Ethics and An Italian Job

Background and Context

 

It is almost unfathomable in the 21st century to consider Italy, a modern country and member of the European Union, as having a culture in which paying bribes, making irregular payments to debtors, and a lack of financial transparency is the norm. Yet in the year 2011, Transparency.org, a global watchdog for governmental and corporate corruption, found that 81% of Italian citizens ranked their government as ineffective at fighting corruption and 95% ranked the level of corruption in the country as the same or worse than in preceding years (Transparency.org, 2011). In 2012, TRACE International, a nonprofit focused on anti-bribery and compliance for global organizations, cited a report ranking Italy as 25th of 26th European member countries on a corruption scale (TRACE, 2012). And in the year 2013, former Italian prime minister, Silvio Berlusconi, was quoted on Bloomberg media as saying:

 

Bribes are a phenomenon that exists and it’s useless to deny the existence of these necessary situations. These are not crimes. We’re talking about paying a commission to someone in that country. Why, because those are the rules in that country…. These are absurd moralisms. If you want to make moralisms like that, you can’t be an entrepreneur on a global scale.’ (Frye, 2013).

 

While this statement was in the context of a bribery scandal involving an Italian manufacturer attempting to sell military machinery to Indian military officials, by implication, former Italian prime minister Berlusconi suggested that any business person in any country, including Italy, should find bribery to be a normal business practice.

Ironically, one year before that statement, the Italian parliament passed landmark anti-corruption and bribery legislation:

 

Italy has adopted a new Anti-Corruption Law: Law no. 190 dated 6 November 2012, which was published in the Italian Official Gazette on 13 November. Bribery and corruption costs the Italian economy an estimated €60 billion per year. The new Law is set to combat that figure and bring the Italian anti corruption legislation in line with that of other EU countries (Juvara et al., 2014).

 

According to the Associated Press, a practical result of this legislation passing included the requirement that every city administration in Italy must appoint an anti-corruption officer to monitor problems and map out anti-corruption and transparency plans as well as organize mandatory training for all levels of its civil servants (Associated Press, 2014).  This change in policy could have been due to any number factors, but at the very least it demonstrated good economic sense. “Investors are less likely to invest in countries with poor governance and high corruption” (Nelson et al., 2011).

In terms of investors and companies with potential interest in Italy, Westfield Corporation, one of the largest and most profitable REITs in the world, announced plans in 2011 to invest $3.8 billion USD to develop and open by 2015 a shopping center in Milan, Italy (Bloomberg, 2011). In the context of the citations above, it is perhaps no surprise that the project has been ‘plagued by bureaucratic delays’ (Danckert, 2014) that as of 2014 have Westfield possibly re-starting the project in ‘the next two years or so’ (Danckert, 2014), pending approvals from local officials and courts. The delays are for a variety of reasons including local official concerns over project ‘liquidity’ (Danckert, 2014) issues on the part of Westfield and its partners. Also cited were civic issues such as environmental risks, as referenced by a city councilor in Milan and local World Wildlife Fund (WWF) stakeholders :

 

Transparency and rule of law must be the cornerstones of this business venture. It will be our duty to ensure that we go in this direction in order to avoid unpleasant situations as recently happened with the Expo. I also remain concerned about the environmental impacts, road network, employment and local trade that this could have on the whole area and Segrate Martesana (Micheli, 2014).

 

Such issues have been openly questioned in the international press who have followed the story, and Westfield remains publicly quiet regarding the matter (Danckert, 2014). Given the amount of money at stake by Westfield and its investment partners, the question is how the company moves towards resolution. As TRACE indicated in its analysis, The Relationship Between Bureaucracy and Corruption, Italy is depicted “as having a deplorably low level of efficiency within the legal system, and as occupying one of the worst positions in Europe in terms of dispute resolution” (TRACE, 2012).

