1. 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

2. 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

3. 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

4. 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

5. 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

6. 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 don’t mix

7. 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

8. Approaches to Managing a Company’s 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

9. 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

10. 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

11. What is Meant by Corporate Social Responsibility?  5 Components of Socially Responsible Business Behavior

12. 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 it’s values  Each company’s version of being socially responsible is unique

13. The Moral and Business Case for CSR  It’s 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

14. Linking a Company’s 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