Strategy and Ethics

Ethics involves notions of Right and wrong Fair and unfair Moral and immoral Business Ethics is the application of general

ethical principles and standards to the actions and decisions of business organizations and the conduct of their personnel Ethical principles in business are not materially different from ethical principles in general Business actions are judged by the general ethical standards of society Legal versus Ethical Behavior

Business Ethics in the Global Community

Some notions of right and wrong are universal while others

are not (universalism vs. relativism) Cross-culture variability in ethical standards Determining what is ethical when local standards vary Managers have to figure out how to navigate the gray zone when cross-culture ethics differ Should adhere to higher standard(s) 3 Schools of Thought Ethical Universalism Ethical Relativism Integrative Social Contracts Theory

Ethical Universalism
Ethical Universalism The most important concepts of what is right

and wrong are universal and transcend culture, society, and religion
Results in a set of universal ethical standards

that apply to members of all societies, all companies, and all businesspeople
Sets limits and puts boundaries on ethical

behavior

Ethical Relativism
Ethical Relativism Differing religious beliefs, customs and

behavioral norms across countries and cultures give rise to multiple sets of standards concerning what is ethically right or wrong What is ethical or unethical depends on the prevailing local ethical standards and can vary from one nation to another There can be multiple sets of ethical standards There is no one-size-fits-all set of ethical norms

Integrative Social Contracts Theory

Integrative Social Contracts Theory
Provides a middle position The ethical standards a company should try to

uphold are governed by both:

A common or universal set of ethical

standards that apply everywhere

Ethical standards that vary according to

local custom (i.e., cultures, traditions, and shared values)

The more stringent standards should always

take precedence

Three Categories of Management Morality

Moral Managers Are dedicated to high standards of

ethical behavior both personally and on the part of their organizations Immoral Managers Are actively opposed to or have no regard for ethical standards in business behavior Amoral Managers Do not pay attention or are blind to business ethics or believe that business and ethics dont mix

Drivers of Unethical Strategies and Business Behavior

Apparent pervasiveness of immoral and

amoral business people

Confusion over conflicting ethical standards Faulty oversight that allows for the

overzealous pursuit of personal gain, wealth, and self interest

Heavy pressures to beat earnings targets Unethical company cultures

Approaches to Managing a Companys Ethical Conduct

Unconcerned or nonissue approach
Do what is legal; do what we can get away with

Damage control approach

Prevent adverse publicity; use window dressing

Compliance approach
Put a compliance system in place to control ethical

behavior
Ethical culture approach
Use culture and peer pressure to control ethical

behavior

Why Should Company Strategies Be Ethical?

An unethical strategy is morally wrong and reflects

badly on the company

Puts reputation at risk and can have costly

consequences
Time consuming and costly to rehab reputation May be shunned by customers

Makes it difficult to recruit and retain employees

An ethical strategy is good business and is in the

self-interest of shareholders

Strategy and Corporate Social Responsibility

Companies should balance strategic actions to benefit

shareholders against the duty to be a good corporate citizen

Should consider the effect that company actions will have

on:
Employees Local communities The environment Society at large Companies must demonstrate a social consciousness

What is Meant by Corporate Social Responsibility?

5 Components of Socially Responsible Business Behavior

Linking Strategy and Social Responsibility

There is no generic approach linking strategy

and social responsibility

Social Responsibility Strategy - the

particular combination of socially responsible endeavors a company elects to pursue

Social responsibility must be rooted in the

company and its values

Each companys version of being socially

responsible is unique

The Moral and Business Case for CSR

Its the right thing to do Corporations have a duty to be good corporate

citizens A business is obligated to act as a responsible citizen and do its fair share to promote the general welfare Should act in the overall best interests of society as well as shareholders It generates internal benefits It reduces the risk of reputation-damaging incidents and can lead to increased buyer patronage

Linking a Companys Strategy to Its Ethical Principles and Core Values

Vision/Mission Code of ethics Core values and a values statement

Culture - perspective
Should not be window dressing Communication Leading by example Should influence and be part of strategy