Business Ethics and Tourism Essay

In addition, t ourism is a unique industry; although general concepts of business ethics are often useful, t ourism transcends mainstream business and must be evaluated accordingly. By forming alliances with subdisciplines of business which parallel our own interests, tourism can advance in appropriate ways. I n recent years, tourism has become an increasingly i mportant industry. As a result, a familiarity with t heories of business ethics is essential. The general n ature of much business thought,* however, is not t otally appropriate for tourism, which is a unique ndustry with its own special needs, priorities and c onsiderations. T his paper begins with an overview of business e thics as crystallized in a polemical exchange bet ween Milton Friedman and Keith Davis. Since the t ourism industry is greatly influenced by such t hought, this analysis nests tourism ethics within a f amiliar setting. U sing this overview as a stepping stone, the u niqueness of tourism is discussed in order to e mphasize its character and to propose ethical s trategies which operate in concert with it.

By formi ng alliances with subdisciplines of business such as m acromarketing, the tourism industry can embrace * Since the Second World War and especially since 1960, the b usiness disciplines have increasingly portrayed themselves as g eneral/universal and capable of bcing employed by all organizat ions. In marketing, for example, the definitive statement of such a n expanded role is Phillip Kotler and Sidney Levy’s “Broadening t he concept of marketing’, Journal Of Marketing (1969) w hich e xplicitly considers lourist activities such as m u s e u m attendance.

A lthough such an orientation is useful in many contexts, it ignores p rofound w m a t i o n between different professions and industries a nd can mask variations which need to be acknowledged. m ore appropriate models and allies. Applying the f ruits of such multidisciplinary cooperation to the e thical realm, the appropriateness of such selective b orrowing will be explored and demonstrated. A d ebate within business theory M odern business ethics can be described with refere nce to a debate between Nobel prize-winning econ omist Milton Friedman and Keith Davis of Arizona S tate University.

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As is well known, Friedman argues t hat ethics are not the province of business while D avis insists that business must embrace social res ponsibility, not merely profitability. F riedman 1’2 argues that the only legitimate role of b usiness is to generate profits for stockholders and h e asserts that dwelling on ethical considerations for t heir own sake perverts its true purpose. Friedman a lso argues that executives are specialists; thus, it is f oolhardy to assume that they are qualified to forge a ppropriate social policies and strategies. F riedman, it should be added, does insist that all rganizations should obey the law; however, he e mphasizes that once enacted, laws become the ‘ rules of the game’ which must be universally o beyed. But until legislation limits options, organ izations should pursue their most fruitful opportuni ty. Friedman, nonetheless, does acknowledge that a f irm might legitimately act in a socially responsible 263 C urrent issues T able I Ethical orientations: a comparison S ocial obligation Social responsibility Social responsiveness G eneral overview Legal and profitable Current social problems a rc responded to Future social and/or environmental problems are nticipated and addressed C hoosing options T he sole consideration aside f rom profitability is legality D ecisions respond to social i ssues which overtly need to b c addressed D ecisions arc based on an a nticipation of future needs a nd/or social problems even if t hey do not impact on the firm a nd/or are not caused by it S trategies are evaluated with r eference to: 7. Is the strategy legal? H as the organization r esponded to problems and i ssues which have emerged as s ignificant? F uture problems are addressed e ven if the organization is not d irectly involved in causing t hem 2.

Is the strategy profitable e nough (however measured)’? m anner if executives perceive that doing so is a good t actic. W hile Friedman’s arguments are most powerful f rom a theoretical vantage, Keith Davis analyzes m odern business as it actually exists. 3’4 Davis e mphasizes the powerful position of modern busin ess; as a result of this clout, he argues, stockholders a re merely one of several legitimate stakeholders which must be considered when strategies are being f orged: economic power and its impacts create moral a nd ethical responsibilities. O nce Davis establishes this point, however, he arallels Friedman by asserting that socially res ponsible behaviour ultimately benefits the organ ization and can help prevent government intervent ion and regulation. In addition to merely staving off g overnment interference, furthermore, the good p ublicity which derives from socially responsible b ehavior can enhance the organization. T heoretically, Friedman and Davis hold comp letely different positions regarding social responsibility. Once they get beyond theoretical issues, h owever, their arguments closely parallel one a nother. A c o n t i n u u m o f social c o n c e r n

