contemporary consumer & business ethics milan 3 - 6 may, 2010 dr neil connon

Contemporary Contemporary Consumer & Consumer &

Business EthicsBusiness Ethics

Milan 3 - 6 May, 2010 Milan 3 - 6 May, 2010

Dr Neil ConnonDr Neil Connon

Implications and Implications and reactions of business to reactions of business to

contemporary ethicscontemporary ethics

Session 3&4Session 3&4

Wednesday Wednesday

11.00 – 13.30 &11.00 – 13.30 &

16.00 – 19.0016.00 – 19.00

Outline of the lectureOutline of the lecture

• What drives business?• CRS• Boycotts• Environmentalism • Government• Media• Conclusions• Bibliography

What drives business?What drives business?

Consumer Sovereignty

• What is produced?• How is it produced?• How is it distributed?

Determined by consumer preferences - expressed by individual choice in the market place (free market)

Adam Smith • producers will find that their self-interest is

served by producing what is socially viable• ..individual.. neither intends to promote the

public interest, nor knows how much he is promoting it.. he intends only his own gain, and he is in this...led by an invisible hand to an end which was no part of his intention.

• the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer


Adam Smith• "It is not from the benevolence

of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages."


Adam Smith• It is the highest impertinence and

presumption, therefore, in kings and ministers, to pretend to watch over the economy of private people, and to restrain their expense... They are themselves always, and without any exception, the greatest spendthrifts in the society. Let them look well after their own expense, and they may safely trust private people with theirs. If their own extravagance does not ruin the state, that of their subjects never will."

Smith, A. 1776 The Wealth of Nations


• Consumers have a free choice to buy or not to buy

• consumers choices determine a business’s success

• choices are conditioned by– available information– Promotional activities

• individual consumers are in a relatively weak bargaining position


Key features of a corporationKey features of a corporation

• A corporation is essentially defined in terms of legal status and the ownership of assets

• Corporations are typically regarded as ‘artificial persons’ in the eyes of the law

• Corporations are notionally ‘owned’ by shareholders, but exist independently of them

• Managers and directors have a ‘fiduciary’ responsibility to protect the investment of shareholders

Social responsibilitySocial responsibility

• ...responsibility to society

Towards a framework for business ethics

What is a corporation?

Can a corporation have social Can a corporation have social responsibilities?responsibilities?

• Milton Friedman 1970 classic article “The social responsibility of business is to increase its profits”

• Vigorously argued against the notion of social responsibilities for corporations based on three main arguments:– Only human beings have a moral responsibility for their

actions

– It is managers’ responsibility to act solely in the interests of shareholders

– Social issues and problems are the proper province of the state rather than corporate managers

Can a corporation be morally Can a corporation be morally responsible for its actions?responsible for its actions?

• Evidence to suggest that legal designation of a corporation makes it unable to be anything but self-interested (Bakan 2004)

• Long and complex debate but generally support from literature for some degree of responsibility accredited to corporations

• Argument based on:– Every organisation has a corporate internal decision structure which

directs corporate decisions in line with predetermined goals (French 1979)– All organisations manifest a set of beliefs and values that lay out what is

generally regarded as right or wrong in the corporation – organizational culture (Moore 1999)

Why do corporations have Why do corporations have social responsibilities?social responsibilities?

• Business reasons (‘enlightened self-interest’) – Extra and/or more satisfied customers– Employees may be more attracted/committed– Forestall legislation– Long-term investment which benefits corporation

• Moral reasons:– Corporations cause social problems– Because they are powerful, corporations should use their power

and resources responsibly– All corporate activities have social impacts of one sort or another– Corporations rely on the contribution of a wide set of

stakeholders in society rather than just shareholders

What is the nature of corporate What is the nature of corporate social responsibilities?social responsibilities?

