Ethics for Managing Business in a Global World
Kemi Ogunyemi
Lagos Business School
Introduction: Toward a Global Paradigm Shift
The first two volumes of this book began addressing the need of functional faculty for help in embedding ethics into their curricula.1 This third volume contains more practical ideas to teach ethics while teaching international business, accounting, auditing, tax, corporate finance, investment management, entrepreneurship, and so on. All readers will surely be grateful to the authors who have shared their ethics-embedding experiences and so contributed to make this a valuable resource for colleagues all over the world.
Undoubtedly, things have changed with regard to business ethics education.2 Far from the previous landscape that was mostly focused on business and negligent of the place of ethics therein, ethics is now being taught under different course titles and in varying course combinations: responsible business; sustainability; corporate and personal responsibility; corporate social responsibility; impact investing; social entrepreneurship; and so on. Business schools all over the world are teaching responsibility, in response to the need to have responsible business professionals.3 This, in some cases, has meant a great deal of within-course integration. However, in other cases, it has simply meant more attractive titles for ethics standalone courses. Since it continues to be of paramount importance that ethics is taught as an embedded part of teaching management,4 a third volume of “Teaching Ethics across the Management Curriculum” remains relevant. This volume, like the others, responds to the worldwide concern to ensure that business enterprise is carried out more responsibly and sustainably. It gives support to functional discipline experts (accounting, finance, entrepreneurship, international business) who wish to include ethics in their course offering and need practical and effective help to achieve this goal.
After this brief introduction, this chapter reflects on various realities of the positive shift in emphasis on ethics all over the world—in terms of more legislation, stronger governance, deeper solidarity, and a greater demand for excellence. A few considerations are then proffered regarding the needs of today’s educators and the new ethical dilemmas. A section follows describing the different chapters that make up this, the third, volume of “Teaching Ethics across the Management Curriculum.” The chapter concludes by reemphasizing that teaching ethics in business schools is an important contribution to promoting justice, equity, and development globally.
New Challenges
Global development and increased competitiveness has affected the business ethics terrain in various ways and this necessarily influences teaching content and pedagogy.5 For example, in many instances, technology and globalization have advanced transparency and accountability by helping to institute controls. Conversely, it has also given rise to new vulnerabilities—hacking, espionage, new types of bullying, and so on; in general, an increased capacity to do a lot of good or much harm. Technological advancement has thus often meant that there are new “improved” ways of behaving unethically because the power coming from access to information is so easily misused.6 For example, thinking of ethics in journalism, where invasion of privacy before might have been hampered by unwieldy equipment, cameras and videos can now be very tiny and easy to conceal. Similarly, in the business world, new forms of corruption continue to surface and new systems are evolving to monitor and check them.
Controls are not enough, however, for building sustainable ethical business cultures and a more just social system. We need people of integrity to do this, and many of them will come from the classrooms of business schools and other higher education institutions.7 At the same time, controls form an important part of ensuring compliance in any system and therefore they must also be constantly updated in order to remain relevant and effective. Evolution in both approaches (compliance and integrity) to promoting and ensuring ethical behavior should be reflected in curriculum design and pedagogy in classrooms where ethics education is being imparted. Giacalone and Thomson, however, suggest that more important than finding new ways to teach in the face of numerous new challenges to ethical behavior is changing the worldview in teaching business and management.8 They suggest a move from an organization-centered one to a human-centered one.9 Such a change would no doubt facilitate the teaching of ethics in a way that can impact the thinking of the professionals who graduate from business schools.
In addition to acquiring a new worldview, today’s business and management students may need to be more alert to global governance requirements and new risks of legal action, to the sustainability development goals imperative, and to the expansion of global consumer influence.
Global Governance and Risk of Legal Action
Organizations are now influenced by a variety of governance mechanisms domiciled in different parts of the world. Apart from the choices of individuals in a firm, if it is a multinational entity, it will be influenced by the governance culture of its home country. Other influences could come from international nongovernmental organizations (NGOs) who make governance demands or from international development organizations. For example, the United Nations Global Compact holds companies to 10 principles of responsible management; these are broadly grouped as human rights, labor, environment, and anticorruption. Over the years, governance expectations have climbed regarding the various aspects of business administration in which the failures have contributed greatly to harming many in both widely reported and less public scandals. The corresponding failures include the lack of honesty in managing for investors’ and other stakeholders’ rather than for personal or solely stockholders’ interest; deceptive marketing; fraud in financial reporting and in the stock and securities markets; inequities in executive compensation; and gross abuses of public trust.
