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Summary Articles Business Strategy & Sustainability
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BUSINESS STRATEGY & SUSTAINABILITYSummary
Week 1. Perspectives: Introduction to corporate social responsibility and sustainability
Crane, A. & Matten, D. 2006. Business ethics: managing corporate citizenship and
sustainability in the age of globalization.
Teacher note: Often the arguments in favour of corporate social responsibility and
sustainability revolve around ethics or morality. This book chapter summarises some of the
most influential ethical theories. Try to understand the main principle behind each of these
theories.
Ethical theories are the rules and principles that determine right and wrong for a given
situation. In locating a place for ethical theory, two extreme positions can be imagined:
• Ethical absolutism: There are eternal, universally applicable moral principles. Right and
wrong are objective qualities that can be rationally determined
• Ethical relativism: Morality is context-dependent and subjective. Right and wrong
depends on the person taking the decision and the culture in which they are located.
Morality is culturally determined.
However, both of these positions are not particularly useful. Therefore, one can take the
position of pluralism: somewhere between absolutism and relativism. Pluralism accepts
different moral convictions and backgrounds, while at the same time suggesting that a
consensus on basic principles and rules in a certain social context can, and should, be reached.
It is suggested that humans already know about morality before they even try to introduce
ethical theory into it. Explanations:
• Morality is foremost a social phenomenon. Morality is applied because we constantly
have to establish the rules and arrangements of our living together as social beings.
• Morality is primarily about harm and benefit. Right and wrong are largely about avoiding
harm and providing benefits.
• The logic of relativism is that everything is just different and nothing is wrong. This
‘anything goes’ approach to morality is not very helpful when we see genuine harm being
inflicted on people.
Therefore, narrowly and rigidly applying one theory and treating the theory as the only
authority in questions of right and wrong would give ethical theory a status that it will never
actually have in practical business decisions.
There are some relevant differences in the mainstream debate in Europe and North America:
• Individual versus institutional morality. Ethical theories in the U.S. tend to be more
applicable to individual behaviour, whereas in Europe the design of institutions in the
economic system seems to be the main influence in developing and applying theory.
• Questioning versus accepting capitalism. In the U.S. the existing framework of
management is not questioned; the U.S. sees ethical problems occurring within the
, capitalist system. In Europe, parts of business ethics focus on questioning the ethical
justification of capitalism.
• Justifying versus applying moral norms. In Europe, there is a strong degree in the
justification and ethical legitimation of norms for addressing ethical dilemmas in business
situations. In the US they focus on the application of morality to business situations.
The main advantage of theories is the fact that they normally provide us with a fairly
unequivocal solution to ethical problems. Theories generally can be divided into two groups:
1. Consequentialist theories: These theories base moral judgement on the outcomes of a
certain action. If outcomes are desirable, then the action in question is morally right. So,
the moral judgement is based on the outcomes, the aims, or the goals of a certain action
à teleological (goal).
2. Non-consequentialist theories: The moral judgement is based on the underlying
principles of the decision-maker’s motivation. An action is right or wrong, because the
underlying principles are morally right à deontological (duty).
Consequentialist theories:
1. Egoism: ‘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’. The theory focuses on the
outcomes for the decision-maker. As a man has only limited insight into the
consequences of his action, the only suitable strategy to achieve a good life is to pursue
his own desires or interests. The theory approaches the idea of objective value: one way
of acting is objectively better or ‘more ethical’ than another.
2. Utilitarianism: ‘An action is morally right if it results in the greatest amount of good for
the greatest amount of people affected by the action. The theory focuses on the wider
social outcomes within a community. The ‘greatest happiness principle’ (as it is also
called) focuses on the consequences of an action, weighs the good results against the
bad results, and finally encourages the action that results in the greatest amount of good
for all people involved. The action with the highest aggregate utility (the value of the
action) can be determined to be morally correct. It comes close to a cost-benefit analysis.
The main problems of utilitarianism are:
• Subjectivity: The feelings of pleasure and pain for instance might depend on the
subjective perspective of the person who carries out the analysis.
• Problems of quantification: Pleasure and pain for instance are not quantifiable. Is
losing a contract really comparable to forcing children into labour?
• Distribution of utility: By assessing the greatest good for the greatest number, the
interests of minorities are overlooked.
The problem of subjectivity led to a refinement of the theory:
• Act utilitarianism: Looks to single actions and bases the moral judgement on the
amount of pleasure and the amount of pain this single action causes.
• Rule utilitarianism: Looks at classes of actions and asks whether the underlying
principles of an action produce more pleasure then pain for society in the long run.
