Assault at the Cathedral

On New Year’s Eve, there were mass attacks on women in Cologne, Germany. More than a thousand young men, many of them with an apparent migration background, congregated next to the famous cathedral of Cologne where they assaulted, groped and even raped women passing by. Local police, far outnumbered, did not intervene in the mayhem. In the days to follow, police, press and government tried to downplay the disaster, in order to avoid controversy about migrants, of which Germany admitted more than one million in 2015, with many more to come.

Since then, statements by police who had been ordered to stand down,  by eye witnesses and by social media, have emboldened the victims to file more than 625 criminal complaints with 40% of them related to sexual assault. Many of the alleged attackers are Arab or North African, which has led to severe discontent with the government and its migration policy. There have been a series of protests, particularly in eastern Germany, blaming Chancellor Angela Merkel’s government and her open-door refugee policies.

Beyond the very serious criminal charges which are for the police and judiciary to resolve there additional serious questions. First, are European countries such as Germany ready to accept so many refugees both mentally and physically? Second, given the huge number of migrants still in motion, who will provide them with a domicile? Third, and most importantly, the desire for temporary tranquility has invalidated the fight for the equality of women, shod the aversion  of violence against women, and done so at a dangerous cost to societal transparency and progress.

For decades, even centuries, western countries have been trading partners with authoritarian regimes in the Middle East, selling weapons, automobiles and other lucrative products. But the encouragement of an Arab Spring has led mainly to an Arab Fall. Yet, a large financial overhang, mainly resulting from international business, has not led to an assimilation of values and behavior. Instead many funds are used to help the distribution of fierce rhetoric, giving rise to Osama bin Laden and many other extremists. These developments are paired with an asymmetry of political correctness in the Western World, leading to new rope which the victim sells to its miscreant.

With decreasing demands for mutual integration, concurrently rising migration and outdistanced procreation, there are fewer viable landing strips for students, women and willing economic participants.

Right now, many of the migrants seek out primarily Germany and Sweden as asylum territories, which is understandable in light of the accommodations and benefits offered. But there are also important cultural milestones and preferences of governments and citizens who receive the human wave. Integration means that hosts learn more about their visitors, but also requires the new arrivals to accept key standards and expectations of their hosts. Though large immigration is likely to dilute rigid norms, it also must lead to asymptotic movement towards established standards.

The EU,  taking on a leadership role consistent with the Treaty of Lisbon,  should pr0otect the human rights of asylum seekers, but also has  right to determine where this protection should take place. For example, the Middle East and Africa have many locations where refugees can be housed, fed and clothed, and protected. Countries such as China and India could develop entire settlement policies for the resolution of a global problem. These are not meant to create new colonies, but rather endorse the establishment of pop-up protectorates, to temporarily provide succor, shelter and peace to refugees.

Third, and perhaps most chillingly because it can set the future rails for disaster, is the failure of the public media to distribute honest information rapidly. An almost week-long delay of media reports was broken only when too many other sources broke the mantra of keeping bad news about migrants out of the public spotlight. This is wrong! Silence is a blow to the victims of violence, and lets them be hunted like game. Women deserve better.

The violent, brutal and sexist treatment of women must be combated radically.The event in Cologne reveals a major flaw societal shortcoming which cannot be tolerated. Germany is an internationalized country due to the composition of its population and its dependence on foreign trade. If it wishes to continue with its international leadership role, Germany must recognize that such role is one of immersion into the world which must result in simultaneous juridical, social and economic leadership. Female equality is a crucial entitlement for more than half of the population. To declare otherwise is wrong for the native locals as well for the wave of newly arriving migrants. The events in Cologne must not become the opening act for continued misery and disrepute.

The attempt to muffle the powerless laments of the victims with the blanket of public silence is most treacherous. One should not cry ‘fire’ in a cinema, but doing so is  encouraged when the flames are in the roof. The suggestors, the targets of the suggestions as well as the self-motivated absconders with truthful information must recognize how their behavior has fertilized the ground for future misinformation and knowledge abuse. Effective steps must be taken to truly make a difference. It is time for such action with specific details clearly spelled out by democratic transparency. As was already promulgated by St. John:” And you will know the truth and the truth will make you free.”

Professor Czinkota presents international marketing at Georgetown University in Washington D.C. 

