Embedding business ethics through organizational learning and knowledge sharing

CSR Certificate 2008 – University of Geneva
Business Ethics as an Enabler of CSR: An Organisational Learning and Knowledge
Management Approach to Participatory Business Ethics
Work submitted by Nadejda Loumbeva

Certificate In Advanced Studies in CORPORATE SOCIAL RESPONSIBILITY
University of Geneva 2008

Business Ethics as an Enabler of Corporate Social
Responsibility: An Organisational Learning and
Knowledge Management Approach to Participatory
Business Ethics

By Nadejda Loumbeva

1


Contents
Summary …………………………………………………………………………………….........3

1. Concept and Importance of Business Ethics ………………………….........................5
1.1. Business Ethics and Profitability ……………………………………………..…………….5
1.2. Codes of Ethics as an Instrument of Business Ethics ……………………..…………….8
1.3. Ethical Organisation?………………………………………..………….............................9
1.3.1. Ethical Style as an Enabler of Business Ethics ………………………...…………….10
1.3.2. Normative Theories to Help Ethical Decision-Making ……………………...….........11
1.3.3. Mainstreaming of Business Ethics …………………………………..…………………12

2. Transformative Potential of Business Ethics ………………………………...………..14
2.1. Business Ethics are Participatory ………………………………………..……………….14
2.2. Business Ethics are a Gateway for Transformations ………………….…..…………...15

3. Why Business Ethics as an Enabler of Corporate Social
Responsibility ? ……..…………………………………………………………………………16
3.1. Relationship between CSR and Business Ethics …………………..……….………….16
3.2. CSR 2.0: Business Ethics as Organisational Culture …………..................................17
3.3. Business Ethics Enables Stakeholder Engagement ……………….……..……………19

4. Organisational Learning and Knowledge Management Approach to Business
Ethics ……………………………………………………………………….……………………20
4.1. Participatory Business Ethics …………………………………………………..…………20
4.2. Knowledge Management in Support of Organisational Learning …………….............21
4.2.1. Organisational Learning - Initiating Transformations ……………. ………………….22
4.2.1.1. Five Steams of Organisational Activity …………………………..………………….23
4.2.1.2. Five Streams of Organisational Activity Incorporating Business
Ethics ………………………………………………………………...…………………………...24
4.2.1.3. Ethical Learning Organisation ……………………………..…………………………25
4.3.2. Knowledge Management – Implementing the Initiated
Transformations …………………………………………………………………………………28
4.3.2.1. Participatory Business Ethics, Knowledge and Technologies ……………………28
4.3.2.2. Knowledge Management Methodologies and Tools Enabling Experiential
Learning of Participatory Business Ethics in Organisations ……………………………......29

Conclusion ……………………………………………………………………………………….36
References ……………………………………………………………………………………….37
Index ………………………………………………………………………………………………41

2


Summary
This paper analyses research in business ethics and corporate social
responsibility to bring forward the benefit of adopting an organisational
learning and knowledge management approach to business ethics in
organisations. This benefit lies in that business ethics enables corporate
social responsibility in organisations, which in turns creates conditions for
these organisations to better address demands and opportunities in their
business environment and therefore optimise their profitability. The paper
further outlines an organisational learning and knowledge management
approach to business ethics. In this, it has four parts, as summarised below:

1. Concept and Importance of Business Ethics
What is an ethical organisation? Is having a Code of Ethics enough? Is the
‘’mainstreaming’’ of a code of ethics enough? What would ‘’mainstreaming’’
mean, in this case? How can this be most effective and useful to an
organisation and its stakeholders and can it enhance corporate social
responsibility and therefore, and presumably, profitability?
This paper discusses answers to these questions in an effort to understand
the exact importance of business ethics to organisations and how
organisations can better harness the potential of business ethics for
themselves and society. In this, the paper draws on research evidence as well
as on facts and figures available in the online space and media today.
2. Transformative Potential of Business Ethics
The paper argues that business ethics is of great importance to organisations
because business ethics carries the potential of transforming organisations’
cultures in accordance with principles of social responsibility. Such a
transformation of organisational culture can lead to a transformation of the
organisation towards not only better management of stakeholder relations but
also and more fundamentally innovation in how organisations do profitable
business. In other words, such a transformation can put organisations on a
path which combines social responsibility and profitability in a way not only
reactive but also proactive to problems and challenges in their environment,
therefore carrying the beneficial transformations to the larger context in which

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they operate. In this way, business ethics can be an enabler of organisations’
corporate social responsibility.
Responsibility?
The need for transformations such as the ones discussed in part 2. carries
some urgency nowadays, because of the growing realisation that humanity
has been using, or some would say devastating, the Earth resources as if
there were more than one planet for humanity to inhabit1. The urgency of such
transformations is further amplified by the current rapidly spreading
globalisation, as well as by ‘’society’s growing awareness of the faults of some
businesses, combined with business’s own errors’’ 2 . And, I argue such
transformations can not take place UNLESS organisations adopt an
organisational learning and knowledge management approach to business
ethics. If they were to do this, business ethics would become an integral part
of organisational culture and a driving force behind what the organisation
does. In this way, business ethics would be an enabler of corporate
responsibility, in a way which transforms culture, leadership and business so
that these are good for society.
4. Organisational Learning and Knowledge Management Approach to
Business Ethics
After arguing for the need for an organisational learning and knowledge
management approach to business ethics, this paper suggests, more
specifically, such an approach. The approach combines organisational
learning and knowledge management in a sequential way:
a. It starts with adopting a ‘learning view’ of the organisation, its stakeholders
and its environment and analysing how business ethics fits, does not fit, and
should fit, with the rest of the systems in order to be transformative to the
organisation in line with social responsibility.

1
According to the World Wildlife Fund, humanity’s footprint first grew larger than global biocapacity in
the 1980s; this has been increasing every year since with demand exceeding supply by about 25% in
2003. (World Wildlife Fund Living Planet report, 2006, p. 16.).
2
Hopkins, M., (2003), The Planetary Bargain: Corporate Social Responsibility Matters, EarthScan Press,
ISBN 1853839736, 9781853839733, p. 15.

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b. After having specified how business ethics should, and would, fit with the
rest of the organisational systems, the approach proceeds to implement this
through knowledge management methods and tools (such as focus groups,
peer assists, communities of practice, e-communities, knowledge networks,
stakeholder engagement and online stakeholder engagement 3 ). This is so
that the organisation, as a whole, learns the business ethics principles
through an intended and beneficial change in the organisation’s culture. The
result of this would be distributed leadership in the organisation inspired by
the business ethics principles having been, and being, learnt, or
mainstreamed.

The paper concludes with the need to field-test the suggested organisational
learning and knowledge management approach to business ethics and see
whether its application would indeed lead to an appropriate, continuous and
profitable enabling of CSR in organisations.

1. Concept and Importance of Business Ethics
What is an ethical organisation? Is having a Code of Ethics enough? Is the
‘’mainstreaming’’ of a code of ethics enough? What would ‘’mainstreaming’’
mean, in this case? How can this be most effective and useful to an
organisation and its stakeholders and can it enhance corporate social
responsibility and therefore, and presumably, profitability?

1.1. Business Ethics and Profitability
To begin with, business ethics is profitable for organisations. As Friedman4
points out, ‘the social responsibility of business is to increase its profits’. And
so, adhering to business ethics is not a mere issue of compliance with law;

3
The nature of stakeholder engagement, as well as the rise in its use by companies, also due to the
growth of the Internet, are discussed by Business for Social Responsibility, (2003), Stakeholder
Engagement Issue Brief, Copyright 2001-2008 to Business for Social Responsibility.
http://www.bsr.org/research/issue-brief-details.cfm?DocumentID=48813
4
Friedman, M., (1970), The Social Responsibility of Business is to Increase its Profits, New York Time
Magazine, September 13, 1970; reprinted in Beauchamp, T., and Bowie, E., (1997), Ethical Theory and
Business, Prentice Hall, p. 56.

5


rather, because it can contribute towards profitability, it is also an opportunity
of utmost importance that organisations should fully use in order to be on a
continuous path of growth and profitability.

In his famous essay of 1970, Friedman further criticises the ‘’widespread
aversion to ‘’capitalism’’, ‘’profits’’ and the ‘’soulless corporation’’, pointing out
that these three are in fact the very foundations of free markets and free
society. Meanwhile, ‘’… it may well be that in the long-run interest of a
corporation that is a major employer in a small community to devote
resources to providing amenities to that community or to improving its
government. That may make it easier to attract desirable employees …
reduce the wage bill or lessen losses …’’ (p.36). In other words, such
approaches and actions on behalf of organisations are not motivated by
‘’social responsibility’’, or business ethics, but rather by what is part of good,
and profitable, business.

It follows from this that a profitable organisation is also an ethical organisation,
because of the important role stakeholders play in the bringing about of
profitability. Unless treated in an ethical manner, stakeholders who are
internal to the system of the organisation (employees) will be in no long-term
position to generate profits for themselves and the organisation. And, unless
their expectations and concerns are addressed, stakeholders who are
external to the system of the organisation (customers, governments, amongst
others) will be unwilling to participate in it as part of processes that lead to
profits, and increasing profits, of the organisation. In this way, there is all
reason why business ethics would be integrated with organisational behaviour
and decision-making.

