Chapter 10 notes

Classical economic model

All activites are done to improve profitability

Firms views sociatal impact of their business as externality

Government have to deal with externalaties

Economic Rationalist

Dont understand the difference between classical economic model

Corporate citizen modelCompany

Ensure profit while being morally responsible

o
Ex scott papers replanting program

is part of greater society

o
Business has an important role in society

Not all activities are done in pursuit of profit maximization

Activist

Not focusing on maximizing profit

o
Profit might not even be the main goal

Firm might just be looking for sustainability

Chosing values

the firm will ahve to determine which model to follow based on what goals
they have
o
Depending on how much the firm wants to include ethics in strategic
decision making will determine which model they will follow.
Sustainable competetive advantage

A comp. Advantage that will not harm society or the environment

Shared Value (fifth model)

CSR does not work becuase firms simply view it as an "add-on" that must be
considered during the strategic decision making process

Shared value increases the competetivness of the firm while also creating
economic and social value

Firms are still acting in their own self interest but they instead of maximizing
their values they are trying to maximize societal value

Shared value aimes to create economic value and societal value

o
3 ways to do this
1.
Make social concerns as important as profit seeking
2.
Re-examine value chain activities

Ex. Coffee farmers

Respect the effect your value chanin activites have on the

environment

3 ways this is happening

Energy use and logistics

Better use of input resources

Procurment

Suppliers welfare

Distribution
Internet can save paper/plastic
3.
Encourage the development of related industries

Ex. Production firms are supported by Hollywood movie

firms
Claims of the shared value model
o Rejects profit maximization
1 Profit is just one element in value creation matrix
2 It is still a core element and thus central to decision making
3 Create value for society, and the business

Ex Vodaphone mobile banking service for rural parts of

India

Rejects the seperation of CSR and strategic decision making

1 Business is part of society

Value creation is the central goal NOT maximizing profit

Chapter 4 stake holder analysis

January 22, 2016
3:54 PM

-who is a stakeholder
-anyone who has something at risk in the decission
-anyone who has a legitimate claim to the outcome
-2 types of stakeholder methods

Stakeholder management
o
Continous process

Stakeholder analysis
o
Specific, case by case basis
New business model includes society as stakeholders; not only shareholders and
owner

Stakeholder analysis is the process of considering the effect decissions have

on various stake holders
o
Who are our stakeholders

Shareholder

Employees

Customers

Suppliers

Government

Community/ interest groups

Environment
o
What are their stakes?
Types of stakes
Financial
Legal/contract
Rights based
Right to a safe environemt

Moral
Interest group
Usually a collective group of consumers
Ex. Environment protection
Priortize stakes
Based on
Urgency
How quickly a stakejholder needs his/her stakes to be met

Legitimacy
The entitlement to an outcome
Some types of stakes like rights based are more legitmate than
interest group stakes (consumers)
Power
How much power and influece the stakeholder exerts over your
firm

4 reasons why stakeholder analysis is better than one focused solely on

shareholders
1.
reality of modern society
-news of disasters and injustices committed by companies spread
quickly and can damage a company's reputation
Firms thus must consdier their impact on all relevant stakeholder
1 Becomming part of law
Courts are begging to force companies to consider the rights of all
stakeholders
Ex debt vs equity claims
2 Moral obligation
Business profit from employees/cities/infastrcture
Since htey benifit from these things they should consider them
in the decision making process
3 Better for business
Can aviod costly PR mistakes
Can lead to customer insights or business oppertunity that might
ahve been missed
Ex tylenol scare led to J&J to invent tamper proof packaging
2 critiques of shareholder theory
o
Firms have a responsibility to maximize shareholder value
o
Shareholder theory does not go far enough in protecting non-human
stakeholders (environment)

Ctextbook chapter 6
January 29, 2016
7:13 PM

-CSR is the ways that firms intergrate the social, economic and environmental
concerns into their strategy and decission making process

What does CSR support

CSR supports the pursuit of the tripple bottom line

Consideration of all stakeholders not only shareholders

Complice with the law is only a starting point

Supply chain relationships

Academic understanding of CSR

Environemt

Econoimc

Social

Voluntary

Stakeholders
CSR and stakeholder approach

You need a legal licence and a so called social licence in order to operate your
firm
o
Social licence is granted by stakeholders

CSR toolbox
o
3rd party certifications
o
CSR auditors
o
Stakeholder adivosry board

CSR and law

o
The law helps with 3 things

Constrains

Prevents firms from doing things that are illegal or

unethical

Facilitates

Allows for the implementation of CSR

Ex contract law forces a third party manufacturer in

a developing nation to abide by certain codes

Precribes

Reporting requirements for CSR

Critisisms ofCSR
o
Firm is doing the job of government
o
Firm must still be good at what it is selling or it wont stay in business
o
Some companies simply engage in CSR window dressing

