Corporate Social Responsibility Model: Changing the Way Corporate Giants Do Business

Enhancing education, partnering with the World Wildlife Fund, committing to Conservation International’s sustainability efforts.

These are just some ways in which big corporations are leaning hard on a corporate social responsibility business model.

Last week, we talked about social responsibility and how it can be passive or active.

Corporate social responsibility (CSR) is an active approach in which businesses consciously change the way they do business in order to positively impact society.

CSR Objectives

There are two main motives to CSR:

  1. To improve quantitative social aspects – including the company’s societal impact
  2. To improve qualitative social aspects – including efficient employee management and processes

This relatively new concept of CSR has evolved as shareholders have. Today’s shareholders are often concerned in a company’s ripple-effect – its impact on the environment and society – rather than simply on the bottom line.

Industrial repercussions are at the forefront of the social conscience, thus shareholders are more apt to hold a corporation responsible for environmental and social impact.

This is not an individualist approach to business; it’s a collectivist approach.

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As you can see in the chart above, rule-based/individualist cultures lean towards personal responsibility, while relationship-based cultures lean towards societal responsibility.

In this way, you can see how economic management business models can benefit from cultural values other than our own.

CSR injects rule-based cultures with relationship-based cultural values.

And it’s a beautiful thing.

Mandated CSR

In some cases, governments mandate corporate social responsibility.

India, for example, required that companies donate 2% of net profits to charitable organizations in 2014, becoming the first country to enact such legislation.

The law required that a CSR board committee be established within the company, designating that 2% over the previous three years’ net profit to CSR. The board director would, at fiscal year’s end, review the company’s efforts to ensure compliance.

But, oftentimes, CSR is voluntary, as in the following cases.

Voluntary CSR

Microsoft’s Bill Gates is well known for his charitable efforts.

The Bill and Melinda Gates Foundation has done a huge part in eradicating hunger and poverty.

The Microsoft company, itself, has focused its efforts on social responsibility, with the Reputation Institute’s Chief Research Officer, Stephen Hahn-Griffiths, stating:

“Microsoft is committed to enhancing education as a highly relevant global human issue – and, unlike Apple, operates as an open-source platform that fosters perceptions of good citizenship and good governance.”

Another example of CSR done right is the Danish company, Lego.

Lego promotes sustainability, partnering with the World Wildlife Fund to fulfill its “Build the Change” and “Sustainable Materials Center” initiatives.

In 2017, Lego extended this partnership, with goals to push global action on climate change and reduce manufacturing- and supply chain-CO2 emissions.

These are just two examples of CSR in action.

What do you think of corporations taking an active approach in positive social change? As a conscious consumer, does a corporation’s social responsibility influence your purchases?

Cultural Ambiguity & Uncertainty: Following the Line of Logic to Understanding

One of the most difficult parts of managing across cultures is a sense of ambiguity and uncertainty when it comes to rules.

Those from rule-based cultures, thrust into relationship-based environments, likely find the rules ambiguous, and vice versa.

Unsurprisingly, the rule-based US culture professes a fundamentally rule-based management theory, decidedly offering straightforward advice regarding successful management.

Take “ad res” versus “ad personam,” for example.

Ad Res vs. Ad Personam

hierarchychartAmerican universities teach an “ad res” organizational theory, in which organizations are structured in a chart adapted to the business. The names can be altered in the chart, as the organizations are indifferent to the people who fill the roles.

However, this differs from how relationship-based cultures view organizational structures. In these cultures, organizations consider “ad personam” to be correct, which is quite the opposite of “ad res.”

With “ad personam” organization, the individual people come first.

Vagueness Leads to Misunderstanding

This is just one example of the way a culture’s values shape their management theory and structures. Just one more reason to clarify any cultural ambiguity or uncertainty in order to better manage within another culture.

Uncertainty stems from vague values, norms, and behaviors, which lend themselves to wrong assumptions.

When things are uncertain or ambiguous, the first step is always to seek understanding.

As we talked about early in this blog, finding the rationale behind the values, norms, and behaviors of your cross-cultural counterparts is essential to clarifying uncertainty and ambiguity.