Furthermore, Sargent notes that ‘’…in the literature on business ethics, the
tension that is evident between the proponents of business on the one hand
and ethics on the other, seems to lie in the perception that there is an inherent
balance or trade-off between following ethical practices and making profits; i.e.
more of one automatically leads to less of the other in some kind of inverse

6


proportion. While many businessmen could probably offer convincing support
for this widespread perception, there is actually an abundance of evidence in
the wider literature that overwhelming refutes this view.’’5. For example, most
recently, KPMG showed consumers are willing to reward the firms that they
do trust to deliver environmentally friendly products, with 42 per cent claiming
they were prepared to pay up to £10 a week extra for green goods or services
on their weekly shop6. In addition to this, Trudel and Cotte demonstrated that
consumers were willing to pay a slight premium for the ethically made goods
and would go much further in the other direction, i.e., they would buy
unethically made products only at a steep discount. 7 To frame such evidence,
Lazslo and Nash 8 specify the notions of ‘ethical leadership’ and ‘return on
ethics’. They further specify that business ethics is beyond Codes of Ethics
and codes of business ethics. Rather, it is a ‘conduct of business that enables
a company to optimize its returns to shareholders, employees, customers,
business partners, local communities and the environment. It is a dynamic
standard for pursuing profitability and growth that allows future generations an
equal opportunity for growth and development.’

Such evidence and theory leads me to believe that business ethics does pay
higher profits to organisations and businesses. And so, understanding what
business ethics is, which is what I try to do in the first section of this paper, as
well as approaching this from a learning and knowledge perspective, which is
what I try to do in the following sections, is very important for organisations to
better leverage business ethics in what they do and be as profitable as they
wish to be.

5
Sargent, T., (2007), ‘’Towards an Integration in Applied Business Ethics: The Contribution of
Humanistic Psychology’’, Electronic Journal of Business Ethics and Organisation Studies, Vol. 12, No. 2,
published by Business and Organisation Ethics Network, http://ejbo.jyu.fi/articles/0401_3.html .
6
Singh, R., (2008), ‘’Sceptical Consumers Prove Green Business Has a Long Way to Go: KPMG survey
Reveals Many Consumers Remain Unimpressed by Corporate Efforts to Limit Environmental Impacts’’
BusinessGreen.com, Jul1st 2008,
http://www.businessgreen.com/business-green/news/2220439/sceptical-consumers-prove-green .
7
Trudel, R. and Cotte, J., (2008), ‘Does Being Ethical Pay?’, in MIT Sloan Management Review, posted
May 12, 2008, http://sloanreview.mit.edu/wsj/insight/brand/2008/05/12/
8
Lazslo, C., and Nash, J., (2007), Six Facets of Ethical Leadership, an Executive’s Guide to The New
Ethics in Business, , Electronic Journal of Business Ethics and Organisation Studies ,Volume 12, No. 2.

7


1.2. Codes of Ethics as an Instrument of Business Ethics
Nowadays, many organisations have Codes of Ethics. More and more
organisations go through the process of creating such Codes as well as
through efforts of implementing them 9 . Presumably, ethical behaviour of
organisations could be judged by whether this organisation has a Code of
Ethics and how this organisation applies it. … Is this the case?

In general, there seem to be criticisms of codes of (organisational or corporate)
ethics (as already noted by Laszlo and Nash10 in the previous section). Think
of Enron. They had a Code of Ethics. Did it work? It certainly did not. Enron
had a 65-page long Code of Ethics which was given to all employees. As
Steiner and Steiner 11 note, its pages read about obeying the law, treating
customers fairly and avoiding conflict of interest. There is nothing in Enron’s
Code of Ethics about specific ethical principles and values of the organisation,
as well the social responsibility of Enron to communities. Most importantly,
even as it was, the Code of Ethics was ignored by Enron’s top executives. A
closer look at it12 shows that Enron’s Code of Ethics was exclusively about
protecting Enron’s interests rather than about cultivating values, virtues and
ethical norm approaches in those who are part of the organisation. In other
words, if Codes of Ethics are important in organisations’ ethical behaviour,
then it is not just about having one but also about what is there in it. It
certainly would also be about how it is used and learnt by the organisation, in
other words, it should not stay in the document, but through a learning
process, become part of the hearts and minds of those who work in and form
the organisation13.

9
Miller, W., (2004), Implementing an Organisational Code of Ethics, International Business Ethics
Review, Volume 7, Issue 1. http://www.business-ethics.org/newsdetail.asp?newsid=50 .
10
Lazslo, C., and Nash, J., (2007), Six Facets of Ethical Leadership, an Executive’s Guide to The New
Ethics in Business, , Electronic Journal of Business Ethics and Organisation Studies ,Volume 12, No. 2.
11
Steiner, G., and Steiner, J., (2005), Business, Government and Society: A Managerial Perspective,
McGraw Hill Professional, p. 592.
12
Arbogast, S., (2007), Resisting Corporate Corruption, M and M Scrivener Press, p63.
13
The importance of approaching Codes of Ethics and business/organisational ethics from a learning
organisation perspective is, as already explained, the subject of this work and will be further discussed
and elaborated upon later in this paper.

8


A further criticism of Codes of Ethics is that these are often nothing more than
compliance codes aimed at meeting the barest of legal requirements. And, a
compliance code is a straightforward statement about do’s and don’ts14 which,
by its nature, would fall short of creating conditions for the building of values
and virtues in the organisation, as part of a way of the organisation’s culture
and approach to business. Such values and virtues would help to make
decisions in circumstances in business life that are challenging and
ambiguous, with which business is abundant, whereas legal compliance rules
would not.

This leads us to conclude that the mere existence of a Code of Ethics in an
organisation can not, in any way, be a prerequisite for ethical behaviour on
15
behalf of this organisation. As Miller points out: ‘’Simply writing and
distributing a code document to employees is … insufficient to reap the many
potential benefits an organization can gain by rolling out a code document in a
thoughtful and effective way. By dropping a legal-based code on the desks of
employees, organizations are likely do little more than waste precious time
and resources.’’ In other words, despite that Codes of Ethics can be an
instrument of business ethics, this is an instrument which organisations may
fail to use in order to deliver on its potential.

1.3. Ethical Organisation?
The above make it clear that business ethics is of great importance to good
business, and that it can not be contained within a Code of Ethics.

And so, then, how can an organisation be ethical?
I argue an ethical organisation is one which has virtues and values built upon
ethical principles at the very bottom of its corporate culture, as well as
normative approaches to implementing such values and principles, and which
behaves according to them and so justifies its behaviour16. I also argue that

14
Mitchell, C., and Curry, J., (2003), International Business Ethics, World Trade Press, p.93.
15
Miller, W., (2004), Implementing an Organisational Code of Ethics, International Business Ethics
Review, Volume 7, Issue 1. http://www.business-ethics.org/newsdetail.asp?newsid=50 .
16
Evidence and argument in support of this statement are further explored in the rest of part 1 of this
paper.

9


an organisation becomes ethical through the mainstreaming of such virtues,
values, and principles in the culture of the organisation.
And, is there a role for Codes of Ethics in organisations being ethical?
Clearly, a Code of Ethics is not enough for an organisation to be ethical, as
noted above. Having a Code of Ethics and distributing this to all employees
does not mean they will understand it and identify with it. The difference
between using Codes of Ethics as instruments of compliance as opposed to
instruments of cultivation of ethical behaviour should be made. Importantly, for
the latter, the Codes of Ethics should rest on ethical principles and norms and
be an instrument with which those principles and norms are brought in the
culture, approaches and therefore behaviour of the organisation.

1.3.1. Ethical Style as an Enabler of Business Ethics
To explore this further, we may think that an ethical organisation is one that
behaves ethically. A number of different approaches to and definitions of what
is ethical behaviour exist in the literature. For example, Solomon17 refers to
the notion of an ‘ethical style’ underlying all ethical behaviour. This ethical
style is grounded in ‘’virtues’’ that influence judgement and action. Geuras and
Garofallo 18 further refer to ethical behaviour as the intersection between
attitudes, beliefs and values which define our perspective as we act and judge
others’ actions. Geuras and Garofallo take the notion of ‘’ethical style’’ to
specify its idiosyncrasy and individuality. In other words, different people have
different ethical styles, just as they have different learning styles, different
personalities, etc. According to these authors, people are unaware of their
ethical style until they take the time to examine their thoughts and actions.

We may think that organisations, like people, have ethical styles too, as part
of the thinking and feeling of the organisation, in other words, as part of the
organisational culture. Indeed, some research by Lovell shows that, in
organisations, ethical behaviour, or lack of such, is ‘’only infrequently a

17
Solomon, R., (1999), as referred to in Geuras, D. and Garofallo, C., (2005), Practical Ethics in Public
Administration, p. 194.
18
Geuras, D. and Garofallo, C., (2005), Practical Ethics in Public Administration, p. 194.

