Tragedies and ethics

The industrial tragedies are what they are. Well tragedies of industrial scale. They raise certain issues and fundamentally alter the conceptions of man's approach and relationship to nature and to the institutions that he has built. It takes no superior wisdom to understand that whatever man creates including institutions should be for the benefit of man, other living beings and of nature in general. In this vein it is worthwhile to examine the questions that the famous disasters or situations pose....

Exxon Valdez

The incident in its magnitude, raised for the first time the question of extending the definition of who is affected to the rest of the living beings as also to the non living environment in addition to people.

The present tendency is to consider the environment as well as the living and the human beings as integral part of the world and to consider any untoward damage or intrusion into the same as something compromising ethics.

A consequence of such thinking is the concern of more and more companies to think in terms of environmental protection and sustainable development. The importance of the case of Exxon Valdez is the new impetus to environmental awareness and mitigation efforts as above.

Johnson and Johnson Tylenol case

The case is an example of how to handle such crises positively. One would well like to think about the response of Cadbury’s in India a couple of years back when some batches of their product was found to be tainted with fungus. The first response of the company was to deny any responsibility and blame it on the distributors however at a very heavy cost. They then had to rope in a brand icon, Amitabh Bachhan to regain their market. The case points that more than mere good deeds, ethics does serve to enhance and preserve the value of reputation. In business terms we call reputation brand equity.

Also the incident brought about some creative innovation in the form of tamper proof packaging.

Ford Pinto case.

This case illustrates how an otherwise perfect decision using sound business tools such as cost benefit analysis can also be used in the wrong place. The use of cost benefit analysis in determining human value in dollar terms is questioned although what the company did was not incorrect legally. Also value of human lives needs sometimes to be calculated in dollar terms as in insurance / compensation etc.

The case also emphasizes the point about caveat vendor (let the seller beware) as it is difficult for lay consumers to make informed choices when it comes to complex products such as a car .

Challenger Disaster

In most organizations there is a predominance of one group over another. In the case of challenger/NASA/Morton Thiokol it was the management priorities prevailing over the technical correctness eventually leading to loss of lives and money and reputation.

The case also highlights the prevalence of group behavioral phenomena such as group think where the pressures of the group forces the individual to concede although all the pointers are in the opposite direction.

Also Asch effect which means that if you repeat a lie often enough it eventually may be perceived as the truth.

Similar was the case with Union Carbide (Bhopal Gas tragedy) where the workers were aware of the clear and present danger but their voice was not heard by the management due to the simple fact that they were workers. Actually the men on the ground know better sometimes than the management. Hierarchy does play a negative role there.

Shell Nigeria.

The case is important in as much as the company Shell tended to destroy a whole tribal land in which the people had not only economic and dwelling attachment but also the attachment over generations.

There is a strange collusion between the military, the government and the multinational company Shell against the very same people that a government is supposed to take care of. We call this collusion the military – government – industrial complex.

It may be that capitalism has reached a stage where the interests of the moneyed business and the interest of the politically powerful become the same and in the process the people suffer.

Also in a situation like the one faced by Shell, it remains a question whether a business has an option and /or a responsibility to leave or refuse to do business in a country which is corrupt and acts against its own people. Can not businesses do without such practices?

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HUMAN RIGHTS AND CORPORATE LIFE

SHELLY JOSE
Lecturer, Rajagiri College of Social Sciences, Kalamaserry

PRESENTED AT
INTERDISCIPLINARY UGC REFRESHER PROGRAMME ON HUMAN RIGHTS FEB 3rd TO 23rd
ACADEMIC STAFF COLLEGE
UNIVERSITY OF CALICUT
JOHN MATTHAI CENTRE
TRICHUR

HUMAN RIGHTS AND CORPORATE LIFE


Introduction

In July 2005, the then UN Secretary General Kofi Annan appointed Professor John G. Ruggie to be Special Representative of the UN Secretary-General on business & human rights. A number of papers were invited and received by Prof. Ruggie’s office. Frequent themes included right to life liberty and security of person, forced labour, bonded labour, compulsory labour, child labour, right to privacy, freedom of association and collective bargaining, non-discrimination, workplace health and safety, right to an adequate standard of living and right to health.
Modern organisation is experienced by people as an additional locus of their existence; one that divides their lives into two distinct ones: the organisational and otherwise. Our era is characterized by the prevalence of mobility and extended times away imposed many a time by the demands of the organisation to which one belongs. A number of authors also express the same concern when discussing on work-life balance. Unfortunately no such topic is discussed under the human rights concerns.

Universal declaration of Human Rights

On 10th December 1948, the General Assembly of the United Nations adopted and proclaimed the Universal Declaration of Human Rights:

Article 16(3) states “the family is the natural and fundamental group unit of society and is entitled to protection by society and the State”.

Article 29(1) states “Everyone has duties to the community in which alone the free and full development of his personality is possible”.

This paper draws on the above and asks the question of what should organisations do to adequately address the issue of work life balance as a (human) right.

Two realities

Two realities of the present world are indisputable: the development and use of technology as a tool and the predominance of a formal organisation as economic vehicle. We have experiences with the first in its misuse leading to unspeakable misery not to mention human rights violations before during and after the world wars. We are experiencing currently a softer and slower but definite version of the ill effect of the latter as when increasingly the organisation eats into the lives of people leading to attrition of the primary social unit.

The organisation man (or woman)

In our day, the organisation man replaces the chivalrous knight of the middle ages and the gentleman of the Victorian times. The hero of our times is the organisation man. More and more of our lives are affected by organisations as when we are customers of a product produced by a business organisation. More importantly organisations are inevitable as a social system that provides the roles and positions and status through which participants deliver their work and services. In the process more and more of participants who otherwise wish to be on their own find themselves incapable of holding their own, a phenomena known as the ‘corporatisation of work’.

The choice therefore for the majority is to be either part of an organisation where one can contribute one’s labour or be left out economically and socially.

If we only consider the constitution of the US, we can see that the life envisaged is reduced to a right to living, liberty is reduced to the fatigued time left after devoting to the corporation and pursuit of happiness reduced to pursuit of money.

The reality of competition

John Kenneth Galbraith famously remarks in his book 'Affluent Society' about the transition of societies from deficiency paradigm of more and more demanded production to the surplus paradigm of marketing in which demands are fabricated to assist the off take of finished goods and to keep the economic machinery rolling. To produce more and to market more is the duty of the Corporate. And when the purchasing power of the consumer is low, there is a new consumer product called credit. In simple terms, irrespective of the ideology, the economic machinery dominates its creators than the other way around. This is an age old familiar theme celebarated in fictional warnings such as Mary Shelley’s Frankenstein.

The lament of collapse

In his paper, “The Twilight of American Culture” MORRIS BERMAN postulates that four factors are present when a civilization collapses:

Accelerating social and economic inequality,

Declining marginal returns with regard to investment in organisational solutions to socioeconomic problems
Rapidly dropping levels of literacy, critical understanding, and general intellectual awareness
Spiritual death or the emptying out of cultural content and the freezing or repackaging of it in formulas.

If we examine societies in particular and the world in general today we can see all the above ingredients in full measure.

We therefore see coexistence of improved economic conditions with increased anxiety about the erosion of economic and other values, increased socio economic problems such as suicide, divorce, family breakups and substance abuse, increased information avenues, with lack of wisdom and packaging of culture as saleable commodities. Capping it all is the bye product, environmental degradation.

The question of human rights

The former discussion was to put forth the thread of causes that bind us in the rat race that in turn leads to the degradation of our existence. Logically it should follow that to preserve human kind two areas need urgent attention: on the restoration of the fundamental unit of society namely family and to environmental restoration.

Both point towards a return to a less individualistic, less consumptive mode of existence. One such mode of alternate living is the eco-communalistic way.

What can organisations do or what should be done to organisations?

Organisations are the social machinery of the economy. If we accept that any human artifact is eventually for human well being rather than competition for its sake then it follows that the organisations must be given its rightful place below the other more fundamental social institutions such as the family and much below the more fundamental real nature. This would mean bringing a more sustainable production process that goes well with the cyclic nature of the natural environment and bringing in systems that makes society more inclusive.
Fortunately modern renewable technology answers the first and modern information technology can be the answer to the second. Wherever possible, organisations may allow flexitime and telecommuting as alternate ways of working rather than appropriating large amounts of time from its workforce. Telecommuting can reduce vehicular emissions considerably and provide increased time for human interaction as well.

Thus leveraging the gains of information technology one may postulate an e-communalism to supplement the eco – communalism mentioned earlier providing both environmental and social benefits.

