Bath Business and Society

Research, analysis and comment on the role of business in society from Bath's School of Management

Topic: Business and society

Business students need a new perspective not a new framework

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📥  Business and society, Education

business-men

 

Two current students on the University of Bath’s MSc in Sustainability and Management, Sanum Jain and Elliot Johnston, discuss the impact that business ethics and sustainability modules have had on their business education. They pose the question: can we talk about business ethics being as important as business economics as part of a management degree?

Management students have the opportunity to sit an array of compulsory and elective courses during their time at business school. As sustainability students, the business ethics module was a mandatory requirement for us, whilst few traditional management students saw this course as an attractive elective. However, it soon became apparent that this course would shape the way we navigate business in a way we think is important for every management student, regardless of specialism.

We became well-versed in the theories of business ethics and came to understand how sustainability needs to be considered as integral to strategy rather than a side-lined marketing tool. Furthermore, we were exposed to the factors that could affect our ethical decision making as agents within a company. Now we field questions about profit making in the face of sustainability limitations, as if we are living in a world where ethical decision making and profit making are mutually exclusive. Our peers in other classes may often label us ‘idealists’ for voicing a perspective we have gained through business ethics. We can't help but wonder if this would be the case if business ethics was compulsory across the School.

Within the first week of studying at Bath, we were introduced to a variety of frameworks upon which we were to base our understanding of business. Most notably, in business economics, we were introduced to Michael Porter’s Five Forces Framework and his Theory of Competitive Advantage. The theory of competitive advantage teaches students about low cost strategies and product differentiation strategies to maintain a focus on profit maximisation, with the end goal of achieving a larger market share. This theory provided the backbone of business strategy from which many other concepts have branched. But not for us.

Our module in business ethics introduced us to a deeper perspective, challenged us to ask more existential questions about business and to understand the ‘why and the how’ behind profit. However, this was not a prescriptive course. We weren’t provided with a specific framework to follow. We engaged in case studies that explored the actions of individuals just like us who had behaved unethically for the benefit of their employer. We delved into the problems created by globalisation, analysed the responsibilities of corporations in the modern world, and looked at the theories we might use to understand how complex ethical problems can be approached in a business environment.

We didn’t just gain a perspective through which to view the business world. Business ethics added a dynamic to the content we were introduced to in our other courses. We were encouraged to question our own values and the way we might view decision making in other realms such as marketing and operations. Furthermore, it led us to understand who we are personally, in relation to the corporations who may hire us in the future.

As sustainability students, we are not alone in our way of thinking. Indeed, Michael Porter himself is now an advocate for sustainable development created through business. In his recent TED talk, he called for commercial organisations to address social issues with alternative business models in order to create “shared value”. At the same time, he called competitive advantage seeking differentiation factors “trivial” in the face of greater challenges.

“Shared value is capitalism, but it's a higher kind of capitalism”, Porter said. “It's capitalism as it was ultimately meant to be, meeting important needs, not incrementally competing for trivial differences in product attributes and market share. Shared value is when we can create social value and economic value simultaneously.”

This isn’t a debate as to which framework should be taught in lieu of another. Michael Porter’s business theories are undoubtedly imperative to a management student’s education. However, even Porter recognises the need to change the perspective from which we learn and operate. Knowing what we know, it is the responsibility of business schools to ensure that the next generation of the workforce are equipped to tackle the ethical challenges they might face. We know from research conducted in our own School that this is starting to happen, but more could be done. Conventional management frameworks should be taught through the perspective of business ethics in order to create managers of the future who can successfully contribute to a sustainable world.

Image: businessmen by David Drexler

Are future managers learning enough about sustainability?

📥  Business and society, Education

ethics

 

While many business schools claim to be incorporating concepts of sustainability and responsibility within their teaching programmes, they are not always effective in doing so.  In an era where failing to walk the talk carries reputational risks, Annie Snelson-Powell asks what determines whether or not business schools make good on their promises to deliver responsible management education?