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function of personal values’’ 19 . Rather, this appears to be generated by
externally generated pressures. In Lovell’s research, personal values appear
to be different than organisational values, in fact opposing one another. From
this, we can infer that individual ethical styles may be quite different from
organisational ethical styles, as well, and possibly often at conflict with one
another. If this were to be true, then how would we make sure the ethical style
of an organisation is one which fully aligns with business ethics, per se?
Apparently, high personal values are not enough for an ethical organisation.

1.3.2. Normative Theories to Help Ethical Decision-Making
In addition to the above argument, having ethical values and virtues that are
shared across the organisation is, still, insufficient for an ethical organisation.
Ethical styles, as well as an overall ethical style, would come about after
values and virtues are blended with normative theories for construing ethical
decisions20. As part of organisational behaviour, we can think of values and
virtues being relatively more emotional, whereas normative theories being
relatively more rational. Integrating organisational learning and knowledge
management approaches to business ethics as part of the organisation’s
management systems would give rise to ethical behaviour, as illustrated
below:

Ethical Values and Ethical Norms and
Virtues (Emotional) Theories (Rational)

Organisational Learning
and Knowledge
Management as part of
Management Systems

Ethical decision-making

Ethical behaviour

19
Lovell, A., (2002), ‘Ethics as a Dependent Variable in Individual and Organisational Decision Making’,
Journal of Business Ethics, Volume 37/2, pp145 – 163. (p.145)
20
Schotsmans, P., (1999), ‘Personalism in Medical Ethics’, Ethical Perspectives, Volume 6, Issue 1.

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In particular, the above illustrates how existing Ethical Values and Virtues
(Emotional) would blend with existing Ethical Norms and Theories (Rational)
to result in on-going organisational learning and knowledge management,
motivated by both of the above, as part of management systems. This would
give rise to ethical decision-making, and ethical behaviour, as part of the
organisation’s business. The process of organisational learning and
knowledge management, although driven by the values and virtues and
norms and theories, would also be feeding back into them to continuously
change how these are understood individually and collectively in the
organisation. The process of ethical behaviour would be doing the same, by
feeding back into the process of knowledge management and organisational
learning, and directly into the values and norms. Albeit merely theoretical,
such a perspective helps to understand how ethical behaviour would arise in
organisations via organisational learning and knowledge management, as a
result of an interplay among virtues, values, theories and norms.

1.3.3. Mainstreaming of Business Ethics
The above perspective is further informed by the nature of business ethics
mainstreaming. Mainstreaming of Codes of Ethics, and business ethics, is an
issue little looked at in the literature despite of its importance and relevance to
organisational learning. Grosser and Moon 21 define ‘’mainstreaming’’ as the
combination between ‘’political’’ and ‘’technical’’ (i.e., leadership vs.
monitoring, evaluation and reporting) in the context of gender mainstreaming
in organisations. Business ethics mainstreaming is also defined as a long-
term process of change on behalf of organisations to respond, adopt and
incorporate issues at stake. In other words, this would be a change in the
perception and cognition of organisations with a view towards more ethical
organisational behaviour22.

21
Grossner, K. and Moon, J., (2004), Gender Mainstreaming and Corporate Social Responsibility:
Reporting Workplace Issues, No. 27-2004 ICCSR Research Paper Series – ISSN1479-5124.
22
Crane, A. and Matten, D., (2007), Business Ethics: Managing Corporate Citizenship and Sustainability,
Oxford University Press, p.518.

12


Based on the above, if we can think of business ethics mainstreaming as the
combination between a soft approach of inspirational leadership and a
technical approach of monitoring, evaluation and reporting. If those two were
applied (preferably in parallel) in an organisation, the result would be an
integration of business ethics in the culture and operations of the organisation,
i.e., as part of organisation approaches, behaviours and decision-making. In
this way, the result would be the organisation having learnt how to use and
project ethical values, motivations and approaches in its work.

The above definition, albeit compelling, could be very difficult to put into
practice and achieve. In fact, how business ethics would be more than a Code
of Ethics in organisations, i.e. mainstreamed in the organisations’ culture and
operations, is informed by research taken from the field of organisational
strategy. The human factor in strategic decisions has been noted by
Roxburgh23. In particular, he notes that organisations (in Roxburgh’s research
– companies) must recognize the impact of behavioural economics on
profitability and address the challenges posed by cognitive biases and agency
problems. In other words, concentrating power in the hands of a few in an
organisation is not at all profitable because it disables it from integrating in
and understanding its environment. In a similar way, a centralised approach to
business ethics, in terms of concentrating authority and ethical judgement in
the hands of a few would not create conditions for an ethically learning
organisation. A new approach to organisational thinking and behaviour, one in
line with distributed and not so much centralised leadership, would enable
business ethics, as in fact any other function, to be mainstreamed effectively
and so with a positive impact on profitability because of the higher focus on
stakeholder needs, expectations and welfare. Distributed cognition in
interconnecting problems and solutions in organisations is what is key for
them to work well in the global political economy.24 Based on this, we can

23
Roxburgh, C., 2006, The Human Factor in Strategic Decisions, The McKinsey Quarterly member
edition,http://www.mckinseyquarterly.com/Strategy/Strategic_Thinking/The_human_factor_in_strategic_
decisions_1731 (online edition) .
24
Roxburgh, C., 2003, Hidden Flaws in strategy, The McKinsey Quarterly member edition,
http://www.mckinseyquarterly.com/Strategy/Strategic_Thinking/Hidden_flaws_in_strategy_1288?gp=1
(online edition): In earlier research, Roxburgh pointed out that human decision-making in organisations
is inherently flawed if standing on the principle of rational, rather than behavioural economics. Human

13


conclude that an organisation can not take ethical decisions unilaterally, by
rather multi-laterally, i.e., in the context of distributed leadership and decision-
making.

2. Transformative Potential of Business Ethics
In this section, it is argued that business ethics carries the potential of
transforming organisations’ cultures in accordance with principles of corporate
social responsibility. Such a transformation of organisational culture can lead
to a transformation of the organisation towards not only better management of
stakeholder relations but also and more fundamentally innovation in how
organisations do profitable business. Such an innovation, via the very
organisational culture from which it would have been initiated, would be not
only profitable for the company, but also beneficial for society. In this way,
business ethics can be an enabler of organisations’ corporate social
responsibility.

2.1. Business Ethics are Participatory
In his book ‘’The Emergence of Leadership: Linking Self-Organisation and
25
Ethics’’, Griffin discusses the potential of business ethics to enable and
drive beneficial transformations in organisations. Griffin notes that traditional
business ethics is based on the idea that the leader of the organisation is
outside of its system as an autonomous individual. Griffin argues that, rather,
a new notion of ethics needs to be developed, one which is not so much
about control and more about enabling, not so much about organisation
survival and much more about organisation participation. We can see how this
means a shift in the very way in which we understand the notion of
organisation today and how this leads to the notion of business ethics being
perceived as a construct that is continuously co-created. We can also see

decisions are biased by over-confidence, herding instincts and false consensuses and so if only a few
people have power to make them the organisation will constantly err. Based on this research, it is
concluded that centralised power can not be adequate in enabling a profitable organisation. It follows
from this that an organisation can not take ethical decisions unilaterally, but rather multi-laterally, i.e., in
the context of distributed leadership and decision-making.
25
Griffin, D., (2002), The Emergence of Leadership: Linking Self-Organisation and Ethics, Routledge,
p.39 .

14


how this means a shift from the three ‘’C’’-s to the three ‘’I’’-s 26, i.e., a shift
from Command, Control and Compliance to Initiative, Imagination and
Innovation. This new notion of business ethics is, understandably,
participatory in terms of how its content is constructed. Mission, shared vision
and commitment to the whole will be of increasing importance to the future
formulation of business ethics in organisations in a way that is a continuum,
more about a process of ethics and less so about content.

2.2. Business Ethics are a Gateway for Transformations
In this way, business ethics can be a gateway to beneficial transformations in
organisations. On the other hand, and in a cyclic sort of a way, such
transformations would be essential for business ethics to stick in
organisations and work in terms of creating better, socially responsible and
environmentally sustainable organisations, in this way more profitable
organisations. As Visser27 puts it across:
‘’ The field of what is variously known as CSR, sustainability, corporate
citizenship and business ethics is ushering in a new era in the relationship
between business and society. ‘’
‘’… we are shifting from the old concept of CSR - the classic notion of
"Corporate Social Responsibility", which I call CSR 1.0 - to a new, integrated
conception - CSR 2.0, which can be more accurately labelled "Corporate
Sustainability and Responsibility" …’’

Visser points out that this new concept of CSR is much more participatory in
its formation as opposed to previously. He further points out that businesses
still practicing CSR 1.0 (and in this way, business ethics 1.0) will be left
behind rapidly as they fail to integrate in the globalising marketplace and
political economy we are facing, and living in, today. In this way, we can see
how an approach to business ethics which is inherently participatory is
needed for organisations to, above all, be in a position to enable CSR 2.0, or

26
As mentioned by Gary Howe, Director of Strategic Planning at the International Fund for Agricultural
Development, during a recent Net Impact Europe Conference (June 2008).
27
Visser, W. (2008) CSR 2.0: The New Era of Corporate Sustainability and Responsibility, CSR
Inspiration Series, No. 1.

