Critical Perspectives on Accounting 20 (2009) 751761

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Critical Perspectives on Accounting

journal homepage: www.elsevier.com/locate/cpa

A Levinasian ethics critique of the role of management and control systems by large global corporations: The General Electric/Nuovo Pignone example
N.B. Macintosh a, , T. Shearer a , A. Riccaboni b
a b

School of Business, Queens University, Canada University of Siena, Italy

a r t i c l e

i n f o

a b s t r a c t
This essay extends [Shearer, 2002] Levinasian critique of the role of nancial accounting with its neo-classical underpinnings in todays global market capitalism. It expands on Levinass ethics-of-being-for-the-other by emphasizing how he developed his radical ethics by drawing on the ancient Jewish texts, an ethics that gives place of privilege to ontology rather than epistemology in contrast to much conventional Western philosophy. The essay illustrates the potential of his ethics for mounting a critique of the use of management and control systems by global corporations. It provides General Electrics takeover of the Italian company Nouvo Pignone as an instance. The systems are an essential element in the expansionary strategies of these massive enterprises that have come to dominate the world. The essay concludes that GEs instantiation of its generic management and control systems into the rms it acquires runs afoul of a Levinasian ethics. That many large global corporations employ similar systems and tactics highlights the urgent need for a broader accountability on the part of such organizations than economic efciency and producing prots to report to capital markets. Levinass ethics, thusly, presents a space of entry to expose and confront the economic commodication of employees scattered across the world. 2008 Elsevier Ltd. All rights reserved.

Article history: Received 5 February 2007 Received in revised form 6 February 2008 Accepted 25 February 2008 Keywords: Management and control systems Levinasian ethics General Electric Nuovo Pignone Global corporations Six-Sigma-System Talmud Jack Welch

1. Introduction The dominant role of the large-scale, global-multinational corporation in todays world is a matter of great concern to scholars in many disciplines. It has been estimated a decade ago that some 25 mega, multinational corporations all but ruled the world (Lowe, 1992). Their combined economic power exceeded the total GDP of four-fths of the worlds population and all but half a dozen of the largest nations. Today the proportion is even larger. In 2006, the combined turnover [revenue] of the ten largest corporations exceeded the GNP of all but three nations [USA, Germany, Japan] while the turnover of the top ve corporations exceeded the GNP of all but seven nations. This astonishing concentration of economic power has been accomplished in no small part by the merger and acquisition strategies employed by global multinational corporations that are facilitated by their generic management and control systems. This essay presents a critique of these practices, instancing General Electrics1 takeover in 1994 of the Italian company Nuovo Pignone, by drawing on Levinass ethics.

Corresponding authors. E-mail address: macintsh@post.queensu.ca (N.B. Macintosh). 1 General Electric was one of the largest three corporations in the world in terms of market capitalization during the early 2000s. 1045-2354/$ see front matter 2008 Elsevier Ltd. All rights reserved. doi:10.1016/j.cpa.2008.02.004

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This essay extends Shearers (2002) seminal Levinasian critique of the role of accounting in the currently ever-expanding global market capitalistic economic system. Today, she observes, market forces have increasingly exerted an ever-greater discipline over the individuals personal and communal life, so much so that, we nd ourselves increasingly unable to control, direct, confront or challenge the system that supports them. We are all, it seems, caught up in the web of a global economic system that we feel powerless to change [p. 541]. Shearer mobilized Emanuel Levinass (1969, 1985, 1998, 1999) philosophical ethics-of-being-for-the-other to show how it, both demonstrates the ethical inadequacy of the economic conception of accountability, and provides the ethical foundation for a greater moral responsibility on the part of economic agents and entities [p. 559] than does the self-interested agent of neoclassical economics that has been adopted as the underlying philosophical foundation of much accounting research, practice, and theory. The very act of practicing accounting, she concludes, cannot be undertaken without adopting a position regarding the extent of moral accountability proper to economic entities, especially corporations, which prepare and issue accounts of themselves. Accountants, including academic ones, on Levinas view, cannot escape this immanent moral duty [p. 542]. This essay takes up these arguments and claims in the context of management accounting and control systems; it extends Shearers exegesis of Levinass philosophy, and it explores, along Levinasian lines, the issue of the kind of ethics embedded in the management and control systems employed by the global multinationals that rule over massive amounts of the worlds wealth. For this purposes it instances the General Electric Corporations [GE] takeover of the Italian state company Nuovo Pignone [NP] as a case in point. Thus it adds to the critical body of accounting research, exposing the other side of management and control systems.2 In doing so, this essay presents a radically different picture of the takeover than that of Busco et al. (2001, 2002, 2006) and Busco (2003). The fact that some of the authors of these studies acted as consultants to NP in the transformation process and in GEs training sessions may have inuenced them to celebrate the transformation of NP into the GE Way and offer it as a model for effective organizational change. Their case study, they report, Shows how organizational transformation can be facilitated by the implementation of an organizational wide system of accounting and performance measurement. In particular, by emphasising the potential of MAS to support rationales underpinning the processes of organizational change [Busco et al., 2006, p. 35]. It was by means of establishing trust in these systems that NP employees, learned how to be GE rather than simply hearing about GE [p. 37]. The takeover, they posited, improved communication and integration by giving employees a common language of accountability based on nancial management control and non-nancial metrics [e.g., the SSP system]. Once the employees came to trust these systems, the instantiation of the GE Way, they concluded, proved to be a great success. The Levinasian critique below presents a very different picture. 2. Levinass ethics of being for the other3 In accessing Levinass philosophy, it is vital to recognize two aspects of his intellectual development that profoundly inuenced his thinking and which often go unnoticed by some of his critics (Chritchely, 1992, p. 5). Early on in his academic career he studied general and classical philosophy, psychology, sociology, and most importantly, phenomenology with Husserl and Heidegger. Such phenomenologists are want to bracket off anything beyond our immediate experience to focus on our consciousness by itself, the only absolute data from which we can begin (Eagleton, 1983, p. 55). Levinas, however, rejected Husserelian meontology in favour of the direct experience of encountering texts and other human beings. As we shall see later, the coming face-to-face with the other is a vital strand in Levinass philosophy. The other crucial element stems from his extensive and unrelenting study, which he began in 1957, of the ancient Jewish texts in general and the Talmud in particular. The Talmud itself is a monumental work and has been the basis for Jewish life, law, and philosophy over the centuries. It is, however, said to be extremely difcult to penetrate, requiring years of intensive study and a mastery of the Aramaic and Hebrew languages to come to grips with it. Levinas aimed to draw on his detailed studies to understand ethics from that perspective, rather than from the traditional canons of Western philosophy. His engagements with the Jewish texts deeply inuenced his thinking (Wygoda, 2005, p. 11). The style of these texts differs dramatically from the classical Greek and the more recent Western approaches to philosophy. The Talmud always challenges the reader to nd his or her own reading of it and so Levinas approached it as a phenomenological reader. Levinass face-of-the-other notion, then, can also be traced to his experiences with the Talmud. He saw in its teachings that we are capable of restraining ourselves to nothing and so willing to let others interests precede our own. In one of his main rabbinic commentaries given to the meetings of the Colloquium de Intellectuals Juifs de langue Franc aise, he selected a Suggiah from Tractate Sanhedrin as the subject of his reading. The text includes a Mishnah describing the seating arrangement for the Judges in a court authorized to decide life or death for individuals brought before it. Levinas saw a link between the erotic Song of Songs with, The Sanhedrin with its magnicent semi-circle, making human faces show themselves to each other, with a perfect hierarchy, attesting to an objectication and subjective absolute order, will nd its basis in an erotic poem, in a verse of the Song of Songs. (Wygoda, 2005, p. 16). In eroticism, Levinas saw that all is out in the open. This particular

