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

2. WHAT DO WE MEAN BY BUSINESS ETHICS? 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 societys standards of right and wrong.92 3. WHERE DO ETHICAL STANDARDS COME FROMARE THEY UNIVERSAL OR DEPENDENT ON LOCAL NORMS?Sources for Ethical StandardsThe School of Ethical UniversalismThe School of Ethical RelativismIntegrated Social Contracts Theory93 4. EXAMPLES OF ETHICAL RELATIVISM ISSUES Variations in Ethical StandardsThe Use of Underage LaborThe Payment of Bribes and KickbacksRelativism Equates to Multiple Sets of StandardsThe Use of Local Morality to Guide Ethical Behavior94 5. 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.95 6. CONSEQUENCES OF ETHICALLY QUESTIONABLE STRATEGIES When Strategies Fail the Ethical Litmus TestSizable civil fines and stockholder lawsuitsDevastating image and public relations hitsSharp stock price drops as investors lose confidenceCriminal indictments and convictions96 7. WHAT ARE THE DRIVERS OF UNETHICAL STRATEGIES AND BUSINESS BEHAVIOR?Faulty Oversight and Self DealingPressure for Shortterm PerformanceUnethical Strategies and Business BehaviorsA Weak or Corrupt Ethical Environment97 8. WHAT ARE THE DRIVERS OF UNETHICAL STRATEGIES AND BUSINESS BEHAVIOR? Drivers of Unethical Business Behavior: Faulty internal oversight allows self-dealing in the pursuit of personal gain, wealth, and self-interest.Short-termism pressure to meet or beat short-term performance targets.A culture that puts profitability and business performance ahead of ethical behavior.98 9. 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 firms personnel.The Business Case for Ethical Strategies: Because an ethical strategy can be both good business and serve the self-interest of shareholders.99 10. STRATEGY, CORPORATE SOCIAL RESPONSIBILITY, AND EVIRONMENTAL SUSTAINABILITY Corporate Social Responsibility (CSR) Is a firms 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.910 11. WHAT DO WE MEAN BY SUSTAINABILITY AND SUSTAINABLE BUSINESS PRACTICES? Sustainability 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.911 12. SUSTAINABILITY AND SUSTAINABLE BUSINESS PRACTICES Environmental Sustainability Strategy Consists of the firms 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.912 13. CRAFTING CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY STRATEGIES Pursuing a Sustainable CSR Strategy in the Firms Value Chain ActivitiesMoral Case: Stakeholder BenefitsBusiness Case: Competitive Advantage913 14. THE MORAL CASE FOR CSR AND ENVIRONMENTALLY SUSTAINABLE BUSINESS PRACTICES The Implied Social Contract: To Do the Right ThingOperate ethically and legallyProvide good work conditions for employeesBe a good environmental stewardDisplay good corporate citizenship914 15. THE BUSINESS CASE FOR CSR AND ENVIRONMENTALLY SUSTAINABLE BUSINESS PRACTICES Increased reputation and buyer patronageReduced risk of reputation-damaging incidentsLower turnover costs and enhanced employee recruiting and workforce retentionIncreased revenue enhancement opportunities due to support of CSR and sustainabilityCSR and sustainability best serve long-term interests of shareholders 915 16. COMBATING THE EVASION OF CSR AND SOCIALLY HARMFUL BUSINESS PRACTICES Increased public awareness of misdeeds of bad behavior by firms Increased legislation and regulation to correct and punish firmsHarmful and Unethical Business Actions and BehaviorsRefusal to do business with irresponsible firms916