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strategy and business
 / Winter 2006 / Issue 45(originally published by Booz & Company)


Recent Research

As the authors observe, CSR is now high on many corporate agendas. More than half of the world’s largest 250 firms produce regular reports on their social and philanthropic activities. Investment in socially conscious firms is on the rise. And the media, investors, and watchdog organizations are putting more pressure on organizations to behave in ways deemed to be more socially responsible.

The trouble, the authors note, is that CSR has traditionally been a limited activity. Organizations have tended to act responsibly in their own neighborhoods, primarily because stakeholders have typically clustered there, and they have shown less regard for issues of concern outside their local regions.

Yet, the business landscape has changed, and the authors point to three recent trends that may already be reshaping CSR. First, corporate boundaries are eroding. Manufacturing companies make products in factories around the world, or outsource the work completely to third parties in distant regions.

Second, corporations’ national identities are breaking down. American manufacturing, retail, transportation, and finance firms now sell more than 30 percent of their goods and services outside the United States; in 1985, that figure was 14 percent. Determining where a company is from has become more and more difficult. For example, Royal Caribbean Cruises is headquartered in Miami; registers its ships in the Bahamas, Ecuador, and Norway; and is legally incorporated in Liberia.

Third, the nature of employment is shifting. Jobs throughout the world are more fluid and flexible than ever before, with less security and greater mobility.

Together, these changes leave the modern multinational corporation that embraces corporate social responsibility with a dilemma: to be responsible to all of its many and varied stakeholders no matter where they are in the world, or to be beholden to its shareholders alone.

Professors Davis, Whitman, and Zald suggest that a new perspective on “global corporate social responsibility” will emerge, one that will likely be influenced by European practices. The European Commission has extensive experience in creating harmonized CSR standards that work effectively across borders. Consequently, the corporation of the future may benchmark its CSR standards against Europe’s, its corporate governance standards against American organizations’, and its production standards against those of the Japanese.


The Ethics of Mary Parker Follett
Domènec Melé ([email protected]), “Ethics in Management: Exploring the Contribution of Mary Parker Follett,” IESE Working Paper No. 618. Click here.

In recent years, the American management consultant Mary Parker Follett (1868–1933) has been rediscovered as a thinker of note, and one whose work touches on many of the issues that preoccupy contemporary managerial minds. Her research and theories about business ethics were particularly innovative, and it is these aspects of her work that Domènec Melé, professor of business ethics at Spain’s IESE Business School, explores.

When Ms. Follett wrote in the 1920s and ’30s, there was no notion of what we now call business ethics, a distinct moral code practiced by companies. But, as Professor Melé points out, Ms. Follett’s view of the organizational world had a decidedly ethical bent, even if she didn’t address ethics directly.

For example, she believed that organizations were made up of complex social relationships, she was the first to acknowledge what is now called empowerment, she regarded leadership as situational, she advocated managerial experimentation rather than regimentation, and she produced novel insights about conflict resolution. In short, she flew in the face of the management orthodoxy of the time, epitomized by Frederick Taylor’s theory of scientific management.

“I do not think we have psychological, ethical and economic problems,” Ms. Follett wrote. “We have human problems with psychological, ethical and economic aspects.” She held that compartmentalized thinking such as Taylor valorized was dangerous. Ethics, therefore, is not an isolated element of business, but one that must be considered in all decisions; this, suggests Professor Melé, is the clearest overall lesson from Ms. Follett’s work. The best management decisions are not made in one dimension or in isolation from the multitude of factors that affect businesses and individuals.

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