Focusing on corruption, the tenth principle of the Global Compact, technology and globalization have also extended its negative impact considerably. This has given rise to a stronger fight against it, one that reaches across borders. Thus, governments are not only more sensitive to internal incidents such as domestic bribery (both private to public and private to private) but also to international infractions such as the corruption of foreign public officials. Legislation around the world that businesses as well as individuals need to be aware of include the U.S. Foreign Corrupt Practices Act (1977); OECD Anti-Bribery Convention (1997); the Inter-American Convention Against Corruption (1997); the ADB-OECD Action Plan for Asia-Pacific (2001); the Council of Europe Criminal Convention on Corruption (2002); the UN Convention Against Corruption (2003); the African Union Convention on Preventing and Combating Corruption (2004); the G20 Anti-Corruption Action Plan (2010); the UK Bribery Act (2010); the Chinese Amendment No. 8 to Article 164 (2011); and the Russian Federal Law No. 97-FZ (2011).
These shifts in governance and regulation levels make it important for educators to understand (and transmit) the dynamics of macroinfluences on corporate responsibility and sustainability. Apart from the purely normative reasons to behave ethically, it is as well that students are also made aware of the practical imperatives of avoiding criminal, administrative, and reputational risks facing their organizations and themselves if they engage in corrupt practices.
Sustainable Development Goals
Quite apart from compliance constraints from legislation and governance mechanisms, the whole world is also experiencing a push in the direction of justice and fairness in development. Corporate entities are being called upon to work with governments and communities in their striving to achieve the Sustainable Development Goals (SDGs), also known as the Global Goals. The SDGs are aimed at addressing the root causes of poverty and the universal need for development. This is an expression of solidarity with others less fortunate and it works toward redressing any past injustices and inequities in history as well as assuring the common good of the whole world. According to Helen Clark, Administrator of the United Nations Development Programme, the SDGs constitute “inclusive and sustainable” avenues toward “meeting citizens’ aspirations for peace, prosperity, and wellbeing, and to preserve our planet.” Educators can approach the embedding of ethics into their curriculum from the perspective of the need for corporate participation in the achievement of the Global Goals.
Consumer Power
This is another realm in which globalization and technology have increased the potential impact on organizations. With social media, corporate mis-behavior can be communicated very speedily all over the world and the brand irreparably damaged. The past “hate” campaigns against Verizon and British Petroleum are old cases in point. They are but small examples of what the media can do to companies given the way it has developed and grown exponentially since the time of those incidents. Managers now need to be taught an awareness of increased public scrutiny and the risk of alienating current and potential customers, even while this should not be their sole motivation for behaving ethically.
A Look at Specific Management Disciplines
In Module 1 of this book, titled “Setting Out,” two chapters capture the idea that ethical considerations in a business should begin from the point of takeoff. Accordingly, Timothy London’s idea of the revised business plan assignment putting the ethical considerations of the entrepreneur at the forefront is a very good way of teaching this. This chapter, being clearly not rooted in any one nationality or teaching system, is easy for entrepreneurship educators around the world to adopt. The key issues in entrepreneurship are raised, and the chapter covers the potential ethical issues that deserve exploration especially with the view of offering faculty some guidance on how they can best teach the concepts such that the students are able to find firm footholds when they are faced with the ethical dilemmas that starting a business enterprise brings with it. The author believes that “engaging with these ideas in a safer space, before the maelstrom of the entrepreneurship process, can provide them with a powerful touchstone to come back to in more turbulent times.” Complementary to his chapter, the examples of ethical dilemmas in Chapter 3 are suitable for imparting learning. The authors, Henrietta Onwuegbuzie and Ijeoma Ugwuanyi, pass across an overall message that doing good is good business. Their experience of teaching entrepreneurs/MBA students to embrace ethical profitability and their passion for discouraging corrupt business practices shines through the chapter and could have much appeal for practitioners. Also, the emphasis on experiential learning and on experience sharing by guests makes the teaching approach they advocate particularly suited to adult learners.
