Investing in Ethics

Loss of profits and market share, diminishing brand reputation, and costly fines threaten companies that do not meet the international standards of ethics. As evident in the wake of scandals involving top brands such as Apple and Nike for example, today’s consumers are becoming better educated about overseas working conditions and the unfair treatment of workers.

As corporate social responsibility (CSR) has risen as a top priority in operations and supply chains, Software Advice, affiliated with Garner – one of the world’s leading information technology research and advisory companies – investigates “which link in the [supply] chain consumers claim to care about most.” In this report examining how corporate social responsibility impacts purchasing behavior, Software Advice assessed consumers’ willingness to pay more for ethical products. Three separate phases of surveys polled a nationally representative dataset of approximately 385 respondents.

In one survey, Software Advice asked three different groups of consumers how much more they were willing to pay for a product, normally priced at $100 that was produced more ethically with respect to a particular link in the supply chain: raw materials, manufacturing, and distribution. Respondents indicated that they would pay an average of $18.50 more if the raw materials were ethically sourced and as much as $27.60 more for a product that was made in good working conditions. 

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Exploring Frontiers of Entrepreneurship at GEC Milan

Milan with JehanAra_GEC_Mar2015

The author, Kim Bettcher, with Jehan Ara, President of the Pakistan Software Houses Association (P@SHA) in Milan.

 

What I love best about the Global Entrepreneurship Congress, most recently the GEC 2015 in Milan, is the diversity of approaches, organizations, and countries that I encounter under the big tent. At this carnival of entrepreneurship, one meets founders and policymakers, leaders from innovation economies and emerging markets, people who have already made it and others who are shaping the future.

Out of this medley, I try to stitch together, what do we actually know about advancing entrepreneurship? And where might promising new directions lie? For me, the theme of this year’s congress was moving the frontiers of entrepreneurship. We are currently pushing against several big frontiers, which include geographic, demographic, and policy frontiers.

Emerging markets are the first frontier. While commonly described as factor-driven or efficiency-driven economies, emerging markets contain pockets of innovation and entrepreneurial ambition. For instance, entrepreneur stories from the Middle East captured in Christopher Schroeder’s Startup Rising have created considerable excitement, as has the Cinderella story of Medellín, Colombia, the site of GEC 2016. In Milan, I was honored to have on my panel Jehan Ara, President of the Pakistan Software Houses Association (P@SHA), who recently founded the Nest i/o incubator. Ara described a growing entrepreneurial community in Karachi and a feeling among entrepreneurs of “wanting to give back” (not unlike the community spirit described by Brad Feld in Boulder). I was ecstatic to see our friends from Nepal, the Samriddhi Foundation, take the limelight as winners of the Rookie of the Year award.

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What Drives Corruption and How Can Institutions Respond?

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What are the drivers of and institutional responses to corruption? Are current anti-corruption instruments used domestically and internationally effective? These were the key questions of a fascinating day-long event organized last week in Washington, DC by the George Washington School of Law and the International Bar Association, among others.

The event gathered a distinguished group of speakers from the government, academia, international organizations, law firms, and non-profits, as well as an engaged audience of anti-corruption scholars and practitioners.

While the discussion touched upon a multitude of corruption-related topics, the following aspects of corruption raised at event were the most valuable insights for me:

  • Corruption as a violation of public trust. Janine Wedel, a Berkeley-trained anthropologist and a professor at George Mason University, emphasized that corruption is more than just simple quid pro quo. Instead, it is a sophisticated network rooted in informal power, influence elites, and often aided by the post-Cold War global economic openness as the revolution of the digital age.
  • Corruption as a governance problem. Nikos Passas, professor at the Northeastern University, pointed out the roots of corruption in discrepancies between legitimacy and legality (lawful but awful conduct by government officials or businesses) and in unlawful but useful behavior (e.g., bribing a doctor to treat a patient in a failing healthcare system). International norms such as the United Nations Convention Against Corruption help by creating agreed-upon legal standards, but improving on-the-ground governance in countries around the world still has a long way to go. Read a Q&A with Nikos Passas here.
  • Private sector as a force for anti-corruption. Baker & McKenzie’s Tom Firestone stressed that a broad-based business community in a given country can be an effective force in anti-corruption efforts. He recounted his experience in Russia where local businesses resisted corrupt encroachments of the state. Local firms, after all, have a strong interest in the rule of law and a level playing field in the business environment. But they can’t do it alone.
  • Inter-governmental cooperation makes a difference. Kathryn Nickerson, Senior Counsel at the Department of Commerce highlighted the importance of the Organisation for Economic Co-operation and Development (OECD) Working Group on Bribery in International Business Transactions responsible for monitoring and implementation of the OECD Anti-Bribery Convention.
  • Corruption as an attack on human dignity. Sarah Chayes, the conference’s keynote speaker, talked about her recently published book, Thieves of State: Why Corruption Threatens Global Security. She pointed out that there is a moral dimension to corruption – it leads to widespread moral decay and individual humiliation that goes beyond money. In extreme cases of corruption-ridden countries, it is not the weakness of the state that leads to corruption. Rather, the institutions of the state have evolved to make them a conduit for corruption that permeates entire societies.

