Week No.8: Games

Mastermind Colors Game

We were asked to create a game through which people could experience the topic of social evolution. We created a game which objective was based on players experiencing social evolution: imitation, changing conditions and limiting information.

The players:

  • Firms (group of people)
  • A facilitator that represents the bank and the market

Rules:

  1. Each firm will receive a list of characteristics of a product, based on: size, color and shape. Each firm must choose the combination they want for their product. For instance, the firm could choose the product to be: small, green and triangle.
  2. Once each firm chose the combination, it delivers the information to the facilitator (bank/market).
  3. The facilitator has a pile of cards which will dictate the path of the game. The cards have the information about the preferences of the consumers and regulations from the bank.
  4. Because the facilitator has the information given by the firms, the facilitator will take a card from the pile and will compare the information given by the firms with the card. The firm that develops a product that is very similar to the one that says in the card is the one that wins the first round.
  5. Because the results will be told to all the firms, the firms will try to imitate to the firm that won and will try to make their products as similar as possible for the next rounds. Nevertheless, to complicate matters, the facilitator will take another card and the preferences of the consumer might change or a new regulation will come out.
  6. The rounds go on until the last card is taken; the winner is the firm that wins the majority of the rounds.

While playing the game, it can be seen how imitating to the other firms can be important but at the same time, in order to win, they must realize that there is evolution taking part, therefore, rules are changing through time.

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Week No.7: LCA, Government and public policies

Life Cycle Assessment (LCA) is “the compilation and evaluation of the inputs, outputs and the potential environmental impacts of a product system throughout its life cycle”. [1] In order to talk about the use of LCA and the ways that the government can influence its use, it is important to understand Sabatier’s framework: “for carrying out a basic policy decision… that decision identifies the problems to be addressed, stipulates the objective to be pursued and in a variety of ways “structures” the implementation process”.[2] In the following lines, Sabatier’s framework will be used for implementing four ways in which government can increase the use of LCA:

Problem: Even though the use of Life Cycle Assessment (LCA) is increasing, (especially in Europe while making waste management policies[3]) it is not a tool that it is used by industries in a broad manner for analyzing the environmental impacts about the life cycle of products in The Netherlands.

Objective: For this case, it is important that the Government gets involve and through creating external control and setting boundary conditions, stimulate the use of LCA to the industries that are involved in the life cycle of the products through the implementation of four policy decisions:

  1. LCA Best Practices Congress: The Government can set the boundary conditions through altering the available information about LCA organizing “Congresses about best practices” for the most important industries to interchange knowledge and best practices about the use of LCA. This will also be a platform in which industries interchange data. In order for the industries to be motivated and participate in this platform, the Government will monitor which industries assisted, if they did not assist, the Government will punish them through an economical sanction.
  2. LCA Analysis and Future Program Formal Document: In order to create external control and set boundary conditions, the Government can create a document which each industry must fill. The document will be about telling the results of a LCA analysis about waste management to the Government. The industries will also have to present a program to the Government, in which they will present the improvements that they will make in their industries to reduce waste and the project management line to develop the program in the future years. If they do not present it, the industry will be closed until it presents its plans. The government will monitor that the plans of the industries will be implemented in the coming years. If they are not implemented as it was said in the document, then the Government will put an economic sanction.
  3. Subsidies for the development of new products: The Government can alter market conditions, subsidizing the development of new products in industries that want to assess environmental impacts of the products through LCA. These subsidies will be for industries that develop new products and they want to assess the environmental impacts of the production where prevention is the key point. Developing these policies, “life cycle assessment can help reduce waste management costs, while considering the broader effects and trade-offs felt elsewhere across society”[4]
  4. Incentives for LCA job positions: The Government can alter market conditions, giving incentives to industries in order for them to create job positions which functions will be analyzing environmental impacts of the production, using LCA analysis and other models of life cycle thinking. The Government will give a subsidy for the payment of that position. In fact, this solution is the complement of number two mentioned above, because if there are specific employees focused on LCA analysis, it will be easier for the industries to present the LCA Analysis and Future Program Document.

Implementation of the process: the ideas mentioned above, will be analyzed through Sabatier´s framework, taking into account the: tractability of the problem, the ability of statute to structure implementation process and the use of non – statutor variables affecting implementation. (See Sabatier Framework in the page below).