T he polemics between Friedman and Davis reflect a c ontinuum of ethical orientations which exist in b usiness thought; it is usually envisioned as having t hree categories: Social Obligation, Social Responsib ility, and Social Responsiveness. Social obligation t heory largely parallels Friedman’s position; besides o beying the law, nothing is required. Firms, howe ver, can and should pursue any ethical or socially r esponsible policy which is believed to be a good t actic. But such motives transform social responsibility into a profit-making ploy. Social responsibility theory, in contrast, is closely llied with Davis’s position which suggests that busin ess profoundly impacts on the fabric of life; thus, p owerful and influential organizations should act in e thical and socially responsible ways. Social respon2 64 sibility theory, however, limits itself to addressing p roblems which currently and overtly exist. Social responsiveness theory can, perhaps, best be s een as an extension of social responsibility theory. I nstead of merely responding to problems which are o vertly obvious, however, socially responsive organ izations anticipate future developments and a ddress them in a forwarding-thinking and proactive ay. T hese three positions can be portrayed as set out in T able 1. B y being aware of these three basic p ositions and remembering that they are milestones o n a broad continuum, tourism professionals will be b etter able to discuss ethical strategies and tactics. T o u r i s m as a special case G eneral theories of business ethics are generic conc epts; they are not inherently geared towards specific applications. Individual industries such as tourism, in contrast, have their own unique sets of p roblems and concerns; thus, the specific ethical c onsiderations of tourism need to be individually ailored to our needs. U nique ethical considerations in the tourism ind ustry must be evaluated from a specific (not a g eneral/generic) perspective. Looking at the evolving tourism industry (and the professional thought which accompanies it) at least three keystone conc epts emerge. They include: • T he concept of ‘progress’ is not a central or u nifying concept within tourism theory and e thics. • T he product which tourism provides may be d estroyed or undermined by pressures created by t he industry. • T he needs of all relevant stakeholders must be a ddressed when tourism strategies are being orged. * ~Each of these concepts is widely discussed in the contemporary t ourism literature. It is impossible in a short space to analyze fully T our&m Management 1995 Volume 16 N u m b e r 4 Current issues Since the days of Social Darwinism in the 19th c entury, various thinkers, especially those in the fields of business and economic development, have ( covertly or overtly) asserted that ‘progress’ is both i nevitable and inherently good (even if short-term g rowing pains might be experienced along the way). T oday, furthermore, many developing countries ontinue to look at progress (as measured by techn ology and the societies of the industrialized West) as a yardstick to measure their own cultures, economies and nations. T hose who champion ‘progress’ inevitably conside r almost all economic development to be ethical since it brings various benefits to a region. -~;uch p erspectives are alive and well in business theory. A p owerful concept in modern marketing, for example, is the ‘GIobalization of Markets’ theory adva nced by Harvard’s Theodore Levitt5~ who argues t hat technological progress and the international c ommunication/interaction it makes possible are reating a universal, ‘global’ culture. As a result, he a rgues that local and ethnic differences are destined t o fade as universal needs and wants emerge. Levitt suggests that the optimum strategy of the firm is t herefore to force homogeneous consumption patt erns upon customers even in cases where markets resist such tactics. In spite of such models of unilateral evolution, disciplines such as applied anthropology and public s ector folklore combine with tourism to question such a ‘knee jerk’ reaction to the cult of progress. T ourism and related disciplines emphasize that ultural differences are real and lasting. Even if u nilateral cultural ‘progress” may occur in the long t erm, it is viewed as a development destined to c ulminate in the unforeseen future and, therefore, n ot the stuff from which viable strategic plans should be forged. I ncreasingly, for example, development projects (such as those involving World Bank participation) r equire both social and environmental impact analysis. Funded projects, furthermore, are typically req uired to devise ways to mitigate negative impacts o n the environment and society caused by developm ent.

