Strategy, Ethics and Social Responsibility Part 1

Kristel Pamela Caluya

Linking Strategy to Ethicsand Social Responsibility

• There should be a link between a company’s efforts to craft and execute a winning strategy and its duties to

Conduct activities in an ethical manner?Demonstrate socially responsible behavior by being

a committed corporate citizen?Limit its strategic initiatives to those meeting needs

of consumers without depleting resources needed by future generations

Business ethics• Concerns the application of general ethical

principles and standards to the actions and decisions of companies and the conduct of company personnel.

• Ethical principles in business are not different from ethical principles in general

• Business actions are judged– By general ethical standards of society– Not by more permissive standards

Ensuring a Strong Commitment to Business Ethics in Multinational Companies

• Three schools of thought about the extent to which ethical standards apply across countries and cultures exist:– Ethical Universalism

– Ethical Relativism

– Integrative Social Contracts Theory

Concept of Ethical Universalism

• According to the school of ethical universalism . . . – Same standards of what is right and what is

wrong are universal and transcend most cultures, societies, and religions

– Universal agreement on basic moral standards allows a multinational company to develop a code of ethics that is applied evenly across its worldwide operations

Examples of UniversalEthical Principles or Norms

• Honesty• Trustworthiness• Respecting the rights

of others• Practicing the Golden

Rule• Avoiding unnecessary

harm to– Workers– Users of a company’s

product or service

School of ethical relativism

• Different societal cultures and customs have divergent values and standards of right and wrong.– What is ethical or unethical must be judged in light

of local moral standards and can vary from one country to another

• Companies a code of conduct based upon the principle of ethical relativism assume that local morality is an adequate guide for ethical behavior

Drawbacks of Ethical Relativism• The ethical relativism rule of

“when in Rome, do as the Romans do” presents problems– It is ethically dangerous for

company personnel to assume that local ethical standards are an adequate guide to ethical behavior

» What if local standards condone kickbacks and bribery?

» What if local standards blink at environmental degradation?

integrated social contracts theory

• According to the integrative social contracts theory, the ethical standards a company should try to uphold are governed by both

1. A limited number of universal ethical principles that put ethical boundaries on actions and behavior in all situations

and2. The circumstances of local cultures, traditions, and

values that further prescribe what constitutes ethically permissible behavior and what does not

Three categories of management morality

• 1. Moral Manager are dedicated to high standards of ethical behavior, both in their own actions and in their expectations of how the company’s business is to be conducted

• 2. Immoral Manager have no regard for so-called ethical standards in business and pay no attention to ethical principles in making decisions and conducting the company’s business.

• 3. Amoral manager• Two forms

• Intentionally Amoral Manager are of the strong opinion that business and ethics are not to be mixed.

• Unintentionally Amoral Manager are simply casual about careless about or inattentive to the fact that certain kinds of business decisions or company activities are unsavory or may have deleterious effects on others.

Drivers of ethical strategies and behavior

• Overzealous pursuit of personal gain, wealth and selfish interest.

• Heavy pressures on company managers to meet or beat earnings and targets.

• Company cultures that put the bottom line ahead of ethical behavior.

•Thank You!!