Crane & Matten, Business ethics, 3rd Edition, Chapter 5

Suggested answers to the Think Theory exercises associated with the Ethics in Action boxes

THINK THEORY 1 Think about the distinction between principles and guidelines and see if you can identify further examples of each in the Unilever code. Evaluate these in terms of the degree of commitment from Unilever, and the feasibility of their implementation, especially across national contexts. Do you consider the code to be a useful management tool?

The document starts with a statement of principles, such as a commitment to honesty and respect for human rights. The rest of the code sets out what this means in practical terms, mostly in terms of general guidelines, such as a commitment to not use forced or child labour, or to work in partnership with others on environmental care. There are some specific behavioural guidelines such as instructions to staff on how to act if confronted with a situation of bribery, and a requirement that breaches of the code are to be reported internally but these are in a minority. There appears to be strong commitment to the code (e.g. management will not be punished for losing business by adhering to the principles); and although the general nature of much of the document does leave plenty open to interpretation, the code covers this by empowering senior regional management to provide more detailed guidance tailored to local conditions. It therefore seems like it has the potential to be a good management tool.

THINK THEORY 2 Think about the notion of a global code of ethics from the perspective of (i) rights, and (ii) postmodern perspectives on ethics. What does each contribute and can they be reconciled?

A rights perspective is concerned with protecting basic inalienable rights in all actions. This perspective can provide a general framework for a code of conduct, setting out company principles that are to be respected. A postmodern perspective, by contrast, locates morality in an emotional moral impulse towards others, encouraging people to follow gut feelings about what is right or wrong in specific situations. This perspective can point to individual responsibility to engage with stakeholders in an ethical manner. However, the highly specific approach of the postmodern perspective, which questions everyday practices and rules, is very different from the general framework of a rights perspective and it is difficult to see how the two can be reconciled.

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Crane & Matten, Business ethics, 3rd Edition, Chapter 5

THINK THEORY 3 What type of stakeholder relationships are described here? What are the benefits and limitations of these approaches for managing business ethics?

The stakeholder collaboration relationships here are technical, typically close to the firms own areas of business. They appear to relate more to the firms philanthropic or CSR commitments than to companies seeking to engage with critical stakeholders. The type of stakeholder relationships can be categorized as instrumental. More specifically, the following is also the case: NGO partnerships seem to be a mix of one-way support and mutual support. Public sector partnerships are a form of project dialogue. Business to business partnerships are also an example of project dialogue, possibly strategy dialogue. Client collaboration is an example of task force relationship. Benefits include: Beneficial ethical outcomes (though not always); Tool for managing business ethics (reduces conflict, easier to satisfy stakeholders); More corporate accountability (democratic governance in decision-making). Limitations include. Resource intensity (time-consuming and expensive); Culture clash (different cultures can lead to problems); Schizophrenia (collaboration in one area, but conflict in another: confusing); Uncontrollability (risk of losing control of strategic direction and image); Co-optation (criticism that stakeholder groups are being co-opted by firms); Accountability (questions of both corporate and stakeholder accountability, especially when meetings are behind closed doors); Resistance (internal or external resistance to collaborative relationships).

THINK THEORY 4 Should social accounting be advocated on a consequentialist or non-consequentialist argument? How would the two arguments differ?

A consequentialist argument could say that the benefits of engaging in social accounting outweigh the costs and it is therefore in the companys best interests to undertake such an exercise. Some benefits include identifying future risks, particularly to corporate reputation; increased investment through inclusion on SRI (socially responsible investment) lists and labels; and decreased pressure from media and civil society groups. A non-consequentialist approach, by contrast, would argue that the firm should engage in social accounting, because it is the right thing to do. It is a way of providing greater

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Crane & Matten, Business ethics, 3rd Edition, Chapter 5 accountability and transparency, engaging with stakeholders and showing them how the companys actions are affecting them.

THINK THEORY 5 Think about the GRI in terms of Zadek et al.s (1997) eight principles of quality in social accounting. To what extent would you say it conforms to and contributes to good practice?

Based on Zadek et al.s (1997) principles: Inclusivity. GRI is a multi-stakeholder, multi-sector initiative that encourages extensive inclusion both for those organizations using it as a reporting standard, and for those it invites to provide feedback on its own progress. Comparability. This is a key goal for the GRI to become the generally accepted standard for reporting worldwide, and has made significant strides towards this goal. Completeness. Another one of the key goals of the GRI was to be inclusive and create a list of indicators that could provide measures for social, environmental and economic considerations. Creating the measures for these areas has had varying degrees of success due to certain issues being easier to quantify than others. Again within this principle, the GRI would conform quite well. Evolution. The GRI model itself has been evolutionary in its development: the third revision of the guidelines was released in 2006, with subsequent sector supplements, national annexes, training materials and even specialist guidance. More importantly, the guidelines encourage users to embark on a continual learning cycle with regard to non-financial issues. Management policies and systems. GRI is mainly concerned with reporting, but has produced tables on its website to indicate its relationship to different management systems such as ISO standards (14000 and 26000 series). It is also important to note that the GRI is intended as a tool for companies who use management systems to report on these systems and includes specific sections of the guideline on these issues. Disclosure. Due to the fact that the GRI is voluntary, disclosure is only possible from those organizations who choose to use the standards. However, for those organizations who do follow the guidelines, there are clear, specific lists of information used to ensure transparent disclosure of appropriate material. External verification. In the G3 version of the guidelines, external verification/ assurance are explicitly recommended (though not required). Continuous improvement. GRI is in support of continuous improvement.

Therefore, the GRI, if followed and used properly, goes far to conform with the eight principles of quality in social accounting and contributes to best practice. If used selectively, however, it may in fact work against the issue of transparency as it would make it more difficult to see what issues companies were not reporting.

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Crane & Matten, Business ethics, 3rd Edition, Chapter 5

THINK THEORY 6 Think about the growth in business ethics management that we identified earlier in the chapter due to the impact of SarbanesOxley legislation and other governance reforms in the early/mid 2000s. Are these developments likely to initiate business ethics management that is characterised by a compliance, values, external, or protection orientation?

It is possible that the governance reforms caused senior management to re-evaluate company values or seek to respond to the concerns of key external stakeholders. However, business ethics management that was set up as a direct response to changes in governance rules seem most likely to be characterised principally by a compliance orientation. That is, the main emphasis would be on preventing, detecting and punishing violations of these new rules. It also seems likely that the management systems set up will have a protection orientation in practice, given that regulators typically impose lower fines on companies with ethics management systems.

THINK THEORY 7 Think about organizations you have been part of, either as an employee or a member of some sort. To what extent would you say that the leaders of those organizations were ethical leaders in that they promoted ethical behaviour from you or your colleagues? Which model of ethical leadership, if any, did they fit into?

This is a question each individual student will answer differently, given their individual experiences. Whatever the specific experience, however, they will need to justify their choice. For illustrative purposes, take the hypothetical example of working for a nongovernmental organization where the leader promoted ethical behaviour; not so much though culture change, but rather with a cultural learning perspective. He encouraged staff to make conscious ethical choices when making purchases in project work. He took a hands-off guidance role, challenging staff on their reasoning but respecting their decisions so long as they supported the organizations goals.

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