Business 303 Sheppard

Business Society & Ethics

Bus. 303 / 2007-3
TITLE: Business, Society & Ethics
PREREQ: 60 credits
INSTRUCTOR: Jerry Sheppard
MY BACKGROUND:
• ACCOUNTANT
• ACADEMIC
• Strategy
• Business Society
and Ethics
MY OPINIONS…
Bus. 303 / 2007-3
TITLE: Business, Society & Ethics
PREREQ: 60 credits
INSTRUCTOR Jerry Sheppard
PHONE 778 - 782 - 4918
 E-MAIL Sheppard@sfu.ca
 NOTES http://www.sfu.ca/~sheppard/index.html
 OFFICE WMC 4387
 HOURS Tue., Wed., Thurs., 12:40 - 1:20 & by Appt.
Contact me in person, by phone or
E-mail & we’ll set-up an appointment.
TEXT
J. B. Cuilla, C. Martin
& R. C. Solomon

Honest Work:
A Business
Ethics Reader
© Oxford University Press (2007).

 FOCUS ON IDEAS AND APPLICATION.

 Skim case examples, diagrams & questions.
 There’s a link to the book site on the 303 site.
Wk. 1-4
Course Description
+ To review & synthesize the lit. on moral issues
in the field of business & society / 3 themes:
• Ethical leadership in business.
• Teaching and evaluating ethical practice in a
challenging workplace.
• The direction of business ethics in an age of
democracy & globalization.
As we discuss various models of bus. ethics &
their application to the current corp. environment,
we shall also undertake a critical assessment of
each model’s practicality and moral implications.
 Grading
Individual Work!

The highest of: 10% - 20% Case 1

10% - 20% Case 2

Plus the highest of: 25% - 35% First Test

35% - 45% Second Test

~ Participation /
‘Fudge Factor’
Class Assignments
Week Topic Chapter topic, Assignments Readings
Week 1 Introduction The Out of Control Corp.? P. 595 - 605
Sept. 6 & Handout
Week 2 Corporate Can we trust the Corporate P. 581 - 595
Sept. 13 Governance Governance structure? P. 606 - 621
Week 3 Corporate Can we trust Corp. Leaders? Text Ch. 15
Sept. 20 Leadership When the Buck Stops: Leadership P. 531 - 556
Week 4 Markets & Will Markets & Courts save us? P. 311 - 343
Sept. 27 Courts Advertising & Product Liability P. 353 - 374
Week 5 Corp. Social What about Corp. Kindness? Text Ch. 7
Oct. 4 Responsibility CSR debate & Stakeholder theory P. 239 - 275
Wk. 6 10/11 EXAM 1 All of the Above …

Wk. 1-7
Class Assignments
Week Topic Chapter topic, Assignments Readings
Week 7 What’s Fair? What do we want from markets? Text Ch. 7
Oct. 18 Society’s Goal What’s fair, ethical and/or just? P. 200 - 221
Week 8 The Ethical What do we want from corp.s? Text Ch. 3
Oct. 25 Behaviour Goal Honesty & trust in business P. 55 - 94
Week 9 A Breakdown What if it is all up to you? Text Ch. 3
Nov. 1 of Loyalty Whistle-Blowing & Co. Loyalty P. 396 - 432
Week 10 Global Ethical Global Ethical Dilemmas Text Ch. 12
Nov. 8 Dilemmas Think Local, Act Global? P. 433 - 471
Wk.11 11/15 More Dilemmas Conflicts of Interest P. 511 - 524
Wk.12 11/22 EXAM 2 All of the Above …
Week 13 The Role of The future place of Markets: P. 647- 649
Nov. 29 Markets Is everything for Sale?
Wk. 1-8
Social Contract
Courtesy:
• No cell phones
In class I will berate your choice of ringtone;
In an exam I may take off 100% of your grade.
Honesty
• Zero tolerance for plagiarism or cheating
Automatic failing grade per assignment.
Come on, it’s an ethics class!
Language requirements:
• Fluency in English is assumed.
Attendance requirements:
• It’s required; this is not a purely on-line course.
 Week 1

The Out of Control Corporation?

BUSINESS, SOCIETY & ETHICS:
MAIN QUESTIONS / ISSUES
1. Who should and does make
the important decisions in our society?
2. Why does Lindblom feel that government
must cater to business?
3. Does this catering mesh with democracy?
4. How then are we to control the corp?

Wk. 1-11
1a. Who should make the important
decisions in our society?
• Philosopher Kings?
• Us (How? Direct? Representative?)

