The Business Ethics Blog

Here’s a starting point for a good classroom discussion.

A story in today’s New York Times is called “How to Outwit the World’s Internet Censors”. It’s mainly about ways net-savvy folks in China might be able to circumvent their government’s stranglehold on the internet.

The OpenNet Initiative (www.opennet.net), an international human rights project linking researchers from the University of Toronto, Harvard Law School and Cambridge University, tracks Internet censorship and the techniques used to evade it. To surf the Web in China and elsewhere without censorship and in marginal safety, said John Palfrey, a Harvard law professor and a member of the initiative, the primary tool is an old standby: the proxy server.

A proxy server is simply a generic computer through which people who want to be anonymous drive Web traffic before it reaches their own machines. This helps dissociate a computer address from the Web sites its user has visited.

It’s not perfect. You never know, for instance, how trustworthy any proxy really is, and servers go up and down unpredictably. But people regularly use proxy servers for all kind of reasons — from the political to the pornographic.

So, companies and other organizations that supply proxy servers, or that supply software designed to mask a computer’s location on the net, are doing a big favour to both a) people living under repressive governments, and b) people who want to be able to traffic in child pornography (for example). And it’s very unlikely that those companies & organizations will be able to claim that their services & products are only used for the good purposes, and never for the bad.

So, here’s the question for class discussion: is a company supplying such products and services doing a good thing?

Links:
Electronic Fronteir Foundation
The OpenNet Initiative
Wikipedia entry on Proxy Servers
Wikipedia entry on Anonymity
Google resources on fighting Child Pornography

Wow. Bono seems to have reinvented corporate involvement in the fight against AIDS, while at the same time slagging old-fashioned philanthropy and hippies too. One smart dude.

From BBC News: Bono bets on Red to battle Aids

The rock star Bono has launched a new global brand, Product Red, with a share of profits to go to the fight against Aids in Africa.

Launch partners American Express, Gap, Converse and Giorgio Armani announced a range of “red” branded products.

These will include T-shirts, footwear, sunglasses and a credit card.

The hope is that profits from the venture will generate a “sustainable” flow of money to support the Global Fund to Fight Aids, TB and Malaria.

Bono warned the world was losing the fight against HIV/Aids, with 6,500 Africans dying of the disease every day.

He stressed that this was a commercial venture and not philanthropy. [emphasis added]

“Philanthropy is like hippy music, holding hands. Red is more like punk rock, hip hop, this should feel like hard commerce,” Bono said.

More on this, from BusinessWeek Online: For Bono, Star Power with Purpose

Perhaps no celebrity alive today is more effective at leveraging his fame for social good than Bono. A day earlier, he had launched a new fund-raising effort called Product Red, an effort to exploit famous brands such as Armani, Gap, and American Express to raise money for efforts to fight AIDS, tuberculosis, and malaria in Africa. Gap, for example, will sell an African-made T-Shirt (guess what color…uh, red), and Giorgio Armani is designing a pair of sunglasses. American Express will issue a Red credit card. A percentage of the sales that the products generate will go to the cause.

Update:
Here is the Product Red website.
Here’s Bono’s own website
Same story, this time from an African news-source.

King Kaufman, the sports columnist from Salon.com, has this skewering of what seems to be a ploy by Reebok to get credit for a huge charitable donation without, you know, actually making a donation:

Reebok escapes charity

I’m sorry to report that Reebok won’t be giving $1 million to Boys and Girls Clubs of America, because the virtually impossible condition the shoe company put on the donation wasn’t met.

You’ll remember that in the “RBK Touchdown Challenge,” Reebok promised the donation if its handpicked squad of six Reebok-endorsing quarterbacks threw more touchdown passes this year than any six quarterbacks had ever thrown in a season. They needed to throw 207.

This required that the six men — Peyton Manning, Donovan McNabb, Matt Hasselbeck, Mark Bulger, Chad Pennington and Byron Leftwich, plus “subs” Alex Smith and Eli Manning if up to two got hurt, which they did — improve on their career highs by 25 percent per man. Peyton Manning’s career high was the NFL record, by the way, so it was a pretty safe bet he wasn’t going to improve on it by 25 percent.

(To read the full story you either need to subscribe to Salon, or get a free one-day trial by agreeing to watch a commercial, first.)

