Dear Readers,
I've established a new personalized website. All my past blogs and upcoming new blogs will be posted there. The website is at www.organizingforsustainability.com
Looking forward to seeing you there
Mike Valente
Business in a Sustainable Society
For those interested in issues such as climate change, social inequity, and the financial crisis, join me in a dialogue to explore the challenges and opportunities associated with sustainability and the role of business in a sustainable society.
Wednesday, May 9, 2018
Wednesday, April 4, 2018
My Grandparents: A Challenge to the Western Food System
With my grandmother passing recently, I've decided to repost a story I wrote about how important it is that her very sustainable approach to food must not die with her.
Here is the post:
At seven years old I playfully follow my grandfather around his seemingly endless backyard garden as he harvests giant field tomatoes, prunes cucumbers and zucchinis, tastes a green grape for ripeness, and feels the tenderness of peaches, pears, and apples as we pass their respective trees. He asks me to hold on to some leaves and vines he pruned from some Sicilian zucchini plants that I presume is slated for the garbage until he tells me that it will add flavour to the soup we’re to have later. We pass two giant buckets of water stationed under the spout of the house’s eves trough, to which he attaches a hose to water some peppers.
My grandmother comes out from her cantina with several empty mason jars scattering them on the back table, which is sheltered by a less than elegantly constructed canopy overrun with vines. He brings her dozens of tomatoes to prepare while he sets up an open pit fire underneath an oversized pot filled half-way with water. She fills the jars two-thirds with tomatoes, seals them tightly and inserts them into the pot to boil for 20 minutes, the time required to preserve the tomatoes for the winter months.
At a time when processed foods such as TV dinners, meat pies, and frozen pizzas are becoming increasingly popular on my and many other dinner tables in the West, I stand in amazement at how foreign this process is to me. Curiosity pushes me to mimic my grandmother as I help to remove stems from some green beans, twigs from some peaches, and residual soil from some tomatoes. Like a shrimp with its head still intact, these vegetables showed an element of completeness, revealing their umbilical cord to nature.
A few hours later we sit down for dinner: crisp lettuce, bean salad, pasta, peaches, and homemade bread, the eating of which garnered a uniquely fresh taste quite exotic to me. After experiencing a mere blush of this delicacy, I’m instructed to separate out the food waste from the ‘regular’ garbage; an unfamiliar task that impinges on valued playtime with cousins. As a respectable grandson, I ask few questions knowing that this second container is somehow for the garden.
Later, as a teenager immersed in western culture with several years to reflect on my grandparents’ behaviour, I judge them as primitive and cheap. How absurd it is, I judge, to catch rainwater to save on the water bill, to use food compost rather than chemical fertilizer or to labour the same fruits and vegetables found ready to eat at the grocery store. I feel embarrassed that my grandparents choose to cling to what I perceive to be an outdated set of traditions inferior to the luxuries afforded to Western society.
Fast forward to today and we see countless studies and documentaries warning of the negative social and ecological effects of the existing food system. Obesity, diabetes, compromised food safety, nitrogen infested oceanic dead zones and biodiversity loss all have close linkages to how we grow, eat, and dispose of our food. Experts attribute these symptoms to the increasing disconnectedness between the food consumer and food producer where young children, when asked where food comes from, refer to the grocery store. We as consumers enter the food system at the point of consumption with no participation in or understanding of how the food got to our plate and how it may be used to grow more food.
When I think of how troubling it is that we’ve become so removed from something so important to our wellbeing, I start to see the traditions my grandparents inherited in a different light. Last summer I started my first garden. It was small and simple but I absorbed and employed as much knowledge as possible from the two individuals who taught me at a very young age about the beauty of becoming more intimate with the food we eat.