15


which I will call Participatory CSR. Such an approach, which could be labelled
Participatory Business Ethics, is what I explore on the final section of this
paper.

Responsibility?
The need for transformations such as the ones discussed in part 2. carries
some urgency nowadays, because of increasing pressures related to global
warming and climate change28. The urgency of such transformations is further
amplified by the current rapidly spreading globalisation, and, most importantly,
by ‘’society’s growing awareness of the faults of some businesses, combined
with business’s own errors’’29. And, I argue such transformations can not take
place UNLESS organisations adopt an organisational learning and knowledge
management approach to business ethics. If they were to do this, business
ethics would become an integral part of the organisational culture and a
driving force behind what the organisation does. In this way, business ethics
would be an enabler of corporate responsibility, in a way which transforms
culture, leadership and business so that these are good for society.

3.1. Relationship between CSR and Business Ethics
There is little in the literature to infer about and/or illustrate the relationship
between business ethics and corporate social responsibility. This may be
because the two are often seen as intimately related in a way almost bespoke.
It could also be because CSR encompasses business ethics as a key
component, and therefore intermittently discusses its nature 30 . Still, Sims 31
points out that good business does not necessarily mean good ethics. I would

28
According to the World Wildlife Fund, humanity’s footprint first grew larger than global biocapacity in
the 1980s; this has been increasing every year since with demand exceeding supply by about 25% in
2003. (World Wildlife Fund Living Planet report, 2006, p. 16.) .
29
Hopkins, M., (2003), The Planetary Bargain: Corporate Social Responsibility Matters, EarthScan
Press, ISBN 1853839736, 9781853839733, p. 15.
30
Hopkins, M., (2008), personal communication.
31
Sims, R., (2003), Ethics and Corporate Social Responsibility: Why Giants Fall, Greenwood Publishing
Group, p. 21.

16


add that good ethics (if properly mainstreamed, as discussed previously) does
mean good corporate responsibility and from thereon - profitability. High
ethics, high corporate responsibility and good business can co-exist. As
already pointed out on page 4, the more ethical an organisation is, the higher
chance for it to be also responsible, sustainable, and profitably so32.

Sims further points out the need for a stakeholder approach to corporate
social responsibility which is ethical and participatory, in other words, a
stakeholder approach to corporate socially responsible behaviour. This is in
line with Visser’s comments33 discussed earlier about the need to move from
CSR 1.0 to CSR 2.0, i.e., a CSR which is participatory within and among the
organisation, other organisations and stakeholders. In addition, CSR 2.0
would, by the nature of this stakeholder participation, harness the power of
Web 2.0 technologies and approaches to bring CSR into the increasingly
popular realms of Web 2.0.

3.2. CSR 2.0: Business Ethics as Organisational Culture
Here, there is the need to expand on the notion of Participatory CSR (or ‘’CSR
2.0’’ as discussed in part 2.). Participatory CSR is about a process of
constructing corporate social responsibility and not so much about content.
Content is important as much as it is part of the process. It follows from this
that having the appropriate process, as part of Participatory CSR, in place, is
paramount to ensure the relevance and usefulness of the content with respect
to the CSR which is being constructed. Distributed and not centralised
knowledge and information are key to Participatory CSR. As already pointed
out in 2.2., Participatory Business Ethics are the very fabric via which
Participatory CSR would be enabled in organisations. Furthermore, a CSR
measurement framework should always measure processes of social

32
‘…From the point of the view of business ethics, an anti-racist organization culture not only increases
profits but also enhances enterprises ability to carry their communal responsibility for the society in
which they operate. The business world is not an autonomous sphere disconnected from the
surrounding society. On the contrary, it has a close relationship with the functioning of society and the
well-being of citizens …’, Sinonen, T., (2007), Racism and Business Ethics, Business and Organisation
Ethics, Volume 12, No 2.
33

17


responsiveness (in terms of business environment scanning, stakeholder
engagement and management of stakeholder relationships, and issue
management) in addition to considering principles of social responsibility
(which we may think would be contained in a Code of Ethics) and outcomes of
social responsibility (Hopkins, 2005 34 ). In other words, participatory and
distributed processes which incorporate and actively use CSR ethical values
and principles are paramount to achieving positive social responsibility results,
though a culture of Participatory Business Ethics.

Visser’s understanding CSR 2.0 (Participatory CSR) is illustrated below for
reference35:
Web 2.0 CSR 2.0
Being defined by watchwords like Being defined by "global commons",
"collective intelligence", "innovative partnerships" and "stakeholder
"collaborative networks" and "user involvement".
participation".
Tools include social media, Mechanisms include diverse stakeholder
knowledge syndication and beta panels, real-time transparent reporting and
testing. new-wave social entrepreneurship.
Is as much a state of being as a Is recognising a shift in power from
technical advance - it is a new centralised to decentralised; a change in
philosophy or way of seeing the scale from few and big to many and small;
world differently. and a change in application from single and
exclusive to multiple and shared.
It follows from this that Participatory Business Ethics, as part of Participatory
CSR, would be about decentralised and not centralised knowledge, as well.
Furthermore, Participatory Business Ethics would be the set of dispositions
and behaviours which would enable Participatory CSR happen within and
among organisations, as well as more widely as part of the conception and
development of all sorts of interactions. In other words, as part of such
framework, business ethics and organisational culture are one and the same.
We should note that this will be a more and more pronounced pressure for
change on companies as Web 2.0 takes stronger and firmer hold of our
societies and civilisations. As Dimitriades36 notes, consumers are increasingly

34
Hopkins, M., (2005), Measurement of Corporate Social Responsibility, International Journal of
Management and Decision Making, Vol 6/3,4, pp 213 – 229.
35
36
Dimitriades, Z., (2007), Business Ethics and Corporate Social Responsibility in the e-Economy: A
Commentary, Electronic Journal of Business Ethics and Organisation Studies, Vol. 12/2 .

18


more important than manufacturers in the new digital economy which shifts
attention and public pressure towards social responsibility of organisations:

‘’Just as the industrial economy gradually evolved from the agricultural
economy, so the industrial economy is currently giving way to the emerging
digital economy. In the new economy technology becomes the dominant
factor of wealth generation "rather than land, labour and particularly capital",
whereas "information and its proper management through information
technology are making the difference and separating the winners from the
losers".

In this way, the increasing pressure on organisations to be more and more
socially responsible in their business will more and more push them to be
inherently (i.e., in terms of organisational culture) , rather than just
superficially (i.e., in terms of only Codes of Ethics), ethical.

3.3. Business Ethics Enables Stakeholder Engagement
This brings us to think that CSR is about engaging with stakeholders whose
needs, wants and expectation can no longer be ignored. And, such
engagement, for it to be successful, would have to be initiated and conducted
over channels of communication that are receptive to what stakeholders and
organisations may need and want as they interact. Unless ethics, and
business ethics, underlies such channels of communication from the point of
view of dispositions and readiness to absorb information, such communication
would be ineffective. As already pointed out in the first section of this paper,
such dispositions and readiness to absorb information would be motivated
both by ethical values and virtues, and ethical norms and theories. These
would be part of how an organisation ‘’feels’’ and ‘’thinks’’, for it to be
receptive to and engaging with stakeholders.

From this point of view, it is not difficult to see the importance of business
ethics as an enabler of CSR: unless organisations are inherently ethical, they
would not be in a position to properly engage with their stakeholders; their
attempts at corporate social responsibility would be insincere, even if

19


organisations do not realise this, and ineffective, as stakeholder engagement
which brings the company to understand and learn about stakeholder needs
and expectations would not take place.

The below diagram further illustrates this:

Business Ethics as a is an enabler of Corporate Social
set of principles and Responsibility as an
values underlying a integral part of the
business business

Organisational Learning and Knowledge
Management approaches, methods and tools
which, if applied to mainstream business
ethics in the organisation, would ensure that
business ethics effectively enables corporate
social responsibility

4. Organisational Learning and Knowledge Management Approach to
Business Ethics
The final section of this work suggests a way in which business ethics can be
integrated in organisations via an organisational learning and knowledge
management approach.

4.1. Participatory Business Ethics
The previous three sections bring us to the need for an organisational learning
and knowledge management approach to business ethics. Such an approach
is here called Participatory Business Ethics approach in analogy with Visser’s
notion of CSR 2.0, or what I would call Participatory CSR. Arguments in
previous sections show that, if approached in this way, business ethics can
enable corporate social responsibility, and have a positive impact on
profitability.

