SUMMARIES ETHICS

CRANE CHAPTER 3

A)NORMATIVE ETHICAL THEORIES

By normative, we mean ethical theories that aim to prescribe the morally correct way of acting; that is, how we
ought to behave. Can best be understood as a code of conduct that all rational beings would adhere to. On the
other hand, descriptive morality applies to a code of conduct adopted by a particular group or society. Rules,
guidelines, principles, and approaches that determine right and wrong.

Ethical absolutism. Claims that there are eternal, universally applicable moral principles. According
to this view, right and wrong are objective qualities that can be rationally determined.

Ethical relativism Claims that morality is context-dependent and subjective. Stemming in part from
anthropological studies of culture, relativists tend to believe that there are no universal rights and wrongs. It
simply depends on the traditions, convictions, or practices of those making the decision.

Ethical relativism is different from descriptive relativism: Ethical relativism, as we use it here, is still
a normative theory (Gowans 2018), and proposes that both sets of beliefs can be equally right

Ethical Pluralism. alternative approach to absolutism and relativism. A pluralist approach accepts that we ought
to recognize that incompatible values can be equally legitimate and tolerate them. Overly tolerant.

The primary value of ethical theories lies in the fact that they help to rationalize, explain, and understand the
hunches or gut feelings we all have about what is right or wrong. Furthermore, they make it possible to engage in
a rational discourse between individuals whose moral values are different from each other.

NORMATIVE ETHICS AND RELIGION

Source of rules and principles. Religions typically invoke a deity or an organized system of belief as the source of
determining right and wrong. Faith is considered the critical requisite for acting ethically. Philosophical
theories, on the other hand, are based on the belief that human reason should drive ethics. Thus according to
philosophical perspectives, rationality is the critical requisite for acting ethically.
Consequences of morality and immorality. In religious teaching, there is an important element of spiritual
consequence for the decision-maker. These consequences might include salvation, enlightenment, reincarnation,
or damnation.

WESTERN MODERNIST ETHICAL THEORIES

'Modernity', as it modernized a lot of traditional thinking dominated by religious approaches throughout the
Middle. They generally offer a certain rule or principle that one can apply to any given situation-hence, they are
absolutist in intention. Normative because start with assumption about the nature of the world and human
beings. Degree of the acceptance of the theory depends chiefly on the degree to which we share their underlying
assumptions. Provide us with a fairly unequivocal solution to ethical problems.
There is a distinct point of division in this group: consequentialist and principle-based theories

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Consequentialist: Called also theological. Base moral judgement on the outcomes of a certain action-they are
goal orientated. Judgement based on the intended outcomes, the aims, or the goals of a certain action. egoism
and utilitarianism.
Principle-Based Theories. Called also deontological (duties) These principle-based theories' prioritize what is
right, rather than what is desirable. We focus on the principle-based theories of ethics of duties, and rights and
justice.

ETHICS OF SELF-INTEREST: ETHICAL EGOISM: A theory that suggests that an action is morally right if in a given
situation all decision-makers freely decide to pursue either their (short-term) desires or their (long-term)
interests. Focusing on the outcomes and self-interest for the individual decision-maker. Don’t mention business
ethics. Ethical egoism (obligation for a person, or by extension a business, is self-promotion). Representative
philosopher Thomas Hobbes = State of nature (society without any systems, controls, or government), anarchy
and chaos would result. Best for everyone-every individual's self-interest-to be governed by some impartial rules.
Economists Adam Smith (1723-90) and Milton Friedman (1912-2006), have somewhat retrospectively been
associated with egoism via their defenses of capitalism and the free market.

It is important to distinguish egoism based on desire from selfishness. Whereas the egoist can be moved by pity
for others, the selfish person is insensitive to the other.
important criticism of egoism based on desire is that it renders patently different approaches to life as being
equivalent; student who just gets drunk every night in the bar is as admirable as the student who works hard
for a first-class degree.

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An egoism based on interests, therefore, approaches the idea of objective value in that one way of acting is
objectively better or 'more ethical' than another. This leads to the notion of 'enlightened egoism'. Egoism, it is
argued, cannot be a moral theory because it is internally inconsistent since each person pursues their own self-
interest and must accept that others do too.

ETHICS OF OUTCOMES: UTILITARIANISM

Utilitarianism: A theory that states that an action ·is morally right if it results in the greatest amount of good for
the greatest amount of people affected by the action . Most commonly accepted ethical theories in the Anglo-
Saxon world. The underlying concept in utilitarianism is the notion of utility.
The basic foundation of utilitarianism is the 'greatest happiness principle'. This is the ultimate consequentialist
principle, as it focuses solely on the consequences of an action, and weighs good outcomes against bad outcomes.
Focuses on the collective welfare that is produced by a certain decision. Ultimately, utilitarianism comes close to a
pain-pleasure version of what we know as cost-benefit analysis.

Problems With Utilitarianism

Subjectivity depends heavily on the subjective perspective of the person who carries out the analysis.
Equal weighting depends heavily on the subjective perspective of the person who carries out the analysis.
Problems of quantification and calculation. Similarly, it is quite difficult to assign costs and benefits to every
situation, and in business terms, apply monetary values. What monetary value is the right one to put on the
experience of childhood?
Distribution of utility: The interests of minorities are overlooked. interests of minorities are overlooked

John Stuart Mill, differentiating between 'act utilitarianism' and 'rule utilitarianism':
Act utilitarianism looks to single actions and bases the moral judgment on the amount of pleasure and the
amount of pain this single action causes.
Rule utilitarianism looks at classes of action and asks whether the underlying principles run of an action produce
more pleasure than pain for society in the long term

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B) PRINCIPLE-BASED THEORIES These approaches stem from assumptions about basic universal
principles of right and wrong

 Ethics of duties
 Ethics of rights and justice

Ethics of duties: Ethical theories that consist of abstract, unchangeable obligations, defined by a set
of rationally deduced a priori moral rules, which should be applied to all relevant ethical problems. In
business ethics, the most influential theory. Kant
KANT For Kant, morality was a question of certain abstract and unchangeable obligations defined by
a set of a priori moral rules- rational. He saw humans as actors who had free will to make their own
choices and could decide. Duty which is derived from a commitment to do the right thing for the sake
of the moral law = categorical imperative or unconditional moral law, that must be obeyed in all
circumstances.
Categorical imperative Act only according to that maxim (principle or rule) by which you can at the same time
will that it should become a universal law.
According to the idea of universal acceptability, the first question would be to ask if we would want everybody
to act according to the principles of our action in all circumstances. Regarding the principle of human dignity, it
is questionable whether the children have freely and autonomously decided to work

Kantianism also has problems with

Undervaluing motivations: This is sometimes called a supererogatory act. Could we really say it was unethical
for a nurse to stay well beyond his shift to comfort a dying patient, or for a manager to work through a public
holiday herself so that her staff can take the holiday.
Undervaluing outcomes: is it acceptable for a new start-up business to cut a few corners on what is ethical
and use their family members as a means of free labour to help them get their business off the ground?
Assumption of rationality: what about others who are not in a position to make such decisions? Are children.

