Ethical Imagination,

1

• Ethical Imagination,
• Regulatory Innovation
• Responsible Management

• IMBA UCL
• 08/12/07
• Laurent Ledoux

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Contents
Ethical Imagination when managers must choose
between  right   right 
1
Regulatory Innovation when a multitude of actors
interact to enforce CSR
2
3
4 case studies to help us reflect on ethical
dilemmas
How do you lead the launch of a product you know
will be extremely controversial?
Edouard Sakiz To distribute the abortion pill?
What should you do if a single parent on your
staff is falling behind in his or her work?
Peter Adario To dismiss Kathryn McNeil?
How should you respond if you are offered an
opportunity at work solely because of your race
or gender?
Steve Lewis To attend St Louis meeting?
What should you do if the expected cost of legal
claims from a potentially lethal product is less
than the cost of retrieving that product from the
market and fix it?
Carlos Pinto To retrieve fix the cars?
Source Badaracco (1997) adapted by Ledoux
4
Commonalities divergences between the 4 case
studies
Decisions impact
Cas pratiques
Lessons

Who is the organisation?
Edouard Sakiz To distribute the abortion pill?
Ethical decisions form, reveal test the
self (John Dewey)
Right vs. Right (ethical dilemma)
Who are we?
Peter Adario To dismiss Kathryn McNeil?
Do you think you can govern innocently, without
dirtying your hands? (Jean-Paul Sartre)
Complexity
Who am I?
Steve Lewis To attend St Louis meeting?
Right vs. Wrong (moral choice)
Carlos Pinto To retrieve fix the cars?
Source Badaracco (1997) adapted by Ledoux
5
Variations on the word  Ethics 
 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
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)
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
6
Possible definition of  Morality 
Current most common morals Universal human rights
duties
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.
7
Potential sources to support ethical
decision-making


Corporate credos Mission statements
Legal duties


Moral or ethical principles
Heuristics (sleep-test rules)
8
Questions to think individual dilemmas Steve
Lewis case
How do my feelings and intuition define, for me,
the ethical dilemma? (To respect oneself or to
be loyal loyal to whom?)
Which of the values that are in conflict are
most deeply rooted in my life and in my
community? (To consider the dilemma as his
parents son)
Who am I?
Become who you are (Friedrich Nietzsche)
What combination of expediency and shrewdness,
coupled with imagination boldness, will move me
closer to my personal goals? (To go to St Louis
but to participate to the presentation)
Looking to the future, what is my way (not the
way of others)? (To become partner in an
investment bank)
Source Badaracco (1997) adapted by Ledoux
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A framework for ethical theories
Individual processes Adaptability responsiveness
Virtue Ethics
Development Ethics
Results Doing good
Principles Doing right
Deontological Ethics
Teleological Ethics
Institutional structure Fixity consistency
Source Fisher Lovell (2003) adapted by Ledoux
10
12 tests filter to validate or reject a decision
Ask yourself these questions concerning the
decision you wish to take
/-
Veto
Trigger
Legal duties
1. Legalist test. Is my decision in accordance
with the law?
Corporate credos mission statements
2. Organisational test. Is my decision in
accordance with my organisations rules of
conduct or ethics
Heuristics
3. Hedonistic or intuitive test. Does my decision
correspond with my gut feeling and my values?
Does it make me feel good?
Respect of ethical principles
Virtue ethics
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
10. Consequential test. Are the anticipated
consequences of my decision and plan positive or
negative?
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?
11
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?