It is important to mention that through the use of Sabatier’s framework it is easier to understand why some Governments create an extensive bureaucracy, because it is the only way that they can assure that the policies they built are being accomplished through monitoring and sanctioning. Although I think Sabatier framework is very useful and a extensive tool to assess the potential effectiveness of policies and external control from the Government, I also think that it lacks to explain the “blind selection”, the one that Gerrits, 2011 gives an example of “earlier decisions that are not obvious to the decision makers” [5] . This is why it is important to analyze the “complex system around the co-evolutionary principle of reciprocal selection between policy systems and their environment”[6] proposed by the same author. It is helpful to assess the unwanted consequences while creating a policy, in this case, for the use of LCA. There are three parts that are important to understand between decisions and the physical system in a complex system perspective:

  1. Assume systemic approach: it is very important to take into account the context for the use of LCA. Due to the fact that it is a tool inside of a broad topic of life cycle thinking, if the purpose of LCA use is not well defined, unintended changes may occur as a result of an incorrect use of LCA in the industries.
  2. Circularity of causal relationships: it might be that the use of LCA changes other systems, like the one about process of productivity in the industries or the market itself. For instance, customers would prefer products that have had an analysis of LCA.
  3. Complexity of causality: Causal relationships could lead to different consequences as the one expected from the use of LCA, especially if the policies are also implemented in industries that are not the most important ones.

This is how not only through Sabatier’s framework but also through a “coevolutionary revision of decision making” we can analyze the implementation of policies. Even though, there is no perfect answer to assess the perfect way of implementing the policies, they are tools to analyze and to also be aware of the unintended consequences that policies can produced if they are not managed with care and deep analysis.

Tractability of the Problem:

1.        While using LCA analysis, the availability of the data and the use of the tool is a problem.

2.        The diversity of target relies on the fact that are different industries involved in the LCA analysis.

3.        The target groups are only the most important industries in the country (NL). “The smaller and more definable the target group, the more likely the achievement of the objective” (Sabatier)

4.        Extent of behavioral changed required: modest because there are some industries that are already using LCA analysis.

Ability of Statute to Structure Implementation

1.Technical validity: relationship between the Government and the industries and the use of LCA. Implementation effectiveness: implementation of policies to produce behavioral changes, the use of LCA. The Government will have to create more institutions (more bureaucracy) in order to monitor and sanction the industries.

2. Financial Resources: two out of four policies mentioned before involve subsidies. If the objective of using LCA in a set time of 10 years and LCA becomes a usual practice, then the subsidies will have to be cut and replaced with new policies that do not involve subsidies. Another source of income for the Government to maintain these policies is the money that they will receive from sanctioning to industries that do not assist to the LCA Best Practices Congress or that do not present the LCA Analysis and Future Program Formal Document.

3. Hierarchical integration within and among implementing institutions: the Government sets the boundary conditions and it is the only one who can sanction and monitor the use of LCA. It must procure not letting any industry interfere with the policy implementation.

4. Consistency: The decisions and rules developed by the Government should be consistent enough, especially when industries apply for subsidies.

5. Implementation: The implementators of these policies should be neutral when monitoring and sanctioning.

6.Formal access by outsiders: the potential beneficiaries will not only be the industries while using LCA but also the consumers of the products who will see these regulations that come from the Government as a way to promote the care for the environment.

Non – Statutory Variables Affecting implementation

1.Variations in socio – economic conditions can affect perceptions of the importance of the problem. Investing in programs in universities can motivate the use of LCA in future years. If there are technological changes, the use of LCA must be a priority unless a better tool is created.

2. Media attention to the problem: In order to a good perception of the use of LCA, the Government should develop media campaigns about its use and benefits.

3. Public Support: the Government must generate political support about the use of LCA from environmental groups and political parties.

4. Constituency groups can be the groups that are worried about the harm that industries cause to the environment. The use of LCA can help their concerns to be more objective. At the same time, the constituency groups can be the opponents of using LCA as a governmental policy. The Government should have a plan about dealing with them.

5. Commitment and leadership of implementing: after the initial period of implementing these four policies, the degree of commitment from industries will decline, as the most committed industries become burned out and disillusioned with bureaucratic routine if the implementation of the policies does not work. It is important to consider policy #2: LCA Analysis and Future Program Formal Document because it requires new institutions for monitoring the plans of the industries.

Stages (Dependent variables) in the implementation of policy outputs process:

Policy outputs        Compliance policy outputs        Actual impacts         Perceived impacts   Major revision in statute

The four ways in which Government can increase the use of LCA through monitoring and sanctioning can develop compliance from industries. It is important to measure the implementation of these policies and lead with new development that may arise

[1] ISO, 2006 quoted in Lazarevic, David, Buclet, Nicolas and Brandt, Nils. “The application of life cycle thinking in the context of European waste policy” Journal of Cleaner Production, 2012

[2] Sabatier, Paul. “The implementation of public policy: a framework of analysis”. University of California, 1980.

