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6:30 – 8:30 am Continental Breakfast — Vancouver
8:30 – 9:45 am Concurrent Session 8
Corporations — Beijing
Chair
Kendy Hess, College of the Holy Cross
On (Not) Attributing Moral Responsibility to Organizations
David Rönnegard, INSEAD
Manuel Velasquez, Santa Clara University
When we speak we often describe organizations as having features that we ordinarily attribute only to human beings. But can organizations be morally responsible for what they do in the same literal sense as human beings? We argue that organizations are not capable of being morally responsible in this literal sense. We maintain that attributions of moral responsibility to organizations are at best anthropomorphic. We provide six arguments for why it is misguided to regard organizations as morally responsible for event-descriptions. We show that organizations cannot intend or act in any morally relevant sense. The desirability of attributing moral responsibility to organizations is acknowledged, but wishful thinking does not make it legitimate.
Friedman, Libertarianism, and Moral Agency: The Inability of Corporations to be Morally Responsible
Michelle Darnell, University of Florida
In much of the literature relating to business ethics, there is a general assumption that businesses, specifically corporate organizations, have moral responsibilities. To this end, Milton Friedman’s views on business ethics are largely dismissed among scholars. However, it is argued here that Friedman’s own views as well as much of the criticism raised against his economic approach to corporate responsibility are riddled with conceptual conflations. This paper attempts to provide clarification of core concepts relied upon by both Friedman and his critics, including ‘artificiality’, ‘freedom’, ‘intentionality’, and ‘responsibilities’. Consequently, this paper presents an interpretation and development of Friedman’s views that is both (1) consistent with Friedman’s broad conclusions, and (2) provides a defense of Friedman’s views from contemporary criticisms. Ultimately it is argued that, from a libertarian perspective, corporate organizations are ontologically incapable of moral agency, though they exist within conditions enabling ‘freedom in action’ and must be held to standards of social responsibility. Given the findings of this paper, there is a call to re-evaluate previous arguments, and re-envision future conversations, about business ethics and the social responsibilities of business.
Kantian Group Agency
Amy MacArthur, High Point University
The problem of corporate moral agency is not a new one in business ethics. Business ethicists have addressed the problem of how to hold large corporations morally responsible for their actions at least since Peter French’s argument in favor of doing so. Despite the work that French’s paper has inspired, however, there have been few direct arguments supporting the notion of corporate moral agency from a distinctly Kantian perspective. One exception is Norman Bowie, who has provided support for conceiving of the corporation as a moral agent bound by the duties that Kant enumerates. Recently, however, Matthew Altman has argued that Kant’s theory cannot provide a coherent account of collective responsibility that would enable holding corporations morally responsible for their actions, concluding that the application of Kant’s moral theory to business ethics is limited.
In this paper I seek to provide a Kantian account of corporate moral agency that can explain how corporations (and other groups) can be held morally responsible for their actions. To do this, I begin by emphasizing Kant’s points that all action is action on a maxim, that an agent’s action is specified by her action, and that the maxim is the proper object of moral evaluation. After identifying a precedent for group agency in Kant’s political philosophy and showing how groups can act in a way that satisfies Kant’s conditions for agency, I conclude by arguing that Kantian group agents, in addition to having moral duties themselves, are themselves owed moral duties by other agents.
Investors — Connaught
Chair
Choi Gyoung-Gyu, Dongguk University
Never the Twain Shall Meet? How Activist Groups Combine Backstage and Frontstage Tactics to Promote Socially Responsible Investment Policy
Tijs Van den Broek, University of Twente
Michel Ehrenhard, University of Twente
David Langley, TNO (Netherlands Organisation for Applied Scientific Research)
Aard Groen, University of Twente
Public campaigns targeted at firms’ socially irresponsible behavior may inflict reputational damage. Hence, the strategies and tactics of activist groups to influence corporate social responsibility are of key interest to business ethics scholars and firms. In this paper, we study how activist groups combine private and public influence tactics over time to promote socially responsible investment policy. We present an in-depth process study of a large reformative activist group that organized a public digital campaign, alongside ongoing private lobbying, to motivate the Dutch financial sector to change their human rights policy concerning land investments in developing countries. To analyze this case, we use Goffman’s dramaturgical analysis on impression management to develop five propositions on the interactions of activists and firms in the backstage and on the front stage. These propositions are explored and refined in the case study analysis. Our paper contributes to the CSR literature in three ways. First, we add a dramaturgical perspective to the collation of influence tactics, which helps to understand the complex interplay between private and public interactions between activist groups and firms. Second, our process study highlights the dilemma that results from tactical complexity that large activist groups with both lobbyists and campaigners may experience. Last, we emphasize the employment of influence tactics over time rather than contingency-based typologies.
