The Business Ethics Blog

Here’s a bit of a “man-bites-dog” story (i.e., a story that’s interesting in part because it involves a reversal of a more common story-line).
The biotech firm, Vaxgen, is “pursuing legal remedies” after the U.S. government (in particular, the Department of Health and Human Services) apparently changed the requirements in a contract to develop a new anthrax vaccine. HHS is apparently asking for further human tests (or perhaps, depending on whose story you believe, asking for tests what were originally scheduled to be conducted after delivery of the product to be done before delivery & payment).

Here are a couple of different versions of the story:

• From the Washington Post: VaxGen Shares Fall on Vaccine Uncertainty
• From Pharmaceutical Executive Magazine: Anthrax Contract Dispute Could Reverberate Across Biotech Industry
• U.S. Wants More Tests of VaxGen’s Anthrax Vaccine

Two issues jump out as reasons why VaxGen must be treading very carefully here.
First, the tests at issue are tests to determine (or further certify) the safety of the new vaccine for use in humans. VaxGen will want to make very, very clear that it’s not resisting efforts to ensure that their product is safe.
Second is the issue of patriotism. I’m sure VaxGen is painfully aware that the programme funding their project is “Project BioShield,” part of the US government’s effort at fighting bio-terrorism. It wouldn’t be surprising to see VaxGen’s actions characterized as unpatriotic, uncooperative, etc…despite the fact that it’s the government, not them, that changed the rules of the game. Question: should it matter (to our ethical evaluation of this situation) that the product being contracted for is an anthrax vaccine, rather than desktop computers or snowplows?

The pharmaceutical industry’s deep, pervasive links to organized medicine are a big problem.
Here’s a story from the NY Times: Unease on Industry’s Role in Hypertension Debate.

The story is about changes in the definition of “hypertension” (high blood pressure), changes which could affect the number of people diagnosed with that illness, and hence affect the quantity of anti-hypotensive drugs pharmaceutical companies sell. The story tells of how the efforts of the group trying to re-write the definition were funded by 3 drug companies (Merck, Novartis and Sankyo), through “unrestricted” (no-strings-attached) grants.

Of the seven doctors who wrote the proposed new definition, six have said that they served as consultants and speakers for pharmaceutical companies that make blood pressure medications. The seventh is a consultant and stockholder in a company that markets a diagnostic method to measure damage to blood vessels.

Such industry affiliations are not unusual among prominent doctors at academic research centers. And for years, the American Society of Hypertension, known as ASH, has operated with industry support.

But some members of ASH have become vocal critics of the influence wielded by the drug industry…

Of course, many physicians deny that the money lavished on them by the drug companies skews their judgment in any way:

But many members of the society have taken umbrage at suggestions that their work for drug makers affects their scientific independence.
“There are those who accuse us of being nothing more than shills of industry; a lot of us take pretty great offense at that,” said Dr. Joseph L. Izzo, a professor of medicine at the University of Buffalo who was part of the group that developed the new definition. “We’ve basically devoted our careers to researching this disease and how to treat it.”

I have only two quick comments about this defence:
1) No one is saying (or no one needs to be saying) that the docs involved are consciously acting as “shills” for industry, or that they would ever knowingly allow their scientific independence to be compromised.
2) Nonetheless, both evidence & common sense suggest that drug company money does have an effect.
See, for example:

• Association of funding and conclusions in randomized drug trials
• Changes in drug prescribing patterns related to commercial company funding of continuing medical education
• Physicians and the Pharmaceutical Industry: Is a Gift Ever Just a Gift?

Relevant books:

• Let Them Eat Prozac: The Unhealthy Relationship Between the Pharmaceutical Industry and Depression
• The Truth About the Drug Companies: How They Deceive Us and What to Do About It
• Selling Sickness: How the World’s Biggest Pharmaceutical Companies Are Turning Us All into Patients

OK, so by now everyone is really, really aware of the controversy over the new movie version of Dan Brown’s The Da Vinci Code. Here’s a new twist that makes the controversy germane to this blog. The movie’s most vocal critic, the Catholic prelature Opus Dei, has issued a press release criticizing Sony (the firm behind the film) for having violated its own Code of Conduct. Here’s the press release: Sony’s Other Code.

