Crane and Matten

Business Ethics (3rd Edition)

Chapter 1
Introducing Business Ethics
What is business ethics?
Business ethics is the study of business situations, activities, and decisions where issues of right
and wrong are addressed.
Ethics and the law
-grey area
Defining morality, ethics and ethical theory
Morality is concerned with the norms, values and beliefs embedded in social processes which
define right and wrong for an individual or a community.
Ethics is concerned with the study of morality and the application of reason to elucidate specific
rules and principles that determine right and wrong for any given situation.
These rules and principles are called ethical theories.
The relationship between morality, ethics and ethical theory

Why 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
Types of misconduct across sectors
Observed ethical misconduct across sectors
Differences across organizational types
Globalization: a key context for business ethics?
What is globalization?
According to Scholte (2005) globalization is not:
internationalization
liberalization
universalization
westernization
Globalization is: a process which diminishes the necessity of a common and shared territorial
basis for social, economic, and political activities, processes, and relations.
deterritorialization
Relevance of globalization for business ethics
Cultural issues

Legal issues
Accountability issues
Globalization can affect all stakeholders of the
corporation
Ethical impacts of globalization
International perspectives on business ethics
Different approaches to business ethics
Who is responsible for ethical conduct in business?
Who is the key actor in business ethics?
What are the key ethical guidelines for ethical behaviour?
What are the key issues in business ethics?
What is the most dominant stakeholder management approach?
Regional differences: Europe, North America, Asia
Sustainability: a key goal for business ethics?
Defining sustainability
Sustainable development is development that meets the needs of the present without
compromising the ability of future generations to meet their own needs. (World Commission on
Environment and Development 1987)
Sustainability refers to the long-term maintenance of systems according to environmental,
economic and social considerations
The three components of sustainability
Triple bottom line
Coined by John Elkington
Bottom line thinking suggests sustainability as a goal
Three dimensions:
Environmental perspectives
Economic perspectives
Social perspectives
Corporate commitments to sustainability
Framing Business Ethics:
Corporate Responsibility, Stakeholders, and Citizenship
Lecture 2
Overview
Analyse the notion of responsibility for corporations;
Distinguish the various concepts of CSR;
Present the stakeholder theory of the firm;
Outline the concept of corporate accountability;
Critically examine the notion of corporate citizenship;
Discuss implications of these mostly US-born concepts for different regions
Towards a framework for business ethics

What is a corporation?
Key features of a corporation
A corporation is essentially defined in terms of legal status and the ownership of assets
Corporations are typically regarded as artificial persons in the eyes of the law
Corporations are notionally owned by shareholders, but exist independently of them
Managers and directors have a fiduciary responsibility to protect the investment of shareholders
Can a corporation have social responsibilities?
Milton Friedmans classic article is The social responsibility of business is to increase its
profits (1970)
Friedman 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
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, 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 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)
Corporate Social Responsibility
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
Corporations should use their power responsibly
All corporate activities have some social impacts
Corporations rely on the contribution of a wide set of stakeholders in society, not just
shareholders
What is the nature of corporate social responsibilities?
Corporate social responsibility includes the economic, legal, ethical, and philanthropic
expectations placed on organizations by society at a given point in time
(Carroll and Buchholtz 2009:44)
Carrolls four-part model of corporate social responsibility
CSR in an international context
CSR strong in US. Influence elsewhere is more recent. This is partly explained by explicit vs.
implicit CSR
Regional differences exist with respect to all CSR levels:

Economic responsibility
Focus in USA on shareholders; France has extensive responsibility for employees;
India has tradition of investment in the local community
Legal responsibility
State seen in Europe as key enforcer of rules; elsewhere government seen with
more scepticism (e.g. corrupt, interfering with liberty)
Ethical responsibility
Wide range of local ethical values & preferences: expectations vary
Philanthropic responsibility
Europe tends to compel giving via legal framework; elsewhere (e.g., USA, India,
China), companies are expected to share their wealth.
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
Outcomes of CSR: corporate social performance
Outcomes delineated in three concrete areas:
Social policies
Social programmes
Social impacts
Stakeholder theory of the firm
Stakeholder theory of the firm
Theory developed by Edward Freeman (1984)
A stakeholder of an organization is:
any group or individual who can affect, or is affected by, the achievement of the
organizations objectives (Freeman 1984:46)
More precise definition of affects and affected by (Evan and Freeman 1993)
Principle of corporate rights - the corporation has the obligation not to violate the rights
of others
Principle of corporate effect companies are responsible for the effects of their actions
on others
Stakeholder theory of the firm:
Traditional management model
Stakeholder theory of the firm
Stakeholder theory of the firm:
A network model
Why stakeholders matter
Milton Friedman businesses should only be run in the interests of their owners
Freeman - others have a legitimate claim on the corporation
Legal perspective

Stake in corporation already protected legally in some way (e.g. legally binding
contracts)
Economic perspective
Externalities outside contractual relationships
Agency problem short term interests of owners vs. long term interests of
managers, employees, customers etc.
A new role for management
According to Freeman, this broader view of responsibility towards multiple stakeholders assigns
a new role to management.
Rather than simply being agents of shareholders, management has to take into account the rights
and interests of all legitimate stakeholders:
Stakeholder democracy
Corporate governance
Stakeholder thinking in an international context
One could argue that although the terminology of stakeholder theory is relatively new in places
like Europe or Asia, the general principles have actually been practised for some time:
German supervisory board includes employee representatives
Keiretsu system in Japan (Chaebol in Korea), a network of banks, manufacturers,
suppliers and service providers
Different forms of stakeholder theory
Donaldson & Preston (1995):
Normative stakeholder theory: attempts to provide a reason why corporations should
take into account stakeholder interests
Descriptive stakeholder theory: attempts to ascertain whether (and how) corporations
actually do take into account stakeholder interests
Instrumental stakeholder theory: attempts to answer the question of whether it is
beneficial for the corporation to take into account stakeholder interests
Corporate accountability
The firm as a political actor
Corporate accountability
Corporate accountability refers to whether a corporation is answerable in some way for the
consequences of its actions
Firms have begun to take on the role of political actors taken up many of the functions
previously undertaken by government because:
Governmental failure
Increasing power and influence of corporations
Reasons for the political role of the firm
Government failure
Risk society thesis
Rise of subpolitics
Organized irresponsibility
Corporate power on the rise
Liberalization and deregulation results in more power and choice for private actors
Privatization of public services
Responsible for employment decisions
Globalization

Governments increasingly encourage self-regulation

The problem of democratic accountability
Who controls corporations?
To whom are corporations accountable?
Key to corporate accountability is transparency
Transparency is the degree to which corporate decisions, policies, activities and impacts are
acknowledged and made visible to relevant stakeholders
Corporate citizenship
Defining corporate citizenship: three perspectives
A limited view of CC
this essentially equates CC with corporate philanthropy
An equivalent view of CC
this essentially equates CC with CSR
An extended view of CC
this acknowledges the extended political role of the corporation in society
Commitments to corporate citizenship
Three views of corporate citizenship
An extended view of CC
Assessing corporate citizenship as a framework for business ethics
Extended view of CC adds something significant that helps us frame business ethics in new
ways:
Helps us better see the political role of the corporation
Clarifies the demand for corporate accountability
Helps to understand business in relation to common citizenship rights within different cultures
and some of the challenges posed by globalization
The rights of citizenship have strong links to the goal of sustainability
Provides a critical perspective on corporations social role that is more in keeping with non-US
ways of thinking about business ethics
Summary
Business ethics is related to the social role of the corporation
Confining corporations to commercial activities too limited
Different perspectives and their relevance in European context
CSR
Stakeholder theory
Corporate accountability
Effects of globalization on role of corporation
Corporate citizenship is latest concept in the field

