Accountability, Communication, Concepts, CSR, Ethics, Featured, Governance, Issues, Models, News, Technology

Trumpism: On the road to state capture?

By Hans Krause Hansen

The inauguration of Donald Trump as President of the U.S. has caused widespread concern. On the long list of worries is Trump’s approach to corruption. With his business empire including hundreds of legal entities across the world, conflicts of interests will pile up.

Corruption is about office holders’ misuse of public office for private or organizational gain, and it has a wide reach. Grand corruption involves the collusion of networks of economic and political elites across national borders. Powerful corporate actors make business deals with political and administrative leaders at various levels, if not directly, then through intermediaries. While always difficult to document due to the secrecy of the deals, we only need to recall the Oil-For-Food and Siemens scandals to confirm that such things indeed take place on a massive scale.

Historically the U.S has suffered from various forms of grand corruption, like any other country. But U.S. governments have also come to play an important role in attempts to curb it. The country pioneered the prohibition of corporate bribery of foreign public officials, and many countries have followed suit. U.S engagement in anti-corruption, and anti-corruption itself, has been subject to controversies. But there is growing acknowledgement across the world of the damaging effects of corruption on economic affairs and trust in political and administrative institutions. Human rights, security and the environment are all affected negatively by corruption.

What are the policies to expect from Trump and his new administration on these matters? Of course we don’t know yet, but there are certainly issues to keep an eye on in time to come.

Conflicts of Interest

During the electoral campaign and as president–elect, Trump waged a war against corruption. Framed in the now well-known Trumpian elite vs. people metaphoric, its primary target was the Washington establishment.

But there are good reasons why Trump better begin to clean up his own house. Just before inauguration Trump explained his plan for how to separate his business empire from the work to be undertaken from the Oval Office. His decision not to create a blind trust for his assets, as well as the appointment of his closest relatives to run the Trump Organization instead of an independent board have been met with widespread suspicion Even from those who speculate it’s unfair that entrepreneurs involved in public life can ultimately be required to liquidate their business have lamented the absence of arms length.

So too has the general lack of transparency in Trump’s tax returns. Two days after his inauguration, WikiLeaks tweeted that “Trump’s breach of promise over the release of his tax returns is even more gratuitous than Clinton concealing her Goldman Sachs transcripts.” The organization has called for someone to blow the whistle.

Walter M. Shaub, Director of the U.S. Office of Government Ethics has stated that Trump’s plan for avoiding conflicts of interest “does not comport with the tradition of our Presidents over the past 40 years.” Since the Watergate scandal, maintaining business while in office has been seen as ethically irresponsible and against the law. Moreover, it sets a very bad example: “The signal a President sends set the tone for ethics across the executive branch. Tone from the top matters.”

Following his statements, Shaub was called to testify before lawmakers in the House of Representatives, a step seen by many as a threat to his office.

The Emoluments Clause

With his family running the business empire, the President will of course be able to interfere directly in it. But he can also come under unduly influence of foreign powers, some of whom may already be enmeshed in it.

But the U.S. Constitution, as well as federal statutes that address nepotism, bribery and so on, forbid office holders to accept presents and other services from foreign powers. Legal scholars have discussed why and how in a recent study of the so-called Emoluments Clause of the U.S. Constitution. While many transactions between the Trump empire and foreign powers will probably not involve “actual impropriety”, it is “a virtual certainty that many would create the risk of divided or blurred loyalties that the Clause was enacted to prohibit.” In a situation “when there is overwhelming evidence that a foreign power has indeed meddled in our political system, adherence to the strict prohibition on foreign government presents and emoluments ‘of any kind whatever’ is even more important for our national security and independence.”

State capture

So the fear is not only that Trump’s business liabilities may affect how he deals with the banks to whom he owes hundreds of millions of dollars in debts, but also how he will approach foreign countries that become business partners or seek special favors. Worst case, Trump’s presidency may lapse into state capture, a term referring to the systemic corruption of business and politics relations. Individuals, organizations and interest groups, domestic or foreign, can come to have disproportionate influence over policies and regulations emanating from the Oval Office and the administration.

Tools for state capture include the buying of laws and decrees, illicit or disproportionate contributions to political parties and groups, manipulation with electoral processes, illegitimate lobbying and revolving door commitments, and not least, through friendship, family ties and intertwined ownership of economic assets. State capture has many facets. It is often related to the illicit financial flows characterizing particular industrial sectors with profound economic and political power asymmetries. Some sectors are high risk, such as the extractive industries.

