Archive for the ‘international’ Category

Should Celebrities Regret Singing for Gadhafi’s Family?

I blogged nearly two weeks ago about the Ethics of Doing Business in Libya. The concern there was about the ethics of involvement in Libya by, well, “businesses” in the traditional, i.e., corporate, sense of that word. But the controversy that emerged short after that, and that continues still, concerns high-profile members of the entertainment business — celebrities like Usher, 50 Cent, and Mariah Carey. Basically, it has come to light that a whole fistful of such stars have, at various times, done private concerts for members of the Gadhafi family. And now, in light of the continuing violence in Libya, most of those stars are expressing regret and doing things like donating the money to charity. (For details, see Public consequences of pop stars’ private gigs, by By Reed Johnson and Rick Rojas for the Los Angeles Times.)

A few people have pointed out that the timing of the celebs’ crisis of conscience is just a little bit off. Libya has been a dictatorship for decades, and its leader has been a vicious madman just as long. As Tim Cavanaugh wrote on his blog at Reason, “Even assuming Qaddafi is so toxic you can’t with sound conscience take his dinars, that didn’t just become the case a few weeks ago.” If it’s right to give the money back now, it was likely wrong to take it in the first place.

But we can also question whether anyone does, or should, give much of a hoot over where these celebs sing, or for whom. The LA Times quotes Sting — a star with a reputation for charity work and activism — as defending having sung for the daughter of Uzbekistan dictator Islam Karimov:

Sting addressed criticism saying he was “well aware of the Uzbek president’s appalling reputation in the field of human rights as well as the environment. I made the decision to play there in spite of that.” He added, “I have come to believe that cultural boycotts are not only pointless gestures, they are counterproductive, where proscribed states are further robbed of the open commerce of ideas and art and as a result become even more closed, paranoid and insular.”

The man has a point. Though it may sound like a self-interested argument, that doesn’t mean it’s a bad one.

(Cavanaugh’s blog entry has a wonderful quote from, of all people, Adolf Hitler, who shrugged off artists behaving in ways that might have taken by him to be treasonous: “I don’t take any of that seriously. We should never judge artists by their political views. The imagination they need for their work deprives them of the ability to think in realistic terms.”)

But this leads me wonder: just what is the objection to singers singing for dictators? Is the money the problem, or is it having sung for (or more generally having done business with, or having provided a service for) an evil man’s family? Consider: if the money really is the problem — i.e., if this really is a case of filthy lucre — then donating the money to charity really does utterly absolve the stars in question of any blame. Or at least it would if the timing weren’t so questionable. Singing for free would also be OK. Indeed, if the money is all that matters, then stars might have a positive obligation to sing for wealthy tyrants and give the money to charity. After all, what could be better than squeezing a few million out of a mad dictator’s family in order to do something good with it? And if singing for free (or singing for money and donating it to charity) isn’t OK, then that seems to imply that the money isn’t the problem either.

Ethics of Doing Business in Libya

Amidst the upheaval in Libya, questions arise about foreign companies doing business there. Many firms, of course, are pulling out and evacuating any employees currently on the ground, for obvious reasons related to safety. But there are apparently still a few reasonably safe places in Libya, places far from the major cities that are the focus on the current fighting. And certainly business done from afar is still an option. So, that leaves companies with choices. Should Libya be considered entirely off-limits? At this point in the conflict, various governments have issued orders that put restrictions in place. But that doesn’t mean that Libya is, from a legal point of view at least, a no-go zone. (Canada’s government, for example, has clarified that Canadian firms are still allowed to do business in Libya, generally, but not with the Libyan government or with the Libyan Central Bank.)

I’m sure many will be tempted to say that foreign companies should pull out entirely. But then, it’s not clear that such a blanket prohibition does much good for the people of Libya as a whole. Note, for example, that Libya currently imports about 75% of its food. Stopping doing business with Libya would mean starving its population.

Of course, even before the current crisis, Libya was a dubious place to do business — at least some kinds of business. Note, for example, that a Canadian company has faced questions about its role in building a fancy new prison for the Gadhafi government. (From the Globe & Mail, see: SNC-Lavalin defends Libyan prison project.)

(An interesting side-note: SNC-Lavalin was recently ranked as one of the best-governed corporations in Canada. Note also that the companies shares are down, apparently because of worries not just about Libya, but about the entire region. About a quarter of the country’s income comes from the Middle East and Africa.)

Building a prison for use by a dictatorship is exactly the kind of project that is likely to draw fire. But that’s not entirely fair, either. As the G&M notes, Libya has been under international pressure to modernize its prisons. And if it is a legitimately good thing for a dictator to upgrade his prisons, then it’s hard to claim that it’s unethical for a company to make a profit by helping him do so.

