FS I I 92-106
Business in Society: The Role of Perceptions and Principles in Organisational Learning
by
Ariane Berthoin A n ta l, M e in o lf Dierkes & K a trin Hähner
v o rb e re ite t im Rahmen des Kollegs
Innovation und Beharrung in der A r b e its p o litik der
G o ttlie b -D a im le r- und K a rl-B e n z -S tiftu n g
Wissenschaftszentrum B e rlin fü r Sozialforschung gGmbH (WZB) R eichpietschufer 50, W-1000 B e rlin -3 0 , T e l.: (030) 25491-0
well do they recognize them? This article explores the extent to which societal issues are taken up by corporations in their publishers statements of principles. The study is based on a content analysis of 57 German corporate policy statements and a review of major socio-political trends for the period 1950-1990. The analysis shows that while a number of major themes are taken up in the policy documents, there is little evidence of anticipatory behavior. Since a number of important themes can be expected to remain on society’s agenda in the upcoming years receive little or no attention in these documents, the ability of companies to perceive societal change in time to shape an appropriate response is questioned.
Zusammenfassung:
Die Öffentlichkeit stellt heute hohe Anforderungen an die gesellschaftliche Verant
wortung von Unternehmen. Im Mittelpunkt der hier vorgestellten empirischen Studie steht die Frage nach der Wahrnehmung und der Lern- und Anpassungsfähigkeit von Unternehmen gegenüber Umweltanforderungen.
57 untemehmenspolitische Grundsatzdokumente deutscher Unternehmen aus den Jahren 1972 bis 1989 wurden daraufhin untersucht, ob und in welcher Weise darin Unternehmen auf Entwicklungen in ihrem gesellschaftlichen Umfeld überhaupt reagie
ren, welche Entwicklungslinien dabei besondere Beachtung finden und ob Unterneh
men ihre Politik in diesen Bereichen eher reaktiv oder antizipativ formulieren.
In den Ergebnissen wird deutlich, daß Unternehmen zwar durchaus gesellschaftlich relevante Themen aufgreifen. Bevorzugt berücksichtigt werden jedoch vor allem Fragen, die eng mit dem Produktionsprozeß und der ökonomischen Funktion von Unternehmen verknüpft sind. Darüber hinausgehende Themen und Probleme werden zumeist erst dann wahrgenommen, wenn sie lange Zeit Gegenstand öffentlichen Inter
esses sind, besonders intensiv oder auch im Hinblick auf gesetzliche Maßnahmen diskutiert werden.
Angesichts der diagnostizierten geringen Wahmehmungsgeschwindigkeit und der hohen Reizschwelle in der Reaktion der Unternehmen auf (veränderte) Umweltan
forderungen diskutieren die Autoren abschließend organisatorische und personelle Maßnahmen, die auf eine Verbesserung der Lembereitschaft und Anpassungsfähigkeit abzielen.
expectations. This became particularly evident in the 1970’s, when public criticism of business corporations increased sharply (Dierkes et al. 1973; Weitzig 1979).
Since businesses are on the whole viewed as organizations functioning according to principles of economic rationality; responding to social expectations partially at least means having to walk a narrow line between social performance and economic constraints. This is a challenge which may at first appear limited to a company’s external relations; it gains added significance internally, however, when one takes into account that socio-cultural change leads to shifts in employee expectations. For instance, public discussion in many Western industrialized countries surrounding the disintegration of values traditionally associated with work indicates that both employees’ image of themselves as well as their expectations regarding work have changed (Ingelhard 1979; Noelle-Neumann and Striimpel 1984). Work today is no longer regarded solely as a duty to be fulfilled and a means of securing one’s existence: it is now expected to provide a worthwhile occupation, foster an
individual self-image and offer opportunities for personal development. As early as 1975, Plesser came to the conclusion that "German employees have become more self-assured, more independent and critical and they demand to be treated as partners" (1975, p. 123, this and other quotes from German-language literature are translated by the authors of this article).
Discrepancies between these expectations regarding work and the structure of the work environment lead to tensions which then endanger the internal and external consensus a company requires to best achieve its objectives. Social innovations are needed in companies in order to shape the working environment and to meet social expectations by fulfilling desires for compatibility between family, work and career or for a more equitable distribution of work. The central prerequisite for such innovation is that companies be aware of changes in their socio-political
environment. Only if companies perceive what is going on around them they can initiate measures to achieve a new balance between corporate interests and societal and individual expectations. Dealing with socioeconomic change, however, need not simply be a reactive matter for organizations. In fact, rapid or perhaps even anticipatory perception of socio-cultural change offers a company the chance to adapt policies to new social expectations more quickly than other companies.
THE ROLE OF CORPORATE STATEMENTS OF PRINCIPLES
To assist business corporations in accomplishing these additional tasks, one of the first priorities is to make companies aware of the environmental factors which until now have played "a subliminal role in corporate policy-making. Promoting
awareness of these factors, thus ensuring that they are taken into account in the planning and implementation of corporate policy" (Plesser 1977 p. 30), is the central point of the new interpretation of the role and tasks of business corporations.
This does not mean that companies have to react to every expectation and challenge coming from their environment. It means they must be aware of these expectations in order to use them as a basis for formulating their own policy with respect to the
"markets" of social, ecological, political and cultural challenges (Dierkes 1974, p.
19).
In Western industrialized economies today, business corporations show a greater willingness than in the 1950’s and 60s to take into account the social, ecological and cultural consequences of their decisions. A growing number of companies now demonstrate their overall appreciation of this social responsibility in statements of principle regarding corporate policy (Gottschall and Wilhelm 1976). Although the publication of such codifications of principles cannot yet be seen as the general norm, many companies are finding it advisable to lay down their own position in writing, and to make it accessible to employees as well as to external stakeholders.
These basic corporate policy statements are intended to bear witness to the company’s unity and to document the stability of its behavior for external
stakeholders (Hoffmann 1989a, p. 168). The need for such publications is seen to be greater in periods of environmental turbulence (Hoffmann 1989a, p. 102).
