INTEGRATING BUSINESS ETHICS AND BUSINESS STRATEGY
Keywords:
business ethics, business strategy, company, strategic managementAbstract
Business ethics includes norms and rules of conduct that operate within the company in the form of a code of ethics. Organizations gain a reputation through ethical behavior based on their employees’ actions. Strategic management involves specifying the organizational mission, vision and goals; examining the internal strengths and weaknesses of the company, as well as external opportunities and threats coming from the external environment; developing policies and plans designed to achieve company's goals; allocating resources to implement these policies and plans and creating sustainable, long-term value for all company’s stakeholders. Many contributions to business ethics and strategic management have specifically focused on the relationship between the two concepts. Corporate strategy must be built on the base of the ethical judgment. Leadership is a key factor that determines whether a company is capable of successfully integrating ethics into business strategy. In the literature on leadership, full attention is paid to the importance of ethical qualities of managers. Managers moral competencies are considered a source of competitive advantage. Effective and dynamic ethical leadership can contribute to creating a corporate culture that will support ethical behavior and maintaining firm’s good reputation and promoting integrity by upholding the company’s values through its business and day-to-day decisions. Ethical decision-making is related to the internal organizational decisions of individuals or social groups about socially acceptable behavior. Ethics can play a significant role in proposing new business models that promote a business vision that extends beyond the economic sphere to encompass a range of social and environmental issues. Current trends in corporate social responsibility and sustainability show how these concepts can act as factors of innovation and as sources of competitive advantage for firms. Business ethics have long been considered a stumbling block in the field of strategic management. However, numerous authors have contributed their research to the fact that business ethics is one of the important components during the early development of corporate strategy and should be included in business strategy. In the last decades of the twentieth century, after strong movements that supported the concept of business ethics, many authors showed interest in the relationship between ethics and business strategy. This trend has continued to this day, especially with the growing importance of social issues for society. There is a growing consensus among researchers that companies wishing to survive in the market need to integrate ethics into all aspects of their strategy, including social and environmental issues and company strategy.
References
Andrews, K. R. (1971/1980). The concept of corporate strategy. Revised edition. Homewood, Ill: Richard D. Irwin.
Andrews, K. R. (1989). Ethics in practice: Managing the moral corporation. Boston, MA: Harvard Business School Press.
Ansoff, I. (1965). Corporate strategy: An analytical approach to business policy for growth and expansion. New York: McGraw-Hill.
Ansoff, I. (1979). The changing shape of the strategic problem. In D. Schendel & C. Hofer (Eds.), Strategic management: A new view of business policy and planning (pp. 37–44). Boston: Little Brown and Co.
Arcelus, F. J. and N. V. Schaefer (1982). Social Demands as Strategic Issues: Some Conceptual Problems, Strategic Management Journal 3(4), 347–357.
Arthur, H. B. (1984). Making Business Ethics Useful, Strategic Management Journal 5(4), 319–333.
Ballesteros, L., Useem, M., & Wry, T. (2017). Masters of disasters? An empirical analysis of how societies benefit from corporate disaster aid. Academy of Management Journal, 60(5), 1682–1708.
Barnard, Ch I. (1938). The functions of the executive. Boston, MA: Harvard University Press.
Baumgartner, R. J. (2014). Managing corporate sustainability and CSR: A conceptual framework combining values, strategies and instruments contributing to sustainable development. Corporate Social Responsibility and Environmental Management, 2(5), 258–271.
Bowie, N. E. (1991). Business ethics as a discipline: the search for legitimacy. In R. E. Freeman (Ed.), Business ethics: the state of the art (pp. 17–42). Oxford: Oxford University Press.
Brickley, J. A., Smith, C. W., Zimmerman, J. L. (2003). Corporate governance, ethics, and organizational architecture. Journal of Applied Corporate Finance, 15(3), 34–45.
Carrol, A. B. (1987). In search of the moral manager. Business Horizons, 30(2), 7–15.
Chandler, A. (1962). Strategy and structure: Chapters in the history of the industrial enterprise. Cambridge, MA: MIT Press.
Crane, A., Matten, D. (2004/2016). Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Fourth edition. Oxford: Oxford University Press.
Dawkins, J., Lewis, S. (2003). CSR in stakeholder expectations: And their implication for company strategy. Journal of Business Ethics, 44(2–3), 185–193.
De George, R. T. (1987). The status of business ethics: past and future. Journal of Business Ethics, 6(3), 201–211.
Drucker, P. (1973). Management: Tasks, responsibilities, practices. New York: Harper & Row.
Elms, H., Brammer, S., Harris, J. D., & Phillips, R. A. (2010). New directions in strategic management and business ethics. Business Ethics Quarterly, 20(3), 401–425.
Ethics Quarterly 12(2), 155–187.
Ferrell, O.C., Harrison, D.E., Ferrell, L., & Hair, J. (2019). Business ethics, corporate social responsibility, and brand attitudes: An exploratory study, Journal of Business Research 95 (2019) 491–501.
Flamer, C., & Kacperczyk, A. (2016). The impact of stakeholder orientation on innovation: Evidence from a natural experiment. Management Science, 62(7), 1982–2001.
Fontrodona, J., & Sanz, P. (2015). The keys to a positive business culture. IESE Insight, 27, 15–22.
Fontrodona, J., Ricart, J.E., & Berrone, P. (2018). Ethical Challenges in Strategic Management: The 19th IESE International Symposium on Ethics, Business and Society, Journal of Business Ethics (2018) 152:887–898
Freeman, R. E. (1984). Strategic management. A stakeholder approach, Boston, MA: Pitman Publishing.
