the referencence should be taken from the pdf attached and the refernce should be taken from the newspaper article which should be after feburary 2020
Instructions – The case study and the article should be minimum of 1 and half page
excluding the reference section and the exercise must have Harvard style
referencing. The articles which are to be refereed for this particular exercise are
attached below. By referring to the articles, the exercise needs to be done
accordingly. To open the attached pdf, double click on the icon
“Submission through Turnitin”
Exercise on Case Study
• Read: Nooyi, I.K. and Govindarajan, V. (2020) ‘Becoming a Better Corporate Citizen: How PepsiCo
moved toward a healthier future”, Harvard Business Review, Mar-Apr 2020
corporate citizenship.pdf
• This case focuses on the Performance with Purpose (PepsiCo) approach. For your exercise you need to
focus on Indra K. Nooyi
• Use the article (plus some additional desk research on Indra) and pre-recording material for Unit 4 (on
Blackboard) to discuss o the characteristics of her leadership during
her time in PepsiCo and o how you would frame her style of
leadership overall.
o support your discussion with reference to the article, additional desk research and the
prerecording (supporting material).
Exercise on Contemporary Article Review
What you need to do Contemporary Article Review
• Identify a contemporary article (newspaper/magazine) that made you think – “someone should do
something about that” or “that’s what frustrates me about the world or society”
• Answer:
o Explain/Expand on the problem/issue (find out more information on the problem/issue) o
What socially-driven business idea could you set-up that would help?
o What skills/characteristics, motivations or life experiences do you have that would help drive
and develop this idea further? What characteristics/skills might you need to develop? Support
your answer with reference to the pre-recording (supporting material).
o What are others around the world doing in this area?
Articles to refer to for case study and Contemporary article:
Global Citizen Dr SImon Wester on Leadership Styles Eco-leadership.docx
Topic.pdf Eco Leadership.epub Pearce.pdf
Instructions: The case study and the article should have Harvard style referencing. The
articles which are to be refereed for this particular exercise are attached below. By
referring to the articles, the exercise needs to be done accordingly. To open the attached
pdf, double click on the icon.
“Submission through Turnitin”
Case Study 2 Reflection Submission
Choose another case of an ethical/ social responsibility (e.g. sustainability) issue that arose in the context of an MNE
(e.g. that may have made the news – it doesn’t matter what the timeframe is). Compare and contrast the actions
taken by the chosen case with the Nespresso seminar case by addressing the following:
1. Taking a multi-stakeholder perspective – are there ethical dilemmas/conflicts that arise for the MNEs in the
context of the issues?
2. Given the conflicts that may have arisen, give your evaluation of the actions taken by the MNEs in
response to the issue?
3. Provide your assessment of how meaningful the social responsibility actions/decisions of the two MNEs
are in general.
Additional notes:
Provide a brief description of the chosen case issue in an appendix to your submission (this is in addition to
the main submission).
Draw on your own secondary/desk research of the two cases as well as academic literature/materials to
frame your discussion.
Format: 1 to 2 page document (excluding the appendix and references/bibliography) or 3-5 minute
podcast/video with powerpoint slides.
Use Harvard Style referencing
Exercise on Contemporary Article:
Choose a contemporary newspaper article of interest to you (published in the last
2 years, that is related to Unit 2. Produce a one-page document for the article that includes:
o Your summary of the key points of the article
o Your opinion on the subject matter – including critical thought,
evaluation or analysis – which you must support with
reference to the lecture materials for the unit AND academic
articles (e.g. an academic book from the library, an academic
article, a Harvard Business Review article, a California
Management Review article). Use more than one academic
article/work.
Selecting the Newspaper Article and Examples of Articles
Selecting the Newspaper Article and Examples of Articles
The article must be published in the last 2 years
Search business sections of The Irish Times, Financial Times, The Economist, The Guardian etc.
Do not use tabloid newspaper articles.
Choose an article that is connected to Unit 2 on sustainability and responsibility
The article can be about a specific company or be more general on the topic.
Structuring Your Review
Structuring Your Review
One Page (excluding appendix):
1. Introduction: Your choice of article including the title of the article and source of article
2. Summary of key points of the article
3. Your opinion
Include here your criticisms/assessment/analysis of the points raised in the article, what you might
agree or disagree with and why. You could use examples of companies/countries/regions to develop
your argument. You must make reference to the lecture material for Unit 2 and academic academic
articles/book chapters).
4. Conclusions
5. Appendix (copy and paste the article here)
Articles to be used for the referencing for both the exercises:
Dark Side of IB.pdf Climate Change is
Not a Problem.pdf
Climate Change and
COVID-19 There Is More Than One Curve to Flatten.pdf
TheDarkSideofInterna
tionalBusiness.pdf
Sustainable Supply
Chain.pdf
Its Hard to be
Good.pdf
BECOMING
A BETTER
CORPORATE
CITIZEN
How PepsiCo moved
toward a healthier
future
LEADERSHIP
AZUMA MAKOTO
SHIINOKI SHUNSUKE / AMKK
AUTHORS FLORAL ARTIST
PHOTOGRAPHER
Indra K. Nooyi
Former CEO, PepsiCo
Vijay Govindarajan
Professor, Tuck
School of Business
94 Harvard Business ReviewMarch–April 2020
apitalism is under
pressure. People
all over the world
believe that CEOs
manage compa-
nies for the short
term because of a single-minded focus on shareholders.
The emergence of activist investors, who focus on quickly
extracting outsize returns, has created even more angst
about how companies are run. To address these issues,
academics, think tanks, corporate leaders, and NGOs have
started talking about how to reform the capitalist system
so that it works for everyone. In August 2019 the Business
Roundtable issued a statement signed by 181 CEOs who com-
mitted to focusing on all stakeholders.
Commendable and courageous, indeed. But the truth
is that change is tough for well-established companies.
Most are not start-ups that began with a social purpose, as
Whole Foods and TOMS Shoes did. Nor were they set up,
as Grameen Bank was, to solve social problems. At compa-
nies that have performed well, sometimes for decades, it’s
natural for employees to continue the behaviors that have
led to strong results. Success, more than failure, prevents a
company’s transformation.
PepsiCo is one of the few established global companies
that have produced superior financial returns while meeting
the needs of all stakeholders. It has always invested for the
long term and delivered results in the short term. The layer
that I, Indra Nooyi, added was a focus on sustainability—by
which I mean satisfying multiple stakeholder interests to
ensure the long-term viability of a company. (For ease of
storytelling, we will use the pronoun “I” in this article when
referring to Indra Nooyi.)
At the very outset, having grown up in an emerging market
where I saw multinationals being a force both for good and
for not so good, I wanted PepsiCo’s contribution to society to
be rooted in its core business model. I did not want us to fund
charitable programs to make ourselves feel or look good.
Our social responsibility had to evolve away from corporate
philanthropy and toward a deep sense of purpose that would
also drive shareholder value. We needed to change the way we
made money—not just give away some of the money we earned.
I came to call this new approach Performance with
Purpose (PwP). It is based on four pillars: delivering superior
financial returns (financial sustainability); transforming the
product portfolio by reducing the sugar, salt, and fat in our
products while dialing up more-healthful, more-nutritious
foods and beverages (human sustainability); limiting our
environmental impact by conserving water and reducing our
carbon footprint and plastic waste (environmental sustain-
ability); and lifting people by offering new types of support to
women and families inside the company and in the commu-
nities we serve (talent sustainability).
C
LEADERSHIP
ABOUT THE ART
The Japanese floral artist Azuma Makoto is known for his botanical sculptures.
He has frozen his arrangements in ice, launched a bonsai tree into space, and plunged
bouquets into the sea. In his series “Undersurface Flowers,” Makoto submerged flowers in
water to show the usually hidden roots of the plants in counterpoint to the blooms above.
THE PROBLEM
There’s a growing sense that corporations need
to be focused more on long-term sustainability
and less on short-term profitability. However,
it’s difficult for well-established companies to
make that shift, because it requires that well-
entrenched organizational routines change.
IDEA IN BRIEF
ONE SOLUTION
Under Indra Nooyi’s leadership,
PepsiCo adopted a program called
Performance with Purpose. The aim
was to put environmental goals and
customer and employee well-being
on a par with financial goals.
THE TAKEAWAY
It hasn’t been easy—but the program
has been a success. Lessons
learned include the need for strong
board support; constant, consistent
communication; early symbolic
actions; and new capabilities.
96 Harvard Business ReviewMarch–April 2020
Harvard Business Review
March–April 2020 97
In my 12 years as CEO, PwP was my primary focus,
and PepsiCo made tremendous progress. Our portfolio of
more-healthful options grew from about 38% of revenue
in 2006 to roughly 50% in 2017. We reduced water use in
our operations by 25% from 2006 to 2018 and provided safe
drinking water to 22 million citizens in the communities we
served. We almost tripled our investments in R&D to expand
our nutritious offerings and minimize our environmental
impact. Women held 39% of senior management roles by
2018. After PwP was implemented, net revenue grew by
80%, and PepsiCo stock outperformed both the Consumer
Staples Select Sector Index and the S&P 500. (See the exhibit
“PepsiCo’s Financial Performance.”)
Those results mask the difficulty of implementing a
purpose-driven strategy. PwP was viewed as transforma-
tional—but many questioned why we were doing it at all.
And even when the will was there, the dominant logic of
the business didn’t simply disappear. For instance, a bright
young team from PepsiCo’s core business that had been put
in charge of the “good for you” orange juice brand Tropicana
tried to extend it into a sugary carbonated orange drink. The
team hadn’t yet understood that PepsiCo needed to limit the
introduction of treatlike products. Changing decades’ worth
of marketing habits was tough too. When a newly hired
senior executive pointed out that the child obesity crisis
in the United States demanded a change in how PepsiCo
marketed soft drinks to children, especially in schools, one
company veteran went as far as to accuse the newcomer of
being a saboteur and a traitor.
In this article we capture some lessons from PepsiCo’s
transformation journey for CEOs seeking to implement a
purpose-driven strategy at their own companies.
ANCHOR YOUR TRANSFORMATION IN A
VIEW OF THE FUTURE
In shaping our approach, we decided to start from the
outside. I asked a team of senior executives to identify
future events that would affect our businesses. They
pointed to several megatrends, many of them universal in
impact, including changes in the world’s demographics, a
preoccupation with health and wellness, scarcity of water
and other natural resources, constraints created by global
climate change, the rise of activism, and a talent market
characterized by shortages of key people.
Coming out of that exercise, we recognized that we
wouldn’t be able to deliver superior financial performance
if we didn’t transform our portfolio to offer more-healthful
products—which many consumers were demanding—in
addition to treats. If we didn’t reduce water and plastic usage,
our costs would go up, and we wouldn’t get a license to oper-
ate in many societies. If we didn’t create a company where
people could bring their whole selves to work, we couldn’t
hope to hire or retain the best and brightest people.
Companies wishing to pursue a purpose-driven strat-
egy ought to embrace the same approach. Leaders should
consider setting up a team that reports directly to the CEO
and scouts out the megatrends that will affect the organi-
zation. Members of the team should be carefully selected
so that they’re not wedded to the status quo and can think
outside-in; otherwise the result will be incremental thinking
from people who are worried that the current model will be
disrupted. After analyzing interactions between the mega-
trends and drawing a composite of what the future might
look like, the team must answer key questions such as: What
innovations to the business model will be necessary? What
investments does the company need to make? What talent
does it need to develop or hire? This process will help CEOs
future-proof their companies by developing “future back”
strategies in contrast to the “current forward” model.
ENSURE THAT THE BOARD IS YOUR ALLY
We realized early that PwP would require the support of
PepsiCo’s board of directors. I created a detailed, multipage
document to show the board how the megatrends analysis
should shape our strategy and how PwP would future-proof
the company. We were lucky that vocal board members such
as Alberto Ibargüen, the head of the Knight Foundation;
Sharon Percy Rockefeller, a leader and policy maker in the
public broadcasting community; Daniel Vasella, the former
CEO of Novartis; Victor Dzau, then the head of Duke Univer-
sity Medical Center; and Dina Dublon, the former EVP and
CFO of JPMorgan Chase, embraced PwP and even challenged
me when they felt that an action was inconsistent with it. For
example, the board heavily scrutinized acquisitions in the
“treat” space and rejected some of them because they would
take us backward. Such was the board’s commitment.
As members retired, the board recruited their replace-
ments with PwP in mind. The Ford Foundation’s Darren
Walker brought an NGO and global society mindset to PwP,
while David Page, director of the Whitehead Institute for
LEADERSHIP
98 Harvard Business ReviewMarch–April 2020
Biomedical Research, enhanced our science-based capabil-
ities. Each board member played a valuable role in PwP’s
implementation.
The board realigned my compensation structure so that it
was based on PwP-related metrics as well as on EPS targets.
That step is critical: It’s how the board becomes the force that
holds the CEO responsible for delivering on a purpose-led
strategy. Not only will the CEO not be able to deviate without
the directors’ involvement, but by setting targets, the
board makes itself accountable to all stakeholders, not just
shareholders.
The board’s support was particularly useful when an
activist investor bought an equity stake in PepsiCo in 2012
and demanded that the company be broken up. The investor
criticized PwP and wanted the company to focus on sugary
beverages and salty snacks, cut costs, and return money to
investors. I listened carefully to him and studied every one
of his ideas. At the end of the day, though, our board—under
the leadership of Ian Cook, the lead director and then-CEO
of Colgate-Palmolive—wrote an open letter stating that the
company was on the right track. We stayed the course. Three
years later the investor sold the PepsiCo stock he had bought
at $70 for $105—a 50% gain thanks to PwP.
BE THOUGHTFUL ABOUT THE LANGUAGE YOU USE TO
COMMUNICATE YOUR TRANSFORMATION
A global company must communicate its purpose-driven
strategy in a way that everyone everywhere can understand.
But it shouldn’t trivialize the message. Many at PepsiCo ini-
tially wanted PwP to be framed as “4 Ps: performance, prod-
uct, planet, and people.” That was simple language, which
we knew we needed, but it sounded to the executive team
like a marketing campaign rather than a serious commitment
to ensuring human, environmental, and talent sustainability
along with strong financial performance. We wanted all
stakeholders, especially our employees, to understand that
sustainability was critical for the company’s future.
The succinct phrase “Performance with Purpose”
provided a broad canvas for growth in an elegant fashion.
It signaled that if PepsiCo didn’t act purposefully to tackle
rising health concerns such as diabetes and obesity and
environmental issues such as water scarcity and plastic
usage, its businesses would find it tough to grow. The prob-
lem would be most pronounced in China, India, and Mexico,
where most of PepsiCo’s future growth was likely to occur
but the social license to do business is difficult to retain.
It’s wise to test the framing of a purpose-driven strategy
in one or two countries before rolling it across the global
organization, because countries will respond to the mes-
sage in subtly different ways. Mexico was one country we
used for a test. At PepsiCo Mexico, after much discussion,
then-chairman Pedro Padierna and his executive committee
localized PwP with the tagline “Desempeño con Sendito,”
which roughly translates to “performing to obtain something
meaningful in a sustainable manner.”
By conducting numerous focus group sessions, we
learned that this language best captured what PepsiCo
wanted to communicate in Mexico. Not only did the idea
go down well there, but PepsiCo Mexico never forgot that
Mexico was the first nation outside the United States to
hear about the new strategy. PwP remains a priority for the
country’s top management today.
MODEL THE NECESSARY NEW BEHAVIORS
WITH EARLY ACTIONS
Taking bold actions early is critical for showing the organi-
zation that the purpose-driven strategy is not just the flavor
of the day. Three things will send a clear message: creating
high-profile leadership positions and filling many of them
with outsiders; overturning decisions that would have made
it through in the “old days”; and letting some people go.
One of the first things I did after articulating PwP was
to create the role of chief scientific officer and appoint
Mehmood Khan, an endocrinologist at Mayo Clinic and then
the head of R&D for Takeda Pharmaceutical, to fill it. That
sent a powerful signal throughout the organization and our
industry that we were committed to building the radically
different capabilities the company needed to execute its
purpose-driven strategy.
Although we announced PwP in 2006, Khan didn’t sign
on until a year later. By the time he had figured out the nature
and structure of the R&D capabilities he wanted to create,
Taking bold actions early is critical for showing the organization that the
purpose-driven strategy is not just the flavor of the day.
Harvard Business Review
March–April 2020 99
it was 2008. His budgetary ask, a significant increase over
the previous year, came just as the U.S. stock market crashed
and the Great Recession began. Even so, I worked to give
him every penny he needed that year and the next. It rein-
forced the message throughout the organization that PwP
was here to stay.
Another new-to-PepsiCo position was that of chief design
officer. Realizing that any successful transformation must
be consumer focused—not just CEO driven—we knew that
design thinking would be critical to our success, so we brought
on Mauro Porcini from 3M. (See “How Indra Nooyi Turned
Design Thinking into Strategy,” HBR, September 2015.)
Over time I recruited several other executives from
outside the company for key senior leadership positions,
including Laxman Narasimhan and Vivek Sankaran, partners
at McKinsey; Brad Jakeman, from the video games developer
Activision Blizzard; and Cathy Tai in China, who came to us
from Apple. Jon Banner, who joined us after a storied career
at ABC, brilliantly framed our messaging as EVP for commu-
nications. Each of them played a major role in the company.
The positional power and capabilities of those senior execu-
tives challenged the status quo and catalyzed change quickly.
Interestingly, not creating or filling what might be seen
as a key role also sends a powerful message. For example,
I did not appoint a chief sustainability officer. If the company
made such an appointment, I felt, PwP would become that
person’s responsibility more than anyone else’s, and I wanted
it to belong to everyone. So I used an expanded leadership
team, consisting of all the executives in the top two levels, to
drive the transformation. PepsiCo’s board-level sustainability
committee wasn’t established until 2017, well after PwP had
put down roots in the company.
Another action that communicated volumes was a late-
in-the-game decision to call off a major new product launch.
One of the teams in PepsiCo’s snack business, waking up to
a growing demand for energy foods, had decided to launch a
caffeine-based snack. The team formulated a product, iden-
tified a brand name, and designed the packaging and labels.
Just days before the planned launch, the product came to
the notice of a senior executive who was not comfortable
that the company would introduce a highly caffeinated
snack that children might consume. He stopped its develop-
ment, despite the costs that had already been incurred and
in the face of enormous internal pressure—a decision
I personally endorsed.
Critics will always emerge, especially in the upper eche-
lons of an organization. It’s important to involve them and
engage in a transparent dialogue with them, pointing to the
existential threat that the company may face tomorrow. It’s
equally important to incorporate their legitimate concerns in
implementing the strategy. However, if detractors aren’t con-
verted within a reasonable period of time, they should not be
allowed to continue to serve on the management team.
DEVELOP THE CAPABILITIES THAT ADVANCE
THE PURPOSE-DRIVEN STRATEGY
To execute PwP, PepsiCo had to build fresh capabilities
in several areas, particularly R&D and product develop-
ment. Historically, PepsiCo’s R&D had consisted of people
trained in the physical sciences, either food science or food
100 Harvard Business ReviewMarch–April 2020
engineering, but Khan hired for vastly different back-
grounds—such as molecular biology, physiology, pharmacol-
ogy, nutrition, and computer modeling—and from compa-
nies outside the food and beverage industry: businesses
such as pharmaceuticals, personal care, beauty care, and
oil refineries. He also appointed as many women as men to
senior positions in R&D and set up research centers around
the world, including Shanghai and Mexico City. That changed
PepsiCo’s R&D capabilities in terms not just of talent but also
of cultural background, gender, ethnicity, and location.
The results were quick in coming. PwP led to the reduc-
tion of salt, sugar, and fat levels in all our core products
without any deterioration in taste—a very difficult undertak-
ing. It also allowed us to create and acquire more-healthful
beverages—Bubly sparkling water, LifeWtr purified water,
Naked Juice fruit and vegetable smoothies, KeVita fermented
probiotic and kombucha beverages, Wimm-Bill-Dann’s dairy
products (in Russia), and, most recently, CytoSport Muscle
Milk—and snacks including Stacy’s Pita Chips, Sabra hum-
mus, Off the Eaten Path baked snacks, SunChips whole-grain
versions, Bare Snacks baked fruit and vegetable snacks, and
Health Warrior plant-based nutrition bars.
