Business Integrity in Practice
Agata Stachowicz-Stanusch and Wolfgang Amann
A Reality Check
Economies around the globe continue to integrate at an amazing speed. Before the core European countries could perfect their own integration, negotiations on further expansion and even a cross-region free trade agreement continued and marched ahead, to name but just one example. The co-emerging problem lies in the fact that all coping mechanisms to ensure sound business conduct did not necessarily follow suit at the same pace. International regulation also lagged behind, let alone the establishment of effective international governance bodies. To top it all, there are not any normative frameworks for businesses around the world. The diversity of opinions and concepts on acceptable behavioral standards across cultures continues to thrive, as is expected. However, our societies as well as companies do need a discourse on the possibility of such a normative framework. Further discussions on business integrity can help create more value for society as well as minimize system shocks.
Granted, integrity inarguably represents a multifaceted construct. We identify at least the following three connotations. One focuses on overcoming inconsistencies—as integrity deals with consistency of actions, values, methods, measures, principles, expectations, and outcomes—integrity partially emphasizes more consistency and less contradiction whilst building more humanistic organizations. Mission statements and codes of conduct should be congruent with portrayed behaviors. In other words, companies ought to walk the talk. The second sheds light on overcoming insufficiencies—integrity emphasizes furthermore the obligation to close gaps between established societal norms and portrayed behavior. Companies and their constituents need to step up, create transparency about their moral compass, and follow set directions. A third connotation approaches the phenomenon with less emphasis on predefined value standards, but with the drive to overcoming incompatibilities. It is less focused on moral gaps but shows an interest in contradiction-free, “whole” organizations with aligned system elements. Thus, integrity shows a facet striving to address and overcome more or less open conflicts of interests and values in different organizational hierarchies, functions and managerial roles, and proposing concrete solutions. These three different, yet complementary approaches need to be detailed and revisited in the light of building businesses with more integrity. Therefore, we compiled this book as a key resource to enhance our understanding of how to build better organizations from this normative standpoint. We faced two fundamental options. We either argue our case based on theory and concepts, or alternatively illustrate with the help of critically discussed case studies on how to make progress. We have chosen the latter approach. To ensure a more realistic view, we selected case settings which vary as outlined in the following.
Structure of This Book and Our “Buffet of Ideas”
We have compiled our buffet of ideas in four main sections. Part I “Toward the bright side of organization” revisits the concept of ethical capital as well as integrity cultures. The chosen real world setting takes the reader to the United Kingdom and New Zealand. Tom Cockburn, Khosro S. Jahdi, and Edgar Gray Wilson jointly review three organizational case studies in how integrity and ethical capital is not only defined but enacted and accrued over time through the strategic and operational alignment of the core principles, policies, and practices of these organizations. The authors outline what the strategic values trajectory of each organization can and ought to be. As a point of orientation, they structure their thoughts with the help of 12 thematic areas. They add a thorough comparison as well as a critical evaluation in terms of three key dimensions of integrity vectors. To reflect the strategic values trajectory of the organizations evaluating mission, operations and implementation, the authors adapted a three-dimensional framework derived from a strategic HRM model, enabling analysis and evaluation of the explicit alignment of organizations’ integrity with their corporate philosophy, strategy, and operational practices.
Abiola Olukemi Ogunyemi continues our joint learning journey in Chapter 2 by deepening our analysis of individual ethical behavior and its key influences from organizational culture. While Nigeria serves as the learning ground for this link, there is room for generalization. Nigeria portrays a particularly difficult and under-regulated external environment. Nonenabling internal environments could entail a fatal blow to the good desires of employees who wish to do what is right. Besides, numerous problems arising from negative behavior can cost organizations heavily. A perception that management is self-interested could lead others to react by taking care of their own interests; policies and value statements that embody altruism but are not applied, or a reward system, may contradict the organization’s intentions to promote other-regarding behavior. Ogunyemi warns that companies inadvertently allow elements of culture or climate that inhibit integrity, because they inhibit other-regarding behavior. Self-interest is outlined as one of the factors that affects the ethical climate of the organization and it is determined by testing how concerned the people in the company are about themselves or their own interests vis-à-vis their concern for others. By and large, this chapter illustrates these ideas with three caselets, emphasizing that workplace integrity requires fostering other-regarding behavior. It also offers insight into cultural traits that enable or inhibit such deeds.
