Table of Contents
Module 1: Stakeholder Interrelationship................................................................. CM-1
Overview ...................................................................................................................... CM-1
Topic 1: Business-Government-Society: An Interdependent System .................. CM-6
Topic 2: Forces Influencing Business-Government-Society Relations............... CM-15
Topic 3: Government's Role in Business and Society........................................... CM-22
Topic 4: Managing Stakeholder Relationships
—Public Issues and the Media ................................................................. CM-26
Module 2: Ethics and the Social Responsibility Continuum ............................. CM-33
Overview .................................................................................................................... CM-33
Topic 1: Defining Ethics and the Ethics Continuum ............................................ CM-39
Topic 2: Values and Ethics in the Workplace ........................................................ CM-48
Topic 3: Corporate Social Responsibility ............................................................... CM-53
Topic 4: Organizations and Their Role in the Community ................................. CM-65
Module 3: Broad Forces in Global Society ............................................................. CM-73
Overview .................................................................................................................... CM-73
Topic 1: Globalization and Global Social-Economic Issues .................................... CM-78
Topic 2: Business and Sustainable Development ................................................. CM-88
Topic 3: Business and Government Approaches
to Protecting the Environment ............................................................... CM-107
Topic 4: Technological Change as a Socio-Economic Force...................................... CM-125
Module 4: Internal Forces and Stakeholders
(Internal "Circle of Influence") ............................................................ CM-138
Overview .................................................................................................................. CM-138
Topic 1: Shareholders and Governance ............................................................... CM-143
Topic 2: Consumer Stakeholders .......................................................................... CM-158
Topic 3: Employee Stakeholders ........................................................................... CM-176
Topic 4: Diversity in the Workplace ..................................................................... CM-187
Copyright & Credits
Copyright © 2017 (Revised), 2014 (Revised), 2008, Thompson Rivers University.
All rights reserved.
The content of this course material is the property of Thompson Rivers University
(TRU) and is protected by copyright law worldwide. This material may be used by
students enrolled at TRU for personal study purposes only. No part of this work
may be forwarded or reproduced in any form by any means without permission in
writing from the Intellectual Property Office, Thompson Rivers University,
copyright@tru.ca.
TRU seeks to ensure that any course content that is owned by others has been
appropriately cleared for use in this course. Anyone wishing to make additional use
of such third party material must obtain clearance from the copyright holder.
Short excerpts from this textbook, Lawrence, A. T., & Weber, J. (2017). Business and
Society: Stakeholders, Ethics, Public Policy (Fifteenth ed.). New York, NY : McGraw-Hill
Education., are used throughout the course with the kind permission of the
publisher.
Course Development Team
Course Writer: Maureen Cureton, MBA
Course Reviewer: Ron Lakes, MA, MBA
Course Editors: Naomi Cloutier, MA; Dawn-Louise McLeod, MEd
Course Revision (2017)
Course Reviewer: Ron Lakes, MA, MBA
Editor: Carolyn Hawes, BA
Associate Dean, School of Business and Economics: Raymond Cox, PhD, M.B.A,
B.Comm, B.Sc. (Associate Dean)
Thompson Rivers University
805 TRU Way,
Kamloops, BC
V2C 0C8
MNGT 3711: Business Ethics and Society
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Module 1: Stakeholder Interrelationship
Overview
This module begins with an introduction to business, government, and society as a
system. By system, we mean a group of individuals and entities that both influence and
are influenced by each other. Whether you are a manager, employee, entrepreneur,
customer, client, community-member, activist, investor, or all of the above, you are part
of an interrelated system of business, government, and society. You are a stakeholder.
Who are stakeholders? According to the textbook authors, stakeholders are
any individual or group that “affect, or are affected by, an organization’s
decisions, policies, or operations” (Lawrence & Weber, 2017, p. 7).
As you progress through this module, we encourage you to reflect on your own
stakeholder roles and relationships. Consider your influence on various systems in
business and society, and the roles and influences of other stakeholders around you.
Topics
This module covers four topics:
•
Topic 1: Business-Government-Society: An Interdependent System
•
Topic 2: Forces Influencing Business-Government-Society Relations
•
Topic 3: Government’s Role in Business and Society
•
Topic 4: Managing Stakeholder Relationships—Public Issues and the Media
Topic 1 explores the broad conceptual relationships between business or the
economy, government or politics, and society or culture.
Topic 2 introduces the forces in the macroenvironment that influence business and
society. These include economic, social, technological, and environmental forces.
Topic 3 focuses on government as a force in society. In particular, you will examine
policies and regulations and their impacts on business and society.
Topic 4 introduces management of stakeholder relationships. You will look at the
gap between an organization’s actual performance and the expectations of its
stakeholders, as well as the potential influences of public issues on organizations
and society. You will also investigate the media’s role in influencing stakeholder
opinion and the lifecycle of public issues. You are encouraged to challenge your use
of media and consider the influence of media on us as individuals, as employees,
owners or managers of a business, and as members of society.
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Course Modules
Learning Outcomes
By the end of this module, you will be able to:
•
Identify stakeholder relationships.
•
Analyze impacts (or potential impacts) of various organizational stakeholder
relationships.
•
Describe government’s role as a stakeholder influencing businesses and other
organizations in society.
•
Describe media’s role in influencing stakeholder opinions and relationships.
•
Identify broad forces influencing stakeholders in business and society.
A Word on Wording:
Modules for this course draw on readings from the course textbook, Business
and Society (Lawrence & Weber, 2017), the focus of which is principally on
large corporations and their relationship with society. Nevertheless, many of
the relationships and forces influencing corporations or large for-profit
businesses are similar to those of small businesses, not-for-profit
organizations, government agencies, and other institutions and
organizations.
Please pay attention to relevant ideas, even when the authors’ wording may
seem to address dissimilar organizations to your own. Use of the words
“business” and “company” in the course modules is consistent with the
textbook and is usually applicable to other small and large organizations as
well.
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Activity Checklist
By the end of this module, make sure you have completed the following activities
and assessments: [Production: ensure indents for parts of activities: ideally, .25. DL]
✓
Complete and check off these Module 1 components:
Read Module 1: Overview, Learning Outcomes, Activities,
Resources,
Read Topic 1: Business-Government-Society: An Interdependent
System
Complete Activity 1-1: Stakeholder Influences and
Interconnections
Part A: Reflective Journal—Stakeholder Diagram
Part B: Reading
Part C: Reflective Journal—Revisiting the Stakeholder
Diagram
Read Topic 2: Forces Influencing Business-Government-Society
Relations
Complete Activity 1-2: Circles of Reflection on
Macroenvironmental (Dynamic) Forces
Part A: Reading
Part B: Reflective Journal—Globalization
Read Topic 3: Government’s Role in Business and Society
Complete Activity 1-3: Government’s Influence on Industry and
Public Health
Part A: Reading
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✓
Complete and check off these Module 1 components:
Part B: Reflective Journal—Regulation of Food Product
and Supply
Read Topic 4: Managing Stakeholder Relationships—Public
Issues and the Media
Complete Activity 1-4: Critically Assessing Media Information
Part A: Reading
Part B: Reflective Journal—Media Perspectives
Complete Assignment 1
Submit Assignment 1 for assessment and grading
Note:
Remember that your Final Project accounts for 40% of your course mark. This
assessment will evaluate your knowledge of the information presented
throughout the course and draw on activities and assignments completed in
Modules 1 through 4.
Review the Final Project instructions before starting each module. As you
read through the module and the textbook, make notes on any information
you think will help you with your Final Project. With the help of your notes,
you should be able, at the end of the course, to quickly complete your Final
Project.
Resources
Module content is drawn from the following resources, as well as from those cited in
the references listed at the end of each topic. You may be interested in reading the
following books and/or articles in part or in their entirety. You can find some of
them in TRU Library. Use Summon at to search across the Library’s content. Also,
see TRU Library’s business research guide.
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Clarkson, M. (Ed.). (1998). The corporation and its stakeholders: Classic and contemporary
readings. Toronto, ON: University of Toronto Press.
Logsdon, J., Wood, D., & Benson, L. (2000). Research in stakeholder theory 1997–1998:
The Sloan Foundation minigrant project. Toronto, ON: Clarkson Centre for Business
Ethics.
Lawrence, A., & Weber, J. (2008). Business and society: Stakeholders, ethics, public policy
(12th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2014). Business and society: Stakeholders, ethics, public policy
(14th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2017). Business and society: Stakeholders, ethics, public
policy (15th ed.). New York, NY: McGraw-Hill Higher Education.
Post, J., Preston, L., & Sachs, S. (2002). Redefining the corporation: Stakeholder
management and organizational wealth. Stanford, CA: Stanford University Press.
Schumacher, E. (1999). Small is beautiful: Economics as if people mattered (25th
anniversary edition with commentaries). London, UK: Hartley & Marks.
Senge, P. M. (1990). The fifth discipline: The art and practice of the learning organization.
New York, NY: Doubleday Dell Publishing Group.
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Course Modules
Topic 1: Business-Government-Society: An
Interdependent System
Introduction
Topic 1 explores the broad conceptual relationships between business or the
economy, government or politics, and society or culture.
Business, government, and society exist as an interdependent system that influences
and is influenced by economics, politics, and culture. The work that we do (our
business) influences the way in which we exist for many reasons. It will affect the
amount of money we have to spend or how we spend our time. This, in turn, may
influence our lifestyle.
Our culture or community influences our personal and professional interests, values,
and perceptions, and our profession or work priorities may affect our opinions of
certain government policies or reactions to political actions. Conversely,
governmental policies and regulations impact our livelihoods, our standard of
living, and our quality of life, as well as the success of the organizations with which
we work.
Business, government, and society are part of a large entity. We are all individuals
within it, but our existence depends on our interaction, and thus we are
interdependent.
When we view business, government, and society as a system that is interrelated we
begin to see both the forest and the trees.
What is a System?
A system is an entity made up of parts that are interconnected, or relationships that
are mutually dependent.
The primary focus of your textbook, Business and Society, is to describe government
and society in relation to business and to present ideas to help businesses succeed
through developing and managing healthy relationships with individuals,
organizations, and various segments of government and society. Throughout this
course, we encourage you to consider these relationships from different
perspectives—not just that of business. Nevertheless, much of your learning will
centre on the role of business in managing relationships with stakeholders within
society and government as well as with other businesses or organizations.
Businesses are affected by economic, social, and political or governmental
interactions and influences—intended and unintended. There are primary and
secondary involvements, and thus, primary and secondary stakeholder individuals
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or groups who possess an interest in each organization’s performance. Stakeholders
hold individual and collective power that can benefit or hinder an organization, and
their actions may, to one extent or another, influence the business or organization
and, perhaps, government and society as well.
It is easy to think of significant events in Canada that demonstrate the
interconnection of business, government, and society. Recall the closure of cod
fisheries on Canada’s east coast and restrictions on salmon fishing on the west coast.
What were the impacts on the communities that relied on fishing and fish processing
for direct or indirect employment and business opportunities?
The economic impact of these government actions cannot be considered without also
recognizing the large social impact on thousands of individuals on both coasts. Job
loss and plant closures threatened the way of life and the culture that has existed in
coastal communities for generations. (For more information, search on the Internet
for “Canadian fisheries industry.”)
Canadian fisheries closures are glaring examples of the interrelationship of business,
government, and society. We may overlook more subtle interconnections, but they exist.
Stop for a moment and consider some of the activities in which you have engaged
this week. Imagine the influence or chain of influence your decisions and actions
may be creating, some significant, some small. For example, perhaps you hired or
fired an employee, selected a new supplier to serve your company, ate dinner in a
local restaurant, voted in an election, signed a petition, donated to charity, or chose
to switch brands of toothpaste.
Who are the stakeholders directly affected by your actions? Are there other
stakeholders indirectly influenced? Was the influence of your actions powerful or
small? In some significant or insignificant way, did your actions influence business
or government or society—or all three entities?
Primary and Secondary Stakeholders
Consider an organization with which you are very familiar. It can be your church or
place of worship, your community group or a professional association, your
university, your place of work, your favourite restaurant, or the place you buy
groceries. Who are the stakeholders who influence this organization?
First, there are primary stakeholders. These are the individuals or groups in society
with which the organization has direct relationships in order to perform its major
mission. Primary stakeholders are critical to an organization’s existence and
activities.
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Primary stakeholders for businesses may include employees, customers, suppliers,
distributors, creditors and shareholders. Rather than customers, a school or
university will have students among their primary stakeholders. An organization,
such as a Rotary Club, would not have shareholders, but it will have members; some
small not-for-profit organizations may have volunteers instead of employees. The
types of primary stakeholder groups may vary, but their commonality is the direct
influence they can exert on the organization or business.
For a business, primary stakeholders are the market stakeholders, the businesses,
organizations and individuals that “engage in economic transactions with the
company as it carries out its purpose of providing society with goods and services”
(Lawrence & Weber, 2017, p. 8). Can a business be successful without market
stakeholders? Are there other stakeholders that influence business?
In addition to primary or market stakeholders, consider the stakeholders or
stakeholder groups with secondary involvement with the business or organization
with which you are familiar. These stakeholders are the people or groups in society
affected, directly or indirectly, by the organization’s activities. Figure 1.2 in Business
and Society lists some of the primary, or market, stakeholders and secondary, or
nonmarket, stakeholders associated with business.
The authors of your textbook, Business and Society, use the terms market
stakeholders and nonmarket stakeholders. Like most other authors, we will
use the terms primary stakeholders and secondary stakeholders so that you
can examine stakeholder influences in the context of not-for-profit,
governmental, and other non-business organizations, as well as in the
corporate context.
Are there other secondary stakeholder groups that have not been identified here?
The list of secondary stakeholders can be quite extensive, ranging from dozens to
hundreds of organizations or other businesses, and from a few to millions of
individuals. Consider a transnational business or organization and all the people
and groups who are affected by their activities. Larger corporations may directly or
indirectly impact millions of secondary stakeholders. There may also be many, many
nonmarket stakeholders that, in turn, influence the transnational business and its
success.
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Can you think of any businesses that have been impacted by media,
government, or activist groups? How do you think the recognition of this
interrelationship with nonmarket stakeholders influences the actions of
leaders and managers?
Sometimes, it is difficult to discern primary and secondary stakeholders. This,
however, is not as important as recognizing that, because we are interdependent, the
policies, decisions, and actions (or inactions) of organizations are not without direct
and indirect consequence and influence on business as well as on society.
Thompson Rivers University
In considering secondary stakeholders, reflect on whether or not they influence the
business or organization or if the organization influences them. For example,
perhaps the government provided funding in the form of a grant or tax break to the
organization. This resulted in expansion of activities and, in turn, an increase in
employees.
Thus, a line may extend from government to employees showing the indirect impact
on the employees of the government grant. If local community is one of the primary
or secondary stakeholder groups listed in a circle, perhaps there are obvious benefits
to the community by the increase in local employment. This is a result of expanded
operations, which, in turn, is a result of the government funding. You can see a chain
of cause and effect demonstrating the interdependencies of business, government,
and society.
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Business and other human endeavours are . . . systems. They . . .
are bound by invisible fabrics of interrelated actions, which often
take years to fully play out their effects on each other. Since we
are part of that lacework ourselves, it’s doubly hard to see the
whole pattern of change. (Senge, 1990, p. 7)
The interaction between the stakeholders is what creates the system. If you apply
systems thinking, you may see the patterns of interrelationships, and this may help
you make better decisions in business and in society. As noted by Senge, “Most of us
have had a lifetime of training in breaking complex problems apart, focusing on the
part we know best, and in ‘fixing’ problem symptoms, usually with little
understanding of deeper causes” (1990, p. xix).
The goal of this course is to help you see the interconnections between stakeholders
and understand how the decisions or actions of one stakeholder group or individual
may influence others. As effective leaders and managers, it is important to develop
the ability to make decisions with awareness and consideration of the direct and
indirect consequences of one’s decisions on all stakeholders involved.
Cause and Effect, and Who’s Influencing Whom
Business influences society, and so, too, can society influence business. These
influences can be powerful or weak. For example, one individual’s decision to avoid
a particular product may not impact a corporation’s share value, but shifts in
consumer preferences can mean the end of yoyos, bean-bag chairs, and Red Cap ale.
Did McDonald’s first-time-ever losses reported for the fourth quarter of 2002
indicate the end of a fast food nation? (see “McDonald’s Posts First-Ever Loss,”
2003). Apparently not, but the pressure continues as individuals and class action
lawsuits in the United States target McDonald’s for the negative health impacts of
what has been called the “Big Mac diet.” Society has spoken, and the multinational
corporation is listening. Veggie burger, anyone?
Successful companies pay close attention to societal trends and consumer interests,
and they invest huge amounts of money trying to convince entire target markets that
their jeans or their T-shirts are the right fit for people of a particular demographic. In
addition to tracking fashion and consumer trends, successful companies heed
stakeholder concerns with regard to such issues as environmental performance,
labour rights, and contributions to the community.
Again, a few individual stakeholders may not sway organizational decision making,
but collectively, mass numbers of individual stakeholders or coalitions of
stakeholders groups can exert significant power. Large corporations, such as Nike
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and K-Mart, experienced first-hand the negative impacts on their companies when
stakeholders reacted to use of child labour in offshore manufacturing operations.
If you ever doubt that one small being can make a significant
impact, just consider a mosquito. (Source unknown)
As individuals, consumers, employees, shareholders, or community members, we
may sometimes feel powerless or exempt from responsibility because we do not
think our actions make much of a difference. However, stakeholders can harness
individual and collective power by voting or by aligning with professional
associations, advocacy groups, consumer coalitions, the media, and activist groups,
or even by participating in mass boycotts to send messages to businesses,
government, and other organizations.
Stakeholder Management
Stakeholder management attempts to achieve an efficient combination of
contributions, risks and benefits that takes account of the roles and concerns of all
stakeholders. (Preston, 2003, n.p.)
In a project at the Rotman School of Management at the University of Toronto,
researchers from the University of Toronto collaborated with researchers from U.S.
universities on a stakeholder model of the corporation. The following material is
from Preston (2003)
Stakeholder management involves the following policies and processes:
1. Corporations should routinely monitor the status of stakeholders, and take
relevant stakeholder interests into account in decision-making.
2. Corporations should communicate openly and clearly with stakeholders,
particularly about their respective contributions and benefits, and about the
probability and severity of downside risks to which they may become
exposed as a result of their contact with the corporation.
3. In dealing with stakeholders, corporations should adopt processes and
modes of behaviour that are accessible to relevant parties, and appropriate in
view of their commitments, contributions, and risks.
4. Corporations should attempt to distribute the benefits of their activities as
equitably as possible among stakeholders, in the light of their respective
contributions, costs, and risks.
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5. Corporations should avoid altogether activities that might give rise to
unacceptable risks to stakeholders (e.g., Bhopal-type catastrophes).
Preston, L. (2003). Reproduced courtesy of Lee E. Preston.
In essence, advocates of the stakeholder model of the corporation pay attention to
the concerns and interests of all individuals and groups with which an organization
interacts. Risk or crisis aversion is one motivator, but stakeholder engagement
policies and processes can also be driven by an ethic or sense of responsibility to
individual stakeholders and society as a whole.
While the five policies and processes of the stakeholder model may seem simple,
interpretation and implementation present an extraordinary challenge for many
organizations. Businesses and other organizations with strong ethical principles, as
well as those that recognize the bottom-line benefits of minimizing risk and building
co-operative stakeholder relationships, likely support this model, which
complements the doctrines of corporate social responsibility (CSR). (We will explore
social responsibility and ethics in the following section, as well as in Module 2.)
Nevertheless, in many organizations today, there is a gap between theoretical
models of ideal stakeholder engagement and practical implementation.
Lawrence and Weber observe, “to be effective, corporations must meet the
reasonable expectations of stakeholders and society in general. A successful business
must meet all of its economic, social, and environmental objectives” (2017, p. 21).
Furthermore, they state, “business success is judged not simply by a company’s
financial performance but by how well it serves broad social interests” (2017, p. 21).
Activity 1-1: Stakeholder Influences and Interconnections
Introduction
The purpose of this activity is to help you develop the ability to identify the network
or system of interconnection among primary and secondary stakeholders in an
organization. As managers, leaders, and team members in our companies,
organizations, or communities, we will make better decisions when 1) we have the
skills to recognize our influence on other stakeholders and 2) when we understand
that there are indirect as well as direct impacts of our decisions and actions.
Instructions
Part A: Reflective Journal—Stakeholders Diagram
•
Stakeholders diagram: Complete a primary and secondary stakeholders
diagram of an organization with which you are familiar, for example, your
church or other faith-based organization, a community group, professional
association, or your place of work.
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Part B: Reading
•
Read Chapter 1: The Corporation and Its Stakeholders, pages 2–19 (up to
“The Dynamic Environment of Business”) to reinforce your understanding of
stakeholders and stakeholder interrelationships.
Part C: Reflective Journal—Revisiting the Stakeholders Diagram
•
Stakeholders diagram: Having completed the reading, return to your
diagram and reflect again on the organization you selected. Ask yourself if
there are other stakeholders that you omitted in your first consideration of
stakeholder relationships. Be specific in naming stakeholders so that the
content of this diagram is not abstract. Add more circles and arrows if
necessary, and differentiate between primary and secondary shareholders or
direct and indirect influences.
•
Are there interrelationships between primary and secondary stakeholders
that you omitted the first time you drew arrows connecting the stakeholders?
Go back to the diagram that you created and spend enough time to really
identify and consider the larger networks of influence and interconnections
there are among stakeholders.
Note: In your activities in this course, you may use personal names and
information because the information is not shared or made public. If you
wish to share this information, however, consider how you present it. Ideally,
if anyone reads the information in your activities, they would be able to see
themselves or others in a positive way.
References
Bellinger, G. (2004). Systems thinking: The way of systems. Retrieved from
http://www.systems-thinking.org/theWay/theWay.htm
Lawrence, A., & Weber, J. (2008). Business and society: Stakeholders, ethics, public policy
(12th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2014). Business and society: Stakeholders, ethics, and public
policy (14th ed). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2017). Business and society: Stakeholders, ethics, public policy
(15th ed.). New York, NY: McGraw-Hill Higher Education.
McDonald’s posts first-ever loss. (2003, January 23). BBC News World Edition.
Retrieved from http://news.bbc.co.uk/2/hi/business/2688665.stm
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Preston, L. (2003). Redefining the corporation: Consensus statement on the stakeholder
model of the corporation. Project of the Joseph L. Rotman School of Management,
University of Toronto.
Senge, P. (1990). The fifth discipline: The art and practice of the learning organization. New
York, NY: Doubleday Dell Publishing Group.
Weber, J., & Glyptis, S. M. (2002). Instructor’s resource manual to accompany Business
and society: Corporate strategy, public policy, ethics (10th ed.). New York, NY:
McGraw-Hill Higher Education.
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Topic 2: Forces Influencing Business-GovernmentSociety Relations
Introduction
Broad forces affecting business-society relationships in the twenty-first century
include economics; globalization and an evolving world economy; changing ethical
expectations and social responsibility in business, natural resource, and ecological
concerns; and innovations in science and technology. These are macro
environmental or dynamic forces that relate to the whole system of business and
society, yet stakeholders may feel their force individually or collectively, directly or
indirectly. We discuss these forces in greater detail in later modules, but given their
importance we introduce them here.
Economics—A Dominating Force
eco•nom•ics: a social science concerned chiefly with description
and analysis of the production, distribution, and consumption of
goods and services. (Merriam-Webster Dictionary, 2007)
Economics is a broad and significant force influencing (and influenced by)
stakeholders in business and society at the local, regional, national, and international
level. While the global economy often takes centre stage with the push for
international trade and business activities that transcend political boundaries, the
local economy is of equal importance.
Economic issues include employment (or unemployment), the cost of living, interest
rates, imports and exports or balance of trade issues for a nation, and the desire for
growth. All these issues affect individual stakeholders in some direct or indirect way.
However, at the local level, the interconnection of these issues with social and
political concerns may be more readily visible. Does Canada’s balance of trade mean
anything to you when you do your weekly grocery shopping? If you are shopping
for affordable and locally grown produce and availability is limited to imported
fruits and vegetables that are premium priced due to currency fluctuations and an
absence of local agriculture, perhaps the economic influences have a more personal
impact on you as a consumer.
The softwood lumber dispute that began in 2002 is a landmark example of economic
and trade issues and their influence on Canadian stakeholders. When the United
States levied tariffs on imports of Canadian softwood, the economic impact made
competitive pricing impossible for Canadian lumber businesses. As the industry
suffered, small towns in British Columbia that were largely dependent on export of
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softwood lumber to U.S. markets were hit with job losses and related social and
economic impacts to their communities.
Economic forces coupled with political forces as Canada and the United States
disputed the issue via the governing bodies of the World Trade Organization (WTO)
and the North American Free Trade Agreement (NAFTA). This dispute involved
stakeholders within Canadian borders and beyond, from international bureaucrats
to Canadian and U.S. politicians; business operators on both sides of the border;
home buyers and housing developers in the United States; and, of course, workers,
their families, and other direct and indirect stakeholders influenced by the collapse
of the industry in mill towns throughout British Columbia.
While we often think of the global economy in terms of large transnational business,
even smaller businesses feel the force of international agreements, tariffs, and the
politics of trade. In the case of the softwood industry, local business owners may
service or supply the larger organizations engaged in lumber exports, or perhaps
they rely on workers in the forestry industry for their customer base. The softwood
lumber dispute continued during President Trump’s administration. Outside of that
industry, there are increasing numbers of small businesses involved in international
trade because larger forces—political, economic, and technological—facilitate
opportunities for widespread global enterprise.
Whether large-scale, small-scale, or something in between, economics is a broad
force that influences stakeholders in business, government, and society.
Ethics and Socially Responsible Business
Socially responsible business refers to large or small organizations that strive to
address both economic and social issues relevant to their stakeholders. The degree of
socially responsible business activity varies from one organization to another, and
the definition is still undergoing scrutiny.
There is considerable overlap between corporate social responsibility and business
ethics, and the terms apply to management of organizations beyond the corporate
sector. As with socially responsible business, the standard and expectations for
corporate ethics is subject to debate, and both are strongly connected to public
values. “The public . . . expects business to be ethical and wants corporate managers
to apply ethical principles . . . about what is right and wrong, fair and unfair, and
morally correct . . .” (Lawrence & Weber, 2017, p.20)—but to what degree?
We may place an organization on a continuum of ethical performance, yet it may be
unclear at which point on the continuum we deem an organization to be unethical.
The standards by which we measure ethics vary from individual to individual and
from one organization to the next. Some criteria may be obvious. For example, no
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doubt we would all agree that humane treatment of workers is an important
measure of an organization’s ethical performance.
Yet, how do we define humane, and how does the ethical standard vary from one
culture or region to another in terms of issues such as minimum age of employees,
number of hours to be worked each week, entitlements to benefits, and conditions in
the workplace?
Chapter 1 introduces ethics as a force in business and society and examines it further in
Chapters 3 and 4. We will explore socially responsible business and ethics in Module 2,
and both large- and small-scale economics and global economies in Module 3.
Natural Resource and Ecological Concerns
Floods and droughts in the Prairie provinces, ice storms in Quebec, blizzards and
hurricanes in the Maritimes, wind storms on BC’s west coast, and forest fires that
ravage vast tracts of land across the country—the environment is a force that exerts a
powerful influence on Canadians and on nations beyond our borders. The impact on
business and society can be measured in financial and social costs, such as damage
to infrastructure, homes, and facilities; disruptions to business and daily life; and
even injury and death.
Natural resource and ecological concerns, such as pine beetle infestation in British
Columbia and Alberta, and the local and global impacts of climate change play a
growing role in business and organizational management. “Managers are
increasingly being challenged to integrate ecological considerations into their
decisions” (Lawrence & Weber, 2008, p. 19).
Controlling air and water pollution, managing waste, and protecting our natural
resource base are some of the most common ecological concerns that affect every
stakeholder group in some way or another. Responsibility for these issues is
sometimes in the hands of business, but without government and societal pressures
to address these concerns, business alone may find it difficult to determine the
perfect balance between profit and protection of our ecosystem.
Optional Resources:
The following articles discuss natural disasters, the economic impacts of
climate change, and disasters associated with human activity, such as floods,
fires, and power blackouts in Canada:
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•
"Modern Plagues," an essay by Andrew Nikiforuk, in Canadian Business
(October 14, 2003, pp. 50–52), describing the impact on Canada’s economy of
major forest fires, hurricanes, SARS, mad cow disease, and power blackouts.
•
"Mother Nature, the newest scapegoat," an opinion piece by David Suzuki,
published in Canadian newspapers (October 29, 2003).
•
The Stern Review on the Economics of Climate Change by economist Sir
Nicholas Stern, evaluating the economic impacts of climate change and the
cost/benefits of either taking action or doing nothing to abate climate change
in the future. This report received worldwide coverage in The Economist
magazine and other publications.
•
Public Safety Canada’s website, with news releases, articles, and reports
related to natural disasters and other large scale emergencies and
infrastructure issues in Canada.
In Module 3, we will continue the discussion of environmental forces.
Innovations in Science and Technology
Can you remember a time when you were in a meeting, movie, or restaurant and
your concentration was interrupted by an unmelodic version of the theme song from
The Lone Ranger or a James Bond movie? Smartphone and cellphone ring tones are
part of everyday life in business and society, just one example from an
extraordinarily long list of innovations in science and technology that influence our
lives in the twenty-first century.
Innovations in every field from manufacturing and communications, health and
medicine, recreation, transportation, architecture, and urban design come from
advances in science, new technologies, and new knowledge. The influences on business
and society are dramatic and wide sweeping. Do you recall when written
correspondence required a postage stamp and several days’ delay in communications?
Internet, social media and other information and communications technologies have
revolutionized business and societal operations in all sorts of ways.
Innovation and new knowledge may result in improved efficiency, reduced costs,
increased opportunities for international business, instant communications,
improved health and medical services, and an expanding global village. These are
some possibilities, but what are the realities? Scientific and technological innovation
is not without cost, including financial outlays for equipment, services, and
infrastructure for communities, individuals, and organizations. There are also
environmental and social costs associated with new technologies and knowledge.
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In the world of telecommunications, the volume of electronic waste (e-waste) is
exploding as the pace of innovation and consumption continues to increase. Our
food and our health are also issues of concern where advancements in science and
technology may clash with social and environmental interests. Debates over
genetically modified food (GMF), stem-cell research, and cloning are widely
publicized examples of the challenge of evaluating the costs and benefits of
innovations in science and technology. New technologies are a “dynamic force” that
“often force managers and organizations to examine seriously the ethical
implications of their use” (Lawrence & Weber, 2017, p. 21).
We will continue to explore this powerful external force in Module 3.
Stakeholder Perspectives on Macroenvironmental (Dynamic)
Forces
By macroenvironment, we refer to large or great forces (issues) relating to the whole
system of business and society. These “dynamic forces” (Lawrence & Weber, 2017,
pp. 19–21) affect individuals and individual organizations in direct or indirect ways.
As Weber (one of the textbook authors) and Glyptis explain:
The forces described in this section are so broad and powerful as
to virtually guarantee that a national business magazine [such as
Canadian Business or The Economist] or a general news
magazine [such as Maclean’s] will have a cover story that ties
into one of these themes.
John McElwee, former chief executive of John Hancock
Insurance Company, was asked what accounted for his success
during his thirty-five–year career with that company. One of the
keys, he says, was each day to use a pen or highlighter to
identify stories that seemed interesting on the front page of the
Wall Street Journal. Then, he read the article with three questions
in mind: What do these mean to my family? To my company? To
my country? (adapted from Weber & Glyptis, 2002, p. 4).
McElwee’s questions are an approach to examining an issue from several
stakeholders’ perspectives. Whenever you consider an issue, you may take a
personal stakeholder perspective, but it is also important to consider other
stakeholders’ interests, concerns, and viewpoints.
Reflecting on an issue in terms of what it means to you or your family is the most
direct and narrow perspective. Regardless of whether or not the implications for
your company or organization directly impact you and your family, there are
ramifications for employees, managers, shareholders, and other stakeholders
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associated with the organization. Reflecting on the implications for your country is
taking an even broader view, even though there may be direct or indirect impacts on
you and your family as well.
We can illustrate these levels of reflection in terms of circles or spheres of influence.
The stakeholder perspective of most direct and narrow influence is the smallest and
most inner circle. This represents your reflection on the meaning or influence on you
and your family. As you move to the outer circles, your reflection is taking a broader
look at implications for your company, for your community, and for society in
Canada.
You may also consider global impacts if you look beyond this country’s borders.
Global impacts of issues may seem far away and personally insignificant. For
example, floods or typhoons in India may elicit your concern for the well-being of
people living in that region, but unless you have relatives or friends or business
operations in that region, these natural disasters may have no direct impact on you
or your family. Other global issues, such as climate change, may have widespread
impact around the world and influence the weather in your hometown or influence
your livelihood in some direct or indirect way.
Thompson Rivers University
Using the Circles of Reflection:This is an effective way for you to reflect on
the impacts of various forces or issues influencing individual stakeholders,
businesses, governments, and other organizations in society.
In activities and assignments throughout this course, you will reflect and
comment on issues from various stakeholder perspectives. Sometimes, the
circle of reflection will be narrow; at other times, you will take a broader look
at influences on stakeholders in business and society in Canada and abroad.
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Activity 1-2: Circles of Reflection on Macroenvironmental
(Dynamic) Forces
Introduction
The purpose of this activity is to encourage you, as a stakeholder, to recognize the
influence of activities going on around you in your company, your community, and
in the world.
Instructions
Part A: Reading
•
Read Chapter 1: The Corporation and Its Stakeholders, pages 19–21. Focus your
attention on how macroenvironmental or dynamic forces may impact your life.
•
Look for two brief print or online newspaper and news magazine articles on
globalization. Find articles that take different views; perhaps one promotes
globalization activities and their benefits and the other criticizes globalization.
Read the articles, keeping in mind McElwee’s three questions.
Part B: Reflective Journal—Globalization
•
Using the circles of reflection, briefly describe what globalization means to
you, your company or organization, and Canada. List influences that you
believe it will have (or is already having) on stakeholders that you identify,
and describe whether these may be positive and/or negative influences.
•
McElwee does not seem to look beyond the influence on his country, but
what about the influence of globalization on stakeholders in other countries?
Is this something that concerns you? Briefly explain your answer.
•
Remember to cite your references (i.e., the articles on globalization). Having
these references handy may help you in later activities or assignments.
References
Lawrence, A., & Weber, J. (2008). Business and society: Stakeholders, ethics, public policy
(12th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence,A., & Weber, J. (2014). Business and society: Stakeholders, ethics, public policy
(14th ed.). New York, NY: McGraw-Hill Higher Education.
Merriam-Webster Dictionary. (2007). Retrieved from http://www.mw.com/dictionary/economics
Weber J., & Glyptis, S. M. (2002). Instructor’s manual to accompany Business and society:
Corporate strategy, public policy, ethics (10th ed.). New York, NY: McGraw-Hill
Higher Education.
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Topic 3: Government's Role in Business and Society
Introduction
Government is a key stakeholder in business and society. In our democratic society,
Canadian politicians make the same claim as that made by U.S. President Abraham
Lincoln in 1863: government is to be “of the people, by the people” and “for the
people” (Lincoln, 1863).
Do all Canadians believe this to be true? Many Canadians are not without
disenchantment with their government. Criticism of taxation, regulation, policies,
restrictions, and other governmental actions (or inactions) may be a national pastime
for some Canadians. A debate over government strengths and shortfalls could
preempt all other discussions in this course, but let us focus here on the role of
government and its intended benefits to business and, in turn, to society.
Governments and Intergovernmental Agencies
Relationships between governments, business, and society include agencies and
participants at the national, provincial, local, and foreign governmental levels.
Additionally, international governing bodies, such as the WTO, the United Nations,
NATO, NAFTA, and the European Union include representatives from more than
one country who work together to make collective decisions about a wide range of
business and societal concerns from agricultural subsidies to international
agreements on trade, pollution and environmental regulations, workers’ rights, and,
even, war and peace.
With the expansion of globalization and shifts in governmental relationships around
the world, the influence of these international organizations is evolving.
Government Influences and Change
Chapter 8 describes the changing role of government and public policy, focusing
largely on U.S. and other foreign governments’ actions. Canada does not exist in
isolation, and many of the changes discussed in Chapter 8 also have a profound
influence on life in Canada. The changing role of government is evident in some
Canadian provinces, such as Alberta and British Columbia, where privatization of
government- or taxpayer-owned organizations and Crown corporations, such as
liquor stores, power generation and distribution services, and health care services,
significantly impacts society. Have governmental changes influenced life for you or
your family? Has your community been impacted by changing governmental
policies or programs?
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Your concern about these changes may vary depending on how directly you feel the
impact and whether you perceive the government’s actions as beneficial. Taxes are a
prime example. Reaction to federal or provincial tax cuts or additional taxes is
typically influenced by how changes in taxation affect your own well-being or the
well-being of your family. Would you agree?
Beyond taxation, governments exert influence over business and society by
implementing laws, regulations, and policies, as well as by administering funding
and other mechanisms to enhance economic development and protect social welfare.
Sometimes, there is a conflict of interests. For example, in the biotechnology sector,
industry insiders view the conservative regulatory process for research, patents, and
approvals as hindrance to progress (Robin, 2003, p. 48).
Yet, the intent of these government controls is to provide protection for the health
and well-being of Canadians by controlling experimentation to screen
pharmaceuticals and other biotech products before they enter the market.
While regulations may hamper industry progress, funding, such as the federal
government’s $80 million allocation to create eighty new university chairs in
biotechnology, and the Canada Foundation for Innovation grants of $43.5 million for
new researchers, are examples of government initiatives aimed at helping drive
industry and economic development in this sector (Robin, 2003, p. 49).
The following diagram illustrates certain roles of government as they relate to
business and society. This diagram is by no means complete. Perhaps you can think
of other roles as they relate to Canadian government and society.
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Thompson Rivers University
As the needs and interests of business and society change, governments’ roles also
change. Can you think of any recent changes in governmental policies or laws that
are influencing you, your family, or your community? Are there government actions
that are affecting your business or livelihood? Keep in mind the following:
Business decision making and political decision making are
closely connected. Business decisions affect politics; political
decisions affect business. (Weber & Glyptis, 2002, p. 113)
Activity 1-3: Government’s Influence on Industry and Public
Health
Introduction
In this activity, we examine the government’s influence on business and explore
some of the reasons why it may intervene in business and societal affairs.
Part A: Reading
•
Read Chapter 7: Business-Government Relations. Skim over any sections
describing U.S. regulations, deregulations, and regulatory agencies, but
recognize that Canadian government functions with many similar agencies or
governing bodies and controls.
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Search online in newspapers and news magazines such as The Globe and Mail,
the National Post, and Maclean’s for archived articles on either bovine
spongiform encephalopathy (BSE, or mad cow disease) outbreaks in the
Canadian cattle industry, or avian influenza (bird flu). Find two articles and
search them for information on how the Canadian government reacts to such
diseases, and what government’s influence might be.
Part B: Reflective Journal—Regulation of Food Product and Supply
•
Describe the purpose of government involvement in the regulation of food
products and food supply by discussing specific ways that government
policies or initiatives may help protect, promote, support, and hinder
industry. In the case of the latter, whose interests do you think the
government is representing (stakeholders outside of the industry)? Use
examples from food industry issues that you have read about in the popular
press. Remember to cite your references.
Note: Your description could be in the form of a diagram, mind map, or
written paragraphs. What you want to focus on is brainstorming your ideas
and capturing information in a way that is relevant to you.
References
Lawrence, A., & Weber, J. (2008). Business and society: Stakeholders, ethics, public policy
(12th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2014). Business and society: Stakeholders, ethics, public policy
(14th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2017). Business and society: Stakeholders, ethics, public policy
(15th ed.). New York, NY: McGraw-Hill Higher Education.
Lincoln, A. (1863, November 19). The Gettysburg address. Retrieved from
http://www.loc.gov/exhibits/gadd/
Robin, R. (2003, September 2). Survival of the fittest. Canadian Business, 50.
Weber J., & Glyptis, S. M. (2002). Instructor’s manual to accompany Business and society:
Corporate strategy, public policy, ethics (10th ed.). New York, NY: McGraw-Hill
Higher Education.
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Topic 4: Managing Stakeholder Relationships—Public
Issues and the Media
Introduction
Organizations face a large number of public and social issues. Consider the severe
acute respiratory syndrome (SARS) outbreak in 2003 and its effect on businesses,
government, and the economy of Canada. The Ontario government’s handling of
this epidemic was the subject of extensive public and media scrutiny.
Another example of widespread public and media scrutiny followed the death of
Polish immigrant Robert Dziekanski, who was tasered by RCMP officers at the
Vancouver International Airport in the early hours of October 15, 2007. Across the
nation and around the world, Canada Customs and Immigration officials and the
national police force faced pubic outcries and persistent media analysis and
coverage. With a cellphone camera, a bystander at the airport was able to use the
Internet to share video images of the horrific scene at the airport.
These images were displayed on computers around the world, and millions of people
weighed in on the responsibility and accountability of the police, the airport’s staff and
management, Canada’s customs and border security, and the Canadian government
itself. Court proceedings involving the RCMP officers continued in 2017.
The Gap between Stakeholder Expectations and Organizational
Performance
With innovations in computers and other technologies prompting greater access to
information and an accelerating pace of change, leaders today face many new
challenges in managing stakeholder expectations. The growing organizational
complexities of a global society add another dimension which includes the potential
for additional layers or networks of primary and secondary stakeholders. If their
expectations are unmet, stakeholders may take action, pressuring business and
government to make changes regarding their social, economic, or environmental
concerns. As Weber and Glyptis say, “The existence of a gap between what is
expected and actual performance stimulates the formation of a public issue” (2002,
p. 22).
Managing the gap between customers or other stakeholder expectations and actual
performance is one of the challenges facing organizations. Large organizations may
have public affairs officers who handle media and public relations, employee
communications and consumer affairs, shareholder relations, and relations with
government, community, public interest groups, and trade associations. Effective
leaders or managers understand and anticipate the potential impacts of social,
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technological, political, and economic issues on their organization. They strategically
manage the gap between their organization’s performance and the expectations of
their stakeholders and the public.
Chapter 2 describes the life cycle of public issues and the ways organizations can
proactively or reactively handle them. Stop for a moment and think about an issue
within your own organization, or perhaps an issue about a company or organization
that you recently read about in the press.
Did this issue last long? Was it here today, gone tomorrow, or did it drag out for
weeks or months? Did it involve political action or legal implementation of changes
in order to satisfy stakeholder expectations? How did the media cover the issue—
did they provide perspectives of various stakeholders or focus on one group or
individual? Did the press seem to favour the company’s position, or was the press
critical of the company’s actions? If you were making decisions for that organization,
would you have handled things differently in order to influence public perceptions?
What could the organization do to minimize the gap between stakeholder
expectations and the performance of the company?
The Media’s Relationship with Stakeholders
Media communications refers to communications via television, radio, the Internet,
social media, newspapers, and other print and non-print media. These media are a
source of entertainment, marketing, sales, and promotional opportunities, as well as
a means of providing news and information, and, of course, education. Sometimes,
the lines between entertainment, education, and journalism are blurred, as
“infotainment” aims to provide information or knowledge in the form of an
entertaining TV show or video, and “advertorials” present advertisements about
products or services in a format that resembles magazine or newspaper editorials.