I noted in an earlier posting that Google is a company with a rep for having some pretty high ideals. Their corporate ethics motto is straightforward: “Don’t Be Evil.”

Now Google is facing criticism — well, mixed reviews — for its decision to comply with the Chinese government’s request that the Chinese-language version of Google censor search results. See this story from Wired News: Google Gagged, but There’s Hope

Google’s decision to filter sensitive topics from web searches in China is a major triumph for the regime’s campaign to have the internet censor itself, observers said Thursday, amid mounting criticism of the move.

However, scholars who study the internet in China said free speech advocates still had room for optimism. While China’s grip on web content appears to be tightening, communist authorities can’t stop the overall trend toward access to more information and greater transparency, they said.

Google said its decision to launch a sanitized version of its famed search engine using China’s “.cn” suffix was aimed at reaching China’s massive internet audience. It defended the move as a trade-off.

The rationale is one I’ve seen before, for other instances of acceding to “local standards” that violate either a company’s home country’s standards or international standards. The idea is that progressive companies from progressive countries are likely to have a net positive effect on local standards. In Google’s case, the argument would look like this: look, if Google is operating IN China, that can’t not be a good thing. Google is all about making information — all information — available, easily, to everyone with net access. So, Google will inevitably result in freer information in China.

I gotta admit, I’m tempted by this rationale. Another way of looking at it: Chinese citizens won’t have any LESS access to information now that Google (even a censored Google) is available there. Only time will tell, but I’d lay money on Google’s presence having, overall, a positive influence on the openness of Chinese society.

The idea of a $100 laptop for the developing world is not news.

But what IS news is yesterday’s announcement: U.N. Lends Backing to the $100 Laptop. The involvement of the United Nations seems a significant milestone.

The United Nations on Thursday lent its support to a project which aims to ship inexpensive, hand-cranked laptops to school-aged children worldwide.
Kemal Dervis, head of the U.N. Development Program, will sign a memorandum of understanding Saturday with Nicholas Negroponte, chairman of One Laptop per Child, on the $100 laptop project, at the World Economic Forum’s annual meeting.

The program aims to ship 1 million units by the end of next year to sell to governments at cost for distribution to school children and teachers.

UNDP will work with Negroponte’s organization to deliver “technology and resources to targeted schools in the least developed countries,” the U.N. agency said in a statement.

How is this a “business ethics” story? Well, the $100 Laptop is a project coming out of MIT’s Media Lab, but a research institute like the Media Lab isn’t going to fabricate a few million computers itself. So it’s got corporate partners, including Advanced Micro Devices (AMD), Brightstar, Google, News Corporation, Nortel, and Red Hat. For those companies, contributing to a project like this is likely to be counted as part of their Corporate Social Responsibility Programs. These laptops will not be sold in developed nations, so this project is unlikely to be a major source of profit. All indications are that this is an attempt to do something positive by making use of these companies’ core competencies (i.e., they’re making the world a better place not by throwing cash at a problem, but by doing what they’re already good at, namely designing and building information technology).

Holy cow!

McDonalds (yes, the restaurant chain) now has its own blog on Corporate Social Responsibility. Yes, a corporation with its own blog dedicated entirely to CSR. From the looks of it, this is brand new, so too soon to tell whether this will be something other than window-dressing, what sorts of issues they’ll deal with, etc.
But on the “about this blog” page, Bob Langert, Senior Director for Corporate Social Responsibility at McDonald’s, writes:

We want to open our doors to corporate social responsibility (CSR) at McDonald’s–to share what we’re doing and learn what you think. That’s the purpose of this blog.
I see a lot of what goes on behind the scenes. I have always wished others could see what I see. Now you can.
I want to use this blog to introduce you to some of the people, programs, and projects that make corporate social responsibility a reality at McDonald’s–to take you along with me as I engage with some of our internal and external stakeholders in various parts of the world and to highlight our accomplishments, as well as the challenges we continue to face.
We want to hear from you because we are always learning and trying to improve. And you can’t learn–or improve–without listening. We live in a constantly changing world where the issues are complex and solutions anything but simple. With such complex issues, we may not always agree on the root causes or best solutions, but we can have a conversation.
CSR is multi-dimensional. At McDonald’s, we break it down into five key areas: balanced active lifestyles, responsible purchasing, people, environment, and community. We’ll be talking about all these areas. I’m very passionate about them all. We know you care about them too and welcome the opportunity to hear your perspective.

