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Simone de Colle University of Virginia Sustainability Advisory Services Managerial Decisions or Organizational Ethical Failures? Bounded.

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Presentation on theme: "Simone de Colle University of Virginia Sustainability Advisory Services Managerial Decisions or Organizational Ethical Failures? Bounded."— Presentation transcript:

1 Simone de Colle University of Virginia sd7ua@virginia.edu Sustainability Advisory Services Managerial Decisions or Organizational Ethical Failures? Bounded Business Ethics Pedavena, 12 Giugno 2010

2 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 3 of 6: FOCUS OF MY RESEARCH Organizational Ethical Failures Sources of unethical behavior Issue-related (Jones, 1991) Context-based (Trevino 1986; Buttlefield, Trevino & Weaver, 2000) AWARENESS FAILURE Moral Awareness (lack of) Simon (1947) Dunfee & Donaldson (1994) Chugh, Bazerman, Banaji (2005) FAILURE OF BOUNDED RATIONALITY/ETHICALITY Bounded Rationality & 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 BIASES Separation 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

4 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.

5 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).

6 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).

7 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

8 Bounded Business Ethics Decision-Making and Organizational Ethical Failures A MODEL INTEGRATING OEFs Start of the decision making process Ethical Conduct Unethical Conduct 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

9 The case of Heineken-Pedavena (1/2) On September 22 nd 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, Heinekens 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

10 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 Heinekens Italy decision to dismiss its brewery in Pedavena an Organizational Ethical Failure? 10 Bounded Business Ethics 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 brewery?

11 Spazio ai protagonisti…. 11 Bounded Business Ethics Qualche anno dopo….


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