Regardless of the form, media communications exert powerful forces on business
and society.
The media has played a central role in shaping the social values
of the last half of the 20th century. (Bowling for Columbine, 2003b)
Media plays a significant role influencing stakeholder perceptions and expectations.
Businesses, government, and other organizations use the media to inform, educate,
coerce, and cajole. Media influences what we know, where we spend our money,
how we vote, and what our society values.
The “Pepsi Generation” was a marketing slogan representing the corporation’s goal
of capturing the entire youth market of soft-drink consumers and it came to
represent a lifestyle—carefree and eternally young. Imagine an entire generation of
people being named after a brand of soft-drink! Along with that perception came
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billions of dollars in sales as somehow a soda pop influenced culture and lifestyle as
well as consumer choices.
Corporations spend billions of dollars in the media, not simply advertising, but
building loyalty to and affinity for their brand through carefully crafted messages
and images that evoke a feeling or way of life that so many of us believe we desire.
Klein explains:
Saturn . . . came out of nowhere in October 1990 when GM
launched a car built not out of steel and rubber but out of New
Age spirituality and seventies feminism. After the car had been
on the market a few years, the company held a “homecoming”
weekend for Saturn owners, during which they could visit the
auto plant and have a cookout with the people who made their
cars. The Saturn advertisements boasted at the time, “44,000
people spent their vacations with us, at a car plant.”
It was as if Aunt Jemima had come to life and invited you over to
her house for dinner. (Klein, 2000b, n.p.)
Will we really be taller, slimmer, happier, and more popular if we drive the right car,
dress in the right clothes, or consume the right brand of beer? Maybe not, but the
messages are potent, and consumers are buying. That’s the power of media.
The escalation of dollars spent on advertising indicates growing use of media
communications to influence our values, our lifestyles and, ultimately, our spending
habits. In 1998, global spending on advertising was estimated at US$435 billion. Of
that, US$196.5 billion was spent in the United States alone (Klein, 2000c). Less than a
decade later, global spending on advertising was projected to grow six per cent in
one year to $605 billion, with the U.S. accounting for $292 billion (McClellen, 2005).
By 1998, the United Nations Human Development Report found the growth in
global spending on advertisement outpaced the growth of the world economy by
one-third (Klein, 2000c).
While General Motors, Pepsi, and other corporations spend millions of dollars in
media communications, other stakeholders are harnessing the power of the media to
influence business. First, we witnessed dramatic protestors gaining media attention
over cruelty to animals in the fur industry. Then, the use of child labour in the
garment industry became a public issue, garnering negative media attention for
corporations and influencing consumer behaviour across the Western world.
Product recalls were followed by public criticism and class action lawsuits in the
wake of the admission of the presence of lead in Chinese-produced toys sold by
Mattel and other companies.
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Sometimes, businesses handle these media or public relations issues without
government intervention. At other times, when issues become public affairs,
governments step in to protect consumer interests by shutting down operations or
imposing standards or regulations to protect members of society.
The relationship between business, media, and the public (especially consumers) can
result in the success or failure of a company. However, media itself is a business and
subject to the influence of its stakeholders. The interests and biases of shareholders
who own newspapers can influence the type of coverage of the perspective
presented. Additionally, corporations that spend vast amounts of advertising dollars
are important sources of revenue for television, magazines, and other media
communications, and they, too, may wield significant sway in the type of
information and perspectives published.
When a California not-for-profit organization produced a television commercial
criticizing Americans for driving gas-guzzling SUVs, several U.S. television stations
refused to provide airtime. Despite the organization’s willingness to pay for the
advertising and outcries over restrictions on “freedom of speech,” some networks were
unwilling to broadcast a commercial that offended their bigger advertisers from the oil
and auto industry. While the environmental and economic impacts of inefficient
vehicles are well understood, some viewers criticized the advertisement for being antiAmerican. Did conflicting stakeholder interests influence freedom of the press?
Governments exert some controls on advertising and media promotions. For example,
in Canada there are significant restrictions on tobacco advertising and sponsorship.
Purportedly, this intervention addresses ethical or socially responsible media
promotions and advertising. Is that the extent of government influence?
While it may not have censored the media, the U.S. government used the media
extensively to promote its “war on terrorism” Was American media fair and balanced in
its reporting after the attacks on the World Trade Centre and Pentagon on September
11, 2001? How did American attitudes influence journalism in Canada?
Perhaps we are conscientious of the sway advertising attempts to gain over
consumers and other stakeholders, but what is the influence of journalism? Is the
news fair and unbiased? Journalists, newspaper and television station owners and
shareholders, advertisers, and the public for which the news is presented—these are
all stakeholders whose interests and perspectives may influence what we hear and
the how it is presented.
In his 2003 Academy Award–winning documentary, Bowling for Columbine, Michael
Moore highlights stakeholder interests and biases in journalism. The movie explores
the question of why there is so much violence in the United States. After identifying
a number of potential influences, Moore points to journalism, and in particular
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television news broadcasting, as a driving force behind violence. According to
Moore, violence sells news, and therefore, the news in the U.S. focuses on dramatic
stories about violence. After all, media is a business and it must sell to survive.
Moore posits that media’s obsession is creating a culture of fear, and perhaps it is
this fear that is driving violence in the United States (Bowling for Columbine, 2003a).
While stakeholders continue to debate the influence of violence in video games,
movies, and music videos, is it possible that the news is an even more potent force
affecting our emotions, actions, and way of life?
Regardless of whether or not you agree with Moore’s thesis, fairness and balance
of reporting, distortion of images, restrictions on free speech, and media
stereotyping are important concerns, not just for government as a watchdog over
media, but for us as critical thinkers or whole-brain thinkers. It is important to
develop awareness of the perspective of the reporting, be it right wing, left wing,
or anywhere in between.
While the accuracy of information presented in newspapers, magazines, televisions
news, and other media sources may sometimes be difficult to discern, we may detect
biases or sweeping generalizations and distortions in reporting if we read with
awareness of both our own preconceptions and the potential partiality of the writer
or broadcaster. Seeking information from a variety of sources, including those that
are not financed by corporate dollars, may also help us to gain a more balanced
understanding of issues in the news.
Consumers, citizens, and other stakeholders in business, government, and society
will benefit from developing the skills to critically read and understand media
information and messages.
Summary
Business, government, and society exist as an interdependent system that influences
and is influenced by economics, politics, and culture. The system is made up of
stakeholders who interact and influence each other in direct and indirect ways. Within
this system, there are forces both internal and direct, as well as broad forces including
media, technology, economics, and the environment. When we understand the complex
interplay of economic, political, and social forces, we are better able to comprehend the
impact of advances in science, globalization of markets, and the changing relationship
between people and the environment in which we live.
As you progress through this course examining the various forces and stakeholder
groups in business and society, take time to reflect on the circles of influence. In the
context of the topic under discussion in each module, ask yourself the following
question: What does this mean to my family, to my company, and to my country? As
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business and society become more globally interconnected, consider also the impacts
on people around the world. In business and society, recognize and appreciate the
importance of stakeholder interrelationships and the significant forces influencing
people near and far.
Activity 1-4: Critically Assessing Media Information
Introduction
As stakeholders in society and consumers of information, we will be better decision
makers if we develop skills to evaluate the information we receive via the media. In
order to do so, we must become aware of our own biases or perspectives that affect
how we receive and filter information and practise critically analyzing and
evaluating the accuracy of information. This activity provides information and
practice in critically assessing media information.
Instructions
Part A: Reading
•
Read Chapter 2: Managing Public Issues and Stakeholder Relationships. As
you read, consider the role media may play in public issues from both the
perspective of wanted and unwanted media attention for a business or
organization.
•
Read Chapter 19: The Public and Corporate Reputation. Skim Exhibit 19. B on
page 426 to see the sensational impact that individuals can have on a large
corporation. Consider also the significant role of media and their influence on
market and nonmarket stakeholders.
•
Read "Evaluating Internet Research Sources" at The CARS Checklist
(credibility, accuracy, reasonableness, support) provides a list of things to
look for in evaluating the quality of information reported on the Internet.
This checklist is also a relevant tool to apply in assessing other forms of
information presented in the media.
Part B: Reflective Journal—Media Perspectives
•
Review recent newspapers or magazines and look for one example of an
article that appears to present information from the perspective of a business
and one example of an article that presents information from a government
perspective. Do these articles also present other perspectives? Briefly describe
why you think these articles are or are not fair and balanced in their
reporting. You should refer back to the CARS Checklist and use the checklist
in your assessment.
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References
Bowling for Columbine. (2003a). [Film’s website’s home page.] Retrieved from
http://www.bowlingforcolumbine.com/
Bowling for Columbine. (2003b). [Film’s website’s library page.] Retrieved from
http://www.bowlingforcolumbine.com/library/teachers/page.php?content=182003
Klein, N. (2000a). No logo: Taking aim at the brand bullies. Toronto, ON: Random
House.
Klein, N. (2000b). Excerpt from No logo. Part II. (2000, November 27). Retrieved from
http://books.guardian.co.uk/firstchapters/story/0,6761,403549,00.html
Klein, N. (2000c). Excerpt from No logo. Part I. (2000, November 27). Retrieved from
http://www.guardian.co.uk/books/2000/nov/27/firstchapters.extract
Lawrence, A., & Weber, J. (2008). Business and society: Stakeholders, ethics, public policy
(12th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2014). Business and society: Stakeholders, ethics, public policy
(14th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2017). Business and society: Stakeholders, ethics, public policy
(15th ed.). New York, NY: McGraw-Hill Higher Education.
McClellen, S. (2005, December 6). Global ad spending expected to grow 6%. Brandweek.
Retrieved from
http://www.brandweek.com/bw/esearch/article_display.jsp?vnu_content_id=100
1615315
Post, J., Lawrence, A., & Weber, J. (2003). Business and society: Corporate strategy,
public policy, ethics (10th ed.). New York, NY: McGraw-Hill Higher Education.
Weber J., & Glyptis, S. M. (2002). Instructor’s manual to accompany Business and society:
Corporate strategy, public policy, ethics (10th ed.). New York, NY: McGraw-Hill
Higher Education.
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Module 2: Ethics and the Social Responsibility
Continuum
Overview
In the words of Bart Victor, Professor for Moral Leadership at Vanderbilt
University’s Owen Graduate School of Management, “Business is the most
dominant social organizing force in the world today, and as such, it owes significant
obligations to society.” Says Victor, “Business is far more powerful and deeply
influential than any competing ideological force, political force or environmental
force . . . . Business now has to see itself and its responsibilities and obligations in a
new way (as quoted in Newswise, 2000, n.p.).
With power and influence comes responsibility. Do you agree? Consider the various
stakeholder groups involved in business and other organizations today.
•
Do you think they would all agree on the type or level of responsibility that
an organization with which they are involved owes to society?
•
What factors do you think influence stakeholders’ opinions about the
responsibility of business in society?
•
Do you think that shifting one’s perspective to a greater circle of reflection
would change one’s perspective?
For example, some Canadian companies face decisions about whether to
manufacture in Canada or to shift operations to lower cost manufacturing centres in
China or India. Often offshore manufacturing results in job losses in Canada, and
this can impact families and local economies.
•
What are the factors that a manager would consider in making such a
decision?
•
If a manager considered the decision from the perspective of the impact on
the company, would the decision differ if the focus shifted to consideration of
impacts on the employees?
•
Should the company concern itself with impact on the local community or on
the Canadian economy?
•
Would the decision differ if they asked, ‘What does this mean for my family,
my community, my country, or to other countries in the world?’.
•
Does a shift in one’s ‘circle of reflection’ influence one’s perspective on the
responsibilities and obligations of a business or organization?
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Course Modules
Topics
This module looks at the responsibilities of businesses and other organizations in
terms of their ethical management practices and social responsibility.
This module covers four topics:
•
Topic 1: Defining Ethics and the Ethics Continuum
•
Topic 2: Values and Ethics in the Workplace
•
Topic 3: Corporate Social Responsibility
•
Topic 4: Organizations and their Role in the Community
Topic 1 introduces the meaning of ethics, the difference between law and ethics, and
the continuum of ethical reasoning and rationale.
Topic 2 continues the discussion, examining ethical reasoning and values in the
workplace.
Topic 3 explores corporate social responsibility and its emergence in business and
society.
Topic 4 focuses on the social and economic responsibilities of business and other
organizations in the community.
Learning Outcomes
By the end of this module, you will be able to:
•
Describe multiple perspectives of stakeholders with regard to ethics and
social responsibility while recognizing the influences of logic, feelings,
values, and perceptions.
•
Recognize biases (especially your own, in your stakeholder roles) and how
they influence perspectives on social responsibility.
•
Analyze ethical issues from multiple perspectives of the organization and its
stakeholders.
•
Recognize the range of questioning and critical thinking in which
stakeholders may engage when considering ethical issues and why this may
vary from one individual or stakeholder group to another.
•
Recognize the spectrum of choices or options on the continuum of social
responsibility that stakeholders may choose, and consider both the drivers of
the decisions and the ethical implications from various stakeholder
perspectives.
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A Word on Wording:
As mentioned previously, modules for this course draw on readings from the
course textbook, the principal focus of which is businesses and their
relationship with society. Nevertheless, many of the management and
decision-making issues relating to ethics and social responsibility in the
workplace apply to all organizations. This includes multinational
corporations, small to medium-size enterprises, not-for-profit organizations,
government agencies, and other institutions and organizations.
While profit may add a different dimension to decision making for corporations,
managing budgets and controlling costs creates similar ethical dilemmas for not-forprofit and governmental organizations, especially when fiscal responsibility is
perceived to conflict with social, environmental, or ethical responsibilities. Also, all
organizations face ethical and social issues in dealing with direct and indirect
stakeholders.
Please pay attention to relevant ideas, even if the terms used, such as corporate
social responsibility or corporate citizenship, seem to address dissimilar
organizations to your own. In many cases, use of the word “corporate” is used to
distinguish an organization from an individual rather than to describe the type of
organization.
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Course Modules
Activity Checklist
✓
Complete and check off the following Module 2 components:
Read Module 2: Overview, Learning Outcomes, Activities,
Resources
Read Topic 1: Defining Ethics and the Ethics Continuum
Complete Activity 2-1: Ethical Decision Making
Part A: Reading
Part B: Reflective Journal—Ethical Practices
Part C: Reading
Part D: Reflective Journal—Analyzing Situations
Read Topic 2: Values and Ethics in the Workplace
Complete Activity 2-2: Stakeholder Perspectives and Applying
Ethical Reasoning Methodologies
Part A: Reading
Part B: Reflective Journal—Perspectives and Methodologies
Complete Activity 2-3: Workplace Ethics, Perceptions, and
Safeguards
Part A: Reading
Part B: Reflective Journal—Ethics in the Workplace
Read Topic 3: Corporate Social Responsibility
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Complete and check off the following Module 2 components:
Complete Activity 2-4: The Benefits of Corporate Social
Responsibility
Part A: Reading
Part B: Reflective Journal— Gravity Payments
Read Topic 4: Organizations and Their Role in the Community
Complete Activity 2-5: Public-Private Partnerships
Part A: Reading
Part B: Reflective Journal—Perspectives on Partnerships
Complete Assignment 2
Submit Assignment 2 for assessment and grading
Reminder: Your Final Project accounts for 40% of your course mark. The
project will evaluate your knowledge of the information presented
throughout the course and draw on activities and assignments completed in
Modules 1 through 4.Remember to read through the instructions for your
Final Project before starting each module. Make notes on the information you
think is applicable to the Final Project as you read through the module and
the textbook. With the help of your notes, you should be able to quickly
complete your Final Project at the end of the course.
Resources
Module content is drawn from the following resources, as well as from those cited in
the references listed at the end of each topic. You may be interested in reading the
following books and/or articles in part or in their entirety. You can find some of
them in TRU Library. Use Summon to search across the Library’s content. Also, see
TRU Library’s business research guide.
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Course Modules
Brooks, L. (2000). Codes of conduct: Trust, innovation, commitment and productivity: A
strategic-cultural perspective. Global Outlook: An International Journal of Business,
Economics, and Social Policy, 12(2), 1–11.
Business owes significant obligations to our society. Newswise. (2000, February 22).
Retrieved from http://www.newswise.com/articles/view/17468/
Carr, A. (1968, January/February). Is business bluffing ethical? Harvard Business Review,
46(1), 143–153.
Donaldson, T. (1996, September). Values in tension: Ethics away from home. Harvard
Business Review, 74(5), 48–62.
Donaldson, T., & Werhane, P. H. (Eds.). (2008). Ethical issues in business: A philosophical
approach (8th ed.). Upper Saddle River, NJ: Prentice Hall.
Hawken, P. (1993). The ecology of commerce. New York, NY: Harper Business.
Holmes, R., & Watts, P. (2000). Corporate social responsibility: Making good business sense.
Conches-Geneva, Switzerland: World Business Council for Sustainable
Development. Retrieved from
http://www.ceads.org.ar/downloads/Making%20good%20business%20sense.pd
Johnson, M. (Winter 2003).The psychology of ethical lapse. Newsletter of the Canadian
Centre for Ethics and Corporate Policy (www.ethicscentre.ca), 2. Retrieved from
http://www.ethicscentre.ca/EN/resources/Ethics_Winter_2003.pdf
Lawrence, A., & Weber, J. (2008). Business and society: Stakeholders, ethics, public policy
(12th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2014). Business and society: Stakeholders, ethics, public policy
(14th ed.). New York, NY: McGraw-Hill Higher Education
Lawrence, A., & Weber, J. (2017). Business and society: Stakeholders, ethics, public policy (15th
ed.). New York, NY: McGraw-Hill Higher Education.
Logsdon, J., Wood, D., & Benson, L. (2000). Research in stakeholder theory 1997–1998: The
Sloan Foundation minigrant project. Toronto, ON: Clarkson Centre for Business Ethics.
McCoy, B. (2008). The parable of the Sadhu. Harvard Business Review, 61(5), 103–108.
Paine, L. (1994, March-April). Managing for organizational integrity. Harvard Business
Review, 72(2), 106–117.
The importance of business ethics. (2001, July). HRfocus 78(7), 1. [available through TRU
Library]
Willard, B. (2002). The sustainability advantage: Seven business case benefits of a triple bottom
line. Gabriola Island, BC: New Society Publishers.
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Topic 1: Defining Ethics and the Ethics Continuum
Introduction
The public image of business does not always inspire public
confidence, since it is often assumed that talk of ethics in
business is only talk. . . (Gillespie, 2002, p. 112)
Is it possible for a company and its management team to be ethical and successful?
How often do you hear stories about companies that made millions of dollars while
engaging in unethical practices? Do you recall the sensational reports of the ethical
transgressions at Bre-X? First, the company’s stock value soared, and they were
heralded as a great Canadian success story, with the company’s claims of rich
mineral deposits sending stock prices soaring. Later, investors lost millions as the
lies and deceit became public knowledge. What about the meltdown of Enron in the
United States? Enron was a multi-billion dollar triumph before the extraordinary
magnitude of managerial malfeasance and unethical accounting practices resulted in
corporate bankruptcy and criminal indictments of senior staff. Once lauded for their
outstanding success, the leaders of these companies were eventually exposed for
their criminal activities. Indeed, the management teams of these companies did not
simply act unethically; they broke the law.
The Ethical Continuum
Ethics is a conception of right and wrong conduct. It tells us
whether our behavior is moral or immoral and deals with
fundamental human relationships . . . (Lawrence & Weber, 2017,
p. 93)
Both laws and ethics define acceptable or unacceptable behaviour or practices within
a company or organization. Government intervention establishes and regulates
many ethical business practices. However, the challenge with ethics is that they may
not appear black or white, and laws rarely capture the shades of grey that people
often encounter in making ethical decisions. If we picture a horizontal line with legal
on the right side and illegal on the left side, perhaps we can measure everything in
between in terms of greater or lesser shades or degrees of ethics.
Thompson Rivers University
At what point on this continuum does something become unethical?
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Is it when it is illegal? If it is legal, is it ethical? Can you think of a business practice
that is legal, but you would consider unethical? Are there activities at your
organization that you judge to be unethical?
Thompson Rivers University
What if a business practice is legal in one country but illegal in another? For
example, a multi-national business many operate under several governmental legal
jurisdictions. Which one dictates their level of responsibility? Do ethical standards
transcend legal obligations? What about child labour in less developed countries? In
many places in the world, the legal age for children to work is much lower than it is
in Canada. If it is legal, is it ethical to employ children? What about environmental
standards? If there are no regulatory controls on air emissions or dumping of waste
or effluent, is it ethical to contaminate the air, water, and land in the country in
which you are operating? What about cultural norms, such as bribery? If bribery is
commonplace in some countries, does that make it ethical for organizations to
engage in these practices? In today’s globalized economy, the issue of business ethics
is more complex than ever before—or is it?
You will explore these issues in the activities and the assignment in this module.
Optional Resource:An optional resource on child labour is the website for
the International Programme on the Elimination of Child Labour (IPEC).
IPEC is part of the International Labour Organization’s (www.ilo.org) efforts
to garner worldwide agreement banning abusive child labour.
There are many laws that prevent organizations from undertaking unethical
practices, but sometimes the law does not adequately address ethical issues.
Sometimes the law is the rationale used to justify unethical decisions. If it’s not
illegal, it must be acceptable. Paine says:
Even in the best cases, legal compliance is unlikely to unleash
much moral imagination or commitment. The law does not
generally seek to inspire human excellence or distinction. It is no
guide for exemplary behaviour—or even good practice. Those
managers who define ethics as legal compliance are implicitly
endorsing a code of moral mediocrity for their organizations.
(Paine, 2008, p. 279)
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When Enron falsely posted its expected future revenues as its current earnings, it
was applying legally acceptable accounting procedures. The intent was to present
the most optimistic figures to Enron’s shareholders. This is only one of the dozens of
ways Enron contrived to maintain share value while revenues faltered. Was this
aggressive and optimistic or manipulative and deceptive? Was it ethical or
unethical? For Enron, sometimes the shades of grey on the continuum slipped
beyond ethics and into illegalities.
Unethical, or Illegal?
Who decides what is ethical or unethical, right or wrong? Laws are imposed on us,
but in our democratic society, they emerge from our common value systems. Do we
all share the same values and ethics? Consider the debates over legalization of
marijuana in Canada or same-sex marriages, the ethics of euthanasia, abortion,
polygamy, child labour, and the legal age for alcohol consumption. Canadian laws
and legislation with regard to these issues are constantly under scrutiny because our
collective views change as our society changes. Irrespective of the law, our own
personal values and morals influence both our opinion of these issues and how we
act. What influences our perception of ethics?
How do we judge right from wrong? Our upbringing and family values, religious
and cultural background, heritage, where we live, our education, our lifestyles,
and our life experiences all influence our personal ethics and where we are on an
ethical continuum. These same influences also affect our perspective on where
are on the continuum.
Perhaps an individual spends an hour each day sending and receiving personal
emails at the office but works hard at other times. In their opinion, they are
behaving very ethically. Another person may behave in the same way but feel
they are cheating the organization or feel some guilt for engaging in personal
activities on company time. Upon reflection, despite having the same behaviour,
the second person may place him or herself lower on the ethical continuum with
regard to this particular behaviour or issue. A third person, observing the
behaviour of both these individuals, may have yet another opinion of the
standard of ethics that these individuals exhibit. Why do these opinions vary?
Even when we are aware that our behaviour or actions are less than perfect
ethically, we may use rationalization to justify our behaviour (as person 1 in the
previous example did: “I work hard, so doing personal emails at the office is not
unethical”). In your activities, you will read the article “The Psychology of
Ethical Lapses,” by Mark Johnson, which highlights four common
rationalizations people use to justify ethical lapses.
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Course Modules
It is important to be aware of what influences our ethics so that we make conscious
decisions with full appreciation of the shades of grey in our actions and behaviour. If
we fully appreciate the ethical implications of our actions, will we make the same
decisions or behave in the same way?
Personal Ethics versus Business Ethics
Do our personal ethics differ from our ethics in the workplace?
In “Corporate Roles, Personal Virtues: An Aristotelean Approach to Business
Ethics," Robert Solomon states that ethics draws on basic human “virtues” of
“honesty, loyalty, sincerity, courage, reliability, trustworthiness, benevolence,
sensitivity, helpfulness, cooperation, civility, decency. . . and reasonableness…”
(1992, p. 330). These are fundamental or general ethical principles, and, according to
Lawrence and others, “Business ethics [authors’ emphasis] is the application of
general ethical ideas to business behavior” (Lawrence & Weber, 2017, p. 94).
Sometimes, the presence or absence of these virtues is obvious
(cooperative/uncooperative, honest/dishonest, sincere/insincere); at other times, they
are present in greater or lesser degrees. Is a business operator dishonest if he or she
claims their product is the best on the market, yet better products do exist? Should
the advertisements read, “The third-best product on the market”? Perhaps a
company claims that their product or service is reliable, but how reliable?
Marketing, including advertising, promotions, pricing, and product information, is
an area of business in which there is great temptation and tolerance for positioning
that is lower on the ethical continuum.
Is this acceptable? If we value the virtues we just listed for individuals in society,
should we expect the same level or degree of virtue or ethics in business? Are
business ethics the same as individual ethics, or do so-called ethical companies sit
lower on the continuum than ethical individuals?
Solomon notes, “Business ethics is too often conceived as a set of impositions and
constraints, obstacles to business behaviour rather than the motivating force of that
behaviour” (1992, p. 330). It seems that the importance of economics and profit in
business may supersede the importance of ethics, or shift some ethical values down
the continuum.
Paul Hawken makes the following comments in The Ecology of Commerce:
By nature, by law, and by tradition, corporations often place
their interests above others, including those of the community,
the state, and the environment.
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When the chairman of the board of Union Carbide [a Fortune 500
company] first heard about [the suffering and death associated
with his company’s industrial accident in] Bhopal, he stated that
he would devote his life to making right what had gone so
wrong for so many victims. Within weeks he was on record with
a correction, saying that he had previously “overreacted,” and
then sought to limit compensation to the people killed and
injured. His first reaction was the human one, but his second and
crucial response was corporate. The president of Union Carbide
cannot publicly express grief, suffering, and compassion if it
places the corporation in financial jeopardy.
Following the accident, Union Carbide proceeded to liquidate a
substantial portion of its assets and give them out to
shareholders in special dividends, thus reducing the
corporation’s potential payout to the victims. Investors who
bought shares after the disaster tripled their money as billions
were paid out to Wall Street speculators, institutions, and
arbitrageurs. In India, years after the accident, a majority of the
200,000 victims exposed to deadly gas suffer corneal opacity or
blurred vision . . . as well as high rates of long-term damage to
the lung, brain, liver, and kidney. Most have still received no
compensation. Union Carbide’s response to Bhopal was, in the
opinion of many critics, unethical and inhumane, but it was
not illegal [emphasis added].
Fortune 500 companies have been involved in illegal behaviour
between 1975 and 1985. U.S. News and World Report states that
115 of the 500 were convicted of a serious crime during the
1980s. (Hawken, 1993, p. 116)
Many years have passed since Union Carbide was exposed for the deadly gas leaks
in Bhopal, India, yet unethical and inhumane acts associated with legal business
practices continue globally. Competition and the pressure to succeed in business
may be the rationale for shifting virtues down into darker grey areas on the ethical
continuum. Is this right or wrong? How far will we allow ourselves as
stakeholders—whether employees, managers, shareholders, consumers, neighbours,
or community members—to compromise our ethics for the sake of short-term
economic gain? With whom does the responsibility lie for the ethical standards of
the business or other organizations in which we are stakeholders? We will explore
these issues in the readings and activities for this section, and you can be the judge.
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Course Modules
Activity 2-1: Ethical Decision Making
Introduction
This activity gives you the opportunity to explore conflicting opinions on individual
ethics and ethics in business and to challenge yourself to reflect on your own ethics
and values.
Instructions
Part A: Reading
•
Read the first part of Chapter 5: Ethics and Ethical Reasoning, pages 92-102.
Skim or skip the sections that describe U.S. laws, and focus on gaining an
understanding of the definition of business ethics and why ethical problems
occur in business, and end at the section “The Core Elements of Ethical
Character.”
•
Read the following articles; access them through TRU Library:
•
Carr, A. (1968, January). Is business bluffing ethical? Harvard Business Review,
46(1), 143–153.
•
McCoy, B. (1983, September). The parable of the Sadhu. Harvard Business
Review, 61(5), 103–108.
Part B: Reflective Journal—Ethical Practices
Briefly answer the following questions:
•
In McCoy’s “The Parable of the Sadhu,” the group faced decision-making
challenges due to conflicting ethics. Have you witnessed an experience where
one person in an organization did not share the same ethics as others in the
group?
•
How was the situation handled?
•
What role did leaders play in this ethical situation?
Prompting Questions: How did the conflicting ethics within the group make
you feel?
Did the difference in values affect working relationships, trust, or morale
among staff or organizational members?
Were the leaders or managers aware of the conflicting ethics? Was it
important to them?
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Did they openly address the situation, or was it ignored or handled in some
private way?
Do you believe that playing to win is an appropriate reason for businesses to
distort information that they provide to customers and other stakeholders?
Comment on your opinion and how it compares to the ideas espoused in
Carr’s article on business bluffing.
Reflect on your interactions with businesses, government, or other
organizations. Can you think of examples of practices that you felt were
unethical but not illegal? What influences your opinion? Perhaps you have a
similar business or have had similar experiences, so you empathize with
management of that organization. Perhaps you have suffered as a result of
the unethical practices of an organization with which you dealt, and this is
influencing your opinion. Be aware of your values and experiences that may
be influencing your judgment.
What criteria or perspectives influence your perspective on what is unethical,
but not illegal?
Why would unethical behaviour be justifiable?
Is the motivation profit, convenience, harmony within an organization, or
playing to win, as Carr suggests?
Does placement on an ethical continuum relate to whether or not something
that is unethical is justifiable? For example, if it is just a little unethical, maybe
it is reasonable under certain circumstances, but if it is very unethical, is it
never acceptable?
Part C: Reading
Read pages 102-106 of Chapter 5: Ethics and Ethical Reasoning, up to but not
including the section “Analyzing Ethical Problems in Business.”
Read Johnson’s one-page article "The Psychology of Ethical Lapses," in the
Newsletter of the Canadian Centre for Ethics and Corporate Policy (Winter 2003).
As you read, consider the following questions, and answer them in your journal:
•
Does our ability to make ethical decisions and apply moral reasoning change
over time?
•
Are our ethical standards unwavering irrespective of the situation?
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•
Course Modules
Are there times when we may slip further towards the dark grey shades of
ethics? What are the triggers and what rationalization do we consciously or
unconsciously apply in making ethical (or unethical) decisions?
Part D: Reflective Journal—Analyzing Situations
Consider the following scenarios and, in your journal, answer the questions that
follow.
Scenario 1: A friend is shopping at a large department store and the clerk
mistakenly gives an extra $20 in change on your friend’s purchase. Your friend
notices the mistake but does not alert the clerk to the error.
Scenario 2: Your colleague is traveling on business in a foreign country and is
bringing sample products into the country. The customs agent explains that some of
the goods are not allowed unless applications are filled out in advance of entering
the country and it is now too late to go through this process for this trip. The agent
then suggests that, for a “tip,” he can overlook this infraction. Your colleague
chooses to pay the bribe.
Scenario 3: Your neighbour is an elderly lady who is living independently but is
getting older and struggling to take care of her home. Her adult children agree to
share the cost of a housekeeper to cook and clean for their grandmother. They have
the opportunity to hire a woman who is a new immigrant and pay a significantly
lower cost than some agencies are offering. However, the terms of payment are cash
only so the family suspects the wages will not be reported to Revenue Canada and
the housekeeper may not be legally entitled to work in Canada. The family chooses
this lower-cost option, anyway.
Questions:
Consider the list of four ways of rationalizing decisions (as cited in the Johnson
article), and identify which excuse(s) or rationalization fits each of the above
scenarios. Do you think the rationalization(s) is/are justified in any or all of these
circumstances? Defend your position.
You may have ideas other than the four that Johnson found about how
people rationalize ethical lapses. You may include these in your analysis of
these scenarios.
Consider Figure 5.5 on page 104 of the textbook. For each of the above three
scenarios, identify what development stage and corresponding basis of ethical
reasoning applies to the decisions. Now that you have considered the scenarios from
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this lens, has your opinion changed as to whether or not the rationalization(s) is
justified in any or all of these circumstances? Explain your answer.
References
Business owes significant obligations to our society. Newswise. (2000, February 22).
Retrieved from http://www.newswise.com/articles/view/17468/
Carr, A. (1968, January/February). Is business bluffing ethical? Harvard Business
Review, 46(1), 143–153.
Gillespie, N. (2000). The business of ethics. In T. Donaldson, P. Werhane, & M.
Cording (Eds.), Ethical issues in business: A philosophical approach (7th ed., pp. 112–
118). Upper Saddle River, NJ: Prentice Hall.
Hawken, P. (1993). The ecology of commerce. New York, NY: HarperBusiness.
Johnson, M. (Winter 2003). The psychology of ethical lapses. Newsletter of the Canadian
Centre for Ethics and Corporate Policy, 2. Retrieved from
http://www.ethicscentre.ca/EN/resources/Ethics_Winter_2003.pdf
Lawrence, A., & Weber, J. (2008). Business and society: Stakeholders, ethics, public policy
(12th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2014). Business and society: Stakeholders, ethics, public policy
(14th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2017). Business and society: Stakeholders, ethics, public policy
(15th ed.). New York, NY: McGraw-Hill Higher Education.
McCoy, B. (2008). The parable of the Sadhu. In T. Donaldson & P. Werhane (Eds.),
Ethical issues in business: A philosophical approach (8th ed., pp. 287–293). Upper
Saddle River, NJ: Pearson Prentice Hall. Originally published in Harvard
Business Review, 61(5).
Paine, L. (1994, March/April). Managing for organizational integrity. Harvard
Business Review, 72(2), 106–117.
Solomon R. (1992). Corporate roles, personal virtues: An Aristotelean approach to
business ethics. Business Ethics Quarterly 2(3), 317–399.
Weber J., & Glyptis, S. (2002). Instructor’s manual to accompany Business and Society:
Corporate strategy, public policy, ethics (10th ed.). New York, NY: McGraw-Hill
Higher Education.
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Topic 2: Values and Ethics in the Workplace
Introduction
Every ethical failure in business that makes the news is usually
followed by media and business commentary that attribute the
wrongdoing to corporate culture. (Johnson, 2003)
We blame the work environment and the culture of an organization for influencing
the decision making of individuals, but what makes up a corporation or other form
of organization? Organizations are staffed, managed, and operated by individuals,
and it is individuals who make decisions.
“One can argue that this collection of decisions creates the culture which itself
influences subsequent decisions,” Johnson says; therefore, “cultures do not make
decisions. Decisions make cultures” (2003).
The ethical analysis and resolution of ethical dilemmas in the
workplace depend on the values, virtues, personal character, and
spirituality of managers and other employees. Good ethical
practices not only are possible, but also become normal with the
right combination of these components. (Lawrence & Weber,
2017, p. 102)
It is the responsibility of managers, leaders, and all members of an organization to
create an ethical corporate culture, and rewarding ethical behaviour is essential. In
1996, Thomas Donaldson wrote that developing ethical standards and codes of
conduct, and treating them as absolutes, helps to define boundaries and guidelines
for ethical behaviour. These absolutes go beyond definitions of legal or illegal
behaviour and draw on the virtues listed earlier: honesty, loyalty, sincerity, courage,
reliability, trustworthiness, benevolence, sensitivity, helpfulness, co-operation,
civility, decency, and reasonableness.
Management “based on integrity holds organizations to a more robust standard”
than management based on compliance, whereas “compliance is rooted in avoiding
legal sanctions, organizational integrity is based on the concept of self-governance in
accordance with a set of guiding principles” (Paine, 1994, p. 111).
Hallmarks of an Effective Integrity Strategy
While strategies and guidelines for ethical management may vary from one
organization to another, Paine identifies hallmarks of an effective integrity strategy;
these may apply to all organizations:
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•
The guiding values and commitments make sense and are clearly
communicated.
•
Company leaders are personally committed, credible, and willing to take
action on the values they espouse.
•
The espoused values are integrated into the normal channels of management
decision making and are reflected in the organization’s critical activities.
•
The company’s systems and structures support and reinforce its values.
•
Managers throughout the company have the decision-making skills,
knowledge, and competencies needed to make ethically sound decisions on a
day-to-day basis. (Paine, 1994, p. 112)
For a more complete description of this strategy, see page 112 in Paine, 1994.
The integrity strategy for supporting ethics in the workplace is more descriptive
than prescriptive. It requires management to demonstrate a fundamental grasp of
core ethical values, and it encourages management and employees to act with
integrity rather than simply complying with rules.
Perceptions about right and wrong behaviour may vary from one culture to another
or from one organization to the next. While we may agree that integrity and values
are important, determining the degree of ethics in our day-to-day lives seems to be a
challenge of many stakeholders in society. Yet, studies documented in the National
Geographic (2003) indicated that even highly social species of monkeys demonstrate
an understanding of fairness and intolerance with unfairness (Markey, 2003).
Nevertheless, personal gain and self-interest, and competitive pressures on profits
and business goals versus personal values may create ethical conflicts in
organizational decision making. Maybe if the monkeys were seeking promotions or
profit or chasing an idealized notion of success they would face the same dilemmas!
To create and sustain ethical organizations, we must reflect on the motivators for our
decisions, actions, and behaviour, and question the decisions and actions of those
around us. In business, as in life, the pressure for success may provoke compromises
in our ethics as well as rationalizations for our decisions, without recognition of their
position on an ethical continuum.
Perhaps if we imperfect humans are better able to recognize our
own rationalizations for actions that trigger our ethical alarm
bells and recognize this reasoning in others, we’ll be led to
making more ethical and ultimately better business decisions.
(Johnson, 2003).
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Activity 2-2: Stakeholder Perspectives and Applying Ethical
Reasoning Methodologies
Introduction
This activity gives you the opportunity to apply ethical reasoning to a case study
and to explore stakeholder perspectives on the outcomes.
Instructions
Part A: Reading
•
Read the balance of Chapter 5: Ethics and Ethical Reasoning, pages 106-110.
Pay particular attention to three of the four ways identified for ethical
reasoning (utility, rights, and justice).
•
Read “Discussion Case: Chiquita Brands: Ethical Responsibility or Illegal
Action?” on pages 111-112.
Part B: Reflective Journal—Perspectives and Methodologies
•
Apply the utilitarian, rights, and justice methods of ethical reasoning to the
issue of whether Chiquita should have agreed to make payments to the
terrorist group in order to protect its employees.
Activity 2-3: Workplace Ethics, Perceptions, and Safeguards
Introduction
The purpose of this activity is to encourage you to identify your own perceptions of
ethical behaviour and to reflect on things that may influence or change your
perceptions. The activity also reinforces learning about systems that safeguard
organizations from unethical behaviour.
Our family background, community experiences growing up and our culture
influence our personal ethics. So, too, do these influences and life experiences affect
our ethics in the workplace. What happens when one’s personal ethics clash with a
business organization’s ethics? Have you ever had this experience? What about
organizations that find their ethics conflicting with those of their customers or, or
other stakeholders with which they are affiliated?
In today’s increasingly global marketplace, we may face cultural clashes as one’s
personal or professional ethics and values conflict with workplace ethics or
standards. Consider restrictions on women’s opportunities in management in some
countries, the use of child labour in factories, or the practice of bribery to secure
government or business contracts that is pervasive in some countries. In some parts
of the world, the business culture may view these practices as appropriate and
acceptable, while people from countries or cultures may frown upon the values and
ethics that allow such practices to exist.
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Instructions
Part A: Reading
•
Read Chapter 6: Organizational Ethics.
•
Read the following article; access it through TRU Library:
Paine, L. (1994, March). Managing for organizational integrity. Harvard Business
Review, 72(2), 106–117.
Part B: Reflective Journal—Ethics in the Workplace
1. Briefly answer the following:
o List programs, systems, safeguards, or other ways that organizations help
foster ethical behaviour in the workplace. Comment on your preferences.
Refer back to readings for this activity and reflect on your own
experiences with business and workplace ethics for ideas.
Sample Answer:
Organizations can foster an ethical climate through managements’ actions
and treatment of employees and through programs and policies that
encourage an ethical corporate culture.
Management should not ignore ethical transgressions, because it weakens
ethical standards and indicates that ethics are not truly important within the
organization.
Organizations can openly promote ethics in the workplace and provide
training to staff on ethical standards and application of ethics in decisionmaking.
Organizations can develop formal ethical standards and/or codes of ethics.
Organizations can develop ethics committees, ethics offices, and/or ethical
hotlines.
Organizations can conduct regular audits or evaluation of the standard of
ethics and adherence to standards among staff and management (as well as
among suppliers, contractors, and other organizations with which they have
significantprofessional relationships).
Organizations can train and develop a culture of ethics. This requires a
culture in which employees do not simply comply with standards or rules
but embrace the integrity of their organization’s ethical practices.
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2. Search online for one company or organization’s ethical code of conduct (also
sometimes called “corporate code of conduct”). This can be a company of
your choice, but it is more likely you will find this information on websites of
larger corporations. Briefly answer the following:
o Do you think these statements reflect a compliance-based or integritybased ethics program (or both) at the company/organization? (Refer to
pages 121-122 of your textbook for a description of these two approaches
to ethical management.) Defend your answer.
o Is the ethical code of conduct directed at one group of stakeholders within
the organization or is it inclusive of all internal stakeholders (such as
employees, management, and boards of directors)?
References
Business owes significant obligations to our society. Newswise. (2000, February 22).
Retrieved from http://www.newswise.com/articles/view/17468/
Donaldson, T. (1996, September). Values in tension: Ethics away from home. Harvard
Business Review, 74(5), 48–62.
Donaldson, T., Werhane, P., & Cording, M. (Eds.). (2002). The role of organizational
values [Case study on Merck & Co., Inc.]. In Ethical issues in business: A philosophical
approach (8th ed., pp. 250–256). New Jersey. NJ: Pearson Prentice Hall.
Johnson, M. (Winter 2003). The psychology of ethical lapses. Newsletter of the Canadian
Centre for Ethics and Corporate Policy (www.ethicscentre.ca). Retrieved from
http://www.ethicscentre.ca/EN/resources/Ethics_Winter_2003.pdf
Lawrence, A., & Weber, J. (2008). Business and society: Stakeholders, ethics, public policy (12th
ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2014). Business and society: Stakeholders, ethics, public policy (14th
ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2017). Business and society: Stakeholders, ethics, public policy (15th
ed.). New York, NY: McGraw-Hill Higher Education.
Markey, S. (2003, September 17). Monkeys show sense of fairness, study says. National
Geographic News. Retrieved from
http://news.nationalgeographic.com/news/2003/09/0917_030917_monkeyfairness.ht
ml
Paine, L. (1994, March-April). Managing for organizational integrity. Harvard Business
Review, 72(2), 106–117.
