Business 303 SheppardBusiness 303 Sheppard Business 303 SheppardBusiness 303 Sheppard

Business Society & Ethics Business Society & Ethics

Bus. 303 / 2007-3Bus. 303 / 2007-3

MY BACKGROUND:MY BACKGROUND:

TITLE:TITLE: Business, Society & Ethics Business, Society & Ethics PREREQ: 60 creditsPREREQ: 60 credits

INSTRUCTOR: INSTRUCTOR: Jerry SheppardJerry Sheppard

• ACCOUNTANTACCOUNTANT

• ACADEMICACADEMIC

• Strategy Strategy • Business Society Business Society

and Ethics and Ethics

MY OPINIONS…MY OPINIONS…

Bus. 303 / 2007-3Bus. 303 / 2007-3

PHONE 778 - 782 - 4918PHONE 778 - 782 - 4918 E-MAIL E-MAIL Sheppard@sfu.ca Sheppard@sfu.ca NOTES NOTES http://www.sfu.ca/~sheppard/index.htmlhttp://www.sfu.ca/~sheppard/index.html OFFICE WMC 4387OFFICE WMC 4387 HOURS HOURS Tue., Wed., Thurs., 12:40 - 1:20 & by Appt.Tue., Wed., Thurs., 12:40 - 1:20 & by Appt.

Contact me in person, by phone or Contact me in person, by phone or E-mail & we’ll set-up an E-mail & we’ll set-up an appointment.appointment.

TITLE:TITLE: Business, Society & Ethics PREREQ: 60 creditsPREREQ: 60 credits

INSTRUCTOR INSTRUCTOR Jerry SheppardJerry Sheppard

Wk. 1-4

TEXTTEXTJ. B. Cuilla, C. Martin J. B. Cuilla, C. Martin

& R. C. Solomon & R. C. Solomon

Honest Work: Honest Work: A Business A Business

Ethics ReaderEthics Reader

© Oxford University Press (2007).© Oxford University Press (2007).

FOCUS ON IDEAS AND APPLICATION.FOCUS ON IDEAS AND APPLICATION. Skim case examples, diagrams & questions.Skim case examples, diagrams & questions. There’s a link to the book site on the 303 site.There’s a link to the book site on the 303 site.

Course DescriptionCourse Description

• Ethical leadership in business.Ethical leadership in business.• Teaching and evaluating ethical practice in a Teaching and evaluating ethical practice in a

challenging workplace.challenging workplace.• The direction of business ethics in an age of The direction of business ethics in an age of

democracy & globalization.democracy & globalization.

+ To review & synthesize the lit. on moral issues To review & synthesize the lit. on moral issues in the field of business & society / 3 themes:in the field of business & society / 3 themes:

As we discuss various models of bus. ethics & As we discuss various models of bus. ethics & their application to the current corp. environment, their application to the current corp. environment, we shall also undertake a critical assessment of we shall also undertake a critical assessment of each model’s practicality and moral implications.each model’s practicality and moral implications.

GradingGrading

~ Participation / ‘Fudge Factor’

Individual Work!Individual Work!

The highest of: 10% - 20% Case 1

10% - 20% Case 2

Plus the highest of: 25% - 35% First Test

35% - 45% Second Test

Wk. 1-7

Class AssignmentsClass AssignmentsWeek Topic Chapter topic, Assignments Readings

Week 2 Corporate Can we trust the Corporate P. 581 - 595

Sept. 13 Governance Governance structure? P. 606 - 621

Week 3 Corporate Can we trust Corp. Leaders? Text Ch. 15

Sept. 20 Leadership When the Buck Stops: Leadership

P. 531 - 556

Wk. 6 10/11 EXAM 1 All of the Above …

Week 1 Introduction The Out of Control Corp.?

Sept. 6 & Handout

P. 595 - 605

Week 4 Markets & Will Markets & Courts save us? P. 311 - 343

Sept. 27 P. 353 - 374Advertising & Product Liability Courts

Week 5 Corp. Social What about Corp. Kindness? Text Ch. 7

Oct. 4 P. 239 - 275Responsibility CSR debate & Stakeholder theory

Wk. 1-8

Class AssignmentsClass AssignmentsWeek Topic Chapter topic, Assignments Readings

Week 8 The Ethical What do we want from corp.s? Text Ch. 3

Oct. 25 P. 55 - 94Honesty & trust in businessBehaviour Goal

Wk.11 11/15 More Dilemmas Conflicts of Interest P. 511 - 524

Week 7

Oct. 18 Society’s Goal P. 200 - 221

Text Ch. 7What’s Fair? What do we want from markets?

What’s fair, ethical and/or just?

Week 9 A Breakdown What if it is all up to you? Text Ch. 3

Nov. 1 P. 396 - 432Whistle-Blowing & Co. Loyaltyof Loyalty

Week 10 Global Ethical Dilemmas Text Ch. 12

Nov. 8 Think Local, Act Global?

