Feedback week 2

Feedback for Marco:

Hello Marco,

Interesting topic to write about. Especially because the UNFCCC is a very large international organisation and very relevant for the scope of our programma.
I think however that it would be better to elaborate more on the difference between rational decision making and bounded rationality. You could explain the concepts a bit and go more deeply into the matter!
I hope this is helpfull !


Feedback

Week 2

Albert Heijn and Black Pete, Bounded rationality or rational decision making?

For a few years now there is an ongoing debate in the Netherlands about a fictional character in the Dutch tradition of Sinterklaas (comparable to Santa Claus) and his helper Black Pete. The debate is about the perceived (or apparent regarding to others) racist caricature that this Black Pete embodies. The last few years this debate intensified and especially companies with an international focus started to abandon this fictional character from their consumer stores and at other places. However, this tradition is very rooted in Dutch society and very angry reactions from the public sparked when companies started to do this. Last year a Facebook petition called "Pietitie" got 2 million likes. And a recent poll showed that 83% of the Dutch population is supportive of "Black Pete". This blogpost is about the decision of Albert Heijn to (partly) ban the Black Pete figure in their advertisements and shops.Albert Heijn stated that they wouldn't ban Black Pete on the products they sell, but they will not use him anymore for decorating their shops. So both sides in this debate will have something. Albert Heijn is a chain of supermarkets operating in the Netherlands, Belgium and some former Dutch Colonies. The mother Holding, Ahold, has also supermarket chains in North and South America.  

Rational Decision Model
The first model I will use to look at this decision is the Rational Decision mode (Simon 1972).This model assumes that people base their decisions after gathering information and decide for the most optimal outcome.  For a company like Albert Heijn, image is very important. Not only image in their main market (the Netherlands) but also outside that country. It is known that some international organisations (like the UN) had made some comments about Black Pete and that this character is seen as a racist caricature by many others outside of the Netherlands. However in the Netherlands, a very large majority of the people. As a corporation Albert Heijn aims to maxime turnover and profit.

Decision based on boundedly rational organization
Now let's look at this case from the perspective of bounded rationality. Many factors play a role in the decision making process in different levels.
The long history of Albert Heijn in the Netherlands has made that routines, rules and standard operating procedures where already inherent in the decision model of Albet Heijn.
Thus, for decisions regarding issues about decoration of the shops and the kind of holidays that are important,different mechanisms did already exist. This decision is probably based on the international business model of Albert Heijn. It is known that this Black Pete figure is controversial in the UN and the United States (where Albert Heijn has quite some actitvity), and to prevent negative publicy, Albert Heijn probaly tried to silently face out the Black Pete figure in their decorations.

Also the cultural values might have played a big role. Albert Heijn always presented itself as a supermarket-chain that is open for every Dutch citizen and not only the majority group. This is shown in many occasions, like the introduction of halal-food in supermarkets in areas where there is large muslim-minitory population, but also the fact that they advertise with the fact that people of all backgrounds can and will work at the Albert Heijn supermakerts.
However, this bounded rationality had led to the fact that Albert Heijn underestimated the reaction in the general Dutch public. Boycot Albert Heijn went viral, and right-wing blogs like Geenstijl created a big fuss about the decision of Albert Heijn regarding Black Pete. This big reaction, eventually made Albert Heijn even to partly lift the ban again. Because, as Friedman  would say, the social responsibility of business is to increase it's profits.

Development on Friedman proposition: The Social responsibility of business is to increase its profits

After reading the provided article from Milton Friedman in the New York Times Magazine¹ ,I developed a more solid position on Friedman’s proposition.
Like last week, where I more or less agreed with the proposition, my view didn’t really change a lot after the readings. Apart from Friedman’s apparently personal aversion from socialism and his multiple use of this term as a simplistic contrast to ‘the free world’ the arguments provided by him for this specific case are quite convincing.

Firstly, Friedman addresses the question regarding the responsibilities of a business.  Because a business is a vague designation and an artificial concept. A much needed clarification on the concept of what kind of businesses have what kind of responsibilities are also given by Friedman, together with notion that it is really important to clarify what it implies for whom.

