between Western and other civilizations.15 But there is only this
one sentence ...
This can be seen as support for this project on The Religious Situation
of our Time under the slogan No world peace without religious peace. For
in this project I am pursuing a strategy which is meant to prevent the clash
of civilizations. My starting point is:
Without peace between the religions, war between the civilizations. No peace
among the religions without dialogue between the religions. No dialogue



J. Delors, President of the EC Commission, is also convinced that future conflicts will
be sparked by cultural factors rather than economics or ideology. And he warns: The
West needs to develop a deeper understanding ofthe religious and philosophical assumptions underlying other civilizations, and the way other nations see their interests, to identifY
what we have in common (quoted in Huntington 1993b, 194).
Huntington (1993a), 49.


between the religions without investigation of the foundations of the religions.

The analyses of the political theorist can partly be confirmed by those of the
theologian, but at the same time they must be partly differentiated:
- Ifwe recognize that Western and Eastern Christianity do not represent two
religions/civilizations but two different constellations, albeit very different, two
paradigms of the one Christianity (the convergence of, and mutual understanding
between, which had already been considerably advanced by John XXIII, the
Second Vatican Council and Patriarch Athenagoras of Constantinople), then
we can also recognize that in particular an ecumenical understanding between
the churches (in Yugoslavia, the Ukraine, between Rome and Moscow) could
have prepared for understanding between the ethnic groups there. (Why should
what was possible between French and Germans be impossible, say, between
Serbs and Croats?)
- Ifwe work out that even three religions like Judanism, Christianity and Islam,
which historically have been in constant confrontation, nevertheless have numerous features of faith and even more of ethics in common, then we need not give
up hope that the tensions which have naturally always existed between religions
and civilizations will not necessarily lead to a clash, even to a military collision.
Peace is possible. (Why should not an agreement like that between Israelis and
Palestinians also be possible between Armenians and Azerbaijanis, Indians and


The Dispute in World History Between Power and Morality

If Western politicians, diplomats and lawyers had a better knowledge of the

other religions, they would be in a position not only to negotiate but also to
carry on dialogue. In that case, at international negotiations and conferences
like for example the most recent conference on human rights in Vienna they
would not be embarrassed by the Chinese Communists, but could point out to
them (and other autocratic Asian governments) that human rights are not something exclusively Western. For example, the concept of <<yen, the humanum,
is quite a central concept of Chinese tradition which at the present time could
very well be a basis for the human rights that are vigorously being called for
all over Asia and Africa and in the long run cannot be suppressed by force. 16


Shu-Hsien, Liu (1993): Das Humanum als entscheidendes Kriterium aus der Sicht des Konfuzianismus, in: Kiing, H.lKuschel, K.-J. (eds.), Welifrieden durch Religionsfrieden, Munich,
92-108; Heilmann, S. (1994): China, der Westen und die Menschenrechte, China aktuell,


Confucius was in fact already convinced that a government could most easily
dispense with the military, if need be also with food, but least of all with the
trust the people have in it. l7 And there is no disputing the fact that from China,
Tibet, Burma and Thailand through Indonesian Westirian and the Philippians
to Kenya and the Congo, human rights express something deeply longed for
by subjects from their rulers. The dissidents are by no means a tiny minority!
Those millions whom the brave Nobel prizewinner Aung San Sun Kyi could
mobilize in Burma through free elections could also be activated in China by
a man like Wei Jingsheng if there were freedom ofexpression. l8
However, clearly human rights for non-Western peoples will have a better
foundation in their own ethnic religious traditions than simply in Western natural-law thinking. And if people in the West had a better knowledge of other
religious and cultural traditions, they would understand why many Asians who
are open to the West and affirm modernization are still sceptical about the
Western system of values. Thus for example many Asians are unwilling to
accept, say, unlimited individualism (with no concern for community) and
absolute freedom (with all the phenomena of Western decadence connected with
it); rather, as always, they attach importance to strong families, intensive education, strict work, frugality, unpretentiousness and national teamwork. l9
But here the great and highly practical question arises: in the great dispute
between power and morality in world history is not the ethical standpoint lost
from the start, as the Machiavellians among the politicians and press commentators would constantly have us believe? Is the one who calls for the maintaining
of certain humane values also in foreign policy a naive preacher and the
one who constructs policy purely on interests a cool strategist? Are politics
and morality as a rule compatible only as long as no important interests are
affected? At all events, do not trade interests in particular prove stronger than
politically moral postulate? It is remarkable that people still offer such allegedly
realistic postulates when even the East European Communist dictatorships which
operated so cynically with Realpolitik finally had to capitulate to the moral
postulates of their own population!
No, politics and morality are not a priori mutually exclusive, and what was
right for example against the South African apartheid state cannot a priori be



February, 145-15l.
Confucius, Analects XII, 7.
Mnouchkine, A./Berger, H.G (1986): Der Prozess gegen den Schriftsteller Wei Jinsheng,
ed. by A.I.D.A. (International Association for the Defence of persecuted Artists); Minzhu,
H. (ed.) (1990): Cries/or Democracy. Writings and Speeches from i989 Chinese Democracy
Movement. ReinbeklPrinceton.
Thus the Diplomat and Director of the Institute of Policy Studies in Singapore, T. Koh:
The 10 Values that Undergird East Asian Strength and Success, international Herald
Tribune, 12 December 1993.


wrong against the Communist dictatorship in China. There is certainly a middle

way between preaching and Realpolitik, the way of a political ethic of
responsibility. That means that a policy of human rights governed by an ethic
of responsibility (say of the USA towards China) would have to calculate coolly
the real conditions under which it can be at all successful. Specifically:
- A government advised by experts must right from the beginning consider
realistically what instruments it has at its disposal for imposing demands for
human rights; unfortunately, to have to withdraw idealistic demands under pressure encourages the political cynicism at home and abroad which there is a
concern to overcome.
- The government must speak with one voice (the Treasury and the Trade
Ministry may not speak a different language from the Foreign Ministry).
- The influential business community should not curry favour in trade negotiations with those who scorn human rights but similarly (in its own discreet
way) insist on the need to observe moral criteria.
- In all unavoidable trade agreements the government should continually emphasize in public and in private that moral perspectives are and remain of prime
importance to it and that without them real friendship between nations cannot
be achieved.
- One government should draw the attention of the other to its own laws (which
are often not observed: torture violates even Chinese law) and bring human rights
to bear as universal (and not just Western) values and norms.
But does the West also practise the values which it often preaches to the
rest of the world? All this brings us to a last question which has not had its
due in the discussion of Huntington so far, the question of an ethic, given the
lack of orientation which is nowadays rampant everywhere.


Lack of Orientation - a World Problem

What should human beings hold on to - in all circumstances and everywhere?

The vacuum in orientation is a world problem.
- Everywhere in the former Soviet block after the collapse of Communism and
under the surface even in Communist China, still as oppressive as before, to
cope with this moral and spiritual vacuum is a problem not only for China but
for all civilizations (Liu Binyan).2o
- In the United States, where the population has increased by 41 % since 1960
but violent crimes have increased by 560 %, single mothers by 419 %, divorces


Binyan, L. (1993): Foreign Affairs, 72, No.4, 21.


by 300 %, children growing up in one-parent families by 300 %21 and shootings

are the second most frequent cause of death after accidents (in 1990 4,200 teenagers were shot).
- In Europe, where after the murder of a two-year-old child by two ten-yearolds
in Liverpool even Der Spiegel complained in a cover story about the orientation
jungle, and a lack of tabus unprecedented in cultural history: The youngest
generation must cope with a confusion of values the extent of which is almost
impossible to estimate. For them clear standards of right and wrong, good and
evil, of the kind that were still being communicated by parents and schools,
churches and sometimes even politicians in the 1950s and 1960s, are hardly
recognizable any more.22
What Friedrich Nietzsche, the most clear-sighted critic of modernity (though
he did not overcome it), saw already arising in the nineteenth century, namely,
man beyond good and evil, obligated only to his will to power,23 the death
of God and overturning the whole of European morality, has become a fatal
reality in the twentieth century: not only in figures of terror like Stalin and
Hitler, not only in the Holocaust, the Gulag Archipelago and in two World Wars
ending with atomic bombs, but also in everyday life, in the ever more frequent
and unprecedented scandals involving leading politicians, businessmen and trade
unionists in our industrial nations, or in the egocentricity, consumerism, violence
and xenophobia of so many people, young people in particular.
If in a new world constellation which is coming into being, humankind on
our planet is going to have any further guarantee of survival, there is urgent
need for a universal basic consensus on humane convictions. A question which
is thousands of years old is also unavoidable in our time. Why should one do
good and not evil? Why do human beings not stand beyond good and evil?
Why are they not just obligated to their will to power, to success, riches,
consumer goods, sex?24 Fundamental questions are often the most difficult of
all, and all over the world much about morals, laws and customs that had been
taken for granted down the centuries because it was backed by religious authority
is no longer automatically accepted. A worldwide dialogue, a global dialogue,
has already been set in motion which should to lead to a consensus over shared
values, standards and basic attitudes, to a world ethic.
For the fundamental question is: why should human beings - understood
as individuals, groups, nations, religions - behave, not in a bestial way, merely





Thus the reservations expressed by the Deputy Foreign Minister of Singapore, K. Mahbubani, in his response to Huntington in Foreign Affairs, 72, 1993, No.4, 14.
Der Spiegel, 1993, No.9.
Kling, H. (1984): Does God Exist? An Answer for TodaY, LondonlNew York, Chapter
D I: The Rose of Nihilism: Friedrich Nietzsche.
Bennett, W.J. (1994): The Book of Virtues. A Treasury ofGreat Moral Stories. New York.


ruled by their physical urges, but in a human, truly human, humane way? And
why should they do this unconditionally, in other words in all circumstances?
And why should everyone do this, and no class, clique or group, no state or
party, be excepted? The question of an obligation which is both unconditional
(categorical) and universal (global) is the basic question for any ethic in a society
which is shaped by tendencies towards increasing scientific and economic globalization (one need think only of the international fmancial market or satellite
It should be evident that there is a fundamental problem here particularly
for modern democracy, which has now also been adopted by Eastern Europe,
about which we should not moralize in a self-righteous way but on which we
should reflect self-critically. Given the way in which the free democratic constitutional state, which recognizes freedom of conscience and religion, understands itself, its world-view must be neutral, and tolerate different religions and
confessions, philosophies and ideologies. Yet given all that, this state is not
supposed to decree meaning to life, no life-style. Is this not quite manifestly
the basis of the dilemma of any modem democratic state, whether in Europe,
America, India or Japan? Dr. Carey, the Archbishop of Canterbury rightly said
a few days ago: Whilst this country is still deeply marked by its Christian
heritage and whilst a large majority retain a belief in God, we can find today
no clearly defined or sharply focused system of values which binds our whole
society together. Secularisation, with its utilitarian bias, does not provide a robust
value system - as we are discovering to our cost.25
People normally feel an unquenchable desire to hold on to something, to
rely on something. In our technological world which has become so complex,
and in the confusion of their private lives, they would like to have somewhere
to stand, a line to follow; they would like to have criteria, a goal. In short,
people feel an unquenchable desire to have something like a basic ethical
But all experiences show that human beings cannot be improved by more
and more laws and precepts, nor of course can they be improved simply by psychology and sociology. In things both small and great we are confronted with
the same situation: technical knowhow is not yet knowledge about meanings;
rules are not yet orientations; and laws are not yet morals. Even the law needs
a moral foundation! And security in our cities and villages cannot be bought
simply with money (and more police and prisons). The ethical acceptance of
laws (which provide the state with sanctions and can be imposed by force) is
the presupposition of any political culture. What is the use to individual states
or organizations, whether these be the EC, the USA or the United Nations, of


Speech by the Archbishop of Canterbury for the Presentation of the Interfaith Medallion
to Dr. L.M. Singhvi, 18 October 1994.


constantly new laws, if a majority of people or powerful groups or individuals

have no intention of observing them and constantly find enough ways and means
of irresponsibly imposing their own or collective interests? Quid leges sine
moribus? runs a Roman saying: what are laws without morals?


Towards a Binding Global Ethic

Certainly all states in the world have an economic and legal order, but in no
state in the world will this order function without an ethical consensus, without
that ethical concern among its citizens by which the state with a democratic
constitution lives. Already in the French Revolution there were those who wanted
to have human duties formulated from the start alongside human rights. The
international community has already created transnational, transcultural and transreligious legal structures (without which international treaties would in fact be
sheer self-deception). But a new world order is to exist, it needs a minimum
of common values, standards and basic attitudes, an ethic which, for all its
time-conditioned nature, is binding in all senses of the word on the whole of
humanity, in short a global ethic.
It was the Parliament of the World's Religions, meeting in Chicago, which
on 4 September 1993 passed a Declaration Toward a Global EthiC26 which
for the first time in the history of religions formulated a minimal basic consensus
relating to binding values, irrevocable standards and fundamental moral attitudes.
This is a basic ethical consensus which:
- can be affirmed by all religions despite their dogmatic differences and
- can also be supported by non-believers.
This declaration takes up the declaration of Human Rights ofthe United Nations
and will deepen the level of rights from the perspective of an ethic. I quote from
this declaration:
We are convinced of the fundamental unity ofthe human family on Earth.
We recall the 1948 Universal Declaration of Human Rights of the United
Nations. What it formally proclaimed on the level of rights we wish to
confirm and deepen here from the perspective of an ethic: the full realization
of the intrinsic dignity of the human person, the inalienable freedom and
equality in principle of all humans, and the necessary solidarity and interdependence of all humans with each other.
On the basis of personal experiences and the burdensome history of
our planet we have learned


Kung, H.!Kuschel, K.-J. (eds.) (1993): A Global Ethic. The Declaration of the Parliament
of the World's Religions. LondonlNew Yark.


- that a better global order cannot be created or enforced by laws, prescriptions, and conventions alone;
- that the realization of peace, justice, and the protection of earth depends
on the insight and readiness of men and women to act justly;
- that action in favour of rights and freedoms presumes a consciousness
of responsibility and duty, and that therefore both the minds and hearts
of women and men must be addressed;
that rights without morality cannot long endure, and that there will be
no better global order without a global ethic.
By a global ethic we do not mean a global ideology or a single unified religion beyond all existing religions, and certainly not the domination of one
religion over all others. By a global ethic we mean afundamental consensus
on binding values, irrevocable standards, and personal attitudes. Without
such a fundamental consensus on an ethic, sooner or later every community
will be threatened by chaos or dictatorship, and individuals will despair.27
That does not mean that such a global ethic would make the specific ethics of
the different religions superfluous. The global ethic is no substitute for the
Sermon on the Mount or the Torah, the Qur'an, the Bhagavadgita, the Discourses
ofthe Buddha or the Sayings of Confucius. On the contrary, it is precisely these
age-old sacred texts, important to billions of people, that can give a global
ethic a solid foundation and make it concrete in a convincing way.
The two fundamental demands, which in the Chicago Declaration are developed: Every human being must be treated humanely. And: What you do
not wish done to yourself, so not do to others! Or in positive terms: What
you wish done to yourself, do to others! On this basis four irrevocable directives follow:
1. Commitment to a culture of non-violence and respect for life: You shall

not kill! Or in positive terms: Have respect for life!

2. Commitment to a culture of solidarity and ajust economic order: You shall
not steal! Or in positive terms: Deal honestly and fairly!
3. Commitment to a culture of tolerance and a life of truthfulness: You shall
not lie! Or in positive terms: Speak and act truthfully!
4. Commitment to a culture of equal rights and partnership between men and
women: You shall not commit sexual immorality! Or in positive terms:
Respect and love one another!
Let me quote only what the Global Ethic Declaration says about a culture of
non-violence and respect for life:

Kiing/Kuscbe1 (1993), 20f.


Numberless men and women of all regions and religions strive to live their
lives in solidarity with one another and to work for authentic fulfilment
of their vocations. Nevertheless, all over the world we find endless hunger,
deficiency, and need. Not only individuals, but especially unjust institutions
and structures are responsible for these tragedies. Millions of people are
without work; millions are exploited by poor wages, forced to the edges
of society, with their possibilities for the future destroyed. In many lands
the gap between the poor and the rich, between the powerful and the powerless is immense. We live in a world in which totalitarian state socialism
as well as unbridled capitalism have hollowed out and destroyed many
ethical and spiritual values. A materialistic mentality breeds greed for unlimited profit and a grasping for endless plunder. These demands claim more
and more of the community'S resources without obliging the individual to
contribute more. The cancerous social evil of corruption thrives in the
developing countries and in the developed countries alike.
(a) In the great ancient religious and ethical traditions of humankind
we find the directive: You shall not steal! Or in positive terms: Deal honestly andfairly! Let us reflect anew on the consequences of this ancient directive: No one has the right to rob or dispossess in any way whatsoever any
other person or the commonweal. Further, no one has the right to use her
or his possessions without concern for the needs of society and Earth.
(b) Where extreme poverty reigns, helplessness and despair spread, and
theft occurs again and again for the sake of survival. Where power and
wealth are accumulated ruthlessly, feelings of envy, resentment, and deadly
hatred and rebellion inevitably well up in the disadvantaged and marginalized. This leads to a vicious circle of violence and counter-violence. Let
no one be deceived: There is no global peace without global justice!
(c) Young people must learn at home and in school that property,
limited though it may be, carries with it an obligation, and that its uses
should at the same time serve the common good. Only thus can ajust economic order be built up.
(d) If the plight of the poorest billions of humans on this Planet, Particularly women and children, is to be improved, the world economy must
be structured more justly. Individual good deeds, and assistance projects,
indispensable though they be, are insufficient. The participation of all states
and the authority of international organizations are needed to build just
economic institutions.
A solution which can be supported by all sides must be sought for the
debt crisis and the poverty of the dissolving Second World, and even more
the Third World. Of course conflicts of interest are unavoidable. In the developed countries, a distinction must be made between necessary and limitless
consumption, between socially beneficial and non-beneficial uses of


property, between justified and unjustified uses of natural resources, and

between a profit-only and a socially beneficial and ecologically oriented
market economy. Even the developing nations must search their national
Wherever those ruling threaten to repress those ruled, wherever institutions threaten persons, and wherever might oppresses right, we have an
obligation to resist whenever possible non-violently.
(e) To be authentically human in the spirit of our great religious and
ethical traditions means the following: We must utilize economic and
political power for service to humanity instead of misusing it in ruthless
battles for domination. We must develop a spirit of compassion with those
who suffer, with special care for the children, the aged, the poor, the
disabled, the refugees, and the lonely.
We must cultivate mutual respect and consideration, so as to reach a
reasonable balance of interests, instead of thinking only of unlimited power
and unavoidable competitive struggles.
We must value a sense of moderation and modesty instead of an unquenchable greed for money, prestige, and consumption! In greed humans
lose their 'souls,' their freedom, their composure, their inner peace, and thus
that which makes them human.28
I am convinced that the new world order will only be a better order if as a result
there we have a pluralistic world society characterized by partnership, which
encourages peace and is nature-friendly and ecumenical. This is the conclusion
of the Declaration of the Parliament of the World's Religions:
In conclusion, we appeal to all the inhabitants of this planet. Earth cannot
be changed for the better unless the consciousness of individuals is changed.
We pledge to work for such transformation in individual and collective consciousness, for the awakening of our spiritual powers through reflection,
meditation, prayer, or positive thinking, for a conversion ofthe heart. Together we can move mountains! Without a willingness to take risks and a
readiness to sacrifice there can be no fundamental change in our situation!
Therefore we commit ourselves to a common global ethic, to better mutual
understanding, as well as to socially-beneficial peace-fostering, and Earthfriendly ways of life. We invite all men and women, whether religiOUS or
not, to do the same. 29



KiingIKuschel (1993), 26-29.

KiingIKuschel (1993), 36.

Hans Ruh

To start with I would like to sketch the problem in four points:

1. The world is facing huge problems.
2. Enterprises have contributed to these problems.
3. What part do enterprises play in solving these problems (ethical responsibility)?
4. Who else would and could solve the problems?
There is no doubt at all that economic enterprises have the first and foremost
part in creating and at the same time solVing today's problems. Apart from
science and technology they are the most potent creators of problems which
have to be solved.
If we ask what kind of problems have been created and should be solved
in this world I can see three common denominators:
1. Particularly in connection with today's ecological problem it becomes
evident that human beings are very different from other beings: humans interfere
fundamentally with the natural course oflife on our planet with the consequence
that there are fast and fundamentally dramatic global changes which endanger
the very basis of life for humans. Unemployment as a consequence of rationalizing and organisational strategies is one of the side effects.
2. Humans have still not solved the main sociopolitical problem: the question
of just and yet adequate distribution and sharing. Arising from this we can see
worldwide and national mass impoverishment, new poverty in industrial countries, violence growing out of poverty, slumming. Social threats apart from the
ecological ones threaten the quality of life and survival for all humanity.
3. Human beings seem to lose their sense of purpose. Particularly in highly
industrialized countries a sense of purpose, perspective and fulfilment of life
are decreasing. Instead primitive behaviour, hollow hedonism, potentials for
more violence, pornography and flight into addictions are on the increase.

P. Ulrich and C. Sarasin (eds.), Facing Public Interest, 29-32,

1995 Kluwer Academic Publishers.


The global problems that we are facing today can all be listed under the
above three points: unemployment, population explosion, destruction of the
environment, violence, drug addiction, slumming, wars.
Let's emphasize again: economic enterprises are first in creating and also
in solving these problems. Of course we know the argument: economic enterprises want to meet the requirements of people and the market regarding goods
and services; enterprises do not see the above mentioned problems at all. And
of course enterprises do try to fulfil the needs of the market. But it should
become much more clear that the fulfilment of these needs creates all the big
problems in the world and does not solve them. This is the real point of ethical
responsibility .
Let's illustrate this fact with the term productivity. The development of this
term shows the problem of the development of economical theory in a micro
area. The root of the word production can be found in Latin: producere
which means bring forth, cause, effect, raise.
The actual meaning of productive was defined differently in different
times. During mercantilism activities were considered productive which contributed to the increase in the wealth of a nation. For physiocrats agriculture and
mining alone meant being productive. Generally, productivity was understood
as the capability to produce goods for the increase of the wealth of a people.
The addition by Adam Smith was decisive: Productive only applies if
the exchange value of a good is more than its original cost. In other words: only
that is productive which can be sold on the market. This dimension of the market
was from then on part of today's definition of market, also in today's meaning
of technical productivity. Productivity today means human work production.
Technology, rationalizing and capital are becoming increasingly important factors
of this performance. Productivity today means goods and services that can be
sold on the market.
Thus this term expresses the advantage and the misery of modem economics:
advantage regarding the indispensable requirement of efficiency and profitmaking. Misery because such a definition of productivity is blind towards the
big questions of our time: unemployment, destruction of the environment, social
disparity, loss of sense, meaning and purpose.
In view of these mayor problems I want to uncover several shortcomings
of today's meaning ofproductivity: the majority of inhabitants of this world,
though willing to work, are not allowed into the productivity process, they are
supposedly unemployed. High productivity is often linked with high destruction
of the environment. To mention just a few: the use of polluting vehicles,
poisonous colours, pesticides, synthetic and plastic materials etc. Despite high
productivity the rich get richer, the poor poorer. This is not only the case
comparing industrial and developing countries, but lately this is also happening
amongst industrialized countries. Productive goods such as weapons, certain


toys, certain electronic and computer games make a big contribution to damaging
health and to the loss of sense and purpose.
The term of productivity comes into a bad light from another point of view
as well. There are people who are supposedly nonproductive but through this
are most useful to society, such as a farmer who works without dung; an
entrepreneur who does not produce senseless or dangerous goods; a transport
firm which works without damage to the environment. Quite often it is these
who work unproductively or do without productivity who are the most useful
to society in the long term because they follow the law of sustainability.
The term of productivity leads us into an apory - facing the problems of
today - more than ever before.
What conclusions do we draw from these lines of thought? We could
demand that productivity should again mean: to the benefit of society. My
thought is: if every epoch has created its own definition of productivity, we
should create our own definition as well which woulde be adequate to the real
welfare of our time.
The term of productivity is a product ofthe history of economics. We have
just reconstructed it and listed its stages: it means a useful process to increase
the welfare of the people, and the exchange value of such a good must be more
than its original cost. Important production factors apart from work are always
technology, rationalizing and input of capital. This definition of productivity
has lead into an apory and has to be corrected in the sense that the new definition of productivity has to consider the above points: the fundamental influence
humans have on this world, the problem of distribution and sharing and that
humans are losing their sense of purpose.
During the process of covering the needs in goods and services these three
realms have come to the forefront even though this was not the intention. What
we need today is a productivity that is ecological, a social benefit and that gives
people a sense of purpose. However, the situation today does not look as if we
were moving in this direction. On the contrary, we have enforced the classical
elements of productivity such as rationalizing and more technology, and are
moving towards apory in a liberalized world market on a global level.
Problems will thus get worse, not better, we are further from a solution particularly regarding the above mentioned three realms: humans interfering deeply
with nature, distribution, loss of sense and purpose. Economic enterprises are
competing harder than ever with each other which makes new solutions difficult.
How do economic enterprises deal with these realities? How, if there are
hardly any regulating instruments internationally? How, if enterprises pass on
the pressure to rationalize even more within national markets, e.g. with redundancies? How, if there is no scope for adequate consideration of the above central
questions within an enterprise? How, ifmanageresses and managers during times
of deregulation are not prepared to cooperate with setting new and strict law


standards locally and globally? The central question for enterprises is: how do
we secure an ecological, social and purpose-giving productivity?
Before I give my answers from my point of view I would like to underline
the necessary contribution from the part of enterprises:
1. Because the government cannot do everything, enterprises have to take responsibility autonomously.
2. Because enterprises within the market have great influence on ecology, in
social matters and purpose-giving, the logical deduction is great responsibility
and need for action.
3. Because enterprises have the biggest potential, they have to use it responsibly.
To answer the question: how to secure a productivity that is ecological,
a contribution in social welfare and purpose-giving? I would like to mention
6 prerequisites (These are requests for enterprises!):
1. Change to sustainable technology,
2. Change to sustainable energy, e.g. decentral solar energy,
3. Careful use of areas, soil, ground and earth,
4. Decrease of social disparity,
5. Change to healthy, purpose-giving and violence-reducing products,
6. Regionalize economies.
Society or the government would have to stipulate the following guidelines
or laws:
1. Ecological tax system,
2. Basic economic security for everybody,
3. Social service rendered by everybody.
This combination of entrepreneurial and legal measures would be a step
towards solving the great problems of today.

Greenpeace's Expectations of Companies with Regard to Their
Ethical and Political Responsibilities
Thilo Bode

This text is about the expectations made of companies by a big environmental

association, in this case Greenpeace, with regard to their ethical and political
responsibilities. I want to deal with this subject by making four theses or contentions. These may be summarized as follows:
1. There is nothing wrong with making a profit. Companies should and must
make profits. What matters are the prices profits are based on, and which
products and services a profit is sought for.
2. It is not enough for companies to formulate environmental policy and
guidelines as company goals. What a company does must be compatible with
its basic aims. Otherwise a credibility gap arises, and this will rebound
negatively on the company.
3. Ecologically efficient production by companies is a necessary but not
sufficient condition for ecologically sound economic management. It meets
limits of economic viability and competitiveness if overall economic conditions and the legal framework work in a counterproductive way.
4. For companies to be credibly responsible, ethically and politically, it is crucial
they be socially and politically committed. The aim of this commitment should
be to create overall economic and legal conditions which encourage and do
not hinder ecologically sound economic management.
P. Ulrich and C. Sarasin (eds.J, Facing Public Interest, 33-40.
It:> 1995 Kluwer Academic Publishers.


The First Thesis

It is a mistake to assume Greenpeace is basically opposed to profit. Profit, the
difference between proceeds and expenditure, is in the final analysis also a
measure of efficient economic management, a measure of the efficient use of
capital and human resources. Ecology, too, aims at achieving the greatest
possible effect with the minimum use of resources. Resources are limited, and
using up material resources wastefully and inefficiently leads to environmental
pollution in the form of emissions, waste heat, pollution of the atmosphere and
waters, and to the destruction of natural bases of life, of forests and seas, for
In being a measure of economic management, profit today often has a
destructive effect because the prices which lead to its determination are misleading. In a market economy profit can only be an indicator of sound economical
business management if prices reward protecting natural resources; that is, when
protection results in higher profits, and wastage and destruction are penalized
through lower profits. This is not the way things are today. Economic management destructive to the natural bases of life is rewarded everywhere because
the environment enters into calculations as being free of charge. This is especially true of cheap fossil energy, where the environmental costs and limited
availability of fossil forms of energy are not reflected in their price. Products
which are made, applied or used with proportionately more energy thus have
a cost advantage which enables them to enjoy higher demand. This results in
the excessive consumption of fossil forms of energy and concomitant consequences for the environment - global warming, greenhouse gases, waldsterben,
waste mountains, and so on.
Since companies should and have to make profits, they find themselves
in a conflict: precisely those products which consume a relatively great deal
of energy in being made or sued, and thus damage the environment - are
profitable. But this conflict is not insoluble. Entrepreneurs can solve it by acting
in a way that fulfils their social responsibilities while being at the same time
in conformity with the requirements of the market. I shall come back to this
point later.

The Second Thesis

The preservation of the natural bases of life today has a high priority in big
companies - verbally. This can be seen, for example, from companies' environmental policy guidelines and corporate goals. In its guidelines on environmental
protection the biggest German corporation, Daimler-Benz, for example, in
having responsibility for the preservation of the natural bases of life, states:


The Daimler-Benz corporation is committed to integrated environmental

protection which acts on causes and which incorporates aU the environmental impacts of production processes and products into company decisions.
The aims are to use resources economically and to be protective towards
the natural bases of life.
At the same time it says in the International Chamber of Commerce's Charter
for long-term Sustainable Development (point 6), to which Daimler-Benz is
a signatory:
International corporations are duty-bound to develop and make available
products and services from which no excessive impacts on the environment
emanate, which are safe in their intended use, economical in the consumption of energy and natural resources, and suitable for being re-utilised,
recycled or harmlessly disposed of
It is without doubt a step forward that companies are stating their commitment
to such far-reaching principles. But in so doing they are also making it possible
for them to be measured by their deeds. And in Daimler-Benz' case these
principles work to embarrassing effect. A corporation that makes cars which
have become the epitome of energy-squandering, and can be described as a real
environmental anachronism (I am referring to the Mercedes class S cars; as you
well know, in the course of its life one single car of this type alone pumps 90
tonnes of CO2 into the air, thus heating up the climate). A corporation like this
would do better not to sign any charter obligating it to make products economical
in their consumption of energy; or it should change its company policy.
A further illustration may make it clear that Daimler-Benz' guiding principles
are not worth the paper they are printed on. When Daimler-Benz' chairman,
Edzard Reuter, came back from a visit to China, he reported that sales of the
Mercedes class S models were the big hit. Making the Mercedes class S the
model of private motorisation to be followed in China! This is a nightmare,
ecologically speaking. Mr. Reuter would argue however that the customer wants
to buy his product, and ifhe didn't make it, someone else would. This argumentation is also fondly used where export and trade in weapons are concerned.
The important point about this is that it shows that Daimler-Benz' corporate
conduct is in blatant contradiction to its ethical principles. This fact will sooner
or later damage the corporation's image and thus also weaken its position in
the market. At the same time this also shows ways out, however. Employing
an appropriately designed marketing strategy, the Daimler-Benz corporation can
also survive without S model cars - and perhaps even do better. And it can
do so even if excessively cheap energy prices work in favour of such ecologically perverse products as Mercedes S model cars.


The Third Thesis

If a company is to implement environmental policy principles in practice, it must

first of all strive for eco-efficiency in production. This term was fashioned
by Stephan Schmidheiny, the chairman of the Business Council for Sustainable
Development, and though technological in nature it nonetheless has great impacts
on company policy and conduct. Eco-efficiency means economical and
efficient use of energy and raw materials in the manufacture, use and waste
disposal of a product, as applied not only to the product itself but also to the
preceding and subsequent stages of production, and to the avoidance of emissions
of toxic or environmentally harmful substances into the ecosphere.
The technological ideal behind this is production in closed cycles of
materials. At the same time it is logical that absolutely clean production cannot
exist. Eco-efficiency thus does not incorporate any definitive provisions. But
what is also certain is that technological potentials for eco-efficient production
are still nowhere near exhausted. Messrs. Schmidt-Bleek and Ernst Ulrich von
Weizsacker of the Wuppertal Institute reckon that energy and resource productivity can be increased in most areas by a further five to ten times.
The ecological efficiency of production in western industrialized countries
has increased notably in the last decade, there being differences between specific
sectors. One sector which has made considerable reductions in emissions of
effluent and pollutants in West Germany in the last few years, for instance, is
chemical industry. But eco-efficiency in making a product is not everything that
matters. Eco-efficiency has also to be achieved at the preceding production stages
and/or when the product is used or applied, and when it is disposed of. A
company can, for example, very cleanly and thus eco-efficientIy manufacture
organochlorines, which are among the worst environmental pollutants, while
damage at the same time arises in their usage. Today environmental destruction
comes increasingly rarely out of the chimney, so to speak, and more and more
through the works gate - in the form of products.
Eco-efficient production has its limits. A company will only press forward
so far with eco-efficient production, and will stop doing so at the point at which
its position in relation to its competitors is weakened and its economic power
to make a profit is reduced. The example of the CFCIHFC-free fridge - production of which was at first not supported by the household appliance industry,
which even went on to try and prevent it - shows that there is still significant
potential despite these limits. Here the technology of cooling and insulating with
natural gases has been known for over 80 years. Industry's innovations are
manifestly not oriented on environmentally ethical principles. Eco-efficiency
is unfortunately very often understood as making optimal improvements to
mistaken developments, and not as a revolutionary strategy which calls conventional ways into question.


The Fourth Thesis

Increases in eco-efficiency by individual companies do not suffice to make a
real change towards an ecological economy. And time is pressing. The human
race is at a crossroads. The earth's population will rise to at least eight billion
in the next few decades. Global warming is increasing, with unforeseeable
consequences. The ozone layer is thinning, endangering the climate and people's
health and food supply. Ten to twenty thousand species of animals and plants
are irrevocably dying out every year, the most gigantic die-off of species caused
by man the planet has ever seen. And in 2020 it is expected there will be no
more primary forests. On top of this, the oceans are being fished until they are
empty, soils are being eroded, and everywhere ground-water reserves are being
used up.
There is agreement we cannot get any further in environmental policy
through additional laws, by imposing limits, for example. There are approximately 1'400 environmental policy ordinances in Germany - but there is no overall
economic or legislative system providing companies with an incentive to run
their businesses ecologically.
The first and most important step here would be a steady increase in the
price of fossil forms of energy, this being part of an ecological tax reform. This
would result not only in energy being used economically but also in resources
being dealt with more economically. This would have to be countered by a
reduction in other tax burdens. The overall burden on companies and private
households ought not to increase: the tax should have a re-routing function, not
a financing one.
An increase in the price of energy would have a far-reaching effect, and
not only on the energy sector itself. More expensive energy would lead, for
example, to waste suddenly being valuable, since waste is nothing other than
bonded energy, and waste incineration nothing other than the destruction of
energy. Many ordinances on waste management would cease to apply. More
expensive energy would also result in a large number of ecologically problematic
substances no longer being able to survive on the market. I refer here to
organochlorines, the production of which is subsidized by cheap electricity.
Ecological tax reform has become a standard demand where ecological
policy is concerned. So why is it not being made?
A disastrous mechanism is at work here. The political parties in Germany
talk of ecological tax reform but don't mean it. The Conservative parties and
the Liberals don't, in principle, dispute that such a tax reform is important. But
they want to realize it in a diluted form, with arrangements for exemptions at
a European and, if possible, global level. This means the reform will either not
come about, or will do so too late, or will be ineffective. The Social Democrats
and the Greens understand ecological tax reform as a financing instrument, which
would finance investments they regard as ecologically sensible. This is to pervert


the idea of an ecological tax, as it is then used as a financing instrument and

not a steering one. Such a reform has in turn less chance of becoming politically
And what about companies?
Responsible entrepreneurs admit in private that tax reform has to come.
But this is as far as things go. They don't take up a position publicly, arguing
it isn't their job to make such a political commitment. In our view they are
mistaken on this point. Entrepreneurs clearly have an influence on economic
policy. In fact they do so to a considerable extent in Germany, via their federations.
Companies' permanent representatives, especially those of the big business
federations such as the DIHT, the German Association of Chambers of Commerce, and the BDI, the Federation of German Industry, are among the most
influential lobbyists in the government lobby halls. The big industrial associations
are fighting fiercely against the introduction of ecological tax reform.
I find companies in Germany generally lack the courage of their convictions.
There is very little trace of a living ethic where environmental policy is concerned, and any social commitment is small-minded and defensive. I can give
you another illustration on this point:
With everyone talking about ecological tax reform, Greenpeace commissioned a study investigating the effects of an energy tax effected by a country
acting on its own. This was commissioned to be carried out by the highly reputed
Deutsche Institut flir Wirtschaftsforschung, the DIW, or German Economic
Research Institute, an institute which advises the German Government on
economic policy. The tax was conceived with the price of primary energy
sources being slowly and gradually raised, by seven per cent per year; the
income from this tax would then channelled back into industry in the form of
a reduction in salary-linked costs, and back to private households as a rebate.
The results of this study are surprisingly encouraging. They show such a
step can legally be implemented by a country acting on its own, that it does
not impair economic growth or foreign trade, that it is acceptable in social terms
(with slight relief for incomes under DM 4'000 a month), and that it would create
between 500'000 and 800'000 additional jobs.
But there are losers as well as winners in this scenario. While industries
such as engineering, high-tech and service industries profit, other sectors,
particularly the iron and steel industry and parts of primary chemical industry,
come under increased pressure to adapt. This change in structure is economically
sensible, however, as it favours industries which use little energy - and high-tech
industries - and so also strengthens German industry's international competitiveness in the long term.
Public reaction to the publication of this study was highly enlightening.
It was commented on favourably inmost of the media, where the gist was that
there was at last an intelligent basis for action in economic policy. This construc-


tive atmosphere was much less in evidence among politicians and political
parties. We have the impression politicians either see themselves exposed to
uncomfortable pressure, or else are disrupted in their plans to use a tax of this
kind primarily as a financing instrument. But since politicians are anxious not
to foul their patch with influential environmental organisations, they reacted
more or less on the lines of this is something well done, we always wanted
to investigate this ourselves, some things have to be clarified here, however,
etc., etc. The usual wishy-washy reaction.
And entrepreneurs? It is understandable that the losers express a negative
attitude to such a tax. But what is less easy to understand is that those who stand
to gain have kept a low profile and shown themselves shoulder-to-shoulder with
the losers. And industry's federations represent the lowest common denominator
- i.e. the losers. In a nutshell, a pioneering, detailed policy proposal is, for
various motives, talked about, too, much by the most important social groups.
This has shown us that it is not a lack of information that hinders tax reform.
It is a lack of political courage and entrepreneurs' wholly inadequate basic
ethical attitude when it comes to taking practical action.
If we assume that only a change in basic economic policy and the legislative
framework can bring about a different form of economic management, managers
have, in my opinion, a special duty to work with commitment for such a change.
It is only right this demand be placed at the door of companies, because all companies are affected when overall conditions change, and have the opportunity
to react to them - and adapt in good time. The call for such influence to be
exerted is thus not unrealistic, it is directly in companies' market interests - or
in conformity with the market. Managers are not forced to trip themselves up.
We are not asking that profits no longer be made. We are calling for you to
act to see that your profits are attained from protective use of our resources and
not from destroying them. The call to exert socio-political influence does not
involve any new definition of companies' role. This influence has been exerted
by companies for years now - through their federations.
If entrepreneurs do not exert socio-political pressure on the state, nothing
crucial will get changed.
As long as entrepreneurs preach one thing and practice another, i.e. talk
privately and in their glossy brochures of their responsibility to future generations, but, through their lobbying in their federations, operate a primitive policy
of preventing ecological reforms, nothing will change. It is no longer enough
for entrepreneurs to vituperate politicians. What is needed is for them to
influence economic policy themselves by coming through with intelligent ideas.
I am convinced that entrepreneurs will in the long term only become credible,
and thus successful, when they perceive themselves and their companies as
having a major responsibility to society, and not as acting obstructively in a
narrow-minded approach.


I would like to conclude with a quotation from Stephan Schmidheiny, who

The crucial point about sustainable development is that it is acknowledged
as a principle but initiatives for implementing it in practice are almost nonexistent. Many of those who would have the power to effect the necessary
changes have no incentive to change the status quo through which they have
attained their power.
And about companies' responsibilities he says:
The world is moving towards deregulation, privatisation and globalisation
of markets. The freedom gained as a result of this obligates companies in
private industry to assume a new responsibility towards society, the economy
and the environment.
It is high time this were done.







Adela Cortina


From Individual Morals to the Ethics of Institutions

In modem western society, voices are to be heard to the effect that morals are
dead, to such an extent that to the countless post-isms that characterize our
era - postmodernism, postcapitalism, postmetaphysics - we would have to add
a new term, and thereby find ourselves in the age of postmoralism. However,
these same voices recognize the fact that, strangely enough, there occurs at the
same time a revitalization of ethics in the so-called field of applied ethics
(such as economic and business ethics, bioethics, gene ethics, ecoethics, IT ethics
or professional ethics), and that this is not only being produced in academic
circles, but also and above all in the different social domains of everyday life. 1
A public opinion conscious of its rights would demand of the agents of different social activities and the institutions that sustain such activities an ethical
conduct, that is to say, a respect for the rights of the public and the satisfaction
of their interests, that is, should they wish to gain acceptation, or be recognized
as legitimate. And from this would spring a demand for a revitalization of the
different ethics, which the agents of different activities and their corresponding
institutions would find advantageous to satisfY, that is, if they wish to sell their
products, since in a modem society not only political power requires legitimization, but also any activity which seeks social goals and causes external
These things being true, we could ask ourselves: how do we explain this
contraposition between the alleged advent of a postmorai era and, at the same
time, the ackowledgement that ethics, in the case of applied ethics, constitutes
a social necessity?

A. Cortina (1993a): Etica aplicada y democracia radical. Madrid: Tecnos.


P. Ulrich and C. Sarasin (eds.), Facing Public Interest, 43-58.

1995 Kluwer Academic Publishers.


According to some authors, the cause of this apparent paradox lies in the
fact that the deceased morals are the Kantian morals, i.e., individual morals of
good intentions, of goodwill and of self-sacrifice as concerns inclinations; the
morals of individual duties. The essence of such morals is the motive of the
action and not the results. In contrast, the ethics of our times does not require
- as these aforementioned authors continue - an ethics of heroes, willing to
sacrifice their desires, because individual goodwill is impotent, and even
dangerous at times, in order to protect the rights of all men against daily
violations. For this we require painless ethics, which would coordinate individual actions by means of rules of a structure so intelligent that the final result
of the coordination would be the best possible good for all concerned, as
independent from the good or bad will of the individua1. 2 As Apel would put
it: In the end, what is important is not good will, but that the good comes to
The astuteness of understanding, and not a respect for the law, is the key
to the painless ethics of the new democratic times, good results and not good
will: former individual morals should be superseded by institutional ethics. 4
Certainly, the reasons which would promote the transition from individual
morals to institutional ethics are particularly understandable in the realm of
economics. To begin with, the modernization process has implied, among other
aspects, the functional differentiation amongst different social sectors, which
already possess their own logic and relative autonomy.5 In the case of modem
economies, these have been characterized by the following features: division
of labour, anonymous interchange processes, growing interdependence and
increased complexity. These traits serve to make superfluous both the motives
for individual action and their consequences vis it vis the overall result, since
we are dealing with the unplanned product of uncountable actions. This implies
that the results do not depend solely on my action itself, but also on how others
act. Here we can see the urgency involved in substituting the logic of individual
action with the logic of collective action, or at least supplementing the former
with the latter. 6
In the second place, the rationality of modem economies has come to be
characterized by mechanisms which appear to be prima facie at variance with


G. Lipovetsky (1992): Le crepuscufe du devoir. Paris: Gallimard.

K.-O. Apel (1976): Transformation der Philosophie. Frankfurt: Suhrkamp, Vol. II, 427.
K. Homann (1993): Die Bedeutung von Anreizen in der Ethik. Paper read at the 25 Jahre
Diskursethik symposium, held at the Centre Universitaire of Luxembourg in December
A. Cortina! J. Conill/ A. Domingo/ D. Garcia-Marza (1994): Etica de fa empresa. Madrid:
Trotta, especially chap. 3.
K. HomannlF. Blome-Drees (1992): Wirtschafts- und Untemehmensethik. Gottingen: Vandenhoeck & Ruprecht, 21.


the exigencies of Kantian morals. If it is true that economic agents are only
moved by the maximization of profits, and that the incentives for their actions
can only be found in the profit motive, and that the cornerstone of a modem
economy is competition, it would seem that there would be no room within for
If all this said is certain, there are still a number of open questions of which
here I should like to mention only three: are morals in general superfluous for
an economy or for a modem enterprise, and not just the morals of intentions?
Should the answer to this be affirmative, then, why would we then need an ethics
to protect individual rights, if we already have judicial and political norms? And
lastly, who is legitimized in order to judge the results of collective actions as
good or bad?
The central thesis of this paper will consist in affirming that the concept
of modem business activity, taken as a whole, contains moral aspects to which
economic agents should cater to if they wish to carry out the tasks assigned
to them. In this context, an indispensable role is played by both a critical public
opinion and businessmen themselves, who not only take such proposals of public
opinion seriously, but are also ready to confront themselves in a critical sense
as concerns their own business activities.
The clarification of what makes up the moral aspects of a modem enterprise
will constitute the first part of this paper; in the second part we shall attempt
to determine the nature and location of public opinion in business activity,
considered as one of the loci of morals, and in the third part we shall go on
to defend a model of critical self-regulation of the business enterprise.


Morals in Modern Business Activity

Before indicating which are the moral aspects of business activity, it will be
convenient to clarify what it is we should understand as moral. I have approached this problem expressly elsewhere, selecting five of the meanings that
the history of western ethics has propitiated and that, in my judgement, are today
inescapable for the construction of any applied ethics, and are all therefore
indispensable although only one of them - the ethics of discourse - can function
as a coordinating marker. 7
The first meaning of moral that I would like to take into account, being
the most wide-reaching, is that which Ortega expressed in texts such as the

Cortina (1993a), chap. 11.


The word <moral> irritates me. It irritates because in its traditional use and
abuse moral is understood to be I know not what ornamental addition
attached to the life and being of a man or a country. For this reason I prefer
that the reader understands it for what it signifies, not within the counterposition of moral-immoral but in the sense which it acquires when someone
says that he is demoralised.
It is thus revealed that morals are not a supplementary and luxury performance which man adds to his being in order to obtain a prize, but the very
being of a man himself when he is in possession of his senses and vital
efficiency. A demoralized man is simply one who is not in possession of
himself, who wanders outside of his radical authenticity and who therefore
does not live his own life, and thus neither creates, fecundates, nor forges
his destiny.8
From this perspective - and I find it very important to emphasize this - morals
can never be something added from outside to the being of man or a specific
activity, but it must come from man's self-development when he is in possession
o/his senses and vital efficiency. Thus, when we apply this concept to morals
and human activities as they are configured by history, the morals of business
activity can never consist in a supplementary performance coming from a
foreign venue, but the full exercise of this same activity within a society which
understands itself historically.
To understand morals in another sense is, in my judgement, leading authors
such as Habermas try to liberate law and politics from morals, as if moral
judgements constituted an external interference for these spheres, and to consider
the supreme principle of morals and that of politics as two subcategories of a
much wider category: the principle of discourse, which is morally neutral.
Ethics would consist in the correct realization of a legitimate politics, in
connexion with the lifestyles of a specific community, and morals would
comprise the compliance with universalizable duties, both subordinated to the
supreme category of rational discourse. 9
However, let us not begin the house by building the roof. If, when dealing
with morals, we fail to begin by mentioning norms (Ape!, Habermas), principles
of justice (Rawls) or rules (Buchanan, Brennan, Homann), but on the contrary,

J. Ortega y Gasset (1947): Por que he escrito 'El hombre a la defensiva', in: Obras
Camp/etas. Madrid: Revista de Occidente, IV, 72. Also J.L. Aranguren (1958): Etica.
Madrid: Revista de Occidente, 81.
J. Habermas (1992): Faktizitiit und Ge/tung. Frankfurt: Suhrkamp, 135ff.; Nachwort
to the 4th revised ed., 1993. Thus the admonition I formulated some time ago to the effect
that, if the ethics of discourse continued to seek refuge in crass proceduralism, it could
well end up transformed as an ethics without moraIs. A. Cortina (1990): Etica sin mara/.
Madrid: Tecnos, especially part II.


and in the footsteps of authors such as Arendt or Barber, we begin with the vita
aetiva,1O with the activities by which human beings develop their lives, we shall
have to recognize the fact that the moral of such activities consists in their full
realization. But yet, what does it mean to develop an activity morally?
In order to develop an activity morally in modem society, it is essential
to consider at least four reference points: I) the social goals via which it
becomes meaningful; 2) the adequate mechanisms for attaining such within
modem society; 3) the judicial and political framework corresponding to the
society in question, as expressed in the Constitution and supplementary prevailing
legislation; and 4) the exigencies of critical moral conscience attained by this
society, which in liberal democratic societies are exigencies of a postconventional
moral level as expressed in Kohlberg. I shall proceed to comment briefly on
these points.
To begin with, it would be convenient to approach the second meaning of
the term morals, closely linked to the concept of vita activa: that which
attempts to encounter the rationality of the moral in specific practices, in that
Neo-Aristotelian sense which today is renewed by a certain communitarianism.
It is not necessary to opt for a communitarian proposal in order to recognize
the fact that business ethics cannot disparage the concept of practice, which
MacIntyre reconstructs as a corporate activity, and which becomes meaningful
- and obtains specific rationality - by seeking certain internal assets, requiring
the cultivation of certain virtues on the part of those who participate in it. 11
Different practices are characterized, therefore, by the assets obtained from the
very same, by the values which are discovered via the pursuit of these objectives
and by the virtues the cultivation of which is required. To be sure, these activities are possible because there are institutions which sustain them, but the
significance of the institutions is precisely that of lending support to the
practices. For this reason it would be advantageous - in my judgement - to
recover the meaning of activity, of vita activa, of an ethics ofactivities which
would sustain institutional ethics. The role of morals within the enterprise is
not just limited to the rules and institutions, although they do play their part. 12
From this point of view, corporate activity is characterized by the pursuit
of an internal asset (the satisfaction of human needs) by way of specific
mechanisms - and this is the second point of reference to which we have
referred - such as the market, competition and profit-seeking, which necessitates
the realization of novel values, such as the search for quality, the ability to make
use of resources (especially human resources), etc.



H. Arendt (1960): Vita activa. Stuttgart; B. Barber (1984): Strong Democracy. BerkeleylLos
AngeleslLondon: University of California Press.
A. MacIntyre (1984): After Virtue. New York: University of Notre Dame Press, chap. 14.
CortinaiConilllDomingo/Garcia-Marza (1994), especially all of chap. 1.


On the other hand, in order that corporate activity be legitimate it is

indispensable that it conforms with prevailing legislation which outlines the rules
of the game for the enterprise and for all those institutions and activities which
have social goals and effects. However, it is not sufficient to build up a business
in the full sense of the word, since legality does not exhaust morality. This is
not only because the legal framework may suffer from gaps and insufficiencies,13
but for at least two other reasons: because a democratic constitution is dynamic
and must be reinterpreted historically, and because the scope of action involved
will never be totally legislated nor would such be desirable.
However, constitutional reforms cannot be driven by the sectorial interests
of different social groups, but only by a modem principle of legitimacy which
at least adheres to the formulae of social contract, i.e., legislation cannot be other
than that which all might desire. Consensus is undoubtedly necessary for legitimizing the politico-economic framework; yet in this context consensus does
not mean a pact of sectorial interests but an agreement concerning a universalizable interest, concerning that which all might desire.
The fact that we are speaking of corporate activity in modem societies under
liberal democracy signifies that we are dealing with societies the moral conscience of which has attained a postconventional level, as expressed in Kohlberg,
Apel and Habermas, internally modulating the way of understanding the enterprise. And in this way we approach the meaning of the term moral which,
if we follow Kant, has come to be assimilated by discursive ethics and which
constitutes the point of reference for the critical morals as mentioned above.
To be sure, any activity or institution which pretends to be legitimate has
to respond to the exigencies of justice as imposed by society in accordance with
the level of moral conscience that said society has attained. In the case of postindustrial modem society, access to the postconventionallevel presupposes the
basic recognition of the fact that all parties affected by decisions and norms
are valid interlocutors, which signifies that the norms which regulate activities
have to be accepted by all parties pursuant to a rational dialogue. As the
Habermasian principle of discourse would put it:
Only those norms of action are valid with which all possible affected
parties as participants in a practical discourse would be in agreement.14



For a detailed criticism against such a Liickenbiisserkonzeption von Untemehmensethik

(stopgap approach to Business Ethics) cf. P. Ulrich (1994): Integrative Wirtschaftsethik
als kritische Institutionenethik. Institut fur Wirtschaftsethik der Hochschule st. Gallen:
Beitriige und Berichte, No. 62, 29. Ulrich argues against Homann and Blome-Drees (1992:
Habermas (1992: 138).


