Week 8 - Strategy and Ethics

Question 1

Husted & Allen (2000)

Answer 1

• Ethics: social obligations or responsibilities
• CSR perspective: a socially responsible firm would behave ethically
• Corporate citizenship: the firm should engage with the social environment proactively
• Ethics strategy: goal is to align the firm’s culture with the core values of society – it does not require investment of resources, is not related to financial performance, and does not involve a plan – it needs additional elements (not actually strategic)
• Strategic philanthropy: marketing objectives, like increasing product sales, e.g. donating to NGOs
• Ethical strategies impose standards on a certain industry, which creates competitive advantage for the imposing firm
• Ethics and social strategies are a kind of differentiation strategies
• Corporates act as ‘private individuals’ and make decide what the ‘societal need’ is in an authoritarian way – it is not actually the societal need
• However, the government can provide incentives for firms to help them identify the sectors where they are needed
• Corporations direct funds towards popular and politically correct causes as they need to produce value for the firm – some issues get neglected
• Kant (1964): good actions that arise out of self-interest or immediate inclination are not morally praiseworthy
• If a firm’s actions do not intend to create value, then they are not strategic. However, if a firm behaves ethically for strategic reasons, then its intentions are not ethical anymore
• Morality should also be judged for firms who ‘do good’

Question 2

Barney (2018)

Answer 2

• Contingency perspective of RBV: without nonshareholder stakeholders providing resources that have the potential to generate profits, there will be no profits for firms to distribute to shareholders

Question 3

Bansal et al (2024)

Answer 3

• Applying macro-level economic principles (e.g., market efficiency) to firm-level strategies leads to harmful assumptions, e.g. assuming aggregate firm profits automatically contribute to societal welfare ignores externalities like climate change
• Strategy must address global environmental crises, such as biodiversity loss and climate change, to remain relevant and impactful
• A firm’s success should reflect its contribution to reducing emissions or preserving biodiversity

Question 4

Martins & Rindova (2023)

Answer 4

o Proposes a firm’s purpose should emerge from internal values and ideals rather than being driven solely by external stakeholder demands
o Purpose becomes a dynamic framework to enact societal and economic change

Question 5

Duran et al (2020)

Answer 5

• Strategic CSR is a subset of CSR activities explicitly linked to competitive advantages and measurable firm performance outcomes
   Reputation Enhancement: CSR initiatives improve public and stakeholder perceptions, attracting talent, investors, and customers.
   Stakeholder Reciprocation: Firms benefit from strengthened relationships with stakeholders who reciprocate through loyalty, collaboration, and financial advantages.
   Risk Mitigation: CSR reduces firm-specific risks by promoting regulatory compliance, environmental awareness, and community goodwill.
   Innovation Capacity: CSR activities stimulate innovation by leveraging diverse stakeholder input and fostering creativity within firms.
  Example: Companies like Unilever attract premium-paying customers by publicizing sustainability initiatives.

Question 6

Driver & Porter (2012)

Answer 6

Focusing on social change is becoming permanent – shift towards profits that also produce positive social change, and financial markets that reward companies for doing so
social entrepreneurship could be a broad foundation rather than a specialised field
shared value: ability to both create economic value and let us call it social or societal benefit – it is about solving problems while making profit
Social opportunities that are leveraged well (e.g. microfinance) can transform capitalism, not NGOs or CSR goals