Title: B368 Business Issues and Ethics
1B368 Business Issues and Ethics
- Group 7
- Final Revision
- C.S. Lai
- Jan. 2013
2Welcome! todays agenda
- QA
- Examination and Review
- QA
3Examination Review
4Format
- Please refer to the Specimen Examination Paper.
5Tips for preparing for the exam.
- Read the Course Guide
- Read the Course Guide
- Read the Course Guide
- Review the TMAs
- Actively participate in the following activities
- Relax, sleep well, and enjoy!
6Topics to review
- Factoring affecting individual decisions
- Issue-related and context-related factors that
influence moral decisions. - Discrimination
- Foreign firms' operations
- Corporate governance
- Corporate responsibility
- Pricing issues
- Relationships between society and business ethics
- Buyer-seller relationships
7Summary of Tutorial 1
- What is business ethics?
- Why is business ethics important?
- Globalization a key context for business ethics?
- Sustainability a key goal for business ethics?
8What is business ethics?
- Business ethics is the study of business
situations, activities, and decisions where
issues of right and wrong are addressed.
9Why is business ethics important?
- Power and influence of business in society
- Potential to provide major contribution to
society - Potential to inflict harm
- Increasing demands from stakeholders
- Lack of business ethics education or training
- Continued occurrence of ethical infractions
- Evaluating different ways of managing business
ethics - Interesting and rewarding
10Models of ethical decision-making
11Stages in ethical decision-making
Ethical decision-making process
Source Derived from Rest (1986), as cited in
Jones (1991).
12Relationship with normative theory
- The role of normative theory in the stages of
ethical decision-making is primarily in relation
to moral judgement - Moral judgements can be made according to
considerations of rights, duty, consequences,
etc. - Commercial managers tend to rely on
consequentialist thinking - However, the issue of whether and how normative
theory is used by an individual decision-maker
depends on a range of different factors that
influence the decision-making process
13Influences on ethical decision-making
- Two broad categories individual and situational
(Ford and Richardson 1994) - Individual factors - unique characteristics of
the individual making the relevant decision - Given at birth
- Acquired by experience and socialisation
- Situational factors - particular features of the
context that influence whether the individual
will make an ethical or unethical decision - Work context
- The issue itself including
- intensity
- ethical framing
14Framework for understanding ethical
decision-making
15Limitations of ethical decision-making models
- Models useful for structuring discussion and
seeing the different elements that come into play - Limitations
- Not straightforward or sensible to break model
down into discrete units - Various stages related or interdependent
- National or cultural bias
- Model is intended not as a definitive
representation of ethical decision-making, but as
a relatively simple way to present a complex
process
16European perspectives on ethical decision-making
- Research on individual factors influencing
ethical decision-making has a strong US and Asian
bias - Consistent with choice within constraints
- Research on situational factors originated by
European authors - Consistent with concern for constraints themselves
17Individual influences on ethical decision-making
18Individual influences on ethical decision-making
19Age and gender
- Age
- Results contradictory
- However experiences may have impact
- Gender
- Individual characteristic most often researched
- Results contradictory
- These categories too simplistic
20National and cultural characteristics
- People from different cultural backgrounds likely
to have different beliefs about right and wrong,
different values, etc. and this will inevitably
lead to variations in ethical decision-making
across nations, religions and cultures - Hofstede (1980 1994) influential in shaping our
understanding of these differences our mental
programming - Individualism/collectivism
- Power distance
- Uncertainty avoidance
- Masculinity/femininity
21Education and employment
- Type and quality of education may be influential
- E.g. business students rank lower in moral
development than others and more likely to cheat - Amoral business education reinforces myth of
business as amoral
22Psychological factors
- Cognitive moral development (CMD) refers to the
different levels of reasoning that an individual
can apply to ethical issues and problems - 3 levels (details next slide)
- Criticisms of CMD
- Gender bias
- Implicit value judgements
- Invariance of stages
- An individuals locus of control determines the
extent to which they believe that they have
control over the events in their life
23Psychological factorsStages of cognitive moral
development
Source Adapted from Ferrell et al. (2002)
Kohlberg (1969) Trevino and Nelson (1999)
24Psychological factorsStages of cognitive moral
development
Level Level Stage Stage Explanation Illustration
III Postconventional 5 Social contract and individual rights Individuals go beyond identifying with others expectations, and assesses right and wrong according to the upholding of basic rights, values and contracts of society. The public affairs manager of a food manufacturer may decide to reveal which of the firms products contain genetically modified ingredients out of respect for consumers rights to know, even though they are not obliged to by law, and have not been pressurised into by consumers or anyone else.