See for instance, Arnold (1998, 1999), Froud et al. (1998), and Arnold and Sikka (2001). Levinas was Professor of Philosophy at the Sorbonne and the director of the Ecole Normale Superior Isrlite Orientale. His thinking is said to have had a profound effect on 20th century philosophy and he has been acclaimed by many as one of the greatest philosophers of our time.
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reading indicates his phenomenological experience with the text to elicit the ultimate signicance of its ethical implications, including for him especially the teachings regarding mans relationship to man. Thusly, Levinass philosophy diametrically opposed the traditional Western canon. Man, he came to understand, is capable of acting, not out of self-interest and exploitation of his fellow man, but rather out of concern for the others well-being to the extent of willingly giving priority to the others interests before our own, and of restraining ourselves to nothing, that is to say, no-thing. These ideas are part of the Nezikin order of the Mishnah, a distinct part of the Talmud that deals with maxims reecting the relationship of Man [self] to Society [others in society]. Many other parts of the Talmud also stress the idea that the individual should see him or herself as nothing in relation to others. Thus, these texts provided Levinas with a referential framework for working out a philosophy that opposed systematic moral philosophies. Levinas, as with some other philosophers, makes a crucial distinction between ethics and morality. Ricoeur (1992), for example, provides a helpful distinction. He reserves the term ethics for the individual subjects aim of an accomplished life and the term morality for the articulation of this aim in norms characterized at once by the claim to universality and by an effect of constraint [p. 170]. He reminds us that both ethics and morality refer to the Greek term mores, which has a double connotation. Ethics is that which is regarded as the good, while morality is that which is imposed by society at large on the individual as the obligation to follow the mores of ones community. Morality constitutes only a limited, although legitimate and even indispensable, actualization of the ethical aim, and ethics in this sense would then encompass morality, so the ethicsmorality relationship involves, at once subordination and complementarity [p. 1701]. Such a teleological claim for the primacy of ethics over morality is consistent with a deontological perspective that sees morality as the obligation to respect the norms of the particular social system or society in question. While morality is subordinate to ethics, together they form a complete whole and enhance each other. On this view, which Levinas shares, moral obligations are ubiquitous within ones community, while ethics applies to individuals in all communities. Business ethics research, for the most part, while explicitly incorporating the morality dimension, fails to elucidate an ethical dimension by which this morality may be judged. In order to address this lacuna, the ethical issue of the individuals [or the entitys] obligation to others, in and outside of her community is addressed by investigating two ontological questions: What is the basic nature of ones ethical obligation to the other? and When does this obligation arise? Levinass response to these questions strikes at the heart of traditional Western metaphysics and, by extension, its history of ethical thought. Western metaphysics even the decentered subject of Freud or Lacan conceives of the individual subject as a self-contained ego for whom the other is merely an object to be internalized in consciousness or comprehended through representation. The individual is deemed to be an autonomous being who can act intentionally with respect to others. This being [or self as Levinas calls him or her] sizes up others upon encountering them, knows them in particular ways, draws on some kind of metaphysical knowledge or intuition of what is good and what is not, and then treats them accordingly. As postulated in neo-classical economic theory, the self-contained individual encounters other[s] and at that moment treats other according to some kind of universal law, and expects other[s] to treat self similarly.4 The ontological thrust of the Western philosophical tradition is dened by its reduction of the other to the same as the self. In this act of representational appropriation, the other is comprehended only as a mirror image of oneself, with the result that the others alterity is effaced. On this ontology, other is assimilated into self like so much food and drink (Chritchely, 1992, p. 16). So, self is a law unto herself, guided by some putative universal truth, and other becomes the medium to an ethical end or action. On this view, ethics is the application, or instantiation, of metaphysical knowledge in some particular situation. For Levinas, this is epistemology, not ontology, and therefore not ethics. Taking a phenomenological position, he concludes that the ontological ethical moment does not arise at the moment of coming into contact with some other person, that is to say, simply in virtue of becoming. Rather, it is already immanent in being; it is there before encountering other[s] but is transcendent of that moment. This is, according to Chritchely, Levinass Big Idea [Chritchely, 1992, p. 68]. Levinass philosophy, then, focuses on the relationship between the self, the other and the face of the other. The self is the self-conscious, knowing subject or ego.5 The other denotes selfs alterity who can be neither known to nor reduced to the same as self in that other . . .escapes the cognitive powers of the knowing subject [p. 5]. And the face is . . .the way in which the other presents himself, exceeding the idea of the other in me (Levinas, 1969, p. 56). This epiphany of the human face penetrates the crust of self, thus rendering . . .the responsibility for the other man undeniable (Levinas, 1998, p. 17). As Levinas (1999, p. 110) explains this crucial point: I am generous toward to other without that generosity being immediately claimed as reciprocal. The moment one is generous in hopes of reciprocity, that relation no longer Involves generosity but the commercial relation, the exchange of good behaviour. In the relations to the other, the other appears to me as one to whom I owe something, toward whom I have a responsibility. Hence, the asymmetry of the I-You relations and the radical inequality between I and the You, for all relation to other is a relation to a being toward whom I have obligations. I insist, therefore, on the meaning of that gratuitousness of the for the other that arises within the I, like a command heard by him, as if obedience were already being [ltre] listening for the dictate. Aleritys plot is born before knowledge.
4 See Shearer (2002, p. 54756) for a detailed critique of the economic theory depiction of all individuals as atomistic, self-interested, rational, utility maximizing beings. See also Roberts (2001) and Lewis and Farnsworth (2007) who detail the irreconcilable ethical conict between the acutely human responsibility of corporations and the sophisticated dehumanizing regimes of calculation which they both mobilize and in which they are entrenched, [p. 179]. 5 Levinas refers to the self variously as the same [la mme] and the I, and the other as lautrie, and the face as la visage dautre.

