Principles of ·

RESPONSIBLE MANAGEMENT Glocal Sustainability, Responsibility, and Ethics

Oliver Laasch Center for Responsible Management Education (CRME) and University of Manchester

Roger N. Conaway Tecnol6gico de Monterrey

PR~E Principles for Responsible IWI Management Education

A CRME publication in support of PRME

~- ~ CENGAGE • - Learning·

Australla • Brazll •Japan• Korea• Mexlco • Slngapore • Spaln • Unlted Kingdom • Unlted States

xiv

BRIEF CONTENTS

PART A: BASICS

1 Context: Drivers, Actors, Subjects

2 Management: Basics and Processes

PART B: DOMAINS

3 Sustainability: Managing for the Triple Bottom Line

4 Responsibility: Managing for StakeholderValue

5 Ethics: Managing for Moral Excellence

PART C: PLANNING

6 Strategy: Responsible Competitiveness

7 Entrepreneurship: Value-Added Ventures

PART D: ORGANIZING

8 Organization: Responsible lnfrastructure

9 Operations: Responsible Enterprise Excellence

10 Supply Chain: Responsible Supply and Demand

PART E: LEADING

1 1 Human Resources: HR-RM Symbiosis

12 Marketing and Communication: Stakeholder Goodwill

13 International Business and Management: Glocally Responsible Business

PART F: CONTROLLING

14 Accounting and Controlling: Stakeholder Accountability

15 Finance: Responsible Return on Investment

Subject Index

Name Index

1

23

52

83

112

155

186

220

260

299

330

366

402

446

485

527

550

1 PART A: BASICS 1 PART B: DOMAINS

Chapter 1: Context: Drivers,Actors, Subjects Chapter 3: Sustainability: Managing

The Context of Responsible Management 2 for the Triple Bottom Line 52

Subjects and Actors of Responsible Management 4 Business Sustainability: Managing for the Triple Bottom Line 53

Subjects and Background Disciplines 4 Origins of Business Sustainability 55 Sectorial Actors 5 The Workplace of Responsible Managers 6 Roots: Indigenous Sustainability 55

The Megatrend and Its Drivers 8 Historical Beginnings of Unsustainability 56 Theoretical Advances 57

Stakeholder Wants and Needs 9 Institutionalization of Sustainability 59 New Markets and Business Case IO The Status Quo and the Future 60 Converging Global Crises IO

Concepts of Sustainability Internet, Transparency, and Globalization II 61 Institutionalization of Responsible Defining Sustainability 6I

Management II The Three Dimensions of Sustainability 6I

Barriers, Inhibitors, and Criticisms 12 Interpreting Sustainability 63

Profit Issues 13 Economic Development versus Sustainable

Economic Crises 14 Development 66 Greenwashing 15 Sectorial Sustainability Footprints 68 Cause Criticism I5 Managing Business Sustainability 70 Applicable for Only a "Selected Few" 15

The Goal: A Neutra/ to Positive Triple Operational Inhibitors I 7 Bottom Line 70

Chapter 2: Management: Basics and Processes 23 Process I: Impact Accounting 7I

Responsible Management 25 Process 2: Impact Management 75

Management Basics and the Evolution to Prime Chapter 4: Responsibility: Managing Management 25 for Stakeholder Value 83

What Is Management and How Do We Make lt Business Responsibility: Managing For Responsible? 28 Stakeholder Value 84

Evolution of Management Thought 3I Origins of Business Responsibility 85 The Responsible Manager 35 Religious Roots of An Evolving Discipline 86

The Role of Managerial Hierarchies 35 Theoretical Advances and Institutionalization 87 Competencies for Prime Managers 37 Status Quo and the Future 88

The Responsible Management Process 39 Concepts of Business Responsibility 89

Planning 39 Defining Business Responsibility 89 Organizing 42 Related Terms 89 Leading 43 Classification and Interpretation 92 Controlling 46 Assessing Corporate Social Per{ ormance 93

XV

Responsibility Management as Stakeholder Management 97

The Goal: Stakeholder Value Optimization 97 Management Process L: Stakeholder Assessment 99 Management Process 2: Stakeholder Engagement rn 3

Chapter 5: Ethics: Managing for Moral Excellence 1 12

Ethical Business and Ethics Management 113

Origins of Business Ethics 114

Roots of Business Ethics n 5 The Discipline of Business Ethics L L 5 Institutionalization, Status Qua, and Future L L7

