Ethics in Business

Maxim Storchevoy, Associate Professor at the Department of Management of St. Petersburg School of Economics and Management, leads a track on Ethics in Business as part of the Applied Ethics Big project. Dr. Storchevoy talked to The HSE Look about the project’s goal and products it is working on.

What is ethics in business and why is it important?

Business ethics is an area of practical management and academic research that was gradually institutionalized in the second half of the 20^th century. It considers what companies and managers may and may not do in their business activities. In the 1950s, as a reaction to increasing power of large corporations, the concept of corporate social responsibility (CSR) was developed in public discussions; it required that large corporations take care of their employees, consumers, and the environment. Later, the UN became the main actor who produced various concepts and mechanisms to develop business ethics at the global level. At first, they suggested the Global Compact between business and society – a short written agreement to comply with ethical norms, respect human rights, refrain from polluting the environment, etc. – which every company may voluntarily sign. Later, they developed the Sustainable Development, Millennium Development Goals (MDG), Sustainable Development Goals (SDG), Environment, Social, and Governance (ESG) concept frameworks for investors, etc. These frameworks were accepted by businesses who are keen to shape their operations according to them and publish regular reports on their progress in this area.

Why is business ethics important? In short, it protects people against negative treatment on the part of their employers and providers of products and services. A society with strong business ethics is a safe comfortable environment where people and organizations can productively work with minimum risk of being hurt.

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Are there any specificities about Russian business ethics?

In Russia, business ethics developed much later than in Western countries since, in the Soviet Union, we lived in the command economy and only turned to the market in 1990s. For example, the CSR concept was only recognized by Russian large business in the 2000s (and not in the 1950-70s as in the USA and Europe). However, our business ethics agenda is rather synchronized with the global one and is developing with minimum delay.

In my opinion, Russian companies demonstrate the same features in business ethics as any other developing country – a low ethical culture, high tolerance for corruption, etc. Corporate relationships are often authoritarian (the boss is always right!) or patriarchal (men should be in charge). Here, we might lag a little behind the developed countries but we still demonstrate some progress every year.

What is your project about and how will it help overcoming key challenges of Russian business ethics?

The Business Ethics track specifies several practical problems that we plan to solve on the basis of academic research and development of practical managerial tools. For example, we are developing tools for assessing ethical performance of companies in the market. In order to manage something, you need to learn how to measure it. Thus, companies and regulators alike need some metrics that would allow them to properly gauge ethics. We are developing an ethics index based on the opinions of people who have some relationships at the corporate level (consumers, suppliers, employees) and the other based on AI analysis of existing texts that have been published on social networks or customer reviews websites (the work on the latter index was transferred to the HSE Centre of Artificial Intelligence recently). Both indexes allow us to rank companies within particular industries for further use by prospective employees, consumers, or regulators. We want to launch them this year.

When the companies realize that they need to improve their level of their corporate ethics, they also need a tool to do that. Here, we need ethics training to teach employees about ethics and why it is important – how to make decisions when faced with ethical dilemmas, etc. HSE University can develop high-quality training for business in Russia through academic research. Our first pilot project concerns ethics training for HSE University since academic institutions are also organizations that face certain problems with unethical behaviour on the part of both students and employees. We will first develop an ethical training programme for HSE students (both in English and Russian) that should be completed and launched by the end of this year. This will be an online training course with various modules each containing videos to be viewed, followed by a series of questions. The videos will provide examples of unethical behaviour while also offering life hacks on how to deal with it. Currently, all students who start their studies at HSE University are presented with guidelines on plagiarism, cheating and academic ethics, which serves as a very brief introduction. Our training is much broader – it is about ethical behaviour in a classroom, communication with teachers and between students and, of course, we have a large module on plagiarism, data fabrication, and ‘contract cheating’. We assume that all first-year students should go through online ethics training. Furthermore, we also realize that there is a need for ethics training for teaching staff. With this in mind, we are planning this project for the next year if everything works out with ethics training for students.

Another of this project’s outcomes that will help to incorporate ethics in business is additional professional education for managers and ethics specialists – we plan to develop two online courses for managers, which will prepare them for passing professional examinations and obtaining Certified Ethics Professional qualifications.

In addition to creating tools that can establish business ethics in companies, our project team also studies mechanisms of self-regulation ethics in the market – both in financial and non-financial sectors. In general, this mechanism requires companies to voluntarily introduce ethical standards (codes of ethics) and monitor compliance thereof. We consider what important elements should be included into these mechanisms, how to determine their effectiveness, and so on.

26 октября, 2022 г.