Has 9/11 changed business ethics?

I can’t believe I just wrote this headline. Looking at today’s punch lines in North American papers or on TV, you can get the impression that 9/11 was the all defining event of the new millennium. And that pretty much nothing in the world has remained the same ever since.

There is a lot of hyperbole out there these days. As shocking as 9/11 appeared at the time the last decade has seen – in terms of loss of life or any other criteria we want to apply – much worse tragedies, injustices and atrocities. This includes a number of ways in which America and its allies have responded to 9/11 (8,500 American soldiers and contractors killed, 103.000 Iraqi civilians killed, according to today’s New York Times).

World politics aside – and there are more gifted minds and eloquent writers out there to address those issues – it’s still worth just engaging in this little thought experiment. So let’s play around with this thought for a second: if 9/11 is the day ‘that changed everything’ – what has its effect been on the niche of the world we are commenting on in this blog? Here are some thoughts off the cuff.

Blurring lines between the public and the private. 9/11 has given many governments new legitimacy in redefing the public and the private in their relation to their citizens. Email, phone conversations, financial records, tax statements are just prominent examples where governments have attempted to intrude the privacy of citizens – all of course in the name of fighting ‘the war on terror’. Conspicuously, many of this information is administered by private companies. Unsurprisingly, we then see that electronic privacy, identity protection and a host of other privacy issues have turned in ethical dilemmas for private business. Arguably, many of the ethical issues here would be on the agenda without 9/11 though, as the main driver of ethical contestation is the mere fact that advances in information technology have made those new ways of information gathering possible in the first place.

New business opportunities. Looking at how America and its allies have approached the wars in Iraq and Afghanistan it is evident that we have seen a surge in business opportunities for private military contractors, mercenary companies and security providers. As the Wall Street Journal investigation ‘Top Secret America’ has highlighted this also pertains to intelligence gathering, counterterrorism or homeland security. This all has propelled private business in a sphere traditionally occupied by governments and other – at least on paper – publicly and democratically accountable societal actors. Again, we can legitimately ask in how far this is really triggered by 9/11. As Naomi Klein has pointed out (‘The Shock Doctrine, Chapter 14), it was exactly on September 10, 2001, when Donald Rumsfeld held a Town Hall Meeting in the Pentagon announcing far flung privatization of military operations leading CNN to the headline on the very eve of 9/11: ‘Defence Secretary Declares War on the Pentagon’s Bureaucracy’! In this sense then 9/11 might have accelerated these developments and provided some much needed legitimacy – but the underlying ideas and intentions were hardly new.

Soaring government deficits. The current debate on government deficits in the US, UK and elsewhere is often directly linked to the so-called financial crisis of 2008/9. This however overlooks the fact that due to the ‘response’ to 9/11 certainly the US and the UK, had already heavily overstretched their budgets. The New York Times today cites a figure of $1.6trillion in costs for just the wars post-9/11. In some ways one could even argue that due to the constant distraction of two wars the looming financial disaster could grow largely unnoticed by governmental scrutiny. And the need to finance those wars made it all too tempting to keep interest rates low - with the widely known effects on cheap credit in America. As a result we now see more or less in all Western democracies an increase slashing of classic welfare state provision. As many commentators have pointed out retreating governmental provision of health, education or other public services has been a key driver in a shifting expectation towards business in engaging in these arenas – the UK probably being the best laboratory to substantiate that thesis.

New issues in diversity and discrimination. Certainly in the US, 9/11 has heightened scepticism towards all things Muslim. This is certainly reflected in tightened immigration laws and the general perception of the public. Conspicuously, there is relatively little case evidence that this has also played out in business. While gender or sexual orientation have been well documented there is only scant evidence of actual discrimination on the basis of being of Muslim faith. This may, however, be more credited to the fairly palpable ‘Teflon’ of political correctness with which those topics have been touched since then in business.

