The Business Ethics Blog

Here’s a story that would make a great case-study, or a challenging student research project.

It involves corporate participation in activites that are, on the one hand, arguably a patriotic contribution to national security, and on the other hand, ethically and legally questionable.

The issue is the role played by telecommunications companies in facilitating the U.S. National Security Agency’s warrantless monitoring of telephone and internet communications. This story from the NY Times is just a starting point.

Here are some snippets from the NY Times, on the role of companies in this story:

A former technology manager at a major telecommunications company said that since the Sept. 11 attacks, the leading companies in the industry have been storing information on calling patterns and giving it to the federal government to aid in tracking possible terrorists.

Several officials said that after President Bush’s order authorizing the N.S.A. program, senior government officials arranged with officials of some of the nation’s largest telecommunications companies to gain access to switches that act as gateways at the borders between the United States’ communications networks and international networks. The identities of the corporations involved could not be determined.

One outside expert on communications privacy who previously worked at the N.S.A. said that to exploit its technological capabilities, the American government had in the last few years been quietly encouraging the telecommunications industry to increase the amount of international traffic that is routed through American-based switches.

Historically, the American intelligence community has had close relationships with many communications and computer firms and related technical industries. But the N.S.A.’s backdoor access to major telecommunications switches on American soil with the cooperation of major corporations represents a significant expansion of the agency’s operational capability, according to current and former government officials.

I began this blog thing a couple months back when I “realized” there were no active business ethics blogs out there. Turns out, I hadn’t looked carefully enough. In fact, there are a few other blogs out there related to business ethics, socially responsible business etc.

I’ll list a few of the ones I’ve found here. No endorsement is implied. Maybe someday I’ll get around to reviewing them…

Principled Profit: The Good Business Blog

Business Ethics Forum

Credo Advisors

Power of Ethics – Daily Quotes

Then there are some more narrowly focused ones:

CSR in China
CWACblog – Companies with a Conscience
Anita Roddick (founder of the Body Shop)
Corporate Social Responsibility in Asia
SRI Notes – Socially Responsible Investing
Conglomerate: Business Law Economics Society
Corporate Fraud Blog

If anyone knows of a really good business ethics blog, please let me know.

A recent op-ed piece in the New York times called “Drugs, Devices and Doctors” points out that conflicts of interest are the norm, rather than the exception, in the medical devices and pharmaceutical industries. In the piece, editorialist Paul Krugman argues that “growing conflicts of interest may be distorting both medical research and health care in general.”

(You have to have a subscription to see the full op-ed piece.)

Krugman goes into some detail regarding a questionable relationship between The Cleveland Clinic, some of its doctors and administrators, and pharmaceutical giant Merck. The story sounds complex, but in essence it all boils down to the fact that “crucial scientific research and crucial medical decisions have to be considered suspect because of financial ties among medical companies, medical researchers and health care providers.”

That should come as no surprise. The past quarter-century has seen the emergence of a vast medical-industrial complex, in which doctors, hospitals and research institutions have deep financial links with drug companies and equipment makers. Conflicts of interest aren’t the exception – they’re the norm.

The economic logic of the medical-industrial complex is straightforward. Prescription drugs and high-technology medical devices account for a growing share of medical spending. Both are products that are expensive to develop but relatively cheap to make. So the profit from each additional unit sold is large, giving their makers a strong incentive to do whatever it takes to persuade doctors and hospitals to choose their products.

What should come as a surprise is that almost all of the attention paid to ethical issues like this in the pharmaceutical industry has been paid by bioethicists and physicians. So far (and correct me if I’m wrong) the pharma industry has garnered relatively little attention from scholars in business ethics or corporate ethics activists. This is a shame. The problems outlined by Krugman in the NYT have precious little to do with the fact that the pharma industry is part of the larger world of health care, so there’s no particular reason bioethicists should be able to corner the market on criticizing an industry that behaves, on the whole, quite badly. Krugman points out rampant conflicts of interest, yet (no offence intended) I doubt most bioethicists could definte “conflict of interest.” It’s just not part of the standard range of problems in that field. But conflict of interest IS a standard problem in business, and so there’s a large lots written about it in both the business ethics and professional ethics literatures. It would be great (hint hint) to see scholars from those fields tackling the problems in pharma.

