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12 Jun 2017

Research: Indulgences or Abuse of Indulgences, a New Perspective on Corporate Sins

Professeur Sénior  Professeur au département Homme, Organisations et Société  Doctorate of Philosophy, Institut Universitaire Européen, Grenoble EM

From environmental damage to product malfunctions or bribery, businesses around the world are often responsible for wrongdoing. However, assessing the moral stature of a business is considered to be a notoriously difficult task. Not only are organizations collective groups, but their moral stance is rarely black or white. Many companies engage in both wrongdoing and "right-doing," with the latter often being carried out in hopes of compensating for the former. To shed light on such organizational behavior, this paper builds on the Catholic conception of indulgences to present a new perspective on business morality.

This article from Patrick O'Sullivan is the subject of the 36th Grenoble Ecole de Management Executive Summary

From the article

Organisational indulgences or abuse of indulgences: Can good actions somehow wipe out corporate sins?
Organization I-22 DOI: https://doi.org/10.3917/ mana.193.0203

The authors of this paper drew a form of analogy between the old Catholic conception of indulgences (and its associated abuses) and an organization's engagement in ethical and unethical behavior. The Catholic church defined the notion of indulgence as "the remission before God of the temporal punishment due for sins already forgiven as far as their guilt is concerned." In other words, indulgences served as a form of compensation for unethical acts committed in the past (and in the case of abuse of indulgence, for acts yet to be committed). The researchers transferred the principle of indulgences to contemporary market environments by proposing a taxonomy to evaluate a company's use of "indulgences."

A framework to categorize company morality

When attempting to right previous wrongdoing, companies may take on a variety of attitudes. The researchers adapted the concept of indulgences to create three categorizations for an organization's intentions and morality: 1) proper indulgence, or a company's genuine attempt to offset a wrongdoing and prevent it from reoccurring; 2) abuse of indulgence, or a situation in which a company makes no real effort to eliminate a harmful activity and instead hopes to compensate for this unethical behavior by carrying out "good works" in another area; 3) organizational impostorism, where a company engages in morally upright posturing while in fact continuing to behave in a completely unethical manner (e.g., greenwashing).

Intention: a critical factor for morality

The researchers recognized intention as a pivotal factor to evaluate a company's moral position as it defines the difference between proper indulgence and abuse of indulgence. A company may repent for a bad act and sincerely intend not to repeat it. The same wrongdoer may also engage in some form of compensatory action to right the original wrong. However, a company can just as easily repent for a bad act and engage in compensatory actions without any real intention of preventing the bad act from reoccurring.

As intention is the determining factor, the researchers suggest judgement be based on actual consequences. It is difficult, if not impossible, to establish an actor's intentions by external or even internal observation (as actors may simply lie). As a result, actual consequences and morally commendable outcomes provide the only concrete method of evaluating intentions. When consequences coincide with proclaimed intent, we can presume true intent. Inversely, when consequences expressed in proclamations fail to occur, then we must be skeptical as to a company's intentions.

Three examples: Siemens, Shell and BP

To further explain their concept, the researchers provided a brief analysis of three well known examples of corporate wrongdoing. To illustrate proper indulgence, they presented the Siemens bribery scandal in which the company underwent major cultural restructuring to right past wrongs and vowed to no longer engage in corrupt practices. To illustrate abuse of indulgence, they presented a case of environmental pollution by Shell. The corporation has implemented significant action in terms of CSR policies and engagement with local communities. However, there continue to be repeated reports of old wrongdoings (e.g., oil spills). To illustrate organizational impostorism, they presented the case of BP's environmental pollution, which is widely considered to be a good example of greenwashing.

Key Points

  • The Catholic concept of indulgences may provide a framework to evaluate company morality.
  • In business terms, proper indulgence refers to genuine compensatory actions to right past wrongs and a real intent to prevent future wrongs.
  • In contrast, abuse of indulgence refers to possible compensatory actions without real intentions to prevent the original wrongdoing from being repeated.
Contacts
Mara Saviotti