InReview – Issue 47

The Market for Virtue: The Potential And Limits of Corporate Social Responsibility by David Vogel; Washington, D.C., Brookings Institution Press, 2005; xii, 222 pp.

David Vogel is professor of business ethics at the University of California, Berkeley, editor of the California Management Review and author of several books on the global economy and the relationship between government and business.

Market for Virtue is one of the better and more important business books to come along in recent years. While Vogel confesses skepticism about the corporate social responsibility (CSR) movement, his well-grounded and insightful arguments seem to be unbiased and based on exhaustive research. He wrote this book because of recent growing interest in CSR, not just among intellectuals and reformers, but also among business leaders. Some corporations now do voluntary social and environmental self-audits, and some corporate leaders are touting the economic payoffs of social and environmental responsibility.

David Vogel tries to find out if there is any evidence of the costs and benefits of embracing CSR. Do customers and investors support businesses that make commitments to CSR? Vogel finds some evidence of positive customer responses to CSR practices such as buying more expensive fair-trade coffee from otherwise impoverished growers and voluntarily providing health care benefits to one’s workers. But he makes a strong case that these examples are only niche markets with minimal broader impact. These practices also often cost firms more, thus impairing investor returns. In sum, despite an ethical, philosophical, or religious case for CSR, the business case is doubtful.

Socially responsible investing (SRI) is also a growing though still miniscule activity. Yet the criteria used to measure “social responsibility” are inconsistent; a company might be ethical and responsible from one point of view, but not another. Though brand reputation and social or environmental policies can have temporary impact (e.g., Shell’s problem of disposing of an oil drilling platform in the North Sea), questions remain: How is responsible behavior defined (e.g., is disposing of an oil platform on land more environmentally destructive than disposing it at sea)? How will this behavior affect business success?

Vogel is especially bothered by grandiose claims for the economic benefits of voluntary CSR programs. He argues that in cases where business behavior is truly destructive to people and the environment, supporting government regulation is the most responsible alternative. Why leave it to voluntary compliance if it is really an issue of ruining our water or exploiting children? Vogel suggests healthy minimal regulation should govern the playing field in such instances.

One aspect of Vogel’s book could be more clear. He usually refers to “corporate social responsibility,” though also uses the more general term “virtue.” Three chapters (2, 3, 7) ask questions about the relationship of business and virtue. But there are really two levels to most questions about ethical virtue in business. The first, not really Vogel’s central topic, concerns the impact of a company’s ethics on its primary stakeholders (customers, employers, investors). If a firm cheats its customers, will customers remain loyal (if they have an alternative)? No way. The same arguments can be made regarding employees (How will they perform if an employer exploits them?), and investors (Will they invest if books are cooked?).

Vogel focuses on a second order of experience. His study is about, for example, whether customers will abandon a firm that cheats its employees. Too bad that probably only a minority of customers care about the welfare of workers who produce what they purchase, but Vogel shows that this is the case. The same goes for investors: Only a minority evidently care if their investment portfolios profit from vice, violence or grinding worker poverty (cf. the “Golden Straightjacket” argument of Tom Friedman’s Lexus and the Olive Tree). It does no good to live under an illusion. The Market for Virtue is a fine contribution to our clarity of vision.

Reviewed by David W. Gill

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Disney War by James B. Stewart; New York, Simon and Schuster, 2005; xv, 572 pp.

James Stewart is the author of a number of best-selling books including Den of Thieves, the former page-one editor at the Wall Street Journal, and a 1988 Pulitzer Prize winner for his work on the stock market crash and insider trading.

This book is about the rise and fall of Michael Eisner, Disney’s CEO from 1984 to 2005, and chairman until 2004. It traces Disney’s extraordinary growth during that period, from a U.S. studio and theme park company to an international media and entertainment company that includes ABC television, Disney merchandising, and ESPN.

In a sense, the book was written about a year too early. Two key events happened after the book was completed: Eisner’s departure from the company in late 2005 and Disney’s acquisition of Pixar in early 2006. To his credit, Stewart lays the groundwork of these events, but it would have been good to see his take on them.

Disney War is written in a well-documented, easy reading style with intrigue on every page. Anyone who has been in the business world will recognize the political games that are played in a large corporation, and those without this experience will gain insight. Great leaders are often flawed, and Michael Eisner had his share of warts, according to Stewart.

