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Article Tag: Business Ethics

I think I need to read this book: Small Change: Why Business Won’t Save the World by Michael Edwards. Read the review by Mark Engler and Arthur Phillips here.

Excerpt:
The Ben & Jerry’s story is but a small cautionary tale about the still-growing and already far-reaching field of “philanthrocapitalism.” This is the term that author Michael Edwards uses in his new book, Small Change: Why Business Won’t Save the World, to describe a wide range of activities. It includes Silicon Valley CEOs using “venture philanthropy” to fund new, business-minded nonprofits; stock market traders developing socially weighted investment funds; bankers extending microcredit loans to the poor; and “social entrepreneurs” aiming to simultaneously serve a “double bottom line” of positive public impact and shareholder return.

The activities covered under the umbrella of philanthrocapitalism are diverse enough to offer exceptions to any generalization about the category. But its practitioners would almost uniformly describe themselves as “results-oriented,” implicitly critiquing the ineffectiveness of existing nonprofits and voluntary organizations. Their unifying idea is that business is more efficient and outcome-driven than government and civil society, and that unleashing market forces is the best means of addressing entrenched problems such as poverty, malnutrition, preventable disease, and poor education.

In Edwards’ words, “the basic message of this movement is pretty clear: Traditional ways of solving social problems do not work, so business thinking and market forces should be added to the mix.” During his nine-year tenure as a director at the Ford Foundation, Edwards saw the popularity of this argument skyrocket. He writes, “if I had dollar for every time someone has lectured me on the virtues of business thinking for foundations and nonprofits, I’d be a philanthropist myself.”

Read more…

Photo by Limbo Poet
The Wall Street Journal seems to take great delight in the idea that the corporate social responsibility “fad” might be passing. Hmm. An 8% reduction in corporate donations in 2008? By what percentage did sales fall in that year? More importantly, it’s been quite awhile since anyone advanced the idea that a company’s commitment to corporate social responsibility should measured simply by its donations. Read the article here.

Excerpt:
When the going gets tough, costly good intentions can go out the window. Company spending has been squeezed by the global recession and budgets for corporate social responsibility have suffered disproportionately.

A survey of U.K. businesses by KPMG and Business In The Community found a third of companies cut their corporate social responsibility budgets in 2009. Corporate philanthropy has also been hit, with a study by the Giving USA Foundation revealing that charitable donations by U.S. companies fell by 8% in inflation-adjusted terms in 2008.

Perhaps this is not so great a loss. There is a growing feeling among company executives that marginal initiatives, which can so easily be dispensed, are not enough to alter corporate behavior. In a speech last year, Stephen Green, chairman of U.K. bank HSBC, said: “There has been a tendency to compartmentalize so-called corporate social responsibility activities as an adjunct to the mainstream business activities.” Mr. Green believes in replacing corporate social responsibility with a new focus on “corporate sustainability,” which, rather than being an add-on to a business. “is about the raison d’être of the company itself.”

Read more…

Read the article here.

Excerpt:
For guidance — and perhaps inspiration — Toyota should do some research on the Johnson & Johnson Tylenol recall of 1982.

That year, seven people in the Chicago area died from taking Tylenol capsules poisoned with potassium cyanide. The case remains unsolved, and no suspects were ever charged.

But Johnson & Johnson (JNJ, Fortune 500) didn’t wait around for the authorities to act. It stopped production of Tylenol and issued a nationwide recall of 31 million bottles already in circulation with a retail value of over $100 million.

The murders stopped, and J&J’s actions led to changes in packaging — those annoying seals on everything from aspirin to milk — as well as federal anti-tampering laws. Through its prompt action, J&J was able to actually enhance the value of the Tylenol brand by making product safety one of its attributes.

Toyota has a much tougher job ahead of it. That’s because the problems in its cars are not the result of a crazed individual but are systemic to the product development process. Fixing the system that allowed the defects to occur will be complex and expensive.

Read more…

Photo by respres“Strategic default” is the term used to describe the decision to walk away from an underwater mortgage. The terms of a mortgage contract spell out the responsibilities of all parties, and include a list of consequences for borrowers who fail to live up to their part of the bargain. Some homeowners, after looking at the terms of the contract, are concluding that they are willing to live with those consequences. But are there moral and ethical implications to this? Read the article here. You can download the discussion paper referred to in the article here.

Marketplace Money had an interesting piece, with Henry Blodget, CEO of the “Business Insider,” and Megan McArdle, of the “Atlantic” magazine debating the propriety of walking away. You can hear that piece and read the transcript here.

Excerpt from the Arizona Republic article:
Arizona law professor Brent White says the only thing standing between many “underwater” homeowners and a better financial future is a misguided sense that walking away from a loan commitment is morally wrong.

White, an associate professor at University of Arizona’s James E. Rogers College of Law, has spent the past few months presenting his argument to other lawyers, real-estate professionals and the national media.

It started with a 50-page discussion paper he published in October, in which White argues that underwater homeowners, those whose unpaid loan balance exceeds the value of their home, are being manipulated into picking up the tab for a real-estate crash that borrowers and lenders created equally.