20


Participatory Business Ethics is about constructing the notion of business
ethics in a participatory way, both bottom-up and top-down, in organisations.
The participatory construction of this notion would be about all which form part
of the notion, i.e., both ethical values and virtues and ethical norms and
theories. This would be done continuously and incrementally as well as bring
together needs and expectations of stakeholders not merely from within but
also outside of the organisation. Like Participatory CSR, Participatory
Business Ethics would be about a new way of understanding and approaching
stakeholder relations – through a process which is distributed (i.e., not
centralised) and continuous. Furthermore, in line with organisational learning
and knowledge management, the focus of Participatory Business Ethics
would be on a process of continuous co-creation of values and
understandings about ethical behaviour, rather than a fixed system of such to
be implemented. In this way, Participatory Business Ethics would be inherent
to organisations in ways that make it part of the organisation’s culture. A
Participatory Business Ethics approach can be part of bringing about Visser’s
CSR 2.037, which I also call Participatory CSR.

4.2. Knowledge Management in Support of Organisational Learning
In order to understand the organisational learning and knowledge
management approach to Participatory Business Ethics, it would be important
to first understand the relationship between organisational learning and
knowledge management. These are not one and the same. Gorelick, Milton
and April 38 define knowledge management as a method for organisational
learning. Clearly, knowledge management puts in place contexts, processes
and technologies which make organisational learning possible. These authors
further define the two concepts like this:

‘’Organisational learning represents a dynamic synergy between people,
actions, symbols, and processes in an organisation.’’ (p.26)

37
38
Gorelick, C., Milton, N., and April, K., (2004), Performance Through Learning: Knowledge
Management in Practice, Butterworth-Heinemann .

21


‘’Knowledge management programs, processes and tools support
organisational learning and address more than the sum of the knowledge of
each member of the organisation or the sum of individual learnings …
individual learning is not sufficient to produce the systematic knowledge
required for organisational survival and growth. ‘’ (p.27)

In other words, these authors consider the organisational complexity vis-à-vis
people, thoughts, symbols, actions, and processes to enable organisational
learning IF AND WHEN leveraged via knowledge management. Such learning
would take place through knowledge management methods and tools creating
conditions for people to share knowledge and learn from each other. In this,
organisations are living organisms39, like people. They have a feeling, thinking
and behaving on their own, in fact such that may not always correspond with
the feeling, thinking and behaving of the individuals who form, and are part of,
the organisation but which should for learning in any organisation to take
place in a sustainable way40. A Participatory Business Ethics approach takes
this into account by adopting an organisation view (learning and system view),
then an individual person view (learning and knowledge view), all as part of
vision and processes to effect change in the culture of the organisation, and
business.

4.2.1. Organisational Learning - Initiating Transformations
The Participatory Business Ethics approach starts with adopting a ‘’systems
view’’ of the organisation, its stakeholders and its environment and analysing
how business ethics fits, does not fit, and should fit, with the rest of the
systems in order to be transformative to the organisation in line with social
responsibility. I explain what I mean by this below.

39
Senge, P., Scharmer, O., Jaworski, J., and Flowers, B. S., 2008, Presence: Human Purpose and the
Field of the Future, Bantam dell Pub Group, ISBN:0385516304.
40
Management in Practice, Butterworth-Heinemann .

22


4.2.1.1. Five Steams of Organisational Activity
In his book ‘’The Fifth Discipline’’, Senge puts across the concept of
organisational learning as five streams of organisational activity happening
together in organisations41:
PERSONAL MASTERY – Individual learning about reality
SHARED VISION – Ability to bring about group interest and enthusiasm in
order to carry out activities and programs, rather than compliance
MENTAL MODELS – Assumptions and generalisations which enable
processing of information, dealing with complexity and taking of action
LEARNING IN GROUPS AND TEAMS – Collective construction of ideas and
approaches, thinking together through challenging and deconstructing of
individual assumptions
SYSTEMS THINKING – Understanding phenomena in terms of their total
context and relationships among the different parts, as well as how affecting
one part affects all others without planning for it to do so

In other words, a learning organisation would be about all of these five
streams of activity happening in parallel and flowing in and out of each other.
Furthermore, in terms of corporate social responsibility, the above streams of
activity would take place not just within the organisation, but also among this
and other organisations and stakeholders (as discussed in section 3.3 of this
work). As Giri and DallMayr 42 point out points out, there is a need for
rethinking systems. And, in rethinking systems, there is the need to move
away from undemocratic power to radical democracy. I.e., power should be
transformative and non-dominating as part of webs of relationships which
constitute self and society.

41 41
As described by Gorelick, C., Milton, N., and April, K., (2004), Performance Through Learning:
Knowledge Management in Practice, Butterworth-Heinemann, p.26 .
42
Giri, A. K., and DallMayr, F., (2002), Conversations and Transformations: Towards a New Ethics of
Self and Society. , Lexinton Books, page 278 .

23


4.2.1.2. Five Streams of Organisational Activity Incorporating Business
Ethics
How would such understanding inform our Participatory Business Ethics
approach? It is obvious that Senge’s learning organisation is about a process
of learning about information, so that this becomes knowledge, and doing this
together in organisations. Participatory Business ethics would have to be part
of all of the above streams of activity in order to be fully and strongly
integrated in the organisation as well as in how this organisation interacts with
the outside and learns accordingly. In the continual construction of what doing
business in an ethical way means, business ethics would also have to
deconstruct the traditional notion of power in order to enable a Participatory
Business Ethics which is, so to say, non-hierarchical, fluid and across the
organisation and organisations.

Here is how Participatory Business Ethics would play in terms of Senge’s five
organisational activity streams:

PERSONAL MASTERY OF BUSINESS ETHICS – Individual learning about
what ethics is, ethical values, principles, virtues, norms and behaviour, in the
context of the organisation’s business, and vice-versa
SHARED VISION INCORPORATING BUSINESS ETHICS – Have concern
and consideration for all stakeholders when carrying out projects and
programs, this motivated by ethical principles, values, virtues and norms at
the bottom of decision-making
MENTAL MODELS BUILT ON BUSINESS ETHICS – Have and use
assumptions and generalisations which enable processing of information,
dealing with complexity and taking of action in a manner which corresponds
with ethical principles, values, virtues and norms
LEARNING IN GROUPS AND TEAMS WHICH IS CONTEXTUALISED BY
BUSINESS ETHICS – Collective construction of ideas and approaches from
the point of view of ethics (and related values, virtues and principles), thinking
together through challenging assignments and deconstructing individual
assumptions through the prism of business ethics, learning continuously

24


about what ethical behaviour is in the context of the organisation and its
stakeholders
SYSTEMS THINKING INCORPORATING BUSINESS ETHICS –
Understanding phenomena in terms of their total context and relationships
among the different parts, as well as how business ethics is/should both
imbue the total context and be an integral part

The above, apart from describing Participatory Business Ethics, can also
constitute a framework for enabling, as well as evaluating, Participatory
Business Ethics in organisations.

4.2.1.3. Ethical Learning Organisation
Whereas the previous section alludes to how organisational learning itself
happens via the prism of business ethics, this section aims to bring forward
how the organisation itself happens, via organisational learning through the
prism of business ethics and with this organisational learning as one key
process to its existence.

There has been a lot of literature on the nature of the learning organisation
(and Senge’s view on the learning organisation was already discussed in
previous sections). Here, I will not go into this, but rather illustrate, through the
power of a schema, my understanding of the components of a learning
organisation. Furthermore, in order to bring this forward as an understanding
of what an ethical learning organisation is, I will base this schema on quotes
that speak of challenges confronting business ethics in organisations today.
This will help to understand how organisational learning, inclusive of business
ethics, takes place in the bigger, and learning, organisation:

25


CONSCIOUSNESS LEARNING
a certain level and form of
consciousness gives rise to a
‘People doing bad make bad certain form of learning, and
business cultures, and bad business vice-versa ‘… the basic problem with the new
cultures make even good people do species of global institutions is that
bad. John Renesch calls this chain they have not yet become aware of
reaction a 'pandemic' which can only themselves as living. … Can living
be defeated when the good get institutions learn to tap into a larger
'conscious'. Can the necessary level field to guide them toward what is
of conscious be achieved? or how healthy for the whole? What
close can we get? can bad people get understanding and capacities will this
conscious too? what about those who require of people individually and
are fully conscious, and good, but collectively?’
existing systems influence
lack the courage to make a stand in Senge, Scharmer, Jaworski, and
the form of learning,
the face of intimidation?’ whereas learning may Flowers, 2008
44
43
Klempner, 2006 uncover previously
unknown characteristics
about the systems and
therefore change the
existing systems perception about them
influence the level, action learning
and form, of which arises
consciousness from behaviours
rather than
consciousness
and conscious
thinking

SYSTEMS BEHAVIOURS
existing systems give rise to
certain behaviours, whereas
some behaviours may have an
‘… ethical misconduct is usually not effect on existing systems ‘Behaving ethically depends on the
because of individual transgression ability to recognize that ethical issues
but often the result of cultural failures exist, to see from an ethical point of
and system breakdown.’ view. This ability to see and respond
45
Boisjoly, 1993 ethically may be related more to
attributes of corporate culture than to
attributes of individual employees.
Efforts to increase ethical standards
and decrease pressure to behave
unethically should therefore
concentrate on the organization and
its culture.’
46
Chen, Sawyers and Williams, 1997

43
Klempner, G., 2006, Editor’s Note, Journal of Philosophy for Business, Issue Number 31.
http://www.isfp.co.uk/businesspathways/issue31.html .
44
Senge, P., Scharmer, O., Jaworski, J., and Flowers, B. S., 2008, Presence: Human Purpose and the
Field of the Future, Bantam dell Pub Group, ISBN:0385516304 .
45
Boisjoly, R.M., 1993, Personal Integrity and Accountability. Accounting Horizons, Issue Number 7 /1 .
46
Chen, Y., Sawyers, R., and Williams, P., 1997, ‘’Reinforcing Ethical Decision Making Through
Corporate Culture’’, Journal of Business Ethics, Issue Number 16/8 .