State capture and its associated processes of favoritism, bribery and blackmailing will need much more attention in the future. Especially the recent mobilization of digital technologies, hacktivism and cyber wars in the election of Trump draw attention to the increasing sophistication of the tools being used. The unknowns of Trump’s business ties to geopolitical adversaries and allies across the globe, together with the skillful use of digital technologies to manipulate global publics, will hopefully prompt investigative journalists and researchers to scrutinize what is going on and what to do.

Adiós FCPA?

A final set of speculations focuses on Trump’s stance towards the U.S. Foreign Corrupt Practices Act (FCPA), a legal cornerstone in the history of international anti-corruption. The FCPA was signed into law in 1977 after the Watergate scandal. It has extraterritorial reach and prohibits U.S. corporations from bribing officials of foreign governments in order to obtain business. The FCPA has inspired legal initiatives elsewhere, including the recent U.K. Bribery Act and important international anti-corruption conventions under the auspices of the OECD and UN, amongst others. Anti-corruption efforts by the World Bank and the International Monetary Fund all echo various aspects of the pioneering FCPA, all of which tie into the much broader work of the world’s leading civil society organization on anti-corruption, Transparency International.

Since 2004, U.S Authorities have scaled up FCPA enforcement, targeting U.S companies and foreign companies. The FCPA is one of the key reference points for the increasing development and implementation of corporate compliance programs in multinational companies worldwide.

But will this continue? In 2012 Trump stated that the FCPA is “horrible law and it should be changed”, and also that it puts U.S. companies at a “huge disadvantage.” That fits with Trump’s preferences for U.S companies winning and his disdain for moral niceties.

However, let’s all take a deep breath when it comes to FCPA enforcement in the Trump Administration, as writes the FCPA Professor, a website that deals extensively with legal issues relating to corruption, anti-corruption and other interesting matters. The fate of the FCPA will depend on the more precise composition of the agencies responsible for the FCPA, bureaucratic inertia and a lot of other priorities. The FCPA Professor further notes there are probably “too many people making lots of money based on the current FCPA enforcement environment for FCPA enforcement to experience a sudden dramatic change.” Anti-corruption has become an industry, a profession, with lawyers, accountants, compliance officers and CSR consultancies making a living by providing expertise. No wonder that corruption has come to be seen as a risk to be managed, even by corporations themselves.

In conclusion, there are many reasons to be worried about what comes next from Trump in matters relating to corruption and anti-corruption. We are indeed in a phase of massive uncertainty and confusion, with unpredictability reigning, also in this area. Notable exceptions in the business of prophecy certainly do come around now and then, but not always for the good.

Hans Krause Hansen is Professor at the Department of Management, Society and Communication, Copenhagen Business School. He teaches and researches about various aspects of public and private governance, including corruption, anti-corruption and transparency regimes in the global North and South.

Pic by Chris Potter, Flickr

Accountability, Concepts, Featured, Models, News, Stakeholders

Redistributing resource rights in a resource-dependent economy: The case of the Faroese fisheries reform

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By Árni Jóhan Petersen

The distribution of rights to natural resources is a complex and challenging task to solve because of the many stakeholders involved. At present, the Faroe Islands are in the process of reforming its fishing system, which undoubtedly will have a significant impact in a country where 95 percent of exports are fish products.

The case of the Faroe Islands can give us insights into how changes in the local economy unfold. The reform will not only change the local fishing industry but also the political landscape and the Faroese population.

Other countries in the region (e.g. Iceland, Greenland, Norway and Scotland) are observing the developments, as they could influence the constellations of their rights to natural resources. The topic is also of great relevance to academics and practitioners because of the economic, political and social challenges and opportunities that necessarily follow from such reforms.

Background

Since 1994 fishing rights in the Faroe Islands have generally been distributed on the basis of past performance (“grandfathering”). Licenses have typically be running for 10 years, but the 10-year period was typically deferred by one year, each year, whereby the licenses tended to become permanent. This led to capitalization, with licensed vessels changing hands for a price far exceeding the commercial value of the vessel.

In order to halt these developments the Faroese Parliament in 2007 decided to stop the annual renewal of the 10-year licenses, so that all existing licenses will expire by 1 January 2018. Thus far, less than a year before the expiry of the existing licenses, a new model has yet to be decided upon. However, the politicians in charge of the reform are now working hard in order to have a new system in place by 1 January 2018.

The Faroese government has required that a new reform should be market-based, and that recommendations for a reform should be developed within the political framework. Historical entitlement, or grandfathering, has been excluded as a possibility, and instruments like “beauty contests” are not to be considered in a new system. There are different opinions as to which solution is the most suitable – some of these will presented below.

I, however, will argue that a solution such as “beauty contests” might be a feasible strategy and that such as strategy could benefit society beyond future expectations – both economically and socially.