Conclusion

In 1962, President John F. Kennedy outlined the Consumer Bill of Rights that codified the ethics of exchange between buyers and sellers. It is perhaps time to envisage a bill of rights to be named the employees’ bill of rights codifying the ethics of living agreed between the employers and employees. And in a strict sense, the employers as natural persons may be subsumed under the term employees and therefore the bill can be termed as bill of rights of “living in organisations”.

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Type of Constructs and conflicts

Type of Constructs as taught by Prof. Pawar and conflicts as interpreted by Prof. Shelly Jose

The building blocks of all theories are concepts. Concepts are defined before they are used in a theory or a debate. Thoughts or the history of thought is full of concepts that are combined and recombined in theories after theories. The theories climb up the ladder of abstraction. Myths such as the myth of creation are also in a way explanations or theories which hold good for some time until replaced by better ones. For instance the biblical myth of creation would date the universe to around 7000 BC but science would not agree. The theory most widely accepted is the big bang theory.

Did the creation myth serve any purpose? It did and it does even today. The same scientist may be a Christian as well as a scientist. How can this be? Can the big bang theory and the creation myth co exist? It does sometimes in the same mind. For that matter, can the corpuscular theory and the wave theory of light co exist? It does. In fact many phenomena of light are explained by one of them rather than the other. So both are accepted and not discarded. In that case why shouldn’t the creation myth and the big bang co exist in the same mind?

Similarly there can be different theories of say Psychology such as Psychoanalytic, Behavioural, Gestalt, Transactional analysis all of them framing the same phenomena in different ways. It is therefore necessary to talk about constructs to understand the co existence of multiple theories to explain phenomena. Science and religion are not really antagonistic.

Type 1 constructs are those that we can see / perceive. For example the table. There is nothing inherently tablish about the combination of words that make up t-a-b-l-e. But over a period of time the Anglo Saxons have been using that particular combination of letters and sounds to mean a flat top on top of four at least three legs. In so far as a trapezium is drawn with four lines downward at appropriate angles and distances would give one the idea of a table or the concept of table. That is to say the mental schema of the type one constructs are fairly agreed upon by almost the entire civilised world.

Type 2 constructs are slightly more complex. They are not seen but can be seen using other devices. Bacteria or red blood corpuscles are examples. They are classified separately since they are not seen without some aid. So with radio waves which are explained in terms of the electromagnetic spectrum whose existence is scientifically established.

Type 3 constructs are slightly more difficult. They are created socially. Democracy is a good example. The particular democracy may vary across the world. But it has its beginnings in the sense of equalness that human beings came to idealise in the march of civilization. Without a sense of democracy there can be a vague sense of injustice, and rancour but no idea of say rights. And without rights there cannot be a sense of duty, both type 3 constructs themselves. As civilisation progressed things became more abstract. The sense of injustice was sort of sought to be resolved through the magna carta. And the ideas of equality, fraternity and liberty flew throughout Europe and the rest of the world. The Americans borrowed and adapted a great deal of it. One by one most of the world turned to democracy and is today implicitly assumed to be a universal value.

Can we see democracy? No. We can only see its indications. A protest, strike, ballot, elections and so on...

Type 4 constructs are even more removed from the world outside. They do have existence only in their own framework. For instance Psychoanalytic theory encompasses id, ego and super ego. They don’t mean anything or they do mean other things elsewhere or in isolation from the framework..

I think of all the four types of constructs the most difficult from a worldly and not academic point is the type three. Type one is fairly seen and agreed upon and is generally in the empirical domain. Type two and four are mostly engaged in by people specialized in certain domains. Type 3 is out there for everyone to interpret and misinterpret and squabble on. There is this one line in 'Black Hawk Down' a movie set in real life Somalian conflict. ‘We don’t want your democracy’. Similarly many other voices of dislike of the western style of democracy are not difficult to find.

Essay on Psychology

Accepting Psychology

I had started this as an essay on Jung but ended up as a brief on Psychology itself.

One of the early readings perhaps in 87-88 while I was pursuing my graduation in English Language and Literature at LOYOLA COLLEGE, Madras was a book titled “The Collective unconscious” of Carl Jung. I finished reading the book in a night which is rare for me. Several things stand out about the book. Apart from Freud who is sort of magazine stuff especially in serious Malayalam ones such as Mathrubhoomi, and popular psychology that is in the form of advice from columnists, this was my first exposure to the world of psychology.

The term as understood by the layman including me at an earlier time was that the psychologist is able to look into the eyes and say everything about your inner workings just like an astrologer or a palmist. This attaches a certain amount of mysticism around the Psychologist. Most magicians display better in this vein using what we understand as illusions. But when one really understands the magic it is nothing short of tricks.

The next exposure is when one studies Psychology as a paper. It talks about perception, learning, personality, attitudes, motivation, intelligence, emotions etc. in a kind of structural inevitability. That is to say because man is such and such and so he tends to do certain things in a certain way. For example man is capable of perceiving three dimensionally because he has two eyes that are spatially set apart optimally and in a straight forward frontal manner. Quite unlike the honey bee which has an aggregate eye, a sort of cluster of eyes that ‘sees’ the flower as not just as one but as a cluster of flowers. All the topics of Psychology mentioned above are in some way similarly discussed. The only dubious area for even the seasoned Psychologist is the Stimulus – Response theory of learning in its various types. The complexity of learning is discussed and the stimulus- response and the response – stimulus theories pooh-poohed by authors such as Arthur Koestler who in my opinion is less seriously considered than he deserves.

To my mind and to most Indian minds I believe western psychology of this sort leaves a sense of ‘there is something more’ that needs to be captured. The western obsession with analysis leaves much to be desired by the synthetic thinking of most of the orient. Very few of the western writes are gifted in the sort of synthesis that is essential to an understanding of worldly phenomena. This happens not within disciplines but across disciplines as well. But their analysis is beyond compare to be even.

Jung comes as a refreshing breeze amidst such. For once it does not start with the individual. Although Psychology deals with the individual, just as Sociology deals with the collective, it is very difficult or even impossible to think about the individual in isolation except in the terminal and cold stage. Anything that we speak about the individual in such a condition is merely the physically structural such as perception and its phenomena such as illusion and hallucination which are special cases of perception in its interaction with the external.

The individual is not as such but a product of the society. Be it the family or larger units of it. All psychology has to consider this contextual fact and attempts to separate the individual would lead to the kind of Psychology that Koestler calls ‘ratomorphic view of man’ or worse still ‘the anthropomorphic view of the rat’ that the stimulus – response theory states. This comes at two levels. The brain and the nervous system is progressively complex from rudimentary life to plants, animals and then higher apes and homo-sapiens. The other is the considerable interplay of social forces in its various gradations from the immediate motherly , to the siblings to the neighbour hood, to the village to the clan or the tribe to the occupational to the impersonal state or nation.

Even the rat that is studied in the laboratory is culled away from its collective to yield any completely valid display of ‘normal’ behaviour.

Jung in this context speaks about the collective not just the immediate living but also into the past through ages to the ancestral, unconscious that he postulates are in the mind of every one of the species. This leads to archetypes that have common symbolic values as well, as in the snake which evokes fear and is a symbol of evil and power of a certain kind.
He then proceeds to talk about the complexes, inferiority, superiority, Oedipus and Electra and traces the archetypes from myths and so forth. It is said that Freud only arranged what Shakespeare already knew and wrote in his plays. Jung to me arranged it far into the past in a grand plot. Does the collective behave in a manner as to expose and express the fears and anxieties of the individual? Is it possible to interpret world events in the light of Psychology? Jung does exactly the same. In his book on “Essays on contemporary events” he does interpret the German collective going back to the mythical Wotan the god of frenzy and restlessness which is so much part of the German Psyche expressed in the philosophy that rocked Europe towards the middle of the century. My curiosity extrapolates to Hofstede in his country metaphors for organizations. The metaphor for German organization is ‘the well oiled machine’. CAN we say the German psyche tends to mask its inner turmoil in external order and discipline in its perfect engineering? Will it some day break loose again?

The Russians put it in a different way that Psychology or the mental phenomena is a fine balance between excitation and restraint. Also quite acceptable to me in this rudimentary form. Jung calls the purpose of Psychology to be more and more of bringing to conscousness what is in the unconscious. Jiddu Krishnamurty always insisted on the pure awareness as against thought.

