**2.2 Research of the largest corporations of the military-industrial complex in the world**

According to the ranking of hundred largest military-industrial companies in the world as of 2016 made by Stockholm International Peace Research Institute in 2019. THE SIPRI TOP 100 ARMS-PRODUCING AND MILITARY SERVICES COMPA-NIES, 2019. The world's largest military manufacturers are Lockheed Martin (USA) Boeing (USA), Raytheon (USA), BAE Systems (UK), and Northrop Grumman Corp (USA) according to SIPRI rating (**Table 3**) [13].

The SIPRI rating does not include Chinese companies, due to lack of data, but indirectly, we can conclude that one of the largest Chinese military-industrial complex companies is the Aviation Industry Corporation of China (AVIC) - a Chinese state-owned company, a manufacturer of aircraft, part of the Chinese militaryindustrial complex. It is ranked 159 in the Fortune Global 500.

The top 10 also does not include the Japanese corporation Mitsubishi Heavy Industries (MHI) (25th place).


Analyzing the corporate culture tools of the world's leading military-industrial complex holdings in the USA and Europe Lockheed Martin, Boeing, Raytheon, BAE

**Table 3.** *The world's largest military-industrial companies according to SIPRI ranking [13].*



**Table 4.**

*Corporate culture documents of largest military-industrial companies [14–21].*

Systems, Northrop Grumman Corp, Airbus Group, one can see a standardized approach to corporate culture (**Table 4**).

Lockheed Martin, Boeing, Raytheon, BAE Systems, Northrop Grumman Corp companies have formed a single standard package of regulatory documents: Code of conduct and Anti- corruption policy the main theses of which coincide almost verbatim.

We should also note Raytheon's Social responsibility report in a single document [14], BAE Systems Corporate responsibility report (2017) [15], Northrop Grumman's Corporate responsibility report (2017) [16], AVIC Social Responsibility Report 2017 [17] while the rest of the companies post this information on the official website. BAE Systems' Code of conduct [18] also contains anti-corruption clauses, with a provision that the Code of conduct contains General corporate rules that may be applied in accordance with the local legislation. Northrop Grumman's standards of business conduct [19] contain anti-corruption standards, and the company has a separate Anti- corruption compliance program.

Airbus [20], MHI [21] have clear instructions for employees on how to behave in the most common typical ethically difficult situations (**Table 5**).

Lockheed Martin, Boeing, Raytheon, BAE Systems, Northrop Grumman Corp, Airbus, MHI have demonstrated a pragmatic approach, i.e. reflected in the codes of ethics theses and provisions that are binding by law (prohibition of discrimination, respect for human rights, prevention of conflicts of interest, fair competition, prohibition of insider information), or are a reflection of the political mainstream in the main host countries (anti-discrimination, protection minority rights, "gender choice," anti-sexual harassment, inclusion) (**Table 6**).

Lockheed Martin, Boeing, Raytheon, BAE Systems, Northrop Grumman Corp have disclosed standard approaches to combating corruption in their anticorruption policies, identified conflicts of interest and how to resolve them. In addition, it can be noted that the Raytheon Corporation, Airbus, MHI have formulated a clear policy regarding gifts, their limits, which makes it easier for staff to understand the acceptable limits (**Table 7**).

Lockheed Martin, Boeing, Raytheon, BAE Systems, Northrop Grumman Corp have all demonstrated a pragmatic approach to social policy, i.e. education was singled out as areas of social policy, in fact, creating a personnel reserve of students/ schoolchildren, since the likelihood of recruiting young professionals who have already completed training in corporate programs is very high. A similar situation arises with a detailed examination of support programs for servicemen /veterans, they usually consist in professional retraining for civilian specialties of servicemen and veterans leaving the reserve. Because Since servicemen leave for the reserve at a young and middle age, they also form a personnel reserve for corporations, already trained in the necessary specialties. Supporting volunteering is also beneficial for


#### **Table 5.**

*Main directions of ethical policy largest military-industrial companies [14–21].*


#### **Table 6.**

*Main directions of anti-corruption policy of largest military-industrial companies [14–21].*

corporations because allows you to unite teams performing noble social tasks, and the bulk of the costs - time, effort, negotiations, organization - lies with the volunteer workers themselves. At the same time, social areas that do not bring direct benefits to corporations are ignored. Features of BAE Systems is that it implements programs of assistance to military personnel and their families in countries that are the main customers - Great Britain, USA, Australia, Kingdom of Saudi Arabia.