Corporate social responsibility encompasses the economic, legal, ethical, and philanthropic expectations placed on organizations by society at a given point in time

(Carroll & Buchholtz 2000:35)

Corporate Social ResponsibilityCorporate Social Responsibility

Economic Responsibility

Legal Responsibility

Ethical Responsibility

Philanthropic Responsibility

Desired by society

Expected by society

Required by society

Required by society

Carrol 1991

CSR in a European contextCSR in a European context• CSR particularly strong concept in US and only more recently

become so influential in Europe• Difference due to explicit CSR is US and implicit CSR in

Europe• Could argue that all levels of CSR play a different role in

Europe– Economic responsibility

• USA strongly focused on responsibility to shareholders• Europe focused on the economic responsibility to employees and local

communities as well– Legal responsibility

• State accepted as prominent force in enforcing rules of the game rather than as interfering in it

– Ethical responsibility• Europeans tend to exhibit greater mistrust of modern corporations than US

– Philanthropic responsibility• In Europe mostly been implemented compulsorily via the legal framework

rather than via discretionary acts of successful companies (US)

CSR and strategy: corporate CSR and strategy: corporate social responsivenesssocial responsiveness

• Corporate social responsiveness refers to the capacity of a corporation to respond to social pressures (Frederick 1994)

• 4 ‘philosophies’ or strategies of social responsiveness (Carroll 1979)– Reaction

– Defence

– Accommodation

– Proaction

Outcomes of CSR: corporate Outcomes of CSR: corporate social performancesocial performance

• Outcomes delineated in three concrete areas:– Social policies– Social programmes– Social impacts

Stakeholder theory of the firmStakeholder theory of the firm

• Theory developed by Edward Freeman (1984)

• A stakeholder in an organization is…any group or individual who can affect, or is affected by, the achievement of the organization’s objectives (Freeman 1984:46)

• More precise definition of ‘affects’ and ‘affected by’ (Evan and Freeman 1993)– Principle of corporate rights - the corporation has the

obligation not to violate the rights of others– Principle of corporate effect – companies are responsible for

the effects of their actions on others

Traditional Management ModelTraditional Management Model

ShareholdersShareholdersShareholdersShareholders

FirmFirmFirmFirm

EmployeesEmployeesEmployeesEmployeesSuppliersSuppliersSuppliersSuppliers

CustomersCustomersCustomersCustomers

Stakeholder ModelStakeholder Model

ShareholdersShareholdersShareholdersShareholders

FirmFirmFirmFirm

CustomersCustomersCustomersCustomers

Civil SocietyCivil SocietyCivil SocietyCivil Society

CompetitorsCompetitorsCompetitorsCompetitors

GovernmentGovernmentGovernmentGovernment

SuppliersSuppliersSuppliersSuppliers

EmployeesEmployeesEmployeesEmployees

Stakeholder theory of the firm:Stakeholder theory of the firm:a network modela network model

Firm

Shareholders

Supplier stakeholder

1

Suppliers

Customers

Civil society

CompetitorsGovernment

Employees

Civil society stakeholder

2

Civil society stakeholder

1

Employee stakeholder

2

Employee stakeholder

1

Customer stakeholder

1

Customer stakeholder

3

Why stakeholders matterWhy stakeholders matter

• Milton Friedman – businesses should only be run in the interests of their owners

• Freeman - others have a legitimate claim on the corporation– Legal perspective

• ‘Stake’ in corporation already protected legally in some way (e.g. legally binding contracts)

– Economic perspective• Externalities – outside contractual relationships• Agency problem – short term interests of ‘owners’ vs. long

term interests of managers, employees, customers etc.

A new role for managementA new role for management

• According to Freeman, this broader view of responsibility towards multiple stakeholders assigns a new role to management.

• Rather than simply being agents of shareholders, management has to take into account the rights and interests of all legitimate stakeholders:– Stakeholder democracy

– Corporate governance

Stakeholder thinking in a Stakeholder thinking in a European contextEuropean context

• One could argue that although the terminology of stakeholder theory is relatively new in Europe, the general principles have actually been practised for some time:– German supervisory board– ‘Covenant Approach’ in environmental

regulation in the Netherlands

Corporate accountabilityCorporate accountability

• Corporate accountability refers to whether a corporation is answerable in some way for the consequences of its actions

• Firms have begun to take on the role of ‘political’ actors – taken up many of the functions previously undertaken by government because:– Governmental failure

– Increasing power and influence of corporations

The problem of The problem of democratic accountabilitydemocratic accountability

• Who controls corporations?

• To whom are corporations accountable?