A question increasingly asked by society and scholars alike is whether business schools are really doing enough to prepare future managers for the social and environmental challenges facing society today.  Are they merely trumpeting empty rhetoric that seemingly supports these ideas, but delivering little in the way of change?  It is a long-held concern that business schools are failing in delivering on their responsibilities in this regard.  New challenges to business school legitimacy ensue with each corporate scandal, not least following the most recent financial crisis where critics suggested that self-serving, business school-educated managers put profits and self-interest ahead of longer-term responsibilities to their employees, stakeholders and the global economy.

Business schools have not ignored these concerns. They have in ever-increasing numbers pledged to address sustainability and social responsibility by committing to delivering responsible management education.  As illustrated by the growing list of signatories to the UN’s Principles of Responsible Management Education (PRME), hundreds of business schools publicly commit to this agenda. Management education, as envisioned by PRME, should be designed to equip future managers to do the right thing when they enter the world of business.  Alongside the traditional corporate objectives, they should be ready to navigate matters of inclusion, sustainability and social responsibility.

However alongside this evident progress come questions over the genuineness of these public claims, given the complexity the associated change implies.  Integrating sustainability and responsibility as core concepts in business schools involves reconciling an underlying tension. To engage with sustainability means thinking of corporate strategy in a way that balances financial concerns with social and environmental issues and impacts: an agenda seemingly at odds with the traditional theories taught in business schools which have historically promoted a profits-first ideology.

This setting provides the context for our research which sought to establish what happens next once commitments like PRME are made.  We tried to identify those features of business schools which are significant in determining whether these promises end up in meaningful activity, or remain the kind of window-dressing that stakeholders are increasingly suspicious of.

We focused on UK business schools and carried out interviews with 68 Deans as well as studying data on rankings and financial performance.  The analysis  revealed that while the presence of sustainability/CSR expertise within the faculty was important, business schools do not require substantial financial resources if they are to make good on their commitment to incorporate sustainability into their teaching in a meaningful way.  Since earlier work suggests that financial resources are a barrier, this is an intriguing and encouraging finding. It suggests business schools across the spectrum of financial means have the ability to meaningfully engage with sustainability through their teaching.

The study also looked at business school prestige and revealed a link between the more prestigious schools and successful implementation.  Since the link was not due to financial resources, it may instead suggest that the enhanced expectation and scrutiny bestowed on those with high prestige creates an impetus to walk the talk.  The implication of these findings provides grounds for hope, since the actions of the prestigious serve as an example to other business schools about how to behave. If prestigious business schools readily engage with sustainability, others may follow.

These findings are important for all business schools wishing to avoid the potential reputational risks associated with claims that do not tally with a fulsome engagement in practice. The insight that it is the expertise of faculty that is critical to efforts to implement sustainability, as opposed to substantial financial resources, means that all business schools are capable of mitigating these risks. This could be by considering how they prioritise specialist sustainability/CSR skills in their recruitment strategies or by developing more of this expertise in-house amongst existing faculty.

An Economist article featuring this research argued that the view of business school graduates as Gordon Gekkos is outdated.  Certainly our findings support a more optimistic view of business schools, which are in many instances making progress in walking the talk on their sustainability commitments and approaching the agenda in a genuine way.  Despite these initial advances, few schools are all the way there: sustainability and responsibility in management education is a continuing challenge, and much work remains to be done.  However our research should serve as encouragement that by seeking to introduce sustainability into the skill-base of business school faculty, schools will be moving in the right direction and playing their part in the solution rather than the problem.

The findings of the study will also be presented at a University of Bath School of Management conference later this month organised to celebrate the 50th anniversary of the University of Bath: ‘The contribution of business schools to inclusive development in Africa and Europe’.

