My special thanks go to my thesis advisor, [title] [Name Surname], who willingly dedicated his/her time to help me whenever I faced challenges with my research work or whenever I needed answers to some questions. Your advice directed me in the right way.
I am also thankful to experts who participated in the interviews to help me with validation of my research project. I would like to express my heartfelt gratitude to BECO staffs for agreeing to take part in my study. The validation interview could not have succeeded without your contributions.
Finally, I would like to express my gratitude to my [friends, family, parents, etc.] for constantly encouraging me when writing this thesis. This accomplishment is because of your unfailing support.
ABSTRACT
The study investigates the possibility that Business Ethics Mindset program by Novo Nordisk will solve challenges that the organisation is currently experiencing. The focus was on factors that support the implementation of BE Mindset and others that hinder its adoption. A case study approach was adopted to assess organisation’s practices and develop a better understanding of Business Ethics Mindset. Data was collected through interviews. Seven respondents were selected from Business Ethics and Compliance Office (BECO) using purposive sampling, and they responded to the interview questions. The interview conversations were recorded using a tape recorder with the participant’s permission and were analysed later transcribed to enable analysis. Content analysis method was used to categorise data into appropriate themes and subthemes. In addition, document analysis was applied to retrieve information from other sources such as company documents and artefacts. Findings revealed that business ethics mindset was new to Novo Nordisk and many employees still did not understand what the program was all about. Although employees in BECO understood the strategy better than other employees, they did not know how to work with it and were not sure if the organisation will achieve its objectives and solve its problems by adopting the strategy. BECO officials had invested in communication tools to help with making employees aware of the strategy in all affiliates. Study participants also expressed their confidence that Novo Nordisk employees were good at complying with business ethics and that the organisation will be successful after Novo Nordisk Way was made the source of values that informed implementation of BE mindset. Training techniques employed by the company would also promote awareness. The study, however, concluded that the organisation still had a lot of things to do in order to encourage policy adoption.
Key Words: Novo Nordisk, Business Ethics Mindset, ethics, compliance, culture, moral, values, institution
CONTENTS
ACKNOWLEDGEMENT. 2
ABSTRACT. 3
SECTION 1. 8
INTRODUCTION.. 8
1.1 Problem Area. 8
1.2 Problem Formulation. 9
1.3 General Objectives. 10
1.3.1 Specific Objectives. 10
1.4 Research Questions. 10
1.5 Study Limitations and Delimitations. 11
1.6 Philosophy of Science. 11
Analysis of Problem Formulation. 11
Social Constructivism.. 12
SECTION 2. 13
METHODOLOGY.. 13
Philosophy. 13
2.1 Part 1: Case Study Presentation. 14
2.2 Part 2: Choice of Theories. 15
2.3 Part 3: Empirical Analysis. 16
2.3.1 Choice of Research Method. 16
2.4 Relationship between Case Presentation, Theories and Empirical Analysis. 19
SECTION THREE.. 20
CASE PRESENTATION.. 20
3.1 History of Novo Nordisk. 20
3.2 History of Novo Nordisk Way. 20
3.2.1 Novo Nordisk Way Business Ethics. 21
3.2.2 The Novo Nordisk Way of Management 24
3.2.3 Novo Nordisk Way Tour 2010. 24
3.3 Business Ethics Mindset 25
3.3.1 Definition of Mindset in Ethics. 25
3.3.2 Definition of Mindset in Anthropology. 26
3.3.3 Business Ethics Mindset at Novo Nordisk. 26
SECTION FOUR.. 30
BUSINESS ETHICS COMPLIANCE OFFICE.. 30
4.1 Structure of BECO.. 33
4.2 Internal Decision Making Structure. 34
SECTION FIVE.. 36
THEORETICAL FRAMEWORK.. 36
5.1 Business Compliance. 36
5.2 Compliance in Pharmaceutical Industry. 37
5.3 Compliance from Roles to Values. 37
5.3.1 Need to make employees aware of Organisational Values. 38
5.3.2 Relationship between Ethics and Compliance. 39
5.3.3 Ethics Compliance Department 40
5.4 Literature Review.. 42
5.5 Evolution of Values. 42
5.5.1 Moral Development Theory. 42
5.6 Organizational Culture. 44
5.6.1 Culture Theory by Schein and Mary Douglas. 44
5.7 Formation of Institutions. 45
5.7.2 How Institutions Think by Mary Douglas. 48
SECTION SIX.. 50
DATA ANALYSIS. 50
6.1 Analysis and Findings. 50
6.2 Discussion. 57
6.2.1 Relating Findings with Theories. 59
6.2.2 How the Findings answer Research Questions. 61
SECTION SEVEN.. 63
CONCLUSION.. 63
7.1 Conclusion. 63
7.2 Implications for Practice. 64
7.3 Implications for Future Research. 65
REFERENCES. 66
APPENDIX 1: INTERVIEW GUIDE.. 70
APPENDIX 2: INTERVIEW SESSION PARTICIPANTS. 85
SECTION 1: INTRODUCTION
This chapter introduces concept of culture and cultural challenges that multinational organisations encounter. A successful culture is one which accommodates intercultural perspectives, promotes internal communication and solves compliance challenges. The chapter also introduces Business Ethics mindset as a new set of values, whose ability to solve Novo Nordisk’s issues will be examined in the study.
