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This chapter opens with a brief discussion of the nature of business ethics, its significance for corporations and the ethical dimensions of a corporation’s stakeholder relationships. The next section is focused on the causes of ethical problems: bad apples, bad cases and bad barrels. In order to examine these it presents the theory related to each before drawing on three case studies: the HIH failure, the LIBOR case and the destruction of Juukan Gorge. The extent to which we attempt to encourage ethical conduct is discussed in the following section. In particular, that section examines corporate accountability, individual accountability and organisation-level approaches that seek to shape the ethical conduct of corporations. The final section is devoted to some concluding remarks.
Deferred prosecution agreements (DPAs) are legal means, alternative to trial, for the resolution of criminal business cases. Although DPAs are increasingly used in the US and are spreading to other jurisdictions, the ethics of DPAs has hardly been subjected to critical scrutiny. We use a multidisciplinary approach straddling the line between philosophy and law to examine the ethics of DPAs used to resolve cases of multinational enterprises’ (MNEs) foreign corruption. Deontologically, we argue that the normativity of DPAs raises critical concerns related to the notion of justice as punishment, with serious cases of international corruption resolved with minimal retribution for offending MNEs. Taking a utilitarian ethical perspective, we also evaluate the effect of DPAs on MNEs’ tendency to self-regulate or re-offend. Our conclusion, supported by critical analysis of the juridical literature and case evidence on MNEs’ recidivism, is that DPAs do not foster ethical behavior.
This article uses Statoil (Equinor since 2018) as a prism to explore some key features and concerns of Western oil companies’ evolving human rights awareness from the mid-1990s to the early 2000s. This period saw the first human rights lawsuits brought against oil companies and a gradual change in their human rights awareness. The article uses insights from the business history literature and new archival material from the oil industry to explain why business ethicists and legal scholars are wrong to argue that the relationship between business and social responsibility, on the one hand, and business and human rights, on the other, are inherently problematic and profoundly disparate due to their divergent historical origins. In so doing, the article offers a historical take on the so-called debate between business human rights (BHR) and corporate social responsibility (CSR), and it repudiates the argument that a so-called minimal understanding of human rights has hindered business from undertaking proactive human rights initiatives. Mapping onto both the business history literature and the BHR–CSR debate, the article aims for a richer understanding of the experiences and ideas that incentivized oil companies to “get serious” about human rights.
Edited by
Andreas Rasche, Copenhagen Business School,Mette Morsing, Principles for Responsible Management Education (PRME), UN GlobalCompact, United Nations,Jeremy Moon, Copenhagen Business School,Arno Kourula, Amsterdam Business School, University of Amsterdam
This chapter starts by discussing the changing overall context in which business, nature and society operate. It is important to understand this context, because it shapes the problems that corporate sustainability aims to address, and it influences how firms can cope with these problems. We then introduce the concept of corporate sustainability. We discuss similarities and differences to related concepts such as corporate social responsibility and business ethics. Next, we review some of the main environmental, social and governance (ESG) issues that firms are asked to address as part of their corporate sustainability commitments. Finally, the chapter reviews four key motivations (instrumental, ethical, stakeholder-based and political) that underpin firms’ corporate sustainability commitments.
Edited by
Andreas Rasche, Copenhagen Business School,Mette Morsing, Principles for Responsible Management Education (PRME), UN GlobalCompact, United Nations,Jeremy Moon, Copenhagen Business School,Arno Kourula, Amsterdam Business School, University of Amsterdam
This chapter discusses the role of ethical reflection in the context of corporate sustainability. It starts by reviewing the relevance of four normative ethical theories (utilitarian ethics, duty-based ethics, virtue ethics and posthuman ethics) for corporate sustainability. Next, the chapter discusses how people in organisations make ethical decisions and which cognitive biases impact our decision-making. In the following section, the chapter asks two essential questions: Why do we need ethics when discussing corporate sustainability? and Can corporations engage in ethical reflection or is this something that only individuals can do? The final section discusses how firms can manage ethics, and we distinguish two orientations that can guide such management: compliance and integrity.
During the 1970s, religious activists were heavily involved in national and international campaigns against multinationals and urged firms to adapt their behavior to align with Christian ethics. This article analyzes the strategies of Nestlé in addressing religious activism at three levels: national, international, and organizational. The analysis examines Nestlé’s collaboration with other Swiss and European multinationals and high-ranking church representatives in establishing dialogue platforms that sought to improve mutual understanding and promote tolerance for global capitalism. Nestlé also contributed to the creation of guidelines for the main churches in Switzerland that were aimed at their partial depoliticization. When Nestlé’s executives faced religious shareholder activists during its shareholders’ annual general meetings, they chose to engage with them to avoid their radicalization, although most of their demands ultimately remained unanswered. Overall, Nestlé contributed to the reorientation of religious discussions to small-scale ethical problems and business self-regulation rather than to substantial reforms of the capitalist economic system.
