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move outwards from the individual at the centre�察�to internal groups 
including their immediate work environment�察�colleagues�察�team and peers�察�
and on to external groups�察�suppliers�察�customers�察�shareholders and eventually 
on to ever´distant publics and organizations。
Ethics and Social Responsibility 227 
ASSESSING OBLIGATIONS 
Not all stakeholders will be affected by any one particular strategy or course 
of action�察�nor will those that are affected be affected to the same degree。 So 
the next step in the process is to see which stakeholders will be affected and 
to what degree。 This can be done using a Stakeholder Relevance Matrix�察�as 
in Figure 9。2。 This shows which stakeholder groups will be affected by the 
decision to relocate a production unit to a new lower´cost country。 
Figure 9。1 Stakeholder mapping 
You 
Organization 
Shareholders 
Customers 
Suppliers 
Government 
petitors 
Department 
Teams
Peers 
Town/Immediate Neighbourhood 
Your Country/Region 
Other Countries and Regions 
Industry/ business sector 
International governments 
Wider publics affected 
Figure 9。2 Stakeholder relevance matrix 
Proposed strategy 
Move production to 
lower´cost country 
Positively affected Adversely affected 
Directly affected Employment created in 
new country 
New munity in new 
country 
Existing workforce 
Existing munity in 
existing country 
Local subcontractors will 
lose work 
Indirectly affected Shareholder returns 
improved 
Home government gets 
less tax 
Management will have to 
travel more
228 The Thirty´Day MBA 
The next step in the process is to analyse the specific interests/expectations 
and rights/responsibilities of each affected stakeholder group。 Following 
through with the example of relocating a factory�察�we can see in Figure 9。3 
the different expectations and rights of the three stakeholder groups seen to 
be most relevant to this decision。 
Figure 9。3 Stakeholder rights and expectations grid 
Stakeholders 
Customers Shareholders Employees 
Rights Be given 
information on all 
factors concerning 
new production 
source 
To be informed in the 
annual report and 
accounts or sooner if the 
implications will cause 
public discussion 
To statutory 
redundancy 
payments 
Expectations Any change should 
be seamlessly 
implemented 
That the pany will 
treat employees properly 
That the move is in the 
long´term best interest of 
the organization 
To be consulted 
and given help with 
job search 
STAKEHOLDER STRATEGIES 
Having identified the stakeholders and weighed up their rights and expectations�察�
an organization has basically three possible ethical stances it 
can take�此�
。 Immoral business�此�Make decisions that are clearly unethical to large 
groups of stakeholders。 The Mafia and organized crime in general 
certainly fit into this category�察�as in many respects do the sex industry�察�
large tracts of the gambling industry and arguably the tobacco and 
drinks industry too。 These last three are accepted as being a customer¨s 
inalienable right to free choice�察�aided by being major employers and 
taxpayers。 
。 Amoral business�此�Make decisions without considering their ethical 
implications either through carelessness�察�indifference or the mistaken 
belief that business is there to make profit only。 Such businesses see 
governments and their laws as the only ethical or moral constraint they 
need concern themselves with。 
。 Moral business�此�All decisions are made considering what is ethical�察�fair 
and just。
Ethics and Social Responsibility 229 
IMPLEMENTING ETHICAL AND RESPONSIBLE 
STRATEGIES 
Ethics and values play a central role in shaping a pany¨s identity and 
reputation�察�building its brands�察�and earning the trust of customers�察�suppliers 
or other business partners。 While honesty�察�fairness and responsibility are 
crucial for building a good reputation�察�an organization that is looking for 
pre´eminence in its field needs to go beyond just meeting stakeholders¨ 
needs。 It has to emphasize the message that it is a。。ractive as a business 
partner and as a good corporate citizen。 To achieve this status the following 
steps need to be pursued�此�
。 Acknowledge and monitor all stakeholders with a valid claim on your 
a。。entions。 
。 municate regularly with stakeholders�察�listening to their interests 
and concerns。 
。 Actively cooperate with stakeholders to minimize risks。 
。 Always avoid actions that endanger lives。 