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Topic 3: Corporate Social Responsibility
Introduction
Corporate social responsibility—or CSR, as it is commonly called—has increasingly
become a part of organizational management and decision making. According to
Lawrence and Weber, in terms of accountability, CSR “means that a corporation
should … be held accountable for any of its actions that affect people, their
communities, and their environment” (2017, p. 48).
This suggests external stakeholders are holding businesses accountable. Indeed, in
Canada, as in many other countries, there are environmental regulations,
employment standards, and other municipal, provincial, and federal regulations and
standards to which corporations are expected to adhere.
When corporations are perceived to perform at standards below some stakeholders’
expectations, this may prompt activists or special interest groups to lead campaigns
demanding that corporations be held accountable for negative environmental or
societal impacts of their operations.
In 2007, when lead was discovered in children’s toys imported from China, Mattel
withdrew its products from store shelves and recalled certain products. However,
concerned parents and organized groups questioned the degree to which
corporations are being accountable for the health and safety of toys made offshore.
Concerned leading citizens also asked what role governments were playing in
ensuring both corporate responsibility and accountability for the health and safety of
toys imported for children.
Defining Corporate Social Responsibility
Corporate social responsibility generally refers to the operation
of a business in a socially acceptable manner, that is, in a way
that meets the ethical, legal, commercial and/or public
expectations that society has of business. (Industry Canada,
2008)
The Social Aspects of CSR
The scope of CSR extends beyond corporate accountability today. Its definition
and application is evolving as managers learn to apply CSR in planning and
decision-making.
CSR encompasses business decisions or actions that have social or societal impacts.
CSR considerations can include management decisions regarding fair labour
practices and employment policies that foster workplace diversity, including
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opportunities for people with disabilities. Some CSR management practices aim to
create safe, harassment-free work environments for women, or even pro-actively
seek to include women in management. Other CSR programs focus on familyfriendly work environments or support for employees’ personal and professional
development.
Beyond Corporate Social Responsibility:
Despite its name, corporate social responsibility extends beyond the business,
or corporate, sector to include socially responsible management practices in
government and not-for-profit organizations. It refers to a management
approach and ethical operating standard that are applicable, irrespective of
the type of organization.
CSR also extends beyond employees to other stakeholders and seeks to build
healthy relationships between the business or organization and the broader
community.
Social Responsibility to Stakeholders
For years, CSR was based on “acts of charity” (Lawrence & Weber, 2017, p. 51).
That was a notion that companies have a responsibility to give back to the
community through what the textbook authors call “corporate philanthropy” (p.
51). This practice continues today with corporations donating to charitable
organizations or community programs. Tim Hortons supports minor hockey and
other children’s sports teams across Canada through its Timbits Minor Sports
Program (see Tim Hortons website, 2010–2012). No doubt many of Tim Hortons’
employees, customers, suppliers, and other stakeholders have benefited from this
financial support
Government and not-for-profit organizations, too, engage in workplace giving
programs by supporting the United Way or charitable groups. Some companies
and organizations are become more strategic about the choice of charitable
support or sponsorship they offer to communities, seeking more obvious or
direct connections with their stakeholders. For example, women’s cosmetics
companies may choose to support research for the cure for breast cancer or other
programs that support women’s health. Financial institutions support financial
literacy training programs in schools, and sporting goods companies support
amateur athletes or sports teams.
Some businesses or organizations help to support community economic
development and community development programs; others are active in human
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rights and programs to support ethical global business (Willard, 2002, p. 9). Some
businesses and organizations include environmentally responsible management
as part of their CSR commitments.
For example, TD Bank Financial Group sponsors the Great Canadian Shoreline
Cleanup, a program that organizes volunteers to spend a few hours or a few days
helping clean up litter and other debris along riverbeds and coastlines across
Canada, as well as helping collect data on the causes and types of shoreline litter in
each region (TD Great Canadian Shoreline Cleanup, 2008). TD’s support goes
beyond its financial commitment—the bank encourages its employees to volunteer
alongside other community members. Engaging employees in community
volunteerism is something that numerous organizations are doing to better involve
their staff in CSR.
More than Giving
In its infancy, CSR focused on corporate philanthropy. While corporate giving and
sponsorship programs are still popular, for many companies and other
organizations, CSR has a broader application. Some organizations view it as a
“branch of risk management” (“Just Good Business," 2008). The risk perspective may
be associated with potential costs or risks of stakeholder backlash associated with
unfair labour practices or poor environmental management practices.
Risk can be assessed in terms of potential for loss of customers or decrease in
product sales, or even loss of license to operate if health, safety, or environmental
transgressions are beyond acceptable limits to society. What was the financial cost to
Mattel in terms of reputation and loss of revenues when lead was detected in some
of its toys? By considering CSR issues in terms of risk, companies can assert an
economic or financial value on the cost of doing “good” business.
Lawrence and Weber refer to the “stewardship principle” in CSR, which are
management practices that assume an “obligation to see that all” stakeholders—
“particularly those in need or at risk” (Lawrence & Weber, 2008, p. 49)—benefit from
the actions of the organization. It is from the stewardship principle that stakeholder
management theory evolved. Organizational leaders who adopt a stakeholder
management approach acknowledge the interdependence of business and society.
This can require leaders to balance the interests and needs of many diverse
stakeholder groups.
Note: Stakeholder management theory was introduced in Module 1.
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In the past, the term CSR was sometimes used to explicitly indicate the inclusion
of stakeholder concerns for the environment as well as for societal concerns.
However, in recent years, the term usually encompasses environmental issues as
a recognized part of social or societal concerns. Perhaps the environment is
included in CSR because neglect or abuse of the environment has societal
ramifications. For example, air pollution caused by manufacturing and
transportation of goods damages air quality and compromises our quality of life.
Worse yet, certain air pollutants trigger higher incidences of asthma and other
respiratory problems, particularly among children.
Water pollution and solid and liquid waste management are other examples from
which we can draw a connection between social and environmental issues. What
about the depletion of resources including forests and fish stocks? Is this an
environmental issue or a social issue? Perhaps it is an economic issue. Consider the
communities across Canada that rely on these natural resources for their livelihood,
as well as people who enjoy recreational activities in parks and wilderness areas.
As you can see, many social and environmental issues are inexorably interrelated.
Organizational leaders who support CSR recognize the interconnection with
economics as well. Well beyond philanthropic support for environmental not-forprofit organizations, CSR can encompass pollution prevention initiatives, energyand water-efficiency programs, and corporate efforts to protect or restore natural
environments. These environmental initiatives may be directly related to core
business activities. For example, CSR efforts can include efforts to minimize
pollution and waste in manufacturing or distribution of goods. Ideally, CSR
decisions and actions have direct and positive economic or financial benefits as well
as benefits associated with enhanced community relations and license to operate.
Some companies engage in environmental leadership that goes beyond their core
business activities. In Module 3, we will consider the environment as a macro force
in business and society.
The Evolving Definition of CSR
While the scope and definition of CSR continues to evolve, businesses and other
organizations interpret and apply CSR differently, depending on their needs,
interests, and level of commitment to the wellbeing of their stakeholders. Instead
of being called CSR management practices or issues, sometimes they are referred
to as environmental, social, and governance issues (ESG). Governance issues are
more typically related to ethics and accountability issues associated with
executives, boards of directors, and shareholders. You will examine governance
issues in Module 4.
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Corporate social responsibility is sometimes referred to as the 3Ps: people, planet,
profit. This refers to corporate or organizational planning and decision-making that
takes into consideration the positive and negative impacts on society (people), the
environment (planet), and financial or economic considerations (profit). This is also
sometimes called “triple bottom-line reporting” (Lawrence & Weber, 2017, pp. 221).
CSR, triple bottom-line reporting, ESG—all these terms refer to strategies used by
organizations to integrate social and environmental considerations along with
financial or economic considerations in business planning and decision making. In
Module 3, you will examine sustainable development and triple bottom-line
management, and the similarities to CSR.
Corporate Social Responsibility Criteria and Continuums
Corporate social responsibility (CSR) goes beyond compliance with environmental
laws, employment standards, and fundamental responsibilities of the corporation to
the community—but to what degree? Opinion varies from country to country as
well as within different organizations and cultures. Just as we may view
organizational ethics on a continuum, so too can we view socially responsible
business on a continuum.
Thompson Rivers University
What criteria would you use to place organizations on different parts of this
continuum? What degree or level of social responsibility merits placement on the far
right side, indicating an organization is totally responsible socially (and
environmentally)? At what point does an organization shift from being socially
responsible to being socially irresponsible? Do you think others would make the
same judgments as you? Do you think your work experiences or other interactions
with business and organizations influence your perception of what is socially
responsible?
How an organization chooses to engage in CSR (or corporate citizenship) may reflect
the values and interests of stakeholders within the organization, as well as the type
of business or industry sector in which it exists. For example, Canadian Business for
Social Responsibility is a professional organization that includes large companies,
some of which are publicly criticized because of the pollution they generate. Yet,
these same companies may have highly effective CSR programs that focus result in
exemplary labour conditions for staff and wonderful programs that support local
communities and charities.
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Where would these companies fall on a CSR continuum? This a challenging question
because there are so many factors that we can use to evaluate the social
responsibility of an organization. In lieu of a continuum, reports, checklists, rating
systems, audits, and social-responsible “screens” are some of the methods
stakeholders employ in evaluating CSR performance.
Canadian Business for Social Responsibility (CBSR):
http://www.cbsr.ca
“CBSR is a business-led, non-profit CSR consultancy and peer-to-peer
learning organization that provides its members with candid counsel and
customized advisory services as they formulate powerful business decisions
that improve performance and contribute to a better world.” (Canadian
Business for Social Responsibility R, 2008a)
CBSR publishes reports, including the CSR/Sustainability Report Assessment
tool. Some of CBSR’s reports are available to the public, while others are
available to members only.
More and more people are choosing to flex their investment power to support
corporate social responsibility. This has created a category of mutual fund-type
investments called SRIs or socially responsible investments. Investors include
individuals as well as organizations and institutions such as foundations, religious
organizations, unions, insurance companies, trusts, investment pools and corporate
and public sector pension funds. Today, many financial institutions and
independent organizations manage funds that specialize in socially responsible
investments (SRIs). These are funds that screen investment for negative and/or
positive social (and environmental) performance as well as financial performance.
Given that social responsibility comes in many forms, how do SRIs determine which
companies to select? Socially responsible investment screening applies all the
standard financial decision-making processes that are a part of a prudent investment
management approach, but it also selects investments based on investors’ ethical,
moral, social, or environmental concerns. There are a large number of social and
environmental issues that SRIs can use to select (or screen) investment.
Rather than using a continuum, SRI funds typically use a checklist to negatively
screen out investments that would not qualify as socially (or environmentally)
responsible and a rating system to evaluate potential investments for their
compliance with some or all of the following criteria. The choice of corporate social
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responsibility criteria varies from one SRI fund to the next, and the degree to which
they scrutinize investments for social (and environmental) responsibility also varies.
Next is a list of some of the more common issues that motivate socially
responsible investors in Canada, according to the Social Investment
Organization:
What are the issues that motivate socially responsible investors?
Charitable contributions. How much and what kinds of charities does a
company contribute to?
Community involvement. Does a company support local programs
strengthening the community in which it operates?
Corruption. Does a company have a history of working with regimes that
operate in corrupt ways?
Ecology and environment. Does a company operate according to sustainable
development practices?
International human rights. Does a company operate in countries respecting
human rights?
Labour relations. Does a company have a good record with regard to treatment
of its employees? Do contractors of the company use sweatshop or child labour?
Military weapons. Is a company a major military contractor?
Minority groups. Does a company have a good record in dealing with minority
groups?
Nuclear power. Does a company generate nuclear power or contribute to the
nuclear power industry?
Product safety and quality. Does a company produce safe, reliable products or
services? Does its advertising truly represent its products or services?
Women. Does a company have a good record on its treatment of women
generally and its female employees in particular?
Investors can select investments managed by professionals employing screens
on these issues, or they can directly choose their own investments based on their
own research or research provided by investment professionals.
Reproduction with permission of the Social Investment Organization.
The Canadian Socially Responsible Investment Review calculated that as of June 2006,
Canadians held $503.61 billion in assets invested according to socially responsible
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guidelines. This was a huge increase over the value of assets two years earlier, which
totaled $64.46 billion (Social Investment Organization, 2007, p. 5).
In addition to leveraging their financial resources, socially responsible investors also
have the opportunity to leverage their voting power as shareholders to influence
CSR performance of the companies in which they invest. Investors sometimes
choose their SRI funds based in part on the shareholder activism of the fund
managers. You will consider shareholder activism and its influence on corporate
governance in Module 4.
Optional Resources:
Social Investment Organization (SIO) is a Canadian organization that
publishes articles, studies, policy and advocacy briefs, and background
information on socially responsible investment in Canada. SIO’s website also
has links to other resources on socially responsible investing and missionbased investing.
Social Investment Organization (SIO) annually publishes the Canadian
Socially Responsible Investment Review. The 2006 SIO Review was published
in 2012.
SocialFunds.com is an American website with articles, press releases, and
background information on socially responsible investment, as well as links
to indices, including Calvert Social Fund Index, The Dow Jones Sustainability
Index, and the Jantzi Social Index (Canadian).
SocialFunds.com also posts CSR links, including the list of "100 Best
Corporate Citizens," and free downloadable guides, such as the SRI Mutual
Funds Kit (an easy-to-read guide to introduce new investors to socially
responsible investment (SRI) mutual funds) and The Community Investment
Guide, which explains how investments can work to assist community
development.
The Pros and Cons of Corporate Social Responsibility
There are arguments for and against CSR. The challenge is to balance the
organization’s financial responsibilities with legal, ethical, social, and environmental
responsibilities. Figure 3.2 on page 51 of the textbook lists the evolving phases of
CSR for a period of over more than fifty years and cites various drivers, including
societal concern for human rights and ecological awareness. Moral obligation to
society is sometimes identified as the driving force behind CSR, as is the notion that
corporate social responsibility is an extension of individual ethics and values.
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Enlightened self-interest is also sometimes cited as a driver, or at least a benefit, of
CSR.
Many of today’s successful companies are operating with their
stakeholders in mind. Their progressive corporate social
performance contributes to their long-term financial viability,
which further promotes healthy communities and stable
economies. (Canadian Business for Social Responsibility, 2008b)
Lawrence and others cite a number of arguments for and against CSR. Critics claim
that CSR or corporate citizenship programs and initiatives lower economic efficiency
and profits, and impose unfair costs on more responsible companies, thereby
creating unequal competition. They also claim that CSR requires skills that
businesses lack, imposes hidden costs on customers and other stakeholders, and
shifts the onus for social responsibility from individuals and society to business
(Lawrence & Weber, 2017, pp. 56–58). Arguments favouring CSR include claims that
it balances power with responsibility, discourages government regulation, improves
business value and reputation, corrects social problems caused by business, and
promotes long-term profits (Lawrence & Weber, pp. 52-55).
Canadian Business for Social Responsibility adds the following list of positive effects
of socially responsible management, noting that all these benefits of good corporate
citizenship translate into financial bottom-line benefits:
•
Reduced operating costs
•
Enhanced brand and image reputation
•
Increased sales and customer loyalty
•
Increased ability to attract and retain employees
•
Publicity and increased public image from good works
(Canadian Business for Social Responsibility, 2008b)
While organizations that engage in CSR may reap long- and short-term benefits
from key stakeholders, many organizations make only a superficial commitment to
socially responsible business practices. If the values and ethics of leaders in the
organizations are not congruent with CSR, then it is unlikely that the companies will
integrate environmental and social policies and programs into planning and
decision making.
Although SRIs have enjoyed rapid increase in investment in recent years, Canadian
and international capital markets, in general, tend to ignore “the potential of
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Corporate Social Responsibility to create shareholder value” (Corporate Governance
and Corporate Social Responsibility, 2003, p. 86).
According to Brian Schofield, a partner in a Toronto-based investment firm focusing
on CSR and sustainable development strategies, “‘Forward-thinking corporations
that seek recognition for their Corporate Social Responsibility activities need to . . .
articulate their successes in a way that capital markets can understand, such as cash
flow, reduced risk and business growth and development’” (Schofield, cited by
Corporate Governance and Corporate Social Responsibility, 2003, p. 86). After all,
CSR is a balance of environmental, social, and economic imperatives.
While SRIs are gaining the attention of the capital markets, CSR management
practices within companies (and other organizations) are evolving beyond
philanthropy and responsiveness to societal demands. Stakeholder partnerships and
triple bottom-line decision-making is resulting in an integration of CSR into overall
planning and management in some organizations.
Some companies (and other organizations) are recognizing the potential for CSR
management to go beyond moral obligation or social responsibility. CSR
management can generate opportunities to build and strengthen stakeholder
relationships and to “create value” (“Just Good Business," 2008, n.p.). While few
companies have yet learned how to truly capitalize on corporate social
responsibility, CSR—if done well—“is not some separate activity that companies do
on the side, a corner of corporate life reserved for virtue: it is just good business”
(“Just Good Business," 2008, n.p.).
Optional Resources:
Industry Canada’s website provides information on CSR, including
information on principles and guidelines, various CSR management systems,
indicators, measurements, benchmarks, reporting, and other CSR tools.
Industry Canada offers, in various accessible formats, Corporate Social
Responsibility: An Implementation Guide for Canadian Business.
Porter, M. & Kramer, M. (2006, December). Strategy & society: The link
between competitive advantage and corporate social responsibility. Harvard
Business Review, 84(12), 79–92. [available through TRU Library]
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Activity 2-4: The Benefits of Corporate Social Responsibility
Introduction
Critics of CSR still refer to economist Milton Friedman’s classic article first published
in 1970 in The New York Times Magazine, in which he states, “there is one and only
one social responsibility of business—to use its resources and engage in activities
designed to increase its profits . . . ” (Friedman, as cited in Donaldson and Werhane,
p. 39). In contrast, there are many articles written since that time that describe a host
of roles and responsibilities for business in society.
In 2006, Harvard Business Review published a paper by famed corporate strategist
Michael Porter and colleague Mark Kramer, on how CSR can be seized for
“competitive advantage,” if properly integrated into corporate strategy.
Instructions
This activity challenges you to reflect on the benefits of CSR and to scrutinize the
information a company discloses about its corporate citizenship (or CSR
performance).
Part A: Reading
•
Read Chapter 3: Corporate Social Responsibility and Citizenship
•
Read the Discussion Case: “Corporate Social Responsibility at Gravity
Payments at the end of Chapter 3
Part B: Reflective Journal—Gravity Payments
•
Is Price demonstrating elements of corporate social responsibility by his
actions in this case? Explain why or why not.
•
What arguments for and against corporate social responsibility are relevant
to this case? Refer to Figure 3.3 on page 53.
References
Canadian Business for Social Responsibility (CBSR) (2008a). About CBSR. Retrieved
from http://www.cbsr.ca
Canadian Business for Social Responsibility (CBSR). (2008b). What is corporate social
responsibility? Retrieved from http://www.cbsr.ca/about/whatis.htm
Corporate governance and corporate social responsibility [Electronic version]. (2003,
September 15). Canadian Business, 76(17), 83.
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Friedman, M. (1970). The social responsibility of business is to increase its profits. In T.
Donaldson & P. Werhane (Eds.), Ethical issues in business: A philosophical
approach (8th ed., pp. 34–39). Upper Saddle River, NJ: Pearson Prentice Hall.
Industry Canada. (2013). International business information: Corporate social
responsibility. Retrieved from http://www.ic.gc.ca/eic/site/csrrse.nsf/eng/h_rs00018.html
Just good business [Electronic version]. (17 January, 2008). The Economist. Special
Reports. Retrieved from
http://www.economist.com/specialreports/displaystory.cfm?story_id=10491077
[Also available through TRU Library]
Lawrence, A., & Weber, J. (2008). Business and society: Stakeholders, ethics, public policy
(12th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2014). Business and society: Stakeholders, ethics, public policy
(14th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2017). Business and society: Stakeholders, ethics, public policy
(15th ed.). New York, NY: McGraw-Hill Higher Education.
Porter, M., & Kramer, M. (2006, December). Strategy & society: The link between
competitive advantage and corporate social responsibility. Harvard Business
Review, 84(12), 79–92.
Social Investment Organization (SIO). (2003). Socially responsible investment FAQ:
What are the issues that motivate social investors? Retrieved from
http://www.socialinvestment.ca/motivation.htm
Social Investment Organization (SIO). (2007, March). Canadian socially responsible
investment review 2006. Retrieved from
http://www.socialinvestment.ca/documents/SRIReview.pdf
TD Great Canadian Shoreline Cleanup. (n.d.). What we do. Retrieved from
http://www.vanaqua.org/cleanup/whatwedo.php
Tim Hortons. (2010–2012). Local programs. Retrieved from
http://www.timhortons.com/ca/en/difference/local-programs.html
Willard, B. (2002). The sustainability advantage: Seven business case benefits of a triple
bottom line. Gabriola Island, BC: New Society Publishers.
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Topic 4: Organizations and Their Role in the Community
Introduction
We know that where community exists, it confers upon its
member’s identity a sense of belonging and a measure of
security. It is in communities that the attributes that distinguish
humans as social creatures are nourished. Communities are the
ground-level generators and preservers of values and ethical
systems. The ideals of justices and compassion are nurtured in
communities. (John W. Gardner, as cited in Shaffer & Anundsen,
1993, p. 28)
Businesses and other organizations exist in communities. Lawrence and others
discuss communities as “a range of groups that are affected by an organization’s
actions” (Lawrence & Weber, 2017, p. 396). This includes site communities and
immediate neighbours in the geographic location where the business or other
organization operates. It also includes the community of employees, various
communities of interest, and communities associated via cyber space. Organizations
may have positive or negative impacts on the people of these communities, and,
given the prevalence of Internet and international operations, impacts can occur on
both local and far away communities.
Community members represent stakeholders or stakeholder groups that are
associated directly or indirectly with an organization. As we discussed in Module 1,
Preston describes a stakeholder model of management that is inclusive of
stakeholders, “takes their interests into account in decision making,” avoids
“activities that might give rise to unacceptable risks to stakeholders,” and provides
“benefits to stakeholders” (Preston, 2008, n.p.).
Businesses that seek to provide benefits to community members beyond employees
and other primary stakeholders are also practicing corporate social responsibility
(CSR). Of course, as with many CSR practices, businesses that take community
interests and benefits to their community stakeholders into consideration are likely
acting with “enlightened self-interest” (“Do It Right," 2008, n.p.).
Organizations benefit from strengthening and supporting the community in which
they operate. Corporate community involvement includes charitable works and
volunteerism as well as involvement in educational, scientific, and health-related
programs. It also may include financial benefits associated with payment of taxes
and contributions to economic development. Some corporations partner with
governments on projects such as new bridge or road construction and management,
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new parks and recreational facilities, and educational institutions and facilities as
well as cultural facilities.
Are there any public buildings or facilities in the town or city in which you live that
are named after a company? This project may have received financial support from
that company or perhaps the project was a result of a public-private partnership.
Public-private partnerships can be leveraged to provide project management
expertise and financial capital for communities while building social capital for the
corporation.
Social Capital in Communities
Social capital is a term that “refers to features of social organization, such as
networks, norms, and trust that facilitate coordination and cooperation for mutual
benefit” (Putnam, 2002, n.p.). Adler and Kwon define social capital as “the goodwill
that is engendered by the fabric of social relations” (as cited in Lawrence & Weber,
2017, p. 398). Social capital refers to a sense of connection, willingness to help,
friendliness, and goodwill among people in communities. Businesses and other
organizations that invest in social capital enhance the quality of life, thereby helping
to build vital, healthy and cooperative communities. In return, “social capital can be
transmuted . . . into financial capital” (Putnam, 2002, n.p.). Thus, “social capital is
coming to be seen as a vital ingredient in economic development around the world”
(Putnam, 2002, n.p.).
Supporting social capital and engaging in community development are key
elements of corporate social responsibility (CSR). We have already discussed
some benefits of CSR in the previous topic section. Organizations that practice
CSR recognize the interconnection of economic development with the quality of
life of their stakeholders including the workforce, their families, the site
community or communities in which the organizations operate, and the society in
which they exist. The World Business Council for Sustainable Development
states, “Business is not divorced from the rest of society. The two are
interdependent and it must be ensured, through mutual understanding and
responsible behaviour, that business’s role in building a better future is
recognized and encouraged by society” (WBCSD, 2003).
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Thompson Rivers University
Why Invest in Social Capital?
According to Victor, business has two significant obligations to society. One is to
“meet the expectations of the community, obey the laws, and be good keepers of the
community’s faith” (as quoted in “Business Owes," 2000, n.p.). The other, Victor
says, is for business to “do extraordinary things to enhance the quality of life and the
community and to assure the character and future of our shared environment” (as
quoted in “Business Owes," 2000, n.p.).
Regardless of obligations, or opportunities for acts of enlightened self-interest,
businesses and other organizations are interconnected and are part of larger
circles of influences, just as their stakeholders are interrelated. Thus, building
strong relationships and strengthening community provides benefits for
organizations, their workforce, and the local and global communities or societies
in which they exist.
Be it volunteerism, charitable contributions, or other forms of support for the
community, organizations that engage in community relations are helping to build
social capital and enhance their own success. Returns are visible in terms of positive
publicity and goodwill toward the company. For some companies, that may
translate into customer loyalty and an expanding customer base.
Organizations may also benefit from tax breaks associated with their sponsorship
programs and philanthropic initiatives. Those that support health and educational
development, as well as economic development initiatives in communities, may
benefit because this helps to build a healthier and more skilled workforce as well as
enriching the company’s social capital. Organizations that build relationships with
the community also have the opportunity for enhanced civic engagement. A higher
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level of social capital “produces a win-win outcome because it enables everyone to
be better off” (Lawrence & Weber, 2017, p. 398).
Stop for a moment and think about some of the corporations or organizations in
which you are a stakeholder. Are you familiar with any programs or initiatives they
have in place that support local hospitals, non-profit associations, or community
events?
Now, think about your experiences at schools, community centres, parks, or local
events. Have you noticed the logos or names of corporations or other organizations
that are providing support to these community services and events? How does that
make you feel about these organizations?
Optional Resources:
The following businesses describe their social capital and community
initiatives on their corporate websites. Search online for these businesses and
review their community engagement or the community aspects of their CSR
programs:
● Canadian Tire
● VanCity Credit Union
● IKEA
● FortisBC
● TD Bank Financial Group
● Gap Inc.
● BC Hydro
There is ample evidence of business and community or social sector interaction. As
we discussed in Topic 3, traditional corporate giving is still prevalent today—local
stores collect toys for children of low-income families during the holiday season,
companies participate in annual United Way campaigns, and large corporations
such as CIBC support the “Run for the Cure” in cities across Canada.
Yet, beyond corporate philanthropy, innovative businesses are creating new
arrangements such as “collaborative partnerships” (Lawrence & Weber, 2017, p. 411)
that benefit communities while also having more strategic benefits for the company.
Partnerships can include business, government, not-for-profit organizations, and
other stakeholders. Together they can be responsive to community needs,
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“contributing aid and assistance where feasible and being socially responsive to
legitimately expressed human needs” (Lawrence & Weber, 2017, p. 413).
Sagawa and Segal (1999) have this to say:
. . . we see in these exchanges a new paradigm for business and
the social sector, one that eliminates barriers between the sectors
while preserving their core missions.
This new paradigm pairs visionary companies that see how the
social context in which they operate affects their bottom lines
with a new breed of social entrepreneurs who understand how
business principles can enable them to fulfill their social missions
more effectively.
Together, they are reshaping how communities tackle some of
their most intractable social challenges. (Sagawa & Segal, 1999, p.
3)
Activity 2-5: Public-Private Partnerships
Introduction
Public-private partnerships are one approach that provincial and municipal
governments in Canada use to help fund social programs and local infrastructure.
There are a growing number of agreements with private enterprises to build, own,
lease, maintain, or operate healthcare facilities, roads, bridges, and other
infrastructure in Canada. Buildings and other facilities along with equipment and
even educational programs in universities, colleges, and elementary and secondary
schools are also funded by corporate contributions and supported by public-private
partnerships.
What are the costs and benefits to business and society? In this activity, we explore
the costs and benefits to communities of public-private partnerships.
Instructions
Part A: Reading
•
Read Chapter 18: The Community and the Corporation.
Part B: Reflective Journal—Perspectives on Partnerships
Review an article/news story on public-private partnerships. Drawing on your own
experience, discuss some of the pros and cons of these types of relationships.
Identify stakeholder groups, including those from the community, and discuss how
their opinions vary on this issue. Identify what may be influencing these opinions.
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Use the circles of reflection to consider what perspectives you think may influence
these stakeholders.
Consider public-private partnerships in education. At the high school,
college, or university level, this kind of partnership can provide real-life or
applied research and work experience for students. Does this experience
compromise academic learning? What if it shifts the focus of the education to
a company’s needs, perspectives, and interests, thereby compromising
students’ exposure to a balanced education?
Can these partnerships benefit communities and society (the country and its
economy) by providing useful employability skills and practical experience
to students who will enter the workforce?
What is the motivation of corporations to provide support or engage in
public-private partnerships in the education sector? Are they motivated by
potential benefits to the company, to the community, and to the country?
They can receive tax breaks, help develop a skilled workforce, gain access to
low-cost (student) labour, influence education and curriculum to coincide
with their corporate interests, and develop a dependency on the use of their
products (which may or may not cost the schools money in the future).
If schools are in need of the financial support or in-kind contributions of
computers, software, books, and other equipment that corporations can
provide, how will this influence education? Will school administrators make
decisions based on the best learning opportunities for students, or the more
financially beneficial options for the school?
What is government’s (e.g., the Ministry of Education’s) role in public-private
sponsorships? Where does their responsibility lie in providing adequate
funding for education or abdicating financial support to corporations? If
government budgets are limited, can society benefit by private sector support
of education? What about public-private partnerships which bring corporate
sponsorship into schools? How might this influence student values, or their
objectivity in decision making? Are decisions made in the best interest of
students? Consider the impact of soft-drink and junk-food vending machines
in schools. They bring revenues into schools, while increasing student
exposure to unhealthy food products. What cost or impacts does this have on
students, on the health care system, and on Canadian society? What influence
does commercialization of education have on students and on society? (This
is a big question).
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What does corporate support of schools mean to you and your family, to
your community, and to the country? How is it influencing individuals,
business, government, and society in Canada today?
We will discuss some of the negative implications of brand and corporate
influence in schools in the consumerism section of Module 4.
Note: Review recent newspapers or magazines and look for one example of
an article that appears to present information from the perspective of a
business and one example of an article that presents information from a
government perspective. Do these articles also present other perspectives?
Briefly describe why you think these articles are or are not fair and balanced
in their reporting. Refer back to the CARS Checklist and use it in your
assessment.
References
Business owes significant obligations to our society. Newswise. (2000, February 22).
Retrieved from http://www.newswise.com/articles/view/17468/
Do it right. (2008, 19 January). The Economist, 386(8563), 22–24. [available through
TRU Library]
Lawrence, A., & Weber, J. (2008). Business and society: Stakeholders, ethics, public policy
(12th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2014). Business and society: Stakeholders, ethics, public policy
(14th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2017). Business and society: Stakeholders, ethics, public policy
(15th ed.). New York, NY: McGraw-Hill Higher Education.
Post, J., Lawrence, A., & Weber, J. (2003). Business and society: Corporate strategy,
public policy, ethics (10th ed.). New York, NY: McGraw-Hill Higher Education.
Preston, L. (2003). Redefining the corporation: Consensus statement on the stakeholder
model of the corporation. Project of the Rotman School of Management, University
of Toronto.
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Putnam, R. (2002, 30 November). The prosperous community: Social capital and public
life [Electronic version]. The American Prospect. Retrieved from
http://www.prospect.org/cs/articles?article=the_prosperous_community.
Sagawa, S., & Segal, E. (1999). Common interest common good: Creating value through
business and social sector partnerships. Boston, MA: Harvard Business School Press.
[available through TRU Library]
Shaffer, C., & Anundsen, K. (1993). Creating community anywhere. New York, NY: G.
P. Putnam’s Sons.
Weber J., & Glyptis, S. (2002). Instructor’s manual to accompany Business and society:
Corporate strategy, public policy, ethics (10th ed.). New York, NY: McGraw-Hill
Higher Education.
World Business Council for Sustainable Development (WBCSD). (2003). Business role:
Corporate social responsibility. Retrieved from http://www.wbcsd.org
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Module 3: Broad Forces in Global Society
Overview
In this module, you will explore broad forces in global society, including
technological change as a socio-economic force, and you will examine ecology,
natural resources, and climate change in the context of business and other
organizations. You will also explore business and societal issues that are emerging as
a result of expanding world markets and globalization.
The term macroenvironment refers to large or great issues relating to the whole
system of business and society. Individual stakeholders or stakeholder organizations
may also feel the effects of these forces. Nevertheless, there is a distinction between
these broad forces and microenvironmental or internal forces that influence
stakeholders within organizations and society. Module 4 examines internal
stakeholder issues.
As you progress through this module, we encourage you to reflect on how
macroenvironmental forces influence you and the organizations and stakeholder
groups to which you belong.
Topics
This module covers four topics:
•
Topic 1: Globalization and Global Socio-Economic Issues
•
Topic 2: Influence of Business on Sustainable Development
•
Topic 3: Business and Government Approaches to Protecting the
Environment
•
Topic 4: Technology Change as a Socio-Economic Force
Topic 1 focuses on global economic issues in the twenty-first century and, in particular,
globalization and its social, political, and economic implications.
Topic 2 examines the challenges of balancing economic development with protection of
natural resources and the environment. This topic introduces you to ecological concerns
and sustainable development, primarily from a broad or global perspective.
Topic 3 continues the discussion of environmental issues, examining both market-based
mechanisms for protecting the environment and government standards and regulations
for the command and control of business and society.
Topic 4 shifts to technology and technological change as a socio-economic force in
business, government, and society today.
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Learning Outcomes
By the end of this module, you will be able to:
•
Observe the complexity of the broad forces and how they relate to you, your
organization, your country, and global society.
•
Analyze the influences that various broad forces, including economics, the
environment and natural resources, and technology may have on
organizations and stakeholders.
•
Identify various stakeholder perspectives on macroenvironmental forces and
the influences on these perspectives.
•
Identify potential opportunities and threats of various broad forces on
organizations and stakeholders.
•
Explain globalization and sustainable development and describe their
influences on business, government, and society.
•
Develop new paradigms with regard to perceptions of the influences of broad
forces and how you can influence or react to external forces in global society.
Note: The term paradigm is “more commonly used today to mean a model,
theory, perception, assumption, or frame of reference. In the more general
sense, it’s the way we ‘see’ the world…in terms of perceiving, understanding,
interpreting…a map…a theory, an explanation, or model of something else.”
(Covey, 1989, p. 23).
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Activity Checklist
Complete and check off the following Module 3 activities and assessments:
✓
Read Module 3: Overview, Activities, Learning Outcomes, Resources
Read Topic 1: Globalization and Global Social-Economic Issues
Complete Activity 3-1: Introduction to Global Business Challenges
Part A: Reading
Part B: Reflective Journal—Conflict Minerals
Read Topic 2: Business and Sustainable Development
Complete Activity 3-2: Ecology and Sustainable Development in Global
Business
Part A: Reading
Complete Activity 3-3: Striving for Sustainable Business Development
Part A: Reading and Exploration
Part B: Reflective Journal—Interface, Inc.
Read Topic 3: Business and Government Approaches to Protecting the
Environment
Complete Activity 3-4: Stakeholder Viewpoints on Carbon Taxes and Cap
and Trade
Part A: Reading
Part B: Reflective Journal—Cap and Trade and Carbon Tax
Strategies
Read Topic 4: Technological Change as a Socio-Economic Force
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Read Module 3: Overview, Activities, Learning Outcomes, Resources
Complete Activity 3-5: Technology’s Influence on Stakeholders and
Society
Part A: Reading
Part B: Reflective Journal—Influence of Technology
Complete Activity 3-6: The Ethics of E-business
Part A: Reading
Part B: Reflective Journal—Uses and Abuses
Complete Assignment 3
Submit Assignment 3 for assessment and grading
Note: Review the Final Project instructions before starting each module. Make
notes on the information you think is applicable to this assessment as you read
through the module and the textbook. With the help of your notes, you should
be able to quickly complete your Final Project at the end of the course.
Resources
Module content is drawn from the following resources, as well as from those cited in
the references listed at the end of each topic. You may be interested in reading the
following books and/or articles in part or in their entirety. You can find some of
them in TRU Library. Use Summon to search across the Library’s content. Also, see
TRU Library’s business research guide.
Clarkson, M. (Ed.). (1998). The corporation and its stakeholders: Classic and contemporary
readings. Toronto, ON: University of Toronto Press.
Donaldson, T., & Werhane, P. (Eds.). (2008). Ethical issues in business: A philosophical
approach (8th ed.). Upper Saddle River, NJ: Prentice Hall.
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Friedman, T. (2000). The Lexus and the olive tree: Understanding globalization. New
York, NY: Anchor Books.
Harvard Business Review (2000). Harvard business review on business and the
environment. Boston, MA: Harvard Business Review Paperback Series.
Hawken, P. (1993). The ecology of commerce. New York, NY: HarperBusiness.
Hawken, P., Lovins, A., & Lovins, L. H. (1999). Natural capitalism: Creating the next
industrial revolution. Boston, MA: Little, Brown and Company.
International Forum on Globalization. (2002). Alternatives to economic globalization: A
better world is possible. San Francisco, CA: Berrett-Koehler Publishers.
Korten, D. (2001). When corporations rule the world (2nd ed.). San Francisco, CA:
Berrett-Koehler Publishers.
Lawrence, A., & Weber, J. (2008). Business and society: Stakeholders, ethics, public policy
(12th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2014). Business and society: Stakeholders, ethics, public policy
(14th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2017). Business and society: Stakeholders, ethics, public policy
(15th ed.). New York, NY: McGraw-Hill Higher Education.
Logsdon, J., Wood, D., & Benson, L. (2000). Research in stakeholder theory 1997–1998:
The Sloan Foundation minigrant project. Toronto, ON: Clarkson Centre for Business
Ethics.
Morhaim, S. (Producer), Bedord, C., & Morhaim, S. (Directors). (2001). The next
industrial revolution: William McDonough, Michael Braungart and the birth of
the sustainable economy. Earthome Productions [Motion picture]. Information
and trailer retrieved from http://www.bullfrogfilms.com/catalog/next.html.
Post, J., Lawrence, A., & Weber, J. (2003). Business and society: Corporate strategy,
public policy, ethics (10th ed.). New York, NY: McGraw-Hill Higher Education.
Schumacher, E. (1999). Small is beautiful: Economics as if people mattered (25th
anniversary ed. with commentaries). London, UK: Hartley & Marks.
Tapscott, D. (1997). The digital economy: Promise and peril in the age of networked
intelligence. New York, NY: McGraw-Hill.
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Topic 1: Globalization and Global Social-Economic Issues
Introduction
The term [globalization] has come into common usage since the
1980s, reflecting technological advances that have made it easier
and quicker to complete international transactions—both trade
and financial flows. It refers to an extension beyond national
borders of the same market forces that have operated for
centuries at all levels of human economic activity—village
markets, urban industries, or financial centers. (International
Monetary Fund, 2002)
The definition above refers to increasing trade and capital flows that integrate local,
national, and regional economies around the world and to the movement of people
(labour) and knowledge (technology) across international borders. A powerful and
broad force in business and society, globalization is fueled by expansion of
international trade and supported by improvements in transportation systems along
with innovations in information and communications technologies (ICT).
While much of the focus of globalization is on local and national economic impacts,
globalization also generates widespread social impacts and political and
environmental issues. It affects culture, communities, and the way of life of workers,
consumers, and communities throughout the world.
Has globalization influenced your life in some way? Check the label on the shirt you
are wearing, or look to see where the produce you buy is grown. Review the names
of the companies in the mutual funds you purchase, or see where your electronics
goods are made. Are these Canadian companies? Even if the answer is yes, do these
companies conduct all their business activities within Canada? How might this
global business environment influence your employment prospects, the costs of
goods that you purchase, or some of the decisions you make in everyday life?
In business and society today, businesses and even universities are shifting to global
operations. We are all influenced by globalization one way or another. What control
do we have over globalization and our role in it?
Stakeholders with particular influence on globalization include governments and
international institutions, such as the Word Bank and the World Trade Association.
Transnational corporations are conducting an unprecedented scope and scale of
business and economic activity around the world, and advances in information and
communications technologies are enabling even the smallest businesses or
organizations to participate in global commerce and other international activities.
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Author and New York Times columnist Thomas Friedman identifies three
fundamental changes that enable globalization: changes in how people
communicate; changes in how individuals, organizations, and governments invest;
and changes in how people learn about the world (Friedman, 2000).
Proponents of globalization believe its advancement is both inevitable and
beneficial; however, its focus on economic development provokes a wide range of
stakeholder views on the costs and benefits of this new world order. Stakeholders’
perspectives on the costs and benefits of globalization run the gamut. Advocates of
globalization believe in the social and economic benefits of expanding capitalism
and increasing efficiency in a global business climate. The International Monetary
Fund (IMF) cites advancements in living conditions around the world, while
acknowledging, “the strongest gains have been made by the advanced countries and
only some of the developing countries” (IMF, 2002).
Stakeholders that hold anti-globalization perspectives are concerned about growing
economic disparity, indicating that while economic conditions in lesser developed
countries may be improving, it is through exploitation of the poor, the natural
resource base, and the environment. While many stakeholders enjoy greater access
to lower cost and greater variety of goods and services, others have antipathy for
increasing consumerism and/or concern over the ecological impacts of global
economic growth.
The Costs and Benefits of Globalization
Advocates of expanding global business through free trade and globalization align,
typically, with Adam Smith’s classic economic theory: “if government abstained
from interfering with free competition, industrial problems would work themselves
out and the practical maximum efficiency would be reached” (Bullock, 2001,
paraphrasing Smith, 1776).
Critics of globalization argue that the quest for efficiency may produce benefits in
absolute terms, but these benefits are being unequally and inefficiently distributed
amongst the global community. They also challenge the information presented
about the true costs and impacts of these so-called efficiencies.
For years, Robert F. Kennedy Jr., senior attorney for the Natural Resources Defense
Council, has campaigned against the negative aspects of globalization. In an
interview with MacLean’s magazine, Kennedy made the following comments:
I believe in free-market capitalism. But in a true free-market
economy you can't make yourself rich without making your
neighbour rich. You show me a polluter and I'll show you
someone who's imposing his costs of production on the public.
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Eastern Canadian lakes are contaminated with mercury and your
forests are acidified. That's the result of coal-burning power
plants in the Ohio Valley. Those impacts pose costs on the people
of Canada and should, in a true free-market economy, be
reflected in the price of electricity generated by those plants. If
those plants had to pay the true cost of bringing their product to
market they would shift to natural gas or other less-polluting
counterparts. We ought to force polluters to absorb the true costs
of doing business. Not doing so distorts all of free enterprise.
(Leahy, S. (2003). An Imbalance of Power. Maclean’s Magazine,
(p. 40)
Kennedy and other critics of the free-market system from which globalization was
born cite the problems of an economic system that fails to assign costs to anything
that does not directly produce economic returns. Globalization may have negative
environmental and social costs that are not measured, and, therefore, we are not
truly evaluating the costs and benefits of expanding global economics.
