Kelly Jacobs ONLY

BOOK REVIEWS

Business Ethics: A Manual for Managing a Responsible Business Enterprise in Emerging Market Economies^ by Kenneth W. Johnson and Igor Y. Abramov, Washington, D.C.: U.S. Dept. of Commerce, International Trade Administration, 2004.

Peter A. Tashman and Timothy L. Fort

ss Ethics: A Manual for Managing a Responsible Business Enterprise in Emerging Market Economies, written by Kenneth W. Johnson and Igor Y.

Ahramov and published by the U.S. Department of Commerce, seeks to inform organizations regularly confronting issues of bribery, nepotism, and other ethically challenging phenomena in their bu.siness operations in emerging market countries. The manual suggests thai by becoming proficient at stakeholder management,' busi- nesses can anticipate, meet, and adapt to a range of business ethics issues endemic in emerging markets. In the process, they will find that doing so is good for business and can actually help develop the nascent local market and legal institutions. This is because good stakeholder management builds social capital among civil and public sector stakeholders. With enough social capital, businesses can infiuence stakeholder behavior and expectations in dialogue as well as through mimetic processes.

The main theme of Johnson and Abramov's manual is that Responsible Business Enterprises are equipped with the decision-making tools to meet the unique chal- lenges present in emerging markets. Responsible Business Enterprises are those businesses that recognize their roles and obligations to the communities where they operate by engaging in the central tenets of stakeholder managetnent. Responsible Business Enterprises have this capability because they have embedded the notion of Responsible Business Conduct into their business enterprise strategies. Respon- sible Business Conduct means demonstrating commitment to ethical behavior at all levels of the business hierarchy from the individual to sub-unit to organization, and from the line-worker to supervisor to tbe CEO. This commitment to ethics occurs over four overlapping realms of decision outcomes: legal compliance, risk manage- ment, reputation enhancement and adding value to the organization and supporting community simultaneously. Each decision requiring moral consideration should address some combination of these elements. In doing so. Responsible Business Conduct helps to ensure that the business is building the necessary social capital that it needs to navigate the landscape of the emerging market business environ- ment. The cornerstone of developing this organizational competency is the Business Ethics Program. Once a Responsible Business Enterprise, the organization has the capability to deveiop a sustainable competitive position in emerging markets

© 2009 Business Ethics Quarterly 19:2 (April 2009). ISSN I052-150X. pp. 307-318

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because it bas the requisite social capital and acts as a positive agent of pro-market institutional development.

Tbe manual is a comprehensive and accessible resource for several audiences interested in the activities and impacts of business operations in emerging markets. Business owners and managers will find it most useful as it provides a rich set of resources and tools for designing and implementing business ethics programs and embedding them into organizational structures and enterprise as well as business level strategies. For example, tbere are 13 worksheets that owners, executives and compliance/etbics officers can use, or adapt, to assess organizational culture, develop reasonable stakeholder expectations and involvement, screen institutional conditions in the business environment, follow logics for creating ethics programs, establisb alignment between core enterprise values, business etbics infrastructure, and more.

There is a list of emerging global standards that businesses can incorporate into their business etbics programs. Tbere are numerous excerpts from actual business vision statements, codes of conduct and executive speeches that provide adaptable and transferable examples. The appendices contain international legal codes such as tbe U.S Foreign Corrupt PracticesActand the Australian Criminal Code, as well as sample codes for guiding supply chain management, inter-organizational codes of integrity and transparency, and an algorhythm for ethical decision-making. Perhaps most important, as a reference, the manual provides numerous question-lists and check-lists that owners and managers can use to guide their efforts in designing, implementing and evaluating tbeir ethics programs and in their overall efforts to transform their organizations into responsible business enteiprises.

Wbiie the manual is mainly intended to advise business management in emerging markets, it applies broadly to other types of organizations, which also face ethical issues with both intemal and extemal stakeholders. Managers of these organizations can benefit from enhancing their abilities to foster and manage reasonable stakeholder expectations. Thus, executives in non-government organizations, govemment agen- cies and academic institutions will also find the manual helpful for tbe purpose of addressing and evaluating ethical conduct within their organizations. Insofar as the process the authors develop actually builds social capital and has a positive effect on the development of market institutions, it applies to any organization that is involved in organizational fields constructed around market activities. In addition, the authors suggest that tbe manual can help shape civil society and govemment expectations of business, as well as inform the media that report on business and society issues.

