{"id":391,"date":"2014-05-13T17:56:47","date_gmt":"2014-05-13T17:56:47","guid":{"rendered":"http:\/\/opentextbc.ca\/strategicmanagement\/?post_type=part&p=391"},"modified":"2019-07-02T23:15:34","modified_gmt":"2019-07-02T23:15:34","slug":"chapter-10","status":"publish","type":"part","link":"https:\/\/opentextbc.ca\/strategicmanagement\/part\/chapter-10\/","title":{"raw":"Chapter 10: Leading an Ethical Organization: Corporate Governance, Corporate Ethics, and Social Responsibility","rendered":"Chapter 10: Leading an Ethical Organization: Corporate Governance, Corporate Ethics, and Social Responsibility"},"content":{"raw":"
\r\n

Learning Objectives<\/p>\r\n\r\n<\/header>\r\n

\r\n\r\nAfter reading this chapter, you should be able to understand and answer\u00a0the following questions:\r\n
    \r\n \t
  1. What are the key elements of effective corporate governance?<\/li>\r\n \t
  2. How do individuals and firms gauge ethical behaviour?<\/li>\r\n \t
  3. What influences and biases might impact and impede decision making?<\/li>\r\n<\/ol>\r\n<\/div>\r\n<\/div>\r\n

    Olibert\u00e9\u00a0Shoes: Doing Business with Soul<\/h1>\r\nIn developing\u00a0the model for ethical business practices, you must choose your company's ethical priorities. Are you eager to avoid products made in abusive working conditions for sweatshop wages? Is the environmental impact of an item\u2019s materials, production, and transport your major concern? Are animals harmed (or not) in the making of your product? Is it important for\u00a0your company to give back to the community?\r\n\r\nCanada\u2019s Olibert\u00e9 Shoes manufactures its wide selection of\u00a0fair-trade footwear in several African countries, from locally sourced leather, and they retail at fifty stores across Canada. Two online British brands have huge ranges of cruelty-free, fashionable footwear made in European factories: Vegetarian Shoes operates in England\u2019s oldest cooperative factory, and Beyond Skin even has a bridal line. MooShoes is a New York store\u00a0(and online source)<\/span> for synthetic sneakers and non-leather shoes, belts, and accessories. <\/span>\r\n\r\nOn the environmental side, a number of sportswear giants are experimenting with high-performance \u201cgreen\u201d shoes using vegetable-based inks, recycled materials, and low-toxicity adhesion.<\/span>\u00a0Nike has an initiative to take back your hole-filled sneakers and grind them up into material for their green shoes or basketball court flooring. And you can buy Simple Shoes made from recycled tires and carpet padding, organic cotton, and hemp, or eco-certified leather and suede (Kielburger & Kielburger, 2012<\/span>).\r\n\r\nIn 2002, Blake Mycoskie\u00a0and his sister Paige competed on The Amazing Race<\/em>. Although Blake\u2019s team finished third in the second season of the show, the experience took him to Argentina, where he returned in 2006 and developed the idea to build a company around the alpargata\u2014a popular style of shoe in that region. The premise of the company Blake started was\u00a0unique:\u00a0for every shoe sold, a pair would be given to someone in need. This simple business model was the basis for TOMS Shoes, which has now given away more than one million pairs of shoes to those in need in more than twenty countries worldwide (Oloffson, 2010).\r\n\r\nThe social initiatives that drive Olibert\u00e9 shoes stand in stark contrast to the criticisms that plagued Nike Corporation, where claims of human rights violations, ranging from the use of sweatshops and child labor to lack of compliance with minimum wage laws, were rampant in the 1990s and 2000s.\u00a0Some of the sportswear giants have reacted by establishing charitable foundations focused on human rights or girls\u2019 empowerment (Nisen, 2013).\u00a0While Nike and others struggle to win back confidence in buyers who\u00a0were concerned with their business practices,\u00a0Olibert\u00e9's social initiatives are a source of excellent publicity and pride in those who purchase their products.\r\n\r\nAlthough the idea of social entrepreneurship and the birth of firms such as Olibert\u00e9 are relatively new, a push toward social initiatives has been the source of debate for executives for decades. Issues that have sparked particularly fierce debate include CEO pay and the role of today\u2019s modern corporation. More than a quarter of a century ago, famed economist Milton Friedman argued, \u201cThe social responsibility of business is to increase its profits.\u201d This notion is now being challenged by firms such as\u00a0Olibert\u00e9, which\u00a0argues that serving other stakeholders beyond the owners and shareholders can be a powerful, inspiring, and successful motivation for growing business.\r\n\r\nThis chapter discusses some of the key issues and decisions relevant to understanding corporate and business ethics. Issues include how to govern large corporations in an effective and ethical manner, what behaviours are considered best practices in regard to corporate social performance, and how different generational perspectives and biases may hold a powerful influence on important decisions. Understanding these issues may provide knowledge that can encourage effective organizational leadership like that of Olibert\u00e9 and discourage the criticisms of many firms associated with the sweatshop corporate scandals.\r\n