Corporate and management principles often are very abstract, and should not be viewed as practically implementable and detailed statements. They represent an initial declaration of corporate intention vis-ä-vis various stake-holder groups, management’s recognition of the interests of workers, shareholders, environmental and consumer protection as well as interests of social and cultural environment.
Precisely in the broadness of these vague formulations, they, like a Constitution, fulfill an important function on a higher, overall social level (cf. Hoffmann 1989a, p. 167): they codify the values that shape corporate decisions on the long term, but in a language open to broad interpretation. They thus meet the conditions of
1981, p. 251) while taking into account the necessity of anchoring future, not yet defined concrete tasks within a relatively broad frame of action. They may be seen as a first significant step toward the transformation of societal demands and
expectations into corporate policy and corporate practice (cf Fiedler 1980, p. 122).
Furthermore, it can be assumed that the publication of these statements is giving rise to stakeholder expectations which in future will not be satisfied by mere declarations not accompanied by deeds. This is particularly true of employees (Dierkes 1977, p. 135).
In light of the growing popularity of corporate codes of principles, it is not surprising that they have attracted increased attention from scholars of business behavior (e.g. Albach 1976; Fiedler 1980; Gabele 1981; Groth 1980; Hoffmann
1989; Wistmghausen 1977). However, empirical research has been rare
(Schlegelmilch 1990, p. 368). This is unfortunate because these statements appear to offer a rich field for analyzing corporate sensitivity to changing social priorities.
It is worth exploring such questions as: Have companies taken social developments into account in their written corporate statements of philosophy and policy? Which trends were of particular interest? Was corporate policy in these areas formulated in anticipation of social change or as a reaction to a peak in the issue attention cycle?
In order to start providing empirical answers to these questions, we undertook an analysis of published corporate statements of policy or principles in the Federal Republic of Germany and looked for evidence of corporate awareness of social issues. Since corporations are embedded within their local or national social environment (Berthoin Antal, 1985; Sethi 1978), it makes sense to focus such an analysis within a single context first. The German "social market economy" {soziale Marktwirtschaft) represents a particularly interesting case, for it appears to have institutionalized long term thinking in socioeconomic relationships quite
successfully. Considering the economic strength of the German system, it is worth taking a closer look at which issues companies perceive to be important enough to take up in their corporate statements of principle.
CONCEPTUAL FRAMEWORK
The point at which companies identify social trends can be mapped in relation to the emergence of the issue. There are several possibilities: companies can anticipate social trends, they can become aware of them after their emergence relatively quickly, slowly, or they can remain oblivious of an issue. Which of the forms of perception predominate in individual cases is determined in part by very broad factors present in the general environment of the company involved. For instance, the basic philosophy of a society regarding corporate responsibility is certainly of some relevance: a liberalistic philosophy would give rise to other corporate reactions as, say, the possible dominance of a socio-ecological approach (Dierkes
1974, p. 47ff.). The recognition in a given business culture that a company is a system of multiple stakeholders also affects the attention devoted to societal issues because it is the basis for the recognition of the existence of various interests affecting the company (Freeman 1984; Kempner, MacMillan and Hawkins 1974;
Plesser 1977). This view of business corporations, which spread in Europe
primarily as a result of the Davos Manifesto (cf. Steinmann 1973), evolved in the late 1960s (Dierkes, Bauer 1973) but was somewhat slow in finding its way into corporate practice. Finally, Zeitgeist also plays a role in the development of a com
pany’s attitude regarding social responsibility (Dierkes et al. 1973, p. 88f.); fur
thermore, the value placed on corporate and management principles as well as on models in general must be taken into account (Albach 1976, p. 764).
The fact that these external factors affect all companies in one cultural area and in one historical period to almost exactly the same degree allows us to treat them to a large extent as constants in our analysis of the perception processes of individual companies. But in spite of these relatively similar general environmental factors, companies vary in their reactions to changes around them; this also applies to companies very similar to each other in economic aspects and where the specially relevant external conditions are nearly the same. This divergence would appear to indicate that there are company-specific factors which play a major role in how a company sees the world around. The results of empirical research support the hypothesis that an organization’s culture serves as a filter for corporate perception of the environment (Berthoin Antal 1985). This filtering function in organizational perceptions emerges because organizational culture is "... the pattern of basic assumptions that a given group has invented, discovered, or developed in learning
have worked well enough to be considered valid, and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems" (Schein 1984, p. 3).
This definition shows the selective character of organizational cultures with regard to perception of the environment. On the basis of traditional ideas and ideals and with a background of common experience, organizations develop values which are shared by all members of the organization and which then function as a filter for the perception of the corporate environment and in decisions about choosing the correct approach to problems. Corporate cultures are stabilized over time by decisions and strategies which are successful from the company’s point of view, thus fostering the development of a behavior specific to this particular organization; the value basis itself then becomes "matter-of-course" and in the end remains anchored more or less unconsciously rather than consciously in the company. Organizational culture as a factor determining perception of the environment thus exerts a high degree of influence on which problems a company is sensitized to and which ones are perceived (Berthoin Antal 1990). The selectivity of organizational culture shows clearly that every culture has specific strengths and weaknesses and that no one culture can be described as being "strong" or "right" (Dierkes 1988a, p. 556). The members of the organization view the environment of a company, as it were, through the filter of its organizational culture, and not until we know in this culture can we find an answer to the question of which expectations, demands and needs in this company’s environment will be anticipated by it, which it will react to and which it will not take into account at all, and what would have to be changed in order to accelerate this process or produce different results.