And the first steps in seeking understanding are to:

  1. Identify the conflicting issue – pinpoint whatever it is that’s rubbing your own values and beliefs the wrong way.
  2. Look at the issue from the other culture’s baobab tree – keeping in mind what you’ve learned about the culture, try to see the issue from their perspective, their standpoint, their worldview.
  3. Seek out the advantages in their perspective – when you approach the issue from your own baobab, you’ll probably see the other’s perspective in a negative light; but from their baobab, a spotlight is shone on their train of thought, allowing you to see more clearly.
  4. Find the line of logic – while seeking understanding may not bring you in line with the other’s ideas of personal and social responsibility, finding their line of logic will lead you to a place of clarity. And with clarity comes understanding.

What Are Their Advantages?

When faced with conflicting cultural behaviors, values, norms, and management methods, ask yourself these questions:

What are their baobab’s benefits?

Why and how are their methods successful in their culture?

When you seek understanding instead of discriminating; when you start looking at another culture through their own lens, you may just discover significant advantages to their methods and values.

In doing so, you may also see the disadvantages and limitations of your own culture and ways you can improve your own culture. In fact, you may adopt certain behaviors, values, or norms that you appreciate.

Next week, we’ll take a look at one of the limitations that the individualistic West has started to improve on: corporate social responsibility.

How Business Communications & Negotiations Differ Across Cultures: Rule- Vs. Relationship-Based

When you walk into a Western office, any Western office, you know that there are rules.

They are hardline rules, and they apply to everyone, across the board.

Western cultures (“Western” meaning the US and Europe) are rule-based cultures.

In countries where equality and justice for all are building blocks upon which society is built, this rigidity in rule-following makes perfect sense. Rules provide objective guidelines for companies, for government, for society as a whole.

Relationship-based cultures, on the other hand…

Relationship-Based Cultural Communication

Negotiation is the basis of relationship-based cultures. Even when it comes to “the rules.”

Managers in relationship-based cultures dictate these rules, and so the better the relationship you have with said managers, the better stacked you are at the negotiation table.

Anything and everything can be negotiated in such cultures.

This leaves a lot of room for ambiguity, something Westerners aren’t very comfortable with when it comes to the workplace.

Being as such, communicating within relationship-based cultures requires one to keep in mind a complex network of human relationships.

Rule-Based Cultural Communication

The company rules in a rule-based culture (like those in the West) are spelled out; they’re explicit. Unless a worker hopes to be fired, he follows the rules.

In fact, the rules laid out by Western managers are communicated directly, and they are often compiled in various written resources.

Most American companies have thousands of pages of rules, included in such documents as the company’s mission statement and vision, their HR handbooks, compliance handbooks, job descriptions and responsibilities, expense regulations, strategies, etc.

Written regulations, above all else, are spelled out for you. Personal preferences and favored relationships don’t apply (at least, they shouldn’t in theory).

This allows managers to communicate within a set of rules. They, therefore, often communicate directly, unambiguously, and concisely.

Negotiation

Considering each culture’s values and the way these values impact communication, negotiating tactics are extremely different across these two cultural types.

When negotiating in rule-based cultures, one often uses a direct approach, as the rules are objective, and disputes can subsequently be resolved using said rules.

In relationship-based cultures, where rules are not black and white, courtesy and saving face is the most important part of a negotiation.

A Western manager must go into a negotiation with the business partner of a relationship-based culture focused on building and maintaining a relationship, rather than with a strategic focus on “the rules.”

Americans and other Western cultures see business as business and not personal. There are rules, so negotiations can get tough, without partners walking away from the table with a broken personal relationship.

But with a relationship-based business partner, you can’t negotiate tough and then expect your partner to amiably join you in a round of golf.

This may be the norm in America, but not in China nor in Japan.

Instead, business and personal are intertwined, so the relationship must be cared for above all else.

Next week, we’ll talk about bridging this understanding.

“Fair and Generous” Missteps in Cross-Cultural Business: A Case Study

An American company was looking to build an assembly plant in Eastern Europe.