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Questions to think internal dilemmas Peter
Adarios case
What are the other strong, persuasive, competing
interpretations of the situation or problem that
I hope to use as a defining moment for my
org.? (To understand that, for Walters, the
basic ethical issue was irresponsibility
McNeils for not pulling her weight his for not
taking action)
What is the cash value of this situation and 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)
Who are we ?
Truth happens to an idea. Its verity is in
fact an event, an idea (William James)
Have I orchestrated a process that can make the
values I care about become the truth of my
organization? (After hiring McNeil, to start
quickly to let her her work known to 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 McNeils issue)
Source Badaracco (1997) adapted by Ledoux
13
Elements of ethical complexity in organization
Intensity of problem felt by the employee
Organisational values / Strength of practices
Support of others
Intensity of problem felt by the employee
Organisational values / Strength of practices
Support of others
Layer 2
Societal values
Personal values
Personal values
Personal autonomy
Societal values
Layer 1
Personal autonomy
Source Lovell (2002)
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Categorisation of possible kinds of reactions and
behaviour to an ethical issue
Ethical puzzle Acting to resolve the issue on the
basis that they have the correct or best
solution (utility).
Ethical problem Clarifying how the conflicts
between different values would lead to different
actions. Acting upon ones best judgement (moral
judgement).
Developing principles
Ethical convention Seeking advice on what
is acceptable applying norms and Conventions
(fairness)
Ethical relativism Maintaining discussion about
the issue rather than seeking closure on it
(relationships)
Achieving the common good
Dialectic of ethical purpose
Ethical awareness Asserting acting upon
ones values Expressing surprise that others may
see things diff. (dignity)
Ethical cynicism Withdrawing from any action or
decision but sniping from the sidelines at
others action (facadism)
The obligation of duty
Ethical neutrality Ignoring problem keeping
quiet (inaction)
Ethical negotiation Seeking out other views
and supporting the wishes of the most powerful
(bending rules)
Self-consciousness
Personal certainty, fixed priorities and values
Personal aporia, shifting priorities and values
Degree of ethical integrity
Source Fisher and Rice (1999)
15
Actions open to an employee, when discovering
wrongdoing, according to his ethical horizon
Ethical horizon
Loyalty
Integrity
Society as a whole
Degree of sacrifice of self for others benefit
Anonymous whistleblowing
Public whistleblowing
Degree of sacrifice to show membership and
commitment
Civil associations to which I adhere
Maintaining silence/lying
Offering to help management find a way to make
things right or Public whistleblowing
My organisation
Degree of sacrifice acting as a scapegoat
Maintaining silence/lying
Trying to persuade the organisation to reveal its
wrongdoing and to put things right
Self
Degree of sacrifice to maintain or increase
personal benefit or stratus
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) or Resigning (when the
organisation will not take the right action)
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Questions to think societal ethical dilemmas
Edouard Sakiz case
Have I thought creatively imagina- tively
about my organizations role in society its
relationship to its stakeholders? (To
orchestrate a public debate among the different
stakeholders)
Have I done all I can to secure my position and
the strength stability of my organization? (To
refrain to take decisions that could expose
directly The organization or to confront the
BoAs president)
Who is the organisation?
Ethics result from the inescapable tension
between Virtue Virtu (Aristote Machiavel)
Have you done all you can to strike a
balance, both morally practically? (To market
the new drug without endangering the
organization)
Should I play the lion or the fox? (To
organize and support a vote that will trigger a
massive counter-reaction from other actors)
Source Badaracco (1997) adapted by Ledoux
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The 4 orders the tensions between the
individual and the group
Synthesis based on the texts from André
Comte-Sponville, Marcel Conche François Jourde
Ethical order Good vs. Bad (Self, subjective or
relative Will)

Ascending hierarchy for individuals
limits
completes
Moral order Right vs. Wrong (Universal or
universalisable duties)
limits
Juridical political order Legal vs. Illegal
Descending hierarchy for groups
limits
Economic, technical scientific order Possible
vs. Impossible (Natural and rational Law)
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The 4 orders types of responsibility
Circumstantial judgement (Phronesis)
Balanced ethical responsibility
Promise, guarantee arbitrage Responsible for
the future
4
Ethical order Good vs. Bad
limits
completes
Unlimited moral responsibility
Irreversibility, unpredictability
anonymity Responsible for others
3
Moral order Right vs. Wrong
Rationality Respect
limits
Dilemma
Limited juridical responsibility
2
Compensation duty Responsible for the effects
Political juridical order Legal vs. Illegal
limits
1
Eco., technical scientific order Possible vs.
Impossible (Natural and rational Laws)
Rationality
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A sequence of questions for guiding ethical
judgement

• Critical self-evaluation
• Proposed decision pass 12 filter tests?
• Confidence of decisions LT strength validity?
• Acceptable exceptions/modification to my/our
  decision?
• Risks consequences of misunderstandings reg.
  the decision?