Russian Business Ethics

We can learn a lot about the fundamental nature of business ethics by looking at its operation in various countries at different levels of economic development and with very different histories. Former members of the USSR are a good place to start. Russia, for example, was once at the heart of the Soviet empire, yet today — 20 years after the fall of that empire — Russia continues to struggle. The country’s per capita GDP is middling (i.e., about 1/3 of American GDP), and the economy has been growing steadily for years, but it’s far from free of problems. Law and order (including the functioning of its basic democratic institutions) continues to be a challenge there. Note also that Russia fares very badly on Transparency International’s Corruption Index.

So what about the role of business ethics in civilizing (and hopefully growing) the Russian economy?

See this story by Khristina Narizhnaya, for the Moscow Times: Business Ethics Get Codified

Business ethics are improving in Russia, on paper at least.

More local companies are emulating Western standards and adopting ethics codes to help them operate in a corrupt environment and create the appearance of trustworthiness.

Such codes regulate everything a company’s employees do, from how they dress to how they act in case a bribe is offered….

In the last three years, state companies, including Sberbank and Rosneft, have established codes for their workers as part of President Dmitry Medvedev’s initiative to increase transparency. Gazprom has begun putting together its ethics guidelines, which could take more than a year to deploy. Private companies have followed suit….

The entire piece is interesting and well worth reading, but I think couple of issues in particular are worth thinking about. First, what is the point of all this explicit attention to ethics? Interestingly, at least some Russian business people seem to be aware that ethics is a fundamental building block for real success in business:

“It is good for the image — and clients, investors and partners respond with trust,” said Econika chief executive Andrei Iliopulo.

(The reference to “image” is a distraction, there. Iliopulo’s main point is about trust.)

Others see ethics as an absolute necessity on a macro scale, for the Russian economy as a whole:

Some experts see the ethics code trend as an example of transforming the economic model from wild capitalism to socially responsible business.

“Business feels this need and tries to fulfill it,” said Alexander Sergeyev, a professor at the School of Higher Economics. “It might seem strange, but people like to live by the rules….”

And then there’s the question of scope, and focus. What are the key issues to focus on? As the story notes, ethics codes can cover everything from conflict of interest to social responsibility:

[British-Russian conglomerate] TNK-BP’s code outlines a set of principles covering ethical conduct, employee behavior, external relationships, health, safety, security and environmental performance, control and finance.

That’s quite a range of issues. And when thinking about a country still struggling to “find its feet” in terms of business ethics, we might well want to ask about priority-setting. So, question for discussion: of the various issues mentioned above, which one should Russian businesses be focusing on? I’m not suggesting single-mindedness. But for the good of the Russian population as a whole, which business ethics issues is likely to be the most important?

(For more on the importance of business ethics for economic development, see Nobel Prize-winning economist Amartya Sen’s “Does Business Ethics Make Economic Sense?”)

Death by Pizza Delivery: Domino’s Korea

During most of the 80’s (starting in 1984), customers of Domino’s Pizza in the U.S. enjoyed the benefits of a catchy promise of speedy delivery: Domino’s promised to deliver your pizza in “30 Minutes Or It’s Free.” The only problem: soon after the slogan was introduced, a rise in deaths due to accidents involving Domino’s drivers was noted. The assumption was that drivers were facing pressure to make good on the promise, and were therefore driving faster, which meant they were more likely to have accidents, some of which were fatal. Lawsuits ensued. Big ones. As a result, the “30 Minute” delivery promise ended back in 1991, in the U.S. But apparently the same can’t be said for Domino’s Korea.

Here’s the story, by blogger Lee Yoo Eun, blogging at Global Voices: South Korea: Backlash After ‘30 Minute’ Pizza Delivery Death

A popular Domino’s Pizza marketing strategy promising pizza delivery within 30 minutes of an order has met with a public backlash in South Korea, following the deaths of several young delivery personnel.

The Young Union, the union For Occupational and Environmental Health (FOEC) and several labor unions held a press conference on 8 February, 2011, in front of Domino’s Pizza’s headquarters in South Korean capital Seoul, pressuring the company to abolish the ‘30 Minute’ delivery system….

Here’s another version of the story, from the Korea Times: Quick delivery jeopardizes drivers.

