Business Ethics II Managing values and believes Tomasz Ochinowski Ph.D [email protected] & Jerzy Jagodziński Business Ethics II Managing values and believes.

Business EthicsII

Managing values and believes

Tomasz Ochinowski [email protected]

&Jerzy Jagodziński

Business EthicsII Managing values and believes

Tomasz Ochinowski [email protected]&Jerzy Jagodziński, editor- in chief - The University of Warsaw, Faculty Management [email protected]

Course Grading:

Final test

(„opened questions” and „opened books”)

Ethics in global world

JERZY JAGODZIŃSKI

Global ethics

• Governments

• International Organisations

• Global banks and corporations

• Local firms

• Individuals

Global ethics - governments

NORTH – SOUTH

REACH VERSUS POOR

Global ethics - governments

• G7 official development assistance (ODA) levels fell by 1% in 2007, excluding debt relief.

• SOURCE: OECD’s Development Assistance Committee 2008

Global ethics - governments

Climate change Global warming

„Greenhouse EFFECTS”

KYOTO PROTOCOL

The pact requires industrialized countries to cut their greenhouse gas emissions from 1990 levels by an average of 5.2% between 2008 and 2012

Global ethics - governments

• The protocol sets separate gas-reduction targets for individual industrialized countries. In Japan’s case, it must reduce emissions by 6%. Despite its firm commitment to the Kyoto Protocol, however, Japan’s emissions actually rose by 8.1% in fiscal 2005.

SOURCE „JAPAN TODAY” 16.02.2007

Goverment and ethics

• Scientists say the evidence is strong that humans are responsible for much of the warming since early in the 20th century.

• The storms that strike the Americas are global warming-influenced.

Global ethics - governments

• USA war spending - Irak, Afganistan

2 trillions dollars

as a result

The leadership of America is at stake

US Federal debt- forcast

GDP, USA, 2006-2010

China

EURO ZONE

CONFLICTS XXI

• GLOBAL ECONOMIC WAR

USA- CHINA CONFLICT?

• Pessimistic scenario?Protectionist tendencies have evidently

reemerged in contemporary world • A tendency to take over possession of

non-renewable production factors by corporations involved in international-scale activities, with extensive support of their respective governments.

International ethics - organizations

World Bank

Global ethics- organizations

The World Bank is like a cooperative, where its 195 member countries are shareholders. The shareholders are represented by a Board of Governors, who are the ultimate policy makers at the World Bank.

Headquarters -Washington

International ethics - organizations

• It is the vision of the World Bank Group to contribute to an inclusive and sustainable globalization to:

• overcome poverty,• enhance growth with care for the

environment,• create individual opportunity and hope

Robert B. Zoellick, President

Global ethics - organizations

„An estimated 1.5 billion people survive on incomes of 2 US$ or less a day. Rising food prices threaten to cause more hunger and malnutrition, while climate change is already having an impact on agriculture, the source of livelihood of the majority of people in poor countries. Infectious diseases, particularly HIV/AIDS and malaria, are widespread. Many of the poorest countries in Africa are landlocked and lack reliable electricity - preventing the development of business”. WB webside

CORRUPTION MECHANISM

SOURCE : WORLD BANK

Bank lends money to the government of a developing country for a specific project

The recipient country will often co-mingle that money with revenue from other sources, such as taxes, private financing, and bilateral donors

The government then distributes the fundsto the appropriate ministry for the project

The ministry sets up operation for the project bidding out contracts for the needed supplies and work Bidding companies pay some commission to get the contract But their estimates are more much higher than needed

Bribery is also being paid by companies who don’t do the work or grossly under perform

CORRUPTION EFFECTS

• Shoddy (miserable) workmanship• Shortcuts taken to finance the bribes• Completely sham projects

„The corruption shortchanges the people in developing countries whom the projects were intended to help. It can lead to real social decay” - World Bank statement.

WORLD BANK

ANTI - CORRUPTION HOTLINE

Report allegations of fraud & corruption in World Bank projects, and staff misconduct

HOW TO FIGHT CORRUPTION?

• PRESSURE FROM PUBLIC OPINION

• FREE PRESS NOTICE

• GOVERMENT INVOLVEMENT

• FAIR PROSECUTION

CORRUPTION AND LOBBING ETHICS

What is lobbying?

LEAGAL DEFINITION:

The deliberate attempt to influence political decisions through various forms of advocacy, directed at policymakers on behalf of another person, organization or group.

