ethics in emerging economies implication for businesses · when surveyed for the perception of...
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Copyright © 2003 by the Center for Ethical Business Cultures®. 1
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Copyright © 2014 by the Center for Ethical Business Cultures®Celebrating over 35 years of business commitment to ethical cultures.
Ethics in Emerging EconomiesImplication for Businesses
Ron JamesPresident and CEO
Center for Ethical Business Cultures
24 October 2014
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Copyright © 2014 by the Center for Ethical Business Cultures®
About the Center for Ethical Business Cultures
Mission
To assist business leaders in creating ethical and profitable business cultures at the enterprise, community and global levels
Background
36 year old nonprofit organization
Partnership with Ethics Faculty at University of St. Thomas
Member of the Advisory Group to the US Sentencing Commission
Advises Boards and Executive Leaders on “Tone at the Top”
Building a Bridge Between Thought and Practice Leadership
Copyright © 2014 by the Center for Ethical Business Cultures®
Ethical Perception Research Articles
2006 – 2009 ‘Assessing the good company.’ Academic and Professional Journals2010 ‘Dimensions of Ethical Business Cultures: Comparing Data from 13 countries
of Europe, Asia, and the Americas.’ Human Resource Development International.
2012 ‘Minding the gap: exploring difference in perceptions of organizational ethics between executives, mid-level managers and non-managers.’ Human Resource Development International.
2012 ‘Ethical cultures in large business organizations in Brazil, Russia, India, and China.’ Journal of Business Ethics.
2013 ‘Building Ethical Business Cultures: BRIC by BRIC.’ The European Business Review.
2013 ‘Ethical Business Culture, Organizational Performance, and Employee Outcomes: Establishing a link between employee perceptions of ethical culture and performance metrics.’ Business Ethics: A European Review.
2014 “Modern Risk Management Through the Lens of the Ethical Organizational Culture.” Risk Management Journal
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Copyright © 2014 by the Center for Ethical Business Cultures®Celebrating over 35 years of business commitment to ethical cultures.
Understanding the Environmentand the Model of Ethical Business Cultures
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Misconduct at Work:• 41% observe it
• 63% will report it (2013 EBS - Ethics Resource Center)
Legislating Good Behavior:• Sarbanes – Oxley Act 2002
• Dodd – Frank Act 2010
• But you can’t legislate integrity!
Trust:• 62% trust business
• 18% trust leaders in business to tell the truth (2013 Edelman Trust Barometer)
Confidence in Leaders:• 15% have confidence
in leaders in business to do what’s right (2012 Harris Confidence Poll)
The Ethical LandscapePersistent Challenges
Source: Ethics Eesource Center 2005
Cost of Ethical Breakdowns:• Typical global organization
loses 5% of annual revenues
• 40 to 50% do not recover losses (2014 ACFE Report on Fraud and Abuse)
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Copyright © 2014 by the Center for Ethical Business Cultures®Celebrating over 35 years of business commitment to ethical cultures.
StakeholderBalance
LeadershipEffectiveness
Long-termPerspective
ProcessIntegrity
ValuesDriven
•Mission Before Profit•Long-term before Short-term•Triple Bottom Line•Board Takes the Long View•Leaders Build for Next 50 Years
•Establishes & Models Behavior•Demands Ethical Conduct•Exhibits Great Personal Integrity•Doesn’t “Shoot the Messenger”•Does What He/She Says
•Balances Interests•Consistent Approach•Balances Value & Profit•Community / Global•Respect & Fair Treatment
• Dedication to Quality•On-going Training•Aligns Performance Appraisals & Promotion•Corporate Governance•Open / Transparent•Mission is Evident
•Clarity of Values•Institutionalizes•Trust & Respect•Eliminates Misfits•Builds for Long-term
•Scope & Methods of Evaluation•Feedback•Measurement Driven Adjustments
Assessment
Copyright © 2014 by the Center for Ethical Business Cultures®Celebrating over 35 years of business commitment to ethical cultures.
