Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
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.
editedby
P E T ER U L R I C H
Chair of BusinessEthics,
Director of the Institute for BusinessEthics,
University of St. Gallen,
St. Gallen, Switzerland
and
C H A R L E S S A R A S IN
Institute for BusinessEthics,
University of St. Gallen,
St. Gallen, Switzerland
W
SPRINGER-SCIENCE+BUSINESS MEDIA , B.V.
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
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,
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PREFACE
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.
v
vi
Peter Ulrich
Charles Sarasin
CONTENTS
Introduction
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
vii
viii
Part ill:
Business in Response to a Concerned Public - Corporate Policies
and Guidelines
ix
Part VI:
Social Challenges and Business Response - Examples and
Experiences
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
INTRODUCTION
BUSINESS IN THE NINETIES: FACING
PUBLIC INTEREST
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?
1.
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?
2.
4
5
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
3.
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
204ff.
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
\0
II
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.
4.
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.
PART
CLASH OF CIVILIZATIONS
OR WORLD PEACE
THROUGH RELIGIOUS PEACE
Hans Kung
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.
1.
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
11
12
13
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:
2.
Realpolitik?
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
14
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
confirmed:
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
2
3
15
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?
3.
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
6
7
16
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
8
9
10
17
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
II
12
13
18
conflicts between civilizations and religions, does not the future of humankind
look extremely gloomy? How are we to react to this situation?
4.
14
15
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.
19
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
Pakistanis?)
5.
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,
20
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
17
\8
19
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.
21
6.
20
22
21
22
23
24
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.
23
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
television).
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
orientation.
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
2S
Speech by the Archbishop of Canterbury for the Presentation of the Interfaith Medallion
to Dr. L.M. Singhvi, 18 October 1994.
24
7.
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
26
Kung, H.!Kuschel, K.-J. (eds.) (1993): A Global Ethic. The Declaration of the Parliament
of the World's Religions. LondonlNew Yark.
25
- 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
26
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
27
28
29
THE RESPONSIBILITY
ENTERPRISES HAVE REGARDING
THE BIG PROBLEMS OF OUR TIME
Hans Ruh
30
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
31
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
32
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.
PUBLIC EXPECTATIONS
TOWARD PRIVATE INDUSTRY
Greenpeace's Expectations of Companies with Regard to Their
Ethical and Political Responsibilities
Thilo Bode
34
3S
36
37
38
39
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.
40
PART
II
BUSINESS IN RESPONSE TO A
CONCERNED PUBLIC
ETHICAL FOUNDATIONS
Locus
1.
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
effects.
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?
44
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
pass.3
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
2
J
45
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
morals.
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.
2.
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
following:
46
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.
47
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.
10
11
12
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.
48
13
14
49
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.
3.
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
15
50
upon the Kantian contribution, and then we can proceed to explain these changes
which forced Rawls and Habermas to refine their concepts of publicity.
16
17
51
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
legitimization.
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
18
52
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
19
53
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.
20
21
Rawls (1993), 6.
Habermas (1992), chap. VIII.
54
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
publicity.
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-
22
55
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.
4.
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
23
56
24
25
26
27
57
28
29
30
58
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.
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60
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.
1.
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
61
2.
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
62
63
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.
3.
64
Lei FricaOl(l[l, the idea that ~you cannot beat the ~narket
i:;
'_,:51- trc:e ili Zl mcraI sense. Clearly, friedman's criticism of business ethics
of
('If
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
\vork'~-'
:r;
UE~' 5(~\Ll.:nce:
65
66
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.
5.
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
Parsons.
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
67
68
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
69
70
71
72
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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Study in the Economics of Internal Organization. 1\"w York: Free Fress.
ENTREPRENEURIAL PERFORMANCE
AND PUBLIC ACCOUNTABILITY
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
1995.
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74
Introduction
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
75
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.
76
1.
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'
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78
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.
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80
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.
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2.
Bank, J.: The Essence of Total Quality Management. Hemel Hempstead: Prentice Hall
International 1992, 15.
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83
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
concerns.
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):
84
Moral responsibility
Content (basics)
Additional 2:
Corporate conditions
No torture;
No child labour;
Minimum standards of job
health care and
safety precautions
Additional 1:
Natural environment
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;
Recycling
Confirmation of selling proposal; screening of ease of
use for consumer
Design, production controls,
usage instructions
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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.
3.
86
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.
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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).
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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.
7
Banks (1992: XI) ..
McConnel, M.: Challenger - A Major Malfonction. London: Unwin Paperbacks 1987, 7.
89
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
force.
9
10
In chapter 4 of my Essence ofBusiness Ethics (1995) one may find additional comments.
