Ethics and MP's expenses: storm in a (claimable) teacup?

Crane and Matten have been in the UK this week, and the big issue absolutely dominating the media has been that of the expense claims of the country's Members of Parliament (MPs). The press and TV have been all over this one like a bad rash, and don't look ready to letup soon. Now no one likes to see elected politicians misappropriating the public's hard earned money - and Britain has already seen itself slipping down the greasy poll of the corruption perception rankings as we mentioned last autumn. But over the course of the past few weeks the media storm has relentlessly criticised politicians from across the political spectrum for abusing the public's trust to such a degree that we've already seen one senior figure resign (the Speaker of the House of Commons), various politicians have had their knuckles rapped and have promised to repay their overenthusiastic claims, and party leaders have been scrabbling for the moral high ground in trying to instigate new systems of control.

When all is said and done, there is little evidence in all this that any of the politicians involved have actually broken any rules; in fact, it would appear that in many instances, their claims were not only approved, but actively encouraged by administrators. This has all been going on for years without anyone getting in much of a commotion about it. Besides, the padding of expenses is a problem that is hardly unique to poilitical circles - the private sector has just as many problems to deal with, and the media industry itself is hardly whiter than white. So is this all a fuss about nothing? Not exactly. There are some real issues here, especially around how to maintain public trust. There are also many lessons to be learnt about business ethics too - particuarly in terms of the limits to compliance systems in managing ethics, and the importance of getting to the deeper problems of how institutions are governed. Some of these points are dissected nicely in some recent posts on the Added Values blog by the folks in the Professional Ethics Network at the University of Leeds. They also link to a nice little interview clip from everyone's favourite Twitter-er Stephen Fry.

Another way of looking at this is to try and understand why such problems have gone on for so long, and how such a culture of corruption ever managed to get cemented into the heart of government in the UK. One of our favourite concepts in exploring institutionalised bad behaviour is "rationalization tactics", as described by Anand et al in the Academy of Management Perspectives. It doesn't take much effort to see in the case of MP's expenses some clear examples of how processes such as incrementalism, socialization, and cooptation have successively socialized MPs into unethical behaviour ... and how rationalizations such as appealing to higher loyalties and balancing the ledger have given them the kinds of excuses that deny wrongdoing and keep everyone in a state of denial. Of course, if we follw this path, the obvious solution that comes to mind therefore, is a fundamental culture change, a new broom in the dusty cupboards of Parliament. But for that, it's going to take a whole lot more than the rhetoric we've heard so far.

Are we living in The Age of Stupid?

Here is another guest-blog from our friend and colleague Laura. Exciting news about new releases from the world of Celluloid. Timely to accompany the Cannes Festival right now. Enjoy!
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I, like Crane & Matten, like to use film and literature to explore our subject in alternative ways which sometimes capture the imagination more profoundly than the average media report or academic case study. Business Ethics films seem to me to fall into two simple categories, the documentary-type film on the one hand and on the other the dramatisation of either a real or realistic example of ethically dubious business-related behaviour. In the documentary form I would include Al Gore’s Inconvenient Truth, Leonardo di Caprio’s The 11th Hour, Supersize Me, The Corporation, WalMart: The High Cost of Low Price, Orgasm Inc. and the ENRON documentary, The Smartest Guys in the Room. The contrasting dramatised approach includes Erin Brockovich, Blood Diamond, The Insider, Rogue Trader, There will be Blood, Michael Clayton and Fast Food Nation.

Each of these two approaches has their advantages and limitations of course. The documentary perspective can comfortably contain more factual information but can err on the preachy side – maybe that’s why the celebrity association seems to pep things up a little and hold interest. And even if you are basically in agreement with the premise, you can’t escape the certain knowledge that the version of events you are getting is clearly aiming to get one side of the story firmly across. This doesn’t move the arguments tremendously far forward but can focus the mind and provide ammunition for debate. The dramatisation approach to Business Ethics films are easier-going to watch in a sense, though of course the credibility of the message can get subsumed in the dramatic action.

A hybrid approach, with the detail and credibility of a documentary but the entertainment factor of a dramatisation, has potential to profit from the best of both worlds. In March a new film released in the UK managed to do just that and combine the documentary and the dramatic styles with considerable success to bring home the runaway catastrophe of climate change with a punch, and miraculously without making you feel like you have been lectured at.