Historical entitlement to a market-based allocation of rights to fish the quotas

A commission appointed by the Minister of Fisheries, Høgni Hoydal, has argued that the political incentives of the reform are to maximize profits, increase public economic gains, and ensure that future fishing is environmentally sustainable. In doing so, the objective is to move away from the current grandfathering system to a more market-based system.

In October 2016, the same commission finished a report in which it recommends that a transition period (of, for example, 10 years) is introduced, meaning that rights will be recalled continuously over this period of time and subsequently distributed on market terms.

The commission’s report demonstrates a potential solution where fishing rights are to be divided into short term (1-year), medium-long term (5 years), and long term (10 years) licenses with a transition period of 10 years (2018-2027). 23 percent of the allotted quantity will be auctioned every year. The rationale behind this approach is based on the assumption that current companies in the fishing industry should have the opportunity to adapt to the changes caused by the new scheme while making sure that the industry will not be impaired in the meantime. With this model, the grandfather mechanism is partially preserved throughout the transition period.

Market-based: all rights recalled by 1 January 2018

Assistant Professor and Economists at the University of the Faroe Islands, Jóannes Jacobsen, who has been an active contributor to the debate on fishing reforms, prefers an alternative solution. He argues that all rights should be recalled by 1 January 2018, as already decided by Faroese legislators, and subsequently be distributed on market terms as short-term, small quotas.

The idea is to abolish the current system and establish a public auction where fishing rights are sold in as small as possible “packages” (e.g. every “package” equals one trip for one vessel). With such a system, all Faroese citizens will have the right to bid in on the auction for these fishing rights. This approach is based on three convictions:

1) It is democratically the best solution because every Faroese citizen has the opportunity to bid in, which is in contrast to the current system where political authorities distribute fishing rights to companies with authorized vessels.

2) It is the best solution in terms of economic gains, as both theory and praxis demonstrate that competition for production resources leads to improved commercial results.

3) It is a fairer solution because all Faroese fishing rights are “property of the Faroese people” (according to Faroese legislation), and that the Faroese people has the right of the market value of these rights. This is in stark contrast to the current system where rights are distributed to a few selected ship owners who have a “permit” to fish.

The ship owners and grandfathering

Needless to say, the companies currently involved in the industry would prefer to continue with the grandfathering scheme because it – according to the industry – facilitates long-term investments and innovation within the fishing industry. But, are there any alternative solutions that would encapsulate a broader preservation of all stakeholders’ interests? Or does it have to be one of the above-mentioned solutions?

Alternative solution (or supplementing elements)

Some solutions have not been assessed by the commission because of clear political incentives and requests for the framework to only consider purely market-based solutions. These market-based approaches are primarily concerned with optimizing and maximizing the economic benefits (e.g. highest bidder wins the rights), while other parameters are left out of the equation.

One supplementing solution could be to implement elements from a “beauty contest” (e.g. as used to regulate the Faroese oil industry) where companies bidding on fishing rights are obligated to abide by certain preconditions set prior to the auction.

Beauty contests in the Faroese fishing industry could be stakeholders bidding on other societal benefits. The licenses for oil explorations in the Faroe Islands were not auctioned, but administratively assessed by the competitors’ exploration scheme (e.g. commitment to safety, environment, shoot seismic and drill exploration wells), and their incentives to improve development progress of the Faroese industry in general (e.g. allocating resources for education, innovation and research etc.).

One of the more relevant considerations is the equitability of the system, where a small number of shipowners reap considerable benefits from a commonly owned resource. This might be remedied by introducing royalties on the catch, or by levying a special resource rent tax on their extraordinary profits.

Consequently, beauty contests in the fishing industry would bind the right-holder to generate some societal benefit that otherwise would not have been achieved in other systems (e.g. market-based). However, such a system would necessarily lead to less transparency than a market-based system, because here, industrial policy clashes with the market where the political objectives are not always clear and accountable.

If this should be an alternative solution, I would argue that that this would take time to develop and implement in the Faroese fishing industry because such preconditions are not used today. Hence, this approach will require a discussion in which companies and authorities will have to identify relevant and suitable parameters to include as preconditions (for a similar argument in a different context see also the recent BOS blog entry by Haack & Schoeneborn).

What are your thoughts? Any recommendations? Which solutions do you prefer? Do you have an alternative solution that should be considered?