Globalization is driven by governments seeking economic growth for their citizenry,
as well as by corporations competing to capture opportunities to expand markets
and revenues while increasing their economic efficiency. Globalization has brought
many benefits in terms of technological advances and increasing economic
efficiencies. The primary measure of its success is economic growth. With increasing
economic growth comes prosperity and enhanced quality of life, or does it?
With expanding global trade, we hear of governments that are complicit in human
rights violations associated with business and nations unwilling to enforce
regulations to protect their natural resource base. For the leaders of such countries,
globalization results in economic gains offset by social and environmental losses.
We observe companies that neglect their responsibilities to the communities or
countries in which they operate. They increase their profits by relocating their
operations to countries where they can pay very low wages or avoid corporate taxes.
Other corporations enhance their profit margins by circumventing regulations or
working in countries with less restrictive regulations, thereby reducing financial
costs associated with environmentally responsible management.
David Korten, author of When Corporations Rule the World, has long criticized
globalization of the world’s economy, claiming that it benefits transnational
corporations (TNCs) at the expense of developing countries and other communitybased economies (Korten, as cited in Copeland, 1999, p. 6).
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Korten also warns of the world’s economy being controlled by a very few large
corporations and the economic disparities associated with this shift in power. Five firms
“control more than 50 percent of the global markets for consumer durables, automotive
products, airlines, aerospace, electronic components, electricity and electronics and
steel,” and five corporations “control over 40 percent of the global markets for oil,
personal computers, and media” (Korten, as cited in Copeland, 1999, p. 6).
Among the world’s Fortune 500 firms, sales increased 1.4 times and assets increased
2.3 times in the period between 1980 and 1993. During the same period, these top
500 companies in the world reduced employment by 4.4 million people while
increasing salary and benefits to chief executive officers (CEOs) by 6.1 times their
compensation of the previous decade (Korten, as cited in Copeland, 1999, p. 6). By
the end of the 1980s, the average compensation for CEOs in the United States was
about 70 times the wage of a factory worker (Reich, as cited in Copeland, 1999, p. 6).
Optional Resources:
David Korten’s website
The International Forum on Globalization (IFG) is this the price of “integrating
economies around the world” (IMF, 2002)? Does the economic efficiency espoused by
Adam Smith translate into profits for some countries and corporations and losses to
quality of life and environment in other countries? Does large-scale business result in a
very slow trickle of economic benefits from tremendous wealth at the top, to marginal
wages for those at the bottom? Is this good business? Is this ethical business?
Whatever your perspective on these questions, it seems apparent that globalization
is a powerful force that will continue to provoke debate over the responsibilities of
affluent countries to their poorer counterparts and the importance of universal
standards of environmental management, business ethics, and human rights.
Implementation of a standard of universal human rights, as well as worldwide
agreement on environmental standards and goals, requires international
agreements. In case of transgressions of agreements, standards or commitments,
policing by international authorities is required. Perhaps, with such controls in
place, globalization can truly do more good than harm.
However, finding common ground on issues relating to the social and
environmental responsibilities of global business operations is a challenge, especially
given the diversity of cultures, societies, and economies around the world. These
influence the values and priorities of leaders and decision makers in both the
government and the corporate sector. In addition, the values and concerns of other
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stakeholders may also conflict with the economic priorities of globalization. Such
stakeholder controversy is evident in the public protests and contentious
atmosphere pervading the larger meetings of the World Trade Organization (WTO)
in recent years.
In a speech appealing to the global business community to support the UN Global
Compact (which stresses the importance of sustainable economic, environmental, and
social strategies), Kofi Annan, then Secretary-General of the United Nations, stated:
If we cannot make globalization work for all, in the end it will
work for none. The unequal distribution of benefits and the
imbalances of rule making, which characterize globalization
today, inevitably will produce backlash and protectionism. And
that, in turn, threatens to undermine and ultimately unravel the
open world economy that has been so painstakingly constructed
over the course of the past half-century. (Annan, as quoted by
Post, Lawrence, & Weber, 2003, p. 500)
According to statistical evidence, globalization contributed to an unprecedented rise in
economic growth in the last few decades, with global per capita GDP (gross domestic
product) increasing almost five fold. In parts of Asia, average per capita incomes are
rapidly approaching the levels found in industrial countries. However, “a larger
number of developing countries have made only slow progress or have lost ground. In
particular, per capita incomes in Africa have declined relative to the industrial countries
and in some countries have declined in absolute terms” (IMF, 2002).
Community Economic Development
Globalization is a force in society, the success of which we measure in terms of
economic growth. What is society’s ultimate goal? Increasing financial wealth? Is
economic growth alone the metric for quality of life? Is large-scale global economic
development the only way to bring prosperity and well-being to society?
One approach that seeks a closer interconnection between economics and the
well-being of society is “community economic development” (CED). “CED is the
process by which local people build organizations and partnerships that
interconnect profitable business with other interests and values” (Centre for
Community Enterprise, 2003). CED brings economics to the local level where
quality of life is not measured by gross domestic product or balance of trade, but
by healthy and vital communities where healthy social interaction, housing,
education, physical and environmental health and well-being, culture, and the
arts all play an equal role to employment and economic activity. As stated on the
Curve Lake First Nation (2012) website:
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CED is a participatory process by which communities initiate and generate their
own solutions to economic problems leading to positive concrete changes in
communities by:
•
creating employment
•
stabilizing local economies
•
reducing poverty
•
contributing to the health of the natural environment
•
building on local resources and capacities
•
increasing community control (Curve Lake, 2012)
CED strategies have multiple bottom lines, “based on a consideration of the
relationship between economic factors and other elements” such as education and
training, the natural environment, health, housing, and the arts (SFU, n.d.).
CED draws from the ideas of the British economist E. F. Schumacher, who was a
protégé of J. M. Keynes, another renowned British economist, and who worked
closely with J. K. Galbraith, the Canadian and American economist. In 1973,
Schumacher published the classic book Small is Beautiful, a critique of the problems
of large-scale economics of western society and a guide to human-scale economics.
This book was updated and republished in 1989 and 1999.
Contrary to the advocacy for globalization and trans-national organizations which
dominate economic forces in western world society, Schumacher argued that largescale economics are economically inefficient, environmentally irresponsible, and
inhumane to workers (Schumacher, 1999). The expression “small is beautiful” refers
to smaller-scale business, cooperative ownership, and regional workplaces that use
local labour and resources. Schumacher’s concern was for the well-being of people
and not maximization of production and corporate projects. Small is Beautiful
provides guidelines for development where financial capital serves people rather
than where people serve capital.
Schumacher’s philosophy “faults conventional economic thinking for failing to
consider the most appropriate scale for an activity, blasts notions that ‘growth is
good’ and that ‘bigger is better,’ and questions the appropriateness of using mass
production in developing countries, promoting instead ‘production by the masses’”
(Wikipedia, 2013), that people can benefit from employment, rather than their
governments benefiting from natural resource exploitation.
“Schumacher was among the first economists to question the appropriateness of
using gross national product (GNP) to measure wellbeing, emphasizing that ‘the aim
ought to be to obtain the maximum amount of well being with the minimum
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amount of consumption’” (Wikipedia, 2008, n.p.). This philosophy was sometimes
referred to as “economics from the heart rather than from the bottom line”
(Sustainable Economics, n.d.)
The most recent edition includes contributions from thirty-three contemporary
leaders and thinkers, who discuss the impact of Schumacher’s philosophy on current
political and economic thought.
Optional Resource:
The Schumacher Society (UK)
Global Corporate Citizenship
Is it possible for large-scale global economics to serve people? Critics of
globalization claim it “threatens employment and living standards and thwarts
social progress” (IMF, 2002). “The powers behind this system are those of the
global banks and financial institutions, the military-industrial complex, the oil
and energy giants, the biotech conglomerates and the powerful media and
communications giants, which fabricate the news and overtly distort the course
of world events” (Chossudovsky, 2001).
Fabrication and distortions aside, how does a transnational company relate to the
society in which it exists? Does it have the same level of commitment to all the
communities in which it operates? How do the stakeholder relationships of
multinational corporations differ from those of a small independent operator who
lives and works in the same community as his or her customers?
There is considerable debate, given large multifunctional corporations are now the
dominant form of economic organization worldwide, about how responsive and
accountable companies should be to their stakeholders. This debate includes
fundamental questions asked by Clarkson, such as: Who should be considered
stakeholders? Which stakeholder interests should a corporation take into account?
How should stakeholder interests be balanced against stakeholder objectives (such
as profits)? What changes should be made to corporate governance to reflect these
new interests? (Clarkson, 1998)
Global corporate citizenship refers to both acts and processes that identify, analyze,
and respond to a “company’s social, political and economic responsibilities as
defined through law and public policy, stakeholder expectations, and voluntary acts
flowing from corporate values and business strategies” (Post, cited in Lawrence &
Weber, 2014, p. 139). While globalization can enable organizations to find ways to
avoid social and environmental responsibilities, companies that aspire to good
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global corporate citizenship apply a high standard of business ethics regardless of
the country or community in which they operate. “No society holds the view that
human beings are accountable only for themselves.…When a corporation or a
business enterprise is part of a community, the leaders of that business are expected
to assume responsibility for the community’s welfare” (Post, Lawrence, & Weber,
2003, p. 488).
What, specifically, constitutes good global corporate citizenship is subject to
interpretation and may vary according to the laws, public policies, stakeholder
values, and expectations of one organization or political region to the next. It is a
“rapidly evolving area of managerial practice” (Lawrence & Weber, 2014, p. 142),
and, in larger organizations this may be managed through corporate
communications or public affairs departments, or through a department dedicated
to corporate citizenship or corporate social responsibility (CSR).
As with CSR (discussed in Module 2), we may view corporate citizenship on a
continuum. Indeed, many of the characteristics of organizations engaging in
corporate social responsibility are similar to those of organizations pursuing good
global citizenship strategies. Companies’ placement on the continuum may shift as
they address social, environmental, and economic issues associated with their
international operations.
Organizations can merge global corporate citizenship strategies with their global
business strategies, reconciling and integrating “their private, profit-seeking
activities with their public responsibilities” (Post, Lawrence, & Weber, 2003, p. 489).
Good global corporate citizens may support issues in their community relating to
poverty, housing, education, the natural environment, health, and the arts, the same
concerns raised by community economic development.
Perhaps, then, it is possible for global organizations to share the same level of
responsibility and concern for communities and their stakeholders. The challenge is
to attract the same level of commitment to global corporate citizenship as to global
economic development. Critics of corporate citizenship programs suggest the efforts
are either “superficial attempts to enhance reputation, without real substance, or that
[the initiatives] are inherently limited by the corporation’s profit-maximizing
imperative, or both” (Lawrence & Weber, 2014, p. 146).
Activity 3-1: Introduction to Global Business Challenges
Introduction
The purpose of this activity is to provide you with exposure to ethical and economic
challenges that may be faced by companies doing business in a global society.
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Instructions
Part A: Reading and Research
•
Read Chapter 4: Business in a Globalized World, to reinforce your
understanding of globalization.
•
Read the Discussion Case: Intel and Conflict Minerals at the end of Chapter 4.
Part B: Reflective Journal—Conflict Minerals
•
How do conflict minerals, and in particular, conflict coltan get their name?
What groups benefited from the trade in conflict minerals and what groups
were hurt by it?
References
Bullock, C. J. (Ed.) (2001). Introductory note Vol X. In A. Smith Wealth of nations
(1776). [Electronic version]. The Harvard Classics: New York, NY: P.F. Collier &
Son. Retrieved from Bartleby.com www.bartleby.com/10/
Centre for Community Enterprise (2003). Community Economic Development.
Retrieved from http://www.cedworks.com/CEDdefinition.html
Chossudovsky, M. (Ed.). (2001, August 29). CRG statement. Centre for Research on
Globalization. Shanty Bay, ON. Retrieved from
http://www.globalresearch.ca/about/
Clarkson, M. (Ed.). (1998). The corporation and its stakeholders: Classic and contemporary
readings. Toronto, ON: University of Toronto Press.
Copeland, G. (1999). Acts of balance: profits, people and place. Gabriola Island, BC: New
Society Publishers.
Covey, S. R. (1989). The seven habits of highly effective people. New York, NY: Simon &
Schuster.
Curve Lake First Nation. (2012). Economic development & employment [Webpage].
Retrieved from http://curvelakefirstnation.ca/services-anddepartments/economic-dev-and-employment.php
Friedman, T. (2000). The Lexus and the olive tree: Understanding globalization. New
York, NY: Anchor Books.
International Monetary Fund [IMF] staff. (April 12, 2000; Corrected January 2002).
Globalization: Threat or opportunity? International Monetary Fund [IMF] Issues
Brief. Washington, DC. Retrieved from
http://www.imf.org/external/np/exr/ib/2000/041200to.htm#I
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Lawrence, A., & Weber, J. (2008). Business and society: Stakeholders, ethics, public policy
(12th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A. & Weber, J. (2014). Business and society: Stakeholders, ethics, public policy
(14th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2017). Business and society: Stakeholders, ethics, public policy
(15th ed.). New York, NY: McGraw-Hill Higher Education.
Leahy, S. (2003, March 31). An imbalance of power [Electronic version]. Maclean’s.
Retrieved from the Business Source Complete database.
Post, J., Lawrence, A., & Weber, J. (2003). Business and society: Corporate strategy,
public policy, ethics (10th ed.). New York, NY: McGraw-Hill Higher Education.
Schumacher, E. (1999). Small is beautiful: Economics as if people mattered (25th
Anniversary Edition with Commentaries). London UK: Hartley & Marks.
Simon Fraser University (n.d.). Centre for Sustainable Community Development. [Web
page.] Retrieved from http://www.sfu.ca/cscd.html
Sustainable Economics. (n.d.) Cultural creative. [Web page.] Retrieved from
http://www.culturalcreatives.org/economics.html
The Centre for Sustainable Community Development at Simon Fraser University.
Courses and certificate program for community economic development
professionals: Our definition of CED. Retrieved from
http://www.sfu.ca/cscd/ced/home.htm
Wikipedia. (2013). Small is beautiful. [Web page.] Retrieved from
http://en.wikipedia.org/wiki/Small_is_Beautiful
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Topic 2: Business and Sustainable Development
Introduction
Globalization is a social, political, and economic force created and influenced by
humankind’s activities. The environment is another broad force with the potential
for significant social and economic impact on individuals, communities, and entire
nations. Consider the floods, droughts, forest fires, ice storms, blizzards, hurricanes,
and heat waves that have taken their toll on Canadian communities. Millions have
died as a result of the 2008 typhoon in Burma (Myanmar) and the earthquake in
China that same year. Thailand, Sri Lanka, other countries on the coast of the Indian
Ocean have taken years to recover from the tsunami that struck their coastlines in
December 2004.
There is no disputing the impact. The question is whether activities such as
industrialization and urbanization contribute to these sometimes catastrophic
events. What is the role of businesses, governments, and other organizations in
influencing environmental force, and how does this force influence us?
Climate change is an environmental force resulting in rising average global
temperatures that are melting polar ice caps and causing sea levels to rise, as well as
generating frequent and severe hurricanes and tropical storms in coastal areas.
In 2007, the Intergovernmental Panel on Climate Change (IPCC) published a seminal
report on climate change which was endorsed by hundreds of scientists around the
world. This report explained how human activity is causing climate change. As a
result, most public discourse shifted from debate as to whether human activity is
causing climate change to discussions regarding responsibility for action and what
steps to take to control or mitigate the impacts of global warming.
What is the IPPC?
IPPC is an intergovernmental organization set up by the World
Meteorological Organization (WMO) and the United Nations Environment
Programme (UNEP). Its members include hundreds of scientists from all over
the world, as well as government representatives and the United Nations
representatives.
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The main activity of the IPCC is to publish regular assessment reports on the
state of knowledge of climate change. For example, Climate Change 2007:
Synthesis Report: An Assessment of the Intergovernmental Panel on Climate
Change was the pivotal report identifying human activity as a cause of
climate change and forecasting significant negative outcomes if the status quo
of business and development were to continue.
In December 2007, the IPCC and Al Gore were awarded the Nobel Peace
Prize for “their efforts to build up and disseminate greater knowledge about
man-made climate change, and to lay the foundations for the measures that
are needed to counteract such change” (Intergovernmental Panel on Climate
Change, 2008, n.p.).
IPCC Climate Change Assessment reports are at http://www.ipcc.ch/. Beyond
catastrophic events and growing concerns over the impacts of climate change,
references to the environment (or ecosystem) may be referring to our air, water,
land, and all the natural resources we depend on for building our homes, highways,
and headquarters. Every product we grow, manufacture, process, and consume
comes from the environment. From corn, cars, and cameras to candy, we rely on
natural resources, and we rely on more natural resources to ship them to their points
of sale. Most likely, more natural resources are consumed in picking up or
processing the waste associated with use of these and all other products. Every
social and business activity in which we engage takes place in the environment, and
everything we own or operate comes from the earth.
Yet, the environment is a force that many of us take for granted and recognize only
as an externality to business and society. As the textbook authors say:
The need for balance between economic progress and
environmental protection is captured in the concept of
sustainable development….Meeting the goal of sustainability is
like trying to solve an extraordinarily complex puzzle, in which
businesses, governments, civil society, and individuals must
work together to achieve common goals. (Lawrence & Weber,
2017, p. 185)
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Activity 3-2: Ecology and Sustainable Development in Global
Business
Introduction
Chapter 9 introduces, defines, and backgrounds ecology and sustainable
development as they pertain to business. This chapter also defines other key terms,
such as carrying capacity, and provides a good foundation on global environmental
issues, threats to the earth’s ecosystem, environmental ethics, and voluntary
business initiatives.
Instructions
Part A: Reading
•
Preview Chapter 9: Sustainable Development and Global Business before
proceeding with the following discussion on business and sustainable
development.
Sustainable development, corporate social responsibility (CSR), ecologically
responsible development, eco-efficiency, triple bottom-line management—these are
some of the terms that, for business, mean “sustaining nature’s resources as well as
sustaining the company” (Willard, 2002, p. 5). Some of the terms, such as CSR,
address social responsibilities to stakeholders within the organization as well as
stakeholders in the communities in which they operate. Other terms, such as ecoefficiency, focus only on economic and environmental responsibilities of
organizations.
Sustainable development is more inclusive. Sustainable
development is like a three-legged stool. Its legs are economic
prosperity, environmental stewardship, and social responsibility.
If one of the legs is missing, the stool is not going to work…
(Willard, 2002, p. 5)
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Willard, B. (2002). The sustainability advantage: Seven business case benefits of a triple bottom line.
Gabriola Island, BC: New Society Publishers.
Integration versus Balance
Sustainable development is an approach to development in which stakeholders seek
to balance social, economic, and environmental considerations when making
decisions. These decisions can relate to businesses or organizations as well as to the
communities in which they operate. This is contrary to a “prevailing view” in which
businesses, in particular, believe “there is an inherent and fixed trade-off: ecology
versus the economy” (Porter & van der Linde, 2000, p. 131).
While perceptions of the trade-offs between economic development and
environmental protection persist, there are numerous societal benefits associated
with environmental protection and restoration. Thus, these two legs of the stool can be
complementary. For example, by avoiding contamination of lakes and waterways,
drinking water can be protected, and, in turn, people’s health and safety. Air
pollution and smog in Beijing, Mexico City, Bangkok, and even Toronto, contribute
to incidences of asthma and deaths in these cities. The social or societal benefits of
minimizing or mitigating water and air pollution can be significant, but seldom are
they quantified. In the absence of adequate governmental regulations, businesses
may choose to degrade the environment for the sake of quantifiable financial gain.
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Governments around the world struggle to balance support for business and
economic development against protection of the health and well-being of their
citizenry. “When people talk about ‘trading off’ or ‘balancing’ economic progress
against environmental and social impacts, rather than ‘integrating’ these three
dimensions, it indicates a lack of understanding of sustainable development”
(Willard, 2002, p. 8).
Rowledge et al. argue:
There is mounting evidence that our old-world, trade-off
paradigm, pitting economic success against environmental and
social goals, is seriously flawed. Both research studies and
practical experience have demonstrated that improved
environmental and social responsibility increase value to
shareholders, customers, employees, and society (rather than
adding costs). Improving environmental and social performance,
in fact, leads to enhanced profitability and value: cost
reductions…waste reductions and process improvements, price
premiums…customer loyalty, lowered cost of capital due to
reduced liability and risk, increased revenue from new products,
markets, and even new businesses; and enhanced asset
management…(Rowledge et al., cited in Willard, 2002, p. 8)
Some companies report other, less tangible benefits of sustainable development,
such as “higher employee job satisfaction and commitment, increased innovation
and creativity, and motivation from a higher sense of purpose” (Rowledge et al.,
cited in Willard, 2002, p. 8).
Note: Willard also published a second book, The Next
Sustainability Wave (2005), which builds on the discussion of
sustainability covered in his first book, The Sustainability
Advantage (2002). The Next Sustainability Wave focuses much of
the discussion on the “perfect storm” of market forces driving
increasing interest in business and corporate social responsibility
(Willard, 2005, p. 89).
Integrating social and environmental issues with economic interests in decision
making requires a shift in mindset in business and society. The shift is away from
the business as usual attitude that considers environmental or social trade-offs or
add-on costs, to thinking that is more strategic or innovative. Instead of pursuing
profit while addressing environmental or social problems as an afterthought,
sustainable thinking integrates social and environmental goals into planning and
decision making.
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With this approach, organizations can develop strategies that avoid degradation of
the environment and negative impacts on society in the first place. As a result they
can avoid the time and costs associated with paying for waste disposal, cleaning up
contaminated sites, or paying to correct other social or environmental problems after
projects are executed. “Life-cycle analysis” and “industrial ecology” are two
examples of innovated thinking that integrate economic, social, and environmental
goals (Lawrence & Weber, 2017, pp. 198).
Industrial ecology, according to the International Society for Industrial Ecology (ISIE):
…encompasses a variety of related areas of research,
manufacturing, and business management practices, including:
•
Material and energy flow studies ("industrial metabolism") of products, and
manufacturing and production processes
•
Dematerialization and decarbonization
•
Technological change and the environment
•
Product life-cycle planning, design, and assessment
•
Product design for the environment ("eco-design")
•
Extended producer responsibility ("product stewardship")
•
Eco-industrial parks ("industrial symbiosis")
•
Product-oriented environmental policy
•
Eco-efficiency
(ISIE, 2008)
Can you think of any organizations that apply industrial ecology or strategically
integrating social and environmental concerns with their goals for sales or other
revenue increases?
Companies like BMW, Hewlett-Packard, and Interface, Inc. are embracing
environmental aspects of sustainability, designing their products (including
computers and printers, and carpet tiles) with consideration for disassembly and
product take-back for reuse of parts and materials at the end of the product lifecycle.
They are among the companies in the world using industrial ecology methodologies,
taking responsibility for the stewardship of their products. By integrating
environmental considerations at the design phase and building them into product
lifecycle management, they can achieve more cost effective and environmentally
beneficial results. When solutions come at the back end of production, the pollution
and waste already exist; environmental solutions are more limited and sometimes
more costly.
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Optional Resources:
Cradle-to-cradle design:
For discussion on the wisdom and advantages of cradle-to-cradle product
design, search the Internet for video clips of William McDonough and/or
Michael Braungart of MDM design, and make use of the following resources:
•
Their award winning video, The Next Industrial Revolution, features the
results of their consulting work with several large companies including Nike,
Ford, and Herman Miller. This documentary has been aired on television
numerous times and is available in some university libraries.
•
Video clips of some of McDonough’s entertaining public presentations are
available by searching online. See his presentation, The Wisdom of Designing
Cradle-to-Cradle.
•
McDonough, W., & Braungart, M. (2002). Cradle-to-cradle: Remaking the way we
make things. New York, NY: North Point Press.
Industrial ecology:
For more on industrial ecology, search online for:
-
The Industrial Ecology Compendium, which defines industrial ecology,
presents its history and goals, describes some of the methodologies and
strategies for industrial ecology, and presents examples of projects around
the world.
-
The website of the International Society for Industrial Ecology (ISIE).
-
The Journal of Industrial Ecology.
According to John Elkington, an international expert on sustainable development in
business, and van Heel, “a commitment to sustainability will only reap maximum
benefits when it is fully incorporated in a company’s core business models,
strategies and processes” (cited in Willard, 2002, p. xviii). Despite corporate success
stories, and the growing body of research that supports a case for sustainable
development, few companies have truly made this transition. Change is often
difficult, especially if it requires a paradigm shift in the way we manage
organizations and in how businesses evaluate success.
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Interface, Inc.:
In the third activity of Topic 2 of this module, you will look at Interface, Inc.,
a company that has incorporated sustainable development into its core
business model. Interface, Inc. is a large company employing cradle-to-cradle
product design and product management, industrial ecology, as well as other
environmentally responsible principles and practices in the manufacture and
sales of its billion-dollar carpet-tile business.
Roadblocks to Sustainable Development
Is resistance to change the only roadblock to sustainable development? If sustainable
development makes sense, why are so many businesses, organizations, and
communities slow to adopt its principles?
Just as businesses, governments, and other organizations face dilemmas in
determining priorities with regard to corporate social responsibility and ethical
issues, establishing priorities for sustainable development strategies and initiatives is
also challenging. The potential tension between social, environmental, and economic
goals is part of this challenge. Even if organizations integrate goals for each of these
elements of sustainable development, there is still a question of balance or degree. If
certain socially or environmentally responsible actions affect short-term economic
gain, is that acceptable to all the stakeholders in a business?
What if long-term advantages, such as positive community relations, are not easily
quantified? What if the benefits are not directly attributable to the financial bottom
line? For example, if a company’s effluent pollutes the local river, but fines or
permits for discharging effluent cost less than implementing new processes to
minimize pollution, and the company is not directly impacted by downstream
degradation of the river, what is a good management decision with regard to
discharge of effluent? This is a typical dilemma that an industrial manager may face.
Similarly, if a real estate developer builds an office complex or apartment building
and plans to sell all the offices and suites, what might motivate that developer to
design an energy-efficient building? The developer may not be paying the utility
bills for heating and cooling after owners occupy the building. Will the developer
realize a significant financial return after investing in energy-efficient lighting,
heating, and ventilation systems that increase the capital cost of the building? If the
market recognizes the value that the developer brings to the project, and is willing to
appraise the building at a higher value, then there is a direct financial benefit to the
developer. Consider another perspective: what are the implications on our natural
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resources of buildings that waste energy? What is the impact on society? Who really
pays for this waste and the excessive consumption of oil and other natural
resources?
Consumption and Economic Growth
What if a company reduces the amount of pollution at its plant in Ontario but builds
additional facilities elsewhere, whether it be in British Columbia, Quebec, or
Malaysia, and generates pollution at these plants? The company improves its
environmental performance in relative terms, but the company’s growth results in a
net increase in overall output of pollution. Is this sustainable development? Can
economic growth be compatible with environmental protection? How do we
measure sustainable development?
Our economy is based on growth and consumption. There are those who advocate
reassessing our values and creating massive shifts away from our consumer society
to a life of “volunteer simplicity” (Elgin, 1993). In his book The Ecology of Commerce,
Hawken states:
…the ultimate purpose of business is not, or should not be,
simply to make money. Nor is it merely a system of making and
selling things…The promise of business is to increase the general
well-being of humankind through service, a creative invention
and ethical philosophy. (1993, p. 1)
If we agree that the purpose of business is to increase our well-being, can we also
agree on a definition of well-being? This, too, is subject to debate. And determining
whose well-being is yet another potentially contentious issue. Should business serve
only the well-being of individual stakeholders directly involved in its activities, or is
the welfare of stakeholders in the community also a concern? Does this concern
extend only to stakeholders in the local community or to the global community as
well? Is business responsible for only those stakeholders directly related to its
activities, or is it accountable for indirect impacts on the well-being of people, plants,
animals, and the planet earth?
Growth versus Development
Another great economist, Herman Daly, “called sustainability in a growthdependent globalized economy an ‘impossibility theorem’” (Daly, as cited in
Copeland, 1999, p. 7). Sustainability does not exclude economics, but it advocates
economic development, not economic growth. This distinction is an important one.
“Politically it is very difficult to admit that growth, with its almost religious
connotations of ultimate goodness, must be limited. But it is precisely the nonsustainability of growth that gives urgency to the concept of sustainable
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development” (Daly & Townsend, 1993, p. 267). Daly, who was once a senior
economist with the World Bank, wrote the following comments on the conflicts
between economic growth and sustainability:
In the minds of many people, growth has become synonymous
with increase in wealth. They say that we must have growth to
be rich enough to afford the cost of cleaning up and curing
poverty . . . . What is at issue is whether growth at the present
margin really makes us richer. There is evidence that . . .
[growth] . . . now makes us poorer by increasing costs faster than
it increases benefits . . . . In other words we appear to have
grown beyond the optimal scale.
The concept of an optimal scale of the aggregate economy
relative to the ecosystem is totally absent from current
macroeconomic theory. The aggregate economy is assumed to
grow forever . . . . A given scale (the product of population times
per capita resource use) constitutes a given throughput of
resources and thus a given load on the environment, and can
consist of many people each consuming little, or fewer people
each consuming correspondingly more.
An economy in sustainable development adapts and improves in
knowledge, organization, technical efficiency, and wisdom; and
it . . . stops at a scale at which the remaining ecosystem (the
environment) can continue to function and renew itself year after
year. The non-growing economy is not static—it is being
continually maintained and renewed . . . . (Daly, 1990)
Daly, H. E., & Townsend, K. N. (1990). Valuing the Earth: Economic, Ecology, Ethics. Development Journal,
267.
In contrast to Daly, Hawken says, “free-market purists believe that their system
works so perfectly that…the marketplace will attain the best social and
environmental outcome” (1993, p. 11). Free-market economists believe that as
resources become scarce, prices will rise, therefore enhancing their value in the
marketplace and encouraging conservation and efficiency. Perhaps this is true, but
at what point do we agree on scarcity, and when does it create widespread response
in the marketplace? Oil is a finite resource that is subject to a number of forces that
affect its price and availability.
Many consumers are unsure or aware of whether or not this resource is scarce and
how this will affect future prices and availability of supply. Every time prices rise
(which may or may not be caused by scarcity), consumers react vehemently. Yet, in
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recent decades, North Americans have demonstrated only nominal consumer shift
toward the purchase of more fuel-efficient or alternative fuel vehicles. Do rising
gasoline prices affect your consumer habits with regard to the type of vehicle you
purchase or the number of kilometres you drive?
Californians reacted to the energy blackouts in 2002; people consciously conserved
and saved electricity. Similarly, a power outage in August 2002 resulted in a
blackout throughout much of Canada and the United States, stakeholders in parts of
Ontario were asked to conserve electricity. With an unstable power supply and the
threat of more blackouts, people in these regions reduced their consumption,
temporarily.
How many power blackouts will it take before businesses, government, and society
recognize the advantages of efficient use of electricity? What price must consumers
pay for gasoline before there is a widespread shift in the marketplace towards
conservation and efficiency? How many forests will be cut down before trees are
perceived as scarce resources? How much contamination and deterioration in the
quality or our air and water must there be before we impose a higher cost on
polluters?
Limits to Growth
In addition to contrasting beliefs in business, government, and society over the
appropriate economic approach to sustainable development, there are conflicting
ideas about the impacts of climate change and the earth’s carrying capacity. Decades
have gone by since Dana Meadows, Dennis Meadows, and Jorgen Randers first
generated computer models calculating the impacts of increasing industrialization,
pollution, resource depletion, growth in world population, and food production.
They published their results in a bestselling book called The Limits to Growth (1972)
and then updated their observations twenty years later in Beyond the Limits (1992).
Their books describe the limits to growth and the potential “uncontrollable decline
in both populations and industrial capacity” unless growth trends are altered to a
“condition of ecological and economic stability” (1992, p. 1). Yet, industrial
development, economic growth, and population growth still continue at an
astounding pace.
Technological Solutions?
Despite the work of scientists, economists, researchers, and leaders with similar
notions, debate continues over the earth’s carrying capacity and the role of
economics in sustainable development. Some acknowledge that resources are finite,
and the present level of industrial activity is damaging the earth and its inhabitants.
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Others cite science and technological innovation as the solution that will enable
continued economic growth without environmental devastation.
Indeed, innovations in science and technology already provide options for reducing
or eliminating dependency on fossil fuels, maximizing efficient use of renewable
resources, substituting clean technologies for polluting ones, and restoring degraded
ecosystems. Hydrogen fuel cells can substitute for fossil fuels in cars, buses and
trucks; hydroxyl waste water treatment systems can clean water contaminated by
sewage and industrial pollution; solar and wind power can generate clean energy—
these are a few of the technological innovations purported to offer sustainable
alternatives to business as usual. Innovations in science and technology are also
enabling some people to live longer.
If these technological solutions exist, why are they not widely implemented? We will
examine some of the barriers, incentives and disincentives for sustainable
development in the next topic section, and explore technology in Topic 4 of this
module.
On the other hand, can science alone provide a panacea for all that ails us
environmentally and socially? Can technological solutions enable us to grow
indefinitely? Perhaps, like many of the earth’s resources, science and technology
may also have their limits.
Social Responsibility—The Third Leg of the Stool
If we can agree that there are limits to growth, or at least acknowledge our reliance
on a finite natural resource base, then there can be some consensus on the
importance of protecting our ecosystem in order to sustain economic development.
Yet, sustainable development is the integration of economics with environmental and
social concerns.
CSR as an Approach to Sustainable Development
We explored social responsibility in Module 2 and observed that there is some
debate as to whether it is a legitimate responsibility of business.
If presenting a business case for integrating social responsibility into business
management requires demonstrating the economic benefits of socially responsible
business, we can argue that many benefits of corporate social responsibility offset
costs. For example, providing good working conditions for staff and management
can translate into increased productivity and higher employee retention rates.
Contributing to charities can garner goodwill as well as tax breaks; sponsoring
education can lead to skilled employees for future hire.
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As Walmart recognizes, supporting local community can generate goodwill amongst
local government and other stakeholders who can support (or combat) business
expansion in a community. It can also help business to develop a loyal customer
base. Even if the precise value is not easily quantified, these are bottom-line benefits
of socially responsible business that some businesses recognize and embrace as part
of their business strategy.
While some corporations are embracing social responsibility on a local or global
scale, others are criticized for using globalized business activities as a means of
acting in ways that are quite the contrary.
According to Wheeler, Colbert, & Freeman:
Two decades ago Peter Drucker famously asserted: “…the
proper ‘social responsibility’ of business is to…turn a social
problem into economic opportunity and economic benefit, into
productive capacity, into human competence, into well-paid
jobs, and into wealth.” In the intervening years there has
developed a lively debate over the role of business in society—
most acutely with respect to the supposed environmental and
social impacts of economic globalization. This development has
led to the concerns of anti-globalization protestors on issues like
third world development, poverty, the environment and
employment being echoed by large numbers of ordinary citizens
worldwide. (Wheeler, Colbert, & Freeman, 2003)
Social Equity—An Element of Sustainable Development
The social element of sustainable development includes such CSR strategies as listed
above, but it also reflects a more global context than is not addressed in all CSR
programs.
Says Willard, “Social responsibility calls for a global view of society and seeks to
ensure that resources and wealth are more equitably shared among citizens of the
world” (2002, p. 7). Meadows et al. are more specific, describing a sustainable society
as one in which “the basic material needs of each person on earth” would be
satisfied and each person would have “an equal opportunity to realize his or her
individual human potential” (Meadows, Meadows, & Randers, 1992, p. 1).
Are equity and equal opportunity realistic goals? Are these reasonable expectations
of businesses, of governments, and of society?
Rawls states, “We may think of human society as a more or less self-sufficient
association regulated by a common conception of justice and aimed at advancing the
good of its members” (as cited in Donaldson & Werhane, 2008, p. 222). The notion of
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“distributive justice” suggests that people should have the right to the basic material
necessities of life, but that does not necessarily mean equity or equal distribution
(Donaldson & Werhane, 2008, pp. 148–150).
Reasonable or not, the concept of equity is an ethical issue, and our perspective on it
likely reflects our individual values and moral principles as well as those of the
society in which we exist. If our ethical reasoning is based on justice, we face a
common ethical dilemma: What is fair or just?
It may be easier to dismiss any serious consideration of equity if we view sustainable
development purely from a business perspective driven predominantly by economic
interests. However, despite the dominance of business as a force in society today,
sustainable development extends beyond the boundaries of corporate affairs. It is an
approach to development that influences the decisions of small, medium, and large
companies, transnational corporations, global economies, as well as non-profits
associations and other organizations, international governing bodies, local and
regional governmental organizations, and communities big and small.
Economic Benefits of Social Equity
While the ethics of global social equity is another subject of debate associated with
sustainable development, there are pragmatic arguments for supporting social and
economic development in poorer regions. One is that “poverty is an underlying
cause of environmental degradation.” Slash and burn agriculture is an example of
how people in poor conditions may “misuse resources just to survive . . . .
Environmental protection will require providing a decent standard of living for all
the world’s citizens” (Lawrence & Weber, 2017, p. 185).
Other advocates of the economic benefits of societal equity suggest that increasing
the education and economic prosperity of the five billion people in the world who
live in relative poverty will provide new markets for goods and services, thereby
supporting global economic development. Microsoft and other leaders in
information and communications technologies are supporting programs to bridge
the “digital divide” between rich and poor nations. They are donating billions of
dollars in cash, products, and service to introduce and expand the use of the Internet
and other computer technologies in poorer nations around the world.
Through its Community Technology Skills Program, Microsoft has donated millions
of U.S. dollars in cash grants and software to community partners around the world
since 2003. The program supports computer literacy and internet technology skills
training as well as more advanced training in order to foster global workforce
development.
Is this an act of philanthropy or enlightened self-interest—or both?
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“Economic development and the digital divide go hand-in-hand for many reasons.
Communities with the tools and skills to compete in the digital economy are at a
distinct advantage over communities that don’t” (Joint Government-Private Sector,
2001). As the world embraces more and more innovations in science and technology,
the division between rich and poor may widen. “A community with a welleducated, technology-literate population is more likely to attract and sustain new
businesses, and these new businesses in turn attract more well-educated,
technology-literate people” (Joint Government-Private Sector, 2001).
Is Social Equity Environmentally Sustainable?
Efforts to increase social equity may also benefit economic development, but what of
environmental stewardship? Technology and social responsibility aside, the world
simply cannot sustain global economic development in the form and pattern of the
first world. Given that current consumption of food, forestry products, and fossil
fuels alone “might already exceed global carrying capacity by roughly 30%” and
about [three quarters] of this consumption “goes to the 1.1 billion people who live in
affluence, while [one quarter] of the consumption remains for the other 4.6 billion
people” (Sustainable Development Research Institute, 2003), sustainable
development faces many challenges indeed. Where we chose to place our limitations
in terms of growth, equity, innovation, and development is largely a matter of
political and social will. Yet, we cannot dismiss the significance of forces in our
natural environment, without which we cannot exist.
Optional Resources:
Ecological footprint for measuring sustainable existence:
Since the 1996 publication of researcher Mathis Wackernagel and UBC
professor William Rees’s Our Ecological Footprint: Reducing Human Impact on
the Earth, several non-governmental organizations have adopted the
ecological footprint model as an accounting tool for measuring and
visualizing the resources required for individuals, households, communities,
regions, and nations to continue to exist on this planet.
The ecological footprint measures human consumption and use of natural
resources and translate the measurement into a footprint, or area of land,
required to sustain that life.
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“The ecological footprint of the average Canadian totals 4.8 hectares. This is
the footprint or amount of land required for food, housing, transport,
consumer goods, and services . . . . If everyone on earth lived like Canadians,
it would require at least three earths to provide all the material and energy
she or he currently uses. (Sustainable Development Research Institute, 2003).
Canadians’ ecological footprint is unsustainable A more recent study
conducted by the Canadian Centre for Policy Alternatives indicated an even
larger ecological footprint in Canada of 7.6 hectares per capita—behind only
the United States and the United Arab Emirates (CBC News.ca, 2008).
California-based organization Redefining Progress is one of several nongovernmental organizations providing information on the concept of
ecological footprints and offering a quiz for measuring an ecological
footprint. Visit Redefining Progress’s site and take the quiz.
Activity 3-3: Striving for Sustainable Business Development
Introduction
Climate change, biodiversity issues, water supply, waste management, population
growth, consumption, and poverty are all key issues to address in pursuit of
sustainable development. Stakeholder groups such as governments, citizens, and
community groups may be in conflict with businesses in terms of priorities for
environmental protection. Some corporations and other organizations are engaging
in initiatives to reduce ecological damage associated with their business activities.
This activity gives you the opportunity to examine a successful business that is a
leader in sustainable development.
Interface, Inc. is the largest commercial carpet manufacturer in the world, with
manufacturing locations on four continents and offices in more than 100 countries.
In addition to producing floor coverings, interior fabrics, architectural products,
specialty chemicals and other products and services for commercial interiors,
Interface is a leader in industrial ecology.
Instructions
Part A: Reading and Exploration
•
Read Chapter 9: “Sustainable Development and Global Business.” Pay
attention to the terminology and definitions provided in the chapter. The
chapter introduces significant environmental issues, which have local,
national, and international impacts on business and society.
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•
Visit Interface, Inc. Look for information on its goals, strategies, and
initiatives concerning sustainable development.
•
View at least one video interview or speech by Interface, Inc.’s founder, Ray
Anderson. You can find video clips by doing an Internet search, or search for
“Raywatch” on the Interface, Inc. website. This includes an interview (aired
January 2007) with George Stroumboulopoulos on CBC’s The Hour.
Note: You may choose to continue to examine Interface, Inc. in Assignment 3.
Part B: Reflective Journal—Interface, Inc.
•
List or chart at least six ways Interface, Inc. is integrating sustainable
development into its business strategy and operations. Don’t forget to look
for social initiatives as well as environmental and economic programs,
policies, and initiatives.
•
Identify what you think is motivating Interface, Inc. to identify sustainable
development as part of its vision and goals. Do you think these are serious
initiatives, or is this a public relations strategy?
•
Would you say Interface, Inc. is growing or developing, or both? Explain
your answer.
•
Comment on the role of staff and leadership at Interface in motivating and
driving improvements in the company’s strategic business initiatives and
progression toward its sustainability goals.
References
A history of industrial ecology. (n.d.). International Society for Industrial Ecology
(ISIE). Retrieved from http://www.is4ie.org
Copeland, G. (1999). Acts of balance: Profits, people and place. Gabriola Island, BC: New
Society Publishers.
Daly, H., & Townsend, K. (1993). Sustainable growth: An impossibility theorem. In
H. Daly & K. Townsend (Eds.), Valuing the earth: Economics, ecology, ethics.
Cambridge, MA: MIT Press. Retrieved from http://dieoff.org/page37.htm
Donaldson, T., & Werhane, P. (Eds.) (2008). Ethical issues in business: A philosophical
approach. (8th ed.). Upper Saddle River, NJ: Prentice Hall.
Donaldson T., & Werhane, P. (2008). Property, profit, and justice. In T. Donaldson &
Werhane, P. (Eds.) Ethical issues in business: A philosophical approach (8th ed., pp.
143–150). Upper Saddle River, NJ: Prentice Hall.