Certainly, Habennas refuses in his latest works to call this principle the principle of the ethics of discourse and he denominates it the principle of discourse, alleging that the justification of nonns of action in general requires
the following of a nonnative principle, morally neutral, which expresses none
other than the sense of impartiality, whereas morals are linked to a specific type
of nonns of action.
However, without dwelling upon this shift of Habermasian discursive ethics
towards the theory of discourse, I should like to emphasize that, from the point
of view of a critical moral conscience which has attained a postconventional
level, those nonns of action are valid in which all parties affected by them as
participants in practical discourse are in agreement, because they satisfY universalizable interests. This critical moral conscience is a requirement which can
never be totally institutionalized, but it has a priviledged status of expression
in modem society: that of critical public opinion, just as Kantian tradition has
understood it.


The General Public as a Locus of Morals in Modern Society

At least as from the 18th century, the concept of publicity has been closely
linked to the political world and, more specifically, to the way in which political
power is legitimized. We are dealing with a public power whose objectives and
effects are public, and which therefore requires public legitimization.
This way of understanding publicity constitutes an indispensable range
marker for the Kantian concepts of Publicitlit and the public use of reason
which remain today, although with certain refinements, within traditions of
political philosophy of such relevance as that of the political liberalism of J.
Rawls or the ethics of discourse of J. Habennas. In all three cases the concept
of publicity is linked to the legitimization of politics, which can only proceed
from the empire of laws rationally desired: a just state cannot found itself on
the private - and therefore arbitrary - will of a sovereign or a social group, but
on the rational will of all those that may desire, and when it comes to detennining that which all might desire the role of a reasoning pUblicity becomes
indispensable. The tenns law, publicity, rationality and legitimacy
become closely entwined. IS
Since the 18th century however, society has seen changes which oblige a
theoretical rethink, and thus enjoin us to rethink in consequence the locus and
function that Kant assigned to critical publicity. Let us then briefly comment


1. Habennas (1962): Strukturwandel der Difentlichkeit. UntersuchWlgen zu einer Kategorie

der biirgerlichen Gesellschaft. Neuwied: Luchterhand 1962lFrankfurt: Suhrkamp 1990.


upon the Kantian contribution, and then we can proceed to explain these changes
which forced Rawls and Habermas to refine their concepts of publicity.

3.1 Critical publicity as a mediator between bourgeois society and political

power (I Kant)
Kant used the concept of publicity in a dual sense: as a principle of juridical
ordering and as a method of illustration. As a principle of juridical ordering,
the Principle of Publicity is an indispensable condition for the justice of law,
since justice can only be thought of as publicly manifest. For this reason, the
transcendental formula of public law reads as follows:
Those actions are injust which refer to the rights of other men whose
maxims cannot endure publication.16
At any rate, in the work of Kant we can still find an intertwining of two ways
of understanding publicity: the representative, i.e., the representation that the
sovereign makes of his people, and republican publicity, which consists in
governing the res publica with the aid of the formula of the social contract, in
accordance with which the sovereign must promulgate his laws within the
context of that which all might desire. By virtue of this interweaving it is
still the sovereign who plays both the role of representing the people and making
the laws public, and making representation should the people be desirous of
these same. In this way, the people are juridically linked to the sovereign, while
the latter is answerable to the people only morally.17
Nevertheless, Kant does not leave the compliance with the contract in the
hands of the sovereign without expressly ascribing to him a voice of the
conscience which serves to remind him, and here the second concept of
publicity to which we referred comes into play: publicity as a method of
illustration or, more specifically, as J. Rawls has reported, the public use of
reason on the part of mature citizens. And it is the informed citizen who has
to publicly criticize public authorities, making public use of his reason. The
liberty of the pen is the champion of the people's rights: reasoning publicity
is the form of conscience which mediates between the private and public spheres,
between civil society and political power.
Society as a whole in this way is structured at two levels, the public sphere
corresponding to political power, and the private sphere. But in this second case



I. Kant (1795): Zum ewigen Frieden, VIII, 381.

A. Philonenko (1968): Theorie et praxis dans fa pensee morale et politique de Kant et

de Fichte. Paris.


we still have to distinguish between the private sphere corresponding to commercial and family transactions, and the political publicity of the illustrated who
mediate between the State and the needs of society by way of public opinion. IS
From this perspective, the res publica is what it is by virtue of having as
its business the public good, but also for preconizing, as a procedure for achieving the public good, the creation of a public space in which citizens can deliberate publicly concerning what is important to them. The existence of this public
sphere is a conditio sine qua non for the illustration of citizens and for the
criticism of political power; conditio sine qua non therefore for political morality,
that is to say, of that sphere which, owing to its public implications, needs
This republican tradition of publicity is maintained in our day via models
of political philosophy such as the two we have mentioned above, although with
serious modifications, owing to the fact that substantial changes have been
produced in the structure of society.

3.2 A domesticated public reason: the public use of reason as part of the
conception ofjustice, characteristic of political liberalism (J. Rawls)
The political liberalism of J. Rawls involves the dual perspective described by
Kant for the concept of publicity, although with express refinements: at the level
of the legitimization of political order, he urges the promulgation of principles
of justice which are able to resist the test of publicity, but the realization of such
principles in daily life requires that a mature citizenry make public use of reason.
However, the structure of society has changed since the 18th century, above
all in two aspects: the political form of government is democracy and therefore
citizens are both the governed and the governors and in this way publicly exercise their reason not to criticize the sovereign, but to construct together a legitimate and just order. On the other hand, the economy and the business enterprise
no longer form part of the private sphere, but have become emancipated therefrom owing to their public repercussions and therefore require legitimization.
Consequently, changes such as these substantially modify the dual concept of
publicity in the following way.
As for the basic principle of publicity, Rawls understands that the stability
of a political order requires the promulgation of principles of justice which may
be published and accepted by all members of the political community. In this
way he conceives the mental experiment of the original position, from which
it is to be understood that any citizen, i.e., any of the free and equal members
of a political community, in the condition of being free and equal, could be in

Haberrnas (1962), chap. II, 4.


agreement with such principles. The notion of the citizen is thus important here,
and not that of man, because what is at stake is the basis of political cohabitation
and not the happiness of specific persons. Once the public principles of justice
have been decided, they would be applied in successive stages to the public
institutions. How then to go about attaining their incarnation in daily life?
At this point the second concept of publicity comes into play: the public
use of reason, to which Rawls dedicates considerable attention in his later
works.19 The mature citizen who attempts to aduce in his political community
those reasons which other citizens can accept is making public use of his reason,
notwithstanding his conception of a good life or his comprehensive theory of
what is good. He who proceeds in this way complies with the moral duty of
civility, which consists in attempting to reinforce the consensus which already
exists in a democratic society concerning mimimum quotas of justice. Cohabitation in a pluralist society is possible precisely because all share in these mimimum quotas which comprise the celebrated interwoven consensus, and it is
a civil and moral duty to reinforce same in order to fortify the cohesion of the
political community.
Public reason is as such in a tripartite sense because: 1) as the reason of
equal citizens, it is the reason of the public; 2) its object is the public good and
the fundamental questions of justice; and 3) its content is public, given by the
principles expressed by the conception of political justice. The content of public
reason is the political conception of justice, and it must refer to contents acceptable for all citizens for, if not, they would fail to offer a public basis of justification.
To be sure, Rawls will insist that this idea of public reason is essentially
political. However, it is also certain that to exercise it is a moral (not a legal)
duty: the moral duty of civility. Therefore, it will be mature citizens, imbued
with the duty of civility, who will hasten to make public use of their reason,
a reason which in this context, more than criticizing political authority, seeks
the consensus of other citizens in all that with which it is already possible to
be in agreement.
No doubt, this liberal concordance in what is already shared has a positive
dimension: that of emphasizing the fact that the construction of life in community demands the joining of forces in pluralist or multicultural societies.
However, it has the inconvenience of being conformist, of leading to an adaption
of what is already existent de facto. Such conformism has quite an effect on
the economic sphere; in Political Liberalism Rawls expressly admits that, with
regard to the fair distribution of material goods - which since A Theory of
Justice has been the object of the second principle of justice - the widest basis
of agreement that can be obtained is that of a social minimum which covers

1. Rawls (1993): Political Liberalism. Columbia University Press.


the basic needs of all citizens. On the other hand, the principle of difference,
according to which the unequal distribution of wealth is only just if it favours
absolutely the most needy, appears to be unable to reach a wide consensus
among society, and for this reason remains excluded from the constitutional
essences.20 The public use of a concordance-based reason within a political
liberalism, no longer philosophical, has lost the critical capacity which the
Kantian proposal enjoyed. This critical capacity is recovered again in the concept
of publicity presented in the Theory of Discourse by J. Habermas.

3.3 The model of publicity of the Theory of Discourse: the critical voice of
civil society (J Habermas)
Critical political publicity is, according to Habermas, an indispensable factor
for a deliberative theory of democracy, since without it an authentic, i.e., radical
democracy is impossible. Publicity forms part of civil society, just as in the
philosophy of Kant, and represents a mediating element between civil society
and political power?l However, the structural changes suffered as much by civil
society as by political authority have led us to modifY considerably the concept
of critical publicity.
As to political power, it is no longer legitimized by a hypothetical social
contract, but in a communicative manner. It is not the sovereign who must
represent the will of a sovereign nation, but a sovereignity of a people which
has become proceduralized communicatively, which results in an administrative
power that has to legitimize itself by way of communication. And this is without
recourse to traditional or authoritarian assumptions, but to arguments capable
of convincing affected parties of their objectives and effects. In this way it
becomes advantageous for political power to listen to the citizenry, both as
expressed by way of institutionalized channels and also via non-institutionalized
public opinion.
Public opinion is thus comprised of those citizens (Gesellschaftsbiirger)
who are at the same time citizens of the State (Staatsbiirger) and who possess
special antennae in order to perceive the effects of the systems, since they are
the parties affected by such effects. Certainly, it is the institutions that have to
take the decisions, and that the influx of political publicity can only be transformed into political power by way of institutional power. But political publicity
can carry out its function of perceiving and categorizing the problems of society
as a whole only if the configuration is made starting from the communication
contexts of the potentially affected parties.


Rawls (1993), 6.
Habermas (1992), chap. VIII.


Certainly, with regard to political power it is essential to create an institutional framework for the public space to such an extent that the rights that make
its development possible are guaranteed. But publicity is in principal an elementary social phenomenon, a structure of communication, rooted in the world of
civil life, which is linked neither to the functions nor to the contents of daily
communication but to the social space created by communicative action. We
are dealing with a public space, linguistically constructive, in which it is possible
to find liberty.
In this way, there is a continuation of the Kantian tradition of a publicity
concerned with the res publica, which functions as a moral conscience of
political authority, because it serves as a reminder that decisions must be taken
in the service of that which all might desire: universalizable interest. And,
just as in the Kantian tradition, it pertains to publicity in civil society. However,
at least three substantial changes have been produced in relation to Kantian
The first of these refers to the concept of civil society (Zivilgesellschaft),
which has suffered significant variation. The expression itself indicates a
considerable change with respect to the bourgeois civil society (burgerliche
Gesellschaft) caracterized by Hegel as a system of necessities, as a system
of labour markets and exchange of goods. 22 Civil society, on the contrary, does
not include economic power, but is made up of, according to Habermas, those
vollUltary associations, non-statal and non-economic, which root the communicative structures of public opinion in the realm of life. As it is the case with other
authors such as Gorz, Walzer or Keane, civil society is formed from and has
as its nucleus associations and movements which perceive the problems of the
private spheres of the living world, which work on them and which bring them
out into political pUblicity. These associations make up the organizational substrate of that public of citizenry which emerges from private life and which seeks
public interpretations for its interests and social experiences, and which influences the institutionalized formation of opinion and will.
In the second place, the subjects of this public opinion are not, as in the
case of Kant, illustrated wise man, but those subjects, affected by systems, who
defend universalizable interests and who therefore collaborate in the task of
forming discursively a common will. As S. Benhabib aptly points out, the Habermas ian conception of the public space is not agonistic, in contrast to that of
Hanna Arendt, nor does it simply promote a neutral dialogue as in the case of
liberals such as Ackerman: we are dealing, on the contrary, with a public space
created commlUlicative1y as from the dialogue of those who defend lUliversaliza-


Habennas (1992: 443).


ble interests, that is to say, in the sense of the principal of Diskursethik mentioned above?3
Lastly, and going further than Kant, Habermas looks toward the institutionalization of exigencies generated by public opinion, or at least in certain measure,
to be converted into an authentic communicative power by way of political
power. However, Habermas does not explicitly consider the necessity for legitimizing economic activity from public opinion as well. To be sure, the first
human activity which began demanding this type of legitimization from the very
beginnings of the Illustration was political activity. But the conscience of citizens
was to grow gradually in recognizance of the fact that any activity with social
goals and repercussions requires rational legitimization in an argumentative sense,
as does also therefore economic activity.


An Anticorporatist Business Ethics

As we pointed out in the second part of this paper, the morals of social activity
attempt to develop it to the point that it attains - to use the words of Ortega
- possession of its senses and vital efficiency; for this reason it makes no sense
to speak of our age as a postmoral age. On the contrary, it would be more
important to attempt to clarify what the moral development of each activity
consists in, since among themselves they lack homogeneity. In this sense it is
urgent to do research with respect to business activity as to what internal assets
are sought after, what virtues are in demand for development, and what values
are aspired after for realization.
At any rate, the level of moral conscience of the society in which the
corresponding activity is developed totally conditions the way in which it is
carried out. For this reason, business ethics cannot be understood as an application of principles already available to any sphere whatever, because nowadays the deductive model for applied ethics is unsustainable. To defend such
a model would signify having to reestablish that traditional model which in
bioethics is called Casuistry 1, because it consists in the aplication of material
principles, already accepted, by means of prudence. In a pluralist society, in
which it can not be expected that all citizens share the same material principles,
this is impossible.
However, neither can the model of applied ethics be inductive, as occurs
in bioethics in Casuistry 2. Those who defend Casuistry 2 as an adequate
procedure for bioethics state that, although nowadays it is impossible to share
certain ethical principles, we can nevertheless take decisions conjointly and

S. Benhabib (1992): Situating the Self. Cambridge: Polity Press, chap. 3.


therefore reach agreement concerning some maxims which serve to orientate

us in specific cases. Such maxims seem to be ~llfficient in ord:::r co take rational
decisions. 24 In my judgement, however. the structure of applied ethics is neither
deductive nor inductive, but consists of a hermeneutic circle, characteristic of
critical herment'utics,25 since \VC discover an ethical principle as a background
to each of the social activities. Weare thus attempting here to capture the
particular modulation of the common principle within the different spheres since
it is composed of different variations on the common melody26 This common
principle is today the recognition of each person as a valid interlocutor, just
as expressed in the ethics of discourse. From this recognition the following
consequences arise for the sphere of business.
In the first place, the rules of the game for the economy have to be constrained within the constitutional framework. This framework is subject to consensus; within it we can already find a moral moment, as can be understood
in proposals such as the constitutionalism of Buchanan, the ethics of politicoeconomic order (Ordnungsethik) of Homann and Blome-Drees, or also in part
in the integrative ethics ofP. Ulrich. However, if the constitutional framework
is simply the fruit of a de facto consensus, in which the diverse political and
economic forces only attempt to obtain their particular advantages and not to
satisfY universalizable interests, as occurs - in my view - in the proposals of
Buchanan and Homann (but not in the integrative ethics of Ulrich), then the
politico-economic order can be found positioned beneath the level of morals
demanded by a postconventional social moral conscience.
The exigencies of the valid interlocutors in each of the social fields, which
explains the boom in applied ethics, remind us that it is vital to constantly revise
the economic order that it may become orientated by universalizable interests.
These exigencies are canalized by means of a reasoning critical public opinion
which from universalizable interests obliges a reinterpretation of the constitution.27
But in order that public opinion be a true seat of morals, it urges us to
promote the duty of civility of which Rawls speaks, since lacking an ethos of
citizenry, the exigencies of egoist citizens are devoid of moral quality. Furthermore, such civility should invite not only concordance but also criticism, follow-



D. Gracia (1991): Procedimientos de decision en etica clinica. Madrid: Eudema, 97.

J. Conill (1993): Zu einer anthropologischen Henneneutik def erfahfenden Vemunft.
Zeitschriji for philosophische Forschung, 47, 422-433; J. Conill (1991): El enigma del
animal fantastico. Madrid: Tecnos.
Cortina (1993a), chap. 10.
In this sense I consider the model of integrating ethics proposed by P. Ulrich to be more
adequate than Homan's model, in which businessmen attempt to modiry the economic order
as from their particularized interests. Ref. P. Ulrich (1986): Transformation der okonomischen Vernunft. Bem/StuttgartlVienna: Haupt, 3rd revised ed. 1993.


ing that branch of Kantian tradition reviewed by Habermas, since concordance

can be achieved at a cost of sacrificing the universalizable interests to the benefit
of the interests of those in power.
At any rate, criticism must be exercised upon all activities and institutions
which have social goals and effects, and therefore upon the economy also, in
such a way that political publicity must be enlarged to form an economic publicity.28 We could thus state, in agreement with P. Ulrich, that critical public
opinion in civil society would have to encounter its echo in economic citizens
(WirtschaftsbUrger) who are willing to concede their systematic primacy to the
ethical principles of the res publica, foregoing their particular economic interests?9
Thus the conduct of businessmen has to become moralized in two senses:
firstly, businessmen have to lend their ears to critical public opinion and consider
adult citizens as friends with whom they can cooperate and not as enemies from
which they have to defend themselves; and also, they must begin the task of
constructing an ethics of economy and of the business enterprise by themselves.
That is to say, they must reflect from an economic viewpoint that moral
principles and values demand a principle of discourse for economic and business
activity specifically related to economic and business ethics.30
The specification of these principles, as manifested via codes of conduct
or public declarations, should satisfy the ambition to self-regulation expressed
at times by businessmen, but it would have to be at the same time an anticorporatist self-regulation.
Therefore, in the case of business ethics it is essential to recognize that a
critical public opinion is indispensable, one that reminds businessmen whenever
necessary that social exigencies are not being satisfied or that the external effects
are perverse. But at the same time we need businessmen willing to satisfy these
exigencies and to express publicly in person as to which principles and practices
should be followed in their activity in order to attain equanimity. Citizens of
the state and of the economy are at the same time citizens of the civil society
which comprises public opinion, and for this reason it is not appropriate to
interpret the criticism of public opinion with respect to the economy and administrative power as simply arising from without. External criticism should remember, when the time comes, that social goals are not being complied with or that
the external effects are perverse, and should thus take on the form of a communi-




A. Cortina (1993b): Diskursethik und partizipatorische Demokratie, in: A. DorschellM.

KettnerlW. KuhlmannIM. Niquet (Hrsg.): Transzendentalpragmatik. Frankfurt: Suhrkarnp,
Ulrich (I994) and P. Ulrich (1993): Wirtschaftsethik als Beitrag zur Bildung miindiger
Wirtschaftsbiirger. Ethica, 1,227-250.
CortinaiConill/Dom ingolGarcia Marza (1994).


cative power by means of institutionalized power. But if there is no remoralization from within the economic system; if the political and economic agents
fail also to make critical public use of their reason, then there are no economic
ethics possible, because the moral, as opposed to law, cannot be imposed, but
must be assumed from within.
In light of the above, I am afraid that we have failed to arrive at the era
of a painless ethic in which businessmen - in the present case - can free themselves from the responsibility of making moral decisions and transfer such
responsibility to the institutional frameworks, but rather an era in which precisely
businessmen promote a business ethics based on non-corporatist self-regulation.
Should this fail to occur, we may have individual businessmen open to public
criticism, and we may have corporate law, but we shall not have an authentic
business ethics.


Ronald J.M Jeurissen

The concept of responsibility implies the notion of a response to a forum that

asks questions, that accuses, that wants to hear justifications. A primary forum
before which the moral responsibilities of business are assessed is the morally
concerned pUblic. The public is morally anxious about business, because it has
come to understand that its well-being is, to a large extent, dependent on the
degree to which business takes its social responsibilities seriously. The disasters
with the Herald of Free Enterprise at Zeebrugge and with the Boeing-freighter
in Amsterdam, or the problems of mass-unemployment, the social exclusion
of minorities and pollution are examples of this.
How does business respond to the moral anxiety of the public? Is it assuming its share of the responsibilities that have to be fulfilled in the society? How
much responsibility can the morally concerned public reasonably expect and
demand from business? And last but not least: how can the public get business
to respond to its moral appeals? These are some of the most fundamental
questions in business ethics.
I understand business ethics as a service institution at the interface between
business and the morally concerned public. Business ethics has no <parti pris)
for any ofthe two. It is neither <public relations) nor public opinion in disguise.
Its interest lies with society as a whole, of which both business and the public
are a part. Business ethics reflects on the moral aspects of the relationship
between business and the public, for the benefit of both. This is its primary
Within this focus, many complicated practical questions arise. To answer
these in a thorough and convincing fashion, business ethics needs a strong,
consistent theoretical foundation. As the primary material object of business
ethics is the relationship between business and the public, the basic theory of
business ethics must be a theory of this relationship. Business ethics must be
rooted in a social philosophy ofbusiness: a philosophical reflection on the actual
role and functioning of business in our society (Van Luijk 1993: 42). Business
P. Ulrich and C. Sarasin (eds.), Facing Public Interest, 59-72.
1995 Kluwer Academic Publishers.



ethics must clarify the present situation of business, and develop moral approaches to business that are adequate in the situation of our society.
In this paper, an outline of a social philosophy of business is presented,
that is based on fundamental insights oftheoretical sociology and social ethics.
In this way, an attempt will be made to clarify the relationship between business
and the morally concerned public. In line with the view of business ethics as
a service institution for business and the public alike, some advice will be given
on how business and the morally concerned public can best handle their
relationship and their communication.


Modern Society

The key word to understanding the actual social role of business in western
societies is modernity. Western societies are modem societies. The modernity
of a society is fundamentally a matter of difforentiation. A modem society is
a society that has differentiated into several relatively autonomous spheres, which
have developed their own logic, their own procedures and rules. If we look
around in our society, we can easily discern several such spheres: we live our
private lives in the sphere of family and friendship; an economic life in the
sphere of the market; an aesthetic life in the sphere of art; and we may live a
religious life in the sphere of a church. Each sphere is led by specific procedures
and rules, that distinguishes it from other spheres. Jesus Christ has already taught
us this, when he chased the merchants away from the temple in Jerusalem.
A second characteristic of modem society is that the differentiation of social
spheres has roughly led to a division of society into two large, distinct realms.
The first realm is the cultural tradition, which incorporates the basic world views
and moral beliefs of the societal community. People are born into this tradition
and they internalize its content through education and socialization. Most of
the time they are not even aware of its existence and influence. They rely on
it as a background of shared meaning in ordinary, day to day, social interaction.
It is the common cultural world people live in. Through their common cultural
and moral background, people are related to each other by strong bonds of
solidarity. The sociological term for the cultural and moral sphere of society
is the lifeworld (Lebenswelt). From a moral point of view one can refer to it
as the moral community.
The second main realm of modem society consists of a number of highly
specific spheres, that each perform one precisely defined job within society.
These spheres are specialized in pursuing precisely determined goals in an
efficient and effective manner. They operate according to strictly formal procedures and rulcs. Kcy words are efficiency, procedural rationality, affective


neutrality and task specialization. The most important rationalized spheres of

modem society are the rational economic system of the market and the rational
hierar.;hical system of bureaucracy. The market system is specialized ire [he
efficient production and allocation of goods and services; the bureaucralic system
is specialized in efficient and effective organization (Habennas 198 1IIi : 171-293).
In present-day modem societies, the specialized sphc~es ofrationai economy
and bureaucracy have acquired a very prominent role. Large and compkx
bureaucratic organizations have penetrated nearly all aspects of our lives; and
time and again we are forced to act in conformity with market principles. But
the rationality of the systems of market and bureaucracy is quite different from
the solidarity and moral warmth of the moral community. Some philosophers
fear that the functional sphere of society might actually (colonize> the lifeworld
(Habermas 19811II: 293). However this may be, it is certain that the relationship
between the two main realms of society - moral community and system - is
a major problem of modem society. How can a society that is based on two
radically different principles still remain in one piece? How can modem society
be protected from disintegration?
In general, there are three theoretical answers to this fundamental problem
of modernity, each based on a fundamentally different perception of modem
society. Each answer entails a particular view of the relationship between business and the public. They can be referred to as the unitarian view, the separation
view and the interpenetration view, respectively. It will be argued that the first
two views are one-sided, and present erroneous views of modem society. In
their one-sidedness, they do, however, capture important aspects of modern
society. The interpenetration view incorporates these aspects into a coherent
picture, which provides an adequate description of modem society and the place
of business in it.


The Unitarian View of the Business-Society Relationship

The unitarian view of society comes down to a denial of modernity. Its model
of society is non-modern, in the sense that is does not take the modernization
process of social differentiation into account. It adheres to the pre-modem view
that society is still based on one unifying socio-cultural principle. It neglects
the fact that the functionally specified spheres of the economy and bureaucracy
have, to a great extent, emancipated themselves from the moral community.
The unitarian view can be discerned in such seemingly different social-philosophical doctrines as Marxism and the social teaching of the Roman Catholic
Church. The Marxist utopia of a classless society, in which work burdens are
distributed according to people's abilities and benefits according to people's needs


(Marx 1962), is based on the assumption of a fundamental bond of solidarity

that holds society together. Marx projected the moral community of the working
class onto society as a whole. This turned out to be a tragic mistake. Marxism
is too optimistic about the pervasiveness of the moral community in society.
In fact, large segments of society, in particular the economy, have disconnected
themselves from the solidarity of the moral community, and are organized on
other principles. In his social analyses, Marx certainly recognized this alienation, but nevertheless his political ideals were not modem enough. Prominent
in the social doctrine of the Catholic Church is the conception of society as an
organic whole, as a sort of family, in which all members are related to each
other by feelings of solidarity and love. This is an extrapolation of the selfperception of the church as the <familia dei, > the family of all God's children
in solidarity with each other. The church sees itself as a moral community, and
it sees society as it sees itself. This paradigm also leads to an underestimation
of the differentiation of society in spheres that are largely disconnected from
the moral community.
In part, business ethics is still influenced by a pre-modem view of society.
The influence can be seen mostly clearly with those business ethicists who conceive of business ethics simply as applied ethics (Velasquez 1992: 1). There
are moral principles that have universal validity, such as the principles of rights
and justice. The task of business ethics is to apply these principles to business.
In a sense, this simplistic applied view of business ethics is very apt. All human
action can be judged by moral principles, and actions in the context of business
are no exception to this. Business cannot escape from morality. But in another
sense the applied view of business ethics is wrong. It assumes that the business
system is still in an unbroken unity with the moral community, and that moral
principles apply to business in the same way as they apply to the moral community. The advice of <unitarian> business ethics to the morally concerned public
would be:
Know the fondamental universal moral principles and apply them to business. Communicate your conclusions to business people and hope for a
positive response.
Both for the public and for business, this advice is of little value. It neglects
the emancipation of the economic sphere from the moral community that is
characteristic of modem society. Very often it is not possible to assess the moral
responsibility of business by simply applying universal moral principles. Moral
principles alone, for example, cannot tell business how much it should invest
in environmental protection, what it should do for the unemployed and what
kinds of anti-competitive practices are morally permissible. To get answers to


these questions, moral principles must be confronted with the internal logic of
the economy, but this the unitarian approach to business ethics fails to do.


The Separation View of the Business-Society Relationship

A second view of society is characterized by an exaggeration of differentiation

processes in modern societies. Essential to this view is the idea that the process
of social differentiation has gone so far, that the spheres of rational economy
and bureaucracy have become radically separated from the moral community.
The picture that this separation view draws of modern society is that of an
archipelago of completely disconnected islands. Communication between these
islands is problematic, for each of the islands acts according to its own logic
and rules, which are hard to comprehend from the perspective of any of the
other islands (Teubner 1989).
The separation view of society has had a tremendous impact on modern
economic thought. Separatists conclude that the systems of the market and the
bureaucracy operate in a non-moral way. It is not morality that holds these
spheres together, but only a set of formal rules and procedures. This does not
mean that they are immoral. Their behaviour within society can very well be
morally approved by the public. After all, the specialized systems of the market
and the bureaucracy provide important services to society. It only means that
morality no longer has a function in these spheres. Market and bureaucracy are
<morally free zones) (Gauthier 1986; Habermas 1992: 460).
What is the place of business in modern society, according to the separation
view? Clearly, it has its place in the autonomous systems of the market and
the bureaucracy. Its place is not in the cultural-ethical sphere of the lifeworld.
This explains why the separatists do not consider it appropriate to talk morals
in the sphere of business. Ifwe agree that the spheres of market and bureaucracy
have become disconnected from the lifeworld, then public moral appeals to
business are useless and without any point. They rest on a category mistake.
The same is true of business ethics.
Critics of business ethics typically argue from a separation view of modernization. A famous example of this is Milton Friedman's article The Social Responsibility of Business is to Increase Its Profits (1970). Friedman attacks the
idea, fundamental to business ethics, that managers should engage in social
responsibility. It would be irrational for managers to do so, because they act
maximally rational only when they act in conformity with the logic of the
market. Managers should single-mindedly pursue only one goal: the maximization of profit for the benefit of shareholders. The invisible hand of the market
then guarantees that their actions will contribute to social welfare in the best


Lei FricaOl(l[l, the idea that ~you cannot beat the ~narket


'_,:51- trc:e ili Zl mcraI sense. Clearly, friedman's criticism of business ethics


The separation vie\\


business does not imply that business can do whatever

it likes. regardless of Ihe effects on the public. The public has to havc some
mean:' by which to control the behaviour of business, and to ensure that its
bchiniour is not socially harmful or disruptive. The separation het',veen the
bus:,":5s s:sttm anclthe lifeworld cannot really be total; there must be a point
;)f COillact. How.;,,::r. this COllrHoction cannot be of a moraillature, fer separatism
"S;"'~'_'C:' th", ]]C,,;.,J idee,' have no place in the logic of the m"rkct and the
burcaucrJtic system. Hence, the public cannot control business by uttering mora!
appeals or making moral claims. How, then, can the separation vic\\' conceive
of a connection between business and the moral community? Friedman gives
al1 important hint about the nature of this connection. Hc states that business
must of coursc, obey the law. He also says that business, of course, wilt act
according to market principles. Thcrefore. if the public is looking for means
to in1ucnec the behaviour of business, it should concentrate on these two
controlling devices: the iaw and the market.
Ii,.'w Cdn the law ard the market be used by the public to inf1uenee the behavieu,- nfbusines~') This can best be explained by using a metaphor: the law and
the m8rket nmclion as transformers hetween the moral community and the business
A tmnsformcr is an electrical device. that changes a high voltage
electric current into a low voltage current which can be used by, for cxample,
a CC'lTPVtCl". It transforms something that is too big for a system to handle into
something smaller that it can deal with. The law and the market function as
lransf"crrllCfs_ They modify mon:! inputs ti'om the lifeworld into outputs that
~h,:: '-'c>'11nn,] sy:'k;n ('1' businc'is can understand and deal with. f f the public
" dC-".f
to translate its moral demands into the Janguage of the );1\V
and the
it \-..,-ill obtain a response fron1 business confon11 \vith its n:crnl
CkT21;,d. Th,; rcspon~e from business is not in itself a moral response. It js riot
IT!c,tivateu. but the effect is similar to a moral response. How does this

according to the separation vjev'-'~ can be sL:nl111arizcd

bu<_n:..:ss is Icd by a strategic orientation [olvord,s
r-\cticn~,~ ~irc CY~_:!u~ltcd in tt,:~rrns of the profitability of the organj~;:atinn. But nnns
do ~i('t ~tdld alone.
pursue their self-i:lterest in a social environment made
Th~ 1cg~c ofbu~:inr,:s5~


UE~' 5(~\Ll.:nce:


up of customers, competitors and a government which sets certain restrictions

on its behaviour. In promoting its self-interest, business will make its actions
dependent on what the actors in its environment do, or might do. It will also
try to influence the behaviour of these other actors to its own advantage. This
type of action, in which you make your own action dependent on what others
do, is called strategic action (Habermas 198111: 385). When the public makes
moral demands on business, it has to transform this message into the language
of business' strategic orientation towards self-interest. This is where the law and
the market come into play.
In a constitutional and democratic state, laws are the result of public consensus on how society should be ordered. The procedures of democratic lawmaking
guarantee (although not always perfectly) that laws express the fundamental
moral beliefs ofthe societal community. Law has a moral content. But law is
not only a code of ethics. Individuals and organizations can be compelled to
respect the law. This is the big difference between law and morality. In content,
they are largely the same, but they differ with respect to the motivation of
compliance. We comply with moral rules when we are convinced that the rule
is morally right. But when we comply with a legal rule we have two options:
either we comply with it because we agree with it, or we comply out of fear
for legal sanctions (Habermas 1992). Thus, the first of the separatist's advices
to the morally concerned public is:
Transform your moral demands into legal rules, so that you do not make
yourself dependent on any moral attitude of business, and business can
respond to your demand in a strategic manner.

The second transformer is market demand. In a market, people typically act

in a strategic manner. Sellers and buyers strategically adapt themselves to each
other's behaviour, in determining the prices and quantities of supply and demand.
This adaptive mechanism makes market demand a second instrument for the
public to communicate moral messages to business in a strategic language. Consumers can translate their moral demands and appeals to business in the strategic
language that business understands, by demanding products in accordance with
their moral preferences. Business will pick up this moral message in its strategic
wrapping and give a strategic response, by adapting its method of production
to the changing demand. The separatists' second major advice to the morally
concerned public is, therefore:
Transform your moral anxieties into consumer demand. When you are
a morally concerned minority in society, then convince as mClIi)' other consU/llas as possible to change their bl(ving behaviour. >!


This is, for example, what anti-apartheid activists did, when they attempted to
mobilize the public to boycott SHELL because of its involvement in South-Africa.
But does the separation view really give a true picture of modem society,
and of the place of business in it? I think not. Numerous examples can be given
of business responses to moral anxieties in society that are not just strategic,
not merely legalistic and not merely a matter of shrewd marketing. What about
firms that develop and implement moral codes, that organize ethical training
programmes, that set up an ethics board, that make charitable donations, that
adopt a highly sensitive stakeholder policy? What about organizations such as
EBEN or the Social Ventures Network, that have as their main goal the promotion of social responsibility in business? A sceptic might view many of these
appearingly moral actions as strategy in disguise, or as based on self-interest
in the long run (Friedman 1970; Bowie 1991). But if one reduces all of these
actions to strategy, the concept of strategic action will be stretched so far that
it will become meaningless.


The Interpenetration View of the Business-Society Relationship

Can we construct a theoretical framework for business ethics that avoids both
the moral over-optimism of the unitarians and the moral over-scepticism of the
separatists? To develop such a theory is one of the major challenges to business
ethics today. What is needed is a theory that neither unifies the moral community
and business, nor separates them, but that integrates them, respecting their
differences while stressing their relation. In developing such an integrative view
of business-society relationships, there is no need to completely depart from
the classical theory of modernity. It can be based on the work of some of the
most outstanding theorists of modernity, in particular Max Weber and Talcott
Weber has pointed out that the occidental, modem and rational form of
capitalism is distinguished from non-western and pre-modem forms of capitalism
in a fundamental manner, by the elaboration of a characteristic economic order
that ties economic actors to a set of moral norms. Modem Western capitalism
is rooted in a specific state of mind, a specific cultural climate, Weber's wellknown spirit of capitalism. Modem capitalism is founded, according to Weber,
on a methodical and rational way of life; an ethos that values hard work,
postponed consumption, and the use of accumulated capital for productive
investments. It also involves moral norms such as honesty and fair dealing
(Weber 1972: 190). Weber stressed, and this is crucial, that modem capitalism
has an ethical foundation, that did not arise from within pure economic rationality itself. The economic principle of utility maximization does not set its own


limits. The normative control of economic action presupposes a relation between

economic interests and a societal community that provides the economy with
a set of ethical standards (MUnch 1984: 12-15,610-611). Weber's theory of the
cultural roots of modem capitalism makes a strong point against the separation
view of modernity. It is not the separation of the economy from the ethical
lifeworld that has created modem capitalism. On the contrary, modem capitalism
is the result of a close connection between the economy and a cultural-ethical
It was not before the work of Parsons, however, that sociology acquired
the theoretical tools to really understand the unity-in-difference of the moral
community and the rationalized spheres of economy and bureaucracy. Like all
theories of modernization, Parsons' theory of modem society is based on the
recognition that society has become differentiated into several relatively independent spheres. According to Parsons, each sphere is characterized by its own rules
and conventions, that determine how people must act in conformity with the
internal dogic> of the sphere. Each sphere, therefore, is characterized by a
specific social role. Parsons distinguished three main spheres of society: a sociocultural, an economic and a political (bureaucratic) sphere. People can move
from one sphere to the other, by changing social roles (Parsons 1951).
The following supposition is crucial to Parsons' theory. Ifsocial action can
be described in ternlS of the social roles that people take within different social
spheres, then it is possible to study social action as a system of social roles.
Society can be seen as an overall system, which consists of a number of subsystems, each characterized by a specific social role. To maintain its integrity
and continuity, a society has to see to it that all its relatively independent subsystems develop in congruence. There must be a minimal degree of compatibility
between the sub-systems of society, in order to prevent social disintegration.
Here, the task of sociology is to study what the specific characteristics of the
various sub-systems of society are, and how these systems are related to each
It was due to the influence of Max Weber that Parsons developed the
concept of zones of interpenetration between social sub-systems. Weber's
discovery of the moral foundation of the capitalistic economy inspired Parsons
to interconnect the subsystems of society internally and not externally, as in
the separation view of modernity. The concept of interpenetration means that
on the boundaries between the various social subsystems there are overlapping
zones, through which they are interconnected. In these overlapping zones,
exchanges take place, through which the subsystems communicate to each other,
and maintain their mutual relations. Through these interpenetrations and
exchanges, the integrity of the universe of subsystems - society itself - is
maintained (Parsons 1971: 6).


In order to clarifY the moral foundation of business, in the interpenetrationzone of the moral community and the economic system, it is necessary to first
probe somewhat deeper into Weber's contention that economic rationality as
such cannot give the economy a moral foundation. Why not?
The core maxim of economic rationality is <maximize utility, reduce costS)
(Acham 1984: 34). This maxim gives very few clues as to what an economic
actor will do in a specific situation. Utility may take the form of a purely egoistic
or a purely altruistic goal; it may consist in private consumption or charitable
donation. Economic rationality establishes no calculability of actors in terms
of their action goals. Nor does economic rationality itself prescribe any means
through which utilities are to be maximized and costs reduced. The objectives
of rational economic actors can be achieved through gifts, mutually beneficial
exchanges, unilaterally beneficial exchanges, or through the manipulation of
demand, fraud, bribery, theft or coercion. As utility maximizers and cost reducers, economic actors are completely unreliable, both in terms of the goals and
the means of their actions. In its most elementary form, economic action offers
no starting point for social integration (ApeI1988: 278). Social integration must
be imposed on economic motives, through some form of order.
The order which integrates economic activities in the context of business
has two main facets: market and bureaucratic hierarchy. As we know from the
economic theory of the firm, business strives for an optimal combination of
market-based and hierarchy-based organization. On some occasions the market
offers the most efficient solution to an organizational problem, on others, a hierarchical solution is the best (Williamson 1975).
It is crucial to see that both the market- and the hierarchy-type of economic
order are based on a moral principle of justice. Neither the market, nor the
hierarchical order are conceivable without this principle. Market exchange
systems and hierarchical decision procedures must be considered as just or <fair>
by the participants in order to be stable and sustainable.
A minimal justice standard for markets is entailed in the economic efficiency
principle of Pareto-Superiority: an economic exchange should benefit at least
one of the exchanging parties, without putting any of the others at a disadvantage. This entails the miminal justice requirement that economic exchanges
should not be to the detriment of any of the exchange parties. Activities by
which the interests of exchange partners are prejudiced, such as the manipulation
of consumer demand, fraud, bribery and coercion, are prohibited. The fundamental justice ethics of the market implies that all exchange partners arc considered
as fundamentally equal in one crucial sense; they all deserve equal protection
from unjust harm (Van Luijk 1993: 61, 207).
Similarly, the market principle of just exchange can be applied to the
relationship between the public and blbincss at the macro level. This is the basic
point ofTho111a5 Donaidson's contract-mode! ofbusiness ethicsc Donaldson sees


the relationship bet\yeen business and society as an exchange relationship.

Society agrees with the existence of business, because, and only as long as, it
benefits from its relation to business. The benefits that business offers to society
are primarily in terms of efficient production. Business benefits from the society
mainly through legal privileges, such as legal personality, and the rights this
entails. Donaldson contends that the e:,changes between business and society
a:-e ruled by an implicit social contract, which detcrmines the conditions of
justice in the exchange relationship. Society \yill not want to continue exchanging
with business, if the costs of business exceed the benefits (Donaldson 1982).
Minimal justice requirements also apply to a hierarchical integration of
economic actions. In particular, the Aristotelian principle of distributive justice
has a bearing on this. In a hierarchical order, controlling authorities should treat
equals equally and unequals unequally. Organization members must be able to
perceive a balance between their own result/input ratios and those of others in
the org&nization. Employees doing identical jobs, for example, should receive
equal pay (irrespective of their gender): also, jobs having <comparable worth>
should be remunerated equally (Sheppard, Lewicki & Minton 1992; Velasquez
1992: 358-360). Moral legitimacy is a prerequisite of bureaucratic authority,
and justice is a fundamental aspect of moral legitimacy.
Whatever the precise formulation of economic justice requirements may
be, it is evident that the compliance with these principles is a necessGlY condition
of the stability of the economic order. Disrespect of the principles will lead to
contradictions and, if universalized, will bring about the disintegration of the
order. If economic actors systematically pursue profits in ways that harm exchange partners, the willingness to exchange will disappear and the market order
will collapse. Likewise, bureaucratic authorities which distribute burdens and
benefits unequally over organization members will find their unfairness and
unreliability answered by a decrease in the loyalty of their subordinates, which
wi!! ultimately lead to the breakdown of the organization. In short, integration
a/moral and ecollomic principles is basic to the business system. It is only d1ie
to the integration with the moral community that business can exist.
The interpenetration view of modernity can explain actions cmd attitudes
of business that cannot be reduced to strategic legalism and market conformity.
Take the simple example ofiegal rule-following. Tfall economic actors reacted
purely strategically to legal regulations, the legal machinery would soon be exna'Ustec by calculated lawbreaking ancl by a constant stream of evasions of the
law. Legal fines would have to be raised to levels that would deter even the
wealthiest cGmpanies. Such high fines would, however, ruin less wealthy firms.
The costs of a law enforcement apparatus capable of controlling purdy strategic,
non-meral economic actors would probably exceed society'S \villingness to pay.
Fortull<1tely. society can rely on a considerable degree of moral motivation in
business to comply with the laws.


A society must rely on a considerable degree of moral integration of the

economic system. That this confidence is not futile is demonstrated by, among
other things, several empirical investigations into the morality of managers.
Repeated surveys from the 1960s onward show that managers generally agree
with the statement Sound ethics is good business in the long run, whereas
only a minority (10 to 15 % in the various surveys) affirms the statement
Whatever is good business is good ethics. Ulrich and Thielemann (1993)
characterized this latter minority category as economistic managers, who upheld the Smithian thesis that orientation to personal gain best guarantees that
economic actors will contribute to social utility. Most managers do not adhere
to this economistic view. They believe that business has a <moral> or (social>
responsibility, parallel to, and sometimes in conflict with, its market orientation.
A legalistic view, that identifies the legality of business practices with their
legitimacy, was not found to be a dominant orientation among managers, by
Ulrich and Thielemann. This is not what one would expect on the basis of the
separation view of modernity. It is an interesting empirical corroboration of the
interpenetration view of business that purely strategic legalism was not found
to be a dominant attitude among managers.
The interpenetration view of business is both promising and sobering to
the morally concerned public. It promises that there are more channels open
to influence the action of business than only the law and consumer demand.
It is certainly not futile to communicate moral demands and anxieties directly
to business. The interpenetration view is sobering, on the other hand, in that
it makes clear that not each and every moral principle that is appropriate in the
moral community can also be addressed to business without alteration. The moral
community and business are not in perfect unity and harmony. They are partly
different and they are relatively autonomous. Typically, more strategic orientation
towards self-interest is accepted in business than in other spheres of society.
In this sense, Milton Friedman is basically right. From the perspective of an
interpenetration view of modernity, the advice to the morally concerned public
is this:

Be neither naive nor pessimistic about the moral response of business.

Formulate your moral demands in terms of the fUndamental justice principles that govern the exchange-relations and hierarchical relationship on
which the institution of business is built. Combine this moral approach to
business with the strategic instruments of the law and consumer demand.
What it comes down to is that the public must develop powers ofdiscernment.
The public will have to learn to become creative in combining moral and
strategic approaches to business. Likewise, business will have to learn creativity
in combining moral and strategic responses to the public's demands. Sometimes


a strategic approach is effective, sometimes a moral approach is better; often

a combination of the two is the best.
A good example of what creativity in combining moral and strategic approaches to business may produce can be found in the work of Henk van Luijk. In
his recently published book on business ethics, Van Luijk makes a plea for a
participatory ethics of business. A participatory ethics of business implies
a voluntary participation of business in the promotion of a public good, on the
basis of shared interests. Business, government and the public all have an interest
in the creation of a public good, and they can only achieve it together. Examples
that one can think of are urban renewal, the maintenance of a decent social
security system, or the protection of the environment. At the institutional level
there are public and private partnerships between government and business, and
non-binding agreements between business, government and societal organizations
about collective goals in the sphere of environmental protection, employment
or health care. Society needs and demands the participation of business in such
cooperative efforts, as the problems are urgent and the state cannot bring about
the solutions all by itself.
Neither purely strategic, nor purely moral considerations produce a sufficient
motivation for business to participate, however. At the strategic level, there are
not enough direct economic incentives for business to invest in these collective
goods. There are indirect economic returns in the long run, but these are not
registered by the market. Nor can cooperation successfully be enforced by law,
because what we want from business is a creative, pro-active attitude, and laws
are not very effective at bringing about such an attitude. Morality itself also
cannot provide the required motivational stimulus. For each individual firm,
there is no moral obligation to participate, due to prisoners-dilemma effects.
The moral obligation to participate rests only with the business community as
a whole. Only in conjunction can strategic and moral motivations prompt business to participate in the collective good. From a strategic perspective, Van Luijk
points to the shared interest that business has in the promotion of public goods;
from a moral perspective he points to the non-compulsory obligation to participate that business has as a member of a moral community (Van Luijk 1993:
212-216). It is in the overlapping zone of the economic system and the moral
community that a particip~tory ethics of business arises, at the intersection of
strategic self-interest and moral responsiveness. It is a major challenge for the
morally concerned public, and for business, to explore the possibilities of bus iness to respond to moral appeals in the context of a <participatory ethics of
business.> Business ethics should undertake major research efforts in order to
explore this new field of ethical possibilities for business.
I hope to have shown that there are strong points of contact between
morality and the rationality of business. Many business ethicists are presently
working on the exploration of the interpenetration zone between the moral


community and business. I think this is the best professional service they can
do for the moral community and business. Perhaps one day, it wili no longer
appear to so many as a contradiction when wc speak of the <business community.)

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Bowie, N. (1991): New Directions in Corporate Social Responsibility. Business Horizons,
July-August, 56-65.
Donaldson, Th. (1932): Corporations alld Morality. Englewood Cliffs:Prentice Hail.
Friedman, M. (1970): The Social Responsibility of Business is to Increase its Profits. New
York Times Magazine, 13 September, 32-33 and 122-126.
Gauthier, D. (1986): Morals by Agreement. Oxford: Oxford University Press.
Habermas, J. (1981): Theorie des kommllnikativen Handelns, Vol I and II. Frankfurt a.M.:
Habermas, J. (1992): Faktizitat und Geltung. Frankfurt a.M.: Suhrkamp.
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Profit. Exercises in Business Ethics). Amsterdam: Boom.
Marx, K. (1962): Kritik des Gothaer Programms, in: Marx-Engels Werke, Vol. 19. Berlin:
Dietz, 11-32.
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illstitutionellen Allfbalis del' modernen Gesellschaften. Frankfurt a.M.: Suhrkamp.
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Prentice Hall.
Parsons, T. (1971): The System of Modern Societies. Englewood Cliffs: Prentice Hall.
Sheppard, B.H.lLewicki, RJ.lMinton, F.W. (1992): Organizational Justice. The Search for
Fairness in the Workplace. New York: Lexington Books.
Smith, A. (1976): An Inquiry into the Nature and Callses of the Wealth of Nations (1776).
ed. W.B. Todd. Oxford University Press.
Teubner, G. (1989): Recht als alltopoietisches System. Frankfurt a. M.: Suhrkamp.
Tonnies, F. (1887): Gemeinschaft und Gesellschaft. Leipzig: Fues's Verlag.
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Morality? Empirical Enquiries into Business-ethical TIlinking Pattems. Journal of Business
Ethics, 12, 879-898.
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Mohr (Siebeck).
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Study in the Economics of Internal Organization. 1\"w York: Free Fress.