Universities must embrace cultural change

Universities are among the most successful institutions created. They do not however accept change lightly. But what role do universities need to play in the knowledge society of tomorrow to continue their success. This question grows more pressing for the western welfare states as their dominance in research and innovation is being challenged by globalization and the dynamics of the emerging economies.

The example of the US, which like no other nation, has been able to benefit from universities as drivers of growth, makes this abundantly clear. For a long time America has combined cutting-edge university research with strong science and engineering and entrepreneurial-oriented business schools. This has allowed the country to promote groundbreaking innovations.

Yet, in an era of major shifts in information flows and communication practices, there are increasing doubts about whether the concepts that allowed previous innovations remain sympathetic to the challenges and research priorities of the future.

The advance of biotechnology and social sciences absorbs almost half the research funds of US universities. Add the expansion of national security and military research, and universities have lost important drivers for the industrial use of new scientific insights. Instead, the ivory towers, which were once believed to have been abandoned, have re-emerged. Tackling the giant US budget deficit, will also require new structures and processes in research and teaching at universities.

In Europe, Germany may appear to be in better shape to innovate, with its broad mix of industrial and service-related leadership and its strong and flexible small and medium-sized businesses. However, this should not obscure obvious weaknesses. What has been achieved through a drive for excellence and high-tech initiatives, for which the government has provided competitive university funding and more autonomy in recent years, may be lost once more. Ideological campaigns declare either that universities are not and should not be subject to economic rules, or express fears about standardized expectations, which are said to lead to a commoditization of higher education.

Universities must deliver on accepted performance measures yet differentiate themselves sufficiently to attract scarce resources under competitive conditions.

Germany and the US face similar problems. So far the American and the German university system have learnt from each other in a time-delayed fashion. Now, due to mounting competitive and financial pressures, universities need to learn from each other simultaneously. University success is not about tearing down the ivory towers. Instead, it is about opening their windows as far as possible to other disciplines and to new markets.

While freedom of teaching and research must be defended, at the same time bridges for mutual transfers of knowledge and best practices have to be built.

We need Alexander von Humboldt’s ideas to be applied to the 21st century. The university of the future is only viable if best research and best teaching go hand in hand with best knowledge transfers. To achieve these goals, universities need reliable funding to generate innovative ideas through research. Interdisciplinary links, a close integration with the environment (both social and natural) as well as research relevance are also necessary.

All this calls for a major cultural change on both sides of the Atlantic. For new scientific knowledge to be used more rapidly in universities and businesses, the university approach to knowledge generation, transmission and application needs to be rethought. More risk capital, new business models and efficient intermediary organizations are needed in order to build a bridge over the valley of death, in which so many basic research contributions have perished before they could become innovations.

Such efforts would be worthwhile. It is not only about wealth and employment; it is also about the development opportunities of each individual and the defense of intellectual freedom.

Written by Michael Czinkota and Andreas Pinkwart and originally published in the Financial Times, August 2011.

Lunch with Dr. Theo Weigel

On the first of October, Professor Michael Czinkota hosted a private lunch with Dr. Theo Weigel at the McDonough School of Business, in collaboration with the Washington D.C. office of the Hanns-Seidel Foundation. Dr. Weigel served as the German Minister of Finance from 1989 to 1998, in the Cabinet of Chancellor Helmut Kohl. He was instrumental in the creation of the European monetary union, and the common currency. He was accompanied by a team of delegates that included his wife, Irene Epple-Weigel, the former alpine skier and Olympic medalist, and their son, Konstantin, a law student in Munich. Also part of the delegation was Richard Teltschik, the Director of the Hanns-Seidel Foundation in Washington. Georgetown University was represented also by Professors Thomas Cooke, Ricardo Ernst, Charles Skuba, David Walker, and Lee Pinkowitz. Also in attendance were three students – one from the McDonough School of Business, and two Masters candidates from the Walsh School of Foreign Service. Additional visitors came from the Hanns-Seidel Foundation and the German Embassy.