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Thus, in contrast with traditional transcendental philosophy which ontologically privileges the intentionality of Being [such as the teleological intention to live well or to live the good life], for Levinas the ethical moment is already there before any intentionality. The obligation of self to other exists before one examines the adequation of her actions in terms of living well. Thusly, the scission between the fact of being [existing for myself] and the fact of being obligated [having an obligation to other] is erased. Both are immediately present in the face of the other and the ethical moment is already there before the self becomes aware of the face. This, for Levinas, is the very condition of possibility for ethics, a condition that is transcendent, not in the sense of some universal, permanent, and foundational access to truth, but rather in the sense of the relationship of self and other in the presence of others face. Crucially, this relationship must be non-reciprocal: I have always described the face of the neighbour as the bearer of an order, imposing upon me, with respect to the other, a gratuitous and non-transferable responsibility, as if the I were chosen and unique and in which the other were absolutely other, i.e., still incomparable, and thus unique [p. 170]. Face, then, is selfs interlocutor who puts selfs essential being in question. It overows self, bringing with it an epiphany containing the imperative ethical injunction, Thou shall not do violence to other. As Levinas puts it: This facing position, opposition par excellence, can only be as a moral summons. This movement proceeds from the other . . . but what is produced here is not a reasoning, but an epiphany that occurs as a face (Levinas, 1969, p. 196). Such an epiphany, importantly, is not, a la Kant, the innity of Reason, or a la Hegel, the coming into fusion with the Universal Spirit, but rather a command not to violate others difference. This injunction, and this is the point to underscore, does not come from within self. It is already there in the innity of his transcendence [and its] primordial expression is the rst word: you shall not commit murder . . . this innity, stronger than murder, already resists us in its face, in his face [Levinas, 1969, p. 199]. As Critchley (1992) sums it up: The ethical relation and ethics is simply and entirely the event of this relation is one in which I am related to the face of the Other. . . whom I cannot evade, comprehend or kill and before whom I am called to justice, to justify myself [p. 5]. From this perspective, the self [as a unique being] is not a self-designated subject of discourse, action, narrative or ethical commitment. Nor is self [contra the ideas of the intentional philosophers of representation such as Socrates, Descartes, Hegel, Sartre and even Husserl] self-contained and so able to determine her own unique ethics of obligation to herself and to others. Nor is self under the push and pull of some transcendental, universal metadiscourse that exists in virtual time-space, such as the reciprocal laws of the market place or ultimately under the sway of some mysterious, sacred realm. Nor is ethics a way of developing ab ovo a code in which are the structures and rules for good private conduct, public policy, and peace between nations (Levinas, 1998, p. xi). Instead, Levinas wants ethics to be seen in relation to the rationality of knowledge that is immanent in being, and that is primordial in the philosophical tradition of the West [p. xxi]. In this special sense, ethics is transcendent, but only, crucially, in the intersubjective relationship between self and other. Thusly, Levinas rejects the individual as existing only for her or himself. Instead, Levinas insists on an absolute and irreducible difference. Therefore, as much as self wants to exist as a being for herself and in herself, she cannot do so since the ethical obligation is already immanent before face appears. In this phenomenological sense, self is transcended, existing attached to but different than other, before becoming self. Self is always and already beyond herself. Prior to any act, I am concerned with the other. And I am never absolved from this responsibility (Levinas, 1992, p. 290). This immanent duty, this concern for other, commands that self does not violate others difference. Thus, self must not demand other to take on any such mutual responsibility, for to do so would mean that other and self would be the same. Such a condition would negate others uniqueness, the very thing that self needs to be self. This desire for others radical difference is at the heart of Levinass ethics. Levinass philosophy is not without its skeptics. One not unusual reaction holds that it is merely an appropriation of Old Testament commandments, especially Thou shalt not kill. This somewhat simple-minded view ignores the fact that Levinas studied avidly and wrote extensively about various Jewish texts, especially the Talmud. He wanted to understand ethics from that perspective, rather than from the traditional canons of Western philosophy. He carried out these activities not to nd their narrow, original meanings, nor to verify their most accurate versions, nor to identify their historical layers and the external and internal inuences reected in them [as is the want of historical-philologists]. Rather he wanted to phenomenologically encounter and experience them in order to sense and intuit what is or might be possible for humans. Levinas saw in these texts a philosophy diametrically opposed to those of say Spinoza, Kant, Hegel, Nietzsche, and Heidegger, which rely on the basic idea of some essential, self-preservationary, self-sufcient, autonomous individual subject. Levinass conception of the self, however, raises troubling challenges to our taken-for-granted assumptions of morality in economic agency. In rejecting the metaphysical idea of the individual as a being who exists for him or herself alone, Levinas also negates the very idea which is at the heart of economic theory of some kind of intersubjective realm where each individual self stands free of all other selves and where self and other share a common space of mutual obligation, existing in a symmetrical, mirror-like relationship. Levinasian ethics, then, imposes on economic actors, such as the multinational corporation and its executives, a radical accountability to the other that is irreducible to the economic interests of the accountable entity.6 His ethics affords the ground for a critique of GEs actions in its takeover of NP.
6 See Shearer (2002, p. 55661) for a detailed argument on this key point. As Roberts (2001) explains, it is the resistance of Levinasian ethics to the logic of economics that makes it such a valuable source of ethical critique, One of the difculties of economics . . . is that its atomistic conception of the self the individual conceived as an independently existing and self-seeking entity makes ethics almost impossible. All relationships are then by denition cast in the form of a trade and all conduct is reduced tautologically to the exercise of self-interest. . .By contrast, for Levinas, ethics is only to be discovered as an approach to the other which denudes us of the illusions of such a sense of self-identity, of a self that is essentially closed upon itself, [p. 111].