PepsiCo launched the first plant-based polymer packaging
for its products some years ago. The polymer starts on a farm
and becomes plastic packaging that’s biocombustible and
biodegradable because it’s made from renewable materials
such as switchgrass, pine bark, and corn husks. Over time
PepsiCo hopes to use by-products from its own food busi-
ness—orange peels, potato peels, oat hulls—to manufacture
“green plastic.” That would be a scientific breakthrough
that few people would associate with a food and beverage
company.
PepsiCo has even developed new machines to produce
more-healthful products. Some years ago Cheetos were taken
out of America’s schools because they didn’t meet the USDA’s
nutrition criteria. They had no positive nutrients, such as
whole fibers, and there was no way at the time to introduce
whole fibers into an extruded snack without clogging the
extruders and shutting them down. No company wanted to
work on the problem, so PepsiCo’s R&D center assembled
a group to computer model the physics and chemistry of
the extrusion of starches and cellulose fibers at high tem-
peratures and high pressure. Two years later the engineers
cracked the problem, designing an extruder that wouldn’t
jam when whole grains were introduced. By 2016 we had
relaunched Cheetos with whole grains, and the product
made its way back into schools. That was good not only for
business but also for organizational morale.
One handy tool that PepsiCo developed is called ReCon
(for “resource conservation”), a multistep process for
precisely measuring water usage and wastewater discharge
in factories. It allows scientists to figure out how and where
they can reuse or recycle wastewater. The company has
developed similar tools for greenhouse gases, solid waste,
and electricity. Reducing consumption and waste has helped
improve the company’s bottom line. In fact, senior exec-
utives informally call ReCon PepsiCo’s 23rd billion-dollar
brand for good reason.
LOCALIZE THE EXECUTION OF THE STRATEGY
Although a purpose-driven strategy must be common to
all countries in which the company operates, each market
should have the freedom to tailor the approach to its needs:
freedom within a frame. Food and taste preferences are
culture-specific, and environmental problems are local.
For instance, water is less of an issue in Russia than in
Mexico, a water-starved country. Because conserving water
reduced costs and ensured a regular supply, PepsiCo Mexico
could justify investments in the latest generation of water-
treatment plants. By recycling 65% of the water they used,
the three plants in Mexico City reduced their reliance on
expensive municipal water.
That set the tone—and the pace—for PwP in Mexico. The
next front was fried snacks. PepsiCo Mexico acquired a well-
known local cookie company, Gamesa, which became the
global center for PepsiCo’s baked products, and the company
recruited a large number of R&D people to push the envelope
in baking technologies and products. Another goal was to
tackle salt levels in its snacks. To lower them, PepsiCo Mexico
retooled the supply chain for flavors: Rather than sourcing
complete flavor packs that contained salt, it started buying
only the core flavors and mixing them with pulverized salt,
reducing the amount of salt used.
Buoyed by these process successes, PepsiCo Mexico
went on to modify its products by replacing ingredients,
using more-natural ones, and adding nutritious elements.
It developed extruded products from corn cereal; reformu-
lated the popular Mafer line by roasting peanuts instead
of frying them; and launched a new line under the Quaker
brand—from cereal that included chia and other ancient
grains to pancake mixes made with Quaker Oats. A typical
breakfast in Mexico is a licuado, the equivalent of a smoothie.
LEADERSHIP
Harvard Business Review
March–April 2020 101
The company marketed the idea of transforming a regular
breakfast into a super breakfast by adding Quaker Oats and
provided branded containers to the small shops that sell li
cuados in every Mexican city. What was good for consumers’
health became a successful line of business.
PepsiCo Mexico effectively leveraged partnerships, too.
Its snack foods business found it nearly impossible to switch
from expensive, imported, and not-so-healthful palm oil
to sunflower oil because the latter wasn’t reliably available
or competitively priced. The company worked with the
Mexican government and the Inter-American Development
Bank to provide incentives and training for farmers to
once again grow sunflowers in provinces that had stopped
doing so. As a result, more than 50,000 hectares of land are
under sunflower cultivation today, saving the country—and
consumers’ hearts—from palm oil imports and providing
PepsiCo Mexico with an inexpensive, dependable, and local
source of raw materials.
FIND SUPPORT OUTSIDE THE COMPANY
CEOs cannot execute a purpose-driven strategy without
building coalitions of support and finding ways to respond to
external critics. Whenever powerful NGOs such as Oxfam and
Rainforest Alliance picketed PepsiCo headquarters, attacking
the company’s agricultural practices or human rights record,
I would make it a point to meet with the demonstrators, hear
them out, and present a counterpoint. Walking even a yard in
their shoes mattered. The NGOs would go away appreciating
that they had been given a patient hearing and be more open
to PepsiCo’s ideas and initiatives in the future.
Companies will need to figure out how to get a second
chance. They will have to proactively deal with skeptical
NGOs that argue that purpose-driven strategies are nothing
more than window dressing. They should learn to engage
with those critics, explain that they are trying something
new, and candidly admit that they are coming late to the
table. Listening closely, reframing NGOs as partners, and
showing that the company takes criticism seriously can often
diffuse a tense situation.
In addition to personal interaction, data can help dispel
NGOs’ negative views about business. Using facts and
conclusions based on scientific results, Khan, Dan Bena (then
the senior director of operations development), and Banner
persuaded several skeptical NGOs to work with the company.
CEOs must also figure out how to join forces with other
companies—even rivals—in their industry. In 2010 PepsiCo
and several other leading companies in the food and bever-
age industry created the Healthy Weight Commitment Foun-
dation. Its members promised to offer consumers low-calorie
options and to remove 1.5 trillion calories from their products
by 2015. As it turned out, by 2012 they had surpassed that
target by more than 400%.
EMBED PURPOSE IN THE ORGANIZATIONAL DNA
A purpose-driven transformation may start out as the CEO’s
passion, but it will not survive unless it is embedded in the
organizational DNA. That requires several kinds of reinforce-
ment, through communication, resource allocation, goal
setting, and recognition and rewards.
Communicating the ideas and ideals of PwP constantly
to every stakeholder was critical to making it stick. From
LEADERSHIP
11.5%
5.5
PepsiCo
S&P 500
9.1
5-
ye
ar
T
SR
13.5%
10.3
13.2
5.5
PepsiCo
S&P 500
10
-y
ea
r T
SR
Note: TSR is an annualized measure that includes the effects of capital gains and
dividends. The 10-year and 5-year TSRs are calculated beginning April 23, 2009 (2.5 years
after Nooyi took office), and ending on April 22, 2019, and beginning April 23, 2014, and
ending on April 22, 2019, respectively, taking into consideration that a new CEO needs
time to begin producing measurable results. Source: FactSet as of April 22, 2019.
The company’s annualized total shareholder return (TSR) over time
compares favorably with the performance of the Consumer Staples
Select Sector Index and the S&P 500. During Indra Nooyi’s tenure as
CEO, the company also improved the healthfulness of its offerings and
its environmental performance.
PepsiCo’s Financial Performance
Consumer Staples Select Sector Index
Consumer Staples Select Sector Index
102 Harvard Business ReviewMarch–April 2020
2007 to 2017, PwP was on almost every cover of the compa-
ny’s annual reports. One of my objectives was to highlight
its continuing importance, but those covers also subtly
signaled that PwP had become the entire organization’s
agenda, not just mine.
I used many external forums to describe PwP and amplify
the message, and every senior executive spoke about it
publicly to build support among external stakeholders.
Khan, Bena, and other subject-matter experts were desig-
nated PepsiCo ambassadors; they traveled the world talking
to various constituencies about specific aspects of PwP.
Resource allocation, too, must be tied to purpose. In
fact, we insisted on a sustainability sign-off for every capital
expenditure. Each proposal had to state what the sustain-
ability impact of the investment would be, what trade-offs
were being made, whether it would meet PepsiCo’s sus-
tainability targets, how it would meet them, and if not, why
not. The sustainability committee reviewed every proposal,
and if the project wasn’t given the green light, it went right
back to the drawing board. We set aside a percentage of the
annual corporate budget in a sustainability investment fund,
drawing from it to subsidize or defray the costs of innova-
tion. That enabled the business units to experiment and test
sustainability-related ideas without having to worry about
the internal rate of return that normally applied. What was
heartwarming was that our CFO, Hugh Johnston, drove this
initiative—unusual for a finance chief.
We set PwP-related goals for everyone, from senior
executives and country heads all the way down to midlevel
managers. Those targets were used to evaluate performance
and help determine annual bonuses. Even the R&D centers
and the market-facing functions had PwP goals that were
linked to performance evaluations and compensation.
Amid formal target setting and resource-allocation
battles, …
Source: https://www.socialsciencespace.com/2020/03/a-brief-guide-to-eco-leadership/
1. A Brief Guide to Eco-Leadership
Published on By
Simon Western
SAGE author Simon Western has written a guide to eco-leadership, a new leadership paradigm for organizations in the climate emergency. For Academic Book Week, we asked him to present a short guide to its principles.
What Is Eco-Leadership?
Eco-leadership is the latest leadership discourse dominating organizational practice. The term was coined by Dr. Simon Western in the first edition of
Leadership: A Critical Text
to describe a new leadership paradigm for organizations in the networked and inter-dependent global environment.
What Are Eco-Leaders?
Eco-leaders conceptualize organizations as ‘ecosystems within wider ecosystems.’ Their focus is on networks, connectivity and interdependence, breaking down silos and distributing leadership widely. They make strong connections with external eco-systems, e.g. with stakeholders, customers, regulators and wider society.
Commercial Eco-Leadership
Commercial eco-leadership describes how companies can utilize new technology and platform economics to exploit the power of networks. Ethical eco-leadership aligns technological, people and environmental networks. These leaders see the connections between utilizing digital platforms, distributing leadership and placing environmental values at the heart of their leadership task. The task of eco-leadership today is to ‘adapt and belong,’ to co-create organizations that are adaptive to change, and also belong to the social and natural world.
The Four Discourses of Leadership
The four main leadership discourses that emerged in the past century in the West, as described in Leadership: A Critical Text, are summarized below:
· The Controller Leadership discourse: ‘Controlling resources to maximize efficiency’
· The Therapist Leadership discourse: ‘Happy workers are more productive workers’
· The Messiah Leadership discourse: ‘Vision and strong cultures’
· The Eco-Leadership discourse: ‘Connectivity, networks, and (ethics)’
Why Does Eco-Leadership Take a Meta-Leadership Position?
Eco-leadership transcends individual leadership approaches, taking a meta-leadership position that addresses the disruptions, opportunities and challenges of our networked age. It recognizes the diversity of leadership that is required in each specific context. Taking a meta-view ensures the right balance of different leadership approaches, that work in harmony to create a dynamic whole. Eco-leaders radically transform their organizations, distributing leadership to the edges making them more agile, responsive and able to self-manage.
How Does Eco-Leadership Work in Practice?
2.
An Eco-Leadership Case Study – Global High-Tech Company
Consulting to global leadership function
Aims:
· Distribute leadership more widely
· Change from top-down culture
· Enable leaders to become more connected, less siloed
· Improve employee engagement
· Enhance adaptive culture
Actions:
· Provide thought leadership
· Key-note to company leadership and key influencers
· Discuss the four discourses and how Eco-Leadership embraces rather than replaces other leadership approaches, providing a network of leadership and followership across the organisation.
Eco-Leadership Addresses a Paradigm Change, Rather Than Fixes a Problem
Eco-leadership means renegotiating purpose: re-imagining what is valued and what success means. This challenges the purpose of companies — from being closed systems that make profits to being open-systems where success is inevitably contingent on a healthy society and healthy environment.
Eco-leaders see organizations as interconnected living networks, with virtual and physical flows between humans, nature and technologies. The task of eco-leaders is to think spatially, to see patterns and connections, and create a network of leaders distributed throughout the organization. Eco-Leadership is to develop ‘webs of work’ and then connect these to the ‘webs of life’.
Four Reasons Why Eco-Leadership Emerged Now
1. Digital Age – Technological changes mean we live in an increasingly networked society, which demands networked, eco-leadership approaches. Top-down and individualistic leadership models are passé. A paradigm shift requires a radical leadership rethink.
2. Hyper-Globalization – In global markets supply chains, partners, customers and regulators are international, creating complex eco-systems and inter-dependencies. These demand holistic eco-leadership responses.
3. Environmental challenges – Local pollution and global climate changes impact on business in many ways. Ethical and innovative eco-leadership approaches are urgently required to address these issues, not only from politicians but also from business leaders. Eco-leadership benefits their business and society as a whole.
4. Business Success – Visionary leaders realize that running a successful business depends on these key factors:
· nurturing the internal organizational eco-system, to get the very best from employees and technologies
· leveraging success from the external eco-systems in which the organization operates
· re-imaging value and purpose to demonstrate inspirational leadership, which has secondary unexpected benefits, such as new innovations, attracting talent and the retention of committed employees.
Article
Global Citizenship and Business Education, Part 1: Antecedents and Global Citizenship and Business Education, Part 1: Antecedents and
Foundations Foundations
José R. de la Torre 1 , Corinne B. Young 2
1 University of Bologna Business School, Italy, and Florida International University (Emeritus), USA, 2 Franklin University Switzerland, Switzerland
Keywords: global skills and values, global competency, sustainability, global citizenship
AIB Insights
Vol. 20, Issue 1, 2020
Whereas national sovereignty persists as the primary form of political organization, the
interconnectedness of today’s world implies that any citizen’s rights and obligations are
no longer confined within national boundaries while many societal issues require global
civic responses. Thus, business leaders need to be educated on the skills and values that
characterize global citizenship in order for them to be accountable and act accordingly.
This article traces the historical foundations of the concept of global citizenship, its
definition and legitimacy. We also list the major skills and values that global citizens must
possess in order to act accordingly.
INTRODUCTION
1
The rights, duties, and obligations of a citizen of any sov-
ereign state are still fundamental to civil society. Nonethe-
less, the interconnectedness of today’s world requires us to
recognize that these rights and obligations may no longer
be confined within national boundaries and that many glob-
al issues require global civic responses. Global citizenship,
however, cannot be simply defined as an extension of the
national concept to a global sphere. As Michael Byers (2005)
writes, “Global citizenship empowers individual human be-
ings to participate in decisions concerning their lives, in-
cluding the political, economic, social, cultural and envi-
ronmental conditions in which they live. It includes the
right to vote, to express opinions and associate with others,
and to enjoy a decent and dignified quality of life. It is ex-
pressed through engagement in the various communities
of which the individual is a part, at the local, national and
global level. And it includes the right to challenge authority
and existing power structures – to think, argue and act –
with the intent of changing the world.”
Nigel Dower (2005) encourages skeptics to at least ac-
knowledge the individual’s responsibility to making this
world a better place by ensuring its continued existence.
To the extent that certain issues transcend boundaries –
both morally and physically – only responsible global citi-
zens can ensure the sustainability of the earth and its in-
habitants. How then should global citizenship be defined?
Where from does it derive its legitimacy? What does it mean
for business leaders? How can it be taught and promoted?
This essay will try to answer the first two questions; a com-
panion piece, also included in this issue of AIB Insights, at-
tempts to answer the last two.
GLOBAL CITIZENSHIP THROUGHOUT HISTORY2
The idea of individuals identifying with fellow human be-
ings near and far has been with us for at least two millennia.
The first recorded mention of a “citizen of the world” dates
to classical Greece and the life of Diogenes (412-323 BCE).
A self-appointed critic of Greek society, he taught that wis-
dom and happiness were inherent qualities independent of
societal norms, and rejected family, political and social or-
ganizations, as well as property rights and reputation, as re-
gressive characteristics of Athenian life. Diogenes is cred-
ited with the first use of the word “cosmopolitan”; when
asked where he came from, he replied “I am a citizen of the
world” (from kosmo – universe – and politês –citizen).
The Stoics, who flourished in Athens during the Hellenis-
tic period, believed that goodness lies in the state of the
soul itself, in wisdom and self-control. Accordingly, each in-
dividual “dwells … in two communities – the local commu-
nity of our birth, and the community of human argument
and aspiration” (Nussbaum, 1997). To understand this view
of cosmopolitanism one needs only to examine Hierocles’
set of concentric circles that define a person’s identity: the
first circle is drawn around oneself, next comes our immedi-
ate family, then our extended family, followed by the neigh-
borhood, fellow citizens and, at last, all humanity (Figure
1). The task of the world citizen is to “draw the circles in
towards the center, making all human beings more like our
fellow city dwellers” (Nussbaum, 1997), deserving our con-
cern.
Early Christians were strongly influenced by these ideals.
The division between the near citizens (belonging to the
polis) and those distant (the cosmopolis) is made starker
by the belief that whereas local government may have im-
plicit divine authority, the most important work for human
goodness is removed from any political sphere. Thus, the
call to “Render unto Caesar the things that are Caesar’s; and
unto God the things that are God’s” (Mathew, 22:21) lends
Some of these ideas were first presented at the Annual AIB Conference in Rio de Janeiro, Brazil, 2010.
This compact narrative is based on information derived from the Stanford Encyclopedia of Philosophy, the Great Books of the Western
World, and Wikipedia.
1
2
de la Torre, J. R., & Young, C. B. 2020. Global Citizenship and Business Education, Part 1:
Antecedents and Foundations. AIB InsightsAIB Insights, 20(1).
Figure 1: Circles of Identity and Feelings of Obligation Figure 1: Circles of Identity and Feelings of Obligation
strength to the concept of a community where all nations
can become saintly and deserving of similar rights regard-
less of their proximity.
Similarly, a major tenet of Hinduism is the concept of
ahimsa, a Sanskrit word that defines non-violence, both to
animals and humans. This is particularly strong in Jainism,
dating to the 6th century BCE, and is incorporated into the
representation of an open palm with a wheel at its center.
The wheel is the dharmacakra, a resolve to halt the inex-
orable cycle of reincarnation to which we are all condemned
through a relentless pursuit of truth and non-violence. Bud-
dhist philosophy emphasizes the cause and effect relation-
ships implied by karma. Here again, one’s goal is to end
the recycle of birth and suffering through good deeds so
we can reach Nirvana. In both cases, the obligation towards
one’s fellow humans is an integral element of maintain-
ing harmony. Sikhism, a variant of Hindu philosophy and
perhaps the only monotheistic religion in the ancient East,
proclaimed that all humans are equal under God, and our
right to life is constrained only by the obligation to care for
others and share one’s material possessions.
During the Middle Ages, scholars such as Erasmus of Rot-
terdam drew on cosmopolitan philosophy to advocate the
ideals of world peace and universal rights. Arguing that hu-
mans are by nature sociable and prone to live in harmony
with one another, Erasmus pleaded for national and re-
ligious tolerance, and regarded all like-minded people as
his fellow world citizens (Erasmus, 1986). Grotius, Hobbes,
Pufendorf and others drew on natural law and social con-
tract theories to lay the foundation for international law in
a “great society of states” bound by a “law of nations” lead-
ing to a universality of rights and duties (Grotius, 1925).
The rise of capitalism as an economic force, the expan-
sion of trade with the newly “discovered” lands in Africa,
the Pacific and the Americas, the voyages of the great
mariners, and the expansion of empires that reached across
the globe during the Enlightenment contributed signifi-
cantly to the spread of these ideas. But it was the accep-
tance of some fundamental “rights for all mankind” as en-
shrined in the American and French Revolutions that gave
cosmopolitanism its greatest surge. The 1789 Declaration of
Human Rights and the preamble to the American Constitu-
tion arose from cosmopolitan philosophy. Many of the lead-
ing lights of the Enlightenment – Voltaire, Montesquieu,
Addison, Hume and Jefferson among them – identified
themselves as cosmopolitans in the sense that they were
not subservient to a particular political or religious philoso-
phy, claimed to be free of cultural prejudices, and practiced
tolerance and social broadmindedness.
Immanuel Kant was a strong advocate of such views. For
him all rational beings were members of a single moral
community, sharing aspirations for freedom, equality and
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AIB Insights 2
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independence within a system of self-governance and com-
mon laws. This precluded any form of tyranny, including
slavery or colonial exploitation, considered contrary to the
higher order of all humans. Whereas some political cos-
mopolitans advocated a single world state, Kant called for
a more rational international order. He argued that global
peace is only achievable when all states are organized along
“republican” principles, group themselves into a voluntary
“league of nations,” and respect the human rights not only
of their own citizens but also of foreigners (Kant, 1991).
