GLOBAL BUSINESS CITIZENSHIP. THE CHALLENGE FOR TODAY’S EXECUTIVES It’s not surprising that today’s executives might perceive the environment as hostile.

GLOBAL BUSINESS CITIZENSHIP

THE CHALLENGE FOR TODAY’S EXECUTIVES

It’s not surprising that today’s executives might perceive

the environment as hostile and dangerous.

A WAY OUT OF THE VISE

Global Business Citizenship (GBC) is a wedge that keeps the manager from being crushed.

Stakeholder expectations become a set of challenges that can be analyzed and balanced.

WHAT IS GLOBAL BUSINESS CITIZENSHIP?

A global business citizen is a multinational enterprise that responsibly implements its duties to individuals and to societies within and across national and cultural borders.

Global business citizenship is a set of policies and practices that allow a business organization to abide by a limited number of universal ethical

standards, to respect local variations consistent with those

universal standards, to experiment with ways to reconcile conflicting local

practices with universal standards, and to implement systematic learning processes for the

benefit of the organization and the global community.

IS GBC THE SAME AS CORPORATE CITIZENSHIP?

Corporate citizenship (CC) is popular and prevalent.

CC can mean broad social responsibility, but usually doesn’t.

CC tends to be voluntaristic and unsystematic.

So, no, GBC isn’t the same as CC.

GBC: THE CITIZENSHIP ANGLE

reflects membership in a polity. defines relationship of person to state (rights and

duties). defines rights and duties of persons with respect

to each other. may confer identity, sense of belonging, tribal

consciousness. has rules for applying, belonging, maintaining.

SO, CAN BUSINESSES BE CITIZENS?

No. They’re not persons. Yes – they’re legal entities and “persons” in law.

No, but they still have responsibilities. Yes, but in a secondary way – as organizations that

serve human needs, it can be beneficial to grant firms certain rights and privileges of citizenship, and they can be expected to uphold community customs and values.

The Real Answer? The question is hypothetical for now, but the behaviors at issue are not.

The first variable:GBC and Strategic Approaches

Multinational enterprises have three basic approaches to strategy:

multi-domestic

globally integrated

mixed

GBC is a MIXED approach.

Multi-domestic strategy emphasizes compliance with local standards.

doesn’t require centralized control or analysis of local standards.

But – it’s the approach that got Shell in trouble in Nigeria.

Globally-integrated strategy emphasizes a top-down, consistent set of policies and procedures to be implemented in all local facilities.

doesn’t require multiple adaptations; is easier to understand and control from headquarters.

But – it’s the approach that got Mitsubishi in trouble in the U.S. And, in developing countries, it can be seen as imperialistic.

The second variable:GBC and Ethical Certainty Operating in many cultures and nations,

companies experience three ethical conditions:1. High certainty: Principles and standards can be

applied everywhere.2. Moderate certainty: Principles & standards can

be applied, but the operational details may be different though consistent with principles.

3. Low certainty: Principles & standards clash, or the local culture has ‘gaps’ where it’s unclear how to apply the company’s principles.

IMPLEMENTING BUSINESS CITIZENSHIP: STRATEGIC APPROACHES

Multi-domestic Globally Integrated

Principles – a limited number of basic universal principles

ETHICAL RELATIVITY

CODE OF CONDUCT

Consistent Norms – acceptable local variations

LOCAL IMPLEMENTATION

ETHICAL IMPERIALISM

Incompatible Norms- norms that are incompletely governed or ungoverned by, or appear to be in conflict with, principles

ANALYSIS & EXPERIMENTATION

ORGANIZATIONAL LEARNING

Deg

ree

of

Eth

ical

Cer

tain

ty

L

ow

---

----

----

----

----

----

--H

igh

Approach to Strategy

SOURCE: adapted from Logsdon & Wood (2002)

BASIC UNIVERSAL PRINCIPLES????

Principles of ethical conduct –

how people are to treat one another

Where do they come from? Who says? religious foundations philosophy supranational agreements universal cultural and even biological realities

Examples Common to the World’s Great Religions

The Golden Rule: Treat others as you yourself want to be treated. Cause no harm: Be kind to others and hurt no one. Preserve the earth, keep the water clean, take only what you need. What we sow, we shall reap. Wisdom is better than gold; contentment better than treasure. Speak the truth and do not conceal it. Be guided by the spirit of the law more than its letter. Keep company with the wise. Practice moderation in all things. Seek the good of the world. Give to the poor. Give from the heart. Give without return. Be hospitable to strangers, for there really is no such thing. Avoid doing what you know to be wrong.

Source: Jeffrey Moses, Oneness: Great Principles Shared by All Religions. New York: Ballantine Books, 1989, 2001.

Examples from (Western) Philosophy Aristotle’s golden mean Kant’s categorical imperative Rawls’s principles of justice

Supranational Agreement Examples

U.N. Declaration of Human Rights OECD Guidelines for Multinational Enterprises Global Sullivan Principles of Social Responsibility U.N. Global Compact ILO Tripartite Declaration of Principles Concerning

Multinational Enterprises and Social Policy (and more)

No need to quibble about universal standards.

They’re under development, like it or not.

HOW CAN WE TELL IF A COMPANY IS A GLOBAL BUSINESS CITIZEN?

