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1Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Ethical Imagination,Regulatory Innovation &
Responsible Management
IMBA UCL08/12/07
Laurent Ledoux
2Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Ethical Imagination: when managers must choose between « right » & « right »Ethical Imagination: when managers must choose between « right » & « right »11
Regulatory Innovation: when a multitude of actors interact to enforce CSRRegulatory Innovation: when a multitude of actors interact to enforce CSR22
Contents
3Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
4 case studies to help us reflect on ethical dilemmas
Source: Badaracco (1997); adapted by Ledoux
Edouard SakizTo distribute the abortion pill?
Peter AdarioTo dismiss Kathryn McNeil?
Steve LewisTo attend St Louis meeting?
Carlos PintoTo retrieve & fix the cars?
How do you lead the launch of a product youknow will be extremely controversial?
How do you lead the launch of a product youknow will be extremely controversial?
What should you do if a single parent on your staffis falling behind in his or her work?
What should you do if a single parent on your staffis falling behind in his or her work?
How should you respond if you are offered an opportunityat work solely because of your race or gender?
How should you respond if you are offered an opportunityat work solely because of your race or gender?
What should you do if the expected cost of legal claims from apotentially lethal product is less than the cost of retrieving
that product from the market and fix it?
What should you do if the expected cost of legal claims from apotentially lethal product is less than the cost of retrieving
that product from the market and fix it?
4Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Commonalities & divergences between the 4 case studies
“Right”vs.
“Wrong”(moralchoice)
“Right”vs.
“Right”(ethical
dilemma)
Co
mp
lexi
tyC
om
ple
xity
Who is theorganisation?
Who is theorganisation?
Whoare we?Who
are we?
Whoam I?Whoam I?
Cas pratiques Decision’simpact
Ethicaldecisions
form, reveal& test
the self(John Dewey)
Ethicaldecisions
form, reveal& test
the self(John Dewey)
Lessons
Do you think you can governinnocently,
without dirtying your hands?
(Jean-Paul Sartre)
Do you think you can governinnocently,
without dirtying your hands?
(Jean-Paul Sartre)
Edouard SakizTo distribute the abortion pill?
Peter AdarioTo dismiss Kathryn McNeil?
Steve LewisTo attend St Louis meeting?
Carlos PintoTo retrieve & fix the cars?
Source: Badaracco (1997); adapted by Ledoux
5Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
An ethos is the doctrine of a particular art of living the best possible life and
the means to pursue this aim (i.e. to live happily or to search for truth)
(Marcel Conche, philosopher)
An ethos is the doctrine of a particular art of living the best possible life and
the means to pursue this aim (i.e. to live happily or to search for truth)
(Marcel Conche, philosopher)
Variations on the word « Ethics »
« Ethos » in Greek: custom, habit, way of behaving in an environment
« Ethos » in Greek: custom, habit, way of behaving in an environment
The primary meaning of «Ethos» or «Ethics»*has therefore to do with:
making your way,positioning yourself in an environment
The primary meaning of «Ethos» or «Ethics»*has therefore to do with:
making your way,positioning yourself in an environment
Ethics is a human activity. The purpose of ethics is not to
make people ethical; it is to help people make better decisions
(Marvin Brown, author & ethics consultant)
Ethics is a human activity. The purpose of ethics is not to
make people ethical; it is to help people make better decisions
(Marvin Brown, author & ethics consultant)
* Note the varied use of the word in different languages
6Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Possible definition of « Morality »
A morality is a set of duties and imperatives (positive or negatives) that a society or a community
gives to itself and which enjoins its members to conform their behaviour, «freely» & in an «unselfish» way, to
certain values enabling to distinguish right & wrong.
A morality is a set of duties and imperatives (positive or negatives) that a society or a community
gives to itself and which enjoins its members to conform their behaviour, «freely» & in an «unselfish» way, to
certain values enabling to distinguish right & wrong.
« Universalisable »Universal morality
« Universalisable »Universal morality
RelativeCollective moralities
RelativeCollective moralities
Current most common moralsUniversal human rights & duties
Current most common moralsUniversal human rights & duties
PoliticsPolitics
LawLaw
LoveLove
ReligionReligion
?
7Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Potential sources to support ethical decision-making
Corporate credos &Mission statements
Legalduties
Heuristics(«sleep-test» rules)
Moral or ethicalprinciples
8Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Questions to think «individual» dilemmas – Steve Lewis’ case
“Become who you are”(Friedrich Nietzsche)
“How do my feelings and intuitiondefine, for me, the ethical dilemma?”
(To respect oneself or to be loyal – loyal to whom?)
“Which of the values that are in conflictare most deeply rooted in my life
and in my community?”
(To consider the dilemma as his parents’ son)
“Looking to the future,what is my way
(not the way of others)?”
(To become partner in an investment bank)
“What combinationof expediency and shrewdness, coupled withimagination & boldness, will moveme closer to my personal goals?”
(To go to St Louis but to participate to the presentation)
Who am I?
Source: Badaracco (1997); adapted by Ledoux
9Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Institutional structureFixity & consistency
Individual processesAdaptability & responsiveness
Results“Doing good”
Principles“Doing right”
VirtueEthics
DevelopmentEthics
DeontologicalEthics
TeleologicalEthics
A framework for ethical theories
Source: Fisher & Lovell (2003); adapted by Ledoux
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Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Ask yourself these questions concerning the decision you wish to take
4. Light-of-day test. Would I feel good or bad if others (friends, family, colleagues) were to know of my decision and action?
5. Virtuous mean test. Does my decision add to, or detract from, the creation of a good life by finding a balance between justice, care and other virtues?
Deontological ethics
6. Veil of ignorance/Golden Rule. If I were to take the place of one of those affected by my decision and plan would I regard the act positively or negatively?
7. Universality test. Would it be a good thing or a bad thing if my decision and plan were to become a universal principle applicable to all in similar situations, even to myself?
Development ethics
8. The communitarian test. Would my action and plan help or hinder individuals and communities to develop ethically?
9. Self-interest test. Do the decision and plan meet or defeat my own best interests and values?
Teleological ethics
11. Utilitarian test. Are the anticipated consequences of my decision and plan positive or negative for the greatest number?
12. The discourse test. Have the debates about my decision and plan been well or badly conducted? Have the appropriate people been involved?
3. Hedonistic or intuitive test. Does my decision correspond with my gut feeling and my values? Does it make me feel good?
Corporate credos & mission statements
Legal duties
2. Organisational test. Is my decision in accordance with my organisation’s rules of conduct or ethics
1. Legalist test. Is my decision in accordance with the law?
Virtue ethics
+/- Veto Trigger
Respect of ethical principles
Heuristics
10. Consequential test. Are the anticipated consequences of my decision and plan positive or negative?
12 tests filter to validate or reject a decision
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Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
The Texas Instrument Ethics Quick Test (2001)
Is the action legal?
Does it comply with TI values?
If you do it, will you feel bad?
How will it look in the newspaper?
If you know it’s wrong, don’t do it!
If you’re not sure, ask.
Keep asking until you get an answer.
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Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Who are we ?
“What are the other strong, persuasive,competing interpretations of the situation or problem that I hope to useas a defining moment for my org.?”
(To understand that, for Walters, the basic ethical issuewas irresponsibility: McNeil’s for not pulling her weight &his for not taking action)
“What is the cash value of this situationand of my ideas for the people
whose support I need?”
(Refine his message and shape it to the psychological &political context in which he was working, in terms
of raising productivity or improving recruiting)
“Have I orchestrated a processthat can make the values
I care about become the truthof my organization?”
(After hiring McNeil, to start quickly to let her & her work knownto his bosses & to campaign for a more family-friendly workplace)
“Am I playing to win?”
(To take swift actions to counter Walters: While Adario was out of the office, she worked with one of the bosses to swiftly resolve McNeil’s issue)
“Truth happens to an idea.Its verity is in factan event, an idea”
(William James)
Questions to think «internal» dilemmas – Peter Adario’s case
Source: Badaracco (1997); adapted by Ledoux
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Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Intensity ofproblem felt bythe employee
Organisationalvalues /
Strength of practices
Support ofothers
Personalvalues
Personalautonomy
Societalvalues
Intensity ofproblem felt by the employee Organisational
values / Strength of practices
Support ofothers
Personalvalues
Personalautonomy
Societalvalues
Layer 2
Layer 1
Source: Lovell (2002)
Elements of ethical complexity in organization
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Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Ethical puzzleActing to resolve the issue on the basis
that they have the corrector best solution (utility).