[3] Lazarevic, David, Buclet, Nicolas and Brandt, Nils. “The application of life cycle thinking in the context of European waste policy” Journal of Cleaner Production, 2012

[4] Koneczny, Karol and Pennington, David. “Life cycle thinking in waste management: summary of European Comission’s. Malta 2005 workshops and pilot studies”. Elsevier, 2007.

[5] Gerrits, L. A Coevolutionary revision of decision making process: an analysis of Port extensions in Germany, Belgium and NL. Public Administration Quarterly, 2011.

[6] Idem

sabatier - New Page-1

Feedback #5: Networks

Feedback given to Paulina Gual:

blog: http://sspmpaulina.blogspot.nl

Dear Paulina:
I find it hard to understand that after the Agricultural Policy from EU, BS developed a series of strategies that brought about the formation of the network. At the beginning of your article it was noted that the cluster started 25 years ago with several companies. Did the formation of the cluster happen before or after the agricultural policy? It will be better if you could explain more about the development of the network trough dates and how the EU Agricultural Policy somehow helped to strength the bonds between the parts in the cluster.
Nevertheless, what you wrote about Wissington facility and the link you made as an industrial complex mixed with social networks is very interesting, especially the fact about British Sugar, playing the main role. I also consider that you chose a good topic to understand better what was related to networks, non local actors and closing material loops. It is very interesting to see the importance that non local actors such as policy makers and sugar producers have and how they can affect the consolidation of networks. Sometimes they are taking for granted. Overall, I think your blog was very well written and analyzed according to the topic of the class.

Week No.6: The game of harvest

“The oceans of the world continue to suffer from the survival of the philosophy of the commons… they bring species after species of fish closer to extinction”

Garrett Hardin

While playing the harvest game, my team debated the idea of whether to be coherent as Industrial Ecologists and decide sustainable solutions for the good of the entire ecosystem or try to win the game as a group and get as many fishes as possible. We knew that choosing the second option would definitely take us to the “tragedy of the commons”, with no fishes in the sea, in a small amount of time. At the beginning we decided to be sustainable, as the other teams were trying to be. Nevertheless, soon the “greed” the one that Friedman talks about, came to be visible in the group. We wanted to win, we wanted to compete, we did not care anymore about the sustainability of the sea, and we just wanted to have as many fishes as possible. So, that is what we did, we asked for more fishes in each turn and since all the fishes we asked for, were given to us, we won the game. We then realized we were the ones who destroyed what the majority of the group wanted, to make sustainable solutions.

This happened also because the groups could not communicate between each other, this is why at the end, the resource system collapsed. Which rules can we create in order for the groups to not exceed the sustainable yield?

I will give two solutions in order to make the system more sustainable:

  • A good solution would be that for the first row, each group fishes the amount of fish they want. Then, all the groups will gather and they will count together the final amount of fish that they took from the system. In order to make the system sustainable, they will decide together the final amount of fish that they can take from the sea per round. So, when they gather together again, they cannot have more fishes comparing to the first raw, the groups that have more than the other groups, would have to give it to the groups that did not get that much fish. One person of each group will be the authority in another group while they are fishing. Each representative from each group will switch from group to group as well and at the end, when they count the final amount of fish, everyone knows that they are not lying or hiding their fish. This is important, because the authority does not rely on a specific person but in each of the representatives of each group.
  • Another solution would be to change the set of mind of people through the sense of community, education, experience and trust. The facilitator (in this case the Professor) will make people from each group get mixed together, talk about the tragedy of the commons and even play the game as a metaphor for all the participants to understand what could happen to their system. In the game, individuals will know more about themselves and they will develop a bond of trust and community. Once the game ends up in a collapsed system, they will understand what could happen and at the end, if they become really conscious about it, all the groups will find the perfect solution in order for them to reach the sustainable number of fish.

Feedback #4: Nokia Case

Feedback given to Milan Veselinov

http://hellofutureworld.wordpress.com

Dear Milan:

I like the way you explain the legitimacy of Nokia through your example of PR and how the information was used several years ago, even before the internet. I like the puzzle that you give, thinking about the “silent PR”. This is why I was also thinking that maybe the documentary is not totally in favor of Nokia, it is the viewer who decides actually. While the documentary revealed how badly the supplier treated its employees, Nokia already hired that supplier several years ago, why is it taking care now after gaining so many profits from the low costs of the parts that were outsourced? That does not say too much in favor of Nokia either.

While I do agree with you when you say that a good coordination mechanism would be the normative, I do not agree totally when it is stated that the factory would have to invest less to comply Nokia requirements. I think the factory would have to invest more in order to fulfill the requirements of Nokia, which at the same time, would make the cost of the outsourcing parts more expensive and then the debate would be if Nokia would continue investing in this supplier if it knows that the parts are more expensive.