1.1 Problem Area
Business ethics is part of social ethics and is thus continually influenced by ethical conditions of the given era. Traditionally, leaders of world countries did not pay attention to long-term effects of ethics and morality of their time. The culture of irresponsibility was then transferred across generations, and negative implications of their actions impacted the later periods. According to Salehi, Saeidinia & Aghaei (2012, p. 2) histories of business is traced from the periods of the slave trade, colonisation, and Cold War. However, ethics is only related to the post-war and post-colonial periods. The researchers clarify that the need for business ethics started gaining attention in the 1970s, but firms just began highlighting their ethical structure after 1990’s. Business ethics was given importance during this era because of the economic and natural disasters that resulted from unethical conducts of businesses. At present, it has come to global attention that ethics in business activities is essential for success, profitability, and sustainability of organisations (Salehi et al. 2012, p. 3). There is a continuous rise in issues and ethical trends that not only impact organisational operations but also affect customers. Today, establishing proper ethical behaviour is the key to avoiding lawsuits related to business ethics. Global expansion by multinational organisations, which seek a share of the foreign markets, raises the concern of investors regarding ethical behaviour of officers and employees. These areas significantly affect the moral-cultural values of the organisation. There are thus two main concerns of businesses across the globe: 1) How business moral values can effectively be communicated to the employees, and 2) the most appropriate communication channel to use.
Researchers have discovered that the traditional Ethics and compliance design is no longer useful in addressing business ethics issues. This calls for the creation of more formalised ethics and compliance strategies. In fact, regulators have realised that absence of cultural integrity can make organisations look at their ethics and compliance programs as a hindrance to achieving business goals (The Wall Street Journal 2016). This paper investigates the ability of the BE Mindset to enable the Novo Nordisk to handle the three significant challenges its business faces and achieve its organisational objectives. The three problems that the organisation currently faces include: i) the increasingly complex compliance requirement such as severe fines and market exclusion; ii) global expansion of the company, to accommodate 7,000 to 8,000 new employees and managers, and iii) Organisational pressure due to the need to achieve financial targets, by meeting the expected sales level (Novo Nordisk 2017). The third challenge is further complicated by the increasing cost of creating awareness across the organisation, and rising risk of BE non-compliance and financial misconduct. These factors can make the organisations’ values difficult to maintain.
1.2 Problem Formulation
Multinational companies are found to spend a significant portion of their income on compliance every year. Even so, companies in industries such as healthcare and finance are reported to pay even more significant amounts when they hire several compliance officers to assist them with investigations (Griffith 2016, p. 2102). Previous research, for example, showed that Siemens AG used approximately one billion on internal investigators following government’s interest in allegations that the company bribed foreign public officials (Henning 2012). Adopting a compliance program is a tool for reducing such financial costs, and elimination of related regulatory and legal procedures encouraged by ethical failure. Misconducts in businesses and strictness of anti-bribery legislations, which followed, under the US government regulations made many multinational businesses understand that unethical conduct has an influence on organisational reputation, brand recognition and growth of profits (Sampson 2016, p. 68).