Testing the decision
Articulating intention process

• 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?

Clarifying the situation What is the ethical
issue to be considered

• Dialogue
• Stakeholders views prioritary needs?
• Issues between stakeh. to be solved?
• My/our positions stabibility strength?

• Casuistry
• Dist. facts from value judg. beliefs?
• Cases 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?

If tests are negative
20
Break
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Contents
Ethical Imagination when managers must choose
between  right   right 
1
Regulatory Innovation when a multitude of actors
interact to enforce CSR
2
22
CSR Abundance of concepts
Deontologies
Company philosophies
Code of ethics
Sustainable development
Business Ethics
CSR
Company codes
Corporate citizenship
Authentifications
Citizenship actions
Labels
Societal performance
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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)
Business 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)
24
CSR Static definitions
Corporate Social Responsibility The 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)

• 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
Sustainable
Viable
Livable
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Key questions about CSR

• Motivation
• In whose interest why?
• For Share- or Stakeholders?
• Marketing opportunism or moral duty?

• Power locus
• Who drives CSR?
• Internally managers or corporates?
• Externally Govs, NGOs or corporates?

You cant properly think about Motivation
Power locus without understanding the CSR
Dynamic

• Dynamic
• How did/does CSR evolve?
• Concepts evolution so far?
• Todays logic in a globalized economy?

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Dynamic How has the CSR concept evolved so far?
Content richness of the CSR concept
8 components of CSR nowadays
Evolution so far?
Citizen participation Proactive engagement
Performance reporting Triple balance sheet
Ethical rectitude Codes of conduct
Social responsiveness  Societal management 
system
Environmental nuisance limit Priority given to
the environment
Sollicitude Employees needs
Philanthropy Grants corporate patronage
Efficient management (Technical skills)
Time
Classical eco. (18th century)
Traditional eco. (19th c.)
Beg. of 20th c.
1960s
1970s
1990s
Beg. of 21th c.
Source Jean Pasquero (2005), adapted by Ledoux
27
Dynamic How CSR is evolving in todays
globalized economy?
Transfer of States duties to corporates
Coherency of the coregulation system
Evolution today?
Effectively
Empowerment of 3rd parties by States Judges
Proliferation through reputation transparency
Highly stylised process in reality these trends
overlap each other
Regulatory innovation process
Hard
2003 Nike vs. Kasky Consumers CSR
concerns legally recognized
Growth of surveillance social controls web
Voluntary adoption of codes of conducts
2001 Global Compact corporates become world
citizens
Politization of comsumption
Corporates emancipation from states
Formally but self-fulfilling prophecy
Soft
Time
Source Responsabilité sociale des entreprises
et co-régulation, by Berns al, 2007
28
Dynamic Proliferation through reputation
transparency
Reputation Law differences in action mode
regulatory effects?
Law
Reputation

1. Immediate discontinued

1. Slow constant (omnipresent)

Evolutionary character of transparency

1. Externally defined

1. Interiorized reflexive

1. Black or white

1. Grey (richer modulation)

1. Concern for single, egal, actors

1. Concern for global tendencies

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 as autonomous self-sufficient
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Dynamic Logical process
Integrating CSR instruments in 4 logical
process steps?

• 1. Norms definition adoption
• Definition
• Global Compact OCDEs principles ILOs
  trilateral declaration Global Sullivan
  Principles Caux Round table AIs principles on
  Human Rights for businesses Ethical Trading
  initiatives 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

• 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

Source Responsabilité sociale des entreprises
et co-régulation, by Berns al, 2007
30
Motivation In whose interest do managers go CSR?
To whom are executive managers accountable?
Contractual vision
Symbolic vision
Economic responsibility
Social responsability
Societal responsability (Towards
institutionalisation)



Society
Stakeholders
Shareholders
Is this the right distinction? Is the distinction
between private public interests so clear?
31
Motivation In whose interest do managers go
CSR? Friedmans model
Are Sternbergs friedmanian Just Business
principles just?
Ordinary decency
Distributive justice