Image by Nic Delves-Broughton

 

Getting women onto the board – why some countries fare better than others

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📥  Business and society, Gender equality, Policy

Office Politics is simply how power gets worked out on a practical, day-to-day basis. 

Office politics "is the use of one's individual or assigned power within an employing organization for the purpose of obtaining advantages beyond one's legitimate authority. Those advantages may include access to tangible assets, or intangible benefits such as status or pseudo-authority that influences the behavior of others. Both individuals and groups may engage in Office Politics." 

Office politics differs from office gossip in that people participating in office politics do so with the objective of gaining advantage, whereas gossip can be a purely social activity. However, both activities are highly related to each other.

Office politics also refers to the way co-workers act among each other. It can be either positive or negative although for most of us 'abnormals' it's negative!

View On Black

 

The world over, there are more men than women in corporate boardrooms. This means that business is missing out on the talent and skills of a hugely important group that could make business more competitive. Here, Dr Johanne Grosvold and Dr Bruce Rayton discuss research which shows how four key institutions - family, education, economy, and government - either facilitate or hinder women’s rise to the boardroom.

Following the collapse of Lehman Brothers in 2008, Christine Lagarde of the World Bank questioned whether the bank would have collapsed had it been the Lehman Sisters, rather than the Lehman Brothers. She suggested that insufficient gender diversity in the upper echelons of financial institutions was partly to blame for the financial crisis and corporate collapses.

The continued under-representation of women in corporate boardrooms across the world remains a thorn in the side of big business and politicians alike. Increasingly though, governments and businesses are beginning to consider what can be done to redress the balance. Some countries such as France and Sweden are leading the way with up to 41% of women on the board, while others such as Greece and Malta lag behind with rates of only around 5-10%.

Given such cross-national variation, we set out to understand why it persists and to identify what could be done better to make gender diversity in the boardroom a reality. Taking a sample of 23 countries, including most of Western Europe, the USA, Asia and Latin America, we analysed the role of education, family, religion, economy and the role of the government in influencing board diversity. Our results were both surprising and encouraging.

Out of the five institutions we analysed, four were statistically significant in helping to explain why women do or don’t make it to the boardroom. Family, education, economy and the government all played a role while religion was the only factor that had no apparent effect.

Education - in countries where women and men enjoy similar levels of enrolment in higher education, women are better represented in the boardroom.

Family - in countries where there are fewer incidents of divorce, there are fewer women on the board. In other words, we found that an unintended outcome of higher rates of the divorce over the last few years has been greater labour force engagement and executive ambitions amongst women.

Economy - where women make up a smaller proportion of the managerial labour force, there are fewer women on the board.

Government - in countries where governments back their welfare legislation and family friendly policies with money and, for example, subsidise childcare, women are better represented in the boardroom. Passing legislation and instigating initiatives designed to encourage women to balance family and working life only give the desired results if there is adequate funding to make these initiatives meaningful and effective.

We believe these results may be good news for business and women alike. Increasingly more women than men are pursuing higher education, which means they are giving themselves the best starting point for climbing the corporate ladder. It is important, though, that governments consider the potential effects of their broader policies on women and families, to ensure that these help rather than hinder women to capitalise on the benefits of higher education.

In many countries, women retain the role of primary carer. Governments are, however, increasingly attuned to the need for providing better funded welfare provisions such as subsidised childcare to ensure that women are able to contribute fully to society and economy. This suggests that going forward, business is likely to reap the rewards of even more and better talent. To maximise these benefits, business could play a more active role in complementing government action, for example by including subsidised childcare in remuneration packages in countries where such provisions are not routinely provided by the state.

Welfare provisions of this kind have typically been associated with liberal or social democracies. But the growing acknowledgement of the business case for supporting women's career progression means that governments and employers in all countries should do more to encourage gender balance in the boardroom.

Is this the beginning of the end for Fairtrade?