Overall, I found really interesting the way you wrote about the whole perspective of legitimacy, the market, Nokia, the supplier, its employees and even the consumers bargaining power.

2) Feedback given to Franco Donati

http://fdsspm.wordpress.com/

Dear Franco:

I found your blog about Nokia really well written and the points were really well defended. Thank you for the information about “Solutions for hope”, that is a plus to the topic. There are so many ethical issues to discuss when talking about big corporations and outsourcing suppliers. I do agree with you about Nokia striving for legitimacy through CSR, nevertheless, I do not agree totally when it says that the honesty that was shown on the uncovered issues of the supplier gives back some legitimacy to it. Especially because, even though the supplier accepts its uncovered issues, their activities are not appropriate, coherent and attached to values and beliefs and under the eyes of society, this is illegitimate.

Nokia can only give recommendations or put some pressure in order to improve the conditions of the employees in the supplier but that will not change the system itself. This is why I totally agree with you when you say that the diffusion of sustainability criteria can’t rely on companies alone.

Overall I found really interesting the way you present the legitimacy of Nokia (although not agreed in the supplier part) and the solution you propose about the combination of market players adopting CSR and other organizations in order to achieve a real sustainable system

Feedback #3 SES

Feedback given to Jorinde Vernooj about SES

https://ecologicalindustrialist.wordpress.com

Dear Jorinde: I think the example you used fits perfectly to explain SES. I also found really interesting that China produces 95% of rare earth elements. China became almost the only country available to find rare earth elements and that is not for free, as you have described in the interactions with other companies and countries. I think that the way you explain the resource system, resource units, governance system, users and interactions is really well done and explained. Nevertheless, I do not agree completely in the outcome when you say that the system seems to perform sustainable when consider economic and social criteria. I don’t know if you are referring to an “ideal outcome” of the system written by Ostrom or if you are talking about the performance of the system itself, when China decreased the exportation and only allow its companies to access to cheap rare earth elements. It seems that this is not so sustainable since USA, Japan and the European Union are complaining for the approach from China.

 

Week No.5: Network Portfolio

1. Identify a regional network of production (drawing on own experience, literature, the news).

2. Analyze this network using at least two of the concepts presented, paying particular attention to the linkages of the regional network with ‘non-local’ actors.

  1. Organigrama e Instotuciones banner

EL SALINERITO

“El Salinerito” is a self organization that started almost four decades ago in a province called Salinas in the Andes Region in Ecuador. Salinas is a province with several communities that lived in extreme poverty. Nevertheless, due to the motivation of the people of Salinas and the help of international organizations (non local actors), the small communities organized themselves, creating various agro-industries and producing traditional goods with the raw materials of the zone. Nowadays, the final products such as chocolates, infusions, sugar, mushrooms and cheese are being sold not only locally but exported to Germany, Italy, Japan, France, USA and Mexico.

“El Salinerito” started when the twenty seven small communities of the zone gathered together and formed the first union credit with the help of Italian catholic religious who arrived as volunteers. After creating the organization, its participants established that the goal of the organization was to defeat the poverty of the communities. In order to do that, each community would create its small business through their agriculture production. Nevertheless, the participants created a norm, every profit that each community would produce, was going to be reinvested in the whole organization “El Salinerito”. At the same time, as an organization, they applied for several loans and asked for help from different NGO’s which helped them with their technical skills. Since then, each community elaborated different products that are linked under the brand of “El Salinerito”. The success of this organization follows the principle of “solidarity economy”, profits are reinvested into the organization and used also to support the communities and their development.[1] This is how this network used the resource of producing knowledge, in order to solve the problem of poverty, all the communities collaborate. At the same time, this network constructed its rules, the limits of the playing field was to reinvest the profit. Using the mechanisms of coordination, they started as a self organization with some individuals but through the time and through the creation of several norms they become a self governance in a network of private actors engaged in rule formation, monitoring and sanctioning if they did not reinvest their profits in “El Salinerito”.

Analyzing this network requires the analysis of two concepts of regional networks: agglomeration and social network. The initial network structures that is found is the social network, because through increase interaction, the authorities of each small community located in proximity develop social capital and the trust to invest their profits. All the participants from each community interact, developed their social capital and all the transactions were based on trust. Any community could retain the profits that they made, instead, they have to give it to the whole organization and that, involves trust. At the same time for this case it is very useful to use a part of the concept of an agglomeration, because the communities, produce each of them different products, are located nearby and they use the same infrastructure, training facilities, availability for supporting the workers and their families, resulting from self organization.