In often discuss the story of “30 Minutes or It’s Free,” as it played out in the U.S., in my business ethics class. I use the case to illustrate 3 key points:

  1. A simple business decision can have large and unforeseen consequences, ones that result in a major ethical challenge for a company. In this case, a simple (and frankly brilliant) marketing slogan resulted in Domino’s executives being called killers and the company facing multi-million dollar lawsuits.
  2. The ethical thing to do is not always obvious. We spend a lot of time chastising companies for bad behaviour, but in at least some cases it is genuinely difficult to know what to do. In the Domino’s case, my students are typically unified in the opinion that something had to be done to reduce the rate of accident-related deaths involving Domino’s drivers, but they’re typically deeply divided on a) how far the company needs to go and b) just what strategy they should adopt.
  3. Putting an ethical decision into action can be very difficult. Back in the late 80’s, there were several thousand Domino’s pizza franchises in the U.S., and tens of thousands of drivers. Any decision made by Head Office was going to have to be implemented by all those franchisees and acted on by all those drivers. Making that sort of thing happen is anything but straightforward.

As for Domino’s Korea — frankly I’m stunned to find out that the people in charge of the Domino’s brand haven’t done more to make sure that a lesson learned 20 years ago, at great expense, is reflected in their international operations.

Groupon Super Bowl Ad: Unethical

A collective gasp could be heard at one particular moment last night during the Super Bowl. No, I’m not talking about the gasp following Nick Collins’ 37 yard touchdown run in the first quarter. I’m talking about the gasp that issued at the punchline of the now-infamous commercial featuring Timothy Hutton.

You can see the 30-second spot here, on YouTube: Groupon – Tibet

And here’s the entire transcript:

“Mountainous Tibet — one of the most beautiful places in the world. This is Timothy Hutton. The people of Tibet are in trouble, their very culture is in jeopardy. But they still whip up an amazing fish curry. And since 200 of us bought at we’re getting $30 worth of Tibetan food for just $15 at Himalayan Restaurant in Chicago.”

Immediately following the commercial’s appearance, Twitter lit up with comments about how “offensive” and “tasteless” the commercial was. Media outlets today have been abuzz with criticism and commentary. The headlines tell the tale. According to NBC Chicago: “Groupon Super Bowl Ad Not a Good Deal”. CNN‘s headline was “Groupon spends big on controversial (tasteless?) Super Bowl spots”. Time asks: “And the Most Offensive Super Bowl Ad Goes To: Groupon?”

But the ad was more than just tasteless. It was unethical. To recruit — and then trivialize — the plight of the people of Tibet to sell Groupon’s services shows a jaw-dropping level of disrespect. And while we often think of disrespect as a matter of bad manners, showing suitable respect for other humans’ basic needs and interets is a core moral principle.

It’s also worth pointing out that the commercial played, perhaps unintentionally, on the unfortunate fact that, for many westerners, complex Asian societies are often most closely associated with exotic dinner fare. Yes, yes, Tibet is exotic and troubled. But hey, they make a yummy curry!

Who knows just what the fallout will be? There have been predictions that Groupon will lose business over this — it’s been suggested that the company may have found the limit of the notion that “there’s no such thing as bad PR.” And, predictably, there have already been calls for a boycott of Timothy Hutton (once an Academy Award winner) will likely have to go into the spokesperson’s equivalent of rehab, perhaps by working with a pro-Tibet charity of some sort.

Of course, some will cling to the notion that intended all this — that they knew the ad would be controversial, and were aiming directly at the enormous amount of free media coverage they’re now getting. Maybe that’s true. But it was a helluva gamble to take. And, if it was a gamble, it was a gamble that treated the people of Tibet as just another Asian trinket to be tossed in among the poker chips.
It’s been pointed out to me (by @Changents on Twitter) that Groupon is apparently donating money to the causes featured in its commercials. See: I’m not at all sure that that’s sufficient to overcome the worries discussed above, especially given that the disrespectful commercials is all that most people will see or know about. What do you think?

God-Washing Davos

Can religion save the soul of the world’s economic system? What does religion have to do with ethics? In particular, what does religion have to do with business ethics? There’s certainly no necessary connection. You’ll notice an utter lack of theological arguments in this blog, for instance. But many people see a connection, and perhaps a necessary one.

For example, see this piece by Dan Gilgoff, for CNN’s “Belief” Blog: How Davos found God

…Since the banking crisis shook global markets more than two years ago and contributed to a worldwide economic slump, the annual Davos summit has invited dozens of religious and spiritual leaders to hash out issues like business ethics and the morality of markets in the company of presidents and corporate titans….

This worries me for two reasons.