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📥  Business and society, Supply chains

iain-daviesAfter decades of fast growth, a reversal in the fortunes of Fairtrade is apparent. This is particularly so for the Alternative Trading Organisations (ATOs) that spearheaded the movement, but which have become its first casualties. Dr Iain Davies asks what the future holds for Fairtrade.  

I remember cold, wet February mornings standing outside supermarkets and handing out free cups of coffee in an attempt to get the supermarket to stock Fairtrade products from ATOs. I remember walking into classrooms to eager faces waiting to hear how we can change the world through trade. It is now 20 years since those first Fairtrade Fortnights, and this week it is rolling around again with the brash claim that “the Fairtrade movement is made up of ordinary people doing extraordinary things in their communities”. The energy and vigour of this early social movement has however noticeably waned in recent years. This year, it is not just the British weather which is casting a dark shadow over proceedings. The question is being asked – is Fairtrade finished?

Fairtrade’s growth for much of those 20 years was meteoric. The Fairtrade mark not only became almost universally recognised, but inadvertently paved the way for the sustainability certifications that proliferate across fast moving consumables today. The UK led the way in the mass-marketization of Fairtrade, and still represents over 25% of all Fairtrade sales globally. But the future outlook has taken a noticeable turn for the worse.

Fairtrade-dave-crosby

Fairtrade by Dave Crosby

Fairtrade sales in the UK fell for the first time in 2015/16 by 5%. There is one growth area: bananas, a market dominated by one global supplier, Fyffes. Banana sales volumes are equivalent to that of cane sugar, coffee, cocoa, tea and cotton combined - all of which have seen volumes stagnate since 2011. Banana producers also benefit far more from Fairtrade membership, while smallholder-dominated categories like coffee and tea need to rely on other certification marks like Organic or Utz Certified to improve income.

Figure 1

Figure 1: Fairtrade benefits to producers (data from Fairtrade.net 2015 Monitoring and Impact report)

In the shops, growth has been in supermarket own-label products, often produced with reduced standards and limited producer support and development. The casualties are the pioneering ATOs, such as Traidcraft, Cafédirect, Divine and Liberation, who operate to much higher levels of producer support and development, but due to price competition and reduced shelf space, have seen like-for-like sales slump in the last five years. There have also been notable failures as new Fairtrade product categories such as gold, rice and quinoa have struggled to gain traction.

To further compound the issue, one of the biggest Fairtrade brands, Cadbury, has announced its intention to withdraw from the independent certification system in 2017, following others such as Starbucks into predominantly self-verified ethical certification. McDonald's and John Lewis Café have jumped to simpler verification systems such as Rainforest Alliance. 2017 certainly does not look rosy for Fairtrade.

There is also the issue of the consumer. Still largely unable to differentiate Fairtrade from other certification systems, our research suggests that frequent Fairtrade consumption is motivated by habit, self-gratification and peer influence, not a deep affinity with Fairtrade or its producers. These consumers are unlikely to switch brands purely because of a change in certification system.

So is the end of Fairtrade nigh? The idealistic social movement I joined, which believed it could subvert the market system, died some years ago. The Fairtrade which works within the existing market system to highlight issues of social injustice, however, and provides a framework for alternative trading, has nudged many commodity companies to confront their supply chain ethics. Indeed for people of this persuasion it could be argued the job is done. The more advisory role negotiated with Cadbury could offer a future to the certification bodies as they attempt to stay relevant to a corporatized, self-accredited system of supply chain governance.

But there remains a nagging feeling in my mind that the absorption of Fairtrade ideals into mainstream rhetoric has come at a cost. Not only has there been a reduction in the number of Fairtrade standards; one voice which may be noticeably absent this Fairtrade Fortnight is that of the pioneer ATOs that spearheaded this social movement. Increasingly delisted from supermarket shelves and priced out of the market by cheaper alternatives, they are struggling to break even whilst maintaining beyond Fairtrade commitments to producers. Ultimately, with an apathetic consumer and so many rhetorically similar marketing messages, it is these farmer owned, co-operative, or social enterprise pioneers that are likely to be the first casualty of Fairtrade’s demise.