III Postconventional 6 Universal ethical principles Individuals will make decisions autonomously based on self-chosen universal ethical principles, such as justice, equality, and rights, which they believe everyone should follow. A purchasing manager may decide that it would be wrong to continue to buy products or ingredients that were tested on animals because he believes this doesnt respect animal rights to be free from suffering.
25Personal values, integrity moral imagination
- Personal values
- an enduring belief that a specific mode of
conduct or end-state of existence is personally
or socially preferable to an opposite or converse
mode of conduct or end-state (Rokeach 19735) - Personal integrity
- Defined as an adherence to moral principles or
values - Moral imagination
- Concerned with whether one has a sense of the
variety of possibilities and moral consequences
of their decisions, the ability to imagine a wide
range of possible issues, consequences, and
solutions (Werhane, 199876)
26Situational influences on decision-making
27Situational influences on ethical decision-making
28Moral Intensity
- Jones (1991374-8) proposes that the intensity of
an issue will vary according to six factors - Magnitude of consequences
- Social consensus
- Probability of effect
- Temporal immediacy
- Proximity
- Concentration of effect
29Moral framing
- The same problem or dilemma can be perceived very
differently according to the way that the issue
is framed - Language important aspect of moral framing
- E.g. Layoff restructuring
- Moral muteness (Bird Walters 1989) because of
- Harmony
- Efficiency
- Image of power and effectiveness
30How ethical decisions are justified
rationalization tactics
31Systems of reward
- Adherence to ethical principles and standards
stands less chance of being repeated and spread
throughout a company when it goes unnoticed and
unrewarded - What is right in the corporation is not what is
right in a mans home or in his church. What is
right in the corporation is what the guy above
you wants from you. Thats what morality is in
the corporation (Jackall, 19886)
32Authority and Bureaucracy
- Authority
- People do what they are told to do or what they
think theyre being told to do
- Bureaucracy
- Jackall (1988), Bauman (1989, 1993) and ten Bos
(1997) argue bureaucracy has a number of negative
effects on ethical decision-making - Suppression of moral autonomy
- Instrumental morality
- Distancing
- Denial of moral status
33Work roles and organisational norms culture
- Work roles
- Work roles can encapsulate a whole set of
expectations about what to value, how to relate
to others, and how to behave - Can be either functional or hierarchical
Organisational norms and culture
- group norms delineate acceptable standards of
behaviour within the work community - E.g. ways of talking, acting, dressing or
thinking etc.
34National and cultural context
- Instead of looking at the nationality of the
individual making the decision now we are
considering the nation in which the decision is
actually taking place, regardless of the
decision-makers nationality - Different cultures still to some extent maintain
different views of what is right and wrong
35Summary
- Discussed the various stages of and influences on
ethical decision-making in business - Presented basic model of decision-making
- Outlined individual and situational influences on
ethical decision-making - Suggested that some individual factors such as
cognitive moral development, nationality and
personal integrity are clearly influential - Suggested that in terms of recognising ethical
problems and actually doing something in response
to them, it is situational factors that appear to
be most influential
36Can a corporation have social responsibilities?
- Milton Friedman 1970 classic article The social
responsibility of business is to increase its
profits - Vigorously argued against the notion of social
responsibilities for corporations based on three
main arguments - Only human beings have a moral responsibility for
their actions - It is managers responsibility to act solely in
the interests of shareholders - Social issues and problems are the proper
province of the state rather than corporate
managers
37Can a corporation be morally responsible for its
actions?
