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Pedavena, 12 Giugno 2010 Bounded Business Ethics Managerial Decisions or Organizational Ethical Failures? Sustainability Advisory Services Simone de Colle University of Virginia [email protected] 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 Sources of unethical behavior • • • Kant/Mill/Aristotle Gauthier (1982) Rest (1986) • • Issue-related (Jones, 1991) Context-based (Trevino 1986; Buttlefield, Trevino & Weaver, 2000) Moral Motivation /Intent FAILURE OF MOTIVATION (weak/lack of) Moral Awareness AWARENESS FAILURE (lack of) • • Werhane (1999) Rorty (2007) Moral Imagination • • Freeman (1994) Harris and Freeman (2008) Separation Thesis FAILURE OF IMAGINATION (paucity of) SEPARATION BIASES (perpetuation of) • • • • • Kets De Vries (1980, 1984, 1991) Messick and Bazerman (1996); Messick (1999) Reynolds (2006) Milgram (1974) Tenbrunsel & Smith Crowe ‘08 • Simon (1947) • Dunfee & Donaldson (1994) • Chugh, Bazerman, Banaji (2005) Neurosis and other psychological traps PSYCHOLOGICAL FAILURES (influence of) Bounded Rationality & Ethicality FAILURE OF BOUNDED RATIONALITY/ETHICALITY Organizational Ethical Failures 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 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. Organizational Ethical Failures = Unethical Conduct + Stakeholder Equilibration Failures Decisions that generate behavior that is Decisions that fail to balance “illegal or morally unacceptable to the stakeholder competing claims in larger community” (Jones, 1991) or a fair and efficient way violate “accepted moral norms of (Venkataraman, 2002). 5 behavior” (Trevino et al. 2006 Bounded Business Ethics More on OEFs Organizational Ethical Failures = Unethical Conduct + Stakeholder Equilibration Failures Traditional Business Ethics research • 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”). 6 Bounded Business Ethics From Traditional Business Ethics… CLEAR ETHICALLY JUSTIFIABLE DECISIONS GRAY ZONE: IS THIS ETHICAL? CLEAR UNETHICAL CONDUCT Separation Thesis Heineken/Pedavena “Business decisions” (as “Amoral Decisions”) BOUNDED BUSINESS ETHICS: ITS EXPLANATORY DOMAIN …To Bounded Business Ethics CLEAR ETHICALLY JUSTIFIABLE DECISIONS Heineken/Pedavena GRAY ZONE: IS THIS ETHICAL? Organizational Ethical Failures CLEAR UNETHICAL CONDUCT Bounded Business Ethics Decision-Making and Organizational Ethical Failures Start of the decision making process Ethical Conduct Unethical Conduct A MODEL INTEGRATING OEFs (fair & efficient) Stakeholder Equilibration Good Organizational performance Organizational Failure (poor perf.) Stakeholder Equilibration Failure Type II OEF (outcomes) (fair & efficient) Stakeholder Equilibration Type I OEF (process) Stakeholder Equilibration Failure Type III OEF (Process + outcomes) There is no “amoral” decision: business and ethics are entangled Bounded Business Ethics 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”. 9 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? Research questions 1. 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 10 brewery”? Bounded Business Ethics Spazio ai protagonisti…. Qualche anno dopo…. 11