Building Sustainable Value

Job #1967

Job Posting Details

Job # 1967 Building Sustainable Value

Posted Date
Aug 21, 2006 @ 14:35
Respond By
Aug 25, 2006
Word Count
0
Budget
$100
Language
English
Gender
Both
Age Range
-
Category
-

Job Description

Ivey's mission is to develop business leaders who think globally, act strategically and contribute to the societies within which they operate.

Usage: podcast to be placed on the web

Target audience: managers and academics

Word Count: 571

Script:

Building sustainable value through fiscal and social responsibility
by Pratima Bansal

Economics or Ethics?
There are countless examples of firms that have broken the law to serve their self interests. The examples roll off our tongues like the names of worn out celebrities: Enron, Worldcom, Tyco, Martha Stewart, Hollinger, Parmalat, and Nortel. Almost every day the business pages report another story of company insiders trying to profit through corporate malfeasance. Many of us do not know the details of the wrongdoings; we just know that the key actors face criminal prosecution. That these firms and certain officers have acted irresponsibly and illegally is never disputed.

But the stories about corporate villains are not only about law breakers. They also include the subtle misdemeanors which blur the lines between right and wrong � wholesale layoffs, under-secured pension plans, poor labour conditions, and inflated statements about financial performance. These issues dog even our most esteemed corporations, such as Microsoft, General Motors, and Royal-Dutch Shell, the storied are often presented as �corporate efficiencies� or �just doing business.� Yet, these insidious issues can cause more damage because they are widespread and widely accepted. They also drive to the heart of a long-standing debate in business � the one between ethics and economics.

Essentially, there are two sides to the debate. The economic argument is that corporations are responsible only to shareholders. If the corporate activities do not maximize profits, then the company is not acting responsibly. The ethics argument states that the corporation is an institution formed to ultimately improve society. If corporate activities do not enhance social well-being, then the company is not acting responsibly.

The debate illustrates the tug-of-war between people and profits. On the one hand, social programs come at an economic cost and firms should not engage in activities that do not have a clear return. On the other hand, economic returns create social costs.

In this article, I describe this tension in more detail and then demonstrate why the debate is flawed. Each side flings mud at the other in an effort to make its own side look better. However, this �either-or� approach polarizes the discussion and distracts attention from the space where economics and ethics converge, and where potential solutions exist.

This overlapping space is not the compromise position. It is a completely tenable position that uses business models that meet both economic and ethical objectives simultaneously. New corporate policies, procedures, and programs are able to secure economic returns while serving society � a position to which most organizational members would like to subscribe. I argue that the overlapping space is not found by recasting ethical issues in economic terms or in disregarding economic models, but rather in marrying social processes to economic ones, so that responsible decisions are both socially and fiscally responsible.

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