I have sort of traced the little Psychology that I know in tracing Jung. The other schools such as social learning of Bandura and the Gestalt Psychology and recently positive psychology and organizational Behaviour and the earlier humanism of Rogers and Maslow are I believe corrections to the deficiency Psychology which was a remnant of the post war years. I hope Psychology would develop in these directions more meaningfully. A further correction would be probably the dualistic thinking of white and black which seems to have created much of the hostility paradigms from individual conflicts to the blocs of the cold war. The black and white thinking needs to be replaced with shades of meanings and reality, more like a spectrum of reality where more and more of space is given to multiple realities in various levels of equilibrium.

Global Environmental Challenge: Emergent Business models

The following paper was presented at IBA, Bangalore in 2010.

Abstract

The signs of an acceptance rather than denial of the environmental issue by the global community exemplified by global initiatives such as the various protocols and other initiatives lead us to think about the responses from the business community. While the market economy’s trust in the invisible hand has so far not rescued the environment, legislations by various governments are by far in the nature of fixing limits on the emissions. The latter tends to view the environmental issue as a problem rather than an opportunity.

Human awareness as it is, requires most importantly to recognise the scarcity shift, that is the shift from abundant resources and lesser populations at the time of industrial revolution to exploding populations and scarce resources more recently.

This paper traces the antecedents of the environmental issue starting with an analysis of the various models of living from the hunter gatherer to the modern fossil fuel. It postulates that humanity is at the juncture of a new sustainability crisis just as the one prompted the move away from the hunter gatherer to the agricultural.

Since both the availability and the non availability of the fossil fuels are sure to affect the world community, the former adversely on the environment and the latter adversely on the economy in its present form, makes switchover to a different business model and an economic model not a matter of choice but a necessity.

The paper traces the assumptions since the industrial revolution and recognizes the new realities that necessitate newer assumptions. New business models emerge around the new assumptions. Essentially all of these leads to rethinking business models which are in the nature of opportunities for business not only in terms of environmental protection but also in terms of profitability.

Keywords: business model, changing assumptions, changing realities, new models, communitarian living, environmental opportunity.














Introduction

A discussion on business models in the context of the environmental challenge would require a tracing of the prevalent assumptions and the changes to those assumptions. The business models so far are premised on a paradigm based on assumptions of industry prevailing from the beginning of the industrial revolution. For ease of reference these may be called paradigm 1 assumptions and the imperative future one, paradigm 2 assumptions.

Given the challenges posed by the environmental issue, mankind is at a crossroads in that a change is inevitable (WBCSD, 1992). To understand the need for a change it may be necessary to trace the models of economy that humankind has gone through.

The earliest of these models of economy are those that are called the hunter-gatherer model. From an environmental perspective this model was characterized by man being part of the ecological system with use of resources in the raw form and generation of minimal organic waste that could be absorbed by nature itself. This model of economy prevailed till about 10000 years ago and is prevalent in the present only in pockets of remote existence of some isolated tribes. The next model is the agricultural one in which the interference to the ecosystem by man appears, but is minimal as in the use of land for cultivation and animal husbandry. The waste generated is organic and is capable of being absorbed by nature itself.

The transition from the hunter-gatherer to the agricultural economy is necessitated by the increase in population and relative scarcity of resources. In other words there was an unsustainability of the existing model. The transition from the primitive society to the agricultural society parallels this change in the economy.

The third model of economy starting around the 1700s is characterized by an industrial way of living with an exponential rise in the use of resources and energy and consequent generation of waste which are far beyond the assimilative capacity of the ecosystem.

When environmental and / or organizational limits are reached economies are forced to adjust and develop in new directions. A larger question is whether this process will converge to an economic- environmental state that is acceptable from the point of view of both equity and efficiency and be environmentally sustainable as well. (Venkatachalam, 2007)

The paradigm 1 assumptions

The paradigm 1 is premised on the assumption that the availability of resources is unlimited or nearly so. Such situations of relative abundance have occurred rarely and briefly in history such as when new continents were opened up. But the earth being a closed system any model will necessarily have to be on the assumption of limited resources. A corollary of the assumption of unlimited resources is that of perpetual growth.
A second assumption on which the paradigm 1 was premised is that of the assimilative capacity of the earth. The waste generated in the early part of the industrial revolution was limited and localized that they were in general absorbed by nature itself or was away from interference to human life. Waste thus was treated as an externality that was outside the purview of economic activity.

In the matter of waste, in paradigm 1 the rights to private property and gain, however, was not balanced with a duty on the public and local commons such as an open grassland or a scrap yard depleted in quality over a period of time. Such degradation of public goods as a result of private gains is the idea that is captured in the term, the ‘tragedy of the commons’ (Hardin, 1968).

Yet another one of the assumptions is the treatment of nature as separate from man and his activities. This gave sanctity to any amount of intrusions, invasions and subjugations made into the natural world. The assumptions in the previous models namely the hunter-gatherer and the agricultural treated man as part of nature.

The conception of the stakeholders of business was limited to the shareholders and may be the customers in whose name the economic activities were justified. The concerns of scarcity of goods gave rise to the preeminence of production and later on when the production reached certain levels the model demanded that the consumption be increased by want creation techniques such as advertising and credit (Galbraith, 1958) so that the economic machine could be kept moving.

Paradigm 1 also assumes that the products and services in general are more attuned to the individual than to the group. This is evidenced in the development of products that are personal rather than collective such as the walkman. There is a business sense in this that the more individualized the needs are the more number of products are required.
Paradigm 1 assumes an exponential growth of population in line with its assumption of unlimited or relatively unlimited resources.

One major concomitant of paradigm 1 is the fossil fuel economy. The drivers of industrial society include the capacity for sourcing and harnessing energy and resources in unprecedented quantities. The industrial economy is founded on the discovery of organic mineral deposits of coal and oil and is named the fossil fuel economy. This discovery and widespread use of convenient fuel drove economy and environment in unprecedented channels.

For the first time the wastes of human activities exceeded the assimilative capacity of the natural ecosystem. The term waste here embraces inefficient use of resources and generation of non bio degradable and toxic wastes mostly derivatives of fossil origin and the pollution of global commons such as the atmosphere in addition to the biodegradable waste that still causes a problem due to the sheer magnitude of its generation beyond assimilation. In addition the fossil fuel economy has created a new class of commons called the global commons and the tragedy of the commons is also scaled up to the ‘tragedy of the global commons’. Global warming and ozone depletion are but manifestations of this new tragedy.
The outcome of this fact is a new situation of unsustainability. For one the fossil fuels are non renewable. There is a time when the available supplies peak and thereafter the demands on the resource increases or remains high whereas the supply starts diminishing. This concept is captured in the term ‘peak oil’ (Hubbert, 1956).

The fossil fuels are required to maintain the economy and any additional availability and use threatens the environment. Because we have built an economy on the fossil fuels and because it is highly polluting, there is a twin edged unsustainability. In other words non availability of fossil fuels is a threat to the economy and availability would be a threat to the environment. It is imperative to move from the fossil fuel economy to the next.

The ‘limits to growth’ system archetype postulates that a reinforcing process of accelerating growth or expansion will encounter a balancing process as the limit of that system is approached. (Senge, 1990)
For nearly six thousand years in known history, the population of the planet grew steadily and towards the end of the twentieth century, it started growing exponentially. A feature of the industrial model based on paradigm 1 is that the industrial model demands growing consumption and the population aspires consumption. For some time such aspirations were fulfilled in a minority of developed nations but nearly all the rest of the nations now aspire to the same or similar levels of consumption. (Meadows, Sanders ; 1992)

A global population demanding consumption levels of the present developed nations simply aggravates the crisis. By the principles of logistical growth models which factor in the carrying capacity of the earth, population should either be reduced concertedly by human kind or risk intervention by nature to be reduced to be within the carrying capacity. A scenario of dwindling supplies in the face of increasing demands would result in a behavioural phenomena of ‘lifeboat ethics’ (Hardin, 1974) where priority is given to survival of one even at the cost of the life of the other. A consumption driven economy demanded by paradigm 1 in a resource dwindling scenario is simply not sustainable.
We have moved from a paradigm 1 reality to a paradigm 2 reality demanding paradigm 2 assumptions.

Paradigm 2 Assumptions

Starting the last quarter of the twentieth century, the paradigm 2 realities are becoming apparent. However our assumptions have not kept pace with the change. The new assumptions therefore will have to be thus arrived at so as to be the base for the next economy.

The new model would require an assumption of limited or dwindling resources. It should consider that the assimilative capacity of the environment is long overshot and the local commons have given way to global commons. (WWF, 2000)

The new paradigm recognizes that no perpetual growth is possible and rather demands that a sustainable development model based on the limitations of the ecology be aspired at. Pollution is no longer an externality because of its global nature.