Shareholder value maximization is the law. It ought to be the law. This is, in part, because the chief alternative available in liberal democratic societies – stakeholder capitalism – is fundamentally flawed. If executives such as those who signed the Business Roundtable’s 2019 statement on corporate purpose really tried to run their companies according to the altruistic principles laid out therein, they would find it an impossible task. Developing the set of objective and quantifiable metrics necessary to operationalize stakeholder capitalism will prove an intractable problem. Even if the requisite set of metrics could be designed, boundedly rational managers cannot reasonably be expected to balance the huge number of competing factors necessary to account for the varied interests of the firm’s many constituencies.
Defines the terms corporation, corporate purpose, shareholder value maximization, stakeholders, stakeholder capitalism, corporate social responsibility, and ESG (environmental, social, and governance). Provides the plan of the work.
Stakeholder capitalism results in a loss of accountability, as executives who are responsible to everyone are responsible to no one. Stakeholder capitalism would be extremely difficult to implement. Proposed means of doing so – such as constituency boards, codetermination, and team production – are all unworkable. Stakeholder capitalism is inconsistent with democratic capitalism. Shareholder value maximization is the result that would emerge if shareholder and stakeholders could bargain (the so-called hypothetical bargain). Shareholder capitalism is pro-social. The profit motive results in socially efficient resource allocation. The profit motive is an essential motivational spark for innovation. The profit motive promotes freedom.
What responsibility, if any, does a corporation have to society? How should corporations balance environmental, social, and governance factors? The Profit Motive addresses these questions of corporate purpose using historical, legal, and economic perspectives. Stephen M. Bainbridge enters the debate around corporate social responsibility to mount an unabashed defense of shareholder capitalism and maximizing shareholder value. The book offers context for the current questions about corporate purpose, and provides a reference going forward. Direct and corrective, The Profit Motive argues that shareholder value maximization is not only required by law, but what the law ought to require.
The ethics of both corporate and government lawyers are critically important to the proper functioning of democratic societies. Both groups advise and act for powerful clients: corporations are amongst the most powerful actors in our society because of the potentially far-reaching impact of their activities; governments have ‘powers and obligations that far exceed those of the normal citizen’. In this chapter, we discuss the ethical responsibilities and challenges facing lawyers who act for these clients. We focus predominantly on corporate lawyers, but then turn our attention to lawyers working in government. While government legal work may seem a far cry from the work of corporate lawyers, in fact in-house corporate and in-house government lawyers face some similar challenges and opportunities.
This paper presents an alternative epistemic worldview of the corporate responsibility to respect human rights (CR2R) as a norm. It examines how an Afrocentric interpretation of the CR2R norm can contribute to a relational system where corporations promote human rights in African host communities. It uses an African norm — Ubuntu — to reframe and reinterpret Pillar II in Afrocentric terms. It argues that this reframing is important for three reasons. First, Ubuntu reframing increases the CR2R norm’s intelligibility in Africa because it clarifies and contextualizes the term ‘respect’ used in Pillar II. Second, reframing the CR2R norm through Ubuntu fills the ethical gap in the interpretation of the CR2Rnorm. Third, an Ubuntu-inspired interpretation insulates the CR2R norm from some scholars’ critique that the CR2R norm’s scope is narrow because it only encourages MNCs to avoid infringing on the human rights of others without prescribing positive obligations. This paper then examines channels through which Ubuntu can influence the CR2R norm.
Chapter 4 analyses corporate culture in East Asia with a view to understanding how Confucian cultural norms can inform efforts to promote compliance with competition law. It suggests that practices to secure compliance among commercial operators can usefully be tailored to takes account of cultural characteristics. This implies a need to consider the legacy of Confucian ethics, which has had a profound influence on the organizational psychology and behaviour of commercial entities in the region. The importance of that legacy suggests that compliance will not be achieved within firms solely on the basis of the external legal environment, an environment in which deterrence-oriented factors such as sanctions and the threat of detection play a central role. Beyond traditional tools, more attention should be given to the internal moral and social environment, and to shaping the logic of appropriateness within a given firm. A compliance culture can thus be constructed on the basis of elements such as moral commitment, Eastern-style education, the cultivation of virtue, and the constructive convergence of the interests of the enterprise and those of its employees.
