Consumption’s links with wellbeing, how to identify ‘bad’ companies and what ethical leadership looks like
‘Ill-being’ at the bottom of the pyramid
CK Prahalad, the Indian-born management guru behind the “bottom of the pyramid” theory, passed away a few years ago. Before his death, he had the pleasure of seeing his idea take flight. It continues to soar. Yet how much do we really know about the people (four billion? five billion? the numbers vary) at the pyramid’s base? Not as much as we thought, it seems.
This fascinating paper looks beyond the basic preoccupation of BOP advocates: ie the question of how, in crude terms, to flog more stuff to more people. Instead, it examines what impact consumption will have. Will it, for example, improve well-being?
The study starts with two basic assumptions. First, the very worst off are less content than those with access to what academics call “global public goods” (what the rest of us know as food, water, power, and life’s other essentials). Second, the notion of consumption is broader than the typical materialistic parameters of product marketing. The paper talks of “consumption adequacy”; translated, that means enough bare essentials to enable a person not to have to worry about basic survival.
Consumer research suggests that consumption and personal well-being are linked in two core ways: through relatedness (acquiring essential goods can drive people to work together to obtain them) and autonomy (an individual’s sense of power/control over their actions).
Drawing on a corpus of data comprising 77,000 individuals in 51 of the world’s poorest countries, the paper’s conclusions are worrying. As long as individuals remain below the consumption adequacy levels, relatedness and autonomy will have “little to no influence on life satisfaction”. Prahalad’s theory is sound, but more “stuff” alone won’t alleviate the “ill-being” of the poor as long as they remain in poverty.
Martin, K & Hill, R (Spring 2012), “Life Satisfaction, Self-Determination, and Consumption Adequacy at the Bottom of the Pyramid”, Journal of Consumer Research, Vol 38 (6): 1166-1168.
Attributes of corporate irresponsibility
Everyone more or less knows what a “good” company looks like. By the same token, we know what a “bad” company looks like. Or do we? Is being bad just the opposite of being good? Yes and no, this paper suggests. Yes, in that corporate irresponsibility is a matter of effects that are both negative and tangibly recognisable. No, in that irresponsibility, like beauty, lies in the eye of the beholder.
The authors propose a theoretical perspective that focuses on how stakeholder perceptionsframe corporate irresponsibility (defined as a phenomenon of its own, separate from its more positive antonym). Particular attention is given to the perceived undesirability of corporate “effects” (read, “impacts”), examples of corporate culpability and incidences of “affected party non-complicity”. That much makes sense. What distinguishes this paper from the obvious is how these perceptions of effect influence one another. Add individual company characteristics (size, sector, perceived disposition, and so forth) and stakeholders’ identification with affected parties, and suddenly “irresponsibility” looks a whole lot more complex.
This insightful paper moves beyond a jaundiced cause-and-effect picture of corporate malfeasance. By shifting the lens from the objective to the subjective, it asks why and how individual observers judge an organisation’s activities to be irresponsible. Most companies pour their energies into convincing external observers of their innate responsibility. This paper reveals why some observers might draw an unintended conclusion.
Lange, D & Washburn, N (Spring 2012), “Understanding attributions of corporate social irresponsibility”, Academy of Management Review, Vol. 37 (2): 300-326.
Leadership, change and ethics
“What’s good for General Motors is good for the country.” This famous (mis)quote is attributed to Charlie Wilson, president of US auto giant GM in the early 1950s. Corporate leaders have since appropriated it for themselves, conflating their own self-interest with that of their organisation. This mindset – what the authors call “utilitarian consequentialism” – has important implications for ethics.
Before the nitty-gritty, however, a few words of clarification on leadership. Number 1, it needs to be seen as a process. Leadership as the function of a single individual, issuing a rallying cry from on high, is seriously out of vogue these days. Number 2, it’s evolutionary; the result of “dynamic exchange and the interchanges of value”. Number 3, it’s all about energy, not structure. Most importantly, leadership is inextricably bound up with change.
With all that in mind, what approaches to leadership evoke ethics-enhancing change? Not all, by any means: that’s the main message here. Any leadership-driven change process has to be undergirded by ethical values. As a consequence, “planned” change driven by an explicit set of ethical principles is far more likely to deliver ethical outcomes than so-called “emergent change” based on a leader’s use of power and manipulation.
One last note: leaders’ interests are not always compatible with the interests of their stakeholders, on whom their success depends. Thus, by a small leap of logic, leaders should see that the greater good is in fact in their best interest too.
Burnes, B & Todnem, R (June 2012), “Leadership and Change: The Case for Greater Ethical Clarity”, Journal of Business Ethics, 108: 239–252.
Campus news
Bill Drayton, founder and chief executive of the social entrepreneur network Ashoka, has received the Harvard Kennedy School’s prestigious Richard E Neustadt award for public policy.
The Canada-based academic forum Network for Business Sustainability has tripled web-traffic over the past year, according to its latest annual report.