Ethics and the Future of Business
Lecture 3: Strategies & Stakeholders
19 September 2022 | Arno Kourula
Table of Contents
1. Changing Management and Behavior
2. Social Entrepreneurship (Mair, 2020)
3. Corporate Responsibility and Sustainability
4. Stakeholder Thinking
1. Changing Management and Behavior
Management as a Calling
Challenge: What kind of a future do you imagine, and what role do you want to play in making it a
future you want to see?
Considerations:
- “Business case” and the environment as an economic asset. Continuous economic growth,
gross domestic product (GDP), return on investment (ROI) as underestimating impact?
- Link between morality and sustainability: Dystopia or Re-enlightenment?
- Interconnection of society and nature, new relationship between business and government?
Evolutionary Bases of Behavior
Goals:
- Proximate: Culture, incentives, preferences, learning, utility, pleasure, values, personality,
etc.
- Ultimate: Evolutionary bases.
Mismatches between current and ancestral goals:
1. Propensity of self-interest
2. Motivation for relative rather than absolute status
3. Proclivity to unconsciously copy others
4. Predisposition to be short-sighted
5. Proneness to disregard impalpable concerns
Evolutionary: 1. Self-Interest
Tendency: People prioritize self-interest over group behavior.
- We care about ourselves bus also about others. We think about altruistic behavior, but it is
based on a self-interested motivation.
- Animals also show empathetic behavior.
Principles:
1. Kin selection
2. Reciprocal altruism
3. Indirect reciprocity
Solutions:
1. Highlight individual benefits.
a. Make it personal, and think of future generations.
2. Create small dense networks
1
,Ethics and the Future of Business
a. We are hardwired to think of social situations of about 50 people.
3. Threaten reputation.
4. Donate first, then ask to reciprocate.
a. Give something first and wait for reciprocation. Evolution has shown that people
tend to give something back.
Evolutionary: 2. Relative Status
Tendency: People are more motivated by relative status than absolute status.
- How much I have is only in relation to what others have.
- Happiness is dependent on relative status.
Someone who studies behavioral economics would say: I don’t care how much I
will earn as long as it is one dollar more than what anyone in the department
makes now or will make.
Principles:
1. Costly signaling
2. Competitive altruism
Solutions:
1. Pro-social competition and rankings.
2. Easily identifiable self-sacrificing behavior.
a. Sustainable behavior should be easily identifiable. How can it become catchy and
make people to change their behavior.
Evolutionary: 3. Social Imitation
Tendency: People copy unconsciously what others are doing.
- Don’t say ‘5% of people in Amsterdam use car sharing’,
but ’50.000 people in Amsterdam are car sharing.’
o You should think of how you can depict
engaging numbers.
Principles:
1. Mimicry
2. Cultural evolution
3. Social norms
Solutions:
1. Depict high prevalence of desired behavior
2. Use social approval
Evolutionary: 4. Future Discounting
Tendency: People value the present more than the future.
Principles:
1. Life history theory
2. Sexual selection
3. Parental investment
2
, Ethics and the Future of Business
Solutions:
1. Emphasize present consequences
2. Highlight stability
3. Attractiveness of social and sustainable behavior
Evolutionary: 5. Impalpable Concerns
Tendency: People disregard problems they cannot see or feel.
- There are cues in society about what is dangerous and what should be done.
Principles:
1. Sensory mechanisms
2. Environmental mismatch
3. Biophilia
Solutions:
1. Locality of environmental problems
2. Create links between behavior and consequences
2. Social Entrepreneurship (Mair, 2020)
In social entrepreneurship, profits and social value are combined.
- Establish new, high-value markets for environmentally and socially friendly goods:
- Examples: Patagonia, Tony’s Chocolonely, Ben & Jerry’s, Body Shop, Fairphone, etc.
Social Enterprises: Addresses social problems by means of markets. They are commonly understood
as having dual – commercial and social – goals at the same time and seen as institutional change
agents.
- There is an increasing number of social enterprises.
- Social enterprises are influential in policy discourses about solutions to social and
environmental problems.
- They fit well with a broader neoliberal trend of market-based approaches.
Mair (2020) advocates a contextual approach: 1,045 social enterprises in China, Germany,
Hungary, Portugal, Romania, Russia, Spain, Sweden, and the United Kingdom.
- Conclusion: One size and form does not fit all.
Social Enterprises: Legal Forms and Problem Domains
Most social enterprises either non-profit or for-profit. However, some are non-profit as well as for-
profit.
- In the US there is an increasing numbers of B-corps.