    References<\/h1>\r\nKielburger, C. &\u00a0Kielburger, M. (2012, September 6).\u00a0Ask the Kielburgers: Where can I get ethical shoes?<\/a> The Globe and Mail.<\/em>\u00a0 Retrieved from http:\/\/www.theglobeandmail.com\/life\/giving\/ask-the-kielburgers-where-can-i-get-ethical-shoes\/article558737\/#dashboard\/follows\/\r\n\r\nNisen, M.\u00a0 (2013, May 9).\u00a0 How Nike Solved Its Sweatshop Problem<\/a>.\u00a0 Business Insider.\u00a0 <\/em>Retrieved from http:\/\/www.businessinsider.com\/how-nike-solved-its-sweatshop-problem-2013-5\r\n\r\nOloffson, K. (2010, September 29). In Toms\u2019 Shoes: Start-up copy \u201cone-for-one\u201d model.<\/a>\u00a0Wall Street Journal<\/em>. Retrieved from http:\/\/online.wsj.com\/article\/SB1000142405274870411 6004575522251507063936.html","rendered":"
    \n
    \n

    Learning Objectives<\/p>\n<\/header>\n

    \n

    After reading this chapter, you should be able to understand and answer\u00a0the following questions:<\/p>\n

      \n
    1. What are the key elements of effective corporate governance?<\/li>\n
    2. How do individuals and firms gauge ethical behaviour?<\/li>\n
    3. What influences and biases might impact and impede decision making?<\/li>\n<\/ol>\n<\/div>\n<\/div>\n

      Olibert\u00e9\u00a0Shoes: Doing Business with Soul<\/h1>\n

      In developing\u00a0the model for ethical business practices, you must choose your company’s ethical priorities. Are you eager to avoid products made in abusive working conditions for sweatshop wages? Is the environmental impact of an item\u2019s materials, production, and transport your major concern? Are animals harmed (or not) in the making of your product? Is it important for\u00a0your company to give back to the community?<\/p>\n

      Canada\u2019s Olibert\u00e9 Shoes manufactures its wide selection of\u00a0fair-trade footwear in several African countries, from locally sourced leather, and they retail at fifty stores across Canada. Two online British brands have huge ranges of cruelty-free, fashionable footwear made in European factories: Vegetarian Shoes operates in England\u2019s oldest cooperative factory, and Beyond Skin even has a bridal line. MooShoes is a New York store\u00a0(and online source)<\/span> for synthetic sneakers and non-leather shoes, belts, and accessories. <\/span><\/p>\n

      On the environmental side, a number of sportswear giants are experimenting with high-performance \u201cgreen\u201d shoes using vegetable-based inks, recycled materials, and low-toxicity adhesion.<\/span>\u00a0Nike has an initiative to take back your hole-filled sneakers and grind them up into material for their green shoes or basketball court flooring. And you can buy Simple Shoes made from recycled tires and carpet padding, organic cotton, and hemp, or eco-certified leather and suede (Kielburger & Kielburger, 2012<\/span>).<\/p>\n

      In 2002, Blake Mycoskie\u00a0and his sister Paige competed on The Amazing Race<\/em>. Although Blake\u2019s team finished third in the second season of the show, the experience took him to Argentina, where he returned in 2006 and developed the idea to build a company around the alpargata\u2014a popular style of shoe in that region. The premise of the company Blake started was\u00a0unique:\u00a0for every shoe sold, a pair would be given to someone in need. This simple business model was the basis for TOMS Shoes, which has now given away more than one million pairs of shoes to those in need in more than twenty countries worldwide (Oloffson, 2010).<\/p>\n