Chapter 3 deals with the prominent topic of whistleblowing, with the author Agata Stachowicz-Stanusch choosing Poland as the location for empirical insights; “to blow or not to blow the whistle—that is the question” in her contribution. Detailing her thoughts and analysis, she addresses the significance of whistleblowing in the context of current conditions in Poland. The author presents definitions and classifications of whistleblowing as well as the recognized barriers for its implementation, including legal ramifications. These considerations are supplemented with cases of whistleblowers who have taken such actions in Poland. The chapter thereby includes references to the current state of research in this area.
Chapter 4 contributed by Peter Odrakiewicz provides an overview of anticorruption actions taken in an organizational context in order to enhance integrity. The chapter shows innovative methods of dealing with new challenges and by suggesting the most effective approaches in an organizational context. Integrity and anticorruption actions in management are core needs for success in a globalized, competitive, innovative enterprise. Integrity management in organization challenges us, as the author outlines, to face new experiences and enables us to develop a pro-integrity and anticorruption organizational philosophy. A pro-integrity, corruption prevention, and eradication managerial organizational position allows entire organizations to transcend the constraints of our past and present experiences and belief systems and to see the world in its organizational complexities, with the goal of building integrity-proof, corruption-resistant and rejecting corruption, while maintaining free organization, in the future. The process of discussing these emerging global integrity and anticorruption challenges is accomplished through the use of analytical review and synthesis of existing literature and definitions, and by describing briefly the historical context and the present integrity and anticorruption situation in international organizations and in social media in management, keeping in mind the role and constraints of organizational environments. Additionally, recent results of the research using video-interviews on integrity and anticorruption situations in an organizational context conducted under the author’s supervision will be presented, with suggestions for possible improvements. The key role of values and norms in organizational culture are closely related to integrity, moral and ethical and corruption prevention concerns, and should be given the highest priority in managerial actions in all areas of human resources, marketing, organizational behavior strategies, and strategic and corporate management, including transparency in all communication in organization challenges. Building an integrity-proof, corruption-free organization of the future should be an aim for all organizations, in order for them to succeed in a complex, intertwined, intercultural, globalized marketplace. The organizations that successfully implement pro-integrity and anticorruption management will gain competitive advantages benefiting their owners, shareholders, and all stakeholders including local communities where they operate and function.
Part II of our book continues by including elements of a more humanistic management system and thus strengthens the foundation for building organizational integrity. Kathryn Pavlovich links integrity and poverty alleviation through enterprise in Chapter 5 on “Faith, hope and care.” Her thoughts inductively examine the role of integrity in enterprise development through focusing on three qualities of moral principles, consistency, and wholeness. It studied three entrepreneurs who have developed enterprises solely for alleviating poverty. This combination of commercial and social purpose provided a rich context to explore how their “calling” to such work involved an integrity of care for others to develop a more humane and just society. The research themes that emerged from the qualitative inquiry for discussion include the discovery of purpose, the creation of social wealth, and integrity for social justice. The theoretical contributions from this study demonstrate that the first quality, moral principles, is a central condition for integrity. The second quality, consistency, emerged as a practice for the development and refinement of integrity. The last quality, wholeness, is an outcome of ongoing consistency of action embedded in moral principles.
Chapter 6 contributed by William B. Mesa enhances our analysis of the role of integrity in building better and more humanistic organizations. The author presents and discusses a consulting model clarifying core values and promoting greater organizational integrity. The kinds of meaning that are most important to an entity are ultimately acted upon by the entity—whether the actions are beyond goals of profit or focused on profitability shaped by values. This chapter explores how three organizations (a business, a performance arts organization, and a winery) act beyond a goal of profitability and have a vision that generates clarity during times of turbulence or flourishing. Core values acted out by the entity represent expressions of integrity which in turn make up the kinds of meaning that are most significant to the entity. In summary, humanistic organizations are concerned with the kinds of meaning that will sustain it for the long term, as outlined by the author.
In Part III of our book on “Values and virtues as milestones for integrity in organization” two more chapters add substance to our analysis and learning journey toward more integrity in business. Yi-Hui Ho and Chieh-Yu Lin share how integrity can be managed in Chinese organizations. This chapter analyzes the dimensions and meanings of Confucian integrity, the importance of interpersonal relationships, and integrity leaderships in Chinese culture, and provides the perspectives of how integrity is managed in Chinese organizations. Moreover, the chapter attempts to provide some clues to the answer by analyzing the integrity value of TSMC, a Taiwanese semiconductor company with excellent corporate social performance and integrity culture. In addition, the chapter critically discusses possible challenges in developing integrity, and addresses issues of managing integrity that are rather unique in the Chinese context—such as saving face. This chapter emphasizes the international flavors that integrity can adopt. Insights on the western Judeo-Christian outlook show not only the natural geographic boundaries, but also that they are just one piece of a much larger patchwork of cognitive patterns. The book thus offers the reader a pathway for understanding the dimensions of integrity in Chinese cultures and the integrity managing in Chinese organizations.