 

Quick facts about the Faroe Islands

  • Approximately 50,000 inhabitants
  • 18 islands
  • Located in the in the North Atlantic Ocean
  • 1,399 square kilometers
  • 274,000 square kilometers of sea area
  • Self-governed part of the Danish Kingdom
  • Language: Faroese
  • Exports of approximately 6.5 billion DKK
  • 95% of exports is fish
  • 20% of export is pelagic fish
  • Five fishing companies have the rights of pelagic fishing
  • GDP is approximately 15 billion DKK

Five different distribution systems

  • First come, first served
  • Lottery
  • Historical entitlement (or grandfathering)
  • Beauty contests (in which other parameters are supplemented the bidding offer)
  • Market-based

Árni Petersen is PhD-Fellow at the Department of Management, Society and Communication at Copenhagen Business School. His PhD project sets out to explore the relationship between responsible business and governance in the Faroese Oil Industry by reflecting on the ways in which involved businesses act as governance takers and governance makers.

Pic by DavideGorla, Flickr

Communication, Featured, Issues, Models, News, Social, Technology

Digital Superpowers and the ‘Reality Business’

By Mikkel Flyverbom.

At certain points in their careers, university professors start to say strange things. I remember vividly how one of my professors at The New School for Social Research started one of his lectures by reflecting on the issue of ‘social taboos, guilt and shame’. I still cringe at the uncomfortable silence in the room when he told us very frankly that his sexual fantasies were what he found to be the most difficult to deal with and talk about.

Our reaction, obviously, was a perfect illustration of the point he was trying to make, although it hardly registered with any of us at the time. But professors may also start to produce very complex sentences or come up with sentences that have a disturbing life of their own, such as that ‘only communication can communicate’ or that a good researcher should be like an ant – ‘a blind, myopic, workaholic, trail-sniffing, collective traveler’.

Without being as explicit or profound, I find myself in conversations with colleagues, where the issue on the table is similarly odd. Our discussions about digital transformations and big data increasingly focus on ‘reality’. So what does this mean?

The point is that internet companies and digital platforms, like Google and Facebook, do not just allow for sharing and connecting, test established regulatory approaches, unsettle a wide range of traditional industries, and lead to new forms of working and organizing. The central role they play when it comes to accessing, organizing and distributing information means that they fundamentally shape how we view the world. Or as Shoshana Zuboff from Harvard Business School puts it in her forthcoming book, these companies are increasingly in ‘the reality business’.

The power of visibilities

Along with more prominent colleagues such as Manuel Castells, Evgeny Morozov, Kenneth Cukier and others, the Spanish newspaper La Vanguardia has invited me to reflect on what they call the ‘Silicon Valley Empire and the New World Order’ for a special issue.

The result is a large magazine full of discussions about the workings and significance of these digital superpowers. My piece, titled Digital geopolitics: Information control and the power of visibilities, focuses on these questions about ‘reality’ – how information is controlled, how we come to know the world, how it is guided, and how things are made visible and invisible in digital spaces. Silicon Valley companies are obviously economic giants.

But they are also behemoths of a different kind: They are powerful because they have access to mind-blowing amounts of data about everything we do, care about and search for. What we used to think of as digitalization currently advances into ‘datafication’, where many parts of social life take the shape of digital traces.

Friendships become ‘likes’ on Facebook, movements through the city produce extensive digital footprints in GPS-enabled devices, and our searches for information show what we value or wish for as individuals and societies. Combined with automated sorting mechanisms, such as algorithms and artificial intelligence, these wild streams of digital traces can be used to show important patterns and inform a growing number of decisions about consumers, diseases or criminal activities. Down the road, much of what we can know about people, organizations and societies will come from such digital sources. As digital platforms move closer and closer to the core of social and cultural life, the questions we should be asking are about information control, the guidance of attention and the power of visibilities.

The point is that there is an intimate relationship between what you see, what you know and what you can control – as an individual, an organization or a society. Just think of how important the invention of the microscope was for the treatment of diseases that were not visible, knowable or controllable before, or how the emergence of maps made it possible to see, know and conquer new parts of the world.

Like earlier inventions, digital transformations fundamentally alter how we make things visible, knowable and possible to control. Because internet companies have the skills and resources to work with digital traces and algorithms, they come to shape our view of the world and guide our attention in individual, organizational and societal domains.

Compared to the internet giants’ size, financial advantages and number of users, these questions about information control and the power of visibilities are largely ignored. But they are central if we want to articulate the shape of contemporary digital transformations.

Reality, not cyberspace

Concerns about the power and significance of internet companies are particularly important to bring up at this moment in time. While some still talk about digital technologies as ‘cyberspace’, as if it is an independent and separate domain that we enter and leave again, their present role is very different.

It hardly makes sense to distinguish between online and offline worlds or the real or the virtual anymore, because digital platforms are the infrastructures and foundations of so many parts of social, economic and cultural life. But still, these digital infrastructures are in the making. Before they solidify and become taken completely for granted, there are a number of difficult questions about power, responsibility and rights that we need to grapple with.

