UTSpeaks public lecture: Ethical vanities

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Are our demands for socially responsible companies and governments unreasonable?

How often do you as a consumer, employee, investor or everyday citizen compromise your stated values for convenience or cost savings? When push comes to shove, how easily would you abandon what you say you value to protect your personal interests? Can we really blame corporations and governments for cutting corners when we may often do so ourselves?

Drawing on fascinating research and case studies, this public lecture reveals the complexity of human behaviour as it relates to the choices and actions we actually make versus those we believe we would make. It challenges the assumption that corporations, governments and NGOs can achieve the level of social responsibility we believe they must, while being composed of demonstrably imperfect beings – ourselves.

Timothy Devinney is Professor of Strategy at UTS Business School and one of Australia's leading business scholars.  He is a Fellow of the Academy of International Business, the Australia-New Zealand Academy of Management and the Advanced Institute of Management (UK) and the Rockefeller Foundation. He is the only management academic to be awarded an Alexander von Humboldt Foundation Research Award and Fellowship. He has MA, MBA and PhD degrees from the University of Chicago in Economics and Statistics and a BSc (Hons) from Carnegie Mellon University in Psychology and Applied Mathematics.

Introduced by Christopher Zinn, Director Communications & Campaigns, CHOICE.

UTSpeaks is a free public lecture series presented by UTS experts discussing a range of important issues confronting contemporary Australia.

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  • And Christopher Zinn.
  • Ask the question:Who is a worker?Who is an “investor”?Who is a customer?We are all part of the “equation”. I will take us through this by looking at some aspects of behaviour.
  • Ironically, a person in a hurry is less likely to help people, even if he is going to speak on the parable of the Good Samaritan. Some literally stepped over the victim on their way to the next building! The results seem to show that thinking about norms does not imply that one will act on them. Maybe that “ethics become a luxury as the speed of our daily lives increases”. Or maybe peoples’ cognition was narrowed by the hurriedness and they failed to make the immediate connection of an emergency. Many people insist that their commitments to certain values (e.g. love, honor, justice) are absolute and inviolable – in effect, sacred. They treat the mere thought of trading off sacred values against secular ones (such as money) as transparently outrageous – in effect, taboo. Economists insist, however, that in a world of scarce resources, taboo trade-offs are unavoidable. Research shows that, although people do respond with moral outrage to taboo trade-offs, they often acquiesce when secular violations of sacred values are rhetorically reframed as routine or tragic trade-offs.
  • Reflect also on the Taboo Experiments and our own experiments on things like Fair Trade labelling etc.
  • Think about the context in the corporate environment … always go to Dilbert!
  • This is a difficult task because it requires sophisticated thinking and sophisticate methods.However, mostly we tend to see the debate structured very simplistically using very limited and flawed approaches.
  • So let’s try and improve on this by looking at some more complex evidence and ideas that follow from these.
  • So what we see in the case of the consumer is that individuals are:ComplexUnlikely to relate their “behaviour” to their “stated values”Much more utilitarian in their actions than their survey responsesUnlikely to immediately respond to moral/ethical appeals that do not align with their utilitarian needs
  • When surveyed workers tend to say that reputation is important, although they downplay social reputation issues more (however these are still apparently quite important).So what do the experiments reveal?
  • Reputation accounts for a very small proportion of the value that they ascribe to a job contract.Corporate reputation is about 5.6%Workplace reputation is about 3.2%Social reputation is about 2.4% (and not significant statistically)We also discover – in line with the consumer results – that those expressing strong “social reasoning” in the surveys do not show this in the experiments. However, those indicating they want money and career opportunities do align between the surveys and experiments.
  • The common man/woman is even more utilitarian.Social reputation comes out dead last in the experiments. Other items like flex schedules, opportunities for volunteering and so on are very low impact. Family policies matter more to women but not hugely so.So if anything .. The MBAs are more cognizant of social and reputational matters in the job than the ordinary worker.
  • Prior studies tend to confound the “social” aspect of the investment portfolio with the “risk/return”
  • Allocations
  • Quote 1: People do not behave like saints and we should accept that there are aspects of our behaviours that are what they are.Quote 2: Surveys are junk. Look at behaviours.Quote 3: People are different. There are few absolute virtues and vices and
  • UTSpeaks public lecture: Ethical vanities

