MGSM870 Organisational Behaviour - Are corporations pathologically amoral?
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Syndicate group presentation on business ethics for MGSM MBA course MGSM870 Organsational Behaviour.
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MGSM870 Organisational Behaviour - Are corporations pathologically amoral?
- 1. A Rebuttal to Joel Bakan
- 5. Joel Bakan Canadian lawyer, writer Professor of Law, University of British Columbia
- 6. By their very nature…
- 10. By their very nature…
- 13. Amoral Immoral An amoral person denies the existence of morality An immoral person believes in the existence of morality but chooses not to comply with it
- 31. Archie Carroll Professor Emeritus, University of Georgia Business Ethics, Corporate Social Responsibility / Stakeholder Management
- 32. Four dimensions of responsibility
- 33. Four dimensions of responsibility
- 45. Four dimensions of responsibility
- 46. 3 branches of ethical philosophy
- 47. Deontology We are duty bound to take a specific course of action, therefore the action is ethical
- 48. Deontology “Once we had the drug in hand, we had the duty to make it available”
- 49. Deontology “As per Milton Friedman (and the law) it is a corporation’s duty to maximise its profits”
- 50. Deontology
- 51. Consequentialism We desire the positive outcome of this course of action, therefore the action is ethical
- 52. Consequentialism “We will set up these bank branches in a more democratic, community-involving way”
- 53. Consequentialism
- 54. Virtue Ethics The course of action is ethical because it is what a morally virtuous person would do
- 55. Virtue Ethics “Don’t be evil”
- 56. Virtue Ethics “Support schools, but don’t talk about it”
- 57. Virtue Ethics
- 60. What John decided to do ((video))
- 61. Peter Drucker
Editor's Notes
- Turn down lights, no further comment or intro
- Let video play through
- Lena: What you’ve just seen is an excerpt from a film by Joel Bakan called "The Corporation".
- Lena: The clip you've just seen showed the World Health Organisation’s Personality Diagnostic Checklist for the definition of a pathologically amoral individual.
- Lena: This is how Joel Bakan defines Corporations: as being pathological amoral by their very nature. We will argue tonight that corporations today are not amoral by nature and we will underpin this argument with current examples. ((pause)) Let’s take a moment to understand the components of Bakan’s argument.
- Lena: “By their very nature…” This phrase symbolises Corporations as a person. Yes, it’s true, a Corporation is defined by law to be a person. Cases are brought to trial against Corporation itself - not the individuals within it.
- Lena: The 14th amendment to the United States Constitution, which was introduced to protect…
- …African Americans from slavery and instill the right to life, liberty and property, was then used…
- …to defend Corporations to that same right.
- Lena: So, in the eyes of the law corporations are held responsible as people just as you or I would.
- Lena: So given that a corporation is indeed a person and that person shows these traits, then the corporation is a …
- Lena: …psychopath. ((Psycho violins sound effect)) No Conscience, no remorse, superficial, self-satisfying, grandiose, irresponsible, manipulative. In short, pathologically amoral.
- Lena: Just so we're clear on definitions, amorality is distinct from immorality – to be immoral is to believe in the existence of morals, but not comply with them. Bakan has coined Corporations as amoral – this is when the existence of morals is denied.. when a being carries on with any action that suits their own needs, without considering how this will impact others.
- Lena: Our argument tonight is that, in today’s society, Corporations cannot step too far without being ‘pointed out’ for their wrong-doings. We are now living in a time where society is ruling the actions of Corporations.
- Lena: Don Tapscott & David Ticoll wrote about “an extraordinary age of Transparency” in their book “The Naked Corporation”. They have recognised that we are now living in a time where the Enrons, Pfizers, Nikes in the world can no longer carry on with their immoral choices – sweatshops, tweaking numbers, environmental wreckage… these are all uncovered by the revolution of Transparency.
- Lena: But how else can we tell that society demands ecological and socially responsible behaviour from corporations?
- Lena: In our society, people vote primarily with their wallet. And voted they have the fact that we can now buy…
- Lena: … green beer …
- Lena: … carbon offsets for flights …
- Lena: … green energy, and …
- Lena: … even sustainable investment options proves this.
- Tom: Another example is Nokia. In January 2008 the global telecommunications concern decided to close its factory in Bochum, Germany (an area already hit hard by the decline of heavy industries) and relocate to Romania. This was despite the Bochum factory operating profitably and cost 2,300 workers their jobs.
- Tom: A massive protest campaign ensued with tens of thousands of citizens pledging on a website to refrain from buying Nokia products.
- Tom: Activists placed barrels around the city where people were urged to place their Nokia mobiles.
- Tom: More and more joined the protests and the boycott. Monetarily, Nokia would have had no trouble absorbing this loss of revenue. But in light of the company’s 400 plus million dollar marketing budget, a large part of which goes into brand building advertising, maybe the looming PR disaster was unacceptable.