Chapter 3
Evaluating Business Ethics:
Normative Ethical Theories
Lecture 3
Overview

Locate the role of ethical theory

Highlight international differences in perspectives
Provide critical overview of traditional ethical theories
Explore contemporary ethical theories
What are normative ethical theories?
Ethical theories are the rules and principles that determine right and wrong for any given
situation
Crane and Matten (2010)
Normative ethical theories are those that propose to prescribe the morally correct way of acting
As opposed to descriptive ethical theories which seek to describe how ethics decisions are
actually made in business
The role of ethical theory
The role of ethical theory
Two extreme positions (De George 1999)
Ethical absolutism claims there are eternal, universally applicable moral principles
Right and wrong are objective qualities, can be rationally determined
Typically traditional ethical theories
Ethical relativism claims morality is context-dependent and subjective
No universal right and wrongs that can be rationally determined; depends on person
making the decision & culture in which they are located
Typically contemporary ethical theories
Normative ethical theories
North American and European origins and differences
Differences between Anglo-American and European approaches based on philosophical
arguments
Individual versus institutional morality
US tend to individualistic perspective
Europe towards wider economic and governing institutions
Questioning versus accepting capitalism
US tend to accept the capitalist framework
Europe tend to question the ethical justification of capitalism
Justifying versus applying moral norms
US tend to focus on application of morality
Europe focus on justification and ethical legitimation of norms
In contrast, Asian perspectives tend to be based on religion (e.g. Islam, Buddhism)
Western modernist ethical theories
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
Major normative theories
Egoism
Theory of egoism - an action is morally right if the decision-maker freely decides an action to
pursue either their (short-term) desires or their (long-term) interests.
Adam Smith (1793): pursuit of individual interest morally acceptable as invisible
hand of market creates benefit for all

Relies on free competition and good information

Enlightened egoism
However, markets do not function perfectly
Anti-globalisation movement
Sustainability debate
Utilitarianism
According to utilitarianism, an action is morally right if it results in the greatest amount of good
for the greatest number of people affected by the action
Also called the greatest happiness principle
Based on cost-benefit analysis
Problems with Utilitarianism
Subjectivity
This has led to refinement of theory
Act utilitarianism
Rule utilitarianism
Issues around quantification and distribution of utility
Act- and Rule-Utilitarianism
Act utilitarianism
Looks to single actions and bases the moral judgement on the amount of pleasure and the
amount of pain this single action causes.
Rule utilitarianism
looks at classes of action and ask whether the underlying principles of an action produce
more pleasure than pain for society in the long run.
Ethics of duties
Categorical Imperative (Kant)
Maxim 1: Consistency
Act only according to that maxim by which you can at the same time will that it should
become a universal law.
Maxim 2: Human Dignity
Act so that you treat humanity, whether in your own person or in that of another, always
as an end and never as a means only.
Maxim 3: Universality
Act only so that the will through its maxims could regard itself at the same time as
universally lawgiving (would others agree? Would you be happy to see your decision
reported in the press?)
Problems with ethics of duties
Undervaluing outcomes
Complexity
Misplaced optimism?
Ethics of rights and justice
Natural rights

Certain basic, important, unalienable entitlements that should be respected and protected in every
single action.
Based on consensus about nature of human dignity
Strongly based in western view of morality
Justice
The simultaneously fair treatment of individuals in a given situation with the result that
everybody gets what they deserve
Fair procedures (procedural justice)
Fair outcomes (distributive justice)
John Rawlss
Theory of Justice

Each person is to have an equal right to the most extensive total system of basic
liberties compatible with a similar system of liberty for all.

Social and economic inequalities are to be arranged so that they are both:

to the greatest benefit of the least advantaged;

attached to offices and positions open to all under conditions of fair equality of
opportunity.
Limits of traditional theories
Too abstract
Too reductionist
Too objective and elitist
Too impersonal
Too rational and codified
Too imperialist
Alternative perspectives on ethical theory
Approaches based on character and integrity
Virtue ethics
Contends that morally correct actions are those undertaken by actors with virtuous characters.
Therefore, the formation of a virtuous character is the first step towards morally correct
behaviour
Acquired traits
Intellectual virtues
Moral virtues
Approaches based on ethics and responsibility
Feminist ethics
An approach that prioritizes empathy, harmonious and healthy social relationships, care for one
another, and avoidance of harm above abstract principles
Key elements
Relationships
Decisions taken in context of personal human interrelations

Responsibility
Active taking of responsibility, rather than merely having it
Experience
Learn and develop from experience
Approaches based on procedures of norm generation
Discourse ethics
Aims to solve ethical conflicts by providing a process of norm generation through rational
reflection on the real-life experiences of all relevant participants
Key elements
Ultimate goal of ethical issues in business should be the peaceful settlement of conflicts
Different parties in a conflict should sit together and engage in a discourse about the settlement
of the conflict, and ultimately provide a situation that is acceptable to all
ideal discourse criteria
Approaches based on empathy and moral impulse
Postmodern ethics
An approach that locates morality beyond the sphere of rationality in an emotional moral
impulse towards others. It encourages individual actors to question everyday practices and
rules, and to listen to and follow their emotions, inner convictions and gut feelings about what
they think is right and wrong in a particular incident of decision-making.
Postmodern business ethics
Postmodern business ethics emphasises (Gustafson, 2000:21)
Holistic approach
Examples rather than principles
Think local, act local
Preliminary character
Summary
Towards a pragmatic use of ethical theory
Typical Perspective
Pluralistic Perspective
Pluralism?
Crane and Matten (2010) argue that for the practical purpose of making effective decisions in
business:
Not suggest one theory or one approach as the best or true view of a moral dilemma
Suggest that all these theoretical approaches throw light from different angles on one and same
problem
Complementary rather than mutually exclusive
Advocate position of pluralism
Middle ground between absolutism and relativism
Considerations in making ethical decisions: summary of key insights from ethical theories

Chapter 4
Making Decisions in Business Ethics
Descriptive Ethical Theories

Lecture 4
Overview
Examine the question of why ethical and unethical decisions get made in the workplace
Determine what an ethical decision is
Review prominent ethical decision-making models
Discuss the importance of differences between individuals in shaping ethical decision-making
Critically evaluate the importance of situational influences on ethical decision-making (issues
and context based)
Identify points of leverage for managing and improving ethical decision-making in business
Descriptive Ethical Theories

Descriptive business ethics theories seek to describe how ethics decisions are actually made in
business, and what influences the process and outcomes of those decisions.
What is an ethical decision?
Main factors in deciding the moral status of a situation
Decision likely to have significant effects on others
Decision likely to be characterised by choice, in that alternative courses of action are open
Decision is perceived as ethically relevant by one or more parties
Models of ethical decision-making
Stages in ethical decision-making
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 decisionmaker depends on a range of different factors that influence the decision-making process
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
Framework for understanding ethical decision-making
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
International 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
Individual influences on ethical decision-making
Individual influences on ethical decision-making
Age and gender
Age
Results contradictory
However experiences may have impact
Gender
Individual characteristic most often researched
Results contradictory
These categories too simplistic
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
Long-term/short-term orientation
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
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 over the next two slides)
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

Stages of cognitive moral development (I)

Stages of cognitive moral development (II)
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 1973:5)
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, 1998:76)
Situational influences on
decision-making
Situational influences on ethical decision-making
Moral Intensity
Jones (1991:374-8) 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
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 (using moral language likely to trigger
moral thinking)
Moral muteness (Bird & Walters 1989) because of concerns regarding perceived threats to:
Harmony
Efficiency
Image of power and effectiveness
How ethical decisions are justified: rationalization tactics
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, 1988:6)
Authority
People do what they are told to do or what they think theyre being told to do
Recent survey of government employees (Ethics Resource Center, 2008: 9):
20% think top leadership is not held accountable
25% believe top leadership tolerates retaliation against those reporting ethical misconduct
30% dont believe their leaders keep promises
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

