Reich v. Vogel: Is CSR Responsible?

Now this is why I came to Haas. And, well, back to school, in general.

Earlier this week, some hundreds of students, professors, and folks around Berkeley gathered with much anticipation on a balcony at Haas, awaiting a debate between Robert Reich and David Vogel on the question “Is CSR Responsible?” (And for Chipotle burritos – yum!)

While some went straight for the burrito line, I hurried to the front to get a primo seat from which I could photograph Robert Reich, the 22nd US Secretary of Labor under President Clinton, and David Vogel, professor of Business Ethics.

As you can see, I made a wise choice.
After the audience arranged itself, spilling through the doorways and around the stage, Dean Rich Lyons introduced the two very special guests.

I won’t transcribe the notes I furiously wrote during the debate, but I’ll share my general summary of their position.

Robert Reich: Arguing ‘no’ to the question “Is CSR Responsible?”
1) Corporations often lobby for policies that undermine their CSR efforts. In other words, although a company may be funding an school breakfast program, it’s likely it also is seeking tax benefits that are reducing public school funding in the first place*.
2) Public policy is the real key to achieving measurable change.
3) A ‘mutual de-escalation’ of lobbying is essential

David Vogel: Arguing that CSR is responsible.
1) CSR manages responding to non-market pressures to engage in policies aligned with public pressure.
2) Companies’ efforts awaken the consumer, ultimately resulting in a public policy push.
2) Companies can make a larger impact that individual efforts.

Afterwards, students from Haas, Boalt (Law), Goldman (Public Policy), Environmental Science, and other disciplines lined up to ask probing questions.

Who won? We all did. The debate was thoroughly thought-provoking. As my friend Jason and I walked towards Bear’s Lair, we had an energized conversation about all that we had learned.

*Entirely fictional examples made up by me.


Does being ethical really pay?

The Wall Street Journal ran an article last week titled “Does being ethical pay?“. The journal article was based on an experiment in which participants were asked for their willingness to pay for a pound of coffee or a T-Shirt. Different groups of customers were given varying information about the standards the company follows producing their goods. One group got positive information, one negative. A control group was provided with no additional information on the product.

In their experiment, the researchers found that consumers were willing to pay a premium for ethically produced goods over the control group and that consumers were demanding a steep discount for products produced following unethical standards.

Why do I mention the article in this blog? It reminded me of a quite similar survey I recently conducted with a team of students as part of my Consumer Behavior class. I would love to say we reached the same conclusion, but we did not. In our survey we found that consumers were not rewarding high ethical standards over a control group. (we did not test for unethical behavior).

Although we only tested for coffee products, our setup was quite similar to the one described in the WSJ article. We surveyed a total of 90 participants split into 4 groups: Two groups read a fictitious news article describing the expansion plans of a coffee house chain in purely financial terms. Two more groups received the same article with an additional paragraph that emphasized the company’s CSR and fair trade efforts. One of each groups was then asked for their willingness to pay for a specialty coffee drink (and some other questions masking the purpose of the survey). The two other groups received the same set of questions later – we wanted to see if the perception of a company’s ethical practices is sticky.

The results? Unlike the study cited in the WSJ we found that in both the immediate questions and the delayed questions, participants actually had a lower willingness to pay when they were informed about the company’s ethical practices and we had to reject our initial hypothesis that ethical standards would increase our participants’ willingness to pay.

There are some limitations to our results: We used the name of an existing coffee hosue chain. While that chain does not operate in the Bay area, existing perceptions might have tainted the results. We also did not sample random consumers: Our survey went to MBA students only. In addition, we did not control for people who do not drink coffee and the presentation of the company’s ethical standards might simply have been too short.

Yet, our results do have some significance. Just because one experiment tells you that consumers are willing to pay a higher price for an ethically produced product, this conclusion might not hold across different groups of consumers or different products. It should also be noted that the way a company presents its production standards might influence a consumer’s perception and companies should carefully consider if they want to advertise their own corporate CSR standards, use press releases to communicate them or find other ways to make consumers aware of their practices. The WSJ article mentions some of these limitations as well.

So does being ethical really, really, really pay? As much as I would like to say “Yes”, all I can say is “Sometimes… Maybe”!


