A recent literature applies economic reasoning to restrict corporate social responsibility (CSR) to profitable opportunities. The underlying theory of the firmassumes widespread public company ownership and a net positive contribution to social welfare in relatively unfettered markets. This modern economic approach posits strict fiduciary responsibility of agents. Management, in this fiduciary role, should have no CSR discretion beyond the requirements of minimalist laws and customary ethics. Any profitable CSR option can be undertaken. Any unprofitable CSR action is defined as discretionary (...) altruism prohibited to fiduciary agents and recommended against for shareowners acting through the corporate form. The modern economic position shifts all unprofitable social issues into the sphere of public policy—which is then influenced by business on the basis of economic self-interest. There are two points of relaxation in this position. First, a firm may need to practice prudential altruism to forestall more costly action by governments and stakeholders. Second, management must consider productivity effects of employee sentiments about social issues and stakeholders. (shrink)

International business norms do not exist. Content and development of such norms is a significant research question for business ethics scholarship. Any norms must address difficult practical and moral problems facing multinational enterprises. The author’s thesis is as follows. A key circumstance is that international relations remain a Hobbesian state of nature. The theoretical solution of a global sovereignty for norm formulation and enforcement is unlikely. The business ethics literature proposes other insightful but theoretical and conflicting solutions to abstract wealth-responsibility (...) and universalism-relativism controversies. Theoretical convergence seems unlikely. Evolution of multiple international policy regimes fragmented by policy arena is more probable. Regimes will typically be neither morals by agreement nor a morality of the marketplace. Regime development can occur in various other ways. Moral leadership, by firms, stakeholders, nongovernmental organizations or governments, can be a vital force. Formal ethical theories caninform and guide such leadership initiatives. This process perspective is applied to several recent case examples cited here as supporting evidence: anti-corruption, labor, environmental, human rights, and fiduciary responsibility initiatives. (shrink)

:International business norms do not exist. Content and development of such norms is a significant research question for business ethics scholarship. Any norms must address difficult practical and moral problems facing multinational enterprises. The author’s thesis is as follows. A key circumstance is that international relations remain a Hobbesian state of nature. The theoretical solution of a global sovereignty for norm formulation and enforcement is unlikely. The business ethics literature proposes other insightful but theoretical and conflicting solutions to abstract wealth-responsibility (...) and universalism-relativism controversies. Theoretical convergence seems unlikely. Evolution of multiple international policy regimes fragmented by policy arena is more probable. Regimes will typically be neither morals by agreement nor a morality of the marketplace. Regime development can occur in various other ways. Moral leadership, by firms, stakeholders, nongovernmental organizations or governments, can be a vital force. Formal ethical theories can inform and guide such leadership initiatives. This process perspective is applied to several recent case examples cited here as supporting evidence: anti-corruption, labor, environmental, human rights, and fiduciary responsibility initiatives. (shrink)

This article proposes a specific logic of dynamics for integrative social contracts theory that combines two empirically oriented process extensions strengthening concreteness of Donaldson and Dunfee’s conceptualization, namely international policy regime theory and Tiebout migration. While either would help “dynamize” and “concretize” ISCT, the two combined are even more insightful. Real-world policy regime processes can develop concrete action-guiding norms instantiating hypernorms to guide business decisions. Donaldson and Dunfee placed empirical reliance on expectation of converging parallel evolution of universal principles and (...) authentic local values. ISCT remains vague on how global or local norms can develop and change, for two reasons. First, ISCT does not explain mechanisms for how proposed hypernorms can become actual global norms and also become accepted across extant authentic communities. International policy regime theory explains how hypernorms can become instantiated as global norms expressed in policy regimes. Second, a basic element in ISCT is implied consent positing free exit from voluntary moral communities. Empirically, individuals or businesses may be unable to exit from undesired membership in authentic communities to which they do not consent. The Tiebout migration model provides valuable insights concerning how substantive mobility or its absence improves on the minimum ISCT assumption of implied consent. An integrated logic of ISCT dynamics generates a three-level framework in which instantiated hypernorms and authentic community norms can empirically change, and individuals or businesses can migrate more freely across extant communities. (shrink)