Predicting Pension Beneficiaries’ Behavior for a Socially Responsible Investment Portfolio
George Apostolakis, Nyenrode Business Universiteit
Frido Kraanen, Tilburg University
Gert Van Dijk, Nyenrode Business Universiteit
Financial and demographic issues bring pressure to bear on the pension systems. The concern about the sustainability of the pension systems has now opened the discussion about introducing individual choices under the collective choice mandate. The objective of this research is therefore to examine pension beneficiaries’ intention towards a socially responsible portfolio by using the general framework of Ajzen’s theory of planned behavior. We use regression analysis to better understand pension beneficiaries’ attitude, subjective norm, behavioral control, perceived effectiveness, and intention for such a choice. Of 767 respondents, from a Dutch pension administrative organization, were collected and identified as valid sample. Consistent with the theory, the results of our analysis revealed that attitude, subjective norm, and perceived behavioral control positively affected individuals’ intention to invest in a socially responsible portfolio. Our results imply that understanding the determinants affecting pension beneficiaries’ intentions can be an effective management tool for increasing their involvement in the decision process for a socially responsible choice. Furthermore, we incorporate in our model perceive consumer effectiveness, confidence, and psychological distance theory as significant factors influencing responsible behavior.
The Ethical Responsibilities of Large Asset Holders
Katherina Glac, University of St. Thomas
Diane Brehmer, Center for Ethical Business Cultures
Jason Skirry, University of St. Thomas
Capital markets have evolved and today are dominated by large asset holders, mostly institutional investors and intermediaries. The legal responsibilities of large asset holders are defined in a variety of ways, for example through the law of trusts that focuses on the fiduciary obligations of the asset holder toward beneficiaries and in some cases even toward fellow shareholders. However, there is little debate in the literature about the ethical obligations of large asset holders that go beyond the ethical concepts reflected in legislation, which mostly focus on only one stakeholder group, namely the individuals who provide the assets that are being invested but are virtually silent on the responsibilities toward other stakeholders or their impact on society’s wellbeing overall. This paper intends to address this gap and begins to sketch out a framework for the ethical responsibilities of large asset holders and examines the characteristics of various groups of large asset holders and how these characteristics give rise to specific instances of the more general responsibilities. The paper also identifies challenges for meeting these, potentially conflicting, responsibilities
Self-Interest and Individualism — Library
Chair
Carson Young, The Wharton School, University of Pennsylvania
Greed, a Forgotten Vice?
Kwok Tung Cheung, University of Dayton
Corporate scandals and financial crises are usually seen as the results of greed. But there is not much discussion of greed in the literature of business ethics even when the topic is about virtue ethics. In this paper I evaluate the conceptions of greed by Deirdre N. McCloskey, Gabriele Taylor and Robert C. Solomon. I find those conceptions wanting. Then I present my own analysis of greed that can capture what people nowadays mean by greed. Finally, I criticize an argument by Daniel C. Russell that attempts to justify greedy behaviors as virtuous or at least morally permissible.
Between Agency and Professionalism: What is the Source of Duties to Self-Regulate?
Hasko Von Kriegstein, Ryerson University and the Hebrew University of Jerusalem
Joseph Heath and others have recently developed an approach to business ethics that is variously known as the ‘market-failures approach’ or the ‘self-reulation approach’. The approach has the potential to generate a set of more or less concrete moral obligations in a business context. My main concern in this paper is to uncover how these obligations come to apply to corporate managers. I argue that we do best to locate the source of duties to self-regulate at the level of shareholders. The professional role of managers saddles them with duties of loyalty towards shareholders, as is widely accepted by scholars of corporate law and managers themselves. As loyal agents managers inherit the obligations that shareholders would have to heed, if they were to act on their own behalf. This is how the duties generated by the self-regulation approach come to be constraints on the ways in which managers can pursue profits.