The assumptions of sustainable development are premised on the metaphor of the three pillars: economy, environment and the society. This is however inadequate and demands that the economy be viewed as embedded in the larger environment and not be treated as separate. Further it also needs to be seen that a third level namely the society is embedded between the environment and the economy. Just as society is limited by the environment, the economy is limited both by the environment and the society. (Mc Gregor, 2003) The new assumptions should be based on the priority of the society over the economy and the priority of the environment over both society and the economy.
The new assumption closely parallels the historical evolution of nature first, society later and economy even later. The new assumption also is founded on Gaia theory which postulates that the living and the non living are integral and the earth as a whole is a living system (Lovelock, 2000).
The assumption of an economy based on greater consumption is to be redrafted both at the individual level and at the business levels. By over consuming we are overdrawing from the real capital that is the Natural capital. The new economy therefore should be based on an assumption of the desirability of quality of life for larger numbers over mere quantity of consumption.

The new reality of global effects further demands that the stakeholders are not merely the shareholders and the customers, but the entire humanity. It emanates from the reality that the quality of life in one part of the globe is determined by the economic activities elsewhere. By this an economy polluting the entire globe is to be avoided as much as an economy that exploits the disadvantaged. The environmental issue is not an isolated one in as much as social issues are intertwined along with the economic.

The ‘nature as capital’ assumption (Lovins, 1999) is another of those paradigm 2 assumptions. In strict terms it is not a new one in that it was only overlooked in the first paradigm.

Paradigm 2 discards exponential growth in population in favour of the logistical growth wherein the carrying capacity of the environment is factored in. Put differently there cannot be exponential growth without nature retaliating in which case population is curtailed to follow a logistical path.

New business models

In order to arrive at a paradigm 2 business model it is necessary to discuss what a business model is. Simply put, it answers the question how the business is planning to make money. It tries to answer the questions about the intended market or niche, the ways to reach that market, the value proposition and the factors needed to pull the business in the long haul. In addition, the elements of the business have to fit together. The product or service will necessarily have to deliver value at an affordable price and the business has to create a surplus for a time long enough to recover the costs. It should also be unique enough to ward off easy imitation by competitors at least until it has recovered the costs. In general the value proposition should be attractive enough to keep the market sufficiently interested in the product or service. A good business model answers the question who is the customer and what the customer values. It also answers the underlying economic logic that explains how value is delivered at an appropriate cost. A business model's great strength as a planning tool is that it focuses attention on how all elements of the system fit into a working whole. (Magretta, 2002). As an emergent reality of the paradigm 1 model, environment as a concern compels businesses into a new model.

The ‘environment as externality’ assumption of paradigm 1 did not give a place for the environmental concerns in this business model. To some extent it was not necessary since the scale of activities was limited. But with paradigm 2 assumptions it becomes necessary to design a paradigm 2 business model. The new realities therefore would call for new business models.

In environmental terms it may be said that the paradigm 1 business model was linear. It was characterized by a process model in which inputs were processed to give an output with a certain lifespan and then ejected into the environment. The same applies to most of the bye products and waste as well. As long as the emissions were not intended as inputs for another process they were also bye products left to take care of themselves.

This model is however alien to nature. Nature does not intend anything as waste. Nature absorbs waste into its own fold to be inputs for other processes. Hence all the processes in nature such as that of water, carbon and nitrogen are cyclic. The best way to describe natural processes is the term ‘cyclic’.

It turns out that the industrial processes that mankind has designed are linear rather than cyclic and over and above and sometimes in conflict with the natural one. The natural model is cyclic and any business model that factors in nature should therefore follow nature. (Frosch and Gallopoulos, 1989). An instance of such cyclic model would be to insist on companies to design systems so as to recall the products at the end of their life so as to be properly disposed, reused or recycled. The concept of industrial ecology that postulates community of industries where the output of one becomes the inputs for the other is an emergent model.

As mentioned there is an imperative that follows from the fossil fuel economy in that availability and non availability are both disastrous, the former one from the environmental point of view and the latter from the economic point of view. When the problem is the same the prescription is an alternative to fossil fuels.

The population growth and the consumption driven economy also calls attention from the sustainability issue. It is unsustainable to continue the present rate of consumption without either destabilizing the environment or the society. If consumption is to be increased for the less developed nations as well then it is environmentally unsustainable. If on the other hand, the present consumption levels of the developed nations are to be maintained, then the question of global inequity would destabilize an increasingly globalised society.

It therefore follows that in the interim businesses would need to follow a reduced use of fossil fuels and use less polluting fuels such as CNG or LPG and in the long run to replace fossil fuels entirely. Between these two alternatives there is space for a number of business models for adoption.
The increase in pressure on profitability can be addressed in broadly two ways. Where the increase in profitability is attained by dematerialization or reduced energy usage it may have some positive impacts on ecological sustainability, where it is achieved by reduced employment there is likely to be social unsustainability (Mc Gregor, 2003). In either case the fact of limits to the resources of the earth places severe restrictions on the living styles of the future. In simple terms there is no alternative to frugality and austerity as a way of life. Businesses should therefore look at maintaining the profitability by defining their products and services in radically new ways. Given our present paradigm of consumption, it might sound impossible to reconcile profitability with reduced consumption.
There can therefore be three levels at which new business models can emerge. The first level of business model modification would be to create a compelling differentiation on ecological grounds. Environmental friendliness can be the new differentiator not only from an environmental point but also from the strategic point of view. Environmental differentiation by businesses would go a long way in conveying the message as well. Businesses and products exclusively in the environmental domain such as renewable also fall into this category. These are in the nature of new business opportunities in the wake of the environmental awareness.

The second level would be to integrate environmental performance at the design stage itself. Buildings for instance could be made water and energy efficient by designing water storage facilities and the use of insulating materials. Building structures could be designed to double up in functionality to include environmental performance such as roofing which could act as solar panels and also insulating structures.
The third level would be to radically rethink the products and services in a way that could be environmentally friendly without compromising on profitability. Looking at carpeting service instead of carpets as products, lighting solutions instead of lighting equipment and painting service instead of paint as the product are some of the examples. Selling of carpets, lighting equipment and paint takes second priority leading to considerable material frugality without affecting business or profitability (Reinhardt, 1999).

Historically man has moved from a collective way of life to an individualistic way of life. In fact individualism is a concomitant of scientific and industrial revolution, but with a severe environmental cost. It is found that environmentally communal living makes a valuable contribution. American research shows that communards use 36% less petrol and 82% less electricity per person compared to their non communal neighbors. Overall communards use 1/3 of the energy their non communard neighbors. Their per capita access to conveniences is almost equal to that of the average US household member even though their per capita consumption is only 25% of the national average. (Metcalf, 2001)

A collectivist lifestyle without compromising on the good aspects of individualism yields dividends economically, environmentally and socially the very same aspects that are under threat in the present crisis. A move away from individualized facilities and therefore infrastructure businesses can innovate on this model and devise new businesses around the new model.

Conclusion

The environmental issue therefore can be treated as an opportunity rather than a problem for businesses. The models of business based on assumptions at the dawn of the technology revolution needs to be modified for the new set of assumptions that emerge from the new realities. Given business’ orientation for adaptation, the environmental imperative cannot be ignored. In fact the interests emanating from the environmental issue are not antithetical to the interests of business either. Environmental issues generate new business opportunities and new business models as well, which in fact improves the profitability as in waste minimization which is both environmentally and economically desirable.

Also the new realities may necessitate new modes of lifestyles as well. Businesses can take the lead in directing mankind into more frugal and communitarian ways of organising around resources. Thus the environmental issue is actually an opportunity that needs to be taken advantage of.

