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  • 1. Business Ethics and Corporate Social Responsibility as Competitive Strategies By Dr Theodore Panayotou Cyprus International Institute of Management and John F. Kennedy School of Government, Harvard University
  • 2. “ profitability is what the business does for itself, obeying the law, being ethical, and a good corporate citizen is what the firm does for others (society or other stakeholders)”. Archie Caroll
  • 3.
    • Social responsibility implies
        • an obligation
        • a degree of altruism.
    • This misses the power of ethical conduct as a management tool and of corporate social responsibility (CSR) as part of competitive strategy.
  • 4.
    • New strategic thinking
      • Source of competitive advantage
      • Shared value for both business and
      • society
  • 5.
    • Corporate responsibility
      • economic responsibility
      • legal responsibility
      • ethical responsibility
      • philanthropic responsibility
  • 6.  
  • 7. Law and regulation Society’s minimum norms and standards of business conduct.
  • 8.
    • Ethical responsibility
        • Avoid harm.
        • Do what is right.
        • Not what the firm has a right to do
        • but what it is right to do.
  • 9.
    • Philanthropic responsibility
      • Be a good corporate citizen.
      • Voluntarily participate in activities
      • that promote human welfare.
  • 10.
    • “ He who dies rich, dies thus disgraced”.
    • Successful businessmen “were morally obligated” to give most of their riches back to the community during their lifetime.
    • Andrew Carnegie
  • 11. The new thinking
    • Business ethics is a powerful strategic management tool for boosting employee motivation, customer loyalty and profitability.
    • Corporate social responsibility is an integrated part of business strategy that creates value for both the business and society.
  • 12. Untapped potential for
    • boosting performance through shared values and a culture of ethical behaviour that builds trust.
  • 13. A reputation for ethical behaviour and trust
    • Strengthens the company’s brand, boosts its market share and customer loyalty.
    • Negotiations become easier, transactions faster and financing more favourable.
  • 14.  
  • 15. Strategic Corporate Social Responsibility
        • Do well by doing good.
        • A healthy society needs successful
        • companies.
        • A successful business needs a stable
        • and healthy society.
  • 16. Michael Porter: CSR test-guide
    • Not whether a cause is worthy but whether it presents an opportunity to create shared value for both society and business.
  • 17. Strategic CSR
      • Moves beyond good citizenship and
      • mitigates harmful value chain impacts.
      • Integrates social and ethical considerations into core operations and strategy effectively.
      • Lowers costs, creates value, or better serves customer needs.
  • 18.
    • Examples
          • Toyota Prius
          • Microsoft
  • 19. CSR must be perceived as
      • building shared value, not as damage
      • control, or as a PR campaign.
      • the impact on the social good is greater and
      • CSR more sustainable when the business
      • has a stake in the outcome.
  • 20.
    • Does it pay to be ethical?
    • The top 50 socially responsible firms
    • have outperformed the Standard and Poor
    • Index of financial performance.
    • Several companies which thrived on
    • unethical behaviour.
    • Even ethical and socially responsible
    • companies have had moral lapses.
  • 21.  
  • 22.  
  • 23. How do we fair?
      • An undue focus on short-term profitability, “get rich quick” approach to business at the expense of sustained competitiveness and long-term profitability.
      • Content to comply with the letter of the law and ignore the spirit of the law.
      • Ethical responsibility: the most pervasive and difficult problem is not immoral but amoral management.
  • 24. The amoral society
    • Amoral managers believe that ethical considerations apply to their private lives but not to business; they believe that ethics and business do not mix.
    • Until they become morally aware, we will continue to read daily headlines about unethical management behaviour.
  • 25.  
  • 26. Philanthropic responsibility
    • Beyond health-related initiatives, philanthropy is virtually
    • non-existent outside North America.
  • 27. Armenia at present
    • Obligations to employees and customers; the narrowest possible concept of CSR.
    • Donations for tax deduction, a short-run gain.
    • “ Corporate governance and Code of Conduct are ‘virgin’ ground.”
    • Commitment to environmental protection: minimal
  • 28. Armenia in the future
    • With increased participation in international trade, Armenian firms must compete in the wider European and global markets where social responsibility counts. In Europe:
    • 70% of consumers base their purchasing
    • decisions, in part, on the social responsibility
    • of firms.
    • 25 % of them are willing to pay more for
    • products that are produced and distributed by
    • socially responsible companies.
  • 29. In the European market
    • Non-discrimination, minority employment, diversity, etc. become issues that no longer can be ignored.
    • Socially responsible investing will grow in importance.
    • Environmental compliance is a minimal requirement for doing business.
    • Trust and reputation are the currencies of business.
  • 30. Conclusion
    • The conflict between economic survival and ethical/social responsibility exists only in the short-run and when one takes a static view of business.
    • With the right strategy, ethical behaviour and social responsibility can be turned into sources of competitive advantage in the medium-to-long-run.