Ethical Choice in a Religiously Diverse Community
Christopher Warren Young, Rutgers University
At the most fundamental layer, this paper examines the effect of a diverse community’s semi-individualistic or its non-diverse semi-communistic organizational structure on the ability of a member of that community to make an important ethical choice; herein defined as choosing to commit suicide. Using Durkheim’s taxonomy of suicide as fatalistic, altruistic, anomic and egoistic, I examine the effect of a community’s changing levels of religious diversity on changing levels of suicide in the same community. Equally, using Akerlof’s adverse selection model, I present the idea that over time religious markets will become more diverse changing the market structure of the society and ultimately changing the levels of suicide for members of the religious community. Each state in the United States is analyzed and compared to one another as if each is an isolated community or organizational structure. The results support the notion that religious members take their own life more frequently in religiously diverse and religiously non-diverse markets, and that over time fatalistic suicide is replaced by egoistic suicide. The results also suggest that Catholics, Jews and Muslims are less prone to increasing levels of diversity when compared to Protestants, and that blacks are less prone to increasing levels of diversity in religiously diverse markets, when compared to whites.
Panel: Human Dignity and Business — Pacific
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Moderators
Alejo José Sison, University of Navarra
Michael Pirson, Fordham University
Panelists
Alejo José Sison, University of Navarra
Michael Pirson, Fordham University
Ignacio Ferrero, University of Navarra
Claus Dierksmeier, University of Tubingen
Anne-Laure Winkler, Baruch College, CUNY
Miguel Alzola, Fordham University
Michelle Westermann-Behaylo, Amsterdam Business School, University of Amsterdam
Our purpose is to foster a humanistic paradigm for business research and practice that allows for the protection and promotion of dignity in business.
This panel begins with a conceptual overview of the current challenges to the economistic paradigm and pronounces more clearly a humanistic alternative: centered on human dignity (Claus Dierksmeier). It will be argued that the notion of human dignity can enhance managerial theory. As an example, the contribution by Anne-Laure Winkler and Miguel Alzola uses the lens of human dignity to re-claim the H (human) component in strategic human resource management (SHRM), thus shifting from seeing employees merely as resources or labor suppliers. Furthermore, Alejo Sison and Ignacio Ferrero propose a specific perspective of dignity and apply it to the context of work. Finally Michele Westermann-Behaylo will use the dignity lens and propose the application of Amartya Sen’s capability approach to stakeholder theory. We thus provide an ample range of perspectives that highlight how the notion of dignity can enhance and complement existing research paradigm in business.
10:00 – 11:15 am Concurrent Session 9
Corporations — Beijing
Chair
David Rönnegard, INSEAD
Corporate Moral Responsibility v. Corporate Social Responsibility: Friedman was Right
Kendy Hess, College of the Holy Cross
Both the literature and the practice of CSR are a bit of a mess right now. There is no consensus on what CSR is or involves, and in the absence of consensus there is no possibility of meaningful discussion about whether firms should engage in it or what that engagement should look like. My primary concern in this paper is to try to address that need, but there are three preliminary matters to address first. After outlining Friedman’s actual objections to “CSR” and the ways the meaning of the term has shifted since he wrote, I quickly introduce one of the new holist accounts of corporate moral agency. The details are not as important as the upshot: having recognized this single corporate moral agent — so similar to a single human moral agent — we can turn to “most of Western philosophy” to answer significant questions about the pursuit of self-interest, obedience to the law, and moral obligation. In fact, traditional Western philosophy can address all of the many threads currently tangled together under the misleading label of “CSR.” The concluding section explores the results of this approach. Among other things, it reveals that Friedman was right that business activity is governed by moral obligations, right to distinguish between moral and “social” responsibility, and right to argue that corporate engagement in “social” responsibility is both inappropriate and dangerous. Firms do not – cannot – have social responsibility, and they exceed their authority when they act as if they do.
Normative Functionalism about Corporate Moral Agency
Waheed Hussain, University of Toronto
Joakim Sandberg, University of Gothenburg
People care a great deal about whether corporations are moral agents. Most of us want, for example, to hold Union Carbide responsible for the Bhopal gas tragedy in 1984 or to hold BP responsible for the Deepwater Horizon spill in 2010. At the same time, however, we recognize that corporations can consist of tens of thousands of individuals, and so—much like ethnic groups or television audiences—it may not be appropriate to treat these collectivities as moral agents in the ordinary sense.
The dominant approach to corporate moral agency (Pettit and List 2010, Bratman 2014, French and Wettstein 2006) focuses on identifying the internal structure that makes an organization distinctively deserving of treatment as a moral agent. In this paper, we argue that this approach does not address the most important contemporary questions about corporate moral agency.