Ethical problemClarifying how the conflicts between different
values would lead to different actions.Acting upon one’s best judgement
(moral judgement).
Ethical conventionSeeking advice on what is
acceptable & applying norms andConventions (fairness)
Ethical relativismMaintaining discussion about the
issue rather than seeking closure on it (relationships)
Ethical awarenessAsserting & acting upon one’s
values; Expressing surprise thatothers may see things diff. (dignity)
Ethical cynicismWithdrawing from any action or
decision but sniping from thesidelines at others’ action (facadism)
Ethical neutralityIgnoring problem & keeping quiet
(inaction)
Ethical negotiationSeeking out other’ views andsupporting the wishes of the
most powerful (bending rules)
Personal certainty, fixed priorities and values
Personal aporia, shifting priorities and values
Developing principles
Achieving the common good
The obligationof duty
Self-consciousness
Dialectic of ethical purpose
Degree of ethical integrity
Source: Fisher and Rice (1999)
Categorisation of possible kinds of reactions and behaviour to an ethical issue
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Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Ethical horizon Loyalty Integrity
Society as a whole Anonymous whistleblowing Public whistleblowing
Civil associations to which I adhere
Maintaining silence/lying
Offering to help management find a way to make things right
orPublic whistleblowing
My organisationMaintaining silence/lying Trying to persuade the organisation to reveal
its wrongdoing and to put things right
Self Protect self by lying/seeking personal advantage or
Refusing to be bought off by the organisation
Keeping silent (inaction is believed not to damage integrity)
orResigning
(when the organisation will not take the right action)
Actions open to an employee, when discovering wrongdoing, according to his ethical horizon
Degree of sacrifice of self for other’s benefit
Degree of sacrifice to show membership and commitment
Degree of sacrifice acting as a scapegoat
Degree of sacrifice to maintain or increase personal benefit or stratus
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Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Questions to think «societal» ethical dilemmas – Edouard Sakiz’ case
Who is theorganisation?
“Have I done all I can to secure myposition and the strength & stabilityof my organization?”
(To refrain to take decisions that could expose directlyThe organization or to confront the BoA’s president)
“Have I thought creatively & imagina-tively about my organization’s role
in society & its relationshipto its stakeholders?”
(To orchestrate a public debateamong the different stakeholders)
“Should I play the lion or the fox?”
(To organize and support a vote that will triggera massive counter-reaction from other actors)
“Have you done all you can to strike a balance,both morally & practically?”
(To market the new drug without endangering the organization)
“Ethics result from the inescapabletension between Virtue & Virtu”
(Aristote & Machiavel)
Source: Badaracco (1997); adapted by Ledoux
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Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
* Synthesis based on the texts from André Comte-Sponville, Marcel Conche & François Jourde
* Synthesis based on the texts from André Comte-Sponville, Marcel Conche & François Jourde
Economic, technical & scientific orderPossible vs. Impossible
(Natural and rational Law)
Economic, technical & scientific orderPossible vs. Impossible
(Natural and rational Law)
Juridical & political orderLegal vs. Illegal
Juridical & political orderLegal vs. Illegal
Moral orderRight vs. Wrong
(Universal or universalisable duties)
Moral orderRight vs. Wrong
(Universal or universalisable duties)
limits
limits
limitscompletes
Ascending hierarchy forindividuals
Ascending hierarchy forindividuals
Ethical orderGood vs. Bad
(Self, subjective or relative Will)
The 4 orders & the tensions between the individual and the group
Descending hierarchyfor groups
Descending hierarchyfor groups
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Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Compensationduty
Responsible for the effects
Compensationduty
Responsible for the effects
Dilemma
Limited juridical responsibility
Limited juridical responsibility
Irreversibility,unpredictability
& anonymityResponsible for
others
Irreversibility,unpredictability
& anonymityResponsible for
others
Unlimited moral
responsibility
Unlimited moral
responsibility
Promise, guarantee & arbitrage
Responsible for the «future»
Promise, guarantee & arbitrage
Responsible for the «future»
«Balanced» ethical
responsibility
«Balanced» ethical
responsibility
Circumstantial judgement (Phronesis)
Rat
ion
alit
yR
atio
nal
ity
+ R
esp
ect
The 4 orders & types of responsibility
Political & juridical orderLegal vs. Illegal
Political & juridical orderLegal vs. Illegal
Eco., technical & scientific orderPossible vs. Impossible(Natural and rational Laws)
Eco., technical & scientific orderPossible vs. Impossible(Natural and rational Laws)
limits
Ethical orderGood vs. Bad
Ethical orderGood vs. Bad
Moral orderRight vs. Wrong
Moral orderRight vs. Wrong
limits
limitscompletes
11
22
33
44
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Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
A sequence of questions for guiding ethical judgement
Dialogue• Stakeholders’ views & prioritary needs?