RECONSTRUCTING TRENDS IN SOCIETY: THE METHOD
In order to be able to present as comprehensive as possible a description of change in social trends in the course of time, a variety of sources were drawn on. The business reports of the German Employers’ Association (BDA) and the trade unions and employers’ associations for a selected range of industries - the chemical, paper, and ceramic industry - have been used. Selected data from the statistical yearbooks of the Federal Republic of Germany from 1951 to 1990 were also analyzed, as well as the quarterly and monthly reports on the economic development for the same
period. An overview of socio-political legislation was gleaned from the Federal Law Gazette and other suitable literature to complement this data. Representative annual survey results were also examined for information on changes in social priorities for the period under review. A particularly rich source of information on trends in social developments are popular magazines, which reflects a wide range of problems under discussion in the society. For our analysis we studied all issues of the weekly news magazine Der Spiegel between 1950 and 1989. This magazine was chosen because Der Spiegel appeared continuously throughout this period and offers a broad spectrum of information, thus giving a comprehensive picture of the social situation. The evaluation was made by classifying the topics throughout the years into broad categories and briefly analyzing the contents of the articles to gain an understanding of the contemporary discussion on relevant problems. The landscape of social change we gained from these various sources was checked and expanded by interviews with experts, including particularly specialists on technological development in West Germany.
A division into decades which was adopted for our presentation of the social situation by no means indicates that trends did not cross over the boundaries of these decades; it was merely a measure to present the complexity of social developments in a managable way.
ANALYZING CORPORATE STATEMENTS OF PRINCIPLE: THE DATA BASE
Recording the main points emphasized by corporations in terms of their social responsibility vis-a-vis external and internal reference groups was done on the basis of corporate and management statements of principle submitted to the Deutsche Gesellschaft für Personalführung (German Society for Personnel Management, DGfP) by member firms. At the time the documents were obtained for analysis (summer 1990), 57 such statements had been submitted. This selection cannot claim to be representative in any statistical sense, but it is plausible to assume that the members who submitted their statements to the DGfP were those companies who highly value this as a management tool.
The 57 statements came from a total of 54 companies, with 3 firms having both a corporate statement of principle {Untemehmensgrundsätze) and a document on
corporate statements1. It is interesting to note that although different headings are used for these documents by the companies the content analysis reveals that the distinction often made by academics between statements of corporate conduct and principles of management (cf for instance Hoffmann 1989a p. 167) is not generally maintained strictly in practice. Many corporate statements discuss management behaviour, and the statements of management principles include broader topics than their titles would lead one to expect. For this reason, our presentation of the results of the analysis does not distinguish between the two types of statements.
In the early 1980s, the statements of principle seem to have gained particular interest (see table 1). The variety of industrial sectors represented shows that a very broad range of companies see this type of statement as a meaningful instrument of corporate management? (see table 2). Almost 75 % of the companies in the sample are multinationals, and of these 60 % are German-owned. *
The archive of the Deutsche Gesellschaft für Personalführung destroys out-of- date versions of documents as soon as new ones have been received. This means that a number of firms adapt these statements of principle to altered situations. It is, however, not possible to see where revisions have been made, as the former documents were not available for comparison with the more recent ones.
The authors are grateful to Birgit Riegraf for the preparatory analysis of the statements.
TABLE 1:
AN OVERVIEW OF THE DATE OF ISSUE OF THE STATEMENTS OF PRINCIPLE
1972: 1
1973: 1
1974: -
1975: -
1976: -
1977: 1
1978: -
1979: -
1980: 7
1981: 4
1982: 9
1983: 4
1984: -
1985: 1
1986: 1
1987: 5
1988: 2
1989: 2
undated: 19
TOTAL: 57
TABLE 2:
OVERVIEW OF THE INDUSTRIES REPRESENTED IN THE SURVEY Consumer goods industry11 Chemistry and paper 7 Electrical engineering
and data processing 7*
Mechanical engineering and metal-working 6 Banks and insurance
companies 7*
others (12 branches) 16*
TOTAL 54 companies
The industries marked with an as
terisk have each one company with both corporate and management prin
ciples .
The statements of principle evaluated here differ significantly in length, design and focus; there are also major differences between industries. Our content analysis concentrated first on the reasons given by the companies for having formulated the statements. Then the central themes of the guidelines were categorized according to a matrix and quantitatively evaluated. The following categories were used in the analysis:
- main corporate objectives - organizational structure - desired management behavior - employee image
- statements on products - customer orientation - corporate innovation policy - environmental problems
- the company’s social responsibility.
As some data refer to several of these categories (e.g. the positive environmental effect of particular product innovations), they were recorded in several categories in the analysis.
SOCIAL CHANGE IN THE FEDERAL REPUBLIC OF GERMANY
The most salient characteristic of social change in West Germany since 1950 is clearly the rapid economic upswing. But this change, it must not be forgotten, was accompanied by a change in values and a shift in society’s priorities. Wishes, needs and requirements which had previously topped people’s list now lost significance against new ideas and interests and were themselves at times judged in a different light. The important social developments of the last four decades are sketched briefly below.
1) The fifties - the post-war period
The situation in West Germany in the fifties was still heavily influenced by the consequences of World War II. Living conditions, particularly at the beginning of the decade, were discussed frequently, with much attention being given to food supply and the housing situation.
Interest began shifting to goods of higher value when basic needs were being satisfied to an increasing degree. Material prosperity and financial security ranked high on the list of people’s wishes (Noelle-Neumann 1956, p. 117; idem 1957, p.
45). However, there was a number of indications that living conditions in the fifties were steadily improving, and the desire for an improved economic situation lost its dominant position (Noelle-Neumann 1965, p. 482). At the end of the decade, the first signs of critical consumer behavior began to appear. This became visible in the discussion surrounding food additives in and the introduction of a new food law.
The primary aim of social legislation in the early fifties consisted of "laying the foundation of social policy in a democratic, social and constitutional state"
(Lampert 1985, p. 97). From 1953 until the seventies, this stage was followed by a phase of expansion in social policy (Lampert 1985, p. 94). The pension reform of
1957 ensured that pensioners were also enjoying an indexed income; a reform of the health insurance system was carried out in the same year. Magazine articles bear witness to society’s particular interest in the post-war equalization of burdens and family policy, with the aim of the latter being evidently an improvement in families’ living conditions and an increased birthrate.