Thus, riding the wave of ‘progress’ is inc reasingly being viewed as merely one option; the costs and benefits of doing so must be weighed in a ccordance with other available alternatives (including a maintaining of the status quo). T ourism, furthermore, differs from other industries since the product offered often cannot be easily r eplaced if it should become undesirable or uns ought. ** In addition, the tourism product can bec ome ‘shopworn’ or pass( a nd, thereby, weakened in t he marketplace if aggressive tactics are not emp loyed to prevent the eroding of demand which can, o therwise, result.

In other endeavors, such as manufacturing, prod ucts can be readily replaced or altered; indeed, the usual strategy in such industries is to deploy research a nd development money so that existing products a re superseded in profitable ways. In such cases of ( planned or unplanned) product obsolescence and r eplacement, the emphasis is upon the inevitability o f a product life cycle and manipulating it so that the o rganization constantly develops new merchandise t o satisfy evolving consumer demands. T he product life cycle, of course, has become a ell-used concept in tourism ever since Butler first a pplied it to the industry in the early 1980sJ ~ A lthough such concepts have had a profound imp act, the tourism literature has increasingly refined t he product life cycle to emphasize its conditional, n ot inevitable nature (for a discussion see Walle7). A k ey aspect of such thought is that although a product life cycle of ‘birth’, “growth’, ‘maturity’ and ‘death’ m ay sometimes occur, this procession is not preord ained and is not usually beneficial. I f the product life cycle is increasingly viewed as a egative potential which exists if active steps are not t aken to forestall or prevent it, the tourism industry s hould manage itself accordingly by accepting that t he tourism product is not readily replaceable or a lterable. Not only is such a position inherently e thical, it is also essential if viable, long-term s trategies are to be pursued. Otherwise, in many s ituations tourism might parallel extractive industries, such as mining, where after a short period of ‘ harvesting’ the region must be abandoned. Such s trategies, of course, are not in the best interests of i nvestors or regions.

T ourism is also a special case because the needs of several different types of stakeholders need to be t aken into account when strategies are being forged. a nd critique such developments; as a result, thcy will considcred in general ways, as necessary, within the context of this article. M y orientations stem primarily from social anthropology and p ublic sector folklore. 1 have significant practitioner experience p resenting ‘traditional people” in a festival setting. I have a c onsiderable background in marketing including teaching, practit ioner assignments and academic publishing. l:See especially ‘The globalization of markets” essay which was o riginally published in Harvard Business Review ( May/June 1983). A critique of Levitt’s theory of globalization is found in my r eview of the book which appeared in The Journal C)~ Macromarketing in 1985. :+:*This is not totally true, of course; thus, it is possihle to build or u pdate hotels and other facilities in order to keep a location ‘state o f the art’. It is also possible for a region to serve new roles as A tlantic City did when it embraced gambling as a new component o f the tourism mix in that city . . . etc.

Nonetheless, on many o ccasions, the public wants to visit a mttural or cultural resource w hich might bc compromised by ovcruse, despoilment or unwise m a n a g e m e n t , If people come to a region to visit nature, for e xample, rapid+ unregulated development or long-term use which e xceeds the region’s carrying capacity can undermine its attract iveness+ In recent years such concerns have emerged as a major i ssue in the tourism literature and in parallel fields such as park management, Tourism Management 1995 Volume 16 Number 4 265 Current issues T able 2 Special ethical considerations of tourism

T ourism perspective Social obligation Social responsibility Social responsiveness ‘ Progress’ is not inevitable or i nherently beneficial Since the concept of ‘progress’ is not universal or inevitable, w e should not place an overr eliance upon it in our s trategies and tactics T ourism has a rcsponsibility to e ncourage development which m eshes with the local e nvironment and culture, not in accordance with a universal c oncept of ‘progress’ Since ‘progress” leads to c oncomitant changes in culture a nd the environment, tourism s trategy should be appropriate a nd mitigate its impact T ourism can be undermined by ressures of the industry C hange wrought by tourism m ight undercut the industry. Such potentials should be p revented and mitigated when d oing so is a good tactic T ourism causes negative i mpacts and pressurcs on p eople and the environment which should be mitigated T he industry has both p ractical and ethical reasons to r cspond to impacts on the e nvironment and local people All relevant stakeholders need t o be considered when strategies a rc forged G overnment regulation and l oan conditions might demand r esponding to the needs of all r elevant stakeholders T ourism should respond to the eeds of various stakeholders which are impacted on by t he industry T he industry should anticipate f uture impacts from various s ources and respond in p roactivc ways In mainstream business, the focus tends to be upon t he organization and its customers. The marketing c oncept, for example, argues that marketing should f ocus almost entirely upon the needs of customers a nd that pleasing customers is the only justification f or the organization’s existence. In mainstream mana gement, furthermore, workers are viewed as r ational beings who choose to be associated with an o rganization.

