By the end of this class you will have had the opportunity to: Gain an understanding of business ethics and corporate social responsibility (CSR) Examined examples of CSR in Aotearao New Zealand Examined business ethics with regard to smoking, alcohol and arms production Viewed social responsibility from four viewpoints: utilitarian, individual, moral rights and justice
Business ethics Can a corporation have ethics? What social responsibilities does a corporation have? To return a profit to the shareholders? To protect its stakeholders? What are the ethical responsibilities of management? Example: BP and the major oil spill off the coast of USA
What do we mean by ethical behaviour? What is accepted to be ‘good’ or ‘right’ as opposed to ’bad’ or’ wrong’ in the context Not what is legal or illegal Views on ethical behaviour: The unfettered free market view (Milton Friedman) The utilitarian view The individualist view Moral rights view The justice view
Close to home Ivon Watkins Dow New Plymouth produced 245T from 1963 to 1987. Contains dioxin a ‘human carcinogen’ Why? Rest of world stopped production in 1980s Used in Vietnam as ‘Agent Orange’ a defoliant with New Zealand serviceman affected. High incidence of cancer, Downs Syndrome and Spina Bifida among families living near the IWD plant in New Plymouth ‘’We bulldozed big pits and dumped 1000s of tonnes of chemicals there.’
Twenty years on: New Plymouth Marfell Park playground Drums of dioxin come to the surface ‘Not a public health risk’ spokesman for NPCC Parents ban kids from park Agreement with local people
‘Big Tobacco’ JIT-Macdonald Canada our goal…if you are an adult and enjoy smoking, we would like you to smoke our brand’ i.e. if you want to kill yourself, please use our cigarettes! ‘We do not market cigarettes to children’ 5m smokers in Canada‘
Targeting youth, minorities and women 1999: spent record $8.4b on advertising and promotion, a 22% increase on previous year 2000: $9.6b 2001: $11.4b Marketing targets: minorities (Hispanic and Afro- Americans), youth and women
(cont) 1996: smoking among Afro-Americans doubled 5x as many billboards in Afro-American communities as white communities Target: young women 1991-99: number of high school girls smoking went up from 27 -34% J R Reynolds (Malboro) company: ‘Dakota for ‘virile females’ Identified as ‘lower-socioeconomic, 18-24, lower education, more likely to become pregnant
Smoking in New Zealand ‘Frighteningly high numbers of Maori women are smoking during pregnancy…’ 50% of Maori smoke Maori young women are taking up smoking in greater numbers Why?
The good news: you are not alone! Three quarters of all smokers in China are males. Smoking will kill a third of all young Chinese males. Study of 1.25 million Chinese revealed largest number of smoking-related deaths in the world (2,000 people a day) By 2050 predict this figure could rise to 8,000 a day or 3m a year!
So let’s make smoking more affordable! In 2009 BATSNZ cut price of its three brands 50c to $1.10 Not illegal but the ethics? Government spends millions trying to persuade people to stop smoking BATS entices people to smoke What do you make of that? Why doesn’t the Government make it much more expensive? Exercise tax?
Binge drinking: The Way We Drink (ALARC) Pakeha Urban Male 30 and over $70K Women matching men Quarter of young people drinking to ‘get drunk’ Half parents do not know when kids drinking Maori drink less often but heavier
And to round off, the ethics of the arms business 2008: first time American military expenditure hit 1 trillion dollars American expenditure on military greater then the rest of the world put together England; BAE Al Yamamah Saudi scandal Serious Fraud Office drops investigation Minster of Defense: to win more export contracts we need to adopt higher ethical standards…free from corruption.’
We are not short of funds; it is what we do with it that matters REPORT: U.S. Military Spending Has Almost Doubled Since 2001 A new report released today by SIPRI, a Swedish-based think tank, reveals that U.S. military spending has almost doubled since 2001. The U.S. spent an astounding $698 billion on the military last year, an 81% increase over the last decade. U.S. spending on the military last year far exceeded any other country. We spent six times more than China — the second largest spender. Overall, the world expended $1.6 trillion on the military, with the United States accounting for the lion’s share:
What would you do? You are the manager of a city bookshop You claim to give students the lowest priced textbooks You know however that your rival is undercutting you by a significant margin Students complain What would you do?
(cont) Ignore the complaints? Drop your price? Justify your pricing strategy? Take the issue to your boss? Rely on student apathy!
Corporate social responsibility“the obligation of an organisation to act in ways that serve the interests of its stakeholders” Who are stakeholders? Who were the stakeholders in the Enron case? Who are the stakeholders at the University of Waikato?
What is the social responsibility of business? The Milton Freidman view (right wing) Corporations are not people: people make decisions; businesses do not Managers are agents of the owners – shareholders – and are responsible to carry out their wishes They have a fiduciary responsibility to maximise profits within the context of what is generally agreed to be moral and ethical They are not in the business of sorting out the ills of society: unemployment racial discrimination, protecting the environment, sustainability. The New York Times Magazine, September 13, 1970. Copyright @ 1970 by The New York Times Company.
The utilitarian view Associated with the ideas of 19th century philosopher such as John Stuart Mill Assess the moral implications of decisions in term of consequences Ethical behaviour is that which delivers the greatest good to the greatest number of people e.g. making profits which are redistributed through the tax system to society
Individualism Pursuit of long-term self interests (self-interest rules!) In the long term, it won’t be in our self-interest as a corporation to lie and cheat But in business, maybe we can push things to the limit?
Moral-rights view Underpins the founding ideas of the American constitution Associated with John Locke and Jefferson Behaviour that protects the fundamental rights of the people Rights to life, liberty and the pursuit of happiness In business; employee rights, privacy health and safety
Justice view Ethical decision should treat people fairly and impartially based on rules and standards Procedural justice to ensure fairness e.g. sexual discrimination in the workplace Distributive justice: people should be treated the same regardless of race, gender, age etc. Interactional justice: people should be treated with dignity and respect
Conclusion A difficult area for organisations and managers ‘Whistle-blowing’ at the individual level? Simply rhetoric? Has to be viewed in context ie the culture.