The Chinese corporation AVIC in its principles of CSR - citizen of the world, public welfare, one belt has demonstrated its commitment to the policies of the Government and the Communist Party of the PRC, such as.



#### *The Corporate Culture of the Enterprises of the Military-Industrial Complex DOI: http://dx.doi.org/10.5772/intechopen.94479*

#### **Table 7.**

*Main directions of social policy of largest military-industrial companies [14–21].*


#### **Table 8.**

*Mechanisms for implementing ethical policy of largest military-industrial companies [14–21].*

This approach to CSR can be easily explained by the status of AVIC as a state company (**Table 8**).

The mechanisms for implementing ethical policies provided by Lockheed Martin, Boeing, Raytheon are highly effective because require a minimum of implementation costs, the creation of small divisions to resolve ethical issues at the same time removes significant risks from the line and senior management of the company, allows you to get faster feedback and is an additional control mechanism for lower-level managers and personnel, at Airbus these functions are assigned to the legal department (**Table 9**).

Authority and hierarchy are determined by the specifics of a large company; if we consider holdings belonging to the largest corporations, then these properties are manifested to a greater extent, since The very scale and complexity of large


#### **Table 9.**

*Diagnosing the type of corporate culture of largest military-industrial companies (developed by the authors).*

holdings presupposes a hierarchical organizational structure, a unified approach to managing all enterprises of the holding.

At the same time, the specificity of corporate governance balances authoritarianism, adding such elements of democracy as collegiality of the supreme governing body - general meeting of shareholders, collegiality of the Board of Directors, Committees of the Board of Directors, Management Board, the presence of independent control bodies - auditors, auditors, internal control services and bureaus/ ethics commissions. The presence of uniform ethical rules for employees and additional rules for managers brings us closer to a democratic corporate culture and the presence of transparent accountability. The most stringent regulation of employee behavior is provided for by Airbus and MHI.

The culture of "High-stakes (we put on our company)" is a high level of risk and extremely slow feedback. This culture includes, as mentioned earlier, enterprises of the defense industry, which are aimed at obtaining the advantages of enterprises with this type of culture: extremely high investment, a solid approach and a long decision-making process, relatively low staff turnover, resilience and long-term prospects.

The type of corporate culture "Academy" is characterized by a focus on the gradual growth of employees who are ready for long-term cooperation with the company. In such companies, the traditions and customs of the company are highly respected. This is especially true for the Boeing Corporation, which shows pride in its more than 100 year history.

#### **2.3 Research of the largest Russian corporations of the military-industrial complex**

This study supports an inference that anti-corruption policy is developed and implemented by the majority of the companies under research.

As a comparison, the largest Russian military-industrial complex companies included in the SIPRI index were selected (**Tables 10** and **11**).

Anti-corruption mechanisms, such as regulation of receiving gifts and prevention of conflicts of interest are closely integrated with ethical norms and ethical policy mechanisms, almost all companies under research have hotlines and ethics commissions, which deal with both ethical issues and corruption violations (**Tables 12**–**14**). It should be noted that an essential gap in both global and national industry leaders is the lack of internal Corporate governance code, the fundamental document reflecting the quality of corporate culture and corporate governance, all the more so as its existence is recommended by the Corporate governance code approved by the Bank of Russia [22]. Another significant drawback is the absence of social reporting. The absence of such a single document is all the more surprising

## *The Corporate Culture of the Enterprises of the Military-Industrial Complex DOI: http://dx.doi.org/10.5772/intechopen.94479*


#### **Table 10.**

*The largest military-industrial companies in Russia according to the SIPRI rating in 2018 [13].*


#### **Table 11.**

*Documents of corporate culture of Russian military-industrial companies [27–30].*


#### **Table 12.**

*The main directions of anti-corruption policy of Russian military-industrial companies [27–30].*


#### **Table 13.**

*Ethical policy implementation mechanisms of Russian military-industrial companies [27–30].*


#### **Table 14.**

*The main directions of ethical policy of Russian military-industrial companies [27–30].*

given that all the studied enterprises have a social policy that is implemented in practice.