The manual is not explicitly intended to contribute to academic discourse in the fields that generally comprise the study of business and society issues. However, the authors skillfully weave together practical examples from tbe fields of business ethics, corporate govemance, corporate social responsibility, and organizational development. They provide rationale and processes for embedding morality into corporate govemance and organizational stmcture, and describe how doing so instm- mentally leads to more effective stakebolder management- and improved prospects for cotnpetitive advantage in emerging markets. Academics migbt analyze how tbe authors achieve tbis to stimulate more scholarly debate about the theoretical link- ages between these areas.

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The Importance of Responsible Business Conduct in Emerging Markets

The first of the manual's flve sections contains two chapters which build the case for the importance of responsible business conduct and adopting a strategy of trans- forming the business to (or maintaining itself as) a responsible business enterprise. It summarizes the transitional nature of economic, legal and social institutions in emerging markets resulting from lingering legacies of central state planning, and it highlights the challenges and opportunities they present to Responsible Business Enterprises as agents of change in these societies. Because in these countries most businesses were state-owned and tbe economies were centrally planned- managing stakeholder expectations is a new reality. Customer satisfaction and protecting the environment were non-issues until recently; instead managers focused on meeting production quotas. In addition, under the old regimes there was little need for legal governance systems for domestic or intemational business. Corporate, contract, privatization, real estate and anti-trust laws did not exist, instead arising spontane- ously in ad hoc arrangements to meet the rapid transition that many emerging markets have made; nor were there norms in business to govern transactions in a routine fash- ion. Thus, domestic businesses often did not fully understand the rationale of their new legal governance mechanisms and how they support the functioning of markets. This was in stark contrast to developed market economies, where laws coevolved with tbe markets allowing businesses to internalize their normative value. Finally, often emerging markets have ineffective legal enforcement mechanisms. Because of these legacies, transitions to market economies have facilitated the unintended consequences of corruption, criminality and shadow (black) markets. These phe- nomena drive up the agency and transaction costs of doing business immeasurably by creating risk and can deter necessary investors and institutional entrepreneurs from joining the development of markets.

To counter, the authors argue that responsible business enterprises can help engage in and promote responsible business conduct among their stakeholder communities. Doing so provides three mutually reinforcing benefits to the RBE and its business environment as a whole. First, it can lead to six distinct types of improved business performance: reputation enhancement, reduced risks, reduced costs, reduced workplace deviance, better performance, and better access to capi- tal (p.21). Second, it can build social capital among the community and gives the Responsible Business Enterprise credibility vis-à-vis other businesses who ap- preciate transacting with a Responsible Business Enterprise. Finally, as a voice for communities and business interests interested in institutionalizing Responsible Business Conduct into the broader business environment, the Responsible Business Enterprise can positively influence governments to affect responsible and effective regulatory regimes. Tbe authors suggest that the goal of this influence is to pro- mote the development of at least seven conditions necessary for a well-functioning market economy: a transparent regulatory system, a sophisticated accounting and financial industry, a stock exchange with meaningful standards, labor laws, intel- lectual property protection, effective and independent legal and judicial systems, and a broad-based tax system (p. 16).

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Planning the Business Ethics Program

In the second section, the authors devote two chapters to planning tbe business ethics program. Because the goal of the business ethics program is to embed responsible business conduct into business strategy, owners and managers must plan programs that can diffuse RBC throughout the organization. Therefore the business ethics program must be congruent with the existing organizational culture and structures, as well its business environment. To achieve congruence, management must first understand its organization in analytical terms. There are at least three dimensions of an organization that management must evaluate and qualify. First, it must as- sess the strengths and weakness of the organization and its culture. Second, it must qualify and understand the ethical identity of the organization in terms of how it achieves legal compliance, manages risk, protects its reputation and adds value to the community at large. Third, it must identify wbat it stands for and what its core values are. Tbe business ethics program must flow logically from tbese values, else organizational members might perceive that it is internally inconsistent. With this knowledge assembled, managers can design the program building on organizational strengths, being consistent witb its ethical identity and centering around its core values. In addition, they can engage key stakeholders to incorporate their concerns and input at tbe outset, identify key personnel who can champion the business eth- ics program during implementation and vest it with authority at all levels of the organization to aftect all personnel (including the CEO).