Short answer: Look for how the company implements each of the GBC steps:

1. A code of conduct, emphasizing a limited but comprehensive set of universal ethical standards.

2. Operational processes that respect local cultural variations consistent with universal standards.

3. Willingness to experiment with ways to reconcile conflicting local practices with universal standards, and

4. Systematic learning processes to help the organization incorporate what it learns in implementation, and to help the entire industry & global economy raise its level of compliance with universal standards.

1. Code of ConductThree Things to Look For in a Code…. Orientation language Implementation language Accountability language

Orientation Language A simple expression of universal values.

“We have nine Principles, which apply to all our business affairs and describe the behavior expected of every employee. The Principles are based on our core values of honesty, integrity and respect for people.”

Identification of key stakeholders, including those involuntarily affected.“Shell companies recognize five areas of responsibility: to shareholders, to customers, to employees, to those with whom they do business, and to society …. These five areas of responsibility are seen as inseparable. Therefore, it is the duty of management continuously to assess the priorities and discharge its responsibilities as best it can on the basis of that assessment.”

Sensitivity to cultural differences.

“Business Unit Leaders are expected to engage in open dialogue and consultation with local communities and their representatives, non-governmental organizations and government at all levels to ensure that potential issues arising from our operations are identified and the risks addressed. Whether we continue to operate in a country with serious human rights issues will be determined in the light of our ability to fulfill our policy commitments in our own activities and to act as a force for good over the long term.”

Attitude of “extra-legal” compliance – going above and beyond the law.

“We will respect the law in the countries and communities in which we operate. This will include competition and antitrust laws and the Foreign and Corrupt Practices Act. Where the law is unclear or conflicting, we will take expert advice but will always seek to act in accordance with these commitments.”

AND WE MIGHT LOOK FOR IMPLEMENTATION LANGUAGE:

Clear guidance on specific situations that are likely to arise in this industry.

Guidance on what to do when the code is in question or when the culture demands adaptation.

Support for employee ethical development. Support for structures, systems, and processes

that facilitate ethical decision-making.

GBC – IMPLEMENTATION LANGUAGE

EXAMPLE: Guidance on what to do when the code is in question or when the culture demands adaptation.

“Many ethical decisions involve dilemmas and require judgment in order to arrive at the best way forward. In cases of uncertainty, everyone working for BP is expected to raise the issues within an open environment with their management and colleagues to obtain clarification. All employees have the right to make confidential reports directly to the help line.

“In consultation with Regional and Country Presidents, Business Unit Leaders should put in place local rules to cover the giving and acceptance of gifts and entertainment which reflect this expectation and local custom. We will never accept gifts or entertainment during the process of a competitive bid or tender exercise.”

AND FINALLY, WE MIGHT LOOK FOR ACCOUNTABILITY LANGUAGE:

emphasis on stakeholder engagement “Business Unit Leaders are expected to engage in open dialogue and consultation with

local communities and their representatives, non-governmental organizations and government at all levels to ensure that potential issues arising from our operations are identified and the risks addressed. Whether we continue to operate in a country with serious human rights issues will be determined in the light of our ability to fulfill our policy commitments in our own activities and to act as a force for good over the long term.”

transparency “Shell companies recognize that, in view of the importance of the activities in which they

engaged and their impact on national economies and individuals, open communication is essential. To this end, Shell companies have comprehensive corporate information programs and provide full relevant information about their activities to legitimately interested parties, subject to any overriding considerations of business confidentiality and cost.”

assurance -- verification of information, openness to monitoring(BP) “Attestation note: The information on this page forms part of the information reviewed

and reported on by Ernst & Young”

IMPLEMENTING BUSINESS CITIZENSHIP: STRATEGIC APPROACHES

Multi-domestic Globally Integrated

Principles – a limited number of basic universal principles

ETHICAL RELATIVITY

CODE OF CONDUCT

Consistent Norms – acceptable local variations

LOCAL IMPLEMENTATION

ETHICAL IMPERIALISM

Incompatible Norms- norms that are incompletely governed or ungoverned by, or appear to be in conflict with, principles

ANALYSIS & EXPERIMENTATION

ORGANIZATIONAL LEARNING

Deg

ree

of

Eth

ical

Cer

tain

ty

L

ow

---

----

----

----

----

----

--H

igh

Approach to Strategy

SOURCE: adapted from Logsdon & Wood (2002)

2. Implementation Consistent with Universal Ethical Principles Many companies: respect for employees’

religious practices requires attention to a variety of holy days.

Wm. E Connor – child labor policy and practice.

3. Experimentation When Principles Don’t Fit with the Local Culture Aarhus United A/S – shea-nut workers in Cote

d’Ivoire

4. Systematic Learning Processes Levi Strauss’s North American database of

supplier relations The Gap’s new social reports Global Compact participation

Strategic Advantages of GBC First-mover advantage as low-cost supplier to

developed regions: Hindustan Sanitaryware. Industry-leader advantage: Hewlett-Packard’s

supplier code. Reduce liability and exposure: The Gap’s social

report and supplier policy. Get stakeholders off the company’s back: Nike. Develop and nourish a skilled, valuable

workforce: Calcados Azaleia.

WHY IS GBC IMPORTANT?

It’s a framework for taking CSR global. It identifies the tension between “one size fits all” vs. “when

in Rome.” It enhances corporate reputation and reduces risk and

liability. With GBC, global business can sustain the many benefits

of capitalism by meeting the legitimate interests of multiple stakeholders.

GBC is good for ALL stakeholders ….