Dynamics concerns the process of change in variable conditions through time at any level of analysis. Various important issues or topics in stakeholder theory and practice involve consideration of change over time and thus unavoidably involve dynamics. While dynamics has received explicit recognition in stakeholder literature, dynamic analysis remains partly tacit and suffused through the literature. One reason is that dynamics remains difficult to model even in economics. This article provides a basic orientation to stakeholder dynamics as a key conceptual (...) and methodological issue for stakeholder thinking. This article identifies current literature concerning stakeholder dynamics and evaluates future directions in dynamic reasoning that would help build stakeholder theory and improve practice of stakeholder management. Notions of competition, influence strategies, change in stakeholder networks, mindsets, salience or values, learning, creative destruction, long-term sustainability, stakeholder reciprocity, sustainable development, and value creation all embed change and thus time dynamics. Static complexity and heterogeneity across units-of-analysis are not the same as dynamics but do also change over time. Dynamics concerns how change process influences consequences (later in time) in relationship to antecedents (earlier in time). Management copes with change process, as much as with complexity and variation in antecedents and consequences. (shrink)

This paper seeks to make a contribution toward a general theory of responsibility and irresponsibility. Such a theory, or framework or model, addresses therelationship between responsibility and irresponsibility. The motive for the effort is that the literature on business ethics, corporate citizenship, and corporate social responsibility combines negative prohibitions with positive requirements and at both individual and organizational levels of action. A prohibition takes the form “do not” expressed in laws and ethics. A requirement takes the form “should” or “ought” (...) expressed in theories of responsibility and stakeholder engagement. Armstrong (1977) points out that actually preventing harm may be socially much more valuable than promoting contribution. (shrink)

This paper explores relationships among authenticity, greenwashing, and institutionalization of best practices for corporate social responsibility . The issue of authenticity versus greenwashing in CSR and stakeholder engagement practices has become an increasingly important topic of activist debate and scholarly inquiry. This paper identifies some relevant literature, defines authenticity and greenwashing, and seeks to connect the definitional distinction to institutionalization of CSR best practices. Connection involves definition and identification of “best” practices for CSR.

This article distinguishes between philosophy for managers and philosophy of managers. Philosophy for managers is prescriptive advice concerning the content of wisdom in practical judgment and action. Managers in action rely on a self-constructed operational code – a concept borrowed here from earlier literature – that unavoidably emphasizes turf, reputation, and coalition in career advancement. The organization is a political arena for decisions, resources, and career opportunities. While elements of operational philosophy are addressed in formal management education, treatment is haphazard (...) and fragmented in a way that leaves managers to develop a personal operational philosophy. How managers address these elements depends on whether they are idealists, realists, or social darwinists in personal philosophy. The author develops these three options as illustrative categories of operational codes for managers. (shrink)

Global climate change has very significant implications for the theory and practice of global justice. Climate change, whether generated by natural processes or human activities, generates uneven distribution of negative and net impacts across individuals, groups, and countries. Sources of climate change due to human activities, and also capacity to respond to climate change, are similarly unevenly distributed. Distributions of sources, impacts, and capacity are likely quite different from one another. In this context, justice concerns who should bear the final (...) real burden of climate change and of actions to mitigate, halt, and reverse climate change. This final real burden is interdependent with global poverty. (shrink)

This paper assesses Milton Friedman’s (1962, 1970) strongly negative view of corporate social responsibility (CSR) and his influence among managers and academics. The subtitle reflects the theme of the IABS 2007 conference: advising practitioners, illustrated by Machiavelli’s The Prince (1513). The paper develops two general arguments. The first argument is that Professor Friedman was a highly academic theoretician arguing the general merits of basically simple theoretical ideas. The second argument concerns advising practitioners. While Friedman’s advice is theoretical (i.e., abstract) rather (...) than practical (i.e., pragmatic), this very characteristic may have increased his influence. There are important lessons to study concerning academic influence among practitioners. Simple ideas may facilitate dissemination and persuasiveness. It is thus worth studying Friedman’s approach to controversy. (shrink)

