Sourcing ethics in the textile sector: The case of C&A

During the last years competition in the textile sector has increased, putting financial returns under considerable pressure. As a result, production has shifted to low wage countries in the third world. This has raised the relevance of ethical procedures. This paper analyses how C&A as one of the largest Western apparel companies organises its sourcing ethics, notwithstanding the financial pressure in the market. Based on interviews with Asian suppliers of C&A during the second half of 2000, we review the opinions of external stakeholders about the sourcing ethics of C&A. Finally, we evaluate C&A’s sourcing ethics from a theoretical perspective.Textile sector; audit; sourcing; code of conduct; compliance; ethics; corporate social responsibility; child labour

Collusion, reputation damage and interest in code of conduct: The case of a Dutch construction company

In November 2001, a TV program showed that many large Dutch construction companies participated in price fixing. We analyze how one such company, Heijmans, reacted to the reputation crises after the TV program by introducing a code of conduct. We present the outcomes of a questionnaire survey conducted among 140 managers just after the TV program with respect to the relevance of such a code and discuss the change in attitude of the CEO of Heijmans following after the negative publicity.Corporate social responsibility; code of conduct; collusion; construction sector; reputation; parliamentary investigation; regulation

Calvin's Restrictions on Interest: Guidelines for the Credit Crisis

Calvin’s view on the legitimacy of interest has had a great impact on the economic development of Western society. Although Calvin took a fundamentally positive attitude to interest, he also proposed several restrictions on the charging of interest. In this article, we investigate the relevance of these restrictions to the current credit crisis. We find that each of them provides a relevant interpretation of what went wrong in the build up of the credit crisis and gives directions to improve policies of banks and governments as well.Banking sector;Bible;bonus system;Calvin;credit crisis;golden rule;reciprocity;government regulation;restriction on charging interest

Profits and Principles: An Economic Framework

Keywords: profit; business ethics; business responsibility; D45; D59; D63; L21; M14; Z13;

Reputation, corporate social responsibility and market regulation

The paper investigates the role of the government and self-regulatory reputation mechanisms to internalise externalities of market operation. If it pays off for companies to invest in a good reputation by an active policy of corporate social responsibility (CSR), external effects of the market will be (partly) internalised by the market itself. The strength of the reputation mechanism depends on the functioning of non governmental organisations (NGOs), the transparency of the company, the time horizon of the company, and on the behaviour of employees, consumers and investors. On the basis of an extensive study of the empirical literature on these topics, we conclude that in general the working of the reputation mechanism is rather weak. Especially the transparency of companies is a bottleneck. If the government would force companies to be more transparent, it could initiate a self-enforcing spiral that would improve the working of the reputation mechanism. We also argue that the working of the reputation mechanism will be weaker for smaller companies and for both highly competitive and monopolistic markets. We therefore conclude that government regulation is still necessary, especially for small companies.Corporate social responsibility; market regulation

Lying in Business: Insights from Hannah Arendt’s ‘Lying in Politics’

The famous political philosopher Hannah Arendt develops several arguments why truthfulness cannot be counted among the political virtues. This article shows that similar arguments apply to lying in business. Based on Hannah Arendt’s theory, we distinguish five reasons why lying is a structural temptation in business: business is about action to change the world and therefore businessmen need the capacity to deny current reality; commerce requires successful image-making and liars have the advantage to come up with plausible stories; business communication is more often about opinions than about facts, giving leeway to ignore uncomfortable signals; business increasingly makes use of plans and models, but these techniques foster inflexibility in acknowledging the real facts; businessmen fall easily prey to self-deception, because one needs to act as if the vision already materializes. The theory is illustrated by a case study of Landis that grew from a relative insignificant into a large organization within a short period of time, but ended with outright lies and bankruptcy.Lying;deceit in business;Hannah Arendt;image-making;self-deception;accounting fraud;politics and business;Landis

Taxes and benefits in a non-linear wage equation

This paper develops a theoretical wage bargaining model, which yields a non-linear wage equation with a positive long term impact of taxes on wages as a special case. The elasticity of the replacement rate depends on the unemploy¬ment rate. The wage equation is estimated on time series data of the Netherlands. By distinguishing between short-term and long-term coefficients, we reconcile the divergence between theoretical predictions and empirical estimates of various components in the tax wedge. The last section summarizes the main findings and reviews some policy implications.Wage equation; bargaining model; tax wedge; non-linearity