 

We need a new voice in the debate about business and society

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📥  Business and society

veronica-hope-hailey1  andrew-crane

Veronica Hope Hailey, Dean of the School of Management, and Andrew Crane, Director of the Centre for Business, Organisations and Society

In our increasingly polarised times, there is fervent debate over whether business is a force for good or bad in our societies. We believe it is high time that university researchers took a more active role in this debate, providing much needed evidence to inform popular opinion. To do so, we need to speak in a new voice.

“It was the best of times, it was the worst of times.” So starts Dickens' novel A Tale of Two Cities, a book which describes in stark comparison the cities of Paris and London at the time of the French Revolution. Today, we too live in divided times. We are divided politically, geographically, culturally, into the skilled and unskilled, the 99% and the 1%. Is your daily working life about Sports Direct or Goldman Sachs? About desperate migration or upward economic mobility? About zero hours contracts or business class flights?

Capitalism is over - you want it

Capitalism is over - you want it, photo by Anne Roth

Your answer to these questions will also undoubtedly inform your opinion about whether globalisation is a good thing or not and about whether business is largely to blame for many of the ills of the world. It will also colour your views on whether “sustainable business” is simply a hopelessly optimistic oxymoron or a genuinely realistic prospect in the coming decades. But these are not just matters of opinion. Behind the answers to these questions lie important empirical facts that can meaningfully shape the path we take.

What is clear, however, is that in times of uncertainty, trust becomes more important. But in the aftermath of the global financial crisis and never-ending corporate and political scandals, public confidence has been profoundly destabilised. The result has been a breakdown in trust in government, business, and so-called experts more generally - and a seeming turn to a “post-truth” society where “objective facts are less influential in shaping public opinion than appeals to emotion and personal belief”.

Irrespective of whether you believe we are really heading down a post-truth path, the message for those of us who might claim some degree of expert knowledge in the debate about business and society is clear. We cannot simply expect to be a trusted source of knowledge. And, to inform opinion, we need to do things differently from how we have in the past.

Most of us in the academic world are in our comfort zone when doing our research and speaking about it to our fellow scholars. A lot of our research is impenetrable to even an informed layperson. Even when it is not, our publications are usually locked behind the paywalls of academic publishers.

Too rarely do we actively bring our knowledge out to the world in a way that truly engages with non-academic audiences. And when we do, the results are sometimes catastrophic. As one recent article put it, “business schools play a significant role in reproducing the values, skills and mindset of much of what is wrong with contemporary capitalism, such as opportunism, greed, a focus on shareholder maximisation, and economic short-termism.”

Things are beginning to change. Our research suggests that the movement to embed sustainability in business school teaching and research is making progress. The Conversation is leading the way in bringing journalistic style to academic research. But in terms of accessible research specifically on business and society, we still have a long way to go. There remains a clear need for a trustworthy source of credible research to inform decisions about how business can best contribute to a sustainable society.

With the launch of the Bath Business and Society blog, we want to bring a new voice to this debate. In fact, we believe that the Bath School of Management is uniquely positioned to bring not just one new voice but a whole range of new voices. Our aim is to inform the conversation in a variety of ways through a variety of lenses. A focus on business and society is a core value of our school and nearly one third of our faculty do remarkable, world-class research addressing this theme.  Our students too, inspired and informed by our research, are impassioned, future leaders, looking to make a difference in the world.

Over the coming months, then, our faculty and students will be drawing on their unique vantage points to bring fresh insight and new knowledge to the debate about business and society. Whether it is climate change, fair trade, inequality, modern slavery, boardroom diversity, food waste, or employee wellbeing, they will have something novel, interesting, and informed to say.  And if they say it in enough different ways, maybe at least something will stick with our post-truth audience out there. Time will tell.