• Key to corporate accountability is transparency

• Transparency is the degree to which corporate decisions, policies, activities and impacts are acknowledged and made visible to relevant stakeholders

Defining corporate citizenship: Defining corporate citizenship: three perspectivesthree perspectives

• A limited view of CC – this essentially equates CC with corporate philanthropy

• An equivalent view of CC – this essentially equates CC with CSR

• An extended view of CC – this acknowledges the extended political role of the corporation in society

Commitments to corporate citizenshipCommitments to corporate citizenship

Company Corporate Citizenship Statement Source

ExxonMobil “Our approach to citizenship is reflected in the ExxonMobil Standards of Business Conduct – which has been in existence more than 30 years – along with guidelines to ensure understanding and adherence. These standards form the framework by which we operate around the globe and include a commitment to good corporate citizenship.”

ExxonMobil 2004 Corporate Citizenship Report.

IBM “IBM is leading a revolution in corporate citizenship by contributing innovative solutions and strategies that will help transform and empower our global communities.”

http://www.ibm.com.

Novartis “Corporate citizenship at Novartis begins with the success of our core business. The more successful we are in discovering, developing, manufacturing and marketing new medicines, the greater the benefits we can offer to associates and shareholders, patients, health care professionals and other key stakeholders.”

http://www.novartis.com

Hilton Hotels “As the world leader in lodging hospitality, we at Hilton recognize our responsibility to corporate citizenship wherever we do business.”

http://www.hiltonworldwide.com

ThyssenKrupp “ThyssenKrupp regards itself as a responsible corporate citizen and brings its efforts to bear in a variety of areas. In the year under review, many of our efforts were channeled into providing aid to victims of natural disasters in various parts of the world. We provide recurring structural support to regions in which the Group operates. Some public tasks can be better accomplished with direct private involvement. In many such cases, the Group supports culture, education, sport and innovation and promotes social, charitable and humanitarian activities.”

ThyssenKrupp Annual Report 2004-5

Roche “Roche Corporate Principles reflect our firm belief that our employees are a critical success factor. These principles embody decades of defining and refining the rules we want to follow as an employer and corporate citizen and they express our conviction that our commercial success depends on the talent and performance of a dedicated workforce.”

http://www.roche.com

Three views of corporate Three views of corporate citizenshipcitizenship

Limited View Equivalent View Extended View Focus Philanthropy, focused on projects,

limited scope All areas of CSR Citizenship: social, political and

civil rights Main stakeholder group

Local communities, employees Broad range of stakeholders; Broad range of citizens; society in general

Motivation Primarily philanthropic; also economic where citizenship is ‘strategic’

Mixed – economic, legal, ethical, philanthropic

Political

Moral grounding Reciprocity, i.e. ‘putting something back’

Duty to be responsible and avoid harms to society

Grounding is not moral, but comes from changes in the political arena

See handout 6 – See handout 6 – Business and EthicsBusiness and Ethics

• coined in 1880 by Irish Home Rule leader Charles Stewart Parnell - describes campaign waged against Captain Charles Cunningham Boycott by Irish neighbours

• strategy quickly became standard tactic used in struggle against English landlords whose property titles were the result of conquest and sustained by legal privilege

• 1879, Parnell and Michael Davitt founded Irish Land League in order to achieve what they called the three "Fs": fair rent, free sale, and fixity of tenure

• League evolved into widespread and successful peasant rebellion and the first peaceful mass uprising in Irish history

Boycotts - historyBoycotts - history

• campaign against Boycott was League's most notable early victory

• was much-hated overseer for Lord Erne, an absentee landlord in County Mayo

• 1880, Boycott refused to lower rents for tenants, an audacious scheme was hatched -servants no longer worked in his house, stores sold him nothing, no mail was delivered, and labourers refused to bring in the harvest

• Boycott imported politically friendly (Protestant) labourers from Ulster but the expense proved disastrous

• humiliated, he was forced to leave Ireland, the campaign's success galvanised Ireland - landlords who evicted tenants found that no other family would move into the vacated home


• ahimsa...is not merely a negative state of harmlessness but it is a positive state of love even to the evil-doer. But it does not mean helping the evil-doer to continue the wrong or tolerating it by passive acquiescence. On the contrary, love, the active state of ahimsa, requires you to resist the wrong-doer by disassociating yourself from him even though it might offend him or injure him physically.