We develop an alternative approach to corporate moral agency—Normative Functionalism—that does a better job of addressing the important contemporary issue. Instead of focusing on some distinctive internal structure, our view focuses on how a justified market arrangement would confer the status of moral agency on certain organizations in order to further various economic and political objectives. We illustrate the superiority of our view in a range of cases, including recent Supreme Court decisions in Hobby Lobby (2014) and Citizens United (2010).
J’accuse: The Role of Individual Normative Judgments in the Development of Business Ethics Theory
Wayne Buck, Eastern Connecticut State University
It is not within the purview of philosophical ethics to say whether or not Mr. A acted unethically when he did X. It is not the place of medical ethics to say whether or not Dr. B acted unethically when she did Y. The job (one among others) of those fields is to establish ethical norms such as it is wrong to X and it is wrong to Y. Whether A’s and B’s actions in fact violate those norms, and whether there are any extenuating or mitigated circumstances in their particular cases, is not the appropriate subject of a journal article in those fields. I argue that business ethics as an academic field is quite different. The task of business ethics is, I will argue, not only to establish norms for ethical business conduct and to ground those norms in ethical theory. The task of business ethics is also to render judgment on the behavior of individual companies. I present a number of arguments for this claim. The bulk of this paper, however, is devoted to showing that the development of rigorous, evidence-based, peer-reviewed investigations of purported unethical behavior by individual companies can make important contributions to ethical theory.
Panel: The Women: Milgram’s Obedience to Authority Experiments — Connaught
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Moderator
R. Edward Freeman, University of Virginia
Panelists
R. Edward Freeman, University of Virginia
Heather Elms, American University
Bidhan (Bobby) Parmar, University of Virginia
Patricia Werhane, DePaul University
It has been over 50 years since Stanley Milgram first began conducting his influential “obedience to authority” experiments at Yale University in 1961, yet academic and popular interest continues. Milgram and his team conducted these experiments with about ~800 naïve participants, but only 40 of them were women. Interestingly, most analyses of the experiments have not focused on this condition, nor compared it to the others. Milgram himself limited his discussion of the women participants to less than a page of text. This panel instead presents a study focused on the women who participated in Milgram’s obedience to authority experiments, including a comparison of their participation/experience to that of the men. We draw on new methods that allow deeper understanding of participant interactions during the experiment and are highly predictive of obedience and disobedience, but in addition to asking whether women behaved differently than men, we examine similarities and differences between the experimental protocols (including the debriefs) in the male and female conditions—i.e., how were the women treated differently from the men? Our analysis sheds light on how people (both men and women, and both experimenters and subjects) act in morally uncertain situations, and has implications for both business ethics research and pedagogy.
Panel: Profit-with-Purpose-Businesses: The G8 Social Impact Investment Taskforce Report and its Applications to the Canadian Business Sector — Library
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Moderator
David Steingard, Saint Joseph’s University
Panelists
David Steingard, Saint Joseph’s University
Bill Clark, Drinker Biddle & Reath LLP
Adam Jagelewski, MaRS Center for Impact Investing
Suzanne Siemens, Lunapads
This panel proposal features an in depth dialogue about “profit-with-purpose businesses” from three perspectives. As one of North America’s appointed representatives on the G8 Social Investment Taskforce, Bill Clark, author of the “Clark Bill,” will discuss legislative recommendations for stimulating social enterprise and impact investing internationally. Tim Jackson, Lead Executive, MaRS Centre for Impact Investing, Canada, will share his experiences facilitating impact investing, social entrepreneurship, and community development across Canada. Two local businesses and development organizations will contribute insights about their work investing at the local, Vancouver level. A tour and site visits for SBE participants will be arranged to witness the substantive difference “profit-with-purpose businesses” are making in the local area.
Panel: Confucian Business Ethics: Confucian Virtue Ethics and Workplace Meritocracy — Pacific
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Moderator
Tae Wan Kim, Carnegie Mellon University
Panelists
Tae Wan Kim, Carnegie Mellon University
Daryl Koehn, University of St. Thomas
Claus Dierksmeier, University of Tubingen
Jeffrey Moriarty, Bentley University
Confucianism, with its long history and extensive influence on Asian economies and workplaces, has attracted increased attention in recent years. Yet, its importance has not been fully explored in business ethics. In this Panel Discussion, we aim to stimulate further developing Confucian business ethics by discussing how Confucianism can be relevant to ethical issues in contemporary Western and Eastern business organizations. In particular, two Confucian panelists will explore how a Confucian view of virtue/character can help business ethics and how a Confucian view of meritocracy can be a defensible alternative to the western concept of workplace democracy. Two Western business ethicists will critically and constructively respond to the Confucian moral visions suggested by the panelists.