Problem domains addressed by social enterprises:
1. Development and housing
2. Social services
3. Education and research
4. Environment
5. Health
6. Culture and recreation
3
Lecture 3: Strategies & Stakeholders
19 September 2022 | Arno Kourula
Table of Contents
1. Changing Management and Behavior
2. Social Entrepreneurship (Mair, 2020)
3. Corporate Responsibility and Sustainability
4. Stakeholder Thinking
1. Changing Management and Behavior
Management as a Calling
Challenge: What kind of a future do you imagine, and what role do you want to play in making it a
future you want to see?
Considerations:
- “Business case” and the environment as an economic asset. Continuous economic growth,
gross domestic product (GDP), return on investment (ROI) as underestimating impact?
- Link between morality and sustainability: Dystopia or Re-enlightenment?
- Interconnection of society and nature, new relationship between business and government?
Evolutionary Bases of Behavior
Goals:
- Proximate: Culture, incentives, preferences, learning, utility, pleasure, values, personality,
etc.
- Ultimate: Evolutionary bases.
Mismatches between current and ancestral goals:
1. Propensity of self-interest
2. Motivation for relative rather than absolute status
3. Proclivity to unconsciously copy others
4. Predisposition to be short-sighted
5. Proneness to disregard impalpable concerns
Evolutionary: 1. Self-Interest
Tendency: People prioritize self-interest over group behavior.
- We care about ourselves bus also about others. We think about altruistic behavior, but it is
based on a self-interested motivation.
- Animals also show empathetic behavior.
Principles:
1. Kin selection
2. Reciprocal altruism
3. Indirect reciprocity
Solutions:
1. Highlight individual benefits.
a. Make it personal, and think of future generations.
2. Create small dense networks
1
,Ethics and the Future of Business
a. We are hardwired to think of social situations of about 50 people.
3. Threaten reputation.
4. Donate first, then ask to reciprocate.
a. Give something first and wait for reciprocation. Evolution has shown that people
tend to give something back.
Evolutionary: 2. Relative Status
Tendency: People are more motivated by relative status than absolute status.
- How much I have is only in relation to what others have.
- Happiness is dependent on relative status.
Someone who studies behavioral economics would say: I don’t care how much I
will earn as long as it is one dollar more than what anyone in the department
makes now or will make.
Principles:
1. Costly signaling
2. Competitive altruism
Solutions:
1. Pro-social competition and rankings.
2. Easily identifiable self-sacrificing behavior.
a. Sustainable behavior should be easily identifiable. How can it become catchy and
make people to change their behavior.
Evolutionary: 3. Social Imitation
Tendency: People copy unconsciously what others are doing.
- Don’t say ‘5% of people in Amsterdam use car sharing’,
but ’50.000 people in Amsterdam are car sharing.’
o You should think of how you can depict
engaging numbers.
Principles:
1. Mimicry
2. Cultural evolution
3. Social norms
Solutions:
1. Depict high prevalence of desired behavior
2. Use social approval
Evolutionary: 4. Future Discounting
Tendency: People value the present more than the future.
Principles:
1. Life history theory
2. Sexual selection
3. Parental investment
2
, Ethics and the Future of Business
Solutions:
1. Emphasize present consequences
2. Highlight stability
3. Attractiveness of social and sustainable behavior
Evolutionary: 5. Impalpable Concerns
Tendency: People disregard problems they cannot see or feel.
- There are cues in society about what is dangerous and what should be done.
Principles:
1. Sensory mechanisms
2. Environmental mismatch
3. Biophilia
Solutions:
1. Locality of environmental problems
2. Create links between behavior and consequences
2. Social Entrepreneurship (Mair, 2020)
In social entrepreneurship, profits and social value are combined.
- Establish new, high-value markets for environmentally and socially friendly goods:
- Examples: Patagonia, Tony’s Chocolonely, Ben & Jerry’s, Body Shop, Fairphone, etc.
Social Enterprises: Addresses social problems by means of markets. They are commonly understood
as having dual – commercial and social – goals at the same time and seen as institutional change
agents.
- There is an increasing number of social enterprises.
- Social enterprises are influential in policy discourses about solutions to social and
environmental problems.
- They fit well with a broader neoliberal trend of market-based approaches.
Mair (2020) advocates a contextual approach: 1,045 social enterprises in China, Germany,
Hungary, Portugal, Romania, Russia, Spain, Sweden, and the United Kingdom.
- Conclusion: One size and form does not fit all.
Social Enterprises: Legal Forms and Problem Domains
Most social enterprises either non-profit or for-profit. However, some are non-profit as well as for-
profit.
- In the US there is an increasing numbers of B-corps.
Problem domains addressed by social enterprises:
1. Development and housing
2. Social services
3. Education and research
4. Environment
5. Health
6. Culture and recreation
3