The Ethical Perception Index:Linking the Model of Ethical Business Cultures
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Global Employee Perspectives on Ethics in the Workplace
CEBC Ethics Themes: Able to discuss ethical
issues/concerns
Senior management practices ethical conduct
Company serves interest of multiple stakeholders
Co-workers behavior consistent with values
Must demonstrate company values to get ahead
Ethics themes benchmarked globally through Kenexa, an IBM Company, WorkTrendsTM
Countries Surveyed:United StatesArgentinaAustraliaBrazilCanadaChinaDenmarkFinlandFranceGermanyIndiaItalyJapanMexicoNew Zealand
The NetherlandsRussiaSouth AfricaSpainSwedenSwitzerlandTurkeyUnited Kingdom IndonesiaKoreaKingdom of Saudi
ArabiaUnited Arab Emirates QatarIreland
StakeholderBalance
LeadershipEffectiveness
Long-termPerspective
ProcessIntegrity
ValuesDrivenMEBCEPI
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Themes
Linking the CEBC Model of Ethical Business Cultures with the Ethical Perception Index
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The CEBC Ethical Perception Index by Country
Ethical Insights: Working Across Cultures -Business and Ethics in China
Cambridge University Press –Ethical Business Cultures inEmerging Markets
Ethical Cultures in BRIC
13 Country AnalysisMinding the GapStrong/Weak Culture
Ethical Perception Index
TEBR
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The CEBC Ethical Perception Index by The Gap
CQ7_3‐WhereIwork,ethicalissuesandconcernscanbediscussedwithout
negativeconsequences.
CQ7_4‐Myorganization'sseniormanagementsupportsandpracticeshighstandardsofethical
conduct.
CQ7_6‐Myorganizationstrivestoservetheinterestsofmultiplestakeholders(e.g.,customers,
employees,suppliers,andcommunity),notjusttheshareholders.
CQ7_7‐ThebehaviorofthepeopleIworkwithisconsistent
withmyorganization's
mission,vision,andvalues.
CQ7_8‐ WhereIwork,peopledonot'getahead'unlesstheirbehaviorclearlydemonstratesmy
organization’svalues.
EPI
3.45
3.59 3.58
3.38
3.18
3.453.53
3.64 3.68
3.46
3.25
3.52
3.72
3.83 3.85
3.67
3.42
3.70
4.21 4.20 4.23
4.11
3.89
4.13
TheGap– MeansIndividualContributor Front‐LineSupervisor Mid‐LevelManager Executive/SeniorManager
Source: Kenexa, an IBM Company, 2012 WorkTrends™
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Minding the Gapby Countries
Source: Ardichvili, A, Jondle, D., and Kowske, K. (2012). Minding the gap: exploring differences in perceptions of ethical business cultures among executives, mid-level managers and non-managers. Human Resource Development International, 15 (3): 337-352.
Copyright © 2014 by the Center for Ethical Business Cultures®
Strong/Weak CEBC EPIby Outcomes
EPI CUSTOMERORIENTATION
INNOVATION MYFEELINGABOUTWORK
MYORGLEADERS
MYORGPERFORMANCE
QUALITYANDIMPROVEMENT
RETENTION
2.38
3.24
2.482.63
2.33
3.12
2.832.66
4.39 4.37
4.094.26 4.25 4.27 4.36
4.17
Strong/WeakCEBCEPIbyOutcomesWEAK STRONG
Source: Kenexa, an IBM Company, 2012 WorkTrends™
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Academic Publications
Ardichvili, A., Jondle, D., Kowske, B., Cornachione, E., Li. J., and Thakadipuram, T. (2012). Ethical Cultures in Large Business Organizations in Brazil, Russia, India, and China. Journal of Business Ethics, 105:415–428
European Publications
Ardichvili, A., Jondle, D., Wiley, J., Cornachione, E., Li. J., and Thakadipuram, T. (2013). Building Ethical Business Cultures: BRIC by BRIC. The European Business Review, March-April, 22-25.
