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Simone de Colle
University of [email protected]
Sustainability Advisory
Services
Managerial Decisions or
Organizational Ethical Failures?
Bounded Business Ethics
Pedavena, 12 Giugno 2010
Bounded Business Ethics
My Research Approach
1. What are the sources of unethical behavior within business organizations?
2. What is “unethical”?
3. What are the (organizational/societal) consequences of (individual) ethical failures? (btw: not only negative…)
4. What is a “Bounded Business Ethics” approach to investigate these problems?
5. What can this approach tell us more about the Heineken-Pedavena case?
2
3 of 6:
FOCUS OF MY RESEARCH
Org
aniz
atio
nal
Eth
ical
Fai
lure
s
Sources of unethical behavior
• Issue-related (Jones, 1991)• Context-based (Trevino
1986; Buttlefield, Trevino & Weaver, 2000)
AWARENESS FAILUREMoral
Awareness(lack of)
• Simon (1947)• Dunfee & Donaldson (1994)• Chugh, Bazerman, Banaji (2005)
FAILURE OF BOUNDED RATIONALITY/ETHICALITY
BoundedRationality &
Ethicality
• Kets De Vries (1980, 1984, 1991)• Messick and Bazerman (1996);
Messick (1999)• Reynolds (2006)• Milgram (1974)• Tenbrunsel & Smith Crowe ‘08
PSYCHOLOGICAL FAILURES
Neurosis and other psycho-logical traps(influence of)
• Freeman (1994)• Harris and Freeman (2008)
SEPARATION BIASESSeparation
Thesis(perpetuation of)
FAILURE OF IMAGINATION
Moral Imagination
(paucity of)
• Werhane (1999)• Rorty (2007)
• Kant/Mill/Aristotle• Gauthier (1982)• Rest (1986)
FAILURE OF MOTIVATION
Moral Motivation
/Intent(weak/lack of)
Bounded Business Ethics
Bounded Business Ethics
What is “ethical”?
In their Academy of Management Annals review of 30 years of research on ethical decision-making, Tenbrunsel and Smith-Crowe (2008: 547) states:
“In our review, it became readily apparent that one notable void in the field was a definition of the fundamental concept of “ethical”…
……without a universal understanding of the core dependent variable, research will remain inconsistent, incoherent and atheoretical”.
Bounded Business Ethics
From “unethical behavior” to Organizational Ethical Failures
5
My tentative definition:
OEFs are decisions within business organizations that:
1)Involve unethical conduct in the decision-making process; and/or
2) Fail to continuously equilibrate in a fair and efficient way stakeholder interests.
= +Unethical Conduct
Organizational Ethical Failures
Decisions that generate behavior that is “illegal or morally unacceptable to the larger community” (Jones, 1991) or violate “accepted moral norms of
behavior” (Trevino et al. 2006
Stakeholder Equilibration
Failures
Decisions that fail to balance stakeholder competing claims in
a fair and efficient way (Venkataraman, 2002).
Bounded Business Ethics
Traditional Business Ethics research
More on OEFs
6
= +Unethical Conduct
Organizational Ethical Failures
Stakeholder Equilibration
Failures
• Type I: Unethical conduct is necessarily an ethical failure in the process of decision making, but not necessarily an ethical failure in the outcomes;
• Type II: Stakeholder equilibration failures are necessarily ethical failures in terms of the outcomes of the decision making process;
• Not every organizational failure is an ethical failure;
• On the other hand, every Type II OEF will generate, over time, a loss of value for some stakeholders.
• Traditional Business Ethics research is focussing on “Type I OEFs”(“Unethical Conduct”).
Bounded Business Ethics
BOUNDED BUSINESS
ETHICS:
ITS EXPLANATORY
DOMAIN
…To Bounded Business Ethics
CLEAR ETHICALLY
JUSTIFIABLE DECISIONS
CLEAR UNETHICAL CONDUCT
GRAY ZONE:IS THIS ETHICAL?
Heineken/Pedavena Organizational Ethical Failures
From Traditional Business Ethics…
Heineken/Pedavena“Business decisions”
(as “Amoral Decisions”)
CLEAR ETHICALLY
JUSTIFIABLE DECISIONS
CLEAR UNETHICAL CONDUCT
GRAY ZONE:IS THIS ETHICAL?
Separation Thesis
Bounded Business Ethics
Decision-Makingand Organizational Ethical Failures
A MODEL INTEGRATING
OEFs
Start of the decision making
process
Ethical
ConductUnethicalConduct
Organiza-tional
Failure (poor perf.)
Good Organiza-
tional performance
(fair & efficient)Stakeholder Equilibration
Stakeholder Equilibration
Failure
(fair & efficient)
Stakeholder Equilibration
Stakeholder Equilibration
Failure
Type I
OEF(process)
Type II
OEF
(outcomes)
Type III
OEF (Process + outcomes)
There is no “amoral” decision: business and ethics are entangled
The case of Heineken-Pedavena (1/2)On September 22nd 2004 Heineken Italy decided to
close down the brewery of Pedavena, a small town in the Italian Dolomites, by the 31st of December 2004, and redistribute all beer production to the other 4 breweries owned by the Group in Italy. In the press release, Heineken’s Board explained its decision by pointing out that:
“…the strong competition by the other groups operating in Italy and other companies exporting in this country, require that Heineken strives for adequate levels of efficiency in production, which the Pedavena brewery is not able to provide because of its objective limitations, despite the important contribution, commitment and professionalism proven by the people of the Pedavena factory”.
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Bounded Business Ethics
The case of Heineken-Pedavena (2/2)From the perspective of traditional business ethics it
does not seem to be a clear case of “unethical conduct”: no ethical principle or moral standard seems to be violated. However, if we look at it from the perspective of Bounded Business Ethics, the following question becomes relevant:
Is Heineken’s Italy decision to dismiss its brewery in Pedavena an Organizational Ethical Failure?
10
Bounded Business Ethics
Research questions1. Why did Heineken managers (initially) decide to close
the Pedavena brewery?
2. Why did the Pedavena workers reject the very generous redundancy package?
3. Why did the civil society of Pedavena (and other volunteers) decide to mobilize themselves to “save the brewery”?
Spazio ai protagonisti….
11
Bounded Business Ethics
Qualche anno dopo….