The press release quotes the following passages from Sony’s code:

“Recognizing that conduct that is socially acceptable in one culture or region may be viewed differently in another, Personnel (of Sony) are required to give careful consideration to cultural and regional differences in performing their duties” (section 1.3);

“No Personnel may make racial or religious slurs, jokes or any other comments or conduct in the workplace, that create a hostile work environment” (section 2.4);

With respect to publicity, Sony commits itself not to engage in false publicity that misleads or slanders others (section 3.4).

Holding Sony to its own code of conduct is a nice (and very legitimate) tactic. But I’m not sure that the passages cited by Opus Dei support the group’s claims.

• Section 1.3 only enjoins “careful consideration,” rather than any particular behaviour. Sony may well have given such consideration, and arrived at the conclusion that this movie doesn’t fail to respect social & cultural differences.
• Section 2.4 is about ethics in the workplace, so it’s not terribly relevant, here.
• Secion 3.4 forbids slander. Whether a work of fiction can count as slanderous is open to question. Lots and lots of movies attribute evil deeds to all kinds of groups and organizations (drug companies, the CIA, Freemasons, various govenments, the legal profession, and so on). I have to admit, I haven’t read the book, so I don’t know whether the portrayal of Opus Dei in the book is so outrageous as to be different in kind from these other portrayals.

OK, so let’s look beyond the “letter of the law,” to look at the spirit of Sony’s code. Perhaps the point of the Opus Dei press release is that Sony has violated the spirit of its own Code of Conduct. It’s pretty clear that the Code requires Sony employees to be sensitive to other people’s values. Does that requirement preclude distributing a movie that the members of a particular religion (or perhaps a range of religions) object to? Is that how we should read Sony’s Code? That depends in part on whether the “sensitivity” is synonymous with avoiding all insult. It also depends in part upon the observer’s views on what sorts of values & beliefs ought to be protected from criticism. To a committed, principled atheist, a negative portrayal of a religious group (or of a religion, or of all religions) might be a positive good. Some people believe that religion ought to be mocked. I’m not about to promote that idea, but it’s worth noting that a movie (a work of fiction, let’s recall) that makes a bad-guy out of a powerful institution is quite different from a movie that, let’s say, demonstrates insensitivity by making villains out of a disempowered or threatened minority.

(p.s., It’s also worth pointing out — lest anyone should overreact to Opus Dei’s protests — that the group’s protests most definitely do not count as an attempt at censorship. The group is decrying the move, and has asked Sony to put a disclaimer on the film, informing audiences that it is a work of fiction, rather than a portrayal of history. They’ve got every right to make their views known, and to encourage changes in corporate behaviour.)

Relevant Links:
Sony‘s corporate website
Sony Group Code of Conduct (pdf file)
Opus Dei page at Wikipedia

Book Links:
The Da Vinci Code (by Dan Brown)
The Da Vinci Code Illustrated Screenplay: Behind the Scenes of the Major Motion Picture
Opus Dei: An Objective Look Behind the Myths and Reality of the Most Controversial Force in the Catholic Church
Sony (a history of the Sony corporation)

Thanks to Michael Cook for alerting me to Opus Dei’s press release.

For many Americans, “Buy American” is a moral slogan (just as “Buy Canadian” is for many Canadians). But as this Wall Street Journal article points out, that advice is hard to follow, at least when it comes to cars (and, I suspect many other consumer goods that have many components): Mom, Apple Pie and…Toyota? (Only the first couple of paragraphs are available for free, unfortunately.)

Here are a couple of key paragraphs:

FEW SPORTS CARS have captured the nation’s imagination like the sleek Ford Mustang, a 21st-century reincarnation of an American classic. The Toyota Sienna minivan, by contrast, speaks to the utilitarian aesthetics of Japan: refined interiors, arm rests and lots and lots of cup holders.

Yet, by a crucial measure, the Sienna is far more American than the Mustang. Statistics from the National Highway Traffic Safety Administration that were publicized in “Auto Industry Update: 2006,” a presentation by Farmington Hills, Mich., research company CSM Worldwide, show only 65% of the content of a Ford Mustang comes from the U.S. or Canada. Ford Motor Co. buys the rest of the Mustang’s parts abroad. By contrast, the Sienna, sold by Japan’s Toyota Motor Corp., is assembled in Indiana with 90% local components.