Work roles and organizational norms and 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
Group norms delineate acceptable standards of behaviour within the work community
E.g. ways of talking, acting, dressing or thinking
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 decisionmakers nationality
Different cultures still to some extent maintain different views of what is right and wrong
Summary
In this lecture we have:
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
Chapter 5
Managing Business Ethics
Lecture 5
Overview
Discuss the nature and evolution of business ethics management
Codes of ethics
Current theory and practice regarding the management of stakeholder relationships
The development of social, ethical, and environmental accounting, auditing and reporting tools
Different ways of organising for the management of business ethics, and critically assess the role
of organization culture and leadership
Extent to which developments discussed in this lecture represent genuine commitment to
business ethics or sophisticated public relations
What is business ethics management?
Business ethics management is the direct attempt to formally or informally manage
ethical issues or problems through specific policies, practices and programmes

Typical components of business ethics management

Mission or values statements
Codes of ethics
Reporting/advice channels
Risk analysis and management
Ethics managers, officers and committees
Ethics consultants
Ethics education and training
Stakeholder consultation, dialogue and partnership programs
Auditing, accounting and reporting
Evolution of business ethics management
Few, if any, businesses likely to use all tools and some do not use any
Escalating adoption of most if not all components (US and UK surveys)
Change in emphasis concerning the purpose of business ethics management
Previously primarily focused on managing employee behaviour
Increasing attention to management of broader social responsibilities
Setting standards of ethical behaviour
Designing and implementing codes of ethics
Codes of Ethics
Codes of ethics are voluntary statements that commit organizations, industries, or professions to
specific beliefs, values, and actions and/or set out appropriate ethical behaviour for employees
4 main types of ethical codes
Organizational or corporate codes of ethics
Professional codes of ethics
Industry codes of ethics
Programme or group codes of ethics
Prevalence of codes and ethics
Increasingly common
Substantial rise in usage during 1990s and 2000s
2/3 of large UK firms have some kind of formal ethical code whilst almost all large US firms
have a code of ethics (Weaver et al. 1999)
Less prevalent in Europe, and in SMEs (Spence and Lozano 2000)
Content of codes and ethics:
Prevalence of issues found in codes of conduct
Critiques of ethical codes
Clear prescription for employees means lack of flexibility
Difficulty with multiple/novel situations, particularly cross-cultural
Vague, generalised statements of obligation
PR device
Questionable control mechanisms that potentially influence employee beliefs, values and
behaviours
suppress individual moral instincts and emotions in order to ensure bureaucratic conformity
and consistency
Effectiveness of codes of ethics

Effectiveness of a code is in the implementation and administration

Suggestions for successful implementation
Maximise participation of organisation members in development stage to encourage
commitment and buy in (Newton, 1992)
Discipline employees found in breach (Webley 2001)
Follow-through (Trevio et al. 1999)
Global codes of ethics
Can organizations devise one set of principles for all countries in which they operate?
Consider some examples
Gift giving in Japan vs. the UK
Equal opportunity commitments in India vs. UK
MNEs should be guided by 3 principles
Respect for core human values
Respect for local traditions
Belief that context matters when deciding right and wrong
Global codes should define minimum ethical standards
E.g. OECD Guidelines for Multinational Enterprise, UN Global Compact
Managing stakeholder relations
Assessing stakeholder importance: an instrumental perspective
Instrumental perspective
Stakeholder impact analysis enable a company to identify the stakeholders most crucial to its
survival and to make sure that the satisfaction of their needs is paramount (Hill and Jones
2001:45)
3 key attributes likely to determine perceived importance or salience of stakeholders (Mitchell et
al., 1997)
Power
Legitimacy
Urgency
Types of stakeholder relationship
Challenge
Sparring partners
One-way support
Mutual support
Endorsement
Project dialogue
Strategy dialogue
Task force
Joint venture or alliance
Problems with stakeholder collaboration
Resource intensity
Culture clash
Schizophrenia
Uncontrollability
Co-optation
Accountability
Resistance

Assessing ethical performance

Areas of assessment
Ethical
Often a focus on internal management systems
Environmental
Impact on natural environment
Social
Broader remit, often including impact on stakeholders
Sustainability
Focus on triple bottom line
Social accounting as generic term
Defining social accounting
Social accounting is the voluntary process concerned with assessing and communicating
organisational activities and impacts on social, ethical, and environmental issues relevant to
stakeholders
Why do organizations engage in social accounting?
Both practical and moral reasons. Four main issues:
Internal and external pressure
Identifying risks
Improved stakeholder management
Enhanced accountability and transparency
Disincentives for social accounting:
Perceived high costs
Insufficient information
Inadequate information systems
Lack of standards
Secrecy
Unwillingness to disclose sensitive or confidential data
What makes for good social accounting? (I)
Inclusivity
Comparability
Completeness
Evolution
Management policies and systems
Disclosure
External verification
Continuous improvement
What makes for good social accounting? (II)
Schemes in place to tackle specific aspects of social accounting:
Auditing and certifying
Social accountability standards SA 8000
Reporting
The Global Reporting Initiative (GRI)
Reporting assurance
AA1000S Assurance Standard

Organizing for business ethics

Formal ethics programmes
Informal ethics management: ethical culture and climate
Organizations can and should proactively develop an ethical organizational culture
organizations with ethics problems should take a culture change approach to solving them
(Trevio and Nelson, 2007: 256)
Culture change approach (very problematic)
Improvements in ethical decision-making have been widely argued to require a managed
transformation of the organizations values in order to create a more ethical culture
Cultural learning approach (promotes moral imagination)
Focus on smaller subcultural groups within the firm
Factionalism and dissent in order to promote learning (Starkey 1998)
Business ethics and leadership
Leaders often said to set ethical tone in organisations
All leadership is value laden (Grint, 1997:325)
Cultural change approach
Leaders role to articulate and personify the values the organisation aspires to
Inspire and motivate employees to follow their lead
Cultural learning perspective
Role of leadership one of participation and empowerment in order to foster moral
imagination and autonomy
Ethical behaviour is not to be promoted simply through the promulgation of specific beliefs and
principles, but through facilitating personal moral engagement, dialogue, and choice (Crane,
Knights, and Starkey 2008)
Summary
Business ethics has varying approaches: e.g., in Europe emphasizes an external, socially based
orientation rather than concentrating on ethical codes to ensure compliance
Question effectiveness of ethical codes
Danger of overstating the benefits of business ethics management tools
Crucial role for the motivations of the use of these tools, the process of their development, and
the implementation and follow-up
Chapter 6
Shareholders and Business Ethics
Lecture 6
Overview
The nature of shareholder relations to the corporation
Analysis of the rights and the duties of shareholders
Specific ethical problems and dilemmas arising in the relation between companies and their
shareholders
The ethical implications of globalization on shareholder relations
The notion of shareholder democracy and the accountability of corporations to their shareholders
and other stakeholders
The differences in shareholder roles and corporate governance in various parts of the world
Perspectives on how shareholders can influence corporations towards sustainability

Shareholders as stakeholders
Understanding corporate governance
Crucial problem: separation of ownership and control
Peculiarities of corporate ownership
Locus of control
Fragmented ownership
Divided functions and interests
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
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
Corporate governance: a principal-agent relation
Shareholder and stakeholder relations: Different frameworks of corporate governance globally
Ethical issues in corporate governance
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
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
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
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
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 nonpublic 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
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)