Each company strives to make the adopted strategy blameless, but the best compliance strategies have shown their inability to block misconduct in organizations. According to Haugh (2017), for example, the Volkswagen AG’s compliance program reportedly failed to prevent employees from cheating during emissions test. Similarly, Well’s Fargo Company’s policies were not competent enough to stop employees from opening accounts that were not authorized by customers. Haugh (2017) also reports that even today, little attention has been placed on determining the causes of such decisions by employees. Moreover, little research has focused on determining the level of understanding of people who develop and implement the practices concerning the meaning and relevance of the rules to business activities (Waller 2017).
Managers of an organisation have the principal duty of ensuring that ethical behaviour is correctly implemented in an organisation but researchers have ignored the relationship between leaders’ actions and formal ethics, and how these factors affect the overall conduct of business (Downe, Cowell and Morgan 2016, p. 899). Additionally, business codes are now widely used as management tools, but the investigation into the effectiveness of the business codes have resulted in conflicting outcomes. Kaptein and Schwartz (2008 p. 117) states that the variations resulted from differences in the definition of terms, inadequate data, and absence of a theoretical framework.
1.3 General Objectives
The main aim is to determine the capacity of BE Mindset to solve business ethics and compliance challenges that Novo Nordisk is currently facing.
1.3.1 Specific Objectives
To determine the strengths and weaknesses of Business Ethics Mindset
To identify strategies which will help improve BE Mindset policies and practices to maintain its effectiveness in ensuring compliance with ethical standards in business
To find out how well managers and compliance counsel understand features of Business Ethics Mindset
To investigate the effectiveness of communication channels of the organisation in sharing practices and policies based on BE Mindset
1.4 Research Questions
What advantages and disadvantages are associated with Novo Nordisk’s BE Mindset?
Will the BE mindset assist the company in achieving global compliance, including worldwide growth and its financial targets?
What strategies can improve the BE Mindset to ensure organisational objectives are achieved?
Do the managers possess the right knowledge and skills to enable them to understand the organisational ethical practices that they are expected to pass across?
Does the company posses proper communication channels that will enable it to pass the ethical practices from managers to the employees?
1.5 Study Limitations and Delimitations
This study examines business ethics of Novo Nordisk and concentrates on how much employees understand business ethics mindset. The study participants are mainly from business ethics and compliance office (BECO), Danish affiliate. The limitations of this study are contributed by methodology used during data collection and analysis. Given that Novo Nordisk is big company with over 40,000 employees, the sample size is quite small (7 participants) and may not adequately represent views of the study population. On the other hand, the qualitative analysis does not allow for measurement of the research problem (Berg 2007, p. 104). Moreover, gathered data might not be realistic or relevant to the study subject because respondents have power to choose whether to reveal particular information or not (Alshenqeeti 2014, p. 43).
Delimitations
The research will use BECO employees to understand business ethics policies and practices of all affiliates. Research results will be generalised to entire organisation. Major approaches employed by Novo Nordisk to ensure successful implementation of BE mindset can be recommended to other pharmaceutical organisations that want to implement new business ethics strategies.
1.6 Philosophy of Science
The reasoning for the scientific method of the thesis is described in this section for the purpose of identifying scientific basis upon which theoretical, as well as methodological perspectives, are founded. Generally, the dissertation is informed by social constructivism approach which emphasizes that human advancements occur in social settings and information can be generated in such environments through positive relations (McKinley 2015, p. 187). I have selected solipsism doctrine because its reasoning matches the perspective of this research. I will start by reviewing the problem formulation.
Analysis of Problem Formulation
As a researcher, I understand the importance of developing research design based on a combination of features of the phenomenon being studied and proper philosophical beliefs. Compliance issues in the pharmaceutical industry are better understood by personnel in charge of formulation and adoption of formal and informal rules. Moreover, the department in charge of setting the regulations understands how ethical strategies relate to business processes. Constructivism approach in this study will facilitate understanding of business ethics from the point of view of organizational staff (McKinley 2015, p. 190). Furthermore, interacting with participants is most appropriate for studies that involve organizational aspects such as personnel, culture, practices, mindset, and philosophies. These are factors that affect reality and also undergo a continuous process of change. Qualitative research design will be employed for this study because it is the best method of collecting data from social settings (Saunders, Lewis and Thornhill 2009, p. 151).