BirdIWaters (1989: 82).
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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.
12
92
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
way.
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
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PART
III
BUSINESS IN RESPONSE TO A
CONCERNED PUBLIC
CORPORATE POLICIES AND
GUIDELINES
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
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98
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:
1)
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.
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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
distrust.
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.
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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
pUblic.
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:
3)
Industry recognizes the right ofthe public to be informed and takes its needs
seriously. Public relations is a management task.
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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
compatible.
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
practices.
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
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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:
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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.
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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
deal.
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
edge.
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
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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
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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.
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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
action.
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
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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
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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.
CUSTOMER Focus IN
ABB SWITZERLAND'S
COMMUNICATION POLICY:
AN ETHICAL CHALLENGE
Andreas Steiner
1.
Theoretical Principles
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1.2 Customer focus in ABB Switzerland's communication policy and its ethical
implications
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
public.
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.
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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.
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2.
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:
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
process.
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
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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.
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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.
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
affairs.
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
somewhere!
119
P. Ulrich and C. Sarasin (eds.), Facing Public Interest, 119-127.
1995 Kluwer Academic Publishers.
120
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
happen.
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
121
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
course.
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
constituency?
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
122
123
*
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.
124
*
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
125
126
caused us - briefly and unconsciously - to tone down the basic values of the
bank.
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.
127
In order to further the cause of Business Ethics, I believe there are two important
requirements.
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!
PART
IV
WHAT HAPPENS IF
SMALL CHALLENGES BIG?
Maya Doetzkies
132
- 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.
133
134
135
CORPORATE RESPONSIBILITY
AND REpUTATION MANAGEMENT
IN CRISIS SITUATIONS
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
citizen.
138
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
accident.
139
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 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.
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.
140
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
141
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
complex.
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.
142
Summing Up
143
ANNEX
I:
Case Histories
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
dangers.
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
144
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.
145
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
substance.
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.
146
Annex II:
Answers
Question
1.
2.
3.
4.
5.
6.
7.
Are instruction sheets for personnel in contact with enquirers available on how to handle a crisis?
8.
9.
10.
Yes
No
147
II.
12.
13.
14.
15.
16.
17.
18.
19.
20.
148
21.
22.
23.
24.
25.
26.
27.
28.
Likewise, have you appointed a person to provide earlywarning services likely to detect emerging crises?
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.
1.
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
149
P. Ulrich and C. Sarasin (eds.), Facing Public Interest, 149-166.
1995 Kluwer Academic Publishers.
150
151
2.
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.
152
153
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.
3.
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
7
8
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).
154
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
10
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).
155
4.
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.
11
12
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).
156
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
learning.
13
14
IS
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.
157
5.
158
16
159
6.
17
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.
160
IS
161
19
162
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
variables.
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.
20
21
22
23
163
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.
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.
164
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1.
Background
168
target audience, the instruments employed, the client, and the tasks that are
performed.
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
facts.
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.
169
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
opinions.
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
profession.
170
2.
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.
3.
Research Design
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.
171
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.
4.
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).
172
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
Superiors
Professional standards
Critical journalism
Media
Public
most serious
16
15
11
9
8
serious
often/very often
34
33
25
27
26
18
24
26
20
13
never
23
23
22
19
27
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
views.
173
What would you normally do in such conflict situations? (q. #3; simplified
table, vertical percentages)
Advertising professionals
Infonnation and
PR professionals
41
18
14
27
41
37
3
19
100
(148)
100
(154)
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
174
context one ends up at least with rankable arguments in favour of (or disfavour
of) ethical codes for the industry: 7
Advertising professionals
36
34
Information and
PR-professionals
26
26
63
9
100
(150)
100
(160)
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
175
professional ethics,
market ethics and
work organisation ethics factors
and of code expectations into a
fairplay-expectation and
- legitimate moral defensiveness factor (cf. appendix).
Statements
64
93
1.5
1.8
1.8
57
97
1.5
1.9
2.1
46
91
1.7
1.8
1.9
20
80
2.0
2.0
2.7
28
2.9
2.4
2.5
35
2.8
2.7
3.3
10
3.6
3.3
3.3
(scores 1-4, strongly agree - strongly disagree, n = approximative 160; a few missing
responses)
5.
Becker and Fritzsche (1987: 292), table V (multiplied by 0.8 to correct for 5-point scale).
176
(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?
Information
Value
Public sector
Private sector
public
private
in itself
instrumental
Justification
transparency of power,
functioning of a public
Information property
completeness legality
persuasive non-illegality
Sender role
reactive
active
Message
correct, neutral
Receiver role
active seeker
reactive consumer
Payment
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
177
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).
