Sunday, May 24, 2009

Day 4: U.N. Global Compact, Corruption case

Global Compact... Panama firms that are members, Banco General and its Social Report for 2007. This could be one of the student projects.

Reasons to Join and Reasons not to Join.

El Rancho Chicken Farm, courtesy of Eduardo Schmidt.

we discussed each of the dilemmas, “options” to the chicken farm manager.

a lot of interesting discussion, particularly about the $100 bribe to be paid to the government official that would enable the farm to buy more dollars which enables them to buy more feed. Also the “dynamic agent” fee to facilitate shipment of feed and delay that of competitors.

there was some concern that the agent might not be reliable, that is that he would go to the highest bidder. this would be dangerous.

I asked pointedly that I wanted to use this case because it was from this general part of the world and might come closer to representing Panamanian business practices. does this happen here? all the time they answered. they were anxious to give me examples. corruption and bribes occur all the time, it’s more difficult to find an occasion when it’s not used.

Then I asked, suppose I’m the new president of Panama. along with several close aids I visit the U.S., Canada, U.K. and other countries known for having the lowest levels of corruption. We spend a lot of time learning how governments fight corruption and we come back with some good idea. it will be difficult, it will be hard, but we think we can do it.

Do you wish us success? Do you want Panama to change? the answer for the most part was “no”.

Day 3: Stakeholder/Clarkson, Enron, Public Policy

I. finish/followed up with PETA/KFC... how would monitoring take place?

also if PETA is low power/high legitmacy/high urgency what would that mean? (salience model)?
what if we thought the claims were urgent? How does that change things?

clarkson principles:

which one is most important?
what is most commonly followed already?
why one is most difficult?

this was a tough exercise... it’s not easy to separate and prioritize these. but it does force them to really look at the principles, consider implications for implementation.

II. enron case:

we discussed the mechanics of enron a little bit. (spe’s, fastow’s magic, AA)
enron culture and the “rank and yank” system...
interesting stuff here, most students seemed interested in working in high reward/high risk cultures. I missed the opportunity to ask about “risk” and skirting the law, or being “ruthless”

III. government/public policy (chapter 4)

finish up with a rudy and cheating example. While I was not surprised that most students would not report a cheating student to the professor (or the university), I was surprised with the degree of passion most students expressed. This reflects in all likelihood the tight bonds these students establish within their cadres.

I asked, “what if you weren’t in the class, it was someone else, possibly even at another university, what would you think of a person who said to you “I think I’m going to turn that student in”. Most expressed their general disagreement with this but indicated it wouldn’t be a big deal, a few said anyone who did that could not be their friend.

More interesting was three years later and Rudy has applied for a job at your company. The boss wants to know if there’s anything he should know about Rudy. Again a few outspoken types were passionate, do not tell anyone. However I surveyed the class asking “would you say absolutely nothing, or perhaps something?” 12 said “something” , 5 said “nothing.

Tuesday, May 19, 2009

Day 2: Discussing "The Corpporation", sweatshops, living wage, stakeholders and social responsibility

Day 2

begin with discussing “the corporation”. I like to start with a general, “what did you think of the film?” question, just to get things started.

*most of the students “liked it”. when I asked them why, they gave some basic answers, “shows injustice”, “shows what happens/“dangers” when businesses get too greedy”.

I followed up with “what stories/parts of the film did you think was especially interesting or you learned something from?” replies:
-BGH (a couple of students were “really disgusted” by this. When I asked if this was a controversy in Panama, they said no. They hadn’t heard of it. Though one student was aware of that it was a controversy in Europe)
-news stories (“the investigators”) according to one student: “the news should be reported truthfully and not censored because of some company”.
-Kathie Lee Gifford and sweatshops
Kathie Lee was an interesting discussion. They didn’t know her background (former Miss America, former TV celebrity, product endorser). She endorses a line of clothes for Wal-Mart, she is a “brand” in and of herself. Does she think to ask the question about where the clothes come from? Can we blame her for that? Interesting division of opinion here (because I did describe her as a bright, independent woman) some felt that should have been smart enough to ask the question, or at least have someone find out the answer for her. Other students felt it was understandable to have missed this.

“living wage” came up. Baltimore has a living wage statute, one of several cities that does. note that it does not require every firm to pay a living wage, just those that have contracts with the city. This is also significantly higher than our minimum wage. I missed an opportunity to ask about minimum wages or a living wage in Panama.

also RE: sweatshops and Nike. I like to emphasize that Nike doesn’t own the factories and doesn’t employee the people, however Michael Moore’s comment about “Nike’s people” is a very good use of the word, a very important concept. These workers are, in a sense, a part of Nike. My experience at home is the same: students can get a little reckless about overstating Nike’s involvement with these factories (i.e. thinking and actually saying for example, “Nike runs (or manages) these factories/sweatshops”. Even though it’s important to separate Nike (and other apparel) companies from ownership, it remains important to think about these workers as part of “Nike’s people”. This point seems useful as we prepare to consider stakeholder claims and legitimacy.