A multipolar world and the rise of China and India. One of the most interesting developments in the US has been its heightened restrictions on immigration of highly educated young people including those graduating from American universities. This has had a number of implications for business both in the US and the rest of the world. Most obvious are changes in those industries where America is still quite advanced, most notably IT, electronics and software. All these industries have in the past and still at present do rely heavily on an influx of foreign-born professionals. While it has become more difficult to hire this talent at home, places such as India have immensely benefited from this. Much of the software development and business process outsourcing of leading US companies is now done in Bangalore, Hyderabad or Mumbai. In this sense, with the US becoming less open to a free movement of people we see that this has benefited other parts of the global economy. This has also been visible in University education. Countries such as the UK, Canada or Australia have seen a surge in international students who found their ambition to study in the US rendered impossible after 9/11.

For business ethics this move towards a world where the US in many fields has lost a pole position is quite interesting. With growing business interests in emerging economies we see, at the same time, an interest in business responsibilities and ethics growing in these parts of the globe. We can certainly argue that the last decade has seen much stronger influence and relevance of other areas of the globe. Business ethics, 30 years ago, was by and large an American subject. This is no longer the case today.

Arguably, much of the changes we discuss here have a fairly tenuous link to 9/11 as such. The events had their most severe impacts on ethics in government, warfare, international relations and how governments have (dis-)respected basic human rights since then. Some of it, as we think, has had a trickle-down effect on business. But maybe the gist of it is still best summarized by commodity trader Carlton Brown in the movie The Corporation: ‘In devastation, there is opportunity!’

Photo by JessyeAnne, reproduced under the Creative Commons licence.

The tangled ethics of black economic empowerment

Following up form our last blog entry about South Africa, the latest issue of the magazine Ethical Corporation provides an interesting feature about he impacts of the black economic empowerment (BEE) policies in South Africa. Citing a recent report from Harvard economists that was commissioned by the South African finance minister Trevor Manuel, the article offers a damming verdict of the policy, which it suggests "is failing the poor of South Africa and not helping business... the policy designed to right the wrongs committed against the country’s black majority during apartheid is working only for a few"

'Reverse discrimination' always makes for some tense ethical debates, but in the South Africa case, the sheer scale of past inequities provided a powerful rationale for introducing some radical measures. Not everyone was completely convinced by BEE, but by going beyond simple hiring and promotion quotes to include a groundbreaking attempt to spread business equity and control to previously disadvantaged groups, no one could say that South Africa's leaders were not ambitious.

The evidence that seems to be emerging though suggests that perhaps they were too ambitious, particularly given the social, economic and political context that South Africa is faced with. The Harvard report points to corruption, personal enrichment, poor financing of BEE equity deals, and some pretty unrealistic targets as some of the key factors that have driven the scheme off the rails. Without sufficiently well-educated and trained talent to fill BEE places, quota programs have run into problems, whilst a skills shortage has been exacerbated by emigrating whites dissatisfied with the skewed labour market. Positive discrimination, if it is going to work, needs to take a root and branch approach that tackles the underlying conditions of inequality (education, poverty, health, and some of the institutional arrangements of business and society) alongside its attention to the symptoms.

BEE is far from a lost cause, and the latest report, whilst controversial, will provide some much needed oxygen to a debate that can all to easily collapse into anger, point scoring, and various forms of racism and political correctness. Supporting or criticizing BEE can sometimes come across as taking sides in a political debate, but ultimately the most ethical policies are those that actually improve people's lives in meaningful ways. So, upholding the moral purpose and principles of BEE is crucial, but clear sighted reform so that it has a greater impact on ordinary black South Africans may be the best, and the most ethical, way to go. Business and government will both have to play a part in making that happen.

Diversity in diversity management

You may remember that in one of our posts last month we asked what exactly made women different in a business ethics context. One of the big issues here is the "glass ceiling"that hinders women from getting to the top of the corporate ladder. Discrimination is often invisible but incontrovertible to those that encounter it.