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
Shareholders and globalisation
Global financial markets
Global financial markets are the total of all physical and virtual (electronic) places where
financial titles in the broadest sense (capital, shares, currency, options, etc.) are traded worldwide
Ethical issues raised:
Governance and control
National security and protectionism
Speculation (see slide on Tobin tax)
Unfair competition with developing countries
Space for illegal transactions (see slide on money laundering)
Reforming corporate governance around the globe
Some important shortcomings in present systems of governance in many countries
Main tool in Europe is codes of governance, dealing with:
Size and structure of board
Independence of supervisory or non-executive directors
Frequency of supervisory body meetings
Rights and influence of employees in corporate governance
Disclosure of executive remuneration
General meeting participation and proxy voting
Role of other supervising and auditing bodies
Legal basis and power of these codes varies dramatically
And the crisis in late 2000s has seen deeper state involvement
US response Sarbanes-Oxley
The Tobin Tax
Effort to impose control on global markets Tobin Tax tax on foreign currency transactions
Not make impossible but impede international currency speculation
Robin Hood Tax
Two main problems with tax:
Global enforcement
Does not differentiate between desirable and undesirable transactions
Combating global terrorism and money laundering
Deregulated social spaces are invitation for illegal financial activities
Money laundering estimated up to $1.5 trillion/year
IMF recommendations for banks to help reduction of money laundering
Know your customer
Prevent criminals getting control of key positions in banks
Identifying and reporting unusual/suspicious transactions

Raise general awareness for regulators and staff

Shareholders as citizens of the corporation
Shareholder democracy
Idea that a shareholder of a company is entitled to have a say in corporate decisions
Supported by legal claim based on property rights
Can shareholders be a force for wider social accountability and performance?
Three issues to consider:
Scope of activities
Adequate information
Mechanism for change
Two approaches to ethical shareholding
Shareholder activism
Buy shares in company for right to speak at the AGM
Voice concern and challenge the company on allegedly unethical practices
Possibility of broad media attention by disrupting the meeting
Issues:
Gets involved with the enemy
Only an option for reasonably wealthy individuals
Socially responsible investment (SRI)
Ethical investment is the use of ethical, social and environmental criteria in the selection
and management of investment portfolios, generally consisting of company shares
Ethical investment
Examples of positive and negative criteria for ethical investment
Negative criteria
Alcoholic beverages production and retail
Animal rights violation
Child labour
Companies producing or trading with oppressive regimes
Environmentally hazardous products or processes
Genetic engineering
Nuclear power
Poor employment practices
Pornography
Tobacco products
Weapons
Positive criteria
Conservation and environmental protection
Equal opportunities and ethical employment practices
Public transport
Inner city renovation and community development programmes
Environmental performance
Green technologies
Ethical Investment

Main concerns with SRI movement

Quality of information
Most information provided by firms and is difficult to verify
Dubious criteria
See table in previous slide
Too inclusive
90% of Fortune 500 firms are held by at least 1 SRI fund
Strong emphasis on returns:
Usually, SRI fund managers screen for performance first, then select using ethical criteria
Firms taking longer-term perspectives and thus sacrificing short-term profitability
therefore unlikely to be included
(See Vogel, 2005)
Shareholding for sustainability
The Dow Jones Sustainability
Group Index
Best-in-class approach
Family of indexes comprising different markets and regions (e.g. Asia-Pacific sub-index added
in 2009)
Companies accepted into index chosen along following criteria:
Environmental (ecological) sustainability
Economic sustainability
Social sustainability
Criticisms of index:
Depends on data provided by the corporation itself
Questionable criteria used by index
Focuses on management processes rather than on the actual sustainability of the
company or its products
Rethinking sustainable corporate ownership: alternative models?
Government ownership:
Part of the landscape in many parts of the world. Resurgent in the wake of the late-2000s
financial crisis (esp. banks and cars).
Family ownership
Families may have longer-term goals, but may not treat stakeholders any better than
MNCs
Co-operative ownership
Hybrid businesses, not owned by investors or managers
Owned and democratically controlled by workers or customers
Not set up to make profit but to meet the needs of members
Spanish Mondragon co-operative has made a striking contribution to sustainability while
staying highly profitable
Summary
Principal-agent relationship between managers and shareholders
Divergent interests and unequal distribution of information institutionalises some fundamental
ethical conflicts in governance
Shareholders have considerable opportunities to use their power over supply to influence
corporations to behave more ethically

Shareholders can play a role in driving corporations towards enhanced sustainability by their
investment decisions at the stock market
Chapter 7
Employees and Business Ethics
Lecture 7
Overview
The specific role of employees among the various stakeholder groups
Core ethical topics of employees rights and duties
Ethical issues and problems faced in business-employee relations
The duties of employees and the companys involvement in enabling employees to live up to
their duties
The notion of corporate citizenship in relation to employees
Basic issues and problems of managing employees in the context of globalization
Explore the notion of corporate citizenship in relation to employees
The implication of sustainability for workplaces and for specific working conditions
Ethical issues in the firm-employee relation
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
Rhetoric and reality in HRM
Rights of employees as stakeholders of the firm
Duties of employees as stakeholders of the firm
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
Women in top management positions
Female Directors in FTSE 100 Companies 2000-2008
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)
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
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
Employee privacy
Four different types of privacy we may want to protect (Simms 1994)
Physical privacy
Social privacy
Informational privacy
Psychological privacy
Health and drug testing
Highly contested issue
Three main issues
Potential to do harm
Causes of employees performance
Level of performance
Despite these criticisms, such tests have increasingly come common in the US
Electronic privacy and data protection
Increasingly relevant as technology advances and electronic life becomes more important
Computer as a work tool enables new forms of surveillance
Time and pace of work
Usage of employee time for private reasons
E-mail and internet
Issue of privacy in situations where data is saved and processed electronically
Data protection
Due process and lay-offs
Ethical considerations in the process of downsizing
Right to know well ahead of the actual point of the redundancy that their job is on the
line
Compensation packages employees receive when laid off
Employee participation and association
Recognition that employees might be more than just human resources but should also have a
certain degree of influence on their tasks, job environments, and company goals right to
participation
Financial participation allows employee share in the ownership or income of the corporation

Operational participation can include a number of dimensions:

Delegation
Information
Consultation
Codetermination
Evolution of trade union membership
Working conditions
Right to healthy and safe working conditions one of the very first ethical concerns for employees
Dense network of health, safety and environmental (HSE) regulation
Main issue is enforcement and implementation
Newly emergent HSE issues relate to changing patterns of work
Ethical issues in the context of:
Excessive working hours and presenteeism
Flexible working patterns
Excessive working hours and presenteeism
Excessive work hours
Thought to impact the employees overall state of physical and mental health
Presenteeism
phenomenon of being at work when you should be at home due to illness or even just for rest and
recreation (Cooper 1996)
Flexible working patterns
Another way of saying that management can do what it wants? (Legge, 1998)
Non-standard work relationships
Part-time work, temporary work, self-employment and teleworking (Stanworth 2000)
Less secure legal status for periphery workers
Potential for:
Poorer working conditions
Increased insecurity
Lower pay
Exclusion from training and other employment benefits
Fair wages
The basis for determining fair wages is commonly the expectations placed on the employee and
their performance towards goals
Note discussion about excessive compensation for executives after the stock market
collapse of 2008
Problems of performance-related pay (PRP)
Risk
salaries and benefits become less secure
Representation
individualized bargaining
Freedom of conscience and freedom of speech in the workplace
Normally guaranteed by governments
Situations in business where freedom of speech might face certain restrictions
Speaking about confidential matters related to the firms R&D, marketing or accounting plans