• Issues between stakeh. to be solved?
• My/our position’s stabibility & strength?
Dialogue• Stakeholders’ views & prioritary needs?
• Issues between stakeh. to be solved?
• My/our position’s stabibility & strength?
Casuistry• Dist. facts from value judg. & beliefs?
• Case’s particularities?
• Diff. betw. particular & general case?
Casuistry• Dist. facts from value judg. & beliefs?
• Case’s particularities?
• Diff. betw. particular & general case?
Imagination• How did I/we get there (history)?
• Other ways to look at it?
• Which ways are (not) ethically helpful?
Imagination• How did I/we get there (history)?
• Other ways to look at it?
• Which ways are (not) ethically helpful?
Clarifying the situation
«What is the ethical issue to be considered»
Clarifying the situation
«What is the ethical issue to be considered»
Articulating intention
& process
Articulating intention
& process
Testing the decision
Testing the decision
Intention• Loyalty to whom first?
• Prioritary objective/intention?
• In line with probable results?
Intention• Loyalty to whom first?
• Prioritary objective/intention?
• In line with probable results?
Process• Process to let my/our value emerge?
• Strategy to let my/our vision of reality prevail?
• Creative vision of my/our role? Lion or fox?
Process• Process to let my/our value emerge?
• Strategy to let my/our vision of reality prevail?
• Creative vision of my/our role? Lion or fox?
Critical self-evaluation• Proposed decision pass 12 filter tests?
• Confidence of decision’s LT strength & validity?
• Acceptable exceptions/modification to my/our decision?
• Risks & consequences of misunderstandings reg. the decision?
Critical self-evaluation• Proposed decision pass 12 filter tests?
• Confidence of decision’s LT strength & validity?
• Acceptable exceptions/modification to my/our decision?
• Risks & consequences of misunderstandings reg. the decision?
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Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Break
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Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Ethical Imagination: when managers must choose between « right » & « right » Ethical Imagination: when managers must choose between « right » & « right »11
Regulatory Innovation: when a multitude of actors interact to enforce CSRRegulatory Innovation: when a multitude of actors interact to enforce CSR22
Contents
22
Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
CSRBusiness Ethics Sustainable development
Corporate citizenship
Code of ethics
Authentifications
Labels Societal performance
DeontologiesCompany philosophies
Company codes
Citizenship actions
CSR – Abundance of concepts
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Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
CSR – Static definitions
Economic ethics“Part of ethics which deals with behaviours and institutions of this sphere, i. e., of the entirety of
exchange activities of goods and services and of production related to this exchange.” (French Penal Code – 1994)
Economic ethics“Part of ethics which deals with behaviours and institutions of this sphere, i. e., of the entirety of
exchange activities of goods and services and of production related to this exchange.” (French Penal Code – 1994)
Business ethicsBusiness ethics
Corporate ethics“Presents itself as responsibility ethics (not only of conviction), organised as a
doctrine which guides activities and behaviour at work” (Fabienne Cardot)
Corporate ethics“Presents itself as responsibility ethics (not only of conviction), organised as a
doctrine which guides activities and behaviour at work” (Fabienne Cardot)
Pragmatic & little theorised
Contextual &in action
Responsive & fragmented
Strategic manifestation:
CSR
Dialog & questioning
3 levels of commitment
3. Values ethics
1. Governance ethics1. Governance ethics
2. Deontological ethics2. Deontological ethics
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Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
CSR – Static definitions
Corporate Social ResponsibilityThe entirety of obligations legally required or voluntarily assumed by an enterprise to pass as an imitable model of good citizenship within a given field (Jean Pasquero)
Corporate Social ResponsibilityThe entirety of obligations legally required or voluntarily assumed by an enterprise to pass as an imitable model of good citizenship within a given field (Jean Pasquero)
Economic
Environmental
Social
The three dimensions of CSR • Multiple expectations:
« societal »
• Assimilation to sustainable development
• Embryonic evaluations
• Global performance = addition of the 3 results
• Ambiguity of the 3P: Profit or Prosperity?