Wben planning the business ethics program, the personnel acting as the catalyst for the program must cleaily understand the expected outcomes of the program. For this end, the authors first refer back to the four levels of decision outcomes (compliance, risk management, reputation enhancement and co-creating value with community at large). Second, they suggest that planners sbould formulate a set of relevant questions for how the organization intends to use the business ethics program to meet its goals at each of these levels. To do so it needs metrics and benchmarks to assess the current level of responsible business conduct in the organization as well what would be acceptable and/or desirable. Understanding tbe organizational culture is also a key to benchmarking. Tbe autbors provide a series of indicators that assess culture as well as a worksheet containing a model survey for measuring it and creating an organizational profile. Finally, planners sbould conduct a systematic scan of the legal, economic, political, environmental, socio-cultural and technologi- cal elements of the business environment. This helps to foster an understanding of what the expectations of its stakeholders are, whether or not tbey are reasonable, and how they can utilize them to develop effective lines of communication and develop appropriate expectations. Again, the authors provide worksheets for systematizing and analyzing the business environment along tbese dimensions.

Business Ethics Programs, Standards, and Responsible Business Conduct

The third section of the manual addresses the issues of designing and embedding the business ethics program into the organization and contains three chapters outlining these tasks. First, a business ethics program has to develop appropriate standards for ethical conduct. Standards allow the responsible business enterprise to clearly delineate authority within its organizational structure, assign responsibility to each of its organizational members, communicate bow tbey will be held accountable for

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their decisions and actions, and communicate to external stakeholders what they can reasonably expect from the Responsible Business Enterprises. In addition, stan- dards guide the creation of operational policies and decision-making algorhythms when policies do not address the specific situation at hand. To help ensure that they are consistent with organizational culture, standards must be congruent with the core values and norms of the corporation. Standards for ethics can be embedded in statements of company principles as well ascodesof conduct and ethics. Codescan contain provisions for legal compliance, meeting industry standards, protecting the environment, and respecting host country cultural norms. The authors incorporate several excerpts of real codes of conduct and statements of company principles as models. In addition, they list code provisions for governing employees, managers, and owners in their dealings with each other and with external stakeholders, com- petitors and the govemment. Finally, the authors provide a sample outline of a code of conduct, which appears to be a comprehensive and logical template.

Principles guiding the establishment of standards include continual improve- ment, consideration of cultural differences (both among organizational members and between the organization and its stakeholders), identification of differences between home country standards and local practices, communicating the purpose of the standard to build nomiative acceptance, including employees in standard setting to incorporate their knowledge and give them voice in the process, and addressing ethical responsibilities by explicitly calling for organizational members to act with honesty and accountability. Again, the manual describes each of these principles comprehensively and explains the normative basis for using them.

A responsible business enterprise ensures the effectiveness of standards by backing them with a responsible govemance process that clarifies the responsibilities and lines of authority between the board and management. Ambiguity in these roles facilitates a potential lack of accountability andresponsibility. Since the goals of the Responsible Business Enterpri.se include fostering reasonable stakeholder expectations, co-creating value with the community and building social capital, a responsible govemance process also requires the board to consider social responsibility as one of its chief concems. Of course, the board must also commit itself to legal and ethical conduct.

Developing standards is only one of the tasks in creating a business ethics program. A second issue is embedding these standards into the Business Ethics Infrastructure. The business ethics infrastructure generally refers to the authority, responsibility, training and accountability mechanisms and routines that are a part of an organization's structure. Many of these structures already exist in most busi- nesses. There are three critical areas of the organizational structure that need to be coupled with specific principles and standards, and again, Ihe authors employ a comprehensive and systematic description of each. First, the organization must have the appropriate authority and responsibility infrastructure. Second, it must have an effective intra-organizational communications structure to facilitate the diffusion of its standards and procedures. Third, it must have the ability to monitor, evaluate, collect feedback, and update itself.

