Case Study

Raymond is currently serving as a non-executive director on the board of a nationalised concern, The Electricity Board (EB), in a developing country in Asia. EB operates several coal-fired power stations and transmits energy through a national grid which it controls. The electricity generated is then sold to the general public by private sector electricity distribution companies.

Raymondis concerned about the ethical implications of a couple of issues discussed at EB's most recent board meeting held yesterday. As a non-executive director, he believes he has a particular responsibility to consider the ethical problems carefully.

(1)A general election campaign has recently begun in this country. The governing party has indicated that it intends to maintain EB as a nationalised industry if it wins the general election, although it seeks efficiency improvements. The opposition party has stated that it wants to privatise all sectors that are currently nationalised. Early yesterday morning before the board meeting, EB's Managing Director was suddenly asked by senior civil servants in the Ministry of Energy to provide a major commitment to cost-cutting in the next ten days. The Managing Director is aware that the Minister of Energy will be making a major election speech in a fortnight.

(2)A recent United Nations report ranked EB's home country in the Top 10 of its worst polluters, as measured by CO2 emissions per head of population. Environmental groups have seized this report who have called for a month of action during the general election campaign. They wish to highlight the environmental damage being caused by the government's environmental policies and to highlight the need to switch to alternative technologies such as wind power generation.

In the last few days, small groups of protestors have broken through perimeter fences at two of EB's power stations and managed to delay coal deliveries by chaining themselves across railway tracks. There have been some reports in the press of heavy-handed treatment being meted out by the security firm hired by EB to deal with the protests. EB's Managing Director has dismissed these reports, saying the protestors' solutions are impractical. They have no rights to access. EB is entitled to take whatever action is required against the protestors to protect their property and maintain electricity supplies.

In addition, extracts from the discussion on social responsibility at the last board meeting are as follows:

Extracts from board meeting minutes

The Managing Director commented that a key element of good corporate citizenship was managing the company's relationship with the natural environment. He, therefore, regarded it as a top priority for the company to introduce an effective environmental management system. However, he was unclear of the exact meaning of the term corporate citizenship.

The Finance Director was more sceptical of the concept of corporate citizenship, claiming that staff co-operation would be necessary if the company were to act as, and be perceived as, a good corporate citizen. She suspected that this would depend on the factors in their background that determined their ethical approaches: 'We can't teach our employees to be good citizens.

Required:

a)Using Tucker's model for decision-making, assess the factors that EB's board should consider when dealing with the current protests by environmental groups.

b)Explain the concept of corporate citizenship and describe the issues that influence an organisation's position on corporate citizenship