• Confusion: sustainabie development of the society or of the company?
• Multiple expectations: « societal »
• Assimilation to sustainable development
• Embryonic evaluations
• Global performance = addition of the 3 results
• Ambiguity of the 3P: Profit or Prosperity?
• Confusion: sustainabie development of the society or of the company?
Fair
Viable
Sustainable
Livable
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Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Key questions about CSR
MotivationIn whose interest & why?
• For Share- or Stakeholders?• Marketing opportunism or moral duty?
Power locusWho drives CSR?
• Internally: managers or «corporates»?• Externally: Govs, NGOs or corporates?
DynamicHow did/does CSR evolve?
• Concept’s evolution so far?• Today’s logic in a globalized economy?
You can’t properly
think about
«Motivation» &
«Power locus»
without
understanding the
CSR «Dynamic»
You can’t properly
think about
«Motivation» &
«Power locus»
without
understanding the
CSR «Dynamic»
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Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Time
Content richness of
the CSR concept
Source : Jean Pasquero (2005), adapted by LedouxSource : Jean Pasquero (2005), adapted by Ledoux
PhilanthropyGrants & corporate patronage
SollicitudeEmployees’ needs
Environmental nuisance limitPriority given to the environment
Classical eco.
(18th century)
Traditional eco.
(19th c.)Beg. of 20th c.
1960’s
Social responsiveness« Societal management » system
Ethical rectitudeCodes of conduct
Performance reportingTriple balance sheet
Citizen participationProactive «engagement»
1970’s 1990’s Beg. of 21th c.
Dynamic – How has the CSR concept evolved so far?
Efficient management(Technical skills)
8 components of CSR
nowadaysEvolution so far?
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Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Dynamic – How CSR is evolving in today’s globalized economy?
2001
GlobalCompact
corporatesbecome world citizens
Time
“Coherency”of the
coregulation system
Corporates’emancipationfrom states
Politizationof comsumption
Voluntaryadoption of codes
of conducts
Growthof surveillance
& social controls’web
Empowermentof 3rd parties byStates & Judges
Proliferationthrough reputation
& transparency
Transfer of States’ duties to
corporates
Regulatory innovatio
n process
Highly stylised process*:
in reality these trends
overlap each otherHighly stylised process*:
in reality these trends
overlap each other
«Formally»
but self-fulfillin
g
prophecy«Formally»
but self-fulfillin
g
prophecy
EffectivelyEffectively
* Source: “Responsabilité sociale des entreprises et co-régulation”, by Berns & al, 2007
2003
Nikevs. KaskyConsumers’
CSR concernslegally recognized
SoftSoft
HardHard
Evolution today?
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Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Dynamic – Proliferation through reputation & transparency
Reputation – Law: differences in action mode & “regulatory” effects?