These are difficult to ask, not to speak of answer, because they cut across economic, regulatory, social, cultural and personal spaces, and we seem to need new vocabularies to make sense of what they will mean for us as individuals, organizations and societies. And here, ‘reality’ comes in handy.

The issue of La Vanguardia can be found here. Contact Mikkel if you want to find out more.

Mikkel is Associate Professor at the Department of Intercultural Communication and Management at Copenhagen Business School. He is co-leading the Transparency subgroup of the department’s World Class Research Environment (WCRE) ‘Governing Responsible Business’ (GRB). He is on Twitter.

Pic by Isaiah van Hunen, Flickr.

Concepts, CSR, Development, Featured, Investment, Issues, Models, News, Partnerships, Sustainability

Crowdfunding for Sustainability: Creating a platform for sustainable ideas

By Kristian Roed Nielsen.

Crowdfunding as phenomenon is strange as it fundamentally boils down to strangers supporting strangers for causes, products or services that have not yet been realized and of which they have little direct oversight or control. Despite this oddity, crowdfunding is growing rapidly.  Just between 2013 – 2014, approx. €2.3 billion were raised, enabling a vast number of enterprises to grow and ideas to become reality. As engaged scholars, the question thus becomes: how to utilize this phenomenon as a means to drive sustainable ideas and projects?

Early testbeds for sustainable crowdfunding

The examples of EcoCrowd, GreenCrowd, and Kiva all point to the potential of crowdfunding in driving both environmental, but also social development and innovation. The case of the German crowdfunding platform EcoCrowd is especially interesting as it illustrates how public finances can be used to create platforms dedicated to tackling environmental challenges by co-supporting their development.

The added benefit of these types of platforms is that they, if successful, become self-sustaining resource centers for further sustainable ideas and ventures. More precise, these platform allow citizens to engage directly in driving sustainable change by supporting, for example, community projects. One example of this includes the The Peckham Coal Line urban park that sought to convert the old raised Peckham coal line in London into a raised urban park via an online campaign on the civic crowdfunding website SpaceHive.

The Peckham Coal Line further illustrates how policymakers can draw-upon the strengths of crowdfunding by co-financing community projects if they hit a certain level of financing. The Peckham Coal Line ultimately successfully raising £75,757a of which government funds represented £10,000 in backing. In this way, community projects could be driven via the entrepreneurial ideas of members of the community.

Future platforms

The future of these platforms of course very much depends on many factors, such as the quality of the campaigns hosted. Prior successful campaigns show that people are indeed willing to engage and raise significant amounts of money. But this requires that people see value in the campaigns hosted. If to many campaigns fail or there simply aren’t enough to inspiring further action, then the platforms will slowly decline.

Therefore, I propose that a collaboration between sustainability-oriented organizations – like Sustainia – represent a great opportunity to find these inspiring campaigns. Sustainia with their Sustainia Awards have a huge database of sustainable ideas and projects just waiting to be supported and scaled. One could even imagine a “Peoples Choice” award where individual vote with their valets for the solution, technology or project they found most inspiring and worthwhile. Sustainia could thus create a platform rich with innovative ideas and projects and “the crowd” can offer the support needed to truly bring these ideas to life.

Kristian is PhD-Fellow studying the potential of crowdfunding in driving sustainable innovation. He is home to the Department of Intercultural Communication and Management at Copenhagen Business School. Follow him on Twitter.

Original Pic by Tommy L, Flickr, changes made by BOS

Citizenship, Communication, Concepts, Development, Featured, Issues, Models, News, Social, Sustainability

Don’t Blame 2016. Be 2017.

By Lara Hale.

I do not need to inform you about the major events of 2016: Devastation in Syria, Brexit, President-Elect Trump, drug wars in the Philippines, and so on. For a refresher, see The Guardian’s summary of 2016’s top global development stories. In the past month, news sources and social media alike have been flooded with tales of The Evil 2016, anthropomorphizing the entire year into a wicked, plotting villain. Curses, angry music, and obscene memes have been directed at the year. Certainly, as a sustainability researcher, I have been taken aback by the threats to environmental and political progress made thus far. But is it enough to leave these events in 2016 in hopes of a better 2017? Would we not have a better chance of a brighter 2017 if we considered our own opportunities for action rather than blaming an arbitrary bracket of time?