References

Mc Gregor, Ian,(2003) An ecologically sustainable business sector within an ecologically sustainable society, Ecological Economics Think Tank, Auckland.
Lovelock, James (2000) [1979]. Gaia: A New Look at Life on Earth (3rd ed. ed.). Oxford University Press. ISBN 0-19-286218-9.
Dennis Meadows, Jorgen Randers, (1992), Beyond the Limits, Chelsea Green, ISBN 0-930031-62-8
Senge, P.M. (1990). The Fifth Discipline. London: Century Business
Venkatachalam, L, (2007) Environmental economics and ecological economics: Where they can converge? Ecological Economics, Volume 61, Issues 2-3, 1 March 2007
Lovins, Amory B et al, (1999) A Road Map for natural Capitalism, Harvard Business Review, May- June 1999
Florida, Richard, (1996);Lean and Green: The move to environmentally conscious Manufacturing, California Management Review Vol. 39. NO ,1 Fall 1996.
Hardin, Garret, (1974); Living on a Life boat, BioScience, Vol 24(10), pp. 561-568, 1974
Galbraith, John K., Affluent Society, Penguin Business, 1958
Frosch, Robert and Gallopoulos, Ncholas; "Strategies for Manufacturing"; Scientific American 261; 144-152, Sept. 1989)
Magretta, Joan; Why business models matter, HBR, May 2002.
Metcalf, Bill; Sustainable Community living around the globe;diggersanddreamers.org.uk referred 05th Oct. 2009.
Hardin, Garrett "The Tragedy of the Commons", Science, Vol. 162, No. 3859, 1968
Reinhardt, Forest; Bringing the Environment Down to Earth, Harvard Business Review July- Aug 1999.
http://data.iucn.org/dbtw-wpd/edocs/WCS-004.pdf
http://www.symbiosis.dk/

Environmental Issues: Changing value perspectives

As per the University Grants Commission Scheme of things we teachers have to undergo two refresher courses between promotions. Some of the courses are multidisciplinary like Environmental Science which people from all or any discipline can attend. Well it is not entirely alien to me as I engage Environmental Management as a paper for the MBAs and MHRMs.



So the mandatory paper that I prepared was around the principle that it should be relevant both frm the environemtnal perspective and the Management perspective. Here is the article.......


Environmental Issues: Changing Business Value Perspectives


INTRODUCTION


Business as the applied aspect of Economics puts together the factors of production. They are land, labour, capital and entrepreneuship. While the first three are tangible, the last mentioned is the particular talent of the business man that puts all the other together for achieving the organizational mission and objectives.

The concern for environment is relatively new although awareness of the effects of human activities on the surroundings is not new. Traditional economics conveniently categorized the concern under the term ‘externalities’ and following suit, the firm hoodwinked itself to avoid any cognizance of the environmental degradation that it was causing.

Out of the factors of production, land is the term that comes to mean the environment although in a much restricted sense and the same was rewarded a rent. Labour was rewarded wage, capital was rewarded interest and entrepreneurship was rewarded profit. Although land was rewarded rent, the restricted sense in which the term land was used ignored its real value in its actual expanded meaning of environment.


In addition, the environment actually was treated as ‘the other’ in a mutually exclusive way from ‘the firm’.

To some extent this exclusion was justified in that in the initial days of industrialization, the waste or the environmental impact was minimal and the earth was supposed to be capable of taking up unlimited amounts of the discards of production. In fact historians note that people thronged after the motor cars to get a whiff of the exhaust because anyway it was far better than the horse dung it replaced.

VALUE IN USE AND VALUE IN EXCHANGE

While in the factor market the environment was restrictively valued thus, in the product market there were two types of values; value in use and value in exchange. Among those things that were valued in use but not valued in exchange was air and water according to Adam Smith himself. Modern man knows better; that he can bottle water and appropriate a value in exchange as well but not before he has polluted much of it. Thus we see that the conceptualization of value in the heydays of industrialization was different from the present one.

Further, land was intrinsically valued more as a community denoting location rather than instrumentally as a commodity for exchange.


The commodity aspect came in much later with notions of private property and private rights. Private rights also automatically attached duty upon the title holder to protect, preserve and maintain the land. Much worse was the commons which theoretically being everybody’s were grazed and otherwise used to degradation with responsibility upon none.

Even so there were communities who managed this issue in ingenious ways by creating layers of rights as in the case of country ponds in certain rural villages. There were rights of recreational fishing, annual harvest of fish, drinking water, water for bathing and washing and also as community centres for information exchange. In a similar way, the sacred groves of Kerala often attached to temples served rights limited to worship for the community. The wisdom of preserving a land as forest and attaching religious significance to them so that people dare not disturb them served the environmental interest in a creative way.

THE TRAGEDY OF THE COMMONS

The commons refers to anything that is held in common such as the air, water or a pasture. The human tendency is to benefit from the common, but when it comes to tending the same, since it belongs to nobody and since tending does not give any private gains no one is inclined to do it until enforced by law.


Eventually the benefits are stripped and the common becomes barren. Obviously with lesser populations and self restricted use it would still be possible to gain without much of a destruction but the industrial revolution and massive scale operations changed that.

With the industrial era with its massive scale of use of resources especially energy, the global commons also started getting affected. These include the atmosphere, oceans, space, communication spectrum, the moon, Mars and other future destinations. The global commons is thus a very specific outcome of industrialization and globalization which required responses of a global nature such as the Kyoto protocol and the Montreal protocol. Here again the responses gave different results. For instance the Montreal protocol relating to ozone depleting substances was largely a success since there was a technological alternative and also the substances were confined to the refrigeration and air conditioning industry alone. The Kyoto protocol on the other hand is not so much a success because of its spread into different sectors especially the fossil fuels and in a fossil fuel economy any attempt at mitigation of emissions would seriously affect the economic growth.






FACTOR PRODUCTIVITY AND NATURAL CAPITAL

Factor productivities have the advantage of being calculable. For labour this would depend on whether the operation was labour or technology intensive and could be calculated in terms of manpower cost per unit of production or manhours per unit of production. Contribution of capital could be calculated in terms of cost of capital or return on investment. Contribution of Entrepreneurship was calculated in terms of Efficiency, Profits, Market share, Company valuation, Market capitalization and Equity appreciation. While all these would find their rightful place in the books of accounts and statements, the contribution of environment, if calculated, would be a function of the ecosystem services that nature provides. In fact environmental contribution to production is not a revenue head but a capital base on which all other investments are made. The benefits that mankind derives from nature include provisioning services such as food, timber and water , regulating services such as climate, floods, and disease control, supporting services such as the nutrient cycle and pollination , cultural services such as physical and aesthetic enjoyment, and our community diversity based on geographic and topographical peculiarities. Even this classification of benefits does not provide the clear picture since if there is no environmental capital there cannot be any other investment.




In other words if we want more of wealth at the expense of the earth and eventually if the earth is stripped there is no economy at all. This would mean the realization and recognition of nature as the first capital which was definitely not the case earlier.

A spate of unexpected industrial disasters of a massive scale brought the global communities’ attention to the damage that business was doing to the environment. These were the Exxon Valdez oil spill, Bhopal Gas tragedy, Three Mile Island and Chernobyl nuclear disasters. These also gave rise to ethical questions regarding business itself. Ethics in general refers to the questions of right and wrong especially in as much as someone or society is affected. These disasters raised the question of whether nature or environment itself was to be treated as some ‘other’ or should it be included in the question of who is being affected adversely. Thus these disasters extended the concerns to not only other people but also to the environment in general.

ECONOMIC SOLUTIONS TO THE ENVIRONMENTAL ISSUES

The economic responses to the environmental issues in the true tradition of market forces vs government regulation was the incentive based approach, the private rights approach and the regulatory approach.


The incentive based approach provided rewards for good environmental practices, but the downside were also obvious; the incentives became licenses to pollute, costs were passed on to the consumer and it was difficult to regulate with attached room for corruption.

Property rights necessitated that the pollution be solely and directly felt by those who pollute and in this way discourage and disincentivise pollution in one’s rightful property. But while accountability was an advantage, the problem still remained as when the commons being privatized was problematic. How could air and rivers be privatized!

The regulatory model required enforcement but as with anything regulatory, was disliked by industry. Although the science of global warming was largely agreed upon there were some who treated it not so much in an anthropogenic way, rendering the science insufficient to develop consensus.

THE PROBLEM OF EXTERNALITY

Economics in its march considered certain issues as externalities as collateral effects outside the purview of the discipline. Externalities are defined as any unintended consequence whether negative or positive paid for or enjoyed by the society at large and sometimes even into the future as well. Environmental impacts qualify aptly as the most severe of those negative externalities. In the earlier days, the assumption was that environment was capable of assimilation of any amount of waste. Environmental Externalities were augmented by the fossil fuel based industrial economy and expressed themselves in pollution, habitat destruction, biodiversity loss and resource depletion. These were results of industrial scale activities but did not appear in the expenditure column and the task remains unfinished even today to make externalities into ‘internalities’ at firm level. However, externalities did appear as subtracted from calculations of GNP in a different measure termed Net Economic Welfare (NEW). But they remained at the macro economic level.

ECOLOGICAL FOOTPRINT AND ENVIRONMENTAL IMPACT

Simultaneously another measure termed ecological footprint also developed as an indicator of environmental effects. It is defined as the amount of ecosystem required for human support OR as the amount of environmental demands by a certain population at a certain consumption level.