 

Ethical Dilemma, Approaches, and Processes

 

As suggested in the citations from the preceding section, the ethical dilemma that may face the company involves how to get the timing of a very high stakes development back on track given the Italian business context regarding bribery described in the preceding section. The primary thread in most press coverage about the Westfield project indicates that the delays are the result of local officials concerned with civic matters, such as environmental and local trade issues. But, could one could assume that the delays Westfield has suffered are the result of the company not acquiescing to local stakeholders on payments beyond standard filings and fees? Very much so, perhaps, considering the fact that Westfield publishes an annual Sustainability report, along with its corporate financial statements, containing extensive data on how seriously the company takes ethical concerns in its developments and operations, especially those involving the environment and the success of local retailers (Westfield, 2014). As a result, this section will review ethical approaches – teleological theory, deontological theory, and virtue ethics – and processes – ethical awareness, judgment, and moral reasoning – that the company may be considering in this ethically risky climate.

Regarding teleological theory, the project described represents good intentions and valuable outcomes by Westfield: a new retail venue in an underserved suburb in northern Italy, creating local jobs in construction and retail, bringing new tax revenue to the region, and long overdue highway improvements for a local airport. By undertaking this project, Westfield will create thousands of new jobs and inject nearly $4 billion of capital into a relatively underdeveloped Italian economy (Percassi, 2014). In terms of teleology and a consequentialist approach, the question to be asked is whether the genuine value creation of a project like this justifies a company engaging in a Machiavellian mode of action with local officials where ‘the end justifies the means’ (Nelson et al., 2011) with respect to bribery or similar actions to move the project forward again. When analyzing the situation using the consequentialist lenses of long- versus short-term, symbolic, and secrecy consequences, the stakes for Westfield are enormous. Development projects, like this shopping center in Milan, take years to plan and build plus many years to pay back on the capital investment. These investments are almost always leveraged through major financial services partnerships and always require government permits and approvals, including for ongoing operations. Considering this long-term time horizon and Westfield’s portfolio of nearly 100 shopping venues worldwide, to be implicated in a bribery scandal would severely damage Westfield’s reputation in the financial services market and put those long term assets into risk. And in terms of secrecy, such actions would have been hidden at the time but have the potential to be discovered with catastrophic consequences in the media and elsewhere, considering the media coverage of this high profile and high risk project as described earlier. The symbolic implication would be that Westfield could not be trusted and potentially rejected as a partner due to the risk of being a ‘tainted’ brand.

With respect to deontological theory, there are critical dilemmas that Westfield faces. Whether taken in the absolute or considering the company’s prima facie duties, the civic challenges presented by the local government are potentially insurmountable. It would be difficult for the company to argue that its prima facie duty, delivering a shopping center to the local residents, is enough to overcome the arguments lodged by local authorities. But in terms of the company’s absolute duties relative to a business climate encouraging bribery, Westfield has a duty that goes beyond its shareholders who expect successful property developments and financial returns for their investments. The company also has a moral, fiduciary duty in terms of its reputation and the trust of its stakeholders, including its investors, retail tenants, and its shoppers: “Companies need support from stakeholders to succeed, and with 69% of recommendations being driven by the perception of the company behind the brand, reputation is a key strategic asset” (Reputation Institute, 2014). As a global and US-based company employing thousands and with billions of dollars in market capitalization at stake for its investors, it must act with good will, in addition to rejecting going the way of bribery as being the only course of action it could consider. And in contrast to the deontologist’s absolutist, duty-based framework, Westfield’s cannot take the  ethical relativist approach of “when in Rome, do as the Romans do’, even when in Milan.

