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Leader to Leader:
Stakeholders and Shareholders
One of the main obstacles to creating visionary companies is the business
culture – largely but not completely shaped by the financial markets – that
declares that the maximisation of shareholder value is the over-riding
business objective. Adopting this as a business priority, runs the
argument, will allow the leaders of a company a reliable compass to make
business judgements – and deliver the result their owners want.
The problem,
though, is that this doctrine completely neglects the reality that
businesses are organisations first and last. And organisations are peopled
by human beings who need to be motivated, lead and trusted. The paradox is
that successful capitalist organisations that are built to last understand
that if they want to prosper the last thing they should be is
uncompromisingly capitalist in the sense that everything has to be
consecrated to promoting the bottom line. They need to have an
organisational purpose – a reason-to-be – that will underpin the
organisation’s systems and structures and give it the social glue that holds
its people together. This does not solve questions about what product,
market and margin is going to make the company achieve maximum
profitability, but it is the precondition. Get the organisational motivation
right and you have a good chance of making it; neglect this at your peril
Will Hutton, The Work Foundation,
Let us, once and for all, deflate the myth that shareholder and employee
interests are somehow mutually exclusive. Using a business model rooted in
sustainable development -- with its triple bottom line of economic
prosperity, environmental stewardship and corporate social responsibility --
we now have a framework that validates the intuitive notion that employees’
“intellectual capital” is as essential to an enterprise’s success as
shareholders’ invested capital … Dow’s People Strategy is far more than a
standard Human Resources plan … The People Strategy is founded on two
underlying assumptions. First, the health and safety of Dow people and
surrounding communities is paramount. And, second, that every action we take
and behavior we encourage must support our Values – chief among them
integrity and respect for people … As a result of the People Strategy,
virtually every aspect of how Dow affects the employee’s work experience is
being re-examined and, where, necessary enhanced. This includes our ability
to attract and retain an outstanding workforce, provide continuous learning,
encourage performance excellence, achieve diversity, promote inclusion and
develop leaders … We already have a world-class cache of Human Resource
initiatives. One very important example:
Dow’s web-based training system. In 2001 alone, more than 385,000
courses were completed by Dow employees. Michael Parker,
President and Chief Executive, Dow Chemicals Corp.
“What must be
clear to every ruler is that the period of stability is now threatened by
popular forces of uncertain magnitude, unknown direction and unclear vision
… Whatever shape they eventually take, theirs will be an unofficial culture
of the dispossessed, the silenced and the scorned.”
Edward Said
Trade unions
have a vital role in promoting CSR. We provide a voice for working people,
and work to promote high employment standards and positive employment
relationships in the workplace. Through trade unions, companies can inform
and consult their staff, engage them in workplace and wider strategic
decisions, promote equal opportunities and so on. 'CSR branded' companies
that do not promote positive employment relationships may find themselves
questioned as to why they do not. John Monks, General Secretary,
Trade Union Congress |
New Academy
Review: Volume 1 Number 2
Summer 2002
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Entrepreneurs are outsiders
by nature – outsiders with a work ethic.
Anita Roddick
A company is no more and no less than its people.
John Monks
Every action we take and behavior we encourage must support our
Values.
Michael D.Parker
Capitalism at its best, forcing corporate elephants to behave as
entrepreneurial fleas.
Richard Scase
Poaching is probably the most important and widespread form of
wildlife utiliization throughout much of Africa.
Edwin Muchapondwa
Shareholders are but one of the key constituencies in an organisation,
rather than the emperors of all they survey.
Will Hutton
The possibility of losing or attracting customers is, after all, the
most potent incentive for business action.
Jeremy Moon
The Enron saga is reinforcing what many see as an urgent need to
strengthen obsolescent disclosure standards.
Allen L.White
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Contents
A View from the Chair – Anita Roddick
Corporate Social Responsibility and Trade Unions - John Monks
Notes from the Edge - Tom Cannon
Leader to Leader -Shareholders and Stakeholders
Will Hutton
Michael Parker
Perspectives on Enron
So much for the American Dream? - Richard Scase
Preventing Future Enrons – Allen White-
Confronting the Critics Revisited: The Governance of Corporate Social
Responsibility- Jeremy Moon
Refereed Papers
Research Insights into Corporate Social Responsibility (Part 1.)
