The Business Ethics Blog

Study finds dearth of women on boards, by Jane M. Von Bergen writing for the Philadelphia Inquirer

The key to getting more women on corporate boards is getting more women on board-nominating committees, according to a study released Thursday on diversity in corporate governance.

Success depends on “who makes the lists,” said Vicki Kramer, a Philadelphia management consultant who is chairwoman of a national network of female executives.

Although more boards are adding female directors, boards are still dominated by men, according to the report by the InterOrganization Network, a group of seven organizations of female executives.

“The snail’s pace at which women are making their way into corporate boardrooms is simply not acceptable,” Kramer said in a statement announcing the report.

It’s pretty widely acknowledged that women are under-represented on corporate boards-of-directors. The cause of that is subject to less agreement (is it all sheer sexism, or do women’s different priorities and life-plans play a role?), and the cure for underrepresenation is less agreed-upon still.

But the study described here illustrates nicely the difference between procedural and substantive justice. Substantive justice has to do with the fairness of actual outcomes: “in the end, how many women end up on corporate boards?” Or, alternatively, “how likely is a suitably-qualified woman to make it onto a corporate board?” Procedural justice has to do with the fairness of the procedure that generated that result: “was the process itself a fair one (regardless of whether it in fact produced an ideally fair outcome)?” The study cited here also points to a connection between procedural & substantive justice. Empirical evidence about outcomes (the low rate at which women are appointed to boards) is being attributed to a fact about the procedure (i.e., too few women are involved in the process of appointing board members). This is a neat bit of empirical input for our thinking about justice: it’s not enough to guess, or to postulate what constitutes a fair procedure. Sometimes we can actually look for evidence of bias in procedures, in order to help us engineer better ones.

Peter Singer (the Princeton University philosopher who is the leading modern advocate of utilitarianism) recently posted the following short article on Microsoft’s compliance with China’s censorship of citizens’ blogs: Fear and Freedom on the Internet.

Earlier this month it was reported that, at the request of China’s rulers, Microsoft shut down the Web site of a Chinese blogger that was maintained on a Microsoft service called MSN Spaces. The blogger, Zhao Jing, had been reporting on a strike by journalists at The Beijing News that followed the dismissal of the newspaper’s independent-minded editor.

Microsoft’s action raises a key question: can the Internet really be a force for freedom that repressive governments cannot control as easily as newspapers, radio, and television?

In particular, Singer is critical of 2 of Microsoft’s claims:
1) Microsoft has claimed that censoring in China is necessary in order to comply with local laws; but Singer points out that the computers on which the relevant blogs were stored were in the U.S., and thus not subject ot Chinese law;
2) Microsoft’s Bill Gates argues that the right to freedom of expression is not absolute, & that Microsoft is (likewise) willing to limit, say, or child pornography. Singer argues that child pornography itself does not “express ideas,” so it cannot be subject to the kind of “freedom of expression” that we all value so much. In China, however, what’s being suppressed is the ability to express a range of views and opinions. So, the child porn example is a red herring.

Singer’s conclusion:

In any case, China’s crackdown on straightforward reporting and discussion of events taking place in that country is not the suppression of a discredited political ideology, but of open and informed political debate. If Bill Gates really believes that the Internet should be a liberating force, he should ensure that Microsoft does not do the dirty work of China’s government.

I think Singer’s argument seems roughly right, as far as it goes. But it only goes so far, and I think that’s less far than Singer imagines. Singer’s argument supports the conclusion that there is something bad about Microsoft’s actions. Namely, it is a bad thing for a company to help a government suppress free expression on important issues. But Microsoft might even admit as much, without admitting that they’ve done anything wrong. (That seems to be Google’s rationale for its agreement to censor search results on its Chinese site.) The question is whether companies like Microsoft and Yahoo and Google are doing more good than harm, overall, by entering the Chinese market (and doing the things that are necessary to stay in that market). Now, in focusing on the balance of harms & benefits, I am not implying that only outcomes matter; I only mean that this is a complicated moral question, the resolution of which requires that we balance rights and freedoms, harms and benefits, short- and long-term effects, etc.

(One last note: Microsoft, Google, and Yahoo have all stated or implied that the practices for which they’ve been criticized have been necessary in order for them to enter & remain in the Chinese market. Such claims always warrant very careful examination. Sometimes convenience masquerades as necessity.)

It’s late on a Friday afternoon, so why not? Check out this odd little piece, Sex workers call for boycott of ‘Grand Theft Auto’ from News.com.