Activism for Sustainability

On the one hand, there was social sustainability progress in 2016. For example, it has become more socially and scientifically acceptable to link environmental disasters to the aggravation of political conflicts, such as in the case of extreme drought preceding the Syrian civil war. On the other hand, in some sense, I believe the essence of active citizenship in sustainability aims has been lost on us. In the groundwork definition of sustainable development, participation is highlighted as a founding pillar: political and financial equality is desirable for encouraging the participation of all citizens in development efforts; the broader participation of individuals, scientific bodies, and non-profit organizations improves societal knowledge and thus development; and local, community-driven citizen participation is needed to contextualize sustainable development. But say that you are a citizen who is relatively politically and financially privileged; has knowledge and a voice to express it; and is rooted in some form of community, be it urban, rural, or something in between: What does it mean to participate? To be active? Well, part of being an active participant is that you have the freedom and responsibility to determine for yourself the nature of your involvement. That said I would like to offer some considerations for 2017 and beyond, based on recent citizen engagement developments.

Nudge or Fudge?

The past several years have seen a rise in the design of choice architectures that encourage “good” — including  sustainability-oriented — behaviours. In other words, organizations, including governments, are working to set up decision making scenarios in ways that nudge you to make decisions they consider best for society. General examples of nudges in choice architecture include signs at your work entrance gently reminding you that choosing the stairs over the elevator is better for your health, or more aggressive devices that are programmed to shut off your apartment’s electricity when you have exceeded a desired usage level. Default rules, another form of choice architecture, refer to which choice is set up automatically for you before you make any active interference: such as whether you are signed up for your company’s 401k plan, or whether you demand renewable energy sources (as opposed to fossil fuel) from your utility company. When these scenarios are designed to favor environmentally-friendly settings, they are referred to as green default rules. Nudges work by suggesting choices for you, and default rules work by setting the automatic choice for you. Note the theme “for you”. Organizations are becoming more sophisticated at understanding and developing these techniques, as can be seen in the 2011 report for the UK government on influencing behaviour through public policy.

Oh hold up! What do these people think they are doing influencing our choices?! Well, unfortunately we have a tendency to not choose as we intend to when left to our own devices. For example, the green gap is a disappointing consumption pattern referring to the disconnect between the environmentally-friendly products consumers testify they will buy and what they actually purchase. We are also victims to the status quo bias, the phenomenon wherein we are most likely to accept whatever we are already accustomed to (harking the idiom “go with the flow”, ironically born out of the hippie era). As such, there certainly have been successful choice architecture outcomes, including with health food and waste disposal. I would also, however, ask you to question the longer-term, larger-scale impacts of allowing yourself to be distracted from active participation. For example, there is already some question as to whether Trump’s election was in some part due to Clinton’s label as the “status quo” candidate, furthering the assumption that business would carry on as usual and triggering a drop in voter turnout, down 2% from 2012 and 5,6% from 2008. Rather, it is those disrupted in their lives who dislodge the status quo, crack the mold, and form a new playing field.

The surprising thing to me about the recent popularity of choice architecture is failure to acknowledge that the choices being offered are not born out of the blue, dreamed up in a peaceful organizational slumber. Nay, these sustainability visions come from the same kind of dedicated activists who have been breaking the mold (arguably in the “bad” way) in 2016. For example, it is brilliant to simply automatically sign up everyone in the neighborhood to order electricity from renewable sources. But without a vigorous citizen-driven activism driving renewable energy first after the Oil Crisis 1978-9 and again with increasing climate change awareness, there would be no renewable energy production sites, no technologies for their construction, no advancement of their efficiencies towards market competition. It took a lot of work to offer the transmission of solar power to our comfortable couch-side lamps and laptops. Or another example is nudging communities to plant their outdoor spaces as bio-diversity supporting, fresh-air and nutrition-producing urban gardens, or nudging consumers to purchase locally produced groceries. But without the desperation of food shortages and community-driven reorganization of food access post-World War II, the concept of urban gardens and community-supported agriculture (CCS) would not exist.

Break on Through to 2017

Not surprisingly, such sustainability activism exists in 2016 as well. Here in Denmark, prevention of food waste has reached the national agenda and promises to expand further. All this, triggered by the persistent activism of Selina Juul, founder of the organization Stop Spild af Mad (English: Stop Food Waste), and the joining of more activists, such as 17-year old Rasmus Erichsen, founder of the app Stop Spild Lokalt (English: Stop Waste Locally), in what can be considered a social movement. Looking back again on 2016, we have reason to feel disrupted, enough drive for action. Please continue to engage in social media and write up your own blog posts about it, but also find yourself a practical, positive action that you can take. For me, I’ve chosen to pursue academic research in sustainable building (not practical!), but also to volunteer for trash clean-ups in nature areas and reduce my hot water usage at home. You do not have to make it your career, but you can take action for 2017. You can use your participatory power and be an activist for creating different, better choices for all of us in 2017.5, 2020.3, 2046.7, and beyond.