Mahatma K Gandhi


NVDA - non-violent direct action• tends to be the last resort for a pressure group• direct action likely to increase as more groups find

their demands not being met• more companies will become involved as targets or

allies• may be symbolic to gain public attention

N Craig Smith 1990 Morality and the Market

BoycottsBoycotts

• specific example of how groups can get their message across

• is organised activity in which consumers avoid purchasing products or services from a company whose policies or practices are seen as unfair or unjust

• can be directly against a company’s activities rather than a product itself

• may involve attempts to openly disseminate information about offensive policies

• boycotts have -ve financial ramifications for the companies being targeted

BoycottsBoycotts

• consumers can engage in several forms of consumer resistance

• pressure groups are likely to be more influential than individuals

• some groups engage in resistance by informing the public about marketing practices regarded as socially inappropriate

• groups have at their disposal a variety of different methods to put their message across

BoycottsBoycotts

Wilson’s 6 guidelines for direct actionWilson’s 6 guidelines for direct action

• if possible it should be relevant to the injustice so that a clear message emerges from the action

• it should have imagination and humour• it should enlist the sympathy of people, not alienate them• it should be non-violent • it should be seen to be an expression of genuine injustice,

and not the first but rather last resort• wherever possible it should be within the spirit of the law

Des Wilson 1984 Pressure: the a-z of campaigning in Britain

BoycottsBoycotts

• A model for the process which results in pressure group influenced ethical purchasing behaviour

BoycottsBoycotts

• 1. Firm’s marketing system stable: firm (F1) is matching its resources with the wants of its customers; promotional pressure group (P) is concerned about issue (X)

• 2. Pressure group awareness of firm’s failings: P becomes aware of F1’s undesirable (as judged by the pressure group) impact on X

• 3. Pressure group response: P approaches F1, other organisations (media, governments etc) and the customer to seek an end to the impact of F1 on X

BoycottsBoycotts

• 4. Firm’s marketing system becomes unstable: the firm’s customers become aware of the impact of F1 on X. This threatens the exchange process because X becomes a part of the organisation’s offering to the customer through negative product augmentation

• 5. Ethical purchase behaviour: some F1 customers, spontaneously or in response to a call for a boycott by P, take their custom to another firm (F2). F2, without the legitimacy shortcomings of impact on X, better matches its resources with those customers’ wants

BoycottsBoycotts

Gauging the success of a boycottGauging the success of a boycott

• has the offending policy been changed?

• will business be more cautious and responsible in their future activities?

• will businesses in similar areas, but that remain untargetted, also change their behaviour?

BoycottsBoycotts

See handout 7 – See handout 7 –

BoycottsBoycotts

Boycotts (Innes, 2006)Boycotts (Innes, 2006)

• Food retailers limited GM content due to fear of boycott by Greenpeace and others (Koenig, 2000)

• Animal rights reforms by McDonalds and other food retailers were preceded by short and virulent boycott efforts by the People for the Ethical Treatment of Animals (PETA) (Zwerdling, 2002).

• Boycotts are a pervasive phenomenon in contemporary society

• From 1988 and 1995 over 200 firms and over a thousand products were actually subject to organised boycotts in the US

• http://www.greenpeace.org.uk/

• Greenpeace is an independent, campaigning organisation

• it uses non-violent, creative and confrontation action to expose global environmental problems

• It aims to force solutions which are essential to a green and peaceful future

BoycottsBoycotts

http://www.greenpeace.org/international_en

Greenpeace's goal is to ensure the ability of the earth to

nurture life in all its diversity. Therefore Greenpeace seeks to:

• protect biodiversity in all its forms• prevent pollution and abuse of the earth's ocean, land, air

and fresh water• end all nuclear threats• promote peace, global disarmament and non-violence

BoycottsBoycotts

The Brent Spar: • “The Brent Spar Sets the Industry Precedent The 20th of June, 1995

was a great day for Greenpeace and the environment.• ...this was the day when the occupation by Greenpeace of the

disused Brent Spar oil platform, a massive public protest and boycott, forced Royal Dutch Shell to reverse its decision to dump the installation in the north-east Atlantic.