First is that religious leaders have no particular expertise in the questions at hand. One clergyman quoted in the story says the key question is “how do you embed values in the culture of companies in a way that would change behaviors?” Good question, but it’s not one about which most religious leaders are likely to have any real insight. Most, for example, won’t know much about the workings of corporations, or about corporate culture, or about (for example) what the criminological literature says about the real causes of wrongdoing. Sure, talking about values can be a good thing. But there’s no good evidence that religious values, or organized religion as a way of inculcating values, does anything in particular to make people more ethical. And certainly there’s no reason to believe that “40 minutes of guided meditation” is going to play any role at all in fixing the problems faced by the world’s economy.

My second worry is that the inclusion of religious leaders is a distraction, a way of deflecting criticism by including a few dozen people who a large portion of the public are likely to associate with the idea of being a good person. It’s symbolic. It’s a way of signalling to the public that the business world really is concerned about doing the right thing — without engaging anyone who actually has the relevant expertise. It’s a feel-good move. It’s like greenwashing, but with religion rather than environmentalism as the focal distraction.

Intellectual Property and the Chilean Miners

Last month I posted about some Ethical Issues for the Chilean Miners. There, I pondered the moral force of the contract that the 33 trapped miners signed while still underground, promising each other to share equally the eventual profits of any future publicity. This month, I’m quoted in an article on that same topic, in Canadian Business. Here’s the online version: Intellectual property: Underground dealing in Chile, by Angelina Chapin

The story of “los 33,” the Chilean miners stuck underground for 69 days has all the makings of a good narrative: complication, action, mystery and a happy ending. Presciently, the miners made a pact while they were underground to share whatever profits come from telling their story and are rumoured to have decided to collectively author a book. According to The Guardian, they even had a lawyer send down a contract to make the “blood pact” legal, meaning when Hollywood producers come knocking, they’ll have a whole group to bargain with.

Not much is known about its content, but the circumstances under which the contract was signed have experts wondering about its validity and whether the specifics should be abided by now that they’ve survived the rescue….

The article gives the last word to Toronto-based lawyer Calin Lawrynowicz, who makes a simple, practical suggestion: rather than wonder about the force of the subterranean contract, the miners ought to sit down to talk about it:

Lawrynowicz says, since the miners don’t have 33 lawyers explaining their individual rights, the group should reconvene with an arbitrator to make amendments to the contract, allowing for reductions and benefits in terms of the wealth distribution.

“It’s like a shotgun wedding in Vegas,” he says. “You may be able to have a great relationship after the fact, but have to reconfirm why you got together in the first place.”

Business Ethics in China

There are significant problems with business ethics in the world’s second biggest economy, China. Witness the recent scandals involving tainted milk powder. Before that, lead paint used in toys was the big issue. Last year, there was a scandal involving injecting water into meat to increase its weight. And it’s not just a matter of a few scandals. According to Transparency International’s 2009 Corruption Perceptions Index, China ranks 79th (just a couple of notches below Columbia, and just above Swaziland and Serbia. (New Zealand is #1 — i.e., least-corrupt. The U.S. ranks 19th, and Canada is tied for 8th.)

Here’s an interesting piece on the topic of the special problems of business ethics in China, on Russell Flannery’s blog on Forbes: On The Front Line In China: Challenging Business Ethics. It’s well worth reading.

Here are just a few thoughts and questions:

1) It’s worth thinking about the relationship between ethics and success in the Chinese context. Three years ago, I blogged from a conference in Latvia, and I pointed out that many countries that were formerly part of the Soviet Union “are still struggling with establishing democratic institutions, and establishing the kinds of background conditions — including the rule of law and traditions of basic trust — that allow their populations to prosper.” In other words, at least some basic business ethics is necessary in order to have a flourishing economy. It’s a truth that many economists (including Nobel prize-winners like Ronald Coase and Amartya Sen) have written about. But China’s economy is booming, apparently despite serious problems related to basic integrity in business. Why?

2) Will foreign trade help? In particular, I wonder about the role of companies like Apple and Walmart. Apple and Walmart (and especially the latter) provide mechanisms for Chinese companies to sell stuff to wealthy westerners. But Apple and Walmart are also high-profile American companies, subject to constant, intense scrutiny. And both have the economic muscle to force Chinese suppliers to do things their way, if they decide to. In other words, if Apple and Walmart insist on (and verify) certain kinds of behaviour, it will happen. In some cases, of course, a company like Walmart — with its constant pressure on suppliers to cut costs — may be part of the problem. On the other hand, dealing with a company like Walmart is going to make all sorts of basic dishonesty very hard to get away with. Walmart famously pays close attention to the details.