。 Use processes that are sensitive to stakeholders¨ needs。 
。 Recognize the danger that managers¨ convenience and the needs of 
most other stakeholder groups will almost always be in conflict。 
。 Resolve stakeholder conflicts speedily and fairly。 
Resolving conflict 
Unfortunately�察�however ethical and socially responsible an organization 
is�察�it will at some stage�察�perhaps even frequently�察�find itself pursuing a 
strategy that upsets other stakeholder groups。 A recent example of one 
such conflict was Shell¨s decision�察�announced in April 2008�察�to pull out 
of the London Array wind farm。 This ♀2 billion project for 341 turbines 
capable of producing 1��000 megawa。。s of power was a key part of the UK 
government¨s strategy to produce 15 per cent of UK energy needs from 
renewable sources by 2015�察�with an aspiration to raise that to 20 per cent by 
2020。 Given that in 2008 renewable energy accounted for only 2 per cent of 
output in the UK�察�the London Array was seen as important�察�perhaps vital�察�
to achieving those goals。 But Shell had to weigh up the consequences of 
upse。。ing the UK government�察�Friends of the Earth and its other German 
and Dutch partners in the project�察�with other concerns。 Shell¨s view was 
that the cost of wind farms was simply spiralling out of control�察�with steel 
prices rising with increased world demand from such countries as China 
and India。 In any event�察�world turbine production was booked up years 
in advance。 Shell already had stakes in 11 wind farms producing over 
1��100 megawa。。s and reckoned that as a pany it could make the same 
230 The Thirty´Day MBA 
contribution to the environment at a much lower cost to its shareholders�察�
but probably on another continent and in another technology。 
Resolving stakeholder conflicts calls for tact and munications 
and the recognition that while you can¨t please everyone�察�you can still 
be ethical。 About 1 per cent of Shell¨s investments are in green projects。 
For example�察�a pany subsidiary�察�Shell Solar�察�has played a major role 
in the development of first´generation CIS ��copper indium diselenide�� 
thin´film technology。 This it believes to be the most mercially viable 
form of photovoltaic solar technology to generate electricity from the 
sun¨s energy。 Together with its joint venture partner in this project�察�Saint 
Gobain�察�it has a pilot plant under construction in Saxony�察�Germany that 
will produce sufficient solar panels to save 14��000 tonnes of CO2 per year。 
So stakeholders such as the UK government and Denmark¨s DONG Energy 
in the London Array project had to be weighed up against Saint Gobain�察�
with the German government being party to both strategies through the 
participation of that country¨s energy giant�察�E。ON。 All the while�察�Shell was 
under pressure to match its historic profit growth。 Authenticity Consulting 
��authenticityconsulting/misc/long。pdf�� has a useful checklist to 
help with decisions about resolving stakeholder conflict。 
Whistle´blowers �C an ethical longstop 
Not surprisingly�察�the people most likely to know about unethical or socially 
irresponsible behaviour are those working in the organization itself。 Governments 
around the world have adopted measures to encourage a flow of 
information on ethical problems and fraud from whistle´blowers �C that is�察�
anyone employed or recently employed by a public body�察�business organization 
or charity who reveals evidence of wrongdoing。 Whistle´blowers 
have also been given a measure of legal protection。 In the United States 
the Lloyd�CLa Folle。。e Act of 1912 started the ball rolling�察�giving federal 
employees the right to provide Congress with information�察�to be followed 
by a patchwork of laws covering such fields as water pollution�察�the environment�察�
the Sarbanes�COxley Act ��2002�� to deal with corporate fraud and the 
Whistleblower Protection Enhancement Act ��2007��。 In the UK the Public 
Interest Disclosure Act ��1998�� and various laws enacted by the European 
Union and other governments provide a framework of legal protection for 
individuals who disclose information。 
Many firms too have established ways to a。。ract information on frauds 
being mi。。ed against them�察�including 24´hour hotlines and corporate 
ethics offices。 For example�察�Vodafone¨s ��vodafone/start/ 
responsibility/supply_chain/whistle´blowing。html�� `Speak Up¨ programme 
�C launched in 2006/07 �C provides suppliers and employees working in its 