Anna Nadgrodkiewicz is Director for Multiregional Programs at CIPE.

Improving Local Level Governance in the Philippines

The Philippine National Police have used the Performance Governance System to improve governance.

Efficient, transparent and accountable governance continues to be a major driving force behind reform movements around the world. In partnership with the Center for International Private Enterprise (CIPE), the Institute for Solidarity in Asia (ISA) has implemented the Performance Governance System (PGS) initiative in the Philippines. The Performance Governance System is a highly rigorous accreditation program that requires participating organizations to reform and strengthen their governance practices with the goal of improving organizational performance, financial transparency and political accountability.

The recently published case study from Strategies for Policy Reform describes the Performance Governance System in detail. ISA has subsequently shared three case studies that illustrate how the adoption of the Performance Governance system has improved public governance in Talisay city, the Philippine National Police, and the Philippine Army.

Teodora Mihaylova is Research Coordinator at CIPE.

Successful Public-Private Dialogue: The Kenyan Perspective

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“The work of development is too important to be left in the hands of governments alone. It is the responsibility of everyone. Especially the business community.” This was Betty Maina’s main point in her speech last week at the 8th Public-Private Dialogue (PPD) Workshop in Copenhagen, Denmark.

The workshop explored how the government, private sector, and civil society organizations can effectively use PPD platforms for collaborative governance and leadership in addressing difficult challenges. Through its collaborative process, PPD provides a structured, participatory, and inclusive approach to policymaking directed at reforming governance and the business climate.

As the CEO of CIPE partner the Kenya Association of Manufacturers (KAM), Maina spoke on the crucial role that multi-stakeholder PPD platforms can play in building a better enabling environment for business. Maina recognized the social, economic and environmental challenges that we face, and the important role the business community can play in tackling those challenges.

“Instinctively people recognize that [these] challenges demand a new kind of leadership, a new way of doing things,” she said. “Business, like governments, will have to be in the forefront of this change.  No one can do it alone.”

One need to look no farther than Kenya as an example of the private sector’s role in solving societal problems. During the 2007 election crisis, the business community was crucial in supporting peace efforts and dialogue which helped prevent further violence. The business community was also instrumental in supporting the development of Kenya’s new constitution in 2010 and now plays a critical role in its implementation.

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The Gaza Strip Today: The Challenges and Potential

Bahaa Eddin Al-Dahoudi is a CIPE-Atlas Corps Think Tank LINKS Fellow at Project on Middle East Democracy (POMED).

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Besides experiencing three destructive wars in less than ten years – Operation Cast Lead, Operation Pillar of Defense, and Operation Protective Edge – the Gaza Strip has suffered since 2007 from two unprecedented major political events that affect both the lives and future aspirations of the Palestinians: the Israeli blockade and internal division.

The Gaza Strip, now in its seventh year under Israeli blockade, remains isolated from the outside world. The blockade affects many fields including education, business, the environment, technology, and culture. What is more, there is the internal Palestinian division which has further exacerbated the situation. The political and social division among the two largest Palestinian factions, Fatah and Hamas, has led to declines in many areas.

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Strengthening Economic Growth Through Public-Private Dialogue

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Fostering a strong competitive market requires the private and public sectors to understand each other’s needs. In any country, entrepreneurs look for ways to make their businesses successful while the federal and local governments deliberate how they can boost the economy by providing loans for businesses or building up infrastructure. Developing solutions to such questions involve facilitating effective public private dialogues (PPD).

At the 8th PPD Global Workshop in Copenhagen, Denmark – which was co-organized by the World Bank Group, Ministry of Foreign Affairs, and the Confederation of Danish Industry – over 300 participants from civil society organizations, companies, governments and development partners from 54 countries came together to share their experiences with PPDs. CIPE and several current and past partner organizations from Ethiopia, Jordan, Kenya, Moldova, Serbia, and Nigeria participated in this four day event.

Betty Maina, CEO of CIPE partner Kenya Association of Manufacturers, was a featured speaker and highlighted the importance of PPD for the enabling business environment. Director for Multiregional Programs Anna Nadgrodkiewicz also presented CIPE’s joint initiative with the World Bank, an interactive knowledge hub website for the global PPD community of practice (www.publicprivatedialogue.org).

The workshop focused both on successes and challenges faced by PPD practitioners when developing, implementing, and evaluating constructive dialogues in different environments. The breakout sessions were divided by range of themes such as fragile and conflict-affected states (e.g. Palestine and Guinea), politically and socially transitioning environments (e.g. Tunisia and Slovakia) and city-level versus regional-level PPDs.

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