Business Ethics

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  • The Caux Round Table (CRT) is an international network of principled business leaders working to promote a moral capitalism\n
  • The UN Global Compact is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption. \n
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  • UN Glogal compact: 10 principles around human rights, labour, environment and anti-corruption\n Global Ethics Forum: 2-3 July Geneva\n 1. How can corporate social responsibility (CSR) strategies and practices be made innovative and relevant in times of crisis?\n2. How can corporate social innovation lead to sustainable development?\n3. How can management education develop an alternative to the dominant economic paradigm, induce a change in the business leaders‘ mindset and develop globally responsible leaders?\n \n\n
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  • Business Ethics

    1. 1. ETHICS & BUSINESS AN OXYMORON?WUNNHAFF A Baaltches 17/06/2009
    2. 2. GETTING USED TO IT• Calvin : • Did you read this? This movie star made over twenty million last year! • What would YOU do with twenty million bucks?• Hobbes : • Beats me. I think it is ridiculous that anyone makes that kind of money• Calvin : • OK. Say you only made fifteen million• Hobbes : • Let’s say eighteen
    3. 3. BUSINESS The Social Responsibility ofBusiness is to Increase its Profits The New York Times Magazine, September 13, 1970 Milton Friedman Nobel Memorial Prize in Economic Sciences, 1976
    4. 4. FRIEDMAN’S ARGUMENTSthere is one and only one social responsibility of business - to use its resources and engagein activities designed to increase its profits so long as it stays within the rules of the game,which is to say, engages in open and free competition without deception or fraud.What does it mean to say that "business" has responsibilities? Only people can haveresponsibilities. A corporation is an artificial person ...In a free-enterprise, private-property system, a corporate executive is an employee of theowners of the business. He has direct responsibility to his employers. That responsibility isto conduct the business in accordance with their desires, which generally will be to make asmuch money as possible while conforming to the basic rules of the society.In most of these cases, what is in effect involved is some stockholders trying to get otherstockholders (or customers or employees) to contribute against their will to "social" causesfavored by the activists...
    5. 5. ADAM SMITH: THE INVISIBLE HANDEvery individual endeavours to employ his capitalso that its produce may be of the greatest value.He generally neither intends to promote the publicinterest, nor knows how much he is promoting it.He intends only his own security, only his owngain. And he is in this led by an invisible hand topromote an end which was no part of his intention.By pursuing his own interest he frequentlypromotes that of the society more effectually thanhe really intends to promote it.
    6. 6. ADAM SMITH: THE INVISIBLE HAND As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to thatEvery individual endeavours to employ his capital of foreign industry, he intends only his ownso that its produce may be of the greatest value. security; and by directing that industry in suchHe generally neither intends to promote the public a manner as its produce may be of the greatestinterest, nor knows how much he is promoting it. value, he intends only his own gain, and he is inHe intends only his own security, only his own this, as in many other cases, led by an invisiblegain. And he is in this led by an invisible hand to hand to promote an end which was no part of hispromote an end which was no part of his intention. intention. Nor is it always the worse for theBy pursuing his own interest he frequently society that it was no part of it. By pursuing hispromotes that of the society more effectually than own interest he frequently promotes that of thehe really intends to promote it. society more effectually than when he really intends to promote it. 1776
    7. 7. SOME EXAMPLESEnronNikeParmalatSub-PrimeMadoff
    8. 8. ENRONOld-fashioned business: selling energy Generational change / J. Skilling & A. Fastow / Innovative business model New accounting rules “Unanticipated” problems Stock market, rating agencies and banks’ pressure More “innovation” and collapse
    9. 9. NIKEBusiness model: Design of sport shoes / offshore manufacturing Child work Nike: “We are not responsible for our suppliers business practices” Employees: “Actually, we should take that responsibility” Process of reflection and new rules / influence
    10. 10. SUB-PRIME“Every American should own their home” House prices boom Flexible mortgages Securitization Collapse
    11. 11. MADOFF“The Madoff Strategy” (Split-strike strategy) Clones less successful: guru, insider knowledge (“front-running”) Sooner or later FED will close him down, but for now it’s a good investment “Feeder Funds” Liquidity crisis and collapse
    12. 12. WISE WORDS
    13. 13. WISE WORDSIt seemed the world was divided into good and bad people.The good ones slept better while the bad ones seemed to enjoythe waking hours much more.
    14. 14. WISE WORDSIt seemed the world was divided into good and bad people.The good ones slept better while the bad ones seemed to enjoythe waking hours much more. Woody Allen
