final Flashcards
Anita Roddick about businesses
- Business of business should not be about money. It should be about responsibility. It should be about public good, not private greed. (
Milton Friedman citata
“There is one and only one social responsibility of business – to use its resources and engage in actitities designed to increase its profits … in open and free competition without deception or fraud.”
Milton Friedman major works and ideas
Major works:
“Capitalism and Freedom” (1962)
“The Optimum Quantity of Money and other Essays” (1969)
Ideas:
○ Close to “Laissez faire“ and libertarianism
○ Close link between money supply and inflation
Milton Friedman criticism and influence
Criticism
○ Does not consider externalities
○ Keynesians, Austrian School of Economics
Friedman’s Influence:
○ Nobel Price Winner in Economics (1976)
○ Influenced Ronald Reagan, Margaret Thatcher, Governments of Chile, Estonia, Iceland, CATO Institute (libertarian think-tank)
Can a corporation have social responsibilities?
Corporations are just artificial persons
Corporate executives are just agents of shareholders
Individual responsibilities -> OK, voluntary … with own money!
Corporate executive has a “social responsibility“ only in his/her capacity as businessperson
Government -> Governing country -> Elected by the public has to serve public interests
CEO Governing company -> Elected by the shareholders Has to serve shareholders’ interests
Business reasons (enlightened self-interest)
- Extra and/or more satisfied customers
- Employees may be more attracted and/or committed (“employer branding” & “employee engagement” policies)
- Reduce risk, prevent litigation, and improve corporate image/reputation
- Long-term investment that benefits the corporation
Moral reasons
- All corporate activities have social impacts of one sort or another, and may cause social problems
- Because they are powerful, corporations should use their power and resources responsibly (sustainability issues)
- Corporations rely on the contribution of a wide set of stakeholders in the society rather than just shareholders
Corporate social responsibility
encompasses the economic, legal, ethical, and philanthropic expectations placed on organizations by society at a given point in time.
apima ekonominius, teisinius, etinius ir filantropinius lūkesčius, kuriuos tam tikru momentu visuomenė kelia organizacijoms.
Carroll’s pyramid suggests
suggests that corporate has to fulfil responsibility at four levels – Economic, Legal, Ethical and Philanthropic.
levels of Carroll’s pyramid
Economic responsibilities:
Legal responsibilities:
Ethical responsibilities:
Philanthropic responsibilities:
Carroll’s pyramid -> Economic responsibilities
Base of the pyramid; understood as the production of goods and services that consumers need and want. As a compensation for the delivery of these goods and services, the company must obtain an acceptable profit.
Carroll’s pyramid -> Legal responsibilities
Compliance with the law and any type of (public and/or private) regulations, in accordance with the basic rules by which the business must operate.
Carroll’s pyramid -> Ethical responsibilities
Obligation to do what is right, fair and reasonable, and to avoid - or at least minimize - damage to the diverse stakeholders to whom the company relates.
Carroll’s pyramid -> Philanthropic responsibilities
Corporate actions that respond to social expectations of good corporate citizenship, including the active involvement of businesses in activities or programmes that promote social welfare and improve the quality of life of the population.
CSR
is a particularly strong concept in the US, and only more recently has become so influential in Europe
Economic responsibility in us and eu
Europe – Focused on responsibility to stakeholders
US – Focused on responsibility to shareholders
Legal responsibility in us and eu
Europe State accepted as prominent power in enforcing rules of the game rather than as
US view of State as interfering in such rules
Ethical responsibility in us and eu
Europe – greater mistrust of modern corporations than US
Philanthropic responsibility in us and eu
Europe - mostly implemented compulsorily via legal framework
US – mostly implemented via voluntary acts of successful companies
Corporate Social Responsiveness
– capacity of a corporation to respond to social pressures
Four “philosophies”/levels/strategies of social responsiveness:
Reaction / Defense / Accommodation / Proaction
CSR outcomes: Three areas of Corporate Social Performance (CSP)
Social policies:
Social programmes:
Social impacts:
Social policies:
Explicit corporate social policies stating the company’s values, beliefs, and goals with regard to its social environment – often included in mission statements or in other corporate policies (e.g., environmental sustainability goals)
Social programmes:
Specific social projects or activities, measures and instruments implemented to achieve social policies (e.g., environmental management programmes)
Social impacts
Proof of specific changes achieved through social programmes implemented in a given period of time
Robert Edward Freeman (1951-)
The father of Stakeholder Theory
“A stakeholder in an organization is (by definition) any group or individual who can affect or is affected by the achievement of the organization’s objectives”
Robert Edward Freeman (1951-) major works and ideas
Major works:
* “Strategic Management: A Stakeholder Approach” (1984)
Ideas:
* Observed that traditional models suggest that shareholders are the core stakeholders
* Proposed that other parties must be also involved - such as competitors, employees, customers, suppliers, trade unions, government, civil society, etc.