Lara is a PHD Fellow at the Department of Intercultural Communication and Management at Copenhagen Business School. Her PHD research is part of the Marie Curie network Innovation for Sustainability (I4S), with VELUX as a partner organization. 

Pic by 周小逸 Ian, Flickr

Event, Featured, News

Workshop on Values-Based Business Model Innovation

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Invitation: Join a workshop on values-based business model innovation, led by DR. Florian Lüdeke-Freund

Hosted by Governing Responsible Business (GRB) Research Environment, this workshop introduces the essentials of the Values-Based Innovation Framework. It will provide a framework, guidelines and tools to renew businesses by focusing on essential values and help innovators solve societal problems. Values-based innovation can motivate the development of new networks and business models that address complex societal problems, such as the unsustainability of current forms of energy supply. 

 We aim to bring together a group of practitioners and students in order to create a mutual learning environment and to test a card-based facilitation method to develop values-based and sustainability-oriented business models. This method builds on the Business Innovation Kit and the Sustainability Innovation Pack. The Business Innovation Kit has been applied in more than 100 workshops around the globe. The Sustainability Innovation Pack is a new extension set developed to support entrepreneurial teams in creating ecologically and socially responsible and sustainable business models.

There is a maximum number of 20 participants, i.e. 10 practitioners & 10 students.

Registration no later than 09.01.2017 (max. 20 participants): Please register by sending a mail to grb@cbs.dk

Date and time: January 18, 2017, 14.00-17.00 

Location: Copenhagen Business School, Porcelænshaven 18A, PHS.023, 2000 Frederiksberg

Accountability, Concepts, CSR, Featured, News

Why Transparency May Not Be Best in Facilitating Corporate responsibility

By Patrick Haack & Dennis Schoeneborn.

Corporate Responsibility (CR) has become an increasingly important issue for business firms across the globe. Yet, implementing and embedding CR tends to be costly. Accordingly, it is tempting for firms to “greenwash” existing business practices with CR policies, reports, and fancy brochures – but without adopting these policies in a substantive way (i.e. what would mean an in-depth implementation in business practices and procedures).

In the same context, corporate transparency is typically seen as the key to make sure that firms would adopt CR practices in substantive form. In contrast, other scholars have argued that a certain degree of intransparency (or opacity) can be beneficial for the adoption of organizational practices. The argument here is that freedom from scrutiny provides space for decision makers to experiment with new CR practices and consider how to implement those practices. This leeway for experimentation, in turn, can then lead to a substantive institutionalization of CR practices – if compared to a more strict transparency regime (that would impede the occurrence of such dynamics to begin with).

In a recent simulation-based study (as part of a larger research project with Dr. Dirk Martignoni, University of Lugano), we demonstrate that a certain degree of hypocrisy and greenwashing, counter-intuitively, can be beneficial to the industry-wide adoption of CR practices. In our study, we explain differences in the ceremonial (i.e. superficial) vs. substantive (i.e. in-depth) adoption of CR practices in an industry with changes of “evaluation regimes” (i.e. degree to which implementation of CR practices are visible to outsiders).
In particular, we look at two evaluation regimes – transparency and opacity – and three levels of adoption – non-adoption, ceremonial adoption, and or substantive adoption. We assume that the evaluation regime can remain stable or switch, due to regulatory changes or industry dynamics. Of the four different possible sequences of evaluation regimes, we pay particular attention to the situation where there is little visibility at first (opacity) followed by greater visibility (transparency), and explore the conditions under which this particular sequence maximizes the prospects of substantive adoption.

Our study’s findings challenge conventional views that a coercive approach focused on the strict enforcement of transparency and accountability would be most effective to the institutionalization of CR practices. To the contrary, our study suggests that, given certain conditions, an initial period of opacity followed by a switch to a more transparent regime can maximize the in-depth adoption of CR practices.
One important practical implication for non-governmental organizations and other critical observers of corporate actions is that a certain degree of greenwashing, at least in the beginning of a CR implementation and learning process, should not be condemned prematurely. Instead, it would be conducive to the institutionalization of CR to steadily maintain and slowly increase pressure towards more transparency – in order to facilitate “ratcheting up” effects toward more substantive CR adoption among players in the same industry.

Please find here a more extensive summary of the article.

Read the original paper:
The paper has won the 2015 Best Paper Award of the Social Issues in Management Division of the Academy of Management. While the paper is currently in a review process, a shorter version can be accessed here. Haack, P. & Schoeneborn D. (2015). Exploring the Institutionalization of Corporate Responsibility: A Formal Modeling Approach. Academy of Management Proceedings, doi: 10.5465/AMBPP.2015.141

Patrick is an Assistant Professor of Business Ethics in the Strategy Department at HEC Lausanne, Switzerland. Dennis is Professor at the Department of Intercultural Communication and Management at Copenhagen Business School.
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Concepts, Environment, Ethics, Featured, Issues, News, Social, Sustainability

Towards More Humanly Sustainable Workplaces

By Dr. Blagoy Blagoev.