Usually unproblematic, since most rational employees would find it in their own best
interests to comply with company policy
Some cases where those restrictions could be regarded as a restriction of employees
rights
Whistleblowing can involve considerable risk
The right to work
Fundamental entitlement of human beings established in the Declaration of Human Rights
The right to work in a business context cannot mean that every individual has a right to be
employed
The right to work should result in every individual facing the same equal conditions in exerting
this right
Employing people worldwide
The ethical challenges of globalization
National culture and moral values
Different cultures will view employee rights and responsibilities differently
This means that managers dealing with employees overseas need to first understand the cultural
basis of morality in that country
Raises the question of whether it is fair to treat people differently on the basis of where they live
Relativism vs. absolutism
Absolutism: ethical principle must be applicable everywhere
Relativism: view of ethics must always be relative to the historical, social and
cultural context
The race to the bottom
Many critics argue that MNCs play a role in changing standards in countries
Globalisation allows corporations to have broad range of choice of location
Developing countries compete to attract foreign investment
Large investors tend to choose country with most preferable conditions
Lowest level of regulation and social provision for employee
Leads to race to the bottom in environmental and social standards
Argument that MNEs have a duty to promote minimally just social & political
institutions where they operate if these do not exist, because of duty to avoid harm (Nienh Hsieh, 2009)
Migrant labour and illegal immigration
Growing mobility of workers is a recent phenomenon of globalization
Typically north-south, can also be in other regions (e.g. UAE)
Workers can also be attracted to particular industries in areas where there is no local
labour (e.g. mining)
Numerous ethical issues here. Examples:
Migrant labour often leads to questionable social phenomena (e.g. drug use)
Migrants are often from poor countries; willing to accept pay & working conditions
normally unacceptable in host country
Migrant workers are often in a country illegally (but a record of employment may later be
the basis for legal residency)
The corporate citizen and employee relations
The corporate citizen and employee relations in a global context
Anglo-American and European models: differences

Continental Europe takes interest of employees into account to a greater degree than the
Anglo-American model
Co-determination
In developing countries
Level of regulation (or at least enforcement) is often poor, though employee protection
often strengthens over time (e.g. Chinas 2008 Labour Contract Law)
Corporate actions therefore often voluntary good citizenship
Ruggies framework for responsibility in human rights
Protect (states duty to prevent abuses)
Respect (firms duty to respect human rights)
Remedy (general duty to create systems to remedy abuses)
Towards sustainable employment
Re-humanized workplaces
Alienation of the individual work in the era of industrialised mass production
Brought tremendous efficiencies and material wealth, but have also created the prospect of a
dehumanised and deskilled workplace
Attempts to re-humanize the workplace
empowering the employee
job enlargement
job enrichment
Success of such schemes contested
Suggested that humanized approach might be more appropriate and effective in some cultures
(e.g. Scandinavia) than others
Wider employment
Large numbers of unemployed people becomes the norm in many countries due to mechanisation
This threatens:
Right to work
Social fabric of particular communities
New technologies herald the end of work? (Rifkin 1995)
From sustainability perspective: ensure that what work exists is shared out more equitably
Green jobs
Green jobs are:
In industries making environmentally-friendly products
Workplace & organization of labour is also more environmentally sustainable
Gained attention in late 2000s; part of broader debate on restructuring economies to be more
sustainable
Examples of specific measures:
Car-pooling
Paperless office
Video-conferencing rather than business travel
Home-based teleworking
Potential benefits are social, economic and ecological
Summary
Discussed the specific stake that employees hold in their organizations
Discovered how deep the involvement of corporations with employees rights can be

Corporate responsibility for protection and facilitation of these rights is particularly complex and
contestable when their operations become more globalized
Considered corporate citizenship and employee relations in different contexts
Chapter 8
Consumers and Business Ethics
Lecture 8
Overview
Discuss the specific stake that consumers have in corporate activity
Outline the ethical issues and problems faced in business-consumer relations
Examine issues in context of globalization
Arguments for more responsible marketing practices
Develop notion of corporate citizenship in relation to consumers
Examine the challenges posed by sustainable consumption
Consumers as stakeholders (I)
Commonplace argument that businesses are best served by treating their customers well
So why continued ethical abuses of consumers and poor reputation of marketing and sales
professions?
Examples of organizations accused of treating customers in a questionable manner:
Multinational drug companies
Fast food and soft drink companies
Banks and credit card companies
Mobile phone companies
Technology companies
Schools
Consumers as stakeholders (II)
Consumer rights can be seen as:
inalienable entitlements to fair treatment when entering into exchanges with sellers. They rest
upon the assumption that consumer dignity should be respected, and that sellers have a duty
to treat consumers as ends in themselves, and not only as means to the end of the seller.
Debate over what constitutes fair treatment
In the past, consumer rights based on caveat emptor
But Caveat emptor eroded by changing expectations & consumer laws
Ethical issues and the consumer
Ethical issues, marketing and the consumer
Ethical issues in marketing management product policy
At the most basic level, consumers have a right to products and services which are safe,
efficacious, and fit for the purpose for which they are intended
Manufacturers ought to exercise due care in establishing that all reasonable steps are taken to
ensure that their products are free from defects and safe to use (Boatright, 2009: 295)
Consumers right to a safe product is not an unlimited right
Safety also a function of the consumer and their actions and precautions
Ethical issues in marketing management marketing communications (I)
Criticisms of advertising broken down into two levels

Individual
Concerned with misleading or deceptive practices that seek to create false beliefs about
specific products or companies in the individuals consumers mind
Social
Concerned with the aggregate social and cultural impacts, such as promoting
materialism
Ethical issues in marketing management marketing communications (II)
Misleading and deceptive practices
Marketing communications aimed to:
Inform consumers about goods and services
Persuade consumers to purchase
Deception occurs when a marketing communication either creates, or takes advantage of, a false
belief that substantially interferes with the ability of people to make rational consumer choices
(Boatright, 2009: 285)
The UKs Advertising Standards Authority says ads should be legal, decent, honest and
truthful
Ethical issues in marketing management marketing communications (III)
Social and cultural impact on society
Objections that marketing communications:
Are intrusive and unavoidable
Create artificial wants
Reinforce consumerism and materialism
Create insecurity and perpetual dissatisfaction
Perpetuate social stereotypes
Such criticisms have been common for at least the last 30 years
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
Ethical issues in marketing management distribution
Concerned with relations between manufacturers and firms, and firms and market
Primary concern is product supply chain
Example: retailers demanding slotting fees from manufacturers in order to stock their
products
Dealt with in detail next chapter
Ethical issues in marketing strategy vulnerable customers
Criticisms when there is a perceived violation of the consumers right to be treated fairly (duty of
care):
Targeting vulnerable consumers
Consumers may be vulnerable because;

Lack sufficient education or information

Easily confused or manipulated due to old age and senility
Are in exceptional physical or emotional need
Lack the necessary income
Too young
Perceived harmfulness of the product
Examples: cigarettes and alcohol
Here, the focus shifts from rights/duties to consequences
Ethical issues in marketing strategy customer exclusion
Takes variety of forms
Access exclusion
Condition exclusion
Price exclusion
Marketing exclusion
Self-exclusion
Ethical issues in market research
Main issue is possible threats posed to the consumers right to privacy
Recent areas of concern:
Personal information available online
Example: Phorms advertising targeting service, which British Telecom trialled
without consent
Use of genetic testing results by insurance companies
Predict likelihood of an individuals genetic predisposition to certain conditions
and illnesses
genetic discrimination?
Globalisation and consumers
The ethical challenges of the global marketplace
Issues around marketing in a global marketplace
Globalization has brought a new set of problems and issues relevant to consumer stakeholders
Different standards of consumer protection
Consumer protection varies widely in terms of government regulation and company
standards
Example of tobacco
Exporting consumerism and cultural homogenization
Global brands huge success has led to increasing concerns over standardization and
uniformity
Considerable debate around role of advertising in promoting consumerism in emerging
and transitional economies
The role of markets in addressing poverty and development
Globalization also raises prospect of firms targeting products to low income consumers
Bottom of the pyramid concept
Examples of successful initiatives:
Microcredit institutions (e.g. Brazil)
High nutrition yoghurt company (Bangladesh)
One Laptop Per Child
Criticism