The Age of Stupid is directed by Franny Armstrong and truly is a film which reaches parts you had forgotten you had. It stars Pete Postlethwaite (seems every film needs a celebrity, but then he is a brilliant actor) as an archivist living alone in 2055 in a world decimated by climate change. As he mutters to himself and his computer screen he reviews footage from 2008 and ponders why, when we had the chance, we didn’t do anything about the environmental damage we were causing.

The documentary aspect comes through as the archivist follows several real stories from around the world: an octogenarian French mountain guide who has watched his beloved landscape change; an ambitious entrepreneur starting a low-cost airline in India and seeking the advantages there which the developed world has long enjoyed; a Shell oilman from New Orleans who sees no real contradiction between a life spent in the oil industry and the horrendous damage caused by Hurricane Katrina, in which he helped to save over 100 people’s lives; a young Nigerian woman who is doing all she can to earn money to put herself through medical school and become a doctor (including fishing in the oil-polluted waters and washing fish with ‘Omo’ to make them ‘edible’); two Iraqi refugee children looking for their brother; and an English wind farm developer trying to overcome opposition in the form of formidable middle aged, middle class locals (he loses).

These real lives show intriguing, sometimes heart breaking perspectives on the fallout of climate change, almost all of which have some connection to corporations (Shell in particular come under the spotlight) and their activities, so useful business ethics material as well as a straight education on the complexity we cause by messing with the environment. For me what it did spectacularly well was bring home the point that climate change is not something for the younger (or future) generation to worry about – it is us, now, of all ages who need to get a grip. In fact, probably, the older we are, the more culpable, with our high cost, high energy consuming lifestyles and endless rooms of stuff we could easily live without. It is the oil man who points out that people looking back on our era will be bound to call it the Age of Stupid, for our failure to act on the damage we are causing.

The film is timed explicitly to galvanise action prior to the United Nations Climate Change Conference in December 2009 in Copenhagen. This is the follow-up to the Kyoto Protocol and the Bali Roadmap. Director Franny Armstrong puts it quite plainly herself “Copenhagen is our last chance”. Certainly, it will be an incredibly important political, social, environmental and economic event, and one in which we will see quite clearly the metal of our respective politicians. Legislation is at last being looked to as part of the solution, as we have seen in the Climate Change Act 2008 in the UK and may yet witness from the Climate Change Bill currently being debated in the House of Representatives in the US. This Bill, going under the official title of the American Clean Energy and Security Act of 2009 , should be considered by the Energy and Commerce Committee by the end of May 2009. The time for tackling climate change could hardly be any more ‘now’.

I –seriously – spent the next few evenings after seeing The Age of Stupid sitting in an unheated, darkened house desperately trying to save energy. The film is that moving and effective at waking you up to the situation we are in. Happily spring is here in the UK so I no longer need to take quite such chilling steps to do my bit. But at the risk of sounding evangelical (as if I haven’t already!), I would say – go and see the film, or better still arrange for it to be shown at your workplace/university/school/arts centre or wherever. If we are quick, we may just manage to be not as stupid as we look.

Laura J. Spence, Director, Centre for Research into Sustainability, Royal Holloway, University of London, UK. www.rhul.ac.uk/management/cris

Keeping it in the Family? Family Firms, Business Ethics and Social Responsibility

In what we hope will be the first of many guest blogs from our extended family of co-authors and colleagues, here's a post from Laura Spence, the co-author of our CSR textbook, about her recent foray into the ethics of (aptly enough) family firms...

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When I mentioned to a friend that I was going to a conference on Business Ethics and Family Business, he looked askance and said “you’ve seen Dallas, that’s all you need to know, isn’t it?” I had been invited to attend the Family Enterprise Research Conference in Winnipeg, Manitoba in Canada (24-25 April, 2009) because of my involvement in a potential journal special issue on this topic, and rather hoped that there was somewhat more to it than the ruthless pursuit of profit and filial jealousy. Happily this turns out to be the case.

I have long lobbied Crane and Matten - not to mention most of the rest of the business ethics /CSR community - about the need to incorporate small and medium sized enterprises (SMEs) in our research. Finally, I think, we are getting somewhere in that respect, but family business, to date, has remained firmly under the radar. As with SMEs, if it were just about the numbers this wouldn’t be the case. SMEs generally comprise over 90% of an economy’s private enterprises (and that includes both developed and developing countries). Family firms, I have learned, are just as important, and of course include large Multinational Enterprises as well as small businesses. The study of family firms is far from being just about the little guys - globally familiar names that are family firms include Kikkoman Soy Sauce, SC Johnson, Ford, Lego, Aldi, Levi Strauss, Estee Lauder, Marriott and Wal-Mart. This list of example organisations alone has a wide range of reputations as far as ethics goes, so there is no intuitive indication of the influence of being a family firm on business ethics. However, these large firms are light years from the common small family business in many respects – maybe it isn’t fair to bundle them all together when the institutional arrangements are potentially so different, if only in terms of the proportion of employees who are family members.