• However this was only a provisional victory . The Brent Spar is one of 400 oil and gas installations to be de-commissioned from the North Sea.”

BoycottsBoycotts

BoycottsBoycotts

“A belief that moral standing inheres in the non-human world, and, that,.....the fate of other species is not to be arranged to suit the comfort and convenience of species Homo Sapiens“

P.R. Hay 1998 Ecological Values and Western Political Traditions Politics Vol. 8 No.2 (1988)

EnvironmentalismEnvironmentalism

Group activities, individual initiatives or attitudes which embrace a range of diverse causes which share a common concern for protecting the ecosystem from further degradation and safeguarding it for future generations

An Inconvenient Truth - http://www.youtube.com/watch?v=wnjx6KETmi4


http://www.youtube.com/watch?v=wnjx6KETmi4

http://www.youtube.com/watch?v=wnjx6KETmi4

“...behaviour that reflects concern about the effects of manufacturing and consumption on the natural environment

Wagner S 1997 Understanding Green Consumer Behaviour

The Green ConsumerThe Green Consumer


• 1960’s sees the start of the movement in Europe• 1970’s /80’s - Scientific research starts to support concerns• movement gains momentum, especially in Germany (Green Party)• by the mid 1980’s there is growing concern for personal health and

safety, and ‘green‘ issues move into mainstream politics in the UK• ‘green consumerism represented a significant shift from the rampant

individualism of ... the Reagan-Thatcher years, assuming the role of primary opposition to the New Right’

Gabriel & Lang (1995) The Unmanageable Consumer


Questions on green consumer behaviour• what drives it• does it carry an ethical or religious dimension• what understanding of environmental issues do GC’s have• do GC’s have a distinctive socio-demographic profile• what influence is exerted by peer groups• is it an expression of a specific lifestyle• what impact does the media and pressure groups have• how much is shaped by the current cultural climate• is this a counter culture appealing to a minority



Environmentalism Environmentalism

“Take a bite out of a hamburger, we are told, and we take a bite out of the world’s rain forests. Buy the wrong car and we may end up not only with a large fuel bill but also with fewer trees and, quite possibly, less intelligent children. Spray a handful of hair gel or a mist of furniture polish from certain aerosols, and you help destroy the planet’s atmosphere - increasing everybody’s chances of contracting skin cancer“

The Green Consumer Guide: J Elkington


But what does it mean for us the humble (although evidently, rather powerful) shopper? It means that shopping is no longer a simple transaction between desire and bank balance. It’s an exercise in moral point scoring, where your opponent is your own conscience.

Jessica Brinton, Sunday Times 26.2.06

See also RED


http://www.joinred.com/products.asp?p=1

• FoE

• Greenpeace

• The Conservation Society

• The Green Party

• books e.g. “The Green Consumer Guide“

• general media interest


Damage SourceDestruction of the ozone

layerGlobal warmingAcid RainToxic wasteWater pollutionLoss of non-renewable or

slowly renewableresources

CFC’s, Expandedpolystyrene

Energy production &consumption (CO2)

- as above -Especially nuclear wasteAgricultural & industrial

run offsRapid use of hardwoods,

minerals, petroleum



Measuring Measuring EnvironmentalismEnvironmentalism

“Good environmental performance is not an optional extra. It is an essential ....no business has a secure future unless it is environmentally sound “ Bob Reid: Chairman ICI

“Avoiding environmental incidents remains the single greatest imperative facing industry today“

Edgar Woolard: CEO DuPont

“Make environmental considerations and concerns part of any decision you make, right from the beginning. Don’t think of it as something extra you throw in the pot.“

Richard Clarke: CEO Pacific Gas

Environmentalism and businessEnvironmentalism and business

• companies now tend to undertake environmental audits• this can help them gain competitive advantage and fend

of any criticism• a whole new category of green businesses has been

generated by changes in consumption patterns• products range from cosmetics to electrical goods and

cars• environmentalists act as referees of corporate behaviour

Gabriel & Lang (1995) The Unmanageable Consumer


The environmental audit

• The systematic examination of the interaction between any business operation and its surroundings. This includes all emissions to air, land and water; legal constraints; the effects on the neighbouring community, landscape and ecology; and the public’s perception of the operating company in the local area…environmental audit does not stop at compliance with legislation. Nor is it a ‘green washing’ public relations exercise…Rather it is a total strategic approach to the organisations activities

