Writings On The Bathroom Wall

The lightning-fast corporate rejection of North Carolina for its legislation on transgender bathroom use was widely seen as an appropriate reaction by business against discriminatory government action. Backed by entertainers, politicians and other celebrities, corporate America let it be known that it rejected the narrow-minded views of the North Carolina legislature (Garcia, 2016).

Companies as diverse as Deutsche Bank and PayPal announced they were reconsidering expanding in the state (Eavis, 2016). Meanwhile, thousands of miles away, French cosmetics company L’Oreal ditched its partnership with “pro-democracy cantopop” singer Denise Ho after the Chinese communist tabloid Global Times criticized its Lancôme subsidiary for sponsoring a concert by the artist(Chuahiock, 2016).

Elsewhere, Poland’s Eurosceptic governing party, the Law & Justice Party, fired the state media’s managers stating that it wanted media coverage to be “impartial, objective and reliable” (BBC, 2016). In Uganda in 2014, few global brands heeded the Virgin Group’s Richard Branson’s call for a boycott after the country passed a law increasing criminal penalties for homosexual acts (Leadbetter, 2014). As recently as June 2016, the Singapore Government banned foreign multinationals from sponsoring the country’s Pink Dot event, its version of Gay Pride (Skapinker, 2016). Some sponsors have publicly announced their continued support of the event. Others have been silent on the subject.

This range of differing reactions to political and cultural tensions around the world suggests that corporations need to tread very carefully in making decisions about where and when to stand up in protest against national and local government decisions that they feel offend their own, their employees’ and some of their customers’ sensibilities. As thrilled as employees of the more than 100 companies that signed a letter in protest against North Carolina’s laws must have been, the inconsistency in applying the same principles across the world now stands out in stark relief. Unless one accepts that there is one standard for political activism in the USA and another in foreign countries, global corporations will need to think very carefully about when and how they exercise their considerable signaling power. For, truth be told, the track record of large companies in standing up against oppressive regimes and in favor of human rights leaves more than a little to be desired.

Whether they did business in Communist Russia, apartheid South Africa or Nazi Germany, many companies came very late to an honest evaluation of their role in supporting unjust societies. To be fair, there are examples of companies that have commissioned extensive research to document their past involvement with dictatorships. Allianz, the Munich-based global insurance company, deals with its ties to Hitler’s regime directly on its website (Allianz Website, 2016). Hugo Boss is another firm that commissioned a book on its ties with the Nazis and issued a formal apology (BBC, 2011). As slow as many large corporations were to divest themselves of their operations in apartheid South Africa, the fact that many of the largest ultimately did so is widely believed to have contributed to the peaceful abolition of the apartheid system (Risen, 1986).

In an increasingly turbulent world, anxious about the effects of globalization and the failure of international institutions to cope with its stresses, we are likely to see an increase in local situations that will put new demands on corporations that are of concern to different stakeholders. The tension between an organization’s embrace of “liberal” values – human rights, diversity, inclusiveness, sustainability – will, we believe, lead to an increase in the potential reputation risk presented by inconsistent behavior against these values around the world.

The risks posed by these developments can be managed in a variety of ways. We propose four principal pathways to manage and mitigate these risks, each representing a series of tradeoffs in terms of cost and effectiveness. We will describe them in more detail below but these pathways are:

1. radical change;

2. vocal activism;

3. quiet engagement; and

4. strict neutrality

This is excerpted from the full article. Click on the link to the journal below.

“Writings on the Bathroom Wall” appeared in The Journal of Business Strategy, Vol. 37 Issue: 5, 2016 pp.46 – 50, and is reprinted with permission from Emerald Publishing Group Ltd.

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