Back in the garden, my grandfather shows me a flourishing avocado plant that grew from an avocado core he planted weeks earlier. I am perplexed when he explains that it’s almost impossible to grow avocados in southern Ontario. But then why plant it I ask? I realize that, to him, the core of the avocado is not waste but life and thus of value to his garden. The notion that food waste doesn’t exist is hard-wired into my grandparents’ subconscious, which explains why even leaves from zucchini plants are a rich flavouring for soup. When I stop and look at the vines overwhelming the now old canopy, I realize that their role in creating shade is no accident. To them, the harvested vegetable or fruit itself is only part of the value the plant provides. The different parts of the plant from its roots to its flower represent unique resources depending on the stage of the plant’s life cycle and its position in the garden.
To my grandparents the garden is a mini-ecosystem, the value of which is a function of the interdependencies of its parts across space and time. This is unlike today’s food system, which uses a reductionist approach of maximizing yield of one vegetable or fruit at the expense of all else, including its own plant parts. Intensive fertilizer and pesticide use, mono-cropping, and the disassociation from the food growing process fundamentally contradict how my grandparents would define agriculture.
As they slowly leave us, I wonder if their much more sustainable traditions will be lost; traditions that were built over centuries to overcome some of the greatest challenges humanity has ever faced including the Great Depression, plagues, and poverty. Should we not learn from this generation so that we can re-associate ourselves with the food we eat and perhaps use this valuable knowledge to address some of the social and ecological issues of OUR time? Perhaps it’s my generation’s responsibility, now aware of the tremendous health and ecological effects of the existing food system, to learn about and maintain these traditions before it’s too late.
Garden picture taken from Happy Living reproduced under Creative Commons
The second picture is of my grandparents dated 2005
Thursday, March 29, 2018
Institutional Theory
Why
do people behave the way they do in any given society? Better yet, why do organizations and the
people within them behave the way they do? This is, no doubt, a complicated
question, responded to by multiple theories that explore the complexity of
human and organizational behaviour. One
such theory that has gained tremendous traction in the study of organizational
behaviour is institutional theory.
Institutional theory draws from constructionism, which suggests that the
outside world is not predetermined or objectively set but is instead
constructed by the decisions, attitudes and behaviours of actors within it. Over time, what is considered normal and
accepted in a given social reality, is largely based on the repeated behaviours
over time of a majority of organizations that assign similar meanings to those
behaviours. When processes and
structures becomes institutionalized, they move beyond instrumental value and
earn intrinsic value as actors assign them validity based on the fact that they
are taken for granted as the ‘way things are’ and/or ‘the way things are to be
done’. When it comes to organizational behaviour, institutional theory offers
an alternative explanation to rational decision-making, a view that organizational
members make deliberate and calculated decisions that reflect a sound analysis
of the merits of a list of alternatives.
Similar to how individuals have been shown to behave irrationality,
organizations too have succumbed to irrational decisions and institutional
theory helps us understand why this happens.
What makes up an institution?
Scholars
refer to three primary dimensions that govern an institution that together
explain how individuals or organizations come to accept a shared definition of
reality. The first is regulative, which refers to the
explicit, formal rules that constrain behaviour and regulate interactions. The regulative dimension works to coercively ensure
stability by establishing ‘rules of the game’ by putting forth rewards and
punishments and threat of legal sanctions.
The more familiar regulative mechanisms are laws imposed by governments
backed by legitimate enforcement and legal processes. Partly through law and order, we’ve come to
accept here in Canada that certain behaviors are unacceptable and therefore
deemed criminal. At the organizational
level, tax law in a given country specifies how much a company would be
required to pay as part of their profit levels.
Another might be regulations for or against bribery or limits on
pollution levels of given industries.