Because small businesses usually don’t really have the privilege to think about corporate social responsibility the discussion is narrowed to down to big (multinational) corporations. And the responsibility is narrowed down to the corporate executive of these companies.
When we move on to the discussion after this, we will see that a corporate executive is a businessman. A businessman whose only has responsibility is to his stockholders, employees and customers.  The problem is that when this corporate executive starts using resources for these corporate social responsibilities, he also uses the resources of his stockholders, employees and even customers.

Another important thing is, who decides what corporate social responsibility is. What is social? In society there are many different views upon that. According to Friedman the only way to decide that is trough democratic political procedures and legislation with the checks and balances that are built in in that system. When a business has to make these decisions he must be legislator, executive and jurist at the same time.

However, I have some critical note on this view. The government can be very slow and ineffective sometimes. Friedman tries to refute this argument by talking about principles and morality, but this is a known fact. Also, the big influence that some corporations have in over the governmental system in some countries can also become a big issue. He fails to notice this, but makes another slam at his perceived socialist threat to the free world instead.
Nevertheless, I would argue that changes in the governmental systems should be the solution for this problem, rather than corporate social responsibility.

1) Milton Friedman, “The Social Responsibility of Business Is to Increase Its Profit,” New York Times Magazine, September 13, 1970.

Feedback week 1

Hello Maja,

Assignment 1: Industrial Ecology Puzzle
I think you did a great job in this blog. I could see your enthousiasm and that you are interested in this subject. Also I liked your sceptical and critical view, this is good for an Industrial Ecologist!

One point of improvement: maybe you could be more elaborative in your sceptism.

Assignment 2: Proposition on business
I think you did what was asked in the assignment.
Develop an ex-ante position about this proposition of Friedman.
Good job! It's good that you used arguments pro and against the proposition, however, maybe it would be good to choose a position in the end, rather than avoiding this by a semantic discussion about the definition.

Week 1: Puzzle & Business

The effect of  publicity:How did GreenPeace make Lego stop the collaboration with Shell?

 

Who didn’t grow up with it? The colorful interlocking plastic bricks of the Danish toy manufacturer Lego. Lego sometimes works together with different companies to make special kinds of lego. Star Wars Lego, Harry Potter Lego and Disneyprincess Lego to name a few.  

Lego had also a contract with Shell, an Anglo–Dutch multinational oil and gas company. In this contract, Lego got money from Shell to produce Shell Lego. This was mainly Lego in the form of Shell gas-stations and Shell racing cars. The collaboration dates to the 1960s. But recenly. This collaboration came to a sudden end. How did this happen?


Greenpeace, a huge opponent of Shell, used this collaboration to criticize Lego.  In an emotional video, based on the Lego movie, Greenpeace aired a petition to make Lego stop ‘ polluting the imagination of our children’ and stop the collaboration with Shell. The video went viral (millions of views) and Lego announced to stop this collaboration. 

 

 According to this news article in Guardian Lego initially resisted to bow for ‘these tactics used by Greenpeace that create misunderstandings among their stakeholders'. But eventually, the pressure of the public was too high for Lego.
This case is a fine example of using the public opinion and modern media tools to force companies to behave more responsibly in  environmental matters.

Ex ante positon on proposition "the business of business is to increase profit"

Firstly, I have to say that my position on the statement will not be fully ex-ante. Because I am familiar with the Friedman and his views about Corporate Social Responsibility. But I will try not to think about it very much when I explain my postion on the Friedmans proposition.

I agree with the core of the statement that the business of business is to increase profit. The most important fact that supports this view is that a business is not a charity. People start business to earn money, create a living and make profit.

But as a business, an agent in a society, you have also some social responbilities right? Yes off course, but the boundaries for social behaviour should be set by the governmental system. A business should not be able to steal from people, use violence or polute the enviroment in an harfmul way. If they do that, the government should have ways to fine and punish the businesses or people who do this.

However, business should only comply to laws created in a democratic way by the people. They have no obligation to add additional other 'social responsibilities'. After all, what is social is in the eye of the beholder..