This article examines the relationship between economic rationality and the possibility of a moral science of business ethics. The purpose of this inquiry is to consider whether a universal and non-controversial moral science of business ethics can be defined satisfactorily, and linked to economic rationality of managers and other stakeholders of firms operating in market economies. Economic rationality connotes economic efficiency, meaning a strictly instrumental maximization of actor utility from limited resources. This rationality is a universal and value free axiom: (...) actors should and generally will be rationally efficient. Utilitarianism accepting aggregation across values is the moral framework associated with market exchange. Business ethics is about normative valuation of motives, actions, and consequences. This article argues that the common foundation across relevant ethical frameworks – moral common sense, Kantianism, virtue theory, religion as a belief system, and utilitarianism – is a first or axiomatic principle of no harm without acceptable justification. A moral science of business ethics proceeds from this no harm axiom. (shrink)

This paper considers the relationship between corporations and global human rights. This relationship lies at the heart of the 2010 conference theme “Business and the Sustainable Commons.” A human or natural right is one that is inherent, and thus universal, in being human. It is typical to distinguish between civil and political rights as a category (thus supposing constitutional democracy in some form); and economic, social, and cultural rights (thus implying minimum conditions such as food, work, education, culture, and so (...) forth). A right for one person implies a duty (not necessarily binding) for some other person or entity. The paper assesses the duty on corporations imposed by definition of global human rights. Such rights also involve considerations of enforcement and funding (or compensation). (shrink)

The recent global financial crisis and economic recession has generated renewed inquiry into and debate over optimal regulation of financial sectors. One such topic of interest concerns how to define, monitor, and regulate the responsibilities of private equity investors. Waves of private equity acquisitions have occurred since the 1980s. The more negative aspects of private equity investment are now under renewed scrutiny. The topic has wide scope, including the recent GM and Chrysler situations. A recent lawsuit by Mervyn’s LLC, a (...) retail department chain operating mostly in California, filed against its private equity owners highlights some of the complex issues in this topic area. The paper examines the Mervyn’s situation based on public information; and places the lawsuit in the broader scope of the topic area. The paper examines the Chrysler situation based on public information; and reports the changes in Chrysler ownership. (shrink)

This paper examines prospects for and content of a global regime for human rights. Competing schools of thought forecast convergence and divergence of national standards under stress of globalization. No such regime exists, and there is no compelling theory of international corporate social responsibility. However, elements of an emerging global regime can be identified and partially overlap with environmental protection issues. This regime is highly fragmented, underdeveloped, and only partially enforceable—but it is in development. The UN Global Compact, the Global (...) Reporting Initiative (GRI), ISO 26000 (expected in 2010), the U.S. Alien Tort Claims Act (ATCA) of 1789 and the permanent international criminal court established in 2002 are illustrations of such elements. The third Ruggie Report, issued 2008, is an important summary of conditions and proposes a strategy for forward progress. Human rights impose important obligations on multinational enterprises (MNEs) operating across highly diverse political, legal, and cultural realities. (shrink)

This paper reports on recent developments concerning responsible management education for the 21st century. AACSB International’s posture is evidently to permit local flexibility concerning delivery of any business ethics education while highlighting the general importance of ethics for business and business schools. Campaign AACSB organized to argue the case for a strong requirement emphasizing foundational course work followed by infusion/diffusion as opposed to local option. The Business Roundtable and theUN Global Compact in 2007 issued strong, useful recommendations concerning business ethics (...) education. AACSB is a listed supporter of the UN Principles for Responsible Management Education (PRME). The ISO 26000 guidance for voluntary corporate social responsibility (CSR) is scheduled for 2010 publication. Global mobilization brings greater influence to bear on AACSB. The paperincludes a large, select bibliography of relevant publications. (shrink)