Interestingly when I asked “was the film fair?” a few students quickly said, “no”, that the film didn’t provide much of the corporate response to its messages. We just had time for some general discussion here because I needed to move on. Now that I think about it, a good question to ask would have been “What would some of these companies, or an industry association, actually say about this movie?”

All that took almost an hour. Now I need to quickly present some material on stakeholder before we take a break. I like to ask students to help share info from the text, so I ask them the following questions (and to use the book, with specific page numbers!) to answer.

What is the definition of a stakeholder?
What are primary and secondary stakeholders? (definitions and then examples of each)
What are the elements of stakeholder salience?

(this is a pretty straightforward 20 minutes or so. They read (out loud) stuff from the book, sometimes I ask people to re-read it for emphasis. There’s an occasional story or point I make along the way. for instance the film the corporation might be an example of the media as stakeholder, and if enough people view it and act in a particular way, that’s a type of salience.)

After we return from a break I ask the students to pair up. I don’t often do this “back at home”, don’t know why, I just don’t. but a new environment and a new challenge makes me more open to try different things.

I ask them, in pairs, in 10 minutes to read the three stakeholder statements from Pfizer, General Mills and General Electric. What are the similarities and differences?

*After 10 minutes, they immediately begin pointing out similarities. The statements seem to use the same concept of “stakeholders”. The lists of stakeholders, while not identical are more similar than different.
*I asked them to pick out a word, or a phrase, from each statement that would really say what that statement was all about. for Pfizer it was “partnership” , for “General Mills” it was “trust”, for GE it was “growth”. Why these differences, why these words? The students seemed to agree that “health care” and “food” were somehow more intimate products, products and businesses that require care and respect more so that GE’s conglomerate portfolio of products.

*I will admit this pedagogy worked fairly well and I will probably try it again. It helps to use variety and keep as many people involved as possible.

We then used one of my favorite examples of stakeholder management. PETA and KFC. KFC has a presence down here, most students seemed to have heard of PETA.

I started with videos from PETA’s “kentucky fried cruelty” campaign website. This includes three videos showing “the Colonel” as a warden of a hellish prison with chickens as the prisoners. Those are mostly for fun and introduce the controversy. then there’s an undercover video of chickens’ being thrown, kicked and stomped on at a KFC supplier. Once the video was shown, before I could even ask any questions several of them said, “that could never happen in Panama”. The idea is that chicken farming is done on a smaller scale, and the automation/specialization/factory nature of chicken processing in the U.S. is not as common here. This was a good discussion.

I then asked “Does PETA have a. power? b. legitimacy? c. urgency?

There is always an interesting discussion about power and legitimacy back in the states. I was surprised and even a little impressed they quickly thought PETA should have a lot of power because once they get the message out, no one will want to buy chickens from KFC. My own experience suggests that students in the U.S. who are KFC customers don’t particularly care about the video: they know that between the raising of the chickens and the cooking comes the killing, and the killing isn’t pretty and they don’t really want to know and they don’t really care. This perspective seemed to surprise the students, at least some.

Upon reflection, this seems a more signficant point now than in the moment in class. Do these students “care” more, if not about the chickens, then something about the killing of the chickens? Is there more concern with animal rights here? It bears mentioning that chicken is a common meat in many Panamanian dishes.

A very good question came up about whether PETA was going after the wrong firm, that is, that KFC doesn’t operate chicken farms, they don’t “kill” chickens. There is a “social responsibility” website for KFC that does have a “supplier code of conduct” and “animal welfare” policies. There was just enough time before the second break to acknowledge that KFC at least has addressed this issue and has some material on its website. Whether this is “enough”, we can’t pursue, time to take another break.

We return from break 2 with just under an hour. Now the topic is “social responsibility”. Again, I ask someone to share the definition from the book, she reads it, the powerpoint follows, hopefully this sinks in.

then the Milton Friedman quote comes in. It was a nice plus that Friedman has a couple of segments in the corporation, so they can put a real person with a name. so we have the pros/con stuff set up.

now I show a you tube video, “can coffee drinkers save the rain forest?” It’s a nice 4 minute video, extolling the virtues of a “back to origin” campaign starbucks has in the chipas. I also asked, most students had been to a starbucks in the states. most already thought of starbucks as socially responsible. I asked why and they said the environment was the big issue. nothing specific however.

I then ask:


then I show a counter video: “Partners?” by a group called Justice Bean to Cup. The video criticizes Starbucks’ fair trade policy with a coffee cooperative in Ethiopia.