The key tension here seems to be between the values of globalization (and the efficiency it brings) on one hand, and patriotism on the other. We can think about this from the points of view of 2 different decision-makers:

The Corporation: Does a company have an obligation to promote the interests of the country (or the citizens of the country) in which it is incorporated? Believers in the efficiency (or fairness) of free markets should presumably answer this question in the negative. Strictly speaking, if the social obligation of business is to provide a product that the market desires in order to return a profit to investors, then moves (investments, policies) driven by patriotism ought to be counted as optional (and driven, like corporate philanthropy, for example, by either altruism or strategic PR concerns). On the flip-side, those who acknowledge the limits of free markets can freely accept the idea that values other than profit-maximization (such as patriotism) ought to drive business decisions.

The Consumer: Does an individual consumer have an obligation to favour products in proportion to their national content? Those who favour a more simple-minded consumerism (and I say that without prejudice!) will assert that a product’s country of origin matters little, if at all. Such consumers merely want to know if the product is well-made, well-priced, and meets their needs. Other consumers will see their purchases as having a broader impact, and perhaps as a way of making a statement. Of course, this puts supporters of “Buy American” in the same philosophical camp as the traditional critics of free, globalized markets. Strange bedfellows indeed.

Relevant Books
How Americans Can Buy American: The Power of Consumer Patriotism (by Roger Simmermaker)
Exporting America : Why Corporate Greed Is Shipping American Jobs Overseas (by Lou Dobbs)
Outsourcing America: What’s Behind Our National Crisis And How We Can Reclaim American Jobs (by Ron Hira)

(Thanks to Dave Chandler for the pointer. You can sign up to receive Dave’s insightful weekly “Strategic CSR” newsletter by emailing him at david.chandler@phd.mccombs.utexas.edu.)

The latest in the ongoing battle over genetically modified crops, intellectual property, and international trade: Soy imports delayed as Argentina fights Monsanto over GM (Food Production Daily)

Argentina’s government joins a group of meat producers in Denmark in a court battle against Monsanto over genetically modified soy, one that has led to imported supplies being held up at the EU’s ports.

The court case, originally brought against meat producers and processors by Monsanto, highlights the problems arising from strict patents relating to genetically modified (GM) crops and other ingredients used as feed in the EU. Currently GM crops can only be imported as feed into the EU.
Monsanto brought the court case against the Danish importers, alleging they were importing soybeans from Argentina derived from a Monsanto-made seed, whose patent is recognised in Europe but not in Argentina.

I’m no expert on international trade, but my guess is that this issue (and the court case) would be a no-brainer if the product in question were anything other than genetically modified crops. At stake, essentially, is whether a corporation should be able to prevent retailers in Country A (which does generally recognize the company’s intellectual property rights) from importing products (ones based upon the company’s I.P.) from Country B (which doesn’t recognize the company’s I.P. rights).
A comparison: if Nokia asked an E.U. government to stop retailers in the E.U from importing rip-offs of Nokia phones from China, would anyone find Nokia’s actions the least bit controversial?

(Interesting side note: just 5 years ago, Monsanto won a corporate citizenship award in Argentina. Go figure.)

Links:
Monsanto
Monsanto @ Wikipedia
An anti-Monsanto page

Relevant Books:
Against the Grain : Biotechnology and the Corporate Takeover of Your Food
Genetically Modified Foods: Debating Biotechnology
Food, Inc. : Mendel to Monsanto–The Promises and Perils of the Biotech Harvest
Agribusiness and Society : Corporate Responses to Environmentalism, Market Opportunities and Public Regulation

When I blogged about Wal-Mart’s move into organic foods last week, I forgot to include a link to this NY Times Editorial: Editorial: When Wal-Mart Goes Organic.
Here’s a snippet:

But here are the pitfalls. Wal-Mart will now become the 800-pound gorilla among the other, slightly smaller gorillas that have tried repeatedly to weaken the Agriculture Department’s definition of what organic means. There is no chance that Wal-Mart will be buying from small, local organic farmers. Instead, its market influence will speed up the rate at which organic farming comes to resemble conventional farming in scale, mechanization, processing and transportation. For many people, this is the very antithesis of what organic should be.