11:30 am – 12:20 pm Concurrent Session 10
Corporations — Beijing
Chair
Amy MacArthur, High Point University
The Corporation as Scapegoat: The Perils of Moral Corporate Responsibility
Ian Hamilton Maitland, University of Minnesota
My essay examines the practice of attributing moral and legal responsibility to corporations and its potential for abuse. I examine three ways in which the idea of corporate moral and legal responsibility has been exploited to shield people in the corporation who commit wrongful acts from the consequences of their acts; to try to abridge the constitutional rights of natural persons; and to expropriate the shareholders of corporations. In the process, corporate moral and legal responsibility may obscure actual responsibility, and the idea of the personhood of the corporation may depersonalize shareholders and managers and strip them of their rights.
Corporate Death Penalty?
John F. Hulpke, University College Dublin
If a corporation is bad enough, should it be subject to the death penalty? Some people are angry about corporate misconduct, so much so that many feel some corporations should be forced to cease existence. The traditional “death penalty” relates to individuals. Should a corporation be subject to the death penalty? We suggest that there is already a sort of corporate death penalty. But, this corporate death penalty suffers from some of the same inadequacies of a death penalty applied to individuals. The death penalty is applied to few of those accused or even those sentenced to death that the likelihood of a murderer being executed is compared to the chance of being struck by lightning. Second, there is no agreement that the death penalty has a deterrence effect. Yet, calls are still heard. Companies that cause permanent environmental damage, cause physical pain and death, violate human rights, should cease to exist. So, should laws be passed instituting a corporate death penalty? If looked seen a long-term perspective, perhaps we already have a corporate death penalty. Both the “iron fist of government” and the “iron law of responsibility” have played roles in ending the existence of some corporations. Similar to the death penalty applied to humans, application is not uniform at times seeming random. Corporate misdeeds continue, suggesting that the corporate death penalty has apparently not deterred corporate misconduct. Business actions that anger people continue. The future? We suggest further study. But, we do not suggest new laws.
Workshop: Publishing in Business Ethics Quarterly: Guidance for New Contributors — Connaught
Chair
Denis Arnold, University of North Carolina, Charlotte
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Bruce Barry, Vanderbilt University
Wayne Norman, Duke University
Ethical Leadership — Library
Chair
Robert Krug, St. Joseph’s College (NY)
Two Paths to Employees Ethical Behavior: How and When Does Ethical Leadership Trickle down Across Different Culture
Omer Farooq, Kedge Business School
Mariam Farooq, The University of Lahore
Muhammad Osaid, The University of Lahore
In this paper, we investigate the multiple mediating mechanisms through which ethical leadership influences ethical behavior of employees. We posit that organizational identification (social identity mechanism) and ethical efficacy (social learning mechanism) are two underpinning processes that mediate the relationship between ethical leadership and ethical behavior of employees. We further hypothesized that collectivism-individualism orientations of employees would moderate these processes, such that employees having high collectivistic orientation would exhibit ethical behavior due to organizational identification whereas, employees high in individualism exhibits ethical behavior due to ethical efficacy. Data were obtained from 549 employees working in different organization from France, India and Pakistan supported our theoretical framework. Results are discussed in terms of their implications for both research and practice.
Legitimacy in Authentic Leadership: A Reassessment of the Moral Dimension
Yusuf Sidani, American University of Beirut
W. Glenn Rowe, Western University
We analyze the moral component of authentic leadership. We explain the role of the leader‘s moral motivation, modeling behavior, and the moral system of the followers in developing moral identification leading to moral legitimacy. Moral legitimacy given to leaders, rather than morality per se, is the key pillar in authentic leadership. Authentic leadership not only influences followers and the organizations in which they work, but also feeds back into the leader‘s own self-concepts. We explain how an understanding of the moral component of authentic leadership from such a perspective helps in understanding some leadership dynamics in situations of ethical relativism thus alleviating some of the concerns raised by some researchers regarding the presupposed moral component of the construct. We suggest implications for research and practice.