There are more and more prominent voices calling for management research and practice to focus on the ‘grand challenges’ faced by society. Undoubtedly, one of those grand challenges most talked about is sustainability. Usually, sustainability is thought about in ecological terms. Indeed, a plethora of well-known issues exist at the interface between business and the natural environment, such as CO2 emissions or water pollution to name but a few. Increasingly, corporations are faced with pressing social demands to manage and organize in sustainable ways in order to prevent such problems from happening in the first place. Yet, another, much less talked about dimension is the human side of sustainability.

Breaking the extra-long hours regime in management consulting

The human side of business sustainability refers us to the problems at the interface between organizations and people, in particular, to the potentially harmful impact certain management practices can have on employees and their families. One, especially harmful development in many workplaces concerns the proliferation of extra-long hours regimes among highly qualified professional and knowledge workers. Many such workers seemingly voluntarily accept to work between 60 and 120 hours a week, remain connected to work through smartphones and laptops, and continue to do so even after experiencing severe work-induced bodily breakdowns. Such ‘extreme’ working time regimes have been shown to be detrimental to both individuals and their organizations: they harm employees’ health, productivity and creativity; reproduce gender inequality; and generate higher employee turnover rates and increasing cost for attracting and retaining highly qualified personnel. In short, in the long term, they create an unsustainable workplace environment. Yet, despite such well-known drawbacks, little progress has been made with dismantling extra-long hours regimes and building more humanly sustainable workplaces. Most work-life balance and family friendliness initiatives do not work.

Extra-long hours regimes persist. Why so?

In my doctoral dissertation, I studied the genesis and historical evolution of an extra-long working hours regime at an elite management consulting firm in Germany in order to answer this question. My empirical investigation demonstrated the historical contingency of the extra-long hours regime: Rather than being pre-given, it only emerged out of a strategic shift at the firm that occurred in the late 1980s. I discovered that the main reason underlying the persistence of long working hours at this firm could be found within the distinct self-reinforcing dynamics triggered by this shift. Over time, these dynamics had constituted and continued to maintain an ecology of complementary and mutually reinforcing management practices, business strategies and cultural norms that were all adjusted to and reinforced the extra-long hours regime. The dynamic spread throughout the entire organization and even beyond: It entangled the consulting firm’s clients too.

The way forward: re-thinking the „work-life balance“ approach

The results of my research imply that the dominant ‘work-life balance’ approach of dealing with such problems of human sustainability needs to be fundamentally reconsidered in at least two ways.

First, building humanly sustainable workplaces is a matter of radical and strategic rather than incremental and operative change. At least in the case of consulting firms, the extra-long working hours pattern cannot be isolated from the plethora of organizational practices, cultural norms and the overarching strategy that have historically co-evolved with it. Simply providing work-life initiatives, such as part-time work of flexible working hours, without attempting to change the entire organizational ecology intertwined with reproducing the extra-long hours regime is not likely to achieve much success. Understanding and breaking the logic of the dynamics that maintain this ecology is crucial for change initiatives to succeed.

Second, and related, we need to widen the traditional focus on internal organizational change. In my research, the dynamics in question went beyond the boundaries of the single firm and entangled client organizations as well. This implies that changing the extra-long working hours regime would also require shifts in the interaction pattern between professional service providers and their clients and the various expectations that structure these interactions.

Key is to change the reproducing dynamics of unsustainable workplaces

Dismantling persistent regimes of extra-long working hours remains one of the key challenges for building humanly sustainable workplaces. Whereas previous research has focuses on criticizing such regimes and suggesting alternatives, we are only now beginning to understand the actual mechanisms that are at work to maintain extra-long working hours. The emergent research findings clearly demonstrate that human sustainability cannot be achieved by providing work-life benefits to compensate for an otherwise humanly unsustainable workplace environment. Rather, the key lies in changing the entire web of interdependent organizational practices, norms and strategies and the dynamics that reproduce such workplace environments.

Blagoy is a post-doctoral scholar at the Department of Management, Freie Universität Berlin, Germany and research fellow at  the Governing Responsible Business Research Environment at Copenhagen Business School, Denmark. In his doctoral thesis, he employed a path-dependence lens to study the mechanisms underlying the persistence of excessive working hours regimes in management consulting firms. His research focuses on overwork in professional service firms, organizational change and persistence, and time and temporality in organizations.

Pic by Quinn Dombrowski, Flickr