    1. 1. Ethical Vanities THINK.CHANGE.DO
    2. 2. Acknowledgements & Co-Conspirators  Pat Auger  Grahame Dowling  Jordan Louviere  Paul Burke  Russell Belk  Giana Eckhardt  Christine Eckert  Nidthida Lin (Perm-Ajchariyawong)  Joachim Schwalbach  Michal Ulrych, Vichit Laoledchai, Thomas Birtchnell, Sandra Peter, Omer Konacki, Michael McGee, Steve Cook, Sandra Kleinsasser, Anja Schwerk
    3. 3. Acknowledgements & Supporters Australian Research Council Alexander von Humboldt Foundation (Germany) Rockefeller Foundation (US) Cambridge U. P. (UK) Various corporations, NGOs and universities  Particularly UTS and Robert Button and Jane Westbrook
    4. 4. A Disclaimer
    5. 5. The Basic Logic of Today’s Talk Corporate Social Responsibility arises ONLY when the human components accept and act upon their responsibility The corporation is “us” as:  Managers The dilemma is that we  Workers rarely act with a level of  Investors responsibility that we  Customers demand from companies
    6. 6. The Complexity of Context, The Fallacy of Generalization The “Good Samaritan” Experiments  Context trumps „values‟ (up to a point?) Those Helping 80% 63% 60% 45% 40% 20% 10% 0% No Hurry Moderate Hurry High Hurry
    7. 7. The Lesson of the Good Samaritan ExperimentsIronically, a person in a hurry is less likely to help people, even if heis going to speak on the parable of the Good Samaritan. Someliterally stepped over the victim on their way to the next building!The results seem to show that thinking about norms does not implythat one will act on them. Maybe that “ethics become a luxury asthe speed of our daily lives increases”. Or maybe peoples’cognition was narrowed by the hurriedness and they failed to makethe immediate connection of an emergency. Darley & Batson (1973)
    8. 8. A More Managerial Perspective: Truthful or Cynical?
    9. 9. What is Required? We need to understand the reality of individual behavior:  In an environment that allows us to understand the trade-offs that we make as ordinary [consumers, workers, investors, …, members of the the society]  When there are costs to our behavior  And the consequences are potentially unknown This is an enormous task  What follows is just a glimpse of the inconvenient reality that we seem to be uncovering
    10. 10. Why is This Critical? Basing corporate and social policy on “myth”, “anecdote” and “opinion lacking scientific evidence”  Is costly and inefficient  Bad policy and products/services that fail  Dangerous socially  Implies the sanctity of one opinion over another based on power and persuasion rather than transparency and evidence
    11. 11. ETHICAL VANITIES I THE MYTH OF THE ETHICAL CONSUMER
    12. 12. Consumer Social Responsibility:Do We Care When We Consume? According to LOHAS about 30 percent of U.S. adults—more than 63 million consumers—now purchase goods and services with a nod toward the products’ health, environmental, social justice and sustainability value. The marketplace, worth $227 billion a year, is expanding at a healthy pace and is projected to reach $1 trillion annually by 2020. (LOHAS, 2006) 70 percent of respondents believed that a firm’s business ethics had “some influence” on their purchasing decisions. (Uusitalo & Oksanen, 2004) YET, What does this imply about behavior?
    13. 13. The Problem of Believing What People Say: Unconstrained Queries  Willingness to Pay or ActionWhat matters in purchasing? Utilitarians Anti-Utilitarians Who are these people? Utilitarians Anti-UtilitariansBrand 51% 11% Females 77% 47%People paid enough to live on 3% 96% + MBA Degree 11% 3%Damage to the environment 22% 98% Amnesty Intl Supporter 8% 34%Animal testing 12% 79% Machiavellianism 98 92Human rights record of the Moral Relativism 3.29 2.90country of production 7% 66% Might imply significant differences Price Premium Utilitarians Anti-Utilitarians Child Labor 12% 16% Dangerous Work Conditions 12% 9%Until you examine whether Minimum Wages 12% 13%this translates into any difference Animal testing 9% 8%in willingness to pay or act Biodegradability 12% 13% Animal By-products 10% 10%