Bottom of the pyramid is a mirage: profit opportunities limited

Social purpose and CSR probably more important than profit motive in developing
inclusive markets
Consumers and corporate citizenship
Consumer sovereignty and the politics of purchasing
Consumer sovereignty
Concept suggests that under perfect competition, consumers drive market
Two ethical limitations based on fairness
Consumer sovereignty customer is king
Consumer sovereignty has three elements (Smith, 1995)
Consumer capability
Information
Choice
How is consumer sovereignty to be assessed? Consumer sovereignty test
Consumer sovereignty test
Ethical consumption
Ethical consumption is the conscious and deliberate decision to make certain consumption
choices due to personal moral beliefs and values
Recent 51-market survey on consumer attitudes:
70% of global consumers said their purchase decision could be influenced by a product
supporting a worthy cause
But socially-desirable answers may not correspond to behaviour
Consumer activism on increase positive
Downside of ethical consumption
Motives of corporations will be primarily economic rather than moral
Consumers may decide they no longer want to or can afford to pay extra for these ethical
accessories
If purchases are votes then rich get more power than poor
Sustainable consumption
What is sustainable consumption?
Sustainable consumption is: the use of goods and services that respond to basic needs and
bring a better quality of life, while minimising the use of natural resources, toxic materials and
emissions of waste and pollutants over the life-cycle, so as not to jeopardise the needs of future
generations (European Environment Agency definition)
The challenge of sustainable consumption
Steps towards sustainable consumption
Producing environmentally responsible products
e.g. Eco-labels are important
Product recapture
See Figure, next slide
Service replacements for products
Selling (e.g.) mobility rather than cars, or leasing photocopiers
Product sharing
Examples: car-sharing, washing-machine-pooling
Reducing demand
Example of Chinas ban on free plastic bags

Implementing the polluter pays principle to create financial incentive for lower
consumption
Product recapture
From a linear to a circular flow of resources
Summary
Chapter 9
Suppliers, Competitors and Business Ethics
Lecture 9
Overview
Show how other businesses suppliers and competitors exist in mutual interdependence with a
given organization
Describe the ethical issues and problems that arise in an organisations dealings with its suppliers
and competitors
Outline how globalization reframes these problems
Discuss whether corporations should assume some degree of extended responsibility for the
ethics of their suppliers
Assess the arguments suggesting that attention to business interrelationships and the network
economy may contribute to more sustainable business models
Suppliers and competitors as stakeholders
Suppliers as stakeholders
A stakeholder of a corporation is an individual or a group that either is harmed by or benefits
from the corporation or whose rights can be violated, or have to be respected, by the corporation
(Evan and Freeman 1993)
Organisations and their suppliers can be seen as mutually dependent
Competitors as stakeholders
Forgotten stakeholders? (Spence et al. 2001)
Legal rights (e.g. not influencing others pricing)
Moral claims (e.g. right to fair play)
So, businesses should not be seen as isolated islands of economic activity, but as actors operating
within a web of other businesses, bound by mutual interests and interlinked flows of resources
and rewards
Firms thus best understood as part of industrial network

Supplier relationship as part of an industrial network

Ethical issues and suppliers
Ethical issues (I)
Misuse of power
Resource dependence theory can help understand relative power of buyer and seller
The question of loyalty
Doesnt fit easily with economic view of firm, but can create mutually-beneficial
outcomes
Preferential treatment
Big challenge: procedural justice approach can help

Conflicts of interest
A conflict of interest occurs when a person or organizations obligation to act in the
interests of another is interfered with by a competing interest that may obstruct the
fulfilment of that obligation
Ethical issues (II)
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 organizations have a formal purchasing code of ethics
Guidelines provided by professional bodies such as the International Chartered Institute of
Purchasing and Supply
Ethics of negotiation (I)
Ethics and negotiation oil and water?
Here are ten popular negotiating actions, all of which can be challenged on ethical grounds
(Reitz et al.,1998):
Lies
Puffery
Deception
Weakening the opponent
Strengthening ones own position
Non-disclosure
Information exploitation
Change of mind
Distraction
Maximisation
Ethics of negotiation (II)
A more ethical approach to negotiating should steer clear of these tactics. This is because:
It is the right thing to do
Such practices incur costs for the negotiator. These are:
Rigid negotiating encourages narrow tactics
Damaged relationships risk of enmity
Sullied reputation making future bargaining troublesome
Lost opportunities tends to prevent progressive discussions that open up new issues
Basic idea: negotiation is not so much zero-sum as a chance to build mutually-beneficial
relationships
Ethical issues and competitors
Problems of overly aggressive competition
Intelligence gathering and industrial espionage create ethical questions when
Questionable tactics
Private or confidential information
Purpose for which information gathered is against public interest
Dirty tricks
Negative advertising
Stealing customers

Predatory pricing
Sabotage
Anti-competitive behaviour
Problems of insufficient competition
Collusion and cartels
Select groups of competitors band together in a cartel or trading group to fix prices and
other trading arrangements for their own mutual benefit
Abuse of dominant position
E.g. Microsoft
Globalization, suppliers, and competitors
The ethical challenges of global business networks
The ethical challenges of global business networks
Reshaping of ethical consideration with suppliers and competitors brings up:
Different ways of doing business
Impacts on indigenous businesses
Differing labour and environmental standards
Extended chain of responsibility
Different ways of doing business (I)
Different ways of doing business (II)
Impacts on indigenous businesses
Size, power and political influence of MNCs often means that they enjoy considerable cost and
other advantages compared to local competitors
Offer employment alternatives to people who would otherwise start their own business (Spencer,
2008: 341)
Exposure to the competition of a major multinational can severely threaten the business of
indigenous competitors (Klein, 2000)
Differing labour and environmental standards
Western firms increasingly sourced through global supply chains
Race to the bottom occasioned by demand by MNCs for lower-cost production in developing
countries
Ethical problem = lower costs often accompanied by sweatshop conditions
poorer labour conditions
less environmental protection
lower attention to health and safety
Extended chain of responsibility
Shifts towards global supply and competition mean that individual firms appear to be faced with
prospect of an extended chain of responsibility
No longer acceptable to argue that the ethics of a firms suppliers or a firms impact on its
competitors was simply not any of its business (see Emmelhainz and Adams 1999)
The corporate citizen in the business community
Ethical sourcing and fair trade
Ethical sourcing
Ethical sourcing is the inclusion of explicit social, ethical, and/or environmental criteria into
supply chain management policies, procedures and programmes

Suppliers willingness to comply or resist pressure to certify (e.g. ISO 14001) is strongly
determined by the type of relationship they have to the companies that purchase from them
(Delmas and Montiel 2009)
Suppliers with a high dependence on their customers are more likely to comply
as are relatively new entrants to the industry
For suppliers, the public act of gaining ethical certification can act as a way of reducing
information asymmetries between themselves and potential buyers
Business-business regulation
Ethical sourcing as business-business regulation
Pressure exerted by powerful corporate customers to comply with ethical sourcing
guidelines and criteria constitutes strong and often very effective regulation of supply
chain members (Locke and Romis, 2007)
Strategies of business-business regulation
Disengagement
Setting of clear standards for suppliers and a means for assessing compliance with those
standards
Failure to meet standards in short- medium term will result in disengagement by the
company
Engagement
Rely on longer-term aims together with incremental targets in order to foster a stepby-step approach to improving standards.
Firm likely to work with their suppliers to achieve improvements
Fair trade
Fair trade is a system aimed at offering the most disadvantaged producers in developing
countries the opportunity to move out of poverty through creating market access under beneficial
rather than exploitative terms. The objective is to empower producers to develop their own
business and wider communities through international trade (Nicholls & Opal 2005: 6)
Aims of fair trade movement
Foster the protection and empowerment of growers
Encourage community development by guaranteeing minimum prices and conditions
In 2008, Fair Trade sales grew 22% (est. 2.9Bn)
But success could put pressure on ethical standards
Challenges also from recruiting employees with mainstream business skills (Davies &
Crane, 2010)
Comparison: Fairtrade & New York Prices for Cocoa, 1994-2009
Sustainability and business relationships
Towards industrial ecosystems?
From supply chains to supply loops
Supply loops are product end-of-life management strategies that fulfil two criteria (Geyer and
Jackson, 2004):
They divert end-of-life products from landfill or incineration by collecting them for
economic value recovery
The reprocessing of these end-of-life products produces secondary resources that replace
primary resources in forward supply chains
To proponents, such closed loop supply chain models have are not only waste reducing, but
eliminate the very concept of waste (Lovins, Lovins, and Hawken 1999).