“I’m confused,” I say, “is Starbucks socially responsible or not?”

some thoughts from the class:

*”if you don’t want to sell your coffee for .57/pound to starbucks, sell it to someone else.”
*”maybe this is a tactic by starbucks competitors to make starbucks look bad”
*”starbucks buys coffee all over the world, what is happening in other places. you can’t judge the company by what happens in one place”
*”the growers are getting greedy!* (i found this an interesting comment, I didn’t want to attack it, but I did ask, do these coffee growers look greedy? do they look like the ones with power here?)

I didn’t press on them to compare Starbucks and its sourcing policies with Nike and the “sweatshop issue” because I really didn’t want to go back to sweatshops again. But there did seem to a common position among students that growing crops/farming is a different matter from working in a contractor’s factory. It may be that farmers are seen as more entrepreneurial, they produce a product and sell it. A young woman working in a “sweatshop” however is a laborer, and has much less voice about her wages, terms of employment, etc.

I concluded the day with the observation that companies that brag about their social responsibility (and starbucks is a good example here) increase stakeholder expectations. If you say you’re protecting the rainforest in the Chipas, then you destroying it (or failure to stop its destruction) in another part of the world will lead to a lot of questions.

Day 1: course intro, capitalism, agency theory, "the corporation"

“groundwork for the course”
updates to syllabus (point allocations, upcoming assignments, project)

Who’s in the class? any thoughts on this title? “can we use business and ethics in the same sentence?”

I need your help
*This is always a challenging class.
*Even more so this time since I haven’t had a lot of time to prepare, plus I’m in another country
*Sometimes we’ll look at info and keep in mind it’s obviously good for the U.S, with limited applicability to other countries (at least Panama), sometimes “business” is generic. I don’t care where you are in the world, what your religion is, what your culture and customs are, what your local laws may say, there are some universal “codes” or understandings we all share.
*Keep an open mind and share. I’m going to do my best to create an interesting and meaningful class. And I can’t do it alone.
*Small stuff: show up time, stay with me (I have to be here, those that are also here win my respect and will be rewarded. those that aren’t...
*also, keep the phones off... and other websurfing.

Dalai Lama’s take on the financial crisis: BW, 5/18/2009, p. 16

“What caused the current collapse?”
I’m telling people including some businessmen who are my friends what this global economic crisis was caused by: One, too much greed. Second, speculation. Third, not being transparent enough. That’s my view. These are moral and ethical issues.”

Conditions of capitalism. (“problems arise from the failures in one or more of these conditions”- p. 14)

three key people on their ideas:

1. Milton Friedman
2. Kenneth Arrow
3. Oliver Williamson

1. Friedman, “chicago school”, champion of the free market, critic of government regulation social responsibility

Wood: “3 elements of social control”. according to Friedman, the market controls itself, though must stay within “the rules of the game”

2. Arrow
-tension between individual wants and society’s
-tension between ends and means (some ends are not achievable)
-price is an efficient allocation of scarce resources, sometimes.
* not bad for soccer games and music concerts
* but what about education and health care?


3. Williamson
-agency theory: problems of 1. moral hazard and 2. bounded rationality

imagine the situation of a U.S. citizen who comes to Panama to work with an local real estate agent: (the reverse could also be true)
moral hazard: Can the the local agent advance his/her interest at the expense of the principal? (the answer should be “of course” though it may not always be easy).
bounded rationality: Is the U.S. principal aware of all they ways he/she can be taken advantage of? (“of course not”)
"if I come from the U.S. with a lot of money and I want to buy real estate in Panama,
is it possible a real estate agent (they're called "brokers" here) will rip me off?
the students said of course, there are many ways, such as selling you land or projects that are undesireable and/or at inflated prices.
"but I thought we were working together?, you were going to help me find a good deal and I will pay you to help me."
this helps set up "moral hazard", the brokers may advance their interests at my expense... particularly if I don't know much "bounded rationality". other examples?

This could also be a good example of Question 2.3: “cheating isn’t always in the actor’s interests, even if he/she can get away with it.”

showed the film the corporation... it’s long (two hours/ 25 minutes, we didnt’ have much of a chance to discuss this.

Background

What follows is a very raw description of my experience teaching "Business Society and Ethics" from May 18-29.

This is my fourth trip to Panama in sixteen months.

My university (Towson University, Towson Maryland) has a relationship with "Quality Leadership University" in Panama City. Basically they offer a Towson degree with Towson curriculum. Some classes are taught by locally-recruited people, other classes Towson professors come to Panama to teach. The format is one class at a time, four hours/day, five days/week for two weeks.

I am using a course packet with ten chapters from Donna Wood's Business Ethics package.

Copies of course materials: cases, links, websites, syllabus and other materials are available on request. Most materials are organized in a Blackboard site. I may be able to allow guest/viewing privileges for interested persons.