Watson and Emery 2003 p668


• Functional – non-functioning• Psychological - perceived disappointment

The more effort exerted to attain a goal, the more dissonance is aroused if the goal is less valuable than expected

Business and how they react to problemsBusiness and how they react to problems

Past Research• correlation between rising standards of living and CD

(Thorelli 1980)• correlation between consumer education and the expression

of CD (Hunt 1977)• higher expectations of standard of living - more frequent the

experience of CD• ‘Customer satisfaction is regarded as a primary determining

factor of repeat shopping and purchasing behaviour’ (Burns and Neisner, 2006, p.49)

VolumeVolume difficulty to measure difficulty to measure intensity intensity


““...throughout the developed economies, ...throughout the developed economies, a range of economic and competitive a range of economic and competitive pressures has forced companies and pressures has forced companies and service providers to re-evaluate the role service providers to re-evaluate the role of the consumer. The creation of of the consumer. The creation of consumer value and customer satisfaction consumer value and customer satisfaction are increasingly seen as key factors in the are increasingly seen as key factors in the achievement of competitive advantage achievement of competitive advantage and commercial success.“and commercial success.“

Bohdanowicz, 1994.


• “To retain customer loyalty, to stay in business, companies can no longer afford to protect themselves from customers who have experienced problems. The history of the corporate world is littered with companies who choose to ignore their customer feedback and relegated the role of customer relations to that of the corporate buffer zone“

John, R., (1994) The Consumer Revolution


www.omafra.gov.on.ca 2007

Customer Satisfaction Model Customer Satisfaction Model 20072007

Meet basic customer Meet basic customer requirementsrequirements

Satisfy unstated Satisfy unstated customer customer

needsneeds

Achieve Achieve Customer delightCustomer delight

Prevent customer Prevent customer complaintscomplaints

Develop customer Develop customer confidenceconfidence

Build consumer Build consumer loyaltyloyalty

http://www.omafra.gov.on.ca/

• Business is driven by self interest• Consumers pay an important role in this

process and sometimes there is conflict (boycott)

• Environmental concerns are on the increase• Business needs to address the environmental

concerns of consumers to continue to appeal to them

ConclusionsConclusions

• Adamson, Colin, 1982 Consumers in Business‘ • Bohdanowicz, Robin and Janet, 1994 Marketing, corporate strategy and the consumer. The

Consumer Revolution, Ed. Robin John, Hodder & Staughton • Burns, David, J., Neisner, Lewis, 2006 Customer satisfaction in a retail setting: The

contribution of emotion International Journal of Retail & Distribution Management Volume: 34 Issue: 1 Page: 49 – 66 Emerald Group Publishing Limited

• Crane & Matten, 2007, • Elkington, J. 1988 The Green Consumer Guide • Fornell, Ryan & Westbrook, 1990 The Key to Customer Retention • Gabriel, Y. & Lang, T. 1995 The Unmanageable Consumer• Hay, P.R. 1998 Ecological Values and Western Political Traditions Politics Vol. 8 No.2 • Hunt, H. Keith, 1977 Consumer Satisfaction/Dissatisfaction: Overview & Research

Directions, Conceptualization and Measurement of Consumer Satisfaction and Dissatisfaction, ed. H. Hunt, Cambridge, MA: Marketing Science Institute.

• Innes, R., 2006. A Theory of Consumer Boycotts under Symmetric Information and Imperfect Competition The Economic Journal, 116 (April), pp. 355–381. Blackwell Publishing

• Shankara, V., Smith, A.K. and Rangaswamy, A., 2003. Customer satisfaction and loyalty in online and offline environments. International Journal of Research in Marketing, 20 (2), pp. 153-175

• Sparks, P. and Shepherd, R., 1992, Self-Identity and the Theory of Planned Behavior: Assesing the Role of Identification with "Green Consumerism,“ Social Psychology Quarterly, 55, (4), pp. 388-399

• Thorelli, H. B. and Engledow, J. L., 1980 Informationseekers and information systems: a policy perspective, Journal of Marketing 44(Spring): 9-27.