Ethics of rights: human rights John Locke ( 1632- I 714). He conceptualized the notion of 'natural
rights', or moral claims, that humans were entitled to, and which should be respected and protected
(at that time, primarily by the state). Rights freedom, life, and property = human rights- Human rights
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 are Basic, inalienable, and unconditional entitlements that are inherent to all human beings, without
exception. Rights are sometimes seen as related to duties. Human rights are based on a certain
consensus about the nature of Human dignity.
In corporations: 2 principles:
(Principle I) 'businesses should support and respect the protection of internationally proclaimed human rights'
(Principle 2) 'businesses should make sure that they are not complicit in human rights abuses'

Ethical theories based on rights are very powerful because of their widely acknowledged basis in fundamental
human entitlements. Strongly located in a Western. Considerable amount of friction might occur if these ideas
were to be directly transferred, if not imposed, on communities with a different cultural and religious legacy.

Ethics of rights: justice clear is that individual rights have to be realized in such a way that they are addressed
equally and fairly. This is where the issue of justice arises.
Justice The simultaneous fair treatment of individuals in a given situation with the result that everybody
gets what they deserve.
Fairness mean:
 Fair procedures. Fairness is determined according to whether everyone has been free to acquire rewards for their
efforts.
• 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.

SOCIAL CONTRACT THEORY

Jean-Jacques Rousseau further captured the idea of how society should be organized in his treatise on the social
contract. Only when society and communities become more interdependent and need to compete for resources
and the ownership of private property becomes possible that strong democratic principles are needed for
individual and collective benefit. On the whole, the social contract becomes visible when some element is
contested.
A popular approach to determining a just social contract. Theory of Justice (1971). Rawls' starting point for his
hypothetical construct is that we should imagine a state of nature in which people are equal free, and rational,
seeking to advance their own interests. He distils clearly that society is just when:
1. Each person has an equal right to the most extensive total system of basic liberties compatible with a similar
system of liberty for all.
2. Social and economic inequalities are arranged so that they are both: benefit of the least advantaged-known as the
'difference principle and 'principle of equal opportunity. The first criterion is foundational to general human rights.
The second criterion is based on the assumption that inequalities are unavoidable, however two conditions should
be met.

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LIMITS OF WESTERN MODERNIST THEORIES
They have the big disadvantage that their view of the world only presents one aspect of human life, while
reality normally tends to be rather more complex.
To abstract: too theoretical and impractical for the pragmatic day-to-day concerns of managers. Normative
theories 'lack power, persuasiveness and effectiveness' because they do not deal enough with the question of
how businesses might actually operate in practice.
To narrow: tends to focus on one aspect of morality at the cost of all the rest of morality.
Too objective and elitist: without any subjective experience of the situation with which they are faced
Too impersonal: By focusing on abstract principles, traditional not take account of the personal bonds and
relationships.
Too rational and codified: denigrates the importance of our moral feelings and emotions. Rorty (2006)
suggests that what we need is better moral imagination and ethical stories rather than moral reasoning.
Too imperialist: ethical theories from the West.

ALTERNATIVE PERSPECTIVES ON ETHICAL THEORY

Four alternative theories.
 Ethical approaches based on character and integrity (virtue ethics)
• Ethical approaches based on relationships and responsibility (ethic of care).
• Ethical approaches arrived at through a deliberative process (discourse ethics)
• Ethical approaches based on empathy and moral impulse (postmodern ethics)

ETHICAL APPROACHES BASED ON CHARACTER AND INTEGRITY: VIRTUE ETHICS

Virtue ethics: An approach to ethics that focuses on the idea that possessing excellent traits of character, or
virtues, is required in order to be a good person. A virtuous person is a morally good and wise person.
Approaches look to the character or integrity of the decision-maker. Focusing on the integrity of individuals
clearly has a strong resonance in a business context, especially when considering the ethics of professionals,
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such as doctors, lawyers, and accountants. Confucianism, with its emphasis on cultivating virtues such as
benevolence (ren), righteousness (yi), ritual propriety (Ii), wisdom (zhi), trustworthiness (xin), and filial piety
(xiao). In virtue ethics, the main message is that 'good actions come from good persons', where good persons
are defined in terms of certain traits or characteristics, namely 'virtues'.
Virtues can be differentiated into intellectual virtues-practical 'wisdom' (phronesis) being the most prominent
one-and moral virtues, which comprise a long list of possible characteristics such as temperance, courage,
justice, honesty, friendship, mercy, loyalty, patience, etc. All these virtues are manifested in actions that are a
habitual pattern of behaviour of the virtuous person, rather than just occurring once or in one-off decisions.
The idea of balance is important here.
Central to the ethics of virtue is the notion of a 'good life. Aristoteles defines it as eudemonia, variously
defined as flourishing, well-being, and happiness.
It does not take long to see what the main drawback of virtue ethics is: how do we make sense
of a seemingly good person doing bad things

ETHICAL APPROACHES BASED ON RELATIONSHIPS AND RESPONSIBILITY: ETHIC OF CARE

Bed in the relationships. The more notorious example is feminism. Point here is that something important is
missing if any one type of voice is privileged and another consistently excluded.
Ethic of care: An approach to ethics which emphasizes our interdependency with those with whom we have
important relationships and acknowledges a role for emotions as well as rationality.
The ethic of care has come under some criticism for being based on 'gender', 'caring', or other over-simplified
reductions of a feminist perspective. This ethic accepts:
Rather than emphasize the need for
rationality and autonomy, the ethic of care acknowledges and accepts that:
• we have an emotional commitment and willingness to act on behalf of those with whom we have a
significant relationship; • we are not autonomous; • we are bound by circumstance, relations, and position;
• we have restricted information and choices; and • we are in positions of unequal power.
Moral problems are conflicts of responsibilities in relationships rather than conflicts of rights between
individuals and therefore can only be solved by personal, subjective assessment that particularly stresses the
importance of emotion, intuition, and feeling.

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ETHICAL APPROACHES ARRIVED AT THROUGH A DELIBERATIVE PROCESS: DISCOURSE ETHICS
These approaches seek ethical behaviour, not in applying ethical principles, but in generating norms through a
process of communication and deliberation that are appropriate and acceptable to those who need to resolve
a particular problem.

Discourse ethics: An approach that aims to solve ethical conflicts through a deliberative process of norm
generation including rational reflection and open communication on the real-life experience of all relevant
participants.

Habermas, main proponent of a discourse approach to business ethics, argue that ethical reflection has to
start from real-life experiences (rather than belief systems. The ultimate goal of ethical issues in business
should be the peaceful settlement of conflicts. With this goal in mind, different parties in a conflict-say, a
business and its stakeholders should meet and engage in a discourse about the settlement of the conflict,
arrive at a new consensus, philosophical criteria, such as impartiality, non-persuasiveness, non-coercion, and
expertise of the participants (Habermas 1983).

ETHICAL APPROACHES BASED ON EMPATHY AND MORAL IMPULSE: POSTMODERN ETHICS

Strove for a rational, scientific explanation of the world and aimed at comprehensive, inclusive, theoretically
coherent theories to explain nature, man, and society. In the area of the social sciences, one of the results of
this was the development of various theories, commonly in the form of certain '-isms', such as liberalism,
communism, socialism, rationalism, capitalism, etc.

Postmodern ethics An approach that locates morality beyond the sphere of rationality in an emotional 'moral
impulse' towards others. It encourages one to question everyday practices and rules, and to listen to one's
emotions, inner convictions, and 'gut feelings' about what is right and wrong.

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A postmodern perspective on business ethics does not then provide us with any rule or principle, not even a
procedure for ethical decision-making, such as discourse ethics. This emphasizes

Holistic approach Postmodernists argue that modernist theories of ethical behaviour lead to an abstract and
distant view of ethical issues that ultimately causes actors to follow different standards in their professional
and private lives.