The case of this organization fits into the industrial complex network because communities gathered together, forming a network not only through themselves but also with a non local actor: NGO’s who supported them.

In this case, we can also see the relation of dependency from the communities to the non local actors, NGO’s, was pretty high. El Salinerito required the help of several international NGO’s. Nevertheless, while putting in practice the technical skills by the producers of each community, developing their own products and later on, their own profit, the level of dependency decreased. As they stated “we have received economic resources but we have responded with an ascending trajectory of self management”.

  1. Make clear how the network you identify constrains and/or enables actors to work towards closing material loops.

Taking into account the category of relationships between self organization and external control (Boons, 2008)[2] El Salinerito is an actor that can self organize and develop monitoring and sanction rules (self organization leading to self governance). This self governance also implies that due to the fact that the communities that involve “El Salinerito” are working together and investing their profits in their whole organization, they depend on each other. Therefore, the degree of dependency is very high which enables its actors to work towards closing material loops.

The material loop is based on the fact that the communities are nearby, after producing their goods; they classify the waste and transform it through compost into organic components. At the same time, because they use their natural resources in order to produce their goods, they have programs to reforest and help their land. Financially, they reinvest their profits into the organization. All the packaging that they use for their products comes from recycling the by-products that they have from their production.

In order to maintain this loop, they must face the problem of coordinating the activities of different economic actors, which in this case are the communities. This problem can be inside of a type of Industrial Ecology called sectoral[3] which is a group of companies, in this case would be a group of communities, performing similar activities, forming an industrial ecosystem. Because the basic organizing principle is the similarity of their activities: producing food products, it is difficult to define the link between input and output relations. Nevertheless, taking into account that the problem of coordination of the activities depends on the type of Industrial Ecology, in this case by sector, “El Salinerito” can develop their own environmental management while producing their products. This is why they have created programs to reforest their own land and better practices for the use of the soil.

[1] “El Salinerito”. http://www.elsalinerito.com

[2] Boons, F.A. “Self-Organization and Sustainability: The Emergence of a Regional Industrial Ecology. Emergence: Complexity and Organization, 2008.

[3] Boons, F.A and Bas, L.W. “Types of industrial ecology: the problem of coordination”. Journal of Cleaner Production, 1997.

Week No.4: Nokia – video portfolio questions

Analyze how the two key organizations in this case (Nokia and the supplier) are striving for legitimacy.

The activities of an organization are legitimate as long as the society accepts them. This is why, in order for organizations to keep going, they must strive for legitimacy, and they must make their activities appropriate, coherent and attached to norms, values and beliefs so the society will admit them. Due to the fact that social responsibility is one of the key elements that the society is looking for in a company nowadays, and through mimicry with other companies in order to strive for legitimacy, Nokia tried to demonstrate not only to their investors and stakeholders but also to the society their “social responsibility image” showing their concern about ethical working conditions of their suppliers in China.

Through an extensive research about the conditions of the supplier, Nokia realized the supplier worked unethically with its employees in China. Nevertheless, Nokia never put direct pressure into the supplier about this; instead, Nokia used a subtle way to express its concerns about the situation to the managers of the supplier. While the team of Nokia exposed to the managers of the supplier their concerns, the managers realized that they had to adopt better practices in order to be compatible and work with Nokia. We can see here a form of coercive isomorphism fighting for legitimacy not only from the Nokia perspective but also the supplier. Nokia used formal and informal pressures, persuading the supplier in China to change the way they were treating to their employees. This was not also Nokia fighting for its legitimacy but it was also a way for the supplier to realize how important it was that they changed the way they were treating their employees in order to continue with the contract with Nokia and for fighting about legitimacy at the eyes of the society. As Paul DiMaggio and Walter Powell said: “coercive isomorphism may be more subtle and less explicit”.[1] Through coercive pressure and a subtle persuasion over the supplier, Nokia let the supplier know their concerns about the situation.

At the same time, the supplier´s bigger concern was realizing that Nokia had a video and that they did not want it to be exposed to the society. The supplier knew really well that they would lose legitimacy because the video indicated the way they operated: violating Chinese law, paying under minimum wage and offering unfair and unsafe working conditions to their employees.

This video lets the viewers of the documentary to think if Nokia was doing this because they were really worried about the conditions of the employees in the supplier in China or because they wanted to maintain their “social responsibility image” and strive for legitimacy in the society showing that they are at least trying to improve working conditions in China.

Since social responsibility has become an important key for companies to strive for legitimacy, many of them are following in a subtle way, the path of isomorphism.

Is the approach taken by Nokia an effective way of diffusing sustainability criteria?

