Business Strategy and Sustainability 2021/22 – The Megatable
Week 1: Introduction to Corporate Social Responsibility and Sustainability
Main takeaways from the articles
1. Crane & Matten (2006) Business Ethics: Managing corporate citizenship and sustainability in the age of globalisation
Ethical Theory: those rules and principles that determine right and wrong for any given situation, help rationalising; two extreme positions:
Ethical Absolutism: argues for an eternal, universally applicable moral principles; right and wrong are objective and can be rationally determined; cannot be realistically rely on
absolutism
Ethical Relativism: argues for relative morality, context-dependency and subjectivity; everything is different, nothing is wrong; no universal rights and wrongs – morality depends
on the person and the culture in which it is located; all sets of beliefs can be equally right
Normative ethical decision-making: all ethical theories that determine the morally correct way of acting; perceived differently in US and Europe – Four key differences:
(1) Individual vs. Institutional Morality: US is more individualistic in their perspective on morality and behaviour while Europe focusses on economic system and wider design of
government institutions in applying business ethic theories
(2) Consequences vs. Duties: US business ethics focus more on the consequences of actions and conceptualise moral status in terms of the pleasure and pain of the outcomes (success-
orientation); Europe focusses more on duties of economic actors, since they are conceptualised more as parts of a larger entity; this approach sees the individual as widely
embedded in a wider social cause and which consequently makes certain normative demands on his or her actions
(3) Questioning vs. Accepting Capitalism: US does not particularly question the existing framework of management but rather sees ethical problems occurring within the capitalist
system, which it treats as a given; Europe relevant parts of business ethics focus on questioning the ethical justification of capitalism – its dedicated to defending or refining the
ethical legitimacy of capitalist economic though
(4) Justifying vs. Applying Moral Norms: Europe (especially the North), there is a movement towards non-religious form of organising; the challenge of ethics here is to a strong degree
in the justification and ethical legitimisation of norms; America not so much, most textbooks see the question of moral values as a given and focus chiefly on the application of
morality in business situations; mostly Christian-based values which are accepted as a given code of moral values and therefore not put under further scrutiny
Pluralism: as traditional and contemporary theories are not particularly useful in business, the authors suggest pluralism (middle-path); accepts different moral convictions and rules while at
the same time suggesting that a consensus on basic principles and rules in certain social contexts can and should be reached
Morality: Assumption 1) a social phenomenon determining right and wrong; in business the supply of moralities is multiplied by the various contexts in which firms operate; Assumption 2)
social consensus that morality is about providing benefit and avoiding harm, which partially eliminates relativist views – morality is more than a subjective feeling or opinion since it is about
actual harms and benefits
Traditional ethical theories: mostly absolutist in nature; seeks universal principles of right and wrong that can be applied to any given situation; degree to which these can be applied in
business depends on the degree to which we agree on underlying assumptions; two groups
(1) Consequentialist ethics – teleological (gr. goal); looks at the consequences of an action, if these are desirable, the action is morally right; two main theories
- Egoism: focusses on outcomes of decision-marker; an action is morally right if the decision-maker freely decides in order to pursue either their (short-term) desires or their (long-term)
interests; as a man has only limited insight into consequences his only suitable strategy to achieve a good life is to pursue his own interests; a student who gets drunk on a daily basis
and an overachiever are similarly admirable if they both followed their interests; an egoist can be moved by pity for others in seeking to remove his own distress caused by their plights,
the selfish person is insensitive to the other
- Utilitarianism: focusses on social outcomes within a wider community (greatest happiness principle); an action is morally right if it results in the greatest amount of good for the greatest
amount of people affected by the situation; assumes underlying notion of utility, the ‘ultimate goal in life’ and the measure of economic value of action; differentiates between
hedonistic (utility measured in pleasure and pain), eudemonistic (utility measured in happiness and unhappiness) and ideal (includes all intrinsically valuable human goods, such as
friendship or trust) view
,(2) Non-Consequentialist ethics – deontological (gr. duty); moral judgement looks at decision-makers
motivation; looks at desirability of principles and based on these deduce a ‘duty’ to act accordingly
in a given situation, regardless of the outcome; two similar approaches
- Ethics of Duty: starts with tradition of God-given moral principles; Kant was convinced humans are
rational actors though who make their own principles; categorical imperative as a framework can be
applied to every moral issue regardless of who is involved, who profits and who is harmed; consists
of three parts – Maxim 1: Act only according to that maxim by which you can at the same time will
that it should become a universal law; Maxim 2: Act so that you treat humanity, whether in your
own person or in that of another, always as an end and never as a means only; Maxim 3: Act only so
that the will through its maxims could regard itself at the same time as universally lawgiving; an
action is morally right if it passes all three tests
- Ethics of Rights and Justice: assumes that every human is entitled to a set of natural rights that are
protected by the state (e.g. rights to life, freedom, property, speech, consent, etc.); rights are
equivalent to duties – my right to privacy imposes a duty on others to refrain from gathering info
about me, rights and duties are two sides of the same coin; big focus on human rights; justice is the
simultaneously fair treatment of individuals in a given situation with the results that everybody gets
what they deserve – fairness here is seen in terms of fair procedures and fair outcomes
2. Bansal & Roth (2000) Why companies go green: A model of ecological responsiveness
A qualitative study into the motivations and contextual factors that explain why firms respond to ecological issues
Assumptions: motivations can be mixed and the notion of equifinality (belief that there is multiple ways to the same goal) could be applied to the ecological setting
Key Concern: Why do some firms embrace ecologically responsive initiatives while others do not?