In an attempt to be “fair and generous,” the company decided not to pay the average living wage of the area, which was much lower than the average living wage in America; rather, they offered to pay new laborers four times that average.

Sounds pretty generous, right?

Well, what they didn’t consider is the disharmony this would sow in the community.

The new lucrative jobs tore the town’s social fabric apart. Folks were anxious about which families would benefit. Things got cutthroat.

The company was now in a precarious position. What should they do in this situation?

Identify the Culture’s Values

With relationship-based cultures, the family unit is often the most important unit in society. Unlike in rule-based cultures, which are often individualist, the family is more important than the individual. In fact, the two are one.

Many in relationship-based cultures support the family financially. Not just parents taking care of their children, but sons taking care of their parents, older brothers and sisters financially responsible for their younger siblings.

In hearing of such a lucrative wage for labor, who wouldn’t jump at the opportunity? Especially when it meant you could better support your in-group financially.

Moreover, the families of potential workers were also invested in these top-paying jobs. Securing the work would mean more money to go around.

Considering this society’s cultural values, what did the company do?

Did they close up shop in Eastern Europe for fear of the consequences of their offer?

Did they take the initial offer off the table and put forth a more comparable living wage?

Nope, they found a cross-cultural solution.

Work within the Culture’s Values

Rather than cut their losses or go back on their word, the company identified the culture’s values and incorporated them into their own.

In order to preserve social harmony in the town, they hired one person from every family unit. The anxiety of potentially being refused this opportunity was spared, and each family was better supported.

This is just one example of a cross-cultural solution that works.

Identify the culture’s values and work within those values the best you can. If you know what your workers care about, what matters most to them, then you know how best to support them, which is mutually beneficial to you.

Relationship- vs. Rule-Based Cultures: Socially-Based Control vs. Individual Autonomy

Imagine living in a culture where the village and the individual are one and the same.

That’s how the Bantu cultures of sub-Saharan Africa see things: an individual’s welfare is dependent on the village’s and vice versa.

One example of the way this manifests in the culture’s social norms is in their greeting.

The Shona people greet others with Maswere sei (“How is your day?”).

The response is Ndiswera maswerawo (“My day is OK if yours is.”).

Relationships are a fundamental part of the culture, so social control is exercised through relationships.

Last week, we talked about how cultures differ in their views of rules and relationships.

In the Shona society, certain relative figureheads are in authoritarian roles over subordinates in the family. Wives are subordinate to husbands, children to parents, younger siblings to older siblings, and all to the village elders.

The culture sees this subordination as natural. Subordinates don’t buck against the hierarchy, because it is the way of life, and the society’s baobab roots are formed and interconnected by relationships.

In contrast, rule-based cultures don’t see rules and relationships this way.

Human Beings as Autonomous Individuals

Rule-based societies view human beings as autonomous (i.e. having no natural authority over others).

As we saw in last week’s post, the authority in such cultures is rather embodied in the rules – rules that are applied to everyone.

This Western cultural concept can be traced back to God and the Ten Commandments.

God is seen as a lawmaker. He governs using universal rule of law.

The Greeks also influenced the West’s rule-based values, as they saw individuals as generally rational and rules as generally logical.

This idea is the basis of “homo economicus,” a principle in which a prosperous society is based on a logical and rational people.

It follows then that, in rule-based cultures, management and behavior is based upon the culture’s respect for rules.

Both cultural types have rules, but they differ in their relation to these rules in two ways:

  • In relationship-based cultures, the authority of rules is directly related to the authority of the person who lays down the law, while in rule-based cultures, rules are respected for their sake.
  • Moreover, in relationship-based cultures, supervision and shame ensure compliance with rules, while in rule-based cultures, fear of punishment and guilt are used for the same.

How This Difference Affects Business Relations

These complex differences can sew distrust between business partners.

Each culture views their own perspective on rules and relationships as just and right. In turn, they view the other’s perspective as corrupt.

Imagine this scenario, adapted from Riding the Waves of Culture:

A manager in a relationship-based culture offers his nephew a lofty position in the company, despite the fact that this nephew is unqualified.