Basic Concepts of Business Ethics 118

Defining Business Ethics L L 8 Levels of Application n9 Moral Dilemmas and the Relationship to Law

and Comp/iance n9 Morality and Values L20 Interpreting Business Ethics n2

• Domains of Business Ethics 124

Domain L: Normative Ethics-Evaluate Right or Wrang L24

Domain 2: Descriptive Ethics-Exp/ain Right and Wrang Actions L 3L

Domain 3: Ethics Management-App/y Management Tools for Right Actions L 3 6

Ethics Programs and Culture L44

! PART C: PLANNING

Chapter 6: Strategy: Responsible Competitiveness

Strategy and Responsible Management

The Goal: Responsible Competitiveness

Phase 1: Formulating the Mission, Vision, and Strategie Objectives

Phase 2: Analyzing the Strategie Environment

Externa/ Environment Analysis Interna/ Environment Analysis Strengths-Weaknesses-Opportunities-Threats

(SWOT) Analysis

Phase 3: Crafting the Strategy

Corporate Level Strategy Business Unit Level Strategy Functional Level Strategy

Phase 4: Executing and Evaluating Strategy Strategy Implementation Strategy Contra/, Review, and Evaluation

xvi

155

156

159

160

162

L68

169

L69 L7L L74

175 L7J L77

Chapter 7: Entrepreneurship: Value-Added Ventures

Social Entrepreneurship and Responsible Management

Goal: The Value-Added Venture

186

187

189

Phase 1: Understanding Social Entrepreneurship and Social Innovation 189

Elementary Perspectives of Social Entrepreneurship L89

Economic Systems L9L Identifying the Starting Point for Social

Innovation L93 Implications for Social Entrepreneurship L95 Money, Labor, and Land L96

Phase 2: Envision Your Pathway 198

Scenario L: From Third Seetor to Social Economy L98

Scenario 2: From Private to Social Economy 20L Scenario 3: Pram Public Service to Social

Entrepreneurship 207

1PART0: ORGANIZING

Chapter 8: Organization: Responsible lnfrastructure 220

Responsible Management and Organizational Theory 222

The Goal: Responsible Infrastructure

Phase 1: Understanding the Organization

Opposing Viewpoints The Organization and Management Theory

Phase 2: Creating Structures for Responsible Business: Restructuring the Organization

Organizationa/ Design Patterns Elements of Responsible Organizational

Structure

Phase 3: Developing the Organization Responsibly

Organizational Leadership Responsible Culture Managing Change

Chapter 9: Operations: Responsible Enterprise Excellence

Operations and Responsible Management

Goal: Responsible Enterprise Excellence

Phase 1: Describe the Process

Mapping the Process

223

223

223

226

227

228

230

238

260

262

262

264

Contents

Describing the Process through Procedure The Difference between HRM and Responsible Documents 267 . HRM 334

Bundling Processes to Management Systems 27I The Business Case for Responsible HRM 336

Phase 2: Be Efficient through Lean Enterprise The New Skills for Responsible HRM 336

Methods 274 Responsible HRM Leadership and HRM Stakeholders 337

Lean Enterprise Methods 274 The Role of the HR Manager in Advancing Toyota Production System 277 Responsible Business 338

Phase 3: Be Effective through Quality Phase 1: Recruitment 339 Management 279

The Traditional Recruitment Process 339 Customer Orientation and Continuous Developing the Responsible Job Description 340

Improvement 280 Obtaining Candidates in a Responsible Way 340 Breakthrough lmprovement through Six Sigma The Selection Process 34I

Innovation and Design 285 Hiring in the Responsible Organization 342

Benchmarking and Breakthrough Improvement 287 Phase 2: Training and Development of Employees 342

Chapter 10: Supply Chain: Responsible New Employee Orientation 344 Supply and Demand 299 A Model for Orientation and Socialization 344 Responsible Management and the Supply Chain 300 Training 346

The Goal: Responsible Supply and Demand 301 Employee Development 347 Employability 348

Phase 1: Understanding the Supply Chain 302 Phase 3: Performance Management 349 Sltpply Networks 302 Performance Evaluation 349 Mapping Supply Architectures 303 Core Competencies 350 The Role of Small and Medium-Sized Community Involvement and Environmental

