Business and Education in the Middle East

N. Azoury, N. Azoury

• Publisher: Palgrave Macmillan
• Year: 2014
• ISBN:
  9781137396969
• Topic: Business
• Subtopic: International Business
• Index: Business

Business and Education in the Middle East brings together academic and business expertise in order to come up with long-term strategies that will have a great effect on the university performance and governance. The book shares experiences and knowledge to explore innovative strategies and plans with a new perspective for the future.

1

The New Social Contract: The Business of Values

Ramsay Najjar

Introduction

The following chapter addresses the topic ‘Winds of Business Change’ by examining the evolving relationship between business and society and the emergence of a new social contract. It explores implications for the corporate communication of social responsibility and makes a case for aligning global agendas in the future.

Businesses in society: a double-edged sword

Businesses are the engine that keeps society running. Not only do they create employment and the wealth that sustains entire communities and nations, but they are also the drivers of innovation, constantly pushing for technological advancement and the enhancement of living standards. Because of their essential role as cornerstones of society, businesses also have the potential to harm it badly if they choose to engage in unethical or socially irresponsible behavior.

As a result of this two-sided reality, the role and ethical responsibility of businesses towards their community and society at large has long been a controversial topic inspiring several, often conflicting, schools of thought. Similarly, the place of communication in this equation has become a point of contention, with many claiming that corporations merely claim to behave responsibly towards society solely for the publicity and to reap the subsequent rewards. Such behavior, best described as ‘image laundering’, has resulted in social responsibility being widely associated with ineffective, insincere programs and agendas that serve corporations and their interests more than they do the societies of which they are a part.

Whatever one’s views on the matter may be, none can deny that the winds of business change are blowing, and it is up to us to follow their direction. Remaining abreast of rapidly shifting changes in general attitudes and behaviors, as well as those occurring in a business’s more general environment, are instrumental to its survival and success.

The following chapter examines the different views surrounding the societal role of businesses, as well as their predicted adoption of a new social contract in upcoming years, paying particular attention to the matter of social and ethical responsibility. It also explores at length the role of communication as an integral part of the relationship between businesses and communities, offering detailed insights into the current and future communication of corporate social responsibility (CSR). Finally, it examines the optimal course of action for corporations to undertake as the movement for social responsibility develops in the future.

Towards a new social contract

Thus far, the debate centered around the role of business in society has been somewhat polarized and split between two camps, with one arguing, as Milton Friedman (in)famously put it, that ‘the only business of business is business’, and the other spearheading a movement that sometimes unreasonably demands that businesses compromise their bottom lines. Though both camps make some valid points, neither succeeds in wholly capturing the essence of the matter.

Naturally, a more moderate middle ground exists. Businesses, and large corporations in particular, undoubtedly have a bigger role to play in society than merely providing a product or service in exchange for financial compensation. Though this mercantilist dimension represented the only raison d’être of businesses in earlier times, a new layer of social responsibility must be added today. While this layer is often dismissed as being at odds with profit margins, we aim to prove that each can indeed be placed in the service of the other, creating value and an all around optimal situation enabled by the effective use of communication.

Indeed, profit and social responsibility need not be juxtaposed: business and social issues can be reconciled and made one if large companies start to review their take on the social contract they have implicitly signed. Traditionally, this contract implied that the chief responsibility of business towards society was the creation of jobs and the provision of goods and services that individuals and households would in turn staff and consume. The ideal was for the two to be engaged in a virtuous cycle of mutual benefit and wealth creation, most often anchored in the context of a specific town, city, or country.

Though the fundamentals of this model remain valid, new givens have entered the equation. With the rise of multinational corporations and the near disappearance of borders within the global economy, the effects of a corporation’s activities and practices have far-reaching repercussions. The disastrous British Petroleum oil spill in the Gulf of Mexico is a prime example. Developments, including the need to curb global warming, practice fair trade, exercise global citizenship, and many others, now require businesses to widen the scope of the part they play in society – hence the need to reconcile profits and socially responsible behavior. This reconciliation would have to highlight the actual significance of social issues to business in a way that is less crude than Friedman’s view and more subtle than that of the fervent proponents of CSR as it is understood today.