Leeds Net Impact Case Competition: February 22-23

The Leeds Net Impact Case Competition finals held at the University of Colorado at Boulder focused on issues of eco-responsibility facing the technology sector. In particular, the case prompt was to develop a strategy for Sun Microsystems to increase revenue from its eco-conscious products and services by $1 billion over a three year period. Our team’s proposal constituted a three pronged approach. The first step was to develop the technology services competencies of Sun through a strategic investment in a company operating in the area of datacenter design and construction. Concomitant was to introduce two business model innovations: datacenters-as-a-service inspired by the Salesforce model and project financing for datacenters inspired by the innovative structures used for solar and wind energy installations. While we did not advance to be among the five teams to present to Sun, we did receive favorable feedback, and we feel our effort and work product reflected Haas’s aspiration to lead through innovation.

And we got in a sweet day on the slopes of Vail!

-Ben Biddle ’09, Morgan Clements ’09, Jeff Denby ’08, Elizabeth Singleton ’08

Case Competitions: They Only Come Out At Night – By Luke Filose ’09

“In a world of normal people who go to sleep at eleven o’clock, one crack team of analysts is working through the night…”

If this were a film trailer, the sentence would probably continue…“to decipher a long-lost Babylonian tablet containing the answer to an ancient secret of apocalyptic proportions.” In the world of business school, however, you’d probably be talking about a case competition. My first competition – the Leeds/Net Impact Case Competition at the University of Colorado, Boulder – focused on a leading internet infrastructure firm moving into “green business.” While we had plenty of background reading over the preceding weeks, our actual assignment (drive significant incremental revenue by 2011 through a new line of energy-efficient products) was given to us at 8 pm on Friday. Our deadline: 8 am Saturday morning. Cruelty, as it turns out, still exists in this world.

Despite the lousy hours, I felt good going in since my team consisted of a former management consultant and two former employees of major technology firms (Jon Burns ’09, Megan Ryskamp ’09, and Naveen Sikka ’09). Given this fountain of expertise, I focused on my core competencies: cracking jokes and procuring snacks to keep us going through the night. Here’s a summary of the Safeway receipt I just dug out of my trash bin:

· Six pack of Coke
· Six pack of Mountain Dew
· 12 pack of Corona (in case things got really desperate)
· Bananas and apples (they look good on a table)
· Sweet & Salty Nut granola bars
· Chips and salsa
· Spicy nuts
· Roasted and salted pistachios

At 8 am, delirious but full of snacky goodness, we submitted our presentation, slept for two hours, and then presented our strategy to a panel of obscenely well-rested judges, including members of the company.

Did we win? Well, let’s just say that none of the three Haas teams that qualified for the top 20 semifinalists advanced to the final round. Haas was recently ranked #1 and #2 in CSR, so my guess is that our ideas were just too advanced for the judges to understand.Like a good film, this experience had a happy ending, but not the one you expected. Due to the knowledge of the firm gained through the competition, I got an interview for a summer internship. If they ask me to name two weaknesses, I’ll probably say spicy nuts and granola bars.

—Charlene Chen

Networking for Impact

Well, we’re back. All 62 of us. A good-lookin‘ crew, huh?…A mere fraction of the total Haas representation in Nashville!

I’ll give some context in case you didn’t see my post last week. Haas sent a large contingent to this year’s national Net Impact Conference, Nov. 1-4, hosted by Vanderbilt’s Owen School of Management in the heart of country music…umm, country.

The Conference was an amazing opportunity to not only meet experienced practitioners and academics in fields we’re interested in, but also a chance to network with socially-minded MBAs from schools all around the country–while getting to know our Haas brethren much better (sometimes it takes getting away from school to really do that). Panel topics ranged from CSR and triple bottom line to social venture and nonprofit management to supply chain greening…and everything in between. One of our Career Services Advisors, Rich Wong, even made the trip out to support us. What a guy.

All in all, the weekend was intellectually engaging, viscerally energizing, and socially satisfying. And we topped it all off with a little line dancing on Saturday night!

Many of us are now fighting colds from the long flight and lack of sleep, but it was well worth it. I, for one, am already looking forward to next year (Wharton is hosting)…


Leaders with a Heart

Many of us were pumped to see Haas move up to #4 globally in the Aspen Institute’s “Beyond Grey Pinstripes” 2007 rankings, which evaluate MBA programs on the extent to which they’ve integrated social and environmental stewardship into curricula and research…And we’re #1 in Course Content!

Having already had my eyes opened in a big way to corporate social responsibility in my first few months at Haas, I’d have to say the ranking seems well-deserved. Indeed, this place takes this burgeoning field seriously–it’s a core part of the school’s (and students’) ethos, culture and curriculum. We pride ourselves on being fiscally AND socially responsible.