Global Ethical

P. 433 - 471 Dilemmas

Wk.12 11/22 EXAM 2 All of the Above …

Week 13 The future place of Markets: P. 647- 649

Nov. 29 Is everything for Sale?

The Role of

Markets

Social ContractSocial ContractCourtesy:Courtesy:• No cell phones No cell phones

In class I will berate your choice of ringtone;In class I will berate your choice of ringtone;In an exam I may take off 100% of your grade.In an exam I may take off 100% of your grade.

HonestyHonesty• Zero tolerance for plagiarism or cheatingZero tolerance for plagiarism or cheating

Automatic failing grade per assignment. Automatic failing grade per assignment. Come on, it’s an ethics class!Come on, it’s an ethics class!

Language requirements:Language requirements:• Fluency in English is assumed.Fluency in English is assumed.

Attendance requirements:Attendance requirements:• It’s required; this is not a purely on-line course.It’s required; this is not a purely on-line course.

Week 1Week 1

The Out of Control Corporation?The Out of Control Corporation?

Wk. 1-11

BUSINESS, SOCIETY & ETHICS:BUSINESS, SOCIETY & ETHICS:MAIN QUESTIONS / ISSUESMAIN QUESTIONS / ISSUES

1.1. Who should and does make Who should and does make the important decisions in our society?the important decisions in our society?

2.2. Why does Lindblom feel that government Why does Lindblom feel that government must cater to business?must cater to business?

3.3. Does this catering mesh with democracy?Does this catering mesh with democracy?

4.4. How then are we to control the corp?How then are we to control the corp?

1a.1a. Who should make the important Who should make the important decisions in our society? decisions in our society? • Philosopher Kings?Philosopher Kings?

• Us Us (How? Direct? Representative?)(How? Direct? Representative?)

• Experts?Experts?

• Bureaucrats?Bureaucrats?

• You Guys?You Guys?

1b.1b. Who does make the decisions? Who does make the decisions?

• Elites?Elites?

• Us Us (How? Direct? Representative?)(How? Direct? Representative?)

• Experts?Experts?

• Business-people?Business-people?

• Other…Other…

2. 2. The What is Democracy? The What is Democracy?

• PowersPowers

• RightsRights

• ResponsibilitiesResponsibilities

3.3. The Lindblom Argument The Lindblom Argument (1 of 4)(1 of 4)

• Leadership Groups are people in Leadership Groups are people in charge of important public functions. charge of important public functions. – They get the big jobs done for society. They get the big jobs done for society.

• There are 2 great Leadership Groups.There are 2 great Leadership Groups. 1. Business-people 1. Business-people 2. Democratically elected officials. 2. Democratically elected officials.

• Most big of shaping & doing in our kind Most big of shaping & doing in our kind of society is entrusted to business. of society is entrusted to business.

3.3. The Lindblom Argument The Lindblom Argument (2 of 4)(2 of 4)

• Given the legalities, business-people Given the legalities, business-people cannot be commanded by democratic cannot be commanded by democratic institutions to perform their functionsinstitutions to perform their functions. . – Business-people must be induced to perform Business-people must be induced to perform

their function.their function.– What they must be given is what they want:What they must be given is what they want:

• E.g. income, chance for growth, autonomy, rights E.g. income, chance for growth, autonomy, rights of consultation, political responsibility, discretion. of consultation, political responsibility, discretion.

• Not everything but generally of the type they want.Not everything but generally of the type they want.

3.3. The Lindblom Argument The Lindblom Argument (3 of 4)(3 of 4)

• Governments thus have no more Governments thus have no more important function than to give important function than to give business what business wants.business what business wants.– To do otherwise is to invite sluggish To do otherwise is to invite sluggish

economic growth, unemployment, economic growth, unemployment, economic (& maybe social) disorder.economic (& maybe social) disorder.

• Political leaders lose their power if they Political leaders lose their power if they do not keep a decently healthy economy.do not keep a decently healthy economy.

3.3. The Lindblom Argument The Lindblom Argument (4 of 4)(4 of 4)

• Thus, in western democratic societies Thus, in western democratic societies there exists two types of control:there exists two types of control:– Democratic or electoral control, and Democratic or electoral control, and – ““Extrademocratic” Business control.Extrademocratic” Business control.

4.4. How’s the Corp. How’s the Corp. Extrademocratic?Extrademocratic?• Aren’t Corp. Leaders elected?Aren’t Corp. Leaders elected?• How are Corp. Leaders selected?How are Corp. Leaders selected?• Who should make policy?Who should make policy?

– Top lobbyist for oil, gas & coal interests to be Top lobbyist for oil, gas & coal interests to be Deputy Secretary of the U.S. Interior Dept. Deputy Secretary of the U.S. Interior Dept.

– Select Anti-Regulatory Industry Lobbyist to head U.S. Consumer Prod. Safety Commish.