And yes, believe it or not, the McDonald’s CSR blog actually does invited your comments.

From Wired News, yesterday: E3 Expo Bans ‘Booth Babes’

The video game industry’s 2006 E3 Expo trade show in Los Angeles is getting a make-over — banned are the swarms of sexy, semi-clad “booth babes” that in years past took the unveiling of new games and technology to titillating new levels.

Rules prohibiting the use of scantily clad young women to peddle video games are nothing new, but the handbook for this year’s show in May outlines tough new penalties, including a $5,000 fine on the spot for the booth owner if the “booth babe” is semi-clad.

Yes, sex sells.
Yes, using scantily clad women to sell video games is pretty demeaning.
But there’s another problem. I think the video game nerds need to be protected. I can’t help thinking: isn’t using scantily clad women to sell things to nerds a bit like using cartoon characters to sell sugary cereal to children? In both cases, we’re talking about a pretty vulnerable population, who may or may not have the experience to make good decisions in the face of such pressures.

(Photo credit:G4 Videogame TV)

This article is a couple of years old, but new to me:
The Wal-Mart You Don’t Know, by Charles Fishman, writing for Fast Times.

The article is about how being a supplier to Wal-Mart is a double-edged sword. Getting the Wal-Mart account can result in huge sales, but Wal-Mart has also been known to bully suppliers into slashing margins and moving production facilities off-shore.

Wal-Mart wields its power for just one purpose: to bring the lowest possible prices to its customers. At Wal-Mart, that goal is never reached. The retailer has a clear policy for suppliers: On basic products that don’t change, the price Wal-Mart will pay, and will charge shoppers, must drop year after year. But what almost no one outside the world of Wal-Mart and its 21,000 suppliers knows is the high cost of those low prices. Wal-Mart has the power to squeeze profit-killing concessions from vendors. To survive in the face of its pricing demands, makers of everything from bras to bicycles to blue jeans have had to lay off employees and close U.S. plants in favor of outsourcing products from overseas.
…
By now, it is accepted wisdom that Wal-Mart makes the companies it does business with more efficient and focused, leaner and faster. Wal-Mart itself is known for continuous improvement in its ability to handle, move, and track merchandise. It expects the same of its suppliers. But the ability to operate at peak efficiency only gets you in the door at Wal-Mart. Then the real demands start. The public image Wal-Mart projects may be as cheery as its yellow smiley-face mascot, but there is nothing genial about the process by which Wal-Mart gets its suppliers to provide tires and contact lenses, guns and underarm deodorant at every day low prices. Wal-Mart is legendary for forcing its suppliers to redesign everything from their packaging to their computer systems. It is also legendary for quite straightforwardly telling them what it will pay for their goods.

Interestingly, the article also cites some very positive aspects of Wal-Mart’s ethics:

To a person, all those interviewed [for this story] credit Wal-Mart with a fundamental integrity in its dealings that’s unusual in the world of consumer goods, retailing, and groceries. Wal-Mart does not cheat suppliers, it keeps its word, it pays its bills briskly. “They are tough people but very honest; they treat you honestly,” says Peter Campanella, who ran the business that sold Corning kitchenware products, both at Corning and then at World Kitchen. “It was a joke to do business with most of their competitors. A fiasco.”

This is the sort of apples-and-oranges data that makes it hard to arrive at final, global assessments of a company as big & complicated as Wal-Mart. On the one hand…but on the other hand…

As part of its annual World Report 2006, Human Rights Watch has just published the following:

Private Companies and the Public Interest: Why Corporations Should Welcome Global Human Rights Rules by Lisa Misol

Because voluntary commitments are insufficient in themselves to prevent corporate implication in human rights abuses, there have been increasingly frequent calls for binding standards. Indeed, regulations already have begun to emerge in some sectors on some issues, but coverage and enforcement is spotty, far short of the kind of comprehensive framework many believe is necessary. Multinational corporations have long responded to calls for any kind of binding human rights standards with the claim that self regulation or voluntary guidelines are enough. But there are signs that this opposition may be beginning to change.