In an era of economic globalization, the states have lost some control in norms and regulations, it is the private market based nonstate authorities the ones that “have gained significance because the state has lost its effectiveness in areas that the “free market” has never been able to provide adequately, such as security, monetary stability, law enforcement…”[2] Nokia, as a representation of the private sector, has started to make a precedent about security working conditions of the employees of their supplier in China; raising awareness of the unethical conditions in which employees are working there. Nokia made an observation into conditions that sometimes the government fail to see, understand and sanction.

Part of diffusing sustainability criteria is the social system integrity and I think Nokia has made a good start about it. This sustainability criteria is linked with the concepts of “human capital which comprises the abilities of individual people to do productive work and therefore includes physical and mental health, motivation and a constructive and cooperative attitude. It also involves social / organizational capital which comprises the social structures and institutions which enable individuals to maintain and develop their human capital and be productive” [3]

Nevertheless, I think that Nokia does not take a firm position about the unethical conditions, it is too subtle and this fails for diffusing sustainability criteria. According to the UN Conference on Environment and Development (UNCED), the goal to achieve sustainable development is “to improve firms’ handling of hazardous wastes, encouraging clean production technologies and facilitating the transfer of those technologies to developing countries”[4] If we use this statement as a metaphor for sustainable criteria in this case, Nokia is encouraging the supplier to revise the processes of their production and through it, treat its employees in a better way. Nevertheless, it fails to put more pressure to the managers of the supplier in order for them to change the human resources policies of its businesses in China. This pressure would be a though external factor for the supplier, “factors external to firms create incentives and expectations for managers, intrafirm politics influences how managers perceive and interpret external pressures and act upon them” [5]

I think Nokia does not take a solid position because it knows that its business is to profit through manufacturing cell phones; a component of the profits that Nokia gained over the years were based on the low costs of the parts that were manufactured by suppliers in China. Nokia knows that in order for the supplier to maintain these lower costs, the supplier must continue having this “unethical system” with their employees. As a viewer of the documentary, it is not clear if Nokia is going to give up part of these profits in order to fight for better conditions of the employees in their suppliers or if it is just a way to present to the society their awareness.

A good example for diffusing sustainability would be the implementation of certifications not only based on environmental issues like the one of 14001 but also on ethical conditions for the workers. The supplier and Nokia would be encouraged to establish their own standard ethical conditions for their workers and make it public upon request.[6] It is important to take into account how private firms are being considered now for diffusing sustainability criteria and it does not only rely on the Government side.

This idea of Nokia to raise this awareness of “unethical conditions” and improve the research they made into the supplier can be complemented with normative mechanism. The two Nokia’s business ethics advisers, who examine the conditions at the Chinese factory, were hired through filtering of personnel in Nokia, being chosen for their studies and their education. I think that universities and professional training institutions can help to prepare even more professionals who, according to Di Maggio “are willing to define the conditions and methods of their work to control “the production of producers” (Larson, 1977)”. If these professionals have the vision to project a more sustainable production, taking into account the ethical conditions of the employees in outsourcing companies, then the normative mechanism will help to establish practicing this “ethical conditions” in suppliers in China as a common practice and soon can also become a norm for all the companies that want to work with outsourcing. Because professionals are subject to the same coercive and mimetic pressures as organizations, if organizations start to take into account really seriously “social responsibility” and developing these new norms of ethical conditions, the system itself can be more sustainable. Companies will try to reach the best practices for being social responsible through the new vision of professionals in the normative mechanism.

 How could another coordination mechanism improve on this?

According to Ostrom, the coordination mechanisms almost never occurred in an isolated way, in this case it is not only about Nokia as a private firm, it is also about self organization between firms and suppliers and it is also about the function of the Government. Firms and suppliers in the market must self organize but also the Government should be the one which sanctions the unethical way in which employees are being treated.

This is why, I think three coordination mechanisms that could improve this situation are self-organization, private – interest government and government.

At this point, private companies that use outsourcing suppliers in China, through self organization, should create stronger norms and put pressure upon suppliers. Supplier companies in China should accomplish these norms in order to be hired by big companies like Nokia as its outsourcing supplier. These norms should be based on treating supplier organization’s employees in a fair way, using safety conditions for them and paying at least the minimum wage.

On one hand, companies will operate in a more “ethical way”, they will create better rules and on the other hand, Chinese government will put pressure on supply firms in their country in order for them to obey the law. At the same time, Governments will support the norms created by companies. This is how this private – interest government mechanism can help the situation.

[1] Di Maggio, P and Powell, 1983. The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Field. American Sociological Review.

[2] Susan Strange mentioned in “Clapp, Jennifer. “The privatization of global environmental governance: ISO 14000 and the developing world”. Global Governance, 1998.