Corporate ecological responsiveness: a set of corporate initiatives aimed at mitigating a firm’s impact on the natural environment; these initiatives can include changes to the firm’s
products, processes and policies, such as reducing energy consumption; refers not to what a firm should do, but the initiatives that reduce the firm’s ecological footprint
Preliminary Model: prior research had identified four drivers of corporate ecological response
(1) Legislation: to deescalate penalties, fines and legal costs firms comply to legislative regulations
(2) Stakeholder pressures: managers are able to avert negative public attention and build stakeholder support by being responsive
(3) Economic opportunities: revenues can be improved through green marketing, and rent-earning firm-based resources, such as corporate reputation or product quality can be
developed through ecological activities
(4) Ethical motives: firms respond as it is ‘the right thing to do’; TMT members and company values are instrumental in encouraging these firms to evaluate their role in society
Two limitations on the preliminary model: inadequate data, inadequately specified model (construct and underlying relationships need greater precision in order to be predictive)
Motivations for corporate ecological responsiveness: the research team identifies three basic motivations -
(1) Competitiveness: the potential for ecological responsiveness to improve long-term profitability; includes energy and waste management, source reducing resulting in higher outputs for
the same input (process intensification), eco-labelling and green marketing, or the development of ‘ecoproducts’; oftentimes simple housekeeping measures such as turning off the lights
that improve overall operational efficiency; competitiveness, in contrast to other motivations results in greater attention paid on cost-benefit analyses – firms had the tendency to
choose the option with highest returns, despite the ecological consequences, which excludes environmental impact from the decision-making
Anticipated benefits: higher profits, process intensification, larger market share, lower cost, differentiation, higher share price, rent-earning resources and capabilities
(2) Legitimation: the desire of a firm to improve the appropriateness of its actions within an established set of regulations, norms, values or beliefs; includes complying with legislation,
instating an environmental committee, developing networks with local community representation, conducting an environmental audit, establishing an emergency response system and
aligning the firm’s image with environmental advocates; threats to a firm’s legitimacy undermine their license to operate and its long-term survival; legitimation is directed at complying
to institutional norms and regulations – focusses not on what would occur if the firm met all conditions of stakeholders (such as trust), but rather on what would happen if they would
not (distrust); satisficing and peer imitation tendency (mimetic isomorphism)
Anticipated benefits: long-term sustainability, survival, license to operate, avoiding fines and penalties, lessening risks, employee satisfaction
(3) Social/Ecological Responsibility: a motivation that stems from the concern that a firm has for its social obligations and values; initiatives include redevelopment of local community
areas to greenfield sites, the provision of a less profitable green product line, donations to environmental interest groups and other local community groups, use of recycled paper,
, replacement of retail items or office products with more ecologically benign items and recycling of office wastes; ethical rather than pragmatic (in comparison to competitiveness these
are not choices made for profits); sense of obligation, responsibility or philanthropy
Anticipated benefits: feel-good factors, employee morale, individual satisfaction
Contexts of these motivations: the research team identifies three contextual dimensions that influence the dominant motivations of firms
(a) Issue salience (prominence): the extent to which a specific ecological issue has meaning for organisational constituents; made up of - certainty (the degree to which the impact of the
issue on the natural environment can be measured, e.g., global warming is not very certain in that regard, toxic waste emission more so), transparency (those issues that are easily
attributable to a polluting firm) and emotivity (those issues that elicit an emotional response from organisation constituents, e.g., oil and chemical spills caught public interest when pictures
of ducks covered in oil came out, but less so for minor spills that happen on a daily basis); issue salience reflects in proven, standardised, quantifiable, tangible, easily costed, measurable and
based on sound science; issues with high salience elicited ecological responses motivated by legitimation of competitiveness as those could be threatened in such a context – a firms
legitimacy for example by constituents that easily see through the impact of the firm’s activities on the environment; a firms competitiveness could be threatened by government agencies
who impose fines or penalties on activities and customers are nowadays more aware of the negative footprint of firms; if issues are not salient, organisational constituents are less likely to
impose pressures; salient issues tend to be more highly valued by consumers and low salience does not often lead to competitive advantage unless the firm is able to make the issue salient
