The Business Ethics Blog

Check out this story in Business Week:

“A Columnist Backed by Monsanto”

Scripps Howard News Service announced Jan. 13 that it’s severing its business relationship with columnist Michael Fumento, who’s also a senior fellow at the conservative Hudson Institute. The move comes after inquiries from BusinessWeek Online about payments Fumento received from agribusiness giant Monsanto (MON ) — a frequent subject of praise in Fumento’s opinion columns and a book.

This raises a bunch of issues, but I’d like to point out 2 of them:

1) How much responsibility does a company (say, Monsanto) have for not putting journalists and authors into conflicts of interest? I take it the normal reaction is that this is an issue of professional ethisc: journalists, professors, etc., need to be careful about what kinds of agreements they enter into, especially if those agreements are likely to affect (or be seen as affecting) their professional judgment. But it takes two to tango. No professional faces this dilemma without someone having someone offered them something. Is a company to be blamed for doing so, or no? Do they have an obligation NOT to affect professional judgment in ways that might benefit them? Is transparency and openness enough to remove all worries in such cases?

2) In an era of blogs, democratization of media, etc., how the hell can we keep track of this stuff? For example, do readers of my blog have any idea whose payroll(s) I’m on? Maybe I’m a shill for the well-funded anti-SUV lobby. (?)

It’s Friday, and it’s sunny outside, so why not a (mostly) positive story about business ethics?

Google, in addition to being the world’s most popular internet search engine, has something of a reputation for ethics. From what I’ve read, that reputation includes both a commitment to ethical business practices, and a more general interest in making the world a better place. There’s also indication that a lot of what goes right, ethically, at Google has to do with the leadership of Google’s founders, Larry Page and Sergey Brin. (Here’s a letter from Page & Brin to Google’s shareholders, describing their thoughts on this.)

Here’s a link to Google’s corporate philosophy.

Google’s unofficial code of conduct is simple: “Don’t be evil” (or, alternatively, “Do no evil”). Here’s the Wikipedia entry for that slogan.

The Register has this story (almost 2 years ago) about Google’s commitment to ethics: “Google’s Ethics Committee revealed”

The Economist has this story (yesterday) about one of Google’s founders: “St Lawrence of Google”

Wired had this story (3 years ago) about Google: “Google vs. Evil”

BBC News had this story in May of 2004: “10 things the Google ethics committee could discuss”

Gotta admit, I’m at a loss for words:

Pharmaceutical companies the world’s most ethical, says Swiss study

The three most ethical companies in the world are innovative pharmaceutical manufacturers according to a new and independent study by a Swiss-based organisation.
The Geneva-based organisation, Covalence, has released its 2005 annual ethical ranking of multinational companies across ten major sectors.

It found that the top three companies with the best ethical score, across ALL sectors, were GlaxoSmithKline, Merck and Bristol Myers Squibb.

If anyone has any thoughts on how companies in a nearly-universally-villified industry end up getting top marks for ethics, let me know.
Actually, I’d rather not hear guesses. But Covalence has some stuff about methodology on its website. [Link updated Nov. ’08] Their approach as a lot to do with corporate reputation (rather than measures of actual performance). A quick look suggests to me that a lot of the criteria have to do with stuff that doesn’t touch on the controversial aspects of the pharmaceutical industry (i.e., its effect on human health). So, if pharma companies do well at stuff like labour relations (which they might well — I’ve never heard of a pharma scandal in that realm), they might well score highly, especially if there isn’t also a category on, say, manipulation of research results.

A U.S. court has decided that the civil whistle-blower protection provisions of the Sarbanes-Oxley Act don’t apply where American companies work overseas.

Here’s a blog entry about it, from an expert on this stuff.

The case involves an Argentinian, working in Argentina for an American company. He blew the whistle on some wonky accounting, was fired, and then he sued the company. He also sought the protection of the U.S. Department of Labor. DOL dismissed his claim; he appealed to the courts, and was ultimately rebuffed.

Here’s the court decision.

(Thanks to Allison Garrett @ the International Corporate Governance Blog for alerting me to this story.)

The Simpsons & Jon Stewart have so numbed me to irony that I’m not sure I even recognize it any more.
Anyway, this story strikes me as ironic.

A senior Wal-Mart executive, Thomas M. Coughlin, apparently covered up the fact that he was stealing from the company by claiming that the expenditures were for a blatantly unethical (and maybe illegal) anti-union project. Oddly, the anti-union project apparently never existed. So, fake wrong-doing covered for real wrong-doing.

The full story: “Was Wal-Mart’s Anti-Union Image Used as a Shield?”, by Michael Barbaro @ the New York Times.

The union project, according to Mr. Coughlin, was a secret scheme, approved by senior Wal-Mart executives, to pay union members for information about which stores they planned to organize.

A year later, when Mr. Coughlin was accused of misusing more than $500,000 in company funds through fraudulent reimbursements, the union project became the heart of his defense, and it immediately transformed the case into a symbol of anti-unionism on the part of Wal-Mart. Reporters seized on it, labor groups issued a flurry of angry press releases about it and the National Labor Relations Board began an investigation into it.

But Mr. Coughlin’s agreement to plead guilty to federal wire fraud and tax evasion charges, which two people close to the negotiations disclosed on Friday, and the lack of evidence that he used the missing money to spy on unions raise doubts as to whether such a project even existed.

Apparently my posting on Microsoft’s complicity with the repressive Chinese government was not alone in the world of business ethics blogs.
Check out:
“Microsoft Bows to Chinese Censors” over at the Principled Profit blog
“Microsoft Going Red?”, at the Credo Advisors blog

John Boatright, who teaches business ethics at Loyola University, is well-known & respected in the world of business ethics.