WHAT DOES LOBBING HAVE TO DO WITH ETHICS

• Is the difference between a consultant and a lobbyist?

• The legislation influence is protected under the law, for instance - First Amendment to the U.S Const..

WHAT ARE ETHICAL DILEMMAS IN LOBBING

• Fairness

• Transparency

• Common Good

GLOBAL ETHICS - ORGANIZATIONS

WORLD TRADE ORGANIZATION

Director - General: Pascal Lamy

„Trade opening and reducing trade barriershas been, is and will remain,essential to promote growth and development,to improve standards of livingand to tackle poverty reduction”

WTO - DOHA DECLARATION

• We recognize the particular vulnerability of the least-developed countries and the special structural difficulties they face in the global economy. We are committed to addressing the marginalization of least-developed countries in international trade and to improving their effective participation in the multilateral trading system.

WTO - DOHA DECLARATION

• Director-General Pascal Lamy, on 17 April 2008, said at an informal meeting of the Trade Negotiations Committee that “time is coming soon to take our work to a higher level and to begin drawing together the threads both within and across the two issues (agriculture and industrial tariffs) as mandated in Hong Kong”.

Contradictory expectations

May 2009 poll by the Pew Research Center found that 63% believe the trade deficit is a big problem for the nation’s economy today.

Overwhelming majority (81%) said that reducing USA trade deficit with foreign countries was an important foreign policy goal.

May 2009 poll by the Pew Research Center

• 65 %: Americans show substantial concern that the products that the US imports may be manufactured in conditions that violate minimal standards of health, safety, or general decency.

• 72%: US should not promote capitalism and free markets around the world if that risked "exploitation of underdeveloped peoples by Western businessmen.

Lesotho case

• One-third of Lesotho’s children are not in school. Meanwhile, Lesotho’s debt repayments equal its entire education budget. Instead of investing in its people, health and development, Lesotho - a nation of 2 million people with external debt of $647 million — sends debt payments to the developed world.

10.05.2008

STIGLITZ STATEMENT

„THE PROBLEM IS THAT THE GLOBAL TRADE IS TREATED AS A KIND OF PURE AUCTION WHERE POOR AND WEAK COUNTRIES ARE IN A LOST POSITION”

NOBEL PRIZE WINNER IN A BOOK:

„Fair Trade for all. How trade can promote development” Polish edition - 2007

GLOBALIZATION - MIGRATION-POVERTY

• SIGNIFICANT EXPANSION OF GLOBAL MOBILITY

• 75 million in 1960 to almost 175 million in 2000 2,2% OF WORLD PUPULATION - 2.9%

Increasing numbers of skilled non-permanent immigrants

Increase of Child Migration

New migratory flows are no longer male-dominated- "if we want to change the world, change the women".

2003 Revision of the Total Migrant Stock UN

Largest recipient of international migrants – YEAR 2000

• USA - 35 MILLIONS,• RUSSIAN FEDERATION - 13 MILLIONS,• GERMANY – 7 MILLIONS, NEXT:UKRAINE, FRANCE, INDIA

SOURCE: Trends in Total Migrant Stock: The 2003 Revision, UN

The governmant’s opinions

• It better to reduce the scope of the international migrants.

Impact on receiving countries

• New customs, practices and behaviour,

• Resentment which can trigger social conflicts, and desintegration – France, Germany, England

• Growing foreign population

Impact on countries of origin

•Rather positive in standarts of lives of both the migrants and the families left behind

•Status in the community elevated

•Possible effects of return migration

Impact on countries of origin

• Negative for the social lives – family desitegration – „dollar mommies”

• Import of strange and unacceptable culture

• Increase in consumerism – political problem?

Global problem…

• How can the clash of values and cultures be minimized ?

Globalalization impact?

Has changed the way

people think and act?

OBESITY AND FEMINE

• 1,3 BILLION PEOPLE ARE OVERFEED - OBESED

• HUNDREDS MILLIONS ARE STARVING

SOURCE- „SCIENTIFIC AMERICAN”

COCA – COLONIZATION

RESPONSIBLE FOR GLOBAL FOOD INFRASTRUCTURE AND SALE OF „RUBBISH EATS”

SOURCE - „SCIENTIFIC AMERICAN”

Mc Donald’s case

• 30% OF POLES SPEND 200 ZŁ A MONTH, FOR EATING, OUT OF HOME,

• 10% DESIGN 300 ZŁ,• THERE IS GROWING PUBLIC

ACCEPTANCE FOR THE MEAL IN PLASTIC TRAY, PLUS COCA COLA.