ReputationReputationLawLaw
1. Immediate & discontinued 1. Slow & constant (omnipresent)
2. Externally defined 2. Interiorized & reflexive
3. Black or white 3. Grey (richer modulation)
4. Concern for single, egal, actors 4. Concern for global tendencies
Current normativity results of a
hybrid of law & reputation,
of regulation & auto-regulation,
in constant evolution
Current normativity results of a
hybrid of law & reputation,
of regulation & auto-regulation,
in constant evolution
New is that this hybrid is considered to be able to develop itself asautonomous & self-sufficient
New is that this hybrid is considered to be able to develop itself asautonomous & self-sufficient
Evolutionary
character of
transparency
Evolutionary
character of
transparency
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Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Dynamic – Logical process
Integrating CSR «instruments» in 4 logical process steps?
1. Norms definition & adoption• Definition
• Global Compact ; OCDE’s principles; ILO’s trilateral declaration; Global Sullivan Principles; Caux Round table; AI’s principles on Human Rights for businesses; Ethical Trading initiative’s Code of conduct
• Adoption
• Codes (individual, sectorial,…)
• Contracts between businesses
• Public tenders & subsidies (laws & contracts)
• Corporate Governance principles
• Legal & administrative rules
• Social dialogue
1. Norms definition & adoption• Definition
• Global Compact ; OCDE’s principles; ILO’s trilateral declaration; Global Sullivan Principles; Caux Round table; AI’s principles on Human Rights for businesses; Ethical Trading initiative’s Code of conduct
• Adoption
• Codes (individual, sectorial,…)
• Contracts between businesses
• Public tenders & subsidies (laws & contracts)
• Corporate Governance principles
• Legal & administrative rules
• Social dialogue
2. Implementation• Generic mecanisms for SRM
• SA 8000 & ISO Norms; OHSAS 18001; ILO-OSH 2001 (security & health at work); EMAS
• Specific mecanisms for SRM
2. Implementation• Generic mecanisms for SRM
• SA 8000 & ISO Norms; OHSAS 18001; ILO-OSH 2001 (security & health at work); EMAS
• Specific mecanisms for SRM
3. Communication (transparency)• Audit
• AA 1000 Insurance Standard; ISAE 3000
• Non Financial Report
• Political auditions & public debates
3. Communication (transparency)• Audit
• AA 1000 Insurance Standard; ISAE 3000
• Non Financial Report
• Political auditions & public debates
4. Controls & sanctions• Unfair practices & publicity
• Contractual responsibility
• Labels (public & private) & boycotts
• Investment policies & financial institutions
• Ethical funds; Stock indexes; Equator Principles
4. Controls & sanctions• Unfair practices & publicity
• Contractual responsibility
• Labels (public & private) & boycotts
• Investment policies & financial institutions
• Ethical funds; Stock indexes; Equator Principles
Source: “Responsabilité sociale des entreprises et co-régulation”, by Berns & al, 2007
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Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Motivation – In whose interest do managers go CSR?
To whom are executive managers accountable?
«Contractual» vision
«Symbolic» vision
Shareholders
«Economic» responsibility
«Economic» responsibility
Stakeholders
«Social» responsability
«Social» responsability
Society
«Societal» responsability
(Towards institutionalisation)
«Societal» responsability
(Towards institutionalisation)
Is this the right distinction?
Is the distinction between
private & public interests so clear?Is this the right distinction?
Is the distinction between
private & public interests so clear?
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Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Motivation – In whose interest do managers go CSR? Friedman’s model
Are Sternberg’s friedmanian «Just Business»’ principles just?
Ordinarydecency
Distributivejustice
Manager’s sole objective
“To maximize long termowner value*”
Minimal necessary values to ensure the organization’s LT survival:• Honesty• Fairness• No coercion or phys. violence• Respect of laws
Minimal necessary values to ensure the organization’s LT survival:• Honesty• Fairness• No coercion or phys. violence• Respect of laws
Rewards should be accorded in proportion to
the value of agents’ contribution to furthering
the organization’s objectives
Rewards should be accorded in proportion to
the value of agents’ contribution to furthering
the organization’s objectives
* Sum of discounted cash-flows* Sum of discounted cash-flows
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Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Motivation – In whose interest do managers go CSR? Berns’ analysis
Is the stark distinction between politics and economy founded?
Politics Economy
Should externalities still be viewed as «external» factors?
