Professor Eric Cornuel ist Director General des European Foundation for Management Development (efmd) in Brüssel

Eric Cornuel: Shareholders vs. Stakeholders

The issue raised by Angel Cabrera is indeed of the utmost importance. The invisible hand system conceptualized by Adam Smith, where the addition of individual selfish behaviours leading to collective well being does not work anymore.
  • Eric Cornuel

As Angel says, managerial decisions do impact the well being of societies. It is hard to accept that 40% of the world’s population live on less than $2 per day, that 250 million child are forced to work in child labour and that 125 million children have never seen a classroom.

A number of actors in the management field (or closely linked to it) have reacted to these situations:

  • Last year a group of INSEAD students developed a “Hippocratic Oath, and organized a conference on the subject;
  • The Evian Group, led by Prof. Lhemann (IMD), has voiced similar opinions;
  • A broad group of business schools in Europe has created the European Academy of Business in Society, in the objective of pushing academics and businessmen to take these dimensions into consideration;
  • During the last Global Forum in 2002, efmd published the “Bangkok Manifesto” on global responsibility, and is following up with publications and conferences.

Obviously, in an ideal business world the manager should be loyal, straightforward, and aware of his/her responsibility vis-à-vis stakeholders (clients, suppliers, employees, environment, shareholders, society, etc). Developing a code of conduct, a “Hippocratic Oath”, is a very attractive idea, but is it completely realistic? I am afraid we are stuck in the middle of the two ethical options superbly described by Max Weber: conviction and responsibility.

I would still like to believe (perhaps naively) that most managers have the well being of society in mind, and given the choice they would prefer to act accordingly. However it is because of circumstances that they have to be “responsible” vis-à-vis their shareholders and company, therefore forgetting their convictions.

What will be the consequences for their companies, employees, and even themselves, if they refuse a number of unethical behaviours commonly observed nowadays? Will they protect their jobs, or their employees, or will they prefer to care for the environment or society at large?

We do have here an issue of finality for the manager, where there is no dilemma whatsoever for the medical doctor!

To summarize I think that Angel’s proposal is excellent and we should go ahead with it. However, I see this document, this code, more like a guideline or a “paragon” we should all tend towards and try to keep in mind.

Concerning the role of education, I firmly believe that “morals” and good citizenship should certainly be taught much earlier than at the MBA level, in order to be a part of the “bed rock” of our mental structures. However this then poses the question of the reform of education at large.

Nevertheless, this would not prevent business schools from developing teaching and research activities related to these issues. The only necessity would be to adopt a transversal approach and introduce these ideas into the different academic topics, instead of creating a new discipline, which would, in my opinion, become a ghetto.

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