“Shareholder value – if you deeply reflect on it, it doesn’t mean anything at all”

Business goals for a sustainable world economy – lecture by Prof. Geert Hofstede

Review by Zoë Perry

If you arrive at a lecture by Studium Generale about 15 minutes early, you will usually get a seat for sure. But doing things how they’re usually done does not qualify as the best strategy when Emeritus Professor Geert Hofstede is in town. 15 minutes before the beginning of the event the SBE lecture hall was already crammed with people and the security guards were denying access for other people arriving. Even Hofstede himself stated that he had never seen this hall so full. It seemed like I would not be able to make it to this lecture. However, we all know how you can convince the SBE staff to make an exception for you. I took my camera, braced up and insisted: “I am the press.” 30 seconds later I sat down next to my friend in the lecture hall.

Introduced through Prof. Mark F. Peterson, holder of the Geert Hofstede Chair on Cultural Diversity at FaSoS, Hofstede started his lecture by arguing that business goals don’t exist since the goals for businesses are essentially those of the business leaders.

His lecture mainly evolved around a study he had conducted with part-time MBA students having work experience in business in 1999. The MBA students rated the importance of certain business goals (such as power, sustainability, personal wealth etc.) for companies in several states all over the world. As Hofstede stated, these students might be the best available judges of their top leaders’ goals.

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Hofstede pointed out that regarding business goals for Europe in the 21st century more stress should be put on social responsibility, continuity, sustainability, profits in 10 years, local values as well as technical and social innovations, while there should be a reduced emphasis on personal wealth, growth, exploiting resources, this year’s profits and global arrogance (“we know what’s good for everybody”), values pursued especially in the U.S. business environment.  Furthermore he pointed out that after having finished their studies, “MBAs should have learned to be servants of society.”

Using the example of an American takeover of a Dutch pharmaceutical company through which about 12,000 people lost their job, he illustrated that in deciding about selling the ownership business leaders should ask themselves:

 

·      What are the cultural business goals of the new owners?

·      What is their long-term perspective?

·      What could this mean for the present stakeholders: employees, customers and the local society?

According to him, too much emphasis is put on shareholder value, since “if you deeply reflect on it, it doesn’t mean anything at all.”

Hofstede’s lecture was a plea for a less ego-results oriented business world, putting emphasis also on the social role of business. While the concept of sustainability in business is a common concept for every economist, this lecture provided an innovative approach for a realizable implementation. The Q&A round afterwards resulted in a big applause and much laughter when Hofstede, replying to a question regarding the future of the U.S., stated that at first it seemed like Obama was going to be the one to change the political system of two parties blocking each other’s actions and thus just raising the national debt.  “I think he seriously tried, but then realized that he couldn’t succeed.” He looked at his audience, smiled, and then said: “Yes, we cannot.”

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