An interview by , CHC, CCEP, Chief Engagement & Strategy Officer, SCCE & HCCA.
AT: Before we get into the very intriguing exercise you developed, can you first give us an overview of what you are teaching at the University of Hawai‘i at Hilo?
TI: Each semester I typically teach one section of Introduction to Business and two sections of Strategic Management, which is the undergraduate business capstone course. I have also taught the International Business course in past semesters. I enjoy the fact that I have the opportunity to work with students as freshmen and then be able to see how they have progressed when they take the capstone at the end of their undergraduate business careers.
AT: As part of your course preparation, you developed an exercise about negotiations in the coffee supply chain. Can you take us through it?
TI: The exercise is a pricing negotiation that accommodates 10–40 participants in a two- to three-hour period. Participants are assigned a role in the coffee supply chain (i.e., farmer, processor, importer, roaster, and café/retailer). They learn about the coffee supply chain in general and are given confidential role-specific sheets that give them the basic parameters for what needs to be negotiated. They then negotiate pricing between their suppliers and customers (depending on their role), and the activity concludes once the café(s) determine their retail price for a 16oz coffee. The parties draft simple contracts as pricing agreements are determined.
Once the instructor has contracts for all negotiated deals, they conduct a debrief, at which point the participants learn about how their own decisions can contribute to impacts elsewhere in the supply chain. They learn about how businesses have ethical responsibilities that extend to both their suppliers and customers across the supply chain.
AT: What led you to develop this exercise?
TI: Since my days as an executive master of business administration student, I have always been interested in developing novel exercises that add value to training business professionals and students alike. Negotiation exercises are an excellent way to expose participants to the uncertainties of business in a safe training environment. In my opinion, experiential learning exercises like negotiations are far more effective than any traditional method of teaching, and participants prefer them.
A former colleague, Dr. Jim Kling, professor of supply chain management at Niagara University, approached me with a problem. He thought that the supply chain exercises available to faculty were limited and wanted something better that could be completed in a short time frame while providing students with a memorable experience. We brainstormed and arrived at the coffee supply chain. It is a mature, well-known industry that participants can easily relate to, and importantly, it has enough publicly available industry details that allowed us to build a realistic experiential activity. On top of this, we both had connections within the coffee industry that allowed us the ability to validate many of the assumptions we had built into the negotiation. With the assistance of a grant from Niagara University’s Committee on College Teaching and Learning, we were able to develop the exercise and eventually get it published in the Decision Sciences Journal of Innovative Education[1] after securing teaching innovation award nominations at the annual conferences of the Academy of International Business and Decision Sciences Institute.
AT: One of the things you wanted to address was bounded ethicality. First, can you define it?
TI: Bounded ethicality recognizes that peoples’ cognitive abilities are limited, and therefore the quality of their ethical decision-making is also limited. Generally, people tend to view themselves as ethical and moral, and to be sure, we agree that the vast majority of people are. That said, we recognize that people are bounded in their thinking, and this will affect all decisions with possible ethical implications. Frankly, every person has a limit to their ethical awareness, as no one can feel responsible for everything happening in the world. Bounded ethicality means that people who see themselves as ethical unconsciously can make ethically questionable decisions because they are limited in their cognitive ability, knowledge, and time.
Supply chain systems are a great place to research bounded ethicality because there are distinct levels of industry radiating from any role. This allows us to demonstrate how one decision anywhere within a supply chain sends impactful ripples throughout the rest of the system. As an example, a large coffee roaster may not be willing to pay a specific price for green coffee from an importer. That importer will then feel pressure to lower their costs to maintain margins, which may result in refusing to pay typical prices to coffee processors, who will then pay less for coffee cherries from farmers, who owe their livelihood to the revenue from a harvest. That original roaster, who drove down the price, may have been feeling forced to do it because they had to realign the salaries they paid to the current market. Sure, they may have realized how this would affect their immediate suppliers, but would they also feel responsible for the rest of the consequences of that decision?
AT: One of the things that I think is interesting is that this wasn’t an ethics exercise, per se, but a business exercise that had an ethical component to it. That’s much more typical of how things work outside the classroom. People don’t say, “Let’s deal with an ethics issue.” They face a business issue that has ethical components and have to make a proper decision. How attuned to the ethics issues were the students going into the exercise?
TI: This is an interesting question that no one has asked before, but perhaps it is because you take a more practical perspective. In actuality, the students have no idea there is an ethical component until the debrief portion of the activity. We have found that when we discuss ethics, people turn on the “ethical switch” in their heads and suddenly become primed to providing the most ethical answer. After all, people are boundedly rational and can only juggle a few things in their decision-making until items begin to “fall.” If we discuss ethics prior, they are sure to consider it. In reality though, when one discusses a typical business concern, the listener takes it in and provides advice. Rarely does ethics come up, and both parties often assume that both are ethical. This incorrect assumption is at the core of our activity. We want participants to learn that thinking they are ethical is simply not good enough to actually be ethical.