Here’s a bit of it:

The Grand Theft Auto franchise is getting attacked from all angles.

Joining the ranks of politicians, policemen and attorneys in their crusade to see the game lifted from shelves are the nation’s sex workers.

On its Web site, the Sex Workers Outreach Project USA, or SWOP, is asking parents to assist them in calling for a boycott of Take-Two Interactive’s controversial game.

Citing a 2001 document from the National Institute on Media and the Family’s David Walsh, SWOP is calling “on all parents and all gamers to boycott Grand Theft Auto.”

OK, we all get why this made the news. “Ha ha.” Sex workers objecting to someone else’s line of business. But the real point is a more serious (and controversial) one: here is yet another group, one intimately familiar with real street violence, arguing that this game is dangerous. I’ve blogged about video games before (here and here) and I take it that there’s no evidence that games like GTA actually have real-world bad effects; but when everyone — from cops to prostitutes — who actually knows about street violence is worried about this game, it certainly does give me pause. At the very least, it makes me think it’s unseemly to make a game out of what is for some a tragic existence.

Under what circumstances should a company be legally forced to carry a particular product?

A recent story says that Wal-Mart stores in Massachusetts are going to be forced to carry the “morning after” contraceptive pill. Apparently state law in the state requires all pharmacies to dispense all “commonly prescribed medications.”

Here are some links to the story:
Wal-Mart Told To Stock Morning-After Pill (@ Forbes.com)
Mass. makes Wal-Mart sell morning-after pills (@ Chicago Sun-Times)
State: Wal-Mart must carry emergency contraception (@ CNN)

So, why should a given store be required to carry a particular product?

One reason might have to do with a particular store having a local monopoly or near-monopoly. If Wal-Mart’s pharmacy is the only pharmacy in (or near) your town, then a decision by Wal-Mart not to carry a particular drug means a serious limitation on consumers’ ability to acquire that drug.
But what about stores in big cities, where there are likely dozens of other pharmacies? Why be concerned then?

The answer, I think, has to do with the logic of collective action: Wal-Mart’s decision not to carry the pill might not be disastrous, but a proliferation of such decisions might be (at least from the point of view of the women who want/need access to it).
In a big city, no individual store’s decision not to carry a particular product is going to have any effect on the product’s availability (just as no individual’s decision not to pay her taxes is going to affect overall government revenues enough to endanger the provision of services, and no individual’s pollution is going to ruin the environment). An individual action in such cases is nearly without effect. But if one store, either because of management’s ethical or religious convictions or because of management’s fears about carrying a controversial product, refuses to carry that product, what’s to stop other stores from following their lead? And if all (or even just “many”) stores make the same decision, the net result (just like the result of rampant tax evastion, or wide-spread pollution) would be a serious problem.

Corporate philanthropy often generates cynicism: we often wonder whether a given corporation is donating to a good cause just to be seen giving to a good cause, in order to improve public perceptions of its overall character.

But seldom is a public showing of atonement so blunt as the one described in this story from BusinessWeek Online: “Samsung Group to offer $800M to charity”

FEB. 7 10:08 A.M. ET South Korean conglomerate Samsung Group said Tuesday it would donate more than $800 million in corporate and private assets to charity as part of an apology for several recent scandals.
…
“Samsung Group deeply repents for causing concern to the people,” the conglomerate said in a statement posted on its Web site. “In order to comply with the views of society and the people, (the group) decided to offer 800 billion won [about $830 million U.S. dollars] worth of assets to society.”

The announcement was, of course, greeted with a degree of skepticism:

Following Samsung’s announcement, the People’s Solidarity for Participatory Democracy, a civic group, accused Samsung of failing to present “basic solutions” to improve how the conglomerate is run, Yonhap news agency reported.

“The announcement was just symbolic and there are no efforts to resolve the Samsung matters,” the group said in a statement on its Web site, according to Yonhap.

Just how skeptical should we be? Here are a few considerations:

1) It’s not clear (yet?) just how the “punishment” is related to the “crime.” It’s not clear how the donation is supposed to right the wrongs done by Samsung. Consider an imaginary alternative: imagine a company involved in an environmental catastrophe going beyond the need to clean up their mess, and making a large donation to Greenpeace. Similarly, a corporation with a poor reputation in terms of gender or racial discrimination might (in addition to revising internal practices) make a donation to a scholarship fund or other program aimed at helping the groups it had formerly discriminated against. These would be examples of a very clear & specific kind of atonement. Just how are the charities Samsung intends to donate money to related to the specific wrongs that Samsung is accused of?