This brings us to one of the basic starting points when understanding what we mean by a ‘family firm’; definition of the key characteristics has been an important aspect of the literature since the field took off in earnest in the 1980s (at least that is when the first dedicated journal on the subject was launched; Family Business Review). A review of definitions has been offered by Chua, Chrisman and Sharma (1999. Previous definitions, they argue, revolve around combinations of family ownership and family management, with ownership being seen as the most important aspect to being defined as a family business. The authors propose that: “The family business is a business governed and/or managed with the intention to shape and pursue the vision of the business held by a dominant coalition controlled by members of the same family or a small number of families in a manner that is potentially sustainable across generations of the family or families.” (p.25).

So where does this leave our expectations of the ethics of the family firm? At the conference, the prevailing assumption was that the family firm, because of a presumed long-term perspective, embedded community orientation and shared vision, would be more ethical and socially responsible than the non-family firm. This sounds great but a little idealistic. As things stand, the fact is we simply don’t know whether there is a clear causal relationship since there has been such very, very little relevant research either theoretical or empirical. Hopefully, the proposed special issue on family business, ethics, stakeholders and sustainability in Business Ethics Quarterly will go some way to revealing whether the ethically challenged oil-rich Ewing family from Dallas - or the virtuous lumber mill owning Waltons of Virginia - provide a good model to reflect on in this barely investigated aspect of business ethics and CSR.

Laura J. Spence, Director, Centre for Research into Sustainability, Royal Holloway, University of London, UK. www.rhul.ac.uk/management/cris

Orgasm Inc.

Now you can accuse Dirk of having a somewhat predictable taste in film titles. After all he got introduced to this media somewhat later in life… But he honestly swears that he went to see this film at the current Hot Docs Film Festival in Toronto for the purest of professional reasons. It is a brilliantly shot, researched and told story about how the pharmaceutical industry identifies and defines new ‘diseases’ which can be a market for newly developed products.

It’s a remarkable film for many reasons. First, we think it really shows the reach of the corporate world up into to most private and personal spheres of human beings. After the tremendous success (commercial that is) of Viagra a lot of pharmaceutical companies have tried to see if similar products could be developed for women. The problem though is that while problems in bed with many men are clearly, say, a ‘mechanical’ dysfunction, the alleged absence of sexual satisfaction with women is a much more complex phenomenon. By carefully funding research, paying celebrity sex columnists and TV presenters and a whole host of players the pharmaceutical industry has – so the film – virtually created the diagnosis for a new disease: ‘Female Sexual Dysfunction’ (FSD).

Once that had been achieved, the next step is obvious: create a pill, a patch, a lotion, an implant – in short: a profitable product – to ‘cure’ women of FSD. Now there are two problems here: all products so far have severe risks and side effects and none of them really work. And that leads to the second problem: FSD - as many of the experts consulted in the film lay out – is not even a proper disease which can be cured by popping a pill. Rather, difficulties to experience a pleasurable and satisfying sex life for women depends by far the least on physical factors, but a whole host of social, psychological, economic and relational conditions. The film shows to which efforts the industry has gone to make female sexuality into just another commodity, which can be made of source of profit; in other words, ‘Orgasm Inc.’

The film is also great learning stuff for other reasons. Institutional scholars have shown the importance of the ‘organizational field’ for business to be successful. Orgasm Inc. shows how companies actively shape this environment: doctors, academics, columnists, TV show hosts, sex helplines, governmental agencies. They all are crucial for corporate success and companies have for long actively shaped, manipulated and used these actors for their interest. By choosing such a rather personal and intimate backdrop, the film just exhibits to which ends companies are ready to go to achieve their goals. Indeed, nothing is sacred any more.

But whatever the somewhat somber story line – it’s an incredibly funny documentary, very watchable. Liz Canner, the director, initially got drawn into this topic through an assignment to put together film material for sexually stimulating women for clinical trials for a pharmaceutical company. The film never lectures, but just by letting people talk, digging behind the surface of sleek corporate executives and mixing material it just achieves its goal in a still rather lighthearted fashion. Highly recommended.