26


In particular, the above integrates learning (and the learning organisation)
together with consciousness, systems and behaviours. The relationships
amongst all these which dynamically constitute a learning organisation are
also explained. An explanation of consciousness, learning, systems and
behaviours follows below and builds on Senge’s model of organisational
learning:

CONSCIOUSNESS - Individuals learn together in organisations which
cultivate a certain level, and way, of consciousness.
LEARNING - This learning, which creates conditions for a certain level, and
way, of consciousness, happens in the context of systems within the
organisation and among itself and other organisations.
SYSTEMS - In other words, the systems are the institutional and relational
conditions which cultivate a certain level, and way, of consciousness in
organisations.
BEHAVIOURS - In the end, the systems, learning and consciousness give
way to certain, and not other, behaviours of those who are part of the
organisation. These also give way to a certain behaviour the organisation
adopts as it interacts with the world outside.

How would this be Participatory Business Ethics? If there were to be not just a
learning organisation, but also a learning organisation which learns through
the prism of business ethics, then there would be ethical consciousness,
systems, and behaviours instituted in the organisation. A learning organisation
does not mean this is ethical, per se, in fact could be quite the opposite. This
is why bringing business ethics and organisational learning together, to
enable an ethical learning organisation, are of paramount importance to
ensure corporate social responsibility is appropriately enabled and carried out
as part of consciousness, systems and behaviours in organisations.

27


How would Senge’s organisational learning model and the model I propose
here (which integrates learning as part of the bigger organisation47) be not just
enabled, but also instituted as organisational process(es)? How would
Participatory Business Ethics, with its participatory nature, be implemented in
organisations and integrated as part of the relationships among organisations
and stakeholders …? The next and final section explores this from the point of
view of knowledge management.

4.3.2. Knowledge Management – Implementing the Initiated
Transformations
After having specified how business ethics should fit with the rest of the
organisational systems, consciousness and behaviour, the approach
proceeds to implement this through knowledge management methods and
tools. This is so that the organisation sets on a path of continually learning
about business ethics values, principles and virtues through an intended and
beneficial change in organisational culture. The result of this would be
continually constructing the notion of ethics and challenging
traditional/conventional notions of power. In this way, and continually, there
would be distributed leadership in the organisation inspired by the business
ethics principles, values and virtues being participatorily constructed.

4.3.2.1. Participatory Business Ethics, Knowledge and Technologies
In their work, Katsoulakos, Rutherford and Zevgolis define strategic CSR
learning and knowledge management as an approach that aims to harness
organisational capabilities and resources towards optimised corporate
sustainability performance:

‘’Strategic CSR Learning and Knowledge Management is defined as an
approach aimed at delivering user-oriented CSR learning services utilising
organisational knowledge as a learning resource and contributing to the

47
The relationship between Senge’s model of organisational learning and the further model of
organisational behaviour being advanced here should be noted, and understood. Senge’s learning takes
places as part of interactions of, and within, organisational consciousness, systems and behaviours.

28


development of strategic knowledge-based capabilities required for attaining
optimised corporate sustainability performance.’’

In other words, these authors refer to the need to harness organisational and
individual knowledge in order to achieve learning about bettering corporate
sustainability. In order to harness this knowledge, they suggest the use of a
set of knowledge management and e-learning tools and methodologies.
Certainly, a Participatory Business Ethics approach rests on the same need to
harness organisational and individual knowledge towards an organisational
culture of corporate sustainability. And so, we can think it would use the same
set of knowledge management and e-learning tools and methodologies in
order to be implemented in organisations.

These authors list a number of methodologies and tools (below). Amongst
those, they mention: collaborative solutions, collaborative education, distance
learning, extranets, intranets, expertise directories, knowledge audits,
knowledge harvesting, learning objects, lessons learnt, mentoring, open
learning, open-space technologies, peer-to-peer networks, knowledge
networks, communities of practice, e-communities, storytelling, simulations,
role-plays, wikis.

Finally, Katsoulakos and his colleagues further pinpoint the importance of
experiential learning to knowledge management as the best way through
which people can share knowledge and learn new knowledge is when they
make active contributions to a larger process. It follows from this that all
knowledge management methods and tools should rest on the principle of
participation and shared experience, in order to enable experiential learning
and organisational learning as described in the previous section. Certainly, a
Participatory Business Ethics approach should rest on the same principles
and understandings and could, by all means, use the same methods and
technologies.

29


4.3.2.2. Knowledge Management Methodologies and Tools Enabling
Experiential Learning about Participatory Business Ethics in
Organisations
Based on the work of Katsoulakos, Rutherford and Zevgolis, as well as on
work conducted by the Consultative Group on International Agricultural
48
Research , below are listed a few knowledge management (KM)
methodologies and tools which could be used to mainstream Participatory
Business Ethics in organisations based on Senge’s learning organisation
framework. These are:

PERSONAL MASTERY OF BUSINESS ETHICS – Individual learning about
what ethics is, ethical values, principles, virtues, norms and behaviour, in the
context of the organisation’s business, and vice-versa.
Suggested KM methodologies:
Good Practices of business ethics can be gathered and put on organisations’
intranets. This would be in line with the promotion of ethical values, norms
and principles, as well as Codes of Ethics, in the organisation. Learning about
good practices of business ethics would dispose individuals to construct their
own ideas about ethical values, norms and principles. A considerable part of
this construction of ideas would take place in the context of discussing with
others who are in the organisation.
Ethical dilemma peer-assists could help individuals in the organisation who
are faced with ethical dilemmas discuss those with peers who are faced
with/have been faced with similar and/or the same ethical challenges. Good
practices could also be shared in the context of such peer-assists. These
could also be conducted electronically.
Suggested KM tools:
Discussion forums on extranets/intranets can help to enable on-line
(supported by face-to-face) discussions about ethical issues, dilemmas,
purpose of the business, ideas and solutions on how to make this more and
as ethical as possible.

48
CGIAR have developed a knowledge sharing methods and tools toolkit which, according to the author,
is currently one of the best and most widely accessible. http://kstoolkit.wikis.cgiar.org/ .

30


Blogs can help personal reflection about ethical dilemmas and asynchronous
sharing of such reflections.

SHARED VISION INCORPORATING BUSINESS ETHICS – Have concern
and consideration for all stakeholders when carrying out projects and
programs, this motivated by ethical principles, values, virtues and norms at
the bottom of decision-making.
Regular briefing and debriefing can help to express and share the
motivation and reasoning behind decision-making. Regular briefing and
debriefing can help to achieve agreement on what values and virtues, as well
as norms and principles, motivate the organisation at large in its business.
Stakeholder Engagement practices, like focus groups, can serve to bring
the organisation’s employees closer to all stakeholders in an attempt to
understand their needs and expectations. Such an understanding across the
organisation, supported by visionary leadership, could be key to enable
shared values, norms and principles at the bottom of the organisation’s
business. Here, the nature of the organisation’s leadership is paramount, as
unless this enables values, norms and principles which are ethically motivated,
the culture of the organisation could stray in the opposite direction.
Suggested KM tools:
Discussion forums which host online discussions on issues related to, for
example, stakeholder engagement, organisational Codes of Ethics, value
statements, amongst just a few, can help to cultivate shared values and
opinions as part of the organisation’s business. These can, also, enable and
facilitate geographically distributed discussions of norms that would help solve
ethical dilemmas encountered as part of the business of the organisation.
Provided that such online discussions are skilfully and appropriately facilitated,
these can be very powerful in enabling a shared vision incorporating business
ethics in the organisation.
E-communities, these being discussion forums with added features, such as
digital libraries, online resources, member profiles and member directories,
amongst others, can be another platform via which to explore the values

31


which motivate those who are in the organisation’s business. E-communities
can be set up for different purposes in the organisation, depending on where
interests lie. Interactions and discussions as part of them can uncover
different opinions on stakeholder challenges and ethical dilemmas
encountered as part of the business. In this way, these can provide further
incentive for people to share and construe the same vision about what ethical
means and is to the organisation.
Online stakeholder engagement in the context of discussion forums, google
and yahoo groups, etc., can add to or completely replace face-to-face
stakeholder engagement. The advantage of it is that many more stakeholders
can be engaged on-line than face-to-face, because of the flexibility inherent to
online interaction.
Blogs can make a strong contribution to the forming and evolving of
organisational culture. Although by nature non-participatory, their potential to
influence collective thinking is enormous. Discussing ethical values, virtues
and norms on blogs and how these would take the organisation on a path of
more and more prosperity can greatly inspire hearts and minds in the
organisation to do business ethically and responsibly.