- Evidence to suggest that legal designation of a
corporation makes it unable to be anything but
self-interested (Bakan 2004) - Long and complex debate but generally support
from literature for some degree of responsibility
accredited to corporations - Argument based on
- Every organisation has a corporate internal
decision structure which directs corporate
decisions in line with predetermined goals
(French 1979) - All organisations manifest a set of beliefs and
values that lay out what is generally regarded as
right or wrong in the corporation
organizational culture (Moore 1999)
38Traditional ethical theories
- Generally offer a certain rule or principle which
one can apply to any given situation - These theories generally can be differentiated
into two groups
Motivation/ Principles
Action
Outcomes
Consequentialist Ethics
Non-consequentialist Ethics
Source Crane and Matten (2007)
39(No Transcript)
40Typical Perspective
41Pluralistic Perspective
42Framework for understanding ethical
decision-making
43Stakeholder theory of the firma network model
44Individual influences on ethical decision-making
45Individual influences on ethical decision-making
46Age and gender
- Age
- Results contradictory
- However experiences may have impact
- Gender
- Individual characteristic most often researched
- Results contradictory
- These categories too simplistic
47National and cultural characteristics
- People from different cultural backgrounds likely
to have different beliefs about right and wrong,
different values, etc. and this will inevitably
lead to variations in ethical decision-making
across nations, religions and cultures - Hofstede (1980 1994) influential in shaping our
understanding of these differences our mental
programming - Individualism/collectivism
- Power distance
- Uncertainty avoidance
- Masculinity/femininity
48Education and employment
- Type and quality of education may be influential
- E.g. business students rank lower in moral
development than others and more likely to cheat - Amoral business education reinforces myth of
business as amoral
49Psychological factors
- Cognitive moral development (CMD) refers to the
different levels of reasoning that an individual
can apply to ethical issues and problems - 3 levels (details next slide)
- Criticisms of CMD
- Gender bias
- Implicit value judgements
- Invariance of stages
- An individuals locus of control determines the
extent to which they believe that they have
control over the events in their life
50Psychological factorsStages of cognitive moral
development
Source Adapted from Ferrell et al. (2002)
Kohlberg (1969) Trevino and Nelson (1999)
51Psychological factorsStages of cognitive moral
development
Level Level Stage Stage Explanation Illustration
III Postconventional 5 Social contract and individual rights Individuals go beyond identifying with others expectations, and assesses right and wrong according to the upholding of basic rights, values and contracts of society. The public affairs manager of a food manufacturer may decide to reveal which of the firms products contain genetically modified ingredients out of respect for consumers rights to know, even though they are not obliged to by law, and have not been pressurised into by consumers or anyone else.
III Postconventional 6 Universal ethical principles Individuals will make decisions autonomously based on self-chosen universal ethical principles, such as justice, equality, and rights, which they believe everyone should follow. A purchasing manager may decide that it would be wrong to continue to buy products or ingredients that were tested on animals because he believes this doesnt respect animal rights to be free from suffering.
52Personal values, integrity moral imagination
- Personal values
- an enduring belief that a specific mode of
conduct or end-state of existence is personally
or socially preferable to an opposite or converse
mode of conduct or end-state (Rokeach 19735) - Personal integrity
- Defined as an adherence to moral principles or
values - Moral imagination
- Concerned with whether one has a sense of the
variety of possibilities and moral consequences
of their decisions, the ability to imagine a wide
range of possible issues, consequences, and
solutions (Werhane, 199876)
53Ethical issues in the firm-employee relation
54Management of human resources an ethical
problem between rights and duties
- The term human resource management and its
implications have been a subject of intense
debate in business ethics - Humans treated as important and costly resource
- Consequently, employees are subject to a strict
managerial rationale of minimising costs and
maximising the efficiency of the resource
55Rights of employees as stakeholders of the firm
56Duties of employees as stakeholders of the firm
Employee duties Issues involved
Duty to comply with labour contract Acceptable level of performance Work quality Loyalty to the firm
Duty to comply with the law Bribery
Duty to respect the employers property Working time Unauthorized use of company resources for private purposes Fraud, theft, embezzlement
57Discrimination
- Discrimination in the business context occurs
when employees receive preferential (or less
preferential) treatment on grounds that are not
directly related to their qualifications and
performance in the job - Managing diversity prominent feature of
contemporary business - Extensive legislation
- Institutional discrimination discrimination
deeply embedded in business
58Sexual and racial harassment
- Issues of diversity might be exploited to inflict
physical, verbal, or emotional harassment - Regulation reluctant
- Blurred line between harassment on one hand and
joking on the other - Influenced by contextual factors such as
character, personality, and national culture - Companies increasingly introduced codes of
practice and diversity programmes (Crain and
Heischmidt 1995)
59Equal opportunities and affirmative action
- How should organizations respond to problems of
discrimination? - Equal opportunity programme
- Generally targeted at ensuring procedural justice
is promoted - Affirmative action (AA) programmes deliberately
attempt to target those who might be currently
under-represented in the workforce - Recruitment policies
- Fair job criteria
- Training programmes for discriminated minorities
- Promotion to senior positions
60Reverse discrimination
- In some cases, people suffer reverse
discrimination because AA policies prefer certain
minorities - Justification for reverse discrimination
- Retributive justice past injustices have to be
paid for - Distributive justice rewards such as job and pay
should be allocated fairly among all groups
(Beauchamp 1997) - Stronger forms of reverse discrimination tend to
be illegal in many European countries
61Globalization a key context for business ethics?