Peter Pratley

This paper first outlines general concepts offree choice and responsibility, which
leads to the basic notion that persons and corporations are above all accountable
for what they may control themselves, their plans and actions, and less for
subsequent tragic incidents.
The second section develops a theory ofcorporate responsibility which distinguishes three major moral commitments entailed in responsible commercial
activities. These moral commitments no longer only cover (a) the safe and proper
functioning of a product or service, but explicitly allow for (b) environmental care
and (c) care for labour conditions. They may be found in most examples of recent
total quality programmes.
By means ofa critical assessment of quality programmes amongst new adepts
we then expand on the phenomenon of moral muteness.
The paper finally launches an appeal for applying our practice based theory
of public accountability to corporate communications. Corporations should first
and foremost be held responsible for their performances as commercial agents.
Accepting social responsibility as a corporation means voluntarily commitment
to three specific areas of public interest. And, responsible entrepreneurs should
communicate what they plan and do concerning in these three areas. By means
of a coherent and transparent policy of corporate commitment to these vital
commitments, corporations may develop a great potential of employee motivation
and public trust. I

The bulk of this paper is drawn from material in the third and fourth chapter of my Essence
a/Business Ethics. This book will be published by Prentice Hall Intemational in July/August

P. Ulrich and C. Sarasin (eds.). Facing Public Interest. 73-93.

1995 Kluwer Academic Publishers.


Our theory presents a normative idea ofmoral accountability, which is exemplified
by a study of quality control practices. It states that private companies first of all
should accept responsibility for what the public may rightfully expect from them
as commercial agents.
Our whole line of argument expresses a specific approach to normative business ethics. It prescribes and evaluates normative standards while referring to
current practices in business. This type oftheory does not seek to formulate abstract
duties and impose them on business just because one has to do so in order to achieve some objective or to respect some duty that lies often quite beyond the core
tasks of commercial companies. Rather, we point to moral commitments which
express existing mediations between public concerns and the strategic interests
ofa commercial organization.
This idea adopts a rather new theory on the relationship between business and
society. It does not dwell upon ideological positions claiming that the business
ofbusiness is to do business, i.e. make profits. Such statements are mainly interesting in abstract economic theory, but only few reflective managers will still
maintain that business does only have to respect its responsibilities towards its
stockholders or owners. Corporations actually accept other obligations towards
consumers, employees and the natural environment, and rather see their task of
making the right mixture and tuning between these different claims.
We will neither dwell upon completely opposite theories professing that business has a binding social contract with society, because it is not clear which moral
appeals from society should be accepted and which not.
This approach aims at being more specific about issues of corporate responsibility and social responsibility, by founding the need to accept certain moral
demands on a closer study of the moral claims accepted by quality management.
We will distinguish three moral commitments entailed in a much applied theory,
Total Quality Management. Our theory claims to contain the core of a practicebased normative theory of entrepreneurial accountability. The three major moral
commitments or purposes we detect can be checked by a historical study of the
shifts in the meaning of quality as it has been used in fifty years of quality
control programs. Though some will regard the theory as merely presenting a
possible working hypothesis, we have the strong feeling that many will already
accept our major arguments as rather evident and quite conclusive. Especially the
second section ofthis paper does not pretend to do more than just enumerate these
topics of vital moral concern. All ofthese topics are separately known to ethicists,
yet these elements have not always been so directly linked together in a comprehensive theory of commercial and entrepreneurial responsibility.
The theory of three moral commitments is quite basic and elementary, yet
at the same time it has some promising features. As it refers to TQM, it can be


checked out in more detail by studying quality handbooks, actual controls, procedures as well as the motivations for pursuing quality programs. A second issue
is linked to the fact that our normative theory is practice-based. It points to concrete
moral commitments which mediate between public concerns and corporate interests, these are the both public and commercial responsibilities accepted by modem
quasi-public institutions. 2 Thus, by studying quality programmes, one may show
that at least three responsibilities are already accepted by private business. Corporations already live up to specific public demands by accepting to measure their
performance. Some are even more outspoken and make them part oftheir corporate
mission statement.
In the third section of this article we will also indicate a vast, but poorly explored potential. Although de facto quality programs do accept at least three moral
commitments, most quality managers remain mute about their morally quite
respectable performances. Her lies the third, and most promising feature of this
theory. It may serve corporate communications. In this respect our view might
serve as an eye-opener for those that struggle on in quality programs but have
severe problems in articulating their objectives in terms of ordinary moral language.
Of course, some objections remain possible. Thus it is quite legitimate to ask
whether other important moral purposes are not lost out of sight. Answering that
question goes beyond the scope of the present paper. Other possible objections
may be due to misunderstandings. For instance, it is relatively easy to reply critics
that shed doubt about the operational value of the distinguished moral commitments. In order to answer this objection one should be aware of the difference
between more general values and the rather concrete and measurable norms. True,
our moral commitments distinguish separate clusters of items. They formulate
general values and purposes. But it is false to claim that these values are not
actually translated into concrete and measurable norms in Total Quality Management. Modem TQM implies constant efforts to find the most adequate norms,
measures and controls in the three detected areas.
The following view defines the minimum level of corporate commitments
which is accepted by commercial business in modem western society. It does not
pay attention to very ethical mission statements, which are not directly linked
to the commercial core activities of a specific private corporation. Concerning
these alleged high performers we just expect them to play along the same rules,i.e.
to apply the same stringent methods for quality control on their deeds and not only
asking from us to believe in their noble intentions. For instance, if The Body Shop
present a corporate activity as serving the high ethical mission of trade for aid,
they should define performance criteria and accept transparent quality controls

The latter expression is borrowed from Ulrich, P.: Die Grossunternehmung als quasi6.ffentliche Institution. Stuttgart: Poeschel 1977.


in this field. Whoever puts forwards some claim in external communications,

should accept and stand open to relevant public enquiries.
Our minimalist view has a much less ethical profile. In a paraphrase of the
expression by Hegel (<<Die Rose im Kreuz der Gegenwart suchen in the Einleitung of his Grundlinien der Philosophie des Rechts), what we are looking for
is the animating principle, the rose in the constant strife for improved corporate
performance. In order to look for it we fix our eyes on the everyday quality control
practice, and refrain from enquiries into more ethical schemes. Our aim is to
distinguish often only implicitly accepted moral concerns by looking at the finalities pursued by the agreed consumer requirements.


Philosophical Principles of Free Choice, Responsibility and

Entrepreneurial Accountability

First we will define some general concepts which may provide arguments for concentrating efforts on those performances which companies can actually learn to
handle and influence themselves. Consequently, we may learn to understand the
reason why tragedy prevention and corporate responsibility do not call for covering
up strategies, as they finally point back to the quality ofprocesses within business.
We will now formulate basic philosophical concepts of responsibility, free
choice which may add some depth to our practice based theory. This tirst section
identifies the formal aspects of human behaviour which can really be improved,
by refelTing to a basic concept of responsibility. Generally speaking, employees
and entrepreneurs can most ofal! improve on two aspects of their behaviour: (a)
plans or intentions and (b) skills, performance and craftsmanship.
Companies should be held responsible for the activities and omissions thcy
really might have handled better. Preventing accidental damage mainly inflicted
by the slings and alTOWS oftreacherous fortune should not be the main motive for
responsible corporate policies. So regarding our topic ofthree moral commitments
for perform ant entrepreneurs, one may say that these entrepreneurs should above
all concentrate on a comprehensivc control of all featurcs of their products and
services that they actually can control. Most of all this refers to the planning and
production by both the suppliers, the in-company departments and the distributors.
The core responsibility of entreprcneurs is to create excellence in all these business
processes. The aim is to meet an enlarged idea of quality, explicitly serving at least
three moral commitments.
These statements implicitly appeal to SDrnc quite philosophical concepts. We
will now proceed 10 a detailed cliscussio'l of our concepts of free choice and a
simplitied notion ofresponsihility. lis
Illenting a \Yiden~d concept ortotal qU:11ity nlanag~fnent is indeed the main olorai'


responsibility of companie~, especially for those ser\'ing the modem consumer

The basic nC'tio;1s 0 fjiec cficin- ml respollsibftity nre founding stones of any
debate on ethicd issues. Especially here, a better understanding of them may help
us to overcome both the extremes of abstrnct mOfclistic hobby-horse riding and
total irresponsible moneymaking. This :d.::a fits in with \,"hat Ronald Jeurissen in
his paper (in this volume) calls the integration view of the relationship between
huoiness rationality and moral responsibility. The first basic concept \ve define
is free choice.

1.1 Towards a dialectical cOllcept offree choice

Our tirst philosophical question is: What ideas offree choice are a necessary part
of any moral claim on indi\'idual and company responsibility? Moral behaviour
presupposes that people have a choice to make, therefore the most fundamental
idea in the accountability debate is free choice. Many fallacies about liberty and
free choice obstruct a clear understanding of the issue of public accountability.
Four of such false myths are:
Free enterprise implies absence of moral obligations,
Liberty implies being totally free from social bonds,
Freedom is a matter of applying sheer will power and inner conviction,
Free and conscious choice stands equal to doing what we wish.
A more mature and balanced concept of free choice has to include two apparently
contrary principles, \vhich both are part of human experience. The first principle
stems from the idea that \'ihat we really choose to do is not merely determined
by external pressures and conditioning. Normal people are capable of making
personal choices, of acting upon their proper decisions. This principle goes for
all ordinary life sitw:!tions where people are confronted with: people are capable
of making autonolll:Jlts choices. The word autonomous does not imply that
humans are independent from external circumstances or social norms, rather it
insists on the idea that moral accountability refers to an individual human being
that can decide for himself and make a stand behind a choice. Whether somebody
perceived that option first or took it fwm the environment is less important here
\Yh:1~ matters is that people can choose for themselves whether they back their
decision or not. People are able t,: ch00se freely.
The second principle within a philosophical concept of free choice relates
to the fact that choices take place here and nm\". The options we have relate to the
g!'o"Cl circumstances. Even our personal skills for coping with this environment
Ill"y be seen as giwn "bilities (,nd disfi.mctions. Choices refer to actl;al, concrete
:!iwLltiO/1S and cppol"/unities fhat have 10 be assessed.


Therefore, an adequate definition offreedom should combine these two principles in one single formula: People are able to make autonomous choices while
considering the given circumstances.

1.2 An example of a moral problem fitting with this idea offree choice
In 1972 a plain crashed in the Andes mountains in Chile. Some passengers survived, but found themselves in a situation with no food supplies. Their environment
consisted of cold snow slopes with no natural food except the bodies of other dead
passengers, once friends or relatives. They faced a dilemma: eating the dead bodies
of their beloved or dying themselves.
By means of this example we can illustrate our definition offree choice that
does not lead to the common dilemmas. Both constituents offree choice have to
be respected when we claim responsibility for a conscious action. The first constituent expresses that the action results from a personal choice or will. The second
constituent stresses the importance of making a well-informed choice based upon
an understanding of the possibilities present in the given circumstances. The crash
survivors in the Andes mountains had a clear choice in their circumstances: either
die or eat their relatives dead bodies. Even though they chose the latter, it is clear
thatthey did it with remorse and a sentiment ofrevulsion. The line ofconductthey
adopted seems forced upon them by overwhelming conditions. These starving
people had limited opportunities. Still, they positively chose to follow a specific
line of conduct in order to achieve some objective. They wanted to survive, and
eating the corpses of their dead beloved was the only way left.

1.3 An application to strategic marketing management

In business the second principle of considering the concrete circumstances is of
utmost importance. Whenever voluntarist business people only see what they want,
expressing a commanding wish and forgetting about external conditions, losses
and tragedies are imminent. A nice example ofthis may be seen in the recent Omo
Power flop. In contrast, the strength of Far Eastern business is partly due to their
open eye for the given circumstances, they seem more expert in apprehending and
judging market shifts and in testing the ease of use of their products.
True choices go far beyond mere wishes as they always take into account the
given circumstances. Free choice weights the present conditions carefully. In this
respect what goes for moral life in general applies also to free business enterprise:
the road to failure is paved by wishful thoughts. We may now study the second
philosophical concept: responsibility.


1.4 Limits and possibilities of individual responsibility

Before discussing some definitions of individual responsibility, it is useful to
explain four constituents of responsible actions. Wilful human behaviour has the
following characteristics:
a. There is an intention.
b. The actual behaviour is the action or an absence ofaction.
c. This effort or lack of effort interacts with the circumstances producing an event:
an actual course of affairs.
d. Following the action results appear. Whenever these subsequent results are
harmful injuries occur, either physical or mental. The subsequent results may
also be rewarding for one or more parties concerned, then they are benefits.
The following two definitions both refer to these characteristics. The first definition
of individual responsibility is rather partial, but serves to illustrate the difference
between the factors a person really handles and those that are largely beyond the
agent's control.
Thisfirst and incomplete definition ofresponsibility starts from the idea that
one is only responsible for the things actually planned and done, not for things
that are at least partially beyond control. Thus, definition I runs as follows: a
person is only responsible for his intentions and what he does or chooses not to
do, but not for the connected events and the related harm and damage. This first
definition exempts individuals from all what happens after the agents intervention,
as it is never simply caused by one factor, but is the outcome of a complex interaction between several agents, means and circumstances.
A second and more complete definition ofresponsibility that falls more in line
with the established convictions on legal responsibility does not only accept responsibility for the agents intentions and (not) acting, but to a certain extent hold agents
responsible for the subsequent events and resulting harm and damage.
People are not only judged for their intentions and actions, but also for the
foreseeable consequences oftheir actions or neglects. Thus, individuals may also
be held accountable for resulting events and injuries or benefits, provided the
following two conditions are both met:
a. The person acted willingly and knowingly and in principle he was able to foresee
this possible outcome (subjective criterium).
b. Any reasonable person with a comparable cultural background would be capable
to forecast that the intentions and the adopted course of action might result in
a certain damage or harm, considering all circumstances as far as they could
be perceived (objective criterium).


This second definition seems to be the better one. Yet, one point referring to the
first definition should be kept in mind: Sane people are almost 100 % accountable
for their own efforts and the events they can iGf1uence directly. What we can
actually improve on by ourselves is mainly a matter of improving intentions and
the care and skill we put in our actions. Unfo;"tunately, the resulting performance
may however be blurred by external effects. As far as these effects fall beyond
our foresight, one may state that they are also beyond our span of control and
cannot be blamed only on us. Accountability for failures is not unrestrained.
The idea oflimited responsibility for unfortunate outcomes has to be stressed
here. In corporate communications it should be expressed with the utmost care.
Accepting accountabilityoflen does not coincide with acceptingjull moral responsibility, most tragedies do not result from fully calculated negligence.
Comprehensive management ofboth, one's proper corporate performance and
of its chain of distribution, is far more important than having superficial and
ephemeral corporate communications. So, the core responsibility ofcompanies
infacingpublic interest is a matter ofredesigning the entire production, purchasing and distribution process in order to satisfY the public requirements, which
we will define in section 2. Reshaping company performance is the proper job
ofthe entrepreneur. It requires building genuine concern inside the company and
amongst co-makers and distributors. In order to build durable relations, the
entrepreneur will have to convince and get others to implement the addition of
this new vision ofpublic accountability in their core business.
This comes close to creating a new sense ofcore competence ofa company.
Ordinarily, this expression refers to the specific resources and trained skills allowing a business unit to produce quality output in a specific field of activities.
It thus defines the strengths of a business unit. Yet, this output-oriented definition
of competence does not cover all. The new consumer requirements will lead to
the addition of green and humanitarian notions, this will seriously change the
requirements for core competence. Nowadays, the morally concerned public rightly
or wrongly holds managers responsible for employment policies and many aspects
of external benefits and damage that are produced in the social and natural environment. As mentioned in section 1, it is not necessary for entrepreneurs to accept
all moral demands as soon as they are expressed. Our theory ofthree moral commitments based on commercial responsibilities may serve as a filter her. Yet, some
of the newly arisen demands for environmental care and labour conditions have
to be incorporated in one's definition of core competencies.



Three Moral Commitments in TQM Programs

We will now elaborate a nonnative concept of entrepreneurial accountability, which

often remains implicit in modem total quality programmes. The basic principle
on which we base our entire argument is that the idea of corporate responsibility
has in fact been enlarged in a very precise and specific way.
Directly linked with the preceding section is our first statement: morally valid
entrepreneurial perfonnance is produced by preventing unnecessary harm and by
the ability to build constructive and durable partnerships with employees, consumers and suppliers. In order to explicitly grant certain moral demands, a morally
responsible entrepreneur has to keep in mind vital corporate interests. Here, one
has to mediate between moral demands and strategic interests, which implies
drawing clear lines. These lines may be expressed in the commitments of the
corporate mission statement. Such a mission statement thus defines a specific
balance between two constituents, one side the strategic vocation ofthe corporation
and on the other its commitment to specific public and consumer demands.
The three moral commitments are disengaged by understanding the purposes
ofTQM programs, and by stressing a major shift in the meaning of quality. What
actually happened to its meaning can be best explained by considering its definition. Quality is defined by John Banks as: Quality is fully satisfying agreed
customer requirements at the lowest internal costs. 3
Now, where does our idea of corporate responsibility come in and how can
public accountability be illustrated by referring to a recent shift in consumer
Right from the start, it is vital to understand that the requirements now accepted
by corporative total quality programs outreach hedonistic claims. Ease ofuse and
personal safety might still be classified as a corporate commitment to hedonistic
consumer requirements, i.e. they seem to aim at personal satisfaction and at
avoiding private pains. In the wordings of Alexis de Tocqueville, the major motive
of consumers seems to be <des succes faciles et les jouissances presentes. But
this hedonistic pursuit does no more correspond to the whole realm of modem
consumer requirements.
The procured ease of use is no longer the unique standard for product quality.
Consumers may boycott cheap and pleasant products that endanger our common
future. Their new requirements combine a mix ofenvironmental and social concern,
and also may lead to powerful bans. Quality presently also includes environmental
and social care. Consequently, the related concept of product responsibility is
broadening. On top ofthe classical moral claims which were based on preventing
personal harm and injury, new claims have been added.

Bank, J.: The Essence of Total Quality Management. Hemel Hempstead: Prentice Hall
International 1992, 15.


Before elaborating on each separate commitment, it is useful to first give an

overlook ofthe commitments distinguished in this normative theory ofcorporate
responsibility. Quality refers to agreed consumer requirements. Now, these
requirements accepted by the TQM corporate program entail at least three categories of moral commitments. They are: (1) consumer care, expressed by satisfying
demands for ease of use and product safety, (2) environmental care, (3) care for
minimum working conditions. It is useful to comment each ofthem in more detail,
so one might understand in what sense they are morally relevant topics.
The safe and satisfactory functioning ofa product or service still is the basic
objective, and it will remain most important. Reducing health risks and providing
customers with reliable products is a perennial moral corporate responsibility.
Maybe the demand of consumers may be interpreted as motivated by hedonism,
but the professional effort to reduce health and safety risks, the incessant perfection
of goods and services by quality corporations is certainly also a moral effort. It
prevents severe harm and discomfort, and it can enhance personal well-being.
Many cases in business ethics reveal that immoral legalism, narrow sales
oriented visions and the overriding of technical safety concerns by commercial
objectives often obscured the clear perception ofthis responsibility. Famous cases
like the Ford Pinto Car, Asbestosis and the Johns-Manville Corporation, the Herald
ofFree Enterprise are all are related to accidents involving tragic failures in respect
to this first and most basic responsibility.
The quality minded corporation has a moral commitment to make well-performing and safe goods and services. This is the perennial responsibility of any
respectable commercial agent. And although this cluster ofrequirements may stem
from hedonistic consumers, we must insist on the specific nature of moral commitment expressed on the side of the corporation. Care for consumer ease and safety
is part of the core responsibility of any professional commerce. Fulfilling this
mission is a matter of constant professional attention, control and hard labour.
Failing to do so should be regarded as the major indicator of corporate failure.
The second and third corporate responsibility refer to public goods. They entail
moral commitments that widen the concept ofagreed requirements; this broadened
scope of agreed consumer requirements obliges modern companies to redefme
quality in a way which now includes environmental and social accountability within
their business philosophies. This shift is partly due to pressures form the market.
The additional commitments are part of a much deeper change in consumer
mentality and public concern, which no longer just refers to the well-functioning
of the product itself. Opinion makers like consumer organizations are no longer
only concerned about personal satisfaction, they propose new requirements which
include claims ofa different kind. This broadening of the quality requirements
may have drastic consequences on corporate sales and on the product portfolio.
Above all, the greening of business illustrates that the procured ease of use
is no longer the unique standard. Many consumers are more and more willing to


pay for a product that stands for environmental values. They will prefer environmentally safe production, e.g. using more natural and non-depletable ingredients.
Even more, they might boycott products and services that endanger our common
future. These new requirements combine a mix of environmental and social
The greening of business can also serve to illustrate that the broadened meaning of quality performance is also triggered from within business due to the
pressure and concern expressed by ones proper staff, the morally concernedpublic
inside the corporation. Even ifmany uninformed consumers remain unaware of
real environmental threats and seem an easy victim of sentimental green marketing,
it can be argued that private concerns face a major public appeal anyhow. Already
many private corporations have committed themselves to elaborate environmental
care programs, often outperforming what the market and the law requires. They
do this because they are well-informed themselves and feel obliged to anticipate
rising issues in a pmactive way.
The moral concern for our natural environment and our common future makes
whole branches ofbusiness endorse voluntary norms for environmental care. They
may cover various aspects of production and distribution processes. In Germanspeaking countries the norms corresponding to Gruner Punkt label are being
applied widely.
Besides the environmental requirements, other additional requirements have
come on top ofthe basic demand for well-functioning and consumer safety. These
additional demands vary according to the type ofproduct or service. They too often
go beyond the standards ofprivate consumer satisfaction. An example of emerging
new requirements is the resurgence of a classic labour-rights topic, but now on
a worldwide scale: the fight against child labour and slavery. Nowadays, activists
ofhigh reputation express concern about the use of child labour and bonded labour
for the production of goods exported to the rich countries. So, a whole cluster of
the additional requirements has to do with minimal labour conditions. Many
consumers are ready to pay a higher price for satisfYing employee rights. National
and European Community legislation has an important role to play here, they might
impose minimum requirements for the humane labour quality of imported goods.
Wholesaler organizations might commit themselves to participatory ethics, by
creating a quality hallmark indicating minimum labour conditions free from torture,
slavery and severe exploitation. In the end, this defends the reputation and interests
ofthose corporations that do maintain more than a minimum of decent labour conditions.
In sum, additional consumer demands going beyond consumer satisfaction
and individual safety have been accepted as morally beneficial quality goals. These
demands can less easily be treated as non-moral consumer expectations, as they
refer to public goods. We close this section by presenting the following table of
three moral commitments (figure):


Moral responsibility

Objective (at least)

Content (basics)

Additional 2:
Corporate conditions

Minimum labour conditions

No torture;
No child labour;
Minimum standards of job
health care and
safety precautions

Minimum of fair retribution

of risks and profits

Additional 1:
Natural environment

Output oriented environmental care:

Limit harmful waste

Input oriented environmental

Reduce the depletion of
natural resources

Consumer satisfaction

Consumer safety

No slavery;
Transparency in employee
payment and bonus systems
Norms for waste discharge;
Fazing out programmes; Use
of filters; design for disassembly
Waste minimalization programmes;
Confirmation of selling proposal; screening of ease of
use for consumer
Design, production controls,
usage instructions

The ethical profile expressed by presently agreed consumer requirements clearly

transcends the perennial effort of business to satisfY private needs, it moves towards
a positive corporate commitment to the promotion of common welfare. Here we
can also formulate the main thesis of this paper:

The major thing a company morally can do is a pro-active and general

commitment aiming at a high in-company performance in order to meet a
broadened notion ofquality requirements. Performant entrepreneurs can and
should accept specific moral demands while maintaining their properfoothold,
which is their function as a commercial agent.


This main thesis contains a missionary statement: Even if a major part of the public
is still reluctant to change, this cannot be a valid excuse for leading managers. One
might even add a more historical vocation to this statement by combining the plea
for pro-active anticipation "vith the general purpose of sustainable growth. Thus
one might say that corporations willing to take a lead at the entrance ofthe third
millennium should implement policies that really foster sustainable growth. The
question is no more towards what direction will our idea of corporate responsibility shift? but rather how to stay in tune with the shift towards environmental
and social accountability?
The shift in the way corporations account for the quality oftheir actions and
neglects should also have its effect on how people look upon their reasons for
doing business. A broader concept ofthe core competencies ofthe company goes
together with growing commitment to wider human objectives and a sense of
contributing to our common future. This aspect is the change between the managers' ears that has to come along with the other changes.
We will now study the performance the quality conscious entrepreneur makes
in face of public interest. This finally leads us up to the reasons for communicating
the actual corporate commitments in a more overt and self-conscious way.


Moral Muteness Amongst TQM Novices

In order to arrive at effective corporate communications which express a response

to public interest one has to train and cultivate a number of skills. This is a matter
of self-education, and of communicating with both employees and external
relations. Making this educational task succeed is one of the major responsibilities
of a performant entrepreneur.
Unfortunately, many corporations that recently obtained quality certificates
do not concentrate on this effort. Corporate communications relating to the above
mentioned moral commitments is often absent. Consequently, too few corporations
that de facto try to perform well in respect to certain moral objectives use ordinary
language to communicate this. They seem dumb folded and unable to publicly
articulate their clear commitment to these specific corporate responsibilities.
Mission statements with carefully formulated and precise moral commitments are
rare. Talk about often quite positive policies and controls is not expressed in a
systematic way, leaving both corporate employees and the concerned public outside
uninformed. The moral purposes of the quality programmes are not well shared,
as they are not communicated and checked out clear enough.
Total Quality Management has a potential for making entrepreneurial performance transparent by using well-balanced moral talk which acknowledges certain
specific moral demands. Although many moral requirements are already being


met within quality management, this is often done in a unselfconscious and oblique
way. So the final aim of this article is to point to TQM's potential as a relatively
independent, highly sophisticated response to demands a/the moral community.
Though many oftheir actual performances may be morally quite respectable,
a huge potential for creating commitment remains unexplored because presently
entrepreneurs refrain from using moral talk. A critical review of the actual practice
of Total Quality Management, especially as it is done by novice companies, may
often reveal a reactive and narrow mentality. The surveyed motives for adopting
quality management are often rather fear driven and reactive, they adhere to ISO9000 standards because ofmarket pressure from clients or in order to remain competitive. 4
This phenomenon will be analyzed according to Bird and Waters concept of
moral muteness, i.e. although these corporations enforce procedures that lead to
morally beneficial outcomes, they do not communicate the moral commitments
they entaiL S This lack of overt commitment is a serious danger for the further
growth and optimalization of TQM. SO, in order to see the true potential for
purposeful and shrewd moral talk, the dangerous consequences of moral muteness
in quality performances have to be well understood first.

3.1 Moral muteness is predominant in total quality management programmes

The common practice of corporations that recently obtained a quality certificate
is non-moral, they behave as ifwhat they do falls beyond moral concerns. Spurred
by a narrow non-moral concept of strategic corporate objectives, they abide to
ISO-9000 regulations. It seems as ifit is only by accident that quality regulations
force corporations to produce in ways that do not damage human well-being and
do not jeopardize our common future.
One major reason for this inability to understand and communicate one's proper
efforts for liable product and environmental care in terms of moral talk may be
a matter of inadequate skills in this respect: moral muteness. Even in the midst
of the 1990s many corporate managers seem unwilling or unable to communicate
their efforts to produce safely and care about the environmental in moral terms.
This phenomenon ofmoral muteness is strongly present amongst the novices who
just have joined TQM quality programs.

Kok, J.lOosterveld, H.: Certificering en kwaliteitszorg. Groningen: KPMG Klynveld

Management Consultants 1993. This report is published by KPMG Netherlands in a quite
limited number. The NRC article The silent green revolution of quality care refers to this
source (cf. note 6).
Bird, F.B.lWaters, J.A.: The moral muteness of managers. California Management Review,
32, Fall 1989, 74-88. Reprinted in: Drummond, J./Bain, B. (eds.): Managing Business
Ethics. Oxford: Butterman-Heineworth 1994,89-106.


Surveys reveal that senior managers rarely express any voluntary commitment
to moral demands when they discuss about the reasons for implementing quality
care. Business people seem unable or unwilling to publicly state how their integrative quality norms actually are corporate commitments, which redefine moral
concerns in operational requirements and controls. Even environmental care is
simply profiled as complying to legal duties or as forced upon by market demands,
not as a moral obligation which also happens to be profitable in many occasions.
We begin with one example that may illustrate this point. A partner ofKPMG,
G.C. Molenkamp, explains his work on environmental care schedules in a Dutch
newspaper article by Mr. T. Westerwoudt. Dr. Molenkamp works for KPMG environmental consultancy group. He gives advice on environmental care programmes, mainly as part of larger TQM programmes. He explains that in the end
corporations often become more competitive and save money. The following
examples illustrate how he sells the implementation of environmental care by
referring to the precept of business rationality reduce costs, increase profits:
People often talk about the costs of environmental care, but a more careful
study reveals quick returns on environmental investments. One good example
is the food industry, where they deal with huge quantities ofwaste and waste
water, requiring expensive treatment. By implementing integrative environmental care schedules and by changing the production process you can cut
costs drastically. We know examples offactories where they only had started
to mind about the water logistics and payed little attention to the quantities
of chemicals used or waste discharge. If you look at these things carefully
and implement changes, you discover great opportunities for making money.
In Ireland we screened a soft drink plant that planned to invest millions in
extending its waste water treatment system. A closer look revealed that this
was superfluous. By taking relatively simple measures the plant limited the
volumes of water input drastically and reduced the dosage of chemicals.6
The general point Molenkamp makes is stated in the same newspaper article:
We assist to a silent green revolution. Environmental issues are no longer
hot items as they used to be in the 1970s. Things no longer happen under pressure of ideological yelling, but behind the curtains corporations work hard
on improvements. And by going along with the process of quality improvement they learn new things every day.

Westerwoudt, T.: The silent green revolution of quality care. Nieuwe Rotterdamse Courant
(Dutch Newspaper), 2S July 1994 (<<De stille groene revolutie van de kwaliteitszorg).


The Dutch newspaper article also refers to aKPMG survey by Kok and Oosterveld,
showing that corporations start the race towards ISO-9000 certificates out of a
defensive need. First, they do not see the real gains of starting quality programs.
Many companies rally to quality management simply because clients ask it from
them - they act by responding to market pressures. According to this KPMG survey
directed by J. Kok in 1993, from the responding 63 corporations the large majority
of the responding entrepreneurs had just one single objective for implementing
total quality controls in accordance to the ISO-9000 regulations: They wanted to
have the certificate, nothing more! In the case of the race towards ISO-9000
certificates, managers apply environmental care because it allows to obtain a
competitive edge. By accident, they obtain financial gains. This positive feedback
is a powerful, but external reinforcer.
What remains is the inability to express moral concern when senior managers
refer to quality performances. This makes one wonder about the explanation of
this moral muteness.

3.2 Possible explanations/or the absence o/moral talk in TQM

Our general impression about the underlying standards ofTQM programmes and
books is quite positive, yet even authors like John Bank rarely dwell upon the way
quality management responds to moral demands. This author mainly uses such
reference in the beginning and at the very end of his book, in between moral talk
is absent from the discourse on TQM. Thus the moral concern shines through in
the opening paragraphs of his preface:
Events leading up to <the major malfunction> of Challenger provide the raw
material of a case study on how not to manage a complex technological project.?
His sample extract from a powerful case study on the causes for the Challenger
disaster can be found on the last pages:
<dn reality, as Challenger's crew smiled down from the launch pad catwalk
at the massive white columns ofthe solid rocket boosters, they were looking
at the final product of flawed policy and political corruption.8

Banks (1992: XI) ..
McConnel, M.: Challenger - A Major Malfonction. London: Unwin Paperbacks 1987, 7.


In order to give more detailed explanations for the absence of moral talk in TQM,
we just state the headings of three explanations provided by Bird and Waters: 9
Threat to harmony. Moral talk is said to be intrusive and confrontational and
to invite cycles of mutual recrimination.
Threat to efficiency. Moral talk is said to assume distracting moralistic forms
(praising, blaming, ideologic profiling) and is held to be simplistic, inflexible,
soft and inexact.
Threat to image 0/power and effectiveness. Moral talk is said to be too esoteric
and idealistic, morally mute managers think that moral talk lacks rigour and

3.3 Dangers o/not articulating implicit moral commitments

In stead ofsimply exposing the potentials ofmoral talk forTQM in positive terms,
we prefer now to comment on the five long-term consequences ofmoral muteness
formulated by Bird and Waters. Little by little the hidden potentials will become

1. Creation o/moral amnesia

Quality management is presented as a technical performance, not as a moral activity. Corporate communications are slow in recognizing the degree to which the
implementation ofintegrative quality management is in fact a wonderful example
of how business handles moral demands in a truly responsible way. By imposing
quality procedures on itself, business has to constantly work on what one might
call the intentions and actions o/the corporation: its schedules and logistic planning and their execution during production and distribution processes. Corporate
planning and production according to integrative quality requirements can be
articulated as responses to moral demands:
It is characteristic ofthis moral amnesia that business people only feel themselves moved by moral obligations and ideals and find no way to refer explicitly to these pushes and pulls except indirectly by invoking personal preferences, common sense and long-term benefits. They remain inarticulate and
unselfconscious of their convictions. 10


In chapter 4 of my Essence ofBusiness Ethics (1995) one may find additional comments.
BirdIWaters (1989: 82).


2. Inappropriate narrowness in conceptions of morality

Moral standards can be characterized as dealing with matters of serious consequence for human, animal and environmental well-being and as expressing some
impartial ideal of equity and justice.
Bird and Waters formulate a common experience of ethicists concerning the
narrow idea of morality used by persons in business. Corporate managers tend
to stonewall moral issues. They obstruct moral debates by presenting issues in
the non-moral terms of operational management. Managers present morally respectable policies as strategic choices, and only speak about morality when they refer
to extraordinary and hot items, i.e. blatantly immoral activities with very harmful
consequences. Managers often are unwilling and unable to formulate positively
that they do act morally:
They <stonewall> moral questions by arguing that the issues involved are
ones of feasibility, practicality and the impersonal balancing of costs and
benefits and that the decisions on these matters are appropriately made by
relevant managers and directors without public discussion. ( ... ) These managers attempted to treat issues that had been questioned as if they were not
publicly debatable. ( ... ) Moral muteness in the form of stonewalling thus perpetuates a narrow conception of morality, i.e., as only concerned with blatant
deviance from moral standards.!!
Here we may point to the positive potential and value of moral talk for entrepreneurs. It can create an atmosphere of pro-active concern within the company, allowing staff members to explore alternatives and seek solutions that meet the accepted moral commitments better.

3. Moral stress for individual managers

The inability to articulate moral expectations in a more balanced and open way
does finally fire back on the personal well-being of managers. Bird and Waters
insist on the exacerbation of moral stress due to the absence of moral human talk.
In the case of our topic, the moral muteness in TQM, the levels of stress most
probably remain tolerable, because the purpose of TQM is often so implicitly
moral. Whenever personal stress becomes unbearable for the manager during the
implementation and improvement ofquality management, this is more due to other
causes. One is the incapacity of communicating directly about moral concerns,
another cause may be uptight behaviour and tunnel vision. The individual managers
of the KPMG survey mentioned above may feel that they are coerced by some
external market demand to obtain the quality certificate. Consequently, they are
not really committed to this quality programme and have to force themselves. If

Bird/Waters (1989: 83-84).


the corporation opts for a more positive appreciation of the moral commitments
and if it allows for a certain degree of moral autonomy and openness, it may relief
the stress imposed by blunt and non-moral quality procedures.

4. Neglect ofmoral abuses

This consequence of moral muteness may seem less relevant, as quality involves
controls. Nevertheless, the sheer ignorance about what the specific moral issues
are to which the organization commits itselfby implementing an integrative quality
programme may lead to setting wrong priorities. Moreover, the inability to
articulate the underlying moral demands has immediate consequences for the
motivation of employees. The manager will often resort to bullying employees
instead of presenting legitimate moral reasons for the planned new procedures
and controls. Bird and Waters indicate a more general point:
Just as norms of confrontation contribute to moral muteness, in circular fashion that muteness reinforces those norms and leads to a culture of neglect.
Organizational silence on moral issues makes it more difficult for members
to raise questions and debate issues. What could and should be ordinary
practice - i.e. questioning the propriety of specific decisions and actions tends to require an act of human heroism and is thus less likely to occur.12

5. Decreased authority of moral standards

The fact that moral talk and moral standards are not used explicitly for the formulation of corporate commitments has another consequence. As there are not
living examples committing themselves to moral objectives, they loose their impact
on the business community.
This consequence also prevents corporations from developing a corporate
culture fostering cooperative self-ruled behaviour. Here lies the great opportunity
for inside communications on the basis of moral commitments expressed in the
corporate statement. It should focus on screening the quality requirements by caring
about their match with these core corporate responsibilities.

3.4 Conclusion: A huge, but only partly exploited potential

F or the first time in the history of industrial modem production the requirements
for quality production are expressed in a system of comprehensive procedures and
controls. The public does not ask for details on these programmes, but they would
appreciate it if corporate communicators could express the business response to


Bird/Waters (1989: 83).


moral concerns in ordinary language. Show how quality relates to basic moral
commitments, do this by insisting on moral concerns incorporated by quality
production and service. 1hls public relations effort itself requires quite some tuning
and education both within the corporations and amongst the external groups. Due
to such an effort, a tidal wave of public satisfaction might rise.
Excellent entrepreneurs should focus on what lies within the corporation's
span of control and constantly foster high performance in those areas where corporative actions really matter. This idea of positive company responsibility will
finally be linked with the idea ofcompany reorientation explained in the first part,
i.e. that companies should redefine their corporate philosophy and implement a
broadened idea of quality management. This inner reorientation is the essential
performance for the company in reply to public interest. Providing quality products
and services that apprehend a widened view ofconsumer requirements as a private
company is its primary task. Vital failures with direct consequences on the
produced goods and services are more blameful and should be more damaging
for ones reputation as an entrepreneur than any unfortunate accident in which one
has been caught up by chance.
This conclusion also points back to the main task of business ethics. It does
not only lament upon catastrophic results due to immoral or unconscious business
activities, nor does it start witch-hunts against the evils ofcapitalism. Rather, business ethics can encourage entrepreneurs to define a restricted set of corporative
commitments as responses to agreed moral demands. It should also insist on transparency, accountability and controls for the corporations moral performance. With
such a mission business ethics can guide and counsel practitioners in a constructive
Finally, let us draw one last conclusion concerning entrepreneurial performance
and public accountability. Our theory ofthree moral corporate responsibilities may
help entrepreneurs who wish to defme and implement their commitments, by pointing to generally endorsed minimum responsibilities. Basically, our moral minimum
states the idea that business should provide quality services and goods to the public,
without endangering either basic public well-being or our common future. Thus,
making money can then be combined with responding to a limited number of highly
moral demands.
Accepting public accountability implies a more affirmative understanding
ofthe matters that are ofthe company's primary concern. These matters especially
relate to tasks and moral commitments in the field ofproduct responsibility, labour
conditions and environmental care. A major part of corporate communications
may then consist of explaining what the company does in order to achieve these
moral commitments.
Moral corporate concern is not just oriented towards the end-users ofthe final
products, but also involves the development of relationships with employees, with
local communities and accepting accountability for certain features ofthe natural


environment. This calls for a redefinition of corporate objectives allowing for an

expanded idea of minding our business.
In the field of corporate communications, the result may be a more mature
and less episodic understanding between public opinion leaders and private business. Companies may evolve to partners in the dialogue with public interest,
accepting a clearly limited responsibility as a business offering goods and services,
but also refusing to function as the major scapegoat carrying the entire burden of
our world's misfortunes.





Andres F Leuenberger

The title of this text refers to the concerned public. But who is the concerned
public? There is no simple answer to this question. When I hear the word
public, I think of consumers, for instance, or voters or politicians - or, for
that matter, the PR agents, the political parties and all the interest groups that
focus their attention on a single issue.
There is no such thing as the concerned public. Special-interest groups,
however, are growing increasingly aware of the power they yield, also in the
political arena. And in the last few years public lobbying for particular interests
has been put on a professional footing. Nowadays, for instance, animal rights
associations, opponents of genetic engineering, environmental protection lobbies
and activist groups opposed to the integration of Switzerland in international
organizations all have impressive financial resources and an army of highpowered lobbyists at their disposal. As a result, professionally managed specialinterest groups have become equated with the concerned public, while general
interests are being blurred. Yet the commitment shown by such groups is by
no means dependent on the money available to them. Rather, it expresses a sense
of involvement, whether genuine or putative, and not infrequently comes close
to being an almost religious profession of faith. But what is all too often
forgotten is that a large part of the public consists of the employees of our
companies, their families, and our shareholders.
And we must also learn to differentiate when we speak of companies. There
is no such thing as the company or the management. The challenges facing
management today vary according to sector, products or, for that matter,
production location. At all events, the public's perception of a company or
industry is shaped by history, by local presence and social exposure, and by
the extent to which a company and its representatives, or an industry, are
integrated into society.
I'd like to discuss some important aspects of public relations as illustrated
by the example of a multinational chemical and pharmaceutical company. This

P. Ulrich and C. (eds.), Facing Public Interest, 97-104.

1995 Kluwer Academic Publishers.


is the sector and the environment that I know best. But what I have to say
applies to industry in general.
What particular challenges does management face from the concerned
public? What sort of public relations should a company engage in?
I'll try to answer these questions with the help of five hypotheses. I hope
to demonstrate that attitudes to industry, new technologies and structural changes
represent a challenge to both the companies themselves and the general pUblic.
My first hypothesis is the following:

The days when the public welcomed industrial and other economic activities
simply because they createdjobs or providedproducts or services are gone,
once and for all. People have become more critical of technological
progress and more aware as regards consumption and consumerism.

The public expects economic activity to be integrated into the broader framework
of development and thus to reflect its own set of values. This view is also taken
by shareholders and, more and more, by modem-minded employees, who
are not prepared to work for a company unless it satisfies their own ethical standards.
The change in public awareness has gone hand in hand with a growing
tendency to pre-judge issues. Not infrequently, large sections of the population
are inclined to condemn in advance - a leaning that is encouraged by the media's
commercialization of information. We're therefore facing a situation which calls
for a particular degree of creativity on the part of the entrepreneur. Or, to echo
Albert Einstein, it is easier to split the atom than break down a prejudice.
Knowledge is the best weapon against prejudice, and therefore communication and information are more important than ever. But in a world in which
information is treated as a commercial product that is available in excess, it is
almost impossible to distinguish what's important from what's unimportant, right
from wrong. With almost economic logic - I am tempted to say - each of us
makes our own selection from the broad range of information available, be it
incomplete, black and white, only half true - or full of prejudices.
Hoarding of secrets generates suspicion. And with the world around us
awash with information, a company very quickly arouses suspicion if it does
not engage in at least one of the kinds of information activities practised by
others. So does this make companies the slaves ofthe communication society?
I think not. But what companies have to realize is that information, readiness
to talk and public relations are crucial location and production factors. After
all, the practices, processes, products and waste disposal activities of companies
are being increasingly scrutinized for their compatibility with the needs of
society, the environment and health.


Companies are a part of public life. They are a part of a social structure
that is not guided solely by economic principles but is equally exposed to social,
public, political and ethical influences. Companies are integrated into the social
and communication network of their environment at many different levels: as
employers, taxpayers, investors, patrons of the arts, sponsors, customers, roadusers and neighbours, to name but a few. And besides their value as employers
and taxpayers, they are increasingly judged by their performance as information
providers, i.e., by their credibility.
The public is becoming more aware than they used to be of events, accidents
or the growing strains being put on nature, because these have a much more
direct impact now that the information can be obtained immediately and
anywhere in the world. Yet a difference exists between public and published
opinion. Some - even spectacular - events have less of an impact than one
would imagine. This is because repetition creates an undercurrent of distrust.
Nowadays, some sections of the population don't know where they stand
on industry, science and technology. This uncertainty has been encouraged by
the fact that certain companies practised - and in some cases still practise a form of communication culture that is predicated on the principle that if you
want to know anything about us, you have to ask us. In a world characterized
by freely available, marketable and often insistent information, this attitude is
pure provocation. After all, companies are expected to take steps to minimize
further damage - or avoid damage altogether. Information - or so it is thought
- can prevent damage. This view is probably wrong. Information or PR are no
substitute for the proper exercise of responsibility.
The inquisitional approach has already produced almost grotesque manifestations in the United States and is increasingly gaining ground in Europe as well.
Pushed by pressure groups, encouraged by laws and welcomed by public
relations companies, television is showing a growing tendency to put industry
in the dock, and interviews and talk shows are becoming veritable tests of
rhetoric. Prejudices are played up to and underpinned. The commercial product
information is increasingly subjected to the laws of the marketplace at the
expense of ethical considerations. The competing information and communication
technologies are at each other's throats. In the media world, market share is what
counts. And given the diversity of the media, entertainment and show are more
important than transparency for the consumer. This generates insecurity and
Infotainment, as it is called, has also gained a foothold in Switzerland.
On Swiss television, for instance, it has become a yardstick for the daily news
broadcasts and other information programmes. Mere facts are felt to be not newsworthy enough or too complicated and therefore they're simply left out because
they tend to lessen the impact of spectacular media effects.


The two-edged attitude to industry, science and technology is reflected in

the welcome given to products while production is basically called into question.
Genetic engineering is a case in point. It is undoubtedly the technology that
will be responsible for any new medicines the future may bring. If the pharmaceutical industry is to achieve major breakthroughs in the development of drugs
to treat the different forms of cancer or AIDS, it will have to use genetic
engineering. But genetic engineering projects - for instance the establishment
of research and production facilities - are running into particularly intense
opposition at present, especially in Central Europe. At the same time and with
equal intensity, however, involved groups are calling for research efforts to be
stepped up in the fields of cancer and AIDS, for which cures have still to be
found. The public is saying yes to products and no to production.
Public expectations of industry are contradictory in other fields as well.
In Switzerland, for instance, public pressure and considerations of competition
law led to the abolition of agreements on uniform terms of agreement and
conditions of business in insurance and banking because they were not in the
interests of consumers. Now people are complaining no less loudly because
these sectors offer a plethora of products and services which the consumer is
hardly able to compare. Market forces on the one hand, transparency on the
With such a background it is particularly difficult to perceive what information the public needs for it to at least accept our activities. And this brings me
to my second hypothesis:
2) Acceptance of economic activity - and this includes industrial production
- is a basic conditionfor the long-term stability and success ofthis activity.
Public acceptance has become a crucial production factor for companies.
Acceptance is founded basically on two pillars: a rational one, information, and,
at a more emotional level, what one might call product benefit. If we have
learnt one thing from the economic activities of the last few years, it is that
acceptance has an emotional aspect to it. The public reacts much less rationally
than was widely assumed. Nevertheless, acceptance and information activities
are closely bound up: as a rule, it is only the well informed who are able to
accept risks or venture into the new and unknown.
But acceptance is not synonymous with blind acceptance. It means
that opportunities can be perceived behind the unfamiliar and the uncertain. It
means comparing the small risk with the enormous benefit that may ensue. But
it also means that with a constructive, critical basic attitude improvements can
be demanded and achieved that will allow the economic activity in question
to be successful. In my view, acceptance is the expression of a critical stance.
It can be attained only if the information provided is sufficient, and if people


go through life with their eyes and ears open. This is a real challenge to a company's information activities, and more particularly for the people who convey
his information - the journalists and the media in general- and for the interested
More than ever before, some bridge-building is now required. For industry
to flourish, it needs an environment in which its activities are viewed critically
yet are still regarded fundamentally as a cornerstone of our society. This means
accepting risks as well, for these will never be completely absent. But, as information recipients, the public is going to need a certain basic knowledge. And
in this connection it is regrettable when, as was recently the case in Switzerland
in the debate concerning school systems, disciplines of such key significance
for the future of our economic, ecological and social systems as the life sciences
are given such short shrift. Here we've definitely got our lines crossed.
Acceptance of industrial activity and of new technologies - such as genetic
engineering in the case of Switzerland - is an important part of a region or
country's attractiveness as a location. This acceptance, and the communication
process that goes with it, are becoming an increasingly important production
factor for companies. There are growing signs that the relationship between the
concerned public and manufacturing industry is by no means one-sided. Companies can enjoy the full benefits of their industrial activities only if they are
able to create a balance between, on the one hand, the justified demands which
are made by the public on industry and which are reflected in the political and
regulatory environment, and, on the other, industry's need for entrepreneurial
freedom, as expressed in the demands it, in turn, makes on the politicians and
the public.
Inevitably, many corporate decisions will be taken which meet with complete
rejection by special-interest groups. But what counts most is the broader picture.
The company has to ensure that it can operate in an environment that does not
flatly reject its way of doing business or manufacturing its products. This means
that both sides must be ready to talk to each other. Both sides must also be ready
to gather the information they need and use it to break down prejudice.
Acceptance must not be blind. That's why media discussion of the blessings
and risks of new technologies is so important. The public has to be well
informed. Only then can industry be guaranteed the kind of environment in
which it can prosper. This brings me to my third hypothesis:


Industry recognizes the right ofthe public to be informed and takes its needs
seriously. Public relations is a management task.

The primary, overriding task of a company is to produce and sell a product or

service that satisfies customers' needs. For economic reasons alone, therefore,
it is normal that the company should constantly work on optimizing these


products and services in terms of quality, complexity and safety of use, cost
effectiveness and satisfaction of customer needs. This changed awareness flows
through our workforce into the process at different levels - from the procurement
stage to research, production and marketing. In all these phases, critical specialists perform cross-checks to ensure that the products meet the customers'
requirements and hence are also - in the broadest sense - environmentally
Nevertheless - and in this respect all entrepreneurs are of one mind industry has to do more than simply put good products on the market. Its
business ethics have themselves become a product. It's no accident that PR
agents and corporate identity consultants are in great demand at present. But
even they are not the whole solution. For companies to be credible in the long
run, they have to practise what they preach. In their dealings with the public,
therefore, they must do more than just describe in fulsome terms - or gloss over
- their own activities; mutual trust and the acceptance this generates must not
be built up on the basis of the corporate identity.
Industry is conscious of its responsibility to its employees, neighbours and
the public at large. This awareness is expressed in specific policies such as
greater efforts in the fields of safety and environmental protection or in sensitizing and training of staff in a drive to ensure improved and honest information
Most of the measures being taken by companies are certainly not spectacular.
At this point, I could start complaining that the media are interested only in
bad news and never in good news. However, we're talking about measures
that, within the company, only feature as additional cost factors, but can create
in the general public the sense of security or insecurity that makes all the
difference between acceptance and rejection. These are measures with a genuine
impact: they represent long-term improvements in production processes and
material flows, and generally entail investments that have to be depreciated over
a number of years. They create a much greater degree of physical safety for
staff, neighbours or the environment than a single short-term, small-scale but
spectacular action would. It is therefore essential that the public should be better
informed about them.
The value of public relations is particularly appreciated in the large international companies, where they are handled with impressive professionalism. Such
companies aim at achieving a high level of acceptance by breaking down
prejudice with the help ofa steady flow of honest information and by building
up a feeling of trust through readiness to talk. For me the key words in this
process are honesty and credibility and I have already used them several
times. After all, the public has a right to information about predictable risks
and the steps being taken to reduce them. The credibility of such information
is greater if it is provided relatively early and contains all the relevant elements


needed, including the less flattering and the problematic aspects. The members
of the public are perfectly able to evaluate the information themselves. And when
they do, they are generally less likely to succumb to prejudices.
Public relations is a management task that cannot be delegated. The manager
embodies the company's strategy, and he stands for the activities and the
credibility of his company. Trust and credibility cannot - and must not - be
built up on the basis of PR concepts; they are products of the manager's
personality. In this respect, we are also satisfying the media's growing tendency
to deal in personalities rather than ideas. And now to my fourth hypothesis:

4) A company's credibility is judged by its actions, and the public has an

exceptionally long memory in this respect. The image which a company
has built up through its behaviour and good products over decades can,
in no time at all, be destroyed for years to come.
In contrast to the private individual who, as a voter, can call for policies and
practices that he's not prepared to pay for as a consumer, industry is judged both
by its words and its deeds. It is the credibility of the individual company and
of the sector as a whole that, in the final analysis, determines whether a specific
manufacturing activity is accepted or not.
The image of the different companies in an industry is blurred. For instance,
a poll conducted among you to determine Whose warehouses went up in flames
at Schweizerhalle? might produce the following answer: 20 % don't knows,
30 % Sandoz, 30 % Ciba-Geigy and 20 % Roche. What I'm trying to say here
is that, in the public mind, the fire at Sandoz and its consequences, are now
blamed on the chemical industry as a whole. Hardly any distinction is drawn
between the different member companies. An industry's image tends to be shaped
particularly by spectacular events. This is also true of the services sector.
Sweeping judgements are made that no amount of advertising or PR work can
dent. For instance, all Swiss banks go in for money-laundering - in films
it is quite normal for Mafia bosses to have a bank account in Switzerland,
regardless of the fact that other countries allow much greater anonymity of
Acceptance and the importance of the emotional dimension are also
illustrated by the railway accident that occurred at ZUrich-Altstetlen. What would
have been the reaction if the fire had been caused, say, by chemical solvents?
The actual cause was fuel, the value and necessity of which is obvious to
everybody. As a result, public debate on the accident was relatively objective.
These examples show where the particular challenges to industry lie. The
concerned public is far from presenting a united front. It is fragmented into
countless small, medium-sized and large special-interest groups. Just as the sheer
volume of information available makes it increasingly difficult for the individual


to pick out the right information, industry is also finding it harder to identifY
the true interests of the population as a whole among the diversity of professionally managed special interests.
The fifth hypothesis reflects my view that, except in the world of media,
nothing has really changed all that much:
5) A company that is aware of its responsibilities to society will always have
to reconcile the need to minimize risks with the pressures put on it to make
a profit. It must make this goal the object ofpermanent, critical scrutiny,
without being side-tracked by spectacular events.
There is nothing new about this. The importance of the industrial activity staff safety and motivation - public acceptance triangle has long been recognized, and obtaining a proper balance for it has actually been a condition of
success throughout the long history of industrial development.
In all sectors of industry, technical improvements have brought demonstrable
progress in factory safety and in reducing environmental impact. They have also
cut risks down to a minimum, with the result that most of these are now
forgotten. Besides constant upgrading in line with technological advances,
programmes have been devised to further develop these - mostly invisible but
nonetheless effective - improvements. Recent examples in the environmental
field include the ICC Charter for Sustainable Development or the chemical
industry's Responsible Care programme. Some ofthe world's biggest companies
have committed themselves formally and publicly to these programmes. They
are being implemented internationally, function properly, and really do contribute
significantly to improving the situation - often more so (political decision-makers
please take note) than the hastily drawn up laws that generate so much pUblicity.
This brings me to my closing remarks.
Economic, and more particularly industrial, activity is possible only if it
is embedded in a political and social environment that fundamentally accepts
it. For any such activity to be successful in the long term, it needs to be accomplished with, and not against, let alone despite, the pUblic. The necessary
conditions have to be created at all levels, whether in the companies themselves,
among the general public, in the media or in the political arena. Credibility and
acceptance are on-going tasks which are recognized as such, and are being
vigorously addressed, by industry. As regards the many special-interest groups
which claim to speak for the general public, we have, in my opinion, every right
to expect them to show a commitment that is cooperative as well as concerned.
After all, what motivates all of us is not the sectarian insistence on obsolete
contradictions but the desire to bring about genuine improvements in the
environment that we share. That is the particular challenge that faces management and the representatives of the concerned public alike.