MENTAL MODELS BUILT ON BUSINESS ETHICS – Have and use
assumptions and generalisations which enable processing of information,
dealing with complexity and taking of action in a manner which corresponds
with ethical principles, values, virtues and norms.
Critical Moments Reflection is individual and group reflection about those
significant moments as part of the business when key shifts in the work have
taken place. Critical Moments Refection can be very useful to identify
circumstances in the business environment which have triggered a deep and
instant understanding of challenges and opportunities presenting the business.
It can also help to identify emotions and thoughts that have led to appraising
those challenges and opportunities in a particular way, consistent with the
values of the organisation, and thus uncover ethical notions and principles
used as part of such appraisals.

32


Storytelling is communicating complex notions and meanings through the
power of (often simple and clear-cut) stories. Storytelling could help to
illustrate, and communicate, good practices about the business. Provided that
such good practices have a substantial contribution by business ethics,
stories about them can be useful to enable the creation of mental models built
on business ethics, as well as mainstream those in the culture of the
organisation.
Mindmapping is mapping the chain of thought when construing the knowing
of something, and new knowledge. In organisations, mindmapping can help to
illustrate individual learning resulting in mental models about the business
environment. Mindmapping can further help to show when and how in the
thought process business ethics becomes an integral part of the mental
models later used to process information and understand the business
environment. In this way, mindmapping can make the organisation and
individuals in it better aware of how they understand the business
environment and whether this understanding is grounded in ethics, or not.
Suggested KM tools:
Data visualisation tools can help with the Critical Moments Reflection and
Mindmapping methodologies. File libraries and file sharing can further add
to this, as well as enable and support storytelling. Podcasting can be a
powerful support to all of the above, especially storytelling. Discussion
forums and e-communities can help to not only disseminate, but also
encourage storytelling from everyone in an organisation, supporting this with
documents, tools, and other evidence.

LEARNING IN GROUPS AND TEAMS WHICH IS CONTEXTUALISED BY
BUSINESS ETHICS – Collective construction of ideas and approaches from
the point of view of ethics (and related values, virtues and principles), thinking
together through challenging assignments and deconstructing individual
assumptions through the prism of business ethics, learning continuously
about what ethical behaviour is in the context of the organisation and its
stakeholders.

33


Knowledge Networks can provide a context in which peers and stakeholders
can share and learn from each other in an environment which is characterised
by trust and openness. Being semi-formal, knowledge networks could be
enabled by organisations as a way of supporting participatory and two-way
communication among the organisation’s employees and stakeholders.
Communities of Practice, being less formal than knowledge networks, can
be another forum of learning in groups and teams in the organisation, both
among employees and among them and other stakeholders. This learning
would, always, be an opportunity to explore issues and take decisions within
an ethical business framework. In such a way, ethical business-making can
be cultivated within and from within such communities.
Suggested KM tools:
E-communities, blogs, discussion forums, digital libraries, file sharing,
social networking sites, and social bookmarking can all support learning
in groups and teams within an ethical business framework. These tools can
be technical supports, in some cases enablers, of both knowledge networks
and communities of practice. Importantly, the use of these tools should not be
random but well integrated with the KM methodologies.

SYSTEMS THINKING INCORPORATING BUSINESS ETHICS –
Understanding phenomena in terms of their total context and relationships
among the different parts, as well as how business ethics is/should both
imbue the total context and be an integral part.
Network Mapping can help to picture relationships among formal and less
formal networks within and outside of organisations. Relationships among the
systems members of these networks belong to can be inferred, as well as
wider implications such carry with them, in terms of how those systems
interact and what the ethics of the business are and should be. Knowing this
can lead to actions to optimise some relationships, create new ones and/or
approach some of them with caution, depending on the business environment,
the business goals and any ethical considerations. Based on this, network

34


mapping can help to initiate changes in the systems and structures of the
business environment towards business that better meets the needs of
stakeholders.
Critical Moments can help to picture and convey how moments of
‘’presence’’ 49 come about in individuals and organisations, such moments
being powerful catalysts for beneficial systemic changes, i.e., transformations.
Revelations conveyed through Critical Moment reflections can help to figure
out elements of importance in bigger systems and evaluate these from a
business ethics point of view in order to inform actions and way forward. In
this way, Critical Moments can help to teach, and cultivate, a systems-thinking
mindset in an organisation inspired by an ethical way of looking at business.
Ethics Knowledge Fairs can push and pull codified and experiential
knowledge about business ethics in the organisation, in terms of values,
norms and more importantly experiences in the context of which such values
and norms have been demonstrated. Such Fairs can showcase stories and
case studies which communicate instances of ethical decision-making. In this
way, they can illustrate considerations and rationale behind such decisions
and cultivate an ethical business culture in the organisation. In addition, and
importantly, stories, case studies and the like can further illustrate different
systems about the business, as well as systems within which the business
exists or with which it interacts, and show the extent to which business ethics
imbues those systems and whether it motivates the making of decisions.
Suggested KM tools:
Digital libraries, file sharing, mindmapping software, creative web
content, RSS can all support the above methodologies. As already pointed
out, importantly, the use of these tools should not be random but well
integrated with the KM methodologies.

Although presented here merely theoretically, the above Knowledge
Management methodologies and tools can help to mainstream the here-
suggested view of ethical learning organisation within any organisation as

49
The concept of ‘’presence’’ was put forward by Senge, P., Scharmer, O., Jaworski, J., and Flowers, B.
S., 2008, Presence: Human Purpose and the Field of the Future, Bantam dell Pub Group,
ISBN:0385516304 .

35


well as among this organisation, other organisations and stakeholders. In
other words, for these methodologies and tools to work as I suggest they do
here, they should be used to support and implement an organisational
learning view of business ethics.

Conclusion
This work suggests a way in which business ethics, in terms of ethical values,
virtues, and norms, can be integrated in organisations via an organisational
learning and knowledge management approach. Here, I call the approach
Participatory Business Ethics. The approach is based on Senge’s view of
learning organisation as well as on the sequential linkages there are and can
be between organisational learning and knowledge management.
Without a doubt, the credibility and usefulness of such an approach would
have to be field-tested in at least a few organisations before a conclusion can
be made with regards to how viable it is. Big multi-national companies, as well
as smaller commercial enterprises, could be ideal candidates for such a field
test. It would be best to carry such out according with an action research
framework.

Nadejda Loumbeva
July 2008

36


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40


Index
The following concepts are used throughout the paper:

Business Ethics – A set of values, virtues, principles and norms which are
part of the culture of an organisation, being both tacit and explicit. In terms of
explicit, these are sometimes contained in the organisation’s Code of Ethics.
These values, virtues, principles and norms are used by those who are in the
organisation to guide decision making and the overall making of the business.

Corporate Social Responsibility (i.e., social responsibility) – ‘’Corporate
Social Responsibility is concerned with treating the stakeholders of a
company or institution ethically or in a responsible manner. ‘Ethically or
responsible’ means treating key stakeholders in a manner deemed acceptable
in civilised societies. Social includes economic and environmental
responsibility. Stakeholders exist both within a firm and outside. The wider
aim of social responsibility is to create higher and higher standards of living,
while preserving the profitability of the corporation or the integrity of the
institution, for peoples both within and outside these entities’’. 50

CSR 2.0 (Participatory CSR) – Participatory CSR is defined by global
commons, innovative partnerships and stakeholder involvement. It is
driven by mechanisms such as ‘’diverse stakeholder panels’’, ‘’real-time
transparent reporting’’ and ‘’new-wave social entrepreneurship’’. It also
recognises ‘’a shift in power from centralised to decentralised; a change in
scale from few and big to many and small; and a change in application from
single and exclusive to multiple and shared’’. 51

Ethical Values – Our decisions often reflect on values and a certain value
system. A value is an implicit understanding about the world around us, or a
certain characteristic about it. More to this, a value is also an implicit
understanding about how the world around us, or a certain characteristic

50
Michael Hopkins (MHCi), (2008), A Planetary Bargain: Corporate Social Responsibility Comes of Age,
(Macmillan, UK, 1998), updated by author January 2008 .
51

41


about it, should be. Ethical values are implicit understandings about how the
world around us should be, in terms of ethics, and how it should be treated, in
terms of ethics. A value system is a set of consistent ethical values and
measures used for the purpose of ethical or ideological integrity52.

Ethical Virtues – In this work, a virtue is a quality which a person, or an
organisation, has as part of their mindset and behaviours. Virtues are so
ingrained in the mindset and behaviours that they are often implicit, i.e., they
‘’pre-empt’’ judgments, in terms of tilting them towards good ethics. Ethical
virtues are those virtues which follow from ethical values, i.e., from implicit
understandings about how the world around us should be, in terms of ethics,
and how it should be treated, in terms of ethics.