10
II
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.
178
Exhibit #2
Situation
(work roles)
\
\
\
\
>it
Alternative
norm-senders
Conflict
perceptions
_____
----- -----
L..,,~_-+-~_~"':'R:-e-gu-fIatio;-l
/
needs
6.
,.....---......
Expectations
from a code
,~tudes
-----"Ir~_
~ / / /
-----
'" '----_.....
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
13
179
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
research.
Appendix
Factor construction information (varimax, researcher-determined number of
factors,14 simplified)
Conflict perception
Factor 1
professional ethics
critical journalism
functioning critical public
media
target groups
personal ethics
professional standards
colleagues
subordinates
superiors
'4
Factor 3
work organisation ethics
,73
,69
,66
,61
,58
,57
,84
,83
,64
,54
,84
,80
,56
information sellers
information buyers
competitors
Variance explained
Factor 2
market ethics
0,34
0,13
0,11
Same number of Factors as in Brinkmann (1994 c), for comparability (the factor solutions
are strikingly similar).
180
Factor 2
refusal expectation
0,78
0,68
0,68
0,76
0,79
Variance explained
0,33
0,26
References
Becker, H.lFritzsche, D. J. (1987): Business Ethics: Cross-Cultural Comparison of Managers'
Attitudes. Journal of Business Ethics, 6, 289-295.
Bivins, Th. E. (1989): Ethical Implications of the Relationship of Purpose to Role and Function
in Public Relations. Journal of Business Ethics, 8, 65-73.
Bowie, N.lDuska, R. F. (1991): Business Ethics. Englewood Cliffs NJ.
Bowie, N. (1982): Business Ethics. Englewood Cliffs NJ.
Bowie, N. (1992): Untemehmensethikkodizes: Konnen sie eine Losung sein?, in: H. Lenkl
M. Maring (eds.): Wirtschaft und Ethik. Stuttgart, 337 ff.
Brinkmann, J. (1991): Sosiologiske grunnbegreper (reprinted in 1994). Oslo.
Brinkmann, J. (1993): Nreringslivsetikk (Business Ethics). Oslo.
Brinkmann, J. (1994a): Moral, Ethik und Wirtschaft. Management Revue, 181-190.
Brinkmann, J. (1994b): Ethical Codes and Ethical Committees - the Norwegian Audiotex
Market as a Case. Forthcoming in Rechtstheorie. 1995, No.1.
Brinkmann, J. (1994c): Moral conflicts among Norwegian Advertising professionals, forthcoming in International Marketing Review, 1995.
Buchholz, R. A. (1989): Business Ethics. Englewood Cliffs NJ.
Durkheim, E. (1973): Moral Education (French orig. from 1925). New York.
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181
Hyman, H.H.lSinger, E. (1968): Readings in Reference Group Theory and Research. New
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Warren, R. C. (1993): Codes of Ethics: Bricks without Straw. Business Ethics -A European
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Werring, H. ed. (1987): Etikkfor ledere (Ethics for Managers). Oslo.
PART
CORPORATE RESPONSIBILITY
AND HAZARDOUS TECHNOLOGY:
AN EXAMPLE OF THE
INTERACTION PROCESS BETWEEN
INDUSTRY AND SOCIETY
Brian Harvey
Neil D. Stewart
1.
Introduction
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.
185
186
2.
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
187
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.
3.
Case Examples
188
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.
189
(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:
13).
(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
190
191
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).
192
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
term.
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
1991).
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
193
194
4.
Conclusions
195
196
References
Barker, A/Peters, B.G. (eds) (1993): The Politics ofExpert Advice. Edinburgh University Press.
Berkhout, F.(1991): Radioactive Waste. Politics and Technology. London.
Biondi, L. and Galli, R. (1992): Technological Trajectories. Futures. July/August 1992, 580592.
Blowers, A. Lowry, D. and Solomon, B.D. (1991): The International Politics ofNuclear Waste.
London.
Carson, R. (1962/82): Silent Spring. London. (First published 1962 by Houghton Miffin).
Cottam, A. (1989): Biotechnology in application: health and safety aspects. Chemistry and
Industry, July 3 1989.
Chemistry in Britain, May 1989,456. Responsible care is business sense.
Chemistry in Britain, February 1991, 111. Pesticides: public responsibilities.
Chemistry in Britain, June 1991,485. How to win friends and influence people.
Chemistry in Britain, October 1992, 861. Incineration-the infernal debate.
Cline, W R. (1991): Scientific Basis for the Greenhouse Effect. The Economic Journal, 101,
(July 1991), 904-919.