Also, important potential sources of value recovery

Industrial ecosystems
Kalundborg industrial ecosystem
Summary
Discussed the stake held by other companies in a corporation
Argument that there were issues of an ethical nature that went well beyond the legal protection of
fair competition
Globalisation substantially increased scope of these problems suggesting expanded
responsibilities for corporations over their operations
Business relationship also increasingly seen as one of main levers for effecting greater attention
to social and environmental problems
Chapter 10
Civil Society and Business Ethics
Lecture 10
Overview
Show how the role played by various types of civil society organizations 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 globalization 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
Civil Society as third sector
Civil society organizations
Civil society organizations include a whole plethora of pressure groups, nongovernmental organizations, charities, religious groups, and other actors that are neither business
nor government organizations, but which are involved in the promotion of certain interests,
causes, and/or goals
Diversity in CSO characteristics
Civil society organizations as stakeholders
Civil society organizations as stakeholders
The growth in the number, power and influence of CSOs represents one of the most important
societal developments in the past twenty years, in terms of how the dynamics of public debates
and government policies concerning corporate behaviour are changing (Yaziji and Doh, 2009:
16)
The stake held by CSOs is largely one of:
Representing the interests of individual stakeholders
Representing the interests of non-human stakeholders
Different types of CSOs
Degrees of trust in different types of organization in selected global regions
Ethical issues and CSOs
Recognizing CSO stakes
Many CSO 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
Ignoring CSOs may have detrimental long-term consequences
CSO tactics
Indirect action
Sometimes criticised for providing 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
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
Some well-known boycotts
CSO accountability
CSO stakeholders might be said to include:
Beneficiaries
Donors
Members
Employees
Governmental organizations
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 supposed beneficiaries tends to raise 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
Globalization and civil society organizations

Globalization and civil society organizations

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 (e.g. China)
Global issues and causes
Problems that transcend national boundaries (e.g. climate change, water
conservation, human rights)
Critique of globalization
Globalization of CSOs
the resistance will be as transnational as capital
Global civil society
Corporate citizenship and civil society
Charity, collaboration, or regulation?
Charity and community involvement
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.
Types of involvement:
Corporate foundations to channel philanthropy
Employee volunteering. This allows achievement of the following aims (Muthuri,
Matten, and Moon 2009):
Making a meaningful social contribution
Contributing to the development of their human resources
Enhancing the firms reputation
Increasing employee morale
Building social capital within the community
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
Some examples of business-CSO collaborations
Drivers towards business-CSO collaboration
Social enterprise
The escalating number of CSO alliances with businesses suggests an increased attention in the
sector to using market-based solutions to address social problems
Venture Philanthropy, also called philanthrocapitalism
application of venture capital techniques to grant making (Moody 2008)

Social enterprise
Has developed since the 1990s
Novel way of embedding dual social and economic goals into the nature of organizations:
social enterprises are designed to address social problems from the outset
Key differences between social enterprise, CSOs & corporations
Problems with social enterprise
Compromise of social mission
Demands of the marketplace can lead to mission drift
Moral legitimacy
The more business-like social enterprises become, the less moral legitimacy they may
have for key stakeholders
Escalation of risk
Social enterprise tends to emphasise risk taking and innovation which can pose threats to
essential services and clients
Prioritisation of profitable markets
The need for sustainable revenue encourages a focus on potentially profitable social
goods and services, rather than unprofitable areas where clients might be more needy
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 points
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
CSOs are now part of systems or regimes of global governance (e.g. Vogel 2008)
Civil society, business, and sustainability
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
This is a battle of green vs. green (Lynas, 2008)
Fostering participation and democracy
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, 2000:249)
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
Chapter 11
Government, Regulation, and Business Ethics
Lecture 11
Overview
The specific stake that governments have in corporate activity
The ethical issues and problems faced in business-government relations
The shifts in these issues and problems in context of globalization
Further develop the notion of corporate citizenship by analysing the changing role of business
and CSOs
Challenges posed by sustainability to business-government relations and show the importance of
strong governmental regulation for achieving potentially sustainable solutions
Government as a stakeholder
Defining government, laws, and regulations
Government
variety of institutions and actors at different levels that share a common power to issue
laws
Laws
serve as a codification into explicit rules of the social consensus about what a society
regards as right and wrong
Regulation
rules that are issued by governmental actors and other delegated authorities to constrain,
enable, or encourage particular business behaviours. Regulation includes rule definitions,
laws, mechanisms, processes, sanctions, and incentives
Government as a stakeholder of business
Government as a representative of citizens interests
Unlike many other stakeholders, government in principle represents an entire community since it
is elected by the citizens of a certain town, region, country or even continent
In this role as the elected representative of citizens interests
Defines the conditions for the licence to operate of business
Restricting business
Enabling business
Debate about the degree of governmental responsibility for a functioning economy
Laissez-faire vs. forceful role in industrial policy
Government as an actor (or group of actors) with interests of its own
Governments have a self-interest to be re-elected
Governments very dependent on business
Governments also compete with business
Ethical issues in the relation between business and government
Identifying the basic problems and issues:
legitimacy, accountability and modes of influence
Main source of ethical problems stems from fiduciary relation to society in general
Government therefore in bipolar situation

Legitimacy of business influence

Business can have a significant influence on the implementation and direction of governmental
policies. It is therefore to no surprise that the issue of public sector ethics has gained enormous
momentum (Dobel 2007). The main ethical consideration arising from this situation is twofold
legitimacy of business influence;
accountability.
Is power and political influence of business leaders a threat to democracy?
To what degree is it legitimate for business to have an influence in politics?
Accountability to the public
One may contend that since the government acts as a representative of societys interests, the
public has a right to be informed about governmental decisions with other constituencies (such as
business), and be able to determine whether it is acting in its interests or not
Although both parties are able to influence each other, the main concerns for business ethics are
where business has influence on government
Modes of business influence
on government
Numerous ways that business can influence government
Oberman (cited in Getz 1997:59) distinguishes among different ways, using following criteria:
Avenue of approach to decision-maker
Direct
indirect
Breadth of transmission
Public
private
Content of communication
Information orientated
Pressure orientated
Business influence on government
Lobbying
Lobbying represents a direct, usually private attempt by business actors to influence
governmental decision-making through information provision and persuasion.
It is considered a weak form of influence (McGrath 2005)
Different types of lobbying:
Atmosphere setting
Monitoring
Provision of information to policy-makers
Advocacy and influencing
Application of pressure
Party financing and individual conflicts of interest
Donations to parties by business can raise conflict of interest problems
Prospect of preferential treatment
The situation is a dilemma: having good relations with political parties seems necessary, but
party financing has dangers
It gains influence
but it could severely harm the companys image and perhaps encourage questionable
behaviour on the part of employees

