A Matter of Course: New Governance
September 10, 2013
Michael Runnels, J.D., department chair and associate professor of law and social responsibility
This course for Emerging Leaders MBA students, which included a two-week trip to China when it was offered last spring, asks students to consider and apply the idea of a fresh approach to corporate reform that encourages dialogue about regulatory principles from the perspectives of industry, regulators, corporate social responsibility advocates, and shareholders. The course took the students to Beijing and Shanghai, where the students gained a new perspective on how to be westerners conducting business in China while complying with U.S. anti-bribery laws.
WHAT DO STUDENTS DO IN THE CLASSROOM?
In what the professor describes as a “dynamic, challenging” course, students learn about Chinese history, culture, and law—and how those laws are applied in reality. “While Chinese copyright law on paper is quite robust, in practice you’d be hard-pressed to find sufficient evidence that any of these laws are being enforced in a consistent manner,” Runnels said.
WHY DID YOU TAKE THE CLASS TO CHINA?
“China is on the forefront of international business. Experience with Chinese business practices exposes students to some of what it takes to become business leaders in the global economy. This was a challenging trip because the first thing that was required of the students was for them to embrace their limitations as learning opportunities,” Runnels said. “Some of the students had never left the States before, and then they found themselves literally on the other side of the planet—in a developing country that is an authoritarian regime and also has a much more collectivist identity than the individualistic identity typical of Western societies.”
HOW IS DOING BUSINESS IN CHINA DIFFERENT?
“We tend to have a contract, legal-based way of doing business—rules, regulations, transparency, and accountability,” Runnels said. “In this fast-paced global economy, there needs to be an appreciation for diverse cultures. As China is the second largest economy in the world, and is going to continue to grow in that trajectory for the foreseeable future, many individuals need to understand that there isn’t really such a thing as Chinese law as much as there is a Chinese relationship—either you have one, or you don’t. Gift-giving in the cultivation of a business relationship is typical in China. The challenge is how to be an individual representing a country that has such strict laws governing gift-giving, and how to conform with those laws in such a way as to not undermine your ability to get a wedge into the most dynamic economy on the planet.”
HOW DO YOU SELL BUSINESSES ON CORPORATE SOCIAL RESPONSIBILITY:
“CSR asks corporations to do good for goodness’s sake, full stop. But if you don’t tie good corporate ethics to the corporate bottom line, then this ethical conversation will quite literally be lost in translation,” Runnels said. “There is a way to tap into a market for morality—and the best corporate actors find ways to innovate in this market.”
WHY SEEK A FRESH APPROACH TO REGULATORY PRINCIPLES?
“With regard to our study of Chinese business practices, the way that the U.S. strictly enforces our anti-bribery laws disincentivizes U.S. corporations from investing in those countries where bribery is perceived as relatively common. This leaves the playing field open to countries who don’t view gift-giving in such an uncompromising manner,” Runnels said. “We need to have a more nuanced view of cultural practices. When visiting someone’s home in China, you must show proper respect. You take your shoes off and you have to be ready to learn.”