Ethical Style – Solomon53 refers to the notion of an ‘ethical style’ underlying
all ethical behaviour. This ethical style is grounded in ‘’virtues’’ that influence
54
judgement and action. Geuras and Garofallo further refer to ethical
behaviour as the intersection between attitudes, beliefs and values which
define our perspective as we act and judge others’ actions. Geuras and
Garofallo take the notion of ‘’ethical style’’ to specify its idiosyncrasy and
individuality.

Ethical Principles – ‘’According to the Webster's New World Dictionary of the
American Language a principle is a a fundamental truth, law, doctrine, or
motivating force upon which others are based. Principles are overwhelming
obvious ideas that are often accepted as a matter of faith. A principle is also
considered an essential element or constituent of a process. Thus, principles
of a process are key characteristic that separate the process from other
55
approaches.’’ In this work, ethical principles are understood as those
fundamental truths, laws, doctrines, or motivating forces which are based in
ethical values, and norms. They can be constituents of business processes

52
Wikipedia: http://en.wikipedia.org/wiki/Value_system
53
Solomon, R., (1999), as referred to in Geuras, D. and Garofallo, C., (2005), Practical Ethics in Public
Administration, p. 194.
54
Geuras, D. and Garofallo, C., (2005), Practical Ethics in Public Administration, p. 194.
55
Source: http://gunston.gmu.edu/708/whatprin.htm

42


and an integral part of the business as part of the bigger system in which it
operates, as well as an integral part of mental models about the business.

Ethical Norms – Whereas principles are fundamental truths, laws, doctrines,
or motivating forces, norms are mentalities based on principles which are
integral to society and culture. Norms are concerned with what is acceptably
doable in a society, as well as within the terms of a certain culture, and
business. ‘’Social norms have been defined as the rules that a group uses for
appropriate and inappropriate values, beliefs, attitudes and behaviors. These
rules may be explicit or implicit. Failure to stick to the rules can result in
severe punishments, the most feared of which is exclusion from the group.
They have also been described as the customary rules of behavior that
56
coordinate our interactions with others.’’ In this work, ethical norms are
understood as norms motivated by and looking to serve ethical values and
principles. Ethical norms are decision-making aids which, if part of
organisational culture, help to rule behaviour according with business ethics.

Ethical Behaviour – Behaviour is the actions we take, and reactions we
make, with respect to our environment, these based on our values, virtues,
emotions, and mental models. A similar way of looking at behaviour is the
following: behaviour ‘’… refers to the actions or reactions of an object or
organism, usually in relation to the environment. Behaviour can be conscious
or unconscious, overt or covert, and voluntary or involuntary.‘’ 57 In this work,
ethical behaviour is understood as this behaviour which comes about as a
result of conscious or unconscious consideration for stakeholders that are
implicated in a decision, or a situation. Such consideration is driven by ethical
values, virtues, principles and norms.

Knowledge Management – ‘’Knowledge management programs, processes
and tools support organisational learning and address more than the sum of
the knowledge of each member of the organisation or the sum of individual

56
Wikipedia: http://en.wikipedia.org/wiki/Social_norm
57
Wikipedia: http://en.wikipedia.org/wiki/Behaviour

43


learnings … individual learning is not sufficient to produce the systematic
knowledge required for organisational survival and growth. ‘’ 58 In this work,
knowledge management stands for the use by an organisation of knowledge
management methods and tools in order to harness both explicit and tacit
knowledge that are in the organisation and enable their use for organisational
learning.

Learning Organisation – ‘’ … five disciplines are necessary to bring about a
learning organisation – personal mastery, mental models, shared vision, team
learning and systems thinking.’’ 59 The intermittent blending of these five in an
organisation enables this to be a learning organisation.

Organisational Learning – ‘’Organisational learning represents a dynamic
synergy between people, actions, symbols, and processes in an
60
organisation.’’ In this work, organisational learning stands for the continuous
process via which organisations, and people who are part of them, learn
based on their experiences in interfacing with the organisation’s environment,
in order to adapt and change in ways positive for the organisation’s business
and the society in which it operates.

Participatory Business Ethics – Participatory Business Ethics is about
constructing the notion of business ethics in a participatory way, both bottom-
up and top-down, in organisations. The participatory construction of this
notion would be about all which form part of the notion, i.e., both ethical
values and virtues and ethical norms and theories. This would be done
continuously and incrementally as well as bring together needs and
expectations of stakeholders not merely from within but also outside of the
organisation.61

58
Management in Practice, Butterworth-Heinemann. P.27 .
59
Flood, R., (1999), Rethinking the Fifth Discipline: Learning Within the Unknowable, Published by
Routledge, ISBN 0415185300, 9780415185301, p.3 .
60
Management in Practice, Butterworth-Heinemann. P.26 .
61
As explained on p. 21 of this work.

44


Stakeholder Engagement – ‘’Stakeholder engagement comprises the formal
and informal ways of staying connected to the parties who have an actual or
potential interest in or effect on the business. Engagement implies
understanding their views and taking them into consideration, being
accountable to them when accountability is called for, and using the
information gleaned from them to drive innovation.’’ 62

Critical Moments Reflection – individual and group reflection about those
significant moments as part of the business when key shifts in the work have
taken place.

Good Practices – Good practices, usually in an organisation, are those ways
of addressing recurring challenges as part of business which lead to
effectively resolving these challenges. Good practices are a knowledge
management methodology concerned with identifying what good practices
there are in organisations and raising awareness organisation-wide about
them, to facilitate knowledge sharing and learning.

E-Community – An online community is a community of people who share an
on-line space to communicate on a topic or topics of interest to the members
of the community. On-line communication can be supplemented by face-to-
face communication, or not necessarily. Common features of on-line
communities are member profiles, digital libraries/repositories of information,
discussion forums, frequently asked questions, member blogs (a tool for
individual publishing of stories, reflections and other means of expression
online) and wikis (on-line collaboration spaces via which several people can
edit one and the same document, simultaneously). Depending on how the
community is configured, these features can be open to all to access or
limited to those who are members of the community. Usually, on-line
communities need on-going facilitation in order to be useful to those who
participate in them.

62
Source: Industry Canada http://www.ic.gc.ca/epic/site/csr-rse.nsf/en/rs00138e.html .

45


Knowledge Fair – A fair, usually organised within organisations, to showcase
examples of knowledge sharing and learning. ‘’Knowledge fair is an event
designed to showcase information about an organization or a topic. It includes
methods such as speakers, demonstrations, booths displaying information,
exhibition boards, workshops, videos, informal corners, open space, etc. A
large amount of information can be made available and attendees can focus
specifically on what they are interested in learning. Attendees can interact
directly with the presenters, getting immediate answers to their specific
questions. They also can establish contacts for further exploration of topics if
needed. ‘’ 63

Knowledge Networks – Groups of people who have come together to share
knowledge and learn from each other on a topic of interest. Knowledge
networks are usually semi-formal and so can be enabled as part of fulfilling
some strategic and/or operational objectives. For them to work well, they
should be sponsored and facilitated. They should also have a clear purpose
which is shared by all who participate in the network.

Network Mapping – Also called ‘’social network analysis’’, network mapping
‘’involves the mapping and measuring of the normally invisible relationships
between people, providing an organizational X-ray for use by HR managers
and consultants’’. As such, network mapping usually reveals that, instead of
flowing within a hierarchy, information, and therefore the potential for learning
and knowledge, actually flows through a vast web of informal channels.64

Community-of-Practice – Also called a CoP, this is ‘’a network of people
with a common interest or problem in a specific area of competence and who
are willing to work together for a given time to learn, develop and share that
65
knowledge.’’ Essential characteristics of a successful CoP are strong
community, well-defined domain of interest, link to own practice, personal

63
Source: Dare to Share Knowledge Management Toolkit
http://www.daretoshare.ch/en/Dare_To_Share/Knowledge_Management_Toolkit/Knowledge_Fair
64
Source: Semantic Studios at http://semanticstudios.com/publications/semantics/000006.php .
65
Source: Date to Share Knowledge Sharing Toolkit:
http://www.daretoshare.ch/en/Dare_To_Share/Knowledge_Management_Toolkit/Community_of_Practic
e

46


motivation, mandate and informal structure. A key difference between
knowledge networks and communities-practice is that knowledge networks
are semi-formal, where communities-of-practice remain and thrive as largely
informal.

Mindmapping – is mapping the chain of thought when construing the
knowing of something, and new knowledge. In organisations, mindmapping
can help to illustrate individual learning resulting in mental models about the
business environment.

Peer-assist – A knowledge management methodology via which a person
(the assistee) identifies a problem s/he is experiencing in her/his work for
others (the assisters) who have faced similar challenges to forward solutions,
based on their experience dealing with these challenges. A peer-assist takes
the form of a session which should be appropriately facilitated by a
facilitator.66

Storytelling – communicating complex notions and meanings through the
power of (often simple and clear-cut) stories. Storytelling could help to
illustrate, and communicate, good practices about the business.

66
A detailed overview of what a peer-assist is can be found here:
http://www.saea.uottawa.ca/index.php?option=com_contenttask=viewid=682Itemid=649lang=en

47

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