Chapter 9: Ethics, Corporate Social Responsibility, Environmental Sustainability, and Strategy

Vocabulary flashcards covering business ethics frameworks, corporate social responsibility (CSR), strategic risks such as short-termism, and performance evaluation metrics from Chapter 9.

Ethical Universalism

An ethical framework based on the core belief that the most fundamental conceptions of right and wrong are universal and apply to members of all societies, companies, and businesspeople, meaning business actions must be judged in the context of society's general standards rather than a separate set of "business-only" ethics.

Ethical Relativism

An ethical framework based on the core belief that concepts of right and wrong are governed by local norms, religious beliefs, and customs, implying that multiple sets of standards exist and local moral standards take precedence when cross-country differences arise.

Integrative Social Contracts Theory

A "middle ground" ethical framework positing a social contract where "first-order" universal ethical norms always take precedence over "second-order" local norms, allowing local cultures room to exert influence only within universal boundaries.

Corporate Social Responsibility (CSR)

A company's duty to operate honorably, provide good working conditions, encourage diversity, protect the environment, and better the quality of life in local communities.

Essence of Socially Responsible Behavior

The balancing act between strategic actions taken to benefit shareholders and the duty to be a good corporate citizen.

Moral Case for CSR

The justification for corporate social responsibility grounded in the idea that "it's the right thing to do," reflecting ordinary decency and civic-mindedness expected of any business.

Philanthropic CSR

A CSR strategy involving the fulfillment of corporate obligations through charitable contributions, such as setting aside $2\%$ of profits for a cancer-recovery facility.

Environmental CSR

A CSR strategy characterized by conscious corporate efforts to protect or enhance the natural environment beyond what is legally required.

CSR Integration

The principle that for corporate social responsibility initiatives to be effective, they must become an embedded part of the way a company operates every day.

Short-Termism

The tendency for managers to focus excessively on immediate or short-term performance objectives at the expense of longer-term strategic objectives, such as cutting research and development (R&D) funding to boost current quarter profits.

Consequences of Unethical Behavior

Severe adverse outcomes experienced when strategies fail moral scrutiny, including devastating public relations hits, sharp drops in stock prices, and costly rehabilitation of company reputation.

Triple Bottom Line

A performance evaluation framework often used for CSR strategies, composed of the "Three Pillars": People, Planet, and Profit.

People (Three Pillars of Performance)

The pillar of the Triple Bottom Line centered on improving the lives of both internal and external stakeholders.

Planet (Three Pillars of Performance)

The pillar of the Triple Bottom Line that evaluates a firm's ecological impact and environmental practices.

Profit (Three Pillars of Performance)

The pillar of the Triple Bottom Line that evaluates the economic impact (encompassing both value and costs) a company exerts on society.

Litmus Test of a Code of Ethics

The standard stating that the true test of an ethical code is the extent to which it is embraced in crafting strategy and guiding day-to-day operations, rather than merely possessing a mandated document.

Global Reporting Initiative (GRI)

An entity that promotes greater corporate transparency and facilitates the benchmarking of CSR efforts across firms and industries through standardized reporting frameworks.