Overlap of posts between business and government

Revolving doors common globally (e.g., US, Europe, Japan)
This raises substantial conflicts of interest
Corruption of governmental actors by business
Corruption is the abuse of entrusted power for private gain (Transparency International)
Main issue of government corruption in relation to business is activities where private
firms shape the formulation, implementation, or enforcement of public policies or rules
by payments to public officials and politicians
State capture is a situation where private firms shape the formulation of regulation by payments
to public officials and politicians
Where state capture becomes a universal law (Kant), a normally functioning economy
becomes nearly impossible
2008 Corruption Perception Index for selected countries
Note: Score relates to perceptions of the degree of corruption among government officials as
seen by business people and risk analysts, and ranges between 10 (highly clean) and 0 (highly
corrupt)
Source: Taken from Transparency International Corruption Perception Index, 2004
(www.transparency.org)
2008 Corruption Perception Index for selected countries
Ethical issues in the context of privatization and deregulation
Privatization profits
Key issue is a fair price
Citizens turned consumers
Economic basis for decisions, rather than political
Natural monopolies
Can lead to over-charging or delivering poor quality
PPPs, Public-private-partnerships
Private sector profit-maximization tends to dominate at the expense of quality and
effectiveness for citizens
Globalization and business-government relations
Globalization and business-government relations
Globalization defined as the progressive eroding of the relevance of territorial bases for social,
economic, and political activities, processes, and relations
British political scientist Anthony McGrew has described this in terms of a transition from a
traditional to a global context, which he calls the post-Westphalian setting (Held and McGrew
2000)
From the national to the global context
When globalisation deterritorializes social, economic and political action, the significance of
these nation states is weakened.
This transition is summarized as:
Society
Holder of political power
Manifestation of political activity

Addressee of regulation
Intensity of regulation
Democratic control of political power
Globalization, government, and business: changing context
Globalization, government, and business: changing roles
Business as an actor within the national context (Westphalian setting)
Businesses are still located within nation states and they are therefore still subject to national
law, which we have called imperative regulation
Problematic: Situations where business becomes an actor in authoritarian and oppressive
regimes
Business as an actor in the global context (post-Westphalian setting)
On a global level, corporation assume a more dominant role while governments bound by their
confinement to territorial boundaries have only limited influence beyond national boundaries
Result is so-called race to the bottom
Business-government relations in international trade regimes
Several transnational government institutions have significant impact on business
Regional bodies: EU, NAFTA, ASEAN
EU is particularly significant, due to its strong legislative powers
Global players: WTO or World Bank
Role of these bodies is to enable trade and exchange of goods and services
Double-edged sword:
They can enable access to cheap labour and larger markets
But the same institutions increase competition and in some ways limit business
Corporate citizenship and regulation
Business as key player in the regulatory game
Corporate citizenship and regulation:
business as key player in the regulatory game
Debate over how to improve rulemaking
Business involvement through self-regulation or reflexive regulation and corporatism
Reasons for new forms of regulation:
Encouragement of a proactive approach from industry
And the hope/assumption of
Cost-effectiveness
Faster achievement of objectives
Examples of regulatory outcomes on different levels in a multi-actor setting
Governments, business and sustainability
Global climate change legislation and business responses: Support vs. obstruction
The debate on climate change regulation has been a key political arena of sustainability
CO2 reductions represent a big threat for some industries
Result: Global Climate Coalition, to lobby against regulation
Variable success (and the coalition has been disbanded)
In Europe, public appetite for action, so firms lobbied to shape the regulation that
emerged. ETS introduced in 2005
Strictest approach, but uses market mechanisms, flexibly
In Australia, Canada, USA, lobbying was against action
Global supply of food and water is another key issue

Bolivian example of ethical issues in water privatization

Volatility of global markets for wheat and rice, exacerbated by rise of biofuels
Summary
We have:
Looked at the stake held by government in business and set out how the role of government and
its central task of issuing regulation for business, affects this stakeholder relationship
Discussed the complex role of governments and the interdependencies and mutual interests that
they have with business
Looked at the way globalisation shifts the role of business and government in regulating issues
of relevance to business ethics
Seen how sustainable development can clash too strongly with short-term profit goals of
business to be left to merely voluntary approaches
Chapter 12
Conclusions and Future Perspectives
Lecture 12
Overview
Reiterate the role, meaning, and importance of business ethics
Summarize the influence of globalization on business ethics
Assess the value of the notion of sustainability
Discuss the role and significance of stakeholders as a whole for ethical management
Review the implications of corporate citizenship thinking for business ethics
Summarise the contribution of normative ethical theories to business ethics
Consider the benefits of thinking about ethical decision-making
Assess the role of specific tools for managing business ethics
The nature and scope of business ethics?
The simple question of what is business ethics? does not exactly lend itself to a simple answer
Particularly with the relationship between ethics and the law:
Corporations sometimes supplement/replace the law-making process with selfregulation;
Sometimes they challenge, resist, and subvert legalistic approaches to enforcing
ethical behaviour
New problems continue to arise because of:
New technologies
Changes in business practices or markets
Exposure to different cultures
Changing expectations
New opportunities for ethical abuse
Scope of business ethics is thus ongoing and dynamic
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

Sustainability as a goal for

business ethics
The challenge posed by sustainability for business ethics is huge
Potentially threatening to existing corporate ways of thinking, organising and behaving
Sustainability implies goals that lie beyond the time horizons of business, and which
might be thought to jeopardise traditional bottom-line goals
Often trade-off between the different elements
Without strong governments issuing legislation and/or developing new institutional
arrangements, business progress is unlikely to be sufficient to meet sustainability goals
Corporate citizenship and business ethics
Two major points
CC in the extended view identifies the corporate involvement in the administration of
citizenship rights, most notably social, civil, and political rights
Alongside this role, the question of accountability automatically surfaces, and here the
picture is not so bright
The contribution of normative ethical theories to business ethics
These theories rarely provide us with a clear-cut, unambiguous, and non-controversial solution
This book could be argued to be closer to a postmodern perspective: ethical theories are at best
tools to inform the moral sentiment of the decision-maker
Ethical theories might help to structure and rationalise some of the key aspects of those
decisions, but their status can never be one that allows a moral judgement or decision to be made
without effectively immersing into the real situation
Influences on ethical decision-making
Descriptive ethical theories helped us to understand the way in which people in organizations
actually made decisions about business ethics
Given the increasingly internationalization of business, we might suggest that the national and
cultural influences on decision-making will become more important, but less clear-cut
The role of management tools in business ethics
Business ethics is about more than just managing with tools and techniques; it is about
expanding horizons, deepening understandings, and developing critical thinking about business
practices
It is not really a separate branch of management, but pertains to every traditional branch or
aspect of management, such as marketing, finance and strategy
A crucial role is likely to be played by:
Social auditing and reporting
Stakeholder dialogue
Employee participation
Shareholder democracy
Business-CSO partnership
Codes of ethics
The role of different stakeholder constituencies in business ethics (I)
Their significance varies in different contexts, issues, and topics
Normative and instrumental approaches
Shareholders
Remain a key stakeholder group for the corporation
Shareholder activism (and SRI)

Employees
European context, this group has a strong legal position
However, new working practices, increased flexibilization have appear to have weakened
the stake of employees somewhat in recent years
Suppliers
Little legal protection
The role of different stakeholder constituencies in business ethics (II)
Consumers
Interesting role since they have always been of utmost instrumental importance to
business ethics, but their normative claims would seem weaker than other constituencies
Ethical purchasing
Competitors
Often lowest priority for corporations
CSOs and governments
Most complex and dynamic role
CSOs have heralded and pushed crucial ethical issues but legitimacy remains open to
contestation
Government seem to be losing some of their traditional power in issuing and enforcing
regulation
Crucial innovation is that the relationship develops more into a partnership than the
previously dependent role of business
Trade-offs and conflicts
One of most challenging tasks of ethical management is effective and appropriate balance
between competing stakeholder expectations and claims
E.g. shareholders profits and employee jobs
Zero-sum game versus positive-sum game