Jerry M. Calton, professor of management at the University of Hawai‘i at Hilo, focuses his research and teaching activities on exploring ways to integrate improved social and environmental performance into the operations and decision-making processes of business firms.
“This has prompted me to question conventional theoretical assumptions about the primacy of the focal firm and the need for managers to deliver single bottom line profitability, often at the expense of poor stakeholder relations,” he says.
Calton and others in his field of business and society have sought to reframe “the firm,” particularly with regard to issues that impact external stakeholders, as a participant in an evolving, decentered web of stakeholder relationships.
“The firm’s stakeholders have multiple and to some extent competing values, interests, and voices,” he says. “Thus, the challenge for managers is to learn how to listen to competing voices and to engage with stakeholders to find common ground among the rubble of competing claims.”
This challenge has prompted Calton to formulate rules of engagement for stakeholder dialogue: All relevant viewpoints should be represented at the table, all voices should be heard and treated respectfully, and all negotiated outcomes should be grounded in consent. These rules of dialogic engagement are necessary to assure fair and ethical treatment and to build the trust needed to sustain stakeholder relationships.
Calton says while these common sense rules are integral to democratic governance, they have not been central to traditional corporate governance assumptions and practices.
“To the extent that more hierarchical corporate managers have sought to drive their firm toward unitary efficient outcomes by emphasizing short term profitability, they have been inclined to treat external stakeholder claims as a cost of doing business,” he says. “However, the gradual accumulation of social and environmental costs has prompted the rise of a cacophony of angry voices that threaten the brand image and reputation of major corporations, for example Wal-Mart.”
Calton says that as a consequence of stakeholder activism around the rise of systemic problems, corporate leaders have begun to engage in community conversations to jointly develop voluntary standards of corporate citizenship behavior. After consensus has been reached on these standards—for example, treatment of sweatshop workers, sustainable environmental practices—many corporations have begun voluntarily reporting on their social and environmental performance and soliciting civil society certification to garner legitimacy for their broader, more pluralist definition of corporate performance.
“A related development is the rise of ethical supply chain management to assure that supplier firms comply with labor, human rights, and sustainability codes of conduct,” he says.
One of the most surprising aspects of these new approaches to network governance is the extent to which hands-on efforts at multi-sector collaboration have outstripped theory development.
“Management theory has been so wedded to the selfish rationality assumptions of economic man and to the unitary focus on the needs of the focal firm, that scholars have struggled to identify the structural and normative prerequisites for multi-sector collaboration such as public-private partnerships,” he says.
Recently, Calton, in association with co-authors such as Patricia Werhane at DePaul University, has pointed to the need to articulate new “mental maps” to frame collaborative efforts that seek to address public goods problems, such as poverty, poor nutrition, public health, and sanitation issues at the base of the global development pyramid. The research, recently accepted for publication in the prestigious Journal of Business Ethics, shows how mental maps based on such constructs as “multi-stakeholder learning dialogues” and “global action networks” can facilitate the scaling up of “partnerships with the poor” whereby social entrepreneurship ventures can generate profits while leveraging social and environmental benefits at the base of the pyramid.
The researchers go on to suggest that experience working with the poor at the base of the pyramid to address shared global problems can help governments, corporations, non-government organizations and social entrepreneurs work together on social and environmental problems at the top of the pyramid. Disappointing results from single-sector initiatives, such as government aid, corporate philanthropy, and private charity have prompted this new interest in multi-sector collaboration.
Calton applies his research insights in his upper division management classes, where student teams are learning how to address community needs in innovative ways. In his business and society class, students are evaluating the social and environmental performance reports that leading business corporations are putting on their websites. Students describe and evaluate the performance measures and evidence of progress to determine the credibility of corporate “triple-bottom-line” claims.
“Students can develop critical thinking skills in evaluating these reports and also learn about a new career track in social and environmental reporting and monitoring,” he says.
Jerry Calton is a professor of management at UH Hilo. He received his doctor of philosophy in history and a second doctor of philosophy in management from the University of Washington. Contact info.