1. In the institutional area, the academic field and
private sector, a new framework is demanded
for economy to grow and develop itself. This
new framework sets aside the short-term vision
imposed by financial markets and gives more
importance to sustainable growth goals for the
long-term, including issues of general interest.
Ethics seem to be, once again, the backbone of
a new system based on two big pillars: social and
environmental ethics.
An economic framework that is able to guarantee
both social peace and environmental sustainability
should be implemented at companies and
institutions. The failure of any of these two
elements will lead to an inefficient economic
system, very unfavourable for business development
and investments.
A New Institutional Role
According to Federico Mayor Zaragoza, Chairman
of the Scientific Council at Fundación Ramón
Areces, there are two aspects that define us as
members of our species and as species over history.
The first one is tied to the aversion to faulty work,
this is, rejection of those who don’t meet their
obligations. The second explains the fear we have
of disappearing as species. Both selection criteria
guarantee the survival and, at the same time, lead
individuals to constantly adapt the context to their
needs.
Knowing that “no problem of human destiny is
beyond human being” (JFK, 1963), the future
challenge will be the use of a new institutional
framework that redefines the form and contents
of the roles and responsibilities of our institutions.
The clash between economical and social elements caused by the big global economic
crisis we are supporting over the last years, forces us to think about alternatives to face the
new context ensuring equity and justice. In this regard, ethics are one of those possible
initiatives, even if the use and abuse of the term have hollow out its real meaning.
Strategy documents
I70/2015
Ethical Leadership.
Solidarity, Respect and
Dialogue: Essential Values
to Fuel Social Change
Public Issues
Insights&Trends
This document was developed by Corporate Excellence – Centre for Reputation Leadership and among other sources contains references to
the statements made by Federico Mayor Zaragoza, Chairman of the Scientific Council at Fundación Ramón Areces; Adela Cortina, Professor
at the University of Valencia; José Luis Monzón, President of CIRIEC; Charles Fombrun, Chairman at Reputation Institute and José Manuel
Pérez Díaz-Pericles ,Founder of the training project Entrepreneurship Training Chain, during the seminary Economía y valores that took place in
Madrid, on February 19 and 20, 2015

2. Insights & Trends 2
Ethical Leadership.
Solidarity, Respect
and Dialogue:
Essential Values to
Fuel Social Change
This approach is known as New Institutional
Economics (NIE) based on neoclassical economic
theories and economic liberalism. It does not mean
to break away from the market economy but to
apply new formulas to solve the problems arising
from it.
Institutions need to be efficient and guarantee social
justice, environmental sustainability and long-term
economic growth. The current economic scenario
and the institutional crisis turn the spotlight on
the legitimation of institutions, that, at the same
time, will have to make further efforts to respond
to the interests and demands of all actors involved:
companies and citizens. The European Union
Directive 2014/23 regarding public procurement is
an example of how institutions need to understand
this paradigm shift. Goals have to be set on the
basis of the results achieved and not as per services
rendered. Legal approaches need a political
backdrop that guarantees business ethics.
This new institutional framework sets big
challenges regarding an upgrade of the public
management systems and, especially, regarding
ethical governance in organizations.
Social economy as an inspiration
for a sustainable economy
In the new social and economic context, modern
economies need to meet the challenges posed
by financial markets, which are becoming more
competitive and global. Citizens have also become
a more active, informed and demanding group,
which is claiming changes in the social sphere. For
this reason, social economy is a benchmark when
looking for possible principles to inspire companies’
business and social action.
According to José Luis Monzón, president of
CIRIEC, social economy is deeply rooted in the
local culture, where local companies operate
their business and develop social actions. Those
institutions work with unified teams and expand
that feature to the communities where their
employees live, generating a high degree of social
cohesion. Creating common spaces to share values,
personal interests and business goals is another
achievement that can be attributed to social
companies. Regarding individual and general
interests, it is important to underscore the high
capability that this kind of organizations have to
marry both up by personally engaging individuals
and all stakeholders. Thus, goals are focused on
sustainable development, which allows greater
independence of public authorities when objectives
have been managed in an appropriate manner.
Although the model suggested by social economy
cannot be fully extended to capital companies, it
can be inspiring and provide value to the business
model through human policies and corporate social
responsibility resources. This allows companies to
assure that their employees identify and commit
themselves with the business plan and actively
engage with the firms they work for.
The current context of social economy represents
a useful tool to include ethical principles in the
business plan. Hence, the company stakeholders
perceive the actions of the organization as
something positive and favourable for their context.
Company, Citizenship,
Economy and Values
In the current scenario, both companies and
citizens are required to create new models of ethical
“In the current
scenario, both
companies
and citizens
are required
to create
new models
of ethical
leadership”
Figure 1: Wordle de Análisis de Literatura
Source: blog.orkestra.deusto.es
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study
regions

