utspeaks public lecture: ethical vanities
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Ethical VanitiesTHINK.CHANGE.DO
Acknowledgements & Co-Conspirators
Pat Auger Grahame Dowling Jordan Louviere Paul Burke Russell Belk Giana Eckhardt Christine Eckert Nidthida Lin (Perm-Ajchariyawong) Joachim Schwalbach
Michal Ulrych, Vichit Laoledchai, Thomas Birtchnell, Sandra Peter, Omer Konacki, Michael McGee, Steve Cook, Sandra Kleinsasser, Anja Schwerk
Acknowledgements & Supporters
Australian Research Council Alexander von Humboldt
Foundation (Germany) Rockefeller Foundation (US) Cambridge U. P. (UK) Various corporations, NGOs
and universities Particularly UTS and Robert
Button and Jane Westbrook
A Disclaimer
The Basic Logic of Today’s Talk
Corporate Social Responsibility arises ONLY when the human components accept and act upon their responsibility
The corporation is “us” as: Managers Workers Investors Customers
The dilemma is that we rarely act with a level of responsibility that we demand from companies
No Hurry Moderate Hurry High Hurry0%
20%
40%
60%
80%
63%
45%
10%
Those Helping
The Complexity of Context, The Fallacy of Generalization
The “Good Samaritan” Experiments Context trumps ‘values’ (up to a point?)
The Lesson of the Good Samaritan Experiments
Ironically, a person in a hurry is less likely to help people, even if he is going to speak on the parable of the Good Samaritan. Some literally stepped over the victim on their way to the next building! The results seem to show that thinking about norms does not imply that one will act on them. Maybe that “ethics become a luxury as the speed of our daily lives increases”. Or maybe peoples’ cognition was narrowed by the hurriedness and they failed to make the immediate connection of an emergency.
Darley & Batson (1973)
A More Managerial Perspective: Truthful or Cynical?
What is Required?
We need to understand the reality of individual behavior: In an environment that allows us to understand the trade-offs that
we make as ordinary [consumers, workers, investors, …, members of the the society]
When there are costs to our behavior And the consequences are potentially unknown
This is an enormous task What follows is just a glimpse of the inconvenient reality that we
seem to be uncovering
Why is This Critical?
Basing corporate and social policy on “myth”, “anecdote” and “opinion lacking scientific evidence” Is costly and inefficient
Bad policy and products/services that fail Dangerous socially
Implies the sanctity of one opinion over another based on power and persuasion rather than transparency and evidence
THE MYTH OF THE ETHICAL CONSUMER
ETHICAL VANITIES I
Consumer Social Responsibility: Do We Care When We Consume?
According to LOHAS about 30 percent of U.S. adults—more than 63 million consumers—now purchase goods and services with a nod toward the products’ health, environmental, social justice and sustainability value. The marketplace, worth $227 billion a year, is expanding at a healthy pace and is projected to reach $1 trillion annually by 2020. (LOHAS, 2006)
70 percent of respondents believed that a firm’s business ethics had “some influence” on their purchasing decisions. (Uusitalo & Oksanen, 2004)
YET, What does this imply about behavior?
The Problem of Believing What People Say: Unconstrained Queries Willingness to Pay or Action
What matters in purchasing? Utilitarians Anti-Utilitarians
Brand 51% 11%
People paid enough to live on 3% 96%
Damage to the environment 22% 98%
Animal testing 12% 79%
Human rights record of the country of production 7% 66%
Who are these people? Utilitarians Anti-Utilitarians
Females 77% 47%
MBA Degree 11% 3%
Amnesty Intl Supporter 8% 34%
Machiavellianism 98 92
Moral Relativism 3.29 2.90
Price Premium Utilitarians Anti-Utilitarians
Child Labor 12% 16%
Dangerous Work Conditions 12% 9%
Minimum Wages 12% 13%
Animal testing 9% 8%
Biodegradability 12% 13%
Animal By-products 10% 10%
+
Might imply significant differences
Until you examine whetherthis translates into any differencein willingness to pay or act
Tough Tradeoffs
Product A
Pro
duct
B
Hi
Hi
Lo
Lo
Functionality
Product A
Pro
duct
B
Good
Good
Bad
Bad
Ethics
Dilemma Situation = Ethics opposes Functionality (Good => Lo)
Non-Dilemma Situation = Ethics supports Functionality (Good => Hi)
Price is varied so that Functionality and Ethics are not “Free”
Functionality Trumps Ethics & Ethics Responds to Price
THE MYTH OF THE ETHICAL
WORKER
ETHICAL VANITIES II
Worker Social Responsibility: Do We Care When We Consider Our Job Contracts?