But
beyond the baseline nation state rules that organizations must uphold, these
organizations can institute their own supplementary rules that influence employee
shared reality in the workplace. Incentive
and reward structures, for instance, play a large formal role in influencing
how employees perceive the social reality of their workplace. This means that
what one employee perceives to be reality in one company could be radically
different from a similar employee in another organization. Consider a company whose fundamental reward
structure is based on sales commissions versus another company whose
fundamental reward structure is based on salary and bonus. Other organizational level regulatory
mechanisms that define social reality might include the handling of confidential
information of a client, the process by which an employee gets promoted or
fired, the explicit process of performance evaluation and the associated
rewards and punishments that result, and how bonuses are calculated.
The second institutional dimension
is normative. Normative aspects of institutions represent
rules-of-thumb, standard operating procedures, role expectations, codes of
conduct, occupational standards, and educational curricula. Unlike the regulative dimension which
influences behaviour based on coercion, this dimension influences behaviour
through social obligation and peer pressure.
Trade or industry associations (e.g. Mining Association of Canada) can
have an immense impact on member organization behaviour not necessarily due to their
ability to legally enforce such behaviour but instead as a result of peer
pressure and the establishment of norms that reflect what is acceptable or
unacceptable behaviour in the industry. For
example, The Equator Principles represents a collective effort on the part of
international banks to reduce the availability of capital to those projects
that produce negative social and ecological externalities in developing country
contexts. The governing body itself has
no legal recourse in the event that a bank does comply but it can rely on peer
pressure and a bank’s quest for legitimacy that tends to come with conforming
to standard operating procedures in an industry. Unlike the regulative dimension where actors
conform out of fear of legal sanction, actors conform to institutional norms to
avoid shaming through social sanction. As
a consequence, in those institutions that are largely influenced by normative
rules, actors within the institution tend to ask, “what is expected of me?”
Part
of what makes the normative dimension so powerful is that actors in society –
including organizations – have a very strong desire to feel part of a group or
community, meaning that social sanctions represent a very powerful enforcement
tool to shape behaviour and social reality.
For instance, the proliferation of sustainability and corporate social
responsibility (CSR) reports across the global oil and gas sector was not a
legal requirement but instead a normative one.
Across many industries, major public companies face major social
sanction by their peers and other stakeholders if they do not have a CSR report. Even CSR tactics can be institutionalized
through normative forces as one did in grocery retail where one business after
another instituted a reusable bag policy and started to charge $0.05 per
plastic bag. There was no law pressuring
companies to adopt this policy but instead a rite of passage to be part of an
exclusive group of “morally sound” companies.
Codes of conduct in businesses are normative as well. It is very difficult to impose coercive legal
sanctions on employees who do not follow the code of conduct because they are
likely very difficult to measure and enforce.
As a result, organizations rely on peer pressure and social obligation
to enforce employee conformance to these codes.
The third institutional dimension is
cognitive. Individuals and organizations
will often adhere to the cognitive dimension of institutions without any
conscious thought of doing so. That is,
unlike its normative and regulative counterparts, cognitive aspects of
institutions are subconscious. For instance, it might feel natural to commute
to and from work in a motorized vehicle in one context but natural to commute
to and from work using public transit in another. In either of these two contexts, individuals
abide by this action because it is culturally supported to do so. Customers
entering a grocery store find it natural to begin on the right hand side of the
store and move left while the consumption of breakfast cereals in western
markets has become a highly unquestioned breakfast tradition in the last
several decades. These are not rational
decisions, nor do they represent legal or even social obligations. They are highly unconscious traditions, the
resistance to which would be deemed unfathomable. Sources of cognitive influences tend to
originate from an individual’s background, ethnicity, upbringing, education,
and life experiences. At the
organizational level, culture has an important impact on the cognitive dimension. For instance, one company might have a strong
culture of cooperation while another might have a strong culture of adversity
and competition. The ensuing behaviour
of employees is often so automatic that it feels very out of place not to
cooperate and share information as opposed to competitively withhold such
information.