Source – „RZECZPOSPOLITA”- Daily Newspaper

Global Gluttony

• USA - each year, the increase of the percentage of the fat children amount to 3-4%.

• Poland – quota of fat children grows the 14 % a year

• Source: The Polish Center of Children Health

MARK TWAIN’S DIET

„WELL BEING IN OUR LIFE LARGELY IS RELATED TO FACT THAT YOU SHOULD EAT WHAT YOU LIKE AND NEXT TO LET EVERYTHING TO BE LEFT AWAY”.

Corporate fraud

• ENRON - corporate accounting deception

• The role of auditors - Arthur Andersen

Corporate fraud

U.S. losses from fraud rose to an estimated $638 billion in 2005 — up from $600 billion in 2002 and $400 billion in 1996

Source: Association of Certified Fraud Examiners. 2006

Corporate fraud

• The report found that, since 2003, the number of companies reporting cases of corruption and bribery rose 71 percent; those reporting cases of money laundering were up 133 percent and reports of financial misrepresentation were up 140 percent.

source: 2005 Global Economic Crime Study.

Some facts

• 90% of Amaricans do not believe that leaders in firms are concerned with the interests of employees

• Only 18% think that companies are doing in favour of their share-holders

• 43% are convinced that their bosses are taking care of the own interests.

Gallup 2010

Reflection

• Bad face of capitalism - social costs

• Real face of capitalism – prosperity and diversity

Grass roots, small firms - ethics

• Small and medium sized businesses (SMEs), defined as those employing less than 50 people:

- account for 99% of all UK businesses

- 45% of all employees work for them.

Source: Dr Laura J Spence Institute of Business Ethics in London

Grass roots, small firms

• Under control of:

local regulations local authorities - better monitoring „ethic zone” for businessmarket and social rulesmorality importance of good and trustful relations

SMEs ethic zone

• More ecological - non-profit goals seem to be on an equal level with profitability

• More transparent and verified,• Less egoistic, self secured,• Small businesses also play a social role as well as

an economic one • Less conflictable – common values, strong sens of

partnership• Relations with competitors are more in the tradition

of mutual support and 'sticking together' rather than in arm's length competition

Source : „Business and morality” – J. Jackson

Examples of ethical challenges

How do I ensure that my employees do their work properly and do the right thing?

How do I deal with my employees’ desire to balance their work obligations with their personal ones?

Problem to consider

Do an ethics rules threaten small and medium firms?

Business ethics

Doing business ethically you make for better business?

Individuals - more pessimistic stance

• Relativism - new rules in global competition

• Utilitarianism – more profits, more confidence, better position

Individuals

• Act in frame of law as well as our system of values

• Religion and culture.

• Mostly we choose positive acting

• More opened to compromise, because we see result of acting

• Stereotype plays limited role

Evaluating your decision

• C onsequence—What are the consequences if I do this? Who will benefit? Who will suffer?L egal—Is it legal? Are there considerations based on laws? I mage—Would I like to see this on the front page of the newspaper? Will this decision affect our public image?C ulture—Does this decision support or damage our organization’s culture and values?

INDIVIDUALIST AND COLLECTIVIST CULTURES

DIFFERENT TYPES OF NEGOTIATIONS

DISTRIBUTIVE OR VALUE CLAIMING NEGOTATION – WIN/LOOSE

INTEGRATIVE NEGOTIATION OR CREATING VALUES, COOPERATION

WIN/WIN

Individuals

• The ethics in medicine

• Why should I be deprived to hand a cognac for my doctor?

Moral as social

circumstances…?

Some reflections

• The USA is responsible for lowering the standards in business?

- greed,

- not sufficient corporate supervision,

- lack of empathy and nonchalance when public opinion is concerned.

Any conclusion

• Bad America!

• Good Europe?

One conlusion

• Never simplify, rather:

HAVE AN EMPATHY TO YOUR PARTNER, AS WELL AS ABILITY TO PENETRATE HIS MIND AND FEELINGS

Ethical values should include

• Integrity

• Honesty

• Openness

• Respect

• Fairness

• Responsibility

Ethics in global world

THANK YOU