[3] Tippet, Joanne. “Criteria for sustainability”. http://www.holocene.net/sustainability/sustainability.htm

[4] Clapp, Jennifer. “The privatization of global environmental governance: ISO 14000 and the developing world”. Global Governance, 1998.

[5] Prakash, A. Why do firms adopt beyond-compliance environmental policies? Business Strategy and Environment, 2001.

[6] Idem

Feedback on assignment #2

The following feedback was given to Romée de Blois

http://socialsystems2014.wordpress.com

Choose a newsitem about an event in which the actions of a firm or governmental agency play a crucial role.

Dear Romée:

I found that the news item you use to explain rational actor model and bounded rationality, was very interesting. I think you detailed very clearly about the RAM model, especially when the OM had to look for evidence, hence looking for optimal investment in information gathering, before making a decision for both: the jeweler and his wife. I also agree in the way you explained this news item with the bounded rationality model. For me, the OM took a controversial decision, especially when we use the serial processing part from the model. OM routine solution would have been to punish the jeweler and also his wife for using an illegal gun, nevertheless, the routine solution was insufficient due to the fact that the gun, even though was illegal, saved the life of the jeweler and his wife. Therefore, their central decision making was not to sentence the jewelry’s wife but only the jeweler, even though his wife used an ¨illegal gun¨ as well. I agree with you in the way you use the models, nevertheless, I felt that more explanation was needed using some characteristics of the bounded rationality model like the agenda setting, parallel processing and serial processing.

 

Friedman-proposition

Something very similar about your opinion happened to me after watching the documentary of ¨Not business as usual¨ and reading the lectures. I agree completely with you when you say that customers nowadays do not only care about a product by itself but also its background. I think that is the problem with the theory of Friedman, because if businesses only focus on profit, then businesses are forgetting about all the things that happen around that profit and therefore forgetting about the background of their product or service.

Overall I really like the way you structured your blog, using a good news item for explaining the models. I do agree with your opinion about Friedman, it is very interesting the way our point of views change somehow once we have more information about it.

2. The following feedback was given to Vigil Yu.

http://vigilyusspm.blogspot.nl

Choose a newsitem about an event in which the actions of a firm or governmental agency play a crucial role.

I think that the newsitem you used is a really good topic to talk nowadays, especially for IE students. It does not only help us to debate through our Social Systems class but also in Renewable energies. I have to admit that I went to the source of the newsitem because I didn’t understand what EPA meant. I think it would have been really helpful if you explained it at the beginning. I already know it means Environmental Protection Agency. Through your analysis I could differentiate really well the concept between RAM and Bounded rationality model. Especially in the bounded rationality model, when EPA takes a decision out of limited information and resources, and also when the goal of cutting the carbon emission is debatable. Although I understood your point about EPA being bounded by organizational routines when cutting carbon emissions by 30%, I did not understand quite well if this is a number of governmental conservation? I think you explain pretty well the decision of EPA using it experiences as an organization with routines, rules and standards. Nevertheless, it could have been useful also, to use the one about parallel processing, because EPA is delegating and decentralizing the methods to reduce carbon emission to each government of every state.

Overall, I think this newsitem and the way you analyze it, is pretty well attached to the concepts about rationality that we are studying.

Friedman-proposition

I do agree with you when you state that the need for a societal change is the one driving our generation to create new business models. Nevertheless, I think it is really hard to sustain these models, especially because as you said, they are linked to the values of the consumers and sometimes the majority of consumers are not looking for “sustainable products” but rather the cheapest ones.

I agree with you when you say that entrepreneurs of our time, since they have been raised with education and wealth, are pursuing not only for profit but for wellness for themselves and the environment. Nevertheless, I would like to find more explanation when you say that in Friedman’s time; he did not see the possibility of having such a win-win situation. I think that his theory is looking actually for a win – win situation while practiced in a perfect free market bounded by laws and rules against fraud. Although I recognize that the theory of Friedman was looking for a win – win situation, it is not real at our time because that perfect free market does not exist.

I agree with you when you say that businesses can go beyond profit and I am glad also that we watched the documentary because it motivates us to create social businesses and I think also it is our responsibility to change the mind set of customers and their values through our own actions in order to achieve sustainable businesses.

Week No.3: Think up a SES in which you are an active part, and in which private firms play a role

1.Analyze the system using Ostrom’s framework.