Similarly, environmental Impact of a country was measured as a product of the Population, Affluence (Consumption patterns) and Technology. This recognized that population alone was not the culprit in the environmental debate but consumption patterns of a society and the technological stage at which the country was as well.


As technology improves to take into consideration environmental performance, this equation might require modification.

BUSINESS RESPONSE

Business approached the environmental issue in different ways. The compliance based approach took on a minimal compliance of various laws or one step further demonstrated the environmental commitment as with an Environmental Management System (EMS) such as ISO 14001.

At a different level, businesses resorted to the measurement of environmental efficiency of a firm in a measure termed Eco – Efficiency. It was defined as a ratio of the Environmental impact per product or service value and considered measures such as the Energy consumption, Water consumption, Greenhouse gases, CFCs and Solid wastes to unit production.

The third and the latest approach is Environmental issue as an opportunity in which Environmental performance is a new parameter of Strategic Differentiation as in the qualifications of a green company, green product, green processes. Further Environmental products , alternate business models such as defining business as service not product, businesses of renewable energy, or plastic degrading micro organisms figure well as trends in business.



CONCLUSION
Thus we see that the earliest approach was one of negligence where environment was left unattended, because nature was abundant. The next approach was to treat environment as commons where when it is everybody’s, it rapidly degraded. Later, environment was merely an externality where economics could not /need not concern.

Still later, environment was recognized as a ‘problem’, because the excesses started becoming obvious. The recognition that the environment was the real capital gave rise to the concept of natural capital.

For business in its lookout for opportunities the ‘environmental issue’ gives a new direction. The general view is ‘if it cannot be ignored can we make use of it’? Still further environment got prominence in design and life cycle of product as against end of pipeline treatment because there is savings in environment. Generally the movement was from environment as necessarily degrading in the march of economic progress to environment as a partner for business and economic development.






In summary, the attitudes of business have undergone a sea change from considering the environmental issue as something to live with to as an opportunity. The general direction of the future would be to take advantage of environment in a way that taking care of environment becomes a good business proposition itself.

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REFERENCES


Hardin, Garret. (1968). Tragedy of the Commons.

Reinhardt, Forest. Bringing the environment Down to earth

Natural Capitalism, California Management Review.

Industrial Ecology

Smith, Adam. Wealth of Nations

Business and international environmental treaties

Liking India

It takes an outsider to enlighten you on the place where you are. Liking India has never been easy although liking Kerala was not so problematic. I saw India first around age five and then Kerala henceforth so much so it was a contrast from the barren north to see kerala in its spring and showers.

Apart from the physical absence sometimes and near total emotional absence always of parents which sure was a problem for me at a tender age, coming back to Kerala kept the rest of India at a distance. In fact I am sure all Indians consider them as Punjabis, Tamilians, Bengalis and so on first and then only as Indians. So a question of the love of the land is true only in the abstract and evokes different meanings to the Indian in him.


My sojourns first to Chennai (then Madras) gave a different picture of the world but the next one to Bihar was a complete shock. I could like these places only in the abstract and in hindsight away from the din, smells , noise and the dust first and then the caste, colours, tastes and irrationalities thereafter. It took much of the ethnocentrism (malluness) away from me, but gave greater insights into how a person can forget that he is blessed until he is taken away to some place else.

Coming to the topic at hand I had an accidental receiving of a book “Into India” by John Keay in 1999 or 2000 which I read only in May 2010. Surprisingly the mundane things that the Indian pushes to the background of perception comes alive when given a treatment by a foreigner. Will I be able to stand back and look at the daily scenes as if I am a foreigner. The answer is YES and I do!!

It is only that when I actually started reading the book I realized so. Also many things that I did not know came alive. The treatment of the subject is as an introduction for the foreign traveler to the country. So it comes as no surprise that one can hear names like Mathew, Joseph and John plenty in Kerala is what the book says. Well I belong to that very minority of communities the Syrian Catholic puts me immediately in a special place. Have I ever looked at me that way ? Have I ever tried to consider my identity? Sometimes I also wonder it is because we are not so different from some other communities as well. For instance Sakaria in his article on ‘Appol Christhuvine enthu cheyyum’ (Thereafter what will we do with Christ?) in Mathrubhoomy weekly says that Christians were a sort of ‘melekkida nainmar’ (upper class Nairs) two millennia ago until they were persuaded to be reorganised by the Portuguese into the Roman Catholic fold in the 17th century or so.

The book is a delight in its organisation and simplicity. I liked India better. I saw India in a different light without much traveling. In fact I had started liking India after I left Bihar. But that was when I started traveling again when I knew that I would come back to Kerala. There is something about the vibrancy, in the resilience that others speak so much about. There is also a certain Indian that I feel one with than my own cousins back home.

Some sort of leveling is taking place due to education , greater interaction and so forth. The next of such surprises was when I read about cultures and organisations in an academic way with Hofstede. And lo and behold a movie true to the letters of what India is as described from a cultural perspective appears. ‘OUTSOURCED’ is more than true and shows the transformation of the foreigner once he surrenders to this incorrigibly impossible land. Without pandering to the love of the false exotic as Satyajit Ray would say….

And then there was Amartya Sen with his ‘Argumentative Indian’. I had not come across the book and had thought it to be one of his academic prose. Sen is difficult in his essays, interviews and speeches. But here it was well conceived and well stringed around a single word ‘argumentative’. Discourse would be a better word but that would be too Greek, like Socrates. Well for India no other word suits other than argumentative. Just watch any crowd in a public place in India.

Shashi Tharoor has written something similar from midnight to the millennium. But with his cattle class, loose words and Sunanda Pushkar I will read it later when he matures. Well I did not mention Nehru in the same genre with 'Discovery of India' which was surprise to me in 1998. No politician in India today qualifies as such. Perhaps I will wait for Rahul Gandhi.

Clash of the titans

The western man’s burden is himself. Having watched the Clash of the Titans I have come to conclude that zero imagination is better than poverty of imagination. If Bollywood can be accused of being masala or formula this one was a hotchpotch of all those archetypes that are of the western man. He, especially the Anglo Saxon stock put to use all inventions to subjugate others. His monolithic view fills his mind with imagined enemies too big for him to handle and therefore he builds defences all the time.

Consider the various scenes evocative of the Greek, the Roman, the exodus, the medieval witches and shapeless monsters, gods and demigods, god who demands unconditional obedience, hideous monsters all put into precipitous dim, cavernous, mad max model of landscape plus monstrous water and land animals out of proportion all against the reluctant protagonist who finally comes around to taking up his mission at the goading of many others and ends up fighting what appears to be his own inner fears in postures defying gravity and any semblance of reality at all. In comes a Pegasus from nowhere. Friend or foe he makes noises and has no role except transportation of the hero. There is not even passion which otherwise movies from the US are famous for.

I am reminded of the twilight of the American Empire. Only this time the gladiators and lions are not spectator worthy, and no less due to the repetitive treatment. Why could not they make movies at least to slow down and enjoy the 3D images!

Tracing back and forth from the doctoral dissertation abstract

One of the assignments Prof M R Dixit gave us on the Management paper was to trace back and forth from a paper. I prepared the following one.

It was on

Tracing back and forth from the doctoral dissertation abstract
“Do as the Romans?
Intercultural influence processes in Intercultural Work Relationships”

By Donald L. Ferrin
Department of Strategic Management and Organization
University of Minnesota

Introduction


The most important boundaries in the world today are often subtle but all pervasive differences in cultural perspective that shape how managers from different societies conceive their role and their work.

Culture is a concept in the realm of Anthropology and Sociology. It has a material facet and a non material facet. It has an unchanging element as also a changing element. It permeates our lives every moment whether we are conscious of it or not. It is an important determinant that distinguishes an individual from another individual. Culture is the personality of the community. It is also the collective programming of the mind; in which sense it has tremendous influence in determining the personality and behavior of the individual.

Many nations harbor different cultures within it; on the other hand many cultures are now spread in different nations. Many nations share a common cultural bond; also many nations share a common culture across the borders more common than many a culture in some remote corner of the same nation. There can be subcultures within the mainstream culture as well.

What happens when two cultures meet? One can imagine a certain remote tribe on a remote island which has never been in contact with any other culture as also the modern ‘organization man’ shuttling across cultures with considerable ease.

Between these two is the fuzzy area where the ambiguities presented by differing cultures leads to functional or dysfunctional relations. Modern

industrial culture is distinguished by its uncanny desire to configure itself and retain the patterns into the most functional one in line with its predominant themes of value addition, continuous improvement and gain.

