The Business Ethics Blog

As promised, here’s my reveiw of “Wal-Mart – The High Cost of Low Price.”

(Bias advisory: I don’t like Wal-Mart. I do shop there occasionally, but I have a semi-irrational dislike of the place.)

OK, what you need to know about the movie:

• It is not an unbiased documentary. It is a one-sided attack piece, and never claims to be anything else.
• It’s also a good movie. It’s worth watching.
• You need to have your critical-thinking hat on for this one.

The movie has a beautiful narrative arch.
The first 15 minutes are about the effect a new Wal-Mart store had on small mom-and-pop busiensses in Middlefield, OH. The story is told by 3 generations of the Hunter family, owners of H&H Hardware. The Hunters are sincere, simple folks who speak eloquently about small-town life, and what the store has meant to their family. I think a lot of people will, like me, find this segment kind of sad, but will feel that nostalgia for the small-town life of yesteryear isn’t enough to condemn a store that manages to provide rock-bottom prices to low-income shoppers mostly through the excellence of its supply-chain. In some ways, this is a set up. The more serious moral condemnation comes in the next section.

(Apparently, this first section of the film is also quite misleading. According to a story in the Cleveland Plain Dealer, the hardware store actually shut down before the new Wal-Mart opened, and the family’s patriarch denies that the big-box store was to blame.)

The second section of the movie, the big middle section, is about much more clearly blameworthy behaviour on the part of Wal-Mart. Here the movie details a range of management practices with negative effects on employees — everything from giving employees too few hours to live on (or to warrant benefits) through to coercing employees to work unpaid overtime. This section also includes stories about Wal-Mart’s lackluster environmental track-record and claims that security in their parking-lots is inadequate.

The final segment of the movie is about towns fighting back. It shows grassroots movements in Chandler, AZ and Inglewood, CA working hard to prevent Wal-Mart stores from opening in their communities. Inspirational music soars as the film portrays the activists’ success at keeping America’s biggest employer at bay.

So, what kind of beast is Wal-Mart? Should we believe this movie, or the company’s own commercials? Big topic, but here are some thinking points:

• The key, here, I think, is not to get bogged down in complicated economic arguments. For most of us, those are not relevant…yet the lion’s share of debate over Wal-Mart on the ‘net is focused on issues like the net effect of a 2% drop in nominal wages combined with a 3% drop in consumer costs. The net economic effect of a company like Wal-Mart is (or should be) a concern for governments, and net local impact should clearly be a big concern for town councils. But I generally think the big-picture economic question is a red herring, and ought to be dropped for most purposes.
• Some of the practices detailed in the movie (discriminating against women and blacks in decisions about promotion, falsifying time-cards, etc.) are clearly ethically indefensible. You don’t need an ethics professor to tell you that.
• Other “sins” pointed out by the movie are much less convincing. For example, the movie points out that a lot of Wal-Mart employees are on various forms of government assistance. It even provides numbers. But just how unusual is it for retail workers to be on one or more forms of government assistance? Personally, I have no idea. But without that sort of baseline information, a statistic about Wal-Mart’s employees is pretty close to useless.
• I’m extremely skeptical about blaming Wal-Mart for what goes on in its parking lot. The movie basically tries to suggest that the company is actually directly responsible for a number of crimes (including at least one rape and one murder) that happened in its parking lots. The specific claim is that Wal-Mart should have had security guards either patrolling or watching on closed-circuit camers. Again, this claim suffers from lack of suitable comparisons. Do other large retailers have security patrols in parking lots? Is there an industry standard in this regard? How does the crime rate in Wal-Mart parking lots compare to the crime rate in parking lots more generally?

[Thanks to Andrew Potter for a useful e-mail discussion on this topic.]

List of other movie reviews on this blog.

This one is more subtle than it at first appears to be.
CTV News has a story today about how in-car DVD players can be dangerous distractions when they’re mounted where the driver can see them. Yes, dangerous. “Experts” even say so.

Here’s a story about an Alaska man who was charged with murder after his in-car movie watching caused a fatal crash. (According to CTV he was recently acquitted.)

My first thought, and probably yours: “What kind of IDIOT…?” Of course driving while watching a movie is dangerous. Seriously and obviously dangerous.
No doubt that’s why manufacturers of these devices have built in safe-guards. According to CTV,
“If installed as recommended, DVD players will not work in an automobile unless the emergency brake is on or the vehicle is in park. But owners can defeat the safety measures by installing the devices themselves.”