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3. The GE Way 3.1. Background When Jack Welch took on the CEO post in 1981, GE was a large diversied conglomerate with nearly 600,00 employees. It had expanded rapidly in the 1970s during which time revenues had increased signicantly but prots had lagged. In 1980, GEs stock price was 13 percent below its 1972 high. Welch, determined to reverse this downward trend in GEs stock price, soon spearheaded an extensive, company-wide restructuring and downsizing program. By the end of the 1980s, GE had divested 125 businesses and eliminated a total of over 300,000 employees. Welch had taken out the layers, pulled out the weeds, and scraped off the rust on the GE family of businesses (Tichy and Sherman, 1993, p. 246). Throughout his tenure, Welch maintained his demand for steady quarterly earnings growth, even as preparations for the more distant future focused heavily on investments and the turmoil of large-scale reorganization [p. 85]. The ultimate objective was to report earnings to the stock market of around fteen percent increase each year, maintain a strong balance sheet, and produce strong cash ows. In nearly every year from 1981 until 2002, GE accomplished these goals. GE executives attributed much of this success to its management and control systems, which they considered to be an incomparable management tool (Stewart, 1999, p. 124). By 2005, GEs stock market capitalization reached $382 billion, the largest in the world. It reported prots of $17 billion on sales of $151 billion and total assets of $673 billion making GEs command of wealth greater than all but a dozen or so nation states. Much of this was attributed to Jack Welchs relentless promotion during his two-decade tenure as CEO of soft values which every GE employee was encouraged to enthusiastically embrace. For Welch, sharing the values of our company was an absolute must for an individual to rise through the ranks, and leadership meant having a sustained passion for and commitment to a proactive shared vision and its implementation (Tichy and Sherman, 1993, p. 321). It is also noteworthy that during Welchs tenure as CEO, his manifesto declared: Companies cant give job security; only customers can. Succeed in the market place or youre out of a job [p. 8]. Operating globally had always been a central plank in GEs business model. While GE had been carrying on business in many parts of the world since the late 1880s, most of these operations involved exports and trading companies. In the 1960s, GE increased its global business mainly by forming joint ventures with foreign rms. In the wake of the slow-down in the US economy in the late 1970s and early 1980s, with CEO Jack Welch leading the way, GE began to expand its global operations.7 GE, as with most other large-scale US corporations, experienced a leveling off of prot rates during the 1970s and early 1980s.8 These corporations, as Marx and Engels foresaw a century and a half ago, began to look seriously at expanding globally. By mid-1980s, Welch recognized this need. The urgency of the need to globalize struck him during a twelve-day would tour in May, 1985 (Tichy and Sherman, 1993, p. 188). In 1986, he realized that large-scale globalization was necessary in order for GE to grow protably and he began pushing hard for it. The idea, however, encountered much resistance throughout the managerial echelons and he realized building the necessary consensus would take time. Indeed, it took nearly a decade to instill the globalization ethos into the ranks as part and parcel of the GE Way. At rst most of these new operations were defensive undertakings to protect their core businesses such as their electric light markets. But a golden opportunity appeared in the early 1990s. A European recession coinciding with a constantly rising US dollar relative to European currencies, the fall of Eastern European socialist and communist governments, and the advent of government privatization programs in many countries, meant that GE could buy earnings in Europe at bargainbasement prices. GE also had a network of scouts around the world looking out for potential takeovers. Most acquisitions were identied and selected on an ad hoc basis rather than in accordance with some master plan.9 Between 1997 and 2000 GE made over 100 acquisitions in Europe each year, and by 2000 employed nearly 90,000 people in Europe. 3.1.1. Acquisition integration modus operandi GEs earlier European acquisitions had proven to be chronically unprotable, partly because they were made defensively, but more so because at the time GE was still unsure of how to export its widely envied management know-how (Stewart, 1999, p. 125). During the 1990s this changed as GE perfected its expert management system integration process with its slogan, There are no mergers of equals for us; there are only acquisitions [p. 126]. The company reembeded this management system in the host companies to effect rapid change in their social structures and local cultures. In fact, the integration usually began before the ofcial takeover date. Due-Diligence Teams, made up of nancial, human resources, and general management experts, drafted up a plan including the embedding of GEs management and control systems into the host company the instant the acquisition became legal. As soon as an acquisition is formalized, an experienced GE chief nance and accounting ofcer is installed who immediately takes control of the accounting operation, including setting up the general ledger in GEs worldwide format. Close behind comes the Integration Manager, usually a younger, ambitious, GE manager with an outstanding track record at