In this story, “Bad barrels help grow bad apples” Diane Stafford (of the Kansas City Star) interviews Boatright regarding his thinking on whether the blame for corporate wrongdoing should be placed mostly on individuals, or on organizational structure.

It’s not an in-depth article, but Stafford does a nice job of letting Boatright do what he does so well: make clear & concise statements that say smart things about hard ethical problems.

More of Boatright’s work:

Ethics and the Conduct of Business (4th Edition) (2002)
Ethics in Finance (1999)

[Bias alert: I hate SUV’s. Don’t assume this post, or any post by me on SUV’s, is a balanced, unbiased, academic assessment. It’s just my conclusion based on the available evidence.]

Here are some anti-SUV resources:

noSUV.org, which includes lots ofAnti SUV news
Anti-SUV t-shirts (actually, also some pro-SUV t’s there)
Anti-SUV: Reasons You Should Not Own A Sport Utility Vehicle
Yahoo’s directory of anti-SUV resources

I just found this neat little commentary by William Raspberry called “Corporate Crooks Take Lead in Teaching Executive Ethics.”
The author is commenting on the now-common practice of having corporate criminals and disgraced executives speak on ethics. This practice is generally seen as serving two purposes: one is that it provides an object lesson for business students and the business world more generally, and the other is that it forces the miscreant to recount, publically, the wrong they’ve done.
Raspberry’s skepticism about this practice is well taken. I must admit that I roll my eyes every time I see another flyer for one of these events. But Raspberry’s criticism misses one key point: when key figures from well-known scandals give talks, people are likely to actually show up. Given the choice, who would you rather hear give a talk on corporate ethics…former Enron CEO Jeff Skilling, or some business ethics professor? So, as much as we might doubt the direct educational value of what a corporate criminal has to say, at least there’s a good chance that a public talk by such a person will generate discussion and draw focused attention to serious issues.

Here’s a story from CTV news about students at McGill university protesting a talk given by Paul Coffin, who was convicted for his part in the federal sponsorship scandal.

The first man charged and convicted for his part in the federal sponsorship scandal served part of his sentence Tuesday by speaking to a group of would-be business leaders at McGill University.

Former advertising executive Paul Coffin was a guest speaker at a management class on the Montreal university campus Tuesday. Such public speaking engagements are part of his conditional sentence.
For the small but boisterous group of protesters who gathered outside the classroom however, Coffin’s mere appearance was an affront.

“The guy should be in jail,” one incensed protester told CTV News. “He stole our public funds and got the trust of the Liberal Party to steal our money and the only sentence he gets is getting into the schools and trying to convince people that what he did was wrong?”

“He should be in jail, not at McGill.”

Here’s a story from today’s New York Times, about Microsoft having taken action, at the request of the Chinese government, to censor a blogger using one of their services. Here are a few key paragraphs:

BEIJING, Jan. 5 – Microsoft has shut the blog site of a well-known Chinese blogger who uses its MSN online service in China after he discussed a high-profile newspaper strike that broke out here one week ago.

The decision is the latest in a series of measures in which some of America’s biggest technology companies have cooperated with the Chinese authorities to censor Web sites and curb dissent or free speech online as they seek access to China’s booming Internet marketplace.

The shutdown of Mr. Zhao’s site drew attention and condemnation this week elsewhere online. Rebecca MacKinnon, a fellow at the Berkman Center for Internet and Society at Harvard Law School, wrote on her blog, referring to Microsoft and other technology companies: “Can we be sure they won’t do the same thing in response to potentially illegal demands by an overzealous government agency in our own country?”

Robert Scoble, a blogger and official “technology evangelist” for Microsoft, took a public stand against the company’s action. “This one is depressing to me,” he wrote on Tuesday. “It’s one thing to pull a list of words out of blogs using an algorithm. It’s another thing to become an agent of a government and censor an entire blogger’s work.”

Another American online service operating in China, Yahoo, was widely criticized in the fall after it was revealed that the company had provided Chinese authorities with information that led to the imprisonment of a Chinese journalist who kept a personal e-mail account with Yahoo. Yahoo also defended its action by saying it was forced to comply with local law.

It is generally true that, when conducting business overseas, companies have an ethical obligation to comply with local law. But there are exceptions. There are cases when following the law — at home or abroad — is the wrong thing to do.

Thomas Donaldson has a very nice perspective on the issue of when/whether to follow local laws (or more generally, local standards) when conducting business abroad. Donaldson has a book on this topic, The Ethics of International Business (OUP, 1991). But I’m more familiar with his article “Multinational Decision-Making: Reconciling International Norms.” Roughly, Donaldson’s heuristic for dealing with conflicts between home-country standards and host-country standards goes like this. We can roughly divide such conflicts into two types: 1) those that are rooted in economics (e.g., some countries can’t afford to implement & enforce the sorts of environmental standards that Westerners take for granted), and 2) those that are rooted in basic cultural differences (e.g., Japan’s resistence to putting women into senior management positions.) Donaldson says these two types of situations should be handled differently.
For Type 1 situations, Donaldson advises managers to ask themselves this question: would the “folks back home” accept the host-country’s lower standards if they themselves faced a similar economic economic situation. If they would, then it may be permissible for the company to follow the lower, local standard in the present situation.
For Type 2 situations, Donaldson advises managers to ask themselves these two questions, in THIS order. First, is it necessary to engage in this questionable practice, in order to do business in this country? If not, don’t do it. If it does seem necessary, proceed to the next question. Second question: does engaging in this practice violate fundamental human rights? If not, it may be permissible to follow local standards. But if doing so would violate human rights, then don’t do it. Ethically, you ought to cease operations & get out of the country.

This is where the rubber hits the road, as far as ethics is concerned. Companies like Microsoft and Yahoo should do the right thing, or get out.