When considering these civic issues such as environmental impact, in terms of virtue ethics, Westfield has a track record of demonstrating the aspirational values of a good actor. As mentioned earlier, Westfield publishes an annual CSR report called a ‘Sustainability Report’ (Westfield, 2014), that is certified as 100% accurate by third party CSR and Sustainability firms such as Catalyst and the Global Reporting Initiative. Such actions by Westfield are consistent with being an actor to whom virtue ethics are important and whose “identity as a moral actor is important to them and that they are devoted to continuously developing that aspect of themselves.” (Nelson et al., 2011) There are also third party ratings services such as CSRHub that benchmark Westfield against its peers and the overall market. As of its latest report, CSRHub ranked Westfield as above the average in terms of its environmental practices and corporate governance (CSRHub, 2014). Perhaps as relevant, as a family founded and managed organization, Westfield’s founder and principals also founded and manage the Lowy Institute, a renowned and respected, Sydney based, non-partisan think tank for international public policy. The Lowy Institute has tackled issues across the spectrum, including bribery and corruption, and ironically has even published opinion pieces analyzing ethics issues like the scandal facing India mentioned earlier (Lowy Institute, 2012). Taking into account Westfield’s awareness of the public’s feelings about the company, one could see how Nelson et al.’s description of the Disclosure Rule, evaluating how the decision maker would feel if those decisions were openly broadcast, would be at the core of the company’s decision making framework.

In terms of ethical awareness, ethical judgment, and moral reasoning, there are two primary considerations at the foundation of these: how much information is available to the company about the business and governmental climate it has found itself in, and how much the company already has a framework for understanding the moral dilemma (Nelson et al., 2011) so that it acts appropriately. Clearly from the numerous citations mentioned above, there is no lack of information regarding the Italian business climate available to a well-established, well-funded, and well-organized, public company such as Westfield. In terms of the company’s existing framework for having a corporate awareness of the moral issues at play, one can refer to the compliance policies section in Westfield’s Sustainability report mentioned above:

 

Serious breaches of these policies (including matters such as suspicions of fraud or financial impropriety, auditing issues, improper or unethical behaviour or criminal activities) are required to be reported immediately to a compliance officer in the relevant country or to the Group Compliance Officer for investigation. Where appropriate, the police or other regulatory authority will be informed (Westfield, 2014).

 

Given that Westfield has awareness of both the Italian business climate as well as demonstrated recognition in terms of its own stated corporate policies, it could be concluded that its ethical awareness should lead to ethical judgment, assuming certain conditions are in place (Nelson et al., 2011). To frame these conditions for determining how the company would employ ethical judgment and moral reasoning in its actions to get the project moving forward, even though it is employed to analyze ethical decision making at the individual level, Kohlberg’s Levels of Cognitive Moral Development (Kohlberg, 1976) provides a useful tool to evaluate the corporate ‘psychology’ that will be at play here. A corporation is comprised of individuals making and influencing decisions (Nelson et al., 2011), and those individual biases impact how the company will appear to have acted by its stakeholders in this scenario. By overlaying Kohlberg’s three levels of moral development on Westfield’s Sustainability report, one could deduce where the company’s overall decision making and actions might fall in handling the situation with its Milan project. The following grid outlines Kohlberg’s development level and stage, alongside the relevant citation from the company’s Sustainability report (Westfield, 2014):

 

Level Stage Westfield Sustainability Report Citation
Pre- conventional Obedience & Punishment Orientation “In 2013 Westfield received no significant fines or non-monetary sanctions for non-compliance with any laws and regulations including those relating to the environment and the provision of products and services.”
Pre- conventional Instrumental Purpose & Exchange “Westfield has always had a keen focus on efficient business practice. This includes health and safety management practices, which we regard as a key measure of an efficient and safe operation.”
Conventional Interpersonal Accord, Conformity & Mutual Expectations “Westfield works hard to understand the issues that matter most to its many different stakeholders. We engage regularly with them on how to improve the Group’s sustainability performance and continuously review our stakeholder engagement policies and practices.”
Conventional Social Accord & System Maintenance “Westfield has appointed Whistleblower Protection Officers in each country in which it operates. Employees are encouraged to report any genuine matter or behaviour that they honestly believe contravenes our code of conduct, policies or the law.”
Principled Social Contract “During natural disasters we open our centres’ doors to local communities to provide practical assistance as well. These centres have been used to set up relief aid stations and have served as rallying points for community fundraising and drop-off locations for emergency goods.”
Principled Universal Principles “Bullying is a major, widespread problem in the United States, with one in four children bullied on a regular basis, according to recent statistics. In 2013, Westfield partnered with two organisations to help in the campaign against it: GLAAD, a support organisation for gay, lesbian, bisexual and transgender people (LGBT), and Spirit Day, on which supporters of LGBT people wear purple in October.”

