We head outside of the United States to talk with Professor Dirk Matten on this episode of The BIS Podcast. As the founding director of the Center for Excellence and Responsible Business at York University, Dr. Matten has gained a wealth of knowledge that he shares with Dr. Cindy Moehring.
Dr. Moehring and Dr. Matten share their insights on what direction they believe business ethics education should be heading for the future.
How much have business ethics changed over the last 25 years? Where have we seen sufficient growth and where are we still lacking? With Dr. Matten’s international experience, this episode is definitely one you won’t want to miss.
Podcast:
Episode Transcript:
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00:00 Cindy Moehring: Hi, everybody. I'm Cindy Moehring, the Founder and Executive Chair of the Business Integrity Leadership Initiative at the Sam M. Walton College of Business, and this is The BIS, the Business Integrity School podcast. Here, we talk about applying ethics, integrity and courageous leadership in business, education, and most importantly, your life today. I've had nearly 30 years of real-world experience as a senior executive. So if you're looking for practical tips from a business pro who's actually been there, then this is the podcast for you. Welcome. Let's get started.
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00:38 Cindy Moehring: Hi, everybody. I have with me today Professor Dirk Matten. Hi, Dirk. How are you?
00:43 Dirk Matten: I'm good. How are you, Cindy?
00:45 Cindy Moehring: I'm great. It's good to see you. Thanks for being with us today. Let me tell you all just a little bit about Dirk. He has quite an accomplished background. He is a professor of strategy and holds the Hewlett-Packard Chair in Corporate Social Responsibility at York University at the Schulich School of Business. And just, Dirk, why don't you tell everybody exactly where that is? Where York University is?
01:12 Dirk Matten: Well, York University is a relatively young university founded in the 1960s, also the business school, and it is in the north of Toronto. It used to be a green field, there was nothing, but now the city has grown so fast that it is really part of the City of Toronto now.
01:32 Cindy Moehring: Okay, very good. You are also... Dirk is also the Founding Director of the Centre for Excellence in Responsible Business there at York University. Dirk has a doctoral degree and the habilitation from Heinrich-Heine University Düsseldorf in Germany. And in 2019 and '20, he was the Gourlay Visiting Professor of Ethics in Business at Trinity College at the University of Melbourne. He is also a Visiting Professor at the University of London, University of Nottingham, Copenhagen Business School, and the Sabancı University in Istanbul.
02:09 Cindy Moehring: He has taught and done research at academic institutions in 13 countries, I think that's remarkable, ranging everywhere from Argentina to Australia, Belgium, Britain, Canada, Czech Republic, Denmark, France, Germany, India, Italy, Turkey, and the USA. Dirk's published 29 books, and he has more than 90 journal articles and book chapters which have won numerous prestigious awards, and it is truly an honor and a pleasure to have you here with us today talking about business ethics and governance and risk, and talking about that from a both US perspective, but also your broad world view. So, thank you.
02:53 Dirk Matten: You're welcome.
02:55 Cindy Moehring: So Dirk, we have been talking to a number of different thought leaders and academics about how the field of business ethics has obviously been changing over the years. There was an HBR article that was written at one point in time, about 25 years ago, that was saying that business ethics was being taught in a way that just wasn't helpful to business students. It was too practical, it was too theoretical, and it was too general. I actually think we've done a lot both on the practice side, and I also think we've done a lot, and I'm learning more on what's been done on the academic side in those intervening 25 years. I'd really like your view of where you think we are today, if you still think it's theoretical, too general and impractical, but where do you think we are today?
03:48 Dirk Matten: We're certainly very much led by philosophers who couldn't find employment in philosophy, hence, got jobs in business schools. And much of it was very informative and very... Talking down to students by telling them how the right way of doing things would look like. Now, I think that has changed in many ways, partly also with the labels changing for the field. It's still business ethics in many classes, but it is much more now couched under corporate social responsibility or creating shared value or social entrepreneurship, so all these more pragmatic and applied ways.
04:53 Cindy Moehring: Right. Has the governance, risk and compliance, that GRC label, is that common nomenclature in Canada or in Europe, generally, in that same vein of ESG and CSR and the alphabet soup or not?