Decision
makers are particularly vulnerable to the cognitive dimension because they are
boundedly rational. That is, their
ability to process all information from the external environment in a rational
way is severely limited. As a result, they
rely on schemas, frames, cognitive heuristics or even belief systems to select
and process information. This means that
social reality is largely influenced by the cognitive frames actors use to make
sense of the outside world. For
instance, individuals belong to particular social groups whether that be a
student, a parent, a grandparent, an employee, a community member. Within each social group are certain
culturally acceptable behaviours that are highly taken for granted yet might
not be the same behaviours these individuals would enact had they not been part
of the social group. Studies show, for
instance, that when in a high pressured managerial role, individuals will
behave in certain ways that contradict their behaviour in their personal
lives. This is not a result of normative
obligations as much as they are of cognitive heuristic individuals use in their
cultural understanding of a manager in a particular industry to guide their
behaviour in particular roles.
An Example: Business School Classrooms
To
demonstrate how these three forces (regulative, normative, cognitive) are
complementary, consider the business classroom environment, which one could
argue is very institutionalized. The
professor imposes certain regulatory tools to influence student behaviour. For instance, grading participation and
imposing penalties for improper or disrespectful behaviour. On the
normative side, students behave in certain ways based on the social penalty
that might come with talking for too long in a discussion, dominating the discussion,
challenging other students in a way that is disrespectful, etc. Regardless of whether the instructor has
regulatory mechanisms in place, the student would be discouraged to engage in
this behaviour due to the social sanctions of being ostracized from the
class. In fact, some instructors find
the regulatory mechanism unnecessary due to the normative enforcement of
student behaviour. Finally, each student
comes to class with a unique background that colours their personality and
demeanor in a classroom setting.
Regardless of the rules or what is deemed acceptable by the class, there
are important subconscious influences that affect student behaviour that
consequently have an impact on class atmosphere. For instance, instructors oftentimes find
that one or two students can have a dramatic impact on the culture of the
class. These students, for instance,
might have a personality that is particularly hostile and combative that is not
necessarily balanced by a contrasting personality in the classroom, which
results in a particular culture. Studies
show that students attracted to business schools possess unique personal
characteristics that are not present in students of non-business programs. For instance, it is likely no surprise that
classroom environments of Harvard Business School or Ivey Business School are
quite competitive due to the fact that the personality traits of students
entering the programs possess high levels of competitiveness and independence.
Legitimacy
Readers
should recognize by now that the strength of any institution is dependent on
how well these three forces reinforce one another in such a way that attitudes
and behaviours become highly taken for granted.
In such a context, actors face
immense pressure to conform to these forces as a means to gain legitimacy by
the social group it seeks to be a part of.
Back to our classroom example, students gain legitimacy within their
peer group when s/he receives good grades from the instructor (regulative),
participates in class discussion in a way that is deemed acceptable by the rest
of the class, (normative), and uses appropriate business vocabulary and
business professionalism (cognitive).
New members of the class will often refer to these forces to earn
legitimacy just as small businesses aiming to compete effectively with large
businesses in a given industry will seek to conform to these forces. Just as we want to be legitimate in our
social circles, organizations too want to be perceived legitimate by its
competitors, consumers, suppliers, and (soon to be) shareholders.
Interestingly
though, the notion of legitimacy tempers the view above that organizations
conform to certain beliefs only because they constitute reality or are taken
for granted. Legitimacy suggests that
organizations also conform because they are rewarded for doing so through
access to markets and resources. Yet
notice that this is opposite to what strategic decision-making frameworks would
suggest, which is to find ways to remain differentiated from larger
competitors. But solid empirical
evidence shows that when organizations conform to the normative, cognitive, and
regulatory forces that define social reality, they perform better. That said, the search for legitimacy does
reinsert the role of pragmatism and instrumental value back into
institutionalization.