62What is globalization?
- According to Scholte (2000) globalization is not
- internationalization
- liberalization
- universalization
- westernization
- Globalization is the progressive eroding of the
relevance of territorial bases for social,
economic and political activities, processes and
relations - deterritorialization
63Relevance of globalization for business ethics
- Cultural issues
- Legal issues
- Accountability issues
- Globalization can affect all stakeholders of the
corporation
64Ethical impacts of globalization
65Globalization as a context for business ethics
- First aspect of globalization is that much
corporate activity takes place in multiple
national contexts - Exposes companies to different cultural and legal
environments - Second aspect of globalization creates a social
space beyond the power of single nation states - For many business ethics problems, no single
nation state is able to regulate and control
corporate actors
66Shareholders as stakeholders
- Understanding corporate governance
67Crucial problem separation of ownership and
control
- Peculiarities of corporate ownership
- Locus of control
- Fragmented ownership
- Divided functions and interests
68Rights and duties in firm-shareholder relations
- Rights of shareholders
- The right to sell their stock
- The right to vote in the general meeting
- The right to certain information about the
company - The right to sue the managers for (alleged)
misconduct - Certain residual rights in case of the
corporations liquidation - Duties of managers
- Duty to act for the benefit of the company
- Duty of care and skill
- Duty of diligence
69Corporate governance
- Corporate governance definition
- Describes the process by which shareholders seek
to ensure that their corporation is run
according to their intentions. It includes
processes of goal definition, supervision,
control, and sanctioning. In the narrow sense it
includes shareholders and the management of a
corporation as the main actors in a broader
sense it includes all actors who contribute to
the achievement of stakeholder goals inside and
outside the corporation
70Corporate governance a principal-agent relation
Principal Shareholder
Seeks profits, rising share price, etc.
Agent Manager
Seeks remuneration, power, esteem etc.
- Features of agency relations
- Inherent conflict of interest
- Informational asymmetry
71Ethical issues in corporate governance
72Executive accountability and control (I)
- A separate body of people that supervises and
controls management on behalf of shareholders - Dual structure of leadership
- executive directors are actually responsible for
running the corporation - non-executive directors are supposed to ensure
that the corporation is being run in the
interests of the shareholders - Anglo-Saxon model single-tier board
- European model two-tier boards, lower tier
executive directors, and upper tier
supervisory board
73Executive accountability and control (II)
- The central ethical issue here is the
independence of the supervisory, non-executive
board members - No directly conflicting interests ensured by
- Typically drawn from outside the corporation
- No personal financial interest in the corporation
- Appointed for limited time
- Competent to judge the business of the company
- Sufficient resources to get information
- Appointed independently
74Executive remuneration
- Fat cat salary accusations
- E.g. average CEO salary in Britain 6.5m (highest
CEO salaries in 2008 Europe, 77m, USA, 84m) - E.g. average annual pay rise for CEOs 11
- CEO increases outstrip shareholder returns
- Ethical problems with executive pay
- Performance-related pay leads to large salaries
that cause unrest within corporations - Influence of globalisation on executive pay leads
to significant increases - Board often fails to reflect shareholder (or
other stakeholder) interests
75Ethical aspects of mergers and acquisitions
- Acceptable if results in transfer of assets to
owner who uses them more productively - Central concern is managers who pursue interests
not congruent with shareholder interests - Executive prestige vs. profit and share price
- Two ethically-questionable options for managers
(Carroll and Buchholtz, 2008) - Seduced with golden parachute for cooperation
- Greenmailing to secure post-merger job
- Hostile takeovers concern when shareholders do
not want to sell - Intentions and consequences of mergers and