 

As Kohlberg described, each higher level and stage of cognitive moral development builds on those that are lower (Kohlberg, 1976). In terms of ethical judgment and moral reasoning, Westfield’s report suggests that the company as a whole has the capacity to act ethically on the entire spectrum of decision stages.

 

Potential Conflicts Between Approaches

 

The challenge in moving from ethical awareness to ethical judgment in this situation will stem ultimately from the varying ethical perspectives in play, especially from the standpoint of Westfield’s stakeholders. To assist with describing Westfield’s different stakeholders and the conflicts it may encounter with each using the differing ethical approaches, I have prepared the following grid mapping each of Westfield’s stakeholders to each of the ethical approaches:

 

Teleological/ Utility Deontological/ Duty Virtue Ethics
Investors Greatest possible financial return regardless of how Duty to be a good steward of the funds invested Intention to generate returns without risking investors’ stakes
Employees Creation of jobs and good salaries regardless of how Duty to pay appropriate salaries and offer a safe work environment Intention to create good jobs and not risk employee safety or reputation
Merchants Lowest possible lease rates with greatest possible sales per square foot regardless of how Duty to act as a good, honest partner in the development and operations of this venture Intention to help merchants operate successfully in new venture
Local Italian People Increased business activity, lower taxes, more employment, and increased convenience regardless of how Duty to operate the venture without damaging the environment or harming local businesses Intention to treat the local Italian people with respect and create growth in the development and operation of the venture
Local Italian Officials The end cannot justify the means if it results in compromising local and national Italian law, but if within the law, the best outcome would be to satisfy local, entrenched interests Duty to improve local roads, pay taxes, abide by laws, not damage the local habitat, and abide by local laws & customs Intention to treat the local Italian officials with respect during the development and operation of the venture, employ local people both in development and ongoing
Italian Government The end cannot justify the means if it results in compromising Italian law, but if within the law, the best outcome would be to satisfy Italian national priorities Duty to abide by national and local laws and pay appropriate national and local taxes Intention to abide by the laws of Italy, help the Italian economy to get back on its feet, and encourage future Italian investment as a result of the venture’s success
US Government The end cannot justify the means if it results in breaking US law, but if within the law, the best outcome would be to satisfy US national priorities Duty to pay US taxes, uphold US laws even when overseas Intention to abide by US law when overseas, repatriate US taxes, support US employees in overseas venture and generally be a good representative

 

Following this grid, many of the same considerations come into play when comparing to Kohlberg’s levels of moral development; in fact, the particular application I’ve used here, Kohlberg refers to as ‘role taking’ (Nelson et al, 2011). The stakeholder grid used here was purposely framed starting with a lens of ‘individualistic’ considerations, moving to local ‘community’ considerations, and ultimately to ‘national’. By increasing the scope of impact to stakeholders and by implication the stakeholders they represent in turn, one can see that in this particular situation, the conflicts that exist are not so dissimilar when comparing by approach. Instead, by my analysis, conflicts exist primarily between the stakeholders rather than the approaches. For example, investors’ teleological concerns about financial returns are very different, if not opposing, to what would be the local Italian officials’ needs for environmental concerns and civic improvements from a deontological perspective.

With these potential conflicts in mind, who would be ‘right’ and which approach would be ‘best’? As important, with opposing perspectives between stakeholders and the need to get the project back on track, how does Westfield find a means to resolve these potential impasses? This paper has cited a number of established, peer-reviewed resources – from Transparency.org, to TRACE International, to Reputation Institute, to CSRHub, to Lawrence Kohlberg. But as with the AICPA being blamed for contributing to a business climate that led to major financial scandals for Enron, WorldCom, and others (Nelson et al., 2011), can any one of these organizations or advisories be trusted more than any other? Part II of this paper will address these questions in more detail, including the decision making framework of this author, how his framework supports a recommended resolution for the company to this dilemma, and how it relates to the decision making framework utilized for this paper.