A rule-based colleague of this manager tells his counterparts:

“They’ll always help their friends and family over more qualified candidates. It’s nepotism. They cannot be trusted.”

On the opposite side, the relationship-based manager sees his rule-based colleague pass up a friend for a position in lieu of a more qualified candidate.

He tells his team:

“He will not even help a friend? How can we trust him?”

In this way, cross-cultural business relations can be easily damaged or decimated, when the motives of other cultures are not understood.

Next week, we’ll talk about how to avoid this misunderstanding.

Rule of Law in Culture: Are Laws More Important Than Relationships?

A hypothetical scenario:

Your best friend is picking you up to head out on the town. As you head into the city center, you notice your friend is driving quite fast; 40 mph in a 20 mph zone down a crowded street.

You see a pedestrian take a step off the sidewalk ahead of your friend’s car. “Look out!” you shout. But it’s too late. Your friend accidentally hits the pedestrian.

An ambulance is called, paramedics try to save the victim, but he doesn’t make it. He dies on the way to the hospital.

Weeks later, you are called to court as a witness to the fatal accident. You know your friend was driving well over the speed limit, but if you tell the truth, he’ll go to prison. If you lie for your friend, he’ll walk away.

Would you lie? Or would you tell the truth?

Survey: Venezuela vs. USA

This was the exact scenario given in a survey sent to 46,000 managers in 40 different countries in a study by Fons Trompenaars and Charles Hampden-Turner.

As a preface, Hofstede’s cultural dimensions define the US is a rule-based society; Venezuela is a relationship-based society.

Knowing this, which society do you think would choose to be truthful in this matter? And which do you think might lie to protect a friend?

As you can see below, the results were exactly as you’d expect.

additional_charts_CMYK-02

96% of American citizens surveyed said that, when confronted with this situation, they would tell the truth and abide by the law. Only 34% of Venezuelans agreed.

The majority of those from the relationship-based society of Venezuela would protect their friend above the law, while the overwhelming majority of Americans would put their societal responsibility before their friend’s fate.

Everyone is Equal in the Eyes of the Law

Western cultures are largely rule-based or “universalist.” Generally, they believe that, in order to be just, established rules and laws should be applied universally.

According to the purest form of justice, all people – friend or stranger, rich or poor, black or white – should be treated equally in the eyes of the law. And, with that perspective, most people in a law-based society would strive toward the rule.

Rules and laws are also seen, more or less, as a black and white matter.

A red light at a pedestrian crossing illustrates the seriousness of law in a rule-based culture.

In Germany or Switzerland – both strict rule-based cultures – place a foot out of line when the pedestrian crossing light is red, and you will see the reaction. Those around you will make it clear – albeit, likely with only a frown – that they’re not happy with your disobedience, albeit likely just with a frown. Even if it’s 2 in the morning.

Laws in a rule-based society are also considered essentially permanent.

For instance, a law that is a law today is unchangeable; it will be the same tomorrow (unless, of course, it’s changed through an often lengthy democratic process that involves party votes and public opinion).

Not even the highest office in the country has the right to change the law in an instant; neither is this highest office immune to the laws.

Beyond the Individual

While rule-based cultures often align with a high degree of individualism, relationship-based cultures walk hand-in-hand with collectivism. This results in a different prioritization of social norms in individualist vs. collectivist cultures.

One Confucian ideal puts this in perspective: care for one’s parents/grandparents comes first; then comes care for one’s children; then, for oneself.

Collectivists see human existence as reaching beyond the individual; rather an individual’s existence is a symbiotic relationship with extended family, the tribe, the village, society. One’s connection to others is part of his/her existence. Existing apart from this is a form of death.

As such, relationships are highly important; oftentimes, more important than rules. The alternative is ostracism which is, again, death.

Imprisonment is a form of ostracism. Should you confess that your friend broke the law, thereby sending him to prison, you are virtually putting him to death.

In this way, you can see the stark and dramatic difference the truth would make in this matter.

In this way, you can see the difference in perspective between relationship-based and rule-based cultures.

In this way, you might begin to understand motivations across cultures.