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6.4. Corruption

One issue which is of concern in the Western world is the question of corruption. This has been exhibited at a governmental level for many years and Transparency International produce an annual list to show how corrupt various countries are. In the 2010 list Demark is the least corrupt country while failed states such as Somalia and Afghanistan are at the bottom. From a corporate point of view however the problem is that in certain countries it is necessary to offer payments in order to do business and the debate is concerned with the extent to which it is ethical to do so. We do not offer an answer to this question - there is no definitive answer. Instead we simply point out that under certain governance codes and certain ethical philosophies it is reasonable but under others it is not. The salient point however is that Western values do not easily translate to every other part of the world.

6.4.1. ISO 26000

One of the most certain definitions found in ISO 26000 is that declared the importance of ethical behaviour. This standard has defined ethical behaviour as: behaviour that is in accordance with accepted principles of right or good conduct in the context of a particular situation and is consistent with international norms of behaviour.

International norms of behaviour, although already agreed to, are always condemned by some countries. These are the countries with similar interests who show their unwillingness to abide by ethical behaviour when it is time to vote on a related standard, or when the world celebrates a Nobel peace prize winner from China.

We must remember however that international standards are a problematic concept as there are very few universally agreed upon standards and it is very easy therefore to assume that Western norms have international agreement.

6.5. Culture

Culture can be defined as a set of shared attitudes, values and beliefs which are based to a large extent upon common backgrounds and experiences. They determine such things as our understanding of appropriate behaviour and reacting to circumstances. Similarities in culture lead towards similar behavioral patterns whereas differences in culture lead to differences - and these differences are a source of misunderstanding. This cultural component of corporate behaviour sets the tone of governance systems in a way which is very complex and is based in part upon the different systems described earlier. We consider that cultural differences are normally excluded from any analysis of governance but these differences mean that any universal code is applied so differently in different cultures as to render the code almost meaningless. In other words we maintain that culture is the most important determinant of the operation of any system of governance.

6.6. The Gaia Theory

While theorists of organisations were developing the notion of greater accountability to stakeholders during the 1970s, other developments were also taking place in parallel. Thus in 1979 Lovelock produced his Gaia Hypothesis in which he proposed a different model of the planet Earth; in his model the whole of the ecosphere, and all living matter therein, was co-dependant upon its various facets and formed a complete system.

According to this hypothesis, this complete system, and all components of the system, were interdependent and equally necessary for maintaining the Earth as a planet capable of sustaining life. This Gaia hypothesis was a radical departure from classical liberal theory which maintained that each entity was independent and could therefore concentrate upon seeking satisfaction for its own wants, without regard to other entities. This classical liberal view of the world forms the basis of economic organisation, provides a justification for the existence of firms as organs of economic activity and provides the rationale behind the model of accounting adopted by society. The Gaia hypothesis however implied that interdependence, and a consequent recognition of the effect of ones actions upon others, was a facet of life. This consequently necessitates a different interpretation of accountability in terms of individual and organisational behaviour.

Given the constitution of economic activity into profit seeking firms, each acting in isolation and concerned solely with profit maximisation, justified according to classical liberalism, it is perhaps inevitable that organisation theory developed as organisation-centric, seeking merely to manage the activities of the firm insofar as they affected the firm. Any actions of the firm which had consequences external to the firm were held not to be the concern of the firm.

Indeed enshrined within classical liberalism, alongside the sanctity of the individual to pursue his own course of action, was the notion that the operation of the free market mechanism would mediate between these individuals to allow for an equilibrium based upon the interaction of these freely acting individuals and that this equilibrium was an inevitable consequence of this interaction. As a consequence any concern by the firm with the effect of its actions upon externalities was irrelevant and not therefore a proper concern for its managers.

The Gaia hypothesis stated that organisms were interdependent16 and that it was necessary to recognise that the actions of one organism affected other organisms and hence inevitably affected itself in ways which were not necessarily directly related. Thus the actions of an organism upon its environment and upon externalities was a matter of consequence for every organism. This is true for humans as much as for any other living matter upon the planet. It is possible to extend this analogy to a consideration of the organisation of economic activity taking place in modern society and to consider the implications for the organisation of that activity. As far as profit seeking organisations are concerned therefore, the logical conclusion from this is that the effect of the organisation's activities upon externalities is a matter of concern to the organisation, and hence a proper subject for the management of organisational activity.

While it is not realistic to claim that the development of the Gaia Theory has had a significant impact upon organisational behaviour, it seems perhaps overly coincidental to suggest that a social concern among business managers developed at the same time that this theory was propounded. It is perhaps that both are symptomatic of other factors which caused a re-examination of the structures and organisation of society. Nevertheless organisational theory has, from the 1970s, become more concerned with all the stakeholders of an organisation, whether or not such stakeholders have any legal status with respect to that organisation.

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