Daily Telegraph, (1990), August 20th: Baffled by the boffins - that's Britain. London.
Dinham, B. (1993): Pesticide Hazard: a global health and environmental audit. ZED Books
(Pesticide Trust), London.
European Commission (1990): Analysis ofpriority waste streams. Manual of the services of
the commission of EC. September 1990.
The ENDS Report, No. 206, March 1992, 18-20: EC Eco-audit Scheme. An opportunity for
voluntary industrial action. London.
The ENDS Report No. 216, January 1993, 39-40: Eco-audit proposal overhauled. London.
The ENDS Report No 220, May 1993, 13: RCEF's incineration report turns up the heat on
landfills. London.
The ENDS Report No. 222, July 1993, 14: Jury still out on Responsible Care.
The ENDS Report No.225, October 1993,22-25: Biotechnology regulation at the crossroads.
Etuljee, G H. (1988): Dioxins in the Environment. Chemistry in Britain, December 1988,1233.
Financial Times, November 21 1991, End of an Era. London.
Financial Times, March 27 1992, Only clean and green borrowers need apply. London.
Financial Times, June 2 1992, Pollution of the atmosphere. A puzzle offiendish complexity
London.
Financial Times, August 11, 1992, A Green Caveat vendor. London.
Financial Times, November lOth, 1992, Clouds of suspicion. London.
Kemp, R. and Soete, L. (1992): The Greening of Technological Progress. Futures. June 1992,
437-457
Kirat, T. (1992): The Social Mastery of Technology: An Agenda for Research and Action.
Futures, Volume 24, July/August 1992, 615-620.
Macgill, S M. (1987): The Politics of Anxiety. London.
Morrow, P.(l989): Developing Responsible Care. Chemistry and Industry, May 1st. 1989,
279.
Pimentel, D. (1991): Pesticides and world food supply. Chemistry in Britain, July 1991,646-7.
Simmons, P.lWynne, B. (1993): Responsible Care: Trust, Credibility and Environmental
Management, in: Fischer, K. and Schot, J. (eds.), Environmental Strategiesfor Industry:
International perspectives on research needs and policy implications. Washington.
197
Topf, R. (1993): Science, Public Policy and the Authoritativenss of the Governmental Process,
in: Barker, A. and Peters, B G (eds.): The Politics ofExpert Advice. Edinburgh University
Press.
Vickers, Sir G. (1983): Human systems are different. London.
Winner, L. (1977): Autonomous Technology. Technics-out-of-control as a Theme in Political
Thought. MIT Press, Cambridge, Mass.
Wynne, B.lWaterton, C.lGrove-White, R. (1993): Public Perceptions and the Nuclear Industry
in West Cumbria. Centre for the Study of Environmental Change, Lancaster University.
ENVIRONMENTALL Y RESPONSIBLE
BUSINESS STRATEGY
Packaging Company's Response to a Critical Challenge
Minna Halme
1.
Introduction
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
199
P. Ulrich and C. Sarasin (eds.). Facing Public Interest. 199-212.
1995 Kluwer Academic Publishers.
200
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,
Walki-Pak.
2.
201
3.
4.
202
- 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
5.
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
population.
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.
203
204
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.
6.
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
205
206
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.
207
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.
208
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.
7.
209
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.
210
consider going beyond the regulation to be reasonable, because ofthe unpredictability of political decision-making.
8.
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
211
References
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.
Karjalainen, A.lRamsland, L. (1992): Pakkaus: pakkausalan perusoppikirja. Helsinki: Pakkausteknologiaryhma r.y.
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.
Roy, R.lWhelan, R. (1992): Successful Recycling Through Value-Chain Collaboration. Long
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.
Stilwell E.J.ICanty, C.lKopf, P./Montrone, A. (1991): Packaging for the Environment: A
Partnership for Progress. Arthur D. Little.
Throop, G.lStarik, M.lRands, G. (1993): Sustainable Strategy in the Greening World: Integrating the Natural Environment into Strategic Management. Advances in Strategic Management, 9, 63-92.
Tomer, J. (1992): The Human Firm in the Natural Environment: a Socio-Economic Analysis
of its Behavior. Ecological Economics, 6, 119-138.
Working Group on Packagings (1993): The Report of the Working Group of Packagings 73.
Helsinki: Ministry of the Environment (in Finnish).
212
214
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.
16'000 to pa
Investment:
Users:
Ciba, Roche, Sandoz; cantons Basel City, Basel Country (and possibly
other cantons and Baden-Wiirttemberg)
Start-up:
October 1994
2. Chronology of Events
May 85:
Feb. 87:
Feb. 88:
May 89:
submission of supplements
Dec. 89:
Nov. 90:
April 91:
July 91:
1988 - 1991:
215
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)
-
- 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)
-
216
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
-
Ciba's annual document Eco-Trend)), with all relevant eco-data of the Basel factory
217
Conclusions
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
219
220
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?