- Tom: In July 2008, Nokia together with the City of Bochum and the Government of North Rhine-Westphalia have announced a stimulus program called “Growth for Bochum” to create jobs in the region. Nokia’s contribution was $40m cash plus the entire proceeds from the sale of assets.
- Tom: As another example, an Englishman named Simon Berry had the idea that Coca-Cola, who own a vast distribution network for their products into third world countries, could transport medicines, such as rehydration salts, to dying children. He set up a website….
- Tom: … became active on Twitter and …
- Tom: …created a Facebook group which already has 8,500 members. Since launching last year he has been invited to Coca-Cola Europe Headquarters who are now considering the proposal. This shows how modern technology and social networks can amplify calls for companies to do the right thing.
- Lena: So corporations can no longer ‘hide’ their actions. Shareholders demand to not only receive their fair share of returns but to understand how the Corporation achieved this. Consumers want to be associated with companies that reflect their values. Shareholders and society are “forcing firms to rethink their fundamental values”.
- Melinda: Today, leaders are focussed not only on “doing things right”, but “doing the right thing”. Archie Carroll, an expert in business ethics, has proposed a model which gives us a framework for measuring the actions of companies.
- Melinda: He states that the social responsibilities of a business have four dimensions; an economic dimension, a legal dimension, an ethical dimension and a discretionary dimension.
- Melinda: These are affectionately known as the "Should-Do's" and "Might-Do's" respectively. This gives a wider dimension to the importance of being a responsible firm. Social responsibility requires firms to look beyond figures and documents and to look out at people and the environment. Carroll foresees the importance of ethical standards as part of a firm's success in the long run.
- Tom: The economic dimension is the obvious one. According to Peter Drucker, Milton Friedman and in fact Joel Bakan, corporations have the undeniable responsibility to maximise profits.
- Tom: Under the legal dimension, corporations like human persons have to abide by laws, rules and regulations.
- Tom: The ethical dimension of responsibility is where society demands that corporations be “good corporate citizens”, and…
- Tom: …the discretionary dimension allows corporations to go above and beyond the ethical expectations of the community in doing good.
- Melinda: To help put some of the dimensions of this model into context, I will tell you a story In the 1970s, an illness called River Blindness infected millions of people every year, mainly in Africa and Latin America. The disease, …
- Melinda: …which is transmitted by parasites, causes serious itching, discolouring, lesions and …
- Melinda: …ultimately blindness. Some sufferers were in such pain that they opted to commit suicide to avoid the agony. There was no known cure at the time.
- Melinda:Then, in 1979, a Merck scientist found that a drug currently being used for dogs, could be used in humans to treat the parasite that causes river blindness. But it wasn't going to be all straightforward. Firstly, it would cost Merck roughly US$100m to develop, test and produce the drug Mectizan for use in humans.
- Melinda: Considering their target market of mostly impoverished nations, it was unsure whether they would have any buyers.
- Merck does have a mission statement, though, which is "Putting patients first". This was a real opportunity to live by their mission statement. Merck felt as though they had no choice. They had the cure in their hands, so they had to put patients first. They invested the $100m and developed the drug. Their fears did come true and there were no buyers for the drug so Merck decided to give it away for free.
- But there was more to the story. There was no distribution infrastructure in place (and there was no ColaLife at the time), so Merck spent another $30m to establish their own distribution program for Mectizan. 30 years on, Merck is still providing the drug for free and they have pledged to do that for as long as there is a need for it.
- Tom: So how does this relate to Archie Carroll’s four dimensions? Economic one could argue that cost of $160m given their mark budg of $1bn and trnover of $23bn annually… Legal we assume they did their due diligence Ethical in providing the drug free of charge Discretionary in continually providing it to this day free of charge So Merck is a perfect example of why we do not agree with Bakan.
- Tom: Another way to look at ethics is through the lens of three branches of ethical philosophy. They are Deontology, Consequentialism and Virtue ethics
- Tom
- Tom
- Tom
- Tom
- Tom
- Tom: Proves Bakan wrong because the socially appropriate option was also the economically ideal one
- Tom
- Tom
- Tom: Outcomes great for company and society
- Tom
- Tom
- Tom: Now we would like to tell you the story of John, an executive facing a moral dilemma ((play video))
- ((Nathan to kick off and manage discussion)) ((Melinda to wrap up and lead over to solution video))
- ((play video, then continue to next slide))
- Nathan: So John has decided against keeping the Sheikh’s business. According to Peter Drucker, John has neglected his duty for profit, is a bad steward of enterprise and needs to be sacked. Would you agree? ((Nathan to manage discussion)) ((Lena to wrap up and lead into conclusion))
- Lena: So, to summarise…
- Lena: …we have seen Joel Bakan’s argument that corporations are effectively psychopaths.
- Lena: We have shown you examples of corporations which disprove Bakan’s theory. They, and many others, increasingly act in the interest of society and the environment…
- Lena: …but what compels corporations to increasingly do the right thing?
- Lena: It is us. We as a society increasingly demand it from them. Thank you.