CEOs must delegate to the appropriate personnel the authority and responsibility of carrying out the business ethics program. This means vesting an executive with the task of overseeing the program to ensure that all organizational members under- stand the importance of the program as well as giving the executive the authority to govem the entire organization. In addition, committees convened to design the

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codes, principles and standards of the program need to incorporate representatives from throughout the company. Employees at various levels in different sub-units can bring a broad perspective on what standards and policies are necessary for the organization. These committee members also need to be the correct people. Employ- ees that have reputations for championing ethical behavior will not only be more effective at establishing ethical standards, but also will earn higher levels of trust from employees and external stakeholders for the belief that the program is a sincere effort to promote responsible business conduct. In addition, external stakeholders should be allowed to participate in the establishment of standards and policies when possible to give voice to their concerns at the outset. Doing so also informs these stakeholders of the goals, challenges and intentions of the organization, and helps to put aside preconceived notions. Throughout this section the authors list and explain the job descriptions, qualificafions and responsibilities of personnel, and committee structures tbat Responsible Business Enterprises can adapt to or adopt when building the authority and responsibility hierarchy for their business ethics programs.

The business ethics program should also establish effective means of communicat- ing its standards, principles and policies to all organizational members. This could entail posting vision statements in the office or plant entrance, sending emails and print notices to organizational members, executive speeches, using routine meetings and private communications, and/or developing brochures, newsletters and websites. In addition, all organizational members need periodic training regarding how to act in accordance with the tenets of business ethics program. Periodic training signals the importance of the program to employees, provides a forum for clarifications and comments, helps to preclude potential misunderstandings, provides opportunities for experiential learning, and facilitates the introduction of new issues and their resultant standards and policies. It is important that executives, managers and supervisors participate visibly in training to reinforce the importance of the business ethics program and its training in the tone from the top. The manual offers some tried and true methods of training such as the use of lectures, presentations, case studies, role playing scenarios, as well as computer and web-based training.

Finally, a business ethics program must collect feedback about the efficacy of its standards, policies, and training outcomes. This means observing actual on the job behavior. It also means collecting feedback internally from employees and externally from stakeholders to see if the standards have improved the company's commitment to responsible business conduct and its ability to meet reasonable stakeholder expectations. It also allows personnel responsible for tbe business eth- ics program to gather information about both misconduct and responsible behavior. Thus, feedback is a critical component of corporate governance, accountability and oversight efforts. Once collected, feedback is then used in several ways including the updating of standards and policies, the content and mode of delivery of com- municating the new standards, and training employees. In addition, it flows through the appropriate authority structure to the executive in charge of the business ethics program and to the board as part of the governance function. Feedback mechanisms themselves need formalization and governance to ensure that they can be effec- tive. For example, employees need to feel secure from retribution when reporting bad news and not conflate it with misconduct. In addition, employees need to feel secure when reporting tbe misconduct of others. Feedback mechanisms of this sort therefore need to maintain confidentially.

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Implementing the Business Ethics Programs

Moving past the planning and design of a business ethics program and the creation of business ethics infrastructure, the fourth section ofthe manual is comprised of two chapters that discuss the implementation of tbe business ethics program. Proper implementation requires "aligning the responsible business enterprise." Alignment means demonstrating a consistent stance and commitment to responsible business conduct in expressions of an enterprise's core values, goals and objectives, in its strategies, policies, decisions and actions, and by ils measurement of perfomiance. In addition, the way an enterprise demonstrates its commitment in each of these areas should flow logically from the preceding area. For example, its decisions should be consistent with its policies, whicb in turn should be consistent with its strategies, and so on. Alignment requires positioning the appropriate personnel throughout the organization so that tbe ethical disposition of any one organizational member is congruent with tbe authority and responsibility that person has in bis or ber job. It also requires the exercise of effective due diligence measures both in hiring people and when forming alliances with supply and distribution cbain partners. If the Re- sponsible Business Enterprise accidentally hires people witb questionable morality or partners with suppliers that do not engage in Responsible Business Conduct, it risks experiencing workplace deviance, damaging its reputation and/or increasing agency and transaction costs.

To help ensure that each organizational member engages in responsible busi- ness conduct in the context of their authority and responsibilities, the business ethics program must establish and/or maintain appropriate incentive mechanisms. Recognizing and rewarding conduct that only creates direct financial gains for the firm is not enough. Incentive mechanisms should also recognize ethical behavior and organizational citizenship, reward Responsible Business Conduct, and punish misconduct. Tbe manual describes several incentive scbemes that reward both fi- nancial contribution and ethical conduct as well as some that reward only financial contributions wbile de-emphasizing ethical conduct.