221
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):
%'
...
...
...
...
...
...
...
...
...
...
...
63
55
40
40
39
37
34
29
22
9
4
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
222
223
1986
1987
1988
1989
1990
1991
1992
1993
oecoconscious
indifferent
not oecoconscious
48
51
54
55
57
55
57
56
22
23
21
21
21
21
16
16
30
26
25
24
22
24
27
28
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
224
PART
VI
1.
Introduction
228
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
Theory.
229
2.
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
environment.
230
3.
Methodology
231
4.
Results
232
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
dates.
233
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
234
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
235
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
236
237
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.
5.
Discussion
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.
238
Yes, but
government is
resisting change
Yes
Yes
2500 Permanent
Layoffs
2500 Temporary
Layoffs
Joint Ventures
Negotiate Delivery Dates
3 Stage Plan
For Permanent
Layoff
Hiring Freeze
Joint Ventures
Mixture of
Temporary and
Permanent
Layoffs
Alenia
Aerospatiale
Temporary Layoff
Italy
France
Government owned
-----------
Table 1
Yes
Yes throughout
Western Europe
Comprehensive
Attrition Strategy
450 Temporary
Layoffs
DiversifY
Permanent
Layoff
CASA
Spain
Yes
540 Permanent
Layoffs
Permanent
Layoff
Dornier
Germany
Yes
Attempting to
Smooth HireFire Cycle
800 Permanent
Layoffs
Permanent
Layoff
British Aero
U.K.
Privately owned
Mixed
Declined
Comment
150 Permanent
Layoffs
Permanent
Layoff
PHatus
Switzerland
tl
\0
240
References
Brady, N. (1990): Ethical Managing. New York.
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
8,579-582.
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,
21-29.
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.
1.
The workforce in North America, particularly in the United States and Canada,
is becoming increasingly female, reflecting a general trend toward two-paycheck
families.
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
241
242
243
2.
244
3.
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.
245
4.
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.
246
- 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.
5.
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.
247
the operation of the learning center would not adversely affect the firm's
profitability.
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
include:
- 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
248
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
random.
6.
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
249
References
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.
Indianapolis.
Lohman, J. Chairman, President & Chief Executive Officer, Excel Industries, Inc., Elkhart,
Indiana (1991/1993): Personalinterviews between 31 October 1991 and 2 August 1993.
250
Miller, W. H. (1991): A New Perspective for Tomorrow's Workforce. Industry Week. 6 May,
6-9.
Williams, L. (1992): Companies Capitalizing on Worker Diversity. The New York Times.
15 December, AI, AI6-17.
RESPONSIBILITY IN MANAGEMENT:
AN ISSUE FOR
PERSONNEL DEVELOPMENT
IN MAJOR COMPANIES?
Stefan Jepsen
Jilrgen Deller
1.
Introduction
252
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).
2.
253
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
254
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
3.
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
3
255
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.
4.
256
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.
257
258
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-
259
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
right.
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
260
5.
Conclusions
261
References
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,
Giitersloh.
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.).
Giitersloh.
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.
262
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.
tt
~I"
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----
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~
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Cluster 2 (n=15) :
Positive
Relation to
Superiors
L__
Creativity
L_n_
L,------_
i- - - -
ftI
=
~.
Q.
Leadership
i
[-----1
-l
Cluster 1 (n=22)
~r
---,r-
"CI
'"
a.
'"
J!
10
8 20
i:l
30
40
Benefit for as
many as
possible
Manners and
Customs
Majority
What helps
socially
Underprivileged
strongly disagree
III disagree
rather disagree
agree
I. strong agree
,/'
Benefit for as
many as possible
- - -.... - - -,-
I"'"
,,/
Manners and
Customs
.. ".
--,'"
-Lc" '
--...--,
... :'
"
"
Ten
Commandments
"',,.
!,
.1.
Majority
I,
..---,--
What helps
socially
Underprivileged
"'-~----oi
,F'" -..._
Cluster 2 (n = 10)
- - - Cluster 1 (n=13)
N
0\
VI
THE CONTRIBUTORS
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.
267
P. Ulrich and C. Sarasin (eds.). Facing Public Interest. 267-274.
1995 Kluwer Academic Publishers.
268
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
development.
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
Zurich.
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.
269
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.
270
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
271
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.
272
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.
273
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.
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.
274
Jost Wirz
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.