The influx of East German and later Hungarian refugees also played a role in public discussion, often with regard to its effect on the labor market: by 1961, 8 million refugees from former German territories and 3 million GDR citizens had come to West Germany (cf. Fassmann and Münz forthcoming). In the early fifties, in spite of the first boom in the German economy in 1950, unemployment was still very high, even though it dropped from an average of 11 % in 1950 to 5.6% in 1955 (Institut der deutschen Wirtschaft 1987, table 16). Reports from the mid-fifties express complained about an oversupply of apprentices, but expectations of lasting economic improvement gave rise to warnings of an impending lack of skilled workers (ifo 1955, p. 13). These expectations came true in the second half of the fifties. Companies tried to overcome their labour shortage through temporary employment and by enticing employees from other firms. By the end of the fifties
"full employment" seemed to have been achieved. Domestic economic recovery seemed to be accompanied by an improvement in external trade relations. The year 1951 saw the creation of the European Coal and Steel Community, forerunner of the European Economic Community (EEC), created in 1957.
The documents analyzed give the impression that an important element of the public discussion on economic topics in the fifties was concerned with the establishment of basic structures for the distribution of economic power between employees and employers. Discussion surrounding the issue of co-determination and at times the question of wages reflected this concern. Workers expected co-determination primarily to give them protection against unemployment and to ensure higher income (Noelle-Neumann 1956, p. 245). But wage claims were surely also the result of the strong drop of the purchasing power of the Deutsche Mark, which gave rise to serious worries among the general population (Noelle-Neumann 1957, p.
184). In the mid-fifties, workplace design started being a topic of interest. One finds reports on reducing working hours, especially on the 40-hour week,
automation and, by the end of the fifties, on working climate. Discussion on these topics focused among other things on their significance for the quality of life.
Public opinion on automation reflected fear of unemployment slightly more than the hope of increased affluence (Noelle-Neumann 1957, p. 99). In addition to
negotiation, trade unions used strikes relatively quite often as an instrument of pressure on business. Basically, however, West Germans preferred cooperation between all occupational and population groups to class struggle (Noelle-Neumann 1957, p. 244f.).
By encouraging people to save as well as to build or buy their own homes, the government advocated the concept of "people’s capitalism": instead of one propertied class, property for all. But magazines conveyed the impression that existing social structures remain basically unchanged. For instance, although
Parliament passed legislation establishing the equality of men and women in 1954, a rather large proportion of the population was in favour of retaining the traditional distribution of roles and a partial dominance of the husband in decision-making within marriage (Noelle-Neumann 1956, p. 207; idem 1965, p. 383). Not until the appearance on the scene of the teenage rebels of the mid-fifties as a new form of youth protest and the anti-nuclear groups rallying against nuclear armament of the German military do we see the first signs of conflicts of interests or values. For most Germans, intelligence, sense of duty and hard work still topped the list of ideal qualities (Noelle-Neumann 1956, p. 116).
2) The sixties - never-ending mass consumption?
In the early sixties, the combination of a stable economy and the promotion of capital formation for all seemed to enable broad sectors of the population to profit from rising affluence. According to corporate opinion, lasting union power in the first half of the decade caused a shortage of labour (ifo 1964, p. 24) which was affected by the large numbers of refugees coming in until the erection of the Berlin Wall. Between 1961 and 1966 the average unemployment rate ranged between 0.7% and 0.8% (Bundesminister fur Arbeit und Sozialordnung 1982, p. 65).
Foreign workers and women were mobilized as a reserve labour force (cf.
Fassmann and Münz forthcoming). But in late 1966 economic recession hit Germany; it reached its lowest point in 1967 but was overcome by the end of the decade, so that in 1968 "... in the economy of the Federal Republic there were once again segments characterized by a shortage of labour" (Deutsches Industrieinstitut 1968, sheet 3). The Economic Stability Law and concerted action were created as new concepts of coordinating economic policy.
Conflicts between employers and trade unions during this period indicate that questions regarding working conditions were gaining in significance. In the mid
sixties, like in the fifties, the consequences of rationalization and automation were discussed, and in some industrial sectors collective agreements were made to protect workers against rationalization. Magazine articles spoke of other work-related problems such as the rise in industrial accidents, the creation of open-plan offices and, particularly towards the end of the decade, co-determination once again. With respect to working hours, the trade unions insisted on their demand of the fifties for the introduction of the 40-hour week as a general rule, a demand which was first achieved for the iron and steel industry in 1960. Another point being discussed between labour and management was minimum vacation.
Along with increasing affluence, the Germans’ interest in social conditions in the Federal Republic seemed to be on the rise. Social policy was going through an expansionist phase (Lampert 1985, p. 94). In the early sixties the Federal Welfare Act and an amendment of the Seriously Disabled Persons’ Act were being dis
cussed. The idea of a basic pension and continued payment of wages in the case of illness were mentioned frequently. In family policy the topics being discussed
included child allowances, but more important still until late in the sixties the problem of overly high birthrates.
Articles continued to denounce shortages in the health services and in education.
Reports on teacher shortages, overcrowded lecture halls and understaffed universities criticized the deplorable state of affairs in schools and universities.
Students also seemed to suffer from the poor housing situation and from landlord rules which often affected their private lives to an excessive extent. The
normalization of living conditions had led to social values becoming more
"bourgeois" and "narrower" (Noelle-Neumann 1965, p. 588f.). Some segments of the student population became dissatisfied with existing conditions. The visit of the Shah in 1967 marked the beginning of student unrest which eventually led to the formation of an extra-parliamentary opposition. But as early as the first half of the decade, twist fever, miniskirts and Beatlemania marked the beginning of a distinct youth culture. The students’ ideas were also supported by professors, workers, apprentices and particularly school pupils. The youth protest movement was accompanied by a wave of hash and psycho-drugs. In the course of these changes, one of the demands expressed was for increased acceptance of the social sciences vis-ä-vis the natural sciences.
This germinating interest in issues of society and social policy can be seen as the first sign of a desire for the fulfillment of interests higher than mere material concerns (e.g. Maslow and Harold 1970). This wish became more obvious in the early stages of a hesitant and regionally limited - particularly in the state of North- Rhine-Westphalia - concern for the natural environment (Noelle-Neumann 1965, p.