acquisitions - Restructuring and downsizing
76The role of financial markets and insider trading
- Speculative faith stocks
- dot-com bubble (companies not made any profit
but worth billions on the market) - Ethical issue bonds based entirely on
speculation without always fully revealing amount
of uncertainty - Insider trading
- Insider trading occurs when securities are bought
and sold on the basis of material non-public
information (Moore 1990) - Ethical arguments (Moore, 1990)
- Fairness
- Misappropriation of property
- Harm to investors and the market
- Undermining of fiduciary relationship
- Insider trading can erode trust in the market in
the long term hence its illegality
77The role of financial professionals and market
intermediaries
- Two crucial professions Accountants credit
ratings agencies - Task is to provide a true and fair view of the
firm i.e. bridge informational asymmetry - Five main problematic aspects of financial
intermediarys job - Power and influence in markets
- Conflict of interest (e.g. cross-selling)
- Long-term relationships with clients
- Size of the firm
- Competition between firms (danger of
corner-cutting)
78Private equity and hedge-funds
- Rise of private equity and hedge funds exacerbate
issues around transparency and shareholder
control - Most general concern
- There are no longer many obligations for public
information about a company once it has been
taken private - Hedge funds do not have to report to regulators
in the same way as other investment firms - Dont even have to report fully to own investors
- Suggestion is this lack of transparency hides
systemic risk
79Corporate Social Responsibility
80Why do corporations have social responsibilities?
- Business reasons (enlightened self-interest)
- Extra and/or more satisfied customers
- Employees may be more attracted/committed
- Forestall legislation
- Long-term investment which benefits corporation
- Moral reasons
- Corporations cause social problems
- Because they are powerful, corporations should
use their power and resources responsibly - All corporate activities have social impacts of
one sort or another - Corporations rely on the contribution of a wide
set of stakeholders in society rather than just
shareholders
81Activity
- Pick an organization that youre familiar with
- Identify the activities that this organization
have done in order to fulfill its social
responsibilities. - E.g.
- Diageo is promoting responsible drinking (Ethics
in Action 2.1) - CLP is planting trees.
- If you re the boss of that organization, will
you support the social responsibility initiatives
by contributing and time? Why and why not?
82What is the nature of corporate social
responsibilities?
- Corporate social responsibility encompasses the
economic, legal, ethical, and philanthropic
expectations placed on organizations by society
at a given point in time - (Carroll Buchholtz 200035)
83Carrolls four-part model of corporate social
responsibility
Desired by society
Philanthropic Responsibilities
Expected by society
Ethical Responsibilities
Required by society
Legal Responsibilities
Required by society
Economic Responsibilities
Source Carroll (1991)
84CSR in a European context
- CSR particularly strong concept in US and only
more recently become so influential in Europe - Difference due to explicit CSR is US and implicit
CSR in Europe - Could argue that all levels of CSR play a
different role in Europe - Economic responsibility
- USA strongly focused on responsibility to
shareholders - Europe focused on the economic responsibility to
employees and local communities as well - Legal responsibility
- State accepted as prominent force in enforcing
rules of the game rather than as interfering in
it - Ethical responsibility
- Europeans tend to exhibit greater mistrust of
modern corporations than US - Philanthropic responsibility
- In Europe mostly been implemented compulsorily
via the legal framework rather than via
discretionary acts of successful companies (US)
85CSR and strategy corporate social responsiveness
- Corporate social responsiveness refers to the
capacity of a corporation to respond to social
pressures (Frederick 1994) - 4 philosophies or strategies of social
responsiveness (Carroll 1979) - Reaction
- Defence
- Accommodation
- Proaction
think about the activity you just donewhich
strategy the organization you mentioned was using?