For analyzing the Social – Ecological System written by Ostrom, I will use the example of oil converted into petroleum as a resource. I will use the SES framework with a specific position in a specific activity. I take an active part as a user in this system: a consumer of petroleum for my transportation. I will specify the parts of this system and also the second level variables that will lead to interactions and outcomes according to Ostrom’s framework and the symbols she uses to explain about its different parts:

cuadrocuadro2

The challenge of SES (Sustainability of Socio-Ecological Systems) is to analyze the relationships among multiple levels of the system, in order to find how sustainable the system is or could be. Extracting oil causes a complex system. The resource system (RS1), sedimentary land in the Amazon Region, is generally located around a high biodiversity environment and close to indigenous communities with ancestral legacy in Ecuador. The resource (RU1) is the barrels of oil extracted from the land. Inside the Governance System (GS1) are the Ecuadorian Government and the Non Governmental organizations like private oil companies such as Chevron or Shell. At the same time and inside the second level variables, there are Non Governmental Organizations, like the ones organized by the indigenous communities where they want to make sure about their property right (GS4) of their land and since they are the most affected by the oil drilling, they are also actors for monitoring and the ones who claim for sanctioning processes (GS8) (when oil companies cause destruction to their environment) not only to the Ecuadorian Government but also to the private oil companies. Finally, the users (U1) are the consumers of the oil transformed in petroleum for transportation (in which I am an active part as a consumer).

The interactions between all these variables, causes a complex dynamic where the goal is to find the productivity of the system (RS5), where oil is abundant (number of barrels of oil) (RU5) and that also has an economic value (RU4) because the economy of Ecuador depends on this activity. According to Ostrom, when “the resource is abundant users do not need to self organize”. Nevertheless, there are some researches that show that oil is not as abundant as before, and that an energetic crisis will come, ¨not when the last drop of oil is extracted but when oil extraction cannot meet demand¨[1] Therefore, the use of oil is passing from being an abundant resource to a scarce resource in the system. Nevertheless, the use of oil keeps growing in Ecuador, for example, the gas stations have reported an increase of 7% in the demand of fuels in the last year[2].

The number of consumers and even the private companies are dependent of oil for several activities (history of use U3) and that is why nowadays, there is a serious concern about this resource and this is why not only consumers but the Government are giving high value to the sustainability of the resource system, looking for other ways of energy for transportation. Many interactions are given through networking activities (I8) and information sharing among the consumers, government and private companies (I2) in order to reduce the amount of oil used in our daily lives.

This is why, the importance of the resource (U8) is taking into account, especially through a part of the users, who are trying to self organize to reduce the use of oil for transportation through several activities. In the most important cities of Ecuador like Quito, Cuenca and Guayaquil, users are getting self organized and starting social movements in which they motivate the population to use their bikes as means of transportation instead of their cars. I have been involved in these movements, also asking to the Municipalities the construction of infrastructure for transportation by bikes.

There are also self organized movements of activists that claim to stop the oil drilling in the Amazon region. Many activists and NGOs defending the right of indigenous people, claim to decentralize the administration of this resource by Governments, because there are proofs that the Governments have not been efficient administering this resource and that is why there are many devastating situations in the Amazon and with the indigenous communities. While I agree with Ostrom when she says that ecological ad social sciences have developed independently and do not combine easily, I know that through Industrial Ecology we can combine them and find out that all these interactions between consumers, private companies, government and NGOs must lead to an outcome where sustainability is the key, not only at the social performance level (O1) but as an ecological performance (O2).

  1. Argue how the principle advocated by Friedman might be put to constructive use in the sustainable management of this SES.

In order to put constructive use in the sustainable management of this SES about oil, I would mention a part of Friedman’s theory: “there is one and only one social responsibility of business, to use its resources and engage in activities designed to increase its profits as long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud”.

Taking into account this principle from Friedman, in order to increase the profits of firms that exploit oil in the Amazon region, investors and stakeholders can take the decision to invest their money for developing new technologies of drilling oil that reduces the environmental impact that they create in the Resource System. Through this, private companies will not only benefit because they will reduce the costs of operations with clean technologies but at the same time, the conflicts into the Governance system (between private companies, the government and indigenous communities) will reduce significantly.

Simultaneously, stakeholders and investors can also decide to invest their resources for researching about the generation of cleaner energies with the objective to create new business for more profits. This new business can grow faster due to the fact, that customers (the users) are already self organized and this will be an answer for their claims about cleaner energy. Therefore, these users will be the new customers of the business of cleaner energy. The business can give more profits than expected and in the long run, can switch from extracting oil to generating a new energy for transportation through cleaner energy sources.

This is how, through market mechanisms proclaimed by Friedman, this SES can be more sustainable.

[1] Mac Kay, David. “Sustainable Energy – without the hot air”. Cambridge, 2009

[2] “The sale of heavy trucks grow” http://www.elcomercio.com/actualidad/negocios/venta-de-carros-pesados-crece.html