More than ever, value creation of companies is growingly dependent on the captation of positive
externalities (university’s proximity, development of new communication channels,…) and avoidance of negative
externalities (pollution, violence,…)
Should externalities still be viewed as «external» factors?
More than ever, value creation of companies is growingly dependent on the captation of positive
externalities (university’s proximity, development of new communication channels,…) and avoidance of negative
externalities (pollution, violence,…)
Is CSR anything else that the growing realization that we need to develop a
new relationship with our environment, made of restraint & moderation?
Is CSR anything else that the growing realization that we need to develop a
new relationship with our environment, made of restraint & moderation?
Are we rediscovering the old idea that «interest» could act as an effiicient
substitute to ext. constraint?
See Montesquieu or Smith.Through the ages, we have gone back and forth on this
relationship (eg. autonomy of politics in the Aristotelian model)
Are we rediscovering the old idea that «interest» could act as an effiicient
substitute to ext. constraint?
See Montesquieu or Smith.Through the ages, we have gone back and forth on this
relationship (eg. autonomy of politics in the Aristotelian model)
Risk
this new relationship takes
the form of an absorption of
the social in the economic
Risk
this new relationship takes
the form of an absorption of
the social in the economic
?Source: “Responsabilité sociale des entreprises et co-régulation”, by Berns & al, 2007
33
Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Source: Webley and More, 2003
Does Ethics pay?
15
20
25
30
35
1997 1998 1999 2000 2001
% R
OC
E
Average MVA/Year (with Code of conduct) Average MVA/Year (all)
Average MVA/Year (no Code of conduct)
Motivation – Marketing opportunism or moral obligation?
ROCE by year for 42 major UK quoted companies
Is ROCE a
pertinent KPI?
In the new system
of coregulation,
risk mitigation
is the biggest driver
Is ROCE a
pertinent KPI?
In the new system
of coregulation,
risk mitigation
is the biggest driver
34
Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Through legal obligation?
Through legal obligation?
Through marketing opportunism?
Through marketing opportunism?
Through moral obligation?
Through moral obligation?
Through own Will?
Through own Will?
Political & juridical orderLegal vs. Illegal
Political & juridical orderLegal vs. Illegal
Eco., technical & scientific orderPossible vs. Impossible(Natural and rational Laws)
Eco., technical & scientific orderPossible vs. Impossible(Natural and rational Laws)
limits
Ethical orderGood vs. Bad
Ethical orderGood vs. Bad
Moral orderRight vs. Wrong
Moral orderRight vs. Wrong
limits
limitscompletes
11
22
33
44
Motivation – Marketing opportunism or moral obligation? Ethique ou «Etiquettes»?
Through the new system
of «coregulation»?
A growing «soft law»
enforced in a «control»
society by a multitude of
actors in a continuous,
innovative power
struggle…
Through the new system
of «coregulation»?
A growing «soft law»
enforced in a «control»
society by a multitude of
actors in a continuous,
innovative power
struggle…
Or rather
«One can rarely be moral alone»
«One can rarely be moral alone»
What is the trigger/driver?
35
Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Power locus – Internally, who is responsible?
Companies or individuals?
Business ethics
Companies Individuals
CSR
The coregulation system redefines, volens nolens,
the definition of what companies are,
through the rights & responsibilities that are gradually attributed to them &
without necessarily recognizing that they have a soul or moral intentionsThe coregulation system redefines, volens nolens,
the definition of what companies are,
through the rights & responsibilities that are gradually attributed to them &
without necessarily recognizing that they have a soul or moral intentions
36
Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Power locus – Externally, where should the common interest be defined?
Privatisation of common interest?
Lower risk acceptance & corporate legitimacy
Companies
Govs & Civil Society
Globalisation &deregulation
Political & juridical orderLegal vs. Illegal
Political & juridical orderLegal vs. Illegal
limits
Economic, technical and scientific orderPossible vs. Impossible
(Natural and rational Laws)
Economic, technical and scientific orderPossible vs. Impossible
(Natural and rational Laws)
11
22 This dichotomy
doesn’t help to
realize the
growing porosity
between
politics & economy
(see Berns)
This dichotomy
doesn’t help to
realize the
growing porosity
between
politics & economy
(see Berns)
37
Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Final thoughts – Main facets of the coregulation system
CoregulationSystem
Evolving hybrid ofregulation & autoregulation,
of Law & reputation
“Intellectual bricolage”From voluntary social responsibilityto legally binding responsibility?
