1. CHAPTER 9
ETHICS, CORPORATE SOCIAL RESPONSIBILITY, ENVIRONMENTAL SUSTAINABILITY, AND STRATEGY

2. WHAT DO WE MEAN BY BUSINESS ETHICS?
Is the application of general ethical principles to the actions and decisions of businesses and the conduct of their personnel.
Are not materially different from ethical principles in general because business actions have to be judged in the context of society’s standards of right and wrong.
9–2

3. WHERE DO ETHICAL STANDARDS COME FROM—ARE THEY UNIVERSAL OR DEPENDENT ON LOCAL NORMS?
Sources for Ethical Standards
The School of Ethical Universalism
The School of Ethical Relativism
Integrated Social Contracts Theory
9–3

4. THE SCHOOL OF ETHICAL UNIVERSALISM
Holds that common understandings across multiple cultures and countries about what constitutes right and wrong give rise to universal ethical standards that apply to all societies, all firms, and all businesspeople.
Effect on Business Ethics
Whether a business-related action is right or wrong is judged by universal standards.
9–4

5. THE SCHOOL OF ETHICAL RELATIVISM
Holds that differing beliefs, customs, and behavioral norms across countries and cultures give rise to multiple sets of standards of what is ethically right or wrong.
Effect on Business Ethics
Whether business-related actions are right or wrong depends on local ethical standards.
9–5

6. EXAMPLES OF ETHICAL RELATIVISM ISSUES
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
Variations in Ethical Standards
9–6

7. INTEGRATIVE SOCIAL CONTRACTS THEORY
Provides a middle-ground balance between universalism and relativism.
Posits that the collective views of multiple societies form universal (first order) ethical principles that all persons have a contractual duty to observe in all situations.
Within the contract, cultures or groups can specify locally ethical (second-order) actions.
9–7

8. APPLICATION OF INTEGRATED SOCIAL CONTRACTS THEORY TO MULTINATIONAL BUSINESS
Effects on Ethical Standards:
Adherence to universal ethical norms takes precedence over local norms.
A local custom is not ethical if it violates universal ethical norms.
Application of codes of ethics should first follow universal standards with allowance for local ethical diversity and influence.
9–8

9. CONSEQUENCES OF ETHICALLY QUESTIONABLE STRATEGIES
Sizable civil fines and stockholder lawsuits
Devastating image and public relations hits
Sharp stock price drops as investors lose confidence
Criminal indictments and convictions
When Strategies Fail the Ethical Litmus Test
9–9

10. WHAT ARE THE DRIVERS OF UNETHICAL STRATEGIES AND BUSINESS BEHAVIOR?
Faulty Oversight and Self Dealing
Unethical Strategies and Business Behaviors
Pressure for Short-term Performance
A Weak or Corrupt Ethical Environment
9–10

11. WHY SHOULD COMPANY STRATEGIES BE ETHICAL?
The Moral Case for an Ethical Strategy:
Because a strategy that is unethical is morally wrong and reflects badly on the character of the firm’s personnel.
The Business Case for Ethical Strategies:
Because an ethical strategy can be both good business and serve the self-interest of shareholders.
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12. The Costs Companies Incur When Ethical Wrongdoing Is Discovered
FIGURE 9.1
The Costs Companies Incur When Ethical Wrongdoing Is Discovered
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13. STRATEGY, CORPORATE SOCIAL RESPONSIBILITY, AND EVIRONMENTAL SUSTAINABILITY
Corporate Social Responsibility (CSR)
Is a firm’s 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.
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14. The Five Components of a Corporate Social Responsibility Strategy
FIGURE 9.2
The Five Components of a Corporate Social Responsibility Strategy
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15. The Triple Bottom Line: Excelling on Three Measures of Company Performance
FIGURE 9.3
Profit
People
Planet
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16. WHAT DO WE MEAN BY SUSTAINABILITY AND SUSTAINABLE BUSINESS PRACTICES?
Is the relationship of a firm to its environment and its use of natural resources.
Sustainable Business Practices
Are those practices of a firm that meet the needs of the present without compromising the ability to meet the needs of the future.
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17. SUSTAINABILITY AND SUSTAINABLE BUSINESS PRACTICES
Environmental Sustainability Strategy
Consists of the firm’s deliberate actions to:
Protect the environment.
Provide for the longevity of natural resources.
Maintain ecological support systems for future generations.
Guard against ultimate endangerment of the planet.
9–17

18. CRAFTING CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY STRATEGIES
Pursuing a Sustainable CSR Strategy in the Firm’s Value Chain Activities
Moral Case: Stakeholder Benefits
Business Case: Competitive Advantage
9–18

19. THE MORAL CASE FOR CSR AND ENVIRONMENTALLY SUSTAINABLE BUSINESS PRACTICES
Operate ethically and legally
Provide good work conditions for employees
Be a good environmental steward
Display good corporate citizenship
The Implied Social Contract: “To Do the Right Thing”
9–19

20. THE BUSINESS CASE FOR CSR AND ENVIRONMENTALLY SUSTAINABLE BUSINESS PRACTICES
Increased reputation and buyer patronage
Reduced risk of reputation-damaging incidents
Lower turnover costs and enhanced employee recruiting and workforce retention
Increased revenue enhancement opportunities due to support of CSR and sustainability
CSR and sustainability best serve long-term interests of shareholders
9–20