• Wagner, S. 1997 Understanding Green Consumer Behaviour• Watson, Michael, Emery, R.T. Anthony, 2003 The emerging UK law on the environment and

the environmental auditing response Managerial Auditing Journal 18/8 666-672

BibliographyBibliography

Why intervene?• Governmental activity in consumer markets is an unexpected

interference in the pursuit of profit

Underpinning Rationale• while a properly functioning market place is desirable in

principle, in practise it has failed to emerge for some reason• for some types of goods and services a conventional market

cannot, or should not, exist

Government EthicsGovernment Ethics

The political spectrum

left left

wingwing

rightright

wingwing

no no interventioninterventioninterventionintervention


• reluctance to get involved in domestic markets

• desire to be in harmony with feelings/cultural awareness of the people

• desire to be seen to be assisting poorer countries

• …but need to balance with domestic needs

• aim to assist in the development of these countries to make them trading partners

• by creating trading partners, theoretically increasing the wealth of the domestic and weaker economies through trade


DFID (Department for International Development) Aims:

• commitment to an internationally agreed target to halve the proportion of people living in extreme poverty by 2015.

• ensuring basic health care provision by 2015

• ensuring universal access to primary education by 2015

• work in partnership with other governments committed to these targets, and with business and the private sector, civil society and the research community,

• works with multilateral institutions, including the World Bank, UN agencies and the European Commission.


• mutual benefits of trade

• concerns over ‘marginalised’ countries

• more caring attitude

• globalisation - global village


Ethical Trade Initiative• an alliance of organisations working

together to promote good practice in the codes of labour practice

• supported by the DFID and the Department for Business, Enterprise and Regulatory Reform .

Non-Government Non-Government Organisations (NGOs)Organisations (NGOs)

http://www.ethicaltrade.org/

See handout 10 – See handout 10 – GovernmentGovernment

& Ethics& Ethics

EU 2005

• Population: 459.5

• 2.2% euro-zone growth

• 5.2% transition economies growth

• Referendums in several countries in the EUs new constitution


Advantages of the EU Single Market• wider choice of goods and services• economic growth• reduced border formalities• freer movement of people• reduced production costs• increased competition• wider educational opportunities• freer movement of capital


Possible disadvantages of the Single Market• fewer safeguards• movement of dangerous goods• quality standards lower• higher taxes• mergers• protectionism• concentration of economic activity• social disruption


Conference on Trade and Development

• Development strategies can only succeed in context of globalisation when implemented in a stable political environment by governments determined to make sustainable development a priority.

Commission working document: 10th United Nations Conference on Trade and Development Bangkok, from 12 to 19 February 2000.


Conference on Trade and Development

Sustainable development also requires • higher savings and investment rates• better education• free trade• environmental protection• social policies• ...and fair and competitive markets.


• Developing and industrialised countries need a multilateral harmonisation of sustainable development rules and principles in the social, environmental and financial sectors.

• This includes the:– promotion of prudential norms and their effective

supervision – promotion of transparency in capital flows so as to

consolidate the domestic financial sectors in developing countries and prevent systemic global crises.



Government Government

& Ethics 2& Ethics 2

• The chief social values cherished by individuals in modern society are realised through groups...the individual has meaning only in relations with others

Earl Latham 1952 The Group Basis of Politics

• There is more to democracy than the occasional vote, and there is more to democracy than political parties. Pressure groups, offering an alternative form of expression, are a healthy component of genuine democracy

Pressure GroupsPressure Groups

What are they?• promote interests of particular group of people or to gain acceptance

for a particular point of view• e.g. National Council for Civil Liberties - aims to defend and extend

civil liberties within the UK• e.g. British Goat Society: aims to circulate knowledge and general

information about goats• there is great diversity in terms of subjects• and in the way they exhibit that concern


Sectional and promotional PG’s:

• membership based on performance of specific economic role, e.g. miners or CEO’s