    15. 15. WISE WORDSIt seemed the world was divided into good and bad people.The good ones slept better while the bad ones seemed to enjoythe waking hours much more. Woody Allen
    16. 16. BAHA’I WRITINGS... the fundamental cause of this world unrest is attributable, not so much to theconsequences of what must sooner or later come to be regarded as a transitorydislocation in the affairs of a continually changing world, but rather to the failureof those into whose hands the immediate destinies of peoples and nations havebeen committed, to adjust their system of economic and political institutions tothe imperative needs of a rapidly evolving age? Are not these intermittent crisesthat convulse present-day society due primarily to the lamentable inability of theworld’s recognized leaders to read aright the signs of the times, to rid themselvesonce for all of their preconceived ideas... The World Order of Baháulláh, Shoghi Effendi The Guiding Principles of World Order Pages 34-38
    17. 17. MANAGEMENT EDUCATION Bad Management Theories Are Destroying Good Management Practices (2005) SUMANTRA GHOSHAL (1948-2004)Advanced Institute of Management Research (AIM), UK and London Business School
    18. 18. GHOSHAL’S CRITIQUE“Scientific” approachIdeology-based gloomy vision, partial analysis,unbalanced assumptions, pretense of knowledgeNegative assumptions about human natureSelf-fulfilling prophecies
    19. 19. WISE WORDS #His lack of education is more thancompensated for by his keenlydeveloped moral bankruptcy.
    20. 20. GHOSHAL ON SHAREHOLDER VALUEAssumptionsPerfectly efficient labor marketsWages necessarily represent fair value, otherwise workers can immediatelyand costlessly move to another jobShareholders carry the greater risk and their return must be maximizedTruth is of course exactly the opposite:Most shareholders can sell their shares far more easily than workers canchange jobsWorkers’ contribution is far more valuable; equity (capital) is a commodity
    21. 21. PRINCIPLES FOR RESPONSIBLE BUSINESSCAUX ROUND TABLEMoral Capitalism for a better worldPRINCIPLES FOR RESPONSIBLE BUSINESSPRINCIPLE 1 - RESPECT STAKEHOLDERS BEYOND SHAREHOLDERSPRINCIPLE 2 – CONTRIBUTE TO ECONOMIC, SOCIAL AND ENVIRONMENTAL DEVELOPMENTPRINCIPLE 3 – RESPECT THE LETTER AND THE SPIRIT OF THE LAWPRINCIPLE 4 – RESPECT RULES AND CONVENTIONSPRINCIPLE 5 – SUPPORT RESPONSIBLE GLOBALISATIONPRINCIPLE 6 – RESPECT THE ENVIRONMENTPRINCIPLE 7 – AVOID ILLICIT ACTIVITIES(published: March 2009)
    22. 22. 10 GLOBAL COMPACT VALUES Human Rights Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and Principle 2: make sure that they are not complicit in human rights abuses.Labour Standards Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; Principle 4: the elimination of all forms of forced and compulsory labour; Principle 5: the effective abolition of child labour; and Principle 6: the elimination of discrimination in respect of employment and occupation.Environment Principle 7: Businesses should support a precautionary approach to environmental challenges; Principle 8: undertake initiatives to promote greater environmental responsibility; and Principle 9: encourage the development and diffusion of environmentally friendly technologies.Anti-CorruptionPrinciple 10: Businesses should work against corruption in all its forms, including extortion and bribery. •
    23. 23. THE STAKEHOLDER CONCEPT
    24. 24. THE STAKEHOLDER CONCEPT Organization
    25. 25. THE STAKEHOLDER CONCEPT Shareholdes Organization Employees Management
    26. 26. THE STAKEHOLDER CONCEPT Clients Shareholdes Local Suppliers community Organization Employees Management Environment Government
    27. 27. THE STAKEHOLDER CONCEPT Common Good Clients Shareholdes Local Suppliers community Organization Employees Management Environment Government
    28. 28. EBBF CORE VALUES1. Ethical business practices2. Social responsibility in business3. Values-based leadership4. Sustainable development5. A new paradigm of work6. Partnership of women and men in all fields of endeavour7. Non-adversarial decision making through consultation
    29. 29. THE TRIPLE BOTTOM-LINE The Triple Bottom Line[A] sustainable corporation is one that• creates profit for its shareholders while• protecting the environment and• improving the lives of those with whom it interacts…It operates so that its business interests and the interests of theenvironment and society intersect. Andrew Savitz, The Triple Bottom Line: How Todays Best-Run Companies Are Achieving Economic, Social and Environmental Success -- and How You Can Too
    30. 30. MORAL LEADERSHIP Service Truth Nobility Transformation Transcendence Capabilities Life-long learning
    31. 31. CORPORATE CULTURE!
    32. 32. INITIATIVESMicro-financeUN Global CompactGlobal Ethics ForumOrganizations like EBBFSelf-control and ISO 26000Sustainability and CSR audits
    33. 33. SUCCESSES2003: Grameen Bank and its founder MohammadYunus jointly receive the Nobel Peace Prizemaking Grameen Bank the first business to be awarded this honorNorway: quota of women on boardsMany single examples of responsible businesses orinitiatives
    34. 34. More than any other time in history, mankind faces acrossroads. One path leads to despair and utterhopelessness. The other, to total extinction. Let us praywe have the wisdom to choose correctly.
    35. 35. HOW ABOUT YOU AND I? What can we do? DISCUSS!

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