Walter G. Frehner

The conflicts of interest between the tough realities of global competition

and ethical demands have increasingly become a subject of public interest over
the past few years.
As a career banker who has worked his way up from the bottom and has
held various positions over four decades in a world-scale bank, I have had more
than ample opportunity to become acquainted with these contending viewpoints
and to learn to live with them.
I very soon realized that there is no such thing as a popular banker. Strictly
speaking, bankers can be popular sometimes - for instance when they can offer
good terms for loans or investments, when they can make a successful investment proposal, or when they can lend a hand in a restructuring project. But this
popularity is short-lived. It lasts only until a competitor comes along with a
better offer, the stock market changes direction or the restructuring is successfully completed. And it extends to only part of the overall business environment
or public.
As Eastern Europe and the developing world bear witness, banks are
essential for the functioning of an economy, but in the eyes of the public they
are emphatically a necessary evil, mysterious organizations that no one really
ever understands. The individual customer, grateful for the security and efficient
service they offer, basically has great trust in them, even though he may view
some of their moves with a certain amount of suspicion. Lay people find it
difficult to understand why, for instance, Swiss Bank Corporation, a reputable
and reliable organization, would get involved in such an arcane area as derivatives; they are very surprised when their bank is involved in a huge bankruptcy
or - even worse - when they read in the newspaper that a company accused
of money laundering has an account with their own bank.
I learned a second important lesson when I was 25. In banking, you can
find professional satisfaction and maintain your integrity only if you develop
a decidedly neutral attitude to money. Money is a commodity that you deal with

P. Ulrich and C. Sarasin (eds.), Facing Public Interest, 105-111.

1995 Kluwer Academic Publishers.


like potatoes or detergent. Anyone who does not grasp that is going to find it
difficult to make rational decisions, let alone resist the temptation of a crooked
Any bank - and in particular a large universal bank - is permanently in
the public eye (and hence open to criticism) on account of its impact on the
economy and its relations with thousands upon thousands of private individuals,
small and large companies, public bodies and other banks both at home and
abroad. This criticism, as I have learned over the years, is very often expressed
in general terms and always subjectively in statements such as
- The banks are too generous in their credit policy.
- The banks always demand triple security, but when you need them, they are
not there.
- The banks are quick to help out big fish when they are in trouble, but they
let the small fry go bankrupt.
- The banks' profits are far too big.
- The banks' dividends are far too low.
Our decisions, on the other hand, are invariably very specific and tailored to
the particular case.
Many of these criticisms have remained unchanged over decades; they are
cliches that seem indelibly imprinted on people's minds. Others wax and wane
according to fashion. Six or seven years ago, everyone was talking about flight
capital, and the Swiss banks came in for some harsh criticism. Now that people
see this capital flow back into the countries from which it came as soon as
relatively stable conditions are established and they realize how important these
monies are for rebuilding economies damaged by decades of state mismanagement, critics have stopped harping on this topic. Now they are levelling different
accusations: money laundering, organized crime, bribery or insider
trading, things that were unknown in Switzerland a few years ago.
Dialogue with the public - and this is the actual core of what I have to
say - emerges from the conflicts that shape our operating environment. The
conflict that is uppermost in people's minds is that between continuity and
adaptation. Swiss banks have long symbolized stability. One reason was their
conservative way of doing business, coupled with a strong bent for banking
secrecy. This stability was underpinned by a safety net of conventions that
hobbled aggressive competition and created orderly conditions. This continuity
- which spelled security and transparent conditions for the banks' clients - was
good for business, even though many banks neglected a little of their competitive
Nowadays, the financial sector in this country is a battleground of competition. Structures are changing fast and radically. Since only the beginning
of 1992, the number of independent Swiss regional banks has decreased by 74.
But even the healthy institutions, in particular the three big banks, are adapting


to the climate of keener competition and are reorganizing their processing and
distribution networks. Change is the order of the day. The banks have to keep
pace with the prevailing economic and social trends if they want to be competitive in the long run. At the same time, however, Swiss financial institutions want
to continue to benefit from their traditional strengths such as quality services,
security, discretion and reliability.
Conflicts are also typical of the wider banking world. There is a great variety
of stakeholders whose common feature is that they are far more vocal
nowadays than used to be the case. Shareholders, employees, the media,
authorities and elected representatives, professional associations, institutions of
every kind and the public - as well as our clients - all take a growing interest
in what we are doing. They put forward their demands in an increasingly
demonstrative and assertive tone. An added difficulty is that the various groups
seldom have the same expectations and demands. The banks are expected - at
one and the same time - to protect Switzerland as a business centre, to be a
secure employer, a strong taxpayer, an attractive investment, to bail out basket
cases and act as a buffer in times of recession. Not to mention being a patron
of the arts and a sponsor. Indeed, these conflicting interests can be manifested
in one and the same person. If you have savings, you want a high interest paid
on your savings account, but as a home-owner you would like your mortgage
to be as cheap as possible. Conflicts all around us.
How do we handle these conflicts? How do we communicate our business
policy so that we can satisfY the expectations of an increasingly emancipated
and critical society? I would not bore you with strategic considerations, but I
would like to explain four basic principles that help Swiss Bank Corporation
fulfil its responsibilities towards all its many business associates and the world
at large.
First: As a company, we stand for fundamental values that go beyond
short-term profit orientation and maximization of earnings.
These fundamental values, which ensure the long-term existence of our
company and which we have laid down in our Corporate Mission Statement,
include the maintenance of our good reputation and a sense of social, public
and environmental responsibility in all our activities in the free market economy
as well as customer orientation, professionalism and strengthening of our
earnings power. It hardly need be stressed that the bank's employees play a
crucial role here. We offer progressive conditions of employment but demand
absolute integrity, honesty and commitment to our company and its goals.
You might object that these are lofty principles that may well become meaningless in the fierce competitive battle that goes on day by day. That is a risk.
However, our mission statement is a benchmark, visible throughout the bank
and known to every employee - a yardstick by which we measure ourselves


and by which we would like to be measured. We work hard to ensure that these
principles are actually put into practice.
It is in my view vital - and this is the second principle - that we actually
live by the values we preach.
What we promise the public must dovetail with what we actually do. Only
then will our company have the necessary credibility to carry on a meaningful
corporate dialogue. Now, practising what you preach is easier said than done.
It is, for instance, a simple matter - and should be obvious - to say that
everyone should comply with the legal regulations. But in a global banking
business it is far more difficult to ensure that this is actually done. Take, for
example, a deal between London and Tokyo with Spanish or Italian securities.
Without any malice aforethought, it could violate Spanish or Italian securities
laws simply because these often very complex regulations are not known in
Tokyo or London.
That is why Swiss Bank Corporation last year built up a comprehensive
compliance organization - to my knowledge the first Swiss big bank to do so.
Its main task is to ensure that all the business we conduct worldwide throughout
the company meets the legal regulations of the country in question, that our
employees abide by the strict rules forbidding insider trading and that no
transactions are conducted which could tarnish our bank's reputation. We have
appointed compliance officers at all the bank's major offices. They are headed
by the Group Compliance Officer, who reports directly to the Group Chief
Executive Officer; they are responsible for observance of the regulations and
advise our employees in legally complex transactions.
Furthermore, it needs consistent leadership from the managers, who have
to sensitize, train and monitor their people with respect to correct business behaviour. A high level of discipline is needed to ensure that our compliance intentions
are put into daily practice.
My second example is the development of a powerful risk management
unit to steer and control credit and market risks. The unit is autonomous and
operates worldwide in all spheres and with state-of-the-art teehnology. In our
own deepest interest we therefore do our utmost to ensure that customers' assets
in our keeping are handled safely and properly.
To maintain their credibility in an era of worldwide criminality and drug
money seeking to enter the market, the Swiss banks resort to tough and appropriate measures that make Switzerland unattractive for dirty money. Back in the
late 1970s, the banks signed the due diligence agreement, which came to serve
as a model for criminal law. In such cases, they are prepared to be more flexible
on the question of banking secrecy. The banks will continue to protect the private
sphere of those customers who have acquired their money legally, but they
support all efforts designed to keep away money of criminal origin or even direct
such assets to the judicial authorities.


As part of our drive to implement our ambitious objectives, we have instituted a quality control programme that enjoins our employees to set measurable
quality goals for themselves and to constantly gauge and improve their work
against this yardstick.
Despite all these efforts, we may nonetheless unwittingly once do business
with a money launderer or engage in insider trading. There are simply too many
transactions settled through us every day. Just as you cannot be sure whether
the banknotes in your wallet might not have passed through some dubious hands,
we cannot peer into the souls of our customers or our employees. We can only
be cautious and watchful and, if push comes to shove, take energetic and strong
A third basic principle on our agenda of social responsibility is our commitment to a policy of open information about our business activities.
In recent years we have developed our reporting system to meet stringent
international standards, even going beyond the requirements of the Swiss
regulatory authorities. Once again, our aim is to provide truthful information
for the public in order to promote understanding for our activities and agenda
and thereby create the climate of trust necessary for our business relations.
This means in particular reporting both positive and negative events. As
I have already mentioned, the banks are one of the key elements of Switzerland's
economy. They create and maintain tens of thousands of jobs (115'000 in
Switzerland and 8'000 abroad). They make a significant contribution to the
country's tax revenues. And they support industrial and commercial development.
Errors and mishaps are occasionally unavoidable wherever creativity, risk-taking
and innovation are called for. Swiss Bank Corporation considers it a duty to
inform the public truthfully and in an open way even about such negative events.
Our fourth and last basic principle derives from the first three: We rate
communication as an important management instrument because it shapes our
company's public image and thus can contribute to making a difference for us
between success and failure.
No chief executive can shy away from this task if he wants to lead his
company to success in the tough competitive struggle. Effective communication
starts with the acquisition of information. Every company - and a bank in
particular - has to constantly track market trends and social, political and cultural
developments and work the information up into reports that serve as an early
warning system. Managers must be willing to listen, to hear what the public
is saying and to adapt their own strategies accordingly.
From what has already been said, the banks are confronted with a permanent
need to explain their position to the public even more so than other sectors of
industry. Our business is complex and many-sided - and often difficult to
understand for the outsider. Our clients and business associates are more varied
and sometimes more exotic than those of an industrial undertaking. We offer


a big target because we make the headlines not only with our own activities
but often with those of our customers.
Realizing their vulnerability, the Swiss banks have in recent years made
great efforts at various communication levels. They have focused on improving
the public's understanding of the banks' role in the economy and general
knowledge of financial issues. Under the motto The banks show their true
face, the Swiss Bankers' Association has, periodically since 1988, been running
a series of television commercials and newspaper advertisements dealing with
the banks' activities. The banks' senior managers appear in person in these
commercials, thereby assuming responsibility for the credibility of the message.
We regularly cover current political topics such as the new Company Act, the
stock market law, taxation in the Swiss financial sector or European integration,
making a direct contribution to the public debate. Surveys have shown, incidentally, that this first-hand information is very well received by the public.
Public appearances in the press or the electronic media are also important.
Members of Executive Boards as well as specialists are popular as commentators,
interview partners for journalists or speakers at public events.
Another important step taken to foster an open and constructive dialogue
was the appointment a year ago of a Swiss bank ombudsperson. This specialist,
who is supported by a foundation and is independent of the banks, is a contact
person, source of information and intermediary for the banks' customers. He
first studies the issues submitted to him, makes his assessment from his interviews with the parties concerned and then proposes a possible solution. Even
after one year, it is clear that this service, which is free of charge to customers,
meets a genuine need and is an important contribution to fostering understanding
between the banks and the public.
Over and above these joint efforts in the banking sector, the individual
institutions have done a great deal on their own in recent years. Swiss Bank
Corporation, for instance, in 1987 centralized all its communication activities
in a unit that reports directly to the Group Chief Executive Officer. This move
was prompted by concrete experience showing that our information organization
could not cope with major communication tasks. At one time a short press
release was enough to still the curiosity of a wide variety of audiences; today
we have to gear our message to a specific target public. Swiss journalists ask
different questions from their foreign colleagues. Investors do not have the same
information needs as the representatives of small and medium-size firms. Retail
customers see things differently from shareholders, and so on.
This is where I should mention the Investor Relations unit we created at
Swiss Bank Corporation. It was an obvious step because investors and financial
analysts showed a growing thirst for knowledge, and the bank is most interested
in fostering good relations with investors. So we recruited specialists who are


responsible for contacts with this key target group and who work to constantly
improve our corporate reporting system.
The art of communication is to convey a consistent line in each and every
message over a long period of time, despite the diversity of the target groups.
Such consistency makes the company as a whole credible in the public's eyes.
Admittedly, there are no magic formulas in this field. Communication involves
a constant effort to create good relations between the company and the world
in which it exists. Sometimes it is plain sailing, sometimes not.
At any rate, with our new organization, we ensure that the information we
convey through public relations, advertising, marketing and sponsoring is
coordinated and merges into a uniform communication strategy. We realize,
after all, that we can only assert our position among the leading international
banks with a systematic and proactive communication policy, consistent messages
worldwide and a clear corporate identity.
I would not like you to come away with the impression that we put so much
emphasis on communication at Swiss Bank Corporation simply because we
would like to project the image of a clean and honest bank. This is not so. A
frank dialogue is important for us because we firmly believe that it is the best
way of achieving our commercial goals.
Today, when competition is increasingly tough, the issue is not who has
the better products and services. Our market research shows us that our clients'
basic needs include professional counselling, transparent information, discretion,
security, honesty and friendliness. Over and above this, they have hopes and
wants that go beyond banking as such: for instance, emotional well-being,
understanding, humanity and esteem.
As regards corporate dialogue, this means that we are gradually turning
away from classic communication strategies in marketing and advertising and
focusing increasingly on fostering direct relations with our many partners. We
have more than just outstanding products and services; we stand out in the
public's mind for our good ideas and ground-breaking messages. The way to
entrepreneurial success also involves the transfer of intangible products such
as counselling and of positive values such as honesty and openness.
I think I have made it clear that this way is not the easy way. It means that
we have to devote ourselves not merely to our business but to the whole world
around us. It also means we have to accept the fact that we would not be able
to satisfY all the different needs at the same time and equally well. On the other
hand, an open dialogue with our environment promotes ethical behaviour in
business life, creating in the long run a more harmonious relationship between
business and society.

Andreas Steiner


Theoretical Principles

1.1 Customer focus - ABB Switzerland's corporate policy

ABB Switzerland's corporate policy is customer focus, a policy of basing
all its activities on the needs and wishes of its customers. This truism of market
economy was radically interpreted by ABB. Up to now, both in the business
world and in environmental protection, conventional wisdom assumed that
end-of-the-pipe customer focus was enough - the main thing was to make sure
that the product or service met customer requirements. ABB's efforts go much
further than this thinking. We examine all processes - from receipt of the order
to supplying a product or taking a plant into operation - in order to assess whether they really benefit the customer. Should this not be the case, such processes
are deemed superfluous and eliminated. Quality and time management are no
longer the last in line but an integral part of the processes and thus make a major
contribution towards assuring the production of top quality products in the
shortest possible time. Quality and time, in their turn, are also customer oriented.
The customer's yardstick for quality and speed is decisive, not ABB's.
We hope that action based on this corporate policy will lead to excellent
customer relations. Indeed, after many years of cooperation in a relationship
of mutual trust with certain customers and suppliers, we hope they will develop
into strategic partnerships. In ABB we reaped the first fruits of our customer
focus policy in the form of good results even during the years of recession.

P. Ulrich and C. Sarasin (eds.), Facing Public Interest, 113-118.

1995 Kluwer Academic Publishers. Printed in the Netherlands.


1.2 Customer focus in ABB Switzerland's communication policy and its ethical
As customer focus is an overriding guiding principle, it must also playa central
role in our communication with customers. Although communication is institutionalized in our communications business area, that is not the end of it. Primarily, of course, communication is local: when an ABB buyer visits one of our
suppliers; when an ABB maintenance engineer visits a customer to service one
of our machines or to show him how to best utilize it; when the director of one
of our ABB companies negotiates with a potential customer; when an executive
holds an annual assessment meeting with his immediate subordinates. In terms
of communication, the customer can be an employee, a shareholder, a journalist,
a supplier, a politician, a business partner, or simply a member of the general
At first sight this seems to be of interest only to the communications specialist, not the ethicist. On taking a closer look, however, highly interesting ethical
implications can be deduced from the business term customer focus:
First of all there is a clear link between customer focus and communication:
In essence, communication is a dynamic expression of mutual human interest.
Real communication can only take place if a dialogue develops rather than a
monologue, a continuous exchange between the source and target parties. The
objective of customer focus in the communication policy of ABB Switzerland
is to foster such dialogue. Only through listening to the other person and
answering his questions can we arrive at a solution to his problem. And it
is at this point that ethics plays a part: a dialogue at this level can only be
achieved if I respect my partner as a person with inviolable dignify.
This highlights another link between customer focus and ethics: Only if
our dialogue is fact-based and truthful can I respect my customer and communicate with him in the long term. Fact-based means that I answer his question
correctly in technical terms, and with clarity, care and precision. Truthful means
that I reply to the best of my knowledge and belief. My reply must correspond
to the facts. Selective truths that filter out some of the related facts are not
truths. The term professional ethics sums up the idea that acting in a way
that respects facts and people is the essence of ethical behaviour: The ethics
of a medical doctor, an engineer, ajournalist, a scientist always comprise both
technical know-how and ethical integrity.
Everyone will appreciate that factuality and truthfulness are the basis for
successful communication. We all know from experience, however, that there
are stumblingblocks involved in keeping to these two criteria. In the following,
I shall confine myself to the criterion of truthfulness.


How truthful must truthfulness be? Everyone, but especially the communications specialist, has to face this question. Conflicts about truthfulness mainly
result from two sources:
- Companies must keep their business secrets. To protect themselves against
competitors they often pursue a policy of maintaining silence, particularly with
regard to such sensitive sectors as strategy, research, and contract negotiations.
- Companies want to present themselves in the best possible light. In the
conference program we say somewhat provocatively: In ABB Switzerland we
want to make statements which show who we are, so that the public will see
us as we want to be seen. Every single one of us wants to be seen to his best
advantage. To ensure this, it is not unusual to construct a Potemkin-style facade,
an illusion that does not reflect our actual condition. Companies, too, can take
recourse to such illusions. When they do, how much truth is there in the glossy
prospectuses for customers or in the brochures and documents for employees?
These two examples show that ethics is not free of conflicts. We are often
expected to choose between courses or to accept certain evils.
In the case of business secrets, the long-term well-being of the company
competes with an open, truthful information policy. As long as business secrets
are not interpreted in a narrow sense and almost everything kept secret, I believe
that an information stop in sensitive areas is justified. This need not be at the
expense of truthfulness. If the reasons given are plausible and understandable,
the public is prepared to accept that to safeguard higher interests no statement
can be made.
With regard to the image that is communicated, I believe that truthfulness
must be given precedence for ethical and for business reasons. In the long-term,
the gap between the image and the facts will come to light. Instead of pretending
to the employees, the customers or the general public, it is much more sensible
to communicate clearly that the actual and the target situation differ and to do
everything possible within the company to reach the target situation within a
given period of time. That is why the statement I quoted from the workshop
program is amplified as follows in the subsequent paragraph:
We believe that our objective is only tenable if what we are and what we
want to be are one and the same: We really are good, and that is why we
want to have a good public image. If we want to communicate this image
it must be reflected in our actions - otherwise we lose credibility.
Because actions and communication are inseparable in business, communication
in our company is a management task.



Practical Application

Now that I have explained the theoretical principles governing our communication policy, you will naturally want to know how they work in practice. In all
truth, there are satistying cases where our principles were implemented successfully, but also cases where our ethical standards were not met. Let me give you
one example of each:

2.1 Successful application: The communication process to announce the sale

of ABB lnfocom AG

In February 1993, ABB reached agreement with the French Thomson-CSF group
on the sale of ABB's activities in the communications technology business area.
In Switzerland, some 500 employees located in Turgi and Lenzburg were
affected by this decision. There were no dismissals as Thomson-CSF took over
the entire work force. From the very beginning, even before negotiations with
Thomson-CSF commenced, the personnel representatives were involved in the
discussions on the future of ABB Infocom AG and in the decision-making
How was the information passed on? ABB and Thomson-CSF agreed to
inform the employees and the public on February 10. It was agreed to maintain
silence up to that point. This is an example of a business secret as mentioned
earlier which, for a certain period of time, was of greater importance than an
open information policy.
And here I must stress for a certain period of time. February 10th saw
the coordinated information of the employees, the press and thus the general
public. The information process was governed by the following criteria:
- ABB employees had to be informed first. This is a strict principle in our company based on the respect we owe our personnel.
- Furthermore, the employees at ABB lnfocom had to be informed by word
of mouth because their need to know was greater and they had to be given the
opportunity to ask questions.
- A legal criterion was that the stock exchange in Paris opens at 10 a.m. Thomson-CSF had to make a statement at that time.
- Silence was maintained up to that point in time.
How did we keep to these criteria?
The most difficult aspect was informing 500 people in two different locations
by word of mouth. Because of the time factor and to ensure the same level of
information, it was agreed to inform the employees centrally in Baden. Until
their arrival in Baden because we had agreed to maintain silence - the employees
were not allowed to know the reason for the meeting. The middle management


of ABB lnfocom was taken to Baden by coach first, and a management information session was held in Baden at 9 a.m. Then the remaining employees were
taken to Baden. They were given the information by representatives of both
executive committees at 10.30 a.m. As soon as the employee information
sessions started, all ABB employees were informed of the events via fax and
notices. After this had been done the press release for the media was dispatched.
One day earlier, on February 9, the national, cantonal and local authorities
involved, as well as the employee and employer associations, were given the
information by phone and asked to treat it as confidential. This brought a
further aspect of customer focus to bear: relationships of mutual trust are built
up that allow the parties concerned to take each other into their confidence.
One day after the public statement, the customers of the former ABB
Infocom AG received a letter from the director giving reasons for the takeover
and assurances of continuity.
The information was disseminated as planned and, in my view, the ethical
aspects of the case (key words: respect for people, factuality, truthfulness) were
dealt with in an exemplary fashion.

2.2 Inadequate application: The communication process during the delayed

delivery of Lok 2000
Our Lok 2000 was a major leap forward from the mechanical locomotive to
the electronic one. Ifpilots of an Airbus A-320 fly by wire then, in analogy,
engine drivers of Lok 2000 drive by wire. With state-of-the-art power
electronics and asynchronous motors, the performance of the locomotive was
doubled while its size remained unchanged. Thus this locomotive serves two
applications: It is a locomotive for passenger trains with a top speed of230 km/h
and also a locomotive for goods trains with high constant traction at lower
speeds. Using the latest power electronics, energy can also be converted in the
other direction, feeding the braking energy back into the power network - and
this almost until the train has come to a standstill. A locomotive, therefore, that
can meet the highest ecological demands.
It is not surprising that this miracle of technology aroused considerable
interest. Within a very short time we received substantial orders from the Swiss
Federal Railways, the Finnish Railway Company, and for the Channel tunnel.
When series production began, however, it became apparent that this innovative
leap forward posed more problems than anticipated, namely in the drives and
control technology sectors. There were delays in delivery.
With the company's image in mind, the reaction in terms of communication
were defensive. We did not, of our own accord, put out information on the
problems arising, although this would not have been damaging in view of the


innovation involved. It was hoped that we would get things under control before
the media discovered our difficulties. In the theoretical part of this paper I said
that any facade was bound to collapse at some time. In our case it was slow
but steady erosion of credibility. In the period from July 1990 to July 1992 we
received twelve critical inquiries on Lok 2000 and its older sister destined
for Zurich's rapid transit network. Stalling tactics were used in the replies, i.e.,
not all the facts were presented. However, every partial answer from our side
provoked further inquiries. It was not until the second half of July 1992 that
an information platform was created to allow clear and comprehensive answers.
Up to August 1993 we received a further seven inquiries. Once the technical
problems with respect to the locomotive had been solved, the media showed
no further interest in this subject.

2.3 Lessons for the future

I believe that the inadequate communication in the second example is typical
for events that involve the company's image. In such cases the companies or
information officers tend to interpret the guiding principles very broadly in the
hope of getting around the worst obstacles.
How can we master such a communication situation and bring it in line
with our customer focus policy and thus our ethical principles?
First of all we should point out actively and of our own accord that problems
exist, that there is a gap between the actual situation and the target situation.
Secondly, the steps to be taken (technical measures) and the time frame
necessary to reach the target situation should be clearly stated. This illustrates
that communication is an entrepreneurial duty.
Thirdly, interim progress reports on the improvement measures should be
presented to the public from time to time. It goes without saying that such
reports must abide by the criteria of factuality and truthfulness. Only in this
way a company can earn the trust and confidence of the general public.
The aim of ethics is to make a success of life, in this case to make it
possible to communicate; conversely, information that is not fact-based can
destroy efficiency just as untruths destroy the basis for dialogue and for trust.
In some situations, it is difficult to practice what one preaches. There is good
reason for fortitude being one of the four cardinal virtues because that is what
is needed to meet ethical standards in disagreeable or alarming situations.


Gerry Wade

I worked in the corporate sector for over twenty-five years. Most of this time
was spent with IBM in the UK but I also worked in Washington DC and
Brussels. The bulk of my career was in the public affairs area. This means that
I was exposed to how a high-profile multinational company operates and was
able to observe the activities of many others.
For much of my corporate life I was active as a private individual in political
and community affairs and this provided me with an additional perspective from
which to judge the activities of my employer and indeed, made me better able
to advise it on how best to relate to public policy and the conduct of its public
This combination allowed me to develop a close interest in the relationship
between the corporate world and its stakeholders and between corporations and
public policy.
My IBM career also coincided with the development in the UK of Corporate
Community Involvement, or Corporate Social Responsibility as it was called
at the time, and I was able to playa part in the process that this went through.
As a result, I have become convinced that Corporate Community Involvement should be an integral part of a company's approach to its business and
of the need for this to be a reflection of its overall behaviour as a company.
Hence my interest in ethics.
I suppose that like many people I always assume that my belief in the need
for ethical behaviour is generally shared but I have been around long enough
to recognize that this is not the case. And it has become increasingly clear to
me that it is difficult to advocate the need for companies to behave ethically
when so many others parts of society behave in an unethical way. Ethics cannot
be considered in isolation, nor is it reasonable to suggest that it is only business
that is unethical or which has to be concerned about ethics. But one has to start
P. Ulrich and C. Sarasin (eds.), Facing Public Interest, 119-127.
1995 Kluwer Academic Publishers.


Business Ethics is the theme of this conference and in this context I have
been asked to look at business policy and corporate dialogue, and in particular
at the challenges likely to arise in the future. I would like to approach this topic
from a business perspective as someone who has worked for a major corporation
and who for the last three years has made a living from advising a broad range
of companies and organisations on their approach to public policy and public
affairs. The finn in which I am a partner is concerned with offering public affairs
research and counselling services. We are not lobbyists but help our clients to
develop and implement a strategy that will allow them to relate to the external
environment in an effective way and which recognizes the business benefits
that this can bring. We see Corporate Community Involvement as an important
part of a company's approach and we see ethics as a fundamental part of this.
I should make it clear in the presence of so many distinguished experts on
ethics, that I claim no particular expertise in the field. I am an interested observer
but I believe that my understanding of the corporate world and how it needs
to handle its external relationships provides me with a particular perspective.
I have no doubt that the issue will become more important and need greater
attention from companies. I have tried and continue to try to encourage this to
In the following I will draw on my experience of Corporate Community
Involvement and how I see this relating to public policy and corporate dialogue.
I will mention some companies who appear to be doing interesting things in
terms of recognising an ethical dimension. I will suggest ways in which I believe
the cause of ethics can be advanced in the corporate world and I will have highlighted some actions which will contribute to this.

For a couple of years I was chair of the Corporate Responsibility Group in the
UK. This is an organisation which represents most of the significant corporate
players in the CCI. At one of our annual consultations during my involvement
we had a session on ethics. The broad purpose of this was to look at the
relationship between ethics and the corporate approach to community involvement. We had great difficulty finding case studies to consider or suitable
speakers who could express the issue in business terms. The session we finally
had left the participants feeling frustrated and complaining that they had
difficulty getting their arms around the issue.
This was around five years ago but it came to mind when I started thinking
about what I would say today. I decided to seek examples of companies that
have a clear policy of communicating their stance in this area. I quickly
discovered that the examples are few. I also discovered that very little thinking
has been done in the corporate sector about the subject and that most of the


concern that exists is being expressed by consultants and most of the thinking
is being done by academics. The assumption in business appears to be that ethics
can be taken for granted. I will have more to say about these matters in due
The fact that I could not easily identify lots of examples of good practice
is instructive and it goes to the root of an issue I will address; do companies
need to have a clearly stated position on ethics, should they communicate the
fact and how active should they be in doing this?
Let me return to the point about not being able to get one's arms around
the issue and the difficulty of having a definition suitable for businesspeople.
Part of the solution here must be to persuade the serious press, especially the
financial press, to take an interest in the subject and to leave treating it in a
flippant manner until it is better established. An example of what I mean
appeared in a recent edition of the Financial Times. This carried a diary item
about a conversation between a son and his father.
The son asks: Dad, what is Business Ethics? The father replies: That's
tricky but I will give you an example. Suppose someone comes into our shop
and spends five pounds and hands me in error two five pound notes stuck
together. Do I tell your mother? This is amusing but it does not advance
understanding of the issue.
When my partners and I started our firm, one of the first things we did was
to prepare a charter spelling out how we would conduct ourselves and treat our
clients. This included a reference to behaving in accordance with the highest
ethical and legal standards. It is interesting that we did not debate what we meant
by this phrase. We took for granted the fact that we knew what the three of
us meant by highest ethical standards. In practice we have found that there have
been occasions when we have had to debate the principle in the context of
particular business situations. It also illustrates the fact that the introduction of
an ethical policy, as a friend at the Co-Operative Bank said to me, is not easy
to operate.
The central question that has to be asked is: why should companies bother?
If one looks at business policy and corporate dialogue in the context of public
policy development and image management, one has to focus on the role played
by the stakeholders. It has to be recognized that these vary in their ability to
reward or to punish a company. They all have one thing in common, they each
form what could be regarded as a constituency. Question: Does ethics have a
It has to be said that the ethics of some stakeholders can be open to
question. For example, consider those politicians - who are part of the community - who shelter behind the letter of the law when their commitment to the
principle of ethical behaviour is queried. We had an example recently in the
UK when it was alleged that members of parliament were prepared to table


questions to be answered by ministers in exchange for payment of cash. When

challenged, part of the defence erected on their behalf was that their behaviour
was not illegal.
Is the business community a possible constituency? Well, we have to
recognize that there is a reluctance on the part of companies to criticize the
approach to ethics of other companies.
I had an interesting experience earlier this year when as part of a syndicated
Corporate Community Involvement study we did we invited the participating
companies to comment on the approach of the other companies in the study.
By request we included a question on ethics in order to establish if any distinction was seen between their behaviour in the community and their overall
approach to business. Companies were extremely uncomfortable about answering
this question saying that in most cases they were not in a position to judge other
companies. By the same token, chief executives are usually prepared to say that
company X does not care about the community but they will not extend this
to suggesting that a company might be unethical.
It appears that ethics, like sex and politics, is something you do not discuss
in front of the children.
I believe that looking at how Corporate Community Involvement has
developed could provide some answers. It has moved from being nice to do
- to should do - to must do. I believe that it is now becoming an integral part
of the behaviour of most good companies, at least in the UK, for I know that
the subject is still feeling its way in many other European countries.
There have been different reasons for this development. In many instances
it has been driven by the core beliefs of the company, especially in recognising
that it is possible to make a meaningful contribution to addressing some of the
social consequences of the recession or corporate restructuring. Sometimes it
has been driven by a crisis and the need to improve public relations. What is
becoming increasingly clear is that a focus on policy issues is becoming a major
driver, especially as the traditional boundaries between government and the other
sectors of society are being redrawn throughout Europe.
I would like to develop this point about changing boundaries because I
believe it has important implications for our topic. What I see happening is a
general questioning of the ability of government to provide all of the services
in the ways in which it has traditionally done so. In the UK this development
is attributed to Baroness Thatcher but there is little doubt that, whoever started
the debate, it is now widespread and government around the world is seeking
a clarification of its role. This is leading to changes in the ways in which public
services are delivered and sectors, including the charity or not-for-profit, are
assuming responsibilities formerly the direct responsibility of government. The
corporate sector is also being invited to assume some of these responsibilities.


I believe that an interesting consequence of this development is that it

highlights the issue of accountability. People believe that government is there
to serve them and in a democracy they can eject politicians they think are not
doing what they should be doing. They believe that government, or to be more
precise the individuals who give it policy direction, are accountable to them
through the ballot box. This is not the case with companies, and as they move
into areas formerly the preserve of government, people will become more
interested in the philosophy that lies behind what they do. This will become
more necessary as companies get more exposed to social and political problems
which they were able to leave to government in the past. I believe that this
development will strengthen the need for companies to have a clear statement
of its approach to ethics and to be prepared to communicate it.

Leaving this point aside for the moment, let us consider what it is that encourages a company to adopt a policy on ethics. Often it is the same beliefs that
results in an active approach to Corporate Community Involvement but sometimes it is the result of bad publicity, such as the example of British Airways
developing guidelines for its employees after being accused ofindulging in dirty
tricks against Virgin Airlines. But it can also be driven by the threat of legislation or the application of existing law. It could be argued that it was recognition
of the actions that could be taken under anti-trust laws that encouraged many
american companies to adopt codes of good business practice. They just could
not afford to fall foul of the law and they had to ensure that their employees
did not cause them to do so.
This focus in the USA on business conduct was particularly strong during
the 1970s and one of the key organisations involved was the business roundtable
- the BRT - which consisted of the CEOs of the biggest companies. A study
conducted by the BRT at that time reported on a recognition that ethics had
to be the responsibility of the CEO, that it was important to have written
guidelines and that these guidelines should indicate the penalties that would
be imposed if they were disregarded.
I well remember that when I worked for IBM I was required to confirm
in writing each year that I was familiar with the contents of the company's
business conduct guidelines and to acknowledge the fact that any failure on my
part to abide by them would lead to my separation from the company. This
was company speak but the meaning of the phrase was absolutely clear - it
meant that I would be fired.
This point about penalties is extremely important. Any ethics policy or
statement is worthless unless it can bite. But there is another important message
from the BRT's work - and that is the need for leadership from the top.


But back to Corporate Community Involvement. Many of the best companies

in the CCI field recognize an ethical or moral dimension to their involvement
in the community and this is being strengthened, not weakened by the growing
recognition that it also makes business sense. If it makes business sense, the
market can reward or punish - it can bite.
It is striking that many companies who have an ethics policy do little to
communicate the fact. Perhaps the recent experience of The Body Shop explains
why they are so reticent. I do not intend to say much about that company but
I will make some personal observations below about what has been going on
and what it means. Let me confine myself at this point to saying that I believe
that it is not only The Body Shop that has been under scrutiny in recent weeks
but the cause of ethics.
I believe that for companies to have a policy on ethics there has to be
pressure from stakeholders. A key question is, can this pressure be used to
ensure that ethics have a constituency? By this I mean a group of individuals
or organisations to whom a company must appeal for support or approval, just
as politicians must persuade the voters that they should be allowed to remain
in office. Clearly investors could playa major role here and a key channel to
them are investment analysts and advisers. I recognize the growth in firms
specialising in promoting and handling ethical investment but these are just
scratching at the surface of the problem. It is the profession as a whole that
needs to take an interest and my limited experience of this group is that they
are not prepared to do so beyond reacting negatively when a company hits a
problem which depresses its value. It is only when these individuals challenge
companies on their ethical stance during financial briefmgs that things will begin
to happen.

One company that has found a constituency is the Co-Operative Bank in the
UK. It adopted a policy on ethics after consulting its customers. At the end of
the day these are the people who can force a company to act - these are people
who can bite. The Co-Operative Bank is an interesting case study. It decided
that it would use its stance on ethics as a marketing tool and it has done so in
an energetic way. As I mentioned, it developed its policy in consultation with
its customers. It sent a draft policy statement to 30'000 of them. 84 % of these
believed that it was a good thing for the bank to have a clear ethical policy.
Only 5 % felt that ethics had nothing to do with banking and 78 % endorsed
the draft statement as a whole. The result is a twelve point statement which
reflects its customers concerns about such issues as the environment, human
rights and the exploitation of animals. Too many of you are probably familiar
with this policy but what I would like to concentrate on is the process the bank


used. In involving its customers it created a constituency and one which it

undertakes to continue to involve on a regular basis in reviewing the policy.
The Co-Operative Bank is also an interesting example because of the
energetic way in which it has gone about communicating its commitment. In
addition to a range of publications, including an ethics pack for students it wishes
to attract as customers, ithas done some advertising on television. This profile
resulted in a complaint being tabled with the UK's Advertising Standards
Authority by the UK Cosmetics Association. The association argued that the
bank's ethical advertising and literature were unfair and misleading. The bank
had highlighted its commitment not to do business with companies which tested
cosmetics on animals. This complaint and another lodged by the Chemical
Industries Association and BASF were rejected by the authority.
These developments show that if you are going to adopt a high profile on
ethics, you have to be prepared to protect your position when challenged, for
challenged you will be.
It is important to acknowledge that the Co-Operative Bank is not in the
same situation as most banks, for it does not have to worry about an army of
shareholders or even investment analysts. The environment in which major banks
have to operate is much more complex. It has involved its customers and it does
not seek to hide the fact that it seeks a marketing benefit from what it is doing,
while at the same time passionately expressing the principles of the policy it
has adopted. The fact that it is in a unique position allows it to pioneer in a
way that it is difficult for other banks and companies to do, and perhaps, for
that reason, it and others should be encouraged to continue doing so!
It is possible for the bank to measure the impact that the policy has on its
business. Yesterday, for example, it published its latest half-yearly results which
according to the London Times showed that ethical banking and aggressive
marketing helped it to overcome a sharp fall in dealing income and to report
an increase in pre-tax profits.
But the interesting challenge it faces is to see if, in due course, it is able
to measure the impact its policy has on society. There is one aspect of the latter
that is beginning to show. I understand that when employees ofthe bank now
introduce themselves the response sometimes is: So you are from the Co-Op
Bank - well I had better watch my ethics!
As you will have noticed, the Co-Operative Bank has discovered that you
have to be ready to protect your position. Professor Peter Puzan has made me
aware of a bank in Denmark which I believe has acknowledged another need
and that is to communicate on the implementation of your policy in a frank and
open fashion. The SBN's ethical accounting statement is most impressive. Its
opening few lines took my breath away. These read The financial accounting
statement for 1993 was satisfactory, but the ethical accounting statement showed
that we made heavy demands of our staff. Recent hard times have perhaps


caused us - briefly and unconsciously - to tone down the basic values of the
It is when most companies feel confident enough to make such a statement,
whether in its annual report or in a separate social report that we will know
that the importance of ethics has finally been recognized.
One company that has without doubt established a strong position as an
ethical enterprise is The Body Shop and I am sure that all of you are aware of
the details of the problems it has recently faced. These have represented a
challenge to its integrity and, I believe, could have serious consequences for
the cause of ethics.
I do not intend to go into the details of the case and I have not had the
opportunity of seeing the document the company prepared in response to the
various allegations made against it but I have closely followed the story as it
developed in the UK press. We need to identity what lessons there are to be
learned from The Body Shop's experience. Based on my reading of newspapers,
I would like to share with you some of my impressions.
My overall impression is that they have reinforced the Co-Operative Bank
message that you have to be prepared to fight to protect your reputation. It is
also clear that you cannot rely on people to accept at face value what you say,
and that there has to be a sustained, well planned communications effort that
addresses all significant audiences, especially the media, and does not forget
the rest of the business community. It is striking that heavyweight business
leaders were not prominent in coming to the defence of The Body Shop.
The tone of this effort has to be appropriate to the audience. I was struck
by the personal nature of some of the comments I saw reported. For example,
an enlightened Sunday newspaper reported that the attacks on the company had
delighted some city stockbrokers who have long been irritated by what they
see as the sanctimonious stance adopted by the company's founders. In the
financial times a columnist admitted I long for the <holier-than-thou> Anita
Roddick and her touchy husband Gordon to be taken down a peg or two.
I quote these rather personal comments, not to embarrass Mr and Mrs
Roddick and their company, but to underline the kind of response there can be
when adopting a high profile in this area. The interesting thing about these
comments is that they appeared in articles that were generally supportive of
the company.
I have mentioned two UK companies which provide interesting examples
of the importance of ownership and culture to approaching ethics. The Co-Operative Bank is owned by the Co-Operative Movement and The Body Shop, started
by the Roddicks, is now a public company. Both seek to gain competitive edge
from their activities but I think it is essential that, in order to persuade other
companies to adopt an active approach to ethics, The Body Shop must overcome
its current problems - the signs are that it is doing so.


In order to further the cause of Business Ethics, I believe there are two important
The first is for all of us to ensure that those companies who are prepared
to adopt an active ethical stance get recognition for what they do.
There are many examples to quote in addition to the Co-Operative and SBN
banks and The Body Shop - in the UK there is Northern Foods and its focus
on fair play, Traidcraft with its focus on trade on fair terms and let's not forget
some ofthe larger companies like Marks and Spencer, who most people would
regard as highly ethical, but who do not seek to exploit this. There are many
other examples of good companies in the UK and elsewhere - C&A and Levi
Strauss with their focus on suppliers and business partners, Timberland and its
let's stamp out racism campaign and Stena Line with its advocacy ofmulticulturalism. These and many other companies are trying - and deserve our support.
The second requirement is to recognize that there is no such thing as perfection, certainly not in the field of ethics, and to reject any suggestion that it can
easily be achieved. Let me conclude by summarizing as follows:
- The successful pursuit of Business Ethics requires an articulation of the
business advantages. This should not be left to academics but needs to become
an integral part ofthe focus of business associations - the issue must be moved
from the classroom to the boardroom.
- It requires leadership and commitment from business, and community leadership, and we all form part of this.
- And it requires recognition on the part of its advocates, especially those in
business, that if you put your head above the parapet you must expect to get
it shot at!





Maya Doetzkies

Two Preliminary Warnings

1. In this short paper, it will be impossible to differentiate all points as much
as it would actually be necessary. For example, I am going to tell about
economy, knowing that it does not exist as such a monolithic block. As well,
I am going to talk about NGO's (Non-Governmental Organizations), knowing
that those cannot be reduced to a common denominator either.
2. It may be that we do not understand each other. By this, I am less referring
to a possible incompatibility of perspectives - this may be the case as well,
though - but more to a misunderstanding due to the fact that we, though of the
same tongue, speak different languages. I would like to illustrate this by means
of a few terms:
- Health: When a business manager speaks of a healthy corporation he
means black figures, growth, profit. But this self-appointed healthy corporation
might produce toxic wastes or poisons which could make people and the
environment ill.
- Growth: Imagine a beautiful big forest. For a member of the timber industry
it means growth when the forest is cut down. If nothing happens to the forest,
for the entrepreneur that is not growth. Such a growth the entrepreneur is
referring to may lead to the situation that one day nothing at all will grow
anymore. Numerous examples may be found in countries with tropical rain
- Responsibility: The operator of a nuclear power plant says that he would
accept responsibility for his plant. But all he can do is accept responsibility for
his more or less adjusted balance sheet. What his plant can do to the environment
he can take on no responsibility for. Radioactive waste, produced by the nuclear
power plant, is going to radiate and threaten people for thousands of years, long
after the operators themselves will be dead.

P. Ulrich and C. Sarasin (eds.). Facing Public Interest. 131-135.

1995 Kluwer Academic Publishers.


- Managers of a tools factory distribute to the press that they have to release
(in German: freistellen) 70 of their staff from their tasks during a reorganization procedure. What they mean is simply that they are going to give 70
people the sack.
Result: In everyday language, terms like health, growth, responsibility,
discharge, etc., are positively connoted. They embody values that are in demand,
desirable, should be aspired to. Economy needs and abuses such terms within
totally different circumstances without making this transparent. This makes
people insecure and causes distrust, as it is never clear what entrepreneurs
actually mean.
Please, don't think that this is mere hair-splitting. It is far more, as it is one
of the explanations why small organizations like the Berne Declaration can
challenge big, financially powerful, influential and mighty corporations at all.
It is because there is a great number of people behind us whose language we
talk, who understand us and who are understood by us. When we use terms
like responsibility or health, we do mean what these words denote.
The potential of our sponsors, members, and supporters is one thing - but
what is of equal importance is our orientation which, in its entirety, proves to
be more life-adequate. We think holistically, because we are not inclined towards
individual, one-sided, egotistical business interests. We have the liberty to
mentally transgress borders, feasibilities and conditions. We have the freedom
to ask questions which would rock others in their very existence in case they
would ask themselves the same. But this, however, is a fundamentally human
trait - as people are holistic beings, not only work force, productive factor.
Humans know about and want a life apart from budgets and balance sheets.
If we small organizations challenge and criticize large corporations, then
it is not from joy of denouncing someone, but out of a responsibility stemming
from this holistic perspective. We consider life as a totality, consisting of many
factors which are weighted differently by us than by entrepreneurs. Profit
maximization is not our foremost aim. Social, ecological and cultural dimensions
are equally important. Terms like justice, equality, fairness, decency, humanity,
holism are not empty shells for us, but values to be striving for. So, when again
and again we stand up for something, it is for the reason that we want proportions to be restored. And today the proportions are distorted - in the sense that
economy, trade, markets, growth have all become so important that basic values
have been dropped out of sight. Many think that it is normal, a matter of course,
that our daily strive is first and foremost for money, that the environment is
being sacrificed for profit, that 800 million people are undernourished (because
the others use up too many resources), that future generations will have to
confront a heavily damaged planet.


To Support This, Three Quotations

The engine of economy is egoism, Marion Grafin D6nhoffwrote in the newspaper Die Zeit. Hans Christoph Binswanger, professor of economics in St.
Gallen, calls the economy insatiable in the sense of exponential growth that
goes along with using up natural resources. He says:
The origin of the ecological crisis lies in the inability to determine and
to respect necessary limits for an economic utilization of the world.
Anita Roddick, the founder of The Body Shop, says:
It has always disturbed me terribly that most of the corporations, no matter
whether big or small, operate in total insulation from their immediate
surroundings. I think this is outrageous. I think it is totally immoral of a
corporation to do its business in the middle of a community, to draw money
from this community, but otherwise totally ignore the existence of it, as
well as its needs and problems.
Weare living in a time in which such entrepreneurial egotism is causing lasting
and irreparable damages. Let's take, for example, the thinning ofthe ozone layer.
Already in the seventies, environmental organizations warned against the use
ofFCCH and the threat to the ozone layer that is linked to it. FCCH producers
denied this, using the argument that scientifically definitive evidence was lacking.
When such evidence became apparent in the eighties, when over the Antarctic
the ozone layer showed a considerable hole during the Winter months, the
entrepreneurs blocked off an immediate exit from the FCCH production, because,
as they said, their businesses couldn't possibly be reorganized so fast. Finally,
after strenuous struggle, the exit was fixed to the end of 1995 in the Montreal
Protocol. Apparently, the corporations couldn't possibly be expected to do this
any earlier. But what could be expected of thousands of men and women - and
animals, by the way - was to take the risk of an illness of the retina or of skin
cancer - possible consequences of UV -radiation entering the atmosphere
NGO's understand themselves neither as dreary moralists nor as controllers
or as the police. We only have a different, rather more independent, perspective
and can afford to regard body, soul and mind as of equal importance. We can
equally afford to stand up for values that have no economic price: well-being,
health of nature, freedom and justice, partnership. Or, to put it differently: we
do not regard the female Kenyan textile worker as a lowest-cost worker, but
as a partner who we want to start a fair partnership with. And for a fair price,


Slowly, slowly! you will probably say. We representatives of the economy

do also support these basic principles. Okay. I'll even believe you. But this again
touches upon the problem oflanguage: the economy's ethical principles are formulated and fought for verbally - but every time when it comes down to brass
tacks, entrepreneurs move back to hide behind their loquaciously written standards. Examples? They are legion - from the dislocation of production to low-cost
countries to the categorical refusal of any eco-tax., from the efforts to patent
a living being to the production of toxic wastes , and so on.
There are indeed beginnings that give cause to expect changes, as e.g. formulated by the Business Council for Sustainable Development at the occasion
of the Unced in 1992. However, how serious entrepreneurs are about this
change of course, they still have to prove. And they are only going to do that
under pressure. Pressure that must come from the outside, from the public.
As individual organizations we may be small. As a network, though, we
are powerful. In Switzerland, environmental and development organizations all
in all count one million members (of about 7 million inhabitants). This is an
enormous potential. And from this, and this is meant as an invitation to you,
you should profit. The economy has participated in causing the global problems
of our time, such as changes in climates, hunger of millions, decrease in the
variety of species, etc. Thus it has the special duty to participate in finding
solutions as well. But this means that such egotistic thinking, as Grafin Donhoff
has formulated, must be set aside. It must be replaced with the active demonstration that the economy is part of the community, as Anita Roddick put it.

From the Above I Deduce the Following Theses

1. The economy abuses positively connoted terms and values in order to veil
negative circumstances. This causes distrust instead of transparency. Independent
organizations, therefore, have set it as their task to speak in plain English and
to translate what is really meant.
2. The economy has to detach itself from the dictatorship of profit maximization
and has to behave more responsibly as part of the community. Independent
organizations with their holistic perspective could be mirrors and sparring
partners for them.
3. The economy is insatiable in the sense of an exponential growth. We cannot
afford growth at the expense of nature anymore. Independent organizations are
regulatives; they point to limits and abuses and, through concrete suggestions
for solutions, they initiate impulses for a change in direction.


4. To a considerable part, the economy is one of the causes of global problems.

Thus it is specially challenged to participate in finding solutions. Independent
organizations are fruitful opposites to talk to, as they strive for holism instead
of representing individual interests.
5. We are living in a time in which global problems make the cooperation of
all forces necessary. Economy, politics, and independent organizations are asked
to enter into a new dialogue to take up the challenges together.

Walter G. Pielken

According to the dictionary, ethics is the moral philosophy and systematic study
of the nature of value concepts such as good, bad, wright or wrong, and of the
general principles which justify us to apply them to any human activity. It is
therefore a dynamic process. What was considered ethical, good behaviour some
decades ago may not any longer be so today. Once juvenile work was as
acceptable as discharging waste into rivers. Today, both are unacceptable.
Although there are economists who continue to believe that the business
of business is only business, this attitude is changing. Today, corporate
responsibility to society goes over and above mere business. In fact, a corporation acting irresponsibly in society may lose customers and markets because
the media will make sure to forge a hostile opinion among the public against
this company. The moral philosophy called ethics has reached the corporate

From Issues Management to Ethics

For decades, business has kept moving more and more into the centre of public
scrutiny and scepticism. The side-effects of the German Contergan drug, the
Seveso spill and the Bhopal disaster concentrated the public's limelight at first
on the chemical and pharmaceutical sector. Today, banking is scrutinized for
drug laundering, agriculture for battery keeping of animals, the food industry
for additives in processed food products.
When Ralph Nader, the US consumer advocate, whose professional associates were known as Nader's Raiders, published in 1965 his book Unsafe
at any Speed, consumerism was born. His institutions were non-profit research
P. Ulrich and C. Sarasin (eds.), Facing Public Interest, 137-148.
1995 Kluwer Academic Publishers.


associations with names such as Public Interest Research Group or Project for
Corporate Responsibility.
The public relations profession picked up the gauntlet. It coined at that time
the term Issues Management, i.e., the early warning system designed to alert
top corporate officers on trends and tendencies to watch. But issues management
was rather a reactive tool in that it tried to preempt developments and advise
on defensive actions.
Europe's greater social-mindedness, the ideas of worker co-determination
creeping into boardrooms (one of the fiercest representatives of co-determination
was the German industrialist Philip Rosenthal) soon shaped what PR people
would call public affairs, i.e., the foreign ministry function of corporations.
This function is rather more proactive than issues management in that it
shapes the relations with the political bodies of a given society. It does deal
with racism, equal pay for men and women in the same position, with environmental affairs, i.e. in short: with matters of prime interest in each society.
The moral philosophy of corporate ethics, therefore, might be defined as
a cooperative, open attitude to matters of public concern, as dialogue communication rather than unidirectional information.
Dialogue communication is, first and foremost, at the root of any responsible, credible communication effort. It means listening to the audience before
speaking. This is of particular importance in crisis situations. Exxon did not
listen when trying to minimise the Alaskan disaster. Johnson & Johnson did
listen when the Tylenol tampering occurred. In both cases the corporate reputation was at stake, the reputation of responsible industrial actors in the worldwide
economy. The cost to the company of the Exxon Valdez disaster today runs
into billions of US-dollars. Johnson & Johnson is as respected as before the

Listening in Crisis Situations

Understanding psychologically what happens when disaster strikes is the key

to good communications. Usually, the mind is shocked when a fire or blowout
occurs. People are struck by uncertainty and fears. Such incidents are perceived
emotionally. And only emotional communication expressing compassion and
the honest concern have a chance to be accepted.
Immediate information in very simple terms addressing the fears of any
audience is likely to dissipate anxiety. The order is: tell everythingfast andjirst.
If one doesn't, someone else will, and that could be the frustrated employee,
the dissatisfied customer or supplier. The worst that could happen is to hesitate,
to say no comment, to deny a fact that will eventually tum up to be true.