 

Recommended Resolution

In this author’s opinion, the resolution to the ethical challenge the company’s leaders may face getting the project moving ahead has two components. Regarding the first component, in an ironic twist, this author would recommend following the lead of the Italians as described in the preceding paper. To be clear, the recommendation would not be to follow the lead of the former prime minister and his statements; rather, this author would recommend to Westfield that it follows the actions of the Italian parliament. Recall that the Italian parliament passed landmark legislation requiring the appointment of an anti-corruption czar and the creation of mandatory training in all city administrations, the first of which occurred in Florence, Italy in August 2014:

 

The issue is to make bureaucrats and citizens understand that this type of behaviour is not correct anymore, you can no longer do this,” said Marco Giuri, one of the teachers of the course. “Because in our mentality, it’s not corruption, it’s just help. It’s not that you are paying for a service, but it’s simply a favour between contacts, a relative, or the fact that he’s a friend. These occurrences are the most common and they are the ones the law wants to break through and it’s common because it’s really in the DNA of Italians.” (Associated Press, 2014)

 

This first component of the author’s recommended solution, the approach of using training and education, describes how to move individuals ‘up’ from their current thinking in Kohlberg’s moral reasoning framework:

 

Development through the stages results from the cognitive disequilibrium that occurs when an individual perceives a contradiction between his or her own reasoning level and the next higher one. This kind of development can occur through training, but it generally occurs through interaction with peers and life situations that challenge the individual’s current way of thinking. (Nelson et al., 2011)

 

Kohlberg and his partners have designed training courses using hypothetical ethical dilemmas. And in this citation regarding training lies the second component to the author’s recommended solution: socialization with peers facing the same challenges and working through those challenges head-on. In contrast to Kohlberg’s design, this author would recommend not using hypothetical dilemmas in the training course, but instead have the stakeholders join together in conference sessions that use Westfield’s project as the case study.

Recall the stakeholder framework cited in the preceding paper and that the stakeholders in this Westfield Milan project go all the way to the local and national governments in both Italy and the US. Given the magnitude of stakes involved for both Westfield and the Italian government, this author would recommend the company and the Lowy Institute lobby senior level participants in the business and both governmental parties to undertake structuring a program that incorporates all stakeholders, perhaps as an extension of the program the Italian parliament organized in Florence (Associated Press, 2014) using Milan as the next venue. Such an action fits ‘Principled’, Stage 6 thinking in Kohlberg’s Cognitive Moral Development model as well as Philanthropic responsibilities in CSR theory, namely moving beyond what the social contract allows towards the ethical principles of justice and rights — rights of all stakeholders that support the development of Italian society into one founded on ethics and a rejection of corruption.

For this kind of engagement to be successful though, the focus cannot simply be on corruption and ethics awareness; this kind of positioning could at best seem like an insult to the Italian stakeholders and at worst result in an even graver impasse in the project development. Instead the focus should be on increasing empathy between all the parties and about their respective stakes in order to facilitate discussing the ethical issues in play and then using the format to drive this management by example through all of the ranks of individuals involved in the project. The reasoning for this can be found in scholarly research as well as assessment frameworks developed by management consultancies, such as Management Resource Group:

 

Empathy is a form of receptivity to the other; it is also a form of understanding. In the latter case, one puts oneself in the place of the other conceptually. In the former, one is open experientially to the effects, sensations, emotions that the other experiences. Undertaking an ethical inquiry without empathy – sensitivity to what is happening to and with the other – would be like engaging in an epistemological inquiry without drawing on the resources of perception. (Agosta, 2014)

 

