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

This paper critically examines the high private gains that were a result of the Compartamos' Initial Public Offering (IPO). It discusses ethical questions related to Compartamos' strategy and states that it:

• Favored some stakeholders such as shareholders and potential borrowers, at the expense of current clientele;
• Led to ethical tradeoffs;
• Contributed to shareholders' interest rather than that of potential borrowers since it was only a sale of existing shares and did not lead to a capital increase;
• Could have benefited potential borrowers if the profits had been reallocated to investment and new lending.

The paper says that the Compartamos IPO raises ethical questions on the role and mission of non-profit or socially-oriented associations and enterprises. Exorbitant returns followed by the sale of shares might attract new investors, but would cause a loss of social identity for microfinance. The paper advocates other strategies of financing such as bonds and the use of corporate social responsibility (CSR) funds.