In addition, it is usually assumed that t hese rational workers are able to dissociate themselves (emotionally as well as physically) from the o rganization in their free time; thus, the organizat ion demands nothing of employees besides their h ours on the job. Such notions are severely challenged by the tourism, applied anthropology and public sector folklore l iterature. These fields emphasize that economic activity (in our case tourism) involves many different s takeholders which should be considered when dev elopment takes place. The local population and the s tability of the local culture are of especial signific ance.

Such considerations of the tourism profession are i nherently ethical because they strive to prevent s ome groups from benefiting unfairly at the expense o f others. In addition, they have a practical value. If, f or example, tourism activity will be disruptive to a r egion, negative side-effects might eventually underc ut the profitability and even viability of the tourism i ndustry in a region. As has been widely discussed in t he literature, alienation of the local population (a possible side-effect of tourism development) may l ead to hostility, a higher crime rate, and various social problems which incur additional costs and ven undermine the attractiveness of a tourism d estination. Thus, on both ethical and practical g rounds, satisfying the needs of all relevant s takeholders is an important activity. T ourism, therefore, emerges as a special case with its own needs and problems, not as an example of u niversal business strategies and tactics. Because of 2 66 this uniqueness, tourism must forge its own s trategies of marketing and deal with the impacts c aused by its presence. Although various marketing t echniques may be used as a d hoc tactics, the u niqueness of the tourism industry dictates that ong-term strategies should be guided by the principles and orientations of our field, not by generic p aradigms from business which largely developed in t he manufacturing industries. Table 2 i llustrates how the tourism industry can c ombine various orientations of ethics with the uniq ue situations it faces. T he field of tourism, while largely influenced by business theory and methods, is a unique discipline a nd profession. Because our industry is a special case of social and economic activity, our specialized s trategies and tactics should dominate the decisionm aking process.

While the industry should use g eneric techniques of business as a d hoc t ools when a ppropriate, our industry should not allow such o rientations to exercise unwarranted authority. Forging responsive partnerships T ourism is not a generic industry since it uniquely i mpacts on the environment, society and cultural s ystems in ways which require a holistic orientation w ithin a broad and multidimensional context. Cont emporary business ethics, however, has been slow t o embrace such a holistic perspective. Historically, t he focus has been upon the organization and its c ustomers. Impacts on third parties (externality ssues) have often been ignored. Thus, the market,ing concept suggests the organization should focus s olely upon customer needs and advance its goals in this way. Such perspectives, however, do not conside r the environment and local populations which are n ot customers. Nonetheless, the marketing concept c ontinues to dominate many for-profit and not-forp rofit organizations. And in a micro sense, it can be c onsidered ethical since the organization is viewed as Tour&m Management 1995 Volume 16 Number 4 C urrent issues s atisfying human needs, an ethical course of action. C ertain sub-disciplines within business, however, re holistically oriented in ways which parallel the d evelopment of modern tourism theory. Kenneth B oulding, for example, is a prominent business t hinker who made significant contributions to G eneral Systems Theory, a discipline which focuses u pon interrelationships between various entities, i nteracting with one another. In order to link such thinking to the tourism p rofession, it is useful to examine a specific subdiscipline of business: macromarketing. According to a p ublished definition of the field, ~,9 Macromarketing a ctivity is concerned with three basic issues (wording lightly adjusted here): • The impact of marketing upon society: T he total i mpact of marketing is examined. Macromarketing considers the impact of marketing on third p arties who are not part of the patron-client r elationship between an organization and its cust omers. In addition, macromarketing is inc reasingly concerned with the long-term impact of m arketing on the greater social and physical e nvironment. • Understanding marketing systems: M acromarketing includes considering ‘the totality of any m arketing action’ even where it transcends the b uying and selling of goods by patrons and clients.