86Outcomes of CSR corporate social performance
- Outcomes delineated in three concrete areas
- Social policies
- Social programmes
- Social impacts
87Ethical issues and the consumer
88Ethical issues, marketing and the consumer
89Ethical issues in marketing management - pricing
- Pricing issues are central to the notion of a
fair exchange between the two parties, and the
right to a fair price - key rights of consumers
as stakeholders - 4 types of pricing practices where ethical
problems may arise - Excessive pricing
- Price fixing
- Predatory pricing
- Deceptive pricing
90Civil Society and Business Ethics
91Overview
- Show how the role played by various types of
civil society organisations in society
constitutes them as important stakeholders of
corporation - Examine the tactics that such groups might employ
towards corporations to achieve their purposes - Discuss the impacts of globalisation on the
nature and extent of the role played by civil
society towards corporations - Discuss the appropriate relationships between
business and civil society - Assess the role of civil society in providing for
enhanced corporate sustainability
92Civil Society as third sector
State sector Government
Market sector Business
Civil society sector Including NGOs, pressure
groups, charities, unions, etc
93Civil society organisations
- Civil society organisations include a whole
plethora of pressure groups, non-governmental
organisations, charities, religious groups, and
other actors that are neither business nor
government organisations, but which are involved
in the promotion of certain interests, causes,
and/or goals
94Diversity in CSO characteristics
Scope Individual Grass-roots Local Regional Nation
al Transnational Global
Type Community group Campaign group Research
organization Business association Religious
group Trade union Technical body
CSOs
Structure Informal Formal Co-operative Professiona
l Entrepreneurial Network
Activities Academic research Market
research Policy research Information
provision Campaigning Protests demos Boycott
co-ordination
Focus Natural environment Social
issues Development Poverty alleviation Human
rights Animal welfare
Source adapted from McIntosh and Thomas (2002
31)
95Civil society organisations as stakeholders
96Civil society organisations as stakeholders
- The stake hold by CSOs is largely one of
- Representing the interests of individual
stakeholders - Representing the interests of non-human
stakeholders
97Different types of CSOs
Sectional groups Promotional groups
Membership Closed Open
Represent Specific section of society Issues or causes
Aims Self-interest Social goals
Traditional status Insider Outsider
Main approach Consultation Argument
Pressure exerted through Threat of withdrawal Mass media publicity
98Ethical issues and CSOs
99Recognising CSO stakes
- Many of these groups tend to self-declare
themselves as stakeholders in a particular issue
(Wheeler et al. 2002) - Issuing statements
- Launching campaigns
- Initiating some kind of action towards the
corporation - Self-declaring does not necessarily lead to
recognition
100CSO tactics
- Indirect action
- Provision of misleading information
- Violent direct action
- Often illegal
- Tends to generate the most publicity
- Is this action civil at all?
- Non-violent direct action
- Demonstrations and marches
- Protests
- Boycotts
- Occupations
- Non-violent sabotage and disruption
- Stunts
- Picketing
101Boycotts
- A boycott is an attempt by one or more parties to
achieve certain objectives by urging individual
consumers to refrain from making selected
purchases in the marketplace - Four different purposes for boycotts
- Instrumental boycotts
- Catalytic boycotts
- Expressive boycotts
- Punitive boycotts
102Some well-known boycotts in Europe
103CSO accountability
- CSO stakeholders might be said to include
- Beneficiaries
- Donors
- Members
- Employees
- Governmental organisations
- Other CSOs
- General public (especially those who support
their ideals) - Recently, growing number of organizations similar
to CSOs being initiated within business - Accountability of CSOs to their supposed
beneficiaries that tends to raise the most debate - Force agendas on beneficiaries without
understanding needs - Limited involvement of beneficiaries in decision
making - CSO donor interests receive higher priority
- Lack of effective mechanisms for beneficiaries to
feedback on CSO performance
104Globalisation and civil society organisations
105Globalisation and civil society organisations
- Globalization reshaping relations between
corporations and CSOs - Engagement with overseas CSOs
- Potentially new set of unfamiliar groups
- Many developing and transitional economies lack
strong and institutionalized civil society - Global issues and causes
- Problems that transcend national boundaries (e.g.
climate change and human rights - Critique of globalization
- Globalisation of CSOs
- the resistance will be as transnational as
capital - Global civil society
106Corporate citizenship and civil society
- Charity, collaboration, or regulation?