Managers sole objective To maximize long
term owner value

• Minimal necessary values to ensure the
  organizations 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
organizations objectives
Sum of discounted cash-flows
32
Motivation In whose interest do managers go
CSR? Berns analysis
Is the stark distinction between politics and
economy founded?
Risk this new relationship takes the form of an
absorption of the social in the economic
Is CSR anything else that the growing realization
that we need to develop a new relationship with
our environment, made of restraint moderation?
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
(universitys proximity, development of new
communication channels,) and avoidance of
negative externalities (pollution, violence,)
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)
Source Responsabilité sociale des entreprises
et co-régulation, by Berns al, 2007
33
Motivation Marketing opportunism or moral
obligation?
Does Ethics pay?
35
ROCE by year for 42 major UK quoted companies
30
Is ROCE a pertinent KPI? In the new system of
coregulation, risk mitigation is the biggest
driver
ROCE
25
20
15
1997
1998
1999
2000
2001
Source Webley and More, 2003
34
Motivation Marketing opportunism or moral
obligation? Ethique ou Etiquettes?
What is the trigger/driver?
4
Through own Will?
Ethical order Good vs. Bad
limits
completes
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
3
Through moral obligation?
Moral order Right vs. Wrong
Or rather
limits
2
Through legal obligation?
Political juridical order Legal vs. Illegal
limits
One can rarely be moral alone
1
Through marketing opportunism?
Eco., technical scientific order Possible vs.
Impossible (Natural and rational Laws)
35
Power locus Internally, who is responsible?
Companies or individuals?


Companies
Individuals
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 intentions
36
Power locus Externally, where should the common
interest be defined?
Privatisation of common interest?
Lower risk acceptance corporate legitimacy
Globalisation deregulation


Govs Civil Society
Companies
This dichotomy doesnt help to realize the
growing porosity between politics
economy (see Berns)
2
Political juridical order Legal vs. Illegal
limits
37
Final thoughts Main facets of the coregulation
system
Intellectual bricolage From voluntary social
responsibility to legally binding
responsibility? Started outside the laws, caught
back by soft laws now To understand it, one
needs to get rid of old concepts of state
sovereignty, legal order and norms
pyramid Porosity of Politics economy based on
a self-limitation of governments
Open, normative power game All shots
allowed? Hard soft laws become instruments
towards the realization of the objectives of a
multitude of players but need inevitably to agree
on certain rules and to allow a third party to
institutionalize the game (hence the
quasi-legal appeal of Global Compact)
Coregulation System Evolving hybrid of regulation
autoregulation, of Law reputation
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 ambitious but more tangible? Do not replace
intl conventions or formal concertation but
ensure effective application on the field
Pragmatic actors more used to action than
diplomacy Hypocrisy or alternative to bottlenecks
of intl society?
Source Responsabilité sociale des entreprises
et co-régulation, by Berns al, 2007
38
Final thoughts Where do we go?
Are ethics or corporates instrumentalized?
Protestant ethos
Progressist ethos
Consumerist capitalism
Birth of modern Capitalism
Expansion of industrial Capitalism
Promotion of infantilist ethos
Time
?

• Probably both
• CSR is not Ethics does it mask bigger issues?
• But corporates do not control the CSR dynamic
• (corporates are also instrumentalized)

According to Benjamin Barber in Consumed How
Markets Corrupt Children, Infantilize Adults, and
Swallow Citizens Whole, 2007 See also Anne
Salmons analysis in  Ethique et ordre
économique une entreprise de séduction , 2002
39
Bibliographie

• Defining moments, Joseph L. Badaracco, jr,
  Harvard Business School Press, 1997
• La responsabilité sociale de lentreprise comme
  objet des sciences de gestion, Jean Pasquero dans
  Responsabilité sociale et environnementale de
  lentreprise, sous la dir. de Marie-France
  B.-Turcotte et Anne Salmon, Presses de
  lUniversité 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
• Rethinking business ethics A pragmatic
  approach, Sandra Rosenthal Rogene Buchholz,
  Oxford Press, 2000
• Introduction aux Pensées de Marc Auréle, Pierre
  Hadot, Le livre de Poche, 1997
• Respect in a world of inequality, Richard
  Sennett, Norton Press, 2004

40
Bibliographie

• Whats 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
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