2) The public admission of guilt we see in this case is an admirable rarity. Of course, the offence being admitted to is quite vague, but it’s pretty rare to see a major corporation admitting to a failure “to comply with the views of society and the people.” That’s got to be worth something.

3) It seems noteworthy that the donation will be a combination of corporate and private money. In other words, this isn’t just a case of a corporate executive giving away someone else’s money (i.e., shareholder money) to make amends for his mistakes. In this case, Samsung’s chairman (and his family) are kicking in a considerable amount of their personal wealth.

4) It’s too easy to be cynical about this. Is Samsung trying to improve its image? Sure. But how is it doing that? Seemingly, by doing things that genuinely warrant our respect. There’s got to be a difference between trying to make people like you by doing things that look good, and trying to make people like you by actually going good. Whether Samsung’s specific choices in this case are sufficiently good to buy it real credibility is a bigger question.

Here’s a nice little commentary from Andrew Leonard, writing in Salon: Enron: Bad apple or poisoned orchard [requires subscription]

Leonard has 2 main points to make.
First, he points out that it’s too easy for everyone to agree that Enron (or rather, its team of senior executives) was bad. Bad, as in one bad apple, one isolated problem:

Naturally, media attention directed at Enron right now is focused on a very narrow question — are Lay and Skilling guilty of intent to commit fraud? Once we get a yes or a no on that, then the whole sorry mess is theoretically wrapped up neatly with a bow, and we can move on to the next corporate scandal. But the truth is that their guilt or innocence doesn’t amount to a hill of beans in the grand scheme of things. The real story of Enron is the story of a company that flourished in an age of deregulation, that had such mighty power that it could get laws changed to allow it to act with less and less restraint, and that with that freedom came complete and utter irresponsibility.

Leonard is of course right about this. Just as any one crooked individual won’t get far with attempts at wrong-doing within a corporation with a sound, ethical corporate culture, a crooked company won’t get very far within a business community and regulatory environment that is intolerant of its shenanigans. Of course, internal policy & practice at Enron made the company fertile ground for pernicious actions by individual employees, and as Leonard points out, the deregulated energy market in the US (along with a willing & cooperative financial community) made it easy for Enron to flourish.

Leonard’s other point (really, for him, just a building block for his main point), is about the fact that Enron really isn’t the worst-case scenario. Enron was in the energy industry, which was bad enough (just ask the people of California, including people with home medical equipment that relied upon the electricity that Enron so gleefully turned off and on in order to manipulate prices). But it could have been worse:

Imagine if, say, a Merck or a Monsanto were run as recklessly as an Enron. The potential public health or environmental disasters that could be spawned by cutting-edge pharmaceutical or biotech firms is a cyberpunk nightmare. Modern multinational corporations have far too much power to be allowed to A) police themselves, and B) influence the crafting of laws that affect their business. They need to be reined in, and they need to be isolated from the political process, not in charge of it. Of course, the complete opposite has been happening in the global economy. Corporate influence and power is at an all-time global high.

The idea that things could’ve been much worse if Enron had been a biotech firm is one I’ve been making in public presentations for 3 years now. Of course, that’s only partly true: biotech (at least the kind related to human health) is, in all fairness, more tightly regulated than the energy industry.
But I think the overall point stands, especially with regard to the role of corporations in the policy-making process. It’s pretty well known, for example, that Monsanto wrote the US regulations on genetically modified foods, and essentially handed them to policy makers in Washington.
That sounds pretty bad, but in some ways it’s more understandable than you might think. Policy-makers in some cases need to rely on those who know more than they do about complicated issues, and companies like Monsanto have a lot of information (not all of it unbiased) at their fingertips. And it’s hard to fault the company for wanting to influence policy. Everybody — private citizens, NGO’s, mom-and-pop companies, large corporations — want governments to make decisions that reflect their values and interests.
So the challenge is this: a) how do we get companies (perhaps entire industries) to show reasonable degrees of restraint in their efforts at lobbying government, and b) how do we make sure that the civil service is sufficiently capable that high-level policy makers don’t have to rely on the world’s biggest corporations to advise them on how to regulate them.