Understanding Ethical Cultures in Emerging Economies: The BRIC’s
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Findings are based on 13,000 responses from employees in large organizations in high growth emerging economies, Brazil, Russia, India, and China, and the US
Significant differences among the four emerging countries with Brazil and India more favorable than Russia and China
By 2050, the combined GDP of these four high growth countries will exceed the GDP of the G7 (seven largest developed economies)
But these four high growth economies rank toward the bottom when surveyed for the perception of corruption (Transparency International Annual Corruption Perception Index)
Authors: Alexandre Ardichvili , Douglas Jondle, Brenda Kowske, Edgard Cornachione, Jessica Li, and Thomas Thakadipuram
Ethical Cultures in Large Business Organizations in Brazil, Russia, India, China, & the US
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The BRIC’s Ethical Culture in Large Organizations
BrazilPaternalism: superiors provide protection and
guidance for loyalty and deference from subordinates
jeitinho – middle path between regulation and what is practicable
Web of reciprocal obligations: Employee loyalty
Leader responsible for group well-being
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The BRIC’s Ethical Culture in Large Organizations
RussiaState dominance of business sphere and legal
institution
Personal loyalty and in-group allegiances shape business behavior
Higher reliance on personal networks vs. legal contracts
blat – ‘‘reliance for favors upon personal contacts with people in influential positions’’
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IndiaUnconditional loyalty
Places a premium on favors, friendship and clanship
Government acts as a gatekeeper, not an enabler Money and connections are how things are done
Intuitive decision making vs. normative
The BRIC’s Ethical Culture in Large Organizations
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ChinaTrustworthiness – emphasizes personal
relationships not contracts
Adherence to rules and prior arrangements not equated to trustworthiness
Informal networks of support and reciprocal exchange of favors
guanxi – role-based duties provides privileges of favoritism and personal benefits to members of in-groups
The BRIC’s Ethical Culture in Large Organizations
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Characteristics of Business Cultures in the BRICs and the US
PaternalisticParticularistic (Situational) Universalistic Collectivistic Individualistic Formal Informal
Brazil x x x x
Russia x x x x
India x x x x
China x x x x
US x x x x
Source: Ardichvili, A., Jondle, D., Kowske, B., Cornachione, E., Li. J., and Thakadipuram, T. (2012). Ethical Cultures in Large Business Organizations in Brazil, Russia, India, and China. Journal of Business Ethics, 105:415–428.
Copyright © 2014 by the Center for Ethical Business Cultures®
The CEBC Ethical Perception Index by Country
2.80
2.90
3.00
3.10
3.20
3.30
3.40
3.50
3.60
3.70
3.80
CQ7_3‐WhereIwork,ethicalissuesandconcernscanbediscussedwithout
negativeconsequences.
CQ7_4‐Myorganization'sseniormanagementsupportsandpracticeshighstandardsofethical
conduct.
CQ7_6‐Myorganizationstrivestoservetheinterestsofmultiplestakeholders(e.g.,customers,
employees,suppliers,andcommunity),notjusttheshareholders.
CQ7_7‐ThebehaviorofthepeopleIworkwithisconsistentwithmyorganization'smission,vision,and
values.
CQ7_8‐ WhereIwork,peopledonot'getahead'unlesstheirbehaviorclearlydemonstratesmy
organization’svalues.
EPI
TheCEBCEPI– UnitedStates2004 2005 2007 2008 2009 2010 2011 2012
22Source: Kenexa, an IBM Company, 2012 WorkTrends™
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The CEBC Ethical Perception Index by Country
23Source: Kenexa, an IBM Company, 2012 WorkTrends™
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The CEBC Ethical Perception Index by Country
24Source: Kenexa, an IBM Company, 2012 WorkTrends™
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Copyright © 2014 by the Center for Ethical Business Cultures®25Source: Kenexa, an IBM Company, 2012 WorkTrends™
The CEBC Ethical Perception Index by Country
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The CEBC Ethical Perception Index by Country
26Source: Kenexa, an IBM Company, 2012 WorkTrends™
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Next Up: Expanding the Research to More Emerging Economies: The MIST’s
Signed Cambridge University Press Book Contract in August, 2014
“Ethical Business Cultures in Emerging Markets:BRIC’s - Brazil, Russia, India and ChinaThe MIST’s – Mexico, Indonesia, South Africa and TurkeyContrasted with the original G7 – Canada, France, Germany,
Japan, Spain, United Kingdom, and the United States Publication in 2016 Leading Academics recruited from around the globe Engaging Business Practitioners to ensure essential
linkage between business and academic insights
Copyright © 2014 by the Center for Ethical Business Cultures®
As economic power shifts, there are implications for the ethical and cultural standards that will guide business behavior and interactions! How are we preparing to address this issue?
Questions and Discussion
Concluding Thought
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For Information on CEBC
Phone the Center: 651-962-4120
Fax the Center: 651-962-4042
Email the Center: [email protected]
Visit the Web: www.cebcglobal.org
Write the Center: 1000 LaSalle Avenue, TMH 331Minneapolis MN 55403-2005 USA
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