I’ve said enough about this already. Andrew Potter, over at the Rebel Sell, has a nice angle on this: the organic shuffle

Salon had an interesting item recently: Big Pharma’s protectionist trade agreements, by Andrew Leonard (If you’re not a Salon subscriber, you have to view an ad in order to get to read this article for free.)

The article is basically about efforts by the pharmaceutical industry to manipulate international trade regulations as a means of protecting intellectual property (i.e., keeping the price of their products high).

The standard industry argument is that Big Pharma needs the reward of big profits to subsidize the huge expense of research and development. There is some merit to this argument. Without the incentive of any profit at all, the Pfizers and Lillys and Mercks simply wouldn’t exist. But the question is not whether it is immoral for pharmaceutical companies to make a buck; the question should always be how does one best balance the public interest with the private? How much I.P. protection is too much?

There’s no easy answer to that question, and reasonable people can disagree on such questions as how long the term of a patent should extend. But reasonable people can also expect that profit-seeking enterprises do not control the governmental policymaking process — that’s a complete perversion of the purpose of government, and that is exactly what is currently standard practice in the United States. It’s bad enough that in the Medicare Drug Prescription Benefit Act, Medicare was explicitly forbidden from using its purchasing power leverage to negotiate price discounts. It’s positively ludicrous that Big Pharma should then proceed to attempt to prevent any government, anywhere, from using its power to operate in the public health interest.

I’m no fan of Big Pharma. They’ve earned their bad rep. But the problem of corporate lobbying is perhaps more subtle than Leonard is allowing, here. Of course we don’t want corporations controlling the policymaking process. But that’s quite different from saying we don’t want them participating in that process. (Admittedly, the latter might sometimes be an attractive idea, too. But it would require serious constraints on free speech, and would hinder policymakers’ access to the crucial information often held by corporations).

Secondly, it’s not so obviously “ludicrous” that a company should attempt to prevent a government from operating in the public interest. Neither you nor I nor any corporation is obligated always to put the public good above our own. If the public good demanded that my home be expropriated to make way for a freeway, I would work hard to oppose that. Rights (human rights, property rights, etc.) put legitimate constraints on the pursuit of the collective good. Of course, the exact nature and meaning of any given right is, in the end, up for debate and negotiation. Perhaps, for example, our understanding of intellectual property rights ought to be a consequentialist one, rather than one rooted in the natural right to the fruit of one’s labour. But in the absence of a definitive answer to that debate, it’s far from ludicrous for a company (pharma or other) to work — within the law & within the rules governing corporate political involvement — to defend its intellectual property.

Here’s an interesting, well, sort-of-story. Actually, kind of an interesting non-story: Poll: Most students think biz ethics optional (Francine Knowles, Chicago Sun-Times)

Most Chicago area high school students queried in a business survey revealed they have a dim view of the need for high ethical standards.

The survey, conducted by the Illinois Institute for Entrepreneurship Education and the Chicago area chapter of the National Association of Women Business Owners, found a wide gulf between the ethical perspectives of high school students and those of business owners.

More than 96 percent of business owners surveyed said they believed that having others view them as a person of integrity is very important, while only 37 percent of high school students surveyed shared that view.

When asked whether it was better to bend the rules and win or play by the rules and lose, 79.2 percent of business owners said the latter was better, compared with 41.7 percent of students.

The survey posed several ethical questions to more than 70 high school students and 80 women business owners in the Chicago metropolitan area.

First, question, class: who can tell me what the Margin of Error is on a study of 70 students? (If you don’t know what margin of error is, look it up before you try to read any more news stories that cite surveys. It’s important.) OK, a hint: the margin of error (roughly the amount by which a study with a sample of this size — 70 — might be wrong, just by chance) is huge. So, the title of this story is pretty misleading. It should read, “Tiny Poll: Majority of Notoriously-Rebellious Highschool Students in One City Gave Anti-Social Answers to Ambiguous Questions.” OK, that’s not very catchy though, is it?