The solution, then, is to frame the matter differently in the form of a new social contract between business and society, along with the obligations, advantages, and benefits shared by both. Such a contract would not make the reductionist error of asserting the primacy of one actor or interest over the other; but rather encompass both in a manner that both parties would consent to and profit from. The new social contract dictates that businesses transition from being mere tourists, so to speak, to becoming fully fledged citizens, and assume the responsibility therewith. This new social contract would also be based on a mutually beneficial dynamic whereby businesses commit to behaving responsibly on every level relevant today, ranging from ethical hiring policies to sound environmental practices, and the public would in exchange reward such behavior through customer loyalty, goodwill, and the building of a favorable reputation. Should companies fail to uphold their end of the bargain, they will be sanctioned by the withdrawal of societal support for their organization.

Soon enough, corporations will no longer be able to ‘hide’ their unethical practices, as they have been accustomed to doing. Aside from traditional sources of influence held by society’s elite, such as lobbying, social pressure, and the shaping of regulatory frameworks, today’s everyday consumer is more alert than ever, capable of chipping away at reputations by creating a far-reaching ripple effect across social media and other online platforms. The need for a new social contract will therefore become unavoidable as a result of these advances in communication technology and consumer empowerment. However, businesses can turn this challenging development into an opportunity by engaging with their societal stakeholders in earnest and building a sustainable, 21st century model of interaction.

The new social contract requires corporations to be accountable citizens of a global community or else risk losing consumer bases.

Now that the need for this new social contract has been established, one question remains. How is it to be forged? What means will business and society use to connect, engage in dialogue, and agree upon the terms of their contract? How will each party be held accountable to the other? The answer is simple: through communication. Media and communication are the surest means of catalyzing this restructuring of the social contract, and the only means of engaging in dialogue, spreading awareness of an idea, and rallying communities around a cause, ultimately creating enough social pressure for real change to be effected.

Communicating social responsibility: the smarter alternative

Along with a newly defined social contract, a newly defined means of communicating social responsibility must also be put in place by corporations. Before delving into the specifics, it is worthwhile first examining the current state of corporate communication.

The sad fact of the matter is that, today, many companies the world over claim to engage in ethically sound behavior when, in reality, they are doing the very opposite. Both Enron and Lehman Brothers proudly boasted about their environmental and community programs, only to be exposed as frauds and turned into classic examples of social irresponsibility. Though this reality is far from ideal it is, nonetheless, understandable. There exists in human beings a fundamental tendency to resort to psychological compensation, meaning that they feel a need to be overly vocal about an issue they know they are doing very little about in an attempt to ease a guilty conscience. The same applies to companies with a compulsion to be well regarded and patted on the back, constantly discussing social responsibility because they know that, in reality, they are taking from society without giving back. Indeed, as long as human beings have this basic need – similar to that for water, food, or sex – to have a positive image of themselves reflected back at them, even if it is a mere illusion, and as long as corporations are formed by human beings, they too will harbor this desire. Opting for a quick, superficial fix rather than a real, long-lasting solution to building a reputation is a form of cognitive dissonance. Just as precious possessions are insured for an amount that at least equals their value, so should goodwill and trust earned through socially responsible behavior equal the value of a corporation’s reputation, serving to preemptively immunize it against potential crises. The gulf that exists between the value of a business’s reputation and the amount dedicated to social programs that protect it defies all logic. This holds especially true in today’s world, where the danger from alleged corporate wrong-doing or communication crises has the potential to severely harm image and reputation.

Corporations need to take out an insurance policy on their reputations in the form of trust and goodwill earned through real positive action.