to its suppliers or consumers
à In contexts in which the issue at hand is prominent, firms tend to be motivated to go green to legitimise themselves and avoid disadvantages in competitiveness
(b) Field cohesion: the intensity and density of formal and informal network ties between constituents in an organisational field (= those organisations in the area of institutional life, such as
suppliers, resources and customers, regulatory agencies or competitors); implies that firms share the same understanding of acceptable organisational practices; fields are built around a
network of interorganisational relationships – it’s intensity is facilitated by proximity (social and geographical); the exchange between proximate firms often leads to mimetic isomorphism;
institutional pressure from industry peers makes it hard to deviate from the norm; field cohesion is strongly positively associated to legitimation and negatively associated with
competitiveness and ecological responsibility (innovations diffuse fast among firms, eliminating potential benefits related to them; superior performance is discouraged as it makes field
members ‘look bad’
à In contexts in which firms are proximate to each other, firms to go green because that is the norm of industry peers
(c) Individual concern: the degree to which organisational members value the environment and the degree to of discretion they possess to act on these values; firms have individuals with
bounded rationality, cognitive biases and personal values that direct their actions and influence a firm’s ecological responsiveness – 1) firms are bombarded with numerous signals and values
help prioritise and discriminate between those that are important and those that are not; 2) environmental values will induce some organisational members to champion ecological
responses; 3) a firm’s TMT are more receptive to changes in the organisational agenda, products, and processes if these fit with their own personal values; ought to be more green because
they want to be good; individual concern will be positively associated with ecological responsibility and legitimation, if the concerns of the individuals are in line with those of constituents
within society
à In contexts in which a powerful individual cares about a problem, firm’s go green as they strongly perceive their own ecological responsibility (and as a by-product legitimise
themselves in the community)
Configurational Profiles (not that important): the authors went out to find the reasons why firms go green, but actually ended up spotting a pattern concerning equifinality (the principle
that there is multiple roads to the same goal); they expect this to be the case especially when green initiatives happen out of ecological responsibility (the solutions are almost infinite and the
person is ‘configured’ to follow his principles); they propose three profiles that lead to high responsiveness because of the coherence or consistency of their patterns:
(i) Caring profile - influence of individuals concern on ecological responsibility is moderated by issue salience, meaning whenever concerns for the natural environment are based on a
compelling social belief that is embodied in a charismatic and powerful manager, a firm will be ecologically responsive; individual concern is strengthened as salience increases; issue salience
provides a legitimising context for the individuals introduction of change; e.g., individuals were observed taking a particularly salient issue, such as the use of recycled paper and induced a
response despite the monetary costs
(ii) Competitive profile – interaction between individual concern and low field cohesion promotes a mixed motive of ecological responsibility and competitiveness, and this mixed motive
results in potentially high responsiveness; as individual concerns are translated into initiatives motivated by ecological responsibility, a firm is additionally motivated by comp. advantage;
when field cohesion is low, competitors do not recognise the firm’s ecological responsiveness as a competitive threat and won’t respond or mimic; in such a case, the firm can then develop a
strategic niche in which it distinguishes itself as a green alternative and might benefit of more ecologically benign products and processes
(iii) Concerned profile – interaction of field cohesion and issue salience induces a more intense legitimation motivation; here the field is cohesive and as ecological concerns are recognised all
field members respond – this occurs because of potentially delegitimising effects associated with the firm’s products and/or processes; all members within the field respond aggressively and
collectively by sharing information and innovating processes; issue salience magnifies the effect of field cohesion as field members are drawn together to protect the legitimacy of an
industry; essentially, the field must be responsive to ensure the survival of its members; this issue is present in industries like chemical and forestry industries as the saliency of the ecological
issues within those is instrumental in precipitating the actions of the respective industry associations, which ultimately leads to an industry-wide response; if someone fails to respond, the
profits of all industry members and the livelihood of some companies would be threatened
To achieve any one of the configurational profiles one can either select the appropriate context or change the existing contexts.