See Welch and Byrne (2001, ch. 19), Globalization and Tichy & Sherman (1993, ch. 19) for descriptions of GEs global initiatives in the 1980s and 1990s. See Harvey (1990) and Woodiwise (1993) for documentation of this general trend. 9 By 1999, GEs European operations accounted for one-third of its reported net income, a percentage that was growing at a compounded rate of nearly 33 percent per annum.
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restructuring [who plays the role of bad cop]. Then, a new General Manager [good cop] is parachuted in with the mandate to integrate the host company into the GE mold as fast as possible. Usually a dramatic reorganization of reporting relationships is also effected within 100 days, replacing the existing geographic, matrix, or whatever organizational design with its traditional functional lines of authority marketing, sales, manufacturing, engineering, R&D, etc. and assigning business units prot responsibility. This often involves eliminating two or three layers of middle and upper management. As one GE executive put it: You have to move very, very quickly. Theres a window of opportunity an expectation of change so you must deliver it fast. One local manager likened it to a WW II Panzer division blitzkrieg. A vital strand of the integration model is the practice of identifying the key local people GE wants to keep as well as pinpointing the blockers [those locals who impede change]. The former are quickly given key management and training jobs while the latter are dismissed. As one GE manager explained, You have to get rid of blockers and identify high-pots [high potential employees] simultaneously. Otherwise you lose the high-pots and the blockers drag their heels. You need to show people the future [p. 125]. This policy reects the human relations philosophy that Welch strived to instill throughout GE, Find the best, and cull the rest [p. 127]. GE executives believe that this tactic immediately improves operating margins, one of its key prot performance indicators, by as much as three to eight percent. They also believe that introducing GEs accounting and control systems and practices into the host company, is worth another eight percent.10 From GEs perspective, companies like Nuovo Pignone t almost perfectly into GEs acquisition campaign of the 1990s. 4. The Nuovo Pignone takeover Nuovo Pigone came into existence in 1842 in Florence, Italy as a cast-iron foundry and later developed a series of products including the worlds rst gas-powered internal combustion engine. Over the years the company grew and prospered and in 1954, when it was incorporated into an Italian government state-owned agency, NP began designing and manufacturing specialized equipment such as electrical turbines, compressors, pumps and turbines for process-based and energy related industries. NP was successful in gaining contracts for mega projects such as supplying compression stations and other sophisticated technological equipment for the Trans-Siberian Pipeline. NP held a well-earned reputation for the quality of its engineering and products and for its protability. So in the wake of the Italian governments massive 1990s privatization program, GE executives, sensing a great opportunity, rapidly acquired 81 percent of NPs common shares and increased this in 1998 to over 90 percent when NP was awarded another major contract by the Trans-Siberian Pipeline. The Italian governments privatization initiative presented a great opportunity to turn . . .a bunch of state-run sinecures into a net income powerhouse [p. 124]. With the European recession of 19921995, with the US dollar that kept rising relative to European currencies, and with the fall of Eastern European socialist and communist governments and the advent of their privatization programs, buying companies in Europe became very cheap for GE. By 1999, its European operations accounted for $24 billion of its total reported revenue and nearly one-third of its reported net income, a percentage that was growing at a compounded at a rate of nearly 33 percent per annum. GE executives attributed much of this success to the way the corporation leveraged its management and control systems that considered to be an incomparable management tool [p. 124]. The company employed it to effect rapid change in the acquired companies management and control systems. 5. Shifting ethos Prior to the takeover, as a state-owned bureaucracy, NP enjoyed a fairly relaxed management style [according to a senior manager at NP for more than 20 years], it has continued to be very protable because of is excellent products and production systems (Busco et al., 2001, p. 1). It also had a good cost accounting system and a solid nancial accounting reporting system and regularly produced the required budgets and ex-post nancial reports for head ofce and for the state-overseeing agency. These systems, however, were not much used in the companys management processes and, as for management control, little emphasis was placed on measurement and performance indicators. All this was to change dramatically when GE installed its elaborate and comprehensive management and control systems including its much-vaunted Six-Sigma operational control system program. 5.1. Six-Sigma Program At the operational control level, the Six-Sigma-Program [SSP] is a key control system for GE. Ostensibly a quality improvement initiative, SSP is actually a comprehensive and sophisticated system for dening, measuring, analyzing, improving, and controlling all operations. Sigma is a measure of the number of mistakes per million operations [six-sigma was at the level of 3.4 mistakes per million]. SSP called for categorizing everyone into one of the following categories: champions [leaders in projects in their area]; master black belts [full-time quality control managers who lead teams]; black belts [new employees and novices]; and green belts [employees working part-time on specic SSP projects]. SSP was rapidly implemented at NP and by 1999, 50 percent of its white-collar workers had been designated as green belts on various projects. Members of

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These included GEs array of management tools such as; CAP, CMS, MGDP, bullet trains, and QMI.

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the various SSP projects were objectied as the new emerging warrior class (Busco et al., 2000, p. 29). A special Quality Team, reporting directly to the new CEO, promoted specic SSP projects throughout NP. The team also appointed black belts in each business function and production process. An extensive SSP training program was initiated and rapidly implemented. To support SSP a detailed and sophisticated measurement system was put in place that included a large number of both non-nancial and nancial statistics. Another team, led by a champion and a master black belt, developed the rst such measurement system using the Parts and Service Division as a pilot project. Each technical production operation in the division was dened in terms of ITOs [initial customer inquiry time] and CTQs [quality characteristics developed by using activity-based-analysis]. Then each operation was converted into accounting and nance numbers including the expected contribution margin and sales increase for each particular department. By integrating nancial and non-nancial measures, Six-Sigma extended the culture of measurement to all parts of NP (Busco et al., 2006, p. 25). This system became the prototype for similar systems throughout NP.

5.2. Objectifying local managers and employees A number of other initiatives complemented SSP. GE executives from other parts of the GE empire were parachuted into crucial executive posts. As above, one of the rst to arrive was a nance executive who, literally on day one, took control of the books, and set up the general ledger in GEs worldwide format. Soon after his arrival, the new CEO began to categorize all managers as either A players [those who subscribed to GEs values and who would be kept and suitably rewarded], B players [those who still deserve to be trusted and have the potential to improve their productivity and skills], or C players, those who do not subscribe to GEs values and who without remorse deserve to be red (Busco et al., 2006, p. 21). You have to get rid of blockers and identify high yers simultaneously [p. 28]. As one B ranked engineer reported, in terms of human relations, these rankings came as a shock, From a rather relaxed system mainly based on egalitarian principles, we suddenly faced the A, B, C ranking theory. I am not arguing it was right before . . . but it was scary [p. 28]. As well, hundreds of managers and employees were shunted through NPs Florence Training Center where they were indoctrinated into the GE Way, trained in SSP, and required to attend corporate seminars in a wide variety of subjects including nance, marketing, project management, TQM, and human resources. GE company manuals, which supplemented this training, also stressed the importance of value added, cost reductions, nancial gains, and especially prots. NP employees were objectied as nance hat wearers (Busco et al., 2000, p. 14, 15). As one NP nancial manager put it, GEs headquarters need the right numbers to show Wall Street. If these are not met, the next week tough inquirers start to cross the Atlantic [Busco et al., 2006, p. 20]. Another NP manager explained, Numbers became the core of our organizational life . . . you need to achieve the targets, you need to show the numbers, and you must do it on a quarterly basis [Busco et al., 2000, p. 15]. And, Reports, data, information, charts and so on ow continuously around the company, largely in response to the pressure to produce numbers, and good ones, every three months (Busco et al., 2001, p. 3). Furthermore, the entire sales force was trained to master nancial selling the GE way by showing customers how NP solutions for them can affect their nancial results and bottom line goals. The GE Way was constantly supported by waves of training, especially aimed at spreading an understanding of nancial performance measurement throughout NP. The resources invested in NP to communicate the GE Way were massive, and communication was endemic . . . It follows you into the toilet (Busco et al., 2006, p. 29). The measurement-based GE Way with its unrelenting pressure to meet efciency and prot targets, penetrated NP from the top down to the shop oor and sales department as, The role of MAS became central [p. 30]. The capstone of the change program at NP, however, was the reorganization of NP into the standard GE market-oriented business units with full prot responsibility. This included locating an accountant/nancial manager in each operating unit who could continuously track its nancial performance. Not surprisingly, in the face of all these not insignicant changes, in a relatively short period of time the old bureaucratic, well-protected state ship culture was replaced by a habitus of performance measurement and accountability for the numbers. GEs generic management and control systems template, with its ideology of nancial performance, had been embedded into NPs social fabric where it was routinely drawn on and reproduced by employees at all levels. As one manager reported GEs measurement-based systems of accountability enabled everyone to wear a new hat, the hat of nance (Busco et al., 2000, p. 15).11 A nancial manager summed up the situation, Numbers became the core of our [NPs] organizational life . . . you need to achieve the targets, you need to show the numbers, you must do it on a quarterly basis (Busco et al., 2000, p. 15). The speed of institutionalizing these expert operational and managerial control systems into a large, foreign corporation like NP was remarkable. A major factor in this, no doubt, was that GE had purchased a large majority of NPs shares, and so GEs executives had considerable authoritative power resources at their disposal to ensure compliance by NP managers