107Charity and community giving
- Starting point for a consideration of business
involvement in civil society - One-way support benefits communities and civil
action but does not usually allow them much voice
in shaping corporate action - Scale of significant giving considerably greater
in USA, because (Reingold, 1993) - US corporations enjoy generous tax breaks on
charitable donations - US corporations tend to pay less in terms of
taxation to support social welfare - American companies give much more to organised
religion
108Business-CSO collaboration
- Closer and more interactive relations between
civil society and corporations - Sometimes called social partnerships
- Limitations of business-CSO collaboration
- Difficulties managing relations between such
culturally diverse organisations - Difficulties ensuring consistency and commitment
- Partnership appear to mask continuing hostility
and/or power imbalances between the partners - The question of power imbalance
- The distribution of the benefits of partnerships
- CSO independence
109Some examples of business-CSO collaborations
110Drivers towards business-CSO partnerships
Drivers for business engagement with CSOs Drivers for CSO engagement with business
Consumer expectations Growing interest in markets
NGO credibility with public Disenchantment with government as provider of solutions
Need for an external challenge Need for more resources
Cross-fertilisation of thinking Credibility of business with government
Greater efficiency in resource allocation Cross-fertilisation of thinking
Desire to head off negative public confrontation and protect image Access to supply chains
Desire to engage stakeholders Greater leverage
111Civil Regulation
- Civil regulation is the ability and power of CSOs
to shape, influence or curb business practice - Focus on relations and outcomes
- Key drawback is that regulation is voluntary
- Key point - civil society can act as a conduit
through which individuals citizens can exert some
kind of leverage on, or gain a form of
participation in, corporate decision-making and
action
112Civil society, business, and sustainability
113Balancing competing interests
- Civil society wide variety of disparate actors
promoting different issues - Business must take account of these different
issues simultaneously - E.g. energy industry wind power
- Groups supporting wind power as clean source of
renewable energy that supports local areas
financially - Groups against wind power because they despoil
the countryside
114Towards participation and empowerment
- Organizationsthat affect you and your
community, especially when they affect the
material foundations of your self-determination,
must be able to be influenced by you and your
communityWhat are required are new forms of
democratic governance so that people can
determine their own futures in a sustainable
environment - (Bendell, 2000249)
115Summary
- Discussed the role that civil society has played
in business ethics - Taken a fairly broad definition of what
constitutes civil society - The representational nature of CSO stakes makes
their claim rather more indirect than for other
constituencies - Gradual shift in the nature of business-CSO
relations from primarily confrontational to a
more complex multifaceted relationship that still
involves confrontation, but also charitable
giving, collaboration and aspects of civil
regulations
116Ethical issues and suppliers
117Ethical issues
- Misuse of power
- The question of loyalty
- Preferential treatment
- Conflicts of interest
- A conflict of interest occurs when a persons or
organisations obligation to act in the interests
of another is interfered with by a competing
interest that may obstruct the fulfilment of that
obligation
118Ethical issues (2)
- Gifts, bribes and hospitality
- Consider the intention of the gift giver
- Look at the impact on the receiver
- Focus on the perception of other parties
- Many large organisations have a formal purchasing
code of ethics - Guidelines provided by professional bodies such
as the International Chartered Institute of
Purchasing and Supply
119Ethics of negotiation
- Ethics and negotiation oil and water?
- Reitz et al. (1998) list ten popular negotiating
actions - Lies
- Puffery
- Deception
- Weakening the opponent
- Strengthening ones own position
- Non-disclosure
- Information exploitation
- Change of mind
- Distraction
- Maximisation
120Ethics of negotiation (2)
- According to Reitz et al. (1998) a more ethical
approach to negotiating should steer clear of
these tactics. - Because
- Right thing to do
- Such practices incur costs for the negotiator
- Rigid negotiating
- Damaged relationships
- Sullied reputation
- Lost opportunities
121Activity
- Ethical Dilemma 9 A beautiful Deal
122(No Transcript)
123- Ethical Issues
- Fairenss, relationship, loyalty, other
responsiblities Vs. Costs, Animal testing - Conflict of interest Personal relationship with
a/c manager - Ethical Theories
- Consequentialist (cost and benefit of the
decision maker) - Utilitarian (Overall costs benefit to consumers,
societyetc.) - Rights (of existing suppliers, animal
rightsetc.) - Justice , rights
- Main considerations
- Due process (in contracting)
- Fair distribution of benefits
- Rights of various stakeholders (existing
supplier, new supplier, the firm, consumers,
animalsetc.) - Cost benefits, long term vs. short term
- How to proceed?
- Maintains balance!