So envisioned, macromarketing considers ‘ understanding’ to include appreciating impacts a nd stakeholders which could be overlooked in a p urely micro evaluation. • The impact of society upon marketing: W hile m uch marketing thought attempts to forge universal principles, macromarketing acknowledges t hat different people conceptualize and practice m arketing in their own ways. This is true of d ifferent cultures and/or different industries. Since much tourism activity takes place on the cusp between different cultures and/or industries, this aspect of macromarketing is especially useful f or the tourism industry.

Such perspectives are expanded in relevant ways in the tourism literature and bolstered by the conc ern which many macromarketers have in developing countries and in the field of economic developm ent. Two especially useful overviews are William M eade and Robert Nason’s ‘Toward a united theory o f macromarketing: a systems theory approach m a nd Donald Dixon’s ‘Macromarketing: a social syst ems perspective’. ~J M odern macromarketing is typically juxtaposed with what is usually called the ‘marketing managem ent’ approach, which is almost entirely concerned with pleasing customers and achieving organizational goals in this way.

The modern marketing concept, n arrowly focused as it is around the patron-client r elationship, comes from this tradition. T ourism Management 1995 Volume 16 Number 4 T he micro approach is so circumscribed that anyt hing which falls outside its focus blurs into obscurity. Although macromarketing acknowledges that m icro techniques are often useful, macromarketers also emphasize that marketing has other legitimate c oncerns (mentioned above) which transcend profitably catering to customer needs in self-serving, micro ways.

Two especially relevant areas of macromarketing thought examine environmental/ ecological issues, transcending a myopic focusing u pon customer needs as the be all and end all of o rganizational strategy. Viewing macromarketing as a viable subdiscipline w ith its own literature and traditions, business t heory emerges as a multifaceted tradition comprising various and varied components, not as a h omogeneous monolith. In addition, circumscribed subdisciplines of business such as macromarketing ( not generalized truisms such as the marketing conc ept) emerge as particularly relevant to the tourism i ndustry.

Since it focuses upon the broader implications of m arketing activities, macromarketing considers the n eeds of many different stakeholders besides organ izations and their customers; thus, macromarketing l ends itself to a broad conception of social responsibility using a systems theory model. Such an orientat ion parallels much contemporary tourism res earch, t* The tourism literature is also responsive to m acro-orientations. Michael Haywood’s ‘Revising t he marketing concept as it relates to tourism’, 12 for e xample, deals with important macro issues in a m anner which parallels macromarketing, but ppears to have developed independently of it. H aywood argues that for a number of reasons the m ainstream marketing concept does not adequately deal with the issues raised by the tourism industry, H e lists a number of key variables which, as in this p aper, suggest tourism is a unique industry and s hould be evaluated accordingly. Specifically, he observes: It is quite evident that managers of tourism organizations encounter numerous externally and internally driven reasons that make it difficult to implement the marketing concept. (12p 200) H aywood states several reasons for this, including:

T h e t r a d i t i o n a l a s s u m p t i o n s o f the m a r k e t i n g conc e p t (emphasize serving customers) . . . Yet few, if +tThe J ournal O f Macromarketing is the major, specialized journ al in the field. It is published out of the Marketing Department o f Michigan State University with Bob Nason as the editor. There is an annual macromarketing conference seminar. Over the years v arious leaders in the field of tourism have participated in both t he journal and the conferences. One notable tourism scholar who h as been especially active in macromarketing is Chuck Goeldner, e ditor of T he Journal O f Travel Research.