Roberto Martin N. Galang and Manuel J. De Vera continue this train of thought in Chapter 8 by shedding light on how to build integrity amongst organizations in Southeast Asia. More specifically, the authors raise the question, “how do you build organizational integrity in societies where corruption is rife?” This chapter looks specifically at two programs designed to change social norms that could potentially lead to an improvement of integrity across firms, despite limited improvements in the quality of the national legal systems. The first case study revolves around improving integrity in the Filipino private sector. The Integrity Initiative is a private sector-led campaign that aims to promote higher ethical standards among companies through the creation of integrity validation systems, and recognize companies for exemplary performance in a set of awards. The second case study is based on the Integrity Education Network and the development of integrity-based university courses in Indonesia. The aim of the Indonesian program is to generate and teach courses to university freshmen that explain the differences between corrupt versus ethical behavior, in hopes of battling the cultural embeddedness of corruption. Through this comparative case study, the chapter seeks to document the factors that lead to the successful achievement of improved integrity and accountability among Filipino and Indonesian organizations.
Chapter 9 compiled by Gustavo González-Couture, Verónica Durana-Angel and David Schnarch-Gonz Couture focuses on how an Executive MBA ethics course can contribute to humanistic management. We thus progress in our storyline beyond just issuing a normative call for more integrity, and move on toward clarifying how to make progress. We increase our geographic scope as well—to Latin America. As the authors argue, Latin American organizations share some universal management principles of efficiency and efficacy in order to endure. However, its complex context challenges managers in unusual ways. With the analysis of these challenges in mind, this chapter describes the experience of an ethics Executive MBA course developed in the Universidad de los Andes (Bogotá, Colombia) that contributes to the moral awareness of its participants. The course shows that neither the rules (e.g., corporate ethics codes) nor the goods (e.g., favorable organizational goals) are sufficient to ensure an ethical behavior. It takes a joint effort by three ethical dimensions: goods, rules, and virtues. The experience clarifies how, through constant self-observation and self-reflection framed within the mentioned ethical dimensions, students at the end of the course register a change in their perceptions about their ideal behavior and their commitment; they became less naïve and more critical.
Part IV on “Integrity priorities during and after the crisis” strengthens our point of view that integrity management may have a substantial situational nature. Burcu Guneri Cangarli, R. Gulem Atabay, and Adviye Ahenk Aktan take the reader to Turkey in Chapter 10, one of the fastest growing and most promising economies on the planet. Organizational integrity has gained a great deal of attention in recent years. Since 2003, Turkish healthcare industry has witnessed radical changes, and it’s argued that these changes seriously damaged the trustworthiness of healthcare organizations and made their reputation questionable in the eyes of public. In that regard, the case explains the main dynamics of Turkish Healthcare System with the effects of recent changes based on the opinions of physicians. Hence, five physicians with different backgrounds explained the main dynamics of healthcare system and its effects on integrity. They also offer suggestions to create a healthcare system that stimulates behaving with integrity for physicians, healthcare clinics, and organizations.
Throstur Olaf Sigurjonsson, Auður Arna Arnardóttir, and Vlad Vaiman enrich our discussion on integrity in business in Chapter 11 by outlining what happens to business ethics and integrity after the financial crisis. Their emphasis is on Icelandic businesses, in light of the financial collapse of 2008. The authors argue that the Icelandic financial collapse was caused, to a large extent, by the lack of good ethical practices in the Icelandic business culture. Using new data as an empirical foundation of this paper, the authors draw conclusions on relevant measures for businesses everywhere. The authors argue that in order to learn from the devastating experience of the financial collapse in Iceland, the societal business culture needs to be changed. Recent research reveals that, unfortunately, little has changed in terms of the unethical behavior displayed by Icelandic business people since the financial crisis.