“I’m all for a society where people must take personal responsibility, but that should also apply to the banks and financial institutions,” he said.

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It’s good to see a renewed emphasis on ethics in UK business schools. But what about here in the US? Read the article here.

Excerpt:
As the bodies responsible for teaching so many of the “masters of the universe” who did so much to cause last year’s economic meltdown, it is perhaps not surprising that business schools have spent the past year doing some serious soul-searching about their culpability for the recession.

Go back to the 1980s and 1990s, when many of today’s corporate leaders were studying for their MBAs, and business ethics and sustainability – in other words, issues around corporate governance, social responsibility and long-term decision-making – played ­little part in business school curricula.

Pre-credit crunch, the need for MBAs to be “ethical” as well as show you how to fast-track your career and make a load of cash was not that high on the agenda, concedes Mark Stoddard, accreditation projects manager of the Association of MBAs (Amba).

“Schools have recognised there have been gaps and they have needed to make changes in the way MBAs are taught,” he says. “Three to four years ago you might have got students complaining about having to take ethics courses. You don’t now.”

Read more…

Photo by anshu_si

Read the article here.

Excerpt:
Last year, famed British chocolatier Cadbury made waves when it announced that 100% of the cocoa used in its popular Dairy Milk line would be sourced Fair Trade. With the news that Cadbury is being sold to American conglomerate Kraft, the question is: will the new owners will keep these policies intact?

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Photo by adria.richards
Hey, Google. It’s about time. Read the article here.

Excerpt:
Google launched its Chinese-language search engine, Google.cn, in January 2006. The company said at the time that it did so in the belief that a search engine would help open access to information for Chinese residents. To obtain permission to operate in China, however, the company had agreed to censor search results that the Chinese government deemed objectionable. Google was harshly criticized by civil liberties groups for its concession to Chinese authorities.

The company now appears to be regretting that decision.

“We have taken the unusual step of sharing information about these attacks with a broad audience not just because of the security and human rights implications of what we have unearthed, but also because this information goes to the heart of a much bigger global debate about freedom of speech,” Drummond wrote Tuesday about the company’s reversal of its position in China. “The decision to review our business operations in China has been incredibly hard, and we know that it will have potentially far-reaching consequences.”

Read more…

Read the article here.
Excerpt:

A new report alleging corruption in Morgan Stanley’s China operations has sullied the firm’s aspirations to be a good example of corporate social responsibility.

Reuters has published a damning article that alleges Garth Peterson, a former employee at Morgan Stanley in China, is suspected of violating the U.S. Foreign Corrupt Practices Act by engaging in bribery with Morgan Stanley’s government and business contacts in China. The article states Morgan Stanley conducted its own internal investigation and already submitted those findings to the U.S. Securities and Exchange Commission. Peterson was apparently fired in December 2008.

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Marketplace and ProPublica
Sharona Coutts and Amy Scott
This two-part series looks at recruiting practices at for-profit schools, particularly the University of Phoenix. You can read part of the transcript, get links for more information and listen to the stories here.
Excerpt:

MICHELE RAMBO: My name is Michele Rambo, and I live in Grand Prairie, Texas.

Rambo signed up at the University of Phoenix in Dallas a few years ago.

RAMBO: I did tell them that I was pregnant and they were like, oh, well that just solves everything, you know, you qualify for a grant, you’re covered. And I’m like, so I don’t have to pay anything? And they told me no.

Classes went well. She got good grades. She was almost finished with her associate degree when a school counselor called about moving her on to a bachelor’s program.

RAMBO: And one of the questions that she asked me completely stopped the whole conversation. She had asked me, so what kind of loan do you have?

Rambo thought she didn’t have a loan. But when she enrolled, she signed what she thought was a form inquiring about federal aid.

Turns out it was an application for loans that’ll cost her $18,000 when she graduates.

RAMBO: It was scary. It still is scary. I’m still scared. I still don’t even know what I’m going to do yet.

So how could this happen?

It turns out the enrollment counselors at the University of Phoenix get paid in part based on how many students they recruit. The university’s negotiating the settlement of a lawsuit that claims employees were pressured to sign people up.

Read more…

Fortune
David A. Kaplan
Good article in Fortune about how business schools may be getting the message about the need for more ethics training. Read the article here.
Excerpt:

Rod Kramer thought it was going to be just another dinner at the Stanford Executive Program last summer.

An affable, popular professor at the business school, he had given his usual talks on influence and persuasion in the realms of politics and business.

Then came the wrap-up social event. But the wife of an important corporate executive — “with the help of some wine,” as Kramer recalls — lit into him “for not teaching morality to MBA students.”

That failure, she told him and then told him some more, was the cause of the global financial meltdown. It was an illustration, says Kramer, currently a visiting professor at Harvard’s Kennedy School, of how much “disenchantment” there is about MBAs these days.

Indicting business schools and management education has become a blood sport. “If Robespierre were to ascend from hell and seek out today’s guillotine fodder,” wrote Philip Delves Broughton in a widely cited piece in the Sunday Times of London earlier this year, “he might start with a list of those with three incriminating initials beside their name: MBA.”

Read more…

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