Practices rather than principles. is based on narratives of experience, metaphors to explain inner convictions,

'Think local, act local'. It rather highlights the fact that no one situation is the same, and that different actors,
power relations, cultural antecedents, and emotional contexts might lead to different judgements in situations

Preliminary character: seen as more pessimistic than their modern counterparts. Ethical reason therefore
constant learning process, an ongoing struggle for practices that have a better fit, or for reasoning that just
makes more sense

However, postmodernists would also question the extent to which you as the product manager are so steeped
in a corporate mentality that you immediately think in terms of costs and bonuses, rather than people and
their lives.

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Chapter 1
Ethics and Effectiveness: The Nature of Good
Leadership

This framework also offers a clear and simple way of describing and assessing good leaders – a good leader is
both ethical and effecttive. Talks about everything from the personal challenges of self-interest and power, to
the problem related to dirty hands and moral luck.

The role of a leader entails a distinctive type of human relationship. Some hallmarks of this relationship are
power and/or influence vision, obligation, and responsibility. By understanding the ethics of this relationship,
we gain a better understanding of leadership because some of the central issues in ethics are also the central
issues of leadership. They include personal challenges such as self-knowledge, self-interest, and self-discipline,
and moral obligations related to justice, duty, competence, and the greatest good.

In leadership, we see morality and immorality magnified, which is why the study of ethics is fundamental to
the study of leadership. In short, the humanities approach never allows us to forget that the very nature of

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leadership is inextricably tied to the human condition, which includes the values, needs, and aspirations of
human beings who live and work together.
Ethikos and Morale
Perhaps the most compelling evidence for why these terms are not significantly different is that people rarely
define the difference between them in the same way. They often tend to define the two terms in ways that
best suit their argument or research agenda.

DEFINITION leadership is about a person or persons somehow moving other people to do something . Where
the definitions differ is in how leaders motivate their followers, their relationship to followers, who has a say in
the goals of the group or organization, and what abilities the leader needs to have to get things done.

1920s: [Leadership is] the ability to impress the will of the leader on those led and induce obedience, respect,
loyalty, and cooperation (Moore 1927, p. 124).
1930s: Leadership is a process in which the activities of many are organized to move in a specific direction by
one (Bogardus 1934, p. 5).
1940s: Leadership is the result of an ability to persuade or direct men, apart from the prestige or power that
comes from office or external circumstance (Reuter 1941, p. 133).
1950s: [Leadership is what leaders do in groups.] The leader’s authority is spontaneously accorded him by his
fellow group members (Gibb 1954, p. 882).
1960s: [Leadership is] acts by a person which influence other persons in a shared direction (Seeman 1960, p.
127).
1970s: Leadership is defined in terms of discretionary influence. Discretionary influence refers to those leader
behaviors under control of the leader, which he may vary from individual to individual (Osborne and Hunt
1975, p. 28).
1980s: Regardless of the complexities involved in the study of leadership, its meaning is relatively simple.
Leadership means inspiring others to undertake some form of purposeful action as determined by the leader
(Sarkesian 1981, p. 243).
1990s: Leadership is an influence relationship between leaders and followers who intend real changes that
reflect their mutual purposes (Rost 1991, p. 102).
2000s: Leadership is shaped by its contextual factors and it occurs when anyone or anything brings forth
direction, alignment, and/or commitment. (Drath et al. 2008; Hunt and Dodge 2000; Kort 2008; Leiden and
Antonakis 2009; Uhl-Bien2006).

The difference: How should leaders treat followers? And how should followers treat leaders? Who decides
what goals to pursue? What is and what ought to be the nature of their relationship to each other?

Hitler: According to the morally unattractive definitions, he was a leader, perhaps even a great leader, albeit an
immoral one. Heifetz (1994) argues. However, when your concept of leadership includes ethical
considerations, Hitler was not a leader at all. Only transformational leaders are leaders in a strong moral sense.
Burns (1978) and Bass (1997).
(Bass and Steidlmeier 1999). Brown et al. (2005) make this distinction between common leadership and ethical
leadership explicit in their concept of ethical leadership: “the demonstration of normatively appropriate
conduct through personal actions and interpersonal relations, and the promotion of such conduct to followers
through two-way communication, reinforcement, and decision-making”
Bennis and Nanus’s (1985) characterization of leadership –“Managers are people who do things right and
leaders are people who do right things” Bennis and Nanus’s comment is the idea that leaders are or should be
morally a head above everyone else.

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For example, Pillai found that charismatic leadership is not only about personal characteristics but is also
something that emerges in leaders during a crisis (Pillai 1996). When people feel a loss of control, they look for
decisive leaders. Another explanation for this disparity between what leadership scholars preach and what
people want reflects conflict in cultural values.
Philosopher Eva Kort (2008) offers notes that group actions, not relationships, reveal the features that identify
what she calls “leadership proper” or “real” leadership from case of “purported” leadership. Real leadership is
ethical and competent leadership. Purported leadership is basically someone in a leadership role, telling
people what to do. Hitler problem depends on whether followers freely choose to follow him because they
endorse his ethics and think he is competent. For Kort, leaders are those whose ideas are voluntarily endorsed
and acted on by others in various situations. This speaks directly to his leadership, but it still does not account
for cases where followers are unethical, or morally mistaken, or when they misjudge the competence of their
leaders In doing so the word leader would not simply refer to a person or role but as Boaks says, a kind of
Aristotelian master virtue that one would attribute to a person.
What is a good leader about ethics and techniques

Agency and Moral Luck

Moral luck is when we attribute praise or blame to a person for an outcome that was not under their control.
As Bernard Williams (1982) notes there are two kinds of moral luck.
- Intrinsic to an action – based on how well a person thinks through a decision and whether his or her
inferences are sound and correct. Careful plans may fail, and risky ones may succeed. The
-Extrinsic to a decision. Things like bad weather, accidents, terrorists, malfunctioning machines, etc., may
sabotage the best-laid plans or make the worst plans work.

Leaders are supposed to take responsibility for an organization, group. Because the notion of moral agency is
sometimes indirect for leaders, especially those operating in complex organizations or systems, luck can play a
significant role

Kant, an act is ethical if it is done with the intent to do one’s duty regardless of the outcome, and unethical if it
is not based on the intent of doing one’s duty and even if it results in a morally good outcome.

The Relationship Between Ethics and Effectiveness

What many scholars mean when they talk about a good leader is that he or she is an ethical and an effective
leader. We do not always find ethics and effectiveness in the same leader. Sometimes being ethical is being
effective and sometimes being effective is being ethical. In other words, ethics is effectiveness in certain
instances.

The criteria that we use to judge the effectiveness of a leader are also not morally neutral. Also one of the
most striking aspects of professional ethics is that often what seems right in the short run is not right in the
long run or what seems right for a group or organization is not right when placed in a broader context.

The moral failures of leaders are not always intentional. Sometimes moral failures are cognitive and
sometimes they are normative. Leaders may get their facts wrong and think that they are acting ethically
when, in fact, they are not.

In some situations, leaders act with moral intentions, but because they are incompetent, they create unethical
outcomes. Machiavelli says, “If a ruler who wants always to act honorably is surrounded by many
unscrupulous men his downfall is inevitable”

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The job of most leaders is inherently utilitarian in that they have to look after the greatest good for the whole
of their group, organization, country, etc.

Most of the time we face moral problems, which are problems for which we can find satisfactory moral
solutions. Moral dilemmas are a distinctive and less common type of moral problem where there is no morally
satisfactory solution.