The liberal economic concepts proposed by Adam Smith
in The Theory of Moral Sentiments, and later in his Wealth
of Nations, had a strong impact on cosmopolitan philoso-
phy. Smith’s view of a world of free trading nations, one in
which markets and not governments catered to the needs of
ordinary people, was very much in keeping with the prima-
cy of the individual in cosmopolitan philosophy.
The formation of the United Nations and other multina-
tional institutions in the modern era provided for the first
time a legal and institutional framework that defines, how-
ever weakly, the rights and duties of the citizens of the
world. Similarly, a number of actors formed either by civ-
il society (NGOs) or in the economic sphere (multinational
companies) have diminished the role and legitimacy of the
nation state as the sole agent of political union.
One of the first acts of the United Nations was to adopt
a Universal Declaration of Human Rights on December 10,
1948, which states that, “All human beings are born free
and equal in dignity and rights. They are endowed with rea-
son and conscience and should act towards one another
in a spirit of brotherhood.” Other UN Covenants expanded
the sphere of human rights to many dimensions fundamen-
tal to modern concepts of liberty and the pursuit of happi-
ness.3 More recently, the UN Global Compact, a voluntary
agreement to which multinational companies may adhere,
includes a set of ten “principles” by which the signatories
promise to abide in managing their global operations.4 They
constitute a set of obligations that global companies, and
by definition their managers, must follow in order to fulfill
their responsibility as global citizens.
Other supra-national institutions such as the Interna-
tional Criminal Court have emerged to provide individuals
legal standing under international law that goes beyond
those provided in national courts. Past cases against Gen-
eral Pinochet of Chile, various Serbian military comman-
ders, and several African leaders are evidence of the in-
creasing reach of this Court. Even national courts (such as
the US’ Alien Tort Claims statute) have increasingly pros-
ecuted cases for wrongdoing that occurred in foreign juris-
dictions by or against national citizens.
Perhaps the most significant change in recent years has
been the rise of civil society groups and NGOs in the world
scene (Kriegman, 2006). Some are spontaneous, such as
against the WTO in Seattle in 1999, or in opposition to war
in Iraq in 2003, or against global warming in 2019. Oth-
ers are structured such as the World Social Forum (WSF),
Amnesty International, the Red Cross and Red Crescent So-
cieties, Médecins sans Frontières, and a host of other reli-
gious and lay organizations whose aim is to provide relief
in the case of famine, medical emergencies or natural dis-
asters, and who have adopted the cosmopolitan vision that
we have a solemn duty to aid fellow human beings in need,
regardless of nationality or distance.
Cosmopolitans do not advocate a subjugation of national
identity to a bland universal mold. Culture is always fluid
and evolving, and human societies have continuously trad-
ed goods, ideas, cuisine, music, games and people, while ab-
sorbing, blending, and innovating (Appiah, 2006). As Krieg-
man (2006) stated, “such hybridization makes it nearly im-
possible to delineate the boundaries of a specific culture.
Cosmopolitanism rejects chauvinism and values diverse
cultures, regarding all people of the earth as branches of a
single family tree. The diffusion of this old consciousness
in the new context of globalization is the basis for forging
global citizenship.”
The current backlash against globalization calls into
question the very tenets of cosmopolitan thinking. The re-
turn to nativist policies across major regions (e.g., the US
under Trump, Brexit in the UK, and populist parties in Eu-
rope, South America and Asia) rejects the notion that one
has any responsibility for fellow humans when they belong
to other ethnicities or countries, and have stood in opposi-
tion to granting sanctuary to political refugees and to eco-
nomic immigrants. Those of us committed to a cosmopoli-
tan viewpoint need to seek solutions to the problems that
gave rise to this counterreaction and not simply abandon
the principles of mutual responsibility (Rodrik, 2017).
There are some accepted precepts that should govern the
actions of any self-proclaimed global citizen in the pursuit
of his/her managerial responsibilities. Thus, a global citizen
is one who abides by the following standards:
• Morally, a global citizen is one who comes to the aid
of those in need, whether near or far, particularly in
times of natural or man-made disasters; defends the
universality of human rights; and opposes slavery or
any subjugation of human beings by individuals, pri-
vate or public organizations, or nation states.
• Politically, he/she fosters freedom of association, ex-
pression and political action; respects the right of
workers to bargain collectively; takes into considera-
tion his/her obligations toward environmental stew-
ardship in all decisions; and fights corruption at all
levels.
• Culturally, respects cultural, ethnic, religious and
racial diversity in the workplace and in society; and
combats discrimination in all its guises against mi-
norities, women and other vulnerable groups.
• Economically, opposes any form of forced or child la-
bor; promotes open and transparent business deal-
ings; encourages the free flow of ideas, goods and ser-
vices, capital and labor whenever possible, internally
and across countries; and works towards the elimina-
tion of poverty by championing programs of inclusion
and economic opportunity for the poor.
They include on Civil and Political Rights, on Economic, Social and Cultural Rights, the Geneva Convention, and conventions Against
Genocide or Torture, on children’s rights, and on gender discrimination.
www.unglobalcompact.org/AbouttheGC/TheTENPrinciples/index.html
3
4
Global Citizenship and Business Education, Part 1: Antecedents and Foundations
AIB Insights 3
http://www.unglobalcompact.org/AbouttheGC/TheTENPrinciples/index.html
SUSTAINABILITY AND THE INDIVIDUAL
Sustainable development is essentially the effort to “meet
the needs of the present without compromising the ability
of future generations to meet their own needs” (Commis-
sion, 1987). Wanting something better for our children and
grandchildren is not a new or rare concept and adds an in-
ter-temporal dimension to the care expressed in Hierocles’
circles. Global citizenship aims to reduce not only the dis-
count rate applied to those distant from oneself, but also
the rate applied to future generations.
Few of us over the age of 30, including the overwhelming
majority of business and governmental leaders, were edu-
cated to understand today’s complex, dynamic and inter-
connected world. Our old ways of learning may no longer
be serving us well, particularly since the issues we now
face are often a result of past decisions, from the deterio-
ration of the environment to the deplorable state of world
health. Peter Senge has promoted “a collective awakening
to new possibilities that will change how people see the
world, what they value, how society defines progress and or-
ganizes itself, and how institutions operate” (Senge, Smith,
Kruschwitz, Laur, & Schley, 2008: 5).
Whereas recent emphasis may focus on corporate global
citizenship (Schwab, 2008; Tichy, McGill, & Saint-Clair,
1997; Wood, Logsdon, Lewellyn, & Davenport, 2006), we
believe that greater consideration ought to be given to the
role of the individual as a global citizen. Senge and his col-
leagues acknowledge the need to move beyond the concept
of “triple bottom line” to one that emphasizes the “inner
work of sustainability.” Ideally, “comprehensive, integrat-
ed and holistic education will result in our acceptance of
the interconnectedness of life on earth and lead us to take
a greater responsibility for our actions and their impact on
the whole” (Senge, Laur, Schley, & Smith, 2006: 97–98). We
have somehow gotten lost in the scientific method and de-
valued intuition at the expense of reason. We need to re-
claim and “develop other forms of intelligence, including
the intuitive, the emotional, the esthetic, and the spiritual”
(Olalla, 2004: 66) if we are to succeed in this mission.
It is the acceptance of this responsibility that makes one
a global citizen, and it is the commitment to collaboration
that makes actions sustainable. John Zogby claims millen-
nials are the “First Globals”; a world-wise generation that
is the most outward looking, socially tolerant, and interna-
tionally aware of all times (Zogby, 2008). It should then be
more expedient to teach these young men and women how
to be global citizens than to try to change Baby Boomers in-
to accepting greater responsibility as global citizens.
CHARACTERISTICS, SKILLS, AND VALUES OF A
GLOBAL CITIZEN
If ensuring the sustainability of the earth is the responsi-
bility of global citizens, then what skills and values must
an individual possess so as to be justly held accountable?
An exercise sponsored by Canada’s International Develop-
ment Agency argued for the importance of four character-
istics of mental processes in global citizens: open-minded-
ness, full-mindedness, fair-mindedness, and world-mind-
edness. In other words, global citizens must be: (1) open to
others’ ideas and points of view, regardless of their identi-
ty distance; (2) able to foresee potential problems and rec-
ognize the limitations of judgment and the importance of
balancing analysis with intuition; (3) impartial when deal-
ing with others and not pre-judge them based on cultural or
demographic characteristics; and (4) believe in “one world”
(Case, 1997; Evans & Reynolds, 2004).
Global competency must also include some level of lan-
guage capability, cross-cultural communication skills, and
the ability to find value in “something foreign” (Hunter,
2004). Global citizens need an understanding of world his-
tory, international relations, current events, and global po-
litical economy. Most importantly, they must promote val-
ues that support a love of and a commitment to humanity.5
Former UN Secretary General Kofi Annan asked a
poignant question, “Do we have shared values?”, that is,
values that make cooperation easier and communication
more effective (Annan, 2003). In 2000, the United Nations
adopted the Millennium Declaration, which defined 8 goals
on poverty eradication, world health, sustainable develop-
ment and education to be achieved by 2015. This was later
replaced by 17 Sustainable Development Goals adopted in
2015 as a “blueprint to achieve a better and more sustain-
able future for all” by the year 2030. Whereas not all coun-
tries are on track to meet these goals, considerable atten-
tion and funding has been committed to the endeavor by
governments and NGOs. But individuals and private corpo-
rations must do their part. To remain silent and not take ac-
tion is to condone the status quo, and to reject the respon-
sibility of being a global citizen.
In summary, these are the skills and values global citi-
zens must possess in order to act:
CHARACTERISTICS AND SKILLS
VALUES
• cognitive abilities;
• courage to take action even under uncertainty;
• cross-cultural competencies, including multi-lingual
proficiency;
• innovativeness and creativity;
• knowledge of global issues and their interdependen-
cies;
• negotiation and conflict resolution skills;
• self-awareness and open-mindedness;
• a strategic (whole picture) perspective;
• systems thinking; and
• a willingness to challenge, be challenged, and to
adapt.
• a sense of justice and fair-mindedness;
• respect for human dignity;
• acceptance of diversity;
• a belief in the power of an individual’s actions;
• commitment to the sustainability of the planet and all
of its inhabitants;
• empathy and a sense of community;
• integrity;
• personal responsibility; and
• a commitment to life-long learning.
https://www.weforum.org/agenda/2018/03/we-need-to-become-global-citizens-to-rebuild-trust-in-our-globalised-world/ 5
Global Citizenship and Business Education, Part 1: Antecedents and Foundations
AIB Insights 4
https://www.weforum.org/agenda/2018/03/we-need-to-become-global-citizens-to-rebuild-trust-in-our-globalised-world/
Our next installment, at the end of this AIB Insights is-
sue, reviews how the work of business schools can foster
these skills and values.
ABOUT THE AUTHORS
José R. de la TorreJosé R. de la Torre ([email protected]) is co-
founder and Chair of the EMBA Consortium for Global Busi-
ness Innovation, professor at Bologna Business School, and
Founding Dean of FIU’s Chapman Graduate School of Busi-
ness where he held the JK Batten Chair in Strategy (now
Emeritus). He previously taught at UCLA, INSEAD, and
Georgia State after earning his doctorate from Harvard
Business School. His research deals with the management
of multinational firms, trust in inter-corporate collabora-
tions and the importance of global citizenship.
Corinne YoungCorinne Young ([email protected]) is the Director of Gradu-
ate Studies at Franklin University Switzerland. She received
her Ph.D. from Tulane University. Her research and teaching
centers on designing and implementing transformational
learning experiences in graduate management education.
She focuses her work on developing responsible leaders in a
stakeholder society.
This is an open-access article distributed under the terms of the Creative Commons Attribution 4.0 International License (CC-
BY-4.0). View this license’s legal deed at http://creativecommons.org/licenses/by/4.0 and legal code at http://creativecom-
mons.org/licenses/by/4.0/legalcode for more information.
Global Citizenship and Business Education, Part 1: Antecedents and Foundations
AIB Insights 5
mailto:[email protected]
mailto:[email protected]
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Global Citizenship and Business Education, Part 1: Antecedents and Foundations
AIB Insights 6
https://doi.org/10.2139/ssrn.956184
https://doi.org/10.2139/ssrn.956184
IntroductionSome of these ideas were first presented at the Annual AIB Conference in Rio de Janeiro, Brazil, 2010.
Global Citizenship throughout HistoryThis compact narrative is based on information derived from the Stanford Encyclopedia of Philosophy, the Great Books of the Western World, and Wikipedia.
Sustainability and the Individual
Characteristics, Skills, and Values of a Global Citizen
Characteristics and Skills
Values
About the Authors
References
Transactors, transformers and
beyond
A multi-method development of a
theoretical typology of leadership
Craig L. Pearce
Peter F. Drucker Graduate School of Management, Claremont Graduate
University, Claremont, California, USA
Henry P. Sims Jr
R. H. Smith School of Business, University of Maryland, College Park,
Maryland, USA
Jonathan F. Cox
Center for the Study of Work Teams, University of North Texas, Denton,
Texas, USA
Gail Ball
Department of Distance Education, The Pennsylvania State University,
University Park, Pennsylvania, USA
Eugene Schnell
Johns Hopkins University, Baltimore, Maryland, USA
Ken A. Smith
School of Business, Syracuse University, Syracuse, New York, USA
Linda Trevino
Frank and Mary Jean Smeal School of Business, Pennsylvania State
University, University Park, Pennsylvania, USA
Keywords Leadership, Directives, Empowerment
Abstract Extends the transactional-transformational model of leadership by deductively
developing four theoretical behavioral types of leadership based on a historical analysis of
leadership literature. Then, in an exploratory empirical phase, uses two data sets to inductively
develop alternative models of leadership types. Finally, with a third data set, tests several
theoretically plausible typologies using second-order confirmatory factor analysis (CFA). The
results of the CFA generally support the existence of four leadership types: directive leadership,
transactional leadership, transformational leadership, and empowering leadership.
The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at
http://www .emeraldinsight .com/researchregister http:// www.emeraldinsigh t.com/0262-171 1.htm
The authors would like to thank James McGregor Burns, Robert J. House, James (Jerry) Hunt and
Ken G. Smith for their helpful comments on earlier drafts of this manuscript.Craig L. Pearce and
Henry P. Sims Jr participated in studies one, two and three; Eugene Schnell and Ken A. Smith
participated in study one; Gail Ball and Linda Tevino participated in study two; Jonathan F. Cox
participated in study three.
Transactors,
transformers and
beyond
273
Received October 2002
Accepted October 2002
Journal of Management Development
Vol. 22 No. 4, 2003
pp. 273-307
q MCB UP Limited
0262-1711
DOI 10.1108/02621710310467587
http://www.emeraldinsight.com/researchregister
http://www.emeraldinsight.com/0262-1711.htm
The purpose of this research is to investigate and build a typology of
leadership that has foundations in, and extends, the current dominant
transactional-transformational paradigm (Sashkin and Rosenbach, 1993; Yukl,
1989). Typologies are theories that identify multiple interrelated “ideal types”
at different levels of abstraction. According to Doty and Glick (1994) typologies
are essential to clear and parsimonious understanding of organizational
phenomena. As Phillips and Lord (1986) and Hunt (1996) suggest, it is critical to
our understanding of leadership that we clearly delineate the behavioral level
accuracy of the typologies we use.
The current dominant typology in leadership research is the transactional-
transformational typology. However, one may wonder if scholars have
coalesced too narrowly on this two factor theory of leadership. Yukl (1989,
p. 212) stated:
. . . [the transactional-transformational paradigm] is fast becoming a two factor theory of
leadership processes, which is an unwarranted oversimplification of a complex phenomenon.
Further, Yukl (1989, p. 212) declared:
. . . the distinction between the two types of leadership is not as clear as some theorists would
have us believe . . . these differences should be determined by empirical research, not
predetermined theoretical definitions that make unnecessary assumptions and bias
subsequent research.
Further, Bass and Avolio (1993, p. 76) stated:
. . . we invite critics and supporters to join in the effort to shape a theory and model of
leadership that captures a broader array of leadership behaviors and attributes than
previously studied.
In this research we attempt to expand the range of leadership examined by
using historical analysis to extend the transactional-transformational
paradigm.
In this paper we take a theory building approach (Doty and Glick, 1994;
Dubin, 1978). Yukl (1998) defined three levels of abstraction in leader behavior
research:
(1) narrow (specific items);
(2) mid-level (behavioral scales); and
(3) broad level (groupings of behavioral scales).
Our focus cuts across these three levels but is ultimately aimed at the
delineation of a broad level typology of the grouping of leader behaviors for use
in future research. Yukl (1998, p. 63) also asserted that:
. . . it is essential to pay more attention to the overall pattern of leadership behavior rather
than becoming too preoccupied with any particular component of it.
Thus, in phase I, we first integrate major historical findings from the field of
leadership to deductively develop a broad level theoretical model of leader
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behavior consisting of four behavioral types. These behavioral types are
groupings of specific leader behaviors, and can alternatively be thought of as
behavioral sets, behavioral strategies, behavioral styles, archetypes, or second-
order factors. In phase II, we empirically examine two independent data sets,
using exploratory factor analytic (EFA) techniques, to inductively generate
alternative theoretically plausible models of the broad level grouping of leader
behavior. Subsequently, in phase III, we test each of the competing models’
ability to account for the underlying structure of the data, with a third
independent data set, using confirmatory factor analytic (CFA) techniques.
This analysis leads to a final model of the broad level types of leader behavior.
As Bryman (1992, p. 113) notes “There is little doubt that there is the possibility
of conceptual confusion becoming rife in this field”. Thus, this research is
intended to help establish some clarity regarding the current status of the field
and to help guide future research on leader behavior and its impact in
organizations.
Phase I. Historical analysis
Our historical analysis of the leadership literature essentially yielded an
adapted and extended version of the model of leadership first proposed by Bass
et al. (1987). The model is also adapted from the theoretical development of
Manz and Sims (1991) and also builds on the work of Yukl (1987) and Quinn
(1988)[1]. The fundamental theoretical and research bases of this model are
derived from a historical analysis of the leadership literature. For each type, we
draw from several theoretical roots of specific leader behaviors as well
theoretical traditions related to leader behavior. These roots are summarized in
Table I and are described in greater detail below.
Directive leadership
The first behavioral type from our historical analysis of leadership is “directive
leadership”. The directive leadership behavioral type describes leadership that
primarily relies on position power, which at times has been referred to as
legitimate power (French and Raven, 1959). Directive leadership also relies on
coercive power (French and Raven, 1959). This type of leadership includes
direction, command, assigned goals, intimidation and reprimand as the
primary mechanisms to influence subordinate behavior.
The roots of the directive leadership behavioral type lie in theory X
management style (McGregor, 1960), initiating structure types of leader
behavior from the Ohio State studies (Fleishman, 1953), task oriented types of
leader behavior from the Michigan studies (Katz et al., 1950), and punishment
research (Arvey and Ivancevitch, 1980; Korukonda and Hunt, 1989; Sims, 1980)
and is similar to what Quinn et al. (1990) refer to as a consolidation orientation.
Each theoretical tradition is discussed, in turn, below.
Transactors,
transformers and
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Theory X. McGregor (1960) defined a two factor theory of leadership; theory X-
theory Y. The underlying tenets of the theory X leader are that the leader
believes that the average adult:
. is lazy – and works as little as possible;
. lacks ambition;
. dislikes responsibility;
. prefers to be led by others;
. is inherently selfish;
. is indifferent to organizational needs and goals;
. is resistant to change; and
. is gullible, not very intelligent, and easily duped.
Holding these beliefs about individuals the theory X manager resorts to policies
and practices that contain tight control mechanisms and exert coercive power
over subordinates (Pinder, 1984). These types of stringent control are the first
basis of the directive leadership behavioral type.