To be sure, this is a problem faced by women everywhere, but at the same time, such institutional discrimination also varies quite significantly between countries. In our business ethics book, we reported on evidence of female held directorships in Europe - where female representation in the boardroom ranged from 0% in Portugal to 29% in Norway. So it was with some interest that we read in the Financial Times last week about evidence emerging of female board memberships in the Gulf region - an area not traditionally known as a leader in diversity management.

The picture painted by the report is of a region that, in terms of diversity management, demonstrates much like Europe quite a bit of, well ...diversity. Some Gulf countries are actually emerging as leaders in the region, with women making up 2.7 per cent of boards in Kuwait, and 3% in Oman. This not only compares favourably to other Gulf states, such as Abu Dhabi (0.6%) and Saudi Arabia (0.1%), but also stacks up pretty well against other ostensibly less conservative countries such as Italy (2%) and Japan (0.4%).

Of course, board memberships do not tell the whole story about gender discrimination in business, but it certainly gives a good flavour of the types of challenges facing women looking to secure advancement to the executive suite. So it's good to see some progress being made in the Gulf, and hopefully will act as a further spur for laggard countries in Europe and elsewhere. Who knows, perhaps even Italy's womanizing PM, Silvio Berlusconi will be able to prompt a greater attention to gender among Italy's boardrooms, especially having appointed the former model and (as the media puts it "ex-showgirl") Mara Carfagna, as Equal Opportunities Minister (pictured right).

But whatever progress is made in Italy or Kuwait, though, such countries will still remain far, far behind the leaders in female board membership. Right now, the place to go for high flying women is Norway, where women now make up 40% of board positions. But we're not talking voluntary social responsibility here; Norway's female friendly pattern is a result of good old fashioned regulation. As the International Herald Tribune reported a couple of months ago, it's not been a easy transition for Norway, but with appropriate mentoring, training schemes, support mechanisms and enforcement, a genuine change in attitudes seems to have accompanied the 2003 law that forced Norwegian companies to fill 40% of board seats with women. Such positive discrimination isn't always popular, but as the chart from the IHT shows, it certainly makes a difference.

So, what makes women so special?

This week on the website of the Globe and Mail newspaper, you can watch Scotiabank CEO Rick Waugh talk about why he thinks it’s a good idea to hire more women. Actually, what he says is not very spectacular, mostly that women are as good as men and often easier to get (as employees, that is…). Well, not exactly a daring observation. And that his company will work hard to raise the 33% share of women in executive positions. Nice intentions.

It goes to show though that equal opportunities for men and women are still an issue. Just think of all the talk about a woman now running for president in the US. It looks like we have come a long way, but there is still much to do.

It is interesting to see how this topic has become more and more an issue for corporations. In our forthcoming book ‘Corporations and Citizenship’ we have a whole chapter on the corporate role in reflecting, enabling or restricting identities of citizens. Gender is just one of many examples here. If we think about equal opportunities for women careers, issues like maternity leave, freedom from discrimination or harassment – it is mostly the corporate sphere where these issues are either respected or suppressed. In that sense then having a CEO talking about the issues is actually reflecting the simple fact that, yes, companies are nowadays centre stage in tackling these inherently political issues.

The debate also goes on in the academic community of business ethics scholars. Our book is one of the few that explicitly features the approach of feminist ethics. While we don’t do much more then summarizing the state of the art, this little section in Chapter 3 has ignited some debate recently. The question is really whether women are inherently different from men: is it correct to stereotype men as ‘rights/status oriented’ whereas women, in this school of ethics, are stereotyped as ‘care/relationship oriented’. With many of our younger (especially female) students our experience in the classroom has been that sometimes this sounds to them like grandmother talking about the war. Long gone are the heated debates on feminism in the 1960s where these theories gained currency.

As we said, we have come a long way here, but it seems there still remains a lot to be done. Both in understanding and appreciating gender diversity (without stereotyping), but also in addressing discrimination and prejudice. And it is in business, where most of these issues are the most hotly contested.