supply chain with a means of reporting any ethical concerns。 Fewer than 10 
Ethics and Social Responsibility 231 
incidents were reported in 2006/07。 That low figure may be less to do with 
the absence of ethical problems and more to do with the deeply ingrained 
biases against whistle´blowing and a distrust of assurances that retribution 
will not follow�察�especially in areas far removed from the watchful eyes of a 
corporate ethics office。 
These organizations can provide further background on the subject�此�
。 The National Whistleblowers Centre ��whistleblowers���此�
Focuses on exposing government and corporate misconduct�察�promoting 
ethical standards and protecting the jobs and careers of whistle´blowers。 
。 Spinwatch ��spinwatch���此�Monitors the role of public relations 
and spin in contemporary society and has worked with whistle´blowers�察�
anonymously�察�on some of the most contentious issues�此�Northern Ireland�察�
the role of the media�察�genetic engineering�察�the oil industry�察�tobacco 
smuggling�察�food and farming�察�and the war in Iraq�察�for example。 
。 Whistleblower ��whistleblower。uk���此�Run by journalists and set 
up to allow people to sell stories to the media confidentially。 It has had 
a measure of success�察�breaking the story on how the Richard and Judy 
Show¨s `You Say�察�We Pay¨ petition was ripping off viewers。 
。 Wikileaks ��wikileaks���此�Its primary interest is in exposing 
oppressive regimes but it offers an avenue for anyone who wishes to 
reveal unethical behaviour in their governments and corporations�察�with 
a degree of anonymity。 
DOES BEING ETHICAL PAY OFF�拭�
There is plenty of anecdotal evidence that ethical and socially responsible 
organizations are be。。er places to work。 At the very least�察�being ethical 
provides an organization with an insurance policy limiting its exposure 
to a range of legal liabilities for faulty products�察�misleading advertising�察�
price fixing and discrimination at work�察�for example。 But evidence on 
whether being ethical helps a business organization to bee and stay 
more profitable is less clear。 Corpedia ��h。。p��//welerpedia���察�
a pliance and ethics training pany with clients in 60 countries�察�
including RadioShack�察�EMC�察�Xerox and PepsiCo�察�produces an index 
of panies deemed ethical。 panies such as Intel�察�Starbucks�察�The 
Timberland pany and Whole Foods Market are in its index�察�which 
it claims has outperformed the S&P 500 by more than 370 per cent over 
5 years。 The rather more scientific and prehensive FTSE4Good Index 
Series ��ftse/Indices/FTSE4Good_Index_Series/Performance_ 
Analysis。jsp�� also shows the ethical panies to be ahead�察�though by a 
rather smaller margin。 Over the 5 years to May 2008�察�the 400 panies in 
the FTSE4Good Index were about 15 per cent ahead of the general index。
232 The Thirty´Day MBA 
But that still begs the question of what constitutes `good¨。 The FTSE4Good 
Index sets out to measure the performance of panies that meet globally 
recognized corporate responsibility standards。 For inclusion a pany 
must be�此�
。 working towards environmental sustainability�察�
。 developing positive relationships with stakeholders�察�
。 upholding and supporting universal human rights�察�
。 ensuring good supply chain labour standards�察�
。 countering bribery。 
It also excludes panies that have been identified as having business 
interests in these industries�此�
。 tobacco producers�察�
。 panies manufacturing either whole�察�strategic parts�察�or platforms 
for nuclear weapon systems�察�
。 panies manufacturing whole weapons systems�察�
。 owners or operators of nuclear power stations�察�
。 panies involved in the extraction or processing of uranium。 
This only serves to highlight the problem of deciding what is ethical and 
what is not。 For example�察�is mining uranium for nuclear power really 
more harmful than�察�say�察�switching to biofuels which�察�aside from probably 
releasing between two and nine times more carbon gases over the next 
30 years than fossil fuels�察�will almost certainly cause food prices to stay 
high�察�particularly in the developing world�拭�Or is the motor industry�察�whose 
products kill more people every year than the armaments industry�察�a more 
ethical and socially responsible sector�拭�
However�察�a small but growing band of business schools believe that 
there is enough mileage in social responsibility and ethics to launch `green¨ 
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