Initiating structure. The initiating structure grouping of leader behaviors
was identified in the Ohio State studies (Fleishman, 1953; Halpin and Winer,
Leadership type Theoretical and research bases
Directive leadership Theory X leadership (McGregor, 1960)
Initiating structure from Ohio State studies
(e.g. Fleishman, 1953)
Task oriented behavior from Michigan studies
(e.g. Katz et al., 1950)
Punishment research (e.g. Arvey and Ivancevitch, 1980)
Transactional leadership Expectancy theory (e.g. Vroom, 1964)
Path-goal theory (e.g. House, 1971)
Equity theory (e.g. Adams, 1963)
Exchange theory (e.g. Homans, 1961)
Reinforcement theory (e.g. Luthans and Kreitner, 1985;
Sims, 1977; Thorndike, 1911)
Reward research (Podsakoff et al., 1982)
Transformational leadership Sociology of charisma (e.g. Weber, 1946)
Charismatic leadership theory (e.g. House, 1977)
Transformational leadership (e.g. Bass, 1985; Burns, 1978)
Empowering leadership Behavioral self-management (e.g. Thorenson and Mahoney,
1974)
Social cognitive theory (e.g. Bandura, 1986)
Cognitive behavior modification (e.g. Meichenbaum, 1977)
Participative management and participative goal setting
research (e.g. Likert, 1961, 1967; Locke and Latham, 1990)
Table I.
Theoretical and
research bases of
the historically-
derived model of
leadership types
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1957). The Ohio State studies identified two broad types of leader behavior
through the use of factor analysis (Yukl, 1989). The initiating structure group
of leader behavior includes two general types of leader behavior:
(1) directive structuring behavior; and
(2) autocratic and punitive behavior (Schriesheim et al., 1976).
Bass (1990) and Yukl (1989) reviewed the initiating structure literature and
defined the following directive/structuring and autocratic/punitive leader
behaviors. Directive leader behaviors included:
. initiates activity of the work group;
. organizes group activity;
. defines, in detail, the way work is done;
. establishes clear channels of communication;
. emphasizes goal attainment;
. assigns subordinates to tasks;
. offers new approaches to problems; and
. coordinates activities of subordinates.
Also, the autocratic/punitive leader behaviors contained in some of the
initiating structure studies included:
. making important decisions without consulting subordinates;
. criticizing poor work;
. ensuring that subordinates follow procedures; and
. ensuring that subordinates work up to their capacity.
Thus, initiating structure is the second basis of directive leadership.
Task oriented behavior. Parallel to the Ohio State studies were the Michigan
leadership studies. These two groups of studies arrived at quite similar
conclusions (Bass, 1990; Yukl, 1989). Likert (1961, 1967) summarized much of
the Michigan studies and found three primary groupings of managerial
behavior:
(1) task oriented behavior;
(2) relationship oriented behavior; and
(3) participative leadership.
In the Michigan studies task oriented behavior included such behaviors as:
. planning and scheduling work;
. coordinating subordinate work; and
. providing supplies, tools and technical assistance.
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transformers and
beyond
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As in the case of the initiating structure leader behaviors, the task-oriented leader
behaviors also form a backdrop for the directive leadership behavioral type.
Punishment research. There are, broadly speaking, two types of punishment,
contingent and non-contingent. In this sense, Kazdin (1975, pp. 33-4) defines
contingent punishment as:
. . . the presentation of an aversive event or the removal of a positive event following a
response which decreases the frequency of that response.
Non-contingent punishment, on the other hand, is the presentation of an aversive
event in some random manner. In an organizational setting there are many types
of punishments that are routinely dispersed, ranging from an angry word to
dismissal. Researchers have also investigated the effects of non-contingent
reprimand and punishment behavior on subordinate satisfaction and
performance (e.g. Arvey and Ivancevitch, 1980; Ball et al., 1994; Korukonda
and Hunt, 1989; Pearce and Sims, 2002; Podsakoff et al., 1982; Sims, 1980). Non-
contingent reprimand tends to yield a negative effect on subordinate satisfaction
but little effect on performance, and contingent punishment has little effect on
subordinate performance (Cox, 1994). Both contingent and non-contingent
reprimand behaviors form part of the directive leadership behavioral type.
Summary. Based on our historical analysis of the theoretical and research
bases of leadership it seems likely that directive leadership will prove to be a
stable and distinct broad level type of leader behavior and will thus prove to be
an extension of the transactional-transformational paradigm. Thus:
H1a. Directive leadership exists as a distinct behavioral type and includes
such behaviors as: instruction and command; assigned goals;
contingent reprimand, and intimidation and non-contingent reprimand.
Transactional leadership
The second behavioral type from our historical analysis of leadership is
transactional leadership. The transactional leadership behavioral type is
generally consistent with the components of the transactional-transformational
paradigm of leadership. The bases of this type lie in expectancy theory (Vroom,
1964), path-goal theory (House, 1971; House and Mitchell, 1974),
exchange/equity theory (Adams, 1963; Homans, 1958, 1961), and
reinforcement theory (Luthans and Kreitner, 1985; Scott and Podsakoff, 1982)
and is somewhat similar to what Quinn et al. (1990) termed output
maximization orientation. Each theoretical tradition is reviewed, in turn, below.
Expectancy theory. According to expectancy theory, a cognitive-rational model
of human behavior, individuals assess situations according to three variables:
(1) valence – the attractiveness of potential outcomes for engaging in certain
behaviors;
(2) instrumentality – the perceived linkage between a behavior and the
outcome; and
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(3) expectancy – the perceived likelihood of effort resulting in the behavior
necessary to obtain the outcome.
Subsequently, individuals engage in behaviors that will maximize their
expected return from performance. In line with equity theory, transactional
leadership is focused on clarifying the effort-reward relationships and using the
reward systems to achieve maximal motivation. Thus, rewards are part of the
“exchange” equation.
Path-goal theory. Building on the concepts of expectancy theory (Vroom,
1964), House (1971) House and Dessler (1974) and House and Mitchell (1974)
developed path-goal theory. Path-goal theory was developed to explain how
various leader behaviors (contained in consideration-initiating structure
research) influence subordinate satisfaction and performance by clarifying the
“path” to desired rewards.
According to House and Dessler (1974, p. 13):
. . . leader behavior will be viewed as acceptable to subordinates to the extent that the
subordinates see such behavior as either an immediate source of satisfaction or as
instrumental to future satisfaction.
This model of leadership espouses the view that the leader needs to modify the
way subordinates perceive the contingency relationships between effort and
subsequent satisfaction and that the means for doing this is dependent on the
subordinate task environment. Thus, the path-goal theory of leadership
emphasizes the transactional nature of leadership.
Exchange/equity theory. Homans (1961), and Adams (1963) are generally
credited with the development of the exchange or equity group of theories.
While several versions exist, the basic tenet of this class of theories is that
individuals seek to maintain equity between what they give vis-à-vis what they
obtain in an exchange (Landy, 1985; Pinder, 1984). Like expectancy theory, this
group of theories is cognitive-rational. Individuals in the exchange relationship
are thought to assess four fundamental pieces of information:
(1) what they give in an exchange;
(2) what they receive in an exchange;
(3) what others give in a similar exchange; and
(4) what others receive in a similar exchange.
Based on these four pieces of information, individuals are thought to strive to
maintain an equitable ratio between what they give and receive from an
exchange in comparison to what others give and receive from a comparable
exchange. The theory predicts that individuals will attempt to rectify situations
where these exchange ratios are out of balance. Research has demonstrated
that individuals are more likely to engage in corrective actions when they
perceive negative inequity than when they perceive positive inequity (Landy,
1985; Pinder, 1984).
Transactors,
transformers and
beyond
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Based on this theory of motivation, prescriptions are made for leadership.
The prescriptions center on motivating subordinate performance through
providing equitable rewards for inputs and thus predicts that higher levels of
subordinate input can be generated through higher levels of reward. Therefore,
this class of motivation theories serves as another basis for the transactional
leadership behavioral type.
Reinforcement theory. Reinforcement theory is summarized by the law of
effect (Thorndike, 1911), which suggests that the consequence of a behavior is
an important determinant of whether the behavior will be repeated. Using the
law of effect transactional leader behavior influences subordinate behavior by
reinforcing (rewarding) those behaviors that are desired (Luthans and Kreitner,
1985; Sims, 1977).
Summary. Based on our historical analysis of the theoretical and research
bases of leadership it seems likely that transactional leadership will prove to be
a stable and distinct type of leader behavior and will thus prove to reinforce the
transactional-transformational paradigm. Thus:
H1b. Transactional leadership exists as a distinct behavioral type of
leadership and includes such behaviors as: contingent material reward
and contingent personal reward.
Transformational leadership
The third behavioral type from our historical analysis of leadership is
“transformational leadership”. This behavioral type is similar to the
transactional-transformational paradigm, but as Bryman (1992) notes there is
some conceptual confusion as to what is contained in transformational
leadership. The historical bases of the transformational leadership behavioral
type are drawn from the sociology of charisma (Weber, 1924/1947, 1946),
charismatic leadership theory (House, 1977), and transformational leadership
(Bass, 1985; Burns, 1978) and is closely related to what Quinn et al. (1990) term
change orientation.
Sociology of charisma. Weber (1924/1947, 1946) introduced the concept of
charisma into the study of leadership. However, much of this work laid
dormant and was only studied in the fields of sociology rather than leadership
per se, until the late 1970s (Bass, 1990). Weber’s (1924/1947, 1946) original
concept of charismatic leadership was focused on the leaders who inspired new
forms of organization.
Trice and Beyer (1986) summarized Weber’s (1924/1947, 1946) work as
containing five components necessary for the emergence of a charismatic
leader. These five components were:
(1) the leader must have extraordinary (mystical) gifts;
(2) there must be some type of crisis;
(3) the leader must espouse a radical solution to the crisis;
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(4) followers must believe they are linked to the leader through some type of
transcendent powers; and
(5) followers validate the transcendence of the leader’s gifts through
repeated successes.
Charismatic leadership theory. House (1977) proposed “A 1976 theory of
charismatic leadership” to address a long-standing gap in the formal study of
leadership. This theory catalyzed the beginning of a new genre in leadership
studies. The basic tenets of the original House model are defined in terms of
leader traits, leader effects on followers, and leader behaviors. House’s (1977)
viewpoints continued to develop, and later revisions of the theory (House and
Shamir, 1993; House et al., 1993) proposed that charismatic leaders engage in
the following six behaviors in order to achieve charismatic effects:
(1) impression management (behaviors designed to display leader
competence);
(2) articulation of ideological goals;
(3) defining subordinate roles in terms of ideological values;
(4) engaging in role modeling behavior;
(5) communicating high expectations and confidence in subordinates; and
(6) engaging in behavior designed to arouse appropriate follower motives
(e.g., need for achievement).
Charismatic leadership theory provides a basis for the transformational
leadership behavioral type.
Transformational leadership. Burns (1978) more clearly explicated the
distinction between transactional and transformational leadership behaviors.
He depicted transactional leaders as those who focus on reward contingencies
and “approach followers with an eye to exchanging one thing for another”
(Burns, 1978, p. 3). He contrasted the transactional leader with the
transformational leader. He depicted transformational leaders as those who
focus on transforming followers’ motivational state to higher level needs such
as self-actualization (Maslow, 1954).
Bass (1985, 1990), Avolio and Bass (1988), Avolio et al. (1999), Bass et al.
(1987), Hatter and Bass (1988), Waldman et al. (1987), and Yammarino and Bass
(1990) operationalized and empirically tested Burns’ (1978) leadership concepts.
Bass (1985, 1990) also extended the Burns’ (1978) model by including leaders
who do not necessarily appeal to only higher moral values. The leader
behaviors included in Bass’ model of transformational leadership include:
. transmitting a sense of mission;
. delegation of authority, coaching and teaching; and
. emphasizing problem solving and use of reasoning.
Transactors,
transformers and
beyond
281
Summary. Based on our historical analysis of the theoretical and research
bases of leadership it seems likely that transformational leadership will prove
to be a stable and distinct type of leader behavior and will thus prove to
reinforce the transactional-transformational paradigm. Thus:
H1c. Transformational leadership exists as a distinct behavioral type and
includes such behaviors as: stimulation and inspiration; vision;
idealism; and challenge to status quo.
Empowering leadership
The fourth behavioral type from our historical analysis is empowering
leadership. Empowering leadership emphasizes the development of follower
self-management or self-leadership skills. Manz and Sims (1990, 1991, 2001)
have called this “superleadership”. The historical bases of the empowering
leadership are found in behavioral self-management (Thorenson and Mahoney,
1974), social cognitive theory (Bandura, 1986), cognitive behavior modification
research (Meichenbaum, 1977) and participative goal setting research (Erez and
Arad, 1986) and is closely related to what Quinn et al. (1990) term a human
resource development orientation.
Behavioral self-management. Behavioral self-management has its roots in
clinical psychology (Mahoney and Arnkoff, 1978). Manz and Sims (1980)
expanded the clinical applications to organizational environments by defining
self-management as a substitute for leadership. Behavioral self-management
includes several self-controlled behavior management strategies (Manz and
Sims, 1990) including:
. self-observation;
. environmental cueing;
. self-goal setting;
. self-reward;
. self-punishment; and
. rehearsal.
Encouraging subordinate behavioral self-management is the first basis of the
empowering leadership behavioral type.
Social cognitive theory. The basic proposition of social cognitive theory is
that of triadic reciprocality (Bandura, 1986). According to triadic reciprocality
individuals influence their environment through their behavior both of which
(environment and behavior) in turn influence the individual. One of the key
contributions of social cognitive theory is a framework for understanding how
modeling influences individual behavior. In terms of the empowering
leadership behavioral type, it is proposed that the leader models appropriate
self-leadership behavior which is subsequently adopted by the subordinate.
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Cognitive behavior modification. Similar to social cognitive theory (Bandura,
1986) cognitive behavior modification research has focused on
“conceptualiz(ing) cognitive events and . . . understand(ing) their role in
behavior change” (Meichenbaum, 1977, p. 11). Cognitive behavior modification
is similar to the cognitive self-leadership strategies of “superleadership” such
as the strategy of re-conceptualizing performance obstacles not as problems,
but rather as opportunities for learning (Cox, 1994; Manz and Sims, 1990), and
thus provides another basis of the empowering leadership behavioral type.
Participative goal setting research[2]. Locke and Latham (1990) reviewed 25
years of goal setting research. The major findings indicate that specific,
difficult goals lead to higher performance, and that, in general, it does not
matter if the goals are participatively or unilaterally set. Erez and Arad (1986)
have found some instances where participatively set goals can lead to higher
performance and satisfaction. However, while the directive leadership
behavioral type includes assigning goals, the empowering leadership
behavioral type emphasis on developing subordinate self-management skills
is more in keeping with participative goal setting as in the case of an ideal
“management by objectives” system (Drucker, 1954).
Summary. Based on our historical analysis of the theoretical and research
bases of leadership it seems likely that empowering leadership will prove to be
a stable and distinct type of leader behavior and will thus prove to be an
extension of the transactional-transformational paradigm. Thus:
H1d. Empowering leadership exists as a distinct behavioral type and
includes such behaviors as: encourages opportunity thinking;
encourages self-reward; encourages self-leadership; encourages
participative goal setting; and encourages teamwork.
Historical analysis summary
Bass and Avolio (1993) state that one of the major problems in the study of
leadership is that there is a tendency, in leadership research, to discount
previously existing theories in an effort to introduce a “new way of thinking”.
We agree. In this section we attempted to build on multiple theoretical and
empirical lines from the leadership literature, and we also attempted to build
on, and extend, the current leadership paradigm rather than discount and
discard it in the development of our deductively derived model of the
behavioral types of leadership.
From our historical analysis we generated four hypotheses regarding
behavioral types of leadership:
(1) directive leadership;
(2) transactional leadership;
(3) transformational leadership; and
(4) empowering leadership.
Transactors,
transformers and
beyond
283
Together these four hypotheses account for our first theoretically plausible
typology (Model One) that we test later with CFA techniques. In the next
section we inductively derive additional theoretically plausible typologies
using EFA techniques.
Phase II. Preliminary empirical examination
Method
In this section we empirically explore the behavioral types of leadership, using
EFA techniques, with varimax rotation, with data from two independent
research projects. Both of these projects, as well as previous empirical research
(e.g. Podsakoff et al., 1982; Bass et al., 1987; Manz and Sims, 1987), relied on our
deductively-derived typology as inspiration to generate questionnaire items to
describe leader behavior. The specific questionnaire items from each study differ
slightly due to improvements made to the instrument over time and because of
differing emphasis on leadership in the projects.
Both of the studies conducted first order factor analyses of leader behaviors
with data collected from different organizational environments. The first order
factor analysis of these data sets can be obtained from Scully et al. (1994) and
Ball (1991), respectively. The results of the first order factor analyses are the
input for our empirically-based inductive generation of leader behavior types.
We then used higher order factor analysis where we conduct factor analyses
of the dimensions produced from the first order factor analyses. The higher
order factor analyses were generated by evaluating factor solutions (from each
data set) over a range of a specified number of factors. The scree points of the
factor solutions were evaluated as input, but were not blindly utilized in
selecting the final solutions. …
ARTWORK Sarah Morris, Black Beetle [Origami], 2008
Gloss household paint on wall, installation view Spotlight
It’s Hard to Be Good
But it’s worth it. Here are fi ve
companies whose success is
built on responsible business
practices. by Alison Beard
and Richard Hornik
88 Harvard Business Review November 2011
SPOTLIGHT ON THE GOOD COMPANY
ooON THE FOLLOWING PAGES, HBR profiles five “good” companies that do more than just pay lip service to community engagement, labor relations, environmental protection, corporate governance, and supply chain accountability. Neither our editors nor the academics we con-sulted have voted them the world’s most so-cially responsible corporations. But each excels in one or more of the areas just listed, and does so by making them part of its internal corporate logic—something that Rosabeth Moss Kanter argues, in another article in this Spotlight, that all businesses should do.These � rms have also succeeded commer-cially—hard evidence that doing the right thing as a company doesn’t con� ict with bottom-line imperatives. As Zhang Yue, the founding chair-man of Broad Group, says, “The survival and growth of a company is the same thing as its social responsibility.”
HBR.ORG
November 2011 Harvard Business Review 89
Spotlight on The Good Company
The Experts
Pamela Hartigan is the
director of the Skoll Centre
for Social entrepreneurship
at the University of oxford’s
Saïd Business School. She is
also a founding partner of
Volans.
Thomas Kochan is the
George maverick Bunker
professor of management and
a codirector of the Institute
for Work and employment
Research at the mIT Sloan
School of management.
Christopher Marquis is an
associate professor in the
organizational behavior unit
at harvard Business School.
Roger Martin is the dean
of the Rotman School of
management at the
University of Toronto.
Dan Esty is the hillhouse
professor of environmen
tal Law and policy at yale
University. he is also the
director of the yale Center
for environmental Law
and policy and the Center
for Business and the
environment at yale, and
the commissioner of the
Connecticut department of
energy and environmental
protection.
Royal DSM
NoTablE STRENgTH
Community
engagement
CoRE buSiNESS Chemicals
CouNTRy Netherlands
yEaR FouNDED 1902
EMPloyEES 22,000
2010 REvENuE
€8.2 billion
10-yEaR aNNualizED
ToTal SHaREHolDER RETuRN 9.6%
FaCT A group of South African primary school
children who ate porridge fortified with MixMe,
a DSM multi-micronutrient powder, saw their
mean store of body iron double over the
course of a 23-week company-sponsored
clinical study.
A decAde Ago, Royal DSM’s core offerings
were petrochemicals, plastics, and base
chemicals and materials. Today the Dutch
firm is in the same sector, but its output
is very different: nutritional supplements,
pharmaceutical ingredients, and energy-
efficient building materials.
If the company’s first
step on the path to being
a good corporate citizen
was to develop and sell
more-sustainable, health-
enhancing technologies
and products, the second
step is even bolder—and
less obviously commer-
cial: giving them away
to those who need them
most.
But both moves are
strategic and designed to
promote long-term corporate success in
an increasingly complex global economy.
The biggest initiative is a partnership with
the World Food Programme to distribute
DSM’s vitamins, nutrient mixes, and for-
tified food to malnourished people in Ne-
pal, Kenya, Bangladesh, and Afghanistan;
10 million will be served
by the end of this year.
