International Project Week From Oxymoron Case to Integrity Case - a Call for Moralization of Management in the Context of International Business Ethics and Corporate Social Responsibility Thursday, May15th 2014 Prof. Birgit Weyer, M.Sc., D.M International Project Week, Helsinki1

What are the goals of today‘s lecture?  Students are able to differentiate between CSR based on the Oxymoron Case, Business Case and Integrity Case  They can explain why moralization of management is important Unternehmensethik International Project Week, Helsinki

Logic of the Oxymoron Case  Ethical behavior is costly (positive Oxymoron Case)  Economic success cannot afford to pay for the cost of ethical behavior (negative Oxymoron Case)  Discarded based on Business Case International Project Week, Helsinki3

From Oxymoron Case to Business Case International Project Week, Helsinki4

Logic of the Business Case  Not behaving ethically responsible is costly (negative Business Case)  Ethic pays off (positive Business Case)  Business ethics is a strategic success factor  Important CSR-Initiatives (e.g. EU-Greenbook) plead the Business Case  Most important theoretical basis Stakeholder-Theory (Freeman,1984)  Ethical businesses are rewarded, unethical are punished through stakeholders (moralization of markets) International Project Week, Helsinki5

The Moral Market Unethical Companies Ethical Stakeholders Media -> Investigative Journalism NGOs -> loss of image Customer -> buycott Employees -> brain drain, mental absence Investors -> De- investment Government -> New regulations International Project Week, Helsinki6

Theorie of the Business Case Ethically sensible and active stakeholders Reward and punishment effect (Ethical rules of the game) Pre-economic and economic consequences (ethics as a success factor) International Project Week, Helsinki7

Critical Issues in the Business Case  Stakeholder can evaluate the ethical behavior of businesses only in very view cases  Greenwashing or „Ethical Storytelling“  Influential stakeholder don‘t care about ethical behavior of businesses - > missing motivation to punish businesses  Business Case works in democratic societies Conclusion: Businesses can be successful based on their ethical behavior, they don‘t have to be! International Project Week, Helsinki8

The Business Case  Simple Aufklärungsarbeit  Double Reassurance - Ethic is a „comforting slogan“ - Ethic doesn‘t interfere with business as usual International Project Week, Helsinki9

From Moralizing the Market to Moralizing Management  Moralizing the market (Business Case) shows through - ethically oriented stakeholder groups (e.g. employees, customer) = wirtschaftsbürgerliche integrity of the individual - business owner feels responsibility for success (Ethics without moral)  Moralization of management (Integrity Case) shows through - Decisions which consider the consequences - „Earn money in a good way“ rathern than „earn good money“ International Project Week, Helsinki10

Moralization of Management „Good“ behavior Earning „good“ moneyEarning money in a „good“ way Decisions Pre-economic Consequences Practical socio-economic consequences Responsibilities FinancialSocietal International Project Week, Helsinki11

Legitimizing Profits  Make financial success dependent on social, ecological and economic legitimy  Be able to justify your behavior toward one-self and others and evaluate it as „good“  Limiting financial business success to „enough“ ROI  Clear definition of what is not wanted (customers, contracts, suppliers) International Project Week, Helsinki12

Define Your Personal Values  Self-reflection relating to values and purpose in life  Leading others requires knowing yourself International Project Week, Helsinki13

Value Management in Practice ① Codify - Is – Analysis of implizit rules and assumptions - Should description based on company goals - Evaluate value- and goal conflicts as well as risks for the organization - Define potential successes and evaluate against risks - Kodify behavioral values in "Code of Ethics“ - Mind the “value quadrant“ meaning values in relation to ethics, cooperation, performance and communication This codifcation is the explication of moral knowledge in a business International Project Week, Helsinki14

Value Management in Practice ② Communicate - Management of values requires constant feedback! - Include major stakeholders in the definition of values - An open, participate internal and external communication strategy is the basis for success of value management -Mistakes in communication will result in resistance International Project Week, Helsinki15

Only 1/3 of Employees is Aware of Company Values International Project Week, Helsinki16

Value Management in Practice ③ Implementation - Experiencing and internalizing of codified moral knowledge, the implicit moral knowledge of the business and it‘s employees - Transfer of values into leadership instruments e.g. choice of strategic partners, CSR initiatives, employee performance management - Values as KPIs in goal setting - Recruiting should choose future employees based on their willingness to live by the company values - Underscores the seriousness in implementing value management International Project Week, Helsinki17

Value Management in Practice ④ Organize - In training programs company values and value based behavior are discussed - Conflicts in relation to goals are presented for dialog - Values are the background for every decision - Instruments are seminars and workshops, as well as communication and public relations materials - Continuous evaluation of implementation and, if necessary, adjustment of values International Project Week, Helsinki18