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Elgin, D. (1993). Voluntary simplicity: Toward a way of life that is outwardly simple,
inwardly rich (Rev. ed.). New York, NY: Quill.
Hawken, P. (1993). The ecology of commerce. New York, NY: HarperBusiness.
Interface, Inc. (2003a). Our goals. Retrieved from http://www.interfaceinc.com/goals/
Interface, Inc. (2003b). Our goals/our vision. Retrieved from
http://www.interfaceinc.com/goals/vision.html
Interface, Inc. (2008c). Who we are. Retrieved from
http://www.interfaceinc.com/who/
Intergovernmental Panel on Climate Change (IPCC). (2008). [Home page.] Retrieved
from http://www.ipcc.ch/index.htm
Joint Government-Private Sector Committee of Experts on Electronic Commerce
(United States). (2001, October 24). Information technology—literacy and training
(FTAA.ecom/inf/103). Retrieved from http://www.ftaaalca.org/spcomm/derdoc/WordDocs/eci103e.doc
Lawrence, A., & Weber, J. (2008). Business and society: Stakeholders, ethics, public policy
(12th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2014). Business and society: Stakeholders, ethics, public policy
(14th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2017). Business and society: Stakeholders, ethics, public policy
(15th ed.). New York, NY: McGraw-Hill Higher Education.
McDonough, W. (2007, April). Talks: William McDonough. The Wisdom of
designing cradle-to-cradle [Lecture]. Retrieved from
http://www.ted.com/index.php/talks/william_mcdonough_on_cradle_to_cradle_
design.html
Meadows, D. H., Meadows, D. L., & Randers, J. (1992). Beyond the limits. Toronto,
ON: McClelland & Stewart.
Microsoft Corporate Citizenship. (2008). Microsoft unlimited potential—community
technology skills program. Retrieved from
http://www.microsoft.com/About/CorporateCitizenship/US/CommunityInvestm
ent/CommunityTechSkills.mspx
Porter, M. & van der Linde, C. (2000). Green and competitive: Ending the stalemate.
Harvard business review on business and the environment. Boston, MA: Harvard
Business Review School Press.
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Rawls, J. (2008). Distributive justice. In T. Donaldson & P. Werhane (Eds.) Ethical
issues in business: A philosophical approach (8th ed., pp. 222–232). Upper Saddle
River, NJ: Pearson Prentice Hall.
Richest Canadians have largest ecological footprint: Study. (2008, June 24).
CBCnews.ca. Retrieved from
http://www.cbc.ca/consumer/story/2008/06/24/footprint-households.html?ref=rss
Society for International Development. (1990). Prato, S. (Eds.). Development [journal],
3–4, pp. 45–47. Retrieved from http://www.palgravejournals.com/development/index.html
Sustainable Development Research Institute (SDRI). (2003). How sustainable are our
choices? Retrieved from http://www.ire.ubc.ca/ecoresearch/ecoftpr.html
Wackernagel, M., & Rees, W. (1996). Ecological footprint: Reducing human impact on the
earth. Gabriola Island, BC: New Society Publishers.
Wheeler, D., Colbert, B., & Freeman, R. (2003). Focusing on value: Reconciling
corporate social responsibility, sustainability and a stakeholder approach in a
network world. Journal of General Management, 28(3), 1.
Willard, B. (2002). The sustainability advantage: Seven business case benefits of a triple
bottom line. Gabriola Island, BC: New Society Publishers.
Willard, B. (2005). The next sustainability wave: Building boardroom buy-in. Gabriola
Island, BC: New Society Publishers.
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Topic 3: Business and Government Approaches to
Protecting the Environment
Introduction
Topic 1 introduced globalization as a force in business and society. Topic 2 discussed
the environment as another broad force and examined sustainable development as a
means of integrating economic forces with social and environmental influences and
concerns. “Society and the economy need a healthy environment” (Willard, 2002, p.
146). In Topic 3, you will investigate how government and business mechanisms
help or hinder the health of the environment and how they protect or ignore the
well-being of natural resources.
The task for policymakers, corporate leaders, and environmental advocates is “how
to promote ecologically sound business practices in an increasingly integrated world
economy” (Lawrence & Weber, 2017, p. 207).
Willard says:
The traditional business view places the environment and
society as separate entities, outside economic considerations and
miniscule in relative importance. Conventional business
intuition mistakenly sees priorities in economic, environmental
and social policy as competing. A more accurate frame of
reference would reverse this perspective and acknowledge that
the global economy is a small sector within global society, which
in turn is within the global environment that is necessary for life
as we know it. (Willard, 2002, p. 146)
Willard, B. (2002). The sustainability advantage: Seven business case benefits of a triple bottom line.
Gabriola Island, BC: New Society Publishers.
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Corporate Environmental Responsibility
The industrial revolution . . . greatly expanded the possibilities
for material development of humankind. It continues to do so
today, but at a severe price. Since the mid-eighteenth century,
more of nature has been destroyed than in all prior history.
While industrial systems have reached pinnacles of success, able
to muster and accumulate human-made capital on vast levels,
natural capital, on which civilization depends to create economic
prosperity, is rapidly declining… (Lovins, Lovins, & Hawken,
1999, p. 2)
Natural capital is another term for natural resources, such as water, air, trees, and
other vegetation, minerals, soil, and oil. It “encompasses living systems” including
oceans, wetland, grassland, rainforests, tundra, coral reefs, as well as all plants and
animals living within these systems (Lovins, Lovins, & Hawken, 1999, p. 2). “As
more people and businesses place greater strain on living systems, limits to
prosperity are coming to be determined by natural capital rather than industrial
prowess” (Lovins, Lovins, & Hawken, 1999, p. 2). Businesses that recognize this
imperative are implementing a variety of formal and informal programs and
strategies for reducing the amount of pollution and waste that they generate,
increasing efficient use of natural resources, and mitigating negative impacts on the
ecosystem on which humans, as well as billions of other plant and animals species,
rely for our existence.
As with corporate social responsibility, some organizations are motivated by an
environmental ethic; others are realizing significant direct and indirect financial
benefits of their environmental initiatives. Although Dow Chemical is still a
significant polluter, it initiated its Waste Reduction Always Pays (WRAP) program
in 1986. According to Willard (2002), Dow’s rate of return on their investment in this
program was 204% (p. 84).
What makes this program particularly interesting is the stakeholder involvement in
these initiatives: all the ideas for reducing pollution and waste were proposed by
employees. In addition to the economic benefits of improved environmental
performance, the company sent a message to employees and other stakeholders that
they care about environmental issues. The value to Dow in terms of employee
morale and goodwill among investors, customers, and stakeholders in the
communities in which they operate is unmeasured.
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Beyond Compliance
“Growing public concern about the health of the Earth’s ecosystem has prompted
political, corporate, and civil society leaders to become increasingly responsive to
environmental issues” (Lawrence & Weber, 2017, p. 205). Business may be proactive
or reactive—responding to public demands and government regulatory
requirements, or taking the lead to improving their environmental performance.
Public expectations as well as the demands of global, regional, and local
governmental (and inter-governmental) organizations are generating interest and
action with regard to protection of our natural capital, and attention to
environmental concerns, such as climate change. Regulation and international
agreements are also increasing the pressure on companies to, at least, comply with
environmental standards.
Greenhouse Gases and Climate Change: One of the most significant
environmental concerns in business and society today is that of climate
change associated with greenhouse gas emissions.
Greenhouse gases are gases present in the earth's atmosphere as a result of
natural and human activity. Among others, these gases include carbon
dioxide, methane, nitrous oxide, chlorofluorocarbons (CFCs) and ozone
(Wikipedia, 2008a).
In 2007, the Intergovernmental Panel on Climate Change (IPCC), released
Climate Change 2007, a report on present and forecasted environmental and
socio-economic (or human) impacts of greenhouse gas emissions. The IPCC
assessment describes catastrophic climate related impacts of greenhouse gas
emissions, including an increase in droughts, tropical cyclones, extreme high
tides and rising ocean temperatures (Wikipedia, 2008b). These environmental
impacts are a result of the greenhouse effect, essentially the formation of a
blanket of greenhouse gases around the earth which allows the sun’s heat to
penetrate but blocks the escape of heat, leading to changes in global
temperatures.
The greenhouse effect is widely accepted as the primary cause of climate
change (also known as global warming), and the consensus of the IPCC
scientists is that human activity is a major cause of climate change and the
accompanying environmental and social impacts.
Governments implement environmental standards and regulations that establish
rules and restrictions with regard to the amount of pollution, waste, or
environmental degradation that organizations and communities can create.
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Organizations face penalties including fines, closure, and negative public relations
for non-compliance with these restrictions. When was the last time you read an
article or heard a news story about a company that failed to comply with
environmental standards and regulations? Remember the movie Erin Brockovich?
“Most firms would prefer to pursue their environmental strategies voluntarily,
rather than be legislated or externally pressured into doing so” (Willard, 2002, p. 4),
and the “impulse in Canada,” as in the United States, “is for devolution of
responsibility for regulation to corporate control” (Leahy, 2003, n.p.). There is some
argument that a “command and control” approach to environmental management
stymies the ability of companies to be flexible in findings ways to reduce their
environmental impacts. This may result in cost burdens that create conflicts between
economic performance and other elements of sustainable development. Michael
Porter, a world-renowned business strategist, disputes this claim:
The lingering belief that environmental regulations erode
competitiveness has resulted in a stalemate. One side pushes for
tougher standards, the other tries to roll standards back . . . This
static view, in which everything except regulation is held
constant, ignores the fact that companies are constantly finding
innovative solutions in response to pressures of all sorts—from
competitors, from customers, from regulators . . . . Research
shows that tougher environmental standards can enhance
competitiveness by pushing companies to use resources more
productively. (Porter et al., 2000, p. 131)
Market-Based Solutions
Some businesses are shifting from being reactive or responsive to public or
governmental demands to being strategic. “Companies normally frame greening in
terms of risk reduction, re-engineering, or cost cutting. But . . . when greening
becomes part of strategy, opportunities of potentially staggering proportions open
up. A number of companies are moving in that direction” (Hart, 2000, p. 106).
“Increasingly, companies will sell solutions to the world's environmental problems”
(Hart, 2000, p. 112). In addition to technologies that monitor and measure the quality
of our environment, and new products and services that minimize or even mitigate
environmental damage, some innovative companies are finding ways to improve the
condition of our ecosystem. With the appropriate incentives, the market economy
may attract these innovations, but government plays a role in market-based
solutions as well.
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Market-based mechanisms for promoting environmentally responsible business
and economic development are gaining popularity. Governments can implement
them in lieu of some regulatory controls or introduce them as incentive for
organizations to perform beyond environmental standards established by law.
Economists, in particular, advocate market-based mechanisms, and evidence
suggests that some companies have found it “surprisingly inexpensive to achieve
pollution reductions that seemed very costly when imposed by rigid regulations”
(Krugman in Hamond, 1999).
Alcan Inc. is one large company that claims increases in shareholder return on
investment and wealth creation can be achieved, in part, by sustainable
development strategies. Initiatives such as pollution control, waste reduction, and
recycling reduce costs and risks, and provide new business opportunities as well.
Alcan claims that wealth creation provides the company “with the means to
contribute to the economic, environmental and social dimensions of our corporate
sustainability, [and] “increased awareness of these issues is fundamental to
identifying new business opportunities, further maximizing value within our
business” (Alcan, 2002).
Government Policies for Driving Market Solutions
While economists advocate market-based solutions, governments can play a role in
influencing the transformation of markets and the economic viability of businesses
in the marketplace. Typically, the corporate sector resists government intervention,
except when it is in the form of tax breaks and subsidies that benefit their sector.
Thus, it was quite unusual when, in January 2007, ten transnational corporations,
including General Electric, DuPont, and Alcoa, partnered with leading
environmental organizations in the United States to call for a nationwide cap on
carbon dioxide emissions. The corporations from a variety of industry sectors—
utilities, manufacturing, petroleum, chemicals and financial services—published a
full-page advertisement in The New York Times proposing legislative approaches and
emissions reductions targets for the United States over a fifteen-year period.
While concern for economic, environmental, and social (or human impacts) of
climate change could be a driver, the group believed that a national standard will
level the playing field because some businesses are more active than others in
voluntary emissions reductions. The group expressed concern that “the various state
efforts, if not coordinated, could lead to a scattershot system of regulation”
(Barringer, 2007).
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Stern Review on the Economics of Climate Change
In October 2006, British economist Sir Nicholas Stern published a 700-page report on
the economic impact of climate change on the world economy. Stern warned that
climate change could be greatest and widest-ranging market failure ever seen. He
concluded that investment of one percent of global gross domestic product (GDP)
each year is required in order to avoid the worst effects of climate change. According
to Stern, failure to do so could risk global GDP being up to twenty percent. In June
2008, Stern increased the estimate to 2% of GNP to account for faster than expected
climate change (Wikipedia 2008d).
Stern proposed the following economic solutions, ones that can be driven by
governmental policy initiatives:
•
Carbon pricing, through taxation, emissions trading or regulation, to show
people the full social costs of their actions
•
Emissions trading schemes, like that operating across the EU, should be
expanded and linked
•
Technology policy changes should drive the large-scale development and use
of a range of low-carbon and high-efficiency products
•
Globally, support for energy research and development should at least
double; support for the deployment of low-carbon technologies should be
increased by up to five times
•
Climate change should be fully integrated into development policy, and rich
countries should honour pledges to increase support through overseas
development assistance (Osborn, 2006)
To read more about the Stern report, search for articles in The Economist or search
the Internet for any of the hundreds of articles summarizing and discussing Stern’s
findings. Review the report or a summary of the report on The National Archives,
UK website (via webarchive.org).
For transnational companies, the emerging regulatory regime and varying
government policies on carbon emissions can increase the complexity and costs of
doing business internationally. Stern’s report focused on costs to businesses and the
world economy associated with failure to implement solutions for climate change.
Just as climate change has a global impact, so, too, does the economic risk associated
with it.
Because the Stern report presented the risk in economic terms, the impact of climate
change resonated with business and governments around the world. Stern
reinforced the serious risk to people, especially those in poorer countries of the
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world. He also proposed policy-related solutions that could lead to shifts in the
market, and calculated the economic benefits of implanting those solutions.
According to Stern’s analysis, shifting the world onto a low-carbon path could
eventually benefit the economy by $2.5 trillion a year, and by 2050, markets for lowcarbon technologies could be worth at least US$500 billion (Osborn, 2006).
Emissions Trading and Pollution Credits
Emissions trading and sale of carbon offsets are market-based mechanisms that help
businesses and other organizations (including governmental agencies) achieve
reductions in greenhouse gas emissions. Businesses or organizations that excel in
reducing carbon dioxide or other greenhouse gas (GHG) emissions may sell or trade
credits for their efforts.
Note: The term carbon emissions refers to emissions of carbon dioxide,
which is one of the more prominent greenhouse gases. Often, the discussion
of carbon emissions or carbon offsets will actually also include emissions (or
emissions reductions) of other greenhouse gases, such as methane.
The European Union’s (EU) cap and trade government system is a required part of
doing business in the EU. Through cap and trade, the EU has created a virtual
market for exchange (selling and buying) of carbon emissions permits between one
business or organization and another. Unlike conventional markets in which goods
are produced and exchanged, companies that are successful in reducing their carbon
emission are able to sell their carbon offsets. Offsets are the difference between the
amount of carbon that they actually emit in a year and the amount they are legally
permitted to emit. So, in reality, they are selling the absence of carbon. The buyers
are those companies with operations that generate carbon output that exceeds the
level they are permitted to emit. Many companies find it more financially
advantageous to purchase these extra rights to pollute, rather than meet the carbon
emissions cap set for them by the government.
The aim of this program is to meet overall carbon reductions targets, while allowing the
market to dictate the source of reductions and to achieve results more cost-effectively.
The Alberta government has experimented with cap and trade in some industry
sectors, and as of 2008, British Columbia, as well as other provincial governments
and the federal government, are exploring the establishment of regional or national
cap and trade systems. Given that cap and trade systems have focused on larger
companies due to the logistics of establishing targets and permit levels, there is some
discussion of establishment of an international or global cap and trade system.
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In Canada and the United States, voluntary carbon trading has emerged as a means
of supporting climate change solutions. Not-for-profit and for-profit organizations
acquire the rights to carbon offsets from suppliers, and sell the offsets to voluntary
buyers. Buyers are businesses of all sizes, some municipalities and government
agencies, and other not-for-profit organizations.
Individuals, municipal governments, and some businesses and other organizations
are voluntarily buying carbon offsets as part of their commitment to contributing to
climate change solutions. Some businesses are motivated by an opportunity to
differentiate their brand or an opportunity to attract and retain customers by
claiming to be carbon neutral. Companies seeking ways to achieve a label or
certification for exemplary environmental performance are also using the carbon
neutral claim as a way to establish a sort of label or standard of corporate
environmental performance. As the voluntary market matures, business and society
will learn to scrutinize carbon neutral claims, and verification of performance will
become more standardized.
Carbon Neutral—What Does it Mean?
For companies and communities to claim to be carbon neutral, they must first
measure the direct and indirect carbon emissions associated with their operations.
Typically, direct and indirect carbon emissions are associated with energy
consumption in buildings and operations. Fuel consumption associated with
employee travel by land, sea, or air is also calculated. (Some companies include
employee commute to and from the workplace, while others do not). Indirect carbon
emissions associated with use of key resources such as paper is also calculated.
After calculating their total annual carbon emissions, companies will then, ideally,
establish targets for reductions and implement programs and policies to achieve
results. For example, a municipality that installs energy-efficient lighting and a
geothermal system at the municipal recreation centre could realize significant carbon
reductions through energy-efficiency improvements in the buildings.
A company that subsidizes employee transit passes and helps reduce employee trips
in single-occupancy vehicles will realize carbon reductions associated with few cars
on the road. An organization that switches from virgin paper to % post-consumer
recycled paper can claim significant carbon reductions because the production of
recycled paper results in about 50% fewer carbon emissions in the atmosphere than
production of virgin paper. Of course, the organization is not actually
manufacturing paper, but their purchasing choices have an indirect impact on
carbon emissions.
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Businesses, governments and organizations committed to climate change solutions
will measure their direct and indirect emissions each year and continue to
implement programs and initiatives to reduce their carbon emissions. If an
organization in Canada or the United States wants to claim to be carbon neutral each
year, it will also purchase carbon offsets through the voluntary markets.
Offsets may come from large-scale tree planting or other carbon sequestration
programs. As trees absorb carbon dioxide (CO2), they are considered a carbon sink.
Other offset projects fund construction of solar, wind, micro-hydro, or other
renewable energy projects which are considered to be clean, non-carbon–producing
sources of electricity and power generation. Organizations that sell carbon offsets
may offer offsets on projects that are local (i.e., within the same province) or
international. In the voluntary carbon offset market, many buyers have preferences
as to whether they want to support local or international projects, and whether they
prefer tree planting or other offset projects. The cost of offsets can vary from one
supplier to another, and at present there are several standards in the marketplace.
Taxes and Subsidies
Taxes and subsidies are also market-based mechanisms that can governments can
implement to provide incentives or disincentives for companies to implement climate
change solutions or improve their environmental performance in other ways.
As a powerful stakeholder in business and economic development, the government
uses taxes and subsidies as a means of encouraging innovation and new business
development. These financial instruments influence how businesses and other
organizations spend their money and where they focus their initiatives. “Ideally,
subsidies . . . exert a positive outcome by helping people, industries, regions, or
products that need to overcome cost, pricing, or market disadvantages” (Lovins,
Lovins, & Hawken, 1999, p. 160). However, many taxes and subsidies encourage
waste and environmentally damaging business practices. They are “perverse
subsidies . . . [that] function as disinvestment, leaving the environment and the
economy worse off than if the subsidy had never been granted” (Lovins, Lovins, &
Hawken, 1999, p. 160).
Some would argue that government subsidies to the forestry, oil, and gas sectors in
Canada encourage unsustainable practices. Other subsidies or tax incentives support
environmental initiatives such programs to reduce energy consumption. Federal
programs provide funding for new technology developments in energy-efficiency
and provide financial assistance to businesses and households implementing energy
conserving upgrades to buildings.
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Stakeholders who fail to recognize the importance of sustainable development to our
long-term survival and quality of life may lobby or push for taxes or subsidies that
support short-term gain or financial advantages at the expense of social and
environmental concerns. “We need, incrementally, but firmly, to transform the sticks
and carrots that guide and motivate business. That means, in essence, revising the
tax and subsidy system” (Lovins, Lovins, & Hawken, 1999, p. 159).
Can you think of any government taxes or subsidies that are not benefiting your
community or the environment? Can you name any government taxation policies,
subsidies, or other fiscal programs that help protect our natural capital while
supporting economic development?
Ecological Taxation
Beyond shifts in government subsidies, there is a growing body of economists and
environmentalists calling for more widespread transformations in fiscal policies
supporting sustainable development.
This is called “ecological tax reform” (von Weizsäcker & Jesinghaus, 1992, p. 18), and
it is not a new idea, but it is one that is gaining a larger voice in recent years,
especially among those who acknowledge the dominance of business over our social
and environmental well-being.
“Around the world, governments tax labour and investment while they subsidize
the use of natural resources” (Willard, 2002, p. 151). This taxation system is a barrier
to business managers and other stakeholders who are seeking ways to rationalize
the economic benefits of sustainable development with the environmental benefits.
Typically both individuals and businesses balk at the thought of additional taxes,
but anyone who buys gasoline, tires, or batteries knows that the Canadian
government has introduced numerous environmental taxes nonetheless. Do these
taxes really provide incentive for people to drive less, pollute less, or make different
choices about the products they purchase?
Ecological tax reform does not advocate additional taxes. Its intent is not to
increase the tax burden on businesses and society. Ecological tax reform (also
known as environmental tax reform) is a revenue-neutral approach to taxation
that rewards individuals and organizations for environmentally responsible
business and consumer choices, and penalizes wasteful, unsustainable practices.
The idea is to put taxes on fossil fuels . . . water consumption . . .and tax the use
of raw materials (especially those which are likely to end up as toxic pollutants or
hazardous waste), to tax emissions and waste, while reducing taxes on “human
labour” (income tax), and create added value and business activity (von
Weizsäcker & Jesinghaus, 1992, p. 18).
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In their article “Sharing the Wealth,” authors Dunkiel, Hamond, and Motavalli
write:
Reforming the tax system now would have two benefits: The tax
system would complement environmental regulation rather than
frustrating it (as it now does); and the tax code could harness
market forces so that they work for the environment, not against
it. Given the large impact that taxes have, they could be a
powerful tool for promoting sustainable development, while
actually helping the economy and supporting labour.
Environmentalists are proposing a "tax shift" to redirect the
incentives in the tax code. The goal, as The Ecology of Commerce
author Paul Hawken puts it, is to give people and companies
positive incentives to avoid taxation. The green economists
would purge the tax code of regulations and loopholes that
clearly encourage environmental degradation, such as the
[US]$17 billion cost of tax-free parking. New levies would be
applied on pollution-generators like products containing lead,
gas-guzzling cars, ozone-depleting chemicals, and the burning of
fossil fuels. Taxes would be judged on their real contribution to
the economy, in terms of job creation and productivity growth,
equity for the people paying them, and resource conservation.
(Dunkiel, Hamond, & Motavalli, 1999, n.p.).
Dunkiel, B. M., Hamond, M. J., & Motavalli, J. (1999). The Environmental Magazine.
International Agreements
In our market economy, which is “the familiar world of commerce comprising both
the developed nations and the emerging economies,” we have come to value the
world as “a complex set of global interdependencies” (Hart, 2000, p. 108). Thus,
despite the existence of independent nations with their own standards, policies, and
regulations, there are also international agreements and governing bodies providing
guidelines and rules for everything from human rights issues to subsidies on wheat.
While much of the focus is on economic interdependencies, the air we breathe, the
water we consume, and the land on which we depend for all our existence is also
interconnected. After all, we are sharing one world. Whether motivated by growing
“environmental ethic” (Lawrence & Weber, 2008, p. 222), levels of pollution are
relatively low in the developed economies compared to levels in lesser-developed
countries, despite intense use of energy and materials (Hart, 2000, p. 109). While
business is greening in Canada, the European Union, the United States, and other
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economically developed areas, many corporations are relocating their “most
polluting activities (such as commodity processing and heavy manufacturing) to the
emerging market economies. Thus, to some extent, the greening of the developed
world has been at the expense of the environments in emerging economies” (Hart,
2000, p. 109).
Many of the world’s large manufacturers have established operations in China,
sometimes shutting down operations in Canada and the United States. Are these
companies reducing their output of pollution or simply shifting the environmental
damage to a country with less stringent environmental regulations? Mining
companies in Canada have faced elevated environmental standards in the past
decade. Is it a coincidence that many companies have shifted exploration and
development to South American and African countries?
The rapid rise of industrialization in countries with extremely large populations,
such as China, India, and Malaysia, “could easily offset the environmental gains
made in the developed economies” (Hart, 2000, p. 109).
Given the rise of transnational business and globalization, it has never been more
important to forge international agreements on issues such as elimination of toxic
chemicals, control of dumping or export of wastes, and reductions in greenhouse gas
emissions. Finding a balance between the responsibilities of economically developed
countries and those of countries with emerging economies is a contentious issue. Can
we expect countries with millions of people living in poverty to share the same level of
concern for sustainable development? While long-term protection of the earth’s natural
resource base will help sustain life for all humankind, it is difficult to recognize
environmental priorities when short-term survival is a more pressing issue. This may be
the rationalization of government leaders in lesser-developed countries, but what are
the responsibilities of the companies that operate in these countries?
An International Treaty on Climate Change
The Kyoto Protocol, also known as the United Nations Framework Convention on
Climate Change, is an effort to bring nations around the world together in
agreement on goals to reduce the amount of greenhouse gases that each country
generates. The Protocol outlines a variety of market-based mechanisms and
economic instruments intended to facilitate international co-operation in the
reduction of fossil fuel consumption and generation of greenhouse gases.
Additionally, governments of the countries signed on to the Kyoto Protocol establish
their own specific strategies for achieving the targets for greenhouse gas reductions.
These strategies include guidelines, standards, regulations, policies, subsidies, and a
host of other programs to provide incentive or disincentive to stakeholders in
business, as well as to other members of society.
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Recognizing that environmental degradation resulting from carbon dioxide and
other greenhouse gases is a global problem, bureaucrats, politicians, business
leaders, and other stakeholders began negotiating the terms of this international
agreement at the United Nations (UN) Earth Summit in Rio de Janeiro in 1992. After
years of intergovernmental meetings, 182 countries have ratified the Kyoto Protocol
(Wikipedia, 2008c). The United States declines participation in this international
accord, while other developed countries that are party to the agreement have
committed to targets for greenhouse gas emissions reductions.
Despite this major international effort at establishing this global compact, few
countries have made any significant progress towards reaching those targets. Some
critics challenge the usefulness of the Protocol given the lack of accountability for
failure to meet targets, while others criticize the accord because developing countries
such as China, India, and Brazil are required only to commit to monitoring and
reporting emissions, without any emissions reductions targets.
Despite international commitment to the Kyoto Protocol, there is much question as
to whether we will achieve the targets we set and powerful resistance to the
agreement from certain industries, such as the oil and gas sector. Supporters of
Kyoto include thousands of Canadian physicians and leading medical organizations,
which claim the Kyoto Protocol is critical for clean air and health (David Suzuki
Foundation, 2007b). Many business, environmental, and community stakeholders
also believe that Canadian businesses and society can benefit economically as well as
environmentally from the Kyoto Protocol.
The Kyoto Protocol requires Canada to reduce greenhouse gas
emissions to six per cent below 1990 levels. This shift will require
investments in energy efficiency, but the payoff will include
lower energy costs for consumers, new jobs from innovation and
enhanced economic growth…
As a wealthy country with well-developed infrastructure and
advanced technological capabilities, we can provide global
leadership on this issue. (David Suzuki Foundation, 2007a)
The Canadian federal government’s decision to ratify the Kyoto Protocol has elicited
a high degree of controversy (Beltrame, 2002). In 2002, prior to signing the
agreement, the federal government conducted cross-Canada consultations with
hundreds of stakeholders. Following the consultations, the Government of Canada
released a proposed strategy for meeting the emissions reductions targets for Kyoto
including a wide variety of policies and programs to encourage energy efficiency
and pollution reduction, not only in the industry sector, but among individual
Canadian households, as well.
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Gaining international agreement on issues, such as actions to mitigate pollution and
environmental degradation, is a tremendous challenge. International agreements can
take years to negotiate, and the terms and details of the agreements may change
many times throughout negotiations.
Regardless of whether or not there is ever complete international agreement, the
Protocol encouraged the Canadian government to develop a plan for addressing
greenhouse gas pollution generated by households, industry, and transportation.
With the change from the Liberal government to Harper’s Conservatives, the name
of the federal government program changed; most of the plans and commitments
remained the same. These include programs that offer financial incentives to
homeowners, building owners, businesses, business owners, and other
organizations or institutions to implement improvements that reduce fuel
consumption and associated carbon emissions. Search the Government of Canada
website for climate action programs.
Just as implementation of ecological tax reform would need to overcome significant
resistance to change, the international agreements on climate change face many
challenging obstacles in order to bring governments and nations together in
transforming business, government, and society toward a more sustainable future.
These obstacles are highlighted by the fact that Canada decided to withdrawn from
the Kyoto Accord in 2011. Negotiations attempting to reach agreements
amongst/between various countries followed Canada’s withdrawal. Tangible
progress has been made including the Paris Agreement of 2015, which is global in
nature (including Canada). This agreement includes a significant expansion of
carbon trading, including offsetting, which facilitates the market exchange of credits
between companies and also countries to achieve overall emissions reduction
(Hopkin, 2016, http://theconversation.com). At the Bonn conference in 2017,
additional progress was made for the implementation of a number of items of the
Paris Agreement. Negotiations at the Bonn conference also worked out details of a
stock-taking exercise in 2018. This exercise will measure progress towards the goals
of the Paris Agreement and to move forward with the controversial issue of
adaptation finance (multiple authors, 2017, http://theconversation.com).
Unfortunately, obstacles to a more sustainable future were heightened when
President Donald Trump pledged on June 1, 1917 to withdraw the United States
from the Paris Agreement.
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Activity 3-4: Stakeholder Viewpoints on Carbon Taxes and Cap
and Trade
Introduction
International agreements, taxes, subsidies, and other market-based mechanisms, as
well as voluntary and mandatory programs for improving environmental
performance of businesses in society are all strategies that integrate environmental
and economic forces.
The Government of Canada and several Canadian provinces have invested
hundreds of millions of dollars in recent years to encourage Canadian businesses
and society to save energy and avoid greenhouse gases and other emissions
associated with energy consumption. These are voluntary programs and their
impact has been minimal.
With Canadians indicating that climate change is a prime concern, numerous other
fiscal policy mechanisms including carbon taxes and cap and trade systems are
either being introduced or considered in all or parts of Canada.
In July 2008, the Government of British Columbia was the first to introduce a carbon
tax. Taxes are never popular, but the BC government claimed this tax was revenue
neutral because individuals and businesses paid a tax on consumption that was
associated with carbon emissions, but received tax breaks and a climate change
dividend payments back.
The purpose of carbon taxes is to increase the costs associated with pollution or
emissions of carbon dioxide. One way to reduce carbon emissions is to increase
energy-efficiency and minimize fossil fuel consumption. Businesses can do this
through operational improvements such as minimizing idling of their delivery
trucks. Technological solutions can result in reduced energy consumption in
manufacturing and transportation, and innovation can drive improvements that are
both operational and technological.
In this activity, you will examine carbon taxes and/or cap and trade systems from a
variety of stakeholder perspectives.
Instructions
Part A: Reading
•
Read Chapter 10: Managing For Sustainability. Skim or skip sections or
figures (such as Figure 10.1) that describe specific U.S. laws, but pay attention
to general information about the role of governments in environmental
management and protection, as well as the greening of management.
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Conduct an Internet search for ”cap and trade” systems and “carbon taxes.”
Be aware of the source of information and the perspectives presented. Seek
fact-based sources, not simply opinion pieces, or at least seek contrasting
opinions so that you do not simply explore one perspective.
Part B: Reflective Journal—Cap and Trade and Carbon Tax Strategies
•
Explain the difference between carbon taxes and cap and trade systems.
•
List places in which one or both of these strategies has been implemented and
describe its impact. (Remember to cite your sources).
•
Comment on the pros and cons of each of the two strategies.
•
List at least two stakeholder groups that might have different perspectives on
the pros and cons you have listed above, and explain why.
Examples of Different Perspectives:
How might the perspective on a carbon tax on gasoline of someone living in a
rural area differ from someone living in an urban area with access to public
transportation?
Would a company that is an intensive user of coal, such as a cement
company, be more in favour of a carbon tax than a company that
manufacturers wind turbines? Why would their perspectives differ?
If your company has invested millions of dollars in energy efficiency and
your competition has not, which company do you think would be more in
favour of a cap and trade system or carbon tax?
References
Alcan, Inc. (2002). The business case: Corporate sustainability report 2002.
Barringer, F. (2007, January 19). A coalition for firm limits on emissions. The New
York Times. [Business section.] Retrieved from
http://www.nytimes.com/2007/01/19/business/19carbon.html?_r=1&oref=slogin
Beltrame, J. (2002, November 11). Pros and cons: Ratify Kyoto or go it alone? Two
experts present their opposing views. [Electronic version.] MacLean's 115(45).
Retrieved from Academic Source Premier database.
David Suzuki Foundation. (2007a). Kyoto Protocol: Economics. Retrieved from
http://www.davidsuzuki.org/climate_change/Kyoto/Economics/
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David Suzuki Foundation. (2007b). Kyoto critical for clean air, health, say physicians.
Retrieved from
http://www.davidsuzuki.org/Campaigns_and_Programs/Climate_Change/News
_Releases/newsclimatechange09250201.asp
Dow Chemical (2008). Our commitments. Waste reduction always pays (WRAP).
Dunkiel, B., Hamond, M., & Motavalli M. (1999, March/April). Sharing the wealth: If
we shift the tax burden from work to waste, everyone benefits. Emagazine.com,
X(2). Retrieved from http://www.emagazine.com/marchapril_1999/0399feat1.html
Hart, S. (2000). Beyond greening: Strategies for a sustainable world. Harvard Business
Review on Business and the Environment. Boston, MA: Harvard Business Review
Paperback Series.
Hopkin, M. (2016). Retrieved from http://theconversation.com
Krugman, P. (March 1999). Introduction. In M. Jeff Hamond, Tax waste, not work: How
changing what we tax can lead to a stronger economy and a cleaner environment.
[Summary version.] Retrieved, from
http://www.rprogress.org/publications/1997/TaxWaste_sum.pdf#search="Krugman"
Lawrence, A., & Weber, J. (2008). Business and society: Stakeholders, ethics, public policy
(12th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2014). Business and society: Stakeholders, ethics, public policy
(14th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2017). Business and society: Stakeholders, ethics, public policy
(15th ed.). New York, NY: McGraw-Hill Higher Education.
Leahy, S. (2003, March 31). An imbalance of power. [Electronic version.] Maclean’s.
Retrieved from the Business Source Complete database.
Lovins, A., Lovins, H., & Hawken, P. (1999). A road map for natural capitalism. In
Harvard Business Review on Business and the Environment. Boston, MA: Harvard
Business Review Paperback Series.
Multiple Authors (2017). Retrieved from http;//theconversation.com
Osborn, H. (2006, October 30). Stern report: The key points. Guardian.co.uk,
Retrieved from http://www.guardian.co.uk/politics/2006/oct/30/economy.uk
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Porter, M. & van der Linde, C. (2000). Green and competitive: Ending the stalemate.
Harvard business review on business and the environment. Boston, MA: Harvard
Business Review School Press.
von Weizsäcker, E., & Jesinghaus, J. (1992). Ecological Tax Reform. London, UK: Zed
Books Ltd.
Wikipedia. (2008a). Greenhouse gas. [Web page] Retrieved from
http://en.wikipedia.org/wiki/Greenhouse_gas
Wikipedia. (2008b). Intergovernmental panel on climate change. [Web page.] Retrieved
from
http://en.wikipedia.org/wiki/Intergovernmental_Panel_on_Climate_Change
Wikipedia. (2008c). Kyoto Protocol. [Web page.] Retrieved from
http://en.wikipedia.org/wiki/Kyoto_Protocol
Wikipedia. (2008d). Stern Review. [Web page.] Retrieved from
http://en.wikipedia.org/wiki/Stern_Review
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Topic 4: Technological Change as a Socio-Economic Force
Introduction
“Technology is an unmistakable economic and social force in both business and the
world where we live” (Lawrence & Weber, 2017, p. 232). The influence of
technological innovations can be small or wide sweeping, insignificant or profound.
Do you remember rotary telephones that pre-dated push-button technology? This
telecommunications innovation was relatively minor in comparison to the massive
social and economic impacts associated with the introduction of wireless telephones.
Social and Economic Impacts of Technology on Business and
Society
In Canada, the impact of wireless phone technology is evident in our everyday lives.
Elsewhere in the world, people in remote and economically underdeveloped regions
with limited telecommunications infrastructure are now able to communicate via
cellular phone technology. Cell phones are transforming business and society in
many parts of the world.
In Senegal, West African farmers and market traders use wireless telephones to
improve business efficiencies. French and Senegalese entrepreneurs provided
cellular phone services to farmers to use the technology to check prices of foods and
goods before going in town to make purchases. “Before having access to this
technology to obtain market information, middlemen often took advantage of
farmers, selling them goods at higher prices” (Mobiles Find Right Price, 2002).
In 2001 in Bangladesh, 97% of homes and virtually all rural villages lacked
telephones. This contributed to underdevelopment of the country and the
widespread poverty of Bangladeshis (Cohen, 2001, p. 2). The Grameen Bank
established Grameen Telecom (a non-profit) and Grameenphone (in partnership
with U.S., Norwegian, and Japanese companies).
Grameen Bank is a micro-finance institution renowned for its successful programs
helping very poor women gain access to credit, with a track record of implementing
unusual financing and development programs. The three foreign companies
recognized opportunities to acquire cellular licenses in Bangladesh and to partner
with the non-profit organization to build a new cellular phone market in this
country. The entrepreneurs are typically very low-income women who borrow
money from Grameen Bank and use the loans and the cellphone technology to
establish small businesses that support their families. The entrepreneurs offer use of
the cellphones on a pay-per-call basis to other poor people who would not otherwise
have access to telephones.
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The goal of Grameen Telecom is to help poor people in Bangladesh to “shift from
relatively low-yield traditional ventures like animal husbandry into the technology
sector, by creating micro-enterprises that can both generate individual income and
provide whole villages with connectivity” (Cohen, 2001, p. 2). The average income
for the cellphone entrepreneurs is US$93 per month, a considerable amount by
Bangladeshi standards. In addition to creating economic opportunities for the poor,
the introduction of cellphone technology in this village phone network “also yields
important secondary benefits to the women who live in the villages that they serve.
Because 95% of the operators are female, and the phones are in their homes, women
who might otherwise have had very limited access to a phone feel comfortable using
one . . . [and] because the phones are so important for whole villages, having female
operators has helped to enhance the status of women in the communities where they
work” (Cohen, 2001, p. 2).
This is an example of both social and economic impacts of technology. Can you
think of other examples of technological innovations that are transforming
communities, cultures, economies, lifestyles, or livelihoods?
The Speed of Change
In addition to wireless telephone technology, many other technological innovations
are influencing the way we interact both socially and professionally, creating
massive shifts in economic development and transforming the workplace.
Technology influences the type of work people are doing as well as where, when,
how and for whom people work. It is creating new management challenges and
challenges for government and society as well.
What are the true costs of technology innovation? What is the cost to society of a
growing trend towards communications or socialization that takes place over
computers, mobile phones, and PDAs (personal data assistants)? What are the
environmental impacts of a world in which people buy and dispose of computers,
cellphones, and all sorts of other electronic devices and gadgets with increasing
frequency, as new versions and impressive new features dictate the need to upgrade
more frequently? What are the health implications of long-term use of computers or use
of wireless technology, such as the Internet and cellphones? Some studies suggest
cellphone use causes brain tumours; others refute it. Some critics claim that the electromagnetic fields (EMFs) associated with use of electronic devices are harmful, and even
deadly. If we cannot see the transmission path, is the technology harmless?
In their book, Everybody's Business: Managing Risks and Opportunities in Today's Global
Society, authors Adrian Hodges and David Grayson quote the simple but significant
words of Microsoft founder, Bill Gates: “The Internet changes everything” (2002, p. 16).
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The speed of penetration of Internet technology into business and society is,
perhaps, unprecedented in history. In one year (July 1999 to summer 2000), the
number of Internet users almost doubled worldwide from 185 million to 360
million people (Hodges & Grayson, 2002, p. 16). In China, Internet growth was
even faster, “from four million users at the end of 1999 to 17 million in September
2000 (Hodges & Grayson, 2002, p. 16). Ongoing technological transformations in
computers and other information technology, as well as decreasing costs are
allowing “powerful applications, that were previously available only to
governments and large business, to be within the reach of small businesses and
individuals (Hodges & Grayson, 2002, p. 15).
Harnessing Internet and Communications Technologies (ICT) for
Business, Government, and Societal Change
Internet and communications technologies (ICTs) help create efficiencies and
enhance the speed and volume of business activity. In previous generations, realtime communications around the world was expensive or technically challenging,
making day-to-day communications complicated for global business activities.
Much of the focus of technological innovation is on the impact on business, but Internet
and other communications technologies are also transforming the educational and
entertainment sectors, as well as politics, government and public opinion. Indeed,
Internet and other communications technologies are among the most powerful and
broad forces influencing primary and secondary stakeholders today.
Widespread use of computers and Internet technology facilitates mass
communications and virtual organization of consumers, activist groups, and other
stakeholders, who are no longer restricted by costs, time zones, political boundaries,
or language barriers. In the past, many of these stakeholders lacked the logistical or
financial means to exert significant influence on business, government, or society.
Today, Internet technology and no-cost or low-cost telecommunications services aid
organizations and enable stakeholders to harness the power of their collective voices
without the cost, time delays, or other logistical challenges that groups faced in the
past. For example, the large-scale protests at World Trade Organization meetings
that began in Seattle in December 1999 were made possible by global planning and
information campaigns that harnessed the power of the Internet as a tool for
organization and communications.
Homemade videos taken from cellphone cameras or digital cameras can be
uploaded to the Internet in minutes and broadcast around the world to share silly,
sublime, or serious issues and information. Whether it’s a baby panda bear born in
captivity, a Hollywood star behaving badly, or an international protest against
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global warming or fair trade, today’s ICT enables instantaneous sharing of
information and mobilization of opinion or action.
Leaders, bureaucrats, and workers in government are also harnessing the power of
the Internet and other communications technologies. Today, Canadians can file their
income tax, contact their local Member of Parliament, research government funding
programs for homeowners and businesses, and even vote via the Internet.
It's no secret that in many of the world's democracies, fewer and fewer people are
actually interested in the old ways of doing politics . . . such as voting, for example.
Countries like Canada and Britain are quickly catching up to the low voter turnout
levels long associated with the United States.
All this voter apathy has led some people to look to the promise of the Internet as a
way to engage average citizens in everyday politics. And their vision of so-called “edemocracy” is gathering steam.