Assessment of how the corporation “affects” stakeholders:
Principle of corporate rights – the corporation has the obligation not to violate the rights of others
Principle of corporate effect – companies are responsible for the effects of their actions on others
Principle of corporate rights
– the corporation has the obligation not to violate the rights of others
Principle of corporate effect
companies are responsible for the effects of their actions on others
Corporate accountability
Issue of whether a corporation is answerable in some way for the consequences of its actions – and if so, to whom.
kam yra atsakinga uz savo veiksmus
Firms have begun to become “political actors” – taken up many functions previously undertaken by government, because of:
§ Privatizations
§ Increasing corporate power & weaker government
§ Increasing encouragement or self-regulation (for example: codes of good practices)
Who controls corporations?
To whom are they accountable
Problem of democratic accountability -> transparency
Corporate transparency
CSP should be made visible to stakeholders -> transparency of CSP policies, programmers & impacts
Quality of corporate transparency: disclosure, clarity, accuracy.
Corporate citizenship -
Corporate function for governing citizenship rights for individuals
Has evolved from (traditional) corporate philanthropy to (current) political activity – corporations as political actors :
○ Governments retreating from catering social needs
○ Governments unable or unwilling to address social needs
○ Governments can only address social problems within their reach
Rights in liberal citizenship are being increasingly influenced by corporations
- Social rights - freedoms to participate in society through entitlements towards third parties (positive rights)
- Civil rights – freedoms from abuses and interference by third parties – most notably the government (negative rights)
- Political rights – freedom to participate in society governance process (e.g., to vote or hold office)
Sustainability
Long-term maintenance of systems according to environmental, economic and social considerations.
sustainability triple bottom line model
The TBL is an accounting framework that incorporates three dimensions of performance: social, environmental and economic.
Sustainability arises when
we’re able to meet the needs of today’s generation without compromising the needs of future generations.
Nine ways to achieve sustainability
First – Leave everything in the pristine state, or return in to its pristine state
Second – Develop so as to not overwhelm the carrying capacity of the system
Third – Sustainability will take care of itself as economic growth proceeds (Simon Kuznet)
Fourth – Polluter and victim can arrive at an efficient solution by themselves (Coase theorem)
Fifth – Let the markets take care of it (e.g., carbon-trade)
Sixth – Internalize the externalities (e.g., taxation, consumer pressure)
Seventh – Let the national economic accounting system reflect defensive expenditures (e.g. pollution-treatment or fire-fighting expenses increase GDP)
Eight – Reinvest rents from non-renewable resources (Hartwick rule) into sustainable projects & policies (e.g., Norway’s approach)
Ninth – Leave future generations the options of the capacity to be as well off as we are (Robert Solow)
Evaluation of all environmental, social and economic negative
impacts and benefits in decision-making processes towards more sustainable products throughout their life cycle
A product life-cycle approach to sustainability
measures a company’s total environmental impact – from raw materials, to production, distribution, consumer use, and disposal of the product by the consumer
Jozeph E. Stiglitz - he said
that GDP is not good measure because it is do not take education, health etc.
The GPI is a metric that has been suggested to
replace, or supplement GDP – consistent with “triple bottom line” considerations
Designed to take fuller account of the well-being of a nation,
only a part of which pertains to the size of the nation’s economy, by also incorporating environmental and social factors which are not measured by GDP
For instance, some models of GPI decrease in value when the poverty rate, pollution, or environmental degradation increases.
why GPI is better than GDP
- For instance, some models of GPI decrease in value when the poverty rate, pollution, or environmental degradation increases.
