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Maverick mythbuster of business academia

AUTHOR: Lachlan Colquhoun   DATE: 23.11.06   ISSUE 2, 2006

Like some intellectual mythbuster, his work in the area of choice theory and corporate social responsibility (CSR) has produced results which challenge the assumptions of the full range of groups, from corporate leaders to left-wing activists, about the validity of their motives.

“I seem to annoy everybody,” says Professor Devinney. “The people on the left don’t like it because I’m telling them that people don't behave in the way people on the left think they should behave.

The more corporations become “socially responsible” the more they accumulate rights and quid pro quos from that investment.

Illustration: Gregory Baldwin

“And the people on the right, don't like it because I tell them they are not lily white either.”

Professor Devinney, the Director of AGSM's Centre for Corporate Change, is one of AGSM’s most prolific academics, combining his teaching role with an active research program as well as enjoying considerable success as an entrepreneur.

His collaborative research projects – involving leading academics from institutions all over the world - have resulted in two innovative AGSM spin-offs, the FutureChoice Initiative and Brandalytics, a new methodology for corporates to quantify changes in the value of their brand and those of competitors.

“Academics are like workmen,” he says, explaining the collaborative approach.

“Some guys are good with wood, others with concrete, so having a broad team on these projects who all work in different ways has provided us with some interesting results.”

In the last six years, Professor Devinney – who came to Australia in 1993 from the US -has been awarded ten Australian Research Council grants, two Co-operative Research Centre Grants, an Advanced Institute of Management Fellowship and other corporate and foundation funding in excess of $8 million.

In recognition of his achievements, Professor Devinney recently received AGSM's Research Award and was appointed a Professorial Research Fellow for his contribution to AGSM’s research standing and international profile.

He describes his research approach as “highly experimental” and characterised by a willingness to take risks and challenge accepted truths.

“Experimenting is the only way to find out whether things are true,” he says.

“Just because something appears to be true from a common sense perspective doesn’t necessarily mean that it is true. That is as relevant in management as it is in any other field.

“People like me say ‘if we do an experiment on this maybe we might actually find out what’s going on,’ but the reality is that what you find out may not be very popular, and might not appeal to people out there who are selling products and services.”

Such an approach, however, brings with it considerable pressure to be accurate and rigorous.

Experimenting is the only way to find out whether things are true.

“Our job as academics is, to a greater or lesser degree, to bring out inconvenient truths, and there’s a lot of scrutiny that goes with that,” says Professor Devinney.

“If you bring out an inconvenient truth you better be sure that it is a truth and not just an opinion.

“That is the difference between an intellectual, scholar and ‘guru’. Guru’s rarely do anything that stands up to the sort of scrutiny scientific scholarship demands relying instead on the ‘court of book sales and speaking opportunities’ as justification for the validity of what they are saying.”

One prime example of Professor Devinney’s approach is his work in the area of corporate social responsibility (CSR), where his research is challenging the idea that individuals and companies will act on their beliefs.

Using choice theoretic approaches, anthropological research- often in documentary form - and neoclassical economic modeling, Professor Devinney and his team of collaborators around the world are looking at the motivating factors which drive decision making in the area of CSR, both from a corporate and a consumer perspective.

In one aspect of this work, Professor Devinney has been examining how people rationalise their choices, when factoring in issues such as child labour or counterfeit goods.

Professor Timothy Devinney, Director of AGSM's Centre for Corporate Change, combines his teaching role with an active research program.

He is also questioning whether some corporate actions, which appear to be driven by ethics and altruism, are really motivated by more commercial reasoning and a desire to create barriers against competitive encroachment.

“Suppose that a company says ‘we want to be more environmentally sustainable and we want to be setting norms of environmental sustainability in our industry," he says.

“But at the same time this company knows there is a fixed cost of environmental sustainability, so a large multinational corporation can actually bear that cost much more than a small local corporation can.

“The question is, then, whether it is ethically responsible for a company to use its sustainability stance to push its competitors out of business.”

Professor Devinney uses a hypothetical example involving US retail giant Wal-Mart to illustrate this point.

“We know that when Wal-Mart moves into an area it dominates the supply chain,” he says.

Professor Devinney describes his research approach as “highly experimental”

“So say they move into organic foods. Are they doing that because they view it as an important thing to do for the society at large, or are they doing it because they know that the margin on organic food is larger than the margin on regular food and its an area where they would actually have a competitive advantage if they were to control it?”

Philanthropy is another area where altruism may not be the only factor at work.

“You might find that an Australian corporation would give money to tsunami victims in Asia, but not to Kashmiri earthquake victims,” says Professor Devinney.

“So are the companies doing it because it makes the chief executive feel good and makes them appear to be involved in the community or are they doing it just to keep NGOs and government off their back or are there other reasons which aren’t so noble?”

After publishing some of this research recently in an article entitled “the Other CSR” in the Stanford Social Innovation Review, Professor Devinney and his collaborators are now planning a follow-up, entitled “the Dark Side of CSR.”

There are things, says Professor Devinney, which linger in the background of the CSR debate, and he believes they need to be talked about if we are to make sense about notions of a civil society and business’s role within that society.

Often, these are subjects highly inconvenient to business groups and government and non-government organisations, but he believes they are important points of discussion and need to be talked about openly.

Professor Devinney has been examining how people rationalise their choices.

“Are governments abdicating responsibility by pushing demands for greater corporate social responsibility? Are corporations using CSR as a competitive weapon wrapped in an ethical cloak?” Professor Devinney asks.

“ Would you want coalitions of corporate interests such Wal-mart or Westpac or AIG or BHP determining the social direction of the society? The more corporations become ‘socially responsible’ the more they accumulate rights and quid pro quos from that investment.

“Do we as individual members of the society know the price of that quid pro quo?”