Trust, Morality, and the Privatization of Water Services in Developing Countries

• Date: 01 December 2013
• Published date: 01 December 2013
• DOI: http://doi.org/10.1111/basr.12021

Trust, Morality, and the

Privatization of Water Services

in Developing Countries

ABU SHIRAZ RAHAMAN, JEFF EVERETT, AND DEAN NEU

ABSTRACT

This article examines the business of water privatization

and the ethics implied in the transformation of the water

services sector in developing countries. Drawing on data

derived from field visits and semi-structured interviews

held with members of government, nongovernmental

organizations, and other stakeholders in one country

undergoing transformation in this sector, Ghana, the

article considers the ethical perspectives of the various

involved stakeholders. The analysis draws on three

perspectives—Gilligan’s ethic of care, Rawls’ principles of

justice, and virtue ethics—which together highlight the

economic, class, and gender-based dimensions of the

privatization debate. Finding that endemic mistrust

characterizes this debate, the article considers what is

needed to re-instill trust among stakeholders. Specific

implications are provided for business leaders and gov-

ernment policymakers.

Abu Shiraz Rahaman is an Associate Professor of Accounting, Haskayne School of Business,

University of Calgary, Calgary, AB, Canada. E-mail: abu.rahaman@haskayne.ucalgary.ca.

Jeff Everett is an Associate Professor of Accounting, Schulich School of Business, York

University, Toronto, ON, Canada. E-mail: jeverett@schulich.yorku.ca. Dean Neu is a Professor

of Accounting, Schulich School of Business, York University, Toronto, ON, Canada. E-mail:

dneu@schulich.yorku.ca.

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Business and Society Review 118:4 539–575

© 2013 Center for Business Ethics at Bentley University. Published by Wiley Periodicals, Inc.,

350 Main Street, Malden, MA 02148, USA, and 9600 Garsington Road, Oxford OX4 2DQ, UK.

INTRODUCTION

Over the past two decades, governments in the developing

world have been actively privatizing their public services.

Although the justifications are typically economic

(Ramsamy 2006), the obstacles faced by privatization proponents

are often political and, equally, moral. These moral obstacles

point to the multiplicity of stakeholder values (Neville and Menguc

2006) that need to be considered by proprivatization actors. Inad-

equate attention to these obstacles results in seemingly win–win

initiatives faltering or even failing (Oestreich 2002). Their impor-

tance notwithstanding, these obstacles have not received a lot of

attention from business ethicists, and it is this lack of attention

that motivates our focus on the deliberations surrounding water

privatization that have occurred and that are still underway in the

country of Ghana, West Africa. The Ghanaian case is worth study-

ing as the country is not only at the forefront of attempts to

privatize the delivery of water in the developing world, it also

provides an excellent example of how moral conflicts and endemic

mistrust can characterize privatization attempts.

The theoretical framing for the article is based on three moral

philosophical perspectives, a feminist ethic of care (Gilligan 1982),

Rawls’ principles of justice (1971, 1984), and virtue ethics (Moore

2005; Van Staveren 2007). These diverse yet complementary per-

spectives allow us to focus on three important dimensions of the

water privatization debate, namely economy, class, and gender.

Our theoretical framing also draws on the “central and ubiquitous

value of trust” (Blodgett and Melconian 2012), specifically

Brenkert’s (1998) observation that trust provides a necessary

foundation for both ethics and international business (see also

Bandsuch et al. 2008; Blodgett and Melconian 2012; Neu 1991).

Together, these works provide the conceptual backdrop for the

study and motivate a set of prescriptions that we think might be

of interest to business leaders and government policymakers.

The article contributes to the business ethics literature in a

number of ways. First, we extend the literature that has examined

the ethics of business involvement in the public sector by highlight-

ing the varying interests and interactions of public and private

sector organizations and their many stakeholders (Bandsuch et al.

2008; Harvey and Schaefer 2001; Neville and Menguc 2006;

540 BUSINESS AND SOCIETY REVIEW

Sharratt et al. 2007). More specifically, we build on this literature

by examining an unaddressed sector, water services; the issue of

privatization and the deliberations that go on around it; and the

ethics that underlie the policy preferences that both privatization

champions and antiprivatization activists propose to governments.

We also contribute to the literature that evaluates economic global-

ization (Harvey 2005; Hibou 2004) and, more precisely, the ethics

that inhere in the spread of global corporate activity (Brenkert

1998; Enderle 2000; Everett et al. 2006; Hudon 2009), further

opening up space for discussion in this area. Finally, we incorpo-

rate a number of alternative ethical perspectives and perspectives

on trust in our analysis that are beginning to gain traction in the

business ethics literature (Brenkert 1998; Moore 2005; Reiter

1996; Simola 2005; Solomon and Flores 2001; Wettstein 2008;

White 1992; Wood and Brewster 2005). In so doing, we further

highlight the promises of these perspectives.

The remainder of the article is organized as follows: in the next

section we discuss the theoretical framing that guides our analysis.

This is followed by a discussion of our data collection and analysis

procedures. After this, we provide a brief background on global

water governance and the attempts being made to privatize water

in Africa. We then present a three-part analysis of the ethics of

water privatization, focusing on economy, class, and gender. In

each of these sections, we consider the role of trust—and its

characteristic lack—in Ghana’s privatization debates. Finally, we

summarize our analysis and provide a number of implications of

our study.

THEORETICAL FRAMING

Our framing begins with the work Foucault (1991), who has us

focus on the mentalities of government and the ethical dimensions

of governing (Dean 2003, p. 16). Emanating from these mentalities

are regimes of practices and power relations between the governed

and those who govern. These regimes and relations, moreover, can

be widely dispersed. In the case of Sub-Saharan Africa, this

framing alerts us not only to the importance of national govern-

ments, but also supranational organizations, such as the World

Bank and the International Monetary Fund. Through their control

of scarce economic capital (Bourdieu 1990), the latter are able to

541RAHAMAN, EVERETT, AND NEU