Non-consequentialist theories:
1. Ethics of duties: According to Kant, morality is a question eternal, abstract and
unchangeable principle; a set of a priori moral laws, that humans should apply to all
ethical problems. He saw humans as rational actors who could decide these principles
, for themselves. Kant developed a theoretical framework for these principles: the
categorical imperative. It 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 à it checks if the action could be performed
by everyone and looks at consistency. An action can only be right if everyone could
follow the same underlying principle. ‘Golden rule’: treat other as you wanted to be
treated yourself.
• 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 à humans deserve respect as
autonomous, rational actors, and this human dignity should never be ignored.
• Maxim 3: Act only so that the will through its maxims could regard itself at the same
time as universally law giving à it checks if the principles of our actions would be
acceptable for every human being.
However, there are also problems with ethics of duty:
• Undervaluing outcomes: There is too little consideration of the outcomes of one’s
actions in ethics of duty.
• Complexity: It is quite complicated to apply.
• Optimism: The vies of a man as a rational actor who acts consequently according to
self-imposed duties seems more of an ideal than a reality.
2. Ethics of rights and justice:
• Ethics of rights: John Locke conceptualised the notion of ‘natural rights’: certain
basic, important, unalienable entitlements that should be respected and protected
in every single action. Examples of these rights are the rights to life, freedom and
property. Corporations, especially multinationals, are increasingly judged with
regard to their attitude to human rights and how far they respect and protect them.
An implication of the theory is that notions of rights are quite strongly located in a
Western view of morality.
• Ethics of justice: The simultaneously fair treatment of individuals in a given situation
with the result that everybody gets what they deserve. Theories of justice typically
see fairness in two main ways:
- Fair procedures: fairness is determined according to whether everyone has been
free to acquire rewards for his or her efforts à procedural justice.
- Fair outcomes: fairness is determined according to whether the consequences
(positive and negative) are distributed in a just manner, according to some
underlying principle such as need or merit à distributive justice.
There are two extreme positions in the justice debate:
• Egalitarian approach: Claims that justice is the same as equality.
• Non-egalitarian approach: Claims that justice in economic systems is ultimately a
product of the fair process of free markets
The ideal argument may well lie in between the two. John Rawls came up with the
‘theory of justice’. He suggests two criteria to decide whether an action could be called
just or not. Justice is achieved when:
1. Each person is to have an equal right to the most extensive total system of basic
liberties compatible with a similar system of liberty for all à we should ensure that the
basic freedoms are realised to the same degree for everyone affected by the decision.
2. Social and economic inequalities are to be arranged so that they are both:
• To the greatest benefit of the least advantaged
, • Attached to offices and positions open to all under conditions of fair equality of
opportunity
à Inequalities are unavoidable in a free and competitive society.
There are limits of Western modernist theories. The main criticisms of Western modernist
ethical theories are:
• Too abstract: too theoretical and impractical for day-to-day life.
• Too reductionist: each theory focuses on one aspect, while all are important.
• Too objective and elitist.
• Too impersonal: the theories do not take into account personal bonds and relationships.
• Too rational and codified.
• Too imperialist.
Because of these limitations, there have been developed more theories and other
perspectives. There are four main contemporary ethical theories (alternative perspectives on
ethical theory):
1. Ethical approaches based on character and integrity:
• Look to the character or integrity of the decision-maker.
• Virtue ethics: morally correct actions are those undertaken by actors with virtuous
characters. The formation of a virtuous character is therefore the first step towards
morally correct behaviour. Virtues are a set of acquired traits of character that
enable a person to lead a good life.
• Central to the ethics of virtue is the notion of a ‘good life’.
2. Ethical approaches based on relationships and responsibility.
3. Ethical approaches based on procedures and norm generation.
4. Ethical approaches based on empathy and moral impulse.
Bansal, P., & Roth, K. 2000. Why companies go green: A model of ecological responsiveness.
Teacher note: Tima Bansal is one of the most prolific business sustainability scholars, and this
is a classic qualitative empirical analysis within organisations and the natural environment.
Focus on the motives of why firms go green at different levels of analysis.
If corporations adopt ecologically responsive practices merely to meet legislative
requirements, then firms will engage in only those activities that are mandated. This study
examines why companies “go green”.
Corporate ecological responsiveness is defined as: “A set of corporate initiatives aimed at
mitigating a firm’s impact on the natural environment.”
There are four drivers of corporate ecological response: legislation (complying), stakeholder
pressures (build better relationships), economic opportunities (economic wealth and CA) and
ethical motives (to maintain ecological balance).
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