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Title: B368 Business Issues and Ethics


1
B368 Business Issues and Ethics
  • Group 7
  • Final Revision
  • C.S. Lai
  • Jan. 2013

2
Welcome! todays agenda
  • QA
  • Examination and Review
  • QA

3
Examination Review
4
Format
  • Please refer to the Specimen Examination Paper.

5
Tips for preparing for the exam.
  1. Read the Course Guide
  2. Read the Course Guide
  3. Read the Course Guide
  4. Review the TMAs
  5. Actively participate in the following activities
  6. Relax, sleep well, and enjoy!

6
Topics 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

7
Summary 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?

8
What is business ethics?
  • Business ethics is the study of business
    situations, activities, and decisions where
    issues of right and wrong are addressed.

9
Why is business ethics important?
  1. Power and influence of business in society
  2. Potential to provide major contribution to
    society
  3. Potential to inflict harm
  4. Increasing demands from stakeholders
  5. Lack of business ethics education or training
  6. Continued occurrence of ethical infractions
  7. Evaluating different ways of managing business
    ethics
  8. Interesting and rewarding

10
Models of ethical decision-making
11
Stages in ethical decision-making
Ethical decision-making process
Source Derived from Rest (1986), as cited in
Jones (1991).
12
Relationship 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

13
Influences 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

14
Framework for understanding ethical
decision-making
15
Limitations 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

16
European 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

17
Individual influences on ethical decision-making
18
Individual influences on ethical decision-making
19
Age and gender
  • Age
  • Results contradictory
  • However experiences may have impact
  • Gender
  • Individual characteristic most often researched
  • Results contradictory
  • These categories too simplistic

20
National 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

21
Education 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

22
Psychological 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

23
Psychological factorsStages of cognitive moral
development
Source Adapted from Ferrell et al. (2002)
Kohlberg (1969) Trevino and Nelson (1999)
24
Psychological 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.
25
Personal 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)

26
Situational influences on decision-making
27
Situational influences on ethical decision-making
28
Moral 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

29
Moral 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

30
How ethical decisions are justified
rationalization tactics
31
Systems 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)

32
Authority 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

33
Work 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.

34
National 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

35
Summary
  • 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

36
Can 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

37
Can 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)

38
Traditional 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)
40
Typical Perspective
41
Pluralistic Perspective
42
Framework for understanding ethical
decision-making
43
Stakeholder theory of the firma network model
44
Individual influences on ethical decision-making
45
Individual influences on ethical decision-making
46
Age and gender
  • Age
  • Results contradictory
  • However experiences may have impact
  • Gender
  • Individual characteristic most often researched
  • Results contradictory
  • These categories too simplistic

47
National 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

48
Education 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

49
Psychological 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

50
Psychological factorsStages of cognitive moral
development
Source Adapted from Ferrell et al. (2002)
Kohlberg (1969) Trevino and Nelson (1999)
51
Psychological 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.
52
Personal 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)

53
Ethical issues in the firm-employee relation
54
Management 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

55
Rights of employees as stakeholders of the firm
56
Duties 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
57
Discrimination
  • 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

58
Sexual 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)

59
Equal 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

60
Reverse 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

61
Globalization a key context for business ethics?
62
What 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

63
Relevance of globalization for business ethics
  • Cultural issues
  • Legal issues
  • Accountability issues
  • Globalization can affect all stakeholders of the
    corporation

64
Ethical impacts of globalization
65
Globalization 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

66
Shareholders as stakeholders
  • Understanding corporate governance

67
Crucial problem separation of ownership and
control
  • Peculiarities of corporate ownership
  • Locus of control
  • Fragmented ownership
  • Divided functions and interests

68
Rights 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

69
Corporate 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

70
Corporate 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

71
Ethical issues in corporate governance
72
Executive 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

73
Executive 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

74
Executive 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

75
Ethical 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

76
The 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

77
The 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)

78
Private 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

79
Corporate Social Responsibility
80
Why 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

81
Activity
  • 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?

82
What 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)

83
Carrolls 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)
84
CSR 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)

85
CSR 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?
86
Outcomes of CSR corporate social performance
  • Outcomes delineated in three concrete areas
  • Social policies
  • Social programmes
  • Social impacts

87
Ethical issues and the consumer
88
Ethical issues, marketing and the consumer
89
Ethical 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

90
Civil Society and Business Ethics
91
Overview
  • 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

92
Civil Society as third sector
State sector Government
Market sector Business
Civil society sector Including NGOs, pressure
groups, charities, unions, etc
93
Civil 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

94
Diversity 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)
95
Civil society organisations as stakeholders
96
Civil 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

97
Different 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
98
Ethical issues and CSOs
99
Recognising 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

100
CSO 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

101
Boycotts
  • 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

102
Some well-known boycotts in Europe
103
CSO 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

104
Globalisation and civil society organisations
105
Globalisation 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

106
Corporate citizenship and civil society
  • Charity, collaboration, or regulation?

107
Charity 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

108
Business-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

109
Some examples of business-CSO collaborations
110
Drivers 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
111
Civil 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

112
Civil society, business, and sustainability
113
Balancing 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

114
Towards 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)

115
Summary
  • 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

116
Ethical issues and suppliers
117
Ethical 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

118
Ethical 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

119
Ethics 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

120
Ethics 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

121
Activity
  • Ethical Dilemma 9 A beautiful Deal

122
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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!
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