When MRG [Management Resource Group] examined what was the strongest predictor of ethical leadership behaviour out of the 22 competencies in their model, the resounding answer was empathy. In other words, leaders who scored highest on empathy also exhibited the highest levels of ethical leadership. (Dowden, 2013)

Critical to both components in this recommendation though is how to effectively impress upon the Italian government at both the local and national level that such an undertaking is worth considering and not just ‘naive moralism’ as former Prime Minister Berlusconi suggested?  “The natural retail development cycle has always been somewhat retarded in Italy because of the huge political lobbying power of the local shopkeepers” (Spybey, 2012). An interesting paper by political science researchers at Northwestern University and Stockholm University, analyzes the relationships between bribery and lobbying:

 

In reality, bribery and lobbying differ in several dimensions. First, lobbying is a legal and regulated activity in many countries, whereas bribery is not. Second, a change in the rules as a result of lobbying often affects an entire industry, whereas the return to bribery is more firm-specific. Third, a government that ponders a change in the rules might have quite different concerns than a bureaucrat considering a bribe (Harstad et al., 2011).

In short, the researchers describe how bribery is a cultural norm for less developed countries whereas lobbying, the legal route to driving change, is the norm for richer, developed countries. They suggest that bribery is a critical factor in keeping a country in the ‘poverty trap’, never allowing the country to improve economically because firms are discouraged from investment — and when firms stop investing they never get to the point where lobbying becomes a worthwhile endeavor. As indicated earlier, given the significant lobbying power of the Lowy Institute, this author would recommend lobbying action with the US and Italian governments to drive this education initiative as the route to help Westfield past its business impasse on its project and help lift Italy out of its cultural impasse in dealing with corruption.

 

Author’s Personal Ethical Decision Making Framework, The Ethical Decision Making Process for the Recommended Resolution, and How These Were Similar or Differed

 

The author’s personal decision making framework is not dissimilar to the framework outlined by Kohlberg and used in making the recommended resolution. Nelson et al offered up an eight step ‘Ethical Decision Making Framework’ with the following structure:

 

  1. Gather the Facts
  2. Define the Ethical Issues
  3. Identify the Affected Parties/ The Stakeholders
  4. Identify the Consequences – Long/Short Term, Symbolic, Secrecy
  5. Identify the Obligations
  6. Consider Your Character and Integrity
  7. Think Creatively About Potential Actions
  8. Check Your Gut

 

The structure of Parts I and II of this paper follow this eight step framework outlined by Kohlberg. The following table recounts what we have reviewed and how it fits this framework:

 

Gather the Facts Detailed numerous press reports regarding the climate of and fight against bureaucracy and corruption in Italy and Westfield’s efforts to launch a new shopping center in this environment
Define the Ethical Issues Identified that the way to unblock bureaucracy in public works projects in Italy has historically involved bribery
Identify the Stakeholders Presented an extensive table of stakeholders (‘role taking’ analysis) and the potential conflicts in ethical approaches when considering each
Identify the Consequences Highlighted the risk to the multibillion dollar project failing with respect to the stakeholders and the teleological/consequentialist considerations to Westfield for each stakeholder – Long-term, Symbolic, and Secrecy consequences were also explored
Identify the Obligations Highlighted the deontological/duty considerations Westfield had to each stakeholder in the ‘role taking’ table
Consider Your Character and Integrity Exploring author’s character and integrity as a foundation of this Part II paper, especially with respect to the author’s emphasis on Empathy as a critical element in ethical decision making
Think Creatively About Potential Actions Described at the beginning of this Part II paper the potential action/resolution to the ethical dilemma in Part I: training coupled with peer-to-peer interaction to increase empathy by both parties
Check Your Gut Reflected the same emphasis outlined in Nelson et al’s framework with respect to the recommended resolution: “…don’t forget your gut. We are all hardwired to be empathetic and to desire fairness. Empathy is an important emotion that can signal awareness that someone might be harmed.”  (Nelson et al., 2014)

 