A story in today’s NY Times, “Under Pressure, Food Producers Shift to Healthier Products.” Of course, the headline isn’t fully accurate, because the article is really about:

• How some food producers are shifting to healthier products.
• How other food producers are reducing the extent to which their advertising of unhealthy products is aimed at kids.
• How still other food producers are burying their heads in the sand.

The NYT story is based in part on the U.S. Institute of Medicine’s report, “Food Marketing to Children and Youth: Threat or Opportunity?” (we’ll ignore the fact that the title seems to present us with a false dilemma). That report costs about $35 to buy, but you can get the main ideas from the IOM’s press release on the topic.

Why is this an issue? From the press release:

Concern has focused on food and beverage marketing practices because of the increase in new products targeted specifically to children and youth over the past decade and the media’s increasing role in socializing young people. Companies spent an estimated $10 billion to market foods, beverages, and meals to U.S. children and youth in 2004, and four of the top 10 items that children ages 8 to 12 say they can buy without parental permission are either foods or beverages.

The IOM’s committee (which, in addition to experts on nutrition and psychology, included business profs and a philosopher), recommends that the industry adopt a self-regulatory approach:

Some companies and restaurants have recently taken steps to develop and promote healthier offerings, but overall the food, beverage, and restaurant industries spend the majority of their resources on products that contain high amounts of added sugar, fat, and salt and that lack essential nutrients, the report says. These industries should shift their creativity and resources to develop a wider array of products that are nutritious, appealing, and affordable.

(For a look at one of the industry’s self-regulatory initiatives, see the website of Children’s Advertising Review Unit.)
But the Committe also says that “A long-term, multifaceted national campaign should be initiated by the government…”

See also Andrew Potter’s useful comments on this story.

Here’s the quick version:
Bellsouth offered to donate a 250,000 square-foot building to the New Orleans Police Department.
Then, New Orleans Mayor, Ray Nagin, announced a plan to provide free wi-fi (wireless internet) service to all residents & businesses, in order to help rebuild the city.
Bellsouth, itself a provider of (non-free) wi-fi services, objected to the Mayor’s plan.
Bellsouth then retracted its offer to donate the building.

Here’s the story from eWeek.com.

Quick points:
1) As the eWeek story points out, the wi-fi and the donation of the building are not intrinsically linked. The implication is that Bellsouth got cranky because it assumed that the donation would result in some sort of quid pro quo, or at least some sort of goodwill. Bellsouth clearly did not get what it thought it was owed.
2) I think the most sympathetic way to interpret Bellsouth’s move: ‘Why would we act generously towards a city that is not just unsupportive, but that moves actively to undercut one of our primary services?’
3) What Bellsouth needs to learn: there’s nothing wrong with thinking that your corporate philanthropy will buy you goodwill, but don’t be so brutally literal about it. Even Social Contract Theorists (or moderately sophisticated ones), who are pretty darned sticky about reciprocity, don’t think that every interaction has to be literally a matter of Tit for Tat.
4) Before you jump to too many conclusions about cold-hearted Bellsouth, gentle reader, make sure to read the very last paragraph of the eWeek story.

A news story this week indicated that Body Shop founder Anita Roddick would be giving away her entire fortune of approximately $110 million.
Here’s the story as reported on telegraph.co.uk

She said: “I am going to start giving it away. I hope that before I die there will be a financial foundation. All my wealth is in the shares. My intention is to give my money away.

“I don’t want to die rich. Money does not mean anything to me. The worst thing is greed – the accumulation of money. I don’t know why people who are extraordinarily wealthy are not more generous.”