466). The growing importance given to consumer protection was a further sign that qualitative aspects were gaining significance.
Voter attitudes also pointed to social re-orientation; the 1966 elections resulted in an SPD participation in government, and in 1969 the Social Democrats scored their first victory in a federal election. If one agrees with the hypothesis of a shift from materialistic to post-materialistic values (Inglehart 1979), one can say that it was in the sixties that this shift began.
3) The seventies - quality as well as quantity
In the early seventies, economic prosperity, still high with the exception of the structural crisis in the Ruhr area, ensured a continued rise in affluence for large sectors of the population. But the 1973 oil crisis brought on a recession the economy did not seem to be able to overcome in the following years. Un
employment, particularly youth unemployment and the shortage of apprenticeships, was felt as a pressing problem (Noelle-Neumann 1976, p. 101; idem 1977, p. 113;
Noelle-Neumann and Piel 1983, p. 259 and p. 334). In 1974, unemployment rose to an average of 4.7%, a high level for Germany, dropping only to 3.8% by 1979 (Bundesminister für Arbeit und Sozialordnung 1982, p. 65). According to
complaints from employers, however, "even in the phase of weaker economic growth after the 1973/74 crisis ... skilled workers remained in short supply despite high unemployment." (Hegelheimer 1979, p. 69). As a result of unemployment, recruitment of foreign workers was halted (cf. Fassmann and Münz forthcoming).
The high costs of unemployment led to a situation where the climate for social policy began to worsen (Lampert 1985, p. 96). The end of the seventies marked the beginning of a conflict about the distribution of work, during which the trade unions demanded the introduction of a 35-hour week.
The recession seemed to intensify the skepticism of certain segments of the population vis-ä-vis the economy, turning what was a rather optimistic mood into greater pessimism. The wish for a life style free of stress was, in the early
seventies, expressed still quite homogeneously in the hippy movement. Later in the decade, this protest movement split into a number of groups differing on the outside primarily in the form of expression chosen. The spectrum ranged from peaceful demonstrations to violence. Newspaper reports gave the impression that these groups shared a common raison d’etre consisting of mostly negative feelings such as fear, despondency and helplessness. These various groups appeared to focus their activities mostly against environmental degradation and technologies they perceived as being destructive to humans: e.g. nuclear power, genetic engineering,
biotechnology and computer technology. Disaffection with the governments’
performance was not limited to young people, however; numerous citizen’s action groups bore witness to this mood in other age groups as well.
The most extreme form of politically motivated action in the seventies was surely embodied by the angry vehemence of terrorism. New anti-terror laws were passed in 1977 in an effort to control terrorism. However, intensified police controls and the increased use of electronic data processing arouse fears of excessive state surveillance in parts of the population; some people also saw the security measures taken for the operation of nuclear power plants as anti-democratic tendencies.
In the seventies, socio-political interest was directed towards the problems of various social groups. Most of all, views on the role of women began to change, and emancipation started to make itself felt (Noelle-Neumann and Piel 1983, p.
97). Within this context, the declining birthrate was often deplored. Furthermore, the problems of socially marginal groups such as the homeless, the elderly and the handicapped appear to be granted increased attention. Addicts were identified as another problem group; in the course of the seventies drug consumption seemed to move towards harder drugs. The rise in so-called "middle-class" addictions such as alcohol and nicotine abuse was increasingly mentioned as a cause of worry. At the same time, health consciousness seemed to be on the rise among Germans.
In view of the unstable internal political situation, companies paid increased
attention to plant security. Another effect of social developments was that they were also interested in management courses and in the issue of the economic sector’s social responsibility. On the other hand, corporate criticism of the rise in sick leave figures could have been a signal that work and qualities such as industriousness and a sense of duty had lost some of their significance (Noelle-Neumann and Striimpel 1984). The tendency towards a more humanized form of work continued to be noticeable. Assembly-line work was now considered by some companies to be an outdated form of organization for human work, and concepts evolved for replacing assembly-line workers by robots. Automation and computerization remained topics of discussion in terms of their effects on people and on work. With regard of the quality of working life, educational leave, the introduction of flexitime and open- plan offices continued to represent current topics of discussion.
In the seventies, employers and trade unions negotiated the possibility of wage policy being more closely connected to individual companies, the inclusion of index clauses into wage agreements, the record figures for industrial accidents and - within the scope of the co-determination debate - the role of company executives.
Labour conflicts at this time were often relatively turbulent.
Progress was being made towards the economic integration of Europe. In 1972 Great Britain, Ireland and Denmark joined the EEC; the introduction of the Euro
pean Monetary System in 1979 was intended to intensify cooperation.
4) The eighties - the break-up o f society?
At the beginning of the eighties the economic crisis which had started in the
seventies continued to intensify. The unemployment rate rose from 3.8% in 1980, a level already considered high by German standards - to a truly dramatic 9.3% in
1985 (Institut der deutschen Wirtschaft 1987, table 16). This was compounded by tense East-West relations and increasingly concrete and threatening environmental problems. Whereas the peace movement, under the influence of the policy of detente in the mid-eighties, lost some of its significance, the entire decade was marked by reports on environmental protection. As a result of this situation, the
"Green" party managed to win seats in the Bundestag for the first time in 1983.
These Bundestag elections also confirmed the CDU/CSU/FDP government which had come to power after the disintegration of the social-liberal coalition. The
increased liberality of economic policy seemed to be rejected by the trade unions, as exemplified particularly by the controversy surrounding co-determination in the coal, iron and steel industry and the reform of the right to strike. Corporate mood, on the other hand, improved, and investment activity increased. The economic upswing taking place in the second half of the decade was not stopped by the 1987 stock exchange crash.
However, this economic recovery did not benefit all members of society equally.
The situation of the "losers" threatened to become still worse as a result of cuts in social policy (Lampert 1985, p. 96), a topic which was heatedly discussed, particularly with respect to the health insurance reform plan. The increased consumption of hard drugs could also be interpreted as a sign of social grievances.