DEONTOLOGICAL AND TELEOLOGICAL THEORIES

Deontological theories locate the ethics of an action in the moral intent of the leader and his or her
moral justification for the action,
Teleological theories locate the ethics of the action in its result. “the greatest good.”

John Stuart Mill the intentions or reasons for an act tell us something about the morality of the person, but the
ends of an act tell us about the morality of the action. In virtue theories, you basically are what you do.

MORAL STANDARDS

When we set moral standards for leaders too high, we become even more dissatisfied with our leaders
because few are able to live up to our expectations.

A business leader may follow all laws and yet be highly immoral in the way he or she runs a business. Laws are
supposed to be either morally neutral or moral minimums about what is right. If the standards are too high,
we may become more disillusioned with our leaders for failing to reach them. We might also end up with a
shortage of competent people who are willing to take on leadership positions because we expect too much
from them ethically.

Narcissistic leaders who, on the bright side, are exceptional and, on the dark side, consider themselves
exceptions to the rules.
If anything, we have to make sure that leaders hold them to the same standards as the rest of society.
leaders will fail less than most people at meeting ethical standards, while pursuing and achieving the goals of
their constituents.

ALTRUISM
Some leadership scholars use altruism as the moral standard for ethical leadership.
Kanungo and Mendonca: thesis is that organizational leaders are truly effective only when they are motivated
by a concern for others, when their actions are invariably guided primarily by the criteria of the benefit to
others even if it results in some cost to oneself”
Altruism is a very high personal standard and, as such, is problematic for a number of reasons. Both selfishness
and altruism refer to extreme types of motivation and behavior.
Locke argued that altruism is about self-sacrifice. Expect no rewards or pleasure. Would anyone want to
be a leader under such circumstances?”
Avolio, uses also extreme cases. In the military is the willingness to make the ultimate sacrifice for the good of
the group. Avolio also used Mother Teresa as one of his examples. In these cases, self-sacrifice may be less
about the ethics of leaders
Nagel Altruism is a motive for acting, but it is not in and of itself a normative principle. Does not guarantee that
the leader or his or her actions will be moral.
Ciulla. Robinhoodism, is morally problematic.

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Great leaders such as Martin Luther King, Jr., and Gandhi behaved altruistically, but what made their
leadership ethical was the means that they used to achieve their ends and the morality of their causes. We
Achieving their objectives for social justice while empowering and disciplining followers to use nonviolent
resistance is morally good leadership. use nonviolent resistance is morally good leadership.
Worchel et al. (1988) defined altruism as acts that “render help to another person. If altruism is only helping
people, then we have radically redefined the concept by eliminating the self-sacrificing requirement.

Mendonca Mutual altruism boils down to utilitarianism and enlightened self-interest. Also add other moral
principles, such as the golden rule, as Confucius mentioned

Confucious golden rule is “It is the word altruism (shu). Do not do unto others what you do not want them to
do to you” demonstrates how to transform self-interest into concern for the interests of others. In other
words, it provides the bridge between altruism and self-interest (others and the self) and allows for
enlightened self-interest

Above is the reason why altruism is not a good standard for measuring morals in Leaders; it loses its meaning
and then makes it confused. The one practical thing we know about leaders is that they usually lose the
confidence and trust of their followers when leaders’ actions are perceived to serve their own interests rather
than the interests of their followers or organizations.

WHY BEING A LEADER IS NOT IN AN ETHICAL PERSON’S SELF-INTEREST

Plato believed that leadership required a person to sacrifice his or her immediate self- interests, but this did
not amount to altruism. Plato referred to the stress, hard work, and the sometimes-thankless task of being a
morally good leader. The only reason a just person will take on a leadership role is out of fear of punishment to
be ruled by someone worse than oneself. And I think it is fear of this that makes decent people rule when they
do” Plato said is in our best interest to be just, because just people are happier and lead better lives than do
unjust people.

The practice of leadership is to guide and look after the goals, missions, and aspirations of groups,
organizations, countries, or causes. Looking after the interests of others is as much about what leaders do in
their role as leaders as it is about the moral quality of leadership. Eg a mayor of a city.

Scholars’ interest in altruism reflects a desire to capture, either implicitly or explicitly, the ethics-and-
effectiveness notion of good leadership.

TRANSFORMATIVE LEADER

It is almost synonymous with ethical leadership. Transformational leadership is often contrasted with
transactional leadership.

Burns argued that leaders have to operate at higher need and value levels than those of followers, which may
entail transcending their self-interests. A leader’s role is to exploit tension and conflict within people’s value
systems and play the role of raising people’s consciousness. On Burns’s account, transforming leaders have
very strong values. They engage followers and help them reassess their own values and needs. Burns opposite
Rost and criticizes consensus in procedures and goals that because erodes leadership.

Burns 2 questions to answer what is a good leader by accounting for both of these questions.:
The first is the morality of means and ends (and this also includes the moral use of power).
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The second is the tension between the public and private morality of a leader. His theory

Transactional leadership rests on the values found in the means or process of leadership. He calls these modal
values. These include responsibility, fairness, honesty, and promise keeping. Supplying lower-level wants and
needs so that they can move up to higher needs. Transforming leaders raise their followers up through various
stages of morality and need, and they turn their followers into leaders.
Hitler was not a transformative leader because they later crush opponents and became a tyrant. Burns tested
him by modal values of honor and integrity or the extent to which he advanced or thwarted the standards of
good conduct in mankind. Second, he would be judged by the end values of equality and justice. Last, he
would be judged on the impact that he had on the people that he touched

TRANSFORMATIONAL LEADERSHIP

Bass more concerned with the psychological relationship between. Could be both good and evil
transformational leaders, Later said Bass and Steidlmeier (1999) argued that only morally good leaders are
authentic transformational leaders; the rest, like Hitler, are pseudotransformational (seek power and position
at the expense of their followers’ achievements) their own interests at the expense of their followers. Bass
(1985) believed that charismatic leadership is a necessary ingredient of transformational leadership. Onn the
contrary Howell and Avolio studied charismatic leaders and concluded that unethical charismatic leaders are
manipulators who pursue their personal agendas.

CRITICS OF TRANSFORMATIONAL AND CHARISMATIC LEADERSHIP THEORIES

Keeley (1998) argued that transformational leadership is well and good as long as you assume that everyone
will eventually come around to the values and goals of the leader.

Price (2000) argued that leaders and followers should be judged by adherence to morality, not adherence to
their organizations’ or society’s values. “Leaders land followers should be judged by adherence to morality, not
adherence to their organizations’ or society’s values.

Solomon (1998) Charisma is not a distinctive quality of personality or character, and according to Solomon, it
is not an essential part of leadership. Instead, trust creates more bonded relationships. specifically talked
about the importance of exploring the emotional process of how people give their trust to others.

KNOCKING LEADERS OFF THEIR PEDESTALS

Scholars might be missing something about leadership when they study only exceptional types of leaders.
Second, by limiting their study in this way, they fail to take into account the fact that even exceptional leaders
get things wrong. Morality is a struggle for everyone, and it contains particular hazards for leaders. The
master for morality is Kant. No individual or leader has the key to morality, and hence, everyone is responsible
for defining and enforcing morality. We need to understand the ethical challenges faced by imperfect humans
who take on the responsibilities of leadership.