The second module contains five chapters dealing with quantitative courses; hence its title, “Looking to the Numbers.” In the first one, Susan Rhame, Liz Mulig, Cheryl Prachyl, and Robert Walsh present a splendid explanation of a selected code of ethics, making abundant references to international standards, associations, and real cases. The authors choose to highlight four subdisciplines in Accounting, to better define the field and the related ethical issues: financial accounting, managerial accounting, accounting information systems (AIS) and auditing, and taxation. The clarity in the identification of the areas to be considered within accounting in order to formulate the ethical reflection is the strength of this chapter. In addition, the clear order of ethical issues and the helpful and specific teaching strategy for each subdiscipline makes it easy to read, follow, and understand. Following this, Kayode Omoregie highlights the ethical issues in corporate finance, calling decision makers in business to consider the best interests of all stakeholders. To help finance students develop what he refers to as “strong ethical consciousness about their actions and ... implications” he offers a great tool, the ARARD-V framework (Awareness, Recognition, Analysis, Reflection, Decision, and Values), to work through an ethics evaluation in an effective manner. The discussion of ethics within a corporate finance realm is rich and instructive. He also provides other excellent examples of how to integrate ethics in the classroom (videos, group presentations, computer-based simulations). In the chapter on statistics, Fabiola Gerpott and Sven Voelpel offer a careful and incisive argument in support of ethics in statistical reporting. They cover the typical ethical issues and provide brilliant ethical teaching strategy—especially the seven-step guide. The way ethical issues are tied to the process of statistical research and analysis is particularly interesting. They point out, reasonably, that faculty in management disciplines other than statistics may need to protect their integrity and credibility by paying attention to the honesty of the statistics they use in teaching.
Next come Chapters 7 and 8 on teaching ethics in finance curricula and in investment courses, respectively. In Chapter 7, Marta Rocchi and Ignacio Ferrero Muñoz creatively incorporate a discussion of the four cardinal virtues—prudence, temperance, courage, and justice—into behavioral finance. The focus on virtue ethics makes for a unique slant on the issues particularly in relation to personal ethical behavior in finance. The examples used could provide an excellent framework for discussion. As well as two case studies, they offer teaching exercises that recommend the use of video clips. Following this, Chapter 8 gives a useful overview of teaching responsible investing while covering a variety of topics in financial ethics education. In this chapter, Jenny Gu, Lynn Kendall, Fernando Arellano, and Shawn Groves highlight the concept of ethics in finance and investment and in teaching finance and investing which is embedded in the concept of socially responsible investing (SRI). They discuss the concept in detail and provide historical and insightful examples of ethical issues that befell the financial and business sectors of different countries. They also give statistics about SRI across the globe. The typical ethical issues in the area of SRI are highlighted and discussed—poor corporate governance, fraud, insider trading, derivatives trading excesses, a lack of transparency in financial reporting. One of the interesting teaching strategies that they propose is the experiential exercise of getting students to actually practice SRI already while engaged in the classroom.
The third and final module, “Going Global,” brings together three chapters that have a globalization orientation. These are the chapters on international recruitment and international business. Thom Pittz and Steven Pittz offer an elaborate discussion of the subject, international recruitment. Chapter 9 discusses the concept, the causes, and the effect while bringing up the ethical implications of using certain branding strategies to attract foreign labor for organizations. A practical teaching case study is also a definite value add to this thought-provoking chapter. In a world where organizations employ across wide geographical boundaries, this chapter is particularly relevant for educators who wish their students to develop the requisite ethical awareness to cope with international labor market negotiations and transactions.
The chapters on international business are written by Tabani Ndlowu and by Asbjorn Osland and Yetunde Anibaba. Tabani introduces gamification in Chapter 10 as a tool for teaching ethics within this discipline. He acknowledges increasing the diversity and mobility of today’s workforce and takes this into consideration in putting forward some of the resulting ethical dilemmas. Gamification resonates as a method of instruction since it evokes emotions and engages students in a way that enables them to think beyond their major discipline. In addition to this innovative pedagogical approach, the description of the author’s survey results of student’s disposition to learning ethics is insightful. The second chapter dealing with ethical issues in teaching international business emphasizes the relevance of combining teaching ethical decision making with compliance issues when referring to international business, especially in four areas: employment, human rights, environment, and corruption. The relevance of international law and salient principles, values, and norms are well developed and reviewed. The authors offer a well structured, and very useful and practical section, on “typical ethical issues—with examples.” Thus, the highlight of this chapter is the identification and explication of real-world examples that highlight the ethical concerns of international business. The approach is highly focused on compliance, to help international businesses guard against falling foul of the laws of the different locations in which they operate. The “advice for teachers” section makes a particularly strong contribution—not only does it provide valuable information to use in the classroom but it also highlights some of the things that we do wrong as educators to cloud ethics with opportunistic considerations.