The improvement in the economic situation brought no clear drop in unemployment figures, but merely a stabilization at a very high level, hovering around the 9%
mark (Statistisches Jahrbuch 1990, p. 20). One of the major measures intended to combat unemployment was the reduction of working hours. Most trade unions
supported the introduction of a 35-hour week, with the first signs of success for the union of metal workers and the printing industry trade union, who successfully struck for a 38.5-hour week in 1984. In the course of the eighties, this trend towards shorter working hours started making inroads into other economic sectors.
At the same time, government and, after initially rejecting the idea, the employers organizations called for a lowering of the retirement age. Employers continued to seek more flexibility in working hours, but churches and trade unions rejected this concept. Another proposal making its way into public discussion was the idea of forgoing wage increases in favour of creating jobs. Foreign workers were
encouraged to return to their countries of origins with government returnee grants.
Possibly as a result of high unemployment levels, some sectors of the population began exhibiting a relatively high degree of hostility towards foreigners. In spite of this persistently high unemployment, by the end of the eighties companies
complained of their increasing difficulties in finding suitably skilled labour (Gattinger 1989, R.3), and at the end of the decade the number of applicants for apprenticeships was on the decrease (Deutsche Bundesbank 1987, p. 39).
Germans from the German Democratic Republic, who started moving to West Germany in large numbers after the opening of the Wall at the end of the eighties, were also viewed as a burden for the labour market. For most of them, integration in the high-tech world of the Federal Republic seemed almost impossible (Hof 1988, p. A-37). Almost all sectors of employment showed increased use of micro
electronics and high technology during the eighties, while simple jobs seemed to be disappearing - a development that appears to be accompanied by a reduction in the gap between blue-collar and white-collar workers.
In the field of social policy, the conservative-liberal government sought to
strengthen the importance of the family. Specifically, measures such as child-raising benefits and the recognition of child-raising periods in pension insurance were adopted with the aim of increasing the birthrate . Demographic trends led to a reform of the pension insurance system at the end of the eighties. Another area given a high degree of attention in the eighties is housing policy. According to newspaper coverage, the wave of inner-German immigrants had brought additional urgency to the already poor housing situation.
The content analysis of popular magazines gave the impression that a tendency towards radicalization was characteristic of general political trends in the eighties.
skinheads - gained momentum with the appearance of a right wing party on the political stage towards the end of the decade. With increasing frequency, demonstrations, even those organized by peaceful groups, became the scene of riots. On the other hand, groups like the "yuppies" indicated that in some sectors of society, the eighties were a time of a new social re-orientation, seemingly typified by stronger materialistic tendencies and a leaning towards luxury. But there was also strong interest in the spiritual world, even in occultism.
FOCUS OF CORPORATE POLICY AS REFLECTED BY CORPORATE AND MANAGEMENT STATEMENTS OF PRINCIPLE
With these thumbnail sketches of the developments in the socio-political environment of German companies since 1950s in mind, let us now turn to the corporate statements of principle. Which issues emerge in these documents and to what extent do they reflect an awareness of social trends? Before exploring the actual themes in these documents, it is worth looking at the reasons given by the companies for preparing and publishing such statements. When assessing the content, it is important to remember, however, that the existence of policy documents does not guarantee the implementation of these policies. Furthermore, the current analysis cannot provide insights into the extent to which the values and priorities published by the company are shared by members of the organization, because the documents do not describe the process behind the formulation of the values.
1) Changes in the environment as a trigger for writing statements o f principle The companies studied give various reasons for preparing statements of principle, but all of them share one common denominator: the turbulence of the environment makes it imperative to state clearly "who we are and what we want". It is usually stressed that basic principles had always existed tacitly in the company, but that in the days of "stability" and "clear market conditions", the days of "predictable development of technology and personnel", it had not been necessary to lay down in writing existing values and guidelines. "We live in turbulent times" is an observation made by many companies, and the changes mentioned in their
statements of principle range from "increase in technological knowledge" and its
"application for the manufacture of more effective products" to "rapid market expansion in new regions and sectors" and "instability of the market". They also include "changing corporate structures in terms of personnel and organization",
"stiffer international competition" and "new employee expectations". Banks and insurance companies mention only employee expectations as a motive.
According to the statements, this cumulation of factors has created a need to verify frames of action which have long become habit and to lay down in writing general, long-term and binding aims. In a turbulent environment, preparing statements of principle is an activity meant to take over the function of determining the "position of the company" and, if necessary, to reconsider it.
Thus the reasons given for establishing principles are changes in the economic, technological and socio-political environment, and a function of these statements is to merge the "internal and external worlds of an organization" (Gabele 1981, p.
245). "Higher environmental consciousness", "new technologies", "increased global intertwinement of the economy", a "discussion of value changes", expressing more
"expectations of individual development" than "values of duty and acceptance" (cf Klages 1987) are buzz-words used to describe social change.
These changes are viewed by companies as new challenges - internal and external - to be met with "innovative action" and which question the value of traditional internal and external corporate guidelines. In times of change a company needs to present a characteristic and stable profile to the outside world, so as to stand out among the competition and, at the same time, be predictable and reliable. These considerations are reflected primarily in the following formulations, which can often be read in the introductory paragraphs of corporate statements of principle: "It is more important than ever to say what we want and what we do not want, to name our aims and present the basic principles of our actions, both internally and to the outside world". They thus specify "where our strong points are and where we consistently differ from other companies". Often the introduction of statements of principle is also the result of the necessity to establish general aims for all
employees, in order to offer a stable framework of action in times of change (cf Plesser 1975, p. 121).
environment, companies increasingly feel the need to formulate models along new and explicit lines. This is confirmed by an earlier investigation carried out by Hoffmann, who points out that "purposeful considerations triggered by public pressures - primarily by the discussion on environment protection - have also led to the formulation of principles" (Hoffmann 1989a, p. 174).
