Pharmaceuticals may face a trade off between being ethical and short term profitability

One of the dimensions in Hofstede’s Multi-focus model is called “Customer Orientation”. Now you could think that it’s always good to be more customer oriented, but let us show you why that is not always the case.

The two poles of the dimension, internally driven versus externally driven (=customer oriented) can be described as follows:

In a very internally driven culture employees perceive their task towards the outside world as totally given, based on the idea that business ethics and honesty matter most and that employees know best what is good for the customer and the world at large. An example of this is when patients are fully dependent on a particular pharmaceutical with a monopoly on a certain drug, placing  the employees of the pharmaceutical in the role described above.

In a very externally driven culture the only emphasis is on meeting the customer’s requirements, whatever they want even if it is not in their long term interest; results are most important and a pragmatic rather than an ethical attitude prevails (source: )

If we now look at the customers of pharmaceuticals: what the customers want is to get the latest medicine as fast as possible, especially those suffering from lethal diseases for which medicines are in the process of being developed. If a pharmaceutical now scores very customer oriented (let’s say 75 or more on a scale of 0 – 100), the pharmaceutical would be selling newly developed medicine even before it has been proven that the medicine is effective and that there are no severe side effects. In other words, the pharmaceutical would be unethical, taking advantage of the despair of people. So by fulfilling the customers’ needs, they may actually harm the customers.

Luckily, an analysis of 6 organisational cultures of pharmaceuticals has shown that none of the companies measured score very high on customer orientation. Scores were between 32 (which is almost too low, even for a pharmaceutical) and 63, being perhaps just a little bit too high, unless in the latter case the testing of newly developed medicines has been outsourced.

The dilemma for pharmaceuticals is that customer orientation is positively related to profitability, unless one knows better what the customer wants than the customer as in the case of Steve Jobs. Especially stock listed companies may be confronted with the short term interest of shareholders who would hence prefer them to be more customer oriented (which implies they would become less ethical). Therefore, it is important to have laws and regulations in place that will prevent these companies from becoming too customer oriented. In most developed economies central governments have made sure that such laws and directives exist and they have established institutes to control whether pharmaceuticals are operating in accordance with them, such as the FDA in the States.

Learn more about Hofstede’s Multi-focus Model on Organisational Culture and Change with our Culture and Strategy web app. ).

Authors: Michael Schachner, Bob Waisfisz and Egbert Schram

Key insights

Using the Hofstede Multi-focus model in the analysis of six organisational cultures of pharmaceuticals showed that the companies scored low on the “Customer Orientation” dimension. Due to the nature of the pharmaceutical industry, prioritizing customers’ needs may actually harm the customers, seeing as an externally driven culture’s only emphasis is on meeting the customer’s requirements, regardless if it is in their long term interest.