But the company, which
has 250 sites in 50 coun-
tries, also participates
in many smaller initia-
tives. For instance, it has
contributed lightweight
composite modules to
a new school in Pune,
India, which reduced
the costs, time, and
environmental impact
of construction; the
“a lot of companies’ CSR
initiatives have nothing to do
with their core business. DSM,
by contrast, has used its
savoir faire, its expertise, and
mobilized staff to improve the
nutrients in the food given in
situations of famine or hunger.
if we could clone Feike
Sijbesma, the CEo, the world
would be a better place.”
Pamela Hartigan, Saïd
Business School
Alison Beard is a
senior editor, and
Richard hornik is a con
tri buting editor, at hBR.
heather Wang, Meghan
ennes, erin Rush, and
Samantha presnal pro
vided additional reporting
for this article.
NoTE aLL ToTaL ShaRehoLdeR
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aUGUST 2011
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90 harvard Business Review November 2011
It’s Hard to Be Good
Southwest
Airlines
Notable StreNgth
Labor
Relations
Core buSiNeSS Airline
CouNtry United States
year FouNded 1967
employeeS 35,000
2010 reveNue
$12.1 billion
10-year aNNualized
total Shareholder returN –6.9%
FaCt Southwest consistently has the lowest
ratio of complaints per passengers boarded
of all major U.S. carriers reporting statistics
to the U.S. Department of Transportation.
school’s students will also be given access
to a DSM nutrition program. Elsewhere in
India, one of DSM’s anti-infectives units of-
fers free medical services to nearby villag-
ers. And in Mexico, DSM employees hold
monthly seminars on safety, health, and
the environment for local schoolchildren.
Fokko Wientjes, the director of sustain-
ability at DSM, says the company believes
that providing aid is both the right thing to
do and critical to the future growth of the
business. “The benefit isn’t difficult to ex-
plain,” he says.
“First, in the war for talent, this way of
thinking makes DSM an attractive em-
ployer. This is a company that’s doing more
than just working for shareholders. We
have extremely low turnover.
“Second, it helps us understand what
the needs are in the different countries
where an organization like the World Food
Programme operates, which helps us
innovate.
“And third, when you work with these
groups you really get the message out on
issues like the importance of nutrients.
And in the end that will lead to inter-
ventions and investments that could be
profitable.”
The service mentality starts at the top
with CEO Feike Sijbesma, who spearheaded
the sustainability-focused rebalancing of
DSM’s product portfolio. Rank-and-file
employees participate by nominating
small projects for the company to fund. In
the middle, local managers are encouraged
to budget for outreach and engagement in
their communities.
“You look at your environment and
think, What can I contribute here?” says
Wientjes, whose stints with DSM’s South
American and Egyptian operations in-
volved work on safer house construction
and environmental cleanup. There’s just
one rule: “It needs to be linked to our strat-
egy, to our expertise. We wouldn’t do lan-
guage lessons for children. But chemistry
and math? That suits our company. That’s
what we know.
“With big projects, you have to find the
right partner and the right cause. You have
to think, What more can I do with these
competencies to build something both for
society and for the company?”
It’s not just donations. In India, one of
DSM’s most important growth markets, the
company has a subsidiary tasked with help-
ing local base-of-the-pyramid businesses
move toward more-sustainable produc-
tion, primarily in agriculture (for example,
by using better cow feed to improve milk
soutHwest’s fIrst newspaper ad, pub-
lished in 1971, promised that its flight atten-
dants—then called air hostesses—would
serve from the heart. (Later commercials
made it clear they would also wear hot
pants.) But what the marketing campaigns
didn’t explain was how the company
planned to create its energetic corps of
customer- loving, costume-wearing em-
ployees. The strategy was simple: South-
west would make its staff happy. Customer
satisfaction and profits would follow.
Today that doesn’t sound new. But back
then it was. And the philosophy has paid off.
yields) and energy (by providing enzymes
to improve the efficiency of gas plants pow-
ered by animal manure).
Wientjes acknowledges that DSM’s
return on its social investment is hard to
quantify. “We don’t really put a value on
it right now, and maybe we should to have
the investor community better under-
stand,” he says. “But shareholders haven’t
ever called me and said, ‘Please stop.’” n
hbR.oRg
november 2011 harvard business Review 91
Spotlight on The Good Company
Broad
Group
“ReSponSibility iS moRe important than
growth.” “Protecting the environment is
more important than profit.” “Love is more
important than anything else.”
You might expect to find those lines
in the values statement of a company
that makes energy-efficient air condition-
ers. But would you expect them from one
based in hypercompetitive, high-pollution
China? From one with industrial custom-
ers in more than 70 countries and more
than $500 million in sales? From one led
by a man worth an estimated $850 million?
From one that might soon go public?
Broad Group, the Changsha-based
business we’ve just described, doesn’t
see a trade-off between responsibility and
growth. Instead, the company—which
makes not only air conditioners but also
air filtration systems and prefabricated
Southwest is now the largest U.S. domestic
air carrier and has been profitable for 38
consecutive years, during which many
competitors declared bankruptcy or oper-
ated in the red.
Last May, on the day the company final-
ized its $3.2 billion merger with AirTran,
Southwest’s management team flew to
AirTran’s Atlanta headquarters to throw an
air-hangar barbecue for the 6,000 acquired
employees based there. CEO Gary Kelly
helped serve brisket. The next day the ex-
ecutive group went back to work on a plan
that will merge seniority lists in 16 collec-
tive bargaining agreements and preserve
the job of every manager below the C-suite,
though some might be required to relocate.
This approach highlights two key elements
of Southwest’s employees-first strategy:
meaningful interaction between staff and
management, and good
relationships with orga-
nized labor.
The company also
champions a corporate
culture—“warrior spirit,
servant’s heart, fun-
loving attitude”—that
promotes collaboration.
There is a “culture com-
mittee,” which is made
up of 200 employees
from all levels and meets
quarterly to plan activi-
ties. One favorite initia-
tive is “Delight and Sur-
prise,” when committee
members unexpectedly
greet the crew of an ar-
riving flight with food and drink and relieve
them of plane-cleaning duties.
Employee development starts with in-
tense onboarding and continues through
the company’s six-week MIT (managers-
in-training) program. Two poster children
for career advancement at Southwest are
Mike Ryan, a VP of labor relations who
started in the mail room, and Teresa Lar-
aba, senior VP of customer services, who
began as a part-time agent in the El Paso
airport.
Southwest’s pay and benefits are above
the industry average. In 1973 it was the
first airline to establish profit sharing, and
employees now own 5% of company stock.
Diversity is a priority, and HR policies allow
for small but critical concessions like letting
flight attendants trade hours.
Much of this is negotiated with the
unions, with which Southwest has always
worked well. Senior labor relations coun-
sel Joe Harris, who has represented the
company since 1972, remembers the initial
thinking of founder and CEO Lamar Muse
and his legendary successor, Herb Kelleher.
“They simply adopted the position that our
employees needed an effective voice so we
would partner with these organizations,”
Harris recalls. Of course, “we’ve had very
contentious negotiations over the years.
But we’re not like the Hatfields and the Mc-
Coys, where we keep
fighting after the fight
is over. At the end of the
day we have a common
objective to keep the
company healthy and
prosperous.”
S o u t h w e s t r e i n –
forces the employee
ownership mentality
through aggressive in-
ternal communication
at live events like Kelly’s
annual “message to the
field” speaking tour and
through new technolo-
gies. The company of-
fers text alerts for cor-
porate news and has a
smartphone app for its intranet, where Kelly
posts a weekly audio update and senior
managers blog and respond to comments.
Will Southwest be able to keep it going
and remain a profit leader among airlines
even as the economy stagnates, margins
tighten, and competitors cotton on to the
employees-customers-shareholder con-
tinuum? “It’s a tremendous challenge,”
Harris acknowledges. “But this philoso-
phy really does still permeate the entire
organization.” n
“Southwest has been
consistently successful by
staying true to its values.
Other airlines have said, ‘We
know we should improve
labor relations, but we have
9/11, Asian flu, gas prices…’
It’s always, ‘We’ll get to that.’
Southwest has said, ‘The only
way we can turn these planes
around quickly is by having
committed, problem-solving
employees that work together.
So what kind of HR practices
promote that?’”
Thomas Kochan, mIT Sloan
School of management
92 harvard Business Review november 2011
still significantly higher than those of less
environmentally friendly options, making
it a harder sell.
The company’s earliest successes were
in locales with unstable electric systems.
Now Broad Group exports to developed
markets around the world, supplying
airports from Madrid to Bangkok as well
as military bases in the United States. It
claims to triple the energy efficiency of
facilities while dramatically reducing
emissions.
The company’s other “good” products
were developed partly as a response to
social and environmental crises: Its air pu-
rification systems were designed after the
2002–2003 SARS outbreak in Asia (a cell
phone that monitors air quality is on the
way); its prefab building system—which
allows for fast, zero-pollution construc-
energy- efficient buildings—is proof that
the two can go hand in hand.
“Being good itself is competitive,” says
Zhang Yue, who founded the company
with $3,000 in 1988 and is now its chair-
man. “A bad company may be competi-
tive in a market for a while, but it won’t
last long. If you offer something of social
value, you will survive, and you will
prosper.”
Of course that wasn’t clear in the 1990s
or even the early 2000s, when Broad was
trying to persuade industrial customers to
switch to its air conditioners. Its technology,
which counterintuitively uses natural gas
or waste heat to cool, is better for the envi-
ronment—it avoids the ozone-depleting re-
frigerants used in electric cooling, reduces
the load on power grids, and requires less
energy overall. But the up-front costs are
Notable StreNgth
Environmental
Protection
Core buSiNeSS Industrial Products
CouNtry China
year FouNded 1988
employeeS 2,600
2010 reveNue
RMB 3.6 billion
10-year aNNualized
total Shareholder returN Undisclosed
FaCt Broad Town, the company’s one-square-
kilometer headquarters, comprises 28 buildings
made of recycled packing crates and shipping
pallets. Three times a day, employees there
are served meals sourced from an on-site
organic farm.
tion of sturdy, well-insulated structures—
followed the 2008 Sichuan earthquake.
Zhang sees that system, the BSB (Broad
Sustainable Building), as the company’s
future. “Buildings consume 40% of the
world’s energy,” he explains. As soon as the
BSB standards are verified by the Chinese
government, the company will tackle its
goal of producing 700 million square feet
of energy-conserving space by 2020. Work-
ing through 100 franchised distributors,
it hopes to win a 30% share of the global
construction market. “We boldly dream
that one day the whole world will cut CO2
emissions by 40% using this technology,”
Zhang says.
Observers have been impressed by
a video showing a prototype 15-story
hotel built in 90 hours. But it’s a long way
to world domination—hence the desire to
raise more capital by taking the company
public.
A stock market listing will bring new
stakeholders, but Zhang thinks he can
hold fast to the company’s ethos and cul-
ture. Indeed, investors will know exactly
what they’re buying into: a company with
environmental protection at its core, led
by an outspoken tycoon who recently re-
nounced his private jet and who refuses to
contribute to overpopulation by having a
second child.
Zhang really does seem to think he can
build a global business on love. “If every-
body and every business becomes socially
responsible,” he says, “then the earth will
become a beautiful hometown for us all.” n
“broad group continually
pushes forward new
ideas, products, and
services that not only
help them meet bottom-
line objectives but also
satisfy their core mission—
solving environmental
problems in a way that
connects to their existing
business.”
Christopher marquis,
Harvard Business School
HBR.oRg
November 2011 Harvard Business Review 93
It’s Hard to Be Good
Spotlight on The Good Company
Notable StreNgth
Corporate
Governance
Core buSiNeSS Fertilizers
CouNtry Canada
year FouNded 1975
employeeS 5,500
2010 reveNue
US$6.5 billion
10-year aNNualized
total Shareholder returN 27.4%
FaCt After BHP Billiton launched a hostile
takeover of PotashCorp last year, the
company’s board of directors met 35 times
(compared with eight times in a typical year),
with an attendance record of 97%. The bid
was eventually quashed by the Canadian
government.
Potash
Corporation
A decAde Ago, after the grand corporate
frauds at Enron and WorldCom unleashed
a wave of scandal-inspired regulation, the
executives and directors of Potash Corpora-
tion made a decision. The Canadian fertil-
izer producer wouldn’t just follow the new
rules. It would get ahead of them.
“There was this groundswell around
governance in the academic, shareholder,
and regulatory communities, and that
made us stop and take a comprehensive
look at what we were doing,” says Joe Pod-
wika, general counsel. “We had established
a sustainability committee, and we realized
one of the pillars had to be good corporate
governance. Instead of adhering to the
minimum requirements, we could imple-
ment best-practice programs that in the
long run would be good for the company.”
What started with a core values state-
ment and code of conduct has grown to
include a host of shareholder-friendly ini-
tiatives, from directors elected by major-
ity vote to “say on pay” for executives—all
before such measures were customary or
mandated. Most initiatives—such as the
stock-option plan based on three-year per-
formance that covers 220 managers and
goes up for shareholder vote each year—are
taken proactively. But PotashCorp also re-
acts to outside pressures. Not long ago a big
Canadian investor group requested direct
contact with board members about execu-
tive pay, without management or counsel
listening in. “The instinct is to say, ‘We can’t
do that,’” Podwika says. “But we looked at
it and decided we ought to”—even at a time
when CEO William Doyle’s annual package
of about $10 million (he also held roughly
$400 million in stock and options) was gen-
erating controversy.
PotashCorp is not without critics. As re-
cently as 1989 it was a debt-burdened gov-
ernment entity. Its mining operations create
serious short-term environmental damage,
even if it invests heavily in land reclamation.
The company also still places “maximize
long-term shareholder value” at the top of
its key goals, followed by ones related to
customers, communities, employees, and
the environment (in that order).
But when it comes to governance,
PotashCorp is by all accounts doing the
right thing. What benefit does the company
get as a result? “One way to think about the
ROI is that it’s like an insurance policy,” says
Podwika. “There’s a generally understood
principle that the real value of the company
is our reputation. I’d say that everybody
has it on their consciousness—our CEO,
our CFO, and certainly our board. People in
every part of the company. We talk about it
all the time.” n
“potash shows leadership in the clarity
and forthrightness of its compensation
disclosure. rather than giving the
minimum required and forcing the
investor to try to figure out what the
compensation really is, it voluntarily
reports how much its executives earn
from exercising stock options—even
though in recent years it has been an
embarrassingly high number. and it
does so with a very user-friendly and
transparent chart.”
roger martin, Rotman School
of management
94 harvard Business Review November 2011
hBR.oRG
Spotlight on The Good Company
ing, Unilever identified its top 10 raw ma-
terials (as measured by volume, strategic
importance, and consumer interest in sus-
tainability) and set out goals for moving to
sustainable supply (as measured by 11 fac-
tors from soil quality to labor practices). For
example, it buys 1.4 million tons of palm oil
annually, or 3% of the global yield, but this
year more than half of that will come from
growers certified by the
Roundtable on Sustain-
able Palm Oil, a group it
helped establish. By 2015
the company intends to
use sustainable palm oil
exclusively.
In manufacturing and
logistics, the company
has set goals for reducing
its environmental impact
both directly (in factories,
distribution centers, and transport) and
indirectly (via better packaging and con-
sumer education). Factories are required
to submit monthly scorecards on their
waste disposal and energy and water use.
“We monitor it just as we monitor cost and
sales,” Sigismondi says. By 2020 the com-
pany aims to reduce CO2 emissions from
manufacturing and logistics by more than
40% from a 1995 baseline. So “we know we
need to do 4% or 5% a year.”
Unilever typically works with govern-
ments and NGOs to ensure that its supply
chain is following best
practices. Though Sigis-
mondi was recently in
India visiting vegetable
farms, he admits “it’s
impossible to do it all on
a one-to-one basis.” Sup-
pliers in markets with
no certification bodies
are told to “self-certify”
against Unilever’s Sus-
tainable Agriculture
Code; their progress is
monitored with software
tools and audits. And
when activist groups un-
earth problems, as Green-
peace did in some of Unilever’s Southeast
Asian palm plantations, the company re-
sponds (in the plantations’ case by revok-
ing their contracts).
All this requires investment, and the
return is variable. Tea growers certified by
the Rainforest Alliance offer higher yields,
which reduce product costs, but for sustain-
able palm oil the balance-sheet defense has
yet to materialize. Still, “we’re big enough
to afford the premiums, and we believe this
is the future of the industry,” Sigismondi
says. “Today we’re investing. We’ll see the
return in years to come.”
There’s more to do. Unilever has not set
targets for sustainable sourcing of chemi-
cals, minerals, and packaging other than
paper and board. It continues to explore
ways to convince customers that they must
behave responsibly, too. “Sixty-five per-
cent of our environmental footprint is re-
lated to how consumers use our products,”
Sigismondi says. “We have to lead beyond
our own four walls.”
hBR Reprint R1111e
to undeRStand the challenge of making
Unilever’s supply chain sustainable, con-
sider this: Each year, the company sells
170 billion products across 180 countries,
sourcing materials from 150,000 suppliers
and operating more than 250 factories. It’s
hard to manage that network, much less
improve its performance on sustainabil-
ity. But, according to Pier Luigi Sigismondi,
Unilever’s chief supply chain
officer, doing better in that
area is a strategic imperative.
“We have to do business this
way to sustain our long-term
business goals,” he says. Af-
ter all, the maker of Lipton
tea, Knorr soup, and Dove
soap can’t ignore farmland
degradation or threats to the
world’s water supply. And
a leading consumer goods
company must respond to consumer de-
mand for sustainably sourced products.
Execution rests on a “prioritize and
conquer” approach. For agricultural sourc-
Unilever
Notable StreNgth
Supply Chain
accountability
Core buSiNeSS Consumer products
CouNtry UK/Netherlands
year FouNded 1930
employeeS 167,000
2010 reveNue
€44.3 billion
10-year aNNualized
total Shareholder returN 4.2%
FaCt It takes 3.5 million pounds of eggs
from 125,000 cage-free hens to make
the 30 million jars of Hellmann’s Light
mayonnaise sold in North America.
“unilever has developed
a pathbreaking frame
work for looking at
products in a cradleto
grave, valuechainwide
way. that represents
a real step forward in
companies’ taking on a
higher burden.”
dan esty, yale Law School
96 harvard Business Review november 2011
hBR.oRG
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1/3
By Dania El Akkawi June 28, 2020
Climate Change and COVID-19: There Is More Than One Curve to
Flatten
thecairoreview.com/midan/climate-change-and-covid-19-there-is-more-than-one-curve-to-flatten/
Photos of cleaner and clearer waters of the Venice canals circulated on social media during the early days of the
COVID-19 global pandemic. The BBC said this was due to the COVID-19 lockdown, a halt to tourism and hence a
drop in traffic in the city. For the first time in years, fish could be seen through the water. Similar incidents of
receding pollution and environmental improvement were sighted in the rest of the world.
Lama El-Hatow, an environmental and social consultant at the International Finance Corporation (IFC), an
international financial institution and member of the World Bank Group, believes that being forced to stay at home
has had an overall positive impact on the environment, but how the world chooses to return to normal will determine
what comes next. During her online talk hosted by Alternative Policy Solutions, a public policy research project at
the American University in Cairo, El-Hatow showed an illustration where future crises were represented in tsunami
waves, each bigger than the one before it. She explained that once COVID-19 (the first wave) comes to an end,
economic recession, climate change, and biodiversity collapse will follow.
“We all ask when this disaster will end and how, but we need to keep in mind that there are a lot of other bigger
crises that will follow,” El-Hatow said.
As a result, COVID-19 and climate change cannot be handled separately. Essentially, if COVID-19 and climate
change issues are solved separately, when the virus ends, climate change repercussions will be much harsher than
before, and new viruses will continue to emerge. This is particularly critical when one considers that the coronavirus
itself came from nature. Research studies have shown that the virus moved from animals to humans in Wuhan,
China’s wet markets. “Infectious diseases that cause epidemics are often a result of things people do in nature. The
disruption of nature causes disease and 60 percent of these infectious diseases are zoonotic; meaning they come
from animals first. This includes AIDS, Ebola, swine flu, and mad cow disease,” she said.
The destruction of ecosystems is the starting point and the reason why these diseases are transferred from animals to
humans. Deforestation, for example, destroys natural animal habitats forcing animal migration to other locations
where they may come into direct contact with large human populations for the first time, or captivity where they are
sold in wet markets thus causing an imbalance to the ecosystem. There is then a direct correlation between the loss
of habitats and an increase in human diseases. For instance, El-Hatow explained that a 4 percent deforestation in the
Amazon rainforest would cause a 50 percent increase in malaria.