3. Insights & Trends 3
Ethical Leadership.
Solidarity, Respect
and Dialogue:
Essential Values to
Fuel Social Change
leadership. The future will be defined by developing
business and social referents able to legitimate this
new model of ethical responsibility.
Traditionally, developed countries have used a
framework where the state was responsible for
general interest and where individuals responded
for particular or private interest. This idea had
some universal merit until the 70s. However,
nowadays, the context has changed and states
have lost influence in favour of civil society —
economy and citizen institutions—, which covers
all areas of private and public life. The current
position of companies and citizens is critical as it
represents a way out of the crisis. In consequence, it
is fundamental to take new responsibilities based on
the new role of those organizations.
According to Adela Cortina, professor at the
University of Valencia, the future challenge is the
achievement of a mature society. And that requires
mature roles. In this regard, Cortina suggests that
this maturity will only be reached when “nations
celebrate their interdependence day and not their
dependence day”. At this point, “we will have
understood that we are human beings and because
of this, socially mature beings”. What Adela Cortina
means is that we cannot survive just by ourselves,
we need our context and our context needs us.
Social change implies active participation of
citizens, who have now the opportunity to
communicate their interests and demands and
organize themselves thanks to the major technical
breakthroughs. Citizen empowerment is coupled
with more responsibilities. A more mature citizenry
is defined by freedom of individuals who, at the same
time, need to take responsibility for their actions
and the benefit of their rights. In modern societies,
values such as solidarity (as individual wilfulness),
respect (as critical evaluation of opposing views),
or dialogue (as the only possible way to understand
each other) must come first. The value that each
society gives to dialogue and understanding will
define its own grow and stability guarantees. This
issue is particularly important due to the increase
of social groups and actors, as well as the growing
participation of those actors in public life and
decision-making processes.
Latin America also sets an example of social
dynamics in this context. If we analyse the last
decade, since the beginning of this millennium,
Latin America has been impacted by social protests:
Chile, Brazil, Argentina, Peru, Uruguay, Costa
Rica, Mexico, and Colombia. Social protests in
Chile, Brazil or Peru had some unique features
never seen before in the region and occur in
a threefold background: (1) all countries were
enjoying economic growth; (2) a new urban and
heterogeneous middle class was emerging; and
(3) there was a general negative feeling towards
institutions and public administrations, political
parties and their leaders due to their own inefficiency
and discrediting. This particular context steps away
from the belief that social protests only occur when
the economy is changing and represents a sign of a
new economic era. Charles Fombrun, chairman at
Reputation Institute, says that “it is impossible to
apprehend the full complexity of the transformative
«Social change
implies active
participation
of citizens»
Figure 2: Cuatro pilares fundamentales que hacen posible llegar al Capitalismo
Source: http://cconsciente.cl/2014/04/14/contenido/
Integración
stakeholders
Propósito
elevado
Liderazgo
consciente
Cultura
consciente

4. Insights & Trends 4
Ethical Leadership.
Solidarity, Respect
and Dialogue:
Essential Values to
Fuel Social Change
power of current citizenry without understanding
the key elements of this new context: the reputation
economy”.
If the 90s were a “gold era for innovation” and the
first decade of the new millennium was the “risk
era”, today we face a new paradigm where it doesn’t
matter what you sell but who you “are” and, more
important, what you “do”. In the new reputation
economy, people pay more and more attention to
the companies that are behind the products and
services they consume. In this sense, reputation
management becomes the management of the
relationship with the company’s stakeholders.
These relationships based on trust are key to
generate corporate value. Reputation is the proxy
of the twenty-first century as was brand building of
the last century. We can conclude that reputation
measurement and management of the risks and
opportunities associated constitute the balanced
scorecard, key indicator of corporate value in the
reputation economy.
A new opportunity for entrepreneurship
Crisis entail new opportunities. In this regard, social
and business entrepreneurship become one of the
cornerstones to overcome the current situation.
Entrepreneurship and innovation are not only
related to new products, cutting-edge technologies
or modern buildings. Entrepreneurship and
innovation are key elements in the XXI century
philosophy and it should be applied in every process
and management system in companies.
Entrepreneurs, employees, social activists and
employees can, and should develop innovative
approaches and enterprising actions. According
to José Manuel Pérez Díaz-Pericles, Founder of the
training project Entrepreneurship Training Chain,
an entrepreneur should have the ability to work in
teams, inspire his or her actions ethically and adopt
a work model based on the “learning making it”
approach. An entrepreneur should also understand
that entrepreneurship rises from the people to
land later in companies that, in turn, can promote
innovation by implementing coherent policies.
Conclusions: Towards a Social Economy
In this current scenario of changes, the solution is
to adopt a proactive attitude. Thus, a new social and
institutional contract needs to be applied to meet
the demands of all actors involved and to consider
private, public and social interests.
For this reason, social economy serves as a
benchmark to set the ethical principles, values
and governance codes in those companies that
operate in the markets, specially, when they include
important derivatives for business’ outcomes. In a
more globalized world, it is foreseeable that social
groups and activist increase their demands. That’s
why it is essential to have an aligned strategy that
permits take the facts into account and gives us
access to the licences needed to operate, with
special attention given to the relationships with our
stakeholders.
The shift of paradigm is a now a reality. It doesn’t
only affect capital companies but all organizations
and institutions. Regardless of their nature, all these
organizations are impacted by the new reputation
economy, its norms and precepts and, particularly,
by the new standards of transparency and good
governance required by all different groups. This
new reputation economy entails risks, but also
opens to new options. Opportunities could be
seized by those organizations capable of apprehend
cultural and social change, develop their ability
to innovate, manage their tangible and intangible
assets and promote a culture that supports their
entrepreneurs benefiting from their contribution to
the overall results of companies and institutions.

5. Leading by
reputation
©2015, Corporate Excellence – Centre for Reputation Leadership
A foundation established by major companies aiming to excel in the management of intangible assets and facilitate promotion of strong
brands with a good reputation and a capacity to compete on the global markets. Our objective is to become the driving force, which would
lead and consolidate professional reputation management as a strategic asset, fundamental for building value of companies around the world.
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