Values and culture play an indispensable role in the global growth ambitions of corporations. Yet a complex tapestry is created when corporate values and culture are layered on top of the many values and cultures that exist in different countries. Navigating these differences can be challenging, yet necessary for any company looking to expand and sustain its global footprint.
Do Global Values Exist?
The word “value” means the importance, worth or usefulness of something, or to consider (someone or something) to be important or beneficial. Therefore, values can and do vary widely among individuals (and companies) around the world. Yet when the question is narrowed from global general values to global ethical values the answer changes.
As Mary Gentile aptly points out in Giving Voice to Values, “[T]here is a great deal of commonality among the lists of moral or ethical values that most individuals identify as central, and … this shared list is rather short.” She goes on to explain that, as Rushworth Kidder points out in his book, Moral Courage: Taking Action When Your Values Are Put to the Test, there are only five widely held ethical or moral values:
- Honesty
- Respect
- Responsibility
- Fairness
- Compassion
These values provide a common base of understanding among diverse individuals and a roadmap for communicating effectively across global cultures. They can also serve as a strong foundation for a company’s global growth.
Seeking Growth in the US: The Case of VW
The story of Volkswagen (VW), a German automotive giant, is illustrative of the pivotal role that ethical values play in a company’s growth strategy. VW harbored ambitions of becoming the largest automaker in the world. In 2015, VW proudly announced that it had achieved that goal by surpassing Toyota. Just a few short months later, however, the EPA disclosed that VW had achieved this milestone through deception.
To achieve the goal of becoming the world’s largest automaker, VW had to capture the US market, which had more cars on the road than any other country. Yet VW couldn’t figure out how to capture the U.S. market while also abiding by the EPA’s newly enhanced regulations regarding stricter standards for nitrogen oxide emissions in diesel cars.
So instead, in their drive to meet sales targets and achieve their goal of becoming the largest, VW decided to cheat. The company did so by installing devices in their diesel cars to trick the regulators. The devices caused the cars to perform within emissions standards while in a test environment, but when the cars were driven on the open road the devices were turned off and the cars emitted significantly more nitrogen oxide than that allowed by EPA’s regulations. In addition, the company knowingly engaged in a false advertising campaign by actively marketing the cars as environmentally friendly.
This deception, which was pervasive within the company, began in 2006 and went undetected for several years. By the time VW pled guilty to criminal charges issued by the Department of Justice in January 2017, the repercussions were staggering. They admitted to circumventing the emissions control system in about 585,000 cars sold in the US from 2009 to 2015. To date the company’s fines and settlements total over $30 billion.
However, the VW story also presents a tale of redemption that illustrates the power shared global values can have within a company. After the scandal, VW embarked on an introspective journey to rebuild its corporate culture, which had the effect of grounding the company in the five shared values identified by Kidder.
First, VW emphasized to their employees the importance of complying with all laws and regulations where they operate around the world. By doing so, the company highlighted their respect for foreign regulators and their commitment to honesty.
Next, VW employed new systems, processes, and procedures, including a whistleblower helpline to empower their workforce to voice their concerns, thereby underlining respect for individual autonomy. At the same time, a clear message was delivered that everyone was accountable for their actions, eliminating any room for willful ignorance and emphasizing the widely shared ethical value of responsibility.
Furthermore, VW’s leadership implemented new measures to create a “fear-free” environment, where employees’ questions and concerns could be addressed with compassion rather than anger or deflection. Finally, company leadership placed an emphasis on setting objective, realistic goals. This helped to ensure fairness in the way business was being conducted, while also promoting a culture of openness where employees were encouraged to raise concerns if they felt any targets were unattainable. These efforts paid off as evidenced in part by VW's stock price, which was initially impacted by the crisis, but showed a robust recovery in the subsequent five years.
Seeking Growth Outside the US: Lessons from Walmart
Walmart's journey presents another instructive tale on the significance of ethical values in global growth. Initially, the retail behemoth was founded on three basic beliefs: respect for the individual, service to the customer, and striving for excellence. These basic beliefs explicitly encompass one of Kidder’s widely held values (respect) and implicitly embody the other four.
When the company was in its early years as a regional retailer with roots in the middle of the United States, it was understood that the three basic beliefs rested upon a foundation of honesty and integrity. In fact, the company’s founder, Sam Walton, was quoted as saying, “personal and moral integrity is one of our basic fundamentals and it has to start with each of us.” Over time, however, as the company expanded, the need for a more explicit articulation of the foundational value of integrity and what that meant in practice, became apparent.
Walmart’s growth prompted the company to proactively revise and refresh its core values by including a clear statement to “act with integrity.” With this change, the company’s three basic beliefs transformed into a straightforward expression of four core values - the three basic beliefs plus the declaration to “act with integrity.”
This change was not merely about adding a phrase to the company’s core values written in the code of conduct and hung on the office walls. It involved making these values resonate in a practical and understandable way for all associates, wherever they worked in the world.
The company accomplished this in several ways, such as publishing locally relevant frequently asked questions within its code of conduct, in the local language. Global leaders would also talk about these core values and tell locally relevant stories about how associates within each operating country were living them out.
Perhaps most importantly, each year the company celebrates selected associates from around the world who have demonstrated how they acted with integrity when faced with difficult circumstances. These global associates are invited to Bentonville, Arkansas, the company’s headquarters, for the annual associates’ meeting with approximately 20,000 Walmart associates from around the world. In 2023 the company received nearly 4,000 nominations for the prestigious honor of being named one of the 2023 Integrity in Action Award Winners.
Achieving Sustainable Success
As global commerce becomes increasingly complex, the importance of creating a shared understanding of Kidder’s five widely shared ethical values cannot be overstated. Both VW and Walmart offer vital lessons. VW showcases the pitfalls of sidelining core moral values as well as the road to recovery. Walmart underscores the importance of making implicit ethical values explicit and locally relevant.
For companies with global aspirations, grounding their growth strategies in universally shared ethical values that are communicated in a locally relevant way is imperative for sustainable success.