• sectional groups protect interests of members

• promotional groups are held together by a shared attitude e.g. Shelter, The Child Poverty Action group


Promotional Pressure Groups• provide scope for political participation

3 types

• single issue pg’s: e.g.CLEAR - sole aim to reduce and eliminate lead pollution

• issues-in-context pg’s: e.g.FoE - number of agendas within overall context

• practice-based pg’s: e.g. Shelter is a charity-cum-pressure group provides assistance/support homeless - campaigning on their behalf


Other issues

• avenues of pressure:– insider/outsider status (extent of access to decision makers)– corporations as an avenue of pressure

• resources:– commitment, cohesion, strategic location (ability to influence

executive)– sectional and promotional groups compared (more influential?)– public opinion

• adopted strategies:



FoE is: • worlds largest international network of environmental groups

• one of the leading environmental pressure groups in UK

• largely funded by supporters

FoE• commissions research

• provides extensive

• information

• and educational materials


FOE• have won many battles with government and

industry - achieving bans on– ozone-destroying CFCs – reduced trade in rainforest timber– increased support for cleaner energy technologies,

and much, much morewww.foe.co.uk



CoffeeCoffee

• Black gold - http://www.youtube.com/watch?v=B7o1KKgLe9M

http://www.youtube.com/watch?v=B7o1KKgLe9M

http://www.youtube.com/watch?v=B7o1KKgLe9M

• Cafédirect is the UK's leading Fairtrade company. It works in partnership with small scale and marginalised coffee, and now also tea, producers to help them strengthen their market presence, add security and increase their income.

• Launched in 1991, the company - and its brands cafédirect and teadirect - has gone from strength to strength, leading Fairtrade into mainstream markets and raising consumer awareness of ethical issues in global trade.

http://www.cafedirect.co.uk/index2.html

• Oxford university Biochemical research centre• controversial new department undertaking animal

experiments• groups (e.g. ALF animal liberation front) threaten

people/businesses that have dealings with it• has been a backlash from ‘silent majority’• ...a crowd mobilised on the streets of Oxford to

protest against the violent anti animal rights lobby

The Sunday Times 26.2.06



Pressure groupsPressure groups

MediaMedia

• plural of the word medium• ‘...newspapers and broadcasting, by which information

is conveyed to the general public’

Types of media:• Newspapers• Television• Radio• Magazines• Internet

Rupert Murdoch

• most media are profit orientated• therefore need to reflect the concerns of

consumers and issues that concern them• as consumer issues move more into the public

domain it becomes more important to reflect them in the media

• investigative journalism is always looking for a new and more interesting angle

• people like news that they can relate to and is relevant to them

MediaMedia

Thread - http://www.bbc.co.uk/thread/video/

http://www.bbc.co.uk/thread/video/

• the aim of most media is to appeal to as wide an audience as possible

• some will aim to appeal to certain sections of society

• some will aim to appeal to certain political standpoints

• some will be used as a mouth piece for their owners e.g. Murdoch

• there will also be local, national and international perspectives, which may differ

MediaMedia

• investigative journalism has brought to the attention of the public a variety of issues

• due to the increasingly widespread nature of the media more information is available and more issues raised

• the effect of this is to concentrate the thoughts of the general public and get them to act often via pressure group involvement e.g. FoE, hunt saboteurs, animal rights

• this can lead to government deciding to change laws - see notes on PG’s

MediaMedia

4.3.98 (www.mirror.co.uk)• ‘Bernie Takes Back His £1M’

• ‘Ministers rule out mass vaccination for smallpox

Situations where government has responded to pressure:• animal testing• beef (..also McDonalds)• internet regulation• Lord Chancellors (Irvine) wall paper

MediaMedia

ConclusionsConclusions

• The position of governments in relation to ethics changes overtime due to differing political ideology and external events

• Pressure groups come and go and will reflect the changing times, events and culture

• Media aims to make a profit and to do so needs to understand and reflect the feelings of the time

...any questions?...any questions?

contemporary consumer & business ethics milan 3 - 6 may, 2010 dr neil connon

Documents

reactions of business

market place free market

dr neil connon slide

consumer preferences

consumer sovereignty

adam smith producers

contemporary ethics

individual choice