- The GPI is used in ecological economics, “green” economics, sustainability and more inclusive types of economics.
- The GPI includes environmental and carbon footprints that businesses produce or eliminate, including in the forms of resource depletion, pollution and long-term environmental damage.
The HDI was created to
emphasize that people and their capabilities should be the ultimate criteria for assessing the development of a country, not economic growth alone.
Summary measure of average achievement in key dimension of human development:
○ a long and healthy life (life expectancy at birth)
○ being knowledgeable (years of schooling - achieved & expected)
○ have a decent standard of living (GNP per capita
The IHDI reflects
the level of human development when inequality is accounted for.
Under perfect equality, the HDI and IHDI
are equal;
the greater the difference between the two, the greater the inequality.
○ In relatively egalitarian countries: IHDI > HDI gain in human development
○ In relatively inegalitarian countries: IHDI < HDI loss in human development
Method promoted by the Global Footprint Network to
measure human demand on natural capital (i.e. the quantity of nature it takes to support people or an economy).
ecological accounting system.
tracks this demand through an ecological accounting system.
The term “overshoot” represents
the level by which human population’s demand overshoots the sustainable amount of biological resources regenerated on Earth.
The Happy Planet Index (HPI)
is an index of human well- being and environmental impact that was introduced by the New Economics Foundation in 2006
Each country’s HPI value is a function of its:
- average subjective life satisfaction (experienced wellbeing)
- life expectancy at birth
- ecological footprint per capita
The UN Global Compact is
“the world’s largest corporate sustainability initiative”
UN Global Compact Mission:
“A call to companies to align strategies and operations with universal principles on human rights, labour, environment and anti-corruption, and take actions that advance societal goals.”
“The multi-year strategy of the UN Global Compact if to drive business awareness and action in support of achieving the Sustainable Development Goals by 2030”.
United Nations Global compact
labour
- businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining
- elimination of all forms of forced and compulsory labour
- effective abolition of child labour
- elimination of discrimination in respect of employment and occupation
“Human Resource Management” (HRM) vs. “Personnel mgmt.”
The term ‘human resource management’ and its implications have been a subject of intense debate in business ethics
Humans treated as important and costly resource (moral hazard?)
Are employees subject to a strict managerial rationale of minimizing
costs and maximizing the efficiency of the human “resource”?
The Gig Economy
Individuals being hired for a specific task, rather than being employed longer term (with the associated benefits) for exactly the same task
Modern slavery
- People who are forced to work through threat, owned or controlled by an employer particularly through mental or physical abuses
- People who are de-humanized and treated as a resource, physically constrained or their movement being controlled
Four types of employee privacy
Physical privacy – physical inaccessibility to others and the right to “one’s own space” (e.g., dilemma of surveillance cameras)
Social privacy – freedom to behave in our private life in whichever way we choose (e.g., dilemma of “immoral” behaviour in private life)
Informational privacy – determining how, when, and to what extent private data about us are released to others (e.g., dilemma of security investigations)
Psychological privacy – not being compelled to share private thoughts and feelings (e.g., dilemma of forcing employees to look happy and smile to customers)
European Union Regulations
Most advanced and sophisticated regulations on privacy at workplace
European Convention on Human Rights
- guarantees every person the right to private and family life, home and correspondence
European Court of Human Rights -
decided that protection of private life includes workplace general
Data Protection Directive (DPD)
- Right to be forgotten
- Easier access to own personal data
- A right to transfer personal data
- Businesses as to inform individuals about data breaches
- Consent of individuals must be given by a statement or by a clear affirmative action
Employee hiring processes must
strictly abide to the law and comply with high ethical standards
Job applicant’s recruitment & application / CV screening
Use standardized criteria & avoid biases
Selection - Potential discrimination issues
- Language
- Physical appearance
- Educational requirements
- Gap in employment history
- Tests (cognitive, skills, psychological, physical, drugs…)
*Interview
Promotions – potential discrimination issues
- Seniority
- Inbreeding
- Nepotism
Recognition that employees might be more than just human “resources” but should also have
a certain degree of influence on their tasks, job environments, and company goals – right to participation
Financial participation –
allows employee share in the ownership or income of the corporation
Operational participation
○ Information – receiving information about crucial decisions
○ Consultation – express views on potential decisions
○ Delegation – control over a range of decisions
○ Co-determination – full right to determine major decisions
Right to association
– to join together for collective defense of worker’s interests (e.g., through trade unions)
Right to healthy and safe working conditions
is one of the most important ethical concerns for employees
- Substantial amount of health, safety and environmental (HSE) regulations – compulsory compliance
- Main issues – implementation and enforcement
Excessive working hours –
damage of employee’s overall state of physical and mental health
“Presenteeism” -
being at work when employee should be at home due to illness or because working time is over
Flexible working patterns –
“non-standard” work relationships:
- Part-time work, temporary work, self-employment, remote work
- Worse pay & conditions, higher insecurity, exclusion from benefits & training
Fair wages
“Everyone who works has the right to just and favourable remuneration ensuring for themselves and their family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection”
Key issues to consider
- What is the prevailing wage in the industry?