- Ken Peattie
Corporate governance disclosure: demonstrating corporate social
responsibility through social reporting.- Anona Armstrong & Mary
Sweeney
Unfair Trade? The Increasing Gap between
World and Domestic Prices in Commodity Markets over the Past 25 Years
- Jacques Morisset
Triple
Bottom Line Reporting: The Importance of Reputation and Trust -
Colin Higgins
Climate Change and Sustainable Energy - Elliot Diringer
Community Participation in Wildlife Management as a Strategy for
Rural Poverty Reduction: The Case of CAMPFIRE in Zimbabwe - Edwin
Muchaponwa
Regular Features
University of Cambridge Programme for Industry - Global
Anti-Capitalism: Ideals, Aspirations and Political Reality - Marc
Stears
Respect Europe - Respectability for change - Kaj Embren
Case Studies
Diageo -Global brands, local citizens - Geoffrey Bush
Stepping towards green state with corporate partnership: initiatives
in Tamil Nadu - Sumana Datta
Research Notes
The changing role of business in society – new perspectives from
leaders in business, government and the not-for-profit sector - Adam
Faruk
Codes of Conduct: Panacea or Bunk? Cornelius von Baeyer
Book Reviews
What’s On
About the Author
Notes for Writers
Technical Information
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Dame Anita
Roddick
As the founder of The Body Shop, I often get
asked to talk about entrepreneurship -- even by hallowed institutions
like Harvard and Stanford. It makes me smile that the Ivy League is so
keen to 'learn' how to be an entrepreneur, because I'm not at all
convinced it is a subject you can teach. How do you teach obsession,
because more often than not it's obsession that drives an entrepreneur's
vision? How do you learn to be an outsider, if you are not one already?
Why would you march to a different drumbeat if you are instinctively
part of the crowd? I never set out to be an entrepreneur, I'd never
heard of the word and I was not interested in its definition. But
since those early days I have had plenty of experience of the ups and
downs of entrepreneurship and I've met many other entrepreneurs I have
liked and admired, so I feel I can discuss the subject with a little
authority. The vision of something new and a belief in it that's so
strong that it becomes a reality. Vision-making is also obsessive, a
type of psychopathology. If you see something new, your vision usually
isn't shared by others.
... Most of the entrepreneurs I've met have had an innate desire for
social change. They understand that business isn't just financial
science, where profit is the sole arbitrator, it is just as much about
taking part in political and social activism, using products as conduits
for social change. That gives entrepreneurs enormous freedom to
experiment with what they want, but it also makes them dysfunctional in
hierarchies and inert structures.
Of course it's easy to talk about creativity, but in essence it remains
a mystery to me. I have never heard or read anything that explains how
people behave creatively, despite the fact that we constantly glory in
human creativity. Einstein said: 'Imagination is more important than
knowledge. 'Dali claimed: 'You have to systematically create confusion,
it sets creativity free. 'Maybe creativity is magic, maybe it is
bestowed by the gods, maybe it is just polished opportunism. I just
don't know and I'll probably go to my grave not knowing. The ability to
mix all these together effectively...
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Unfair Trade: The Increasing Gap Between World
And Domestic Prices In Commodity Markets Over The Past 25 Years
Abstract
This paper looks at the spreads between international and domestic
commodity prices and then explains why these spreads have increased over
time. The main finding is that the spreads between world and domestic
wholesale prices as well as between domestic wholesale and consumer
prices have increased dramatically because of the asymmetric response of
domestic consumer prices to movements in world prices. In all major
consumer markets, decreases in world commodity prices have been
systematically much less transmitted to domestic consumer prices than
have increases. This asymmetry does not seem to be explained, at least
systematically, by changes in trade and tax policies across consumer
markets or in one individual market over time. Similarly, factors such
as transport, processing and marketing costs as well as changes in
standard quality do not appear to have played a major role in the
increasing spreads over time. A special effort should be made,
therefore, to understand better the determinants of world, wholesale,
consumer prices, and their relationships in commodity markets. The
increasing spreads have certainly cost several billion of dollars every
year to producing and exporting countries of commodities by restraining
the expansion of the final demand for these products over the past 25
years. Jacques Morisset, Foreign Investment Advisory Service of
the World Bank |
Corporate
governance disclosure: demonstrating corporate social responsibility
through social reporting.