      The social initiatives that drive Olibert\u00e9 shoes stand in stark contrast to the criticisms that plagued Nike Corporation, where claims of human rights violations, ranging from the use of sweatshops and child labor to lack of compliance with minimum wage laws, were rampant in the 1990s and 2000s.\u00a0Some of the sportswear giants have reacted by establishing charitable foundations focused on human rights or girls\u2019 empowerment (Nisen, 2013).\u00a0While Nike and others struggle to win back confidence in buyers who\u00a0were concerned with their business practices,\u00a0Olibert\u00e9’s social initiatives are a source of excellent publicity and pride in those who purchase their products.<\/p>\n

      Although the idea of social entrepreneurship and the birth of firms such as Olibert\u00e9 are relatively new, a push toward social initiatives has been the source of debate for executives for decades. Issues that have sparked particularly fierce debate include CEO pay and the role of today\u2019s modern corporation. More than a quarter of a century ago, famed economist Milton Friedman argued, \u201cThe social responsibility of business is to increase its profits.\u201d This notion is now being challenged by firms such as\u00a0Olibert\u00e9, which\u00a0argues that serving other stakeholders beyond the owners and shareholders can be a powerful, inspiring, and successful motivation for growing business.<\/p>\n

      This chapter discusses some of the key issues and decisions relevant to understanding corporate and business ethics. Issues include how to govern large corporations in an effective and ethical manner, what behaviours are considered best practices in regard to corporate social performance, and how different generational perspectives and biases may hold a powerful influence on important decisions. Understanding these issues may provide knowledge that can encourage effective organizational leadership like that of Olibert\u00e9 and discourage the criticisms of many firms associated with the sweatshop corporate scandals.<\/p>\n

      References<\/h1>\n

      Kielburger, C. &\u00a0Kielburger, M. (2012, September 6).\u00a0Ask the Kielburgers: Where can I get ethical shoes?<\/a> The Globe and Mail.<\/em>\u00a0 Retrieved from http:\/\/www.theglobeandmail.com\/life\/giving\/ask-the-kielburgers-where-can-i-get-ethical-shoes\/article558737\/#dashboard\/follows\/<\/p>\n

      Nisen, M.\u00a0 (2013, May 9).\u00a0 How Nike Solved Its Sweatshop Problem<\/a>.\u00a0 Business Insider.\u00a0 <\/em>Retrieved from http:\/\/www.businessinsider.com\/how-nike-solved-its-sweatshop-problem-2013-5<\/p>\n

      Oloffson, K. (2010, September 29). In Toms\u2019 Shoes: Start-up copy \u201cone-for-one\u201d model.<\/a>\u00a0Wall Street Journal<\/em>. Retrieved from http:\/\/online.wsj.com\/article\/SB1000142405274870411 6004575522251507063936.html<\/p>\n","protected":false},"parent":0,"menu_order":10,"template":"","meta":{"pb_part_invisible":false,"pb_part_invisible_string":""},"contributor":[],"license":[],"class_list":["post-391","part","type-part","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/opentextbc.ca\/strategicmanagement\/wp-json\/pressbooks\/v2\/parts\/391","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/opentextbc.ca\/strategicmanagement\/wp-json\/pressbooks\/v2\/parts"}],"about":[{"href":"https:\/\/opentextbc.ca\/strategicmanagement\/wp-json\/wp\/v2\/types\/part"}],"version-history":[{"count":3,"href":"https:\/\/opentextbc.ca\/strategicmanagement\/wp-json\/pressbooks\/v2\/parts\/391\/revisions"}],"predecessor-version":[{"id":3339,"href":"https:\/\/opentextbc.ca\/strategicmanagement\/wp-json\/pressbooks\/v2\/parts\/391\/revisions\/3339"}],"wp:attachment":[{"href":"https:\/\/opentextbc.ca\/strategicmanagement\/wp-json\/wp\/v2\/media?parent=391"}],"wp:term":[{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/opentextbc.ca\/strategicmanagement\/wp-json\/wp\/v2\/contributor?post=391"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/opentextbc.ca\/strategicmanagement\/wp-json\/wp\/v2\/license?post=391"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}