- What is the local wage level?
- What is the nature of the job itself?
- What are the qualifications & experience needed?
- Is the job secure? What are its prospects?
- What are the employer’s financial capabilities?
- What are other employees inside the organization earning for comparable work?
- Problems of performance-related pay
Fundamental right of human beings:
“Everyone has the right to work, to free choice of employment, to just and favourable conditions of work, and to protection against unemployment”
the right to work in a business context cannot mean that every individual has a right to be employed
The right to work should result in every individual facing the same equal conditions in exerting this right
A healthy working/personal life balance is increasingly difficult to maintain:
- Increasing importance of flexible working patterns
- Increasing pressure for longer working hours
- High demands of highly qualified work (managers, creative- work positions, professional freelancers, etc.)
Some proposals for improving work-life balance:
- Sabbatical schemes
- Higher flexibility in work schedules
- CSR-based family-friendly policies (e.g., childcare support)
- Home-based remote work: personal, family, social, economic & ecological benefits
Discrimination in the business context occurs when
employees receive preferential (or less preferential) treatment on grounds that are not directly related to their qualifications and/or job performance
Discrimination may occur
on the basis of gender, race, disability, age, religion, education, appearance, class, sexuality, marital status, family, accent, etc.
“Institutional” or “structural” discrimination happens
when discrimination is deeply embedded in business
Diversity management
– prominent feature of contemporary (HR) management approaches, closely related to fighting discrimination at work
Affirmative action
which can include (depending of the specific form of action taken) positive discrimination, reverse discrimination, or employment equity, implies specific preference given to groups considered by some to be victims of social discrimination.
Examples of affirmative actions
preferential access to education, employment, health care, social welfare, etc.
Negative rights
(strict equality, non-discrimination & literal equality of opportunity, “weak” affirmative action) vs. positive rights (equity, positive discrimination & fair/real equality of opportunity, “strong” affirmative action)
Employers rights vs. employees rights
(e.g., employers – right to choose who works for them and “fit” with current workforce)
Affirmative action policies –
increasingly popular as part of CSR in the HRM domain (“equal opportunity employer”, “affirmative action employer”, etc)
“Weak” affirmative action
Passive non-discrimination – willingness in hiring, promotion, and pay decisions to treat races, sexes etc. alike.
Pure affirmative action - concerted effort to enlarge the pool of applicants so that no one is excluded because of past or present discrimination.
Pure affirmative action
- concerted effort to enlarge the pool of applicants so that no one is excluded because of past or present discrimination.
“Strong” affirmative action
Preferential hiring – systematically favouring minorities, women, etc. in decisions of enlarging labour pool.
Positive discrimination – specifying numbers (quotas) or proportions of minority, women, etc. group members that must be hired.
Passive non-discrimination
– willingness in hiring, promotion, and pay decisions to treat races, sexes etc. alike.
weak affirmation
Preferential hiring
– systematically favouring minorities, women, etc. in decisions of enlarging labour pool.
strong affirmative
Positive discrimination
– specifying numbers (quotas) or proportions of minority, women, etc. group members that must be hired.
strong
Pure affirmative action -
concerted effort to enlarge the pool of applicants so that no one is excluded because of past or present discrimination.
weak
Human characteristics that make people different from one another, including:
- characteristics a person has little or no control over;
- Characteristics that can be adopted or modified.