The recent global financial crisis and worst recession since the Great Depression underscore the theoretical and practical importance of defining requirements for assessing alternative theories of capitalism. The expressed goal of Freeman and his co-authors is to replace value-allocating ‘shareholder capitalism’ with value-creating ‘stakeholder capitalism.’ Each theory combines a different value proposition and principal-agent conception. So interpreted, the value creation proposition suggests two requirements for assessing alternative theories. A proposed better theory of capitalism should demonstrate first practicality of prescriptive guidance (...) for managers and second superiority of its embedded value proposition for sustainable long-term performance. Shareholder and stakeholder conceptions are not the only approaches to developing a theory of capitalism embedding a different value proposition and agency model. Two other conceptions suggest organisational wealth and corporate social responsibility (CSR) theories of capitalism. All four alternatives meet the relatively minimal requirement of practicality. Freeman and his co-authors argue the value creation proposition will outperform the value allocation proposition. But organisational wealth and CSR theories may also outperform shareholder capitalism. Demonstrating that stakeholder capitalism will outperform organisational wealth and CSR theories depends on which principal and value proposition one judges most important in particular conditions. (shrink)

This paper examines definition and interpretation of corporate hypocrisy. There are two different kinds of hypocrisy. One form is objective and universal: a business actor states an ideal or standard and anyone else can see reasonably that the actor’s behavior deviates substantially from this espoused ideal. The other form is subjective and thus is not universal: someone else states an espoused ideal or standard and argues that the business actor’s behavior does not match that prescribed ideal. The paper provides a (...) proposed model in which hypocrisy and cynicism interact in a vicious circle such that both increase. A dimension of this model is that demand for corporate financial altruism is unlimited, while the supply of corporate financial altruism is strictly limited. This imbalance is ripe for generating hypocrisy and cynicism. (shrink)

Labor issues were an important feature of 2004 U.S. presidential campaign rhetoric. The principal reason is the adverse effect on employment, compensation, and pension rights of World Trade Organization (WTO) trade liberalization and other economic trends. The objective of this paper is to investigate six key issues affecting the changing role of labor in the 21st century. (1) One issue is outsourcing of employment from advanced economies to developing and transitional economies. (2) A second issue is immigration of knowledge-skilled labor (...) from developing-transition economies to advanced economies. (3) A third issue is immigration of low-wage service labor from developing-transition to advanced economies. (4) A fourth issue is minimum working conditions, together with compensation and pension rights. (5) A fifth issue is ownership incentives for knowledge-skilled labor (Blair, 1995). (6) A more distant issue is eventual substitution of technology for labor. (shrink)

This paper explores an approach for formulating a prescriptive theory of the firm that integrates economic and ethical criteria to guide strategic and operationalconduct of managers. A prescriptive theory posits goal optimization. A “constrained multiple goal optimization” approach models the firm as a broad set of multiple goals and multiple constraints, the latter both internal and external. An exploration begins with no assumptions concerning whether economics and ethics are compatible or antithetical. If the two approaches are mutually reinforcing, a win-win (...) situation obtains. If the two approaches are in win-lose conflict, a key issue is which approach is hierarchically superior or whether the two approaches can be weighted relatively. (shrink)

This paper reports a preliminary sketch of a framework for integrating perspectives on economics, ethics, strategy, and stakeholders (Jones, 1995). It may notbe desirable in management practice to separate such considerations (Harris & Freeman, 2008). There are three general types of collective choice institutions: governments, markets, and voluntary associations. There are four general types of moral theory: moral rules (Kantianism), consequentialism (utilitarianism), virtuousness (bundling virtue theory, religion, and moral intuitionism), and social contract. There are three general positions concerning social responsibilities (...) of individuals and corporations (i.e., a licensed group of individuals). One position asserts zero social responsibility beyond compliance with laws. The polar-opposite position asserts significant social responsibilities by moral obligation. An intermediate position asserts social responsibility by agent cost-benefit analysis. The framework seeks to map these types of institutions, moral theories, and social responsibility conceptions relative to one another. The purpose is to see whether insight can be obtained concerning certain key developing debates. The paper explores implications of the work of Ostrom and Williamson (winners of the 2009 Nobel Prize in Economic Sciences) for this framework. That work addresses choice institutions—to which moral theories and social responsibility theories can be added. (shrink)