05:13 Dirk Matten: Well, I think that the governance and the compliance... That's the interesting thing, if you look at the finance programs, their ethics and compliance plays a role, but it is mostly not really about ethics, it's about compliance. And that's not the same thing, right?
05:34 Cindy Moehring: Yes.
05:34 Dirk Matten: So...
05:35 Cindy Moehring: So can you just pause for a second and explain how you see those two as different, for the audience?
05:43 Dirk Matten: Well, compliance is basically... And that's what you have in a lot of banks and other organizations, there's an ethics and compliance officer or department. It's basically making sure that everybody sticks to the rules. Ethics, of course, is a different project. That's managers evaluating a situation where there are no rules. So if you think of supply chains, and if you think of climate change, if you think of the immigration debate in the US over the last four years, that's where companies have to sit down and say, "What do we think is the right thing to do here?" There are no rules, there are no laws around it, or you have a government in the US, and that also applies to other parts of the globe, that the government retreats from making rules, or makes rules which are perceived unethical, and that's I think where ethics comes in. Ethics is about individuals and also organizations finding out what is right and wrong in a specific situation and acting accordingly.
07:08 Cindy Moehring: Yeah, I think that that's... I think that's very well said. You actually wrote an article, an interesting one, in the early 2000s about the domain of business ethics and should that... Is it expanded, and where should it be? And what really struck me was a phrase you had in there about ethics actually being at the beginning of... Often, before the law begins. Can you just explain what you meant by that?
07:42 Dirk Matten: Well, to comply with the legal framework often for companies is a challenge, what you think of taxation and other things, that's sometimes already a tall order, don't get me wrong. And there is a certain ethics involved in respecting local laws or international laws, or things like that. But the crucial thing about ethics is that it poses normative questions of right and wrong before managers where there are no rules, where there is no law, and that's where ethics starts. That's where you apply ethical rules, moral judgment, moral principles to a certain situation, and then act accordingly.
08:41 Dirk Matten: So it is really the space where the hand rail, let's say, of the law does no longer help you. And we can also go a step further by saying that in some situations, the law might prescribe things that an individual company finds unethical. Think of the immigration ban of Donald Trump two, three years ago, where then a couple of very forward-looking and courageous business leaders, Starbucks, some of the Silicon Valley companies, said, "No, this is morally wrong, this law. We do it differently." So it goes both ways, but it puts managers in a situation where they have to make these normative value judgments themselves.
09:42 Cindy Moehring: So because you come at this from a very world-wide view, and because you're teaching in an international school, could you share a little bit about what you see as both the similarities and differences in the way business ethics is, let's say, understood in the US versus internationally?
10:09 Dirk Matten: Well, there's a bit of an irony here. I think the idea of business ethics is much more currency in the Anglo-Saxon world, I would say, that people understand that business has to do these things, partly because hosts of issues where governments are not involved. If I compare this with my early days in the career and also some of the consulting work I have done over the years in Europe, the idea of business ethics is much more seen skeptically, but the reason for that is that companies are much more highly regulated. In terms of health insurance, for instance, Starbucks, yes, they have their program for their employees, which they do voluntarily, and that's part of their CSR, or part of ethical considerations, that their workers should have it. A European company would never wrack their brains about that because they are obligated by law to contribute to health insurance of their employees.
11:25 Dirk Matten: And that goes in many other directions, they say, "Why would we sponsor university chairs or university education? We pay our taxes, we are highly taxed here, and that's the job of the government." So in that sense, it's an irony that, yes, companies in Europe do a lot of ethical things and behave, I would say across the board, also with regard to environmental issues, climate change, they behave quite responsibly, but they don't do it by their own volition, they do it because they are forced by the government, and that delegates their managers mostly to compliance, but not to independent individual thinking about business ethics and right and wrong. Because these decisions are sort of taken away from them. You see the UK, I think, is probably the most interesting laboratory here, because until the early 1980s, before Thatcher, they still had very densely knit welfare state, labor rights, and all these things.