When a crisis occurs, the victims are obviously the first ones concerned,
immediately followed by the employees of the company suffering from it.
According to the saying that public relations begins at home, internal audiences will have absolute priority over external ones. Because of the fact that
employees can be your best (or worst) ambassador.

The Importance of the Media

The media are second in importance. They have come to consider themselves
as the watch-dogs of society. Investigative journalism emerged a long time
before, and reached new peaks with the Watergate scandal in the United States.
Ever since, the media have developed a suspicious attitude not only to politics,
but also to business. The media's deep-rooted scepticism about corporate
anonymity and bigness was strengthened by past cover-ups, unnecessary secrecy,
untruthfulness of statements uncovered by journalists, pretentious officialese
in self-glorifYing statements, unexplained modem technology and its impact
in society.
The seven most common mistakes during crises are: silence, no comment
answers, hesitation, defensiveness, understatement, logical and rational facts
and figures, as well as acting on good faith.

How Do the Media Work?

At the breaking of a crisis the company affected has the choice between waiting
for the media to enquire or to call them in the first place. While the first attitude
is reactive, the second is proactive and demonstrates the determination of a
company to be candid and open to the public.
As the Hoechst case shows, companies are advised to make sure that they
know the extent of a crisis at the beginning. Letting the news out with salami
tactics only produces distrust and the suspicion that there is more to come.
As journalists are paid to produce their story at once, they work under
tremendous pressure. They have no time to wait until the author of a crisis has
put together the details. Planning for crises is the only solution to the problem.


Planning for Crisis Management

With the checklist on crisis management planning in the appendix it should be

easy to plan for the worst case. Prior to any emergency communication it is,
however, necessary to develop a positive attitude towards crisis management.
Because crises are productive situations once we remove the after-taste of
disaster, as Max Frisch says. Bringing the organisation's performance into line
with public expectation means to build credibility through a succession of
responsible acts before a crisis breaks.
Companies are advised to create lean crisis management teams acceptable
to internal audiences to include not more than seven representatives from safety
and accident prevention, marketing/sales, research and development, plant
management, legal, financial and aUditing, public relations and personnel. Within
this crisis management team spokespersons have to be appointed and each
member should have a deputy.
The company then proceeds to cataloguing potential crisis situations,
devising prevention policies and planning strategies for dealing with each
potential crisis. The task force will appoint crisis control and risk control teams,
identifY what and who will be affected by any given crisis and establish
communications channels to minimise damage to the corporate reputation.
Of paramount importance is to put the plan in writing including the names,
private and business addresses, phone numbers of emergency services, the crisis
management team and their deputies, the spokesperson and his or her deputy
as well as the up-to-date media list.

Anticipated Background Information

When the incident or accident actually occurs, tension explodes and everyone
is swamped by requests for information. The New York World Trade Center
bombing on February 28, 1993, was followed by 7.30 a.m. planning sessions
and mid-morning press-conferences every day, seven days a week for six weeks,
beginning in the morning after the blast. Or to take another example: When
Schweizerhalle caught fire just after 1.15 a.m., Japanese TV-crews were
knocking at the door of Sandoz two hours later.
It is a fallacy to believe that even the fastest PR department will be able
to develop appropriate answers from scratch on what is burning, who was kidnapped, or what type of poisonous waste was pumped into a river. For crises
involving products, substances, raw materials or production processes, but also
involving top management or plant installations, the following documentation
can easily be prepared in advance: description ofproduct(s), of substances used


including their potential hazards, their interaction with other substances, with
water, fire extinguishing foam or powder, toxicity, environmental danger, etc.
Prepared in advance for just in case can be the description of production
processes, backgrounders on the company, biographies and pictures of general
management personnel, crisis management team, spokesperson. This material
would include situation maps to be handed out to the media.
When the Sandoz's warehouse went up in flames, nobody knew what was
actually burning and how the products reacted with each other, with water and
finally with the river Rhine. Ciba-Geigy learned a lesson in that in late 1993
they published a register of every hazard that exists in its Basle industrial

It Has Happened: What Next?

Once the accident or incident breaks loose, the crisis management team is called
to meet within the shortest possible time. It assesses the gravity of the incident
and decides, ifthe case is serious, to establish a staff and emergency press centre
for incoming calls (around the clock, if necessary) and hands out instructions
to switchboard operators on who answers what. The centre then establishes an
emergency press room for briefings, insures that the spokes-person(s) and
deputy(s) are on duty and arranges for a quiet room for editorial services. Parallel
to these preparations the centre will assemble the updated background information and have a holding-statement ready.
At major disasters it faxes the announcement of a press briefing to the
media, to alleviate pressure from incoming press requests. And the media will
appreciate the prospect of being informed first hand.
Before meeting the press, the company informs its own personnel and other
key players (i.g. trade unions, government officials, etc.).
An important parallel activity of the crisis management centre is to monitor
carefully the media, particularly radio and TV, as they are the fastest in reporting. As and when biased or wrong statements are reported, the spokes-person
in charge of the media can issue rectifying statements before the written media
pick them up. It is here that the dialogue approach may come to full fruition.
This approach should also be observed when the media ask a question which
needs research. Since mostly there are no silly questions but only silly answers,
the longer a journalist must wait to get the answer, the more suspicious he
becomes regarding the declared openness of the corporation.


Summing Up

Ethical, responsible behaviour of companies in today's global village require

a constant effort of dialoguing with the directly and indirectly involved groups
a corporation is targeting. The best technical gimmicks or electronic superhighways cannot divert from the fact that dialogue communications in our sense
involves human beings. And that any crisis is also a communication crisis.
The Economist wrote in its January 31,1987 issue: Every firm, no matter
how small or benevolent, has its share of malcontents. The one thing that can
be guaranteed in a crisis is that information will somehow be leaked to the press.
If the firm refuses to talk, journalists will find other sources of gossip. It is
therefore far better:
- to be absolutely frank,
- to centralise the flow of information,
- to plan for the worst,
to address all audiences,
to be prepared beforehand,
to be proactive, not reactive.




Case Histories

Case No 1: Remington Razors

In the mid-seventies quality control in a French electric shaver factory of the
then Sperry Remington Corporation had developed a dangerous zeal: they wanted
to remove blemishes from the plastic housing of the shaver's motor by using
a fine copper-wire brush. During the cleaning operation, the brush could lose
a hair-fine piece of the copper wire. If it were not removed from the shaver,
the user could suffer from an electrical shock that might even be fatal.
At the discovery, the management of Remington decided to recall all 90'000
shavers carrying a specific serial number, although not a single complaint had
been received by the company. During a media and advertising campaign,
owners of the shaver carrying the appropriate serial number were either refunded
or given another shaver in exchange.
Although the recall operation may have cost Remington around 1 million
dollars, the benefit of an ethical policy emphasizing the customer's safety and
well-being is more than worth the expense.
Source: Howard Abbott: Managing Product Recall. London: Pitman 1991.

Case No 2: Tylenol
Until September 28,1982, Johnson & Johnson had a 35 % share of the US overthe-counter analgesic market. Its product, Tylenol, had $ 450 million of annual
sales and contributed 15 % to the company's profits.
On September 29 and 30, 1982, the news spread that 3 people had died
from cyanide poisoning, after taking the tablets in various parts of the US. In
subsequent news reports the figure went up to 250, finally to 2'500 casualties.
Johnson & Johnson adopted the worst possible scenario approach, and lost
little time in recalling millions of bottles ofTylenol capsules. Reportedly it spent
half a million dollars warning doctors, hospitals and distributors of the possible
After testing eight million tablets the company found that no more than
75 boxes, all from one batch, had been contaminated killing 7 people. Instead
of limiting the recall to the Chicago area, it chose to take a large loss rather
than expose anyone to further risk. It acted against the advice of the State of


Illinois, but in favour of a public relations consultant and recalled all Tylenol
boxes on the US market.
Johnson & Johnson considered the criminal tampering of one of its products
as a marketing chance. Within weeks it had developed a tamper-proof packaging
and was back on the shelves with Tylenol.
It had realized that the company's reputation had been at stake. A major
crisis like this one, perceived mismanagement of the aftermath, and the failure
to communicate effectively during and after the crisis, can destroy a reputation
built during may years, in a matter of days, even hours.
Source: Michael Regester: Crisis Management. London 1987.

Case No 3: Edmond Safra

Descendant of a highly conservative Lebanese banking dynasty and one of the
world's richest private bankers, Edmond Safra had built his Trade Development
Bank into one of Geneva's most prestigious private banks. In early 1983, he
sold the Geneva Bank to American Express for $ 550 millions while keeping
his US Bank, Republic National Bank of New York.
On the Board of American Express he realized two years later the extreme
cultural shock between his own ultra-conservative banking philosophy and that
of Amexco. He decided to buy back part of what he had sold to Amexco. When
signing the deal, he committed himself not to open another bank in Switzerland
before March 1st, 1988.
On March 1st, 1988, he opened Safra Republic in Geneva after he had
inaugurated before smaller banking units in Paris, London, Luxembourg, Jersey
and Gibraltar. Former TDB employees and clients who had been sold to
Amexco came back to the bank of a man whose discretion, iron investment
principles and conservatism are beyond any doubt.
Suddenly, in early 1988, press articles appeared in Europe and Latin America
accusing Edmond Safra of being involved in the Iran-Contra affair and in
narcodollar trafficking. Public Relations agencies and detectives in the US and
in Europe investigated possible sources of the news. The media carrying the
news ranged from ultra right wing and anti-semitic (Minute in Paris) over
credible left-wing (Mexican magazine) to run-of-the-mill daily publications (La
depeche du Midi of Toulouse).
The resulting international media storm against Safra (the Swiss-French
TV devoted a full hour, prime time feature report in Temps present to the
case) caused a serious drop of the Safra Republic shares. In addition, the banker
and his colleagues knew their client reactions: No conservative, high net-worth
individual would deposit his funds with a bank involved in illegal trafficking.


It took year-long investigations by detectives and sheer coincidence to find

out that Amexco's PR department had planted the rumour to discredit Safra
publicly in order to stop the client and management drain at IDB. It was a
period of stagnating stock quotations and tremendous personal hardship for
Edmond Safra. It ended with an $ 8 million damage payment by American
Express to charitable organisations chosen by Safra and widely publicized, and
with an enormous loss in reputation for Amexco Bank and its CEO James D.
Robinson, III.
Source: Bryan Burrough: Vendetta. New York: HarperCollins Inc. 1992.

Case No 4: Hoechst
At 4.15 in the morning of February 22, 1993, the Frankfurt-Griesheim plant
ofHoechst suffered from a blowout of 10 tons of a substance (Ortho-Nitroanisol)
which rained down on 108 hectares of adjacent land affecting 2'754 inhabitants
of the Schwanheim locality. At 5.25 a.m. Central Public Relations of Hoechst
was informed and started work at 5.45 a.m.
At 6.30 a.m. a first interview was offered to a Frankfurt-based radio station
for the early-morning news at 7.00 a.m. In order to control all information channels, Central PR called a press conference with subsequent visit of the blowout
place for 9 a.m. When the conference ended at 10.15, the professional fire
brigade announced separately that two more localities were affected by the
This second news conveyed the impression that Hoechst had communicated
only half the story. In the afternoon of the same day at a press conference
organized by the Land Ministry of the Environment, the Minister accused
Hoechst of a deficient information policy. From February 22 to 25, discussions
ofthe day prior to the accident became known according to which the substance
was suspected to have caused one cancer casualty in the US. It was also found,
that once the substance was in the air, it formed compounds which are not
formed during the industrial production process. Both findings were picked up
by the media thus contributing to a feeling of insecurity among the population,
and to a dwindling credibility of Hoechst during the following weeks.
As 18 major and minor incidents occurred within Hoechst between February 22 and April 2nd, 1993, even the best willing began to doubt about the
company's reliability.
Source: LudWig Schonejeld: Ein Jahr nach Griesheim. Hoechst, February 1994.


Annex II:

Crisis Management Planning Check List


Are you conscious of what activities and staff situations

are risks which could lead to a crisis?


Have you appointed a crisis management team for just

in case?


Has the crisis management team been exposed to media



Have specific competences been assigned to each team

member enabling clear answers?


Has the crisis team exercised dummy crises?


Are the following corporate departments represented in

the crisis management team (not more than 7 people):
Safety and Accident Prevention
- Marketing/Sales
- Research and Development
- Plant management
- Auditors, legal, financial
- Public Relations
- Personnel


Are instruction sheets for personnel in contact with enquirers available on how to handle a crisis?


Do these instruction sheets contain the names and phone

numbers of the crisis team members?


Do you have a written crisis management plan?


Does the plan provide clear communication directives

(i.e. what and how to say, what not to say)?





Does the plan contain of all responsible team members,

spokespersons (and deputies), emergency services (fire,
toxicology, etc.)
- names, private and business add' :ses, phone numbers
- contact addresses in case of ab~ ,Ct; (holidays, sickness, military service)
- cellular phone numbers


Is the list of emergency services complete including

(whatever applicable):
- Hospitals
- Helicopter/automobile ambulances
- Police
- Toxicology unit
- Fire brigade
- Environmental protection unit
- Radiation protection unit


Is a cascade alert system in place whereby one informs

the next?


Have meeting points, press rooms and alternatives been

fixed in writing?


Are above rooms equipped with all communications

equipment and secretariat facilities?


Can the PR-officer or spokesperson operate telecom

equipment without assistance?


Has the crisis plan a database with internal and external

specialists likely to cooperate or testity on an ad-hoc


Does the crisis plan contain a list of bodies which enjoy

information priority (lawyers, neighbours, trade unions,
labour representatives, local government officials, etc.)?


Does the crisis management plan include an up-to-date

media list (local, national, international, wire services,
radio, TV, etc.), possibly with names of journalists known
to the company?


Are these lists updated on a quarterly basis?



Are question-and-answer sheets for sensitive production/

formulation issues available?


Are accreditation/press passes available for press tours

through the plant/laboratory/building?


For crises involving products, substances, raw materials

or production processes, has the following documentation
been written up for use by the media:
- description of product(s)
- description of substances used (potential hazards; interaction with other substances, with water, foam,
powder; toxicity; environmental danger; etc.)
- description of production process(es)
- backgrounder on company
- biography and picture of General Management, crisis
management team, spokesperson(s)
- Description of plant, with photos and situation map
- Description of prevention/security systems


In general, are the following documents available in case

of an emergency:
- holding statement to the media
- invitation to press conference


Have you a legal/technical/scientific clearance system in

place to approve media copy?


For crises involving products, have you a recall mechanism in place?


Have you appointed a crisis team member to carry out

the monitoring of media reports?


Likewise, have you appointed a person to provide earlywarning services likely to detect emerging crises?


Ethically Conscious Public Relations Management
as Promoter of Industry-wide Agreement on Ethical Policies
Regine Tiemann
Susanne Zajitschek

In our paper we reflect upon the possibilities corporations have to solve (ethical)
problems of industry-wide significance, for example the problem of environmental pollution. Often a single corporation is overcharged by solving the problem on its own because the only suitable solution would be a collective effort.
This is a solution of ethical displacement: A shift from the level of a single
corporation to the level of industry or, concerning to the business ethics concept
of Peter Ulrich, a shift from normative management to layer of shared systempolitical responsibility for the order of economic structure. An industry-wide
agreement on ethical policies represent the shift to layer of shared systempolitical responsibility for the order of economic structure of all industry
corporations. The agreement is the result of cooperative negotiations between
the affected corporations (and stakeholders) according to the idea ofHabermas'
communicative ethics. After discussing the strategic implications of an industrywide agreement on ethical policies we show that in contrast to the conventional
success-oriented PR management only the ethically conscious PR management
can support the process of cooperatively negotiating. We examine the role of
ethically conscious PR management before, during, and after the cooperatively
negotiations. The ethically conscious PR management is an important promoter
during the whole problem-definition and problem-solving process.


Introductory Consideration

With the following contribution to the discussion we intend to show that the
shared set of ethics and success, and the scope of entrepreneurial actions for
P. Ulrich and C. Sarasin (eds.), Facing Public Interest, 149-166.
1995 Kluwer Academic Publishers.


all the corporations in an industry, can be enlarged by industry-wide agreements

on ethical policies.
The starting point for our considerations is formed by the negative external
effects, frequently discussed during recent years, which are reflected, among
others, in industry specific production processes.! These negative external effects
do not find any resonance within the purely economic evaluations of the
entrepreneurial process in which arguments are based on a solely mediumpurpose rationality (instrumental rationality). Here, at the latest, the supposedly
private behavior of corporations becomes a public matter within which the
legitimation of corporate behavior needs to be discussed by all potentially
The massive civil protest of recent years, the lacked confidence in, or even
great anxieties of the public concerning the technological progress, or, more
generally, the considerable clashes and differences between society and many
corporations, give evidence of the fact that this purely instrumental rationality
appears inadequate. Owing to the fact that the instrumental rationality is strategically success-oriented, questions touching values or general meaning do not find
any echo. This type of rationality must be extended towards a socia-economic
conception of rationality:
Any action or institution can be defined as rational in a socio-economic
sense which free and mature citizens, in a reasonable politico-economic
agreement among all those who are concerned, have consensually determined (or could have determined) as a legitimate way of creating value
This renewed term of economic rationality, transformed through the ethics of
discourse (Ulrich), aims at an inclusion of the dimension of a normative social
integration, i.e. a real-life based legitimation, into corporate and industry politics
via a functional system integration, which as such creates only a functional
coherence (of individual interests) but not one of norms and rules of a just and
fair living together.

Ref. and in the following Ulrich (1993).

Ulrich (1994: 19), translated by the author himself; for a further explication in English
cf. Ulrich (1990).



Components of an Integrative Economic and Corporate Ethics as

a Basis for Ethical Industry-wide Agreements

The corporate model fonning the basis of our considerations regards a corporation as a more or less public institution (Ulrich 1977), i.e. corporate actions
are not a private matter at all. This results in corporations of an industry taking
social concerns, and through these a critical public, seriously. They are obliged
to deal in an ethically responsible way with the legitimate claims of those who
are directly or indirectly involved in, or concerned with, corporate decisions.
Ethical responsibility here means literally to give account to somebody, to
produce acceptable reasons for one's intended actions in a dialogue with those
concerned with these actions (UlrichIFluri 1992: 71). Or in other words:
Whenever anybody questions the legitimacy of another's power, the power
holder must respond not by suppressing the questioner but by giving a reason
that explains why he is more entitled to the resource than the questioner is
(Ackennan 1980: 4). Most of the dialogue fonns in an industry, though, are
characterized by a purely strategic perspective. It is our aim to (re-)institute the
acceptance ofa critical public. One example of this may be the German chemical
industry's campaign Chemistry in Dialogue. But this can only mean a factual
recognition of corporate actions, or, put differently: as long as it makes sense
in an economic way (prudence in regard to strategic ensurance of perfonnance),
public concerns are given their due regard. In opposition to those make-believe
dialogues we demand a genuine dialogue, including the extended ethical perspective. What, therefore, characterizes this genuine dialogue? One of the fundamental questions for corporations and industries is: Which positive reasons
do we have for our entrepreneurial actions? Only if the corporations actually
do have the better arguments will they persevere when facing a critical public.
Only by a conscious questioning of the legitimation of entrepreneurial actions
together with the insight that true entrepreneurial responsibility can be observed
solely within a dialogue, can potentials of communication and of mutual respect
of values be fonned and extended by a genuine dialogue.
A guiding principle within a true dialogue can be to look for commonly
supported solutions. Or, to phrase it differently, both parties must be willing
to deal with already existing conflicts or with those that appear to be a result
of the current level of infonnation. They must be willing to verbalize the
respective activity targets (in the sense of Habennas' communicative actini)
and to reach a consensus by rational argumentation.
In the following, we would like to present the theoretical frame of reference
within which we will locate our discussion.

Ref. later.


Starting point for an integrative ethics of economy and corporations

according to Peter Ulrich (1993) is the insight that ethics need not necessarily
be harmonious with economic success, nor necessarily in total opposition. This
refers to the permanent process of comprehensive reflection on solid and
acceptable foundations and references ofthe meaning of 'valuable' entrepreneurial management (UlrichIFluri 1992: 67). Within the process of extending the
scope of entrepreneurial activities for innovative syntheses of ethics and
success, an applied and regulating idea of a corporate-political as well as an
industry-political dialogue between the corporations and all stakeholders is in
the center of interest. This idea can be supported by discursive ethics as well.
Thereby the attempt is to be made to solve through rationally controlled
communication processes the conflicts of values and interest evolving in connection with entrepreneurial activities. For the corporations of an industry, this could
mean, though, that the road towards corporate-ethical syntheses of ethics and
success could only be paved with innovative ideas, i.e. new production processes,
new products, etc., or through shared learning processes within a market sector
or industry. This represents the first level of responsibility, the business ethics,
of an industry'S enterprises. The second level - republican4 corporate ethics does not center on the actual entrepreneurial activities, but the institutional
elimination of this 'organized irresponsibility' (Beck 1988) of the economic
system which in itself keeps the entrepreneurs structural prisoners in corporateethical dilemmas (Ulrich 1994: 36). This means that a critical questioning of
systemic inherent necessities must take place. The corporations of an industry
ought to share a responsibility for the political order and should not accept the
economic framework as preordained or as inalterable functional and factual
necessities. 5 The set task is to take a part in the overall design in order to dissolve these ethical dilemmas.
This leads to the conclusion that the profit principle (a purely economic
argument), which corporations often refer to when confronted with ethical
problems, plays only a secondary role in comparison to the justice of a social
order, in particular the res publica as a whole. But this does not result in
unreasonably demanding of corporations to accept ethical conditions or activities
up to a point at which the corporate survival as such is endangered to a degree
that would consequently lead to insolvency (aspect of reasonableness).
Before we enter into the actual consequences for ethical industry-wide agreements, we would like to illuminate the various scopes of corporate-ethical activities. Firstly, they consist of the economic-political level that we have already
mentioned above. The next level of the possibilities of action and design is

For the term republican in a Kantian sense refer to Malter (1991).

Ref. to Kuhn (1993) for the theoretical models of a paleo-liberal market and an ordo-Iiberal
state and their criticism.


formed by the corporate-political level. This is where through normative management a responsiveness should be established and extended with regard to social
norms and values. The third level, the business-strategic level, deals with
questions of extending strategic success potentials on the basis of an ethically
acceptable corporate policy. Finally, on the fourth level, the operative level,
the formed potentials are to be applied. Here, the guiding idea is to apply these
potentials with the ethically conscious6 considerations for social, ecological,
and economic scarcities (Ulrich 1993: 21 ). We are going to focus on the layer
of shared system-political responsibility and normative management through
rationally controlled communication processes applied to the industry level.


The Problem of Ethical Displacement

Imagine the following example: All corporations of an industry use an ecologically harmful production process. In fact there is a new technology which enable
them to protect the environment more effeciently, but at a higher cost.1 If only
one corporation used the new technology the costs and consequently the price
of its products probably will rise. Thus the corporation is in danger of getting
competitive disadvantages which may lead to failure and unemployment in the
long run. Moreover, it should be obvious in this case that a single corporation
cannot solve the problem of environmental pollution on her own. Even if she
would use the new technology the others probably will not. Thus the effect of
reducing the damage to the environment will not be great. 8
Such a situation is typical of ethical dilemmas. 9 Ethical dilemmas are situations in which an individual is caught in a situation in which neither of the
two available alternatives seems ethically acceptable. Iftaken at their face value,
there is no ethically acceptable action (De George 1990: 27). Concerning our
example, the corporation has two alternatives: first, to produce non-pollutingly
but to risk failure and discharge of the employees, and second, to produce


Ethically conscious points at the fact that first a consciousness of ethical problems has
to exist before corporations can demonstrate their good will to act ethically as well.
Supposed that all other aspects rest equal (ceteris paribus).
Nevertheless, there are very often corporations locating their production in a foreign country
in order to evade the law of their horne country. They argue that it is too expensive to
satisfy the requirements of the horne country's law - the environmental legislation normally
is not stringent in the countries of Third World. Generally, production is more harmful
to the environment but much more cheaper over there. So in their horne country environmental pollution would be reduced. But this solution does not reduce the global environmental pollution.
See also Steinmann/Olbrich (1994: 135-136).


ecologically hannful but to safeguard employment. At the level where the ethical
dilemma occurs the problem seems to be not solvable ethically. De George
differentiates five level of analysis: the level of the individual, of the corporation,
of the industry, of the nation, and the international level. If there is a situation
of ethical dilemma on one level, it is only resolvable on a higher level. This
is called an ethical displacement which is an ethical problem on one level [that]
may only find a true solution on another level (De George 1990: 27). Corporate dilemmas [... ] may require changes in industry structures to guarantee fair
conditions of competition (ib.). De George (1990: 32) claims the need of a
business ethics network in order to establish a possibility of discussing the ethical
dilemmas. Concerning our example given above, an unspecific business ethics
network is not enough. The starting point for an industry-wide agreement on
ethical policies could be that all members ofthe industry federation discuss the
problem ofthis distinctive ethical dilemma. This is a well specified starting point
because all members are affected by the problem.
Often we can read in the newspapers that a corporation would like to act
ethically but could not do so because other corporations do not either. The
implications of the market are so strict, they argue, that it is not possible to act
ethically. There seems to be only two alternatives: Either to act ethically and
therefore losing competitive advantages or to make profits but not to act
ethically. But, are there really only these two alternatives? A third possibility
for corporations will be acting ethically by simultaneously making profits through
an industry-wide agreement on ethical policies. This is a solution of ethical
displacement: A shift from the level of a single corporation to the level of
industry or, refering to the business ethics concept of Peter Ulrich, a shift from
normative management to the layer of shared system-political resonsibility for
the order of economic structure.
What do we mean by an industry-wide agreement on ethical policies? It
is an agreement on objectives and/or suitable actions in order to solve the ethical
dilemma. The agreement is the result of cooperative negotiations according to
the idea ofHabermas' communicative ethics (Habermas 1990). To be effective
(almost) all corporations of an industry have to take part in the agreement and
assume a self-commitment. The corporations' self-obligation is necessary because
there are no principles or rules of legal force to deal with the corresponding
problem in a satisfying manner. Self-commitment also means that there is no
possibility to take legal proceedings against a corporation disregarding the agreement.lO The objective of the agreement is to find a way to realize both acting


The problem of free riding is important but not mentioned in this paper. Likewise the
conceivable similarity to cartels and industry-wide agreements on ethical politics is not
mentioned here because the legal provisions are different in every country. Concerning
the German legal provisions see e.g. Frieling (1992: 145-158).


ethically and making profits. I I Furthermore, representatives of the state and of

other stakeholders should sit on the committee for negotiating cooperatively
the conditions of the agreement (Frieling 1992: 116). This is necessary for all
stakeholders affected by the externalities l2 of the problem. For instance, if an
ecologically harmful production process endangers the health of neighbours.
As we will see later, the distinction between the objectives and suitable action
to realize them is important.


Strategic Implications of an Industry-Wide Agreement on Ethical


On the one hand some corporations argue that they would like to act ethically
but can not do so because of the market necesseties. However, the perfect
competition of economic literature does not exist in reality. The resource-based
theory of the firm, for example, is based on market imperfections (Mahoney/
Pandian 1992: 368, 370). For instance, Porter (1980) shows that corporate action
is not only determined by the industry structure. The prior industrial organization
structure conduct performance paradigm is modified by connecting the
industrial organization model to the firm's strategy (Porter 1981). Corporations
have the possibility to act strategically (strategic choice perspective) (Steinmann!
Lahr 1991: 5-10). As we pointed out above, an industry-wide agreement on
ethical policies leads from a corporate perspective to an industry perspective.
The following discussion will start at the corporate level. But we will concentrate
especially on the perspective of industry structure.

4.1 Corporate level

Corporate level strategic implications concern the resources, capabilities, and
strategic assets of the firm. While resources are defined as stocks of available
factors that are owned or controlled by the firm [... ] capabilities, in contrast,
refer to a firm's capacity to deploy resources, usually in combination, using
organizational processes, to effect a desired end. [... ] Capabilities are based on
developing, carrying, and exchanging information through the firm's human



For a similar definition but without distinct consideration of ethical politics see Frieling
(1992: 115-135).
An externality is defined as an indirect effect that concerns an agent other than the one
exerting this economic activity and that this effect does not work through the price system
(Laffont 1987: 263).


capital (AmitlSchoemaker 1993: 35). The corporation's strategic assets are the
set of difficult to trade and imitate, scarce, appropriable and specialized resources and capabilities (AmitlSchoemaker 1993: 36) that establishes the corporation's sustainable competitive advantage (ib.). The resource-based view concentrates on the inner processes of the corporation and is closely related to the
concept of core competences (Porter 1991: 107). Core competences are defined
as the collective learning in the organization, especially how to coordinate
diverse production skills and integrate multiple streams of technologies
(PrahaladlHamel 1990: 82).
Concerning an industry-wide agreement on ethical policies there are two
initial situations at the corporate level. First, the problem is related to the
different core competences or strategic assets of the corporations. For example,
the emissions of the production process are ecologically harmful, but the production process is a consequence of the strategic assets and therefore a factor to
create (sustainable) competitive advantage. Hence, the corporations will probably
not discuss about suitable actions because it bears the risk of unintentionally
giving away information about capabilities and core competences. 13 The corporations are interested in maintaining their barriers to imitation (Mahoney/
Pandian 1992: 371).14 The corporations will only talk about objectives and
improve their production process on their own. For example, they could define
the objective of reducing emission caused by production. Defining objectives
means not discussing actions to realize them. Consequently, the agreement and
its objectives can be considered as incentives to innovate. It is up to every single
corporation to perform product or/and process innovation in order to reach the
agreement's goal. 15
Second, the core competences and strategic assets of the corporations are
not involved because the ecologically harmful production process is quite similar
in every corporation. In this case, the corporations probably will not only talk
about objectives, but also about suitable actions for improving the production
process. It is a chance to learn together. Hamel (1991) calls this interpartner



In fact this is a risk of strategic alliances, see e.g. HamellPrahalad (1991: 89).
The barriers to imitation at the corporation level can be considered as an analogue of entry
and mobility barriers at the industry level (MahoneylPandian 1992: 371).
The definition of core competences contains the value for the customer. Thus innovations
induced by the agreement have to improve customer value.


4.2 Industry level

The resource-based view is complementary to the industry analysis framework

(AmitlSchoemaker 1993: 35; Mahoney/Pandian 1992: 371). Firm specific resources and capabilities are seen as the basis for strategy (Grant 1991: 116). But
the sources of profitability are also determined by the characteristics of the
industry. To compete within a certain industry every corporation needs some
industry specific resources and capabilities. These resources and capabilities
are called strategic industry factors on the industry level (AmitlSchoemaker 1993:
36). Within an industry the strategic industry factors drive competition [ ... ]
by virtue of dominating the structure of sunk costs incurred in the course of
competition (Ghemawat 1991: 5; AmitlSchoemaker 1993: 36). At the industry
level they are determined by the interactions among the competitors, customers,
innovators outside the industry, state regulators, and other stakeholders. Furthermore, they cannot be predicted ex ante (AmitlSchoemaker 1993: 36). For
example, strategic industry factors can establish barriers of entry and therefore
influence industry attractiveness (BharadwajNaradarajanlFahy 1993: 84-86;
Grant 1991: 118). In this context, strategic industry factors can be compared
to industry standards which raise costs of entry. Industry standards as collectively
owned resources are public goods. Their benefits can be extended to further
corporations at marginal costs (Grant 1991: 118, 134 footnote 13; Mahoney/
Pandian 1992: 371 footnote 11).
We hypothesize that an industry-wide agreement on ethical policies could
become a strategic industry factor. This new strategic industry factor would be
a solution referring to De Georges' (1990: 27) statement that corporate dilemmas [... ] may require changes in industry structures to guarantee fair conditions
of competition.


Some Characteristics of an Industry-Wide Agreement on Ethical

Policies as Strategic Industry Factor

Integrating numerous articles, AmitlSchoemaker (1993: 36) identify ten general

characteristics of strategic industry factors (SIF). Four characteristics can be
applied to an industry-wide agreement on ethical policies considered as strategic
industry factor. Furthermore we add a new fifth one.
(1) SIF are Stock type resources and capabilities that ex post are shown
to be key determinants offirm profitability: It should be the aim of the industrywide agreement on ethical policies that the required ethical resources and
capabilities will become an important part of the industry stock type. For
example, initiated by the corporation Vorwerk the Association of Environ-


mentally Friendly Carpets e.V. was founded in 1990 (Steinmann/Zerfa~ 1993:

19-21). The Association examines the production processes of the associated
corporations concerning its environmental compatibility. If the product and the
production process is ecologically safe the carpet is awarded with the Association's signet Carpet Contaminant-Tested (Important consumer information
GUT). Today, two thirds of the European carpet manufacturers are members
of the Association. 16
(2) SIF are determined at the market level through complex interactions
among industry rivals, new entrants, customers, regulators, innovators, suppliers,
and other stakeholders: According to the idea of communicative ethics, an industry-wide agreement on ethical policies is based on complex interactions among
all affected participants according to the idea of communicative ethics.
(3) SIF are strategic in that they are subject to market failures and may
be the basis for competition among rivals: This characteristic concerns the difficult problem of free-riding. There must be regulations inhibiting that participating
corporations get the benefit of good image without fulfilling correctly the particular commitments of the agreement.
(4) Their development takes time, skills, and capital - not all aspects of
their development and interactions will be known or controllable: RinglVan
de Ven (1994) point out that at the beginning of interorganizational cooperations
there are two uncertainties: the uncertainty concerning the future state and the
uncertainty whether the corporations will be capable to rely on trust. RingIV an
de Ven (1994) present a process framework of the development of cooperative
interorganizational relationships in which formal, legal, and informal socialpsychological processes are integrated. We think that an industry-wide agreement
on ethical policies can be considered as a kind of interorganizational relationship.
The section of ethically conscious PR-Management bears upon this suggestion.
(5) Barriers to imitation: A corporation has to build up barriers to
imitation. A barrier to imitation at the corporation level is an analogue to an
entry or mobility barrier at the industry level which works to protect the
sustainability of the competitive advantage (MahoneylPandian (1992: 371 ). We
suppose that the industry-wide agreement could thus be a source of competitive
advantage. In this case, the participating corporations have to protect their
ethically based sustainable competitive advantage so that competitors which
not participate in the agreement or new entrants cannot imitate it. Hence they
have to build up a barrier to imitation at the industry-wide agreement level.
The barrier to imitation is especially important for those corporations who have
developed capabilities collectively in order to solve the ethical problem, for
example by interpartner learning.


See the information paper Introducing GUT.



On the Way to an Ethically Conscious PR Management as Promoter

of Industry-wide Agreements on Ethical Policies - Some Fundamental

The above considerations point out some fundamental problems as well as

possibilities of ethical industry-wide agreements. We tried to show which
strategic implications could result from such ethical industry-wide agreements
concerning the corporate, respectively, the industry level. Which implications
in tum concern an ethical PR management will be highlighted in the following.
Initially, the term of, and the pre-conditions for, an ethically conscious PR
management will be explained briefly. After that, we will consider in more detail
how such ethically conscious PR management can be shaped in the process of
ethical industry-wide agreements.

6.1 Two dimensions of ethical PR management

The following differentiation between success-oriented and ethically conscious
PR is based on Habermas' theory of communicative behavior (1981). Habermas
distinguishes between success-oriented and communication-oriented acting. In
like manner, we want to apply this theory to corporate PRo
The sole aim of success-oriented PR applied within the corporate practice
as a social technology is the wielding of influence. Media and methods are
applied to reinstitute factually an acceptance by a public grown critical (instrumental perspective). In most cases, what matters is acting in the individual
interests. The PR models predominant in practice are based on activities like
publicity, the unilateral, asymmetrical communication (persuasion) and a conveyance of information that is characterized by one-sidedness. 17 These models
do not offer any openings for ethical catalogues of questions, as they are applied
only from the perspective of an end-of-pipe instrument to ensure a reciprocal
influence on interests. The corporate-political and economic-political layers have
been totally blocked off in the area. Most of the corporations apply PR only
to pretend a pseudo-dialogue. A pseudo-dialogue is characterized by the initial
lack of an openness towards results. Corporations are unwilling to relinquish
their relative claim to power in favour of a true co-operation or rather a genuine
dialogue. This genuine dialogue as such is characterized by the very absence
of claims to power; instead it is based on superior arguments with regard to
the answering of questions concerning the legitimation of entrepreneurial actions.


Ref. Grunig (1992), who demands a fourth model in addition to the three above mentioned
which accounts for a bilateral, symmetrical communication with mutual understanding
- something we demand in agreement with Grunig for the practice.


The factual result of such a pseudo-communication can never be a consensus

shared by all stakeholders, as an assent has only been reached by persuasion
but not by approval of all involved and concerned. And how could such an
approval be expected if the corporations do not include a public that has grown
critical but employ a kind of fair weather-PR? Its employment is mainly massmedia controlled. This implies automatically that most concerns cannot be
considered at all. Such opportunities have therefore mainly been used by
organized groups, which in tum utilized their possibilities of power. The result
of such a pseudo-communicative process - if it takes place at all- is characterized by a mutual wielding of power and influence. The only possible result
cannot be a reason-controlled or a consensus-oriented compromise, but one which
has been induced by power. Tacit conflicts are often not brought out into the
open as well. This is so because many corporations refuse to make their
corporate policy transparent, something which might lead to conflicting concepts
of value among the stakeholders, a posture that is very often dominated by purely
economic intentions. We mean transparency as an unveiling of corporate
secrets or strategic factors of performance. In fact, the corporation takes its
corporate responsibility to demands ofthe society seriously (ethical self-commitment), it can be taken for granted that the top executives are able to estimate
exactly which application of corporate policy or of strategic decisions should
be open to comment from the public. In contrast, corporations have to be aware
that these tacit conflicts not open to the public discussion may be revitalized
at a later point in time and then may lead to so-called manifest conflicts. Ifworst
comes to worst, corporations may then be unable to stand the public pressure
because they have deprived themselves of the necessary scope for possible
In contrast to that, the constitutive demand of an ethically conscious PRdiscussion is an unconditional legitimation as the precondition for an ensurance
of acceptance. The coordination of actions is represented by general consensus,
a precondition for which is a common definition within a corporate dialogue
of the problem. Through this process, aspects of power have been totally blocked
off. This corporate dialogue is based on the readiness of all concerned by
activities for an unbiased, reasonable communication (UlrichIFluri 1992: 71).
Hereby, the human relation level assumes the central role. It would be a misunderstanding to believe that there are generally accepted, operationally applicable
rules for an ideal discourse and that just to implement those in the targeted
dialogue would mean to fulfil them. Nevertheless, some few minimal requirements should be fixed for an ideal communicative situation. This rules should
be applied equally to the organization and to its publics. These are: 18 Participa-


Ref. now and in the following Habermas (1983: 93ff.).


tion of all concerned, freedom from prejudice/reason, and equality of chances

to voice demands when having agreed to a proposal.
In spite of all, it has to be seen that within an ideal discourse, a variety of
problem types can appear:
The personal constellation cannot be structured in a way that all concerned
can be included (Le. succeeding generation).
The personal motivation is such as to push personal motives to the front.
Factual imperatives exist that make themselves felt when the participants are
dependent on the corporations (for example as employees).
A factual competence of participants is not guaranteed as different information
bubbles exist; and finally
The corporate-political discourse has to be terminated due to time limits, as
otherwise the capacity to act would be endangered.
Therefore it is important to understand that the conditions have for an ideal
discourse to be seen as a regulative idea. 19
This represents one dimension of an ethically-conscious PR framework
concept on the basis of an integrative economic and corporate ethics developed
by Peter Ulrich. In respect to this dimension, the following questions are of
central importance:
- What justifies the respective corporation or industry to pursue the determined
targets (corporation/industry - society: output perspective)? Who determines what
corporations are allowed to do and what is forbidden (society - corporation/industry: input perspective)? Within a discourse, the existence of these questions
should be guaranteed.
The second dimension concerns the functional aspect:
- Which utility potentials (PUmpin 1989) for all stakeholders can a corporation create, including different value dimensions? Utility potentials are not
considered from a utilitarian perspective but rather from the point of view of
a communicative-ethical corporate concept. The currently relevant criteria for
value and utility have to be deThe ethics of discourse on which this all rests
represents a regulative idea in the Kantian sense, i.e. concrete directives cannot
be deduced automatically. To follow Ulrich, the pragmatic sense of an ethics
of discourse lies in the fact that it delegates the task for a discursive justification of norms from the theory to the practice: the practical dialogue must be
applied in practice (Ulrich 1991: 203).


Ref. Ulrich (1987: 286ff.).


6.2 Pragmatic considerations towards an ethically-conscious PR management

within industry-wide agreements on ethical policies

So the practical dialogue has been delegated to the practice. Which possibilities
does an ethically-conscious PR management have after all? In the following,
some possibilities are being highlighted in the discussion; these considerations
are not supposed to form a conclusive analysis of all possibilities for an
ethically-conscious PR management, on the contrary, they are meant as one
possible frame for further contemplations. For this, a framework 20 has still to
be developed which covers the intention of describing situational and activity
Before the process of negotiation/agreement
Already before the process, an ethically-conscious PR management can function
as an Issue Management, so to speak. By focusing on all potential areas of
problems which might arise with respect to the current industry-wide agreements,
the management can already gain a first impression of possible differences. By
a conscious communication of possible contents of industry-wide agreements
to the critical public, arguments pro and con can be staked out already in the
approach to the agreements. Because a so-called general public is non-existent,
the ethically-conscious PR management has to identifY the different publics who
are or will be involved in the process. 21 A mediator who is part of the whole
process determines who is to be invited to the negotiations. 22
During the process of negotiation/agreement
On the one hand, there are numerous competitively neutral possibilities of
structuring an industry to comply with the ethical obligations of a critical public.
On the other hand, various possibilities for structuring offer themselves in cooperation with the different stakeholders of an industry. In both cases, an
ethically-conscious PR management oriented to the regulative idea of a corporate
dialogue on the basis of a bilateral symmetrical communication23 can support
the political process of ethical industry-wide agreements. It can contribute to
an ethically acceptable and economically successful consideration and management of the needs and legitimate interests of all those directly and indirectly
involved in the corporate value-added process. This means that not only the
individual representatives of an industry are invited to a genuine dialogue, but
those as well who are directly or indirectly concerned with the consequences.


For this framework and its meaning ref. Porter (1991).

Ref. GrunigIHunt (1984: 132ff.).
For the mediation model ref. SteinmanniZerfass (1993: 3f.).
Ref. GrunigIHunt (1996: 22) forthcoming.


The actual aim of the dialogue should indeed be a possible consensus among
all concerned. We know that this process cannot run ad hoc, but takes considerable time. It is possible as well that initially the parties have to agree upon a
certain negotiable platform before the actual dialogue with all concerned can
take place. In spite of this, we are of the opinion that actually within this phase
the decisive steps for the future have to be determined.

After the process of agreement

After having concluded the ethical industry-wide agreements, an ethicallyconscious PR management can communicate the agreements to all those who
were not present at the process as such. This aspect is of great importance as
the agreements cannot be seen as set for all times. The dynamics of our modem
times demand that through the addition of new information, i.e. new risk factors
within a production process which were not known at the time of the agreement,
these have to be introduced into the discussion within a process that has to be
started anew. It is this that characterizes a successfulleaming process between
corporations and between an industry and the public.

7. Outlook
We are of the opinion that through industry-wide ethical agreements arguments
of inherent necessities by the corporations, which above all are manifest as
imaginary competitive disadvantages or profit losses, can be invalidated. What
is more, by including even critical stakeholder groups in the process of negotiations and agreements, the demand for a legitimation of corporate activities and
thus those of a modem business and corporate ethics will be met. It is the task
of all concerned to show good will, to be open for ethical matters not only on
the corporate level, but on the industry level as well. It cannot be the sense of
ethical industry-wide agreements for some corporations to exclude themselves
to the disadvantage of the others which observe the agreement. We have seen
that for an ethically-conscious PR management there exist many possibilities
to support and encourage the process of industry-wide agreements. If one regards
Public Relations management literally as management of public relations, then
it is in the interest of every corporation to take these seriously, to reflect upon
the various stakes, and to face the tasks of the future. Res Publica thus take
precedence over all interests of private enterprises.


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Johannes Brinkmann
Hans Gudmund Tvedt

Our project is an experiment in bridge-building between theory and practice.

This paper presents the results of a pilot-survey carried out in spring 1994 among
Norwegian information and PR professionals. The survey tried to measure major
role conflicts, how the respondents claim to handle such conflicts, and then to
reconstruct what is typical for the moral self-conception within this industry,
both on its own premises and compared with the Norwegian advertising industry.



It may be a useful starting point to dwell briefly on the characteristics of the

ethical conflicts the public relations professional is prone to encounter in his

work, as they represent a wide range of dissimilar problems.
The term public relations is rather imprecise. The New Collins Concise
English Dictionary defines the phenomena as <<the practice of creating, promoting, or maintaining good will and a favourable image among the public towards
an institution, public body etc. Information is often used to describe the work
done by the practitioner. However, in the PR-business, information is rarely
an end in itself, especially not when working for the private sector. In most
instances it is used as a means to achieve something else, i.e. political influence,
market acceptance, or saving a company's reputation when at stake during a
major crisis. The core of the business is to influence people, in order to change
their attitude and ultimately their behaviour. This implies that the practitioner
is likely to find himself approaching ethical borderlines from time to time. It
also means that these situations may be extremely different, depending on the

P. Ulrich and C. Sarasin (eds.). Facing Public Interest. 167-181.

Ii:) 1995 Kluwer Academic Publishers.


target audience, the instruments employed, the client, and the tasks that are
It may be useful to bear in mind that the public relations industry is not
necessarily trying to influence the public. More often than not it is targeting
a specific group of people or a segment of the general public. Within the
industry, it is quite usual to draw a distinction between four separate practices:
Public affairs and media relations,
Market communication,
Corporate employee information,
Financial information and investor relations.
The moral conflicts arising in these separate fields show a great deal of variation,
and they are encountered at various levels.
In it's most basic form, the conflict is a question of the means to be employed: Are there situations or ends that make it legitimate to tell a lie? Or, if you
stick to telling the truth, do you have to tell the whole truth, and nothing but
the truth? In many instances, the most efficient strategy is deliberately making
a false impression by withholding facts or publishing irrelevant and misleading
At this basic level, a conflict situation may also occur when there is a discrepancy between the practitioner's personal ethical standards or political views
and those of the employer, the client, or the society. A typical case is the PRprofessional summoned to work for a political issue or a party he is strongly
opposed to.
At another level, the practitioner is facing the question of whether the intent
of the client (or employer) is immoral in itself. Is it, for example, immoral to
motivate people in the third world to start smoking, in order to develop perfectly
legal markets for a client in the tobacco industry? And there is the case of a
dubious client asking for an uncontroversial service - say, a repressive regime
wanting help to improve the level of health education in it's country. Finally,
there is the question of fair play: should a practitioner refuse to assist a party
under strong attack from the media because of disapproval of him or his case?
One might argue that everyone should have a possibility to make his point of
view known before the public makes it's verdict. In cases like this, the PRpractitioner could easily be seen in the role of the party's counsel in the media's
court of law.

1.1 Legislation and ethical guidelines

What Norwegian information professionals should do (or leave) is described

by the two professional organisations, in Ethical Guidelines for Public Infor-


mation Workersl and by the Professional Code - Eight Rules for Proper
Information Work.2 Some organisations have additional codes, as e.g. BursonMarsteller world-wide.
There are few relevant legal rules, as the general freedom of utterance also
applies to the information and public relations industry. However, legal restrictions are imposed on certain marketing practices and on advertising in the ether
media. There is also a general prohibition of advertising for alcohol and tobacco
products, and in some cases the mentioned rules may apply to commercial
information and public relations work as well, while not to the editorial freedom
of the media.
Legislation dealing with fair competition, and statutes prohibiting libels and
forwarding criminal actions, are other examples of relevant provisions. There
are actors and norm-senders more or less related to each of such rule-sets - such
as the industry'S own ethics council which can handle ethical cases if parties
should ask for it, the professional council ofthe press (Pressens faglige utvalg),
the consumers' ombudsman (Forbrukerombudet), the market council (Markedsradet) and the competition committee (Prisn'tdet).
Professional and industry ethics have also been dealt with occasionally in
Norwegian mass media, e.g. in petits (paragraphs) such as Gasvatn 1994, or
especially in the financial daily Dagens Na:ringsliv in a number of articles from
April 22, 1994 and onwards, and of course in the two professional media,
Inforum and Expressen. FOI, Forum for offentlig informasjon, the public
information professional organisation, has even issued a 27 pp.-brochure on
public information ethics (1993). There is also a public document on administration ethics (Forvaltningsetikk, NOD 1993: 15).
In other words: A survey dealing with codes and conflicts was not raising
essentially new questions for the respondents, but rather invited them to articulate
The starting point of the survey was concrete and practical - it should find
out if and how one could map the ethics status quo letting members of these
two main organisations both vote over the frequency and seriousness of moral
conflicts at work, as well as over the idea of a code as such. At the same time,
as instruments built upon previous research, a somewhat more academic use
of the data was made possible.

Etiske retningsiinjer for offentlige informatorer, of august 1990, with the following sections:
Legal rules - relations with the public - relations with media - professional responsibility credibility - the role of information professionals, approx. I 112 pages.
Yrkeskodeks - Atte regler for god informasjonsskikk, without date. The eight rules deal
with: respect for society and individuals - sources - media integrity - conflict of interest pro-forma-organizations - confidentiality - not harming others - reputation of the



Relevant Concepts and Literature

The conceptual core of our study builds upon mainstream social science, with
concepts such as social role-sets, conflict within and between roles, norms and
expectations, reference groups or norm-senders etc. (cf. Brinkmann 1991,
1993, and still Rommetveit 1953, Hyman and Singer 1968). Another reference
is of course standard public relations literature (cf. for a summary L'Etang 1994).
In business ethics literature, moral conflict potentials are sometimes discussed
from a role-conflict angle (cf. e.g. Steinmann et. al. 1994, Bivins 1989), and
normally as an aspect of stakeholder-relationships (see e.g. Beauchamp and
Bowie 1993: 54-93, Boatright 1993: 404-407). Moral conflict potentials are also
often discussed as a question of so-called ethical codes (see e.g. Robin et al.
1989, Buchholz 1989: 136ff, Bowie 1992, Brinkmann 1994b and c with further
references). The potential positive functions of such codes (taken from Bowie
and Duska 1990: 96-98) are probably more important than the codes themselves:
- Establishment of peer pressure,
- Provision of predictable and stable guides,
- Guidance and decision help in concrete dilemma situations,
Control of employer's power,
Specification of the social responsibilities of business (and/or information
work, authors add.),
- Self-regulation instead of state interventionism.


Research Design

The survey presented here is a slightly adjusted replication of a similar study

carried out in the Norwegian advertising industry in autumn 1993, which again
was mainly re-using previous designs and instruments (see Brinkmann 1994c).
Data for the present study were collected by mail questionnaire in spring 1994.
The first two main questions measured the frequency and seriousness of a
number of presented moral conflicts, developed on the basis of own previous
research. A third main question was translated from Becker and Fritzsche (1987)
and asked for the respondents' opinions about ethical codes in general. 3
For practical reasons, the two samples were drawn (systematically) from
the member-lists of the two existing professional organisations. 4 The average

Most of the other questions were replicated, too - from two student ethics surveys carried
out by min (1991) and (1993), as well as from Kaufmann eta!. (1986) andJamard (1990).
Double membership is possible and not seldom. 20 % of our respondents report such
double membership.


response rate for both organisation samples was 31 % (without reminder) and
33 % after a reminder to the FOI-subsample, which is about as expected for
such a survey.s There is no indication of any systematic sample bias.