In private, some multinational executives have started to question whether industry’s antagonism to regulation makes sense when it comes to human rights. They realize that only binding standards can ensure a level playing field and that, increasingly, the choice facing them is not between adopting voluntary codes of conduct and doing nothing. It is a choice between continuing to compete on an uneven, ever-shifting playing field and participating in the creation of universally binding and enforceable rules that apply equally to all companies.

The “level playing field” argument is a good one, generally. It basically says that in some situations, business should actually welcome some form of regulation. We all want to do the right thing; no one wants to see human rights violated. But the best intentions sometimes run up against competitive pressures. In the face of competitive pressures, personal conscience may fall by the wayside. One way to fix that is to invite regulation (either by government or by industry groups) so that all companies are able to do the right thing, without fear of competitive disadvantage.

Here’s a new study about the causes of unethical corporate behaviour.

Pressure to Meet Unrealistic Business Objectives and Deadlines Is Leading Factor for Unethical Corporate Behavior

NEW YORK–(BUSINESS WIRE)–Jan. 17, 2006–Pressure from management or the Board to meet unrealistic business objectives and deadlines is the leading factor most likely to cause unethical corporate behavior, according to a new survey on business ethics. The desire to further one’s career and to protect one’s livelihood are ranked second and third respectively as leading factors. That’s according to a global survey commissioned by American Management Association (AMA) and conducted by the Human Resource Institute (HRI).

The AMA/HRI survey on “The Ethical Enterprise” included responses from 1,121 managers and HR experts from around the world. The survey was conducted in conjunction with AMA’s affiliates and global partners, including Canadian Management Centre in Toronto, Management Center de Mexico in Mexico City, Management Centre Europe in Belgium and AMA Asia in Japan.

According to the AMA/HRI survey, working in an environment with cynicism or diminished morale, improper training about or ignorance that acts are unethical, and the lack of consequences when caught are the next leading factors likely to cause unethical behavior. These factors are followed by the need to follow the boss’s orders, peer pressure/desire to be a team player, desire to steal from or harm the organization and, paradoxically, wanting to help the organization survive.

And what solutions does the study suggest?

“Laws and regulations are, and will remain, the most influential external drivers of corporate ethics, but legislation is no substitute for the presence of leaders who support and model ethical behavior,” said Edward T. Reilly, president and CEO of American Management Association. “Corporate leaders need to communicate ethical values throughout the organization, but they must do more than talk the talk in order to establish and sustain an ethical culture,” Reilly added.

A couple of notes:
First, note that the headline of the press release is somewhat misleading: technically, the survey isn’t about unethical corporate behaviour. If you look at the full report, you’ll see that the researchers “asked participants about the top three reasons that were most likely to cause people to compromise an organization’s ethical standards.” So, it’s about individual behaviour. Sometimes, of course, an action by an employee affects outsiders in a way that might make observers want to call it a “corporate action.” (Example: Exxon rightly gets blamed, as a corporate entity, for the Exxon Valdez spill, despite the fact that running the oil tanker aground wasn’t really a corporate decision.) But that’s not really what the study seems to be about. It seems to be about unethical behaviour by employees, regardless of whether that behaviour amounts to a corporate action. (The work of ethics scholar Peter French is a good starting point for thinking about when it is that an action is a corporate action. See his “The Corporation as a Moral Person,” originally printed in the July 1979 American Philosophical Quarterly, but anthologized in various textbooks.)

Second, notice that the various factors listed are not mutually exclusive. It’s quite likely that unethical behaviour often results from a combination of, say, pressure to perform, the need to follow the boss’s orders, and a desire to help the organization survive. In fact, it seems quite unlikely that the need to follow the boss’s orders operates independently of the desire to further (or protect) one’s career. And a lack of (or improbability of) negative consequences must almost always be a factor.

Third, note (if you haven’t already) that little of this is very surprising. These are pretty much the factors most people would expect to see at play. But I guess it’s good to have actual evidence.

Fourth, this study only shows what factors people believe to cause unethical behaviour. It’s not about what actually does cause unethical behaviour.

Finally, note that there’s no mention of whether any of these causal factors amount to an excuse. (An electronic search of the full study finds zero occurrences of any of these words: blame, culpable, culpability, exculpate, justify, justified. There is one occurrence of the word “excuse.”) It would be interesting to know if the people surveyed thought any of the reasons given actually work to mitigate blame; it would be even more interesting for someone to work out a good argument about that.