Discipline systems on the otber hand need to be legal and ethical and provide organizational members accused of misconduct due process for explaining their be- bavior. They should also have tbe capacity to distinguish mistakes and failures from actual misconduct, and need to carefully address the former two issues. Mistakes and failures might actually result from attempting to engage in responsible business conduct. Therefore the business etbics program should avoid discipline measures tbat discourage Responsible Business Conduct when mistakes and failures occur.

Misconduct on tbe other band requires strong discipline measures; a business ethics program that lacks these measures signals to organizational members tbat some individuals receive preferential treatment, or that the fimi does not take mis- conduct seriously. If misconduct leads to unlawful actions by agents of tbe firm on its bebalf. tbe responsible business enterprise needs to cooperate with the govem- ment and make voluntary disclosures of relevant information about the action. If misconduct leads to barm of a stakeholder, the Responsible Business Enterprise needs to engage that stakeholder and make sincere efforts to mitigate any negative impacts caused by its agent(s).

In either case. Responsible Business Conduct entails an investigation into whether the business ethics program standards and procedures were adequate, it placed tbe rigbt personnel in tbe right positions, it effectively communicated its standards,

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procedures and expectations regarding Responsible Business Conduct, and/or it detected the incident as early as possible. A worksheet at the end of chapter 8 helps businesses conduct such an investigation.

With the responsible business enterprise "aligned," it has the capabilities to confront several common challenges in emerging market business environments and address those challenges with responsible business conduct. These challenges include managing relationships with govemment officials and entities, competing responsibly in the private sector, engaging in ethical, legal and transparent business transactions with the private and public sectors, and engaging in voluntary actions to enhance community development and good public govemance. The authors suggest a variety of Responsible Business Conduct practices for tbe purpose of meeting these challenges.

When managing relationships with govemments. Responsible Business Conduct requires making efforts to reduce both the demand and supply sides of corruption, bribery and extortion. In addition, it requires promoting better standards, proce- dures and regulations in and from the govemment, for tbe purpose of better public govemance. This implies not only promoting better governance of business, but also within the govemment itself so that its agents are more likely to look after the interests of business and society and less likely to engage in misconduct.

The authors also suggest that the Responsible Business Enterprise take special care to minimize its environmental impact. Even if it is in complete compliance with host country legal mechanisms, host country environmental protections may not adequate. Resulting environmental degradation can negatively impact local communities and dismpt otherwise sound stakeholder management practices. Thus, Responsible Business Enterprises may need to self-regulate their environmental impacts using emerging global standards.

To act as a responsible competitor in the market place, the responsible business enterprise should avoid improperly influencing govemment by securing competi- tive advantages over competitors via political strategies. Proper corporate political strategies seek to secure better public govemance and improved policies that address collective business concems. Business associations are a useful medium for doing so. When Responsible Business Enterprises become contractors for govemments. they run the risk of abusing the public trust by succumbing to corrupt practice endemic in emerging market govemment contracting processes. In addition, they risk penal- ties under both home and host country legal regimes. Thus, responsible business conduct in govemment contracting requires attention to issues of accountability and transparency to ensure that firm's agents do not engage in corrupt practices. The authors provide several sets of guidelines for this end developed by the World Bank, the World Trade Organization, and tbe U.S. Govemment Procurement Of- fice. In addition, they cite an example of how a U.S. company publicly disclosed its financial transactions with its host country govemment so local citizens could understand the magnitude of the revenues their govemment collected and how it used these funds (p. 211). In addition, they cite the code of ethics for govemment contracting of another major U.S. corporation (p.217).

Finally, responsible business enterprises should develop an appropriate level of voluntary action in their host countries and communities. As employers, providers and purchasers of goods and services, and as conspicuous large organizations in the public eye, businesses have the ability to positively influence transaction governance

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practices among their distribution and supply chain partners and improve their own reputations through community action. In addition, investing in community develop- ment can have positive secondary effects on business competitiveness. By helping to foster opportunities for economic advancement of women, and access to education, credit and healthcare, to name a few community development initiatives, businesses contribute to developing individual incomes, skill sets and capabilities. As a result, they indirectly contribute to both the efficiency of their labor pool and the purchasing power of their consumers. This line of thinki ng is consistent with pro-poor business strategies' and models of strategic corporate social responsibility.^

Evaluation. Feedback, and Organizational Learning

The final section of the manual, discusses the importance of formally evaluating the business ethics program, updating it, and then promoting organizational learning based on its lessons. The authors suggest that executives in charge of evaluating the business ethics program must seek the answers to several questions, including:

• How does the organization learn from its internal culture and extemal business environment?