An important distinction between the author’s personal ethical decision making framework and the one outlined above is that the author takes a much ‘shorter’ route to a decision. That route can be summarized by Habit 5 found in Stephen Covey’s 7 Habits of Highly Effective People: “Seek first to understand, then be understood” (Covey, 1989) – in short, empathy. The author has studied and practiced Covey’s 7 Habits framework for developing a personal character ethic over a large part of his career. Like Kohlberg, Covey has three stages of development – Independence, Interdependence, and Continuous Improvement – each of which build on the prior. Slightly different from Kohlberg’s approach, Covey’s ‘Independence’ stage emphasizes a topic that Nelson et al. explore regarding Locus of Control, namely how much a person believes he or she exerts influence over life’s events. (Nelson et al., 2011) Covey’s ‘Interdependence’ stage has at its core the concept of embracing a ‘Paradigm Shift’, i.e. that two parties can see exactly the same thing yet differ with one another, and to approach decisions with an ‘Abundance’ perspective, i.e. success does not equate to winner-take-all, but rather to a ‘win-win’ approach — all of which this author practices in his own personal decision making. This author believes that decisions combining an internal Locus of Control with a Paradigm Shifting perspective and an Abundance mindset results in the most ethical outcome for all parties.

 

Priorities Used in Making the Recommendation

 

To identify the priorities used in decision making, it is critical to examine the values that are at play in order to help clarify the right set of decisions (Nelson et al., 2011). For the purposes of this analysis, the author decided to use the stated values found in Westfield’s sustainability report to set priorities. Why? The company, successful and ethically responsible as cited by reputable third parties mentioned earlier, must have integrity in its decision making, which means being true to its values or evolving those stated values to be true with its current self. Westfield’s stated values are: maintain focus, passionate execution, collaborate, imagine and innovate, be inclusive, push the limits. (Westfield, 2014) The following grid describes how each stated corporate value has helped to prioritize the recommended resolution:

 

Maintain Focus At the core of this value is respecting what you have control over as an individual – in this case have the senior executive stakeholders and relevant government sponsors initiate a forum in Milan as a continuation of the training the Italian parliament started in Florence
Collaborate Set the format of the forum to be focused on empathy rather than purely ethics and dealing with the historical issues of corruption in Italy
Passionate Execution Westfield senior management should take the initiative to present the idea to the relevant governmental stakeholders and then work with the relevant stakeholders to develop the program
Imagine and Innovate It is unlikely that this kind of public-private partnership has existed before and could present incredible, new opportunities to Westfield to participate on the global policy stage in a new way, perhaps through the Lowy Institute for International Policy
Be inclusive Similar to the Collaboration value, but even more at the heart of being empathic, this value means truly embracing diversity and seeking out the other party’s point of view
Push the Limits As with the value of Imagine and Innovate, this value is about ‘seeking out new opportunities’ and asking ‘what else is possible’ – e.g. the recommendation of the Westfield-Milan officials training program

 

Legal, Political, Societal, Corporate, and Individual Influencers in Decision Making Process

 

The first paper covered this topic extensively as part of the ‘role taking’ analysis, and it is worth restating here in light of the recommended resolution and values analysis presented. The analysis of each Westfield stakeholder was plotted in a grid with respect to Westfield’s position relative to each of the three ethical approaches – teleological, deontological, and virtue ethics:

 