2) Foci o f the statements o f principle
All the corporate and management principles in the sample include statements on company aims. Most often, in fact in almost 60% of the documents, one of the points mentioned is achieving a yield high enough to ensure the economic security of the company, so as to guarantee corporate continuity and stability. This clearly confirms the findings of earlier studies: "profit continues to be a prime aim of corporate policy. However, profit is viewed more as a socio-political task than as the fulfillment of shareholders’ interests. Securing corporate competitiveness, stability and growth is achieved to a large degree by decisions made within the company" (Albach 1976, p. 750). In approximately 30% of the statements of principle, economic success is seen as a prerequisite for safeguarding employment.
Safeguarding employment, with no linkage to economic success, is listed in a further 15% of statements of corporate objectives. This aim is established primarily in companies of the chemical and paper industry as well as in mechanical
engineering and the metal-working industry, where it is mentioned in almost 70%
of statements. In contrast, banks, insurance companies and the consumer goods industry refer to this topic in just under 25% of the documents. In addition, more than 80% of the companies in the chemical and paper industries stress the
orientation of the company to international competition - a topic which is addressed in more than 40% of the documents. It must be said that statements on this topic are kept very general, and that concrete ideas on how to ensure productivity on an internationally competitive level are expounded in only two documents ( l x consumer goods industry, 1 x electrical engineering and data processing). Banks and insurance companies make no mention whatsoever of this topic. In the context of international competitiveness, a few of the documents set down the
organizational form they wish for the company, with eight statements opting for decentralized organization and one management statement choosing a multi-dimen
sional organization structure.
TABLE 3:
CORPORATE AIMS
Achieving 60%
adequate yield
Safeguarding employment 45%
linked to
economic result 30%
not linked to
economic result 15%
Orientation to inter- 40%
national competition
Statements on desired management behaviour and cooperation among employees are most evident in management guidelines, but corporate statements also include references to management style. Almost 70% of the statements of principle endorse a cooperative style of management; it is therefore a very widespread form of basic management philosophy, as Albach (1976, p. 755) already points out. Furthermore, nearly all statements of principles include more detailed treatment of the issues of rules of cooperation among employees and within the company information rules and channel. The role model function of superiors is stressed, especially in management statements.
Cooperation among employees on different or equal hierarchical levels is underlined in two-thirds of the statements; its aim is to promote trustful cooperation, which is expected to encourage the flow of information and corporate communication. For this purpose, these companies place considerable emphasis on establishing clear objectives for their employees. As a rule, these objectives are expected to be set by managers in collaboration with employees and to be derived from the overall corporate aims.
According to the statements of principle, the relationship between managers and their employees should be marked by the following central elements: first of all trustful communication (almost 70%), followed by delegation (50%) and openness
also stressed.
TABLE 4:
MANAGEMENT ATTITUDES
Cooperative management style 70%
Trustful communication 70%
Cooperation among employees 66%
Delegation 50%
Openness 40%
The control function as an essential management responsibility is stressed in more than half of the documents. Further management functions explicitly mentioned include (in order of frequency) criticism, praise, selection and training of
employees as well as their assessment. More than 30% of the statements mention that managers should encourage fiirther training and team work among their employees. Companies in the chemical sector and the paper industry place particularly importance on further training, mentioning it in 80% of the cases.
Team work gets above-average emphasis in mechanical engineering companies and in the metal-working branch: it appears in every second document. Only five management statements encourage managers to foster their employees’ aspirations for self-realization and personal development.
TABLE 5:
MANAGERIAL FUNCTIONS
Control 50%
Criticism 50%
Praise 45%
Selection and training 45%
Assessment 42%
Encouragement of training 30%
Fostering self-realization 9%
Overall, companies’ comments on management style are mostly borrowed from the currently popular management concepts (cf Gabele 1982 p. 190), but closer
examination reveals differences between industrial sectors. For example, banks and insurance companies place the highest value on authority and the prerogatives of management. Their statements of principle, with one exception, read like mere instructions for managers presenting employee needs from the manager’s point of view and granting minimum space to the inclusion of employees. The opposite extreme is represented by electrical engineering and data processing companies, who refer most seldom to the task description of "classical" management concepts and place primary emphasis on the idea that work should be pleasant for die
employees. Management concepts in the mechanical engineering and metal-working branch as well as the chemical and paper industries can be classified between these two poles. For example, mechanical engineering and metal-working companies discuss at length and in detail how managers should lead, but for them, in contrast to the banks and insurance companies, delegation and employee participation play a considerable role. Companies in the chemical and paper industry place a large degree of significance on the value of work for the employees, as in electrical engineering and data processing, but seem to encourage a more authoritarian style of management. Among companies of the consumer goods industry, statements on management style present a very heterogeneous picture, making it impossible to make overall generalizations for the various sectors.
Employee image is marked by the expectation that employees be willing to give first-class performance. Almost 50% of the statements of principle accentuate this expectation, which is also expressed in calls for unconventional and independent thinking, constructive criticism and creativity. In three management statements, these demands go as far as to praise the courage to question decisions and make one’s own decisions.
Worker qualification is considered very important, linked in more than 40% of the statements with willingness to learn and employee motivation. Almost as often, there are expressions of expectation that employees should identity with company aims. In this context, 50% of the statements mention the following topics: high degree of identification with the job, mobility, loyalty, flexibility, lack of
selfishness, quality consciousness and a high environmental consciousness. Almost one quarter of the statements expect employees to show a sense of responsibility, and self-assurance is also mentioned. In 20% of the cases, social commitment of
in terms of employee image; the statements that mention the topic all describe actively involved employees. It should be noted, however, that banks and insurance companies mention employee image in only 37.5% of their statements.
TABLE 6:
EMPLOYEE IMAGE
Willingness to first-class
performance 50%
Identification with the job 50%
Mobility 50%
Loyalty 50%
Flexibility 50%
Lack of selfishness 50%
Quality consciousness 50%
Environmental consciousness 50%
High qualification 48%
Willingness to learn 44%
Motivation 42%
Identification with co. aims 38%
Sense of responsibility 25%
Soc. commitment outside co. 20%
In the descriptions of working conditions, the most frequent topic is remuneration, mentioned in almost 60% of the statements. Almost all of these postulate that remuneration should be linked to performance. The second place in factors
influencing working conditions is held by workplace safety. 10% of the statements explicitly insist that working conditions be so designed as not to endanger the health of employees. Both topics, remuneration and safety, are particularly important for the chemical and paper industry, where they are mentioned in 80% of the papers.