AT: How did the role playing affect their ethical sensitivities? And what issues of bounded ethicality did it show the students?
TI: We consciously try to replicate this assumption in our activity. All participants go about their business assuming that they, along with everyone else, are being ethical. We give them plenty to consider (e.g., time constraints, new information, cognitive considerations) so that they reach the bounds of their rationality quickly. Their assumption is of course a mistake, and we want them to make this mistake because the realization they have (i.e., that it should be their responsibility) becomes much more impactful. They can see how easy it is to get overwhelmed in business and to incorrectly assume that others will shoulder their ethical burden.
Through this realization, we find that participants significantly extend their ethical scope of responsibility (how responsible they are for others’ actions) as well as their strength of ethical action (how willing they are to take action when something ethically questionable occurs). The role playing itself does not increase ethical awareness, but it is still critical as it provides participants a recent and common context to refer to as we debrief.
AT: Business is constantly looking for new ways to make ethics training more involving and for it to have an impact. It sounds like role playing can be very helpful, but I imagine, as with most things, we should add, “if it’s done right.” What makes for good role-playing exercises?
TI: You are absolutely right. The important factor in role-playing exercises is that everyone must recognize that each can only simulate a slice of reality. Of course, everyone would want every exercise to be as representative as possible, but there are many benefits to abstracting away from reality that people may not consider. For example, our exercise takes two to three hours to complete, depending on the format. This will never happen in the coffee industry today, in which the largest suppliers (Brazil and Vietnam)[2] are thousands of miles from the largest consumers (United States, European countries)[3] of coffee. Yet, we want it to be completed quickly because we want participants to observe the entire supply chain as a whole versus just their assigned role, and they can accomplish that if they see the farm-to-cup process over a short period of time.
Good content also matters. It is important for participants to feel they can connect or relate the role play to their own lives. If they feel they could never use what they learn in their careers, they have little motivation to learn new concepts. This would result in less impactful debriefings and significant learning opportunities lost. As you recall, we chose the coffee industry for this reason. Everyone either drinks coffee or knows someone who does. Everyone has read about parts of the coffee industry (e.g., roasting, free trade, news about Starbucks). Having this immediate connection to the activity helps in its effectiveness.
Another major component of role plays that is critical to success is building in competition. Gamification of the exercise is motivating for participants, but it is also more realistic. In business, everyone is competing. A good role play needs to be competitive. It might be an extra credit point for students, or a bag of coffee for professionals.
AT: Right now, we’re living in a time of tremendous disruptions of supply chains. Ongoing trade disputes, coupled with the pandemic, have caused significant disruptions. Companies have had to find new business partners, and often quite quickly. How can they ensure that they are sourcing and dealing with new business partners ethically?
TI: First and foremost, managers need to know that everyone is ethically bounded. That realization is key, because one only has control over their own actions, but if they realize they are limited, they can make strides to fill in the gaps and provide checks and balances. This is the main reason why corporate social responsibility departments exist. Companies are willing to establish corporate social responsibility departments just to make sure the firm is doing everything it can to be conducting ethical business.
As you mention, time is of the essence during this era of COVID-19, and if you recall, time is one of the three factors that bound people’s decisions. People feel the pressure to find secondary suppliers as their main suppliers get closed for cleaning or encounter their own supply-chain disruptions. This is precisely when decision makers assume too much or take unnecessary risks.
Despite this uncertain and rapidly changing business climate, there are strategies that can be implemented that can help. For example, the use of third-party certifications can be useful. There are many organizations that certify for quality in every industry, and they can help to cut down vetting time for new suppliers. They may even have other suppliers who they feel are worth recommending that are already certified, thereby extending a company’s network.
Another idea is to build in an ethical component into a company’s mission and/or core values. The mission and core values are in effect a primer for doing business if they are used correctly. A mission describes what a company does well right now and serves as a guide for operations. A company can expect its employees to be primed to act ethically if it is included in its mission statement and reinforced appropriately. Core values describe how a company wants its employees to interact with each other and its network. An ethically aligned core value will also serve as a guide for employee behavior when sourcing new suppliers. Best of all, implementing these strategies will save critical resources like time and money, because employees will be more efficient in whom they pick and will inherently avoid ethically charged scandals by aligning their decision with the mission and core values.
AT: Any other thoughts on how we can help businesspeople understand their ethical blind spots?
TI: The key to building scope of ethical responsibility and strength of ethical action in business is to continually push the limits of professionals. Right now, there are not enough experiential exercises that do this, and so students are limited to an ethics course during their collegiate career, and professionals get even less, perhaps an online refresher course or review of company values at a retreat. In no way is this enough to stretch their bounded ethicality. People end up still believing they are ethical when, unconsciously, they continue ethically questionable practices. Companies need to continuously seek out experiential ethics training so that participants can not only be told about their “blind spots” but also experience the fact that they still exist. Only when people know they exist can people address them, and they can only address them if they have an experiential context from which they can draw.