Second, who is supposed to be surprised that a significant proportion of adolescents (maybe) have immature, antisocial attitudes?

OK, so, snippy comments about this survey aside, there is a serious issue here, related to the role-models young folks see in media & pop-culture portrayals of the world of business, and the long-term effect that has on their thinking and their values. That’s a serious topic. If anyone knows of good empirical research on that topic, e-mail me, and I’ll blog about it.

(Thanks to Laura Hartman for the heads-up.)

Here’s an interesting story from The Guardian: Somerfield gives up on ethics

Britain’s fifth-biggest supermarket chain, Somerfield, has pulled out of the Ethical Trading Initiative, an alliance including unions and retailers that aims to ensure suppliers in developing countries meet basic labour standards.

The move has drawn comments that Somerfield, under its new owners, flamboyant financier Robert Tchenguiz, and venture capital firm Apax Partners, are more concerned about profits than about the fair treatment of workers in poor countries.
…
Somerfield maintained its leaving the ETI would not cause a lowering of ethical standards. The company said: ‘Somerfield was a founder member of the ETI. We remain committed to the principles of an ethical trading policy and have incorporated accepted codes of practice across our business.

The title of the Guardian article is pretty misleading. At the very least, it makes what seems to be a large, unsubstanitated assumption, namely that Somerfield’s withdrawal from the ETI signals a change in the company’s commitment to monitoring & improving labour conditions along its supply chain. But if Somerfield is indeed still committed to that, it’s likely going to need to do something concrete to signal that commitment.

Relevant Links:
Somerfield‘s website
Ethical Trading Initiative‘s own website (Here’s ETI’s official statement on Somerfield’s withdrawal.)
Ethical Trading Initiative (per Wikipedia)
International Labour Organization
Implementing Codes Of Conduct: How Businesses Manage Social Performance In Global Supply Chains (book)

A few weeks back I blogged about Wal-Mart’s stated intention to become the world’s #1 purveyor of organic foods. (See: Wal-Mart Goes Organic!?)

Today’s New York Times has an update: Wal-Mart Eyes Organic Foods

Starting this summer, there will be a lot more organic food on supermarket shelves, and it should cost a lot less.

Most of the nation’s major food producers are hard at work developing organic versions of their best-selling products, like Kellogg’s Rice Krispies and Kraft’s macaroni and cheese.

Why the sudden activity? In large part because Wal-Mart wants to sell more organic food — and because of its size and power, Wal-Mart usually gets what it wants.

As the nation’s largest grocery retailer, Wal-Mart has decided that offering more organic food will help modernize its image and broaden its appeal to urban and other upscale consumers. It has asked its large suppliers to help.

Wal-Mart’s interest is expected to change organic food production in substantial ways.

Some organic food advocates applaud the development, saying Wal-Mart’s efforts will help expand the amount of land that is farmed organically and the quantities of organic food available to the public.

But others say the initiative will ultimately hurt organic farmers, will lower standards for the production of organic food and will undercut the environmental benefits of organic farming. And some nutritionists question the health benefits of the new organic products. “It’s better for the planet, but not from a nutritional standpoint,” said Marion Nestle, a professor of nutrition, food studies and public health at New York University. “It’s a ploy to be able to charge more for junk food.”

Just a couple of quick points:
1) This whole story flags a big “buyer beware.” The term “organic” is not synonymous with “healthy” (which is why, in many juristictions, producers and sellers of organic foods are forbidden from making claims that organic foods are any healthier than non-organic foods.) And, just to push the point, if you eat a diet consisting largely of foods high in sugar — even if it’s organic sugar — you’re going to suffer for it. (And apparently Wal-Mart is going to help illustrate this point, by offering at least some high-sugar, highly-processed foods that also happen to be “organic.”)
2) Note that one of the key objections (from advocates of organic foods) to Wal-Mart’s involvement is that it will “ultimately drive down prices and squeeze organic farmers.” Yes, that’s exactly what Wal-Mart does. But remember: there’s nothing sacred about current prices. In fact, by driving down prices, Wal-Mart may of course reduce the income of organic farmers, but at the same time they’ll make organic foods available at lower costs to consumers. And that’s good, right?