Enterprises (SMEs) 304 Stewardship 3JI Social Sustainability 3IO Offboarding 353 Phase 2: Managing inside the Supply Chain 311 Phase 4: Compensation, Benefits, and Employee

Engagement Practices 3I2 Well-Being 354 Standardization and Certification inside the Driving Principles of a Compensation System 354 Supply Chain 3I3 Living Wage 356 Application of QM Principles in Environmental Employee Well-Being 356 Management in OM and SCM 3I5 Ecoefficiency and Ecoeffectiveness 3I6 Phase 5: Employee Relations and Logistics 3I6 Communications 357

Phase 3: Closing the Loop 318 Union-Busting 357

Industrial Ecology 3I9 Employee Communications 358

The Circular Economy 320 Chapter 12: Marketing and Communication: Closed-Loop Supply Chains 32I Stakeholder Goodwill 366 End-of-Life (EOL) Design 322

Marketing, Communication, and Responsible Further Closed-Loop Tools 323 Management 367

The Goal: Stakeholder Goodwill 369

1 PART E: LEADING Phase 1: Ensuring Effective Integrated Marketing Communication 370

Chapter 11 : Human Resources: HR-RM Understanding Effective Communication 37I Symbiosis 330 Marketing Responsible Business Performance 377 Human Resources and Responsible Management 331 Phase 2: Applying Responsible Management The Goal: HR-RM Symbiosis 332 Marketing and Communication Tools 381

Phase 0: Understanding the HR-RM Spheres of Application of Responsible Interdependent Relationship 333 Management Communication Tools 38I

Contents xvii

Responsible Management Communication Tools 383 Phase 2: Evaluation and Elaboration

Phase 3: Customizing Stakeholder of the Data 459

Communication 389 Costing Models 459

A Stakeholder Communication Model 389 Responsible Business Performance Metrics 460

Stakeholder Audience Analysis 391 Indicators 461 The Value-Added Model 464

Chapter 13: International Business and Social Return on Investment 466

Management: Glocally Responsible Business 402 Phase 3: Reporting 466

Responsible Management and International Global Reporting Initiative 468 Business 403 Integrated Reporting 470

The Goal: Glocally Responsible Business 405 Auditing and Assurance 471

Phase 1: Understanding the Glocal Business Ethics of Accounting 474

Context 405 Phase 4: Management Control 474

G lobalization 406 Responsible Management Dashboard 476

Localizing Responsible Business 408 Chapter 15: Finance: Responsible Return

Phase 2: Assessing the Responsible International on Investment 485 Business 415

A Transnational Perspective of Responsible Responsible Financial Management 486

Management 415 The Goal: Responsible Return on Investment

Assess the Type of International Firm the (RROI) 488

Company Is 416 Phase 0: Understanding Financial Assessing the Company's Degree of Global Management 489

Sustainability, Responsibility, and Ethics 417 Mechanisms and Structures of Mainstream Phase 3: Mapping International Business Financial Management 489

Activity 421 Questioning Paradigms of Financial

Global Sourcing 423 Management 492

Global Trade 424 Phase 1: Financing Responsible Business 493 Foreign Markets 426 Socially Responsible Investing 495 International Subsidiaries 428 SRI Indices Global Strategie Alliances

497 430 Activist Shareholding 499

Phase 4: Responsibly Managing in a Globalized Directed Financing: Private Equity and Impact Business 431 Investing 499 Cross-National Diversity Management 432 Alternative Ownership Models 500

Intercultural Management 432 Cross-Financing and Goodwill Financing 502

Cross-Cultural Ethics 434 Debt Financing 503

Phase 2: Capital Budgeting and Programming

1 PART F: CONTROLLING Interna! Activities 503

Calculating the Social Return on Investment 505 Chapter 14: Accounting and Controlling: Subjects of Capital Budgeting 512

Stakeholder Accountability 446 Phase 3: Results and Governance 513

Accounting and Responsible Management 447 From Shareholder-Value- to Stakeholder-

The Goal: Stakeholder Accountability 449 Value-Based Management JI3

Phase 0: Understand the Basics of Accounting 450 Corporate Governance and Fiduciary

Responsibilities JI5 The Rise of Sustainability Accounting and Its Fiduciary Responsibilities 518

Role in Responsible Accounting 453 Subject Index 527

Phase 1: Identify the Account and Gather Data 454 Materiality 457 Name Index 550

xviii Contents