Sustainable Management Metropolia Business Ethics IP week

1. Sustainable ManagementMetropolia Business Ethics IP week 11 Social Context

2. Social context • “almost everyone is capable of torture and other evil acts if placed in the wrong social context” Susan Fiske, Princeton University • Stanley Milgram experiment showed that 2/3 of participants did cross borders

3. Stanford prison experiment Situational context was created where students performed roles of guards and prisoners. Within 6 days the experiment had to stop because of excessive abuse of the prisoners. Situation: role-playing, coercive rules, power differentials, anonymity, group dynamics, and dehumanization. Participants: 24 were selected based upon mental stability. At day 5 prisoners were extremely stressed

4. Social context • Diffuse responsibility (other people involved, it comes with the job) • Dehumanizing (victims are not seen as full, or as animals) • Brotherhood mentality (group commitment) • Social cascade effect (large group of people do or think because others have done it before) • Financial markets • Protest movement • Opinion polls, voting New scientist article,”they made me do it” Bond ,2007)

5. Social context • Social learning (assuming that others know something you don’t know) and social coordination (doing it together, going up in the mass) are driving factors • Peer pressure (it is hard to go against peers) • Reinforcement (in large groups with same opinion, “see I was right”) • Polarization (we – they thinking, especially in crisis, iraq after 9/11, police and football crowd) New scientist article,”they made me do it” Bond ,2007)

6. Motivation and Values • Bruntland definition of sustainable development “Meet the needs of people…without compromising the needs of future generations…” • What are the ‘needs’, or better the ‘wants’ • Values are the basis of motivation in decision making

7. Hierarchy of Needs Maslows Pyramid Western Biased Pinto’s Pyramid Eastern Biased

8. ERG Theory Alderfer Growth needs Relatedness needs Satisfaction / Strengthening Existence needs Frustration / Regression Satisfaction / Progressing

9. Motivation • Humans are motivated by 3 impulses: • Greed (we want to gain) • Fear (we don’t want to lose, loss aversion) • Morality ( do what is right, even if it means loss and harm)

10. Value of Live • How much consumption during lifetime • Avoiding death • How much income generated • Check your worth out: • www.dinkytown.net/java/HumanLifeValue.html

11. Value of Live • Needed in calculating life saving measures • Preventing legal actions Moral issue: • Sell kidney on Ebay • Win a kidney in a show

12. Ford Pinto Case • In production 1971-1980 • Design flaw: fuel tank was easily punctured in rear end collisions, and could set fire to the car • Doors could jam in accidents to, deathtrap

13. Ford Pinto Case • Ford knew about the design flaw, but decided after a cost-benefit analysis that it was cheaper to pay off lawsuits • A memo about this leaked • Pintos were called back in a costly operation • Pinto gained a bad reputation (only 2 mln sold out of the projected 11)

14. Ford Pinto Case • Expected Costs of producing the Pinto with fuel tank modifications: • Expected unit sales: 11 million vehicles (includes utility vehicles built on same chassis) • Modification costs per unit: $11.00 • Total Cost: $121 million[= 11,000,000 vehicles x $11.00 per unit] • Expected Costs of producing the Pinto without fuel tank modifications: • Expected accident results (assuming 2100 accidents):180 burn deaths180 serious burn injuries2100 burned out vehicles • Unit costs of accident results (assuming out of court settlements):$200,000 per burn death*$67,000 per serious injury$700 per burned out vehicle • Total Costs: $49.53 million[= (180 deaths x $200k) + (180 injuries x $67k) + (2100 vehicles x $700 per vehicle)]