Descriptive Research Questions and Findings

As in the mentioned project among Norwegian advertising practitioners, in the

beginning of the project there were three basic and practically motivated
questions, namely:
(1) Which moral conflicts are most frequent among Norwegian information
professionals, and which of them are perceived as most serious?
(2) How would professionals probably behave in such situations?
(3) What are the main arguments in favour of (or disfavour of) ethical codes
for the industry?
The following four tables are addressed to answering each of these questions.

Some background information is important: FOI has more members than Informasjonsforeningen, but many of its members are working less than 100 % with information work
issues, some of those again with a very low fraction indeed. Of300 mailed FOI-questionnaires 88 were returned, and 75 of the 200 questionnaires mailed to the IF-sample. When
subtracting 6 FOI-members who are not any longer or in fact not yet working within
the field, this represents response rates of30 and 38 % respectively. The somewhat lower
response rate from FOI-members was as expected, given the lower degree of information
work for many of the sample. These rates are comparable to the mentioned advertising
survey, with a response rate of 41 % (of which approx. 10 % after a reminder letter; a
minor incentive was used in both rounds). After a DM-thanks-or-reminder letter to the
whole FOI-subsample during June the FOI-rate increased slightly from 27 to 30 %.
A comparison against membership statistics shows no systematically ample bias. Still,
the sample does not fulfil strict statistical demands of a probability sample (with measurable, random bias).
More important is the final size of the data set (n=163), which permits bivariate table
breakdowns, but hardly sophisticated multivariate controls. On the other hand, the sample
size is comparable to the advertising data set (n=IS2).


Table #1
Which of the following areas can cause moral conflicts for you, and ifso, how
often? (q. #1)" Which ones of the above mentioned moral conflicts are most
serious for you? (q. #2 b ; simplifiedc percentages, n = approximative 160)
Conflict types

Professional standards
Critical journalism

most serious




often/very often





16 alternatives and three open alternatives were offered for a vote, ranging on a four-point
scale from never to continuously.
... please mark the three most important ones; most serious: % of 1st ranks; serious:
sum of 1st, 2nd and 3rd ranks, i.e. adding up to more than 100 %.
8 least frequent/least serious items omitted.
extreme value continuously combined with often, in-between value rarely omitted.

In addition to the (most serious) issues shown in table #1 the questionnaire had
listed another eleven items: legality borderline questions, presentations of
females, competitors, colleagues, subordinates, personal ethics, environment,
buyers and sellers of PR-services, target groups, market researchers. 6
The (simplified) table #1 shows clearly that moral conflicts are experienced as
exceptions, not as frequent (as expected, the most normal answer category
is seldom - as in-between value it is omitted in the table). The relatively high
ranking of professional standards is consistent with the answers in the advertising survey sample - the other high rankings are obviously industry specific,
such as potential role conflicts emerging from being spokesperson of top
managers and being expected to tell favourable truths only. (The relationship
between professionalism and morality deserve a follow-up-discussion - e.g.,
As part of question #1, it was possible to add hand-written conflict issues. Only 8 of
the interviewees did that, and mentioned topics such as truth in internal newsletters, cultural
differences in international agencies, particular clients. Our hope to provoke hand-written
reflections of the respondents about why the issues chosen were considered most serious
were disappointed - only 8 of the respondents used the opportunity to formulate their


if they should be regarded as logically independent, or rather as Siamese

Two questions asked the respondents how they probably would react in
such moral conflict situations. One question was put directly after the question
measuring conflict seriousness (q. #3), the other one was posed later, to follow
up a question of morality definitions. To simplify tables 2 and 3, related answer
alternatives were combined. The new categories are parallel to well-known
distinctions between exit, voice, and loyalty (Hirschman's term, table 2), and
between comparative vs. normative reference groups (table 3) respectively.
The answer frequencies from a similar study among Norwegian advertising
professionals half a year earlier are included for comparison (see for details
Brinkmann 1995).
Table #2

What would you normally do in such conflict situations? (q. #3; simplified
table, vertical percentages)
Advertising professionals

speak up, carefully

be loyal to own organisation
be loyal to colleagues
other answers

Infonnation and
PR professionals





Table #3

In moral conflict situations in work contexts some people will prefer to keep
problems for themselves, whereas others prefer to share them with others. What
would suit you, and whom would you normally ask first? (q. #14; simplified
table, vertical percentages)
The explicit statement ofa few consensual ideals and a minimum of traffic
rules would usually neither harm nor provoke anybody. If one assumes the
translatability of argument wordings from an American to a European-Norwegian


context one ends up at least with rankable arguments in favour of (or disfavour
of) ethical codes for the industry: 7

Advertising professionals

colleagues in the same situation

more experienced colleagues or superiors
partner, family, friends
other answers


Information and






Table #4
Independently of your answers to the questions above we would like to know
more about your principal attitude towards codes of ethics. We have listed a
number of statements about possible consequences of such a code for information
work. We ask for your vote ... (q. #5; advertising industry and US means
included for comparison)
According to table #4 codes are mainly welcomed because of their expected
contribution to role clarity and fair competition. On the other hand, there seems
to be realism or scepticism among many of the respondents with respect to
conformity and enforcement. Most of the respondents seem to have a positive
attitude towards codes, but would rather not rely upon them as the only guarantee
for discipline and morality.
Answers to a check-list question about moral contlict frequency and seriousness should of course not be read as facts, but rather as symptoms of common
denominators of an industry subculture (or if one prefers other concepts: of an
industry ideology, conscience collective, livslogn), partly of internalised
industry discussions about quality standards, partly even of internalised general
critics of public relations and lobbying. Instead of over-interpreting single-itemanswers, the reasonable next step is an experimental grouping of items, e.g.,
by exploratory factor analysis of contlict attitudes into

To avoid biased responses, we asked carefully for an evaluation independently of the

respondents' eventual knowledge of the existing codes (61 % did know and gave more
or less correct examples, 12 % did not, and 28 % did not know).


professional ethics,
market ethics and
work organisation ethics factors
and of code expectations into a
fairplay-expectation and
- legitimate moral defensiveness factor (cf. appendix).


Strongly Strongly agree PR

Adv (US
agree (%) + agree (%) mean mean mean)8

Professionals consider codes as a useful

aid when they want to refuse an unethical
request impersonally






Codes raise the ethical level of the industry






A code helps managers in defining clearly

the limits of acceptable conduct






In cases of severe competition, a code

reduces the use of sharp practices






People violate codes whenever they think

they could avoid detection





Codes are easy to enforce









Codes protect inefficient firms and retard

the dynamic growth of the industry

(scores 1-4, strongly agree - strongly disagree, n = approximative 160; a few missing


Suggestious for Discussion and Further Analysis

In a conference presentation, it is legitimate to end up with open questions rather

then streamlined answers.

Becker and Fritzsche (1987: 292), table V (multiplied by 0.8 to correct for 5-point scale).


(1) Should there be (and is there) any difference between public sector and
private sector information work, morally and professionally?
(2) Should there be (and is there) any common industry morality, among
information professionals? If not, is there any work-role-specific morality?
How important is the individual dimension of morality?

5.1 Public sector vs. private sector information work

For discussion purposes, one can describe public and private sector information
work as ideal types, distinguished by a number of criteria:
Exhibit #1


Public sector

Private sector



in itself



transparency of power,
functioning of a public

investment/expense for survival

in markets/stakeholder relationships

Information property

completeness legality

persuasive non-illegality

Sender role




correct, neutral

sender-determined, attractive for

target groups

Receiver role

active seeker

reactive consumer


free good/via taxes

built into product price

Main problem

lack of segmentation

shortage of attention

Ideal-typical portraits are of course no empirical descriptions. But they are useful
as points of reference, for understanding of processes, deviance, degeneration
etc. Maybe the public sector is more and more managed as private business.
Maybe the information labour market is more or less one for both public and


private sector. 9 Maybe the differences between public and private sector information work are clear only in scarce cases, and rather small in day-to-day routine
work. On the other hand, such a dichotomy may still be central in professional
self-conceptions. 10
Our survey did not contain any direct measures of such sector identification.
But one can still use the data for bivariate comparisons by organisation membership or employer, and then decide if Norwegian information professionals can
be treated as one subculture-segment, or rather as two distinct private vs. public
sector segments. II
Such comparisons of the moral conflict climate, or attitudes towards a code
give a gross impression of similarities and differences. A simplification and split
of the tables shown above indicate a similarity of the two subsamples which
is even stronger than expected. Among the sixteen conflict issues only 3 differ,
and these differences are slight only (the FOI-sample-members report a 0.2 to
0.3 scale points higher frequency of moral conflicts regarding colleagues, public
and legal borderline questions).

5.2 Moral pluralism among information professionals

Business ethics is often defined as principally reflected morality, as moral
philosophy related to business issues. A bit more specific (and taking the
empirical relativity and diversity of moralities seriously) ethics could also be
defined as an agreed-upon common denominator of divergent moralities. 12




As in most countries, there are wage gaps, or more precisely, bigger wage differences
in the private sector (an old Norwegian saying is probably outdated by increased unemployment - there are probably not only fools and socialists left in the public sector).
The Hill & Knowlton campaign in the US in connection with the Kuwait conflict, and
Pentagon's dealings with the media during the subsequent war, are both interesting and
rather ambiguous cases, suited for further discussion. A less dramatic example is public
sector information preceding the referendum on Norwegian EU-membership.
Results of such an analysis could of course be interesting in the context of an eventual
organization merger discussion.
Ethics appear then almost as a necessary bridge-builder in a society which seems to drift
apart. Or with a quotation: The resolution of traditions is synonymous with the everincreasing take-over of societal norm systems by legislation, and a privatization of morality.
A vacuum is emerging between an impersonal jurisprudence and an intimate morality.
It is up to ethics to close the gap between values and the legal system ... A pressure towards
innovation within economy, science, life-styles and arts creates continuously situations
which not any longer can be related to a status quo. Each sector is occupied with its own
principles which have a built-in tendency to transcend moral considerations ... (Jensen
et al. 1990,38; author's transl.) At first sight the quotation reads almost as an empirical
anti-thesis to the classical Durkheimian concept of morality as collective conscience.


Morality denotes what is (relatively) right, judged from individual and/or

subcultural standpoints.
Morality should not a priori be reduced to a function of either individualism
or collectivism. When looking empirically at the information profession it seems
fruitful rather to presuppose a variable degree of moral heterogeneity, \3 i.e., a
mix of competition and similarity, between private, professional, status, corporate, industry moralities, maybe even general business moralities.
One survey data set as ours can of course hardly catch and cover so many
moralities at the same time. But our data can definitely illustrate the existence
of different moralities, in a preliminary fashion. A systematic arrangement of
variable types can be visualised tentatively (see exhibit #2) and could then in
a next step be formulated in rather traditional prose, as a number of possible
research questions, focusing upon conflict perceptions and expected code functions, as natural dependant variables.

Exhibit #2
(work roles)




----- -----




from a code

~ / / /


'" '----_.....

Final Remarks

Questions about moral conflicts do more than collect answers. They are probably
also starting reflection and learning processes (and could be justified as such).
If this is so, a replication could result in different, less spontaneous and more


Cf. on moral heterogeneity Brinkmann (1993), 85-107.


reflected answers. Since some shortcomings in the material are due to typical
limitations of the survey method, qualitative follow-up-studies among information
professionals would be a wise next step. The arrangement of professional ethics
workshops could possibly combine possibilities. The final question of the survey
asked the respondents if they were interested in a workshop in professional and
business ethics. 65 percent answered yes, absolutely or depending on the time
schedule. Some additional 13 percent answered maybe - if it were free,
or not too expensive. There is obviously a market for future action and action

Factor construction information (varimax, researcher-determined number of
factors,14 simplified)

Conflict perception
Factor 1
professional ethics

critical journalism
functioning critical public
target groups
personal ethics
professional standards


Factor 3
work organisation ethics



information sellers
information buyers
Variance explained

Factor 2
market ethics




Same number of Factors as in Brinkmann (1994 c), for comparability (the factor solutions
are strikingly similar).


Expectations from codes

Factor 1

The code would raise the ethical level of

the industry

Factor 2
refusal expectation


2 In cases of severe competition, the code

would reduce the use of sharp practices


3 The code will be easy to enforce


4 The code would help managers in defining

clearly the limits of acceptable conduct


5 Professionals would welcome the code as a

useful aid when they wanted to refuse an
unethical request impersonally


Variance explained



Becker, H.lFritzsche, D. J. (1987): Business Ethics: Cross-Cultural Comparison of Managers'
Attitudes. Journal of Business Ethics, 6, 289-295.
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Brian Harvey
Neil D. Stewart



The theme of the 1994 EBEN conference addressed the critical issues in the
relationship between a corporation and the public, the impact these issues have
on business policy and the management of relationships to external groups in
an efficient and ethically responsible way. The aim of this paper is to illustrate
these themes from the standpoint of companies managing hazardous technology
in society.
Corporate Responsibility is often thought primarily to concern financial or
social aspects of governance. However modem technologies such as are used
by the chemical and nuclear power industries are perceived in some quarters
to be systemically threatening at a global level and raise important concerns
within society that they are managed responsibly.
The work on which this report is based was sponsored by a company
involved in managing hazardous technology and which was concerned to increase
its appreciation of Corporate Responsibility as it applies to its activities. The
aim of the study was to isolate the principal issues involved and assist the
company to activate an effective corporate responsibility policy in this area.

P. Ulrich and C. Sarasin (eds.), Facing Public Interest, 185-197.

1995 Kluwer Academic Publishers.



Technology Out-of-Controb)

While hazardous technology does indeed pose major threats to human and natural
life if it is not managed responsibly, this needs to be understood in the context
of the perception of society about technology in general. 150 years ago, at the
birth of what became known as the enlightenment, mankind believed technology could provide a good life for all; the human race was perceived as master
of its environment. The technologist was a Red Cross Knight, wholly to
be trusted because wholly dedicated to doing good. In the course of the last
150 years, however, the technologist has been transformed in the eyes of society
through sorcerer to sorcerer's apprentice (Vickers 1983).
This change occurred because technology proved to be a potent means of
creating evil as well as good, most notably in the technology of warfare. Worse,
it seems in some respects that technology is beyond the ability of society to
manage. Thus arms races developed momenta of their own, which now appear
even more threatening in the fragmented world of modem Europe and products
like CFCs and DDT displayed dramatic and unsuspected side effects.
It appears that developments in the technical sphere continually outpace
the capacity of individuals and social systems to adapt, and that, in some
circumstances, technology becomes an oppressive force that poses a direct threat
to human freedom. Hence the notion explored rigorously by Winner (1977)
in his book Autonomous Technology of Technics-out-of-control. This
momentum in the development oftechnology can be thought of as a trajectory;
the tendency of novelty to spring directly from the antecedent like a powerful
current in a river (Kemp and Soete 1992, Biondi and Galli 1992). Technology
appears to develop a momentum of its own which defies wider social control
even though it is managed by people and nominally intended to serve social
ends (Winner 1977).
Technology also seems beyond the ability of anyone company or any other
single institution to determine. There are many examples of firms that tried to
resist technological change in their markets. It is hard to identify any which
have succeeded, except perhaps for those small niche businesses which base
their activities on the specific attractions of more traditional skills. The motto
is: If we don't do it, someone else will. Society has a problem to establish
the social mastery of technology, a pressing and threatening challenge for the
coming years, and an issue of corporate responsibility in the broadest sense
(Kirat 1992).
These thoughts about technology may seem overdone but they drive underlyingtensions in society. Thus in the UK, some market research (Topf1993: 106f)
showed that only 24 % of people in the UK believe that scientists can be
trusted to make the right decisions, and that only 44 % that the benefits of
science are greater than any harmful effects. There are national differences


in these statistics, but the tendency to distrust science and technology is wellestablished and growing throughout northern Europe.
One might conjecture about the underlying causes for this trend. There is,
for example, a growing literature on the social perspectives of risk and how
it is perceived and related to benefit within society. Two discussions about the
nuclear power industry covered within this study, give examples of this (Berkhout 1991, McGill 1987). There are also political dimensions as activist groups
have grown around some of the issues; one example of this is the growth of
Greenpeace as a lobbyist against some aspects of the nuclear industry (Blowers,
Lowry and Solomon 1991). This apparently increasing distrust is far from what
the scientist, a Red Cross Knight taking objective views based on factual
evidence, and dedicated to the good of society, might expect.
The UK Daily Telegraph has commissioned Social Surveys (Gallup Poll)
Ltd. to assess attitudes to science before each annual meeting of the British
Association for the Advancement of Science. These also chart the low esteem
of science and technology in our society. In 1990, on August 1 to 8th, 1024
people of 16 and over were asked a series of questions about science and
scientists. To one question Whom do you trust to tell the truth? the relative
ratings were: Doctors 68/200, Policemen 46/200, Priests 40/200, Solicitors
25/200, Teachers 12/200, Scientists 6/200, Trade Unions 2/200, Politicians 11200.
Yet science purports to be about objective truths. In addition, when asked about
the impact of science and technology on everyday life, 30 % saw either no
benefit or a negative impact (Daily Telegraph 1990). Thus hazardous technology
needs to be seen in the context of broadening distrust oftechnology itself within
some societies.


Case Examples

3.1 Hazardous technology in industry

The focus of our study was to investigate the workings of corporate responsibility in the chemical and nuclear power industries. More specific learning came
in addition from looking at industrial groups involved in biotechnology development and incineration of hazardous waste. Each is perceived by some to pose
threats to mankind and to the environment of considerable magnitude, such that
some activists would wish to curtail their activities substantially.
The chemical industry carries out regular public opinion polls about its
favourability to the public at large. As recently as 1979, this index was around
50 %. During the 1980s, the industry saw its favourability decline to under 20
% (Chemistry in Britain June 1991: 485). Thus less than 20 % of UK citizens


had a favourable view of the industry, and, although this has now recovered
to some extent, it remains a problem for the industry. The US industry has
experienced the same trend so that in 1992 only 14 % of the population took
a favourable view of it (Financial Times November 10 1992). This has caused
the chemical industry to be concerned about its licence to operate. It fears,
for example, that community distrust of its activities will prejudice sanctions
of new plants and activities and indeed that it may even be legislated to the
point of non-viability.
An example of this in practice is the resistance which the then Ciba-Geigy
(now Ciba) encountered in trying to establish a centre for biotechnology research
in Basel, its historic home. Activated by The World Wide Fund for Nature and
local environmental groups, and remembering the accident on the Rhein of the
other local chemical company Sandoz in 1986, the city authorities effectively
blocked this development (Financial Times November 21 1991).
The nuclear industry is even more strongly opposed in by some sectors
of society, especially through its generation of long-living hazardous waste, its
Achilles Heel (Blowers, Lowry and Solomon 1991), in the form of spent fuels
and other radioactive materials used in the generation of power and including
the nuclear plants themselves. Few countries have come to solutions to the
disposal of nuclear waste which enjoy widespread support through society, an
issue which can create strong local activism whenever a potential site is proposed
(Berkhout 1991, Macgill 1987, Blowers, Lowry and Solomon 1991).
The biotechnology industry has been said to carry with it the potential for
irreversible and long-term environmental consequences .... without precedence
in the history of technology (Cottam 1989). The trigger for this would be
genetically modified organisms (GMOs) released into the wild and developing
predatory dominance over natural species.
The incineration industry is the most important source of dioxin in the
environment. These are a group of chemicals which have been described as the
products which will end western civilisation, so widespread are they in the
environment and devastating in their human toxicity (Etuljee 1988).

3.2 The five principles of corporate responsibility which define best practice
Our work has brought us to the conclusion that five broad principles define best
corporate responsibility practice in the area of hazardous technology. The five,
which are illustrated in the remaining text, are
(1) Development of an institutional framework to legitimise activities, and
especially to link regulatory controls and self-regulation to preserve corporate freedom whilst protecting society.


(2) Development of independent audit and measurement protocols which

monitor damaging impacts on the global system outside the company and
ensure that working methods within the company deliver the necessary good
(3) Development of improvement and innovation to reduce the risk of damage
to the human and natural environment
(4) Development of active stewardship processes so that the Company acts to
protect society and the environment from harm which might be caused
indirectly but as an identifiable consequence of its activities.
(5) Development of policies which encourage involvement by stakeholders in
the Company's decision making, encouraging a culture of openness and
understanding, focusing on issues of public importance and designed to
generate trust.

(1) Institutionalframeworks
It is characteristic of the hazardous activities which form the subject matter of

this study that they are based on specialist knowledge which is not normally
within the reach or understanding of lay people. Thus it is that society needs
to establish an independent source of specialist knowledge - a counterpoint which can examine proposals made by industry from a basis of equal knowledge.
This process has been called critical review or obtaining peer agreement
in a recent in-depth study of the nuclear industry (Macgill 1987).
Recent UK experience of this process can be found in:
(1) The House of Lords Select Committee on Science and Technology in their
investigation of the regulation of the UK biotechnology industry and its
competitiveness (The ENDS Report, No 225, 1993: 22).
(2) The Royal Commission on Environmental Pollution which has examined
preferred options for disposal of waste (The ENDS Report, No 220, 1993:
(3) The various public enquiries into the nuclear industry and most notably the
Sizewell B Inquiry (Berkhout 1991, Macgill, 1987).
In each case, specialist opinion is brought forward representing both sides of
the case and an intense critical review can take place. On occasions, heated
debate has ensued and, in most cases, the final result has been that industry has
received legitimacy to proceed to develop its technology, but within carefully
constructed regulatory and self-regulatory frameworks.
Part of this framework is the relevant trade sector bodies, of which the
Chemical Industry Association (see 3.2.2) is one. Society cannot negotiate


regulatory frameworks with each company in an industry; it uses statutory or

industry bodies for this purpose.
One example of this has been the way in which the European Commission
has progressed its strategic dialogue with industry bodies to define a framework for reducing the environmental impact of some priority waste streams,
such as tyres, chlorinated solvents and medical waste (European Commission
1990). The trade associations not only contribute to the framework to agree
standards; they also are expected to monitor the performance of their members.
An empirical observation of the nature of these debates is that the worst
initial fears about the dangers of hazardous technologies tend to subside and
are replaced by a perhaps more balanced view of the risks and benefits involved.
Thus in the 1970s, the scientists involved in USA and UK agreed a voluntary
moratorium on developing industrial biotechnology further until sufficiently
rigorous controls were agreed and in place. The recent House of Lords Select
Committee on Science and Technology now recommends a loosening of the
regulatory controls and a speeding up and simplification of the process of
notification (The ENDS Report, No 225, 1993: 22).
Similarly, the WHO now believes from epidemiological studies they have
carried out that many of the initial extreme fears of dioxin have probably been
overstated (Chemistry in Britain October 1992: 861).

(2) Monitoring and auditing

The second principle is that companies should devise measures which record
their performance in critical areas when seen from the perspective of their
external stakeholders.
As a result of public pressures to clean up its act, the UK Chemical
Industries Association (CIA) launched its Responsible Care programme in
March 1989. In doing this it was following similar launches in North America
the year before, and other national associations have followed since (Morrow
1989, Simmons and Wynne 1993). At a practical level, the aim of the programme is said to be to realise the CIA's policy of self-regulation within a
framework of legislation. This legislation would be to an extent which the
industry would regard as a realistic balance between protecting the essential
interests of society but allowing responsible companies to develop without
excessive regulatory burdens (Chemistry in Britain May 1989: 456). Responsible
Care has involved the national industries in drawing up codes of practice and
guidance and encouraging individual companies to implement them in a process
of continual self-improvement. A critical part of these codes is commitment
to measure and reduce impacts on the environment in the form of wastes and
other emissions.


Similar commitments are required of the many companies involving themselves in the UK BS7750 Environmental Management System, and in the more
recent EC Eco-management and Audit Scheme (EMAS). Both use the wellestablished methodologies of quality assurance to deliver the necessary audit
and control procedures (The ENDS Report No 206 1992: 18f, The ENDS Report
No 216 1993: 39). The C.I.A., noting the drive towards effective self-regulation
in other industries, is now involved in making its Responsible Care codes subject
to IS09000 verification. Thus external auditors will be asked to confirm that
individual companies are indeed building responsible behaviour into their
working practices. The Chemical Manufacturers Association (the US equivalent
to the CIA), also noting that performance indices done by the industry itself
may not carry weight in influencing the public, decided in June 1993 that
companies' self-assessment would be subject to third party verification (The
ENDS Report No 222 1993: 14).

(3) Improvement and innovation

In many areas industrial development is sapping the ability of the environment
to absorb its consequences. The list of environmental threats is very large,
including specific environmental damage such as that which arises from ozonedepleting chemicals and certain pesticides, more gradual impacts such as carbon
dioxide emissions and other contributors to global warming, as well as solid
wastes, acidic gases and river pollution, and depletion of irreplaceable common
resources such as fossil fuels, fresh water and some minerals. Recognising this,
for example, the CIA Responsible Care codes, BS7750 and EMAS all commit
companies to measure their environmental impacts and reduce them. The
philosophy of continuous improvement is built in.
Many of these environmental threats are subject to substantial scientific
uncertainty. Thus the basis for global warming, the implications of ozone
depletion and the full impacts of pesticides, for example, are far from clearly
designated. The science involved is simply too complex (Cline 1991, Financial
Times June 10 1992, Chemistry in Britain, February 1991: 111). As a result
society and governments wish to apply a precautionary principle, for example
in agreeing targets for reduction of carbon dioxide emissions, even though an
exact understaning of the impacts of global warming does not exist.
What is certain is that industry must modify and often reduce its impacts
on the environment if society is to provide succeeding generations with a
sustainable quality of life. Responsible business must understand the issues
involved and assess what it can and should do based on a balanced appreciation
of the complex issues involved. It should then take action to improve its
performance and find new ways of working with a proper sense of priorities
which balance managing consumer demands and expectations with best environ-


mental practice. These will not be easy to find. Environmental regulations, which
represent a form of societal consensus to control some aspects of industry, are
only part of the solution by their very nature. Irresponsible companies and
individuals can always find ways to circumvent regulation at least in the short
We live in an age of almost pathological consumption where wasteful
activities are built-in by our social system which focuses on material growth.
Only effective self-regulation can start to reverse this trend. However in a world
where the customer is King, customer education and carefully weighed risktaking are essential.

(4) Stewardship
The fourth principle is based on the notion that corporate responsibility doesn't
end at the factory gate. Product Stewardship implies cradle-to-grave ownership
of the consequences of industrial activity. It has become part of the chemical
industry's Responsible Care initiative, and is one of the most important yet
challenging codes.
Product Stewardship started in the agrochemical industry in the USA and
this industry has been notable for the way in which it has made the concept
operational. The logic for this is obvious; pesticides are poisons put into the
hands of farmers (Dinham 1993). The consequences of not controlling them
are clear from the damage caused by the unwise use of organo-chlorine pesticides such as DDT and described in 1962 by Rachel Carson in Silent Spring
(Carson 1962/82), the book which many regard as the starting point for modern
environmental concerns.
One result of a stewardship approach with agrochemicals has been the
development of Integrated Pest Management an approach now fully supported
by the industry. Pesticide treatments are carried out in a carefully managed
regime, only when really necessary and to the minimum extent. Treatments are
combined with a wide array of pest control practices. It specifies the wise
and selective use of pesticides only where they are really needed (Pimentel
Thus responsible behaviour includes cradle-to-grave ownership of activities
and products. It implies taking care that damage does not occur to the environment from products sold by industry, even where the product has passed to other
owners (customers and consumers) in the strictly legal sense. Stewardship can
be seen as enlightened self-interest; that it is to industry's benefit to protect the
market for its products. Thus the market for pesticides would be much more
constrained if Integrated Pest Management did not exist.
Parallel examples from this perspective have occurred in the banking and
insurance industries. In the USA, a significant court ruling occurred in the case


of US vs Fleet Factors. The court decided that a secured lender to a company

found guilty of environmental damage, has liability even though it had no direct
impact on management decisions. This occurs because security documentation
possessed by the lender was said to give them right to exercise some measure
of control. (Financial Times March 27 1992). This is also a form of stewardship.

(5) Involvement of stakeholders

In Section 3.2.l, institutional frameworks were examined as a means by which
society can make critical peer review a means of ensuring that industry behaves
responsibly. The notion was advanced that, as many technologies are beyond
the understanding of the lay-person, an institutionalised counterpoint based on
specialist knowledge is needed to regulate hazardous technology. There is plenty
of evidence to suggest that this is not enough (Berkhout 1991, Simmons and
Wynne, 1993).
Thus, the Nuclear Installations Inspectorate in the UK is regarded by the
nuclear power industry as well-informed and very demanding, but this does not
always stop the resistance to the industry'S plans from community action groups.
Indeed one study found that Greenpeace was regarded as the most effective
regulator of the nuclear industry by a significant number of local people
(Wynne, Waterton and Grove-White 1993). Similar arguments appertain to the
chemical industry and Her Majesty's Inspectorate of Pollution (HMIP). While
critical peer review is an important component of corporate responsibility, it
is not a sufficient condition for responsible behaviour. It would seem that to
the lay-person, regulators and the industry they purport to control, form an
institution in themselves which forms a barrier to trust for people outside their
club. Trust is a more subtle emotion (Simmons and Wynne 1993, The ENDS
Report No 206 1992: 18t).
Many useful studies into perceptions of environmental risk have noted the
social perspectives ofthis (Berkhout 1991, MacgillI987). Someone living close
to a chemical or nuclear plant may feel economically dependent upon on it, but
may not advance beyond a broad perception of how well (or badly) it is
managed. Studies into the nuclear industry have shown how complex is the
relationship between the industry and its neighbours;

the industry's very dominance has led to something of a <dependency

syndrome> in much of the surrounding population. This, in turn, manifests
itselffor many local people in the <burying> ofa range of personal ambivalences and anxieties about the plant, its operations and its implications
(Wynne, Waterton and Grove-White 1993).


This creates so-called nuclear-oases around such plants as Sellafield in the UK

where the industry is supported by local opinion but regarded with substantial
anxiety at the same time (Blowers, Lowry and Solomon 1991, Wynne, Waterton
and Grove-White 1993). Both the nuclear and chemical industries have established local initiatives in the communities around their plants to reduce the
anxieties of their neighbours and thereby help preserve their licence to operate.
Creation of trust is an emotional activity and full of apparent paradoxes.
Attempts to create openness by publishing data and arranging familiarity visits
may be counter-productive as a suspicious lay-person questions the motives of
this and wonders what is not being told. The climate of secrecy and forced
disclosures which characterise parts of the nuclear industry in many parts of
the world, do not help this (Wynne, Waterton and Grove-White 1993).
Trust, because it is an emotion, has more in common with brand management and image creation than with logical understanding and measurement.
Familiarity breeds trust as well as contempt, ifit is well managed and ethically
pursued. Thus best practice must include efforts to give hazardous industries
a human face and human values, as a way of inspiring justified trust in their



In the highly focused example of business-society interaction which is offered

to us by industries operating with hazardous technologies, the corporation is
just one element in a complex interaction of forces which is generating a
technological momentum. What is arguably an extreme case, nuclear technology,
illustrates the point that companies operating in such indlliltries (whose hazardous
technologies are, from the perspective of the present geleration, inherited)
can be regarded as designated stewards. They have a guardianship role on
behalf of society, protecting that society from dangers implicit in necessary but
hazardous technology and developing it on behalf of future generations.
Such a highly responsible social role of stewardship may seem most readily
envisaged when the industry operates in the public sector, with an apparently
direct social mandate. Yet this broad concept of stewardship is not diluted by
a formal change of ownership; far from it, because, in many respects, best
practice in managing hazardous technology is associated with responsible private
ownership. In such circumstances, the state can concentrate in representing the
interests of society without the conflicts of interest which direct ownership might
imply. This is one of the lessons which the environmental disasters of Eastem
Europe has brought hone to us.


Thus, from a practical, managerial point of view corporate responsibility

is highlighted when hazardous technology is managed in the private sector. There
is a clear need to manage, in effect to achieve the integration, of those aspects
of the day-to-day running of the company which can be derived from our five
principles, the processes of:
- industry regulation and self-regulation,
measurement and audit,
product and process innovation,
product stewardship along the length of supply and user chains,
stakeholder dialogue.
These five management processes, expressed in more conventional terms, are
realised through such processes as:
corporate affairs,
- corporate communications,
- research and development,
operational control,
- total quality management,
marketing, public relations and community affairs.
These are issues of business policy, and not side-issues. The chemical and
nuclear industries have learned that their licence to operate depends on
acceptance by their stakeholders of their activities. Each industry surveyed in
this study has been subjected to intense public scrutiny and been shaped in its
development by this scrutiny.
So, there is a clear challenge for us - as researchers, consultants or managers
in whatever industrial sector - which is highlighted by the specific example
we have given of hazardous industries. The first challenge is to understand the
implications of the five principles in any specific setting. Then the further
challenge is to understand the implications the principles for each of the
associated conventional management processes, and to integrate these in what
has been called the corporate social policy process)). Business ethics has a vital
role to play in this, as a tool in the search for an integrating framework of
corporate policy, and as a means of implementation.


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Packaging Company's Response to a Critical Challenge
Minna Halme

Public concern about preservation of our natural environment poses a major

challenge to business enterprises in general, but there are certain industries whose
environmental problems are under special public scrutiny. The packaging industry
is one of these cases. In recent years the question of environmental responsibility
has become a strategic issue within the industry. Packaging companies in the
western countries have had to redirect their business policies considerably. This
paper examines the impact of environmental demands on the Finnish corrugated
board industry, scrutinizing the strategic change in one enterprise. From an
empirical vantage point it looks at the kind of deep going changes that business
enterprises might have to undergo with increasing public expectations of accountability, and explores ways in which they can successfully cope with those



Among the various ethical issues modem corporations are faced with, environmental protection is one of the most critical. Over the past decades we have
seen a dramatic expansion of environmental problems, from pollution and solid
waste issues to deforestation, soil erosion and other forms of natural resource
depletion and degradation, to global concerns such as climate change and the
thinning of the ozone layer. A growing number of studies suggest that there
is a need for a new environmental ethic (Buchholz 1993, Burrows 1993, De
George 1986, Stead and Stead 1992, Tomer 1992). For the last three years,
environmental ethics has topped the list for additions to corporate ethical policy
statements (Throop et al. 1993). In some industries, corporate annual reports
P. Ulrich and C. Sarasin (eds.). Facing Public Interest. 199-212.
1995 Kluwer Academic Publishers.


have been devoting more and more space to descriptions of measures taken in
environmental protection (Nasi and Nasi 1993). Public concern for the preservation of our natural environment poses a challenge to business enterprises in
general, but there are certain industries in which environmental issues actually
outweigh other demands encountered by the business enterprises. The packaging
industry is one of these cases. Only a few years ago, the environmental effects
of packaging still had no priority over other ethical dilemmas in packaging (Bone
and Corey 1992), but the last three years have changed the business perspective
ofthe industry considerably. This paper shows how the environmental demands
imposed by society have redirected the ways of doing business in the Finnish
corrugated board industry, highlighting it with an example of one manufacturer,


The Target Company

The target organisation, a package manufacturing company called Walki-Pak,

belongs to a Finland-based international paper corporation, United Paper Mills
Group (UPM). The packaging industry is among the leading five industries in
the country. There are altogether three corrugated board manufacturers in
Finland, all of considerable size and with similar preconditions of operating.
The strategic change in our case company reflects the changes in the industry
to a great extent.
Over half ofWalki-Pak's turnover comes from export. Main export marketing areas are Scandinavia and Central Europe. Since many of its domestic customers are export companies, Walki-Pak is fairly dependent on export. The target
firm of this study, the corrugated fibre board unit ofWalki-Pak, is the biggest
of its ten subunits. Corrugated board is used mostly as secondary and transit
packaging, protecting goods while they are being transported. It is manufactured
by gluing together corrugated fluting (the inner corrugated layer) and one or
two liners (outer facings). Liners are called either kraftliner and testliner. The
raw material of kraftliner is usually bleached or unbleached chemical pulp,
whereas testliner contains recycled fibre. Ninety percent of the wood used by
the European pulp, paper, and board industry for virgin paper comes from
European forests; the rest is mainly from North America (Peippo 1993).



The Research Methodology

In-depth interviews of managers and company documentation were the main

data collecting methods. Data was gathered from informants from different levels
and functions of the target organisation. Twelve managers and two workers were
interviewed. Two respondents were from the UPM corporate level; one was
the managing director ofWalki-Pak; and nine managers as well as both workers
were affiliated with the corrugated board unit. The respondents represented
general management, marketing, production and R&D functions. Interviews
lasted from two to three hours each and some managers were interviewed more
than once. The main interviewees were also contacted by phone after and
between the interviews to check new developments in the process of change.
Most of the interviews were conducted between April and May 1992 and some
of them in December 1992. Interviews were semi-structured. All interviews were
tape recorded, transcribed in full, and coded.
For the purpose of gaining a wider perspective and more reliability, industry
experts from six organisations were interviewed: the Ministry for the Environment, the Packaging Technology Group, Finland's Consumers' Association,
Finnboard (the fibre board exporters' association), the National Consumer
Research Centre, and the Technical Research Centre of Finland (Food Laboratory). Documents and artefacts such as letters, memos, newspaper articles,
company newsletters, trade journals, annual reports, product brochures, packaging
studies, and legislative texts served as complementary sources of data.


Environmental Issues within Packaging

The most visible environmental problem created by packaging is municipal

waste. Others include the toxicity of landfills, the depletion of scarce or nonrenewable resources, litter, pollution and ozone depletion. In tackling these
issues, source reduction, recycling, choice of raw materials, energy consumption,
use of chemicals in the production process and use of harmful substances in
addition to basic packages are important considerations (Buchholz 1993, Karjalainen and Ramsland 1992, Stilwell et al. 1991). The main question in the
recycled vs. virgin raw material debate in the Nordic countries is, whether it
makes sense to use recycled fibre since
- it has to be imported (Collins 1992: 29) (the collection rate of corrugated
board in Finland is 65 percent and it is used in fibre board manufacturing), while
these countries realise an annual savings in forest stock (25 million m3 annually
in Finland);
- the use of recycled fibre requires more energy for transportation;


- recycled fibre-based corrugated boxes are heavier than their virgin fibre
counterparts (light weighting, i.e. development of lighter packages is an important
method of source reduction); r and
- fibre cannot be reused endlessly: from four to five times on the average, seven
times at the most. After that it becomes useless for anything else except for
energy production. At an aggregate level, the process thus always calls for
primary fibre (Peippo 1993).2


A Brief Chronology of Environmental Decisions and Events at and

around Walki-Pak

Walki-Pak's corrugated board unit started to use recycled fibre in 1987. Recycled
fibre comprised three percent of the total raw material used. The reasons for
starting to use recycled fibre were not environmental; wastepaper based fibre
was cheaper than virgin fibre and lessened Walki-Pak's dependence on domestic
primary fibre suppliers by offering an additional source of raw material.
Environmental issues became a frequent topic of discussion in Walki-Pak's
management group in 1987. They have been the most arduous of the managerial
group's issues. According to Walki-Pak's managing director's estimation, between
1987 and 1992,90 percent ofWalki-Pak's investments were based on environmental considerations. For instance, three new plants were built for environmental reasons.
The year 1990 was The Year of Environmental Protection at United Paper
Mills. Operations were evaluated from an environmental point of view and the
staff received environmental education. An Environmental Policy Statement was
published in 1991. These measures did not have a major influence on Walki-Pak,
because they were directed at the environmental problems occurring at UPMs
main business area, paper making.

In their efforts for environmental protection the Nordic countries have tended to resort
to light weighting. The central European countries for instance tend to use more recycled
fibre since they are densely populated and realize accumulation of recycled fibre. The
Nordic countries have minor accumulation of waste paper due to small and sparse
The Nordic pulp and paper industry has tended to argue that Scandinavian forestry is a
prime example of the sustainable use of natural resources. Criticism against the arguments
has been presented for instance in The Ecologist by Risto Isomiiki (1991), who calls Finnish
forestry unsustainable. In November 1993, following criticism expressed by Greenpeace,
the German magazine Der Spiegel accused the forest management methods in Canada,
Scandinavian countries, USA and Russia of threatening the biodiversity of Northern forests.


Corrugated board had always been considered an environmentally sound

material because it is made of renewable resources and is biodegradable.
However, visits to central European corrugated container factories and industry
conferences started to change the minds of some of Walki-Pak's corrugated board
unit's managers. In the summer of 1990, one of the biggest customers asked
for corrugated board boxes made mostly of recycled fibre. Walki-Pak was unable
to meet this request. This incident was an impetus to search for reliable recycled
fibre suppliers who could provide the firm with sufficient quantities of this
material. Only in 1991, however, when more customers began to ask for recycled
corrugated containers, did Walki-Pak's corrugated board unit systematically start
to increase the proportion of wastepaper raw material. By the end of that year,
the proportion of recycled material used had grown to ten percent.
Environmental efforts did not take place only at the recycling front. The
new corrugated board plant, completed in the beginning of 1991, uses natural
gas as an energy source and has modem waste colour purifying equipment,
although the water-soluble colours used by Walki-Pak are not supposed to be
harmful to the environment.
In 1991, Germany decided to reform its packaging legislation. According
to the new regulations, manufacturers and retailers are obliged to take back and
recycle the packages in which their products are sold. Enforcement of packaging
waste acts was phased in during the years 1991 and 1992. Also the European
Community's first proposed directive on packaging and packaging waste set
high targets for reducing the impact of packaging on the environment. Ten years
after the directive enters into force, 90 percent by weight of packaging should
have been recovered, 60 percent by weight of packaging should have been
recycled as a material, and no more than 10 percent of packaging waste output
should have been disposed ofthrough landfill or other means. The proposal was
not passed, and in December 1993 the EU accepted a more flexible amended
proposal. Finland, too, is in the process of reforming its own waste act with
measures somewhat similar to Germany's but not quite as extreme. It aims at
quantitative prevention of waste and increased recycling of packaging waste
so that in the year 2000 there will be less packaging waste disposed than in
Ironically enough, in less than two years the main strengths of the Finnish
packaging industry, own raw material production of fibre-based products and
significant vertical integration from raw material production to packaging production (European Packaging 1991), turned into double-edged swords. All in all,
the year 1991 was a time of confusion in Walki-Pak's corrugated board unit.
The environmental soundness of corrugated board and the Nordic countries' way
of manufacturing corrugated board of virgin fibre did not seem so obvious any
more. For many years no limits to the growth of the packaging industry had


been projected. Now in a short period of time, societies were taking more and
more serious measures to reduce packaging.
In the beginning of 1992, Walki-Pak's corrugated board unit made its first
long-term environmental decision. It began to use recycled fibre in ten different
corrugated board qualities on a continuous basis. Earlier the use had been occasional and products containing recycled fibre had been marketed only to
customers who had asked for it themselves. This decision can be seen as a
turning point in the company's environmental policy making. Prior to it decisions
dealing with the environment had been done as ad hoc or situation-specific
decisions. By mid 1992 the amount of recycled fibre had risen to 30 percent.
In addition, development of lighter packages was continuous. From 600glm2
in 1983 Walki-Pak had come down to 500glm2 in 1993. This long-standing trend
of light weighting, originally adopted in order to reduce energy and material
costs, is an important form of source reduction.
A more environmentally responsible business policy was shaped throughout
1992. In co-operation with Finland's Corrugated Board Association, Walki-Pak
conducted research among retailers concerning the advantages and disadvantages
of corrugated board (in terms of the environment) and published a brochure
Corrugated Board and the Environment. Walki-Pak also worked with other
Finnish corrugated board manufacturers to organise the collection of used
corrugated board in Finland and launched an extensive information campaign
about environmental aspects of corrugated board to 13 stakeholder groups in
January 1993.


The Impact of Environmental Concern on Walki-Pak's Business


We now move on to look at the elements ofWalki-Pak's business strategy that

were adjusted as a result ofthe environmental demands imposed on packaging.

6.1 Broad concept ofproduct

In line with their increased sense of responsibility, manufacturers have also been
adopting a broader concept of product, product stewardship. This refers to
systematic company efforts to reduce health and environmental risks in all
significant segments of the product life cycle (Roy and Whelan 1992). WalkiPak's new product policy contains several characteristics of an ecologically
oriented product policy: raw materials are used more sparingly, the amount of


waste is reduced, the waste is recyclable, and emissions of harmful substances

are reduced (Meffert and Kirchgeorg 1993).
Formerly, Walki-Pak's product concept was the end-product itself, a corrugated container. Today, product considerations often include the whole product
life cycle from raw material to disposal. Following are some statements or
activities that describe the practical implications of the new product policy:
- The focus of R&D activities is easier recycling.
- The corrugated board unit now has twelve basic product qualities (paper
grades) instead of four, because it has several redesigned products that contain
recycled fibre.
- Product development aiming at separation of materials is continuous. Composites that are technically easy to separate into their component materials, are
being developed.
- A prototype factory where composites of cartons and plastic can be recycled
was completed in February 1992.
Walki-Pak's new policy consists in an extensive use of recycled fibre as
a raw material; only a few years ago the company only used virgin fibre. Currently the share of secondary fibre is around 30 per cent, while the target is 50
per cent. However, in the Nordic countries the ratio of recycled to virgin raw
material is under constant consideration. The main question in the debate on
recycled vs. virgin raw material is whether it makes sense to use recycled fibre
since it has to be imported and since it does not promote light weighting. This
issue has also caused ethical concern to the managers of the corrugated board
unit: for all the above reasons, they feel it would be right to use virgin fibre
for corrugated board production in Finland. However, the managers also recognize the need to recycle paper and packaging waste. The strongest external
demand they face is that some of their customers require packages which contain
recycled material. Even if they agree with the facts above, the use of recycled
fibre is for these customers a strong selling argument or, in some cases, a
prerequisite for marketing in the first place. The latter is true for multinational
companies that have common environmental guidelines and for those customers
who export to Germany.

6.2 Competitive advantage

Price and good quality used to be the most important competitive factors. Earlier
it was thought that there are no limits to the growth of the packaging markets,
but that is no longer a viable premise. Because the target company does not
deliberately aim for negative growth, it must look for growth from somewhere
else than increased packaging. Potential new market areas include the developing
countries, Eastern Europe, or the former Soviet Union, where there exists a need


for packages, particularly for food. However, none of these countries can afford
these types of commodities. This means that new markets must be conquered
from other packaging materials or from competitors manufacturing similar
packaging. The competition has become fiercer, both between different packaging
materials and between companies manufacturing packages of the same material.
Nowadays environmental considerations, particularly recycling, offer an important competitive advantage. In the corrugated board unit this includes the
successful use of recycled fibre as a raw material and managing the collection
of used corrugated board from retail outlets where it accumulates.
The environmental demands imposed by legislation as well as customers
has made the competition within the packaging industry much harder. As its
competitors, Walki-Pak has now adopted a more active marketing strategy.
Whereas corrugated board manufacturers used to be reactive and passively wait
for customers to ask for environmental solutions, the initiative has now been
taken up the industry itself. The current policy is actively to offer more environmentally benign innovations.

6.3 Open corporate communication

Information disclosure and active communication have become a necessity not
only PR-wise, but also because they are a requisite for managing recycling
through the supply chain. As the general public began to take an interest in the
environmental impacts caused by packaging, Finnish corrugated board manufacturers expected corrugated containers to replace some of the plastic packaging,
since plastic is difficult to burn or recycle. As plastic is not biodegradable, it
would clog in the landfills for centuries. There was a fair amount of confusion
when the top managers of the corrugated board unit realised that corrugated
containers can be seen as representing a throw-away mentality and that they
would have to compete, for instance, with reusable plastic boxes. Also, some
companies are now fmding ways to recycle plastics profitably. It was realised
that the corrugated board industry would have to be much more open and active
in its information disclosure if it wanted to conduct a successful environmental
policy in the first place. Successful recycling requires co-operation from each
part of the supply chain. This cannot be achieved unless the members of the
supply chain from raw material suppliers to the waste management sector are
aware of recycling opportunities and their respective tasks. To improve recycling
both quantitatively and qualitatively, Finland's Corrugated Board Manufacturers'
Association (SAPY) decided to launch an information campaign under the
heading recycling project. It started up in spring 1992.
The first step was to collect more information about customers' experiences
of recycling corrugated board. To this end, Walki-Pak, together with Finland's


Corrugated Board Manufacturers' Association, decided to carry out an extensive

survey among retailers. 3 The survey was conducted in April and May 1992. The
main topics covered were the advantages and disadvantages of corrugated board
compared with other packaging materials; retailers were also asked how they
would like to see the collection of packages organized. On the basis of the
results, Finland's Corrugated Board Association set out to clarity stakeholders'
ideas about the environmental aspects of corrugated board by publishing a small
booklet called Corrugated Board and the Environment. In 1993 more environmental information was published, and towards the end of the year the Finnish
corrugated board manufacturers organised an information meeting about recycling
for the press and certain other stakeholder groups.

6.4 Active stakeholder policy

In Walki-Pak's case the need to improve the environmental characteristics of
products led to increased networking both horizontally and vertically. When
the solid waste crisis began to unfold, the previously very much non-regulated
industry suddenly encountered increasing concern from regulatory agents. At
first the package manufacturing industry adopted a more reactive attitude to the
new claims, but it was soon realised that the industry could not afford to wait
to be regulated; it needed to take an active standpoint. Today, Finnish corrugated
board manufacturers have active co-operation with the Ministry of Environment,
for instance. Co-operation between the players across industries was needed
especially to manage all stages of recycling. Co-operation with competitors
intensified. Even though they were competing with each other, package manufacturers and particularly corrugated board manufacturers shared certain common
interests. For instance, best results of collecting corrugated board were to be
achieved with co-operatory efforts.
The needs ofWalki-Pak's direct customers, i.e. the packers, became more
diversified. Before the rise of environmental issues, it had been enough for these
customers to offer good quality at a reasonable price. In 1991, the exporting
customers began to ask for recycled fibre in containers, whereas most customers
operating on the domestic markets still gave priority to quality and price. For
this reason, a more active marketing strategy, based on the customers' diversified
needs, was called for.

96 per cent of used corrugated board accumulates in retail outlets or industrial enterprises,
only four per cent ends up in households (The Working Group ofPackagings 1993). 109
retailers and ISO sales clerks were interviewed in the survey.


The need to develop the recycling of corrugated containers required cooperation with distributors and retailers. Retailers contribute to recycling by
collecting and assorting the corrugated materials which accumulate in their
premises. The waste management sector, which consists of PaperClaim Ltd.
and its members (the collectors), gained more importance because it was
necessary to organise the actual collection of corrugated board from retailers
and distributors.


A Prerequisite for Successful Environmental Strategy: A Shift in the

Managers' Ethical Values

The change of business strategy has demanded a change in certain values of

Walki-Pak's managers. Their underlying assumptions concerning the firm's
responsibility of the natural environment have shifted. Not more than a few years
ago, Walki-Pak's managers considered corrugated board environmentally friendly
because it is made with renewable resources, that is biodegradable, and manufacturing it does not pollute (compared to the air and water pollution caused by
other parts of the paper corporation). Under these assumptions the company
needed no policy to guide its actions in respect to the natural environment.
Managers strongly believed, and still to a great extent do, that manufacturing
corrugated board of virgin material in the Nordic countries is environmentally
benign. Nobody was expected to question this fact. For quite a while, corrugated board was seen as potentially beneficial to the environment. Slowly the
managers have realised that packaging and packaging waste cause environmental
problems. Today the nature's capacity to absorb wastes is seen as limited, and
the company aims at reducing the environmental harm caused by packaging.
As Walki-Pak's managing director and the plant manager of the corrugated
containers unit put it:
The question is to find packages that are the least harmful to the environment. (managing director)
We try to invest in production machinery with which we can manufacture
more environmentally sound products. (managing director)
I doubt the usefulness oflife cycle comparison between various packaging
materials to the average consumer. We are talking about the kind of values
and things that are difficult for consumers to understand and judge. It is
much more important to speak about how to reduce packaging in general
as well as their weight, and how to recycle packages. (plant manager)


UPM's and Walki-Pak's managers used to assume that environmental protection

can only create costs. Today, however, environmental consciousness and sound
business practices are no longer considered mutually exclusive, particularly in
the long term. A central tenet in the new business policy of Walki-Pak is to
invest in environmental protection and encourage environmental innovation.
Environmental investments to Walki-Pak's three new plants do not yet bring
profits, but they are seen as a future possibility. When it comes to developing
new products with environmental characteristics, they need to compete with
former solutions not only in terms of performance but also in terms of economy.
According to Walki-Pak's managers, most customers are not prepared to pay
more for environmentally sound products. But when a manufacturer succeeds
in developing a more environmentally sound product that is also economically
competitive,4 it can usually look forward to good future prospects in terms of
market share. The plant manager of corrugated containers unit stated:
It is important to do this business without burdening the environment. But
it should not create extremely high costs for trade, industry, or consumer.
And I think it will be possible.
If, however, a situation arises in which economy and environment are in conflict,
when, for instance, a customer is not willing to pay more for a more environmentally benign product solution, Walki-Pak's managing director anticipates
that the company would not make an unprofitable solution but would compromise the environmental considerations.
Environmental protection used to be viewed as a responsibility of the
government, its officials and legislators. The company reacted to regulations
and often opposed them. Usually minimal efforts were expended to achieve
Currently, the policy of Walki-Pak is to take an active part in solving
environmental problems. The managers assume that the companies in their industry should do so, since meaningful solutions cannot be created merely by laws
and regulations. However, the managers feel that optimal results for the environment could neither be achieved by businesses operating alone without regulation.
Managers hope for increased co-operation between legislators and industry. They

At Walki-Pak, the most recent example of this kind is a fiber-based lid for yogurt containers. It would replace the aluminium lid. The fibre-based lid has better performance
in many respects, but the price cannot be set higher than that of the aluminium ones. The
development process lasted two and a half years and was conducted in close cooperation
with the customer.


consider going beyond the regulation to be reasonable, because ofthe unpredictability of political decision-making.