Competition law is a significant legal transplant in East Asia, where it has come into contact with deeply rooted variants of Confucian culture. This timely volume analyses cultural factors in mainland China, Japan and Korea, focusing on their shared but diversely evolved Confucian heritage. These factors distinguish the competition law systems of these countries from those of major western jurisdictions, in terms of the goals served by the law, the way enforcement is structured, and the way subjects of the law respond to it. Concepts from cultural studies inform a new and eclectic perspective on these dynamics, with the authors also drawing on ideas from law and economics, comparative law, East Asian studies, political science, business management and ethics, and institutional economics. The volume presents a model for cultural analysis of comparative legal topics and contributes to a greater understanding of the challenges to deeper convergence of competition laws between East and West.
Drawing on the work of Donaldson and Walsh, this article explains why for-profit companies in industries denominated by intrinsic values such as health, education and justice, have heavier responsibilities when it comes to honouring the human rights reflected in their industry identity. Optimized collective value, the overarching aim of any system of business, is defined in terms of the satisfaction of intrinsic values, a definition that gives special meaning to firms operating in industries themselves defined in terms of intrinsic values. Nor are such companies’ responsibilities to human rights, such as the right to healthcare, conveniently reducible to the ‘enlightened’ pursuit of profit. For example, a pharmaceutical company such as Pfizer or Moderna may be required to make its COVID-19 vaccine more accessible to COVID-19 victims in developing countries at the expense of optimizing profits over the long run. Such companies have a special and mandatory correlative duty to honour the right to healthcare that derives from their corporate constitutional purpose.
In this study, we theorize humanness in organizations as a property of practice. We apply practice theory to examine how humanness becomes enacted in a business organization as people prioritize organizational and individual ends in their work activities. Our empirical case study examines the everyday interactions of development team members in an R&D organization of a large Nordic cooperative. Challenging the dominant individualist and structuralist approaches in humanness and human dignity studies, we identify and locate four different aspects of humanness in organizational practices. As a result, we show how the emergence of humanness is an ongoing process that transpires through two mechanisms: site shifting and reconciliation; that is, people shift between different sites of the social, consisting of different sets of practices with underlying disparate assumptions of humanness, which requires reconciliation. These findings provide a basis for an alternative theorizing of humanness in organizations.
This study presents a cross-temporal comparison of managerial ethics in China and the US. Although it is well established that cross-cultural differences exist in business ethics and that culture and values in a society may evolve over time, little attention has been paid to the longitudinal changes in such cross-cultural differences that might have occurred over time. Building on three different perspectives on values evolution, namely, convergence, divergence, and crossvergence, we investigate whether and how cross-cultural differences in managerial ethical decision-making and the associated moral philosophy have changed in China and the US over the decade between the mid-1990s and the mid-2000s. Our analysis reveals that the difference in Chinese and American managers' ethical decision-making evolved in many different directions over the decade, lending support to the crossvergence perspective. Interestingly, however, we discover that the divergence outlook prevails when it comes to the moral philosophies behind their decision-making. These findings provide critical insights into cross-cultural as well cross-temporal evolution in business ethics in a world of increasing cross-cultural and multicultural interactions.
As societies become more polarized, there is increasing pressure for business leaders to have a sense of purpose and to make moral decisions. Being a good leader requires both a keen understanding of the realities of human decision making as well as an analysis of what is right and wrong. This book integrates lessons from three intellectual traditions – psychology, philosophy, and political economy – to guide readers on a journey to rigorously explore their values and decision making. The authors begin by examining people's intuitions about right and wrong. They then clarify principles that embody these intuitions and help readers engage with others whose intuitions or principles differ from their own. Ultimately, this book teaches readers how to be strategic as they lead with their values: as individuals, as designers of organizations, and as businesspeople interacting with societal institutions.
I argue that lying in business negotiations is pro tanto wrong and no less wrong than lying in other contexts. First, I assert that lying in general is pro tanto wrong. Then, I examine and refute five arguments to the effect that lying in a business context is less wrong than lying in other contexts. The common thought behind these arguments—based on consent, self-defence, the “greater good,” fiduciary duty, and practicality—is that the particular circumstances which are characteristic of business negotiations are such that the wrongness of lying is either mitigated or eliminated completely. I argue that all these “special exemption” arguments fail. I conclude that, in the absence of a credible argument to the contrary, the same moral constraints must apply to lying in business negotiations as apply to lying in other contexts. Furthermore, I show that for the negotiator, there are real practical benefits from not lying.