To Whom should We be Fair? Ethical Issues in Balancing Stakeholder Interests from Banco Compartamos Case Study

CEB Working Paper No. 09/036

34 Pages Posted: 10 Sep 2009

See all articles by Arvind Ashta

Arvind Ashta

CEREN EA 7477 Burgundy School of Business - Université Bourgogne Franche-Comté

Marek Hudon

Université Libre de Bruxelles (ULB) - Solvay Brussels School of Economics and Management

Date Written: September 9, 2009

Abstract

In the world of microfinance, interest rate ethics is an important issue, thrown into the limelight by the Initial Public Offering of Compartamos which resulted in millions of dollars of gains, some of which found their way into private pockets. These high gains were based on high interest rates, raising ethical questions. The paper then uses a stakeholder analysis to explain the interests of different stakeholders in this case and present that fairness to one group of stakeholders is often at the expense of another group. We take the position that in this case, specifically, the firm objectives could have been met without such ethical trade-offs. The specifics of the case are then generalised to all NGOs participating in for-profit firms.

Keywords: agency problem, business ethics, fairness, governance, microfinance, stakeholder

JEL Classification: G29, G3, L32, L33, N8, F30, F34, F35

Suggested Citation

Ashta, Arvind and Hudon, Marek, To Whom should We be Fair? Ethical Issues in Balancing Stakeholder Interests from Banco Compartamos Case Study (September 9, 2009). CEB Working Paper No. 09/036. Available at SSRN: https://ssrn.com/abstract=1470643 or http://dx.doi.org/10.2139/ssrn.1470643

Arvind Ashta (Contact Author)

CEREN EA 7477 Burgundy School of Business - Université Bourgogne Franche-Comté ( email )

29 rue Sambin
21000 Dijon
France

Marek Hudon

Université Libre de Bruxelles (ULB) - Solvay Brussels School of Economics and Management ( email )

50 Avenue Roosevelt
Brussels 1050
Belgium

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