Teleological/ Utility Deontological/ Duty Virtue Ethics
Investors Greatest possible financial return regardless of how Duty to be a good steward of the funds invested Intention to generate returns without risking investors’ stakes
Employees Creation of jobs and good salaries regardless of how Duty to pay appropriate salaries and offer a safe work environment Intention to create good jobs and not risk employee safety or reputation
Merchants Lowest possible lease rates with greatest possible sales per square foot regardless of how Duty to act as a good, honest partner in the development and operations of this venture Intention to help merchants operate successfully in new venture
Local Italian People Increased business activity, lower taxes, more employment, and increased convenience regardless of how Duty to operate the venture without damaging the environment or harming local businesses Intention to treat the local Italian people with respect and create growth in the development and operation of the venture
Local Italian Officials The end cannot justify the means if it results in compromising local and national Italian law, but if within the law, the best outcome would be to satisfy local, entrenched interests Duty to improve local roads, pay taxes, abide by laws, not damage the local habitat, and abide by local laws & customs Intention to treat the local Italian officials with respect during the development and operation of the venture, employ local people both in development and ongoing
Italian Government The end cannot justify the means if it results in compromising Italian law, but if within the law, the best outcome would be to satisfy Italian national priorities Duty to abide by national and local laws and pay appropriate national and local taxes Intention to abide by the laws of Italy, help the Italian economy to get back on its feet, and encourage future Italian investment as a result of the venture’s success
US Government The end cannot justify the means if it results in breaking US law, but if within the law, the best outcome would be to satisfy US national priorities Duty to pay US taxes, uphold US laws even when overseas Intention to abide by US law when overseas, repatriate US taxes, support US employees in overseas venture and generally be a good representative

 

All decisions that a corporation makes are ultimately based on the decisions of individuals in the corporation who will have biases and their own decision making frameworks (Nelson et al., 2011). Implicit in this grid are the perspectives of the individual executives and managers who will need to get the project back on track in Milan, based on their fiduciary duty to their stakeholders, who include investors and prospective merchants, and the bonuses and jobs of these executives could be on the line if the project doesn’t succeed. There is the perspective of the Milanese officials who have duties to entrenched local stakeholders, including environmentalists and local shopkeepers who may be displaced by a new shopping center. But, there are also perspectives of stakeholders that go beyond the immediate stage. For example, there is the perspective the US government, which has well established laws against corrupt foreign practices (FCPA), which must not conflict with how the company navigates this potential minefield. And there is the perspective of the Italian government which needs foreign investments of this scale to succeed in order to reinvigorate the national economy. In addition, there are personal wins involved for the stakeholders as well. For example, the local Milanese official, Micheli, would have the opportunity to interact with Italian national officials and demonstrate his own personal commitment to ethical behavior among important peers in his network. The following adjacency matrix describes the win-win, as Covey calls it, for each stakeholder relative to the other stakeholder:

 

Offers  >
Wants \/
Investors Employees Merchants Local Italian People Local Italian Officials Italian Government US Government
Investors Support of Westfield Support of Westfield Buy from Westfield Support of Westfield Support of Westfield Support of Westfield
Employees Support of Westfield Support of employees Use of Westfield malls Support of Westfield Support of Westfield Support of Westfield
Merchants Investing in Merchants Alignment with merchant needs Buy from merchant Support of Merchant needs Lower regulation & taxes Lower regulation & taxes
Local Italian People Investment in local business Potential for jobs Potential for jobs and economic growth Protection of local interests, environment Protection of local and national interests, environment Respect of Italian national interests, future investment
Local Italian Officials Funding for future efforts Future votes and support Future votes and support Future votes and support Access to important network Access to important network
Italian Government Potential for new investment in Italy Future votes and support Future votes and support Future votes and support Support for campaigns Stronger diplomatic and economic ties
US Government Economic development, funding Support of US firms overseas Expansion to US markets Support of US firms overseas Support of US firms overseas Stronger diplomatic and economic ties

 

In terms of the stakeholders/ influencers involved in Westfield’s decision, Westfield must strive to get all of them to meet, to be aligned, and to appreciate what each stakeholder’s needs are. This goes to the heart of the author’s recommendation of Westfield engaging the Lowy Institute to lobby the US and Italian governments to conduct an ethics education program focused on increasing cross-stakeholder understanding and empathy.

 

References

 

Associated Press. (2014). Florence hosts Italy’s first anti-corruption class for public officials.

The Guardian. Retrieved from:

http://www.theguardian.com/world/2014/aug/11/italy-first-anti-corruption-class-florence

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