• How does it gather, store, and communicate tbis knowledge to important personnel and stakeholders?

• How does it use tbis information to pursue organizational goals and meet reasonable stakeholder expectations?

Evaluation is critical because it allows the organization to assess its own perfor- mance with respect to the standards and policies developed in its business ethics program. In addition, it aids in assessing the relevance and effectiveness of those standards, policies and expected outcomes, and in devising new alternatives and responses to dynamic issues tbat it faces wben pursuing its organizational goals through responsible business conduct. Thus, it is once again important to revisit the important outcomes that the organization wishes to achieve, their congruence with the core values of the organization, tbe organizational culture, and stakeholder expecta- tions. This evaluation requires an effective data collection plan. The authors supply some useful tools for tbis, including a survey, directions for conducting interviews and holding focus groups, and suggestions for reviewing archived information. Ef- fective evaluation also requires a reporting mechanism consistent witb the principles of communications in a responsible business enterprise discussed previously in tbe manual. Reporting can also utilize formats provided by emerging global standards such as the Global Reporting Initiative, or the United Nations Global Compact Com- munication of Progress. Finally, evaluation and reporting of business ethics program performance can lead to organizational leaming and continual improvement of RBC performance by developing knowledge of organizational culture, facilitating changes to inefficient business ethics program components, providing direction in the efficient reallocation of resources across tbe business ethics infrastructure, and establishing accountability to stakeholders (thereby building trust and social capital).

Analysis

While the manual is a comprehensive reference and resource, it raises several questions. One pertains to tbe material covered. A second relates to what it means

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for business ethics to have a manual such as this emanate from the United States Department of Commerce.

From the perspective of the intemal coherence of the book, the question of manag- ing cultural diversity, especially in terms of maintaining a coherent corporate policy across countries in which businesses are conducted by the company emerges as an unanswered question. By the authors' own admission, tbey intended the manual to guide business behavior through an emphasis on processes that improve Responsible Business Conduct rather than empirical examples. Thus, it informs at a general level and does not address specific legal or ethical issues (p. xvi). As a result, the manual does not concretely distinguish between Responsible Business Conduct in emerging markets versus Responsible Business Conduct in the home country. The authors make the implicit argument that properly managing stakeholders gives a responsible business enterprise the ability to foster reasonable expectations and build social capital among them, while concurrently creating a pathway to important information about them and tbe business environment. In addition, tbey make several references to the challenges of addressing cultural differences (knowledge of which is gained by engaging stakeholders in dialogue) and the variance between home and host country norms. However, there are few explicit suggestions for managing cultural diversity. The problem of reconciling home and host country norms is better explained by classic works such as The Ethics of International Business^ by Thomas Donaldson. Perhaps the authors could have developed case studies of firms operating in emerging markets and their effort in building business ethics programs, engaging in Responsible Business Conduct, fostering reasonable stakeholder expectations, achieving better business perfonnance and/or contributing to the development of market stabilizing institutions.

The authors do address the importance of Small and Medium sized Enterprises (SMEs) in emerging markets, noting that they comprise most of the business activity in those economies, by offering some advice and insight into the challenges they face. SMEs in emerging markets face different ethical is.sues than Multi-National Enterprises (MNEs), because they have primarily home-country stakeholders and associated pressures (where MNEs have global stakeholders), with fewer resources to address them. The authors neatly summarize the different issues tbat the two types of organizations face in the legal, economic, political, environmental, socio-cultural, and technological realms (p. 75). They suggest that SMEs adapt the programs and structures used by MNEs who are first mover organizations in terms of developing Responsible Business Conduct and business ethics programs. Typically SMEs with less complex organization stmctures, lines of communications and fewer resources need less formal business ethics infrastructure. For example, instead of using coun- cils and committees of organizational members from across the business to develop specific policies, individual managers or tmsted employees can perform such du- ties. Also, since the organizational complexity of SMEs is markedly lower, there are easier routines that they can employ to promote ethical behavior and prevent workplace deviance. For example, simple steps to prevent fraud that are feasible in SMEs include restricting bank account access, keeping regular books and hiring a certified accountant, creating reporting mechanisms for misconduct, conducting thorough prescreening of job applicants and treating employees well (p. 132).