A nnouncements for the c onference as well as abstracts from it are published in the journal e ach year. 267 Current issues” a ny of these attractions are ever designed explicitly f or tourist use or consumption. (12pp 200-201) Citizens of a community are direct or indirect recip ients of the economic costs and benefits derived f rom tourism. (12p 201) F rom the perspective of tourism, then, a customer o rientation needs to be balanced with the community. (lZp 201) U sing these and other considerations, H a y w o o d g oes on to propose revising the marketing concept as it applies to tourism. Such an orientation portrays mportant parallels between tourism and macrom arketing which should be enhanced and strengt hened. A lthough m a c r o m a r k e t e r s may not initially be v ersed in tourism, they do embrace paradigms and o rientations (such as systems theory) which dovetail w ith the c o n t e m p o r a r y literature of tourism. For this r eason, communicating with such individuals can be f ruitful and mutually beneficial. S ince macromarketing shares our concern with e xamining and possibly mitigating the impact which t he modern world (and tourism) exerts upon the e cological and cultural subsystems, this specialized ubdiscipline appears to be more relevant to our n eeds than general business theory. By portraying t ourism as a subsystem which impacts on larger s ystems (and vice versa), the specialized paradigms o f macromarketing can be employed when discuss ing the ethical structures of our industry. T he tourism industry has often borrowed very g eneral concepts from business without adequately a djusting them to our unique needs. Subdisciplines s uch as macromarketing, however, provide a more f ruitful source of cross-disciplinary cooperation. I h ave focused upon the marketing literature merely b ecause it is an area I know.

Other alliances can s urely be formed elsewhere; certain aspects of the ‘ human relations’ areas of m a n a g e m e n t thought are o ne obvious example. It is hoped that by seeking out s uch specialized subdisciplines, we can better struct ure tourism methods and ethics. Conclusion: appropriate and strategic communication T he field of business has evolved generic theories of e thics and social responsibility. Tourism scholars a nd practitioners need to understand such thinking. 2 68 S o armed, we will be better able to negotiate and c ommunicate with a variety of people. S tarting with an analysis of the debate between

M ilton Friedman and Keith Davis, the paper outl ines an ongoing polemic within business ethics. B oth Friedman and Davis’s positions, however, can b e depicted as ‘micro theories’ since, in the final a nalysis, they tend largely to focus upon the micro b enefits derived from an organization serving a s pecific set of clients. S uch paradigms should be supplemented with m ore holistic perspectives which exist in various s ubdisciplines of business thought. To be specific, m acromarketing can be combined with our attempts t o restructure the marketing concept using holistic, n ot micro orientations.

B y being aware of and building upon business s ubdisciplines which parallel our work, tourism s cholars and practitioners will be able to find allies w ithin business and expand our toolkit of appropria te models and techniques. Such cross-disciplinary e xchanges have both practical and ethical implicat ions. R eferences Triedman, M ‘The social responsibility of business is to make ~jrofits’ New York Times Magazine 1970 (13 September) ohnson, W “Freedom and philanthropy: an interview with Milton Friedman’ Business And Society Review 1989 (Fall) 11-18 3Davis, K ‘Five propositions for social responsibility’ Business Horizons 1975 (June) Davis, K and Fredrick, W C Business And Society 5th edn McGraw Hill, New York (1984) ~Levitt, T The Marketing Imagination Free Press, New York (1983) 6Butler, R ‘The concept of a tourist area cycle of evolution: implications for management of resources’ Canadian Geographer 24 (1) 5-12 7Walle, A H ‘The festival life cycle and tourism strategies: the case of the cowboy poetry gathering’ Festival Management and Event Tourism 1994 SFisk, G ‘Editor’s working definition of macromarketing’ Journal o f Macromarketing 1982 (Spring) 3-4 ~Hunt, D ‘The three dichotomies of marketing: an elaboration of issues’ in Slater, C C (ed) Macro-Marketing: Distributive Processes For A Societal Perspective Business Research Division, University Of Colorado, Boulder, CO (1977) ~°Meade, W K and Nason, R W ‘Towards a unified theory of macromarketing: a systems theory approach’ Journal of Macromarketing 1991 (Fall) 72-82 HDixon, D ‘Macromarketing: a social systems approach” Journal o f Macromarketing 1984 (Fall) 4-17 ~2Haywood, M ‘Revising and implementing the marketing concept as it relates to tourism’ Tourism Management 1990 (September) 195-204 Tourism Management 1995 Volume 16 Number 4


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