The Unintentional Benefits of How COVID-19 Was Handled
The global response to COVID-19 may indicate how we should deal with climate change. The past few months
have shown that lockdown, quarantine, travel bans, work from home, social distancing, online learning, and reduced
transportation were not only able to directly curb the spread of the virus, but also had a positive impact on the
environment. Global emissions were also briefly reduced.
https://www.bbc.com/news/av/world-europe-51943104/coronavirus-venice-canals-clearer-after-lockdown
http://aps.aucegypt.edu/ar/?fbclid=IwAR2dEngnNrRx8N-QQ9ZKVvXPWTtQBOO9Sv38Vf4ngtGcRSMJ07Nq5dfoYPs
2/3
Inevitably, however, there was economic disruption as unemployment skyrocketed and global supply chains were
affected, explained El-Hatow.
The World Bank where El-Hatow works traditionally holds an annual meeting of some 10 thousand people but
because it was done virtually this year, there was a reduction of 79, 500 metric tons of carbon dioxide emissions.
She noted that the quantities of such emissions are equivalent to those produced from the deforestation of large areas
of the Hawaiian Islands.
But whether or not the impact of this is only short term is still a question on the table.
While consumer spending did decrease on a whole, it also shifted to new markets. “We are consumption-driven
societies, and this increases climate change issues. But when we were on lockdown for three months, consumption
decreased in certain areas, for example in luxury goods, but caused an increase in food and medical supplies,” El-
Hatow said.
When life returns to normal, higher consumption rates, pollution, and deforestation will come back and perhaps with
harsher impact, explained El-Hatow. In China, when shops reopened, for instance, Hermès sold luxury goods for
about 3 million dollars. “This is what revenge purchasing looks like. When shops reopen, there are queues of people
shopping again.”
This is why returning to “normal” needs to be accompanied with new perspectives based on the lessons learned
from COVID-19. When lockdowns were first implemented, businesses and entrepreneurs had to think outside the
box with online learning, online working, and remote entertainment, meaning that “business as usual” may never
look the same. “We’ll still have to somehow return to normal but it needs to be done in a way that won’t hurt, or
increase carbon emissions to worse levels.”
What Should Recovery Look Like?
As people have relatively adapted to life online, there are golden opportunities to be taken. When asked how the
world should embrace the digital transition for the sake of the environment, El-Hatow said that people’s behavior is
key. “As individuals, we need awareness and to know that what we do, what we consume, and how much we
consume, impacts the world. The private sector needs to encourage digital work for remote learning, remote
education, remote shopping and remote entertainment,” El-Hatow told the Cairo Review.
But a lot of this is easier said than done, especially with the social disparities that exist in every society and a virus
that has left the world in economic decline. El-Hatow stressed that people in lower income households have less
internet access than those in richer households and countries. Although there are those who may be able to work
from home, many receive daily income salaries and work in the informal economy, which makes them even more
vulnerable to climate change and health hazards. The economic downturn caused by COVID-19, according to the
World Bank, is predicted to shrink the global economy by 5.2 percent this year—the deepest recession since the
second World War.
El-Hatow explained that governments need to work together to flatten both climate change and COVID-19 curves.
Creating a balance between the economy and development, and the health of humans and the planet is essential, she
said. It is necessary for countries to work together for better long-term results. “For post COVID-19 recovery, there
needs to be social inclusion in terms of health care and education infrastructure, investments in renewable energy,
and a move to a more digital economy that includes e-commerce, e-payments, e-learning and e-governance.”
https://www.worldbank.org/en/news/press-release/2020/06/08/covid-19-to-plunge-global-economy-into-worst-recession-since-world-war-ii
3/3
At least from the shared experience of COVID-19, global communities have learned about solidarity on the
individual, national, and global levels, and have gained some awareness that human behavior does indeed have an
impact on our carbon footprint.
Dania El Akkawi is associate editor at the Cairo Review of Global Affairs.
https://doi.org/10.1177/0170840618765553
Organization Studies
2019, Vol. 40(5) 725 –744
© The Author(s) 2018
Article reuse guidelines:
sagepub.com/journals-permissions
DOI: 10.1177/0170840618765553
www.egosnet.org/os
Climate Change Is Not a Problem:
Speculative Realism at the End of
Organization
Norah Campbell
Trinity College Dublin, Ireland
Gerard McHugh
Trinity College Dublin, Ireland
PJ Ennis
University College Dublin, Ireland
Abstract
In this paper, we trace the compounding and escalation of frames to try and encompass the reality of
climate change. These frames capture significant aspects, revealing new contours and extreme organizational
challenges. However, what if climate change is unframeable? We locate three ontological dimensions of
climate change – its unboundedness, incalculability and unthinkability – that make this case. This means that
climate change is not a problem that organizations can encompass, divide or draw lines around – some ‘thing’
that can be recuperated into existing institutional, infrastructural and interpersonal frameworks. Instead, it
is calling forth forms of organization without any precedent. We argue that the philosophy of speculative
realism, specifically the work of Quentin Meillassoux, reveals climate change as a new World for which
we do not have categories. We deploy Meillassoux’s concepts which are non-human and rational to think
through what climate change is ontologically. Meillassoux’s work is characterized as the reintroduction of
the old philosophical idea of the absolute, and we use it as a possible way to overcome the equivocal status
of climate change without succumbing to despondency and passivity. Rather than a negative, overwhelming
threat, climate change gives us what we call a bleak optimism: the realization that climate change has already
happened, and that human civilization must learn how to die in a way that is a creative and just foreclosure
of the Earth’s organizational forms.
Keywords
Anthropocene, climate change, ontology, Quentin Meillassoux, speculative realism, the absolute
Corresponding author:
Norah Campbell, Trinity College Dublin, College Green, Dublin 2, Ireland.
Email: [email protected]
765553OSS0010.1177/0170840618765553Organization StudiesCampbell et al.
research-article2018
Article
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726 Organization Studies 40(5)
Introduction
At its most fundamental level, organization is an environment-making process. It entails the draw-
ing of ‘general lines’ in the fabric of the whole (Holt & Mueller 2011, p. 68), and as such constitutes
the most basic mode of existence. All organization begins with the making of some sort of cut in
the universe, to simultaneously create and order an inside from an outside (Barad, 2003, p. 815;
Cooper, 1986). As Holt and Mueller argue, such lines are drawn by organization to produce ‘ele-
ments of a reality that can be controlled by human intervention’ (2011, p. 70) – creating realities
that become regarded as necessary rather than arbitrary the more we dwell within them. In order to
bracket ‘a’ reality out from an undifferentiated plasmic whole, we need to frame it in some way – a
fundamental process of all reality-building that pours the very moulds of thinkability (Cooper,
1986, p. 303). In this paper, we extend the argument that, far from merely a linguistic nicety, how
we frame climate change will determine the future of life on Earth. This is because frames are
strategic devices; they are a mode of coping with the hugeness of reality by initiating a number of
moves: bounding it (acts of defining, separating, assimilating), stabilizing it (acts of fixing, delim-
iting, controlling) and bringing it into view (acts of empiricism, technologies of representation and
control). How we frame climate change is critical because while they begin as useful models for
viewing reality, frames end up as recursive lenses through which that phenomenon is measured and
acted upon (Schüssler, Rüling & Wittneben, 2014; Wright & Nyberg, 2017). As our understanding
about climate change expands, new frames emerge side-by-side to cope with the novel dimensions
it is constantly revealing. Climate change is an externality (e.g. Banerjee, 2012; Marechal &
Lazaric, 2010), a superwicked problem (Levin, Cashore, Bernstein, & Auld, 2012; Varone, Nahrath,
Aubin,& Gerber, 2013; Wright & Nyberg, 2017) or the Anthropocene (Hoffman & Jennings,
2015), with many other frames operating in between.
We are witnessing the compounding and escalation of frames to try and encompass the reality
of climate change. These frames capture significant aspects, revealing new contours and thus new
and extreme organizational challenges. However, what if climate change is unframeable? What if
one of its qualities is its very unboundedness – that we can no longer separate out what is climate
change and what is not?1 What if climate change is incalculability itself, where its intotalizable
effects create emergencies and materialities that are beyond known forms of planning and organ-
izing?2 What if one of its structural qualities is its sheer unthinkability, whereby each time we try
to capture it empirically, organizationally, or psychologically, it escapes? This would mean that
climate change is not a problem that organization can encompass, divide or draw lines around –
some ‘thing’ that can be recuperated into existing institutional, infrastructural and interpersonal
frameworks. This would mean that climate change is calling forth forms of organization without
any precedent.3 These questions have no logical or empirical answers: they concern its ontology.
In other words, we know a lot about particular aspects of climate change, but we do not see its
fundamental being. If we can begin to do this, climate change will change thought itself.
We propose the ontologization of climate change; it is no longer a problem within the world, but
constitutes the world we live in. Building on this argument we introduce the concept of World
(Monde), in the specific sense that it is used by the speculative realist philosopher Quentin
Meillassoux. Drawing from and building on Meillassoux, we argue that climate change must be
understood as the absolute context that determines what is possible, and also, crucially, what has
replaced a previous World. In the first part of the paper, we set out to demonstrate that conceiving
climate change as some ‘thing’ that we can divide and see behind, mis-ontologizes its very nature.
We will analyse the process of framing and then chart the discursive evolution of climate change
as a problem. This ultimately reveals a set of difficulties that the framing of climate change as a
‘problem’ or ‘thing’ generates:
Campbell et al. 727
(1) it triggers an ordered set of epistemological assumptions, expectations and responses;
(2) it leaves organization unable to encompass the structural unboundedness, incalculability
and unthinkability of climate change4;
(3) it means that climate change is not recognized for what it is, namely the World.
Once we cease to think of climate change as a problem that can be framed, we then explicate the
consequence of recognizing it as the generative context from where problems emerge. With this
recognition in place we then offer a set of techniques drawn from speculative realism. We intro-
duce the idea of World in the speculative realist sense to make the claim that climate change cannot
be subsumed into any existing organizational categories, and that organizational research in the
future may be dedicated to finding the right categories to account not for a superwicked problem,
but for forms of organization without precedent. We then argue that speculative realism is a strat-
egy for thinking, organizing and solving at the widest rational angle. This section will demonstrate
how, contrary to our common take on the limits to rationality, the vista of the rational is massively
expansive. Inquiry at the widest rational angle is a form of thinking and acting that is not concerned
with manifestations of phenomena, but rather with the fundamental structure of reality in its abso-
lute and unconditioned form, in order to ‘deliver metaphysical truths unto the world without
deforming them with the forceps of one’s own epistemic apparatus’ (Dudley, 2015, p. 113). This
means that to think about the absolute realness of climate change, we need to resist the temptation
to reduce it to its geophysical or historico-political manifestations, but to establish it first and fore-
most as an ontological threat. It is only then that we can begin to describe the escalation and abso-
lutization of ethics that is necessary to authentically occupy it.
Finally, we explore how Meillassoux reintroduces the old philosophical idea of the absolute,
and we suggest it is a possible way to overcome the equivocal status of climate change without
succumbing to despondency and passivity. Rather than a negative, overwhelming challenge, it
gives us what we call a bleak optimism, characterized as organizing without hope, because climate
change has already happened. As we come to realize the ontological dimensions of climate change,
we are required to learn how to die as a civilization. This dying constitutes a creative form of fore-
closure that unlocks a justice that cannot exist without this realization.
Frame Analysis and Climate Change
Understanding the process by which climate change is framed is crucial as this process may
lead to new forms of organization (Wright & Nyberg, 2017). Research in climate change has
long been about the construction and interpretation of the object in question, and the output
reveals highly diverse responses from individuals, organizations and societies (Bosomworth,
2015; Hoffman, 2011; Lefsrud & Meyer, 2012; MacKay & Munro, 2012; Wright, Nyberg, &
Grant, 2012). Frames are ‘general organizing devices’ that do numerous things: they define
problems, diagnose causes and suggest solutions (Nisbet, 2009, p. 18; Nisbet, Hart, Mylers, &
Ellithorpe, 2013; D’Angelo & Kuypers, 2010). They influence organizations by their argu-
mentative strength (Borah, 2011; Nisbet, 2009) and can determine the size of climate change,
in the sense that they define and therefore produce climate change through the work of prob-
lem-identification, claims-making, attribution-laying, boundary delineation, counter-framing,
bridging, amplification and constructing identity-forming vocabularies and discourses (see
Snow, Burke Rochford, Worden, & Benford, 1986 and Benford & Snow, 2000 for overviews).
Framing climate change in particular ways can alter an audience’s ideological beliefs and
value sets about it (Nisbet et al., 2013; Scheufele & Tewksbury, 2007, see Kahneman &
Tversky, 1984). Despite the fact that climate change is an object that has enjoyed consistent
728 Organization Studies 40(5)
and widespread scientific consensus, individual organizations and transnational institutions
the world over lack a common frame, conspicuously so.
In framing work, each domain tends to draw its proposed solutions from within its own field
(Rittel & Weber, 1973). This subsumption is part of a tendency to retroactively fit the problem into
familiar categories, in the hope of taming it. The climate change literature has to date been over-
whelmingly dominated by economics, (geo)engineering and legal theory/policy studies (see
Hoffman, 2011; Weingart, Engels, & Pansegrau, 2000). These disciplines propose solutions to
climate change that invoke markets, technologies and policies respectively, though each discipline
has differing criteria about what constitutes legitimacy, authority and efficacy (Luhmann, 1989;
Weingart et al., 2000). This means that before they get to solutions, the phenomenon has already
been scientized, politicized, mediatized and organized. A fourth frame has, more recently, been
gaining traction in organization studies, one that draws from indigenous cultures in the hope that a
deeper emotional maturity might lead to a deep engagement with the environment which ulti-
mately bestows life (Dörries, 2010; Gosling & Case, 2013; Nyberg & Wright, 2016; Nyberg,
Spicer, & Wright, 2013; Verweij et al., 2006). In this domain, climate change is framed as an ‘exis-
tential threat’ that forces us to fundamentally question what it means to be an ecologically interde-
pendent species with moral agency. For example, Gosling and Case ask how we can go about
imagining life itself if the worst predictions of climate change are accurate (2013, p. 706). They
contrast the West’s failure to imagine the end of life as we know it with the Native American Crow
Nation – a people forced to accept the absolute extermination that has befallen it (2013, pp. 711–
12). They suggest that the story of the Crow Nation, one of passing through the end of their own
World, might provide us with a prototype for countenancing our own death, in this case ‘the loss
of meaning that results when existentially significant activities are no longer possible’ (Gosling &
Case, 2013, p. 716).
The ultimate goal of framing is to enfold audiences into an enclosure that is conceptually acces-
sible, favouring a ‘loose net’ approach, which captures as many people as possible (Büchs, Saunders,
Wallbridge, Smith, & Bardsley, 2015). For example, as many have noted, ecological modernization
(variously termed economic development, win-win, green/clean tech) is a frame for climate change
that seems to enclose the greatest number of diverse stakeholders, and is commonly regarded as the
one which could break conceptual gridlock on the issue (see, inter alia, Elkington, 1994; Porter &
Kramer, 2011). The frame of ecological modernism uses carbon as a way to engage diverse stake-
holders, a centrifugal locus that is calculable, non-political and scientific and presents opportunities
for innovation. Framing theorists tend to oppose niche frames for controversial issues, as they tend
not to bring people along with them. It has been argued, for example, that the catastrophic framing
of climate change backfires, and ‘play[s] into the hands of skeptics’ because it has been shown that
communicating any extreme element of climate change has boomerang effects, causing audiences
to disbelieve the entire message (Nisbet & Scheufele, 2009, p. 1771; Hart & Nisbet, 2012). Frames
tend to be most powerful when two issues, ostensibly different, are linked in complementariness in
the same sphere as the concept in question (Snow & Benford, 1988, p. 198) so that the intended
audience is interpolated by the concept – a process known as frame-bridging. For example, the well-
known biologist E. O. Wilson, in emphasizing the religious and moral dimensions of climate change,
has convinced many religious leaders that the environment is central to their faith (Nisbet, 2009).
Successful framing of climate change tends to focus not so much on the reality of the moving target,
but on the sustainability of discourses that are imaginable and thinkable and connectable with peo-
ple’s existing worlds (Boomier, Lanz, & Zuber, 2015; Levin et al., 2012; Moore, 2016). In other
words, frames work through the integration of the phenomenon into a reality that is manageable. But
the prioritization of an existing and unifying frame can have unintended consequences. The framing
of climate change as ‘ecological modernism’ for example, is essentially a reification process that
Campbell et al. 729
transforms it into ‘the carbon problem’ leading to the production of carbon markets that ironically
‘serve as creative new modes of accumulation’ (Böhm, Misoczky & Moog, 2012, p. 1617). While
reducing carbon emissions seems critically important, it is a short-term strategy that reifies ecologi-
cal maladaptation to (quite literally) a single element and can run counter to achieving more substan-
tive change (Böhm & Dabhi, 2009; Paterson & Stripple, 2012; Veal & Mouzas, 2012).
Recent work in organization studies finds that we are suffering not so much from a deficit of
information as a deficiency of emotional knowledge about climate change. Thus, the locus of the
problem moves to the psychological, affective realm. This framing involves an intensification of
the problem, an elevation of it to an existential threat or trauma because it calls forth a huge, if still
latent, psychological re-examination of nothing less than the meaning of life on Earth, demanding
that we become more ecological in our cognition, behaviour and affect. Wright and Nyberg (2012),
for example, find that climate change has become a major factor in identity formation, and argue
that sustainability managers in organizations perform complex affect-based work to translate the
broader social emotions of climate change into the local emotional landscapes of organizations to
establish new norms that ‘alter the emotional salience’ of climate change in the workplace (Wright
& Nyberg, 2012, p. 1573).
The Discursive Evolution of a Problem
Why is analysing the evolution of climate change frames more than an act of linguistic categoriza-
tion? In short, frames determine what constitutes life and who gets to live it (Adams, 1990; Butler,
2010). ‘Climate change’ is itself a holding term that is loaded with epistemological baggage, not
least because it has been politically more palatable than global warming in conservative circles
(Morton, 2013; Poole, 2006). It is by looking at the boundaries of climate change that we are
afforded a chance to ontologize it. Thus, in Table 1, we present a chronology of the ways in which
‘climate change’ in its various manifestations has been framed over the last three decades, from
1986 to 2016. Academic sources were identified using Business Source Complete. We began by
using ‘environment’ as the broadest field, and then narrowed our investigation within this pool to
those articles that dealt with the ecological environment as its main focus – 127 in total. We then
categorized articles according to what term(s) was/were specifically used, and then coded any
explicit reference to its epistemological dimensions (specifically, references to the who, what, why,
when and where of climate change). We noted the source domain of the term used and, where
applicable, solutions or recommendations that were proposed. Many articles had slippage of terms,
as well as multiple frames. We included in Table 1 only publications that are recent and representa-
tive of the cumulative logic of that frame.
The framing of climate change is not a static process, but evolves and regresses over time, as
specific economic, social and policy contexts shift. Thus, the frames in Table 1 can overlap consid-
erably, but what emerges are distinct attempts to understand and organize for a phenomenon with-
out precedent. It begins with the first sustained recognition of climate change in the 1970s as a
negative externality that can and should be internalized. Later, with the framing of climate change
as a wicked problem, we began to conceive of a problem for which there may not be a ‘solution’.
Emerging in the 1980s and continuing to today is the frame of climate change as a threat. Here the
notable dimension is the inextricability of (human) life and the environment that supports it. This
tends to be a predominantly emotional frame that resists the recuperative logic of opportunity, and
focuses instead on values and morality. This framing global warming is one that emerged from the
scientific community and quickly became useful for organizations that recognized the market
opportunity that carbon an greenhouse gases represented. The debate frame is a sceptical frame
that is politically and (to a lesser extent) scientifically motivated. It works by what Kellstedt,
730 Organization Studies 40(5)
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…
84 Harvard Business ReviewMarch–April 2020
Verónica H. Villena
Assistant professor,
Penn State University
Dennis A. Gioia
Professor, Penn State University
A More
Sustainable
Supply Chain
OPERATIONS
AUTHORS
Harvard Business Review
March–April 2020 85
Companies tend to
focus on their top-tier
suppliers, but the real
risks come lower down.