Discussion and Conclusions

The case discussed in this paper exemplifies how society's demands for better
environmental protection can act as a trigger for considerable policy change
in business enterprises. Environmental concerns used to be viewed as exogenous
to normal business activities.}) The stand was reactive, the company used to
wait for directions and orders from the authorities. Recently, environmental
considerations have become an integral part of business and product policy
decisions at Walki-Pak.
The guiding idea in Walki-Pak's current business policy is to diminish the
level of environmental harm, i.e. solid waste, caused by its product. The most
viable methods to this end are recycling and light weighting. Product development towards lighter weight of packaging is continuous. To succeed in the
challenge of improving recycling, intensive co-operation is needed with other
parts ofthe supply chain from raw material producers to the waste management
sector (Halme 1995).
Before Walki-Pak was able to change its business strategy, changes were
also needed in the managers' ideas about the company's responsibility for the
natural environment. When first encountered by the demands to protect the
environment, Walki-Pak did not want to change its old ways of doing business,
but rather pursued to convince itself and its interest groups that its operations
are and always have been environmentally benign. However, a profound
change in business strategy was called for. The concept of product was broadened, the factors constituting competitive advantage changed, corporate communication today is more open, and the company's stakeholder policy more
active than in the past. The actual process of change was gradual.
The study indicates that business enterprises within environmentally critical
industries have begun to acknowledge the interdependence of economy and
ecology. The fact that managers recognize the role of business life in solving
environmental problems implies that the way of doing business as usual is
changing. Although we cannot draw any far-reaching conclusions on the basis
of one case study, the target company is a very typical representative of its
industry, neither a pioneer nor a reactionary in terms of environmental performance. It is not an isolated element but has linkages to what is happening at
least in the respective industry, if not in general. However, it can still be
questioned whether sustaining the natural environment calls for more profound


changes in business decision-making and operations than the ones described


Bone, P.F.lCorey, R. (1992): Ethical Dilemmas in Packaging: Beliefs of Packaging Professionals. Journal of Macromarketing, Spring, 45-54.
Buchholz, R. (1993): Principles of Environmental Management: The Greening of Business.
Englewood Cliffs, NJ: Prentice-Hall.
Burrows, B. (1993): Essay Review - The Greening of Business and its Relationship to Business
Ethics. Long Range Planning, 26, No.1, 130-139.
Collins, L. (1992): Environment versus Industry: A Case Study of How the Pulp and Paper
Industry is Responding to Changing Attitudes to the Environment. Business Strategy
and Environment, I, No.4, Winter.
DeGeorge, R. (1986): Ethics, the Environment, and Free Enterprise. Philosophical Inquiry,
VIII, 1-2.
European Packaging (1991). Surrey: Pira International.
Halme, M. (1995): Environmental Issues in Product Development Process: Paradigm Shift
in Finnish Packaging Company. Forthcoming in Business Ethics Quarterly.
Isomliki, R. (1991): Paper, Pollution and Global Warming: Unsustainable Forestry in Finland.
The Ecologist, 21, No.1, JanlFeb.
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Meffert, H.lKirchgeorg, M. (1993): Marktorientiertes Umweltmanagement: Grundlagen und
Fallstudien. Stuttgart: Schaffer-Poeschel Verlag.
Nasi, JuhaINiisi, S. (1993): The Environmental Question as a Strategic Element in the Finnish
Forest Sector. Proceedings of the International Association for Business and Society.
San Diego, CA.
Peippo, E. (1993): Environmental Facts about Paperboard. Helsinki: Finnboard.
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Range Planning, 25, No.4, 62-71.
Stead, W.E.lStead, J. (1992): Managementfor a Small Planet: Strategic Decision Making
and the Environment. Newbury Park: Sage Publications.
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of its Behavior. Ecological Economics, 6, 119-138.
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Other Archival Material

Amended proposal for a Council Directive on Packaging and Packaging Waste (1993).
European Community, COM (93) 416 final- SYN 436. Brussels.
Banks, K. (1992): Comparison Between the EC Packaging Directive and Local Country
Legislation. Presentation at Conference Packaging Waste: Collection and recycling
Implications of the EC Directive. London.
CITPA Consulting Group of Experts for the Environment (1991): Position Paper for the Paper
and Board Converting Industry
Der Spiegel (1993): PlUnderer im Norden. No. 46, 244-247.
Draft Proposal for a Council Directive on Packaging and Packaging Waste. European Community DG XI-A4, 2112/1992, Final Draft.
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Articles from UPM info 1991-1993 (United Paper Mills house magazine).


The Case of the Ciba-Geigy Incinerator for Special Waste
Ralph Saemann

Long-term success (or the sustainable development) of an enterprise will be

the result of the simultaneous and equivalent consideration of its
- social/societal, and
- environmental
responsibilities. Balancing and optimizing all three responsibilities will eventually
replace yesterday's maximizing one (= profits).
In order to achieve both the environmental and the social/societal compatibility necessary for any company's long-term success, legislation and market
instruments will prove to be necessary, but not sufficient: personal and corporate
ethics will be required as an additional and decisive third leg. In our Western
civilization the required ethics will be based essentially on
- ethics of responsibility, coupled with
- formal aspects of communicative ethics.
While the former will entail responsibility
vis-a-vis not only mankind, but also nature,
- not only for local and short-term, but also for global and long-term consequences
in all actions and decisions, the latter will require, for all major, disputed norms
or projects, open discussion with all competent parties concerned, in order to
strive for a consensus acceptable to all parties. Communicative ethics is the
appropriate formal attitude to face public interest in our times.
The case of the regional incinerator illustrates a company's attempt to combine both ethics of responsibility and communicative ethics in practice, in an
albeit still incomplete way.

P. Ulrich and C. Sarasin (eds.). Facing Public Interest. 213-217.

1995 Kluwer Academic Publishers.


The Project
Table 1 summarizes the dimensions of the project, which was conceived as part
of a federal program to establish sufficient capacity for the safe disposal of
special waste in Switzerland.

1. The Regional Incinerator


16'000 to pa


SFr. 120 mio


Ciba, Roche, Sandoz; cantons Basel City, Basel Country (and possibly
other cantons and Baden-Wiirttemberg)


October 1994

The Chronology of Events

Table 2 highlights the most important dates over the 6-year-period from the
beginning of the planning effort until receipt of the final construction permit.
The period 1988 to 1991 was above all characterized by intensive discussions
with competent parties, representative for some aspects of public interest, but
clearly critical of the original project.

2. Chronology of Events
May 85:

beginning of planning effort

Feb. 87:

first submission of project; request for detailed environmental analysis

(first environmental compatibility approval UVB)

Feb. 88:

re-submission of project; 450 objections; supplements demanded

May 89:

submission of supplements

Dec. 89:

receipt of construction permit; more requests; more appeals

Nov. 90:

rejection of appeals by cantonal authorities

April 91:

decision of major opponent to cease opposition

July 91:

final construction permit

1988 - 1991:

intensive period of discourse with critical, competent parties concerned


Ethics of Responsibility
Table 3 attempts to identify specific items of corporate and personal ethics of
responsibility, extending backward in time to the early 70's. These items illustrate, besides many personal, individual initiatives, a corporate culture reflecting a preparedness for going beyond the law (in the sense of the third leg
mentioned in the above). This aspect of corporate culture developed in part from
a traditional emphasis for long-term considerations and for long-term success
(rather than quarter-by-quarter improvement of results), illustrated also by an
intensive and lasting commitment to research. As can be seen, the development
of a modified, modem corporate culture does not take place over night.

3. Ethics of Responsibility
- Corporate principles (early 70's)
- Principles and guidelines for environmental protection (EP) (early 80's)

Role of EP among corporate functions (early 80's)

- EP as compulsory part of all investment projects and major planning activities (80's)
- Ciba's Corporate vision 2000 (late 80's)
- Increasing emphasis on eco-performance of units and individuals (90's)

First comprehensive corporate environmental report (press conference 93)

High levels of annual investment and expenses for EP (since 70's)

Leadership in regional water treatment plant (70's)

Development and pilot work in incineration for special waste (70's)

Successful incineration of the 41 Seveso waste drums in 1985

=> a preparedness for going beyond the law and

=> an emphasis on long-term considerations/long-term success


Communicative Ethics
Table 4 mentions some actions or attitudes which can be interpreted as illustrations of communicative ethics. Most of the items mentioned were voluntary and
legally not required, undertaken with the intention to develop the necessary
consensus between the company and all important opponents.

4. Communicative Ethics

Early involvement of local government

First report on a project's environmental compatibility (<<UVB)

Many discussions and info-meetings (ca. 100)

Two public hearings (CH, FRG)

Detailed project information to competent opponents; consideration of their arguments

in final design

- Neighborhood newspaper (ca. 30'000)


Concept of transparent plant, guided tours for neighborhood groups

Ciba's annual document Eco-Trend)), with all relevant eco-data of the Basel factory

Institution of an advisory board, with representatives ofNGO's, critics, local authorities,

with access to all operational data

Artistic decoration of building facades according to neighborhood preference

'* a willingness to engage in an open dialogue

Interestingly, and as a consequence of the open dialogue, the entire construction
period as well as the start-up operations for this originally sharply disputed
project were not marred by any significant public opposition.
Looking back, one can see that this period of open dialogue with the opponents (considered by many outsiders, even from the chemical industry, as
an (<unnecessary waste of time) turned out to be a cornerstone for gaining the
necessary public acceptance.



- For long-term success, industry will increasingly need to put emphasis on

corporate and personal ethics in all their actions and decisions; sustainable development will not be realized without this.
- In order to promote this needed change in personal attitude and behaviour,
the teaching of and raising the awareness for ethics must become part of the
educational process, in schools, universities, institutes of technology and professional associations.
While some efforts in Switzerland have started on a modest level in this
direction (e.g. at the two institutes of technology in Zurich and Lausanne; at
the University of St. Gallen; by the Swiss Academy of Engineering Sciences,
ZUrich, publishing Ethics for Engineers/Technical Scientists for use in
engineering schools), a much broader and encompassing effort is needed to
secure a successful future.


Jost Wirz

We all believe in a modem market system. We all believe that there is no better
way to solve the problems oftoday's society, to take care of people's needs and
to maximize their wellbeing.
Weare convinced that as a consequence and in order to succeed, companies
and institutions offering products and services must be totally market-oriented,
must be market-driven.
The better a company does detect wishes, hopes and wants of marketpartners and consumers and the better an institution has adopted a through-theline marketing philosophy, the more successful they are. (One of the many
definitions of marketing thinking reads - as you know: to satisfy needs - at
a profit.)
However and at the same time, we all know that reacting to market demand
blindly and to fulfill wishes of customers without reflection can be harmfull
to the world of today. There is a conflict of interest. Good marketing can be
bad for our planet. You cannot serve the stockholder and the environment
simultaneously. This phenomenon I call the marketing dilemma. Examples for
this daily contradiction are easy to find:
On the one hand, people love fast and powerful cars, spend more time and
money on travel around the globe, buy household machines and entertainment
equipment, use home computers and fax machines, consume blueberries from
California, beer from Holland (possibly in aluminum cans!) and wine from
Australia, install a sauna and a solarium in their home, are using highly concentrated and ever stronger detergents, etc., etc.
On the other hand, these buying and consumption patterns are - directly
or indirectly - a heavy burden on the environment.
Everybody is aware ofthis. But rarely are we consequent. Of the 30 million
light bulbs bought in Switzerland last year only one million were energy saving

P. Ulrich and C. Sarasin (eds.), Facing Public Interest. 219-224.

1995 Kluwer Academic Publishers.


lamps. They cost more, this is true. But they save up to 80 % of electricity.
Every child knows, to mention another example, that for moving heavy goods,
trucks are a bad and the train is the better solution. (By the way: this bad image
of road transportation goes so far that we - as consultants - recommend our
clients not to identify their lorries any more. What used to be the pride of a
corporation today is a stigma. So the merchandise travels in a neutral, anonymous way.) But at the same time, the same customers are extremely impatient.
When ordering, lets say, 24 bottles of Epesses white wine in Lausanne, we
want it now, immediately, not 10 days later.
What should a responsible marketer do in this situation? Listen to demand
only? Or also to his conscience? Retire certain products of his that can be
harmful to the environment? Disregard certain aspects of demand and stop
fulfilling needs - thus move away from a perfect marketing concept - and leave
the market - as a hero - to the competition? Or, if possible, produce better
products and educate consumers in the hope, the market will honor his
progressive policy? Maybe not today, but tomorrow? My question is: do we
have the time to wait for demand to shift?
Do you remember Protector, the first detergent in Switzerland without
phosphate some 10 years ago? The product launch was a failure. Protector was
too early on the market. Consumers lied when they told market researchers that
they wanted such a product. Their concern for clean lakes and clean rivers was
not real. They were not willing to pay a 10 % premium for a safer product. They
paid only lip service to improved water quality.
Or do you remember when in the US the first air bags were available in
cars at a little extra price? No reaction whatsoever. A good idea was a flop
because the time was not ripe.
One more example: The Wander company is ready to introduce Ovomaltine
(Ovaltine) in a refill bag in place ofthe traditional cardboard can, but is hesitant.
Why? Will the Swiss customers buy the product in the new package that offers
so many obvious advantages? (As you know, in theory, the perfect package is
one that weighs nothing, occupies zero volume and trumpets the product
manufacturer's buy-this-now message.) Or will the consumers from St. Gallen
to Geneva reject it because they want to stick to the little old drum reminding
them, in a sentimental way, of their childhood or of the days when the Swiss
army was unbeatable thanks to this secret weapon?
In general, refill packages have caught on quite rapidly in Switzerland. But
taking into account the many advantages of waste-reduced packaging for
detergents, cleaning products or milk, the success is disappointing. Is it because
the price difference is too small? And is this differential not greater because
the manufacturers do not want to push sales in refill packages too strongly
because big boxes and bottles and packs give them more shelve space - thus
more impact in the store?


One thing is clear. Don't do any research. Don't ask the public any questions
on these subjects. The answers are never reliable. In instances, when the head
says one thing and the heart another, studies are useless, if not misleading.
Take a look at this study undertaken in Germany in 1993. When asked what
factors would influence consumer behavior and product choice, the respondents
said the following (see table 1 below):

What influences buying decisions of consumers?

Companies that...




protect the environment

don't do any product tests on animals
take into consideration consumers' rights
take into account employees' interests
use new technology in a responsible way
create jobs for handicapped people
do not produce weapons
engage in fair trade with developing countries
make contributions for integrating foreigners
sponsor art and cultur
support political parties



* Percentage of people saying that this behavior

of a company is influencing positively their buying decisions
Source: imug-Emnid 1993

This is certainly not the truth. Consumers still prefer attractive brands, consumers
still like convenience products and go for bargain prices - even if they are aware
of the fact that what they do is not completely environment-friendly. Also:
consumers are lazy. In Switzerland, they return only every second battery. This
means that the other 50 % of the used batteries are thrown away with the
garbage. In spite of the fact that today you can easily deposit them in any store.
So again, how should the marketer behave?
Normally, for a corporation in a very competitive situation, both directions
- retiring certain products or launching completely new ones - are too risky
and too costly. Who can afford stop selling certain products that might not get
a special eco-award but that make a sizable contribution to the company's
profits? Who wants to be a marketing Winkelried?
Winkelried is a man out of the world of Swiss myths and legends. In the
battle of Sempach in 1386 when the Swiss and the Habsburg army stood face
to face a few meters apart in a High-Noon situation, this soldier by the name


of Winkelried grabed as many enemy spears as possible, threw himself to the

ground, thus opening a hole in the frontline and allowing his fellows to rush
forward and beat the Austrians badly. Of course Winkelried got killed. But his
sacrifice made victory possible. Is this a policy to be recommended?
The other question also remains: should a responsible company improve
existing products, launch eco-products even though consumer demand is not
yet strong enough - hoping it will grow or hoping to be able to change the
consumers preferences? I believe this is not the way. Nobody should take
decisions at his own disadvantage. This is against the system. This is pure
masochism. Do not forget: Winkelried did not survive.
Of course, in certain special markets, it is possible to use ecology as a USP,
as a unique selling proposition, and by doing this find a special niche in the
market and be successful. See The Body Shop cosmetic company of innovator
Anita Roddick. By the way: you might have heard that The Body Shop company
is being attacked these very days. US critics claim that the firm is treating its
suppliers in certain third world countries not as well as Anita Roddick is always
telling the public. And that they do use animals for testing their cosmetic products. See the clothing manufacturer and retailer esprit that tries to differentiate
itself from H + M and Benetton by stressing it uses only green cotton (whatever
that is) in its production. See the Max Havelaar line of coffee and tea products
coming from farmers in Latin America receiving better prices. See the Pablitobananas sold at Volg food stores at a socalled solidarity price reflecting the
trust free production. See the eco cheese products manufactured by the Baer
cheese company cooperating only with biological milk farmers. See the range
of products Migros is offering under the Migros-Sano label - a large selection
ofbio-food stuff. See the eco labels of Coop by the names of Coop Naturaplan,
Coop Natura Line for textiles and Oecoplan mainly for non-food goods. Speaking
of Migros: this huge retailer is making a great effort to increase rail transport.
See the new Volkswagen Golf Ecomatic whose Diesel engine automatically
is shut off when you take your foot from the gas pedal - thus reducing the
production of exhaust by one third. See the sporting shoes manufacturer Nike
that opened on August 27, 1994 a recycling court in Berlin, a basketball court,
the floor of which was manufactured by using 4'500 old Nike shoes. Nice idea.
But these are all singular cases: if they are more than PR gags, they are
creative or experimental ventures based on alternative thinking and building
on a particular segment in the limited market of eco freaks. So I was not
surprised reading last week that sales of Volkswagen's Oeko-Golf were
disappointing so that the manufacturer had to adjust the target for 1994 down
from 10'000 cars to only 3'000. And the trend towards ecological consciousness
is stagnant - if not shrinking. Take a look at the table 2 below.
We also note that magazines that were launched during the upswing of the
green movement in Germany are in difficulties these days. The leading title
Natur has lost almost a third of its circulation in 1993.


How many households consider themselves oeco-conscious?




not oecoconscious




Also the power and the pressure potential of consumer organizations are generally too weak to make an industry change its policies and practices. Institutions
like the Council on Economic Priorities in New York, the Franklin Research
and Development Corporation in Boston, the Investor Responsibility Research
Center in Washington, the New Consumer in Newcastle or Greenpeace or the
World Wildlife Fund WWF have become well known over the years, but their
influence is - should I say - negligible, or to be nice: small.
Their publications like the Business Ethics Magazine in the U.S. or
Oeko-Invest of Austria and Germany are more or less insider titles. It is a
pity. I like the idea of a guide like Shopping for A Better World from the
UK analyzing hundreds of companies and rating 2500 brands. So the consumer
can tum his or her shopping trolley into a vehicle for social change. With
minimal effort and expense your shopping power can be used to help build a
better world, it reads in the editorial. This is all very well. And it is conform
to the market-oriented system that is based on the undisputed fact that only a
shift in demand can change supply, that only consumers can make producers
produce other products. But this demand is not here, or at least is not strong
enough. So nothing changes, nobody moves.
The new directive of the EU on eco-auditing, effective since July 13, 1994,
is more or less a catalogue of wishes and hopes. Its effect will be minimal, I
am sad to say. We need incentives for large, established corporations like Procter
& Gamble, Unilever, General Motors and Toyota to adopt a new behavior.
The current system forces the entrepreneurs to close their eyes - and hope.
Hope for someone else to put up rules and guidelines that force all competitors
to behave differently, in an environment-friendly manner. But who might this
someone else be? Another invisible hand a la Adam Smith? Or industry?
Government? Or both together? It is clear that such dos and don'ts must
correspond to restrictions, directives or voluntary standards. They can consist


of sets of law or a system of rewards and penalties, if it is the government that

takes care of the problem.
Take as an example the car industry and the forced reduction of the exaust
problem. The solution? Fixing new and low limits and making bi-annual controls
mandatory - thus making the catalyst standard equipment and paving the way
for lead-free gasoline.
Take the State of California where, by the year 200 I, one out of twenty
cars, and by 2003, one out of ten cars sold must be completely exaust-free thus be a battery-powered vehicle.
Take the reduction of sulphur in heating oils. This step asked for more
modem burners thus improving the burning process tremendously.
Of course, if you leave the task of regulating an industry to the government,
there is the danger of over-regulation because bureaucrats in government agencies tend to be perfectionists. To prevent this from happening, a close cooperation between industry and the respective administration seems to be essential.
On the other hand, if an industry wants to establish its own rules of conduct
on its initiative, then we need self-regulation guidelines and industry-own
The Swiss beverage manufacturers decided on a code of practice when they
wanted a large portion of the aluminum cans to be recycled. By designing an
elaborate system they succeeded in getting 80 % of all cans back within only
three years.
The self-control measures of the Swiss cigarette manufacturers are another
interesting case in this area. In order to limit the omnipresence of promotional
material for brands like Marlboro, Camel, Barclay, Select and Parisienne these
companies have decided jointly to stop completely with certain activities that
many people considered as some kind of pollution. This is why you do not see
anymore Marlboro umbrellas in garden restaurants, no Camel posters in public
busses or trains, no Barclay flags outside tobacco shops, no give-aways like
Select paper hats or Parisienne T-shirts on children.
The adherence to these guidelines is supervised by the self-regulatory body
of the Swiss Advertising Association called Foundation for Truthfullness in
In conclusion, the market system and the marketing concept need to be
enlarged. They must be complemented by a belief in enlightened self-restriction,
sensible and fair market regulation making some practices illegal. Some freedom,
freedom of action that is, must be sacrified in favor of a system of fixed minimal
standards, in other words spears of equal lengths, forcing the marketers to
behave in a eco-friendly manner in the marketplace. We should be willing to
pay this price. It must be done, I believe, in order to overcome the marketing
dilemma and save the marketing philosophy and the whole market system as
otherwise ideal and unbeatable credos.






Perspectives from the Boardroom in Six Member States
David L. Mathison

Europe is experiencing a radical economic and political change. Many speculate

that this change is forcing Western European companies to abandon traditional
social democratic values in the workplace and replace them with a more
pragmatic hardened global value. To test this possible shift, top executives
representing six major European Aircraft Manufacturers were interviewed. This
industry was selected both because of its central importance in the New Europe
and because it was one of the hardest hit during the current recession. Four
clusters of questions were asked: What is your strategic response? How have
your Human Resources been impacted? How do EC laws limit you? Do you
see a change away from workers welfare? Content analysis was applied to the
findings and patterns were plotted. In general, most executives recognized a
trend moving away from workers welfare. Among other implications, the New
Europe appears to be a great deal less kind than the old.



There is considerable speculation in both academic and popular literature that

business values in EC Europe are undergoing a profound shift. Traditional social
democratic, cradle-to-grave corporate assurances are now giving way to a more
pragmatic new Eurovalue (Mathison, 1993; Farrel, et ai, 1993). The main
engine of change, it is argued, is the harsh reality of the present world recession
where western Europe has been especially hard hit with an official figure of
11 % unemployment now possibly growing to Eastern European levels of 16 %

P. Ulrich and C. Sarasin (eds.), Facing Public Interest, 227-240.

1995 Kluwer Academic Publishers.


in 1994 once make-work and training programs are financially stripped out
(Javetski, 1993). Underlining this trend, the once progressive Federation of
German Industry, the umbrella management association is now calling for a
fundamental reorientation of workers pay and benefit systems (Crumley, et
aI, 1993). Surprisingly, even amidst Les Thurow's failed predictions about Europe
in his best seller, Head to Head (1992) he correctly questioned whether the New
Europe could both maintain its highly progressive social principles as outlined
in the EC Social Charter and yet still compete with the purposefulness of its
Asian and North American counterparts who work for less pay, longer hours,
with less vacation and enjoy considerably less state mandated benefits.
However, suggestions that Western Europe is experiencing a profound
shift in core values)) flies in the face of two factors ethicists understand to be
among our most stable of human characteristics, first our values (Brady, 1990)
and second the implicit cultural agreement, or social contract (Donaldson, 1993).
Indeed proponents countering this argument of EC Europe in change, cite as
an example, Volkswagen's newly announced policy of a four-day work week
job sharing plan or France's Prime Minister Balladur's stubborn insistence of
a minimum livable salary while allowing more hiring flexibility as a typically
compassionate European Alternative to the US practice of mass payroll slashing
(Crumley, 1993).
Whichever argument is more compelling, one unavoidable fact still remains,
Western European companies pressed by global competitors are presently
trimming benefits. As well, the steadily expanding safety net that had been one
of the continents proudest achievements is starting to shrink with many citizens
worried that the new Europe might be a good deal less kind the old.
The purpose of the present study is to explore whether or not this shift is
a temporary even cyclical adjustment in troubled times, or a profound change
in European's core value system. Because the European Aircraft manufacturing
industry represents both one of Europe's leading economic concerns and is a
major employer directly impacted by the current recession it was chosen as an
ideal industry to study this possible shift in values. Six individual corporations
were visited in six member states. Systematic Interviews were conducted with
vice-president level representatives of each corporation. The results of these
interviews were analyzed, patterns of responses assessed and preliminary
conclusions made. Finally implications of these findings were drawn relative
to the field of Business and Society and the study of Implicit Social Contract



Literature Review

Jack Mahoney, Director of the King's College Business Ethics Research Centre
observes that while the US focused on business ethics some twenty years earlier,
it wasn't until the late 1980s that this subject emerged as an academic subject
in Europe (Mahoney, 1992). There were however, he reflects, some notable
exceptions. which include the studies of Melrose-Woodman and Kuerndale
(1976), Steinmann and Qppenrieder (1985), Webley (1988) and Harvey (1989).
Qfparticular relevance to the present study however, was Q'Neils (1986)
research which identified the European business perspective in relation to the
US. Concerning social issues, he observes: 1. they have different attitudes, 2.
Europeans favour greater responsibility toward employees, 3. they view social
issues from a more long term perspective, 4. they see Americans as being more
harsh, intense and ruthless especially in relation to job layoffs, and finally, 5.
Europeans feel they are more tolerant to governmental Intervention in relation
to workers rights, subsidies and social welfare.
Luijk (1989) makes similar observations. However, he also notices a subtle
shift in European business attitudes by the late 1980s and just prior to the
solidification of the European union. As EC Europe faces 1992 argues Luijk
(1990), 1. the number and size of Europe's business problems are growing, 2.
there is a new openness among executives toward change and innovative social
solutions and, 3. the business community is willing to dialogue as a means of
problem solving in national policy related social issues.
The Los Angeles Times Mirror Center for the People and the Press early
in 1991 conducted a survey which polled over 13'000 western Europeans (Los
Angeles Times, 1991). These researchers' goal was to gauge any possible shifts
in attitudes and values during this critical moment in European History. They
report they found an overall new optimism termed Europhoria, to be tempered
by new unwielding tensions. Respondents expressed specific concerns about
racial conflicts, the flood of new refugees absorbing traditional jobs and a
disquieting dominant Germany. The young and better educated seemed to
embrace change more readily than those who saw themselves as ill equipped
to compete in a new higher tech work environment. As these Europeans looked
eastward, military fears seemed momentarily resolved but now replaced with
additional concerns about further job loss due to low cost off shore manufacturing. While there was near universal support in this poll for further economic
cooperation within the Ee, respondents from individual member states expressed
doubts whether their own national economies would be strengthened in the
process. Not surprising, the welfare state concept was reaffirmed by these 13'000
Europeans, yet less than half were willing to pay higher prices to protect the


Of particular relevance to the present study is Mathison's (1993) research

which focuses directly on the question of a possible value shift among European
business leaders. A comprehensive survey was administered to 106 CEOs
representing the largest corporations in Western Europe. The results were
extensive and considerable agreement in values were found. Of major concern
for these CEOs was Soviet instability, pollution prevention costs and unwelcome
exploitation of Central Europe by non-European corporations. Even more
interesting was what these CEOs ranked as their lowest concern. Of least
importance was racial minority and women's opportunities, promotion by age
not merit, and a concern for the growing weakness of labours political power.
Mathison (1993) concludes by suggesting that there is substantial evidence of
a shift away from valuing European's traditional social democratic traditions
and a movement toward a new toughened pragmatic globalized Eurovalue.
It was suggested that corporate's need for survival may now reign king over
Europe's historic concern for individual workers welfare.
For the purpose of analysis this transition in values can also be understood
in terms of Implicit Social Contract Theory (Donaldson and Dunfee, 1993).
Essentially an implied contract of mutual responsibility has historically bound
the European Lord to his vassal a kind of labour in exchange for security
agreement. This is unlike the American implicit contract of labour in exchange
for capital where common concern for general welfare is not acknowledged.
Donaldson and Dunfee (1993) argue that once a contract is understood among
members of either a society or a specific community it tends to be a stabilizing,
even defining element of that Society which in turn resists change. Therefore,
it is suggested that while economic reality may be forcing considerable adjustments within the Western European communities employment structure it is
predicted that employee and employer alike will resist this inevitable change
to their society.



3.1 Overview of the study

To assess any possible shift in values a systematic series of structured face to
face interviews were arranged with six vice-presidential level executives
representing six leading aircraft manufacturers in Europe. The firms visited
included Aerospatiale of France, Dornier of Germany, British Aerospace of the
u.K., Alenia ofItaly, Pilatus of Switzerland and CASA of Spain. This industry
was selected to study for three basic reasons; First, it represents New Europe's
most shining example of meeting the 21 st Century head-on by balancing global


competition with member state cooperation; second, it is also one of Western

Europe's largest employers and finally, aircraft manufacturing is one of the
hardest hit industries during this current recession and represents a significant
proportion of Western European layoffs.
The interview format was selected over surveys because of its greater
potential to glean key information, plus 100 percent participation was gained.
Finally the information emerged in a more comfortable executive office setting
with follow-up clarification questions possible. The questions asked of these
six executives generally clustered around four basis themes:
1. What is your strategic response to the present recession?
2. How have your Human Resources been impacted?
3. How have EC law, national law and industry norms affected your Human
Resource decisions?
4. Do you see any change in Western Europe concerning workers rights and
do you agree with these changes?

3.2 Data analysis

Content analysis was applied to interview results, and patterns of responses were
assessed. Finally, these data were graphically depicted in a table format.



All six interviews were successfully completed within each corporation's

headquarters except for PHatus which was conducted in a Luzern hotel conference room. All were in English and ranged in length from 25 minutes to almost
two hours. For ease of comparison each corporate response will be considered
together under each question heading.

4.1 What is your strategic response to the present recession?

A comprehensive review of each aircraft manufacturer's competitive position
and strategic response is naturally beyond the scope of this paper. However,
in general it should be pointed out that this industry tends to experience
significant cyclical fluctuations such as the American Engineers Recession of
1971 which hit Boeing and McDonnell Douglas especially hard. Currently the
European Aircraft Manufacturing industry is experiencing many of the problems


that also plague greater Western Europe. This industry recently e~erienced a
severe cutback in product orders just following a significant period of sharp
expansion and increase in manufacturing capacity.
Amidst these circumstances three government owned aircraft manufacturers,
France's Aerospatiale, Italy's Alenia and Spain's CASA are all struggling to
survive within the confines of strong national laws designed to protect its
employees. However, each of these governments do provide financial aid to
these ailing companies in the form of lower taxes and interest rates, direct
research aid and supplemental contributions to severance packages.
Accordingly, Aerospatiale's strategic response to this industry wide recession
is to pursue joint ventures in an effort to share both costs and risks with other
firms, begin a hiring freeze and exercise a three week company wide layoff with
partial pay in hopes to control fixed costs. Alenia, the Italian owned counterpart
is also pursuing a similar strategy. This includes joint ventures, a mixture of
temporary and permanent layoffs, plus making backlog adjustments, that is,
negotiating with airplane purchasers when the plane is to be delivered, thus
smoothing production scheduling and in tum hopefully retaining employees.
The third government owned manufacturer is CASA whose executives report
is pursuing an identical strategy to Alenia except all layoffs are only temporary.
Privately held European plane manufacturers enjoy far greater freedoms
in their respective strategic responses and are apparently not hesitant to exercise
these options. By example United Kingdom's British Aerospace is not only
unencumbered by government ownership, the entire U.K. has opted out of the
Social Charter, EC's first line of defence of workers rights and benefits. Accordingly, British Aerospace's strategy for survival includes significant numbers
in permanent employee layoffs, joint ventures and backlog adjustments.
Dornier, Germany's private counterpart is also exercising its option of permanent layoff and is also diversifYing into consulting and solar energy research.
Finally, Pilatus of Switzerland, while not part of the larger Airbus Consortium
still shares strategies similar to the other private firms. Already 150 of the
approximate 1000 employees have been permanently laid off according to these
Swiss executives, with more layoffs being considered if contracts with Korea
and South Africa don't materialize. This is a near unheard of solution for tiny
regulated Switzerland. Pilatus is also diversifYing and negotiating new delivery

4.2 How have your Human Resources been impacted?

As previously noted, to a greater or lesser degree the human resources of each
of these six major European corporations have been directly impacted. To their
credit all of these executives from each of these firms have expressed specific


concerns for the human suffering involved with layoffs. However, also without
exception, if the legal option was available to reduce the workforce in any way,
it was exercised.
Again, Aerospatiale, Alenia and CASA all demonstrated the greatest restrain
on layoffs although there was considerable variation on how this was achieved.
To both maintain full employment and yet reduce fixed costs, France's
Aerospataile invoked a hiring freeze and introduced an across-the-board mandatory three week temporary layoffwith partial pay. If this interim measure proves
inadequate, Aerospatiale's executives indicated that they have developed a three
stage Plan B. The first stage will offer early retirement packages for employees
over 56 years of age, while the second will interestingly help employees to create
their own businesses. The final state will be to ask selected employees to only
work part time. Alenia has, like Aerospatiale, attempted to redistribute workers
to retain them, but in the end reduced its workforce in 1993 by a record 5000
employees. Corporate executives were quick to add however, that over 50
percent of these layoffs were only temporary. The firm is also using early
retirement incentives to assist in its efforts to dances. It should be noted that
the Italian firm is required to pay fully 80 percent of six months salary when
they layoff an employee. Consequently, Alenia faces extremely high termination
costs. CASA of Spain is the third stateowned firm visited and also a country
with possibly the highest of all termination costs. CASA has only directly laid
off 450 employees. However thousands have been laid off indirectly through
early retirement and voluntary termination incentives.
In the privately held firms located in Germany, the UK and Switzerland,
human resources experienced even greater impact. Dornier of Germany has
already laid off 540 employees and was certain to add an additional 200 to the
list before year's end. In fact the German executive interviewed for this study,
a man of about 55 years of age, intimated he himself was about to be terminated
within the month. Dornier was currently training managers to handle the layoff
and to understand how to legally justifY redundancies to the ever powerful
Company Works Council.
Remember, the UK offers maximum latitude to employers considering
layoffs. Under these conditions British Aerospace executives indicated already
800 workers have responded to the option of voluntary separation regardless
of the time in service. However, the expenses of this initial compassionate
approach soon became staggering with 1993 layoff costs ranging between 7
to 8 million pounds (about $ 12 million). More recent layoffs are based on
absenteeism and attendance. One company official interviewed indicated that
additional layoffs are imminent and Alternative methods to handle overcapacity
are being considered. Pilatus of Switzerland, as mentioned earlier, has already
reduced the workforce by 150 employees. They hope this is the last of the


layoffs because, as the executive interviewed noted, the company's culture

dictates that employee stability and sense of security are key concerns.

4.3 How have EC law, national law and industry norms affected your Human
Resource decisions?
Sources for a comprehensive review of EC national and regional laws and
regulations are readily available (Goodhart, 1993; Community Charter, 1993),
however such detail is beyond the purpose of this study. The following are legal
restrictions individual executives felt were most relevant to their decisions in
corporate downsizing, and mostly only these will be considered.
According to executives interviewed, the French government in December
1993 passed a law requiring corporations to develop a social plan for each
employee they wish to layoff. This law affects any firm with 50 or more
employees wishing to release ten or more workers. This social plan requires
measures to assist in re-employment via training courses, part-time employment,
shared employment with other firms and creation of new enterprises. This plan
must also be Ok'd by the Comite Centrale d'Entreprise. Minimum termination
payments are one-tenth of a months salary for every year employed. Officials
of Aerospatiale said also they must deal with local politicians on regional impact
studies. According to Aerospatiale's estimate, it cost approximately fFr. 300'000
(about $ 55'000) to layoff a single employee. In Italy prior to being released
an employer must give any employee a minimum 15 day notice. A mandatory
75 day consultation period begins once employees are given notice during which
alternatives to layoffs are discussed. If there are no solutions after 30 days, the
Employment Ministry joins the discussion. Employees released are guaranteed
80 percent of their current salary during the first year with benefits continuing
up to four years depending on age and location.
Termination costs in Spain are among the highest in Europe. Spain's Labour
Ministry must approve all layoffs and if the labour union opposes the layoff,
which according to CASA's officials is usually the case, the Labour Ministry
must investigate. CASA must continue to pay employees until a final decision
is made. If the layoff is Ok'd employees are entitled to 45 days pay for each
year of service with an 18 month maximum. To avoid union hassles often CASA
will agree to pay employees as much as 60 days salary per year of service.
German firms wishing to terminate employees must justify any layoffs with
the company's government mandated Works Council. Dornier cannot layoff on
the basis of age, tardiness or attendance. However, and surprising, performance
and social issues like marital status and dependent children may be considered.
A six-week notice is mandatory for releasing employees who have worked for
the firm under 10 years. Although termination payments are not specifically


required by law they are usually part of the Works Council social plan and are
relatively high. Dornier executives indicated that they already paid a preliminary
5.6 million DM (about $ 3.3 million) to the 540 employees released in 1993.
In the UK, government regulations are relatively simple and straight forward
concerning redundances. For large scale layoffs the firm must give employees
90 days notice and consult with the union. Although termination payments vary
according to length of service, most employees at British Aerospace were entitled
to one week's salary per year of service.
Finally, while Pilatus' executives reported only 150 layoffs in 1993,
additional measures were being considered to avoid any more redundancies.
This included introducing flex-time, early pensions and subcontracting for
additional work. These executives were hesitant to discuss both what was
required by Canton and Swiss National laws regarding layoffs and the actual
costs incurred with the ISO employees.

4.4 Do you see any change in Western Europe concerning workers rights and
do you agree with these changes?
In this final cluster of questions, executives from these six European corporations
were asked directly about their perceptions on Western European changes in
workers welfare and whether they agree with these changes. Understandably
many of these corporate leaders found this question both awkward and difficult
to answer.
Accordingly this section of the project, gleaned the least number ofresponses yet proved the richest in gaining a basic understanding of the essential
research focus of this study. Respondents proved surprisingly candid, few wanted
change, especially change away from such a universally agreed upon value as
workers welfare, yet most felt change was both inevitable and beneficial given
the changing world's intensely competitive environment.
French officers at Aerospatiale expressed deep concerns about its future
competitive position given both the US and Japanese freedoms to layoff nearly
at will and with minimum demands on the firm for specified severance pay
following termination. These same executives also expressed additional concerns
regarding local Toulouse authorities and their hesitancy to approve even
temporary three week layoffs with pay.
While Alenia executives complained about the high termination costs
imposed upon them by the Italian government they also expressed gratitude for
federal support in supplementing severance packages and other key aids. These
executives saw no governmental softening on workers welfare issues but
questioned if Italian industries could remain competitive much longer without
such changes. Spanish corporate leaders expressed an almost exact opposite


perspective on workers rights as compared to the Italians. They felt it was

obvious given Spain's current 23 % unemployment rate that Spanish corporations
cannot be and should not be asked to absorb the enormous costs of downsizing.
They felt Spain's restrictions on employers were too great and government aid
too little. They felt the trend in Western Europe was toward less federally
mandated workers benefits and they agreed with that trend.
The officials interviewed at Dornier did not blame German law nor workers
benefits for its lack of international competitiveness. And while they noted the
costs of termination proved high, they seemed to accept such payments as the
hard costs of doing business. These same executives did however complain about
the excessive pro-worker stance that the local Labour Office demonstrated when
Dornier was in arbitration with its own Works Council. They did agree that
likely the future for Europe would include less workers benefits.
The U.K. executives at British Aerospace seemed downright hostile toward
workers welfare issues and complained loudly about legal actions (industrial
tribunals) brought on by the union in retaliation for unwarranted redundancies.
It was voiced that unless EC Europe fully reconsiders the excess of workers
benefits (i.e., three fortnight length holidays, astronomical severance packages)
that Europe is doomed to remain uncompetitive against unregulated corporations
such as Boeing of Seattle.
Finally, Switzerland's executives at Pilatus simply declined to comment on
the question and pointed out that their products were not in direct competition
with any US or Asian aircraft manufacturers, therefore Swiss workers rights
were' not relevant. They did mention however that they valued the freedom to
decide on personnel matters, a freedom not enjoyed under EC Europe's restrictive
Social Charter.

4.6 Summary of results

Table 1 in the appendix graphically depicts some of the patterns and trends found
in the Interviews. Five out of the six executives interviewed acknowledge a trend
away from workers benefits but each offered unique reasons why. When asked
do you agree change should happen? again all but one executive said yes.
Whether or not the firm was state owned or private seemed to also influence
how human resources were handled. All three private firms, Dornier, British
Aerospace and Pilatus, resorted to permanent layoffs while the state owned
Aerospatiale, Alenia and CASA had only temporary layoffs. There are two
notable exceptions however. Alenia who reported in addition to the temporary
layoffs, fully 2500 employees were permanently discharged. This constituted
the largest number of displaced workers among the six firms yet it is also a
government owned corporation that reports very high government protection


for workers. The other exception was British Aerospace, a finn that enjoys
considerable latitude in dealing with employees and relatively low government
control in such matters yet the finn exercised considerable compassion and
restraint amidst the layoff process.



New Europe's executives do appear to share the perspective that traditional social
democratic values in the workplace are being seriously challenged. Some of
these corporate leaders studied agree with this trend while others strongly decry
such a transition. Both groups however wonder if EC Europe can remain
competitive without the change. This finding while limited to small but comprehensively studied samples seems to agree with earlier observations of Europe
in transition (Mathison, 1993; Los Angeles Times, 1991; Luijk, 1990, 1989;
O'Neil, 1986).
However, unlike earlier studies the present research suggests a growing
polarization of distinct European groups that earlier seemed to share core values
in common. The first is the rift repeatedly discussed by executives between
labour and management, the second and apparent division between government
versus privately owned companies on how human resources are managed. The
fonner division, Management versus Labour has all the eannarks of a traditional
US collective bargaining situation. The problem is this is Western Europe and
the implicit Social Contract is different (Donaldson & Dunfee, 1993). Both
employer and employee had defined and mutual obligations and rights. It was
labour in exchange for security. This contract appears broken. Whatever the
case nowhere in our sample with the possible exception of Dornier is there any
indication that this implicit Social Contract is honoured.
The other notable division observed in this study was between government
owned and privately owned companies. What is striking here is regardless of
national origin, privately held finns engaged in pennanent tennination while
state owned finns tended to moderate this option by favouring temporary layoffs.
The suggestion here is, given the option, executives in the Europe of the
mid-1990s will behave not unlike executives in North America or even Japan.
Considerable evidence in the literature anticipates just such a trend. Europe of
the mid-90s is apparently favouring a competitive positive over historic social
concerns (Owen and Dynes 1992, Mathison 1993 and Crumley, et al 1993).
While a full discussion of the implications ofthis study for the emerging new
Europe is clearly beyond the boundaries of this paper, four significant implications for ethics research do seem evident.


Implication 1: Traditional western European employee welfare is under assault.

Both corporations pressed by intense global competition and governments faced
with 23 million jobless are realizing an overhaul in the system is long overdue.
The developed world's largest safety net according to the majority of executives
interviewed strangles job creation by sapping incentive and making it too expensive to hire and fire. It is a good idea they argue but it doesn't work.
Implication 2: There is a new rift between western European labour and management.
The seamless fabric of unity of purpose, the social contract between labour and
management is now tom and this rip will likely grow wider. This was clearly
evident in the numerous negative comments about workers groups by corporate
leaders in the present study. This rift also pointed out well by the French
economics professor, Jacques Bichot, who observes any attempt to cut back
on benefits and job security have resulted in violent protests in Italy and massive
demonstrations in Germany (Crumley, 1993).
Implication 3: The need to avoid layoffrestrictions is accelerating privatization.
The French government recently offered to privatize Aerospatiale. As government
reduces the level of support it will likely result in an increase in layoffs to
improve efficiency. As a member of Italy's Industrial Reconstruction Institute
which has privatized many of its 1200 companies in the past two years, Alenia
could follow Aerospatiale's example. According to the Wall Street Journal,
(1993) this privatization trend in EC Europe allows more flexibility in hiring
and replaces a system that made firing workers almost impossible.
Implication 4: There is substantial evidence suggesting a core shift in values
away from historic social democracy toward a toughened new global pragmatism.
Western Europe like the Japanese today and the US of early 1990 are all facing
a new reality. The Third World is entering the fray with booming economies,
new markets and healthy manufacturing opportunities, be it for IBM computers,
Mercedes Benz automobiles or McDonnell Douglas aircraft. With this transition
into the 21st Century of intensified true global competition, there may emerge
genuine superordinate values shared by all developed countries, values that may
seem harsh to the European, Americans and Japanese alike. Will this trend
emerge and become a fixed part of Europe's new industrial character, or is it
an aberration that is a temporary departure from its normal course? Future
research should address such questions.

Yes, but unions

are resisting

Yes, but
government is
resisting change


Do you see any change in

Western Europe concerning workers welfare?

Do you agree with these



High Government Control

2500 Permanent

2500 Temporary

Joint Ventures
Negotiate Delivery Dates

High Government Control

3 Stage Plan
For Permanent

3 Week Temporary Layoff

With Partial Pay

Hiring Freeze

Joint Ventures

Mixture of
Temporary and



Temporary Layoff



Government owned

How has EC and National

Regulation affected your
human resource decisions?

How have your human resources been impacted?

What is your strategic response to the present recession?

Research Question Clusters


Table 1


Yes throughout
Western Europe

High Government Control

Attrition Strategy

450 Temporary






Yes, but questioned the wisdom of change

Moderate Government Control

540 Permanent





Yes felt change

was essential

Low Government Control

Attempting to
Smooth HireFire Cycle

800 Permanent


British Aero


Privately owned



Low Government Control

150 Permanent






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Crumley, B.lMade, W.lSchoenthal, R. (1993): Farewell to Welfare. Time, Nov 22, p.51.
Donaldson, T.lDunfee, T. (1993): Integrative Social Contracts Theory: A Communitarian
Conception of Economic Ethics. Economics and Philosophy, 1-36.
Farrell, C.lMandel, M.lJavetski, B./Baker, S. (1993): What's Wrong, Why the Industrialized
Nations are Stalled. Business Week, August 2, p.54.
Goodhart, D. (1993): Ground Rules for the Firing Squad. Financial Times, Feb 15, p.8.
Harvey, B. (1989): Business Ethics in Great Britain, in: Steinmann, H.lLoehr, A. (eds.):
Unternehmensethik. Stuttgart.
Javetski, B. (1993): You Thought '93 was Rotten for Europe'? Just Wait. Business Week, Dec.
27, p.62.
Los Angeles Times (1991): The Pulse of Europe, Sept. 17, Section HA.
Luijk, H. (1990): Recent Developments in European Business Ethics. Journal of Business
Ethics 9, 537-544.
Luijk, H. (1989): Crucial Issues in Successful European Business. Journal ofBusiness Ethics
Mahoney, J. (1992): personal conversations, London.
Mathison, D. (1993): What Social Issues Worry New Europe's CEO's the Most? A Methodological Study Comparing France, Germany and the U.K.. Journal of Business Ethics 12,
Melrose-Woodman, J.lKuerndale I. (1976): Towards Social Responsibility: Company Codes
of Ethics and Practice. British Institute of Management Survey Reports 28.
O'Neil, R. (1986): Corporate Social Responsibility and Business Ethics: A European Perspective. International Journal of Social Economics 13(10), 64-76.
Owen, R.lDynes M. (1992): The Times Guide to 1992. London.
Steinman, H.lOppenrieder B. (1985): Brauchen wir eine Unternehmensethik? Die Betriebswirtschaft 45,170-183.
The Community Charter of Fundamental Social Rights for Workers. 1993, Commission of
European Communities
The Wall Street Journal (1993): Italy Signs Wage Accord, p.A8
Thurow, L. (1992): Head to Head. New York.
Webley, S. (1988): Company Philosophies and Codes ofBusiness Ethics. Institute of Business
Ethics, London.


A Conflict with Public Perceptions
in the United States
James S. O'Rourke

This is an authentic case study dealing with corporate communication, media

relations, community relations, and the operation of an employee child care
center on the premises of a company in the Midwestern United States known
as Excel Industries, Inc. The company is a supplier of window systems to the
automotive industry that acquired a subsidiary firm known as Nyloncraft, Inc.
The decision of Excel Industries executives to close a child care center operated
by Nyloncraft, Inc. caused great harm to the reputation of the company, largely
because of media coverage and community reaction. Corporate executives
acknowledge that careful planning and a different approach to communicating
the message might have saved them from considerable grief and criticism.


Family Issues and the American Workplace

The workforce in North America, particularly in the United States and Canada,
is becoming increasingly female, reflecting a general trend toward two-paycheck
According to a study entitled Workforce 2000 from The Hudson Institute,
an increasing number of women are entering the North American job market.
Between 1990 and 2000, two-thirds of all new workers will be women. And,
by 2000, some 61 percent of all working-age women will be employed.
Most studies also indicate that these women are entering the job market
more for economic than for professional reasons. While the number of women

P. Ulrich and C. Sarasin (eds.), Facing Public interest, 241-250.

1995 Kluwer Academic Publishers.


with college degrees and professional credentials is rising, so is the number of

single-parent families headed by women. These families are, for the most part,
well below average in income and education, and are more likely than two-parent
households to require public assistance.
Employers are coming to realize that what had fonnerly been seen as women's issues - including flexible scheduling, maternity and family leave, and
daycare - are really family issues deserving serious attention from both the
public and private sectors. Some of these matters have become the object of
protracted and heated negotiation during collective bargaining. And, what once
was regarded as a lUxury or fringe benefit in many organizations, is more
frequently viewed by employees as an entitlement.
In North America, and especially in the United States, daycare for the
children of working mothers is not seen as an entitlement to be provided by
government. The U.S. Federal Government views itself as constitutionally
excluded from issues related to management of education and childcare, and
state and local governments cite a lack of funding. Corporate America has
increasingly come to see a social responsibility for the children of their employees, and employees have come to expect and depend on such corporate responsiveness to their needs.
This case deals with several aspects ofthese recently-emerging family issues.
While each employee has both a cost and a value to a business organization,
each employer has concomitant obligations and responsibilities to those employees. This case is about balance among those obligations and management
decision-making when obligations are in conflict or when responsibilities pull
in opposite directions.