12:44 Dirk Matten: And then Margaret Thatcher came in and slashed it all. And then companies like Marks & Spencer, for instance, came up with a slogan, "Healthy High Streets Need Healthy Back Streets." And you see in Europe, certainly, that the UK is leading with regard to corporate social responsibility and business ethics. And I always call that a little bit Margaret Thatcher's unacknowledged grandchild, because it was her policies of taking the state out of all of these arena that then left the buck with corporations. And that's where the movement for CSR in the UK then grew. And then later under Blair, he took it over and coordinated, today there's a CSR Academy and awards and all this kind of stuff. But that's an interesting laboratory to see how that can change.
13:43 Cindy Moehring: Yes.
13:44 Dirk Matten: It doesn't apply to the rest of Europe, certainly Scandinavia, Central Europe, Germany, France, Spain, Italy, but even there, we have seen quite some changes in the last 30 years, which again, then have given rise to fairly sizable CSR movement there also.
14:10 Cindy Moehring: Interesting. So how do you think the globalization of the world... Although in some parts, we seem to be retreating from that a bit, or at least, they're trying to and pulling away, but in general, I think COVID-19 has shown us that we are still very globalized. So how do you think that globalization has affected views of this area?
14:41 Dirk Matten: I think globalization is one of the main drivers of the business ethics movement. And that also is, of course, accompanied by digitalization, and by, generally, the fact that what happens in Vietnam does no longer stay in Vietnam. So I think that companies become involved... And it's an interesting thing. In Europe, the companies who are involved in CSR, and I've just sketched out a little bit the general reluctance to go there, are all multinationals who are confronted with these issues in areas where laws either don't exist or are not enforced and where they have to find their own normative standards to deal with this.
15:37 Dirk Matten: And that's, I think... In that sense, globalization is, I think, the key driver that it exposes companies to context where they can't anymore rely on governments to tell them what is right and wrong and just comply. Where they really have to find out, what are the labor standards we are operating? What is the right working age? How far are we responsible for the communities in which we operate? Where does it stop providing healthcare or education even in these communities? These are all questions companies only face due to globalization. So, globalization has been a huge driver of the business ethics field.
16:24 Cindy Moehring: Yeah. What do you think are the main concepts for effectively communicating the importance of business ethics in a practical way?
16:34 Dirk Matten: Well, the first one, I would say, is storytelling. There's an interesting... There was an interesting talk, actually, the last talk Richard Rorty, the philosopher, gave at a management conference in 1990... In 2005, where he had... They gave him the topic, "Does business ethics need philosophy?" And his line was, "Well, what business ethics professors, if they want to be effective, do is tell a good story and spin it with a good journalistic skill. And that's it." And I think that's really an important thing, storytelling.
17:32 Dirk Matten: And by this, I don't mean necessarily to just have them do case studies, but embed the message in good practical examples and stories. I think that's one of the thing. The second thing I would say is pragmatism, in the sense that I really am skeptical about colleagues who are, let's say, Kantians or utilitarianist, and push down their message from their theoretical view of the world. As I said earlier, I see all these ethical theories as true, of course. And you use them together, and you practice that with your students. That's where I see... So I would say, pragmatism.
18:26 Cindy Moehring: Okay.
18:28 Dirk Matten: And then the third one, I would say, is, avoid the language of ethics.
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18:36 Cindy Moehring: What do you mean by that third one?
18:39 Dirk Matten: The thing is that ethics has very bad connotations. It has the idea that someone comes who knows right and wrong, and tells you both.
18:53 Cindy Moehring: Yes.
18:55 Dirk Matten: I think that's part of the reason that we have resorted to these other concepts of corporate social responsibility, corporate citizenship and so on, 'cause they don't have these normative presuppositions.
19:10 Cindy Moehring: Right.
19:11 Cindy Moehring: Some 15 years ago, I was single, and when I went to a bar, and someone asked me, "What are you doing?" And I said, "I'm a business ethics professor," the conversation was over.
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19:25 Dirk Matten: Yes, but I'm right. You don't want to hang out with an ethics guy. And in that sense, I think we should be very careful also about how we sell that. I'm not against business ethics, don't get me wrong. But it's a question how we sell it to our students. How do we engage them, get them involved. And not make it something that they consider to be preached at, but just another teaching subject. I think that that's the challenge.