    14. 14. Tough TradeoffsFunctionality Ethics Product A Product A Lo Hi Bad Good Lo BadProduct B Product B Hi Good Dilemma Situation = Ethics opposes Functionality (Good => Lo) Non-Dilemma Situation = Ethics supports Functionality (Good => Hi) Price is varied so that Functionality and Ethics are not “Free”
    15. 15. Functionality Trumps Ethics & Ethics Responds to Price
    16. 16. ETHICAL VANITIES II THE MYTH OF THE ETHICAL WORKER
    17. 17. Worker Social Responsibility: Do We Care When We Consider Our Job Contracts?Major public issues such as a company’sreputation for strong ethical practices havebecome critical factors in choosing whereto work, even to the point where manyemployees are prepared to sacrifice pay orpromotion in order to work fororganizations that are actively engaged ingood social responsibility practices[underline added].More specifically, concerns about ethicalbehavior outweigh concerns about theenvironment by all generations, whenmaking employment choices. (Kelly Services Annual Workplace Survey, 2010)
    18. 18. Worker Social Responsibility: Unconstrained/MBA Unconstrained Rating Top 5 Reasons Mentioned 4.00 35 30 3.75 25 20 Percent 3.50 15 3.25 10 5 3.00 0The rating scale is: 1 = completely irrelevant; 2 = not veryrelevant; 3 = relevant; 4 = very relevant; 5 = absolutely critical
    19. 19. Salary Sacrifice: The Ultimate Question (MBAs) Relative Importance (Percent) Salary/Compensation Time DemandsPromotion Opportunities City / Size Bonus Split Travel Demands Location (Country) Corporate Reputation Workplace Reputation Social Reputation Signing Bonus Pension Overseas Travel Stock Option Contract Length
    20. 20. But What of the Ordinary Worker? Surely They Care! Impact Weights Salary/Compensation Overtime Paid Time Demands Travel Demands Contract Length Corporate Reputation Promotion Opportunities Family Policies City / Size Workplace Reputation Professional Devlpmnt Union Wkplace Community Wk Pension Flex Schedule Social Reputation
    21. 21. ETHICAL VANITIES III THE MYTH OF THE SOCIALLY RESPONSIBLE INVESTOR
    22. 22. Investor Social Responsibility:Do We Care When We Consider Our Investment Choices?For years, the notion of socially responsible investing (SRI) — puttingyour money into companies that represent and uphold your personalvalues — was considered a fringe strategy. No longer. Last year,$2.71 trillion — roughly one of out every nine dollars underprofessional management in the United States — was invested incompanies based on their environmental or social records, accordingto the Social Investment Forum. Northern Trust – Promoting their SRI Funds, 2010
    23. 23. Superannuation Allocations
    24. 24. Pension Allocation Game Allocations (Percent of Portfolio) Underallocation Percentage High High Risk/ReturnRisk/Return High High Medium Medium Risk/ReturnRisk/Return Medium Medium Risk/ReturnRisk/Return Low Low Medium Medium Risk/ReturnRisk/Return Low Low Risk/ReturnRisk/Return 0% 10% 20% 30% 0 5 10 15 20 Socially Responsible Normal Investment Overall, the under allocation is about 20 percentage points
    25. 25. ETHICAL VANITIES IV INDIVIDUAL SOCIAL RESPONSIBILITY http://www.6billionothers.org
    26. 26. So What Do We Make of This? [We must] make the best of mankind as they are, since we cannot have them as we wish George Washington speaking of his troops (1775) As I grow older, I pay less attention to what men say. I just watch what they do. Andrew CarnegieThe problem with people who have no vices isthat generally you can be pretty sure they’re goingto have some pretty annoying virtues. Elizabeth Taylor
    27. 27. So What Do We Make of This? It is good to have hopes and aspirations about human behaviour  But we must not allow these to delude us to the reality of that behaviour We cannot base policy (either corporate or social) on hope and aspiration alone  We must integrate this with how people live their everyday lives in many guises We must be careful not to insist that our institutions behave better than we ourselves are capable But that does not imply that we do not demand change nor can we change
    28. 28. Thank You and Questions?More information at: www.mythoftheethicalconsumer.com
    29. 29. How Context Matters

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