The problem with the book is its one-sided portrayal. Eisner’s leadership is described in negative terms during difficult and good times alike. Even the creative growth of Disney, the growth of its theme parks and film business seem to have been in spite of Eisner rather than because of him. This did not seem credible to me. I believe Eisner is more complicated than described in this book, and showing both his strengths and weaknesses would have enriched the story, not detracted from it. Though the book reports a valid point of view, Stewart should have worked harder to create a richer, more balanced picture of Eisner.

Reviewed by Al Erisman

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Bait and Switch: The (Futile) Pursuit of the American Dream by Barbara Ehrenreich; New York, Henry Holt and Company, LLC, 2005; 237 pp.

Barbara Ehrenreich is a freelance writer with many books to her credit, including the best-seller Nickel and Dimed. She is a frequent contributor to Harper’s and The Nation.

In Nickel and Dimed, Eichenreich played the part of a person trying to survive on a number of different minimum-wage jobs. In this book, she takes on the identity of one who is “between jobs” trying to find an executive position in public relations.

Her search for work lasts a year. In this time she hired coaches, went to job fairs, worked the Internet, and developed a network. Along the way she encountered, and describes in uniformly unflattering language, many “coaches” who sold their services to those looking for work. She found a number of “commission only” job opportunities with no benefits and significant up-front investment requirements. But by the end, she did not have a single nibble on a traditional salaried position with benefits at a traditional company. To her credit, she documents some things she might have done better in her search. But the net of this is a difficult, depressing picture of a tough world faced by those looking for work.

Her story is carried by a keen sense of observation, great sense of humor, and an excellent writing style. I found this book more credible than Nickel and Dimed. Perhaps she drew on her experience of the previous book and was more familiar with the process of going under cover. Perhaps her writing career gives her more insight into posing as an out-of-work executive than as a minimum-wage worker.

Who should read this book? I have a number of friends who are looking for work, but I would hesitate to suggest it to them. The book offers very little helpful insight or hope. Maybe the target reader should be those in human resources who are on the hiring end. Seeing the picture from the other side may be helpful for managing the process. For sure, the growing population of professional coaches should read this book. Though I am certain there are quality people doing good things in this group, seeing this caricature should help them avoid some particularly obnoxious behavior. Finally, this is an excellent read for anyone in business who cares about people.

Reviewed by Al Erisman

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The Island, Directed by Michael Bay (DVD)

The possibilities posed by engineering the human gene raise a host of moral questions. These two films address a few such questions in distinct — though not too serious — ways. The Island is set in the near future and depicts a world where the wealthy can “own” an identical self-copy, just in case they find themselves in need of spare parts. The clones, living in a comfortable colony, eagerly wait to “win” their chance to be transported to an imagined paradise called “The Island.” Lincoln Six-Echo (Ewan McGregor), and his gal pal, Jordon Two-Delta (Scarlett Johanson), are clones who learn “The Island” is really the parts bin. The Island depicts a future where ethics have been swallowed by law. Clones are legal property of their originals, so they have no rights. The fact they happen to be conscious is no more than an inconvenience to their owners — and an especially big inconvenience for Six-Echo’s owner.

Serenity, Directed by Joss Whedon (DVD)

Serenity is set 500 years in the future where the imperialistic government of a bilingual (English and Mandarin) Earth has expanded its frontiers across the galaxy. Malcolm Reynolds (Nathan Fillion), a rebel commander of a spaceship called Serenity, unwillingly stumbles into a massive government cover up. It turns out a government experiment to engineer a happy, utopian planet didn’t quite work out, and a government operative is determined to make sure Reynolds and crew don’t discover the truth. Serenity depicts a future where science has been swallowed by a state led by rules, unwilling to admit their irreversible mistakes.

Of the two films, Serenity is more fun. It combines a witty, read-between-the-lines script with a campy western (the original Star Wars formula) in a sci-fi setting. Plus, it has great special effects, and better kick fighting than Buffy the Vampire Slayer (also Whedon’s). The first half of The Island is more thought provoking than Serenity in the contemporary issues it raises, but the second half digresses into tiresome chases and explosions. If I had to pick one, I’d pick Serenity.

Reviewed by Gerard Beenen