Studying the ethical policy of Russian companies, we can conclude that companies are guided mainly by the mandatory rules adopted in Russia by the state and society, the emphasis is made on observing human rights, fairness, labor protection, protection of confidential information, prevention of conflicts of interest and fight against corruption, with lack of attention to issues of special rights of minorities and inclusiveness which are relevant in the society of the United States, the EU, the countries of the British Commonwealth.

The main directions of social policy were analyzed on the basis of corporate reporting data (**Table 15**).

The Almaz-Antey Air and Space Defense Corporation [23] does not provide internal documents and reports for public access, the information on social and personnel policy is posted on the official website o the corporation. JSC "Russian Helicopters" [24], United Aircraft Corp [25], United Shipbuilding Corp [26] reflect their social policy in their annual reports. JSC "Russian Helicopters" developed the Code of corporate ethics [27], Anti-corruption policy [28]. JSC "Corporation "Tactical Missiles Corp" developed the Anti-corruption regulation and the Basic social policy [29]. JSC "Concern" Almaz-Antey developed Human Resources and Social Policy [30].

In comparison with the reviewed best practices, it was found that insufficient attention is paid to the following corporate culture tools:



*The Corporate Culture of the Enterprises of the Military-Industrial Complex DOI: http://dx.doi.org/10.5772/intechopen.94479*

**Table 15.**

*The main directions of social policy of Russian military-industrial companies [27–30].*


#### **2.4 Analysis of the mechanisms of corporate culture**

To assess the effectiveness of the mechanisms of corporate culture with the participation of the authors in 2018–19, an analysis of the mechanisms of corporate culture was carried out using the method of expert assessment.

When applying the method of expert assessments, 10 experts were involved, who are middle managers, specialists in large companies. The evaluation criterion is the effectiveness of the implementation of the corporate culture tool. The form of participation of experts is face-to-face, the type of answers is ranging, the main method is the Delphi method (**Table 16**) [31].

Step 2. Calculation of weight values of experts' opinions depending on their competence (**Table 17**).

$$Ki = \frac{K\mathfrak{J} + \mathrm{Ka}}{2} \tag{1}$$

Ki-coefficient of competence of the i-th expert, considering the degree of familiarity with the question discussed (Кз) and substantiation of the answer (Ka):


#### **Table 16.**

*Step 1. Results of the first step of evaluation of the effectiveness of the corporate culture tools implementation [31].*


#### **Table 17.**

*Step 2. Calculation of weight values of the experts' opinions depending on their competence [31].*


#### **Table 18.**

*Step 3. Calculation of the effectiveness of the corporate culture tools implementation, considering the experts' competence [31].*

Kk and Ka are evaluated on a scale from 1 to 2, where 1 is the medium level of competence, 2 is the high level of competence; i = 1..m — sequential numbers of experts; m – the quantity of experts m = 10.

Step 3. Calculation of weight values of the experts' opinions depending on their competence (**Table 18**)

$$\overline{X}\_{j} = \frac{\sum\_{i=1}^{m} X\_{ij} \cdot K\_{i}}{\sum\_{i=1}^{m} K\_{i}} \tag{2}$$

Xij – evaluation of the relative importance (in points), set by the i-th expert to the j-th element; j = 1 … n – sequential numbers of the studied elements; n — the number of elements of the objectives tree n = 8.

Step 4. Identifying the most promising ways to improve corporate culture.