11 See also Busco et al. (2006, p. 30), When GE took-over, the role of MAS became central, and many were required to wear the hat of nance. As the former CFO of NP pointed out . . . the rst three GE individual to arrive at NP were the chief nancial ofcer, the nancial planning and analysis manger, and me as a corporate auditor . . . The nance organization changed its mission . . . to being a more contemporary organization with nancial skills, new accounting systems, and mostly concerned with driving shareholder value by taking an active part within organizational life.

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and employees with the new status quo.12 While NP employees had resources at their disposal for resisting as Giddenss dialectic of control notion suggests13 those who resisted were soon identied as C players and dismissed, thusly negating the dialectic of control. And, just as crucially, the new business-unit centered reorganization served to unsettle, break up, and disperse the old bureaucratic hierarchy and its moral codes. The stories and rhetoric, which contributed to the creation of the myth of the GE Way, had a powerful impact on the established frames of meaning (Busco et al., 2006, p. 29). This power resource played a central role in effectively embedding the GE Way deep into NPs social fabric. The new numbers-based, prot-centered reporting system also proved pivotal. The performance measurement and accountability for the numbers ethos came into being as the dominant signication structure. Upper management, drawing on their transplanted power resources with their rights of command, readily imposed the new meet the numbers discursive regime throughout NP. By 1999, GE had successfully disrupted and replaced the way of life of the armed but peaceful bureaucratic state ship. The remaining managers and employees alike had been trained and indoctrinated in the new governance discourse, which was now the major means for NP managers to communicate with each other and, more crucially, with personnel at GE headquarters in the USA. The meet the numbers discourse became intertwined with the new moral codes.14 The moral injunction at NP demanded: Manage by and meet your numbers or else! Welchs credo, Control your destiny or someone else will,15 with its goal to contribute to GEs reported quarterly and annual earnings, was made abundantly clear almost daily, and it was particularly reinforced every time GE released accounts of its most recent quarterly earnings. From GEs global perspective, the takeover of NP was an unqualied success. As Stewart (1999, p. 125) reports, Businesses like Nuovo Pignone symbolize one of the biggest stories of Welchs storied career, how Americas most admired company, and a very American one, has become a truly global corporation. Stewart (1999, p. 125). Busco et al. (2006) also seem to celebrate the GE takeover as a managerial success, The GE-NP case shows how organizational transformation can be facilitated by the implementation of an organizational-wide system of accounting and performance measurement [p. 35]. But from the perspective of Levinass ethics a quite different picture emerges. NPs managers and employees paid the price of this success as they struggled to establish their places within the new social order with its morality of prots above all else. 6. A Levinasian critique of the NP takeover Levinas holds that in ones intersubjective relations with others one is interdependent with others. This manifests Levinass ontological moment of accountability to others, one that is subject to ethical evaluation. Giving an account of oneself signals that as a unique ethical entity, one is accountable to a moral community at large. It is similar for corporations. As Schweiker (1993, p. 241) puts it, This otherness involved in personal identity is also present in corporations. It inheres in the duciary relation between a corporation as an economic force and the accountant as the one who renders an identity.16 It follows that, The issue, then, is not if one [a corporation] is socially responsible, but how that responsibility is exercised or neglected by the corporation [p. 246]. This deontological moment, then, imposes a demand for morality on GE that seems to have been neglected. GE discursively portrays its identity to the world at large, to a great extent, by means of its nancial accounting reports. And this of necessity evokes awareness on the part of the corporation of its relationship to those who read, use, and rely on these reports to take actions in the world of business, commerce, and government. While such relationships and accounts are not isomorphic with those of the individual, they are, nevertheless, a source of moral agency and evaluation. On this view, GE is not a self-contained independent entity and so free to determine some kind of GE-unique obligation to others, such as the companies it takes over around the globe and their employees. For this would mean that GE exists only for itself; that it is part of an intersubjective realm where it stands disencumbered from all the other parts of society; that GE and the other corporations and institutions in society share a space of mutual obligation; that they exist in a symmetrical, mirror-like relationship; and that they are identical in that each stands alone pursuing its self-interest as best it can. This position imbues such relationships with a suspect ethical imperative. This essay, then, aims to give ethics its proper place, as Levinas insists, as a stand-alone discourse outside of the logic of self-interest seeking. From this position, as much as GE wants to exist as a being for itself, it cannot do so since the moral obligation to others is always and already immanent. It precedes the moment when GE becomes aware of an acquired companys otherness. At this moment, GE is already transcended, existing attached to but different from these corporations. Its ethical responsibility is already there prior to taking them over. This immanent duty commands that GE not violate their radical differences. Moreover, GE cannot be absolved from this obligation. Yet this is what GE did in the NP takeover. NP existed prior to the takeover as an entity in its own right relying on its unique institutionalized relaxed management style that, as one former manager reported metaphorically, safely steered the NP ship of state through the waters of business,

12 Giddens (1979, 1984) refers to authoritative power resources as the rights of some agents to command others; and allocative resources as the rights of some to hold command over material objects such as technology, equipment, knowledge, etc. 13 Giddens (1984, p. 374) denes the dialectic of control as: The two-way character of the distributive aspect of power [power as control]; how the less powerful manage resources in such a way as to exert control over the more powerful in established power relationships. 14 As Giddens (1984, p. 31) puts it, Structures of signication always have to be grasped in connection with domination and legitimation. 15 This is the title of the book about Welch by Tichy and Sherman (1993). 16 Schweiker discusses at some length and provides the rationale for speaking of the agency of a corporation.