Finally, Helena Desivilya Syna, Michal Raz, and Amit Rottman outline their thoughts in Chapter 12 on how to improve organizational integrity through humanistic diversity management. The authors present the case of minority–majority relations in academic institutions and healthcare organizations. Humanistic diversity management is explored in divided societies, engulfed by protracted national conflict. The authors’ conceptual framework integrates two bodies of knowledge: the characteristics of diversity and its management in organizations and the effects of protracted conflict on relations among adversarial and diverse groups in organizations. Two Israeli cases demonstrate the impact of mixed nurses’ teams and the consequence of Jewish and Arab students in an academic college. The cases indicate that both medical staff as well as students in demographically diverse institutions face intergroup biases and tensions due to the salience of social categorization and the faultline phenomenon. They also experience difficulty in dealing with diversity issues related to the national conflict, which therefore remains hidden. The chapter presents an action model aimed at improving humanistic management practices, thereby potentially enhancing organizational integrity—organizational justice, sense of inclusion, and the capacity to express an authentic voice by individuals and diverse social groups. This action framework focuses on the relations between minority and majority, emphasizes the role of subjective perceptions, and the need to move them from the hidden sphere to the overt level. It assigns a central role to interpersonal and intergroup negotiation, places the intervention in the specific organizational context and emphasizes the need to interface and coordinate diversity management at the micro (group) level and the macro (national policy) level.
How to Best Enjoy This “Buffet of Ideas”
This book’s editors encourage the reader to read selectively, contingent upon the individual interests when it comes to regions, industries, and topics presented in this book. Not all of the chapters are likely to be of equal priority. Reflection is furthermore dear to us editors. We therefore added suggestions for further reading as well as questions to review the content of each chapter.
We also invite you, as the reader, to critically reflect on the very complexity drivers characterizing the integrity field and its very debate. There are four main complexity drivers worth mentioning. First of all, there is diversity. Integrity portrays multiple connotations as such. For some, it first and foremost deals with the need to close unacceptable gaps with societal norms. Organizational leaders and managers must step up and eradicate whatever inefficiency persists when linked to the larger societal expectations and demands. For others, integrity represents an intracompany challenge. The board or top management issues codes of conducts, mission or value statements, and somewhere, someone in the organization defects. Others in turn see in integrity less a compass to follow, but a clear risk issue. The threat of fines and reputational damage even up to what has been labeled less elegantly in the new media world as “shitstorm” need to be avoided at all cost. For an additional group, integrity represents a core management tasks. Some parts of the organizations simply do not fit together, causing conflicts of interest and friction where it adds zero value to the customer as well as the company and its stakeholders. Diversity also materializes when we reflect on the industries we present in this book. Each one of them, at times even each player in them seems to have unique challenges, rendering general one-size-fits-all recipes misplaced.
Interdepedency is the second complexity driver. It affects the integrity discussion, for example, when we add the international dimensions. Politics, philosophical underpinnings, local business culture and economic development status can have severe impact. At times, a lack of integrity in the form of corruption emerges only when economies are underdeveloped Integrity competencies and respective training—as we outline in this book—can thus mediate the relationship between the actors in the system and their business challenges. Demanding more integrity without allocating the resources for training represents a recipe for disaster. Ignoring the interdependencies with local elements in one’s business context merely equals an oversimplification of the analysis. This leads us to the next complexity driver—ambiguity. Which leaders and managers can actually know of all these local shades of integrity? When it comes to the value expectations of societies, there is ambiguity. Would society want jobs, innovations, environmental, and social safety? What are priorities? Same considerations hold true for top managers which set the tone in firms. They may not know what really happens in different parts of the organizations. They may also deem consequences uncertain. Any solution to integrity challenges therefore must reduce the harmful ambiguity in the system. Eventually flux emerges as the fourth driver of complexity. It alludes to the speed of change as well as the number of directions in which change can happen. After all, values and norms change. They may be temporarily suspended in times of crises. With further economic wealth, other dimensions of a high quality of life transpire. The same holds true when economic conditions change. Standards are lowered, although we remain purely descriptive, not evaluative. Our chapters on integrity in a crisis situation shed more light on this phenomenon.
Next to encouraging you to serve yourself selectively from our compiled buffet of ideas and to consider the inherent complexity, we want to stress the need to implement situational solutions based on individual cases as our third main message. As there are probably as many integrity challenges and preconditions as there are companies, so would the option space for solutions reflect this richness. Each leader and manager must therefore not only understand this contingent nature of integrity solutions, but also ensure the skills to build at times highly temporary solutions in their own, unique setting. They may, but at times may not find all the answers from elsewhere. They have to construct these answers which often cannot be merely found, but have to be developed, experimented with, rolled out, constantly improved, and in due time retired to make space for new solutions. Successfully doing so requires focus, heart, energy, and courage as the “new book” on integrity then has to written. If the book at hand at least partly serves as a source of activation, inspiration, encouragement, and learning, we have achieved our goal.