Slavery’s shameful secrets, anti-corruption in Russia and stakeholder activism
Slavery, through a management lens
Bar some notable exceptions (Saudi Arabia, Niger, Yemen and Oman among them), few of the world’s countries carried the practice of slavery with them into the 20th century. So why is a leading management journal giving space to the issue in 2013? The reason is two fold. First, slavery hasn’t gone away. As many as 30 million people are still subject to bonded, forced, trafficked or traditional slave labour. It’s there in the west African cocoa industry, in the Uzbek cotton industry, in India’s brick factories, to name but a few places. Second, it’s there because it’s an economic and – by the author’s logic – a management phenomenon.
If slavery is to be countered, it must be understood. This is the paper’s objective. The result is a fascinating “theory” of modern slavery as a “management practice”. Slavery, the author argues, depends on a duality of factors. At a macro level, the right conditions need to be in place: industrial (eg demand elasticity and labour intensity), socioeconomic (eg poverty and unemployment), geographic (eg physical isolation), cultural (eg tradition and religion) and regulatory (eg weak governance). Such conditions make some industries – agriculture, mining and construction, to name the most prevalent – particularly vulnerable to slavery.
The paper’s key insight derives from asking not only why slavery persists, but also what makes it prosper. The answer lies in “microlevel capabilities” that make extreme human exploitation as viable management practice. These comprise “insulating” capabilities, such as debt management and violence, and “shaping and sustaining” capabilities, such as the informal lobbying, bribery and threats that ultimately maintain and legitimise the illegal domain of slavery.
For the academic community, this paper opens up new research possibilities around the intersection of macro and micro institutional forces. Of particular interest is the role of “tacit, informal, and routinised” practices that affect institutional work. Practitioners will be interested in the concluding discussion around supply chain interventions, which range from training auditors to formal certification programmes such as Rugmark. There’s no one solution, however. Only when a company has a clear idea of “the complex set of variables and relationships that explain why slavery persists at the enterprise level” can it hope to tackle the issue effectively. One good place to start is in eroding the capabilities that slave operators use to shape their external environments.
Crane, A (Jan 2012), “Modern Slavery as a Management Practice”, Academy of Management Review, 38 (1): 49-69.
RosPil: collaborating against corruption
A lawyer-turned-anticorruption-activist, Russia’s Alexey Navalny is founder of the Russian internet-led organisation RosPil. Set up in 2010, RosPil has reputedly helped prevent the granting of dubious contracts worth up to $1.3bn. The organisation relies heavily on volunteer experts, who trail through public contracts for evidence of illegality, and is funded primarily through crowd-financing. Its success has seen Navalny gain a nationwide following – plus a two-week stint in jail after he vocally denounced President Putin’s recent election victory as fraudulent.
Behind the screenplay storyline lies an important question: should companies in Russia be supporting RosPil? The authors are surprisingly hesitant. Their caution derives in part from Navalny’s personal political ambitions. Wider political and cultural context also play a part. Opposing the state in Russia, which the fight against corruption inevitably entails, carries consequences – consequences that very probably come with an economic cost. And the cultural situation condones, or at least turns a blind eye to, corruption. Not all emerging markets are the same. Take India, where the IPaidABribe.com name-and-shame website is a storming success.
The paper comes down on the side of collective action against corruption, a tacit endorsement of RosPil’s model. Who should lead the fight? Those with the “strongest incentives and the sharpest abilities”. That means crime fighters like Navalny. But it “obviously” includes business leaders, too. “By staying silent, leaders must ask if they are poisoning the pool from which they all drink,”
Healy, P & Ramanna, K (Jan/Feb 2013), “When the Crowd Fights Corruption”, Harvard Business Review, 91 (1): 122-128.
Dialogue with shareholder activists
Companies targeted by shareholder activism will typically react in one of three ways to activist resolutions: they will ignore it (“omission”), acknowledge it (“let-it-go-for-the-vote”) or agree to it (“acquiescence”). A fourth option exists, albeit under-utilised: namely, to enter into dialogue. Done well, negotiated solutions can emerge – and shareholder disputes avoided. But which companies take this fourth option and why? Taking resolutions filed by members of the Interfaith Center on Corporate Responsibility over a four-year period, the authors of this paper hit on some interesting commonalities. Companies that opt for dialogue tend to be larger, to be more responsive to stakeholders, to have the chief executive as board chair, and to have a relatively lower percentage of institutional investors.
As stakeholder activists come increasingly to the fore, companies will need to become clearer on their engagement policies. Critics with a shareholding interest are not the same other critics. They are the owners and the primary stakeholders of the company. Batting them off remains possible, but increasingly less advised.
Rehbein, K et al (Jan 2013), “Corporate Responses to Shareholder Activists”, Journal of Business Ethics, 112:137–154.
Campus news
University of South Carolina Darla Moore school of business is to incorporate a major case study about Wal-Mart’s sustainability strategy into its international MBA programme.
Fuqua School of Business in Durham, North Carolina, is set to host the Duke Conference on Sustainable Business and Social Impact on February 20.