Plato constructed his theory of the ideal leader –the philosopher king who is wise and virtuous. Plato argued
that the perfect state could come about only by rationally exploiting the highest qualities in people (although
this sounds a bit like transformational leadership. Philosopher king could be developed through education.
Plato’s ideas on leadership progressed from a profound belief that it is possible for some people to be wise
and benevolent philosopher kings to a more modest belief that the real challenge of leadership is working
successfully with people who do not always like each other, do not always like the leader, and do not
necessarily want to live together. Plato contended that we cannot always depend on leaders to be good and
15
that is why we need rule of law. Good laws, rules, and regulations protect us from unethical leaders and serve
to help leaders be ethical
Plato asks us to consider what we would do if we had power without accountability.

SELF-DISCIPLINE AND VIRTUE

The moral challenges of power and the nature of the leader’s job explain why self knowledge and self-control
are, and have been for centuries, the most important factors in leadership development.

(Lao Tzu, trans. 1963, p. 152). He also tells us, “The best rulers are those whose existence is merely known by
people.

Confucious “If a ruler sets himself right, he will be followed without his command. If he does not set himself
right, even his commands will not be obeyed. In the “First Sermon,” the Buddha described how people’s
uncontrolled thirst for things contributes to their own suffering and the suffering of others.

Virtues are a fundamental part of the landscape of moral philosophy and provide a useful way of thinking
about leadership development. What is important about virtues are their dynamics (e.g., how they interact
with other virtues and vices) and their contribution to self-knowledge and self-control. Virtues are good habits
that we learn from society and our leaders.

Whereas virtues come naturally to those who practice them, they are not mindless habits. People must
practice them fully conscious of knowing that what they are doing is morally right. Perhaps the most striking
thing about the Greek notion of virtue (areté), which is also translated as excellence (Plato and Aristotle).

Excellence is tied to function. The function of humans, according to Aristotle, is to reason. To be morally
virtuous, you must reason well, because reason tells you how to practice and when to practice a virtue. In
other words, reason is the key to practicing moral virtues and the virtues related to one’s various occupations
in life. Virtue ethics does not differentiate between the morality of the leader and the morality of his or her
leadership

CONCLUSION

how ethics and effectiveness are inextricably intertwined, the better we will understand the nature of
good leadership.

Ethics of leadership has to be examined along a variety of dimensions:

1. The ethics of a leader as a person, which includes things like self-knowledge, discipline, intentions, and so
forth;
2. The ethics of the leader-follower relationship (i.e., how they treat each other);
3. The ethics of the process of leadership (i.e., respecting followers command and control, participatory);
4. The ethics of what the leader does or does not do.

We then have to take one more step and look at all of these interdependent dimensions in larger contexts and
time frames. One of the most striking distinctions between effective leadership and ethical and effective
leadership is often the time frame of decisions. Ethics is about the impact of behavior and actions in the long
and the short run.

A richer understanding of the moral challenges that are distinctive to leaders and leadership is particularly
important for leadership development.
16
It means happiness, not in terms of pleasure or contentment, but as flourishing. A happy life is one in which
we flourish as human beings, both in terms of our material and personal development and our moral
development. Change is part of leadership, but so is sustainability. Ethical leadership entails the ability of
leaders to sustain fundamental notions of morality such as care and respect for persons, justice,and honesty,
in changing organizational, social, and global contexts.

To really understand leadership in terms of ethics and effectiveness, each one of us needs to put our ear to the
ground of history and listen carefully to the saga of human hopes, desires, and aspirations, and the follies,
disappointments, and triumphs of those who led and those who followed them.

CRANE CHAPTER 4
Making Decisions in Business Ethics
Descriptive Ethical Theories

Descriptive ethical theory Theory that describes how ethical decisions are actually made in business, and
explains what factors influence the process and outcomes of those decisions.

Descriptive ethical theories provide an important addition to the normative theories covered in Chapter 3:
rather than telling us what business people should do (which is the intention of normative theory), descriptive
theories seek to tell us what business people actually do-and more importantly, they will help to explain why
they do those things

We are probably less likely to know why we thought about it in this way or why we even saw it as an ethical
issue in the first place. This, however, is the purpose of descriptive models of ethical decision-making. Various
models have been presented in the literature, and by far the most widely cited ones have been derived from
the work of psychologists.

WHAT IS AN ETHICAL DECISION?

That ethical decisions are concerned with a judgement about right and wrong. is moral in nature. there is an
important process of identification that goes before this, whereby we examine situations and determine
whether they are characterized.

There are a number of factors that we might identify here, the most important of which are these:

The decision is likely to have significant effects on others. critical aspects of morality are that it is concerned
with harms and benefits, and that it is about considerations of social good.

The decision is likely to be characterized by choice, in that alternative courses of action are open. When
decision-makers actually recognize that they have ethical choices, then they face an ethical dilemma.

The decision is perceived as ethically relevant by one or more parties the decision immediately incurs some
degree of ethicality.

MODELS OF ETHICAL DECISION-MAKING

17
We are probably less likely to know why we thought about it in this way, or why we even saw it as an ethical
issue in the first place. This, however, is the purpose of descriptive models of ethical decision-making. Various
models have been presented in the literature, and by far the most widely cited ones have been derived from
the work of psychologists.
Model represent two things
 The different stages in decision-making that people go through in responding to an ethics problem in a
business context.
• The different influences on that process.

Mark Schwartz helpfully distinguishes two further broad perspectives on ethical (2016) decision-making as
either rationalist or intuitionist/sentimentalist.
RATIONALIST assumes that a logical reasoning approach, a kind of calculation of what needs to be done, is
followed prior to arriving at an ethical judgement. Majority of ethical decision-making theory assumes this
perspective
COGNITIVE PROCESS OF INTUITION and/or emotion or sentiments. According to these perspectives, quick
moral intuitions are key-the idea that you just know what is right or wrong without stopping to think through
all the possible permutations or logics which apply to a decision. Emotion-based mechanisms and sentiments.
on ethical decision-making.

Ways to evaluate business ethics integrate Schwartz's model to the rationalist, emotional, and intuitive factors
may (2016) be one way forward in ensuring a more balanced approach. But rationalist still dominant

STAGES IN ETHICAL DECISION-MAKING

Framework for conceptualizing rationalist ethical. Four-stage process of ethical decision-making

introduced by James Rest (Craft 2013; Schwartz 2016). Although one stage in the model might be
reached, this does not mean that one will necessarily move on to the next stage. The model
distinguishes between knowing what the right thing to do is and actually doing something about it; or
between wanting to do the right thing and actually knowing what the best course of action is.

RELATIONSHIP WITH NORMATIVE THEORY

These stages of ethical decision-making are primarily in relation to moral judgment. Much economic and
business theory is largely predicated somewhat narrowly upon consequentialism (Desmond and Crane 2004),
and there is some evidence to suggest most people are consequentialists.

18
An interesting example of consequentialist reasoning was given by Joel Bakan (2004: 61-5) in his book The
Corporation. He describes the decision-making process at General Motors in the face of a design problem with
its Chevrolet Malibu model.

Type of cost-benefit analysis as a 'hallmark of corporate good behavior.' Bakan (2004:64) quotes the
philosopher Alasdair MacIntyre who argues that the executive 'has to calculate the most efficient, the most
economical way of mobilizing the existing resources to produce the benefits ... at the lowest costs.

INFLUENCES ON ETHICAL DECISION-MAKING

Factors that influence decisions into two broad categories: individual and situational (Schwartz 2016). Help to
explain why certain business decisions get made, and why people behave in ethical and unethical ways in
business situations

 Individual factors. These are the unique characteristics of the individual actually making the relevant
decision. These include factors that are given by birth (such as age and gender) and those acquired by
experience and socialization (such as education, personality, and attitudes).
• Situational factors. These are the particular features of the context that influence whether the individual will
make an ethical or an unethical decision. These include factors associated with the work context (such as
reward systems, job roles, and organizational culture) and those associated with the issue itself (such as the
intensity of the moral issue or the ethical framing of the issue).

