Defining ethical business behaviour
November 30, 2012
When it comes to business, the average person may only think about profit margins and bottom lines, but Ryerson researcher Chris MacDonald, a professor in the Department of Law and Business at the Ted Rogers School of Management, and director of the Jim Pattison Ethical Leadership Education and Research Program at the Ted Rogers Leadership Centre, has a much broader perspective. His take may cause consumers to take a closer look at the meaning behind organic and fair trade labels.
“Business institutions are a fundamental part of society and their decisions are of huge importance,” says MacDonald.
At a time when Canadians’ distrust of the corporate world is on the rise according to a survey by the global public relations firm Edelman, MacDonald is studying several business-ethics issues. For instance, how are businesses aligning their practices with consumers’ values? Also, what motivates corporations to perform in socially responsible ways and what does it even mean to “do the right thing” in business?
As consumers buy organic, fair trade products, and invest in funds that adhere to ethical standards, businesses are being forced to operate in an increasingly complex marketplace – where the values that underlie products are as important as the merchandise. While brands like Whole Foods and The Body Shop intrinsically stand as symbols of certain values (i.e., a commitment to natural products), other businesses are using product labels to demonstrate company values to shoppers. But, MacDonald wonders, how much meaningful information can a product sticker actually convey? Moreover, do consumers even understand what labels such as “dolphin friendly” and “Canada Organic” really mean?
His research shows even though more businesses are engaging in socially responsible behaviour, consumers are becoming increasingly skeptical of corporations’ motivation. But, MacDonald points out, businesses don’t act as a single brain; corporate decisions to sell “green” products or support charities are often made for numerous reasons and are driven by multiple individuals. Therefore, MacDonald asks, as long as a company consistently demonstrates morally responsible behaviour, does the driving force behind that activity truly matter? Or is it more important to focus on the positive outcomes of a company’s decision?
Finally, there is some confusion about what to call “doing good” in the business world. When MacDonald examined the websites of several leading pharmaceutical companies, for example, he found that while all of them professed a commitment to doing the right thing, there was no consistency in the vocabulary they used to do that.
That said, MacDonald argues against the casual use of such business-ethics terms as corporate social responsibility, sustainability, triple bottom line and corporate citizenship. When those expressions are used interchangeably, their true meaning is lost, he says. For example, the term sustainability is often used to describe a variety of socially responsible activities, but its roots are in the environmental movement and most people associate it with being “green.”
“Words are powerful things,” MacDonald says. “My worry is that by choosing terms in business arbitrarily, some people will end up feeling misled.”