Adam Smith — Pacific
Chair
Patricia Werhane, DePaul University
A Tale of Two Hypocrisies: Adam Smith, Ha-Joon Chang, and the Principles and Policies of Neoliberalism
Michael Thomas Schleeter, Pacific Lutheran University
This essay represents an attempt to determine, first, whether or not the neoliberal principles and policies that have largely shaped the global economy over the past several decades in fact have their basis, as they are often thought to have, in classical political economy, particularly that of Adam Smith as it is developed in his Wealth of Nations, and, second, whether or not they in fact serve to promote, as they are often argued to do, the prosperity of individuals, particularly those living in developing nations. In both cases, this attempt depends heavily upon and benefits greatly from the work of Cambridge institutional economist Ha-Joon Chang. Ultimately, the essay presents a case, first, for the proposition that these neoliberal principles and polices depart significantly from those advocated by Adam Smith and, second, for the proposition that neither of these alternatives is best suited to promote the prosperity of individuals living in developing nations. In addition, it presents a brief account of why neoliberal policies have been so widely adopted by developing nations today as well as a brief account of how they might come to be replaced by better ones.
Adam Smith and Catholic Social Teaching: Markets, Power, and Business Leadership
Gregory Wolcott, Loyola University Chicago
Due to an emphasis on negative political and economic liberty, Catholic Social Teaching (CST) takes a rather cautious view toward the value of the ideas of Adam Smith. Detractors of Smith within CST point to what they consider to be deficiencies within his works: an impoverished moral anthropology, a lack of concern for the common good, and markets untethered to human concerns and needs. Defenders of Smith within CST tend to emphasize the material benefits that derive from Smithian institutions, such as economic growth, improvements in standards of living, and the new opportunities that arise from cultures focused on innovation. This paper argues that Smith’s ideas have real value for CST. However, this value primarily lies in his moral psychology. While not denying the dangers of business activity for our moral lives, Smith also helps us to understand the possibility of the moral corruption of those who wield political power, thus providing an indirect defense of political and economic liberty that coheres with important Christian ethical notions found in CST. This is the case even though CST does not consistently recognize concerns over the dangers of wielding political power. This paper further suggests that these basic insights are relevant regardless of one’s favored institutional arrangements. Finally, the foregoing Smithian considerations have implications for the value of the business leader’s spiritual life—thus addressing the tensions between material and spiritual concerns within CST.
12:30 – 1:45 pm Business Ethics Quarterly Editorial Board Luncheon — Cristal Ballroom
For members of the BEQ Editorial Board only×
12:30 – 1:45 pm Former Emerging Scholars Luncheon — Vancouver
By invitation only×
2:00 – 3:15 pm Concurrent Session 11
Panel: Responsibility and the Financial Crisis— Beijing
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Moderator
Michael McDonald, University of British Columbia
Panelists
James Dempsey, University of Warwick
Tom Sorell, University of Warwick
Jeffrey Moriarty, Bentley University
David Silver, The University of British Columbia
Since the start of the global financial crisis there has been no shortage of views aired in politics, the media, and popular debate, regarding who should be held responsible and why. One reason for this is the complexity of the events involved. Another is that our normal ways of thinking about responsibility, and their theoretical expression in philosophy, have been developed in the context of small scale, personal interactions, and so it is hard to work out how responsibility should be ascribed for large scale, macro events such as the crisis. This panel will address both of these challenges. Participants will offer narrative accounts of the crisis, so capturing events in ways which facilitate theoretical analysis. Importantly, these narratives are not taken to be mutually exclusive, so dissipating some of the tension surrounding different ways in which responsibility may be assigned. Building on this, each participant will offer a theoretical account of how responsibility should be ascribed for the events and outcomes described, tailored to the particular features presented. These theoretical developments will bridge the gap between ‘traditional’ conceptions of responsibility, and intuitive responses to the activity of individuals, institutions, governments and whole sectors of the economy, that can be linked in different ways to the financial crisis and the harm that it caused.
Panel: Social Licence to Operate (SLO): Stakeholder and/or Social Contract Theory in Action? — Connaught
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Moderator
Wesley Cragg, Schulich School of Business
Panelists
Wesley Cragg, Schulich School of Business
Jim Cooney, Beedie School of Business,; Simon Fraser University; Norman B. Keevil Institute of Mining Engineering, University of British Columbia
Robert Boutilier, Simon Fraser University, Vancouver; Australian Centre for Corporate Social Responsibility, Melbourne
David Lertzman, University of Calgary
Ingrid Putkonen, CIIEID (Canadian International Institute of Extractive Industries and Development)
The expression, “social licence to operate” was introduced into the business ethics lexicon in conversations between Jim Cooney, Vice President of Placer Dome, a Canadian gold mining company and the World Bank in the last decade of the 20th century as a tool for understanding the ethical/csr responsibilities of mining companies operating or proposing to open mines. It was introduced as a metaphor building on the requirement that mining companies needed a licence to operate from a regulatory authority to pursue mining operations. It was designed to suggest that, in addition to regulatory approval, the approval of local communities impacted by mining operations was also required, a form of approval labelled “a social licence”. It is now widely accepted, particularly among Canadian resource extraction companies and stakeholders, that obtaining legitimacy for a resource extraction initiative requires a social licence to operate. Its significance has been enhanced by the growing importance of the principle of “Free, Prior and Informed Consent (FPIC)” now enshrined in the UN convention on Aboriginal Rights. In Canada the credibility of the concept has been enhanced by a series of Supreme Court judgments focused on the rights of Aboriginal communities to be consulted prior to economic development initiatives on their traditional territories. This panel, which includes the person originating the concept, will explore the application and implications of SLO for understanding and defining the ethical responsibilities of corporations advancing economic development initiatives.