3) What about western companies selling things in China? A while back, I blogged about the fact that there’s a lot to be gained by, for example, North American companies that figure out how to do business in China in a way that’s ethically acceptable to the folks back home. In this regard, Google and various pharmaceutical companies come to mind. Again, those are companies subject to significant scrutiny. Is there hope that those companies can raise the ethical tone of the Chinese industries they work in or with? Again, some may find it ironic to see anyone looking to Big Pharma to improve ethics anywhere. But despite its many failings, Big Pharma is heavily regulated, and those regulations (and the threat of litigation) force those companies to avoid behaviours that are likely very tempting to companies operating in places, like China, where regulations may be more lax.

Tip the Farmer?

In much of the world, patrons of restaurants and bars tip their waiters, waitresses, and bartenders, in recognition of a job well-done (and in recognition that, in some jurisdictions at least, such jobs are exempted from minimum wage requirements). More recently, tip jars have shown up at places featuring counter service only, like coffee shops. But if you’re going to tip your barista, why stop there? Why not show your appreciation to, say, the farmer who grew and harvested the coffee?

That’s precisely the idea behind this interesting project:

“We’re using technology to put a human face on a commodity product that Americans savor every day. Coffee lovers don’t think twice about providing a well-deserved tip to a barista, so why not use your smart phone or computer to tip the actual farmers who grew your coffee,” said Thaleon Tremain, General Manager, Pachamama Coffee Cooperative. “This isn’t charity, but a chance at a more direct and meaningful relationship with your coffee farmer.”

[That’s from this press release.]

Interesting idea. And far be it from me to object to a voluntary transfer of wealth. But I wonder about just why farmers are being chosen as the beneficiaries. The most straightforward answer, of course, is that the project is the brainchild of the coffee growers cooperative. It’s entirely (and not unreasonably) self-serving. But from a consumer’s point of view, why tip farmers, in particular? If you appreciate your coffee, and want to improve the lives of the underprivileged people who made it possible, why single out farmers? Why the farmer, and not the truck driver who brought the coffee beans to the processing plant? Or the longshoreman who loaded the coffee onto or off of the ship that carried it from Guatemala or Ethiopia? Or the shipping clerk who made sure that the paperwork got done? Chances are, none of these people is well paid.

My guess is that our continuing romanticization of farming makes it easier to be sympathetic to the plight of a (poor) farmer than it is to be sympathetic to the plight of a (poor) shipping clerk. But from an ethical point of view, the choice seems entirely arbitrary.

(For a recent blog entry about a project with similar intentions, see “Progressive Garment Factory, or Charity?”).

Progressive Garment Factory, or Charity?

What’s the difference between a progressive factory and a charity?

Here’s the story, by Steven Greenhouse, for the NYT: A Factory Defies Stereotypes, but Can It Thrive?

…Ms. Castillo had long dreamed of a bigger, sturdier house, but three months ago something happened that finally made it possible: she landed a job at one of the world’s most unusual garment factories. Industry experts say it is a pioneer in the developing world because it pays a “living wage” — in this case, three times the average pay of the country’s apparel workers — and allows workers to join a union without a fight.

“We never had the opportunity to make wages like this before,” says Ms. Castillo, a soft-spoken woman who earns $500 a month. “I feel blessed…”

There’s lots that’s interesting, here, but what most struck me was the similarity between the factory described (which produces apparel under the label “Alta Gracia”) and the controversial (Product) RED campaign. As you may already know, (Product) RED is a project that attempts to leverage consumerism into charity, by donating a small portion of profits from certain consumer goods — RED-branded iPods, for example — to the Global Fund (to fight AIDS, tuberculosis, and malaria in needy countries). I wrote about RED here and here.

See the similarity? Red asked consumers to pay a premium so that money could be donated to the Global Fund. Alta Gracia asks consumers to pay a premium so that the money can be donated to the company’s workers. In both cases, there’s an attempt to advance a worthy cause (disease prevention on one hand, poverty alleviation on the other) by appealing to affluent consumers via value-laden branding.

Two questions occur to me.

1) Will Alta Gracia be subject to the same kinds of criticisms that (Product) Red has been subjet to? If not, why not?

2) It seems to me that the choice of workers as beneficiaries of the Alta Gracia scheme is but one option. Who are other potential beneficiaries of schemes like this? If RED helps out by donating profits directly to third parties (i.e., via the Global Fund) and if Alta Gracia helps out by donating higher wages to its workers, are there other parallel mechanisms that would work? Here’s an example. What if the company that owns Alta Gracia (Knights Apparel) were publicly-traded (instead of privately-held). And what if it gave shares to poor families, so that they could receive dividends when the company makes a profit? Would that be ethically the same thing? Would people who generally think profit-seeking is evil suddenly think profits are a good thing?

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