### *The Corporate Culture of the Enterprises of the Military-Industrial Complex DOI: http://dx.doi.org/10.5772/intechopen.94479*

To identify more accurately the importance of the corporate culture tools and to develop an algorithm for their implementation, an abstract economic model is suggested for consideration. This model determines the qualitative characteristics of the modeled object, which is the modernization of corporate culture. When building the model, the main approaches of the multifactor model are used, namely, the analysis of the individual factors influence separately and as a whole on the modeled object.

GfK Consumer Life conducted international research that identified 10 crucial types of corporate social responsibility from the consumers' point of view, which got top positions in the rating (**Table 19**) [32].

Within the framework of the study conducted by KPMG and Effie in 2018, the finalists of the competition between companies implementing the sustainable development goals Effie Awards Russia 2017 in their social projects were marked. The finalists pointed out in their projects the following sustainable development goals out of 169 sustainable development goals (**Table 20**) [33].

The corporate culture tools analyzed by the authors are currently highly recommended for all companies and mandatory for large businesses and companies with public ownership.

Internationally this is regulated by:


In Russia, there are the following legislative norms that recommend and require to implement anti-corruption policy and prevent conflicts of interest:


• The Federal law of December 25, 2008, N 273-FZ "On Countering Corruption";

**Table 19.**

*Crucial types of corporate social responsibility from the consumers' point of view.*


#### **Table 20.** *Rating of sustainable development goals.*


Today there are three main concepts, on which modern theories of corporate social responsibility are based.

**Stakeholders concept**. A stakeholder is an individual or organization that exerts influence on or is influenced by the activities of another organization, its products, services, and related production performance indicators [34].

**Corporate citizenship** implies the responsibility of companies for what is happening in the country and the mutual responsibility of the state and business to the society [35].

**The concept of corporate sustainability**, which is the newest concept in the field of corporate social responsibility. Its founder J. Elkington introduced the concept of a triple bottom line of a corporation's activities, which includes financial and environmental dimensions complying with the idea of eco-efficiency with the addition of the assessment of social and broad economic impact [36].

In Russia, large companies and companies with public ownership are guided by the approach to social responsibility, defined by the Concept of long-term socioeconomic development of the Russian Federation [37]. There are no binding forms of social reporting, similar to annual financial statements, but the most widely used ones in the world at present are the UN Global Compact, and The Global Reporting Initiative (GRI) [38].

The stability of the Asia-Pacific region is attracting major attention owing to its increasing relevance in the current globalized world. China has been predicted to be a world power in a few decades. The size and progress of the development of its defense industry are one of the most relevant factors influencing the current global arms market and the security stability in the region.

#### *The Corporate Culture of the Enterprises of the Military-Industrial Complex DOI: http://dx.doi.org/10.5772/intechopen.94479*

The region's nations place greater emphasis on foreign sales and exportation of their defense products. However, they face a highly competitive international arms market where a large number of companies compete to sell their products and only the development of niche technologies appears to have greater prospects for generating success.

Most South Korean defense companies have greatly diversified their production into the commercial sector, which may compensate for the above problems of overcapacity and poor economies of scale (and subsequent lack of competitiveness). The Chinese defense companies have similarly, although less significantly, achieved certain diversification of their production [38].

Conversely, Indonesian arms producers remain highly dependent on the state's procurement programs.

South Korea and Singapore have had unlimited access to modern weapons systems technologies and to the global arms market; China, on the other hand, has been under an arms embargo placed by the U.S.A. and the E.U. since 1989, and Indonesia was under a U.S. arms embargo between 1999 and 2005. In consequence, China relied on dual-use technologies and reverse engineering techniques applied to Russian weapons systems in order to then develop its defense sector, while Indonesia has been unable to develop its defense industrial base until recent years.

The mercantilist approach, in which the state exercises a large amount of control over the defense industry, may lead to extensive investments in the defense industry, lack of competitiveness, and an eventual decrease in the nation's security; whereas the application of liberal principles, in which there is minimum intervention by the state in the defense sector, may result in more competitive military equipment production and therefore greater security, although may also create certain vulnerability as there is greater dependence on foreign suppliers.