A moral core places ethical considerations superior to business interest. This core must include voluntary prescriptions in various forms to “buy higher, sell lower.” International business ethics must somehow address the tradeoff between corporate financial and stakeholder interests. Corporation codes of conduct generally do not define a moral core. Corporate citizenship is typically strategic investment in markets and reputation. There are two practical paths for formulating a moral core. One path is civil lawsuits against multinationals that, successful or not, increase (...) corporate moral sensitivity. The other path is evolution of multilateral codes of conductembedding negotiated norms for guidance of corporate behavior. Four key cases illustrate: (1) World Bank approach for combating corruption in Chad; (2) a lawsuit against Unocal alleging human rights abuses by Myanmar; (3) a lawsuit against ChevronTexaco alleging environmental and community damages in Ecuadorian Amazonia; and (4) demand by developing countries for relaxing intellectual property rights. (shrink)

This paper proposes an organizing framework that shows likely relationships among five identifiable approaches to corporate social responsibility (CSR). CSR is an umbrella term embracing mandatory, expected, and voluntary activities. CSR is a contested concept, along a continuum from strong CSR through strategic CSR to zero CSR positions. The intention for the framework is to help scholars with understanding how various CSR approaches relate to one another. The organizing framework is explicated in Figure 2.

This paper examines appropriate definition of responsible capitalism in relationship to business tax avoidance and tax policy lobbying. Extant literature on this topic tends to assert or assume that tax avoidance and tax policy lobbying are irresponsible, especially with respect to developing countries. The argument is that developing countries have a legitimate need for tax revenues in the public interest. This paper discusses objections to the assertion and the argument. The author separates legal and moral notions about taxation. Generally, in (...) reasonably clean constitutional democracies, businesses and households do not have a moral duty to overpay taxes or to avoid engaging in tax policy lobbying. The decision problem is strategic and political, not ethical. In corrupt regimes, businesses and households arguably face a condition of justifiable civil disobedience. (shrink)

This brief document introduces two papers (which follow in sequence) based on presentations at the conference in teaching workshop (June 27, 2008) jointly organized and conducted by Duane Windsor (Rice University) and Harry Van Buren III (University of New Mexico). The purpose of the teaching workshop was to report on recent developments concerning responsible management education. Windsor made some introductory comments. Van Buren followed with an exposition of his experiences with and critical reflections on business ethics education particularly with undergraduates (...) at the University of New Mexico (a state institution). Windsor followed with a report of recent developments and some reflections on responsible management education with three different types of MBA students at Rice University (a private institution). There followed an extended, wide-ranging open forum with very active discussion by attendees. (shrink)

This paper explores whether and if so why virtuous behavior, good citizenship, and justice theory reach a limit when applied to legal tax and regulatory avoidance. A general conception of public policy avoidance includes such instances as corporate inversion, other tax avoidance, and regulatory haven decisions. These instances are legally permissible choices, but subject to moral and political criticism intended to promote voluntary self-regulation and changes in public policy strengthening regulatory controls. Economic patriotism and corporate social responsibility arguments call for (...) voluntary self-regulation by companies in advance of public policy changes. (shrink)

Corporate scandals reveal the need for deep transformation of management education so as to profess and promote moral leadership. AACSB and business schools bear partial fault for the recent situation. New 2003 AACSB accreditation standards do highlight business ethics. But the 2003 standards undermine moral, legal and political education by defining “ethics” narrowly and tending to signal pure “infusion” in place of any independent foundation coursework. This paper states a case for an independent foundation course, required universally at undergraduate and (...) graduate levels of business or management education, addressing businesses in societies, legal environment of business and business ethics. Independent foundation instruction by specialists should be followed universally by systematic infusion of these areas throughout business curricula. Neither standalone coursework nor pure infusion is satisfactory. The paper discusses roles, content and location of a required foundation course—followed by systematic infusion—for moral, legal and political education of future managers. (shrink)