Workshop: Teaching Professional Responsibility with Novels — Library
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Christopher Michaelson, University of St. Thomas, Opus College of Business
Matthew Statler, New York University
This workshop seeks to build upon an experiment requiring novels in the business ethics classroom that we believe to be the first of its kind on the scale it was attempted. Philosophers have long claimed that narrative helps to explore the broad ethical question of how to live, and psychologists and brain scientists have recently shown that novels improve affective theory of mind and that good novels cultivate social empathy better than conventional narratives. To advance this research and pedagogy, the objectives of this workshop are to introduce and facilitate dialogue about the use of literature in the business ethics classroom; identify and discuss specific works of literature (and other narrative genres) that work well; and collaboratively identify and develop measures for assessing the impact of using literature in the business ethics classroom.
Social Enterprise — Pacific
Chair
Marta Rocchi, Business Ethics University of Navarra
For-Profit Social Enterprise: An Economic and Legal Analysis
John Boatright, Loyola University Chicago
Social enterprise—which is also called social venturing, social innovation, and social entrepreneurship—is a recent development in which organizations seek to provide social benefits in a businesslike manner. Although many social enterprises are traditional nonprofits, some have adopted the for-profit form in order to realize their social mission more effectively. Given the formidable challenges of competing in markets with nonprofits and purely for-profit businesses, as well as government welfare services, it is difficult to understand how for-profit social enterprises can exist, much less prosper. Successful for-profit social enterprises require both a business model and a governance structure which allow them to be profitable while effectively realizing their social mission. This inquiry employs economic and legal analysis to identify the aspects of a business model and a governance structure for social enterprises which can enable them to succeed in a highly competitive marketplace.
Toward a Post-Paradox One Bottom-Line: Transcending Financial, Social, and Environmental Bottom-Lines with the B Corp Movement
David Steingard, Saint Joseph’s University
This paper presents a framework for evaluating the degree of integration between “profit” and “purpose” in corporate social responsibility (CSR) research and practice. Utilizing the field of paradox theory and the idea of asymptotes, this framework suggests that present conceptions of CSR with multiple bottom-line considerations are evolving. This trajectory of deepening integration moves along a continuum through shareholder capitalism, stakeholder management, the integrative model of CSR, and ultimately toward a One bottom-line approach. This approach offers an aspirational ideal type that transforms dis-integrated profits and purpose into a more integral “profit-with-purpose” pursuit for business. The B Corp movement is offered as an exploratory example of how higher order integration manifests in business practice. Implications for research are discussed.
Why the New Benefit Corporations May Not Prove to Be Truly Socially Beneficial
Daryl Koehn, University of St. Thomas
This paper documents the various benefits that ostensibly are being realized by a new form of social enterprise within the United States—the benefit corporation. Numerous reasons are adduced for questioning whether these benefits are likely to be achieved. In particular, the new type of corporation faces challenges in attracting investors, raising capital, clarifying board duties, protecting directors from lawsuits, and establishing that its products and services genuinely are good. In addition, judges and watchdogs may find it difficult to assess when a benefit corporation truly has pursued its social mission and balanced various stakeholder claims. The analysis identifies areas where the current laws regarding benefit corporations are weak and suggests that lawmakers to think more profoundly about how benefit corporations are to be held accountablefor delivering upon their promises.
