Chapter 9: Ethics, Corporate Social Responsibility, Environmental Sustainability, and Strategy

Question 1

What does business ethics deal with?

Answer 1

Application of general ethical principles to the actions and decisions of businesses and the conduct of their personnel.

Question 2

What are the 3 distinct schools of thought about the extent to which ethical standards travel across countries (to be applied in all locations that a multinational company operates in)?

Answer 2

1. School of ethical universalism
2. School of ethical relativism
3. Ethics and integrative social contracts theory

Question 3

What does the school of ethical universalism hold?

Answer 3

The most fundamental conceptions of right and wrong are universal and apply to all.

Question 4

What does the school of ethical relativism hold?

Answer 4

Differing religious beliefs, customs, and behavioural norms across countries/cultures give rise to differing standards of ethical rights and wrongs. Business-related actions are deemed right or wrong based on prevailing local ethical standards.

Question 5

What is the integrative social contracts theory?

Answer 5

Provides a middle position between ethical universalism and ethical relativism. Within the boundaries of a company’s “social contract” (a set of ethical principles that are widely recognized), local cultures/groups can specify additional actions that may or may not be ethically admissable.

Question 6

What are the 3 main drivers of unethical business behaviour?

Answer 6

1. Faulty oversight
2. Heavy pressures on managers to meet performance targets
3. Company culture that puts profitability above ethics

Question 7

What is self-dealing?

Answer 7

Managers take advantage of their own position within a company to further their own private interests rather than those of the firm.

Question 8

What does the concept of short-termism describe?

Answer 8

Managers have a tendency to focus excessively on short-term performance objectives at the expense of longer-term strategic objectives.

Question 9

What are the 2 reasons why a company’s strategy should be ethical?

Answer 9

1. Unethical strategies are morally wrong and reflect badly on the character of the company and its personnel
2. Ethical strategies can be good business and serve the self-interest of shareholders

Question 10

What are (3) examples of visible costs that companies can incur when ethical wrongdoings are discovered?

Answer 10

1. Government fines/penalties
2. Civil penalties (lawsuits)
3. Costs to shareholders

Question 11

What are (4) examples of internal administrative costs that companies can incur when ethical wrongdoings are discovered?

Answer 11

1. Legal and investigative costs
2. Costs of providing remedial education/ethics training
3. Costs of taking corrective actions
4. Admin costs associated with ensuring future compliance

Question 12

What are (7) examples of intangible (less visible) costs that companies can incur when ethical wrongdoings are discovered?

Answer 12

1. Customer defections
2. Loss of reputation
3. Loss employee morale
4. Higher employee turnover
5. Higher recruiting costs
6. Adverse effects on employee productivity
7. Costs of complying with often harsher government regulations

Question 13

What is corporate social responsibility (CSR)?

Answer 13

A company’s duty to operate in an honourable manner, provide good working conditions for employees, encourage workforce diversity, be a good environmental steward, and actively work to better the quality of life in local communities and society at large.

Question 14

What should company managers display in operating their businesses?

Answer 14

Social conscience

Question 15

What are the 5 components of a CSR strategy?

Answer 15

1. Honorable/ethical operations
2. Philanthropy, community service, better quality of life worldwide
3. Workforce diversity
4. Enhanced employee well-being
5. Environment/sustainability

Question 16

What are the 5 components of a CSR strategy?

Answer 16

1. Honorable/ethical operations
2. Philanthropy, community service, better quality of life worldwide
3. Workforce diversity
4. Enhanced employee well-being
5. Protect/sustain environment

Question 17

What is a company’s CSR strategy defined by?

Answer 17

The specific combination of socially beneficial activities the company opts to support.

Question 18

What is the triple bottom line refer to?

Answer 18

Three types of performance metrics; economic, social, and environmental. (People, planet, profit)

Question 19

What are sustainable business practices?

Answer 19

Those that meet the needs of the present without compromising the ability to meet the needs of the future.

Question 20

What is a company’s environmental sustainability strategy?

Answer 20

Its deliberate actions to protect the environment, provide for the longevity of natural resources, maintain ecological support systems for future generations, and guard against ultimate endangerment of the planet.

Question 21

When are CSR/environmental sustainability strategies more likely to contribute to a company’s competitive advantage?

Answer 21

When they are linked to a company’s competitively important resources and capabilities or value chain activities.

Question 22

What are the business benefits for CSR/environmental sustainability business practices?

Answer 22

1. Increased buyer patronage
2. Reduction of reputation damaging incidents
3. Can lower costs and enhance employee recruiting/workforce retention
4. Opportunities for revenue enhancement
5. In the best long-term interest of shareholders