Social Constructivism
Social constructivism is theory of knowledge which usually applies to sociology and communication theories. It investigates knowledge developed by individuals who work jointly to understand the world. Generally, social constructivism theory suggests that knowledge is constructed when individuals interact in a social environment (Amineh and Asl 2015, p. 13). Culture and surrounding, therefore, play a major role in the theory (Amineh and Asl 2015, p. 13). This theory fits well in this study which investigates need to change organisational culture. Further, Kim explains three other basic aspects of social constructivism: knowledge, learning and reality. First, the theory explains that reality does not exist on its own but results from human activities. Secondly, the theory expresses that knowledge is socially and culturally constructed. Finally, social constructivism is based on argument that learning is a social event which happens through interaction and collaboration among people (Kim 2001, p. 3).
The case presentation contains data which were collected from documents provided by BECO staffs at Novo Nordisk. I had to interact with them and discuss my study area before they decided on the materials that were relevant to my project. On the other hand, theoretical framework is written based on books that were suggested by my supervisor to provide crucial information concerning features of social environment such as culture, values and people. Theoretical section, therefore, explains how values and rules are introduced and implemented in an organisation. Finally, empirical analysis made use of interview results. Interviews were conducted with seven BECO employees using face-to-face interactive sessions, in which researcher asked questions and participants responded.
SECTION 2: METHODOLOGY
The current chapter presents methods that the proposed study intends to employ to achieve research objectives. Research onion method was used to inform various steps of this study. The figure below indicates that selection of research philosophy is in the outer layer of research onion.
Figure 1: Research Onion
Source: Saunders, Lewis and Thornhill 2009, p. 108
Philosophy
Philosophy is the line of beliefs and assumptions about construction of knowledge, which does not necessarily take a dramatic form and is more like a response to a given problem (Saunders et al 2009, p. 108). The decision about philosophy is preceded by determination of beliefs and assumptions that are usually described under ontology, epistemology and axiology.
Ontology
Saunders et al defines ontology as the manner in which a researcher perceives reality, which affects the choice of research strategies for studying the topic (Saunders et al 2009, p. 119). In other words, ontology is about how employees and management of Novo Nordisk perceive BE Mindset. It illustrates what the beliefs and assumptions of staff regarding the program are and what they expect it to do for the organisation. In qualitative research, subjectivism prevails but combining it with objectivism yields better results.
Epistemology
This explains what the researcher believes are the components of acceptable knowledge. Epistemology also helps with creation of acceptable knowledge and promotes the process of conveying the beliefs to others (Saunders et al 2009, p. 119). For this study, data was collected using semi-structured interviews. More information was also gathered from secondary sources such as books, journals and company documents.
Axiology
It describes the researcher’s understanding of need for values in a study (Saunders et al 2009, p. 119). This study will obey particular ethical requirements. With interviews, in particular, ethical considerations must be part of the study because the strategy is an intrusion into participants’ private lives (Cohen et al. 2007, p. 408). Ethical standards thus require that researcher explains the aim of the interview and how it will be conducted so that they willingly agree to participate. Another area of importance is confidentiality of the gathered data (Saunders et al 2009, p. 180). Additionally the researcher ensured that sensitive details were protected from unauthorized access.
Pragmatism
This perspective is built on argument that research questions determine the choice of ontology, epistemology and axiology because one maybe better at responding to a given question than others (Saunders et al 2009, p. 109). When working with positivist or interpretivist perspectives, it becomes a great challenge to select the most appropriate approach for answering questions. This study will therefore adopt a pragmatic perspective because it is possible to work with under either positivist or interpretivist points of view (Saunders et al 2009, p. 109).
2.1 Part 1: Case Study Presentation
Research Approach and Strategy
The three approaches defined by Saunders et al 2009 are deduction, abduction and induction research. The most appropriate research approach for this study is induction. Under inductive method, research is supposed to start with specified goals and proceed into developing theories from the study (Zalaghi 2016, p. 25). The inductive method also works best with small sample sizes in generating qualitative data. However, the reliability of the findings may be questionable because the sample used is usually tiny (Zalaghi 2016, p. 26). The strategies defined by Saunders et al 2009 include survey, experiment, archival research, case study, ethnography, action research, grounded theory and narrative inquiry. This evaluation takes the form of a case study.