• Experts?

• Bureaucrats?

• You Guys?
1b. Who does make the decisions?
• Elites?
• Us (How? Direct? Representative?)

• Experts?

• Business-people?

• Other…
2. The What is Democracy?
• Powers

• Rights

• Responsibilities
3. The Lindblom Argument (1 of 4)
• Leadership Groups are people in
charge of important public functions.
– They get the big jobs done for society.
• There are 2 great Leadership Groups.
1. Business-people
2. Democratically elected officials.
• Most big of shaping & doing in our kind
of society is entrusted to business.
3. The Lindblom Argument (2 of 4)
• Given the legalities, business-people
cannot be commanded by democratic
institutions to perform their functions.
– Business-people must be induced to perform
their function.
– What they must be given is what they want:
• E.g. income, chance for growth, autonomy, rights
of consultation, political responsibility, discretion.
• Not everything but generally of the type they want.
3. The Lindblom Argument (3 of 4)
• Governments thus have no more
important function than to give
business what business wants.
– To do otherwise is to invite sluggish
economic growth, unemployment,
economic (& maybe social) disorder.
• Political leaders lose their power if they
do not keep a decently healthy economy.
3. The Lindblom Argument (4 of 4)
• Thus, in western democratic societies
there exists two types of control:
– Democratic or electoral control, and
– “Extrademocratic” Business control.
4. How’s the Corp. Extrademocratic?
• Aren’t Corp. Leaders elected?
• How are Corp. Leaders selected?
• Who should make policy?
– Top lobbyist for oil, gas & coal interests to be
Deputy Secretary of the U.S. Interior Dept.
– Select Anti-Regulatory Industry Lobbyist to
head U.S. Consumer Prod. Safety Commish.

I would Heck, I
do it! did do
it!
5a. How do we Control the Corp.?
Henry
Mintzberg

Nationalized
Company
. Democratize it Examples:
- Employee Manitoba’s take-
Involvement over of New Flyer

. Nationalize it Federal takeover

[596-605] CDN National RR
- Market Failure
5b. Democratizing the Corp. (1/2)
• Radical Corporate Governance:
Strong Participation Rights [606-13]
– Dignity
– Fairness
– Self-respect
– Health
– Democracy
– Autonomy
– Utility
5b. Democratizing the Corp. (2/2)
• International Corporate Governance
– Big firms often have a major s-holder (a bank)
– Larger German firms have a 2-tiered system
 Banks (especially a firm’s ‘main bank’) are
highly influential with a firm’s managers
 Employees, union members & shareholders

appoint a group to select the board

– Japanese Banks (especially a firm’s ‘main
bank’) are influential with a firm’s managers
Passive, stable shareholders exert little control
Virtual absence of external mkt. for corp. control
Powerful government intervention; close relations
5c. How else we Control the Corp. (1/4)
. Pressure it E.g. Jawboning…
- Political coercion

. Regulate it E.g. Standards of

- Command lead in glaze…
& Control

[596-605]
5c. How else we Control the Corp. (2/4)
Let it do its job while raising . Trust it
expectation / Social Audits.
- C.S.R.

[596-605]
5c. How else we Control the Corp. (3/4)

Hirshman’s . Ignore it
Exit, Voice &
Loyalty… - Let it do its
econ. job
• Exit:
. Market Force
• Voice:
. Protest
• Loyalty:
. Maintenance [596-605]
5c. How else we Control the Corp. (4/4)
Industrial
development /
Tax breaks for
investment.

Issues Include: . Induce it

Board Reform; - Pollution
Shareholder Tax option
initiatives;
Big Funds; [596-605] . Restore it
Exec. Compensation. - S-holder Demo.
5d. Shareholder Democracy
• Board Reform
– Professional Full Time Directors
– Increasing Director's Liability.
• Barbarians at the gates
• Full Disclosure on Corp. Takeovers.
• Annual meetings that allow for real
votes on shareholder initiatives.
• Big Investment Funds that force fund
managers to take an active interest.
• Exec. compensation that’s
tied to shareholder returns.
6. How then do we Control the Corp.?
. Pressure it . Trust it
- Political coercion - C.S.R.

. Regulate it . Ignore it
- Command - Let it do its
& Control econ. job

. Democratize it . Induce it
- Employee - Pollution
Involvement Tax option

. Nationalize it [596-605] . Restore it

- Market Failure - S-holder Demo.
Wk. 1-30