Organizational Fields and Institutional
Logics
Although
institutions can be a powerful source of influence on actors, in many cases
their reach can only go so far. In the
example above, the competitive classroom is really only evident in certain
university and college programs and is not evident in other programs. This is important for two reasons. First, institutional power has a
boundary. In some cases, a particular
institutionalized behaviour may be restricted to a small number of highly
similar actors (e.g. Canada’s big banks) while in other cases institutionalized
behaviour may apply to a group of diverse actors (e.g. Fair Labour Association). Organizations influenced by a given
institution are said to exist in an organizational field. An organizational
field represents a community of organizations “that partakes of a common
meaning system and whose participants interact more frequently and fatefully
with one another than with actors outside the field” (Scott, 1995: 56). Examples might include businesses that define
a supply chain, businesses in an industry, a group of NGOs, a trade
association, a collection of diverse organizations within a small community, or
a selected group of governments (e.g. G20).
As each actor in the field makes decisions and behaves, they impose and
reinforce the coercive, normative, and cognitive forces on other organizations
in the field.
Second,
given that the influence of an institution is restricted to a particular
organizational field, it is useful to consider how different sets of
regulative, normative, and cognitive forces can be associated with one
organizational field and how a different set of these forces can be associated
with an alternative organizational field.
In other words, despite facing a similar problem, organizational fields,
each with their own meaning systems tied to regulative, normative, and
cognitive forces, will have a dramatically different interpretation of the
problem and of the solution. Scholars refer to the institution that governs a
particular organizational field as an institutional logic. Logics regulate behaviour within an
organizational field because they represent a particular combination of
regulative, normative, and cognitive forces.
More specifically, they are taken-for-granted, resilient social
prescriptions, often encoded in laws and norms, specifying the boundaries of
the field, its rules of membership, and the role identities and appropriate
organizational forms of its constituent communities. As an example, consider how three different
logics interpret human activity. The institutional logic of capitalism is based
on accumulation and the commodification of human activity. But the logic of the state is of
rationalization and regulation of human activity by legal and bureaucratic
hierarchies. The logic of the family is
community and the motivation of human activity by unconditional loyalty to its
members and welfare. As another example,
scholars have shown a dramatic difference in the cognitive, regulative, and
normative forces that characterize a professional logic (i.e. medical
practitioners) versus those that characterize a management logic (i.e.
administrators). Although these two
groups of actors work side by side within a health care setting, they both
bring with them highly distinct institutional practices and beliefs that clash
when these actors interact with one another.
While medical practitioners are all about high level quality care at
whatever cost, for instance, hospital administrators are all about efficiencies
and cost savings. The point here is that
logics provide an important meaning system for actors in an organizational
field and helps to differentiate one organizational field from another. The strength, stability and maturity of an
institutional logic is based on the extent to which actors in the
organizational field adhere to the rules, norms, and practices that define that
field.
But
increasingly, organizational fields are becoming characterized by multiple and
often conflicting logics. That is,
fields are no longer made up of like-minded organizations but instead are made
up of highly diverse actors who bring with them their own logic. This is
because unlike traditional definitions of fields that were based on membership
homogeneity, more recent definitions of fields suggest that they represent a
congregation of actors that gravitate to particular issues. This means that actors making up a field can
originate from divergent and often contradictory logics. For instance, although environmental groups
and chemical companies may share a similar organizational field because they
influence one another, they do not share the same regulative, normative, and
cognitive forces that influence attitudes and behaviour towards the
environment. Microfinance institutions, as another example, face highly
contradictory logics when they attempt to simultaneously adhere to the market
or business logic of profit maximization and the development or NGO logic. Consequently,
some organizational fields may be guided by one overarching logic while other
more diverse organizational fields may face conflicting logics.