Markam, Ontario [is] preparing to hold Canada's first municipal
election in which residents will be able to avoid the queue at the
ballot box and vote with the click of a mouse instead . . . . Earlier
[in 2003] Britain became the first country in the world to
experiment with Internet voting in a public election. And the
birthplace of parliamentary democracy is leading the way in
other areas, too, from online consultations to MPs' Web logs.
(Canadian Broadcasting Corporation, 2003)
Technological Cost and Challenges
Along with their benefits, information and communications technologies create
challenges for business and society. In terms of sustainable development, there are
many potential environmental and social benefits, such as the ability for researchers,
organizers, activists, and other stakeholders in business and society to transform the
way they work, play, plan, meet, or interact. They can use virtual communications in
order to collaborate on projects and develop plans or solutions via the Internet and
other information technologies. “Satellite images and geographic information
systems help researchers to identify and solve a host of environmental problems,”
and data can substitute “for materials and energy, as digital cameras do in their use
of computer chips rather than film” (Worldwatch Institute, 2003).
Computers and other technologies can help reduce consumption of paper and other
material goods (although few businesses and organizations have actually achieved
significant reduction in paper usage), and they enable people to avoid automobile
use by telecommuting or doing banking and other day-to-day transactions online.
Parents can register their children for soccer season, bridge players can meet online
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to challenge opponents in far off countries, families can digitally send paperless
photographs to relatives around the world, non-profits and universities can organize
virtual conferences, and businesspeople can meet without getting in cars or on
airplanes. However, despite all the potential environmental and social benefits for
business and society, these technologies generate massive amounts of solid and toxic
waste, and large quantities of toxic chemicals that may pollute air and water are
used in manufacturing computers and electronics. This is an ever-growing burden
on the earth’s ecosystem (Worldwatch Institute, 2003).
In addition to information and communications technologies, there are many other
innovations that can help reduce household energy consumption, improve
automobile fuel efficiency, and eliminate pollution and toxic waste associated with
manufacturing processes. While these technologies exist, consumers, business
operators, and other stakeholders may not choose to use them.
Vehicles are a prime example. Technological innovations enable reduced emissions
and increased fuel efficiency in automobiles and light trucks. Cleaner fuels and
hybrid gas-electric cars have also entered the marketplace, and Ballard Power
Systems has been test-marketing its hydrogen fuel cells in vehicles for more than a
decade. Yet, it is not simply technological know-how that influences the adoption
and spread of innovation.
Despite the lower performance standards with regard to both fuel efficiency and
emissions standards in SUVs and light trucks, these vehicles dominated the auto
market in North America for several years. Even before the jump in gas prices in
2007 and 2008, studies indicated that raising fuel efficiency “standards for SUVs and
light trucks to the same level as cars would save American consumers $27 billion at
the gas pump and save over one million barrels of oil a day” (Becker, 2003). Despite
the environmental and financial costs, the trend for purchase of SUVs and light
trucks continued for several years.
In this case, was it innovation that drove uptake of SUVs, or was it creative
marketing campaigns of the North American auto industry? Were the
environmental and financial impacts the by-products of innovation, or were they
outcomes of changing consumer preferences that were driven by clever
advertisements and low-interest financing?
Privacy and Security
Along with the financial and environmental costs and benefits of innovation,
technological change, there are social costs and benefits. Among these are social
ethical concerns relating to health, safety, privacy, security, and ownership. (Some of
these issues are discussed in Chapter 12, which is your assigned reading in this topic
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section). In the words of de la Mothe, “ Innovation is a dynamic through which so
much new value and creative destruction flows” (2000, p. 5).
Issues of privacy and security have always been a concern for stakeholders dealing
with business, government, and other organizations. However, the growth of the
Internet and e-commerce has introduced a host of new concerns. Organizations
entrusted with customer or client information have a responsibility to protect the
privacy of these stakeholders and to use information according to an ethical protocol
that has emerged in e-commerce. Internet users and organizations handling private
information must also deal with Internet-enabled security breaches and malicious
damage caused by hackers.
In addition to the costs, Internet privacy and security issues are creating ethical as
well as legal concerns that are complicated by the size and scope of the industry as
well as the fact that users and abusers can operate in a “virtual” environment where
policing and control are particularly challenging.
Internet technology has also enabled piracy or theft of software, and created
logistical and ethical concerns surrounding copyright, production, and distribution
rights, especially in software and music. In 2003, the music industry began
prosecuting individuals who illegally download music from the Internet. It is
unlikely they intend to punish all the offenders; however, by taking legal action
against some offenders, the industry generated media attention, sending two
powerful messages to the virtual community. The first is that Internet users are not
invisible in cyberspace, and the industry is capable of tracking users’ activities. The
second is that Internet theft is a crime and it is punishable by law.
© John Fewings. www.fewings.ca
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Health, Safety, and Risks
Internet and other communications technologies are not the only technological
innovations influencing business and society. Automation and nanotechnologies are
transforming the manufacturing sector, influencing job and skills requirements and
cost-efficiencies. Transportation technologies have revolutionized leisure as well as
business travel and the movement of goods around the world in the last century.
Innovation in science, medicine, pharmaceuticals, agriculture, fisheries, forestry,
mining, and technologies have small-scale and wide-reaching impacts on
individuals, communities, economies, and the eco-system.
Can you list at least three technologies you are using today that you did not use five
to ten years ago? How have they influenced your life?
Technological change provides many benefits, but there are also risks as well. As
we mentioned earlier, there is pollution and environmental degradation
associated with the industry producing all the technological gadgets and
wizardry that so many people now require to get through daily life. Furthermore,
all these new technologies, with their built-in obsolescence, are creating
consumerism on a scale unprecedented in history. The insatiable need to dump
our outdated products and upgrade or acquire an even more sophisticated
version of the same gizmo might be good for business, but is it good for society?
Consumption, waste, pollution, and industrial activity all take their toll on
humans, plants, and animals in our ecosystem.
Perhaps this is the price that society pays for technological change, but what of other
risks to our health and safety? Technologies may be developed for a productive
purpose but used for a destructive one. For example, nuclear and aerospace
technologies have the power to enhance our quality of life, yet they also have the
potential to do great harm—and they have. Even seemingly benign technological
innovations, such as biological manipulation of plants, can be beneficial or harmful.
The debate on genetically modified food products (GMFs) is ongoing. Opponents
cite the potentially hazardous impacts on our health or the health of the agricultural
ecosystem, while advocates of biological innovations believe the agriculture and
food industry (and society) benefit from advances associated with the genetic
engineering of seeds, plants, and food ingredients.
The Good, the Bad, and the Ethics
Biotechnology, bioengineering, and innovations in medical science are creating
tremendous ethical debates in determining the risks and benefits to individuals and
society. Organizations and individuals are concerned about their rights with regard
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to food and health safety, health care, impacts on our environment, preservation or
creation of human life, and genetic manipulation of humans, plants, and animals.
Endless Innovation or Enough?
Innovations in medicine and medical technology enable organ transplants and
prolonged life. Biotechnology and bioengineering facilitate new drug treatments to
cure diseases, enhance human performance, eliminate wrinkles, and bring people
closer to the “fountain of youth.” In his book, Enough: Staying Human in an
Engineered Age, Bill McKibben examines the medical, social, ethical, and
philosophical arguments against certain technological advancements that he
challenges as taking us away from our humanness (2003). McKibben acknowledges
our technological and intellectual ability to continue to innovate, but suggests that
individuals, business, and society today, or someday soon, need to make decisions
about how much technology is enough.
Environmental Ethics
While the industry giant Monsanto battled a Saskatchewan farmer over ownership
of genetically modified seeds that had blown into the farmer’s fields, other
stakeholders, including ethicists, activists, organic farmers, bio-engineers, and
industry insiders, continued to debate the risks and benefits of genetically modified
soy beans, corn seed, and other food and animal crops. Health and safety is a
paramount concern, but what about the environmental ethic?
With the emergence of an industrial society in the 1800s and 1900s came an interest
in conquering nature for the benefit of humankind. While some western
philosophers believe the purpose of civilization is to dominate and control the
environment (or nature) and other living things, environmentalists and other
stakeholders in society dispute both the ethic behind this philosophy as well as the
practicalities of it. The Jane Jacobs, Dr. Carl Henrick Robèrt, Paul Hawken, and
many other environmental leaders and thinkers have suggested that patterning
economics and technological development after nature and integrating ecological
principles into planning and design will result in a healthier and more sustainable
society. Some writers use metaphors from nature to describe business paradigms.
For example, in Leadership and the New Science, Margaret Wheatley uses the
patterns of a stream as a metaphor for patterns in business and organizational
behaviour (1999).
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Optional Readings:
The following books describe the benefits of economics and/or business
development patterned after the principles of ecology and the processes of
nature:
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Jacobs, J. (2001) The nature of economies. Toronto, ON: Vintage Canada.
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Hawken, P. (1993). The ecology of commerce. New York, NY:
HarperBusiness.
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Robèrt, K.-H. (2002). The natural step story: Seeding a quiet revolution.
Gabriola Island, BC: New Society Publishers. Retrieved from
http://www.newsociety.com
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Nattrass, B., & Altomare, M. (2002). Dancing with the tiger: Learning
sustainability step by natural step. Gabriola Island, BC: New Society
Publishers.
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Nattrass, B. and Altomare, M. (1999). The natural step for business: Wealth,
ecology and the evolutionary corporation. Gabriola Island, BC: New Society
Publishers.
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Waage, S. (Ed.). (2003). Ants, Galileo, and Gandhi: Designing the future of
business through nature, genius, and compassion. Sheffield, UK: Greenleaf
Press.
Harnessing the Good
Issues regarding environmental ethics, other morals or values, and technological
developments will, no doubt, continue to provoke ethical debates about the risks,
benefits, and righteousness of innovation and change. After all, there is much good
that comes of innovation. A program at the University of Victoria (UVic) is an
example of the highest integrity being applied to technological innovation. More
than 300 UVic faculty, staff, and students volunteer “their time and expertise to
develop and test new devices” that assist people with disabilities to improve their
quality of life (Shore, 2003). “Machinists, computer scientists, electrical and
mechanical engineers, biologists, physiologists, psychologists, neuroscientists,
technicians, and students” from the university collaborate on projects such as:
…a sensor system that allows visibly impaired children to ride
tricycles, a communication system based on the detection of eye
movement, automatically opening laptops to assist people in
wheelchairs or people with limited hand movement, a device to
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teach developmentally delayed children how to grip bars, and a
lateral-movement rocking horse to teach children with
developmental disabilities how to balance…They’re all
innovative ideas that have, or are being, turned into reality by
the University of Victoria Assistive Technology Team. (Shore,
2003)
A “Knowledge Society”
“Knowledge, learning and information are centrally posed as the new currency” (de
la Mothe & Niosi, 2000, p. 5). Information and communication technologies,
automation, and other innovations are driving the emergence of an “information
society” (Lawrence & Weber, 2008, p. 279) or what Drucker calls the “knowledge
society” (Drucker, 2001, p. 1). “Knowledge will be its key resource, and knowledge
workers will be the dominant group in its workforce” (Drucker, 2001, p. 1).
According to Drucker, this new economy will rely heavily on “knowledge
workers”—teachers, accountants, scientists, engineers, doctors, and lawyers—but
the “knowledge technologist” will also be in demand. These are computer
technicians, software designers, paralegals, manufacturing technologists, analysts in
clinical labs and research facilities, who require specific training but still engage in a
fair amount of manual labour in their day-to-day professional activities (Drucker,
2001, p. 2).
A knowledge society can be borderless because “knowledge travels even more
effortlessly than money” (Drucker, 2001, p. 1). “As more business becomes
information and data-oriented, rather than requiring raw materials and production
facilities, jobs will be rapidly shifted to different locations and at little cost” (Hodges
& Grayson, 2002, p. 17).
Thus, technological transformations shaping the knowledge society are facilitating
globalization. The evidence is everywhere, according to Hodges and Grayson:
•
In Barbados, as many people now work in the IT industry as there are in the
sugar-growing industry.
•
Motorola has equipment design centres in both India and China.
•
Texas Instruments designs its most sophisticated computer chips in India
(Hodges & Grayson, 2002, pp. 17–18).
Throughout history, technological developments have revolutionized business,
culture, and communities, and we continue to innovate in electronics, computers,
telecommunications software, hardware and infrastructure, biotechnology,
medicine, and other sectors. Every country of the world is at some stage of
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technological transformation, although the pace of change varies dramatically. The
many influences of this powerful force on business, government, and society are
staggering. What impact will it have on our economy, our environment, our
communities, and our culture next year…and over the next ten or twenty years?
How will technology influence change? How will society embrace that change?
What will be the benefits and what will be the casualties and drawbacks to these
changes?
Activity 3-5: Technology’s Influence on Stakeholders and
Society
Introduction
In this activity, you will reflect on the influence of technological innovations on your
own life and consider the impact of new technologies on stakeholders in society
around you.
Instructions
Part A: Reading
•
Read Chapter 11: The Role of Technology.
Part B: Reflective Journal—Influence of Technology
•
In your journal, describe three recent technological initiatives that directly
affect your daily life and/or lifestyle.
•
How have these technologies influenced your life or required (or inspired)
you to change. Do you think this influence (or change) is beneficial or
detrimental to your wellbeing? Explain your answer.
•
Do these technologies influence other stakeholders with whom you interact
(at work, home, or in the community)? Briefly explain why and/or why not?
•
Do you have ethical concerns regarding these technologies? Defend your
answer.
Note: Your description could be a diagram, mind map, or written
paragraphs. What you want to focus on is brainstorming your ideas and
capturing information in a way that is relevant to you.
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Activity 3-6: The Ethics of E-business
Introduction
E-commerce and other business activities conducted through the Internet are
provoking the need to establish ethical guidelines to protect the privacy and security
of online customers. The following Discussion Case and eBC article provide some
ethical principles and guidelines for businesses and other organizations engaged in
e-commerce and other Internet-based marketing and communications activities.
Instructions
Part A: Reading
•
Read Chapter 12: Regulating and Managing Information Technology.
Part B: Reflective Journal—Uses and Abuses
•
According to the information presented in Chapters 11 and 12, the Internet
affects society both positively and negatively. In your opinion, what is
greater—the benefits from the Internet or the damage caused to society by the
Internet? Explain your answer.
•
Many businesses collect information on customers’ lifestyles and purchasing
preferences, and well as financial information about customers or clients. Is it
appropriate for organizations to share profiles of customers or clients (with
other organizations) without the knowledge or approval of those customers?
Defend your answer and identify your stakeholder perspective (i.e., are you
involved in the business of e-commerce or Internet-based marketing, are you
a consumer, or both?).
•
Given the prevalence of social networking websites, such as Facebook, how
do you think these public forums and communities can be used or abused to
gather market intelligence or information on potential customers, employees,
or business associates?
•
Review recent newspapers or magazines and look for one example of an
article that appears to present information from the perspective of a business
and one example of an article that presents information from a government
perspective. Do these articles also present other perspectives? Briefly describe
why you think these articles are or are not fair and balanced in their
reporting. Refer back to the CARS Checklist and use the checklist in your
assessment.
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References
Becker, D. (2003). I don’t care about the air. [Web page.] Retrieved from
http://web.archive.org/web/20030207055450/www.idontcareaboutair.com/facts/fuel.sh
tml
Canadian Broadcasting Corporation. (2003, September 2). E-democracy—Markham.
[Transcript.] The Current. Retrieved from
Cohen, N. (June 2001). What works: Grameen Telecom’s village phones. A digital dividend
study by the World Resources Institute. Retrieved from
http://www.digitaldividend.org/pdf/grameen.pdf
de la Mothe, J., & Niosi, J. (2000, September). Tools for analysing biotechnology. In J. de la
Mothe & J. Niosi (Eds.), Economics, science, technology and innovation series: The economic
and social dynamics of biotechnology, 21(3-5). Boston, MA: Kluwer Academic Publishers.
Drucker, P. (2001, November 3). A survey of the near future: The next society. Economist
316(8246).
Hawken, P. (1993). The ecology of commerce. New York, NY: HarperBusiness.
Hodges, A. & Grayson, D. (2002). Everybody's business: Managing risks and opportunities in
today's global society. London, UK: DK Publishing, Inc.
Lawrence, A., & Weber, J. (2008). Business and society: Stakeholders, ethics, public policy (12th
ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2014). Business and society: Stakeholders, ethics, public policy (14th
ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2017). Business and society: Stakeholders, ethics, public policy (15th
ed.). New York, NY: McGraw-Hill Higher Education.
McKibben, B. (2003). Enough: Staying human in an engineered age. New York, NY: Henry
Holt and Company, LLC.
Mobiles find right price for farmers. (2002, October 6). BBCNews: World edition. Retrieved
from http://news.bbc.co.uk/2/hi/technology/2290540.stm
Shore, V. (2003, October). UVic ingenuity goes on display at UVATT Open House. The
Ring: University of Victoria’s community newspaper 29(12). Retrieved from
http://communications.uvic.ca/ring/03oct02/news/uvatt.html
Wheatley, M. (1999). Leadership and the new science. San Francisco, CA: Berrett-Koehler
Publishers, Inc.
Worldwatch Institute. (2003). Resource center: Economy. Retrieved from
http://web.archive.org/web/20030823041920/http://worldwatch.org/topics/economy
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Module 4: Internal Forces and Stakeholders
(Internal "Circle of Influence")
Overview
This module explores some of the key internal forces influencing organizations in
business and society. This includes primary or “market” stakeholder groups
including owners or shareholders, boards of directors, consumers, customers or
clients, and employees. As you know, there are other primary stakeholder groups,
but this module focuses on these groups, and their particular roles, rights, and
responsibilities in businesses and other organizations.
Topics
This module covers four topics:
•
Topic 1: Shareholders and Governance
•
Topic 2: Consumer Stakeholders
•
Topic 3: Employee Stakeholders
•
Topic 4: Diversity in the Workplace
Topic 1 introduces you to corporate governance and two important stakeholder
groups—shareholders and boards of directors. This section focuses on corporate
governance and some of the particular challenges and responsibilities facing
businesses in Canada and the U.S. today. Governance refers to the overall control of
an organization’s activities and actions, and it is vital to all organizations whether
they are public, private, governmental, non-profit, or for-profit. Whether or not you
work in the corporate sector, business decisions and actions have direct and indirect
impacts on you, your family, your country, and the global community. Thus,
corporate governance and the control of organizations is important to everyone.
Topics 2 and 3 of this module cover two stakeholder groups to which you likely
belong—consumers and employees. Topic 2 explores a variety of consumer
protection issues and the impacts of consumerism on business and society. Topic 3
examines employees’ rights and responsibilities and the role of government and
management with respect to this issue.
Topic 4 of this module covers diversity in the workplace, employee and
management issues, and the role of government with respect to these areas.
As you progress through this module, we encourage you to reflect on your own
experience as a stakeholder and how the issues, actions, or events described in this
module affect you, your family, your community, and all Canadians. Also, given the
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expansion of globalization and global business development, consider how some of
the issues discussed in this module might be very different for consumers,
employees, managers, and other stakeholders in other parts of the world. Finally, we
encourage you to reflect on the interrelationship of ethics and corporate social
responsibility with some of these topics.
Learning Outcomes
By the end of this module, you will be able to:
•
Identify the rights and responsibilities of internal stakeholders.
•
Identify stakeholders involved in ensuring or enforcing the rights and
responsibilities of key internal stakeholders.
•
Identify impacts on internal stakeholders of other stakeholder perspectives,
actions, and decisions.
•
Describe internal forces influencing businesses and other organizations.
•
Discuss influences of the perspectives of stakeholders within the
organizations.
•
Describe a connection between corporate social responsibility, organizational
ethics, and the rights and responsibilities of internal stakeholders.
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Activity Checklist
✓
Complete and check off the following Module 4 components:
Read Module 4: Overview, Activities, Learning Outcomes, Resources
Read Topic 1: Shareholders and Governance
Complete Activity 4-1: Governance in Canadian Business
Part A: Reading
Part B: Reflective Journal—Governance Issues
Read Topic 2: Consumer Stakeholders
Complete Activity 4-2: Consumer Protection and Genetically
Modified Foods (GMFs)
Part A: Reading
Part B: Reflective Journal—The GMF Debate
Complete Activity 4-3: The Story of Stuff
Part A:Online Video
Part B: Reflective Journal—Stuff
Read Topic 3: Employee Stakeholders
Complete Activity 4-4: Internet Use in the Workplace
Part A: Reading
Part B: Reflective Journal—Personal Use of Telephones and Internet
Read Topic 4: Diversity in the Workplace
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Complete and check off the following Module 4 components:
Complete Activity 4-5: Diversity and Equal Opportunity in the
Workplace
Part A: Reading
Part B: Reflective Journal—Workplace Equity Issues
Complete Assignment 4
Submit Assignment 4 for assessment and grading
Complete and submit the Final Project
Note: The Final Project accounts for 40% of your course mark. The project
will evaluate your knowledge of the information presented throughout the
course and draw on activities and assignments completed in Modules 1
through 4.
We suggest that you read through your Final Project before starting each
module. Make notes on the information you think is applicable to the Final
Project as you read through the module and the textbooks. With the help of
your notes, you should be able to quickly complete your Final Project at the
end of the course.
Resources
Module content is drawn from the following resources, as well as from those cited in
the references listed at the end of each topic. You may be interested in reading the
following books and/or articles in part or in their entirety. You can find some of
them in TRU Library. Use Summon to search across the Library’s content. Also, see
TRU Library’s business research guide.
Aaker, D. A., & Day, G. S. (Eds). (1982). Consumerism: Search for the consumer interest. New
York, NY: Free Press.
Canadian Coalition for Good Governance (2005b). Corporate governance guidelines for
building high performance boards, Version 1, November 2005. Updated March 2010:
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http://www.ccgg.ca/site/ccgg/assets/pdf/CCGG_Building_High_Performance_Boards
_Final_March_2010.pdf
Canadian Heritage-Patrimoine Canadien (2004). Canadian Diversity: Respecting Our
Differences. Retrieved from
http://www.canadianheritage.gc.ca/progs/multi/respect_e.cfm
Donaldson, T., & Werhane, P. (Eds.). (2008). Ethical issues in business: A philosophical
approach (8th ed.). Upper Saddle River, NJ: Prentice Hall.
Elgin, D. (1993). Voluntary simplicity: Toward a way of life that is outwardly simple, inwardly
rich. New York, NY: Quill.
Harvey, C., & Allard, M. J. (2001). Understanding and managing diversity: Readings, cases, and
exercises. Upper Saddle River, NJ: Prentice Hall.
Hodges, A., & Grayson, D. (2002). Everybody's business: Managing risks and opportunities in
today's global society. London, UK: DK Publishing, Inc.
Human Resources and Social Development Canada [HRSDC]: Labour. (2008a).
Employment equity. Access updated information by searching ‘employment equity’
at http://www.hrsdc.gc.ca/eng/home.shtml
Lodziak, C. (2002). The myth of consumerism. London, UK: Pluto Press.
Lawrence, A., & Weber, J. (2008). Business and society: Stakeholders, ethics, public policy (12th
ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2014). Business and society: Stakeholders, ethics, public policy (14th
ed.). New York, NY: McGraw-Hill Higher Education
Lawrence, A., & Weber, J. (2017). Business and society: Stakeholders, ethics, public policy (15th
ed.). New York, NY: McGraw-Hill Higher Education.
Roberts, S. (1998). Harness the future: The 9 keys to emerging consumer behaviour. Toronto,
ON: John Wiley & Sons.
Strandberg, Coro. (2005, March). The convergence of corporate governance and corporate
social responsibility. A study sponsored by the Canadian Co-operative Association.
Available at http://corostrandberg.com/wp-content/uploads/2005/12/corporategovernance.pdf
Tapscott, D., & Ticoll, D. (2003a). The naked corporation. Toronto, ON: Free Press/Viking
Penguin Canada.
Willard, B. (2002). The sustainability advantage: Seven business case benefits of a triple bottom
line. Gabriola Island, BC: New Society Publishers.
Willard, B. (2005). The next sustainability wave. Gabriola Island, BC: New Society
Publishers.
Wilson, T. (1996). Diversity at work: The business case for equity. Toronto, ON: John Wiley &
Sons.
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Topic 1: Shareholders and Governance
Introduction
“The term corporate governance refers to the process by which a company is
controlled, or governed” (Lawrence & Weber, 2017, p. 283). Managers are
accountable to stakeholders, including creditors, shareholders and/or owners of the
company, government agencies, and employees. Employees may be stakeholders in
terms of their role in day-to-day operations, and they may also own stock in the
company.
Shareholders own the company. A private company may be a family-owned
enterprise, or it may belong to one owner, a few, a few dozen, or many, many
shareholders. In contrast, public companies typically have thousands of
shareholders with some of the stock (or shares) in the company changing hands in
daily stock market trading. Despite the large number of shareholders, public
companies tend to have a few shareholders (or small numbers of institutional
investors that represent the collective investment of pension funds or mutual fund
buyers) who dominate the stock holdings. Sometimes the dominant shareholders are
the original founders or financiers, but not always.
Corporate Governance
Shareholders hold authority within a firm because they are the collective owners.
However, upper management or senior executives typically make most decisions,
and therefore control most companies. Boards of directors play a key role in
corporate governance. They are an elected group of individuals who have “a legal
duty to establish corporate objectives, develop broad policies, and select top-level
personnel,” and to review the performance of management to ensure that “the
company is well run” and shareholders’ “interests are protected” (Lawrence &
Weber, 2017, p. 283).
While many not-for-profit organizations have boards of directors and adhere to
governance issues, the focus of this section is on the private sector. By this we mean
public or private corporations operating in a for-profit environment. Your textbook
tends to address issues in the context of large corporations, most of which are public
companies that trade on at least one exchange and are owned by thousands of
shareholders. Nevertheless, many of the governance issues discussed in your text
are relevant to small and not-for-profit organizations, as well.
Managers control the day-to-day operations of businesses and other organizations.
They represent the interests of a larger group of stakeholders, including customers
or clients, suppliers, shareholders or investors, employees, government agencies,
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and community members. Of course, it is assumed that individuals also have their
own interests in mind when they work for a business or organization. Governance
refers to policies and procedure that aim to help ensure that managers serve the
interests of shareholders and other stakeholders. According to the Conference Board
of Canada, governance arrangements can include guidelines and controls such as the
following:
•
The power given to management
•
Controls over how management can use power (e.g., boards of directors may
oversee management-level decision-making)
•
Management’s accountability to stakeholders (e.g., guidelines or rules about
what issues are within a leader’s individual control and what issues or
decisions must be vetted by a board of directors or advisors)
•
Formal and informal processes by which stakeholders influence management
decisions (The Conference Board of Canada, 2003)
Thompson Rivers University
In recent years, corporate scandals and corrupt practices in businesses and not-forprofit organizations has prompted calls for more effective corporate governance.
This includes greater awareness of the responsibility and accountability of boards of
directors and a movement toward increasing shareholder involvement. Professor
Len Brooks affirms this in his description of Enron Corp.: “This company
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experienced a failure of the governance process . . . and as a result, we find that
management was out of control, certainly out of control of the board of directors”
(Brooks, as quoted in McFarland, 2002, p. B9).
Shareholder Influence on Governance
The primary reason that individuals and institutions invest in corporate stock is to
pursue financial gain, although some shareholders also seek corporate control.
Typically, shareholders influence the price of shares by creating demand that pushes
prices up. Conversely, en masse selling of stock pushes prices down when buyers
will only respond to lower prices.
Individual participation in the stock market fluctuates with investor confidence in
the public markets, and with personal interest in investment opportunities. In
today’s public markets, institutional investors are playing increasingly bigger roles
influencing both the price of stock and sometimes also influencing activities of the
companies in which they invest. Institutional investors pool the equity of large
groups of individuals into a collection of investments. Pension funds and mutual
funds are two significant categories of institutional investors. Even people who do
not have stock market trading accounts can be investing in the stock market by way
of their pension plan at work or through investment in mutual funds. Unless you
pay attention to the list of companies in which these funds invest, you may not even
be aware that you are an owner of Shell, Ballard Power, Intrawest, DeBeers, or other
large public companies. (Institutional investors are discussed briefly in Chapter 13
on page 292).
Institutional investors have the same rights and responsibilities as other
shareholders. However, larger funds may have considerable holdings in a particular
company, and this enables them to flex collective shareholder powers if they so
choose. In recent years, institutional investment groups have become influential
stakeholders in business and society, and they “have become more assertive in
promoting the interests of their members” (Lawrence & Weber, 2017, p. 292).
One of Canada’s larger institutional investment groups, the Ontario Teachers’
Pension Plan (OTTP), uses its substantial shareholder power to influence corporate
governance issues. In 2002, the CEO of (OTPP), Claude Lamoureux, co-founded the
Canadian Coalition for Good Governance (CCGG). CCGG’s Annual Report 2007
states that assets would have grown from $350 billion in 2003 to $1.4 trillion in 2008,
and the number of members from 13 to 45 (Canadian Coalition for Good
Governance [CCGG], 2007, p. 1). “The mission of the Canadian Coalition for Good
Governance is to represent Canadian institutional shareholders in the promotion of
corporate governance practices that best align the interests of boards and
management with those of the shareholder” (CCGG, 2008).
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Coalition members use their collective voting power to encourage the corporations
in which they invest, “to follow the best practices of good governance” (CCGG,
2003b). Said Lamoureux, “For us, governance is a means to improve performance . . .
We own these stocks . . . And we have a responsibility to act like owners”
(Lamoureux, as quoted in Gray, 2003a, p. 46).
Good Governance
The coalition developed guidelines for good governance that focus primarily on
improving the boards of directors of corporations to achieve effective and ethical
management. The guidelines include how to select directors with extraordinary
qualities, how to structure boards to create strong governance teams, and how to
ensure the processes of good governance are followed (CCGG, 2003b). These are not
new ideas. In Business Week’s 1996 “report card on corporate governance,” writers
Byrne and Melcher listed similar board attributes and performance characteristics as
those listed in the CCGG’s guidelines. So, why is it that the coalition felt the need to
organize and to develop its own set of guidelines for corporate governance?
According to Stephen Jarislowsky, co-founder of the CCGG, “’Investor confidence in
the capital system has been badly shaken by events that in many cases could have
been prevented if boards of directors had provided vigorous and competent
oversight of corporate executives . . .’” (CCGG, 2002).
The objectives of the CCGG include:
-
Ensuring that all public corporations have highly qualified boards of
directors who understand that they are accountable only to the
shareholders in the carrying out of their fiduciary duties.
-
Ensuring that boards of directors insist on excellent and ethical
management.
-
Ensuring that that the board of directors supervise management
proactively.
-
Ensuring that all committees of the board of directors are independent
from management and highly qualified.
-
Ensuring that external auditors follow policies of transparent accounting,
reporting directly to the audit committee thereby ensuring independence
from the management of the company.
-
Supporting compensation schemes that reward employees for superior
performance.
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Developing a common position on acceptable accounting standards and
financial disclosure through input with the various regulators and
standard setting organizations.
Reproduced courtesy of the Canadian Coalition for Good Governance, www.ccgg.ca.
The coalition considers the role of the board of directors as key to good governance,
and it encourages its membership to use their collective power as shareholders to
advance this agenda. In addition to addressing the roles and responsibilities of
boards, the CCGG is also concerned with other issues, such as fair and reasonable
compensation, ethical management, and transparency in accounting (CCGG, 2005).
Given some of the high profile corporate governance scandals reported in the press
in recent years, it is not surprising that these issues are of concern to the CCGG.
Today, investment groups, management consulting firms, watchdog organizations,
financial institutes, and institutional investors around the world consider
“environmental, social, and governance” (ESG) issues in evaluating business
performance and investments. For example, Mercer is an international consulting
firm that delivers human resource and related financial advice (Mercer, 2008a).
Beyond a set of guidelines, Mercer applies an assessment of managers, [integrating]
environmental, social and governance issues into the assessment (Mercer, 2008b).
According to Mercer, “institutional asset owners are becoming increasingly
interested in whether managers behave as active owners of capital and whether they
reflect the materiality of ESG in their investment decision-making” (Mercer, 2008b).
Tim Gardener, global chief investment strategist at Mercer explains: "’In the past, it
was just a small group of organi[s]ations that were interested in active ownership
and environmental, social and governance analysis. However, there are a growing
number of mainstream investors who believe these issues can have an impact on
long-term investment performance’" (Mercer, 2008b).
Optional Resources:
Search online for:
-
Canadian Coalition for Good Governance (CCGG)
On the website, search for:
-
Corporate Governance Guidelines for Building High Performance Boards
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Governance Self Appraisal Form based on the Corporate Governance
Guidelines for Building High Performance Boards. (This is a tool for selfassessment that can be used by organizations of boards of directors.)
-
Canadian Business magazine publishes an annual survey of the twenty-five
highest- and lowest-ranked boards of directors in Canadian businesses.
The ranking is based on such criteria as independence, accountability, and
performance. You can search for these annual surveys in Canadian
Business magazines through TRU Library.
-
Search for the term “Environmental, Social, Governance” (ESG) for
discussion of companies, tools, and methodologies for ESG assessment, or
information on companies applying ESG analysis in management and/or
investment analysis.
Governance Reform
The power of investment funds is evident by their financial influence in the stock
markets. However, their influence on corporate governance has gained media
attention in recent years and support from critics of poorly governed companies. In
2003, the Ontario’s Teachers’ Pension Plan (OTPP) created a stir when they withheld
support for election of directors at several companies because OTPP was not
satisfied with the performance of the boards of these companies on key matters.
For example, OTPP targeted the board of Magna International Inc. when the company
approved a pay package of more than $52 million for founder Frank Stronach. Teachers’
voted against the board because they believed the pay to Stronach was unreasonably
high (Gray, 2003b), especially given the fact that his role was only in a consulting
capacity, with his daughter holding the senior executive position at that time (Watson,
2003, p. 17). Despite their efforts, the pension fund’s collective voting power did not
stand up against the Stronach family, who controlled more than fifty per cent of the
voting shares in Magna while actually owning less than one per cent of the company’s
equity (Gray, 2003b). Advocates of governance reform list the conflict of interest
surrounding family members on boards of directors and the duel-class share structure
as two other areas of concern (Gray, 2003b).
While the Teachers’ pension fund did not change things at Magna, their vigilance along
with the coalition’s collective power may help to reform corporate governance in Canada.
While many applaud their influence, critics claim that tighter regulations and increased
shareholder activism is resulting in more paperwork with most of the benefits going to
lawyers, accountants and consultants, not the corporate bottom line (Gray, 2003b).
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Among the critics, Lord Conrad Black, one of Canada’s most successful business
leaders, called corporate governance a fad, with zealots, and a tendency to excess
(Black, quoted in Gray, 2003b). It is interesting to note that less than a year after
making these statements, Black was forced to step down as Chief Executive Officer
(CEO) of Hollinger International due to an investigation about collecting $7.2 million
in non-compete fees without proper authorization from the board of directors
(Stewart & Waldie, 2004).
Speculation about Black’s impending resignation caused share prices to increase
in the few months preceding his announcement, and on the day that Black
stepped down as CEO, Hollinger’s stock rose another six per cent (Gray, 2003b).
Share value increased, despite calls for resignation of Hollinger’s board of
directors as well, some of whom were Lord Black’s family members. For Black,
this was not the first scandal surrounding business improprieties. Black also
resigned as chair of the board of directors and in the fall of 2004, the Securities
Exchange Commission filed a civil fraud lawsuit against Black and some of his
colleagues. The following year, Black was arrested on criminal fraud charges and
subsequently convicted of three counts of fraud and one count of obstruction of
justice. Despite appealing the conviction, Black was sentenced to seventy-eight
months in prison (“Conrad Black sentenced,” 2007).
Ethical or legal transgressions sometimes devastate the share value of publicly
trading companies, impacting shareholders who assume that the companies abide
by good governance practices. The OTTP and shareholder activists, such as
representatives from socially responsible investment (SRI) funds, do not simply
assume companies are practicing good governance. They are watchdogs, using their
voting power to influence governance practices and their investment power to
choose companies that meet their standards of good governance. Claude
Lamoureaux of Teachers’ believes that “good governance is just good business, and
improving it is a vital way to improve performance” (Gray, 2003b). In Canada, there
is no quantitative research to back Lamoureaux’s claims. However, in the U.S., a
study done by Wilshire Associates Inc. showed a positive correlation between
improved governance and share performance (Gray, 2003b).
Accounting and Accountability
The extreme to which Enron Corp. used accounting practices to inflate revenues and
misrepresent the true financial condition of the company is almost too outrageous to
believe. Yet, despite the public outrage over this debacle, many corporations
continue to employ accounting and reporting practices that do not accurately
disclose financial information to stakeholders.
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The CCGG identifies accounting procedures as another issue of concern for good
governance, and they are not alone. Gaps and inconsistencies in regulations enable
companies to provide misleading financial information, and the difference between
reality and reporting can be staggering. In response to the increasing scrutiny of
securities commissions, some public companies are disclosing vastly different
financial situations despite no material changes in their operations.
For example, Crystallex International Corp., which trades on the Toronto Stock
Exchange, “took a trip to the confessional . . . reporting millions of dollars of
retroactive write-downs” (Baines, 2003, p. 13). For Crystallex and its shareholders,
the result was to reverse an earlier-reported profit of $3.4 million to a loss of $40
million (p. 13), a change that could significantly influence shareholder confidence in
the company.
Good governance alone may not be sufficient to protect stakeholders from unethical
or illegal accounting practices. The accounting profession has yet to establish specific
standards and guidelines for reporting that eliminates the opportunity for ambiguity
or manipulation of information, and regulators have allowed these practices to exist
without sufficient oversight. Audits are conducted with the assumption of
management’s “good faith.” The weakness of the audit process is that few
companies would willingly pay more money to get auditors to actively look for
wrong-doing and audited financial statements are not vetted for fraud.
In the case of Enron, the external audits were done by the same firm that Enron paid
to do the internal audit, and “were compromised by conflicts of interest” (McFarland,
2002, p. B9). Some of Enron’s staff expressed concern about unethical decision making
and questionable account practices, but the board of directors ignored internal whistle
blowers and “suspended the code of conduct rules . . . ” (p. B9). This was poor
governance, indeed. Without good governance, the absence of accountability and
lapse in ethical management contributed to the creation of a corrupt corporate culture.
Enron and WorldCom and other scandals cost investors billions of dollars when share
prices collapsed, and some companies closed their doors.
In response, the Sarbanes-Oxley (SOX, or Sarbox) Act, also known as the Public
Company Accounting Reform and Investor Protection Act, was introduced into law
in 2002 for companies trading on U.S. stock exchanges. This “legislation establishes
new or enhanced standards for all U.S. boards, management, and public accounting
firms” (Wikipedia, 2008). It includes descriptions of corporate board responsibilities
and a host of criminal penalties for non-compliance with this law (Wikipedia, 2008).
There is some debate of the costs and benefits of Sarbox. Supporters contend that
strengthening corporate accounting controls and other aspects of the legislation “has
played a useful role in restoring public confidence” in capital markets, but
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opponents claim the act “has introduced an overly complex and regulatory
environment,” which is reducing American competitiveness “against foreign
financial service providers”(Wikipedia, 2008).
Transparency and Corporate Social Responsibility
While the Canadian Coalition for Good Governance calls for transparency in
accounting and financial reporting (CCGG, 2003a), some stakeholders are
demanding greater transparency and accountability in all aspects of business
operations and management (Hodges & Grayson, 2002). Business consultants and
authors Don Tapscott and David Ticoll coined the term “naked corporation” in their
book of the same title (2003a). A naked corporation is one that is open, accountable,
and transparent to all its stakeholders. This goes beyond disclosure of basic financial
information.
According to Tapscott and Ticoll (2003a), if firms are not open and accountable, their
stakeholders will find out anyway. “People and institutions that interact with firms
are gaining unprecedented access to all sorts of information about the corporate
behaviour, operations, and performance” (p. xi). The Internet is one of the tools that
provide low-cost access to information and a rapid means of widespread
communications for shareholders, activists, and the media. “Stakeholders now
scrutinize the firm as never before, inform others, and organize collective responses.
The corporation is becoming naked . . .” (p. xi) and, if it must expose itself, it should
try to look its best.
The Naked Corporation
Tapscott and Ticoll claim transparency is an “old force with new power” with “farreaching implications for most everyone” in business and society (2003a, p. xi).
According to the authors, “at the end of 2003 the corporate world was still
weathering a crisis of trust on a scale unseen since the Wall Street crash of 1929” and
greater transparency is the panacea for this crisis (p. xii). “Firms that exhibit ethical
values, openness, and candour have discovered that they can better compete and
profit” (p. xii).
Tapscott and Ticoll recommend that corporations maintain the privacy of their trade
secrets and personal data, but they question the ethics and values of organizations
that fail to disclose other information, suggesting that these firms may be masking
“shoddy financial deals and inferior or unsafe products” (2003b). In a critique of The
Naked Corporation, an article in The Economist challenged transparency, citing the
dangers of exposing corporations to anti-capitalist media and activities. “Capitalism
is not a fair fight and, as nobody is perfect, there will always be things happening
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within a firm that its enemies can seize upon to embarrass it, or worse” ("Get
Naked,"2003).
Is business an unfair fight? Is fear of media or activists a reason to avoid
transparency? Open and engaging, or selective and secretive—which approach will
benefit stakeholders? Which stakeholders will benefit? Which stakeholders will
suffer?
According to Tapscott and Ticoll, research shows that transparency pays off for
companies with good governance, quality products and service, and consideration
for their employees, their community, and the environment (2003b). A naked
corporation engages with its stakeholders, building “transparency and integrity into
their business strategy, products and services, brand and reputation, technology
plans, and corporate character” (Tapscott & Ticoll, 2003a, p. xiv). Public exposure
encourages ethical and effective management and good governance, because when
you are naked, you cannot hide your flaws.
The Link between CSR, Stakeholders, and Governance
The stakeholder model of management, which we discussed in Module 1, also
advocates of transparency and accountability. This model calls for “corporations to
communicate openly and clearly with stakeholders. . . ” (Preston, n.d., n.p.). It
recommends corporations strive to be accessible, “and take relevant stakeholder
interests into account in decision making” (Preston, n.d., n.p.). Similarly, corporate
social responsibility (CSR) espouses the responsibilities of organizations to a broader
spectrum of stakeholders than those represented by the primary stakeholder group.
In the traditional governance model, management is accountable to the board of
directors and investors or shareholders. However, as we discussed in Module 1, a
large web of market and nonmarket stakeholder groups influence and are influenced
by an organization. A growing number of corporations are realizing that they are
accountable to a large web of these primary and secondary stakeholders, and they
are recognizing opportunities associated with stakeholder engagement.
At its most basic, corporate social responsibility (CSR) is about seeing business as an
integral part of Canadian society, the global community and the environment that
supports it. A business does not exist in isolation. It relies on a multitude of
relationships with customers, employees, suppliers, communities, investors, and
others—in other words, stakeholders.
Stakeholder engagement comprises the formal and informal ways of staying connected
to the parties who have an actual or potential interest in or effect on the business.