Freeman, R. E., & Gilbert, D. R. (1988). Corporate strategy and the search for ethics. Englewood Cliffs, NJ: Prentice-Hall.
Freeman, R. E., Gilbert, D., & Hartman, E. (1988). Values and the Foundations of Strategic Management, Journal of Business Ethics 7(11), 821–835.
Friedman, M. (1970). The social responsibility of business is to increase its profits. The New York Times Magazine, 13 September.
Gazzola, P., & Colombo, G. (2014). CSR integration into the corporate strategy. Cross-Cultural Management Journal, 16(2), 331–337.
Gilbert, D. R. Jr. (1986). Corporate Strategy and Ethics, Journal of Business Ethics 5(2), 137–151
Hart, S. L. (1995). A natural-resource-based view of the firm. Academy of Management Review, 20, 986–1012.
Hart, S., Sharma, S., & Halme, M. (2016). Poverty, business and sustainable development. Organization & Environment, 29(4), 401–415.
Heath, J. (2006). Business Ethics Without Stakeholders, Business Ethics Quarterly 16(4), 533–557.
Hosmer, L. T. (1994). Strategic planning as if ethics mattered. Strategic Management Journal, 15(S2), 17–34.
Humble, J., Jackson, D., & Thomson, A. (1994). The strategic power of corporate values. Long Range Planning, 27(6), 28–42.
Kirrane, D. E. (1990). Managing values: A systematic approach to business ethics. Training & Development Journal, 44(11), 53–60.
Leidka, J. (1998). Constructing an Ethic for Business Practice; Competing Effectively and Doing Good, Business & Society 37(3), 254–280.
Logsdon, J., & Wood, D. (2002). Business Citizenship: From Domestic to Global Level of Analysis, Business
Maxfield, S. (2008). Reconciling corporate citizenship and competitive strategy: Insights from economic theory. Journal of Business Ethics, 80(2), 367–377.
McWilliams, A., & Siegel, D. S. (2001). Corporate social responsibility: A theory of the firm perspective. The Academy of Management Review, 26(1), 117–127.
McWilliams, A., & Siegel, D. S. (2011). Creating and capturing value: Strategic corporate social responsibility, resource-based theory, and sustainable competitive advantage. Journal of Management, 37(5), 1480–1495.
Mele, D. (2009a). Editorial introduction: Towards a more humanistic management. Journal of Business Ethics, 88(3), 413–416.
Mele, D. (2009b). Integrating personalism into virtue-based business ethics: The personalist and the common good principles. Journal of Business Ethics, 88(1), 227–244.
Paine, L. S. (1996). Moral thinking in management: an essential capability. Business Ethics Quarterly, 6(4), 477–492.
Porter, M. E., & Kramer, M. R. (2006). The link between competitive advantage and corporate social responsibility. Harvard business review, 84(12), 78–92.
Porter, M. E., & Kramer, M. R. (2011). Creating shared value. Harvard Business Review, 89(1/2), 62–77.
Reynolds, S. J. (2003). A Single Framework for Strategic and Ethical Behavior in the International Context, Business Ethics Quarterly 13(3), 361–379.
Robertson, C. J. (2008). An analysis of 10 years of business ethics research in “Strategic Management Journal”:1996–2005. Journal of Business Ethics, 80(4), 745–753.
Robertson, C. J., & Crittenden W.C. (2003). Mapping Moral Philosophies: Strategic Implications for Multinational Firms, Strategic Management Journal 24(4), 385–392.
Robertson, C. J., Blevins, D. P., & Duffy, T. (2013). A five-year review, update, and assessment of ethics and governance in “Strategic Management Journal”. Journal of Business Ethics, 117(1), 85–91.
Rusinko, C. A. (2010). Integrating sustainability in management and business education: A matrix approach. Academy of Management Learning & Education, 9(3), 507–519.
Sanchez, P., & Ricart, J. E. (2010). Business model innovation and sources of value creation in low-income markets. European Management Review, 7(3), 138–154.
Simon, H. A. (1945/1975). Administrative behavior. 3rd edition. New York: The Free Press.
Singer (2010). Integrating Ethics and Strategy: A Pragmatic Approach, Journal of Business Ethics (2010) 92:479–491
Singer, A. E. (1994). Strategy as Moral Philosophy, Strategic Management Journal 15, 191–213.
Sison, A., & Fontrodona, J. (2011). The common good of business: Addressing a challenge posed by «Caritas in Veritate». Journal of Business Ethics, 100, 99–107.
Smart, V., Barman, T., & Gunasekera, N. (2010). Incorporating ethics into strategy. Developing sustainable business models. Discussion paper. London: Chartered Institute of Management Accountants.
Solomon, R. C. (1992). Ethics and excellence. New York: Oxford University Press.
Solomon, R. C. (1999). A better way to think about business: How personal integrity leads to corporate success. New York: Oxford University Press.
Stafford-Smith, M., Griggs, D., & Gaffney, O. (2017). Integration: the key to implementing the sustainable development goals. Sustainability Science, 12(6), 911–919.
UN (2015). Transforming our world: The 2030 agenda for sustainable development. New York: United Nations, New York.
Wagner, M. (2010). Corporate social performance and innovation with high social benefits: A quantitative analysis. Journal of Business Ethics, 94(4), 581–594.
Werhane, P. H. (1999). Moral imagination and management decision making. New York: Oxford University Press.
Zekos, G. (2004) Ethics versus corruption in Globalization, Journal of Management Development Vol. 23 No. 7, pp. 631-647.