PHOTOGRAPHER EDWARD BURTYNSKY
a rising number of multinational corporations have pledged
to work only with suppliers that adhere to social and envi-
ronmental standards. Typically, these MNCs expect their
first-tier suppliers to comply with those standards, and they
ask that those suppliers in turn ask for compliance from their
suppliers—who ideally ask the same from their suppliers.
And so on. The aim is to create a cascade of sustainable
practices that flows smoothly throughout the supply chain,
or, as we prefer to call it, the supply network.
It’s an admirable idea, but it’s been hard to realize in
practice. Many of the MNCs that have committed to it have
faced scandals brought about by suppliers that, despite being
aware of sustainability standards, have nevertheless gone
on to violate them. Consider the embarrassing scrutiny that
Apple, Dell, and HP endured not long ago for sourcing elec-
tronics from overseas companies that required employees to
work in hazardous conditions, and the fallout that Nike and
Adidas suffered for using suppliers that were dumping toxins
into rivers in China.
What’s more, all those scandals involved first-tier suppli-
ers. The practices of lower-tier suppliers are almost always
worse, increasing companies’ exposure to serious financial,
social, and environmental risks. In this article we describe
various ways that MNCs can defuse the ticking time bomb
those risks represent.
WHERE THE PROBLEMS ARE
To understand the situation and develop ideas for tackling
it, we conducted a study of three supply networks. Each
was headed by an MNC considered to be a “sustainability
OPERATIONS
ABOUT THE ART
Edward Burtynsky’s photographs explore
the manufacturing landscapes of China and
their central role in the global supply chain.
In
recent
years
86 Harvard Business ReviewMarch–April 2020
IDEA IN BRIEF
THE PROBLEM
Many multinational
corporations have
committed themselves
to using suppliers with
sustainable social
and environmental
practices, but
suppliers—especially
those low in the supply
chain—often don’t
comply with standards.
This poses serious
financial, social, and
environmental risks.
THE RESEARCH
The authors studied
the supply networks of
three MNCs con sidered
to be sustainability
leaders. They discov
ered a set of best
practices—but also saw
how difficult it can be
to enforce standards.
THE SOLUTION
Awareness is key.
Companies should
consider adopting the
best practices featured
in this article, such as
establishing longterm
sustainability goals and
including lowertier
suppliers in an overall
sustainability strategy.
Harvard Business Review
March–April 2020 87
leader”—one in the automotive industry, one in electronics,
and one in pharmaceuticals and consumer products. (For
the specific selection criteria, see the “About the Research”
sidebar.) We also studied a representative set of each MNC’s
suppliers—a total of nine top-tier and 22 lower-tier suppliers,
based variously in Mexico, China, Taiwan, and the United
States. What we discovered was that many were violating the
standards that the MNCs expected them to adhere to. The
hoped-for cascade effect was seldom occurring.
We found problems in every country we studied. In
Mexico we visited five lower-tier suppliers; all lacked envi-
ronmental management systems, and four lacked proce-
dures for handling red-flag social problems such as sexual
harassment, retaliation by supervisors, and hazardous labor
conditions. At three of the companies, temporary workers
made up nearly 50% of the workforce, and turnover rates
sometimes reached 100%, making it difficult to implement
viable environmental, health, and safety programs. In China
and Taiwan we visited 10 lower-tier suppliers, all of which
had marginal environmental practices, dangerous working
conditions, and chronic overtime issues. In the United States
we studied seven lower-tier suppliers and found that three
had high concentrations of airborne chemicals and a lack of
systematic accident reporting.
The pattern is worrisome. Remember, all those suppliers
were connected to model firms that were working proac-
tively to encourage sustainability. If exemplary MNCs are
having trouble ensuring good practices among their lower-
tier suppliers, then “regular” firms, in all likelihood, are
faring even worse at this.
The problem, ironically, often starts with the MNCs them-
selves. They frequently place orders that exceed suppliers’
capacity or impose unrealistic deadlines, leading supplier
factories to demand heavy overtime from their workers.
When we asked a representative at one supplier why his com-
pany had violated a 60-hour workweek limit, he gave us a
frank explanation: “We didn’t want to tell our customer that
we can’t produce its products on time, because otherwise it’s
going to try to find someone else that can. But our customer
didn’t give us enough notice to hire enough skilled people to
do the job.”
First-tier suppliers, for their part, rarely concern them-
selves with their own suppliers’ sustainability practices.
That’s often because they’re struggling with sustainability
issues themselves. The noncompliant company we cited
above, for example, doesn’t try to enforce a strict 60-hour
workweek limit with any of its suppliers. “We don’t comply
with this requirement ourselves,” the representative told us,
“so how could we ask our own suppliers to do so?”
For MNCs, there are special challenges in governing
lower-tier suppliers. There’s often no direct contractual
relationship, and a particular MNC’s business often doesn’t
mean that much to the lower-tier supplier. If American and
Japanese automakers rely heavily on a certain seat maker, for
example, they can demand that it adhere to their sustainabil-
ity standards. But that seat maker may have a hard time get-
ting its suppliers to follow suit. Suppose it does business with
a foam manufacturer that has many other big customers in
the electronics, appliance, and health care industries—each
of which has different sustainability standards. The foam
manufacturer has little incentive to conform to the automak-
ers’ sustainability requirements, because the automakers
account for only a small fraction of its total business.
Furthermore, most lower-tier suppliers are not well
known, so they receive relatively little attention and pressure
from the media, NGOs, and other stakeholders. Even when
they do attract attention (for sexual harassment problems,
for example, or chronic overtime demands), we found that
they do not feel the need to address the issues involved. They
tend to act only when MNCs intervene.
Lower-tier suppliers are also the least equipped to handle
sustainability requirements. They often do not have sustain-
ability expertise or resources, and they may be unaware of
accepted social and environmental practices and regulations.
They are also frequently located in countries where such
regulations are nonexistent, lax, or not enforced at all. And
typically they don’t know much about the sustainability
requirements imposed by MNCs—but even if they do, they
have no incentive to comply. This may explain why most
of the lower-tier suppliers in our study lacked programs to
dispose of toxic waste and in fact had no environmental
management program whatsoever.
MNCs, too, are handicapped by ignorance. They fre-
quently don’t even know who their lower-tier suppliers are,
let alone where they’re located or what capabilities they have
(or don’t have). Many of the 22 lower-tier suppliers in our
study are small or medium-size private firms that provide
little information to the public—characteristics that, in effect,
make them almost invisible. Several directors of the three
MNCs we studied viewed this as a big problem. “The demon
in this place,” one of them said, “is the [lower-tier] suppliers
that I know the least about.” Another said, “I don’t have
control over the ones that pose the highest risks, so I’m losing
sleep over them.”
OPERATIONS
P
hotos ©
E
d
w
ard
B
urtynsky, courtesy H
ow
ard
G
reenb
erg G
allery and
B
ryce W
olkow
itz G
allery, N
ew
York / N
icholas M
etivier G
allery, Toronto
88 Harvard Business ReviewMarch–April 2020
All these concerns mean that lower-tier suppliers are
unquestionably the riskiest members of a supply network.
If they have poor or dubious sustainability performance,
then an MNC that does business with them can endanger
its reputation and suffer profound repercussions—losing
customers, being forced to find new suppliers, or having its
supply chain disrupted. To reduce such risks, MNCs need
to include both first-tier and lower-tier suppliers in their
sustainability programs.
BEST PRACTICES
The three MNCs in our study have taken a number of steps to
promote suppliers’ social and environmental responsibility:
• They have established long-term sustainability goals.
• They require first-tier suppliers to set their own long-term
sustainability goals.
• They include lower-tier suppliers in the overall sustainabil-
ity strategy.
• They task a point person on staff with extending the firm’s
sustainability program to first- and lower-tier suppliers.
These are all beneficial measures that other companies
should consider adopting. Firms can also borrow some of the
specific strategies that our MNCs use to spread good practices
throughout their supply networks. (See the exhibit “Manag-
ing Lower-Tier Supplier Sustainability.”) These fall into four
broad categories:
Direct approach. The MNCs we studied set and monitor
social and environmental targets for their first-tier suppliers
regarding second-tier suppliers. The automotive corporation,
for instance, has a strong commitment to supplier diver-
sity. It requires its first-tier suppliers to allocate 7% of their
procurement spending to minority suppliers. Some first-tier
suppliers were already meeting that target; others have
made substantial changes to do so (for example, by changing
performance criteria for their purchasing managers). The
first-tier suppliers we interviewed noted that the MNC peri-
odically checks to see if the target is being met and creates
opportunities to help them network with minority lower-tier
suppliers.
Another MNC annually surveys its first-tier suppliers to
gather information not only about their health, safety, labor,
and environmental practices but also about the sustainability
Managing Lower-Tier
Supplier Sustainability
Ideally, multinational corporations will use a combination
of approaches—direct, indirect, collective, and global—to
encourage sustainable practices throughout their supply
networks. Some specific strategies within each type of
approach are listed below.
Direct
• Evaluate first-
tier suppliers
by using
sustainability
performance
indicators that
capture their
requirements
for lower-tier
suppliers.
• Survey
suppliers on their
environmental,
health, safety,
and labor
practices and on
their procurement
practices.
• Work with
major first-tier
suppliers to map
the firm’s supply
network.
Indirect
• Provide training
and foster peer
learning among
first-tier suppliers
to help them
Indirect
Direct
Global
Collective
improve their
procurement
practices
with lower-tier
suppliers.
• Select high-
performing
suppliers to
pilot new
sustainability
initiatives.
• Reward
suppliers for
cascading
sustainability
requirements
to lower-tier
suppliers.
Collective
• Commit to
developing and
complying with
industrywide
sustainability
standards, and
help suppliers
become full
members
of industry
organizations.
• Via industry
organizations,
share
resources with
competitors
and major
suppliers
to achieve
sustainability
goals.
• Encourage first-
and lower-tier
suppliers to take
advantage of
sustainability
training
programs offered
by industry
organizations.
Global
• Work closely
with relevant
NGOs and
international
institutions
interested
in improving
supply chain
sustainability.
• Use tools and
data that those
organizations
provide for
dealing with
suppliers
(contracts and
scorecards).
• Recognize
suppliers that
excel in programs
sponsored
by NGOs and
international
institutions.
Harvard Business Review
March–April 2020 89
90 Harvard Business ReviewMarch–April 2020
performance of their lower-tier suppliers. The surveys seem
to be having the desired effect: They’ve prompted first-tier
suppliers to engage in internal discussions about whether
they should and could alter their procurement practices (to
adopt industrywide sustainability standards, for example).
And on two occasions, firms have made changes to comply
with MNC requirements (such as using key performance
indicators to monitor supplier sustainability).
Additionally, the three MNCs work with their major sup-
pliers to map the connections and interdependencies in their
supply networks, including those at the lower-tier level. This
allows them to identify potentially risky lower-tier suppliers
and to work with the major suppliers to deploy customized
risk-mitigation programs where needed.
Indirect approach. The MNCs we studied delegate
elements of lower-tier-supplier sustainability management
to their first-tier suppliers. This approach is effective because
the MNCs are hands-on: They offer training to suppliers and
provide some incentives for implementing sustainability
practices. Most of the first-tier suppliers we interviewed
told us that such training had led them to make substantial
changes in their manufacturing processes and to begin asking
their suppliers to adopt similar sustainability standards.
The three MNCs have also created preferred-supplier pro-
grams aimed at fostering peer learning about sustainability.
One corporation, for instance, invites its most socially and
environmentally responsible suppliers to join an exclusive
group that enables them to strengthen relationships with
the MNC and exchange best sustainability practices with one
another. Several of these suppliers have started to set their
own sustainability requirements for the suppliers they use.
To further encourage first-tier suppliers to cascade
the MNCs’ sustainability requirements into their own
supply networks, MNCs can use supplier sustainability
awards, long-term contracts, and preferred status.
Collective approach. Our MNCs collaborate with their
competitors and major suppliers to develop and disseminate
industrywide sustainability standards. They recognize that
a single MNC cannot be expected to fight alone against the
problematic labor or environmental practices of global sup-
pliers. Doing so would be not only prohibitively expensive
but also unfair, because in most sectors, the major corpora-
tions use many of the same suppliers.
OPERATIONS
Harvard Business Review
March–April 2020 91
The MNCs we studied are all founding members of
industry associations focused on developing sustainability
standards, providing assessment tools, and offering training
to first- and lower-tier suppliers. One notable association is
the Responsible Business Alliance (RBA), whose members
include Intel, HP, IBM, Dell, Philips, and Apple.
Collaborative initiatives have many benefits. They can
increase efficiencies for suppliers, who can use a standard-
ized self-assessment or audit to satisfy many customers and
thus avoid duplication. These initiatives can also draw in
more suppliers, because suppliers that have many customers
with the same sustainability requirements tend to be more
willing to participate. And collaboration can make sus-
tainability initiatives more feasible, because industrywide
training is subsidized by members.
Additionally, when MNCs help their first-tier suppliers
become full members of an industry association, those
suppliers must then comply with industry standards, which
means they have to assess their own suppliers’ sustainability.
The RBA, for example, requires its full members to conduct
approved audits annually for at least 25% of their own high-
risk facilities and 25% of their high-risk suppliers’ facilities.
(Risk here is assessed along labor, health and safety, environ-
mental, and ethical dimensions.)
Industry associations have a unique power over both first-
and lower-tier suppliers, as most of their members are major
players in their sectors. Consider the electronics maker Flex,
a full member of the RBA and a first-tier supplier for many
MNCs. A second-tier electronics supplier is unlikely to refuse
a request from Flex for a compliance audit, because it knows
that Flex itself has passed this audit and that most other top-
tier electronics suppliers, to stay competitive, will probably
start issuing similar audit requests.
Global approach. The MNCs we studied make a point of
collaborating with international organizations and NGOs that
share their goals. For instance, all three corporations have
joined the United Nations Global Compact, an international
effort to promote corporate social responsibility. The three
MNCs also participate in the Carbon Disclosure Project’s
(CDP’s) Supply Chain Program, a global data-collection plat-
form in which suppliers disclose information about their car-
bon emissions. Firms such as Microsoft, Johnson & Johnson,
and Walmart use this platform to engage their suppliers in
being transparent about their environmental impact. Several
participating suppliers told us that as a result, they are now
collecting previously unsolicited information and making
investments to try to reduce their carbon footprints.
The progress is encouraging: According to the CDP’s 2019
supply chain report, 35% of the program members engaged
with their suppliers on climate change in 2018, up from 23%
the year before. Additionally, the report noted, “as suppliers
become more mature in their understanding of sustainabil-
ity issues and advance their approaches for taking action,
there is evidence that they too are improving in their efforts
to cascade positive change downwards through their own
supply chains.” This is occurring not only because MNCs
have asked their suppliers to disclose their carbon emissions
but also because that information influences how the MNCs
contract with suppliers. One of the corporations we studied
has created an award to recognize the suppliers that have
improved the most in terms of CDP Supply Chain Program
performance. Another MNC includes the program’s ratings in
its supplier scorecard and monitors those ratings annually.
ROOM FOR IMPROVEMENT
The MNCs in our study have successfully addressed some of
the problematic sustainability practices of their suppliers. But
as we’ve already noted, there’s plenty of room for improve-
ment in what they’re doing. In our research, we identified a
few critical shortcomings in their operations when it comes to
developing sustainability beyond first-tier suppliers.
First, the MNCs’ engineering and procurement units often
preapprove lower-tier suppliers, but their vetting criteria
don’t include social and environmental considerations. In
other words, engineering and procurement address only the
first of the proverbial three Ps of sustainability (profit), focus-
ing on such issues as cost, quality, delivery, and technology,
while overlooking the second and third Ps (people and the
planet). Not surprisingly, that can lead to situations in which
preapproved lower-tier suppliers violate the sustainability
requirements of the MNCs they work with. The first-tier
suppliers are then in a tough spot. Like it or not, they have
to work with preapproved suppliers—but they are held
accountable if those companies mistreat workers or harm
the environment. As one exasperated manager said while
OPERATIONS
All the procurement employees we interviewed said they needed more
training to properly pursue supplier sustainability on behalf of their firms.
92 Harvard Business ReviewMarch–April 2020
describing this conundrum, “I am just using the supplier you
asked me to use!”
Such predicaments are not uncommon. Different func-
tional units of an MNC (engineering, procurement, sustain-
ability) may pursue different agendas in interacting with
first- and lower-tier suppliers—with results that do systemic
damage to the corporation’s overall sustainability effort and
undermine its credibility. To avoid this, MNCs should set
convergent sustainability goals and align the incentives for
all functions that interact with first- and lower-tier suppliers.
A second problem is lack of sustainability training and
incentives for procurement officers. All of the 52 procure-
ment employees we interviewed (at MNCs and at suppliers)
said they needed more training to properly pursue supplier
sustainability on behalf of their firms. Arguably, they need
more incentives as well: Companies must reward them for
hitting all three Ps—that is, not just cost, quality, and delivery
goals but also social and environmental ones. Our research
suggests that isn’t yet happening in a meaningful way. For
the procurement professionals we interviewed, cost savings
were unquestionably the top priority, followed by quality
improvement and on-time delivery. Social and environ-
mental concerns were notably absent. We should add that
although companies at every level of the supply network
need to provide more training and incentives for their
procurement officers, supplier firms are likely to do so only if
MNCs lead the way.
A third shortcoming we observed is that although our
three MNCs devote considerable effort to developing their
first-tier suppliers’ sustainability capabilities, they have little
direct contact with their first-tier suppliers’ procurement per-
sonnel. As a result, those people are poorly informed about
the MNCs’ sustainability requirements and cannot commu-
nicate them clearly to their own suppliers, much less enforce
them. To alleviate that problem, MNCs could invite suppliers’
procurement personnel to their sustainability training
sessions (along with environmental, health, and safety per-
sonnel) and encourage them to participate in industrywide
sustainability training. Alternatively, MNCs could engage
the top executives at their first-tier suppliers and explain the
importance of building a sustainable supply network, with
the goal of motivating them to catalyze the dissemination of
sustainability requirements to lower-tier suppliers.
MAN Y MU LTI NATIONA L COR P OR AT IONS sincerely want to
embed fair labor practices and environmental responsibility
throughout their supply networks. A good way to start is by
adopting the sustainability strategies used by the three MNCs
in our study. But all corporations can and should do more.
They should send their suppliers a more consistent message
that economic, social, and environmental requirements are
all important. They should make the same message clear to
their procurement officials and create incentives for them to
pursue not only economic goals but also environmental and
social goals. Those officials should take a hands-on approach
to collecting data about suppliers’ capacity, monitoring indi-
cators of their sustainability performance, and engaging with
them in continuous improvement projects. The MNCs should
also work directly with their suppliers’ procurement units
on the best ways to disseminate sustainability requirements
throughout their supply networks. The danger of not acting
is clear: A supply chain is only as strong as its weakest link.
HBR Reprint R2002F
VERÓNICA H. VILLENA is an assistant professor of supply
chain management at the Smeal College of Business at Penn
State University. DENNIS A. GIOIA is the Robert and Judith Auritt
Klein Professor of Management at the Smeal College of Business.
We focused our study
on three “exemplary”
multinational corporations
that met five selection
criteria: (1) They were
included in the Dow Jones
Sustainability Index. (2)
They were members of the
Carbon Disclosure Project
(CDP) and the United
Nations Global Compact.
(3) They had been involved
in industrywide supply-
chain sustainability
efforts. (4) They were
certified as having a large
percentage of plants
with effective quality-
management systems
(ISO 9001), environmental
management systems
(ISO 14001), and safety-
management systems
(OHSAS 18001). (5) They
were members of the
Billion Dollar Roundtable
(firms spending at least
$1 billion with minority-
and women-owned
suppliers).
We also interviewed
representatives of
industry associations
(including the Responsible
Business Alliance and
the Automotive Industry
Action Group) and NGOs
(including the CDP and
the Centre for Reflection
and Action on Labour
Rights) to gain a more
comprehensive view
of how each of these
stakeholders helps
MNCs disseminate their
sustainability agendas
throughout their supply
networks.
