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CHAPTER 9
ETHICS, CORPORATE SOCIAL
RESPONSIBILITY, ENVIRONMENTAL
SUSTAINABILITY, AND STRATEGY
Business Ethics
93
CORE CONCEPTS
Ethics concerns principles of right or wrong
conduct.
Business ethics involves the application of
general ethical principles to the actions and
decisions of businesses and the conduct of
their personnel.
94
The School of
Ethical
Universalism
The School of
Ethical
Relativism
Integrated
Social Contracts
Theory
95
THE SCHOOL OF
ETHICAL UNIVERSALISM
Ethical Universalism
96
THE SCHOOL OF
ETHICAL RELATIVISM
Ethical Relativism
97
CORE CONCEPT
The school of ethical relativism holds that
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.
These differing standards mean that whether
business-related actions are right or wrong
depends on the prevailing local ethical
standards.
98
EXAMPLES OF ETHICAL
RELATIVISM ISSUES
Variations in
Ethical Standards
The Use of
Underage
Labor
The Payment
of Bribes and
Kickbacks
Relativism
Equates to
Multiple Sets
of Standards
The Use of
Local Morality
to Guide Ethical
Behavior
99
910
911
CORE CONCEPT
According to integrated social contracts
theory, universal ethical principles based on
the collective views of multiple societies form a
social contract that all individuals and
organizations have a duty to observe in all
situations.
Within the boundaries of this social contract,
local cultures or groups can specify what
additional actions may or may not be
ethically permissible.
912
913
INTEGRATIVE SOCIAL
CONTRACTS THEORY
914
APPLICATION OF INTEGRATED
SOCIAL CONTRACTS THEORY
TO MULTINATIONAL BUSINESS
915
916
CONSEQUENCES OF ETHICALLY
QUESTIONABLE STRATEGIES
When Strategies Fail
the Ethical Litmus Test
Sizable
civil fines and
stockholder
lawsuits
Devastating
image and
public relations
hits
Sharp stock
price drops as
investors lose
confidence
Criminal
indictments
and
convictions
917
Unethical
Strategies
and Business
Behaviors
A Weak or Corrupt
Ethical Environment
918
919
CORE CONCEPT
Self-dealing occurs when managers take
advantage of their position to further their own
private interests rather than those of the firm.
Short-termism is the tendency for managers to
focus excessively on short-term performance
objectives at the expense of longer-term
strategic objectives. It has negative implications
for the likelihood of ethical lapses as well
as company performance
in the longer run.
920
921
923
924
FIGURE 9.1
925
926
CORE CONCEPT
Corporate social responsibility (CSR) refers
to a companys duty to operate in an honorable
manner, provide good working conditions for
employees, encourage workforce diversity, be
a good steward of the environment, and
actively work to better the quality of life in the
local communities where it operates and in
society at large.
927
FIGURE 9.2
The Five Components
of a Corporate Social
Responsibility Strategy
928
929
People
Profit
Planet
930
931
WHAT DO WE MEAN BY
SUSTAINABILITY AND SUSTAINABLE
BUSINESS PRACTICES?
Sustainability
932
CORE CONCEPTS
Sustainable business practices are those
that meet the needs of the present without
compromising the ability to meet the needs
of the future.
An environmental sustainability strategy
consists of a firms deliberate actions to protect
the environment, provide for the longevity
of natural resources, maintain ecological
support systems for future generations,
and guard against the ultimate
endangerment of the planet.
933
934
CRAFTING CORPORATE
SOCIAL RESPONSIBILITY AND
SUSTAINABILITY STRATEGIES
Pursuing a Sustainable CSR Strategy
in the Firms Value Chain Activities
Moral Case:
Stakeholder
Benefits
Business Case:
Competitive
Advantage
935
936
Operate
ethically and
legally
Provide good
work conditions
for employees
Be a good
environmental
steward
Display good
corporate
citizenship
937
938
Harmful and
Unethical
Business
Actions and
Behaviors
940
941
942