Case study design has undergone a series of improvements that have shaped it into a flexible research strategy capable of helping researchers get a deeper understanding of situation being examined because it allows for the use of multiple approaches (Yin 2014, p. 2). In this study, case study approach helped research understand how Novo Nordisk is prepared to adopt business ethics mindset. Focus was on employee awareness of the program, strategies the company has invested into in preparation for adoption of the policy and further strategies it plans to use in order to achieve organisational objectives. The case study describes prior programs that the company established to promote business ethics and accomplishments of the company using the strategies. Another important area was the weaknesses of the existing strategies, which describes the reasons for which the company wants to introduce a new approach to business ethics.
This approach was also selected for other benefits including that it decreases positivist understanding, promotes postmodern perspectives, focuses of participant’s point of view and gathers a large amount of information to describe the phenomenon (Saunders et al 2009, p. 145; Denzin and Lincoln 2011, p. 9). Successful analysis of practices and policies of Novo Nordisk required the researcher to gather a lot of information. Moreover, case study design enables a thorough analysis of the study subject within the natural setting so that views and opinions of participants about the topic are understood. The documents used for case study analysis were provided by the company and excess personal views of the individuals who made the records. Stewart (2014, p. 151) explains that combinations of strategies that are often used in case study include an examination of documents and artefacts, observations and interviews. This study employed analysis of documents and artefacts to gather adequate information for case study presentation.
2.2 Part 2: Choice of Theories
Theoretical framework has two major sections. The first section concentrates on ethics and compliance because the researcher wanted to determines features and functions of ethics and compliance department. The findings would be compared against business ethics approaches of Novo Nordisk to determine consistency of theories and the organisation’s practices. Compliance is very important area when discussing business ethics because it entails adoption of recommended standards and provision of evidence of adherence to the standards. The section basically concentrates on helping readers understand ethics and compliance, especially the role of law in establishment of internal systems. Crucial steps in development of a new strategy such as incorporating statutory requirements while linking people, technologies and business practices are discussed in the section.
Theories also helped research to realise that introducing a business ethics program is not enough hence an organisation must prepare approaches for implementation, tools for measuring extent of effect of policy or culture change, steps for monitoring and reviewing the strategy, and how to accurately analyse and report conformance. The role of ethics and compliance department are also discussed in the section. The theories also focused on duties performed by the department and discusses among others, risk identification, risk prevention, scheduling monitoring and review, and identification of solutions. The section also looks into Payne’s book of 1993 to determine reasons that might cause organisation’s leaders or employees to act unethically when doing business. The book also emphasizes the need for employee awareness of ethical policies and how chances for misconduct can be minimized.
The second section is based on culture and its importance in the organisation. In the section, different theories are considered. An organisation’s culture is built on values that direct daily choices and actions made by employees. Moral Development theory by Kohlberg (1984) is applied to understand origin of values and how they advance to the stage of becoming common among members of a group. In defining what culture really is, Cultural theory by Schein (2004) was selected. The theory described major components of a culture to include: visible structures and practices; strategies, goals and visions; and perceptions, thoughts and unconscious beliefs. Studying institutional theory revealed that an organisation must have objectives to be achieved before implementing a strategy. Finally, a focus on How Institutions Think by Mary Douglas (1986) helps readers understand that institutions are formed through collective efforts of individuals who think on behalf of the company.
2.3 Part 3: Empirical Analysis
2.3.1 Choice of Research Method
Based on the nature of this study, mono method qualitative research was the most appropriate. An essential feature of qualitative study is that it is (social constructivism) the understanding that knowledge can be constructed through positive interactions participants in a social environment (McKinley 2015, p. 187; Saunders et al 2009, p. 151). Moreover, the study is best for small samples and has no limits to scope of the research (Brown 2005, p. 485). However, generalizability of findings to entire population may be limited by because sample size is usually minimal (Creswell 2009, p. 15).
2.3.2 Time Zone
The two time zones presented by Saunders et al 2009, p. 155 include cross-section and longitudinal. This study will adopt cross sectional time zone because there is limited time duration.
2.3.3 Techniques and Procedures
Data Collection Methods
In-depth interviews will be used in the proposed study to identify and understands the point of view of participants concerning the study topic. My personal computer’s voice recording application will record the responses, including time and date of the interviews.