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Stakeholder engagement spans a continuum of interaction that reflects the degree of
influence stakeholders have in decision making. At one end, businesses simply
inform stakeholders of their plans. At the other, stakeholders are deeply involved
from early in the decision-making process. In between are varying degrees of
consultation and participation. Suncor Energy characterizes three positions on the
continuum as information sharing, consultation and collaboration. In this guide,
stakeholder engagement includes, at a minimum, a genuine effort to understand
stakeholder views. (Industry Canada, 2007)
Some businesses perceive the convergence CSR and governance in the context of risk
(Strandberg, 2005). For example, a factory’s operations may pose environmental,
health or safety risks to employees or the communities in which they operate. Boards
of directors and executive leadership may be held accountable for these risks, so
good governance would evaluate and ideally eliminate or mitigate these risks.
Others connect governance and CSR as a values issue (Strandberg, 2005). That is, the
leadership of a company may integrate stakeholder accountability and responsibility
into management and decision-making, looking beyond risk to consider corporate
environmental and social responsibilities and opportunities (Strandberg, 2005).
The Power of External Stakeholders
Module 2 introduced socially responsible investment (SRI) funds and their use of
social screens to select investments in socially responsible businesses. A growing
number of pension funds also use social screens. Individuals and groups invest in
socially responsible investments on principle or because they want to exert control
over the companies in which they invest. Shareholders are also becoming active by
“sponsoring social responsibility shareholder resolutions” (Lawrence & Weber, 2017,
p. 293). These resolutions are typically presented at companies’ annual general
meetings in order to use shareholder voting power to dictate improvements or
actions with regard to one aspect or another of a company’s CSR performance.
As a result of shareholder activism, these stakeholders are exerting increasing power
and influence over management of the company. As we discussed, large
institutional investment groups, such as Ontario Teachers’ Pension Plan, are also
using their voting power to influence governance and decision making in public
companies. Pension funds and SRIs may not actually attract active voting by their
many shareholders, but they can use the power of the proxy (absentee ballot) in
order to represent large numbers of shareholders and a significant percentage of the
shares in companies. The more shares, the more votes, and therefore the greater the
influence over management and decision making.
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In 2003, the large transnational company, PepsiCo, battled through shareholder
ballots with some of its vocal shareholder groups. The publicly trading company
sought support from the U.S. Securities and Exchange Commission to prevent a
shareholder vote on the company’s responsibility to world water scarcity issues.
Denied their request, a resolution was filed by Boston-based Trillium Asset
Management Corporation and Vancouver-based Real Assets Investment
Management Inc. (now called Inhance Investment Management, with majority
ownership by Vancity Credit Union). In the first resolution of its kind, the two
socially responsible investment (SRI) funds “called on PepsiCo to consider the
new business risks it faces in a world rapidly running out of fresh water” and to
“develop plans to address the emerging crisis of global fresh water scarcity”
(Real Assets, 2003).
Given that PepsiCo earns thirty-seven per cent of its sales from beverages that use
water as their base ingredient, and bottled water is one of their fastest growing
product lines, water scarcity is a business concern to this multi-national corporation
(Real Assets, 2003). For the socially responsible investment funds, water scarcity is
also a social and environmental concern around the world and a concern for which
they believe this company should take some responsibility.
The two socially responsible investments funds (SRIs) garnered significant
shareholder support, with significant ramifications for PepsiCo. This is a new
approach to environmental activism and corporate social responsibility, one in
which shareholders and shareholder activists use their voting power to connect
global environmental issues with corporate social responsibility.
Activity 4-1: Governance in Canadian Business
Introduction
The purpose of this activity is to encourage you to build your awareness of issues in
organizations and the role of media, shareholders, and other stakeholders in
influencing good governance.
Instructions
Part A: Reading
•
Read Chapter 13: Shareholder Rights and Corporate Governance. Despite the
American perspective, the topics discussed in this chapter are all relevant to
shareholder and governance issues in Canada. You will note that some of the
issues, such as socially responsible investment (called “social investment” in
this chapter), were introduced briefly in Module 2.
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Part B: Reflective Journal: Governance Issues
•
Find two articles in a newspaper or magazine, such as the Globe and Mail,
the National Post, MacLean’s magazine, or Canadian Business, that describe
corporate governance activities of a publicly trading company. Choose a
company that trades on a Canadian stock exchange or has corporate offices in
Canada.
Hint:
If you do not have access to hard copies, look online for the websites of the
newspaper or magazine you choose.
•
Based on your research, describe the governance issue or issues.
•
List ways the company tried to improve its corporate governance or
recommend way(s) in which you think the company should improve.
•
In your opinion, what is the most important or significant governance
initiative that this company can undertake? Explain your answer by
discussing the impact of this initiative on the stakeholders of the company.
•
Is there any indication of efforts to increase transparency of reporting and
communications at the company in the articles you read? Alternatively, are
there any indications that the company is avoiding transparency and/or
accountability? Explain your answer.
Note: Your description could be a chart, diagram, mind map, or written
paragraphs. Focus on brainstorming your ideas and capturing information in
a way that is relevant to you. This process will help you to gather ideas or
observations you want to make, and to analyze and effectively communicate
the information.
References
Baines, D. (2003, June 23). Digging deeper. Canadian Business, 76(12), 12–13.
Byrne, J., & Melcher, R. (1996). The best and worst boards: Our new report card on
corporate governance. Business Week, 3503, 82–98.
Canadian Coalition for Good Governance (2002, June 27). Institutional investors
form coalition to fight for improved corporate governance. The Voice of the
Shareholder.
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Canadian Coalition for Good Governance (2003b, September 15). Canadian Coalition
for Good Governance sets out guidelines for corporate Canada [Media release].
The Voice of the shareholder.
Canadian Coalition for Good Governance (2005). Canadian Coalition for Good
Governance recognizes Canada’s leaders in corporate disclosure. The Voice of the
shareholder. Retrieved from http://governancefocus.blogspot.ca/2005/09/canadiancoalition-for-good-governance.html
Canadian Coalition for Good Governance (2007). 2007 annual report. Retrieved, from
http://www.ccgg.ca/site/ccgg/assets/pdf/33670_Annual_layout.pdf
Canadian Coalition for Good Governance (2008). How the CCGG works to improve
governance. The Voice of the shareholder. Canadian Coalition for Good
Governance. (2008; 2013). Mission and objectives. The Voice of the shareholder.
Retrieved from
http://www.ccgg.ca/index.cfm?PAGEPATH=About_CCGG/Mission_Objectives&
ID=17612
Conference Board of Canada (2003). Governance and corporate social responsibility.
Retrieved from http://www.conferenceboard.ca/GCSR
Conrad Black sentenced to 78 months in jail. (2007, December 10). CBCnews.ca.
Retrieved from http://www.cbc.ca/money/story/2007/12/10/conradsentence.html
Get naked. The Economist, 369(8346). Available at
http://www.economist.com/node/2137974
Gray, J. (2003a). Shareholder no. 1. Canadian Business, 76(14/15), 40–46.
Gray, J. (2003). Oh lord. Canadian Business, 76(23), 34–35.
Gray, J., Holloway, A., & McClearn, M. (2003, August 5–18). How the boards rank.
Canadian Business, 76(14/15), 59–61.
Hodges, A., & Grayson, D. (2002). Everybody's business: Managing risks and
opportunities in today's global society. London, UK: DK Publishing, Inc.
Industry Canada. (2007, August 13). Corporate responsibility. Part 3: The importance of
stakeholder engagement. Retrieved from http://www.ic.gc.ca/epic/site/csrrse.nsf/en/rs00138e.html
Lawrence, A., & Weber, J. (2008). Business and society: Stakeholders, ethics, public policy
(12th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2014). Business and society: Stakeholders, ethics, public policy
(14th ed.). New York, NY: McGraw-Hill Higher Education.
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Lawrence, A., & Weber, J. (2017). Business and society: Stakeholders, ethics, public policy
(15th ed.). New York, NY: McGraw-Hill Higher Education.
McFarland, J. (2002, March 20). Enron managers “out of control,” conference told.
Globe and Mail, p. B9.
Mercer LLC. (2008a; 2013). About Mercer. Retrieved from
http://www.mercer.ca/aboutmercer.htm?siteLanguage=1007
Mercer LLC. (2008b, May 21). Mercer manager research developed to consider
environmental, social and governance factors. Available at
http://www.accountability-central.com/nc/single-view-default/article/mercermanager-research-developed-to-consider-environmental-social-and-governancefactors/
Preston, L. E. (n.d.). Consensus statement on the stakeholder model of the corporation.
Rotman School of Management, University of Toronto.
Real Assets. (2003, May 8). PepsiCo faces new risks in a world running out of water, say
shareholders [News release]. A synopsis of this issue is available at
http://www.uusc.org/content/shareholder_activists_issue_new_%2526%2523039
%3Bpepsi_challenge%2526%2523039%3B_human_right_water
Stewart, S., & Waldie, P. (2004, January 9). Analysis raises questions about his
income, expenses. The Globe and Mail, A1. Retrieved from
http://www.theglobeandmail.com/news/world/analysis-raises-questions-abouthis-income-expenses/article992166
Strandberg, C. (2005, March). The convergence of corporate governance and corporate
social responsibility. A study sponsored by the Canadian Cooperative Association.
Retrieved from http://corostrandberg.com/wpcontent/uploads/2005/12/corporate-governance.pdf
Tapscott, D., & Ticoll, D. (2003a). The naked corporation. Toronto, ON: Free
Press/Viking Penguin Canada.
Tapscott, D., & Ticoll, D. (2003b, October 14). The naked corporation. The Wall Street
Journal Online. Retrieved from
http://online.wsj.com/article/0,,SB106608157577651000,00.html
Watson, T. (2003). A tale of two executives. Canadian Business, 76(11), 17.
Wikipedia. (2008). Sarbanes–Oxley Act [Web page]. Retrieved from
http://en.wikipedia.org/wiki/Sarbanes-Oxley_Act
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Topic 2: Consumer Stakeholders
Introduction
Consumers are market (or primary) stakeholders. They are customers or clients that
influence organizational decisions and activities. Conversely, businesses and other
organizations can exert power and influence over consumers through marketing,
advertising, and through day-to-day operations and their presence in a community.
“Safeguarding consumers while continuing to supply them with the goods and
services they want, at the prices they want, is a prime social responsibility of
business” (Lawrence & Weber, 2017, p. 302). Some businesses and organizations
fulfill this responsibility; others do not.
Consumer Protection
In Canada, consumer protection is a right of all citizens. Consumers are at risk from
unsafe or unreliable products, and some organizations abuse customers with unfair
pricing or unreasonable conditions of sales or service. False advertising is another
unethical practice that consumer protection aims to guard against in our society, and
many consumers are duped by misleading or confusing labeling on products. In
recent years, the right to privacy has also become an increasing consumer protection
concern as the Internet enables organizations to collect and transmit all sorts of
information about customers, patients, clients, or other consumers.
Government agencies and consumer advocacy groups serve as watchdogs for
consumer rights and protection. Product liability laws and other consumer
protection laws are in place to support consumer protection, but proactive
businesses and other organizations establish and adhere to their own high standards
of quality and responsibility to consumers. Socially responsible companies
undertake a variety of initiatives for anticipating and satisfying customer
expectations.
Government’s Role in Consumer Protection
In Canada, a number of federal and provincial agencies provide services aimed at
protecting the rights and interests of consumers. For example, Transport Canada
handles road and transport safety concerns. Among other services, they provide
consumer information and enforce standards and regulations with regard to airbags
in cars, vehicle defects, recalls, and cellular phone use while driving.
Transport Canada also oversees consumer protection for airline travel, including
fairness in pricing and procurement, as well as airline and airport safety issues.
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The Canadian Food Inspection Agency
Despite the significant role that federal and provincial agencies play in consumer
protection, many Canadians pay little attention until events generate media interest.
The Canadian Food Inspection Agency (CFIA) influences Canadians each and every
day because they deliver all federal inspection services related to nutrition and food
labelling, food safety (such as food alerts and recalls) and animal health, and plant
protection (CFIA, 2003).
The Agency played a prominent role in the handling of the bovine spongiform
encephalopathy (BSE) outbreak in western Canada in 2003. When the Agency found
a single steer in Alberta that tested positive for BSE (also known as mad cow
disease) in the summer of 2003, it precipitated a consumer protection issue that went
beyond health and safety concerns, resulting in widespread economic ramifications
as well. Stakeholders affected by the outcome of the inspections included cattle
ranchers, the feed industry, beef wholesalers and retailers, businesses that shipped
meat, and brokers that handled the export trade. Of course, meat consumers in
Canada and elsewhere who feared for the safety of their food supply played a
significant role in this issue, and the economic impact on beef farmers also extended
to the communities in which they lived.
Optional Activity:
In Module 1, Topic 3: Government’s Role in Business and Society, you examined
the government’s role in protecting Canadian consumers against bovine
spongiform encephalopathy (BSE, or mad cow disease) in the Canadian cattle
industry or Avian influenza (also known as bird flu). After reading this topic
section and Chapter 14: Consumer Protection, you may wish to reflect on and reexamine the government’s role in protecting consumers from BSE or bird flu.
Look back at Module 1, Topic 3, Activity 1-3: Government’s Influence on
Industry and Public Health. Review your description of government’s roles and
responsibilities in protecting consumers and supporting the industry. Which
government agencies were involved, and whose interests did they protect?
Health Canada
Health Canada is another government agency engaged in consumer protection. It is a
federal government department that sets standards and provides legislation and
enforcement on consumer health and safety issues from product safety to advertising
restrictions. It addresses a broad range of health and safety issues in this country.
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Health Canada was a key player in management of response to outbreaks of mad
cow disease and avian influenza (bird flu) in parts of our nation. Health Canada’s
involvement extended beyond consumer protection issues associated with these
outbreaks in animals (that could influence our food chain) to the 2003 human health
crisis associated with an outbreak of severe acute respiratory syndrome (SARS) in
Ontario and other parts of Canada. In more recent years, Health Canada dealt with
widespread concerns about bisphenol A, a toxic chemical that leaches from some
plastic water bottles (and baby bottles), and that some believe migrates to the food
contents of canned goods.
In 2008, after several deaths associated with an outbreak of Listeriosis (Listeria) in
cured meats from a food packing plant in Ontario were confirmed, Health Canada
and the Canadian Food Inspection Agency (CFIA) collaborated with provincial and
local health authorities across Canada to investigate the outbreak. Responses
included a widespread food recall of cured meats and an investigation into the cause
of the deadly food contamination. Food inspection practices were reviewed by the
company and the Public Health Agency of Canada (Public Health Agency, 2008).
Optional Resources:
CBC News.ca. (2008, August 28). How Maple Leaf Foods is handling the
Listeria outbreak. Retrieved from
http://www.cbc.ca/money/story/2008/08/27/f-crisisresponse.html
Other Health Canada activities and responsibilities include reviewing new drugs before
approval for sale and distribution in Canada. Health Canada oversees the safety of
foods, health products, natural health products, and cosmetics. Health Canada approves
or rejects the sale of products or ingredients in Canada if it deems them unsafe.
Determining acceptable levels of risk to Canadians’ health and safety is sometimes
challenging. Developers may provide evidence of their products’ safety or benefits, but
later evaluation by the developers or other stakeholders may produce contradictory
information. Many consumer activists are discontented with the level of scrutiny that
Health Canada applies to the safety of various products and ingredients, such as
genetically modified foods (GMFs) and the production and sale of alcohol and tobacco.
Health Canada is still exploring the risks associated with GMFs. Meanwhile,
organic farmers, environmental activists, and other stakeholder groups are
calling for bans or product labelling, at the very least, and warnings for consumer
protection. Other stakeholders, particularly those from the biotechnology
industry, refute consumer concerns.
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While the health and safety of genetically modified foods is a subject of ongoing
debate, most would agree that alcohol and tobacco have little or no nutritional value.
Due to the serious health risks associated with the consumption of both these
substances, Health Canada restricts the sale of alcohol and tobacco products to
minors, and controls distribution, regulates advertising, and requires health warning
labels on tobacco product packaging. Any further restriction would likely meet
fierce battles over individual rights and freedoms, despite the fact that tobacco and
alcohol consumption are associated with tremendous health costs that are borne by
Canadian society. Rather than ban these products, Health Canada supports
campaigns to educate consumers about the risks associated with alcohol abuse,
drinking and driving, and cigarette addiction.
Industry Canada—Office of Consumer Affairs
Even though federal departments, such as Health Canada and Transport Canada,
address certain consumer protection concerns that relate to their jurisdictions,
Industry Canada’s Office of Consumer Affairs (OCA) covers many of the same
issues, such as protecting consumers from unhealthy, unsafe, unfair, or illegal
practices associated with the buying and selling of goods and services. This can
relate to consumer policies, standards, laws and codes, scams, recalls, tips on
cellphone contracts, guarding against identify fraud, doing business online, and
other consumer interests and concerns (Industry Canada, 2008).
The Office of Consumer Affairs—Mandate:
Canada’s Department of Industry Act dictates the federal government’s
statutory responsibility to promote and protect consumer interests in Canada
as well as to promote productivity and innovation.
The Office of Consumer Affairs (OCA) responds to these responsibilities with
the following activities:
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Conducting policy research and analysis on consumer issues
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Ensuring consumers have the information and tools needed to protect
their interests, while driving industry to be more innovative and
productive
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Working with business to develop consumer friendly business practices,
including voluntary codes and standards
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Supporting consumer groups and NGOs to enabling them to provide
input into policy development and consumer expectations
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Supporting legislative and regulatory reforms with provincial and
territorial partners. (Industry Canada, 2008)
Federal Consumer Protection Services
The OCA‘s Consumer Information website amalgamates information from federal
departments and agencies, provincial and territorial ministries, and NGO partners. It
is a repository of information on Canadian consumer information and services,
providing tools and information to support informed consumer decisions about a
wide variety of consumer issues that may be simple or complex.
The site has many features, including lists of product and food recalls, alerts on
consumer scams and frauds, interactive financial calculators for determining costs
associated with credit cards, and comparisons of the cost of buying versus leasing
vehicles. It also offers tips on consumer protection in various consumer situations, such
as shopping online, investing, dealing with telemarketers or door-to-door sales people,
renovation contractors, and car repairs. The site includes a Complaint Roadmap.
Optional Resources:
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Consumer Information
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Health Canada
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Canadian Food Inspection Agency (CFIA):
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Transport Canada
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Consumer Protection BC
Provincial Consumer Protection Services
In addition to federal government agencies, provincial governments also have
consumer relations departments. For example, in British Columbia, the Ministry of
Justice “works to maintain and enhance public safety across British Columbia”
(Ministry of Public Safety and Solicitor General, 2008). The Ministry focuses on
issues such as crime prevention, law enforcement and corrections, road and fire
safety, hazard mitigation and emergency response, among other service areas.
In 2004, the British Columbia Legislature passed the Business Practices and Consumer
Protection Act [SBC 2004].
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The Business Practices and Consumer Protection Authority (BPCPA) of British
Columbia is not-for-profit organization established in 2004 to offer consumer
protection information and services related to business practices, such as debt
collection and telemarketing, and is also a licensing body for some industry sectors
(BPCPA, 2008).
The Better Business Bureau
The Better Business Bureau (BBB) is a non-profit consumer protection organization,
with chapters across Canada.
People who need support in dealing with unfair business transactions contact the
BBB and file a complaint against a business, and the BBB investigates, expelling
members who do not comply with BBB membership standards. The BBB also
publishes reports listing member organizations with good reputations and member
and non-member organizations for which BBB has received consumer complaints.
BBB programs include business and consumer education, review of fairness and
accuracy in local advertising, and dispute resolution.
Information and Privacy Rights
In addition to the right to safety, health, and fairness, consumer protection issues
also deal with the right to information and the right to privacy.
The right to information covers a number of issues relevant to Canadians. For
example, health and safety issues are a prime issue associated with information
rights relating to product and ingredient labeling. Another important issue is the
itemized breakdown of parts and labour in automobile repairs.
Federal and provincial legislation also provides Canadians with the right to
information that is in the public domain. This includes transparency of government
contracts with private companies.
The federal Department of Justice laws and policies dealing with freedom of
information and data protection, including the Access to Information Act and the
Privacy Act. Provincial governments also have provisions for the rights of residents
with regard to how government agencies access and use personal information. In
British Columbia, for example, the Office of the Information and Privacy
Commissioner (OIPC) established The Freedom of Information and Protection of Privacy
Act (FIPPA), which allows access to information that is held by public bodies in BC.
Conversely, BC’s Personal Information Protection Act (PIPA) “sets out how private
organizations (including businesses, charities, associations, and labour
organizations) may collect, use, and disclose personal information” (Office of the
Information and Privacy Commissioner, 2004). Alberta’s Ministry of Government
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Services administers similar legislation under that province’s Freedom of Information
and Protection of Privacy (FOIP) Act.
See policies, procedures and guides to British Columbia’s Freedom of Information
and Protection of Privacy Act (FOIPPA) and Personal Information Protection Act
(PIPA).
See Alberta’s Freedom of Information and Protection of Privacy (FOIPP) Act.
View information on Alberta’s Personal Information Protection Act (PIPA).
See the federal Department of Justice page on access to information and privacy
laws.
Telecommunications and Internet Privacy Issues
Brokering of personal information for bulk mail advertisers and telemarketing sales
has been a contentious privacy issue for many years. See the Canadian Anti-Fraud
Centre to read about mass-marketing and Internet fraud, identity theft, how to
recognize and report a scam, fraud prevention, and other issues. This website also
has a list of scams.
As we discussed in Module 3, the emergence of Internet use in government and
business is raising ethical and social questions of privacy, security, and ownership,
as well as health and safety concerns (Lawrence & Weber, 2008, pp. 119–121).
Consumer protection faces unprecedented concerns with regard to privacy rights,
and the speed of change and adoption of Internet and other telecommunications
innovations is magnifying the challenge.
The ease with which customer, client, or patient information can be collected and
disseminated is creating the need for guidelines and policing of Internet use in
business and government, as well as among private users. Organizations entrusted
with customer or client information have a responsibility to protect the privacy of
these stakeholders and to use information ethically. In 2004, Industry Canada
published The Canadian Code of Practice for Consumer Protection in Electronic
Commerce. The code “establishes benchmarks for good business practices for
merchants conducting commercial activities with consumers online” (Consumer
Measures Committee, 2004). The code does not change existing laws, regulations, or
voluntary codes of conduct that exist in Canada with regard to consumer privacy
and protection. It attempts to fill in the gaps and collate the information in the
context of online business and consumer activity.
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The Canadian Code of Practice for Consumer Protection in Electronic
Commerce:
Information on The Canadian Code of Practice for Consumer Protection in
Electronic Commerce is archived on the Consumer Measures Committee
(CMC) website, a secretariat of the federal department of Consumer Affairs.
A PDF version of is available on the CMC website.
The Consumer Movement
Despite the significant role that government departments and agencies play in
protecting consumer rights, many people believe that individual stakeholders
should also participate in consumer rights and protection activities. Collectively, this
is called the “consumer movement,” and for decades, consumer movements have
targeted businesses or industry sectors addressing concerns ranging from fluoride in
toothpaste to truth in advertising. The consumer movement arose because of the
failure of some businesses to operate fairly and honestly; the consumer movement is
a collective effort by consumers to counterbalance the power of business and to
“safeguard” consumer rights (Lawrence & Weber, 2014, pp. 335–336).
Health and Safety
Some of the more prominent consumer movements in recent years are associated
with food products and additives. Mothers and other citizens concerned for the
health of their families generate public awareness especially relating to risks
associated with our food and water supplies. These consumer watchdogs have been
particularly concerned about the use of chemical fertilizers and pesticides in food
production, toxins and contaminants associated with bottled water and canned
foods, and genetic modification of fruits and vegetables.
The organic movement has become a significant force in society, attracting a broad
group of stakeholders including farmers and food producers as well as consumers
from a variety of demographic sectors. The movement has shifted from the fringes of
society to become both a mainstream concern and an economic opportunity for the
food industry, and an emerging market opportunity in the clothing industry.
Consumer movements can very powerful. They can shift consumer preferences
away from certain products or brands, organize widespread boycotts, stimulate
demand for new products or services, and orchestrate the removal of products from
the marketplace by government regulators or by companies that don’t want to fight
the movement.
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Consumer activism associated with genetically modified organisms (GMOs) is a
prime example. (These are also called GMFs [genetically modified foods] or GE
[genetically engineered foods] when referring to bio-engineered food crops or
genetically modified crops.) Not all GMOs are used for food. Clothing and other
products can also be manufactured from GMOs. The health and safety risks
associated with the genetic engineering of soybeans and other food crops is the
subject of ongoing research and debate among government researchers, agency and
industry representatives, and activists. Consumer watchdogs and activists created
such a powerful public reaction that, in June of 1999, the European Union (EU)
issued a moratorium on growing or importing GMOs. The moratorium was in
existence for several years until the World Trade Organization ruled against the EU
in a case brought by the U.S., Canada, and other nations (EurActive.com, 2007).
What is your opinion of the health and safety of GMOs? Are there benefits to
society? Are there risks?
You will explore consumer issues associated with GMOs in an activity at the end of
this topic section.
Consumer Activism
Not all consumer movements are concerned with health and safety issues. Fairness
and equity issues have also galvanized consumer movements. For example,
consumer watchdogs and activists have prompted massive public outcries against
child labour, slave labour, and inadequate or inhumane working conditions in
sweatshops around the world.
One consumer movement that is gaining attention among some stakeholder groups
is the anti-consumerism movement. We will discuss anti-consumerism in this
module, but first let us define consumerism.
Defining Consumerism
Lawrence and Weber define consumerism as synonymous with the consumer
movement, that is, the “organized, collective efforts by consumers to safeguard their
own rights” (Lawrence & Weber, 2017, p. 305). Merriam-Webster’s dictionary has a
similar definition:
•
con•sum•er•ism: the promotion of the consumers' interests
However, it also includes the following definitions:
•
con•sum•er•ism: the theory that an increasing consumption of goods is
economically desirable; also: a preoccupation with and an inclination toward
the buying of consumer goods.
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© Copyright John Fewings. Used with permission.
Consumer spending is an economic driver in Canada, contributing a significant
portion of our nation’s gross domestic product (GDP). It “affects the economy,
governments, educational institutions, the workforce, the retail sector, consumerbased manufacturers and service providers, and the financial services and
investment community” (Roberts, 1998, p. 15). In the award winning documentary,
Manufacturing Consent: Noam Chomsky and the Media, Chomsky explained that
consumerism not only influences our economy, it is “the purpose of our economic
system,” and he cautioned that a society based on “individual material gain…will
destroy itself in time” (Adbusters, 2008b).
Watch a video clip of one of Chomsky's discussion of our economic principles of
individual material gain:
https://www.youtube.com/embed/arNqC7swb5g
Globally, companies spend billions of dollars on advertising campaigns aimed at
convincing consumers of their need for material gain. Market researchers and
managers seek information on why consumers choose certain products or services,
how people’s attitudes towards products are formed, and how to change those
attitudes. Business operators want to know what to do to persuade consumers to
buy their products or services and how to motivate customer loyalty. Researchers
profile sectors of the consuming public, so companies can design marketing and
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sales activities to capture the interest of the demographic group that is the target
market for their products or services.
Marketing and advertising drive consumerism or consumer spending, and while the
impact on business is more obvious, we might also consider the influence of
consumerism on society. In his book The Myth of Consumerism, author Conrad
Lodziak observes:
Life in the west is lived within a culture awash with the
advertising, brand-names and labels of conspicuous
consumerism. Accordingly, consumerism and consumer culture
have become central to critical discussions of identity…and
culture as never before. (Lodziak, 2008)
Factors Influencing Consumers
Corporations have significant power to sway consumers, but so, too, do consumers
have power to change corporations. What are the factors that influence consumer
behaviour? Marketing strategist Shirley Roberts identified nine factors: economy,
globalization, technology, government, environment, demographics, consumer
psyche, wellness, and retailing (1998, pp. viii, ix). According to Roberts, these factors
change with the influence of values, attitudes, lifestyles, and buying behaviour (p.
ix). With the emergence of Internet and other technologies, Roberts claimed that
society had shifted to a “consumer driven era” (1998, p. 1).
Globalization and Economic Growth
In other modules, we discussed some of the influences of globalization, the
environment, and technology. What are some of the ways these forces influence
consumers and other stakeholders?
Corporations pursuing global business seek opportunities to expand markets
throughout the world by attracting and increasing new consumers or more
consumption. In an interview with Canadian Business magazine, which called her
“the world’s most powerful female auto exec,” Maureen Kempston Darkes
explained that General Motors (GM) would target emerging markets in Latin
America in recognition of the fact that the auto market in most of the wealthy
countries was nearing saturation (Watson, 2003). In countries where many
individuals and families did not own automobiles, Kempston Darkes explained that
GM could expect sales to increase “by 45 per cent—much higher than the single digit
gains expected in wealthy countries.” No doubt, to shareholders, board members,
employees, and managers of General Motors, these sales projections were good
news. But what were the implications for other stakeholders?
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Expanding global sales for this transnational corporation would result in spill-over
benefits to suppliers, distributors, and other firms associated with their operations.
The economies of the communities and countries in which these businesses operate
might also benefit. What about the global and local environmental impacts of such a
significant increase in vehicle use? What about the societal impacts of communities
in which people spend much of their day driving in automobiles? What about the
economic benefits and burdens to individuals, communities, and countries in which
car ownership increases by forty-five per cent?
Consumers influence a much broader group of stakeholders than simply those
involved in the direct buying and selling transaction. And consumerism is a
powerful force influencing the social, economic, and environmental well-being of
business, government, and society. On a global scale, these impacts are even more
far reaching.
Enough Consumerism?
As we noted earlier, Merriam-Webster’s dictionary offers two definitions of
“consumerism.” One refers to it as a theory on the economical desirability of
increasing consumption, and the other defines consumerism as “a preoccupation
with . . . the buying of consumer goods” (Merriam-Webster OnLine, 2008). Yet,
peruse the Internet for articles on consumerism, and your search results are likely to
come upon a raft of information on anti-consumerism. Perhaps this is a backlash to
the aggressiveness of marketers and the culture of consumerism that pervades much
of western society. For some, it is a reaction to rising corporate power and the
advancement of globalization. Others identify environmental and social perils
associated with increasing worldwide consumption, and they are asking, “How
much is enough?”
An anti-consumerism campaign in the United Kingdom organized by the nonprofit
group Enough, proclaims that “any proposed solutions to the problems of world
poverty, environmental destruction, and social alienation will fail, unless they also
address the role that the consumerist lifestyle plays in creating these problems”
(Never Enough, n.d., n.p). According to Enough’s campaign booklet, “20% of the
world's population consumes over 70% of its material resources, and owns over 80%
of its wealth” (Never Enough, n.d., n.p.). The organization does not call for denial of
basic needs, abandonment of technology, or compromises to our quality of life but
rather is advocating three types of consumerism: green consumerism, ethical
consumerism, and anti-consumerism.
Green consumerism refers to “purchase or participate in goods or services which
attempt to replace existing ones with something designed to be ‘friendlier’ and less
damaging to ecosystems and natural planetary defences” (Never Enough, n.d., n.p.).
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According to Enough, ethical consumerism is “green consumerism which [also]
considers a variety of wider issues than just a product's green credentials, such as
whether or not the manufacturer invests in the arms trade or has supported
oppressive regimes” (Never Enough, n.d., n.p.). These are also the types of consumer
values shared by stakeholders who choose socially responsible investments (SRIs).
Watchdog organizations, as well as firms that seek to attract these consumers, are
helping to educate and inform the public about ethical or green consumerism.
Stakeholders in these consumer groups are those individuals or families who put
their beliefs about environmental and social responsibility “into action in their
purchase decisions,” according to reporter Joanne Blain (2003, p. F1). In a Vancouver
Sun article, “Cashing in on Conscience,” Blain profiled typical green consumers in
Vancouver. “Lohas” (which stands for "lifestyles of health and sustainability") is the
label the marketing industry uses for the “growing group of consumers who have
strong moral values about what they buy—and are willing to put their money where
their convictions are” (Blain, 2003, p. F1). According to Blain, consumers in this
demographic represent as much as 32 per cent of the U.S. market, and businesses
that want to capitalize on this market are making greener choices about the products
they choose to produce and sell (2003, p. F1).
Anti-Consumerism
Anti-consumerism goes beyond shifts in purchasing choices. It challenges “many
of the assumptions about what is needed in contemporary society” (Never
Enough, n.d., n.p.). The anti-consumerism movement is spreading throughout the
world, although it is eclipsed by the much bigger shift to globalization and
expansion of global world trade. Many advocates of anti-consumerism are
motivated by environmental values about conserving the world’s natural
resources or concerned about the ethical implications of inequitable distribution
and consumption of goods between wealthier and economically disadvantaged
individuals and nations. Others are rebelling against a consumer lifestyle and the
values with which they believe it is associated.
The book Voluntary Simplicity (Elgin, 1993), as well as many subsequent books and
magazines, organizations, and networks, describe a way of life in which personal
fulfillment is not tied to material well-being. Two of the many groups around the
world advocating this lifestyle are The New Road Map Foundation and The Simple
Living Network in the U.S. These organizations challenge whether growing
consumerism has a positive of negative impact on the health and happiness of
families and individuals in our society.
We are producing more and spending more, but are we happier?
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In addition to these lifestyle movements toward voluntary simplicity, other
consumer movements target specific actions or events. In 1992, the first Buy Nothing
Day (BND) was launched in the Pacific Northwest in Canada on the day after U.S.
Thanksgiving. Buy Nothing Day organizers called upon individuals to avoid buying
anything on this one day of the year. Think about it—do you purchase something
every day of the year?
This simple initiative sparked debate, radio talk shows, TV news stories and
newspaper headlines around the world, and the campaign continues each year. Buy
Nothing Day/Xmas is promoted by organizations around the world with
participants in many countries (Adbusters, 2008a). According to Adbusters, every
year organizers approach major U.S. television networks to request broadcast time
promoting the event, and every year the networks refuse, claiming that “asking
people not to buy anything threatens ‘the current economic policy of the United
States’" (Adbusters, 2008a).
Inspired by the success of Buy Nothing Day, there are now dozens of organizations
that promote similar events. Buy Nothing Christmas, for example, started as a
national initiative of the Canadian Mennonites and is another campaign promoted
by Adbusters in Vancouver, B.C. In the U.S., The Christmas Resistance Movement
and the Centre for a New American Dream’s Simplify the Holiday campaigns promote
boycotts of Christmas and holiday season consumerism. They promote ways to
enjoy the holiday season without excessive buying and consumption (The Christmas
Resistance Movement, 2008, and New American Dreams, 2008).
Optional Resources:
-
Buy Nothing Day/Xmas
-
Simplify the Holidays
Is this “bah humbug” or emancipation from the burdens of consumerism in the
holiday season? You can decide. Whether you support these consumer (or anticonsumerism) movements or not, it is interesting to note the power of consumers as
stakeholders in business and society. This can be the collective purchasing power
that influences the success of products, services or certain brands. It can also be the
collective force of consumers that choose ethical or green purchasing options, or
even those who choose to “buy nothing.”
You might enjoy viewing Wearable Feedbags, an entertaining news broadcast style
commentary on our addiction to consumption of fast-foods. This video was
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produced by The Onion, a U.S.-based online news website that parodies current
events and issues in the U.S.
Activity 4-2: Consumer Protection and Genetically Modified
Foods (GMFs)
Introduction
The purpose of this activity is to encourage you to consider the perspectives and
influences of various stakeholders in a consumer protection issue.
Instructions
Part A: Reading
•
Read Chapter 14: Consumer Protection. As you read, focus your attention on
rights of consumers identified in this chapter and in this module’s notes.
•
Using the Internet and/or print media sources, research consumer protection
issues in Canada concerning foods derived from genetic engineering, such as
genetically modified foods (GMFs) and genetically modified organisms
(GMOs), and agriculture biotechnology.
•
Review consumer protection information on one of these Government of
Canada websites:
o Canadian Consumer Information
o Health Canada
o The Canadian Food Inspection Agency (CFIA)
Part B: Reflective Journal—The GMF Debate
•
Create a chart, paragraph, or diagram with the following information:
o Stakeholders and stakeholder groups involved in the GMF debate in
Canada
o A brief description of each stakeholder’s role and influence in this
consumer protection issue
•
Write several short paragraphs addressing the following:
o The consumer protection concerns over GMFs and your opinion of
whether or not you regard it as an important consumer issue
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o Whether you believe products containing GMOs should have this
information presented on the product labelling, and/or whether there
should be a warning label indicating the potential dangers of GMFs
(defend your answer)
o How activist groups influence the GMF consumer protection debate in
Canada and their influence on both consumers and the government, and
whether this stakeholder group’s role is a benefit or a hindrance to
consumer protection issues
When reviewing your own reference resources, remember to use the CARS Checklist
(credibility, accuracy, reasonableness, support) you used in Module 1. Re-read
Evaluating Internet Research Sources about things to look for in evaluating the
quality of information reported on the Internet.
Activity 4-3: The Story of Stuff
Introduction
In this activity, you reflect on stakeholders involved and influence in the extraction,
production, distribution, consumption, and disposal of the “stuff” we consume.
Instructions
Part A: Online Video
•
Go to The Story of Stuff and view all sections of the presentation.
•
Start at the beginning (“Intro”) and proceed through the various brief
sections: “extraction,” “production,” “distribution,” “consumption,”
“disposal,” and “another way.” Be patient if buffering causes a delay before
the production plays online for you. The entire video takes about 20 minutes
to view.
Recommendation:
Review the journal questions/discussion points below before you begin
viewing the video.
Part B: Reflective Journal—Stuff
•
List the various stakeholders involved or influenced by our desire for “stuff.”
•
Describe the real or potential positive and negative impacts of “the
corporation’s” activities as presented in this video.
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•
Pick a product that you can see near you at this time (such as your computer,
paper, the chair you’re sitting on, or the cup of coffee you are drinking).
Create a diagram or map of the potential stakeholders involved in bringing
this product to you, from the raw materials (extraction) through to delivery at
the store in which you made the purchase. Comment on the influence you are
having on some of these stakeholders because of the collective power you
exert as a consumer.
•
Comment on the messages and opinions presented in the video. Was there
anything that was new to you? Was there any information that you do not
believe or perspectives with which you disagree? What information or
commentary did you find most interesting, and why?
Note: Your discussion could be a diagram, a mind map, or written
paragraphs. Focus on capturing information in a way that is relevant to you.
References
Adbusters. (2008a). Buy nothing day. Retrieved from
http://www.adbusters.org/campaigns/bnd
Adbusters. (2008b). Noam Chomsky on rethinking capitalism. [Blog.] Retrieved from
http://www.adbusters.org/blogs/blackspot
Blain, J. (2003, July 24). Cashing in on conscience. Vancouver Sun, F1.
Business Practices and Consumer Protection Authority [BPCPA]. [Renamed Consumer
Protection BC]. (2008). About us. Retrieved from http://www.consumerprotectionbc.ca/
Canadian Consumer Information Gateway. (2008a). Canada’s Government and
Partners. Retrieved from http://consumerinformation.ca
Canadian Council of Better Business Bureaus. (2008). Overview of the BBB in Canada.
Retrieved from http://www.ccbbb.ca/
Canadian Food Inspection Agency [CFIA]. About the CFIA. Retrieved from
http://www.inspection.gc.ca/about-the-cfia/eng/1299008020759/1299008778654
Chomsky, N. Manufacturing consent: Noam Chomsky and the media [Documentary]. (2004).
On Adbusters: Blackspot Blog: Naom Chomsky on rethinking capitalism. [Website.]
(2008, July 31). Retrieved from
http://www.adbusters.org/blogs/blackspot/noam_chomsky_rethinking_capitalism.ht
ml
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Consumer Measures Committee (2004). The Canadian code of practice for consumer protection
in electronic commerce [Archived web page].Retrieved from
http://www.cmcweb.ca/epic/site/cmc-cmc.nsf/en/fe00064e.html
EurActiv.com. (2007). News: WTO panel rules EU GMO moratorium illegal (2006, 8
February). Retrieved from http://www.euractiv.com/en/trade/wto-panel-rules-eugmo-moratorium-illegal/article-152341
Industry Canada (2008). Canada’s Office of Consumer Affairs (OCA: About the Office of
Consumer Affairs. Retrieved from http://www.ic.gc.ca/epic/site/ocabc.nsf/en/ca00038e.html#Mandate
Jobb, D. (2003, March 3). Who’s responsible? Canadian Business, 76(4), 39–42.
Lawrence, A., & Weber, J. (2008). Business and society: Stakeholders, ethics, public policy (12th
ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2014). Business and society: Stakeholders, ethics, public policy (14th
ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2017). Business and society: Stakeholders, ethics, public policy (15th
ed.). New York, NY: McGraw-Hill Higher Education.
Merriam-Webster OnLine. (2008). Consumerism. [Definition.] Retrieved from
http://www.merriam-webster.com/dictionary/consumerism
Ministry of Public Safety and Solicitor General (2008). About the ministry. British Columbia.
Retrieved from http://www.gov.bc.ca/justice/index.html
Never enough anticonsumerism campaign. (n.d.). A critical look at consumerism, poverty and
the planet [Booklet].Retrieved from http://www.enough.org.uk/index.html
Office of the Information and Privacy Commissioner for British Columbia. (2004). [Home
page.] Retrieved from http://www.oipc.bc.ca/
Public Health Agency of Canada. (2008). Listeriosis (Listeria) outbreak. Retrieved from
http://www.phac-aspc.gc.ca/alert-alerte/listeria_200808-eng.php
Roberts, S. (1998). Harness the future: The 9 keys to emerging consumer behaviour. Toronto,
ON: John Wiley & Sons.
Simple Living Network. (2003). Understanding where we are as a culture. The Story of Stuff,
with Annie Leonard. (2008). [Video presentation.] Retrieved from
http://www.storyofstuff.com
University of Michigan Press (n.d.). The myth of consumerism: Conrad Lodziak. About the
book.
Watson, T. (2003). Driven. Canadian Business 76(20), 72–76.
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Topic 3: Employee Stakeholders
Introduction
Employees are an important primary stakeholder group in organizations. There
is a mutual dependency between employees and employers, with economics
playing a pivotal role in the relationship. In the private sector, companies exist
largely to generate revenues. In the governmental and non-profit sectors,
organizations exist to provide services or assist society to function in some way.
Employees of government, non-profits, and for-profits earn their livelihood by
helping operate organizations and by producing the goods and services for
which the organization exists.
Employee and Employer Rights and Responsibilities
There are numerous social, ethical, and legal issues associated with employees in the
workplace. Both employees and employers have certain rights and responsibilities.
Please note the list on page 327 of your textbook.
Laws protect some employer or employee rights and responsibilities; employeeemployer contracts may protect others. Some rights and duties have a social or
ethical connotation, which may or may not be explicitly addressed in the working
relationship. Take “loyalty and commitment,” for example. There may be a formal
contract committing the employer to securing the employee’s job for a certain period
of time or, perhaps, organizational policies and employment contracts dictating
employee obligations for nondisclosure of trade secrets. However, a sincere level of
loyalty and commitment by employees is more likely to be engendered by
exemplary working conditions and fair and just treatment.
Just as cultural influences and personal values can affect workplace ethics, so,
too, can they affect employees’ and employers’ perceptions of their rights and
responsibilities. Do workers in Japan have the same expectations about their
rights and responsibilities as workers in Canada? What about workers in China,
or Italy, or Mexico?