19:57 Cindy Moehring: Yeah, it is business integrity. Integrity has been a word that people have also gravitated around as opposed to ethics, which has this kind of pre-formed idea of, "You're gonna preach at me." So, yeah. Well, Dirk, this has been a fabulous conversation and I appreciate your time very much. It's been illuminating to get a bit of the global view, so thank you for that.
20:17 Dirk Matten: My pleasure.
20:20 Cindy Moehring: I do wanna end, though, by asking you a few questions that I ask everyone so that we can benefit from what others are reading or listening to or watching. But what is one of the best books, let's start with that, books that you've read in the last few months?
20:39 Dirk Matten: Well, as I said in my email, who reads books anymore in these days?
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20:45 Cindy Moehring: Okay, let me back up.
20:47 Dirk Matten: But I have a suggestion.
20:49 Cindy Moehring: Okay.
20:49 Dirk Matten: I have a suggestion, actually. So I read this book here.
20:55 Cindy Moehring: Okay. Yes.
20:56 Dirk Matten: The Global Minotaur.
20:58 Cindy Moehring: Yes.
21:00 Dirk Matten: And it's written by Yanis Varoufakis, the former Finance Minister of Greece. And that's a fascinating book because that relates also to our conversation because I think a lot of these business ethics questions are, these days, macro questions.
21:15 Cindy Moehring: I know.
21:15 Dirk Matten: They are... The ethics of business is very much determined by the broader economic and social context in which business operates. And what he does in this... And of course, he was the Finance Minister of Greece when Greece was in this debt crisis, so he was thinking about these things a lot and he's an economist.
21:38 Cindy Moehring: Yes.
21:38 Dirk Matten: And he basically gives a story about the post-war economy and how the US mostly organized financial system that then was disrupted by the Euro and led to these imbalances. And of course, they had a lot of ethical questions here. How... The way the global financial system is organized incentivizes mostly the financial industry, but also in many ways, manufacturing companies, particularly in Germany at the time, the Greece conflict, to make certain decisions about right or wrong behavior. So I thought that was a great, eye-opening book for me.
22:25 Cindy Moehring: That sounds fascinating. I'm gonna add that one to my list. What about what you've watched recently, a good movie or a good series or anything that had an ethical dilemma that was enjoyable and exciting and interesting?
22:43 Dirk Matten: The classic example for me is still House of Cards. That is...
22:48 Cindy Moehring: Aah. [laughter] That's awesome. Yes, we watched that.
22:53 Dirk Matten: Awesome. And it's full of ethical dilemmas. And I think one of the movies, if you ask me about a movie, I would say that one of the best ones I've seen in the last couple of years is Margin Call.
23:08 Cindy Moehring: Say it again?
23:09 Dirk Matten: Margin Call.
23:10 Cindy Moehring: Margin Call. Okay.
23:13 Dirk Matten: You know that one?
23:13 Cindy Moehring: I don't know that one. I did not watch it.
23:15 Dirk Matten: Oh, I so recommend it. It's on Netflix these days.
23:18 Cindy Moehring: Okay.
23:19 Dirk Matten: I so recommend it. I always use one of the clips in my class. It's just so fantastic. And the whole thing about a lot of these movies is, how do good people do bad things?
23:37 Cindy Moehring: Yeah. Definitely.
23:38 Dirk Matten: And I think that's a big section also of my book. How... What are the factors that make good people do bad things? Because only in the very few cases, and even then, when... Especially the tabloid press when scandals happen, it points to an evil person. If you look at it exactly in more detail, it's always the incentives and the situational factors that cause people to do these things rather than being inherently evil.
24:22 Cindy Moehring: Right. Well, this has been lovely. I so appreciate the time that you spent with us.
24:29 Dirk Matten: Thank you very much, Cindy. It was a great pleasure to do that. And thank you for taking the time to talk to me.
24:36 Cindy Moehring: Absolutely, you bet. Alright, thank you.
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24:41 Cindy Moehring: Thanks for listening to today's episode of The BIS, the Business Integrity School. You can find us on YouTube, Google SoundCloud, iTunes, or wherever you find your podcasts. Be sure to subscribe and rate us. And you can find us by searching THEBIS. That's one word, T-H-E-B-I-S. Tune in next time for more practical tips from a pro.
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