Started outside the laws, caught back by “soft” laws now; To understand it, one needs to get rid of old concepts ofstate sovereignty, legal order and norms pyramid;Porosity of Politics & economybased on a self-limitation of governments
Open, normative power gameAll shots allowed?
Hard & soft laws become instruments towardsthe realization of the objectives of a multitude of players
but need inevitably to agree on certain rulesand to allow a third party to «institutionalize» the game
(hence the quasi-legal appeal of Global Compact)
Not ethically,nor democratically elaborated
Legitimate?
CSR growth does not require corp. to have a soul or moral
intentions; Habermas: sous-institutionalization of global laws;Decoupling between law and political institutions
Less ambitiousbut more tangible?
Do not replace int’l conventions or formal concertationbut ensure effective application on the field; Pragmatic actors more used to action than diplomacyHypocrisy or alternative to bottlenecks of int’l society?
Source: “Responsabilité sociale des entreprises et co-régulation”, by Berns & al, 2007
38
Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Are ethics or corporates instrumentalized?
Protestantethos
Protestantethos
Birth of
modernCapitalism
Birth of
modernCapitalism
Progressistethos
Progressistethos
Expansion of
industrial Capitalism
Expansion of
industrial Capitalism
Time
Consumeristcapitalism*
Consumeristcapitalism*
Promotion of
infantilist*ethos
Promotion of
infantilist*ethos
According to Benjamin Barber in «Consumed: How Markets Corrupt Children, Infantilize Adults, and Swallow Citizens Whole», 2007; See also Anne Salmon’s analysis in « Ethique et ordre économique : une entreprise de séduction », 2002
Final thoughts – Where do we go?
Probably both…
• CSR is not Ethics: does it «mask» bigger issues?
• But corporates do not control the CSR dynamic
(corporates are also «instrumentalized»)
Probably both…
• CSR is not Ethics: does it «mask» bigger issues?
• But corporates do not control the CSR dynamic
(corporates are also «instrumentalized»)
?
39
Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Bibliographie
Defining moments, Joseph L. Badaracco, jr, Harvard Business School Press, 1997
La responsabilité sociale de l’entreprise comme objet des sciences de gestion, Jean Pasquero dans Responsabilité sociale et environnementale de l’entreprise, sous la dir. de Marie-France B.-Turcotte et Anne Salmon, Presses de l’Université du Québec, 2005
La société malade la gestion, Vincent de Gauléjac, Seuil, 2005
Le capitalisme est-il moral, André Comte-Sponville, Albin Michel, 2004
Ethique et ordre économique: une entreprise de séduction, CNRS Editions, 2002
Le fondement de la morale, Marcel Conche, PUF, 1993
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Introduction aux “Pensées” de Marc Auréle, Pierre Hadot, Le livre de Poche, 1997
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Business Ethics & Values, Colin Fischer & Alan Lovell, FT Prentice Hall, 2003
Working ethics, Marvin Brown, Jossey-Bass, 1990
Responsabilité sociale de l’entreprise : Faut-il enchaîner Prométhée ?, Philippe de Woot, Economica, 2005
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Ethical Imagination, Regulatory Innovation & Responsible Management – Laurent Ledoux – 08/12/07
Bibliographie
What’s a business for?, Charles Handy, HBR, december 2002
Can a corporation have a conscience?; Kenneth Goodpaster & John Mathews, January 1982
Does business ethics pay?, S. Webley & E. More, London IBE, 2003
Managing messy moral matters, C.M. Fischer & C. Rice, in Strategic Human Resources, J. Leopold, L. Harris & T.J. Watson, 1999
The vulnerability of autonomy that denies the exercise of moral agency, Alan Lovell, in Business Ethics: a European review, 2002
Responsabilité sociale des entreprises et co-régulation, T. Berns, P.F. Docquir, B. Frydman, L. Hennebel & G. Lewkowicz, Bruylant 2007