Abstract
This paper discusses some of the critical issues and corporate
governance choices for members of boards concerned with decisions about
their organisation’s corporate social responsibilities (CSR). The paper
defines corporate governance, corporate social responsibility, and
discusses some ethical and pragmatic reasons why Triple-Bottom-Line (TBL)
reporting of CSR is of benefit to corporations. It argues that various
antecedent conditions (values, legal requirements, perceived benefits of
CSR, and the ability to measure and report CSR practices) drive socially
responsible behaviour, and that the practice of CSR is demonstrated by
TBL reporting. Responsible reporting is transparent and communicates
with relevant stakeholders. It will only happen if board members, their
accountants and relevant stakeholders are convinced that reporting is
possible, credible and worthwhile. The paper reports the opinions of a
survey of investment directors on this issue. Anona Armstrong
Victoria University and Mary Sweeney University of Melbourne
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Research Insights into Corporate Social Responsibility
(Part 1.)
Abstract.
The aim of this two-part review is to encourage some of the wisdom
relating to CSR produced by academics in recent years, to escape out
into the wider world. The review is inevitably selective rather than
comprehensive. Trying to cover a field that effectively encompasses the
whole of business, the societies in which business operates, and the
planet that they all exist upon, is fundamentally something of a
“Mission Impossible”. The fabric of CSR is woven from a very diverse set
of threads, and this review was only able to pick up a selection that
seemed to be of potential interest to the readership of NAR. Apologies
are offered to anyone whose research work has been neglected or whose
findings have been over-simplified. This article represents the first
half of the review, and it concentrates on general CSR issues; on its
relevance to specific management functions; and on the challenge of
integrating CSR initiatives across a company. The second part, to be
published in the next edition of NAR, looks at CSR from the perspective
of law, accountancy, accountability and socially responsible investment.
Professor Ken Peattie, University of
Cardiff |
Community Participation In Wildlife Management As A
Strategy For Rural Poverty Reduction: The Case Of ‘Campfire’ In Zimbabwe
Abstract.
Zimbabwe faces an increasing incidence of poverty, especially in the
rural areas, with about 76% of the population living below the poverty
line. The poorest areas are wildlife-abundant rural districts and the
sustainable use of the wildlife and other natural resources by the rural
poor could greatly reduce their poverty. CAMPFIRE is a framework to
conserve wildlife and fight poverty by giving rural communities, through
their rural districts councils, the authority to manage and use local
resources, particularly wildlife, to derive economic benefits. Elinor
Ostrom carried out an investigation of the institutions that
characterise some of the world's long-enduring communally owned
resources and concluded that there is a set of design principles that
they share. Our starting point in search for reform that should be made
in CAMPFIRE is an investigation of the extent to which Ostrom's design
principles are satisfied. With such reform CAMPFIRE could be a
break-through in long-term rural poverty reduction in Zimbabwe.
Edwin Muchapondwa, University
of Zimbabwe
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Joint
Forest Management in India – case study
The forest management in India experienced a pivotal change in 1990
when the Ministry of Environment and Forests, Government of India issued
policy guidelines for the joint forest management (JFM) to combat
deforestation and degradation in the country. The JFM is a system of
governance that devolves the responsibility of forest protection and
management on ecosystem people in partnership with the state forest
department for regeneration, efficient use and sustainable conservation.
People are organized into village forest committees (VFCs) at the
village(s) level with executive committee (EC) elected by the VFC
members. The EC takes the role of the regulator in monitoring the access
to forests and also in regulating utilization of
usufructs such as grasses, NTFPs, and a portion of the proceeds from the
sale of trees when they mature. The genesis of the concept can be
traced in the 1970s in the success of Arabari experiment in West Bengal
and Sukhomajri endeavour in Haryana. However, JFM got real momentum in the ensuing years since 1990. Currently, 27 Indian states have adopted
JFM and over 63,000 FPCs are managing around 14 million hectare of
forestlands (MOEF 2002). Ms Sumana Datta, Tate Energy
Research Institute (TERI), New Delhi, India |
PREVENTING FUTURE ENRONS
The precipitous collapse of Enron from glamour stock on Wall St. to
penny stock bankruptcy, raises a plethora of questions about accounting,
auditing, and regulation of America's publicly listed companies. What is
clear, even at this early stage, is that corporate disclosure, the
bedrock of efficient and effective capital markets, needs some
fundamental rethinking. Allen L. White, Director of the
Global Reporting Initiative
and Vice President of Tellus Institute
in Boston, USA |
So much for
the American Dream?
US-inspired management models are no longer seen to be the panacea for
economic growth and efficiency. The personal and social costs are now
being recognised to a far greater extent than only a couple of years
ago. The bursting of the dot com dream has revealed other shortcomings
of the American model. Richard Scase, University of Kent |
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