3:30 – 4:45 pm Concurrent Session 12
The Financial Crisis and Financial Risk — Beijing
Chair
Greg Wolcott, Loyola University Chcago
Leverage, Illiquidity, and Catastrophic Loss: A Case Against the Contractualist Approach to Risk
Tobey K. Scharding, Bloomsburg University
I present and evaluate the Lehman Brothers Investment Firms’s risky investing leading up to its 2008 bankruptcy for the purpose of understanding how it contributes to the growing literature in the ethics of risk. Risk theorists have articulated and criticized utilitarian approaches to risk, in which the ethically preferred action is the one that maximizes expected value, and deontological approaches to risk, in which the ethically preferred action is the one that does not put rights at risk. There is growing consensus that a contractualist approach, in which risks are ethically acceptable when they are part of a social system from which everyone benefits, is the most promising strategy for risk regulation. I argue that the Lehman banking scandal challenges the adequacy of the contractualist approach to risk, in the sense that even apparently beneficial risks can be ethically problematic when they threaten, as in the Lehman case, the foundations upon which the risk taking itself depends. I evaluate three aspects of Lehman’s risk taking: (1) investing in complicated, hard-to-price financial instruments; (2) investing while highly levered; and (3) investing while relying on a bailout. I then show this risk taking challenges three contractualist approaches to risk: the equitable system approach, the shared aims approach, and the suitable standpoint approach. Finally, I analyze what remains useful of the contractualist approach and sketch some ideas for formulating a more adequate approach to address financial risk.
Assurance Mechanisms and the 2007 Mortgage Meltdown
Jeff Frooman, University of New Brunswick
Sareh Pouryousefi, Nottingham University
This paper re-examines the mortgage meltdown of 2007 in terms of agency theory. A three-phase model characterizing the mortgage market is presented with the key players identified in terms of the roles they play in the industry. Players are shown to operate simultaneously in roles of principals and agents, such that double agency is prominent in the industry. Assurance mechanisms used by players to reduce the agency risks they are exposed to (adverse selection and moral hazard) are surveyed. Two typologies of the assurance mechanisms are generated, using type of resource the mechanisms rely upon on one axis, and risk bearer (borrower, lender, 3rd party) on the other axis. The typologies are used to gain insight into possible causes of the mortgage meltdown that lead to the global financial crisis.
Corporate Social Responsibility and Corporate Risk Taking
Maretno Harjoto, Pepperdine University
We hypothesize that CSR serves as a control mechanism to curb excessive risk taking and to reduce excessive risk avoidance. Firms with CSR focus must balance the interests of multiple stakeholders, and therefore, must allocate resources to satisfy both investing and non-investing stakeholders’ interests. Using five measures of corporate risk taking and a sample of 1,718 U.S. firms during 1998 to 2011, we find that stronger CSR performance is associated with lower level of risk taking activities for firms with risk taking measures above the industry median. We also find some evidence that CSR performance increases risk taking for firms with risk taking measures below the industry median. We examine the mechanism through which CSR has an impact on firm value and find the positive indirect impact of CSR on firm value through its impact on risk taking. Firms with stronger CSR performance are positively associated with firm value because CSR reduces excessive risk taking and risk avoidance.
Emerging Scholars — Connaught
Chair
Robert Phillips, University of Richmond
More Than Looking Fair: Social Accounts and Moral Behavior
Michelle C. Hong, Virginia Tech
The Stakeholder Mindset: A Powerful Psychological State that Enhances Perspective Taking
Karim Ginena, University of Virginia
Bidhan (Bobby) Parmar, University of Virginia
Andrew Wicks, University of Virginia
Sensemaking, Schema Interaction Dynamics, and Corporate Environmental Performance
Guillaume Charles Frédéric Pain, Concordia University, John Molson School of Business
To Kill a Thief…with Ethics: On the Need for Moral Sentiment Presented by Locke’s Concept of Money
James Murphy, DePaul University
Market Competition — Library
Chair
David Dick, University of Calgary
Alternative Medicine and the Ethics of Commerce
Chris MacDonald, Ryerson University
Is it ethical to market complementary and alternative medicines? Complementary and alternative medicines (CAM) are medical products and services outside the mainstream of medical practice. As the terms imply, “complementary” medicines are typically offered as an adjunct to other, more mainstream, treatments, whereas “alternative” medicines are offered as substitutes for mainstream treatments. Complementary and alternative medicines are not just medicines (or supposed medicines) offered and provided for the prevention and treatment of illness. They are also products and services – things offered for sale in the marketplace. Most discussion of the ethics of CAM has focused on bioethical issues – issues having to do with therapeutic value, and the relationship between patients and those purveyors of CAM. This paper aims instead to consider CAM from the perspective of commercial ethics. That is, we consider the ethics not of prescribing or administering CAM (activities most closely associated with health professionals) but with the ethics of selling CAM (some