Major public issues such as a company’s reputation for strong ethical practices have become critical factors in choosing where to work, even to the point where many employees are prepared to sacrifice pay or promotion in order to work for organizations that are actively engaged in good social responsibility practices [underline added].
More specifically, concerns about ethical behavior outweigh concerns about the environment by all generations, when making employment choices.
(Kelly Services Annual Workplace Survey, 2010)
Worker Social Responsibility: Unconstrained/MBA
Company
Job
Corpor
ate re
putatio
n
Wor
kpla
ce re
puta
tion
Social’ r
eputatio
n 3.00
3.25
3.50
3.75
4.00
Unconstrained Rating
Company
Job
Corpora
te re
putatio
n
Work
place
reputa
tion
Social r
eputatio
n 0
5
10
15
20
25
30
35
Top 5 Reasons Mentioned
Pe
rce
nt
The rating scale is: 1 = completely irrelevant; 2 = not very relevant; 3 = relevant; 4 = very relevant; 5 = absolutely critical
Salary Sacrifice: The Ultimate Question (MBAs)
Salary/CompensationTime Demands
Promotion OpportunitiesCity / Size
Bonus SplitTravel Demands
Location (Country)Corporate Reputation
Workplace ReputationSocial Reputation
Signing BonusPension
Overseas TravelStock Option
Contract Length
Relative Importance (Percent)
But What of the Ordinary Worker? Surely They Care!
Salary/CompensationOvertime Paid
Time DemandsTravel DemandsContract Length
Corporate ReputationPromotion Opportunities
Family PoliciesCity / Size
Workplace ReputationProfessional Devlpmnt
Union WkplaceCommunity Wk
PensionFlex Schedule
Social Reputation
Impact Weights
THE MYTH OF THE SOCIALLY RESPONSIBLE
INVESTOR
ETHICAL VANITIES III
Investor Social Responsibility: Do We Care When We Consider Our Investment Choices?
For years, the notion of socially responsible investing (SRI) — putting your money into companies that represent and uphold your personal values — was considered a fringe strategy. No longer. Last year, $2.71 trillion — roughly one of out every nine dollars under professional management in the United States — was invested in companies based on their environmental or social records, according to the Social Investment Forum.
Northern Trust – Promoting their SRI Funds, 2010
Superannuation Allocations
Pension Allocation Game
Low Risk/Return
Low Medium Risk/Return
Medium Risk/Return
High Medium Risk/Return
High Risk/Return
0 2 4 6 8 10 12 14 16 18 20
Allocations (Percent of Portfolio)
Socially Responsible Normal Investment
Low Risk/Return
Low Medium Risk/Return
Medium Risk/Return
High Medium Risk/Return
High Risk/Return
0% 10% 20% 30%
Underallocation Percentage
Overall, the under allocation is about 20 percentage points
INDIVIDUAL SOCIAL RESPONSIBILITY
ETHICAL VANITIES IV
http://www.6billionothers.org
So What Do We Make of This?
The problem with people who have no vices is that generally you can be pretty sure they’re going to have some pretty annoying virtues.
Elizabeth Taylor
[We must] make the best of mankind as they are, since we cannot have them as we wish
George Washington speaking of his troops (1775)
As I grow older, I pay less attention to what men say. I just watch what they do.
Andrew Carnegie
So What Do We Make of This?
It is good to have hopes and aspirations about human behaviour
But we must not allow these to delude us to the reality of that behaviour
We cannot base policy (either corporate or social) on hope and aspiration alone
We must integrate this with how people live their everyday lives in many guises
We must be careful not to insist that our institutions behave better than we ourselves are capable
But that does not imply that we do not demand change nor can we change
Thank You and Questions?
More information at: www.mythoftheethicalconsumer.com
How Context Matters
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