Institutional Change and Institutional
Entrepreneurship
So far, our discussion here has
centered around the stability and strength of institutions in influencing
behaviour. But history shows that institutions
do change. That is, alternative logics
can replace prevailing logics governing organizational fields. The best way to
think about institutional change is to consider how what was once deemed
subconscious and taken-for-granted undergoes a dramatic change. A very current example of institutional
change unfolding before our eyes is how Uber is challenging the conventional
normative, regulative, and cognitive forces that govern paid
transportation. The taxi industry
benefited for quite some time from a highly stable institution where behaviours
of actors in the field (i.e. taxi-drivers, municipalities, consumers) were
highly taken-for-granted. But the very
notion that paid transportation doesn’t necessarily have to reside with
specifically marked vehicles but could include the thousands of non-marked
vehicles otherwise sitting parked and unused, while completely logical for many
now, radically challenged (if not yet changed) the logic of paid
transportation. Another example of
institutional change emerged in the organizational field of Chartered
Professional Accountants in Canada. Once
a highly institutionalized set of behaviours by the big five (at the time)
accounting firms, the standard service of auditing and assurance was challenged
to include management consulting, a service unheard of prior to this
change. CPA Canada had to scramble to
develop the regulatory mechanisms to govern this service and the large firms,
through their repeated behaviours, began to establish the cognitive and
normative behaviours that slowly became institutionalized. Finally, fueled by neoliberal tendencies of
the 1980s and subsequent budget constraints by all levels of government, there
has been a shift in the logic that governs how public services (e.g. schools,
health facilities, public works) are administered. What was once a public commons logic that saw
decisions, attitudes and behaviours reflect the needs and interests of the
commons, has now turned into a business logic that views cost efficiency and
revenue generation as the primary belief system that governs how and why
particular decisions are made. As a
consequence, two logics clash when community members balk at the increased
reliance on corporate sponsorship in schools on the one hand and school
administrators refer to the need for financial sustainability as the way
forward on the other. Another more
familiar example might be the Canadian diet.
There is no doubt that regulative, normative, and cognitive forces play
an important role in what constitutes a Canadian diet. Cognitive desires for salt, sugar, and fat
overruled any rational effort by consumers to eat well while growing norms
associated with eating on the go, in the car, and at your desk facilitated fast
food that carried with it particular harmful effects. Finally, and perhaps less intuitively,
regulatory forces have played a substantial role in facilitating a particular
Canadian diet. Government subsidies of
the meat and poultry industries in the 1900s meant that these products were
priced lower in real dollars next to healthier alternatives. We’re only now starting to see a challenge to
this institution as a result of small changes to these three forces.
So then what causes institutional
change? In the case of Uber, and many
examples like it, technological innovation can be the source of change. The Internet itself has questioned many taken
for granted practices in society including the whole concept of retail. Other causes might originate from particular
individuals or organizations. Scholars
call these actors institutional entrepreneurs.
Institutional entrepreneurs can be defined as actors (whether it be
individuals, groups, or organizations) who envision new combinations of
regulative, normative, and cognitive forces as a means of advancing interests
they value highly yet that are highly suppressed by the strength of existing
institutional logics. Actors, according
to Battilana and colleagues (2009: 68), “must fulfill two conditions to be
regarded as institutional entrepreneurs 1) initiate divergent changes; and 2)
actively participate in the implementation of these changes.” Often,
institutional entrepreneurs "spearhead collective attempts to infuse new
beliefs, norms, and values into social structures, thus creating
discontinuities in the world of organizations" (Rao & Giorgi, 2006:
271). Institutional entrepreneurs face
an immense challenge because they are trying to change or at least challenge
the very social reality that, by definition, is meant to suppress the
motivation and/or awareness of alternative realities. An example of an institutional entrepreneur
might be Muhammad Yunus, who sought to challenge the highly taken for granted
institutional logic of banking. Yunus
needed to challenge the regulations that determined who was eligible for
financing. He needed to stand up against
the highly entrenched norms in the industry of ignoring the poor because they
didn’t meet industry standards of what constitutes an eligible loan. Most importantly, he needed to challenge the
highly taken-for-granted cognitive notion that the poor are less reliable in
their ability to repay debt. While Yunus
did not changing the logic governing banking, he strongly challenged it by
demonstrating that the many institutional forces that dictated a social reality
were not necessarily optimal.