Interviews
Kvale 1996, p. 14 defines interview as a process that allows at least two people to exchange views about a common topic. According to Kvale and Brikmann (2009, p. 150), qualitative interviews enable a researcher to determine respondent’s perspective. One advantage of interviews is that they enable human beings to interact for the purpose of generating knowledge within the social environments (Kvale and Brinkmann 2009). However, there is a possibility that the information gathered may deviate away from the aims of the research because participants may decide to select the information to reveal (Alshenqeeti 2014, p. 43).
Semi-structured Interviews
A semi-structured interview was used to collect data about Novo Nordisk’s intentions to implement BE Mindset. In semi-structured interviews, a researcher has more freedom especially when asking follow-up questions (Kvale and Brinkmann 2009). Brinkmann and Kvale 2014, p. 157 define thematic and dynamic questions as the two ways of directing semi-structured interviews. As a researcher I decided to use dynamic questions because they create a natural interview environment and enable the interviewee to speak freely when responding to the questions.
Sampling
The study employed purposive sampling to select study respondents. The non-probability approach allows for selection of respondents based on knowledge of the research topic (Freedman et al. 2007, p. 333). The current study focuses on seven employees from Business Ethics and Compliance department at Novo Nordisk and one employee from Danish Affiliate at Novo Nordisk.
Data Analysis
Below are the procedures which were employed when analysing qualitative data after the interviews.
Transcription
The first step will be to transcribe the recorded data, to change spoken words to transcripts that can be analysed (Stuckey 2016, p. 7). The accuracy of information will be prioritised during transcription. Preparation of transcripts will open the way for evidence-based interpretation.
Content Analysis
Data analysis will be performed using content analysis method. The content analysis allows the researcher to divide collected data into themes and even further into sub-themes for comparison (Beck and Manuel, 2004, p. 35). The strategy, however, includes multiple steps and is thus time to consume.
Document Analysis
It includes examination and explanation of secondary data (Bowen 2009, p. 28). Materials applicable in this process include personal records, artefacts, and public documents (Bowen 2009, p. 31). The outcome of such studies is usually more reliable because mixed approaches reduce research biases.
Validity and Reliability
Validity and reliability of research tools inform about the significance of the research findings. According to Dornyeri (2003, p. 595), validity and reliability of data collection methods give assurance that participants provided relevant information. Validity is the level at which research represents study objectives (Berg 2007, p. 104). Proper interview questions will avoid incidents here researcher seeks responses that back preconceived views, misconceptions of responses, and misunderstanding of questions on the part of respondents (Cohen, Manion and Marison 2007, p. 150). Reliability is the ability of a selected research technique to give similar outcome on repeated tests. While acknowledging that interviewing methods have poor reliability, Creswell (2009, p. 19) advises that researcher’s validity and reliability is achievable through proper strategies.
2.4 Relationship between Case Presentation, Theories and Empirical Analysis
There are three main methods of data collection and analysis in this study: case study presentation, theoretical framework, and empirical analysis. Case study determines organisation’s business ethics procedures and practices by analysing documents and articles while theoretical framework investigates the connection between ethical processes of the company and literature presentation. After the connection is determined theoretically using the first two procedures, empirical analysis is conducted to examine credibility of the theories. In this study, empirical analysis is based on interview results. The Knowledge gained from theories and case presentation also informed setting of relevant questions for the interview guide, which was used to gather data for empirical analysis.
SECTION THREE: CASE PRESENTATION
Novo Nordisk plans to institutionalise a new set of values and there is need to understand why the organisation thinks changing its culture will solve its problems. This section thus presents the history of Novo Nordisk so that problems with the existing culture are determined and reasons for cultural change justified. This section presents the story of Novo Nordisk from the time it was formed and values it followed.
3.1 History of Novo Nordisk
The origin of Novo Nordisk can be traced back to 1922 when August and Marie Krogh established Nordisk Insulin laboratorium, after learning about insulin in the US (Novo Nordisk 2011, p. 2). They worked alongside Dr. Hans Christian H. who supposedly was proficient in managing of blood sugar. The team advanced and employed Harald Pedersen to construct machines for insulin production. Thorvald Pedersen, Herald’s brother, was as well hired to conduct chemical analysis during insulin manufacture. The two brothers, however, left and formed Novo Terapeutisk Laboratorium (Novo Nordisk 2011, p. 7). The two companies operated separately for about 65 years, during which both were successful and managed to