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armed but not having to re a shot. One manager described NP before the take over as a bureaucratic ship . . . armed [but] we didnt need to shoot; no one asked us to nd our limits: there were no wars to do (Busco et al., 2006, p. 24). This changed dramatically, when GE took over, the war began and there was a common enemy to shoot at: the market competitors [Busco et al., 2006, p. 24]. The ship was boarded by GE executives and managers and NPs long-standing templates for managerial behavior were disrupted and dismembered as GE embedded its management and control systems into NP thus providing guarantees of expectations across distantiated time-space (Giddens, 1990, p. 28). Yet Levinass philosophy enjoins us to realize that an ethical imperative is there before GE reembedded its management and control system with its different moral imperatives at NP. When NP appears before GE as the face, it brings with it an epiphany containing the imperative ethical injunction; Thou shall not do violence to NP. Thus, the very condition of an ethics-ofbeing-for-the-other a transcendental call for a non-reciprocal relationship, a gratuitous non-transferable responsibility arose. GEs executives, however, paid little heed to this summons. Not only did GE do violence to NPs otherness, but also, as we shall see next, to NPs managers and employees as well. GEs much-vaunted Six Sigma Program [SSP] serves as a specic example. SSP dened each and every employee as a champion, a black belt, or a green belt. Complementing SSP, the new CEO categorized every manager as either subscribing to GEs values, or who can be trusted to subscribe to them, or who does not subscribe to them and deserves to be red. And in virtue of GEs desire to report quarterly and annual steady growth year after year in reported earnings to the capital market, managers and employees alike were construed by the new management and control systems as self-same individuals whose job it was to meet their numbers. All were pressed into the GE universal corporate mold. For Levinas, such treatment would stand as a clear and unmistakable case of doing violence to their otherness. Welchs own categorization of employee types evidences this. For Welch there were only four kinds of managers: Type I shares our values, makes the numbers skys the limit. Type II doesnt share the values gone. Type III shares the values but misses the numbers typically, another chance or two. Type IV: is the hammer who delivers the numbers but does it on the backs of people, often kissing up and kicking down during the process. We have to remove Type IVs because they have the power, by themselves, to destroy the open, informal, trust-based culture we need today and tomorrow [GE Annual Report, 2000]. Welch made this message perfectly clear throughout the entire company when Type IVs were dismissed. And he attributed much of GEs great leap forward in the 1980s and 1990s to this practice. Such actions, however, clearly violate a Levinasian ethical command for relationships with the other. Welch also articulated a moral ethos for GE in no uncertain terms. His dictum, Control your destiny or someone else will, permeated the organization. [Presumably this someone else was Welch]. A forceful injunction Change or Die reinforced this maxim (Tichy and Sherman, 1993, p. 7). Employees lived in fear of the pink slip and all its business units had to be No. 1 or No. 2 in their industry. Moreover, the GE Way featured a mean and lean, meet your numbers, improve operations continuously, achieve high growth in sales and prots, and dont resist, mantra. These words betray GEs and Welchs staunch advocacy of neo-classical economics with its one-dimensional, self-interested, and atomistic behaving subjects homo economicus. GEs managers and employees around the world were objectied narrowly as self-serving and utility maximizing subjects. Yet as Shearer (2002) emphasizes, when all humans are construed as sovereign, self-interested maximizers self-interest becomes the means to the attainment not only of the actors private good, but of the collective or interpersonal good as well. Within economic theory, the individuals ethical obligation to other is transferred to the invisible hand with its laws of the market place [p. 569]. In the NP situation, this means that GE deems its managers and employees to be equal and sovereign moral subjects and so invested with an ethics of a symmetrical intersubjective reciprocal obligation that nullies their radical differences. From a Levinasian philosophical position, however, absolving GEs executives of their obligation to NPs managers and employees is out of the question. It cannot be discharged by the pursuit of private economic interests. The obligation is not discretionary; it is transcendent of the very constitution of the economic agent (Shearer, 2002, p. 570).

7. Discussion This essay aimed to effect a broader accountability, especially a concern for justice in economic life on organizations like GE and their executives than their economics-based practices permit. The GE Way featuring meet the numbers or else is a discourse [a linguistic formation] with power effects that often go unchallenged and even unnoticed. As Shearer and others [see Arrington and Francis, 1993; Arrington and Puxty, 1991] have argued, economic discourse needs to be counterbalanced by an ethical discourse that takes seriously the obligation to the other, and that holds the GEs of this world and their executives accountable to a wider scope of good than that of private interest where they are obligated to pursue only their and their own good. Under such conditions local employees must sacrice their personal identities [selves] in order to keep their jobs and so they become subservient agents to the takeover corporations. As one manager told the researchers, The number of yes-man [sic] mushroomed, particularly among the youngest and newcomers who, very often, acted more for career purposes, than according to true personal beliefs (Busco et al., 2000, p. 26). Nor can the executives, including nancial ofcers, escape involvement in such undertakings. They too sacrice their identities in order to secure their jobs and become mercenary servants to their corporations. They too need to identify the ethical situation in which they place themselves.