Forbes.com has this slide-show featuring The Most Corrupt Countries. The source for the info is apparently Transparency International (though Forbes.com gives way too little info about the source of the data, how it was gathered, etc. Still interesting reading.)
[Tech note: the slide show proceeds automatically, and too quickly. There are controls just above the pictures that supposedly let you control the speed.]

Topping the list: Chad

What may turn out to be the single most piggish use of philanthropic funds has placed Chad at the top of the list of the world’s most corrupt nations. Proceeds from a project, funded in part by the World Bank, to build an oil pipeline through Chad and Cameroon were to have helped feed the desperately poor people of these nations. Instead, some $30 million was diverted to buy arms to keep in power the government of President Idriss Deby.

I posted a few days ago about a murder at a Montreal gas station. At that time, I noted that there was nothing about this, no response of any kind, on Shell Canada’s website. I also noted that I had emailed Shell about this, and would update you here if I heard back.

Today I received an e-mailed response. Apparently Shell had issued a statement (on January 25, 2006), but hadn’t posted it on their website. Here’s the text of the statement:

The following is a statement distributed throughout Montreal on January 25, 2006 from Shell Canada’s President and CEO.

The Shell family was shocked and saddened today by the news of the tragic death of an attendant at one of our gas stations in Montréal early this morning.

On behalf of the company, I extend my sincerest condolences to the family and co-workers. Care and support services are being provided to family, the retailers and their staff who have been affected by the incident.

Montreal authorities have released few details so far, but I assure you, Shell is cooperating fully with the ongoing police investigation.

We take the safety and security of our people very seriously and we have a variety of measures in place to protect them. We will conduct a thorough examination of this incident to see if there are lessons to be learned to help us to continue to improve.

Clive Mather
President and CEO
Shell Canada Limited

[Apologies for this re-posting. This was posted a few days ago, and then deleted due to technical difficulties.]

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Here’s an interesting editorial from the Philadelphia Inquirer, “How do we repair America’s integrity?” It’s by Jim Lichtman and Richard O. Hanson. [Note: this article seems to have gone off-line. Don’t bother clicking now.]

The article is interesting for 2 reasons.

First, it includes a good, clear recounting of the Enron saga. If you don’t actually know what went on at Enron, read Lichtman and Hanson. It’s as good as any brief account I’ve seen.

The editorial concludes its recounting of the Enron mess with this:

The victim is the trust of the American people. Every time we hear of another personal, corporate, or political ethics scandal, our trust and confidence in individuals and institutions declines. But the deeper question in all of this is: How do we get back America’s integrity?

The second thing that makes this article interesting is that (I think) it’s answer to that question is a very common one, but it’s also quite wrong.

The authors mention the Sarbanes-Oxley Act (“which calls for more independent oversight and internal controls on how companies do business”), but argue that legislation just won’t suffice.

Until there is a clear and consistent change of attitude among top management concerning the method and practice of business; until corporate boards begin to live up more fully to their responsibilities instead of passing the buck; until there is a consistent demonstration of honesty, integrity, accountability and respect from the top down, ethics always will be relegated to empty platitudes on mission statements and speeches given at shareholder meetings.

The problem with this kind of prescription is that it’s silent on just how we’re supposed to achieve the requisite “change in attitude.” Are corporate execs who previously saw their mission as world domination just supposed to wake up one day and suddenly get it? Is that actually our best plan? This is akin to the idea that we could fix the environment if, you know, we all just, like, thought harder about how much we’re screwing up the earth. Of course, changes in attitude are a key part of large-scale change. This is particularly true in cases (which are common) in which we need to rely on lots of people to behave properly with limited supervision.
But the hard part is figuring out how to achieve constructive changes in people’s attitudes. Legislation is one way. Your attitude toward any activity is bound to change if you’re told that the government will take you out behind the woodshed (figuratively, hopefully) for engaging in it. Peer pressure can also change attitudes. But peer pressure results from an influential group of your peers having, and pressing you to have, a certain attitude…clearly a chain that has to start somewhere. Attitudes can also change due to negative press coverage of corporate decisions, or due to religious conversion, mid-life crisis, getting married, or divorced, or having kids, or reading a great book, or…lots of things.
So, yes, corporate attitudes need to change. But achieving the right kinds of changes, on a massive scale, in the short term, is such a serious challenge that we need to stop calling for change, and start proposing ways to do it.

(For a much more detailed, and smarter, account of this issue as it applies to environmental problems, see the chapter of The Rebel Sell called “Spaceship Earth.”)