Although workforce diversity must be
acknowledged, stereotyping (assuming that group averages or tendencies are true for each and every member of the group) should be approached with caution.
To survive and prosper in increasingly heterogeneous societies and complex business environments, organizations must
capitalize on employee diversity as a source of competitive advantage.
Diversity management:
set of activities involved in integrating “non-traditional” employees (e.g., women, minorities, etc.) into the workforce and using their diversity to the firm’s competitive advantage.
Diversity itself can have a positive, negative, or neutral effect on
firm performance. Active diversity management should aim at optimizing the diversity-performance link.
Diversity management actions & programmes are
closely related (or even be part of) CSR policies.
Potential benefits of diversity management programmes
Greater creativity, considering new ways and less obvious alternatives.
Better problem solving, moving from group-thinking to “out-of- the-box” thinking.
Greater system flexibility, thanks to more openness to new ideas and greater tolerance and acceptance of changes.
Better information input and management of knowledge, due to the broader variety of sources and experiential backgrounds.
Better marketing strategies, especially in target markets which are increasingly multicultural and multi-ethnic.
Focus on diversity vs. focus on inclusiveness
Focus on diversity (openness to difference, but stereotyping risk)
vs.
focus on inclusiveness (integration of “the others”, but brainwashing risk).
Resistance to change
from dominant groups (traditionally “white males”).
Overcoming segmented
(e.g. sex or race-based) communication networks.
Resentment due to
Overcoming the “glass ceiling”
perceived favouritism towards ‘non- traditional’ employees.
when making promotion decisions.
Usual targets for diversity management programmes
- Ethnic, cultural, and/or religious minorities
- Women
- People with disabilities
- Homosexuals–and more recently the broader
*LGTBIQ+ community - Older workers
Usual targets for diversity management programmes
- Ethnic, cultural, and/or religious minorities
- Women
- People with disabilities
- Homosexuals–and more recently the broader
*LGTBIQ+ community - Older workers
Facilitating and improving diversity management
- Must have top management support
- Creating an inclusive organizational culture
- Diversity training programmes
- Support groups
- Accommodation of family needs
- Senior mentorship programmes
- Apprenticeships
- Communication standards
- Diversity audits: assessment of effectiveness of diversity management programmes
- Diversity goals as part of performance appraisal of managers
- Management responsibility and accountability
Whistleblower -
An employee or ex-employee of an organization who, in good faith, discloses information about serious malpractice by that organization.
Criteria for whistleblowing
- Information must be released by a stakeholder within the organization, usually an employee or former employee.
- Information that is released must not have already been made public.
- Information that is released must be of substantial importance and be about the misconduct of the company or its members.
- Information must be released to parties that fall outside the whistleblower’s normal chain of command.
- Information must be released voluntarily in an effort to correct wrongdoing, rather than for revenge purposes.
European Court of Human Rights (07/09/2011)
An employee who acts in good faith and the “public interest” in the disclosure of wrongdoings outweighs the interests of the employer.
Creation of channels of reporting within companies/administrations
Obligation to create effective and efficient reporting channels in companies of over 50 employees or municipalities of more than 10,000 inhabitants – contributing to develop a a healthy corporate culture.
Whistleblowers are encouraged to use
internal channels within their organization first, before turning to external channels which public authorities are obliged to set up. In any event, whistle blowers will not lose their protection if they decide to use external channels in the first place.
Whistleblowers are encouraged to use
internal channels within their organization first, before turning to external channels which public authorities are obliged to set up. In any event, whistle blowers will not lose their protection if they decide to use external channels in the first place.
Persons protected include those
with a range of profiles who could acquire information on breaches in a work-related context (e.g., employees, including civil servants at national/local level, volunteers and trainees, non executive members, shareholders, etc.).
A wide scope of application
New rules cover many areas, e.g., public procurement, financial services, prevention of money laundering, public health, etc. For legal certainty, a list of all EU legislative instruments covered is included in an annex to the directive. Member states may enlarge this list when implementing rules.