Educators for Today
Faculty development is one of the more important areas in which schools need to invest if they are to live up to their responsibility as educational institutions from which emerge ethical business leaders.10 Faculty need to develop themselves in many regards:11 curriculum design in order to redesign existing programs to include the concepts that will lead to a heightened sense of responsibility and perhaps inculcate a human-centered view of the world;12 pedagogical design to include methods and means that will lead to enhanced learning and deeper understanding; and assessment techniques that will underscore the message that this is an important part of the educational package. The contents of this book (in every volume) can help toward achieving the first two and thus contribute to the “enriched, multi-dimensional experience of learning (and, hopefully, internalizing) ethics within the business school curriculum” envisaged by Neesham.13
Also important is the need to continue breaking any traditional silos in teaching so that the learners can see the connections between all the different aspects of business. Given that networked or integrated learning is a good substratum in which to embed ethical reasoning, the chapters of this book constitute a tool that faculty can deploy to make it a reality for their students. As emphasized in all the different chapters, equipping future business leaders in technical competence imbued with responsibility and ethics makes for a better world for us all.14
Happily, as also emphasized in Chapter 3, behaving ethically can be very good for business. If a business builds its people to be ethical and puts in place systems that enable them to act ethically, it will soon establish a reputation for integrity and good governance, which will give it an edge both locally and globally over competitors. Such a business will find it easier to attract funding, to please customers, and to elicit commitment from its employees. The increased ethical culture devolving from the activity of these last-mentioned stakeholders will help the firm to be more efficiently productive internally and to project a better brand. Having many firms like this will build trust in society and therefore to more sustainable and equitable economic growth and development.
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2 Nastase and Gligor-Cimpoieru (2013); Holland and Albrecht (2013).
3 Nelson, Smith, and Hunt (2014).
4 Hoivik (2009); Rasche, Gilbert, and Schedel (2013).
5 Nastase and Gligor-Cimpoieru (2013).
8 Giacalone and Thomson (2006).
9 Giacalone and Thomson (2006).
10 Nelson, Smith, and Hunt (2014); Dellaportas et al. (2014).
11 Holland and Albrecht (2013).
12 Giacalone and Thomson (2006).
References
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Dellaportas, S., S. Kanapathippillai, A. Khan, and P. Leung. 2014. “Ethics Education in the Australian Accounting Curriculum: A Longitudinal Study Examining Barriers and Enablers.” Accounting Education: An International Journal 23, no. 4, pp. 362–82.
Giacalone, R.A., and K.R. Thompson. 2006. “Business Ethics and Social Responsibility Education: Shifting the Worldview.” Academy of Management Learning and Education 5, no. 3, pp. 266–77.
Harris, A.L., M. Lang, D. Yates, and S.E. Kruck. 2011. “Incorporating Ethics and Social Responsibility in IS Education.” Journal of Information Systems Education 22, no. 3, pp. 183–87.
Hoivik, H. 2009. “Developing Students’ Competence for Ethical Reflection While Attending Business School.” Journal of Business Ethics 88, pp. 5–9.
Holland, D., and C. Albrecht. 2013. “The Worldwide Academic Field of Business Ethics: Scholars’ Perceptions of the Most Important Issues.” Journal of Business Ethics 117, pp. 777–88.
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Nastase, M., and D.C. Gligor-Cimpoieru. 2013. “A Plea for the Importance of Business Ethics Education for Future Managers in an International Competitive Environment.” Review of International Comparative Management 14, no. 2, pp. 191–201.
Neesham, C. 2015. “Leverage Points in Business Ethics Education: A Virtual Symposium.” Journal of Business Ethics 131, pp. 509–10.
Neesham, C., and J. Gu. 2015. “Strengthening Moral Judgment: A Moral Identity-Based Leverage Strategy in Business Ethics Education.” Journal of Business Ethics 131, pp. 527–34.
Nelson, J., L.B. Smith, and C.S. Hunt. 2014. “The Migration Toward Ethical Decision Making as a Core Course into the B-School: Instructional Strategies and Approaches for Consideration.” Journal of Education for Business 89, pp. 49–56.
Rasche, A., D.U. Gilbert, and I. Schedel. 2013. “Cross-Disciplinary Ethics Education in MBA Programs: Rhetoric or Reality.” Academy of Management Learning and Education 12, no. 1, pp. 71–85.