Philosophers
January 25, 2016
8:58 PM

Teleogical ethics

Everything has a purpose

Actions that drive the thing towards the purpose is good actions that drive it
away are bad
Utilitarianism

Betham
o
Says that we should maximize pleasure and minimize pain

Do the actions that does the most good for the greatest number of
people
Jon Stewart Mill
o
Said that Bethams theory promoted lower level pleasures

Short term indlugances instead of long term goals

o
Quality of pleasure over quantity
4 main points
o
Consequentialism

Ends justifies the menas

o
Hedonism

Pursuit of pleasure and avoidance of pain

o
Maximalism

Doing the actions that creates the most good for the most
amount of people
o
Universalism

You must consider the pleasure and pain of others when making
a decission

One persons pleasure should not be priortized above anyone

elses
Problems with Utilitarianism
o
Subjectivity of measurment

How can we measure the pleasure or pain someone else feels

What is the critical mass required for the greater good

o
Allows for harming of someone for the greater good
o
Taken to the extreme any actions can be justified
o

Dentological Ethics

Means duty

Right actions stems from it being ypur duty

Intentions behind actions must be pure in order to be considered moral

Consequence of action has no bearing on the morality

Kant

Every actions is based on a maxim

o
Maxim is a reason for doing an action

Moral maxims
o
Maxims that are universally good and should always be followed
o
Ex honesty

Consequences do not determine morality

Catagorical imperative
o
Universality

In order to be a moral maxim the maxim must be applicable

universally

Ex lying can never be considered moral becuause if

everyone lied humans would not be able to function
o
Never treat someone as just a means to an end
Critisisms

Inflexable

Labels maxims as universal

Does not giver consideration for context or consequence
o

Social Contract

John rawls

Concerned with the distributions of advantages and disadvantages in society

Institutions and government should ensure that every person has equal
opportunities and the same liberties

Respect the basic dignity of human

o
Do not base judgement on his talents, career, gender ect

2 principals of justice
Everyone should have basic liberties so long as they do not infringe
upon the liberties of another
o
Inequality is justified only under 2 situations

Inequality is permissable only if it imporves the lives of the least

well off

Ex. Homeless people are better off under capitalism than

under feudalism even though there is greater inequality

Difference principal
o

textbook
January 29, 2016
5:30 PM

Social Contract

John rawls

Concerned with the distributions of advantages and disadvantages in society

Institutions and government should ensure that every person has equal
opportunities and the same liberties

Respect the basic dignity of human

o
Do not base judgement on his talents, career, gender ect

2 principals of justice
Everyone should have basic liberties so long as they do not infringe
upon the liberties of another
o
Inequality is justified only under 2 situations

Inequality is permissable only if it imporves the lives of the least

well off

Ex. Homeless people are better off under capitalism than

under feudalism even though there is greater inequality

Difference principal
o

January 27, 2016

11:32 AM

Virtue ethics

Person focused

Concerned with virtue, character, self control and good habits

Focused on how to be a good person and live a virtous life

The nature of your being

3rd major ethical tradition

o
Dentology
o
Teleology/ Utilitarianism
Aristotle

Teleology
o
Beleived that everything ahd a purpose
o
Human purpose was to be happy
o
How do we achieve happiness

Develop good character, emotional control and good habits

We develop good character through reason and

excersising self discipline

Recgonize the difference between minor states of happiness and

last long term happiness
o
Different view than kant

We should feel good about acting well

The golden mean

Virtues are a golden mean between excess and dificiency in our relationships
with other people
o
Ex. Courage is between cowardice and arrogance
o
Ambition is the mean between sloth and greed

It is doing the right thing at the right time

Strenghts (know one)

Makes sense
o
We innately seek to determine good people from bad
o
Greater chance that a snap decission will be an ethical one

Attention to the person and the importance of emotions, self control,

relationships

Addresses hey gaps in other ethical traditions

Weakness (know one)

Why does everything have to have a purpose

Does not provide concrete guidance on how to act or what standrads to

follow

Virtues are taught through family and teachers but what if these teachers are
not virtous themselves
Confucius

Virtue ethics

Teachings were called analects

Humanist
o
Values human life and dentered around humans

Strong focus on the collective no the individual

Humans are inherently good
Goal is to become a wise and moral person
Ceremony and rituals
o
The outward expression of confucian ideals like order and harmony
o
Everyone and everything has its place
o
Ceremonies have a important purpose

Tell us our place in society

Celebrates ideals that we value

Reverance for parents
Hierarchy
o
Obey superiors
Cultivation of knowledge and wisdom

Other ethical traditions

Action governed

Dentolody and utilitarism