For more information
about the research,
see “The Missing Link?
The Strategic Role of
Procurement in Building
Sustainable Supply
Networks,” by Verónica H.
Villena, Production and
Operations Management
(May 2019), and “On the
Riskiness of Lower-Tier
Suppliers: Managing
Sustainability in Supply
Networks,” by Verónica
H. Villena and Dennis
A. Gioia, Journal of
Operations Management
(November 2018).
About the Research
Harvard Business Review
March–April 2020 93
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Article
Bringing the Dark Side of International Business into the Classroom Bringing the Dark Side of International Business into the Classroom
Donna K. Cooke 1 , Frank DuBois 2 , Rajeev J. Sawant 1 , David E. Sprott 3 , Len J. Treviño 1
1 Florida Atlantic University, USA, 2 American University, USA, 3 University of Wyoming, USA
Keywords: ib education, case studies, human trafficking, “conflict” cobalt, heineken in africa, dark side activities, globalization
https://doi.org/10.46697/001c.13441
AIB Insights
Vol. 20, Issue 1, 2020
We contend that positioning dark side activities (DSA) as a more central component of IB
coursework is important for students to understand the legitimacy and performance
consequences of such phenomena. We draw on six types of DSA: environmental
degradation; questionable marketing practices; accounting or financial fraud; corruption;
labor abuses; and cultural imperialism. We suggest that IB educators expose students to
concrete examples illustrating when MNEs may drift to the dark side and provide three
short case studies. We provide informational resources and discussion prompts for human
trafficking and outline a United Nations framework to structure in-class discussion of
DSA.
INTRODUCTION
A typical international business (IB) course is multi-disci-
plinary in nature, covering various topics, including inter-
national strategy, international trade, foreign direct invest-
ment, foreign exchange and global capital markets, glob-
al and regional cooperation and international human re-
sources. Although the “dark side” of IB has been covered
in textbooks and cases for decades, we argue that a more
structured effort to educate students on both the benefits
and drawbacks of IB is warranted. We contend that such
dark side activities (DSA) should be positioned as a more
central component of IB coursework so students can under-
stand the legitimacy and performance consequences of such
phenomena. Digitalization of commercial activity, coupled
with the rapid pace of globalization, have accelerated this
effect, with increased awareness of DSA and their negative
effects on various stakeholders. Indeed, some may argue
that the dark side of IB and its manifestations is a major
reason why globalization itself is under attack. Therefore,
our objective is to provide faculty with examples of teaching
materials and a framework that can be applied in the class-
room to expose students to the dark side of IB.
In order to allow IB educators to identify and categorize
dark side activities, we turn to Batra (2007), who identified
six types of DSA with which MNEs may be directly or indi-
rectly involved and that are immoral, unethical, or cause ir-
reversible harm to communities and the planet. They are:
(1) environmental degradation, (2) questionable marketing
practices, (3) accounting or financial fraud, (4) corruption,
(5) labor abuses, and (6) cultural imperialism. Victims of
dark-side behavior by MNEs range from upstream providers
(e.g., cocoa farmers, cattle ranchers) to downstream con-
sumers who may unknowingly purchase products that were
made with child or slave labor or that were produced under
inhumane working conditions.
We argue that it is incumbent on IB educators to expose
IB students to concrete examples that illustrate when in-
ternational business drifts to the dark side and that enable
students to come face-to-face with such issues in a learning
environment. In the following sections, we provide three
short case studies and discussion prompts as examples that
can be used to illuminate cultural differences, corruption,
varying ethical norms, CSR and sustainability within DSA.
Next, we provide a series of informational resources (see
Table 1) and discussion prompts for one of the most horrific
sides of international business – namely human trafficking.
These are only three of many examples of MNE malfeasance
that seem to occur with increasing frequency. We conclude
by outlining a potential framework from the UN that can be
used to structure in-class discussion of DSA.
CASE 1: HEINEKEN IN AFRICA
A recent book by Dutch investigative reporter Olivier van
Beemen1 provides extensive documentation of the brewer
Heineken’s activities in Africa (van Beemen, 2019).
Heineken has been in Africa for over 100 years and has more
than 40 breweries in 16 countries from which it exports to
most of the other countries on the continent. Despite the
underdeveloped status of most of the markets there, in re-
cent years Africa has witnessed rising affluence and greater
stability and is perceived by international brewers to be a
fertile new frontier in the battle for new markets.
Speaking about general attitudes toward beer in Africa, a
Burundian interviewee commented, “We worship beer. Beer
is part of each important moment in life and every ritu-
al.” Heineken hoped to become a dominant player by gain-
ing market share from its main rivals Guinness and AB In-
bev. In Nigeria, which accounted for close to half of its
revenue in Africa, its subsidiary, Nigerian Breweries, pro-
duced three popular brands: Star, Goldberg, and Gulder.
Van Beemen interviewed the former managing director of
Nigerian Breweries, Festus Odimegwu, who recounted the
efforts that were made to invigorate sales of one of its
struggling brands, Legend Extra Stout. The Legend brand
was in an intense battle with Guinness over the sale of its
The information for this case is based on the book by van Beemen (2019). 1
Cooke, D. K., DuBois, F., Sawant, R. J., Sprott, D. E., & Treviño, L. J. 2020. Bringing the
Dark Side of International Business into the Classroom. AIB InsightsAIB Insights, 20(1).
https://doi.org/10.46697/001c.13441.
https://doi.org/10.46697/001c.13441
dark beer. In fact, Nigeria is the second largest market for
Guinness Stout after the UK. Hoping to unseat Guinness
from its leadership position, Heineken developed a mar-
keting strategy that leveraged the pervasive myth in Africa
and other regions that regular consumption of dark beers
would enhance sexual performance. As part of this strategy,
Heineken identified 500 bars or “hot spots” where they be-
lieved they had the greatest likelihood of finding new cus-
tomers. Frustrated that traditional promotional strategies
were not working, Heineken developed a more personal and
direct approach by developing a training program for female
brand ambassadors who would frequent these “hot spots”
to promote the brand. As it turned out, many of the “ambas-
sadors” were also engaged in prostitution and, as such, were
quite “persuasive” in selling the Legend brand to customers.
Heineken’s brand manager in Nigeria estimated that there
were as many as 2500 “Heineken Girls” involved in the pro-
motion and that the campaign had resulted in a fourfold in-
crease in sales.
Under criticism that the practice was exploitative of
young and vulnerable women and that it facilitated the
spread of sexually transmitted diseases, Heineken was ini-
tially unrepentant. Later, as word of the practice came to
light, and organizations such as the Gates Foundation sus-
pended cooperation with Heineken and a Dutch Bank re-
moved them from its sustainable investment fund,
Heineken bowed to international pressure and took steps to
put into place rules restricting the behavior of promotion
girls and the spread of this practice to other countries. In
2018, at Heineken’s annual shareholder meeting,
Heineken’s President, Jean-Francois Van Boxmeer, even
apologized for an affair that he had had with a promotion
girl in Zaire when he was country manager there in the
mid-1990s. The following prompts might be used to frame a
discussion of the case.
CASE 2: CLEAN ENERGY?
Cobalt is a metal that is used in the manufacture of lithium-
ion batteries for electric vehicles, laptops, and other de-
vices. The Democratic Republic of the Congo (DRC) is the
world’s largest exporter of cobalt (Atlas of Economic Com-
plexity., 2014), with more than 60% of global production.
The DRC is beset with corruption, poverty, and human
rights abuses, including child labor and forced labor and un-
safe and unhealthy working conditions. In the cobalt min-
ing industry, children under the age of 14 sort the ore with
their bare hands and wash the rocks at watering holes. The
practice is rampant at small or artisanal mines, where free-
lance workers, or creusers, perform much of the work. There
children are exposed to cobalt dust, which can cause serious
lung and skin diseases. Poverty-stricken families rely on in-
come from children. In a Fortune magazine article (Walt
& Meyer, 2018), journalists told the story of 15-year-old
Lukasa, who walked two hours to work each way in order
to labor for 8 hours six days a week for under $9 on a good
day. With the next largest exporter of cobalt being China
(VINACHEM, 2016), which has its own issues with human
rights, it is difficult for companies to avoid buying “conflict”
or “blood” cobalt.
Due in part to increased media coverage, there is mount-
ing pressure on companies to address the problems within
the cobalt supply chain. Thus far, the responses are diver-
gent. For example, within the automobile industry, manu-
facturers such as Tesla, Ford Motor Company, and Volkswa-
gen Group all use cobalt in their electric vehicles. The av-
erage electric car battery contains about 20 pounds of the
metal. Elon Musk of Tesla announced via a tweet in 2019
that the next generation of car batteries will not use any
cobalt. Yet, the Powerwall and Powerpack Tesla batteries for
use in homes and industry utilize even more cobalt than
the car batteries. It is unclear if the tweet applies to these
products as well. Meanwhile, Ford plans to use blockchain
technology to ensure that its cobalt is ethically sourced.
The outline of the plan includes third-party on-site audits
of mining practices measured against industry standards,
such as those from the Organization for Economic Coopera-
tion and Development (www.oecd.org). An audit trail based
on blockchain is supposed to help the company validate its
sourcing. Volkswagen Group’s approach is to buy directly
from the mines to shorten the supply chain and facilitate
verification. It has also partnered with the Global Battery
Alliance of the World Economic Forum to spur action on
responding to social, environmental, sustainable, and in-
novation concerns in the battery market. Other automobile
manufacturer partners are Audi, Mitsubishi, and the Volvo
Group.
In 2019, these are nascent plans. The global lithium-ion
battery market is projected to be $100 billion in 2025. The
feasibility of developing high quality, scalable rechargeable
batteries without cobalt is uncertain. Another unknown is
whether blockchain verification will even prevent unverified
sources from entering the supply chain. If the actions are
successful, what happens to the other children like Lukasa,
and their families who are so dependent on the income from
cobalt?
CASE 3: HUMAN TRAFFICKING
A particularly horrific and egregious DSA is human traf-
ficking. Human trafficking, or nonconsensual exploitation
of vulnerable people, if ignored, can easily creep into MNE
supply chains. We provide resources in Table 1 that instruc-
tors can use to structure assignments for students related
to trafficking. Building on these resources, faculty and stu-
dents would ideally address questions such as:
1. Heineken is probably one of the most well-known and
successful Dutch multinationals. In thinking about
this case, what is your assessment of the ramifications
to Heineken stakeholders, (both internal and exter-
nal)?
2. Van Beemen’s book documents other cases in which
Heineken engaged in unethical business practices in
Africa. Do you think a case can be made for some sort
of multilateral oversight of the business practices of
MNEs?
3. The Netherlands is well-known for tolerance of sex
workers and has often been the target of international
criticism. Do you think that this may have played a
role in Heineken executives turning a blind eye to
marketing practices that would have been illegal in
most countries?
1. Why should the lithium-ion manufacturers care
about human rights abuses by their cobalt suppliers in
the DRC?
2. For a manufacturer intent on starting to source cobalt
from the DRC, what recommendations do you have for
addressing human rights concerns? Be specific about
actions that should be taken by the manufacturer.
3. How would a manufacturer know if its actions are
having any beneficial effect on human rights?
1. Why might firms be tempted to look away from the
Bringing the Dark Side of International Business into the Classroom
AIB Insights 2
http://www.oecd.org/
Table 1: Human trafficking and labor rights information Table 1: Human trafficking and labor rights information
TOPIC RESOURCE REMARKS
Human Trafficking,
Modern Day Slavery,
and Economic
Exploitation
http://documents.worldbank.org/curated/en/
208471468174880847/pdf/
498020NWP0SP0d10Box341969B01PUBLIC1.pdf
A discussion on definitions, prevalence,
relevance for development, and roles for the
world bank in the fight against human
trafficking.
UNODC report on
human trafficking
exposes modern form
of slavery
https://www.unodc.org/unodc/en/human-
trafficking/global-report-on-trafficking-in-
persons.html
Provides some key statistics on human
trafficking
Tackling modern
slavery in global
supply chains
http://oecdinsights.org/2016/03/11/tackling-
modern-slavery-in-global-supply-chains/
Discussion of modern slavery in firms and
what has been done to tackle the issue
Global Slavery Index
https://www.globalslaveryindex.org/2018/data/
maps/#prevalence
Provides data for three dimensions:
prevalence, vulnerability, and government
responses
Threats against labor
rights
https://www.ituc-csi.org/IMG/pdf/ituc-global-
rights-index-2018-en-final-2.pdf
Ratings of countries by the International Trade
Union Confederation with respect to workers’
rights in a Global Rights Index
Monitor labor rights
issues
https://laborrights.org/
Learn about campaigns to secure workers’
rights in particular in agribusiness and the
garment industry
Sustainable business
practices
https://www.unglobalcompact.org/
Broad range of reports on human rights,
environmental, health and safety, and anti-
corruption issues
Understanding
Supply Chain Issues
https://www.business-humanrights.org/en/
knowthechain-benchmarking-2016
Engaged in initiatives to advance human rights
and ethical behavior in global sourcing
Human Trafficking Resources
A FRAMEWORK AND CONCLUSION
In recent years globalization has come under assault, as
critics have assailed human rights violations, environmen-
tal crimes and financial shenanigans that MNEs and their
affiliates have pursued. While numerous examples of DSA
exist, we provide three sets of course materials that can be
adopted for classroom use. Use of these examples can be en-
hanced when applied in an appropriately framed setting.
While a variety of approaches can be used to teach these
cases in IB courses, one framework we recommend is the
UN’s Protect, Respect, and Remedy Framework (Murphy &
Vives, 2013). This is particularly useful for framing discus-
sions of MNEs and human rights abuses (as with the three
cases provided in this article). The framework maintains
that all human beings have a right to equal treatment.
While the government bears responsibility to protect hu-
man rights, it is business’ responsibility to respect human
rights (especially in those cases when abuses are ignored
by the government) in order to legitimate its right to con-
duct business. In addition, MNEs must perform due dili-
gence, avoid being complicit in human rights abuses, and
avoid activities that could be perceived as influencing gov-
ernment officials. The remedies for abuses are judicial and
non-judicial and take the form of compensation, restitu-
tion, cease and desist, strengthening of the law, and public
apologies (Murphy & Vives, 2013). In addition to the dis-
cussion prompts already provided, the instructor could ask
students to consider the extent to which an MNE respected
human rights by these standards. Did it do due diligence?
Was it directly or indirectly complicit with human rights
abuses? Did it seek to influence or undermine the sover-
eignty of the government? This framework can also be read-
ily supplemented with a video that includes various human
rights abuses to illustrate the consequences of DSA, such
as the experiences of children working in deplorable condi-
tions.
In summary, the objective of our essay is to highlight
how IB pedagogy can be enhanced by recognizing the re-
alities of the “dark side” of IB and the ramifications that
these activities have on the perceptions of MNEs. It is criti-
cal to expose our students not only to the negative impacts
of DSAs but also to possible solutions to counteract them.
Thus, our aim is to illuminate the value of bringing severe
ethical breaches to the foreground so that business students
have greater awareness and can choose ethical alternatives
aimed at addressing their impacts. We contend that a bal-
anced approach to these issues (e.g., when framed with the
UN framework) will help prepare students to identify and
develop solutions to these problems during their careers.
The unfortunate truth is that the three examples we provid-
ed only scratch the surface of the myriad issues one could
potential role of human trafficking in their supply
chains?
2. If you were a manager in a firm with potential human
trafficking issues, how would you conduct an investi-
gation?
3. How should management respond to repair the rep-
utational damage and negative publicity caused by a
firm’s human trafficking issues?
4. What role do stakeholders (e.g., government, suppli-
ers, consumers, trade associations, compliance audi-
tors, etc.) play in human trafficking beyond the MNEs
themselves?
Bringing the Dark Side of International Business into the Classroom
AIB Insights 3
cover. There are many other examples of DSAs and other
pedagogical approaches that can be used to introduce this
material. For example, in addition to case studies, facul-
ty can develop negotiation exercises, cross-cultural simu-
lations, and project assignments. No matter the approach
taken, it is incumbent on faculty to be sensitive to and to
anticipate and prepare for a range of possible student reac-
tions. Many of our students are natives of countries where
dark-side behaviors are more common and, as such, they
may take issue with comments by faculty or other students
that may be perceived as a projection of cultural and moral
superiority. Student activists may also be pushing univer-
sity administrations to divest endowment resources from
companies known to have engaged in DSA (e.g., the recent
protests by climate change activists that took place during
halftime at a Yale and Harvard football game). As always,
faculty need walk a fine line in discussions about ethical
behavior on the part of the multinational enterprises (and
universities!).
ABOUT THE AUTHORS
Donna K. CookeDonna K. Cooke ([email protected]) is Associate Professor in
the department of Management Programs at Florida At-
lantic University. She received her Ph.D. from the University
of Miami. Her research focuses on issues related to organi-
zational commitment, engagement, and quality of work life.
Frank DuBoisFrank DuBois ([email protected]) is Associate Pro-
fessor of Information Technology and Analytics at Amer-
ican University. He received his Ph.D. from the University
of South Carolina. His research focuses on lean production,
HR practices and state capitalism and he produces the year-
ly Kogod Made in America Auto Index.
Rajeev J. SawantRajeev J. Sawant ([email protected]) is Assistant Profes-
sor of International Business at Florida Atlantic University.
He received his Ph.D. from the Fletcher School at Tufts Uni-
versity. His research focuses on firm internationalization,
corporate political activity and emerging market firms.
David E. SprottDavid E. Sprott ([email protected]) is Dean and Profes-
sor of Marketing in the College of Business at the Univer-
sity of Wyoming. He received his Ph.D. in marketing from
the University of South Carolina. His research focuses on re-
tailing, branding, influence strategies and marketing public
policy.
Len J. TreviñoLen J. Treviño ([email protected]) is Director of Interna-
tional Business Programs and SBA Communications Profes-
sor of international business at Florida Atlantic University.
He received his Ph.D. in International Business from Indi-
ana University. His research focuses on the antecedents and
consequences of foreign direct investment and the interna-
tionalization strategies of multinational enterprises.
This is an open-access article distributed under the terms of the Creative Commons Attribution 4.0 International License (CC-
BY-4.0). View this license’s legal deed at http://creativecommons.org/licenses/by/4.0 and legal code at http://creativecom-
mons.org/licenses/by/4.0/legalcode for more information.
Bringing the Dark Side of International Business into the Classroom
AIB Insights 4
mailto:[email protected]
mailto:[email protected]
mailto:[email protected]
mailto:[email protected]
mailto:[email protected]
REFERENCES
Atlas of Economic Complexity.Atlas of Economic Complexity. 2014. . Boston, MA:
The Observatory of Economic Complexity. https://oe
c.world/publications/.
Batra, M. M. 2007. The dark side of international
business. Competition ForumCompetition Forum, 5(1): 306–314.
Murphy, M., & Vives, J. 2013. Perceptions of Justice
and the Human Rights Protect, Respect, and Remedy
Framework. Journal of Business EthicsJournal of Business Ethics, 116(4):
781–797.
van Beemen, O. 2019. Heineken in Africa: A Heineken in Africa: A
Multinational UnleashedMultinational Unleashed. London: Hurst & Company.
VINACHEM. 2016. 10 Top Cobalt-producing 10 Top Cobalt-producing
countriescountries. http://www.vinachem.com.vn/news/news-v
nc/10-top-cobalt-producing-countries.html.
Walt, V., & Meyer, S. 2018. Blood, sweat, and Blood, sweat, and
batteries: Inside Congo’s cobalt minesbatteries: Inside Congo’s cobalt mines. https://fortun
e.com/longform/blood-sweat-and-batteries/.
Bringing the Dark Side of International Business into the Classroom
AIB Insights 5
https://oec.world/publications/
https://oec.world/publications/
http://www.vinachem.com.vn/news/news-vnc/10-top-cobalt-producing-countries.html
http://www.vinachem.com.vn/news/news-vnc/10-top-cobalt-producing-countries.html
https://fortune.com/longform/blood-sweat-and-batteries/
https://fortune.com/longform/blood-sweat-and-batteries/
Introduction
Case 1: Heineken in Africa
Case 2: Clean Energy?
Case 3: Human Trafficking
A Framework and Conclusion
About the Authors
References
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