1.1 Corporate communication and public perceptions

This is also a case involving corporate communication. The executives and management of every business enterprise operate in an environment that is information-rich, yet rife with rumor, misunderstanding, and misinformation. Business
leaders must understand that every action, whether intended for public discussion
or not, will have an effect on the public's perception of their business.
Business leaders should also understand that, as they draft their corporate
strategy and implement tactical moves in the marketplace, they will interact and
communicate with a very diverse and complex audience. Those who will see
and hear of management's actions will have varying backgrounds, reading
abilities, knowledge of the subject, political views, prejudices, and interests.
In many ways, the mass audience reached by radio, television, newspapers,
and magazines is many smaller audiences. It may be helpful to think of the larger
audience as comprised of shareholders; customers; suppliers; competitors;


politicians; local, regional and national government officials; potential investors;

prospective employees; neighbours; community members, and so on.
In some cases, business leaders might well consider separate messages for
separate audiences, designing their words and pictures for the backgrounds,
needs, interests, inclinations, and potential reactions of each. Shareholders, for
instance, might have a greater interest in knowing how an event or announcement
will affect their investment than do members of the surrounding community.
Employees might have a much keener interest in how an event will affect their
jobs and their lives in the organization than would others.
The case of Excel Industries, Inc. is an authentic case derived from personal
interviews with executives and employees ofthe firm and its subsidiaries. Contemporary press reports provide corroborating evidence ofthe events described
in the case.


The Acquisition of Nyloncraft, Inc.

In 1988, Excel Industries, Inc., a supplier of window systems to the automotive

industry, purchased Nyloncrafi, Inc., a $ 40 million injection molding company.
Both firms are headquartered in Northern, Indiana, in the heart of the domestic
automobile supply region. At the time of the acquisition, Nyloncrafi was a highly-regarded firm with great promise for growth, and had exactly the sort of
manufacturing capacity, equipment, and labor force that Excel Industries was
looking for.
At the time of the corporate takeover, Nyloncrafi, Inc. operated a daycare
facility that was regarded as among the most innovative in the nation. Money
magazine, us. News & World Report, and other business publications featured
the facility, describing it as (<one of the best equipped 24-hour-a-day learning
centers in the Midwest that is operated by a corporation for the benefit of its
James J. Lohman is Chairman, President, and Chief Executive Officer of
Excel Industries. When the Learning Center was opened, he said, it suited
the needs ofNyloncrafi very nicely. It was expensive, but it helped us to attract
and retain a reliable workforce that would help the company grow. We had a
number of female workers who were of child-bearing age and it made good
sense for us to assist them with their childcare needs. We knew from experience, he added, that a first-class, on-site learning center would reduce turnover,
absenteeism, and tardiness. It was good for business, it was good for our
employees, and it was good for the kids.


2.1 Excel invests in the Learning Center

When he said expensive, Lohman wasn't exaggerating. When Excel acquired
Nyloncraft, we immediately invested $ 200'000 in the Learning Center, improving it so that it met or exceeded all recommended standards for facilities of that
type. The center's annual budget was in excess of$ 400'000 to provide roundthe-clock care and instruction for 110 children.
Within a few years, Lohman said, we discovered that fewer and fewer
of our employees had children enrolled in the Nyloncraft Learning Center, so
we expanded enrollment to the community at large. By 1990, less than 10
percent of those enrolled were children of Nyloncraft employees. By then, the
annual subsidy was near $ 300'000.
We weren't just looking after these children, as a babysitting service
might, he added. We provided state-certified instruction, professional preschool development programs, and we fed them. Our insurance, reporting, and
oversight problems were growing by the day. It was becoming increasingly
difficult to justify a subsidy that was well in excess of a quarter-of-a-million
dollars for the children of only 10 Excel employees. The financial pressure was
simply too great for us to continue the operation.


Excel Executives Decide to Close the Learning Center

Excel tried unsuccessfully for nearly a year to find a buyer for the Learning
Center. Failing that, they tried to fmd a management firm that would agree to
take over the day-to-day operations of the facility. No one would step forward
to help us, he said, so we reluctantly decided to close the Nyloncraft Learning
Center. It wasn't something we wanted to do; we simply had no other choice.
Lohman approached each ofthe parents with a personal letter, telling them
the center would close in two months. We did everything we could to help
them find alternative daycare during that time, he said. Obviously we felt
an obligation to the children of our employees. That's not the way the community - led by eager television and newspaper reporters - saw the issue.
We were vilified for the way we handled this, Lohman said. We had
lost more than three-quarters of a million dollars on the Nyloncraft Learning
Center operation since we purchased the firm; very few of our employees
actually had children enrolled in the programs they offered; and in the midst
of an economic recession, we couldn't justify the expense. A more pro-active
approach to the situation might have helped. Anytime you have bad news to
give someone, you need a plan that will assure a minimum adverse impact, both
on the people who receive the news, and on the company's public image.


3.1 News coverage focuses on Excel critics

Local news coverage of the Learning Center closing focused almost exclusively
on the plight of the non-employees who would have to seek alternative daycare
arrangements for their children. The vast majority of the non-employees were
young, low income mothers working in minimum wage jobs that provided no
benefits, such as daycare. Television news cameras from WNDU/Channel 16,
WSBT/Channel 22, and WSJVIChannel 28, caught these young women in moments of anger, frustration, and confusion. What are we supposed to do?
shouted one mother. They've just kicked my kids out in the street!
The emotional scenes, videotaped just outside the Nyloncraft Learning
Center, were entirely one-sided and edited for maximum reaction from television
viewers. Newspaper accounts were generally more restrained and somewhat
better balanced with management reaction, but headlines were certainly provocative.
What should Excel have done, in retrospect, to soften the blow? Well,
that's not easy to say for sure. I do know that the public never did hear our side
of the story, and that would be my first objective, either in news stories or paid
advertisements. We wanted to be responsible citizens, but there was no easy
solution to this case. Did the community eventually understand your dilemma?
I think most community leaders knew from the beginning what the problem
was. We just didn't communicate well with young mothers about how we and
the community would address their very real need for proper daycare.
Nyloncraft, Inc. is a profitable subsidiary of Excel Industries, Inc., but is
no longer in the daycare business. Excel donated the furnishings, equipment,
and learning materials from their Learning Center to the local YMCA, which
now operates a similar facility.


Timetable of Events

- April 1988: Excel Industries, Inc. completes the purchase of Nyloncraft, Inc.
of Elkhart, Indiana.
- June 1988: Excel Industries, Inc. Board of Directors approves the investment
of$ 200'000 in the Nyloncraft Learning Center to upgrade facilities and improve
educational programs.
- August 1990: Senior management reviews the $ 300'000 annual subsidy to
the Nyloncraft Learning Center and elects to discontinue financial support for
its programs.


- September 1990: Excel Industries, Inc. Board of Directors approves the management decision to close the Nyloncraft Learning Center. Senior management
decides to seek a buyer for the facility.
- August 1991: After nearly a year, no suitable buyers or sub-contractors are
found to operate the facility. Excel management contacts parents, telling them
the Learning Center will close in two months. Alternative daycare arrangements
are sought for the children of Nyloncraft employees.
- August - September 1991: Parents who are not employed by Excel Industries
contact local news organizations, notifying them of the decision to close the
Nyloncraft Learning Center, and complaining of unfair treatment. Local newspapers, radio, and television outlets cover the story, focusing primarily on the plight
of non-employees who have few alternatives for daycare.
- October 1991: Excel Industries management counter strongly-negative publicity with detailed announcements of their own. Press releases and brief interviews go largely unnoticed. Furnishings, equipment, and learning materials are
donated to the Elkhart YMCA, which agrees to expand its day care operations.


Lessons Learned

Reasonable observers of the events described in this case might well conclude
that a corporate enterprise such as Excel Industries has neither a legal nor an
ethical obligation to provide either daycare or pre-school instruction for the children of its employees. By the same token, however, the same observers might
see the value in doing so.

5.1 The value of the Learning Center to Excel Industries

The operation of a learning center such as the one described at Nyloncraft, Inc.
might well provide the firm with:
- A loyal, stable worliforce that develops strong emotional ties to the company.
Reduced turnover, diminished recruiting and retraining costs, and lower absenteeism and tardiness might well result from such emotional bonds.
- Favourable community relations and an enhanced image as a good corporate
citizen within the area served by the company.
- Enhanced recruiting advantages, as the company seeks out new workers to
replace those who move, retire, leave the firm, or are promoted.
- Stronger ties to shareholders because of the reduced likelihood of strikes,
job actions, and general employee dissatisfaction. This assumes, of course, that


the operation of the learning center would not adversely affect the firm's

5.2 The role of corporate communication

A reasonable observer of the events described in this case might also conclude
that communication is at least as important as noble intention. Corporate communication strategy is also just as relevant as corporate actions in judging whether managers have followed an ethical course. Careful planning in the corporate
communication process might have suggested a plan of action that would
- Separate messages for separate audiences. Shareholders are interested primarily
in the impact of the learning center on profit, whereas parents are interested
primarily in the welfare of their children. Carefully crafted and internally consistent messages, focusing on the primary concerns of each group would not be
difficult to formulate and deliver. Management cannot say fundamentally different things to different groups, but can easily focus on each group's special
interest in the decisions of the corporate leadership.
- A detailed description of efforts to secure alternative daycare arrangements
for both employees and non-employees who use the learning center. Even unsuccessful attempts to improve the circumstances ofthese parents are worth discussing, if only to assure them that the company's management cares about them
and their families.
- Face-to-face interaction with those people most directly affected by the decision to close the center. A letter, memo, or general notice is likely to be perceived as distant, cool, and uncaring.
- Careful timing of the release of messages related to the decision so that parents don't learn of the action through the mass media. Corporate management
should never use the news media to communicate with people who expect to
hear from them directly.
- Messages that focus on the ethical, positive, and human-responsive actions
of management. The news media, by their very nature, will focus on the exception, the aberration, or the unusual in depicting the day's events. Coverage will
tend to depict, more often than not, what's gone wrong rather than what's gone
right in situations involving conflicting rights or interests. Furthermore, in a
time when nearly two-thirds of all adults in the United States say they get most
or all of their news from television, management should expect the public's
understanding of a story to be incomplete at best. Television is, by nature,
shallow, simplistic, and superficial, concentrating on visual imagery, quick
changes of scene, and fragmentary, almost mosaic impressions. Details, analysis,
perspective, and depth are left to the more serious newspapers and weekly news


magazines that are read by just a fraction of the population. The perceptions
left by journalists who employ a hit and run methodology as they dash from
one story to the next, will often leave interested viewers with fragments and
snippets of fact, stitched together with opinions that are often gathered at

5.3 Public perceptions of management actions

Reasonable observers might further conclude that, in the minds of many who
will learn of and follow the details of a case such as this while it unfolds,
perception can equal reality. For many, in fact, perceptions may form the basis
for both attitudes and action, even when the perceptions are false. Good deeds
that go unnoticed are still good deeds. But when the general perception of a
company's actions is that management is behaving badly or behaving in a cold,
uncaring way toward its employees, perceptions can wrongly destroy a
company's reputation. This is particularly unfair when the perceptions - gathered
in large part from the news media- are unbalanced, untrue, or incomplete. James
Forrestal, an American cabinet official in the Truman Administration once
remarked: You must not only do a good job, but the public must also know
that you are doing a good job.


Questions for Discussion

1. What ethical obligations, if any, did Excel Industries have to the women who
were employed there? Is an employer obligated to provide daycare for its employees' children?
2. What obligations did the ftrm in this case have to the community? Having
once opened its doors to the children of non-employees, was the ftrm obligated
in any way to continue caring for them?
3. Could a firm such as Excel Industries sidestep ethical issues associated with
daycare altogether by recruiting either male employees or women past child-bearing age?
4. What responsibilities does Mr. Lohman have as Chief Executive Officer to
the shareholders and debtholders of Excel Industries, Inc.? Does his obligation
to maximize shareholder wealth and minimize debtholder risk conflict with an


obligation to provide a safe, comfortable working environment for female

employees who may be concerned about child care?
5. Once it became apparent to Mr. Lohman that the Nyloncraft Learning Center
could no longer be economically justified, what ethical obligations did he have
to the women whose children were enrolled there?
6. Do the company's responsibilities to employees of the firm exceed those it
may have to women who are not employed by Excel Industries?
7. What role should corporate public relations and the public news media play
in communicating this decision to Excel employees? What role should they play
in communicating the decision to the community at large?
8. What vested interest do you suppose the community of Elkhart, Indiana, has
in the continued operation of the Nyloncraft Learning Center?
9. Do any reciprocal obligations exist between the community and the employers
for the proper care, feeding, and education of pre-school children whose parents
are employed in the community? Has Excel Industries violated any unspoken
pact between management and its workers, or between the company and the
10. In explaining the decision to close the Learning Center, how much detail
is Mr. Lohman obligated to reveal? Is the community or are his workers entitled
to an audit of the Learning Center's resources?
11. In this particular case, is adequate daycare for employees' children simply
a fringe benefit, or has it become a condition of employment?
12. Does an employee have a right to expect anything more from an employer
than a paycheck and safe, humane working conditions?

Brown, T. (1990): Workforce 2000: Will It Work? Industry Week. 6 August, 19-2l.
Canfield, s. (1993): Work and Family. The Seattle Times. 6 January, C5-7.
Hudson Institute (1987): Workforce 2000: Work and Workers for the Twenty-First Century.
Lohman, J. Chairman, President & Chief Executive Officer, Excel Industries, Inc., Elkhart,
Indiana (1991/1993): Personalinterviews between 31 October 1991 and 2 August 1993.

Miller, W. H. (1991): A New Perspective for Tomorrow's Workforce. Industry Week. 6 May,
Williams, L. (1992): Companies Capitalizing on Worker Diversity. The New York Times.
15 December, AI, AI6-17.

Stefan Jepsen
Jilrgen Deller

The presented project is an attempt to investigate the concept of responsibility

in management and its application in the context of personnel development
policy of Daimler-Benz. Empirical research at a personal level in the groups
of up-and-coming managers and regular staff members is a main part of this
In our opinion management ethics can be seen as a task of education. If
we understand management ethics in this way, and on this basis seek to locate
the issue inside businesses, then we must pose the following questions. Why
can management ethics represent an innovative challenge for personnel development in a major concern, and how can the issue of implementing responsibility
in management be integrated into personnel policy? In order to get responses
that relate to actual practice, we wanted to know first of all what - and how
- employees think about responsibility in management.
Management ethics can play an integral and central role in the career
development of our employees and in the further development of the structures
within the concern as a whole. It can become a task of education that finds its
application within a continuing process of education.



The pilot project we would like to present is an attempt to investigate the

concept of responsibility in management and its application in the concrete
context of personnel development policy within the Daimler-Benz AG. The
P. Ulrich and C. Sarasin (eds.J. Facing Public Interest. 251-265.
Ii:> 1995 Kluwer Academic Publishers.


research is part of a doctoral thesis project. The main subject of this project
is to find a starting point for social-ethical reflection of management as an area
of moral responsibility.
Up to now, Protestant social ethics has mainly been concerned with
reflecting upon problems of what we may call economic ethics in the sense of
market ethics. Questions about the scope our economic systems offer for
adjustment in the direction of a sustainable economy, i.e. an ecologically sound
and socially acceptable economy, have played a central role. I On the other hand,
Protestant social ethics has paid little attention to business ethics in the sense
of the ethical questions affecting individual businesses - what we may term
management ethics. Exemplary this is reflected in the German Evangelical
Church's discussion paper Gemeinwohl und Eigennutz - Wirtschaftliches
Handeln in Verantwortung fiir die Zukunft (ed. 1991: 104 f.), in which the idea
of a business as a location of moral responsibility is barely addressed (Ulrich
1992a: 86ff.). Up to now, management ethics has been regarded above all as
the territory of economists. 2 As far as social ethics is concerned, many aspects
of management ethics represent a field that has yet to be dealt with adequately.
As this cooperation, from the very outset, took on the form of a dialogue
between theory and practice, we should also today like to retain this structure
element which is very important for us. Thus, we will first of all present from
the viewpoint of the practicing manager why business ethics is an important
subject for future-oriented personnel development (Part 2). After this we shall
make a number of comments on the aim of the project and on the conception
ofthe questionnaire (Part 3). Seen against this background, we should particularly like to throw open some initial results of our survey for discussion in this
workshop (Part 4). In this connection, we consider it very important that we
want to present some first emerging results and trends. They offer the occasion
for a multitude of questions which we pose at present with respect to the analysis
and assessment of our project (Part 5).


Business Ethics in a Personnel Development Perspective

2.1 Initial situation

Responsibility in management, both internal and external responsibility, is a
natural and constant topic within a company whose activities - alone on account
of its size - affect many aspects of society, and which at the same time, through

See e.g. Rich (1987; 1990: 13).

See e.g. Staffelbach (1994), Forum fur Philosophie Bad Homburg (ed. 1994).


its innovations, is involved in shaping the future of our society. In our personnel
development measures the topic responsibility is indeed touched on in many
ways - but most ofthe time only touched upon and not dealt with explicitly.
This taking-for-granted with which the issue responsibility is treated can
far too easily lead to a failure to see that there are a great many situations where
it's initially not at all obvious what a responsible decision might look like. On
top of this a general shift in values, and the fact that our employees come from
a variety of different cultural backgrounds, means one can no longer automatically say that decisions are made and carried out on the basis of a particular
set of shared common values.
It is with this background in mind that we approach the question as to
whether responsibility in management is an issue for personnel development
policy in a major company. Ifpersonnel development is to mean more than the
administration of career paths, then this is a question which it has to tackle.

2.2 Possible effects ofdealing with questions ofbusiness ethics within personnel
management policy

Our project can have internal and external consequences. Internally, it can serve
to initiate a process of discussion about responsibility and its significance within
and beyond the company. An open discussion, in which the situation analysis
represents a first stage, can lead to a constructive discourse about perspectives
for the future that are of crucial importance for a major concern within society.
The discussion simultaneously encourages reflection about roles and mutual
expectations regarding behaviour. If in the course of this process old questions
gain a new topicality, for example in how we understand personnel development,
in what differentiated ways personnel development can and should adapt to
various customer groups or what forms of obligation we wish to practice,
then this represents a gain for our personnel development not just in terms of
new content. It means, rather, the exploration of new directions in the development of teamwork.
Externally, explicitly addressing responsibility in management as an issue
can also have important consequences. Socially relevant groups, customers as
well as prospective new employees, may see this focus on responsibility as
conveying a particular message. A readiness for dialogue to the outside signals
an increased awareness of the interests of others and the capability to act in
a conciliatory way rather than playing power-politics can increase acceptance
(SteinmanniLohr 1989, Lohr 1991).
In conclusion we may say that the integration of business ethics in personnel development measures, seen as a critical-constructive reflection of respons ibility in management, can represent an innovative opportunity for personnel


development to the inside and outside. In a situation where we are all too often
preoccupied with ourselves it can serve to direct our attention towards a more
holistic view of our surroundings and environment: something that is essential
for sustainable, successful economic activity. Understood in this way, business
ethics would be an integral and constitutive element in the development of our
employees and our company. An education task which would be implemented
as a continuing education process. 3

2.3 Aim of the study

Before coming to personnel development measures, in the form of training for
example, it is necessary to gain a picture of the current situation of the attitudes
of potential training participants in a diagnosis phase. This was one of the aims
of the study which we present here. With the project we hope to identity the
models of responsible action that currently serve as orientation points for our
up-and-coming managers, in particular. Beyond this we want to address the
question as to whether this situation analysis matches the model prevailing in
management and in our organisation, or whether there are discrepancies or
perhaps even fundamental differences between the models. If our situation
analysis shows the latter to be the case, we must tackle the question of what
steps personnel development must take and/or omit in this case with what
legitimation in favour of further development in a common direction.
The study presented here can be regarded as a factor of discussing business
ethics thinking in an industrial company. Preparations are currently in progress,
and this is the next step on the path we have started down on, for a group-wide
conference (Daimler-Benz Forum) with junior management in April 1995 on
the subject of business ethics.


Business Ethics in a Research Perspective - the Research Instrument

In order to get responses that relate to actual practice, we wanted to know first
of all what - and how - employees think about responsibility in management.
With this in mind we set about designing a survey, the methodology of which
should allow employees' opinions to be reflected as comprehensively as possible.
In drawing up our questionnaire we distinguished between the following three
main areas: career orientations and values, ways of understanding ethics, justice
and responsibility in management, reactions to conflicts involving responsibility

See e.g. Staffelbach (1994), Wittmann (1994).


and approaches to jUdging such conflicts. This division into sections allows us,
on the one hand, to use tried and tested survey questions and methods, whilst
on the other hand combining these with new questions specifically designed
to meet our particular needs.
For the section on career orientation and values the work ofv. Rosenstiel,
Nerdinger, SpieS and Stengel (1989) on the values and ideals ofjunior managers
has proved especially helpful. In this case we have simply attempted to procedures that have already been developed into our questionnaire. Of equal
importance for us are the empirical works of Ulrich and Thielemann (1992),
on the thought-patterns of managers in matters of business ethics, and of
Steinmann and Lahr (1989) and Lahr (1991) on ways of reassessing the Nestle
case from the standpoint of business ethics. In its present version, the questionnaire we have developed comprises four sections:
- Career orientations
- Values
- Management and responsibility
- The Nestle case
The fact that our investigation relates in this stage to a single company means
that the significance of our results depends to a large degree upon the extent
to which respondents approach the questionnaire impartially. Without sufficient
openness on the part of respondents the value of the questionnaire would be
significantly reduced. The majority of those employees that we wish to include
in the survey will most probably come from the ranks of up-and-coming
management, which includes employees from various countries. From the total
100 questionnaires mailed in the summer of 1994, 40 questionnaires where
returned. This provided an overall response rate of 40 percent.


Hypotheses and Results

4.1 Value and Job Orientation

Rosenstiel et al. (1989) had established a model discribing value-orientations
of up-and-coming management. We have used the values included in his study.
In addition to the orientations stated by v. Rosenstiel et aI., we put the data
through a two-cluster analysis (see appendix, fig. 1). Our thinking was that we
could in this way detect correlations which may be blanked out by the Rosenstiel


Hypothesis 1:
A two-cluster analysis helps to achieve a profound insight into preference
structures which are not recorded by the Rosenstiel approach.
Result 1:
The two-cluster solution reveals interesting results (see appendix, fig. 1).
The clusters differ significantly in the values of <<job security and positive
relation to superiors. Cluster 1 can be described as follows: The persons
seek performance, work which demands creativity and a good relation to
superiors. Also important, though, are a secure job and health. Cluster 2
is characterized positively by the preference for creativity, performance and
a more pronounced altruism. A striking feature is the relative low importance attached to a secure job.

What is striking in a comparison of both clusters is that both groups seek

performance, but differ clearly in respect of their other value orientations. Cluster
2 appears significantly more autonomous (<<positive relation to superiors is less
important) and more willing to take risks (<<secure job is less important). The
search for creativity is also more pronounced, approximately significant. At the
same time, the others play a more important role in the cluster 2 world
(<<altruism is important). In contrast, cluster 1 appears to be more oriented
toward health, security and performance and also to seek a positive relation to
superiors (passive, hierarchy-oriented relation orientation), without, however,
preeminently wanting to concern themselves with others (active, less hierarchyoriented relation orientation).

4.2 Management and Responsibility

This part of our questionnaire, as already mentioned above, creates a link on

the one hand to elements of the study conducted by Ulrich and Thielemann
(1992) and, on the other hand, develops its own focal points. What we want
to do in this part is to determine the preferences which the respondents set when
we are dealing with the relation of ethics and success, determining justice and
responsibility in management. It is also of interest for us to know whether it
is possible to identifY distinguishable orientation types on the basis of the data
On the basis of the study of Ulrich and Thielemann (1992), we have first
of all asked the respondents about whether they agree with the following
statement (E. Reuter, Chairman ofthe Board of Directors of Daimler-Benz AG):
You cannot manage a company according to Christian or social-democratic
principles; you can only manage it well or badly (179). On the basis of the


results of Ulrich and Thielemann, we would expect 2/3 of the respondents to

agree with this statement.
Hypothesis 2:
About 2/3 of the respondents will agree with the statement. In contrast, 1/3
of the random sample are more likely to reject the statement.
Result 2:
The random sample replicates the result of the Ulrich and Thielemann study.
Two out of three respondents agree to a greater or lesser extent with this
statement. The dimension of party political oriented management of a
company comes second in the respondents' answers to a dimension well
or badly which is not clearly elaborated in terms of its criteria.

To what extent well or badly can be associated with a moral dimension is

what a second statement is intended to clarify, likewise originating from E.
Reuter and which reads as follows: Businesses are more than instruments of
a particular intellectual performance oftechnocrats. The purpose oftheir action
has to be understood morally and has to be evaluated in moral terms, and not
only in the form ofeconomic statistics (Steinmann/Lohr 1989: 87). Here, too,
we asked whether our respondents agreed with this statement. By the way, this
statement incorporates the intention of the question of Ulrich and Thielemann
(1992), which reads: Do you also agree with the statement: 'You cannot manage
a company morally or immorally, but only well or badly?(179). This
statement is rejected by the majority, with 41 no votes (n=53).
Hypothesis 3:
The majority of the respondents will agree with the statement on the importance of morals in business.
Result 3:
What we find is a large consensus regarding the purpose of the action of
a business. Almost all the respondents share to a greater or lesser extent
the opinion that the purpose of the action of businesses has to be comprehended morally and may be judged morally.
The dimension morals appears significantly less contested in a synoptical presentation with the aforementioned result. That the dimension morals
is a judgement factor of good or bad appears to us to be not proven.
Rather, the dimension morals appears to act as a background factor which
stands behind both the dimension described as party political as well as
good or bad.


On the basis of the study conducted by Ulrich and Thielemann (1992) we asked
about the relation between striving for corporate success and moral responsibility.
According to Ulrich and Thielemann (1992), a majority option is likely in favour
of a harmonious relation (179). The question which is posed, however, is whether
this option for a harmonious relation of both dimensions, as is characteristic
for the average of the significantly older respondents of the Ulrich and Thielemann study, also applies to up-and-coming management. We go on the basis
that the critical potential in our random sample is greater and thus expect an
option which is rather more pronounced in favour of a conflicting relation of
the two dimensions. This assumption is supported by the results of the study
conducted by Kaufmann, Kerber and Zulehner (1986), who determine a rather
indifferent relation between ethics and success in favour of a strongly opportunistic attitude among management.

Hypothesis 4:
Up-and-coming management is more likely to recognise a conflict between
striving for corporate success and moral responsibility.
Result 4:
The share (2/3) of those respondents who recognise rather a harmonious
relation between striving for corporate success and moral responsibility,
is unexpectedly high. This result tallies approximately with the result of
the Ulrich and Thielemann study. It is also clear, though, that 113 of the
respondents still see a rather conflicting relation between both dimensions.
Ifwe take the results of the three questions together, what we find is that there
is a clear preference in the random sample for the correlation of morals and
the purpose of business activity. The different assessment of the correlation
between ethics and success permits the conclusion, however, that, in this
connection, completely different ideas may be present in respect of the imparting
of ethics and success. These might extend from economistic harmonization,
according to which economic and responsible action coincide, through to the
structural conflict between private and business morals.
One question within this part of our questionnaire, based on Ulrich and
Thielemann (1992), is devoted to perceptions of justice. We attempted to
determine terms and substantiations for justice (see appendix, fig. 2). In respect
of the question What is just? (186) the results of Ulrich and Thielemann would
lead us to expect that not all terms regarding justice come equally strongly to
the fore, but that a preference sequence would result in favour of a positive
evaluation of law and order, manners and customs. In particular, what
all as free and equal beings can consider right obtains a clear positive evaluation in the Ulrich and Thielemann study. We then ran the data through a three-


cluster analysis in the belief that the clusters will provide information on the
distinguishable orientation types (see appendix, fig. 3).
Hypothesis 5:
The respondents ranked a discursive, a conventionalist and a legalistic term
of justice significantly higher than comparable substantiation variants.
Result 5:
The respondents (n=40) opinions differ on the derivation of justice from
various sources (see appendix, fig. 2). The evaluations in respect of law
and order, benefit for as many as possible and what helps socially
underprivileged largely follow a normal distribution. We find a shift in
the middle category from rather agree to rather disagree in respect of
manners and customs, and a shift to the left of the middle categories
toward the pole of agree in respect of what all free and equal consider
A polarisation tendency exists in the case of the Ten Commandments
as a criterion for justice. The two most strongly represented categories are
agree and strongly disagree. The Ten Commandments as an example
of explaining religion seems to result in polarisations. As regards to majority, two out of three respondents take the view that justice cannot be
derived from majorities. A third of the respondents, in contrast, consider
that majorities can constitute justice.
All in all, we find a differentiated result which corresponds in its trend
with the results of the Ulrich/Thielemann questionnaire, with the exception
of the evaluation of the Ten Commandments.
Hypothesis 6:
A cluster analysis can be used to condense the data of the sample to preference types which differ clearly in respect of their justice term.
Result 6:
With the exception of the factors what free and equal consider right and
what helps socially underprivileged the three clusters differ significantly
from each other (see appendix, fig. 3). What all free and equal consider
right plays an important role for all of the clusters obtained, and indeed
an outstanding role for clusters 2 and 3. What helps the socially underprivileged is expressed to differing extents in the various clusters.
For cluster 1 (n= 13), justice stems above all from manners and customs
and also from the Ten Commandments. The next most important factor
after what free and equal consider right is law and order. Justice, in
contrast, has less to do with what helps the socially underprivileged, with


the benefit for as many as possible or with majority decisions. What

we find is a religious, legalistic, conventional type whom we term the
ethical principle type.
With the exception of the outstanding important of what free and equal
consider right, cluster 2 (n=lO) is characterised by the rather small extent
of the other factors. Law and order, manners and customs, the Ten
Commandments and majority are classified in the disagree range. There
is no major expression of majority for socially pronounced values. This
autonomous type rather rejects commitments with the focal point on what
all free and equal consider right. The lack of clear expressions in the
agree range gives rise to the belief that we are dealing here with a rather
more hedonistic type. The data we have gathered, though, do not permit
us to confirm this belief. It seems appropriate to survey such a factor in
a follow-on study.
The respondents described with cluster 3 (n=14) orient their positive
answers especially to the majority. The items what all free and equal
consider right and to law and order are also in the agree range. Manners
and customs and also benefit for as many as possible each playa less
significant role. On the other hand, these respondents consider an orientation
toward the Ten Commandments in a search for the sources of justice as
being rather unimportant. We call this balanced type, who is oriented more
to discursive majority factors than religious factors, a discursive majority
type with a social touch.



As we tried to show by using selected examples, the constructed diagnosis

instrument can help to find significant answers concerning our initial question
what and how employees think about responsibility in management. The
presented differences between clusters can possibly be interpreted as hints to
the existence of typological differences. Evaluating the presented results it is
necessary to bear in mind that the size of our sample only allows preliminary
answers. It seems necessary to replicate our results in samples of similar and
different companies, possibly in samples of more substantial size. This request
is formulated in the awareness of the difficulty of raising bigger sample sizes
in industry. Also it would be interesting to compare results of the age group
of our sample with older age groups in order to find out generation differences
in this very field.
This research is a first attempt to diagnose ethical-normative orientations
on different levels. So far the relation of the different levels has not been


researched. In order to evalute results and to understand possible correlations

and differences further research of this topic would be most useful.
The research instrument used in our study also needs to be developed
further, should the use in the field of prognosis be intended. The reliability of
the instrument needs to be analysed and advanced criteria need to be formulated
and possible validities need to be analysed. For this purpose it seems advisable
to reduce the multitude of different aspects and to concentrate on fewer dimensions. In order to identify important dimensions, e.g. for diagnosis, the before
mentioned studies need to be conducted.
All in all, these results of our study which we have drawn on as examples
and which are designed in the form of a workshop report to provide you with
an initial insight into our efforts, show that the questionnaire permits quite a
number of interesting observations. Questions which are still to be discussed
include what a survey on different types of ethical orientation can mean for the
implementation of business ethics in personnel development programs. Also
the design of the implementation process of business ethics and the role that
the presented approach could play in it needs to be discussed further. One last,
but not at all unimportant question concerns the legitimation to invade its
employees concepts' of orientation and personality.4 Having in mind all these
unanswered questions, it seems that this field offers a wealth of further research

Forum fUr Philosophie Bad Homburg (ed. 1994): Markt und Moral. Die Diskussion um die
Unternehmensethik. Bern, Stuttgart, Wien.
Kirchenamt der Evangelischen Kirche in Deutschland (ed. 1991): Gemeinwohl und Eigennutz.
Wirtschaftliches Handeln in Verantwortungfiir die Zukunft. Eine Denkschrift der EKD,
Kaufmann, F .x.lZulehner, P.M.lKerber, W. (1986): Ethos und Religion bei Fuhrungskriiften.
Eine Studie im Auftrag des Arbeitskreises fUr Fiihrungskriifte in der Wirtschaft, Miinchen.
Lahr, A. (1991): Unternehmensethik und Betriebswirtschaftslehre. Untersuchungen zur
theoretischen StUtzung der Unternehmenspraxis. Wiesbaden.
Rich, A. (1987): Wirtschaftsethik Bd. 1. Grundlagen in theologischer Perspektive (3rd ed.).
Rich, A. (1990): WirtschaftsethikBd. 2. Marktwirtschaft, Planwirtschaft, Weltwirtschaftaus
sozialethischer Perspektive. GUtersloh.
Rosenstiel, L.v.lNerdinger, F.W.lSpie/3, E.lStengel, M. (1989): Fuhrungsnachwuchs im
Unternehmen. Wertkonflikte zwischen Individuum und Organisation. MUnchen.

See e.g. Rosenstiel (1991)

Rosenstiel, L.v. (1991): Unternehmensethik - Eine verhaltenswissenschaftliche Perspektive,
in: Dierkes, M.lZimmermann, K. (eds.): EthikundGesehaft. Dimensionen undGrenzen
unternehmeriseher Verantwortung. Frankfurt a.M., 128-155.
Staffelbach, B. (1994): Management-Ethik Ansatze und Konzepte aus betriebswirtsehaftlieher
Sieht. Bern, Stuttgart, Wien.
Steinmann, H./Lohr, A. (1989): Unternehmensethik - eine realistische Idee. Versuch einer
Begriffsbestimmung anhand eines praktischen Falles, in: Seiffert, E.K.lPfriem, R. (eds.):
Wirtsehaftsethik und 6kologisehe Wirtsehaftsforsehung. Bern, Stuttgart, 87-110.
Ulrich, P.lThielemann, U. (1992): Ethik und Erfolg. Unternehmensethisehe Denkmuster von
Fuhrungskraften - eine empirisehe Studie. Bern, Stuttgart.
Ulrich, P. (1992a): Moral in der Marktwirtschaft. Eine Kritik der EKD-Wirtschaftsdenkschrift,
in: Evangelisehe Kommentare. Vol. 2, 86-89.
Wittmann, S. (1994): Praxisorientierte Managementethik. Gestaltungsperspektivenjiir die
Unternehmensjiihrung. Hamburg.









Security of



Search for





1 = very important 6 = very unimportant


j-- -



+------------~,,-~~ ~




Fig. 1: Value orientation /2-Cluster-Analysis

Cluster 2 (n=15) :

Relation to





i- - - -







Cluster 1 (n=22)









8 20




Law and Order

Benefit for as
many as

Manners and

What all Free

and Equal
consider right

Fig. 2: What is justice?


What helps

strongly disagree

III disagree

rather disagree

Il!!J rather agree


I. strong agree


Benefit for as
many as possible

1 = strong agree 6 = strongly disagree

- - -.... - - -,-


Law and Order


Manners and

.. ".


What all Free

and Equal
consider right

-Lc" '


... :'





" " ,,1


Fig. 3: What is justice? / 3-Cluster-Analysis




What helps


,F'" -..._

- Cluster 3 (n= 14)

Cluster 2 (n = 10)

- - - Cluster 1 (n=13)



Thilo Bode
Thilo Bode studied sociology and political economics at the Universities of Munich
and Regensburg. Diploma in political economics 1972. 1972-1975 research at the
University of Regensburg on direct investment in developing countries. Doctorate 1975.
1975-1978 engagement with Lahmeyer International, Frankfurt. International consultant
for planning and monitoring infrastructure projects in developing countries (water and
energy supplies). 1978-1981 engagement with Credit Institution for Reconstruction.
Project manager for planning, financing and monitoring economic cooperation projects
in Africa and Asia. 1981-1986 independent consultant for international organizations,
governments and businesses. Project planning and monitoring, management consulting
in developing countries. 1986-1989 executive position at an international metals business. Strategy and controlling, supervision of daughter companies. Since 1989 Executive Director of Greenpeace Germany.

Johannes Brinkmann
Johannes Brinkmann was born in 1950. PhD in sociology at MUnster university.
Working in Oslo since 1975, since 1989 as forsteamanuensis (associate prof.), at the
Norwegian School of Marketing in Oslo, which is part of the Norwegian School of
Management (BI-foundation). Research and teaching within business ethics, cross
cultural communication, and social science/methodology. Some consulting.

Adela Cortina
Adela Cortina was born in Valencia, where she studied and received her doctor degree
in 1980. Inauguration in 1980 in Madrid. Scholarship from DAAD in Munich and
Alexander-von-Humboldt research programmes in Frankfurt under K.O. Apel. Since
1987 she is a professor for legal, moral and political philosophy at the University of
Valencia. She participates in research and working groups in both Europe and Latin
America. Her areas of research are: discourse ethics, applied ethics (bioethics, economic
ethics, ...), theory of democracy, human rights.
P. Ulrich and C. Sarasin (eds.). Facing Public Interest. 267-274.
1995 Kluwer Academic Publishers.


Jiirgen Deller
Jfugen Deller, born in 1960, studied psychology and economics in the U.S. and at
Kiel University/Germany. As a member of the International Management Associate
Programme he started working for Daimler Benz AG in projects of management and
organizational development as well as in the intercultural area. Since 1993 he works
in Corporate Executive Management Development of the Group in the fields of
executive management development, international management congresses and intercultural training. Jiirgen Deller has published research in personnel selection and

Maya Doetzkies
Maya Doetzkies is a journalist with over 15 years of media experience. As a journalist
and editor with several newspapers she is, among other things, a specialist in questions
of environment and development. As a private lecturer at the Media Education Center
(Medienausbildungszentrum MAZ) she has dealt extensively with issues of media
policy. As executive director and head of the media department of Greenpeace
Switzerland she was responsible for the media work of one of the country's largest
NGOs. Today, she holds a position as special secretary to the Berne Declaration in

Walter G. Frehner
Walter G. Frehner is Chairman of Swiss Bank Corporation. Born in 1933, he attended
commercial school and subsequently completed a bank apprenticeship. From 1954
to 1957 he broadened his experience both in Switzerland and abroad. In 1958, he joined
Swiss Bank Corporation, Zurich. He was appointed Vice President in 1964. After
assignments in the Domestic Credits Division at Headquarter in Basel from 1967 on,
he was promoted to Executive Vice President of the St. Gall Branch in 1971, with
responsibility for stock exchange, securities, private clients, Institutional investors,
branch network and logistic. In 1974 he became a Central Manager and Member of
the Executive Board with responsibility for domestics credits. He was appointed
General Manager and Member of the Executive Board in 1978 and held the position
of President of the Executive Board from 1987 to 1993. He was elected Chairman
of Swiss Bank Corporation in spring 1993. Walter Frehner holds directorship in the
Supervisory Board of the Swiss National Bank, Nestle, the Baloise Insurance Group,
Swiss Corporation for Microelectronics and Watchmaking Industries (SMH), Schindler
Holding Ltd. and Ciba-Geigy Ltd.


Minna Halme
Master of Science (Economics), University of Tampere, 1990. Currently preparing
doctoral thesis on Environmental Management Paradigms of Business Organizations.
Visiting researcher at Georgetown University, Washington D. C. 1992-1993. Instructor
of marketing at University of Tampere 1991-1992. Research fellow at the School of
Business Administration, University of Tampere, Finland.

Brian Harvey
Brian Harvey is the Co-operative Bank Professor of Corporate Responsibility at Manchester Business School. He has been consulted by the European Commission, the
Industrial Society, the European Foundation for Management Development and Shell
International Petroleum. He was a member of the British Institute of Managemenfs
working party whose report Business Social Policy was published in 1987. He is
secretary of the European Business Ethics Network, was Programme Committee
Chairman of the 1990 annual conference in Milan and a member of the 1991 London
annual conference programme committee. Professor Harvey is a Fellow of the Royal
Society of Arts.

Stefan Jepsen
Stefan Jepsen was born in 1964 in Flensburg (Germany). From 1983 to 1991 he studied
protestant theology at the Universities of Kiel and Tiibingen. He belongs to the
founders of the Institute for Economic and Social Ethics (IWS) at Rostock, where
he works as managing director since 1992. He is a member of the Arbeitskreis
Evangelischer Unternehmer in Deutschland e.V. (AEU). His main areas of interest
include ethics and the responsibility of medical practitioners and especially business
ethics. Since 1992 he has lectured in these areas at the University of Rostock. At the
moment, he is working on a doctoral thesis project about responsibility in management
(<<Leitbilder erfolgreichen Handelns - Management und Verantwortung in sozialethischer Perspektive). Empirical research at the Daimler-Benz AG is a main part of
this project.

Ronald J.M. Jeurissen

Dr. Ronald J.M. Jeurissen (1958) studied theology, philosophy and social sciences
at Nijmegen University, Tilburg University and the University of Amsterdam. Presently
he is a lecturer and consultant in business ethics at Tilburg University. He published
in Dutch about fundamentals of business ethics, marketing ethics, flexibility of work,
business-government relationship and the ethics of finance. He is a member of several
Dutch study groups in the field of social and economic ethics.


Hans Kung
Hans Kling was born in 1928. 1948-1957 philosophical and theological studies at the
Gregorian University, the Sorbonne and the Institut Catholique de Paris. 1962-1965
official theological consultant (Peritus) to the Second Vatican Council appointed by
Pope John XXIII. 1960-1963 Professor of Fundamental Theology, 1963-1980 Professor
of Dogmatic and Ecumenical Theology at the Faculty of Catholic Theology and
Director of the Institute for Ecumenical Research at the University ofTiibingen; since
1980 Professor of Ecumenical Theology and Director of the Institute for Ecumenical
Research at the University of Tiibingen. Honorary Degrees from several universities.
He is coeditor of several journals and has written many books.

Andres F. Leuenberger
Born in 1938. Economics studies at the University of Basel. Master degree. Graduate
School of Economics St. Gallen. PhD at the University of Neuchatel. 1968 joined
F. Hoffmann-La Roche & Co. Ltd, Basel, Department for International Coordination
Pharma Marketing. 1970 moved to Roche Japan. 1973 General Manager of Roche
Japan. 1980 returned to Roche Basel as Member of the Corporate Executive Committee. 1982 Deputy Chairman of the Corporate Executive Committee. 1983 Member
of the Board of Directors. 1990 Vice-Chairman of the Board of Directors. President
of the Board of the Swiss Federation of Commerce and Industry (<<Vorort) since 1994.

David Mathison
David Mathison is both a Professor of Management and the Management Department
Chairperson at Loyola Marymount University in Los Angeles California. He teaches
Policy, International Management and Business Ethics. His research interests are mainly
focused on social issues of European Management.

James S. O'Rourke
James S. O'Rourke is Director, Notre Dame Center for Business Communication and
Associate Professor of Management at the University of Notre Dame. In a 25-year
career in govemment and higher education, he has earned an international reputation
in writing, speaking, business communication and media relations. Business Week
magazine recently named him one of the outstanding faculty in Notre Dame's
graduate school of business. Dr. O'Rourke is a 1968 graduate of Notre Dame with
advanced degrees from Temple University, the University of New Mexico, and
Syracuse University. He has taught writing and speaking at such schools as the United
States Air Force Academy, the Defense Information School, the United States Air


War College, and the Communications Institute ofIreland. He was a Gannett Foundation Teaching Fellow at Indiana University, and a graduate student in the Humanities
at Cambridge University in England. He is widely published in both professional
journals and the popular press.

Walter G. Pielken
Walter G. Pielken graduated in linguistics and worked for years as a simultaneous
interpreter. After two years each with the public relations departments of German
porcelain manufacturer Philip Rosenthal and the Federation of German Industries in
Cologne, he joined Switzerland's Overseas Radio Service. From 1963 to 1977, he
worked for Hill & Knowlton International SA in Geneva and ultimately became
Vice-president in charge of coordinating major accounts throughout Europe. In 1977,
he left H & K in London and joined Burson Marsteller International SA in Geneva
as Group Manager. On January 1, 1980, he founded Pielken & Partners SA. His
consultancy serves as Swiss liaison point for the European Consulting Group and
represents in Switzerland the largest independent Public Relations agency of the United
States, Fleishman-Hillard. In addition to having played a prominent role in the Swiss
Public Relations Society, Walter Pielken lectured in public relations at universities
and private communications institutes, has the Federal PR Consultant Diploma and
is a member of BPRA, PRSA (COlllsellors Academy) and IPRA.

Peter Pratley
Peter George Pratley was born in 1954. He graduated in philosophy at the Catholic
University ofNijmegen (1983) and Toulouse-Ie Mirail (1983). Until 1989 he has taught
philosophy at a social academy. In 1989 and 1990 he followed a course in general
management combined with a full year of work as assistant to a general manager in
the metal industry (equipments for water treatment). Since 1990 he teaches business
ethics, from 1992 on at the Hanzehogeschool in Groningen.

Hans Ruh
Hans Ruh was born in 1933. 1953-1958 studies in theology in Zurich, Bonn and Basel.
1958 ordination in the Church of Zurich (VDM). 1958-1963 post graduated studies
in theology (PhD; Prof. Dr. Karl Barth, Basel). 1963-1965 member of the Gossner
Mission, Berlin-East. Since 1971 professor for social ethics in the protestant theological
faculty of the University of Berne and director of the institute Schweizerischer
Evangelischer Kirchenbund. Since 1983 professor for systematic theology with
mainpoint social ethics in the theological faculty of the University of Zurich.


Charles Sarasin
Born in 1958. Studies of mechanical and industrial engineering in Zurich. Specialist
for industrial software (CIM) with IBM. Studies of Economics in Berne and st. Gallen.
Engagement at the Institute for Business Ethics at the University ofSt. Gallen. Building
up of a course in business ethics for high-schools. Organization of the EBEN Conference 1994 as Conference Manager. Since 1995 working for Landis & Gyr Management
AG, Zug, in the Corporate Internal Audit.

Ralph Saemann
PhD in chemical engineering at the ETH Zurich. 5 years in the USA for process and
project engineering. 7 years Geigy and 21 years Ciba-Geigy in production, product
management, marketing and division management. 1983-1991 member of Ciba-Geigy's
executive committee. Responsible for technology, investments and environmental
protection among other duties. Founding member of the Swiss Association for
Ecologically Conscious Management (OBU). Vice-Chairman of Swiss Academy of
Engineering Sciences. Member of several boards of directors.

Andreas Steiner
Andreas Steiner was born in 1945. In 1970 he graduated at the Swiss Federal Institute
of Technology, Zurich in mechanical engineering. 1971-1976 assistant at ITT (Institute
for Thermal Turbo Machinery). 1976-1981 project engineer in the Combined Gas/Steam
Turbine Systems section with Gebruder Sulzer AG, Winterthur. 1981-1989 Head of
Section Combined Gas/Steam Turbine Systems. 1989-1991 Head of Product Division
Thermal Energy Systems (formerly boiler and nuclear engineering). 1991-1993 Head
of Segment Projectile Weaving Machines, Gebruder Sulzer AG, Winterthur. In 1993
he joined ABB as a member of the Executive Committee of ABB Switzerland and
since 1995 he is responsible for the Power Generation Business of ABB Switzerland.

Neil D. Stewart
Neil D. Stewart is a private researcher, teacher and consultant and a Visiting Fellow
at Manchester Business School. His areas ofinterest encompass environmental management and system thinking, which he sees as complementary areas for research. He
is very active in the field of environmental management systems, especially cybernetics.
Previous to these activities he was a senior commercial manager at the major chemicals
corporation ICI. In that role he represented his company on a number of environmental
groups including the Technical Committee ofETAD (<<The Ecological and Toxicological Association of Dyestuffs Manufacturing Companies) and was part of the group
which defined the first UK Product Stewardship guidelines for the chemical industry.


Regine Tiemann
Regine Tiemann was born in 1966 in Gelsenkirchen, Germany. After finishing school
she studied business administration at the University ofErlangen-Niirnberg from 1985
till 1991. During her studies she made internships in some corporations in Germany.
Since 1992 she is academic assistant at the Institute for Research in Business Administration, University of Zurich.

Hans Gudmund Tvedt

Free lance reporter while attending University, 1970 to 1975. Editor, literary and
cultural department of national newspaper Morgenbladet, 1976 to 1980. Editor-in-chief,
magazine publishing company Panthera Presse, 1980 to 1981. Owner and general
manager of Mira presse, offering editorial services and art direction, advertising and
public relations 1982 to 1993. Consultant at Burson-Marsteller since February 1993.

Peter Ulrich
Peter Ulrich, born in 1948, studied economic and social sciences from 1967 to 1971
at the University of Fribourg, Switzerland. He graduated in 1976 with a Dr. rer. pol.
from the University of Basel, Switzerland. After working for almost five years as a
management consultant in Zurich, he obtained a three-year scholarship from the Swiss
National Foundation for Scientific Research and habilitated in 1986 with a venia
legendi for economic sciences and their philosophical foundations at the University
of Witten-Herde eke, Germany. From 1984 to 1987, he held a full professorship for
Business Administration at the University of Wuppertal, Germany. In 1987, he was
appointed to the newly established chair of Business Ethics at the Hochschule St.
Gallen (HSG). Since 1989, he has been the first director ofthe Institut fUr Wirtschaftsethik (Institute for Business Ethics) at the HSG. Since 1992, he has been a member
of the EBEN Executive Committee. In this function he initiated the seventh annual
EBEN conference 1994 in St. Gallen and chaired the programme committee.

Gerry Wade
Gerry Wade worked for IBM for 25 years before leaving with Alastair Bruce and Peter
Naughton to form Bruce Naughton Wade, public affairs management counsellors, in
July 1991. The majority of those years were spent in the public and external affairs
area, culminating in appointment as Head of Public Affairs for IBM UK. In parallel
with his IBM career Gerry Wade had an active political and community life. He held
a number of posts in the Conservative Party including Chair of Greater London Young
Conservatives, National Vice-Chair of the YC's and Chair of the Tory Reform Group.


Jost Wirz

Graduate of State College, Zurich. Employment in leading advertising agencies in

Paris, London, New York. Master of Business Administration (MBA) from Northwestern University Graduate School of Management, ChicagolEvanston. 1967-1970
account supervisor with Wirz Advertising Inc., Zurich. 1970-1974 Executive Vice
President Account Management. Since 1975 Chairman of the Board. Since 1983
Chairman of the Board of Wirz Partner Holding Inc.

Susanne Zajitschek

Susanne Zajitschek was born in 1964. After finishing school, she studied teaching
at the University of Augsburg from 1983 till 1985. Then, she studied business
administration at the University of Augsburg and Munich from 1985 till 1991. During
her studies she made some practical with Siemens AG, Munich. From 1991 till 1993
she worked at the Treuhandanstalt Berlin. Since 1993 she is a doctoral student at the
Institute for Business Ethics, University ofSt. Gallen. 1993 she was academic assistant
at the Betriebswirtschaftliche Abteilung at the University of St. Gallen. She was a
member of the EBEN Congress Management.

Issues in Business Ethics

1. G. Enderle, B. Almond and A. Argandona (eds.): People in Corporations.
Ethical Responsibilities and Corporate Effectiveness. 1990
ISBN 0-7923-0829-8
2. B. Harvey, H. van Luijk and G. Corbetta (eds.): Market Morality and
ISBN 0-7923-1342-9
Company Size. 1991
3. J. Mahoney and E. Vallance (eds.): Business Ethics in a New Europe. 1992
ISBN 0-7923-1931-1
4. P.M. Minus (ed.): The Ethics of Business in a Global Economy. 1993
ISBN 0-7923-9334-1
5. T.W. Dunfee and Y. Nagayasu (eds.): Business Ethics: Japan and the Global
ISBN 0-7923-2427-7
Economy. 1993
6. S. Prakash Sethi: Multinational Corporations and the Impact of Public
Advocacy on Corporate Strategy. Nestle and the Infant Formula Controversy.
ISBN 0-7923-9378-3
7. H. von Weltzien Hoivik and A. Frallesdal (eds.): Ethics and Consultancy:
European Perspectives. 1995
ISBN Hb 0-7923-3377-2; Pb 0-7923-3378-0
8. P. Ulrich and C. Sarasin (eds.): Facing Public Interest. The Ethical Challenge
to Business Policy and Corporate Communications. 1995
ISBN 0-7923-3633-X; Pb 0-7923-3634-8