In addition, they suggest adapting or adopting the emerging global standards offered by associations such as the U.N. Global Compact, the Caux Roundtable,

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the Global Reporting Initiative, and others, since they provide common language that can be spoken with stakeholders (including MNE customers). By improving the lines of communication with stakeholders and adopting standards that are likely to have more global legitimacy. SMEs can improve their chances for foster- ing reasonable stakeholder expectations, building social capital, maintaining legal compliance, managing risk, protecting tbeir reputations and co-creating value with the community at large.

From a tnore strategic perspective, it is worth asking what it means for businesses, and for the field of business ethics, to have this manual positioned as a primary guide to ethical business behavior around the world. This is, as we have suggested, a solid book. It performs an admirable synthesis of academic scholarship and practical guidelines and basic work processes (even worksheets) for practitioners. In this, it has to be a welcome bridge between academic and practitioner work. It does not "dumb down" academic rigor in favor of quick and easy apborisms about how to be ethical in business. It does address important issues in a way that encourages managers to bring to bear solid scholarship to the workplace. Any book like this should be welcomed. The fact that the book comes from a U.S. government program - the Good Governance Program of the Department of Commerce - should make no difference in evaluating the content of the material.

Yet it would seem likely that the source of tbe material may, in fact, make a dif- ference. This manual is part of a Good Governance Program strategy to establish "business ethics institutes" around the world. Rather than continuing the Department of Commerce's traditional method of advocating for U.S. business interests, the Good Governance program's emphasis is that if basic ethical principles are encouraged in emerging markets, local economies will flourish. Without the burden of corruption, for example, markets will be based on price and quality rather than cronyism. In tbat environment, the Department of Commerce believes, U.S. business interests will also flourish due to a confidence in U.S. companies being more used to operating in a market where relatively good governance practices are required and because U.S. businesses will compete well if corrupt practices are minimized.

Those assumptions, ofcourse. may be challenged, but that's not the point of our assessment. Assuming such beliefs are true, a well-done, U.S. government-sponsored manual could (a) reflect well on tbe government itself and (b) to the extent that individuals in emerging markets have a good opinion of the U.S. (or at least of the practices advocated), the authority of the messenger (and message) could have a valuable effect on the emerging country. For that matter, regardless of the view of the messenger's own moral integrity, if there is a belief that, given the strength of the United States, the proposed practices are the way markets will be encouraged to develop, a simple awareness of power would suggest that local businesses might do well to adopt these ethical practices. Thus, this manual could have a greater impact on the development of ethical business behavior around the world than any number of academic conferences and articles might provide. That's tbe good news.

The bad news is tbat to the extent these practices are viewed as (a) first-world domineering, or (b) simply a vehicle to promote, in fact, U.S. business interests as opposed to advocating for a level, ethical playing field, tbe messenger may cast a larger degree of doubt over the fairness of the message itself.

Our sense is that the manual is likely to promote business ethics in a relatively efficacious way. But it does raise interesting issues of business ethics that merge with

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public policy questions. Corporate responsibility as a whole has become far more mainstream than it was, say twenty years ago. There have always, of course, been governmental efforts to rectify problematic business behavior, but one must search hard to find a governmental program that so readily makes use of the academic literature as authority to ground recommendations and guidelines. With this book, the academic field of business ethics cannot claim to be an isolated, marginalized component of a business school curriculutn. Its lessons are front and center as a dimension of U.S. poiicy. On the whole, we view that as good news. But it is a dif- ferent posture for our field and one that is worth thinking about more deeply.

Notes

1. R. E. Freeman, Strategic Management : A Stakeholder Approach (Boston: Pitman, 1984). 2. T. M. Jones, "Instrumental Stakeholder Theory: A Synthesis of Ethics and Economics."

Academy of Management Review 20(2) (1995): 404-37. 3. C. K. Prahaiad, The Fortune at the Bottom of the Pyramid: Eradieating Poverty Through

Pmfit.s (Philadelphia: Wharton School Pubhshing. 2006). 4. M. E. Porter and M. R. Kramer. "Strategy and Society: The Link Between Competitive

Advantage and Corporate Social Responsibility," Hanurd Business Review 84(12) (2006): 78-92. 5. T. Donaldson, The Ethics of Intemational Business (New York: Oxford University Press,

1989).