Business Respect - CSR Dispatches No#143 - 22 Dec 2008

An email newsletter with news and discussion focusing on corporate social responsibility globally, looking at the companies in the news and the emerging issues. Linked to the website at http://www.businessrespect.net and produced every two weeks.

This web page provides news stories and articles from the newsletters. Newsletters also include links to features on the internet, Mallen's blog, and other resources.

In this issue, we ask whether the business schools helped promote management myths that played a part in the collapse.

Welcome

Here's a thought to provide some Christmas cheer (not). There are a number of news stories I didn't include in the news list this time because ... it was just too boring to have a long list of stories that were all about the same thing, some company or another in a corruption scandal or other prosecution.

So alongside those that WERE covered, Parmalat and Siemens, I could have added the Anglo Irish Bank, whose chairman resigned when he was discovered to have hidden personal loans from shareholders, and ABB which has said it has put aside $850m to prepare for possible costs from bribery and price-fixing investigations. ExxonMobil, which has agreed to pay $6.1m for violating a Clean Air Act agreement, PartyGaming, whose founder is pleading guilty to illegal web betting, and Mattel, to pay $12m to 39 US states for the Chinese lead-tainted toys scandal.

I think that in future, I may just keep a rolling 'in the courts' type article that summarises all but the most important of these. Sadly, I suspect the era of routine scandal, corruption and greed is not likely to be drawing to an end in 2009.

The people that take part in such scandals give business a bad name overall. And everyone has to take personal responsibility for their own actions.

Of course, we are more caught up at the moment with the systemic issues that have led to the global crisis in business. What if these were not down to just a few greedy bankers, and a few corrupt officials? Supposing this was the logical outcome of some of the management logic that has been made mainstream over the last thirty years by the business schools?

This is the premise of the main feature this time.

I had posted on Twitter (you can follow me at http://twitter.com/mallenbaker - or get the news stories as they are posted at http://twitter.com/businessrespect) a previous article re. how we assume everything can be measured. I got a useful 'tweet' back from Shakti Kapoerchan drawing my attention to a very well argued, very well researched article by Sumantra Ghoshal, which provided the inspiration for this piece. The basics are reflected in articles I've been writing over the last couple of years, but the business school / academic article was new to me. A link to that article is provided at the end of the piece.

Agree with the article? Why not help to get a bigger audience for it by 'digg'ing it, or promoting it via any of the other social networking sites you may be a part of. Just go to the article on the website and use one of the links there.

A lot of people will be doing a lot of soul-searching and thinking over the Christmas / New Year break. I think we need to reframe the crisis now as a great opportunity.

If you were going to look back in five years time and say "who would have thought that those troubled time would present me with such a great opportunity to make a difference to the world" - what might have happened in the next five years to reach that outcome?

Let's see how much we can make it happen.

News

US: Top businesses join ethics initiative

In response to the widespread crisis of confidence in the ethics of big business, seventeen major corporations have joined the Business Ethics Leadership Alliance. The companies, which include Wal-Mart, General Electric, Dell, PepsiCo and Accenture, between them represent nearly $1 trillion turnover.

Russian companies most likely to bribe

A survey by Transparency International has found that companies based in Russia are the most likely to pay bribes in order to win business in other countries, followed by China and Mexico. Belgium and Canada ranked equally as the countries where companies were the least likely to pay bribes.

UK: Lush cosmetics firm funds direct action airport group

Cosmetics retailer Lush has emerged as a funder for climate change protesters that occupied one of London's airports and closed it for half a day before being removed by police.

India: Government to launch product label as guarantee over child labour

The Minister of State for Women and Children, Renuka Chowdhury, has said that there is to be a new product label which will be made available for products where it can be shown that no child labour has been involved in their manufacture.

US: Light cigarette suit can go ahead

The US Supreme Court has ruled that people can sue tobacco companies over alleged deceptive marketing of light or low-tar cigarettes using state consumer protection laws.

US: Siemens settles over worldwide bribery

The US Securities and Exchange Commission has settled with Siemens AG over charges that the German company engaged in systematic bribery in order to win business from foreign governments.

Taiwan: listed companies must disclose on social responsibility

Taiwan's Financial Supervisory Commission (FSC) has said that firms listed in the country must make greater disclosure on social responsibility to help investors see which are making better progress towards sustainability.

Italy: Parmalat founder gets ten years jail for fraud

The founder of Parmalat, Calisto Tanzi, has been sent to prison for ten years for the fraud that resulted in the dramatic collapse of the dairy giant. He had been accused of manipulating the share price and helping with false accounting.

UK: Companies squeezing suppliers for cash

Two suppliers out of three have experienced arbitrary extensions to their payment terms by company customers during the last three months, according to a survey by the Institute of Credit Management.

Article

In theory, there's no difference between theory and practice

Author: Mallen Baker, dated 22 Dec 2008

How much blame should business schools take for the management thinking that has led to the current world crisis? Has it really all come down to the actions of a few greedy bankers who just happened to find themselves all in control of all the banks at the same time? Or were the seeds for the downfall being sown long ago?

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