Corporate attitudes that are based more on talking than effective action no doubt exist. But that does not mean that genuine, impactful initiatives do not also exist. By examining some facts and figures, we see that in 2011 one of the largest corporations in the United States made a whopping $69.87 billion income. In that same year, it dedicated $107.8 million to CSR programs, the equivalent of 0.15% of total revenues. Looking at this percentage, one might feel inclined to think that much too little was dedicated to social causes. If, on the other hand, one were to consider that, in absolute terms, this is quite a significant amount to spend, one question still remains: Does the amount yield the desired return on investment, both in terms of increasing the brand equity of a given company, and in helping to better societies and develop them sustainably? The answer is, unfortunately, a negative one.

One factor explaining this unfortunate phenomenon is the fact that the lion’s share of social responsibility initiatives today falls under the category of ‘fake zeal’. Exacerbating the problem further still is the reality that although the public grows more discerning by the day, many still cannot differentiate between genuine initiatives and programs and those that are fake. A close look at today’s business landscape shows us that claims should not be taken at face value; if a company alleges that it engages in ‘socially responsible’ work, it most definitely does not mean that the claim is based on real action. To put it simply, many corporations are talking the talk precisely because they do not walk the walk. One could even go so far as to compare this phenomenon to the relationship between a psychiatrist and his patient, where the troubled patient is under the illusion of having sufficiently addressed his issues simply by talking about them, when the reality is that real-life action needs to be taken in order for things to be truly fixed.

First and foremost then, and before anything else can be done, the public needs to reach a point where it is able to tell the difference between what is real and what is not. It is of the utmost importance that they have the means to distinguish between those who are genuine and sincerely committed to society and those who hide behind a veil in the hope of ‘laundering their image’ and somehow compensating for unethical or unsustainable conduct. The most beneficial direction at this point in time, therefore, is to commit resources to raising awareness levels and equipping the public with the capacity to tell the difference between social programs that are sincere, ethical, and effective, and those that are not. This would entail the dedication of serious portions of budgets over the coming years to this very cause. It would also mean the creation of far-reaching awareness campaigns, the crafting of educational strategies, the setting of standards and objectives by sector, and the establishment of key performance indicators (KPIs) and other clear indicators that would allow individuals to measure concretely corporation performance. With all the grave problems that the world faces in our day and age, many will surely demand to know why raising awareness is important, let alone necessary. The answer is that, the way things currently stand, we are in a lose–lose situation, for the most part.

Corporations that claim to be ‘socially responsible’ citizens of the community are not perceived as credible by many. They are most often dismissed or brushed aside for being insincere by overly cynical members of the public who may even fail to respond positively to a genuine effort. On the flip side, members of the public who do believe in the sincerity of corporate efforts may not be demanding enough and fail to hold corporations as accountable for their promises as they would their governments or other important societal actors. Either way, the result is negative all round. Businesses are not reaping the desired goodwill and engaging in optimal interaction with their consumer bases, nor are they effecting real change because the vast majority of initiatives remain superficial, and are met with some resistance even when they do have actual substance to them.

Not only is this situation sub-optimal, it can also be seriously damaging to a business. Indeed, efforts at social responsibility that are perceived as insincere can even go so far as to hurt a company’s brand and sales quite badly. In a recent survey, 71% of respondents said they would stop buying a product if they were misled by a green claim, and of that 71%, more than 30% would boycott outright a company that made false claims. This goes to show that ‘greenwashing’, or any other form of faked commitment to ethical behavior, can have dire consequences for businesses once consumers find out. This problem, however, comes with a solution, and awareness lies at its heart. If awareness levels are increased effectively and the average ...

Table of contents

• Cover
• Title
• Introduction
• 1  The New Social Contract: The Business of Values
• 2  The Next Digital Development in Education
• 3  A Business Outlook for the Arab Region
• 4  The Future of Learning in the World of Hospitality at Le Cordon Bleu
• 5  Winds of Business Change
• 6  Business Challenges in Turbulent Lands: The Case of the Middle East and North Africa
• 7  The Impact of Technological Development on Business and Education
• 8  Education in the Middle East: Challenges and Opportunities
• 9  Education in a Globalized Era: An Outlook from the Receiver
• 10  Conclusion
• Index