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In this regard, Levinass ethics offers a point of resistance to the imperialism of such discourse and thus of resistance to the imperialism of rms like GE and the other massive multinationals whose operations reach around the world and whose economic power exceeds that of all but a dozen or so nation states. While Shearers insights alert us to the general issue, this essay pinpoints the specic role that management and control systems play in making such domination and expansion possible. These systems are at the heart of any attempt to establish a broader accountability on the part of these corporations and their executives. Thusly, this essay offers the possibility of challenge and resistance to one-dimensional discourses such as the GE Way. Otherwise, employees such as those at NP will be commodied and treated as mere objects of appropriation and as such will remain accounted for but not accounted to. The discourse of management and control systems, on this Levinasian view, needs to be expanded to include an accounting to the individual employees of the acquired companies. The GE Way discourse that is embedded in its management and control systems is bereft of accountability to these others. In more general terms, such economic theory-based, one-dimensional discourse assimilates the ethical by denying Levinass ethics its ontological presupposition of otherness, substituting its symmetrical self-interest ontology instead. Thusly, the notion of others otherness goes unnoticed. It can be recovered only by bringing this discursive violation to the surface and into the light. Levinass ethics, then, presents a space of entry to expose and confront the economic commodication of employees scattered across the world in organizations such as GE. Crucially, NP is by no means an isolated case. During the 1990s GE acquired 133 European companies and in 1999 alone GE made 108 acquisitions worldwide. Nor is GE alone in this. Most other global multinationals did likewise. The GE take-over tactics can also be seen as a manifestation of the phenomenon Shearer discerningly brings to the forefront. As market forces exert a greater discipline over our individual and collective lives, we nd ourselves increasingly unable to control, direct, or challenge the system that supports them. We are all, it seems, caught in the web of a global economic system that we feel increasingly powerless to change (Shearer, 2002, p. 541). The NP case provides a striking illustration of how these forces are instantiated in the individual managers and employees practical consciousness through the medium of GEs management and control systems systems that they were hard pressed to challenge. Their moral obligation was made clear by GE. One NP manager described the relentless and intense instilling of the GE Way into these individuals ways of thinking and acting, To fully understand the magnitude of the change, you have to look at GEs operating system, which is the GE Way in action: i.e., a year-round series of intense learning sessions . . . In January 1995, this was the rollercoaster we suddenly found ourselves on. With no chance to escape or postpone, we had to learn quickly how to fasten our seat-belts, and enjoy the ride (Busco et al., 2006, p. 22). In the face of this onslaught managers and employees felt powerless. GE executives were clearly intent on producing NP personnel as the same as themselves, making them GE Way clones, and thereby enacting a reciprocal relation of responsibility. Thus they violated the fundamental injunction of Levinass philosophy the non-reciprocal relation of responsibility. It is also of interest to note that even the trade unions, which were strong in Italy at the time, also seemed hard pressed to challenge the GE modus operandi. In January 1997, CEO Welch, made a speech to all employees that made GEs position clear regarding its employees, including those at NP. Everyone at GE would be classied as either A, B, or C Players and the Cs [those who dont ascribe to the GE Way and deserve to be red]. Thusly the moral obligation of NP employees was an unconditional Hobsons choice the GE Way horse or none. In response, even the trade union seemed able to offer only token resistance. It placed a notice in the Florence factory canteen stating that NP has always had a strong commitment to its workers. It stated, We will not allow the destruction of an asset [human resources] by someone [GE headquarters] who ignores our history, our culture . . . or by someone [local management] who has suddenly lost his memory due to being well paid [Busco et al., 2006, p. 289]. But rather than resisting, the unions meekly referred to the need for re-training stressing that workers who leave the company must have appropriate support and guarantees, and that those who remain should have the means to re-qualify, to be re-educated, and to have an assurance for the future [p. 29]. Even the previously powerful unions seemed powerless in confronting GEs colonization of NP. 8. Conclusion The GE/NP takeover is a case in point of the phenomenon Shearer (2002, p. 541) fore fronted but that rarely gets addressed in the accounting literature, Expanding global markets have resulted in renewed concern with accountability by transnational corporations . . . [that] exert a greater inuence over our individual and collective lives [p. 541]. Moreover, Accountants cannot escape involvement in this undertaking. Indeed, it is impossible to engage in either accounting practice or accounting research without assuming a position on the extent of accountability proper to the economic entities for which they are prepared [p. 542]. Yet management and control system research, by and large, has tended to ignore the considerations brought to the forefront in Levinass philosophy. As Reiter and Williams (2002, p. 577) observe, Researchers do not have an inclination to engage in philosophical and methodological introspection. But, as Shearer (2002, p. 567) emphasizes, Any system of accountability that is restricted to a purely economic rationale is inadequate to discharge the obligation to the Other because, within economics, the very existence of the Other is subordinated to the instrumental purposes of the egoist self. Levinass ethics exposes and forefronts how organizations and their executives also have an obligation that the pursuit of self interest alone cannot discharge. Nor is this incumbent duty discretionary. It transcends the intersubjective realm of the management and control systems designers and implementers. GEs imposition of its generic management and control systems into the rms it acquires runs afoul of a Levinasian ethics of being for the other. It implies a predetermined knowledge of what each unique other needs or demands, prior to any encounter with the

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face of the other. In contrast, the transcendent injunction of the face not to violate others uniqueness supercedes any self-interested motivations. GE executives seemed oblivious to this ethical duty and put reporting prots to the stock market over ethical obligations to people. The NP case is not an isolated one. In 1994 and 1995, when the European recession made acquisitions cheap, GE acquired hundreds of European companies, its European revenues rose $9.1 billion. Many global corporations operated in like fashion, installing their unique integration models and management and control systems in companies acquired around the world. The role played by management and control systems of all kinds, in the face of the ever-increasing domination of the world by giant global corporations operating as private enterprises whose own self-interests dominate their actions and decisions, surely needs critique. That these systems are underwritten by a suspect ethical stance should be of vital concern to management and control systems researchers and practitioners alike. This essay, then, might enable corporations and their managers to see their obligations to the broader human, environmental and moral domains of todays world in a new light, one that might expand the scope of their management and control systems to better mirror the ethical obligations they have to stakeholders other than the shareholders of transnational enterprises. As Schweiker (1993, p. 231) makes the crucial point: The need for economic accountability in our world situation cannot be doubted. If it is impossible to render economic forces morally accountable, then human beings have become slaves to their own nancial and corporate creations and the earth is subjected to unending exploitation under the aegis of efciency. Acknowledgement The authors are grateful to the Social Science and Humanities Research Council of Canada for partial support of this research. References
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