LIMITATIONS OF ETHICAL DECISION-MAKING MODELS

Individual and situational factors are very useful for structuring our discussion and for seeing clearly the
different elements that come into play within ethical decision-making. Individual and situational factors are
very useful for structuring our discussion and for seeing clearly the different elements that come into play
within ethical decision-making.

19
INTERNATIONAL PERSPECTIVES ON ETHICAL DECISION-MAKING

US and Asia the central focus of the business ethics subject tends to be individual actors and their
behavior, whereas in Europe there is more interest in the design of economic institutions and how
they function in a morally desirable way and/or encourage moral behaviour of business actors.

Individual factors influencing ethical decision-making has a strong North American bias, while
situational factors, on the other hand, have been subject to a lengthy debate principally originated
by European authors.

To begin with, the very founders of modern organizational theory in Europe have stressed social contexts the
influence of on ethical decision-making.

Max Weber between actions that were guided by an 'ethic of absolute ends' and an 'ethic of responsibility'
represent an idealistic view of humanity, reflecting a person's real moral convictions rooted in social good, the
latter is an ethic that sees responsibility for the pursuit of the organization's goals as the ultimate moral
imperative.

Zigmunt Bauman ( 1991 ), has argued that there is not only an influence of bureaucratic organization on the
morality of actors, but he regards the two as mutually exclusive. He contends that organizational dynamics act
to neutralize the 'moral impulse' of the individual. Rational organizations require loyalty, discipline, and
obedience.

In contrast, US-based researchers have tended to focus more on the importance of individual agency in ethical
decision-making.

Philip Zimbardo, business ethics researchers from the region have tended to focus on individual-level
differences.

Asian business ethics researchers, meanwhile, have also tended to replicate this approach by concentrating
mainly on studies of managers and the cultural values that drive their ethical perception and choices

INDIVIDUAL INFLUENCES ON ETHICAL DECISION-MAKING

Individual influences on ethical decision-making relate to these facets of the individual who is actually going
through the decision-making process. Some evidence suggests that entrepreneurs and small business owners
may think and act differently than others in response to ethical issues, because they tend to be creative, goal-
orientated, and risk tolerant.

Individual factors can more readily account for why some people are perhaps more swayed than others into
unethical conduct because of the influence of their colleagues. Individual factors can help to explain why some
people perceive particular actions to be unethical while others do not. Hence the issue about the factors
influencing us to think, feel, act, and perceive in certain ways that are relevant to ethical decision-making.
20
 1. AGE AND
GENDER
Demographics
factor. Gender
has, in fact, been
one of the
individual
influences on
ethical decision-
making in
business most
often subjected to
investigation
(Craft 2013).

Chen and
colleagues (2016)
point out that
gender is a far
from
straightforward construct, which includes biological sex, psychological qualities, and gender-role attitudes.
They point out that gender socialization theory argues that social factors or influences cause distinct moral
developments in men and women; thus, men and women respond differently to the same situation.

It is rather simplistic to assume that some people are just more ethical than others, and even if this could be
claimed, there seems no obvious reason why gender would be an important determinant. However, as we saw
when discussing feminist ethics in Chapter 3 there is evidence to suggest that the way in which men and
women think and act in response to ethical dilemmas might differ.

Similarly occur with age.

NATIONAL AND CULTURAL CHARACTERISTICS

Differences in what they perceive as ethical or unethical. Issues of nationality, ethnicity, and religion have
therefore been of increasing interest to researchers of ethical decision-making, as one might expect, given the
trends towards globalization.
As we argued previously, people from different cultural backgrounds are likely to have different beliefs about
right and wrong, different values, etc., and this will inevitably lead to variations in ethical decision-making
across nations, religions, and cultures.
Research has suggested that nationality can have a significant effect on ethical beliefs, as well as views of what
is deemed an acceptable approach to certain business issues. Cases of managers from developed and from
less-developed countries, but also between those from different countries within Europe, those from Europe
and the US, or even between those from different ethnic groups in the same country

21
Geert Hofstede's research has been extremely influential in shaping our understanding of these differences,
with his dimensions:
 Individualism/collectivism. This represents the degree to which one is autonomous and driven primarily
to act for the benefit of one's self, contrasted with a more social orientation that emphasizes group
working and community goals.
• Power distance. This represents the extent to which the unequal distribution of hierarchical power and
status is accepted and respected.
• Uncertainty avoidance. This measures the extent of one's preference for certainty, rules and absolute
truths.
• Masculinity/femininity. The extent to which an emphasis is placed on valuing money and things
(masculinity) versus valuing people and relationships (femininity).
• Long-term/short-term orientation. This addresses differences in attention to future rewards, where long-
term-oriented cultures value perseverance and thrift, while short-term ones emphasize more preservation of
'face', short-term results, and fulfilment of social obligations.
• Indulgence. This measures the degree to which societies permit or suppress gratification of basic and natural
human drives related to enjoying life and having fun.

Criticism To Hofstede
(Baskerville-Morley 2005; Mcsweeney 2002; Mcsweeney, Brown, and Iliopoulou 2016),who challenge the
claim that national culture exists at all, and argue that the dimensions lack predictive power.

Agneta Moulettes (2007) pointing out that this dimension contributes to reproducing a prejudiced view of
both culture and gender.

EDUCATION AND EMPLOYMENT

The type and quality of education received by individuals, as well as their professional training and experience,
might also be considered to be important individual influences on ethical decision-making Similarly, individual
values may shift as a result of exposure to particular working environments.

Ethics on Screen 6, The Big Short, gives a chilling depiction of the greed and fraudulent behaviour, which was
somehow accepted and normalized. Hence, although some aspects of individual morality may be developed
through upbringing and general education, there is also a place for ethics training in enhancing people's ability
to recognize and deal with ethics problems in the workplace (Trevino and Nelson 2014).

PSYCHOLOGICAL FACTORS
Psychological factors are concerned with cognitive processes; in other words, how people actually think.
Two of the most prominent psychological factors: cognitive moral development and locus of control

Cognitive moral development: A theory explaining the different levels of moral reasoning that an individual
can apply to ethical issues and problems, depending on their cognitive capacity. Its creator was Lawrence
Kohlberg's (1969) . It explains the reasoning process through childhood into adulthood
He suggested three broad levels of moral development and identified two specific stages within each of the
three levels, giving six stages of moral development altogether.

 Level one. The individual exhibits a concern with (1) self-interest and external (2) rewards and punishments.
• Level two. The individual does what is expected of them by others. (3) Interpersonal accord conformity and
mutual expectations (4) Social accord and social maintenance.

22
• Level three. The individual is developing more autonomous decision-making based on principles of rights
and justice rather than external influences. (5) Social contracts and individuals rights (6) Universal ethical
principles

See the Table 4.3 below

23
Table shows the moving to 'higher' level of moral reasoning. The important thing to remember about CMD
theory, however, what how is that it is not so much is decided that is at issue, but the decision is reached in
terms of the individual's reasoning process. Two people at different levels could conceivably make the same
decision, but as a result of different ways of thinking. All the same, Kohlberg argued that the higher the stage

24
of moral reasoning, the more 'ethical' the decision. Most people tend to think with level II reasoning (hence its
'conventional' tag). Most of us decide what is right according to what we perceive others to believe, and according
to what is expected of us by others.