The lunch was inaugurated by Professor Czinkota, who gave a welcome address that included an introduction of Dr. Weigel’s many accomplishments. Following this, Dr. Weigel addressed the attendees of the lunch. He discussed his experiences with the creation and establishment of the Euro, relating both facts and anecdotes. One such story was of how the common currency came to be known as the “Euro,” rather than the other alternatives under consideration at the time, such as the Frank, Mark or ECU. He vehemently denied the common perception that the Euro was Germany’s reward of others for support of reunification, asserting that the two momentous events were planned and executed separately. Dr. Weigel talked about the fall of the Berlin Wall and the reunification of West and East Germany, at what was the eve of the 25th anniversary of the reunification. Yet it was not only German history that was discussed at the lunch, but also contemporary German politics and European current affairs. The issue of the refugee crisis in Europe was explored by Dr. Weigel as well as the other participants. Dr. Weigel believes that Germany can absorb the current volume of incoming refugees, approximately 800,000, for one year (possibly two). This will help the German economy, which is currently facing a demographic shortage of working-age and job-seeking citizens. Any absorption of refugees beyond this number, however, would end up harming the German economy.

For more than an hour, issues such as U.S.-Germany relations, collaborations and perceptions by the youth of the two countries, and Germany’s leadership role in the world were addressed in the question and answer session following Dr. Weigel’s speech.

743

Volkswagen Crisis – A Lesson in Trust

By Michael Czinkota

The Volkswagen crisis, triggered by misleading emissions measurements, has reinforced the idea that truthfulness and simplicity are pillars of international marketing and integral to a business’ public face. The (formerly ?) largest car global manufacturer in terms of sales has been accused of fitting defeat devices into its diesel cars in the United States that can discern when the vehicle is undergoing emissions testing and turn on full emissions control for that duration. Once the testing is over, however, the emission controls are switched off and allow the cars to emit between ten and forty times the regulation standard of nitrogen oxide. Since this deception has come to light, Volkswagen’s stocks have crashed, with shares falling 38% in two days. This initial loss to investors and the brand alike showcases the importance of truthfulness in business operations.

Businesses are constrained by the nations and societies in which they operate. Their standards of conduct should ensure their business activities are beneficial to the people and society. Companies that are seen to violate such expectations will see their trustworthiness diminished. Reduced trust results in tangible losses for the company in terms of fines and costs of recall, and also causes the public to censure the company via strongly diminished sales. In order to regain the trust of the consumers, Volkswagen must engage with both short and long term measures.

Already, Volkswagen has taken important steps to punish those responsible (either directly or via neglect) for the violation of the emission standards and the disappointment of the public’s trust. Within five days, CEO Martin Winterkorn has resigned, although he denies having any knowledge of the wrongdoing. Additional heads will roll, with lay-offs signaling to the public that the company expects adherence to high standards of behavior, and is not lenient on those that break the social contract. Volkswagen has also set aside 6.5 billion euros ($7.3 billion) to cover the costs of recalling the cars with the defeat device, as well as any other damages. Together with future direct and indirect costs, this step curtails the company’s profits for years to come. Yet it goes a long way in indicating that Volkswagen is ready to accept responsibility and do what it must in reparation of the betrayal of the trust which customers and governments had placed in the company.

Public trust is an important determinant of a society’s willingness to allow international firms to do business in their nations. Volkswagen will have to rebuild this broken trust, and reinforce the values of truthfulness and simplicity in its workings. No longer will VW consumers allow the company’s real activities to be shrouded in complexity, or permit the lines of truthfulness to be blurred. For Volkswagen, standards will be scrutinized more and enforced more sharply. Its ways of doing business must become more transparent and understandable by the public. For a company that is at the heart of Germany’s manufacturing and export economy, and thought to reflect the social responsibility and consciousness of its home country, this active misleading of regulations and claims is a shock for supporters and customers, particularly those who bought a VW diesel to help the environment. Also affected is the general German reputation for fine workmanship and honesty – in other words all fellow firms doing business in and from Germany. The economic downdraft which results from the misstep also major collateral damage. For example, missing billions of revenue means that money targeted to help the migrants in Germany, will be much less available.

Volkswagen now will have to prove itself anew as an honest partner, and engage in curative marketing to heal the wounds. Doing so will be a very expensive uphill task, considering the magnitude of the deception and the corresponding stain on the “People’s Car”. Best wishes to the firm and its workers.

Related Articles and Media Pickups:

View on migrants entering Hungary

Hungary has been the spotlight of the news recently with reports of the maltreatment of migrants entering and passing through the country. While I do not agree with the drastic measures taken, Hungary’s short-term solution is mainly about concern for its own economic stability.

I spoke with CCTV’s Asieh Namdar regarding my thoughts on the issue. You can view the video here: http://youtu.be/A6X4m-aWP-8