Support and protection measures for whistleblowers
Rules introduce safeguards to protect whistleblowers from retaliation, such as being suspended, demoted and intimidated. Those assisting whistleblowers, such as colleagues and relatives are also protected. The directive also includes a list of support measures which will be put in place for whistleblowers.
Feedback obligations for authorities and companies
Rules create an obligation to respond and follow-up to whistleblowers’ reports within 3 months (with the possibility of extending this to 6 months in duly justified cases).
Pros and cons for the whistleblower
Discouragements
short- and fixed-term contracts
Gagging (confidentiality) clauses in work contracts
Duty of fidelity
Negative view of whistleblowers
Disastrous personal consequences
_____
Encouragements
Freedom of expression clauses in human rights regulations
Legal duties
Corporate codes expressly demanding this
Changing view of whistleblowers as a corporate safety net
Two ethical limitations based on fairness
- Individual transactions will be unfair to certain consumers
- Without consumer sovereignty, the economic system is inefficient
Consumer sovereignty assessment
- Consumer capability – degree of freedom from limitations in rational decision-making (e.g., from vulnerability or coercion)
- Information – availability and quality of relevant data pertaining to a purchase decision
- Choice – extent of the opportunity available to freely switch to another supplier
Consumer sovereignty assessment
- Consumer capability – degree of freedom from limitations in rational decision-making (e.g., from vulnerability or coercion)
- Information – availability and quality of relevant data pertaining to a purchase decision
- Choice – extent of the opportunity available to freely switch to another supplier
Under perfect competition,
consumers drive the market
john elkington sukure
triple bottom line
triple bottom line main concept
businesses does not have only one single goal, but has extended goal which adding enviromental, economic, social value too
TBL social
subsidized hospital project in a sparsely populated urban area
TBL enviromental
rural water supply project kuris padeda zmonems ir sumazina kaina
(John Maynard Keynes) about businesses
- Economics is essentially a moral science and not a natural science.
(Albert Einstein) about businesses
- Not everything that can be counted counts, and not everything that counts can be counted.
(Joel Bakan) about businesses
- Evidence suggests that the legal designation of a corporation makes it unable to be anything but self-interested
(Milton Friedman) about businesses
- Society doesn’t have values. People have values
normative ethical theory
rules, guidelines, principles, and approaches that determine right and and wrong
ethical egoism (consequentialist theory)
a theory that suggests that an action is morally right if on a given situation all decision makers freely decide to pursue either desires or their interest
utilitarism (consequentialist theory)
a theory states that an action is morally right is it results in the greatest amount of good for the greatest amount of people affected by the action
ethics of duty (kantianism)
ethical theories that consist of abstract, unchangeable, obligations, defined by a set of rationally deduced a prior moral rules, which should be applied to all relevant ethical problems
categorical imperative (kantianism)
act only according to that maxim by which you can at the same time will that it should become a universal law
human rights
basic, inalienable, and unconditional entitlements that are inherent to all human being, without exception
justice
the simultaneous fair treatment of individuals in a given situation with the rest that everybody gets that deserve
social contracts
a hypothetical agreement between members of a society and those who govern it that establishes the inter-relationships, rights, and responsibilities on a fair basis
virtue ethics
an approach to ethics which focuses on the idea that possessing excellent traits of character or virtue is required to be a good person.
ethic of care
an approach to ethics which emphasises our interdependency with those with whom we have important relationship and acknowledges a role for emotions as well as rationality
discourse ethics
an approach that aims to solve ethical conflicts through a deliberative process of norm generation including rational reflection and open communication on the real-life experience of all relevant participants
postmodern ethics
an approach that locates morality beyond the sphere of rationality in an emotional ‘moral impulse’ towards others. it encourages one to question everyday practices and rules , and to listen gut feelings
ethical absolutism (normative)
claim that there is eternal, universal moral principles
ethical relativism (normative)
claim that there is no universal right or wrong it simply depends on culture, traditions
consequentialism
it is the measurement of the consequences of an action which determine if it is ethically correct. teleological theory
hedonism
Utility is identified by pleasure and the absence of pain. Only pleasure is ultimately good, but the amount of pain can be deducted from the amount of pleasure to yield the ‘net pleasure’.