The situational context in which employees might find themselves within their organization is likely to
be very influential in shaping their ethical decision.

Criticism to CDM It is worth remembering that the theory was initially developed in a non-business
context

Gender bias: made by former student Carol Gulligan, she argued that women tended to employ an 'ethic of
care' deciding what was morally right, emphasizing empathy, harmony, and the maintenance of
interdependent relationships, rather than abstract principles

Implicit value judgment CMD privileges rights and justice above numerous other bases of morality.

Invariance of stages: if we observe that people either regress in CMD or, more importantly, if they use
different moral reasoning strategies at different times and in different situations. Essentially, we do not always
use the same reasoning when we are at work as we do at home.

LOCUS OF CONTROL
The second psychological factor commonly identified. Locus of control determines the extent to which he or
she believes that they have control over the events in their life. Relatively limited effect on ethical decision-
making

So someone with a high internal locus of control believes that the events in their life can be shaped by their
own efforts, whereas someone with a high external locus of control believes that events tend to be the result
of the actions of others, or luck, or fate.

If you had an external locus of control, you might automatically blame your professor for setting a difficult test,
or you might blame Crane, Matten, Glozer, and Spence's book for not preparing you properly. If you had an
internal locus of control, however, your first thoughts would probably be more along the lines of questioning
whether you had really done enough preparation for the exam.

In terms of ethical decision-making, Trevino and Nelson (2014) suggest that those with a strong internal locus
of control might be expected to be more likely to consider the consequences of their actions for others, and
may take more responsibility for their actions

A more immediate relationship to decision-making is perhaps provided by our next three individual factors-
values, integrity, and moral imagination.

PERSONAL VALUES
Might be regarded as 'the moral principles or accepted standards of a person'

DEFINITION Personal values Individual beliefs about desirable behaviours and goals that are stable over time
and which influence decision-making.
Hence, common values include examples such as self-respect, freedom, equality, responsibility,and honesty.
25
Milton Rokeach (1973: 5) personal value is an 'enduring belief that a specific mode of conduct or end-state of
existence is personally or socially preferable to an opposite or converse mode of conduct or end-state'. most
frequently cited definition

Very influential in decision making within an organization, in ethical decisions, since values are key
repositories of what we regard to be good/bad and right/wrong.
People typically have more than 70 operative values, and even among these, some values will be more
influential on behaviour than others.

(Banaji et al. 2003). That individuals may espouse certain values, they also have a number of unconscious
biases that shape their decision-making.
(Gao 2017). whether environmental influences should be given greater emphasis

This kind of attention to values has been particularly evident at the level of corporate or organizational values.
Many companies have attempted to set out what values their organization has, or stands for. This most
common approaches to managing business ethics over the years.

(Posner 2010; Byza et al. 2017). Alignment of personal and organizational values-the idea of values
congruency-is typically seen as an ideal basis for developing good working relations and for empowering,
retaining, and motivating staff. However, it is unclear whether such a situation is necessarily better for
encouraging ethical decision-making.

PERSONAL INTEGRITY

DEFINITION Personal integrity An individual's adherence to a consistent set of moral principles or values.
Regardless of any inducement or temptation to deviate from them.

The core meaning generally refers to integrity as consistency (Brown 2005: 5).
Wholeness, consistency of words and actions, consistency in adversity, being true to oneself, and
moral/ethical behaviour

Personal integrity has increasingly surfaced in relation to ethical decision-making, most particularly in relation
to the behaviour of leaders (e.g. Krylova, Jolly, and Phillips 2017)

Integrity frequently plays a central role in incidents of whistleblowing, which refers to acts by employees to
expose their employers for perceived ethical violations.

DEFINITION Whistleblowing Intentional acts by employees to expose, either internally or externally, perceived
ethical or legal violations by their organization.
Often require the employee to maintain their personal integrity or commitment to a set of principles despite
being confronted with numerous difficulties, obstacles, and opposition.

Acts of ethical decision-making like these, especially where the consequences for the individual are so severe,
are clearly driven by a considerable degree of personal integrity on the part of the whistleblower.

26
MORAL IMAGINATION
DEFINITION: Moral value 'A sense of the variety of possibilities and moral consequences of their decisions, the
ability to imagine a wide range of possible issues, consequences, and solutions' (Werhane 1998: 76). Creativity
with which an individual is able to reflect about an ethical dilemma.

Those with greater moral imagination should be able to envisage a greater set of moral problems,
perspectives, and outcomes. Who exercised moral imagination were more likely to generate mutually
beneficial outcomes for business and society than those who didn´t

SITUATIONAL INFLUENCES ON DECISION-MAKING

Many people appear to have 'multiple ethical selves' (Trevino and Nelson 2014: 252)-that is, they make
different decisions in different situations.
There are two types of situational influences:

• Issue-related factors: There are a number of important factors to consider regarding situational influences.
For a start, the decision process we go through will vary greatly according to what type of issue it is that we are
dealing with. Some issues are perceived important but other don’t. The differences in the importance we
attach to ethical issues are what we call issue-related factors.

• Context-related factors. Hence our beliefs and actions are largely shaped by what we see around us: the
group norms, expectations, and roles we are faced with. Conventional level of morality, which prompts us to
seek guidance from those around us. These types of influences are called context-related factors.

ISSUE-RELATED FACTORS

Increasingly recognized as important influences on the decisions business people make when faced with
ethical problems. We need to consider the nature of ethical issue itself. and in particular its degree of the
moral intensity. We need also to consider how that issue is actually represented within the organization, need
to also consider the issue's moral framing.

MORAL INTENSITY
Thomas Jones (1991) defined as a way of expanding ethical decision-making models to incorporate the idea
that the relative importance of the ethical issue would itself have some bearing on the process that decision-
makers go through when faced with ethical problems. Six factors by John:

 Magnitude of consequences. This is the expected sum of the harms (or benefits) for those impacted by the
problem or action.
• Social consensus. This is the degree to which people are in agreement over the ethics of the problem or
action. Moral intensity is likely to increase when it is certain that an act will be deemed unethical by others.
• Probability of effect. This refers to the likelihood that the harms (or benefits) are actually going to happen.
• Temporal immediacy. This is concerned with the speed with which the consequences are likely to occur. The
more years for the consequences to happen, moral intensity to be much lower.
• Proximity. This factor deals with the feeling of nearness (social, cultural, psychological, or physical) the
decision-maker has for those impacted by their decision.
• Concentration of effect. Here we are concerned with the extent to which the consequences of the action are
concentrated heavily on a few or lightly on many.
27
MORAL FRAMING
The same problem or dilemma can be perceived very differently according to the way that the issue is framed.
Moral framing is a key influence in ethical decision-making.

DEFINITION Moral framing: The use of language to expose or mask the ethical nature of certain behaviors or
decisions. It is mostly used to make an unethical action look more acceptable to oneself and/or third parties.
Words are already associated with cognitive categories that consist of moral content.

Nevertheless, there are people reluctant to ascribe moral terms to their work, this is called moral muteness.
Bird and Waters' study found that groups of managers tend to reframe moral actions and motives, and talk
instead of doing things for reasons of practicality, organizational interests, and economic good sense.

These are the threads perceived by managers but also employees

Harmony. Managers believe that moral talk disturbs organizational harmony by provoking confrontation,
recrimination, and finger-pointing.
• Efficiency. Managers feel that moral talk clouds issues, making decision-making more difficult, time-
consuming, and inflexible.