Employee and employer rights, responsibilities, and expectations vary among
industry sectors, as well as from country to country. Each year, Maclean’s magazine
lists the top 100 employers in Canada, but does not rank the companies because of
these industry differences. “Apples can’t be compared to oranges—some sectors
offer better benefits and working conditions than others (MacKlem, 2003, p. 24). The
listing uses a survey that grades companies on several issues including health,
financial and family benefits, as well as working conditions and involvement of the
organization in the community.
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In addition to benefits such as additional vacation time, maternity leave salary top-ups,
and financial bonuses, many companies provide benefits aimed at enhancing employee
morale and encouraging health and well-being among employees. Nature’s Path Foods
of Richmond, British Columbia, provides free health breakfasts, on-site fitness facilities,
and a company-sponsored wellness program. ArcelorMittal Dofasco of Hamilton offers
profit-sharing, recreational and educational facilities, and three post-secondary
scholarships to employees’ children each year. Sun Life Financial Inc. of Toronto
provides tuition subsidies, and the company pays for a life coach for employees who
need help addressing personal or work-related issues. Amex Canada of Markham,
Ontario, allows up to six months of paid leave for staff to work for charities, and both
Epcor Utilities of Edmonton and Vancity Credit Union in British Columbia allow
extended leaves of absence (MacKlem, 2003). One Vancity employee spent a year
volunteering in Albania, and “brought back skills, and a fresh perspective” that, she
believes, enhanced her contributions to the organization (p. 26).
The benefits and perks that these companies offer to employees extend well beyond
any legal responsibilities, so why do they do it?
Some companies are motivated by a sense of social responsibility, and they
recognize the benefits in terms of employee morale and company reputation among
customers and the community. “Companies making a difference in the broader
community also make their employees feel good about going to work. And from a
bottom-line point of view, smart companies know that happy employees are
generally more productive” (MacKlem, 2003, pp. 23–24).
For their annual list of the twenty-five best companies to work for in British
Columbia, BC Business magazine uses a consulting firm to conduct its survey. The
firm developed a “human capital index” that analyzes human resources (HR)
practices “that drive shareholder value” (Withers, 2003, p. 53).
The annual survey of employees and employers focuses on questions that address
attraction and retention of employees, organizational communications and the working
environment, as well as organizational effectiveness, decision making, and supervision.
Other questions address performance management and employee benefits, including
rewards and recognition, career development, and learning and leadership opportunities.
Many of the same benefits we identified for companies that engage in corporate
social responsibility (in Module 2) also extend to companies that engage in
exemplary employer-employee practices. “The best employers do more than issue
pay cheques. They improve life in the workplace and in the surrounding community
as well” (MacKlem, 2003, p. 22). In return, organizations that provide exemplary
working conditions and outstanding benefits are rewarded with attraction and
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retention of committed and talented employees, higher productivity, and an
excellent reputation, all of which can translate into higher revenues.
Author Bob Willard estimates that the cost of hiring a new employee is about $7,000,
and according to KPMG and Canadian Advanced Technology Alliance, the cost of
replacing a worker that leaves a company is at least $25,000 (2002, p. 28). Employee
turnover is a serious organizational and financial concern for companies, especially
in the case of skilled-worker retention where estimates for “the loss of intellectual
property that accompanies each departed worker can be enormous” (Willard, 2002,
p. 28). Costs can include the loss of productivity during turnover, the expense of
training replacement staff, administrative expenditures, cash payments for
separation settlements, and the cost of lost experience, knowledge, and contacts
(Willard, 2002, p. 28). Thus, beyond any social or ethical responsibility to employees,
organizations benefit financially from programs and initiatives that enhance the
work experience for employees.
Leadership and Commitment
In addition to the provision of comfortable working conditions, perks, and benefits to
employees, what other factors support a healthy employee—employer relationship?
We identified commitment as an employee’s duty and an employer’s right.
Commitment goes beyond compliance with the rules and fulfilling one’s duties.
According to Willard, “Commitment engages the energy and creativity of people’s
hearts, minds and hands, while compliance only engages their hands” (2002, p. 47).
Leaders who share a vision with their employees help to foster commitment (p. 47),
and in “a high-performance culture/company,” the organizational structure and
dynamics help to “unleash the potential of people who are committed to clear,
relevant, and meaningful work that they have been involved in shaping” (p. 48).
Willard lists four factors of an employee commitment model developed by the
consulting company Belgard-Fisher-Rayner. According to this firm, the following
four factors yield employee commitment:
•
Clarity: Employees understand what the goal is—the objectives are clear and
they can articulate them to others.
•
Relevance: Employees see the relevance of the goal to business success—they
understand how it is good for the company’s customers and helps the
company succeed.
•
Meaning: They see the personal meaning of the goal—what it means to them
personally and how it resonates with their personal values as a worthwhile
goal.
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Involvement: They want to be, and are, involved in the shaping and
deployment of the goal. Without involvement, there is no commitment. . . .
Giving people the choice to be involved is key . . . even if they choose not to be.
Organizational leaders who empower their employees and who help to make
employees’ work relevant and meaningful find that productivity is higher because
employees are “fulfilled by doing worthwhile work” (Willard, 2002, p. 49). This
belief provides some of the rationale for corporate social responsibility.
Legal Rights and Responsibilities
Corporate social responsibility (CSR) is a voluntary commitment on the part of the
organization, just as the top companies listed in Maclean’s and BC Business
magazines’ surveys voluntarily commit to their exemplary programs. At the same
time that we are witnessing an increase in CSR, there are also organizations that are
abusing the rights of employees and neglecting their responsibilities as employers.
The government of Canada sets workplace standards and regulations dictating
certain rights and duties of both employers and employees.
Companies found to be non-compliant with their legal responsibilities to employees
can be subject to fines or other penalties, including jail terms for corporate officers.
The right to fair treatment, a safe working environment, and a certain level of
privacy and security are all issues addressed by Canadian law. However, these
rights may be subject to interpretation, and there are limits. Unions are a powerful
force in western society, and they came about because of the need to establish
greater worker power to offset employers who did little to ensure worker rights.
Today, some stakeholders believe unions have outlived their purpose or exceed their
role in business and society, creating unreasonable expectations on employers.
Others believe unions are an essential force, and their role in protecting workers’
rights is just as important today as it was in the early part of the twentieth century.
The Right to Employment Security
Unions played a high profile role in protecting employment rights and job security
for hospital workers in British Columbia in 2003–2004. Three large unions, the
Hospital Employees’ Union (HEU), the BC Nurses’ Union (BCNU), and the BC
Government and Service Employees’ Union (BCGEU), legally challenged the BC
Liberal government’s introduction of Bill 29, the Health and Social Services Delivery
Improvement Act (CUPE, 2003a).
In an attempt to reduce health care costs, the BC government introduced the new
legislation to break its legally binding contracts with almost 100,000 hospital
employees, who were members of these unions. By voiding the contracts, they
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eliminated many jobs, reduced services, privatized some services, and outsourced
labour to lower-cost contract workers. From the government’s perspective, the cost
savings benefited more stakeholders (the residents of BC) than employees. From the
workers’ and unions’ perspective, the government violated the Canadian Charter of
Rights and Freedoms.
In March 2003, the United Nations (UN) International Labour Organization (ILO),
which is the UN organization in charge of upholding labour standards, assessed the
BC government’s new legislation (along with five other laws that Premier Gordon
Campbell’s government enacted) and issued a public statement condemning the BC
government’s actions. The ILO concluded that Bill 29 (and the five other laws)
“violate basic rights and protections for working people,” and breach “international
labour standards that are respected in democracies worldwide” (CUPE, 2003b).
The unions took the BC government to court to have Bill 29 struck down as
unconstitutional. However, despite the public protests and condemnation by the
UN, the BC Supreme Court dismissed the constitutional challenge of the three
unions. After the September 2003 ruling, the three unions announced they would
appeal the court’s decision. According to the President of the B.C. Government and
Service Employees’ Union, George Heyman, “Bill 29 represents a fundamental attack
on the rights of workers,” and “there are important principles at stake” that the
unions plan to defend . . . “all the way to the Supreme Court of Canada if necessary”
(CUPE, 2003c). According to Heyman, “Bill 29 poses a threat to the rights of every
union member, not just in this province, but across the entire country. . . [and] at its
core, this case is about the value of freely negotiated collective agreements under
Canadian law” (CUPE, 2003c). While the court battle dragged on, more and more
union workers lost their jobs.
What do you think? Should a new government have the right to break contracts of
previous governments? Under what circumstances (if any) could you justify
breaking employee-employer contracts?
In these days of increasing global competitiveness, employees without unions or
contracts may find themselves increasingly at risk of job loss, as organizations
downsize to reduce employee wage and salary burdens, outsource to eliminate the
cost of pensions and benefits or to save money on lower contract labour, and shift
operations to low-cost labour pools in developing countries. For many workers, the
right to security is a thing of the past.
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The Right to a Safe Work Environment
Organizations are legally obliged to provide a safe working environment. How safe?
Safety issues address a wide variety of concerns from the use of hard hats on work
sites to indoor air quality issues associated with emissions in manufacturing and
tobacco smoking in the workplace. There are rigorous and specific standards with
regard to some safety issues, while other standards are more loosely defined and
monitored.
Smoking is a contentious workplace safety issue. After years of research and debate on
the impact of second-hand smoke, Health Canada implemented the federal Nonsmokers' Health Act in 1998, restricting smoking in federally regulated workplaces and
public places such as airline flights, intercity buses, trains, and transport terminals.
Numerous federal, provincial, and municipal laws have followed to limit or restrict
smoking in or around workplaces. Additionally, many employers have established
policies or restrictions regarding workplace smoking (Health Canada, 2008).
While workers no longer smoke in offices, the definition of “workplace” is unclear, so
debate continues with regard to workers such as truck drivers, who spend much of their
days outside or in vehicles, and service workers whose jobs take place outside. Bars and
restaurants are another contentious location, and the hospitality industry has balked at
smoking bans. Nevertheless, in some jurisdictions, such as the City of Vancouver,
smoking in bars and restaurants has been restricted for some years now.
There is no federal administrative body with power to ban smoking. Restrictions on
smoking in the workplace have come under local government jurisdiction, however,
some provincial governments are now using occupational health and safety (OHS) and
workers’ compensation legislation to ban smoking in bars, restaurants, and other
workplaces. Some people believe this infringes on personal rights and freedoms.
What is your opinion on the safety of smoking in the workplace? Do you think your
opinion is influenced by whether or not you are a smoker?
Banning tobacco smoking remains controversial because debate continues over the
degree to which workers’ health is at risk from environmental (or “second-hand”)
tobacco smoke. Many other safety issues concerning employees are, however, more
straightforward, so there is legislation and regulation concerning employee safety—
from technicians’ exposure to radiation in hospital X-rays to the training required to
operate heavy equipment.
Breach of safety issues can constitute criminal negligence. Under existing criminal
negligence laws, companies can be charged for health and safety violations. Officers
and directors of companies face fines and jail terms for violations of occupational
health and safety legislation, however, the federal government is revising the
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Criminal Code to make it easier to convict corporations who neglect safety concerns
(Jobb, 2003, p. 39). The revisions aim to hold corporate decisions makers, including
managers and boards of directors, directly accountable for “an explicit duty to
protect the safety of workers and the public” (p. 40).
Even before high profile cases of corporate fraud and illegal accounting scandals,
such as at Enron and Worldcom in the U.S., the Canadian government was
examining corporate governance and corporate liability law. The tragic death of
twenty-six coal miners in an explosion at Westray mines in Nova Scotia was the
catalyst. An investigation into the 1992 mining disaster found that “Westray
management ignored even the most rudimentary safety rules, allowing methane and
coal dust to far exceed explosive levels” (Jobb, 2003, p. 40).
The RCMP charged the mine owner and two Westray officials with criminal
negligence and manslaughter. However, the owner declared bankruptcy, and
prosecution withdrew charges in 1998. “A public inquiry called for a review of the
criminal accountability of corporations,” and the United Steelworkers of America
Union (USWA) sent lobbyists to Ottawa to pressure the government into action (p.
40). As a result, Bill C-284 was introduced into parliament in 2001, but more than
two years later, it was still undergoing review and amendments.
One of the key elements of the Bill is “whether an official with operational authority
committed the crime, or knew underlings were breaking the law and turned a blind
eye” (Jobb, 2003, p. 40). According to Greg Yost, a lawyer with Justice Canada’s
criminal law policy section, senior corporate officers should be accountable for the
actions of their employees, and it is the responsibility of these officers to be
informed. Determining accountability and punishing those responsible for criminal
misconduct may pose a challenge in some cases, especially as large corporations
become “more complex, with far-flung branches, subsidiaries and layer upon layer
of management” (p. 40).
One critic claims it will be difficult to get compliance if this law requires constant
supervision on the part of management, while “others suggest Ottawa’s proposal
does not go far enough. Australian law enables firms to be convicted if they allow a
corporate culture to develop that encourages or tolerates wrongdoing” (p. 43). David
Stewart-Patterson, senior vice-president of policy for the Canadian Council of Chief
Executives, stated that this legislation tries to “’refine the question of how we
determine who’s responsible. If you’re not doing anything wrong in the first place,
then the question of who’s responsible doesn’t come up’” Stewart-Patterson, as
quoted in Jobb, 2003, p. 43).
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The Right to Privacy
In the previous topic, we addressed privacy issues with regard to consumer
protection. In Module 3, we briefly discussed some of the privacy protection
concerns associated with use of Internet marketing and communications in business
and government. The article “The Importance of Business Ethics” provides an
opportunity to reflect on the employers’ and employees’ attitudes about ethical
practices. This article reports on a survey of 557 employers and employees in which
the participants rated “business ethical violations” (2001, p. 3).
It is interesting to note that most of the employer practices listed in that article relate
to privacy issues. They include monitoring of employees’ Web surfing content and
their emails; and allowing supervisors to access employees’ personal health records,
inspect employees’ lockers or work areas, and use video surveillance in the
workplace. These types of actions are increasingly common in the workplace as
technological innovations enable organizations to monitor employees by a variety of
means. Often employees are unaware of these infringements on their privacy, and
most often, monitoring is legal. In addition to ethical concerns, the question is: Do
these practices help build a healthy and productive organization?
Fair Labour Standards
In other parts of this course, we briefly touched on fair labour practices in the
context of labour standards and worker conditions for organizations operating in
developing countries. Labour standards also exist in Canada, and labour relations
boards protect workers’ rights with regard to fair treatment on issues such as
entitlement to breaks during the workday, right to a minimum wage, payment and
time off for vacations or sick leave, and other rights. Issues where employees’ rights
may be challenged relate to privacy, monitoring, ethical behaviour, working terms
and conditions, and free speech.
Apart from their legal obligations, employers’ consideration of these rights may vary
according to the corporate culture, personal values, and the influence of the society
in which the business operates. Employees’ expectations for fair labour standards
are also affected by culture and personal values, as well as their experiences in the
workplace. Many organizations, especially larger corporations, establish guidelines,
codes of conduct, or other standards to establish criteria for acceptable behaviour
and performance in the workplace. There are also industry-wide codes of conduct
associated with particular sectors and voluntary codes established and promoted by
non-profit organizations that reinforce ethical labour practices and increase the
standard of acceptable employer and employee behaviour.
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These guidelines and codes cannot contravene Canadian laws or the laws of the
country in which an organization is operating. However, in countries with lower
labour standards, corporate codes and guidelines can establish higher standards for
such issues as minimum age of employees, compensation levels, and working
conditions. In addition to codes of conduct that are company-specific, some nongovernmental organizations and industry associations also develop and promote
adherence to their standards.
For example, Nike is a supporter of the Fair Labor Association (FLA). FLA oversees
Nike’s, and other apparel companies’, voluntary compliance with the FLA’s
Workplace Code of Conduct (Lawrence & Weber, 2008, p. 509).
Levi Strauss & Co., established its own guidelines, the “Business Partner Terms of
Engagement" to “address issues that are substantially controllable by [their] individual
business partners” (Paine & Katz in Donaldson, Werhane, & Cording, 2002, p. 447). In
these terms of engagement, Levi Strauss & Co. outlines employment, ethical, and health
and safety standards that guide the company in selection and management of business
partner relationships. The company uses its clout as a large multi-national corporation
to demand that its business partners, including contractors and suppliers in developing
countries, establish a higher level of employment standards than the standards to which
their partners might otherwise adhere.
Levi-Strauss & Co. also developed an “Aspiration Statement” to accompany its
mission statement. “We want a company that our people are proud of and
committed to . . . We want our people to feel respected, treated fairly, listened to,
and involved. These goals are indicative of an organization that respects their
employees and values the contributions of this important stakeholder group (Paine
& Katz in Donaldson, Werhane, & Cording, 2002, pp. 452–453).
Activity 4-4: Internet Use in the Workplace
Introduction
The Internet is lauded as a tool to increase efficiency. However, by some estimates,
organizations lose millions of dollars in lost productivity each year because of
employee use of the Internet (and telephones) for personal business. In this activity,
you reflect on employee rights to use the Internet and telephone for personal use.
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Instructions
Part A: Reading
•
Read Chapter 15: Employees and the Corporation. Apart from references to
U.S. government departments and U.S. legislation or labour laws, the same
issues and terms of conditions of employment that the textbook describes for
employees in the U.S. are relevant to Canadian employees.
Part B: Reflective Journal—Personal Use of Telephones and Internet
Write a few short paragraphs describing your perspectives on personal use of
telephones and the Internet in the workplace:
•
Do you think it is the right of organizations to monitor employee use of the
Internet and telephones for personal use? In your answer, consider that some
employees may make use of the Internet on their coffee or lunch breaks. Do
you think this is acceptable? Also, do you think the nature of the
communications should influence the employment policies, rights, and
restrictions? (For example, perhaps personal emails are permitted but not
web-surfing.) Defend your position.
•
Identify the stakeholder perspective or perspectives that you represented
above. Was it that of an employee, manager, owner, or other? How might
your stakeholder perspective(s) have influenced your answer? Reflect back
on the question from another stakeholder’s perspective. Comment briefly.
References
CUPE on the front line. (2003a, April 10). BC Supreme Court to hear unions’ Bill 29
Charter of Rights suit starting Monday. Retrieved from
http://www.cupe.ca/www/news/3839/?submit=print
CUPE. (2003b, March 26). UN body slams Campbell government for violating basic
standards, protections for workers [News release]. Retrieved from
http://www.cupe.ca/www/news/1620
CUPE. (2003c, September 11). Unions intend to appeal BC Supreme Court judgment on
contract-breaking law [News release]. Retrieved from
http://www.cupe.ca/www/media/5880
Health Canada (2008). Healthy living: Smoking cessation in the workplace—A guide to
helping your employees quit smoking, non-smoking regulations. Retrieved from
http://www.hc-sc.gc.ca/hc-ps/pubs/tobac-tabac/cessation-renoncement/indexeng.php
The importance of business ethics. (2001, July). HRfocus, 78(7), 1.
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Jobb, D. (2003, March 3). Who’s responsible? Canadian Business, 76(4), 39–42.
Lawrence, A. T., & Weber, J. (2008). Business and society: Stakeholders, ethics, public
policy, (12th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2017). Business and society: Stakeholders, ethics, public policy
(15th ed.). New York, NY: McGraw-Hill Higher Education.
MacKlem, K. (2003). Top 100 employers. Maclean’s, 116(42), 22–28.
Paine, L. S., & Katz, J. P. (2002). Levi Strauss & Co.: Global source (A). In Donaldson,
T., P. Werhane, & M. Cording (Eds.) Ethical issues in business: A philosophical
approach (7th ed., pp. 432–457). Upper Saddle River, NJ: Prentice Hall.
Willard, B. (2002). The sustainability advantage: Seven business case benefits of a triple
bottom line. Gabriola Island, BC: New Society Publishers.
Withers, P. (2003). The 25 best companies to work for in BC. BC Business, 30(1), pp.
32–53.
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Topic 4: Diversity in the Workplace
Introduction
Diversity is viewed as one of Canada's most important
attributes, socially and economically. Canadians value diversity
for enriching cultural expression and making daily life more
varied and interesting. Businesses and employers recognize that
diversity in the workplace promotes innovation, stimulates
teamwork and creativity, and helps expand markets for goods
and services. (Canadian Heritage, 2004)
The Canadian Charter of Rights and Freedoms prohibits discrimination based on race,
national or ethnic origin, colour, religion, sex, age, or mental or physical disability
(Status of Women Canada [SWC], 2003a). This extends to equity in all aspects of
Canadian life, not just in the workplace. In this country, the federal and provincial
governments play an important role in protecting and promoting inclusion and
equity in the workplace and in society. Section 15 of the Canadian Charter of Rights
and Freedoms came into effect in 1985, “guaranteeing equality for all Canadians
before and under law and equal protection and benefit of law” (SWC, 2003b).
According to the Charter, every individual is equal before and under Canadian law,
regardless of religion, gender, age, colour, or mental or physical abilities
(Department of Justice, Canada, 2008a).
Despite this statement about equality, there are four categories for which special
attention to protection of rights and freedoms applies in Canadian law: women,
Aboriginal people, persons with disabilities, and members of visible minorities.
Why do these groups get special attention and protection in the Canadian
workplace?
It is not that individuals in the designated groups are inherently
unable to achieve equality on their own, it is that the obstacles in
their way are so formidable and self-perpetuating that they
cannot be overcome without intervention . . . . Equality in
employment will not happen unless we make it happen. (Abella,
1985, as cited in Human Resources and Social Development
Canada [HRSDC], 2008a)
One of the myths that HRSDC dispels is that equality should be left up to market
forces. According to HRSDC, employment equity programs and initiatives are
required to complement market forces because the market can be quite ineffective in
remedying workplace inequity (HRSDC: Labour, 2008a).
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It may not be intentional; however, for a variety of reasons, women, Aboriginal
people, persons with disabilities, and members of visible minorities face inequitable
workplace opportunities to white males. Surveys and studies of workplace policies
and practices “confirm that certain people are denied access to jobs, promotions, and
training” in Canada (HRSDC: Labour, 2008a).
Equality versus Equity
The term employment equity is not used in your textbook because it is a Canadian
term coined in 1984 by Judge Rosalie Silberman Abella, Canada’s Commissioner of
the Royal Commission on Equality in Employment (HRSDC, Labour, 2003a).
Employment equity describes “a distinct Canadian process for achieving equality in
all aspects of employment” (HRSDC, Labour, 2003a). Canadian law considers all
people equal, but employment equity does not seek to facilitate equal treatment of all
workers in an organization because people are not all the same. The term was
introduced in order to distinguish Canadian employment laws and process from the
"affirmative action" model in the U.S. and equal opportunity measures that “were
available in Canada at that time” (HRSDC, Labour, 2003a).
Employment equity programs were introduced in Canada in order to address
"’systemic discrimination’" that “was responsible for most of the inequality found in
employment” (HRSDC, Labour, 2003).
Equity and Equality
Equal employment opportunity is discussed in Chapter 16, with specific reference to
U.S. employment laws.
Employment equity differs from equality or equal employment opportunities.
Employment equity does not always mean treating everyone the same, it “means
treating everyone with fairness, taking into account people's differences” (HRSDC,
Labour, 2008a). In a diverse workforce, fair or equitable treatment requires
organizational leaders to understand individuals’ needs and differences and take
these into account in order to foster productivity.
For example, hiring persons with disabilities may require adaptation of
workstations. Organizations may consider this to be too onerous or expensive, yet
the cost of adapting a workstation to accommodate a person with a disability is,
typically, less than five hundred dollars (HRSDC: Labour, 2008a). Sometimes the
real impediment is an employer’s lack of understanding about hiring, training,
promoting, and accommodating people with disabilities, and this can lead to unfair
employment practices.
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Wheelchair ramps and automated doors, special computers and computer programs
for the visually impaired, and communications devices to assist people who are hard
of hearing are all logistical solutions that can facilitate greater employment equity
for persons with disabilities.
Government Support of Diversity
In addition to the Canadian Charter of Rights and Freedoms, there are a number of other
federal laws and policies that support Canada's commitment to diversity, including
the Canadian Human Rights Act, the Employment Equity Act, the Official Languages Act,
the Pay Equity Act, and the Multiculturalism Act. Provinces and territories also
promote diversity through programs, laws, and human rights commissions, and
Canada is a signatory to international conventions on equity and diversity, including
the Universal Declaration of Human Rights and the International Covenant on Economic,
Social and Cultural Rights.
In addition to legislation, governments from the municipal to federal level also
undertake numerous programs addressing employment equity as well as diversity
issues in everyday Canadian life. The goal is to “mobilize communities to promote
dialogue and help people overcome barriers to their participation in society”
Canadian Heritage, 2004).
Optional Resource:
See the Human Resources and Skills Development Canada (HRSDC) website
for general information on employment equity and equal pay, among other
things.
Federal Employment Equity Programs
Two important federal legislative acts governing employer obligations to workplace
diversity include the Employment Equity Act and the Employment Equity Regulations.
The Employment Equity Act covers Crown Corporations, as well as four hundred of
the country’s private sector employers operating in federally regulated industries,
such as banking, communications, and inter-provincial and international
transportation (HRSDC, Labour, 2003a). The act does not dictate diversity quotas or
other excessively onerous employer obligations with regard to accommodation of
the four designated group members.
The Employment Equity Act outlines core employer obligations to eliminate barriers
and improve employment access to the four designated groups, remedy past
employment discriminations, and “foster a climate of equity” in the workplace
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(HRSDC, Labour, 2003a). The Employment Equity Regulations lists regulations
associated with the Act, which “were finalized after Canada-wide consultations in
1995 with representatives of labour, employers, and other designated groups”
(HRSDC, Labour, 2003b).
Human Resources and Skills Development Canada refers to employment equity as
an “on-going planning process used by an employer” to:
•
Identify and eliminate barriers in organizations’ employment procedures and
policies;
•
Put into place positive policies and practices to ensure the effects of systemic
barriers are eliminated;” and
•
Ensure appropriate representation of ‘designated group’ members
throughout their workforce (HRSDC, Labour, 2003a).
Other Governmental and Non-Governmental Equity Programs
In addition to the above federal government services listed in the resources box
above, there are hundreds of other federal, provincial, and municipal government
programs and services, including programs specifically assisting women, Aboriginal
people, persons with disabilities, and members of a visible minority. The Ontario
government was particularly aggressive in the early 1990s with its employment
equity program, which some likened to the quota system of affirmative action in the
U.S. With the change in provincial government in 1995, the province’s legislated
employment equity quotas came to an end (Wilson, 1997). Across Canada, various
non-governmental organizations offer access and equity support for people from
these four designated groups (women, Aboriginal people, persons with disabilities,
and members of a visible minority) as well for a broader group of individuals
identified as part of Canada’s diverse society. Additionally, some for-profit
consulting firms across Canada and the U.S., as well as in Europe and elsewhere,
provide businesses and other organizations with guidance implementing,
measuring, and monitoring diversity programs.
Expanding Diversity and Inclusiveness
In their book, Understanding and Managing Diversity, authors Carol Harvey and M.
June Allard present a more comprehensive definition of diversity than one
addressing the four designated categories. Their book looks at the influences on the
workplace of secondary aspects of diversity associated with different life experiences
(such as military or international travel experience), different ways of
communicating, differences in religion, and other influences, as well as primary
diversity issues of gender, ethnicity, mental or physical abilities, and age, sexual
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orientation, and education. According to Harvey and Allard, understanding how
these influences create diversity—or differences—in employees is an important key
to good management (Harvey & Allard, 2001).
In management circles, the term inclusion is sometimes used interchangeably with
diversity. The term inclusive conjures an image of the way in which employees and
managers should act in order to foster workplace equity. According to human
resources consultant Myra Howze Shiplett, leaders set the tone in organizations by
establishing processes that require employees to work together and by creating a
climate that is open and welcoming to a diverse workforce (Shiplett, 2003).
Organizations that understand and value inclusiveness (or diversity) are “more
productive” and “able to attract and retain the best talent” (Shiplett, 2003, p. 1).
Organizational Benefits of Diversity
Changes in Canada’s population and labour pool in recent years, as well as
globalization, are drivers of employment diversity. “Diversity is fast becoming a
key strategic business issue in many corporate boardrooms” (Global Diversity @
Work, 2008a).
This is the perspective of an organization called Global Diversity @ Work, which is
sponsored by corporations including IBM Canada, Honeywell, and United Airlines.
According to Global Diversity @ Work, labour shortages in certain industry and
professional sectors have encouraged organizations to expand the diversity of their
workforce in order “to tap into previously under-utilized labour supplies, both
locally and globally” (Global Diversity @ Work, 2008a). Additionally, globalization
requires the ability to work with people in other countries, wherein culture and
other differences create the need to manage diversity among employees, managers,
contractors, and customers.
Many employees are intolerant of harassment and discrimination in the workplace,
so progressive organizations implement diversity initiatives to mitigate these
problems, as well as to attract high calibre employees” (Global Diversity @ Work,
2003a). “Managers are now being asked to deal with the highly complex and
sometimes emotional issues that are generated in an increasingly diverse workforce”
(Global Diversity @ Work, 2003a). This presents challenges to business leaders who,
says diversity expert Trevor Wilson, recognize the key to success in global business
is the ability “to attract, retain, motivate and develop high potential employees
regardless of race, culture, age, sexual orientation, education, economic class or
thinking style (Wilson, n.d.). Effective management requires leaders who foster “an
organizational culture that values differences and maximizes the potential of all
employees” (Taylor, 1995).
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Workplace Diversity and Equity Initiatives
“Progressive employers have begun to use diversity initiatives as a means of
positioning themselves as the employer of choice for their industry” (Global
Diversity @ Work, 2008a). Global Diversity @ Work presents a business case for
employment diversity, which lists potential organizational and financial benefits for
implementing various equity initiatives. Hiring and retention initiatives may cut
costs associated with legislative non-compliance and reduce losses and turnover
costs associated with recruiting and training new employees.
Creation of an inclusive workplace may also help avert turnover and eliminate other
costs associated with investigating, defending, and litigating human rights
complaints and payment of financial settlements in the event of harassment or
discrimination complaints (Global Diversity @ Work, 2003a). A diverse and inclusive
workplace may also lead to greater creativity, which can result in new ideas for
greater productivity, enhanced service, or even new product ideas.
Organizations implement employment equity programs that address hiring and
promotion and retention programs and policies, as well as compensation equity
policies. Some establish guidelines for workplace interaction, implement employee
and management diversity training, and monitor and analyze their equity programs.
Outside their internal operations, some organizations also develop sales and
marketing initiatives that target diverse customers (Global Diversity @ Work, 2003a).
Legal and Financial Incentives
RBC Financial Group employs experts to adapt their software so that visually
impaired workers can interact with their computer monitors by using a talking
screen reader. In addition to legal requirements to provide access for people with
disabilities, some companies recognize the market opportunity. “One in seven
Canadians over the age of 14 has some form of disability,” representing “$25 billion
in annual disposable income. RBC began tapping into that market when it became
the first Canadian bank to offer Braille statements” (Eastwood, 2003, p. 73).
Diversity Policy Statements
Some organizations develop a diversity policy statement outlining their
commitment to diversity. At a minimum, this statement should reflect their
responsibilities under Canada’s Employment Equity Act.
Levi-Strauss & Co. created an “Aspirations Statement,” which included the
company’s perspective on inclusiveness. It states: “We want a company . . . where all
employees have an opportunity to contribute, learn, grow, and advance based on
merit, not politics or background” (Paine & Katz, as cited in Donaldson, Werhane, &
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Cording, 2002, p. 452). The statement lists one of its goals as “leadership that values
a diverse workforce (age, sex, ethnic groups, etc.) at all levels of the organization,
diversity in experience, and diversity in perspectives” (p. 453). Levi-Strauss & Co.
claims that diversity provides advantages upon which the company can capitalize.
Successful Diversity Initiatives
In their book Managing the Mosaic: Diversity in Action, authors Kandola and Fullerton
report on a survey in which representatives of 285 organizations evaluated a number
of workplace diversity initiatives. The following is a ranking of the “ten most
successful initiatives” (Global Diversity @ Work, 2003b).
The 10 Most Successful Diversity Initiatives
-
Introducing benefits for part-time workers.
-
Allowing flexibility in dress requirements.
-
Allowing time off for dependent care beyond legal requirements.
-
Benefits for same sex and different sex partners equally available.
-
Buying specialized equipment, e.g., Braille keyboards.
-
Employing helpers/signers for those who need them.
-
Training trainers in equal opportunities.
-
Eliminating age criteria from selection decisions.
-
Providing assistance with childcare.
-
Giving “fair selection” training to recruiters.
-
(And tied for 10th place) Allowing staff to take career breaks.
Kandola & Fullerton. (1996). The 10 Most Successful Diversity Initiatives. Managing the Mosaic: Diversity in Action. Retrieved
from: http://web.archive.org/web/20031204025208/http://www.diversityatwork.com/business_case_practices.html
Some of the initiatives above are unrelated to the four designated diversity groups—
women, Aboriginal people, persons with disabilities, and members of a visible
minority—identified in Canada’s Employment Equity Act. For example, initiatives
relating to benefits for same-sex partners addresses the rights of gay people in the
workplace, and elimination of age criteria in selection decisions targets ageism in the
workplace.
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A list of Canada's top 100 employers is published each year by the Canada’s Top 100
Employer’s project. Employers are compared to other organizations in their field to
determine which companies offer the most progressive and forward-thinking
programs (Canada’s Top 100 Employers, 2013). Among other things, the evaluation
criteria includes work atmosphere and social programs; health, financial and family
benefits; and vacation and time off (Canada’s Top 100 Employers, 2013).
Companies with programs such as childcare, job-sharing, flex-time, and part-time
employment practices cater to parents seeking opportunities to balance work and
family life. More often these are women workers, but not always. While some
companies balk at the cost of employee programs, others recognize the benefits in
terms of employee health, productivity, and retention. In justifying their
commitment to “family-friendly programs,” the CEO of General Mills, Steve Sanger,
comments on how turnover is very costly and that after investing in their
employees, they do not want them to leave.
Diversity expert Trevor Wilson states that in order to be effective, workplace
diversity strategies must:
•
Link to business objectives. They should not be social programs.
•
Include all employees, even those that may not be identified in any
designated categories of diversity.
•
Protect the merit principle (i.e., hire, promote, or retain employees based on
merit, not simply to fill quotas). This approach avoids tokenism and reverse
discrimination (Hayes, 1999).
Assessing Employment Equity
Canada is a nation of diversity, but, despite the rhetoric of government ministries,
the amount of diversity to which you are exposed varies depending on where in
Canada you live.
Consider your own place of work or a workplace with which you interact, such as
the bank or the supermarket. Do you witness a significant diversity of age or
ethnicities? Is this representative of the community or region in which you live? Is
there a mix of women and men employed there? If so, which gender dominates
management? What about the presence of people with disabilities, or the presence of
Aboriginal people? How diverse is this workplace, and how do you think the
diversity (or lack of diversity) influences the culture and dynamics within this
organization?
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In Canada, many women have become entrepreneurs, perhaps as a means of
bypassing the so-called “glass ceiling” that some people believe exists, especially in
larger corporations. Indeed, men still dominate senior management positions in
most Canadian businesses, but the reasons for this may or may not relate to
employment equity issues. Traditional industry sectors, such as mining and forestry,
and older institutions, such as banks and financial services, may be more entrenched
in obsolete management strategies that are not supportive of diversity.
One example of this is the barriers women encounter in their efforts to access
financing and capital for entrepreneurial ventures. Profit magazine publishes an
annual report on the top 100 women business owners in Canada, based on a ranking
of annual revenues. The top 100 have a combined average revenue base of $32.5
million (Myers, 2007).
Over the years, many successful women entrepreneurs have commented on the
effects of gender bias on their careers, and some say they were treated unfairly by
male bankers (Oliver, 2003). In 2003, CarePartners had more than $13.5 million in
sales, and CEO Linda Knight was ranked by Profit magazine as one of Canada’s top
100 women business owners. Despite her success, Knight described an incident in
which her (male) banker requested she obtain the support of her husband in cosigning for a line of credit for the business she founded (Oliver, 2003).
Some banks have responded to long-standing complaints about gender bias against
women-owned businesses by developing equity policies, and others have
implemented programs to serve women customers specifically. Knight explains that
she had no expectations for special treatment, and simply wants fair treatment that
is based on the merit of her business, not her gender (Oliver, 2003). Recognizing that
forty-nine per cent of all new businesses in British Columbia are started by women,
RBC is targeting this sector with online resources (Make It Business, 2008, p. 13).
RBC and Vancity also co-sponsor and facilitate a series of professional development
workshops targeting women entrepreneurs (The RBCs of Lending, 2008).
Whether small business or large, woman-owned or not, about eighty per cent of the
Canadian workforce is made up of women, Aboriginal people, visible minorities,
and people with disabilities (Mourtada, 2007). If employers want to effectively
compete for the best talent out there, they have to consider all of their options, and
that means reaching out to visibly diverse candidates. “Aside from assembling a
staff that reflects what's going on in the real world, in terms of appearances and
work styles, there's a real business case to be made for diversity” (Mourtada, 2007).
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Marc St-Amour, VP of human and financial resources for Expographiq (a Canadian
firm that designs exhibits), claims that his company is “better at retaining its staff
since making diversity a priority,” and “it's also better at understanding its clients”
(as quoted in Mourtada, 2007).
With increasing ethnic diversity, as well as other equity issues influencing Canadian
organizations, diversity is an issue that can we cannot ignore in business, as well as
in other parts of Canadian society.
Optional Resource:
Diversity in the Workplace
Summary
This topic is best summed up by Lawrence and Weber:
…In a global community, where traditional buffers no longer
protect business from external change, managers can create
strategies that integrate stakeholder interests, respect personal
values, support community development and are implemented
fairly. Most important, businesses can achieve these goals while
also being economically successful. Indeed, they may be the only
way to achieve economic success over the long term. (Lawrence
& Weber, 2014, p. viii)
Activity 4-5: Diversity and Equal Opportunity in the Workplace
Introduction
In this activity, you will examine equity issues in the workplace with which you
associate.
Instructions
Part A: Reading
•
Read Chapter 16: Managing a Diverse Workforce. Focus on the content that is
relevant to Canadian stakeholders, and ignore references to U.S. laws and
commissions. Affirmative action is a term only used for the U.S. It refers to a
program that began in the U.S. in the late 1960s and continues in some parts
of the U.S., even as legal, academic, and business leaders continue to
challenge its merit.
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Part B: Reflective Journal—Workplace Equity Issues
In a couple of short paragraphs, comment on the following with regard to your own
experiences with workplace equity issues.
•
Consider your own place of work or an organization with which you are
familiar. Are you aware of any inequities? If so, describe what you know or
believe to be the cause of these inequities. If not, explain why you think
inequities do not appear to be a problem in this workplace.
•
Do you think workplace equity is important? Explain your answer, giving
reasons (including your opinion on the benefits and/or costs).
•
Reflect back on your answers above. Do you think your own race, gender,
age, life experiences or circumstances affect your perspective on what you
observe with regard to workplace equity issues? Explain your answer.
References
Canada’s Top 100 Employers. (2013). Retrieved from
http://www.canadastop100.com/index.html
Canadian Heritage. (2004). Multiculturalism. Canadian diversity: Respecting our
differences.
Canadian Heritage. (2004). Multiculturalism: Canadian Multiculturalism Act. Retrieved
from http://laws-lois.justice.gc.ca/eng/acts/C-18.7/
CBC News. (August 28, 2008). How Maple Leaf Foods is handling the Listeria outbreak.
CBCNews.ca. Retrieved from http://www.cbc.ca/money/story/2008/08/27/fcrisisresponse.html
Department of Justice, Canada (2008). Canadian Charter of Rights and Freedoms,
Constitution Act, 1982. Retrieved from
http://laws.justice.gc.ca/en/charter/#garantie
Eastwood, A. (2003). Second sight. Canadian Business, 76(4), pp. 73–74.
Global Diversity @ Work. (2003a). Diversity at work: The business case for equity.
Retrieved from
http://web.archive.org/web/20031018002356/http://www.diversityatwork.com/bu
siness_case_benefits.html
Global Diversity @ Work. (2003b). Diversity at work: The business case for equity.
Retrieved from
http://web.archive.org/web/20031204025208/http://www.diversityatwork.com/bu
siness_case_practices.html
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Global Diversity @ Work. (2008a). About us. Retrieved from
http://web.archive.org/web/20030806065223/http://diversityatwork.com/about_us
.html
Harvey, C., & Allard, M. J. (2001). Understanding and managing diversity: Readings,
cases, and exercises. Upper Saddle River, NJ: Prentice Hall.
Hayes, V. (1999). Beyond employment equity. Ivey Business Journal, 64(1).
Human Resources and Social Development Canada [HRSDC]: Labour. (2003a). What
is Employment Equity?
Human Resources and Social Development Canada [HRSDC]: Labour. (2003b). Key
Elements of the Employment Equity Act and Regulations.
Human Resources and Social Development Canada [HRSDC]: Labour. (2008a).
Employment Equity—Myths and Realities.
Human Resources and Social Development Canada [HRSDC]: Labour. (2008b).
Equality in the Workplace.
Lawrence, A., & Weber, J. (2008). Business and society: Stakeholders, ethics, public policy
(12th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2014). Business and society: Stakeholders, ethics, public policy
(14th ed.). New York, NY: McGraw-Hill Higher Education.
Lawrence, A., & Weber, J. (2017). Business and society: Stakeholders, ethics, public policy
(15th ed.). New York, NY: McGraw-Hill Higher Education.
Mourtada, Rasha. (2007, March 5). Diversity in the workplace. Retrieved from
www.theglobeandmail.com.
Myers, J. (2007, November). PROFIT W100: Canada's Top Women Entrepreneurs.
Posted to Canadian Business Online.
Oliver, L. (2003). What women want. Profit, 22(5).
Paine, L. S., & Katz, J. P. (2002). Levi Strauss & Co.: Global source (A). In Donaldson,
T., P. Werhane, & M. Cording (Eds.) Ethical issues in business: A philosophical
approach (7th ed., pp. 432–457). Upper Saddle River, NJ: Prentice Hall.
The RBCs of Lending. (2008). Make It Business, 5(5), 13.
Shiplett, M. H. (2003, November). The power of diversity and inclusion. IN Brief
[Newsletter], 1. Retrieved from
http://web.archive.org/web/20060117123513/http://www.diversityatwork.com/M
onster-Nov2003.pdf
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Status of Women Canada [SWC]. (2003a). Setting the stage for the next century: The
federal plan for gender equality. Advancing gender equality. Retrieved from
http://publications.gc.ca/collections/Collection/SW21-15-1995E.pdf
Status of Women Canada [SWC]. (2003b). Setting the stage for the next century: The
federal plan for gender equality. Advancing gender equality. Progress of women’s
rights. Retrieved from http://publications.gc.ca/collections/Collection/SW21-151995E.pdf
Taylor, C. (1995). Building a business case for diversity. Canadian Business Review,
22(1).
Wilson, T. (2013). The human equity advantage: Beyond diversity to talent optimization.
New York, NY: Wiley.
Wilson, T. (1997). Diversity at work: The business case for equity. Etobicoke, ON: John
Wiley & Sons Canada Limited.
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