And I imagine there are more than a few auto accessory shops that would be willling to bypass those safety measures for you, if you’re not the do-it-yourself brand of idiot.

So why not just ban such devices altogether? Well, turns out that at least some of them are multi-featured, including navigation systems with maps, etc. So these devices do seem to have a legitimate place on the dashboard of a parked vehicle.

Here are some provocative questions, sans satisfying answers:

• Are aftermarket installers of DVD players responsible for the poor choices of their customers (i.e., in bypassing manufacturers’ safety features)?
• Should manufacturers be selling these directly to the public, if safety features are so easy to bypass?
• Is there anything special about in-car DVD players, such that they should be regarded as a special risk and singled out for regulation, in comparison to dozens of other nameable in-car distractions?

OK, I squeaked out a few minutes this morning to watch the first 10 minutes of “Wal-mart – The High Cost of Low Price.”

My initial reaction is positive, at least in the sense that this looks like a reasonable teaching tool, a good movie to generate discussion in a classroom, etc.
The opening sequence shows CEO Lee Scott rallying the troops with a very polished speech to an annual meeting of employees.
The next 10 plus minutes are about the effect of a new Wal-Mart on a particular small, American town. It’s an effective sequence of interviews with simple, well-spoken “normal folks,” about the effect of Wal-Mart on their community.
Stay tuned for a full report.

Check out this story by Peter Foster in the National Post.

In it, Foster rails against George Clooney’s new movie, Good Night and Good Luck, for what Foster thinks is its unjustified anti-corporate slant. The film is a fictionalized account of newsman Edward R. Murrow’s courageous defiance of Senator Joeseph McCarthy. In particular, Foster criticizes the movie’s portrayal of the Aluminum Co. of America (now Alcoa), a sponsor of Murrow’s newscasts who eventually bailed out.

I haven’t seen the movie yet, but Foster’s article points to an interesting topic. Of course, the main reason Hollywood (as if “Hollywood” is an entity with one mind!) sometimes picks on big business is, well, ya gotta pick on someone. Movies need villains. For better or for worse, big business makes an easy target. Frankly, I don’t generally blame movie-makers for helping themselves to whatever boogie-men they can find, at least when they’re doing fiction. But then, GN&GL is a fictionalized account of real historical events.

This warrants more thought: what are the implications, for public perceptions of the corporate world, of portrayals of corporations in fiction (e.g., Wall Street, semi-fiction (GN&GL), and non-fiction (The Corporation)?

(Thanks to Andrew Potter for pointing me to Foster’s story.)

This one would make a terrific case-study for anyone teaching business ethics.

CBC ran a story back in February on the few Canadian stores then selling GloFish™. In case you haven’t heard of it, the GloFish™ is a small tropical fish (a zebra fish, to be exact) that has been genetically modified so that it glows in the dark. They were developed (and are now legally sold) in the U.S.

Apparently, the fish were imported into Canada in violation of federal regulations. According to the CBC’s story, the retail outlets they talked to had no idea that there was a problem.

Lesson #1: Monsanto isn’t the only firm we can talk about when discussing commerce in Genetically Modified Organisms. These issues, and a range of new demands, are facing a huge range of companies both very large and very small. See relevant comments here from an executive with the Federation of American Aquarium Societies.

Here’s the Advisory Note issued by Environment Canada back in February.

(On a related note: here’s a good commentary on current controversy over cloning pets.)

Issues here:
What is the responsibility of companies with regard to keeping up to date on environmental policies in general? Does genetic science change the rules in this regard?
One small-time fish breeder was unaware that he was breeding GloFish™ (purchased at a pet store) in violation of patent. Whose responsibility is it to get such industries “up to speed?”
More generally: Biotechnology has introduced *new* concerns into various commercial domains that previously faced few ethical issues. When is it problematic for a firm to assume that a tropical fish is just a tropical fish?

Here’s a neat example of internet-mediated grassroots monitoring of corporate behaviour.

Blogger LA Green Girl writes: “Starbucks agreed that, according to its own policy, company stores should French-press a cup of fair trade coffee for you, any day of the week, in the 23 countries it is licensed to.”