Cross cultural management is a form of negotiation, whereby persons in interactions acquire participative competence for working in a multicultural team.

Culture: definition and metaphors

Culture refers to the distinctive collective mental programming of values and beliefs within each society. It is the shared ways of thinking, feeling and reacting; shared meanings and identities; shared socially constructed environments; common ways in which technologies are used; and commonly experienced events. It is the collective programming of the mind which distinguishes the members of one group or category of people from another. In the broad sense it refers to the social context within which humans live. Culture has been defined as a fuzzy set of attitudes, beliefs behavioral conventions and basic assumptions and values that are shared by a group of people and that influence each member’s behavior and his/her interpretation of the other people’s behavior.

The predominant metaphors used are the ones of programming and the lens. The former was proposed by Hofstede and the latter by Triandis. Triandis opined that “our collective experiences within our culture provide a lens through which we see the world. This cultural lens is a metaphor of being able to put on special goggles that show the world as it appears to someone from a different cultural group”.

Culture and trade relations

Culture has been a relatively new addition to the OB literature. Increasing world trade and recent trends towards globalization has necessitated new ways of dealing with the cultural differences in business settings. The trend in the colonial days was towards cultural subjugation or least of all, an indifference towards the host culture. An attitude of ethnocentrism by the colonial power was counterbalanced by the compliance/acceptance or incipient reaction by the subject.

Modern day commerce and business involves democratic ways of negotiation, dialogue, confidence building and workable relationships. These necessitate understanding major differences and nuances of the culture of the other and hence an interest in cultural studies.

The place of Ferrin’s dissertation in the literature on culture:
It is the concern with greater understanding for the sake of functionality that drives many a researcher to the study of processes within and across organizations. Ferrin has chosen the common assumptions in the intercultural research literature to test whether cultural norms do indeed influence, influence processes in leader- subordinate relations.

An understanding of intercultural processes gains all the more relevance in the context of increased mobility of organizations and people brought about by the irreversible trend of globalization. Organizations are more and more likely to be populated by people from different nationalities and culture. Organizations are to negotiate and enter into contract with each other from different cultures. Insights into cultural nuances of the interacting cultures both at the stage of contract building as also subsequent maintenance of the contract relations would help organizations in eliminating costly misunderstandings.

In a very broader sense any insight into interacting cultures are likely to bring about long term benefits in the sense of cultural understanding and exchanges even outside organizations in the arena of world integration. This could prevent belligerent posturing that many a nation has entered into. Many attribute the emergent fundamentalist trends to a dissatisfaction with the onslaught of western culture that globalization has subtly brought in.

Content analysis of Ferrin’s dissertation.

The area of study for Ferrin is the “subtle region of interpersonal influence tactic at the intersection of cultures in dyadic intercultural environment”. Most intercultural studies examine how managerial beliefs, norms and behaviors differ across cultures, but Ferrin examines how people perceive individual beliefs and culture norms in intercultural settings, and how their perceptions are manifested in their behavior.

Inter personal influence is a key element of leadership which in turn involves compliance from another person. It is natural on human’s part to desire to reduce the uncertainty inherent in any setting and especially in a new setting. In the intercultural context, the uncertainties are accentuated by the new behaviors that might be “required or expected and old behaviors that would be considered unacceptable or inappropriate”.

Ferrin used the following ‘appropriateness cues’ and set out to study which of them actually emerged in the intercultural dyadic situation:

Individual’s beliefs. Norms of individual’s national culture.

Interaction partner’s beliefs. Norms of interaction partner’s national culture.




Findings

The options available to an actor in the intercultural setting are intercultural adjustment, interpersonal adjustment or no adjustment.

Findings from Ferrin’s study indicated that ‘people focus on balancing their own beliefs with their counterpart’s beliefs. People consistently view adjustment in their intercultural relationships as balancing own and other’s beliefs rather than own and other’s cultural norms’.

Further, ‘people in dyadic cultural work relationships inhabit coherent, socially constructed worlds in which they view behavior as a function of their own and the other’s beliefs, not their own and the other’s cultural norms’.

This supports , according to Ferrin, an earlier perspective advanced by Mc Call and Simmons ‘that people do manage to attain some fumbling consensus on the situation and thus go on to conduct their respective businesses’.


This reminds one of the situation in a train compartment, where people come together from different walks and after the initial withdrawal get on well till the end of the journey in certain tacitly accepted ways. In other words there develops certain norms of space, courtesies and boundaries till the end of the journey that is sufficient for the immediate purposes of the travelers.

‘All that is needed is a sufficient lack of disagreement about one another for each to proceed in some degree, with his own plans of action’.

Ferrin’s major contribution is breaking the assumption of adjustment being conforming to foreign culture norms or simply intercultural adjustment.

In its place the study finds out interpersonal adjustment and no adjustment as alternatives in the repertoire of behavior available to the culturally different superior and subordinate. In other words the study finds out that in inter cultural relations, ‘behavior is a function of one’s own and the other’s beliefs, not one’s own and the other’s cultural norms’.

In a way, Ferrin’s findings negate the influence of culture almost completely and leaves the individuals themselves in dyadic settings to work out an acceptable space and culture of their own to pursue their goals.

The place of culture’s influence in Management and OB literature: the past


In general all study can be traced as an attempt to provide clarity with the ultimate objective of efficiency and eliminating waste by the use of the

insights gathered from the study. This can be traced to the scientific management spirit of finding a better fit, better approach etc. However culture in organizational theory belongs to the realm of management of people.

The human relations school in particular looks at interpersonal behavior and group dynamics and its influence on organizational processes. With increasing instances of interacting cultures it has been observed that culture is a major variable influencing the domain of human relations. Specially so, since cultural environment is a determinant of personality and is in turn defined as the collective programming of a community, implying culture is the personality of the community.

Understanding the relationships leads to better prediction and control over situations involving intercultural interactions. Culture can also be related to the inductively arrived at classic fourteen principles of management, proposed by Fayol.

Some of the principles of Fayol may be related to culture by hindsight although Fayol may not specifically have linked them to culture.

For instance developing sensitivity to the importance of cultural differences creates greater understanding and therefore order as against haphazardness among practitioners. By creating the least friction possible due to cultural insensitivity there can be created an environment for greater espirit de corps. Greater discipline may also be achieved by an understanding of the human and cultural processes at work

Even culturally equitable processes and rewards may be extrapolated by hindsight. Further studies may also relate cultural determinants of initiative, another principle enumerated by Fayol.

Also by hindsight were we not watching certain (sub)cultural processes at work during the Hawthorne experiments where the group under study developed norms distinct from those set by the supervisors, when they developed terminologies such as ‘rate buster’ and ‘rate chiseler’ ?

We see therefore rudimentary references to culture and its implications implicitly in Fayol and Hawthorne experiments.

Culture per se
Hofstede’s dimensions of culture

The legacy of culture being studied as a specific management concept begins with the seminal work of Geert Hofstede in the 70s. Hofstede conducted extensive studies in IBM company spread over nearly 50 countries and arrived at the four dimensions which he claimed universal and comprehensively explaining the domain of culture. These dimensions are as follows:

Power distance: Refers to the extent to which the members of a society accept that power in institutions and organizations is distributed unequally. The basic problem involved is the degree of human inequality that underlies the functioning of each particular society. In high power distance cultures power and authority are accepted as part of life and consequently high value is placed on obedience to superiors and following orders. In low power distance culture, individuals value equality and may question the orders of superiors before following them.

Uncertainty avoidance: Postulates that a fundamental dimension of any culture is the level of tolerance it has for uncertainty and ambiguity. It is the extent to which a culture programs its members to feel either uncomfortable or comfortable in unstructured situations. Unstructured situations are novel, unknown, surprising and different from usual. Cultures high in this dimension value conformity, maintain rigid codes of belief and behavior and do not tolerate deviation, while cultures low in the dimension maintain a more relaxed atmosphere where deviance is more easily tolerated. Basic problem involved is the degree to which a society tries to control the uncontrollable.

Individualism-Collectivism: It is the degree to which individuals are supposed to look after themselves or remain integrated into groups, usually around the family. Individualistic cultures place emphasis on the achievements, initiative and goals of the individual, while collectivistic cultures subordinate those to group membership and the goals of the group. Positioning itself between these poles is a very basic problem that is faced by all societies.

Masculinity-Femininity: This dimension addresses the fundamental issue of the way a society allocate social roles to the sexes. Cultures high in masculinity tends to maximize the social differentiation between the sexes. Men have outgoing and assertive roles and women have caring and nurturing roles. Culture high in femininity tended to minimize the social
differentiation between the sexes. Women can take assertive roles and men can take the caring roles. Fundamental problem is the distribution of emotional roles between the genders.