Summary
In
summary, institutional theory is meant to provide a lens through which to
understand behaviour. It is a
particularly important theory for understanding organizational behaviour
because it suggests that, as part of an organizational field, organizations
struggle to behave rationality in the backdrop of strong regulative, normative,
and cognitive forces that define a taken-for-granted reality. This has
fundamental implications for sustainability because it provides a partial
explanation for why organizations struggle to break from the pack of
unsustainable behaviour. It also
suggests that organizations that take sustainability seriously can only do so
if they understand the institutional forces that make such an endeavor
difficult if not impossible. These
institutional entrepreneurs are climbing the proverbial waterfall as they work
to advance more sustainable outcomes through changing regulatory, normative,
and cognitive forces to which they are also vulnerable.
Wednesday, March 28, 2018
Facebook's Debacle - Denying Responsibility
Facebook’s recent
debacle represents another example of a business that is quite apologetic
for not considering that they might have a broader responsibility beyond their
investors. As Zuckerberg, in a recent
interview with CNN, stated:
“If you told me in 2004, when I was getting
started with Facebook, that a big part of my responsibility today would be to
help protect the integrity of elections against interference by other
governments, you know, I wouldn't have really believed that that was going to
be something that I will have to work on 14 years later”
While it is unfair
to suggest that Zuckerberg, his executive team, and the Facebook board could
have predicted this very scenario, it is not unfair to expect them to consider
the broader societal implications of their business model and to take
responsibility for the negative externalities that could result.
It is hard to be
sympathetic when, for decades, companies have denied responsibility for the externalities
of their business model, almost to suggest that they are victims to external
forces beyond their control. In 2012, Facebook
denied responsibility for any cyberstalking that led to Amanda Todd's suicide. Just this past year they
denied responsibility for the proliferation of fake news claiming that they were
not a media company but a social planform company and thus shouldn’t police the
content on their site. For years they have claimed that privacy was their number one concern despite heavy criticism that they breach this privacy principle when it represents a form of revenue for them but ignore it when it represents a cost.
Just like
businesses before them that initially started off with a denial strategy, they
are starting to first defend their position and, if they are smart enough, will
come around to be a leader in fixing these negative externalities.
The poster child
for denial of negative externalities was Nike. In the 1990s, Nike
struggled to understand, initially, how and why they should have responsibility
for the egregious working conditions in their supply chain when they didn’t own
their suppliers. They just couldn’t
understand how this was their problem, claiming that they too are simply a
victim of a highly corrupt and horrible supply chain. But society didn’t accept this argument. And it looks like society isn't accepting Facebook's argument.
But where does this
thinking come from? It comes from the
shareholder wealth maximization ideology that pervades businesses. Hypothetically, if I have tunnel vision to maximize wealth
for my shareholders, it’s easier for me to rationalize behaviour that has
negative implications for other stakeholders, unless I see how that impact will
compromise shareholder wealth.
Otherwise, it’s not my problem.
That’s a government problem. I’m
here to maximize return for my investors.
Full stop. Only when I see that
my actions impact that return will I do something about it. But, for most
companies, they realize this when it’s too late.
The similarity with
Nike is that Facebook struggles to understand why they should have
responsibility for content that is communicated and shared on their platform
and whether and how their app developers, who are essentially suppliers, use
the data of their consumers. The
contexts are different but the reluctance to understand and accept broader responsibility
remains.
This is a crucial
problem when we consider that the complexities of the business environment have
propelled managers into uncharted territory, fueled by issues that were
once the domain of civil society and government but are now at the forefront of
daily business operations. More often than not, these companies face
major financial problems because their narrow focus on shareholder wealth
desensitizes them to responsibility beyond what is required by law, and society
makes them pay for it.
Subscribe to:
Posts (Atom)