So, her blog asks people around the world to verify Starbucks’s compliance with its own policy, by walking into a local store and asking for a cup of free trade coffe, and to report back. (Participating also gets your name entered in a draw for “A 12 oz bag of Monkey & Son Velvet Hammer fair trade organic coffee.” Cool.)

Here’s the Starbucks Challenge 2.0

Two recent news stories raise the same issue (not that they were necessarily trying to raise the issue).

Just what IS “corporate social responsibility” (CSR)?

The Financial Times’ website has this item:
How corporate responsibility works in a market economy. I won’t complain too much about the fact that this story doesn’t actually make good on the promise implied by its title. The bigger worry is that the author doesn’t explain what he means by CSR. Now, definitions aren’t always crucial, and as Melissa Whellams has reminded me, in the case of CSR it’s probably much better NOT to insist on a single, universal definition. But in this case, where the issue at hand is whether CSR is compatible with, or likely to contribute to, market success, it seems pretty crucial to know what you mean by “CSR.” As some people define it (roughly: “seeking out initiatives that are good for the community AND good for profits”), CSR obviously passes the test. But other definitions of CSR are more demanding and, hence, less likely to be attractive from a purely profit-oriented point of view.

The second item is this:
NGO’s call for Partnership, Not Philanthropy, from IPSNEWS.net.
Skipping the actual substance of this story, I’ll get straight to the smoking-gun quote:
“Definitions of corporate social responsibility range from the most conservative position, which maintains that the only duty of private firms is to generate wealth, to the most progressive, which holds that companies should voluntarily donate part of their profits to philanthropic activities.”

Two problems there: first is that what they label “the most conservative position” is not actually a definition of CSR at all, though it is a position on what social responsibilities a corporation has. That’s a small but crucial difference. Secondly (and again I owe this point to Whellams) the version of CSR that the authors label as “most progressive” is actually pretty old-school. Lots of modern CSR advocates actually sniff disdainfully at the idea that companies can bill themselves as Socially Responsible just because they shell out a few (tax-decuctible) dollars.

I know just enough about sweatshops & child labour to know that it’s a complicated issue.

And I’m pretty sure that “rescuing” child workers who a) don’t want to be rescued, and who b) don’t have any other real options but to go back to the sweatshop as soon as they get the chance is a pretty lame solution. Clearly “someone oughta do something,” but just as clearly, this is not it.

Not that I’ve really got a better idea. (If I did, I probably wouldn’t be posting to this blog in between bouts of grading.)

I’m anxiously awaiting the arrival of my copy of the new movie,
“Wal-mart – The High Cost of Low Price.”

I’m anxious not because I expect the movie to be good (which I don’t), or even because I’ve got misgivings about Wal-Mart (I’m actually kind of ambivalent about the company.) I’m anxious because I’m currently fascinated with documentary movies as a way of debating (or preaching about) corporate ethics. Movies have the dual advantages, in this regard, of a) being able to attract a broad audience, and b) being long enough to do a thorough job of explaining the issues. That is, if an understanding of the issues is what you’re trying to promote.

Here’s the low-down on the few I’ve seen recently:

Enron: The Smartest Guys in the Room. This one was terrific. Lots of gory details. Not preachy, blissfully free of commentary from ethics experts. Here’s a review I wrote.

The Corporation
This one was awful. The kind of stuff you feed to undergraduate Critical Thinking classes to let them practice spotting fallacies. A friend of mine referred to this one as “the intellectual equivalent of snuff porn.”
Here’s a review of the movie, by Joe Heath.
Here’s a review by Andrew Potter of the book on which it was based.
Here’s a reasonably balanced story about the book, courtesy of CNN.

Watch this space for a review of the Wal-Mart movie, shortly after it arrives on my desk.

No, the irony of the term “Corporate Ethics” (or “Business Ethics”) is not the oh-so-tired joke about it being an oxymoron.

The irony of the modern usage of the term is that, most places you look, it’s become a synonym for “corporate law-breaking.” Check out the Washington Post’s Business Ethics Page. See anything that DOESN’T involve criminal charges?

Clue for the uninitiated: this is ironic because, on Day 1 of Business Ethics 101, the first thing you learn is that ethics is not the same as law. I have no idea whether anything can be done to rescue the term “ethics” from it’s current deflationary usage.

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Update, Nov. 16 2008:
I’ve updated the link to the WP’s business ethics page, above. They seem to have moved the page.