A fifth dimension long term vs short term orientation was also introduced recently. This refers to the extent to which a culture programs its members to accept delayed gratification of their material, social and emotional needs.

Culture: an alternative framework by Edward T. Hall

Three important dimensions about cultural differences that Hall described include: time, context, and space.

Time: "Time is one of the fundamental bases on which all cultures rest and around which all activities revolve. Understanding the difference between monochronic time and polychronic time is essential to success..." Monochronic time is characterized as linear, tangible, and divisible. In monochronic time, events are scheduled one item at a time and this schedule takes precedence over interpersonal relationships.

Polychronic time, on the contrary, is characterized by "the simultaneous occurrence of many things and by a great involvement with people".
Context: High and low context refers to the amount of information that a person can comfortably manage. This can vary from a high context culture where background information is implicit to low context culture where much of the background information must be made explicit in an interaction.


People from a high context culture often send more information implicitly, have a wider "network," and thus tend to stay well informed on many subjects. People from low context cultures usually verbalize much more background information, and tend not to be well informed on subjects outside of their own interests.

Space: Here, space refers to the invisible boundary around an individual that is considered "personal." This sense of personal space can include an area, or objects, that have come to be considered that individual's "territory." This sense of personal space can be perceived not only visually, but "by the ears, thermal space by the skin, kinesthetic space by the muscles, and olfactory space by the nose"

The grip of Hofstede’s dimensions on the cross cultural management literature is almost complete. In the many academic programs dealing with cross cultural studies Hofstede is essential reading and Hall is recommended reading.

Culture’s influences: other studies

One of the fundamental and dominant themes in OB, motivation, has upon empirical validation, suggested cultural influences. Motivation is one of the basic processes at the individual level. Yet upon examination has been found to vary in detail across cultures.

For instance the ‘self actualization’ postulate of Maslow hinges heavily on the idea of the individual and the self as something that is sacrosanct and unique and something that should be driven towards actualization. However, the actualization of the individual in some cultures different from the milieu

from which Maslow himself comes, was found to be viewed as something to be subordinated to the collective interests. Indeed, had Maslow come from a collectivistic society, he would not have chosen the individual as the unit of analysis, but the collective! In studies conducted among Japanese for instance, the belongingness needs were found to be preponderant over the esteem needs.

This implied that the universality of the theories emanating from the individualistic west was suspect and some other factor moderated the hierarchy or precedence of motivating factors (and possibly other aspects of behavior) and clearly this factor was the context of the individual namely, culture. Therefore culture became something as fundamental as the individual himself in understanding and predicting human behavior.

Another effort which studied motivation in the context of culture was that of David Mc Clelland. He studied achievement motivation and postulated that the same leads to success in business. Carrying the notion forward he suggested that the same is true for the economy a country or the world as a whole. He summarized his findings in his book titled “The Achieving Society”. Mc Clelland’s methodology was a content analysis of children’s books.

In a replication study of Hofstede on relationship between national culture and Customer Relationships Management (CRM) training in aviation industry conducted among 9000 male commercial pilots in 18 countries, power distance and uncertainty avoidance were identified as the most correlated with theoretical predictions.

In the same study, individualism scores were higher than the respective country scores. Explanation being that modernization may have produced shift towards more individualistic values in their countries or may be only pilots because of the self selection of pilots into a very individualistic profession. Also some supports were established for the perception that pilots the world over share the same values. In all countries pilots are at the forefront of their culture with regard to technology and global communication.

Hofstede’s dimensions have also been used as a guideline for first contact situations with foreign law enforcement agencies across cultures for special agents of the Air Force office of special Investigations(AFOSI) during military contingency operations.

For instance, law enforcement agencies high in uncertainty avoidance may establish tight network of reliable informants. Conversely law enforcement forces willing to tolerate a great deal of uncertainty and ambiguity may assume a more reactive posture.

The above illustrates a few instances where the study of culture was made to provide practical tips to practitioners. Almost in all the studies, the grip of the Hofstedian dimensions is palpable.

Hofstede’s main contribution is in providing a theoretical framework for applying the influence of culture in managerial phenomena across countries. Before Hofstede, until 1980 most of the work were atheoretical, simply comparing managerial phenomena in different countries.


The underlying assumptions of culture studies

One of the interesting features of the dominant paradigms in cultural studies is the assumption that the whole gamut of culture with its innumerable diversity is possible to be captured in just four or five dimensions. Does it not leave out many other aspects that may still need explanation?

Application of culture in the work context implicitly assumes that people do not abandon their societal values and attitudes upon entering the office or the factory. While what is implied in the concern with compartmentalistion of modern man’s existence is to some degree the opposite.

Another strong assumption, almost a truism, is the recognition of international management as an activity which has evolved into some form of work requiring interactive global networking, team working and organizational learning.

The unfilled gaps: themes for the future

An analysis of culture studies suggests the following themes for the future of the domain.

1.Future work should bring about better theories about culture identifying which aspects of Management phenomena are “universal and which are culture specific”.

Much work remains to be done in developing cultural dimensions in such a
way as to serve as parameters to describe specific phenomena such as

leadership so that one is able to predict, say, X leadership style fits well with Y culture. Similarly fit between person, task and managerial phenomena with culture can also be developed.

2.The development of a new paradigm which can be more easily amenable to practical application is warranted. Indeed one of the comments on Hofstede is that the work is too broad as to be open to more day to day applicability.

There is an ever louder voice among the practitioners for a ‘shift from the essentialist approach of Hofstede which make it hard to develop new approaches and therefore a plea for new cultural frameworks’.

For instance there is a vague precipitation around the idea of knowledge and an emanating explicit distinction between the more self seeking American styles of learning, knowledge sharing and the Asian and continental European cultures whose practices are group based.

One new dimension which probably is relevant is the doing orientation vs being orientation.

3.The cross cultural studies still originate from the individualistic west. More studies from the rest of the world should throw better light on cross cultural aspects. The individualistic west still sees through the individualistic goggles.

4.The discourse on culture is “preoccupied with the properties of individual

elements than with the product of their combinations, assumption being that end result in combining is something unpleasant”. Increasingly it has been observed that such situations produce a third culture which is a functional cultural hybrid. Study of individual cultures is comparative whereas what is warranted is a study of the hybrid. This would require an “embracing of culture in all its diversity as a resource rather than a threat for responding to the demands of a global economy and for reaping the full benefit of cross boarder alliances and for enhancing organizational learning”.

This would also necessitate a study of the elements of culture and the development of a “cultural periodic table” in much the same way as the periodic table of chemistry, from which it should be able to predict the characteristics of the hybrid.

5. Increasingly a third culture cutting across ethnicities, languages and religion is precipitating around the youth at the technical and modernized forefront of different nations. This is distinct from the subcultures within societies. In fact members of this third culture tend to gravitate towards each other and away from their cousins in their own culture. More studies need to be done in this area.

6.What about the cultures that are outside the purview of the industrial– business complex? Most studies are concentrated around these. Will the marginalization of the rest create newer issues for the world or is the world moving irreversibly towards a dominant business culture where efficiency in work and consumption are the only concerns?


Within the industrial – business complex there is an increasing need to regard actors against concrete background of organizational functions, real industries and real problems away from the broadly definable cultural terms of Hofstede.

7.It is high time for a new paradigm for explaining more subtle differences within a large country such as India. Some of the dimensions tentatively put forward are:

Entrepreneurial orientation,
Intellectual orientation,
Progressiveness vs conservatism,
Isolation vs assimilation,
Individual orientation vs social orientation
Toughness.

8. In terms of practical application cultural studies still hover around the nominal differences rather than the systematic divergence region. An example of the nominal differences problem is that of the name NOVA given by general Motors to one of its products and sent to Mexico. Inquiries on the reason for poor sales revealed that in the Spanish language the name means “it does not go”.

The emic-etic dilemma is inherent in cross cultural research as to be cultural requires the emic perspective and cross requires the etic perspective. However both offer their own problems.



The emic perspective implies one looks from one’s own paradigm much like the fish looks at himself through the medium of water. The etic perspective means the perspective of the outsider.

The natural born who looks at his own culture from the outside lives the precarious life of an outcast. Whereas the fish analogy implies that the fish is aware of the water only when it is out of it!

Till such time such problems are resolved (which is indeed difficult), the cross cultural research will have to content with resolving problems of the nominal differences rather than the systematic differences.

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