But don’t too excited about heading to your local Body Shop, cap-in-hand, just yet. An explanation posted on Roddick’s own website clarifies that while Roddick does indeed plan eventually to give away her entire fortune, doing so is a long-term plan:

“What I am going to do is set up a charitable foundation, through which donations will be made to groups and individuals that show leadership in the areas of global justice, human rights, environmental action and grassroots organising. But we won’t be accepting unsolicited requests. There aren’t any immediate plans to set this foundation up….”

(Thanks to Andrew for the tip.)

Pharmaceutical advertising (including advertising to health care professionals, as well as direct-to-consumer advertising) raises a number of ethical issues.

Not surprisingly, given that the behaviour of pharmaco’s has such a significant impact on human health, scholars in bioethics have been on the front lines, here. Bioethicists have done an excellent job of highlighting serious conflicts of interest, distortions of physician prescription patterns, and concerns about the disproportionate quantity of money spent on advertising (as opposed to, say, R&D).

The downside has been a relative lack of detailed, nuanced attention to issues of corporate ethics. Too often the call has simply been for the pharma industry to “shape up,” and “start behaving responsibly.” It would be really great if lots of people in business ethics took up these issues. For one thing, scholars in business ethics have at their fingertips decades’ worth of relevant literature on ethics in advertising, conflict of interest in the professions, stakeholder involvement, etc etc etc.

Here, the Director of Pharmaceuticals Marketing at Pfizer weighs in on some issues of corporate ethics in pharma advertising.

One news story does not a bad company make.
One incident of racism does not a racist company make.
One incident, in which a Wal-Mart store stalls for 2 hours after being presented with a cheque for a corporate purchase by a well-dressed black man with lots of I.D., dos not necessarily mean racism.

None the less, check out this story in the Saint Petersburg Times.

Poor Ben Rogovy. It seemed like such a good idea at the time. He saw homeless men in his Seattle neigbourhood standing holding signs asking for money. A lightbulb went on. Why not get them to hold signs that advertised something!? “Bumvertising” was born.

The idea got big coverage after it was lampooned on the Daily Show with Jon Stewart. (Follow the link and then click on “Face for Rent.”)

Critics have called Bumvertising “exploitative.” The Daily Show segment used the word “unscrupulous.”

Clearly the name “Bumvertising” was ill-chosen. “Bum” is a rather dated, generally offensive term for homeless people (typically men). So, let’s take it as a given that Rogovy should think about re-branding.

OK, but seriously. What really is wrong with Bumvertising, other than its unfortunate name? Rogovy is doing more to help the homeless than the vast majority of us do. Are the homeless the only ones left who aren’t allowed to be corporate shills? Perhaps the homeless shouldn’t have to do this kind of work. Indeed, and it would be better still if the homeless weren’t homeless at all. But isn’t criticizing Bumvertising sort of a case of letting the best be the enemy of the good? How is putting a sign, and a few dollars, in a homeless man’s hands different from a corporation putting a few thousand dollars, and a corporate logo, on an under-funded theatre troupe’s marquee? So long as no one’s being asked to do anything particularly demeaning (and I just can’t see holding a small sign as demeaning) it hardly seems “exploitative.”

Here, Rogovy defends himself quite ably.

And here’s a pretty good story about the debate, in the Seattle Post Intelligencer.

Haiku: Japanese poetic form consisting of 17 syllables arranged in three lines of 5, 7, and 5 syllables each.

Our stock value fell
When our managers told lies
No one is perfect

Alternatively, Haiku may follow a 3-5-3 pattern…

In the night
will you be haunted
by your choice?

Why business ethics Haiku? Why not? A better reason than that: if a corporate credo is a brief, concise statement of a company’s values, then the right Haiku could be like a credo on steroids. Super-brief, memorable, inspiring. Consider it a challenge…