Almost as frequently mentioned as safety in the area of working conditions, in 30%
of the documents, are social benefits. However, they are specified in only 5 cases:
ensuring employee old-age security, health provisions, construction of private housing and apartments as well as company catering.
Almost 20% of the statements of principle explain that it is important to create a work climate fostering above-average performance and to increase employee satisfaction with the company. Respect for employees’ personality and human dignity is mentioned in just under 20% of the documents, and the issue of equal opportunity for employees appears in only two companies.
TABLE 7:
WORKING CONDITIONS
Remuneration 60%
Safety 33%
Social benefits 30%
Respect of personality 18%
and human dignity
Work climate fostering 18%
above-average performance
Equal opportunities 4%
The overall high number of points relating to employees confirms that in the statements of principle the employee is the "center of attention" (Gabele 1982, p.
189).
Product quality is an issue in more than 50% of the statements of principle, stressing the aim of guaranteeing "first-class product quality". The necessity of ensuring performance at fair market prices is also emphasized. Only one statement formulates the expectation that products should not constitute a health risk. "Safe"
and "environmentally safe" are product characteristics stressed particularly in the chemical and paper industry. All statements in this branch contain references to product quality. Product quality is mentioned particularly frequently in the statements of principle in the consumer goods industry (64 %), but they are then mostly quite short. There are only three documents where this topic is discussed at greater length.
| 0 0
8 0 — —-
6 0 ..
4 0 2 0
s
T3.
Figure 1. Product quality: Frequency by industry (in percentages)
22 companies link product quality in their statements to the customer orientation of the company, and one statement of principle brings up this topic without any
mention of product quality, so that the issue of customer orientation is treated in a total of 40% of statements. These companies stress that they want to fulfill
customer expectations. Three features are singled out: efficient service (20%), customer advice before and after the sale, and ensuring good products at fair prices (each just under 15%). 10% of statements mention the aim of promoting continuity in customer relations, in four of these cases in the form of a trustful, partner-like relationship. Customer orientation is mentioned most often in the statements of principle of companies in the chemical and paper industry (57 %); the electrical engineering and data processing branches represent the average, but the 37.5% of statements which address the issue of customer orientation do so with particular intensity.
6 0 5 0 4 0 3 0 2 0 1 0
Figure 2. Customer orientation: Frequency by industry (in percentages)
The issue of corporate innovation policy comes up in some 30% of the statements.
Top performance in this field is expected to result from an organizational climate fostering research as well as from above-average investment in research and
development. Innovative products, it is hoped, will improve the company’s position on the market and give it or help it maintain a know-how advantage in the areas of sales and application technology. This development is not meant to lead only to the application of product technologies; it should also apply to the area of
environmental protection, and in one case, to product safety. The issue of corporate innovation policy is treated with above-average frequency by companies in the chemical and paper industry and in electrical engineering and data processing (60%
of the statements in both branches). Two companies in the chemical and paper industry presented their concepts in special research guidelines included in the statements. In contrast, this topic is mentioned in only one statement in the banking/insurance sector.
6 0 5 0 4-0 3 0 2 0
Figure 3. Innovation Policy: Frequency by industry (in percentages)
The topic of environmental protection is treated in just over 35% of the statements of principle, with reference being made to environmentally safe products and production processes and taking into consideration the use of raw materials and energy. Almost 20% of companies stress their desire to support their customers in efforts to use the products safely and environmentally soundly. In one case, environmental protection and economic interests are explicitly assigned equal importance. Improving the environment is an aim pursued by two companies. The statements of principle of the chemical and paper industry address the issue of environmental policy most frequently. All the statements here discuss the topic in detail, and - as for innovation policy - two companies include special guidelines for this policy area. At 40%, electrical engineering and data processing companies are also above-average in their concern for the environment. However, their treatment of the topic is very limited, mostly in the form of adjectives such as "non-polluting"
and "environmentally safe", meant to characterize the features of the products or production processes.
Figure 4. Environmental Protection: Frequency by industry (in percentages)
Overall social commitment to a company’s societal environment is mentioned in 44% of the statements. In its weakest form, this topic acknowledges only the existence of social responsibility or is intended to mean - by analogy with economic liberalism - the creation of jobs and payment of taxes. Banks and insurance
companies, more than others, interpret their social obligations as a policy problem connected with the protection of a social market economy and a liberal social order.
Mechanical engineering and metal-working companies share a similar attitude.
Social considerations are most important for the chemical and paper industry, being mentioned in 86% of the statements. None of the industrial branches studied are very specific in explaining what they mean by social responsibility, and only 8 statements concretely define social responsibility as a commitment to contribute to cultural, humanitarian or social issues. A further socio-political task stressed is the obligation to train workers beyond actual need. Transparency in corporate activities and the company’s economic stability are mentioned as particular social
responsibilities. Examples of socio-political commitment are improving the infrastructure and community projects (e.g. supporting the churches, schools,
company.
Figure 5. Social Responsibilty: Frequency by industry (in percentages)
LINKING SOCIO-POLITICAL TRENDS AND CORPORATE STATEMENTS OF PRINCIPLE
Having reviewed the general trends in the socio-political environment of business in Germany over the last decades and having explored the content of corporate
statements of principles, we can now examine how close the links are. Which issues are recognized in the documents and which receive little or no attention? The data do not permit an exact analysis of the time lag between the emergence of an issue and its identification by companies, because the documents may well have been drawn up much later than the issues were recognized. However, since corporate statements of principle are meant to be "aids for appropriately dealing with social developments" (Gabele 1981, p. 251) the two sets of aggregate data provide a usetul basis for formulating initial conjectures on corporate perceptions of societal issues.