I would do it!

Heck, I did do

it!

[596-605][596-605]

Henry Mintzberg

. . Nationalize it Nationalize it - Market Failure- Market Failure

. . Democratize itDemocratize it - Employee - Employee

InvolvementInvolvement

5a.5a. How do we Control the Corp.?How do we Control the Corp.?

Nationalized Nationalized Company Company Examples:Examples:

Manitoba’s take-Manitoba’s take-over of New Flyerover of New Flyer

Federal takeover Federal takeover CDN National RRCDN National RR

• Radical Corporate Governance: Radical Corporate Governance: Strong Participation Rights [606-13] Strong Participation Rights [606-13]

– DignityDignity

– FairnessFairness

– Self-respectSelf-respect

– Health Health

– DemocracyDemocracy

– AutonomyAutonomy

– UtilityUtility

5b.5b. Democratizing theDemocratizing the Corp.Corp. (1/2)(1/2)

– Big firms often have a major s-holder Big firms often have a major s-holder (a bank)(a bank)

– Larger German firms have a 2-tiered systemLarger German firms have a 2-tiered system Banks (especially a firm’s ‘main bank’) areBanks (especially a firm’s ‘main bank’) are

highly influential with a firm’s managershighly influential with a firm’s managers Employees, union members & shareholdersEmployees, union members & shareholders appoint a group to select the boardappoint a group to select the board

– Japanese Banks (especially a firm’s ‘main Japanese Banks (especially a firm’s ‘main bank’) are influential with a firm’s managersbank’) are influential with a firm’s managers

5b.5b. Democratizing theDemocratizing the Corp.Corp. (2/2)(2/2)

• International Corporate Governance

Powerful government intervention; close relations

Passive, stable shareholders exert little controlVirtual absence of external mkt. for corp. control

[596-605][596-605]

. . Regulate itRegulate it - Command - Command & Control& Control

. . Pressure it Pressure it

- Political coercion- Political coercion

5c.5c. How else we Control the Corp.How else we Control the Corp. (1/4) (1/4)

E.g. Jawboning…E.g. Jawboning…

E.g. Standards of E.g. Standards of lead in glaze… lead in glaze…

[596-605][596-605]

5c.5c. How else we Control the Corp.How else we Control the Corp. (2/4) (2/4)

. . TT rr uu ss t it i tt

- C.S.R.- C.S.R.

Let it do its job while raising Let it do its job while raising expectation / Social Audits.expectation / Social Audits.

[596-605][596-605]

5c.5c. How else we Control the Corp.How else we Control the Corp. (3/4) (3/4)

. . Ignore itIgnore it - Let it do its - Let it do its econ. jobecon. job

Hirshman’s Hirshman’s Exit, Exit, Voice & Voice & Loyalty…Loyalty…• Exit: Exit: . Market Force• Voice: Voice: . Protest

• Loyalty: Loyalty: . Maintenance

[596-605][596-605]

5c.5c. How else we Control the Corp.How else we Control the Corp. (4/4) (4/4)

Industrial Industrial development / development / Tax breaks for Tax breaks for investment. investment.

. . Induce itInduce it - Pollution - Pollution

Tax optionTax option

. . Restore it Restore it - S-holder Demo.- S-holder Demo.

Issues Include:Issues Include:

Board Reform; Board Reform;

Shareholder Shareholder initiatives;initiatives;

Big Funds;Big Funds;

Exec. Compensation.Exec. Compensation.

5d5d.. Shareholder DemocracyShareholder Democracy • Board ReformBoard Reform

– Professional Full Time DirectorsProfessional Full Time Directors– Increasing Director's Liability. Increasing Director's Liability.

• Barbarians at the gates Barbarians at the gates • Full Disclosure on Corp. Takeovers.Full Disclosure on Corp. Takeovers.

• Annual meetings that allow for real Annual meetings that allow for real votes on shareholder initiatives.votes on shareholder initiatives.

• Big Investment FundsBig Investment Funds that that force fund force fund managers to take an active interest.managers to take an active interest.

• Exec. compensation that’s Exec. compensation that’s tied to shareholder returns.tied to shareholder returns.

[596-605][596-605]

. . Regulate itRegulate it - Command - Command & Control& Control

. . Nationalize it Nationalize it - Market Failure- Market Failure

. . Pressure it Pressure it

- Political coercion- Political coercion

. . Democratize itDemocratize it - Employee - Employee

InvolvementInvolvement

. . Induce itInduce it - Pollution - Pollution

Tax optionTax option

. . Ignore itIgnore it - Let it do its - Let it do its econ. jobecon. job

. . TT rr uu ss t it i tt

- C.S.R.- C.S.R.

. . Restore it Restore it - S-holder Demo.- S-holder Demo.

6.6. How then do we Control the Corp.?How then do we Control the Corp.?

. . Ignore itIgnore it

Wk. 1-30