28
• Image of power and effectiveness. Managers believe that their own image will suffer since being associated
with ethics is typically seen as idealistic and utopian and lacking sufficient robustness for effective
management

Andrew Crane's (2001) study of managers involved in environmental programs highlights some of these
concerns and problems, suggesting that fears of being marginalized can lead managers to engage in a process
of amoralization» seek to distance themselves and their projects from being defined as ethically motivated or
ethical in nature and intead build a picture of corporate rationality suffused with justifications of corporate
self-interest. The process of amoralization may mean that even ostensibly 'intense' ethical issues may be seen
by co-workers and others as simply a business problem rather than a moral one.

Moral framing can also occur after a decision has been made or an act carried out. It is important therefore to
look not just at what people decide, but they then justify their decisions to themselves and others. Anand et al.
(2004: 39) call these justifications rationalization tactics-namely 'mental strategies that allow employees (and
others around them) to view their corrupt acts as justified'.

Six such strategies-denial of responsibility, denial of injury, denial of victim, social weighting, appeal to higher
loyalties, and the metaphor of the ledger

Factors abetting 'which enables individuals engaging in corruption to describe their acts in ways that make
them appear inoffensive

29
CONTEXT-RELATED FACTORS

By context, we mean the organizational context in which an employee will be working-especially the
expectations and demands placed on them within the work environment that are likely to influence their
perceptions of what is the morally right course of action to take. Extremely important to shaping ethical
decision-making within organizations. Are the main factors that can be addressed in order to improve ethical
decision-making in the workplace.

SYSTEMS OF REWARD

We tend to take it for granted that people are likely to do what they are rewarded for yet it is easy to forget
that this has implications for ethical conduct too. For example, if an organization rewards its salespeople for
the number of sales they make, then those salespeople may be tempted to compromise ethical standards in
their dealings.
Ethical violations that go unpunished are likely to be repeated.
Sometimes, however, the effects of rewards and punishments may not even be direct; employees may sense
the prevailing approach to business ethics in their organization by looking at who gets promoted and who does
not, or who seems to get the favour of the boss and who does not, and interpret 'correct' behaviour from the
experiences of their more or less fortunate colleagues.

AUTHORITY
DEFINITITION The exercise of hierarchical power to compel a subordinate to act in a certain way. It is a key
factor in shaping ethical decisions because employees tend to follow the explicit and implicit preferences,
orders, and rules of their superiors.

Managers can also have an influence over their subordinates' ethical behaviour by setting a good or bad
example

Clearly, those in authority can influence their employees' ethical decision-making simply by looking the other
way when confronted with potential problem

BUREAUCRACY

DEFINITION Bureaucracy: A type of formal organization based on rational principles and characterized by de
tailed rules and procedures, impersonal hierarchical relations, and a fixed division of tasks. It tends to prevent
personal moral reflection in favour of prescribed organizational policies.

Bureaucratic dimension has been argued to have a number of negative effects on ethical decision-making:"
Paul Du Gay, in particular, has sought to remind us of the film: good that comes with bureaucracy (2000) and formality

Suppression of moral autonomy. Individual morality tends to be subjugated to the func

tionally
specific rules and roles of the bureaucratic organization. Thus, effective bu
reaucracy
essentially 'frees' the individual from moral reflection and decision-making,
since they need only to follow the prescribed rules and procedures laid down to achieve
organizational goals. This can cause employees to act as 'moral robots', simply following
the rules rather than thinking about why they are there or questioning their purpose, just
30
as the officers in the Magical Congress of the United States do in our Ethics on Screen 4
Fantastic Beasts and Where to Find Them.

•
Instrumental morality. The bureaucratic dimension focuses organization members' at
tentions
on the efficient achievement of organizational goals. Hence, morality will be
made meaningful only in terms of conformity to established rules for achieving those
goals-i.e. instrumentalized-rather than focusing attention on the moral substance of the
goals themselves. Accordingly, ethical decision-making will centre around whether 'cor
rect'
procedures have been taken to achieve certain goals rather than whether the goals
themselves are morally beneficial. Thus, loyalty rather than integrity ultimately becomes
the hallmark of bureaucratic morality.
•
Distancing. Bureaucracy serves to further suppress our own morality by distancing us
from the consequences of our actions-for example, a supermarket purchasing manager
in London is rarely going to be faced with the effects of their supply negotiations on farm
workers producing the supermarket's coffee beans in Colombia.
•
Denial of moral status. Finally, bureaucracy has been argued to render moral objects,
such as people or animals, as things, variables, or a collection of traits. Thus, employees
become human 'resources' that are means to some organizational end; consumers are
reduced to a collection of preferences on a marketing database; animals become units of
production or output that can be processed in a factory. The point is that by dividing tasks
and focusing on efficiency, the totality of individuals as moral beings is lost and they are
ultimately denied true moral status.

WORK ROLES
As we have seen, the bureaucratic organization of work assigns people to specific specializations or tasks that
represent work roles. Work roles can be functional-for example, the role of an accountant, they can be
hierarchical-the role of a director.

Roles can encapsulate a whole set of expectations about what to value, how to relate to others, and how to
behave.

In the business ethics context, prescribed work roles, and the associated expectations placed on the person
adopting the role, would appear to be significant influences on decision-making. Our individual morality, the
values and beliefs we might normally hold, can be stifled by our adoption of the values and beliefs embedded
in our work role.

The important thing to remember is that many of us will adopt different roles in different contexts, reinforcing
this idea of people having multiple ethical selves.

ORGANIZATIONAL NORMS AND CULTURE

Another set of potentially powerful influences on ethical decision-making are the group norms that delineate
acceptable standards of behaviour within the work community.
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Group norms essentially express the way in which things are, or should be, done in a certain environment, and
might relate to ways of acting, talking, justifying, dressing, and even thinking and evaluating.

As such, group norms tend to be included within a more or less unofficial or informal set of characteristics,
including shared values, beliefs, and behaviours that are captured by the notion of organizational culture.

DEFINITION Organizational culture: The meanings, beliefs, and common-sense knowledge that are shared
among members of an organization, and which are represented in taken-for-granted assumptions, norms, and
values.

Organizational culture has been widely identified as a key issue in shaping ethical decision-making.

This is not particularly surprising, for there is wide-ranging evidence, as well as strong conceptual support, for
the proposition that culture and ethical decision-making are profoundly interwoven.

Employees become socialized into particular ways of seeing, interpreting, and acting. This will shape the kinds
of decisions they make when confronted Such cultural expectations and values can provide a strong influence
on what we think of as 'right' and 'wrong'.

Many authors, such as Trevino and Nelson (2014) and Ferrell et al. (2014), speak of the need for an 'ethical
culture' to enhance and reinforce ethical decision-making.

Nonetheless, even though it may be unclear how to deal with an organizational culture's influence on ethical
decision-making, the very fact that there is some kind of relationship between the two would appear almost
irrefutable.

NATIONAL AND CULTURAL CONTEXT

This factor varies from the national and cultural characteristics. Now we are considering the nation in which
the decision is actually taking place, regardless of the decision-maker's nationality.

To some extent different cultures still maintain different views of what is right and wrong, and these
differences have significant effects on whether a moral issue is recognized, and the kind of judgements and
behaviours.

While some models have incorporated factors relating to the social and cultural environment (e.g. Hunt and
Vitell 1986; Ferrell et al. 1989), there has been relatively little empirical research investigating the effect of this
on ethical decision-making

SUMMARY / CONCLUSION
The basic model presented in the chapter provides a clear fit outline of how these elements together, although
as we mentioned earlier, this model should be regarded simply as an illustration of the relationships involved,
not as a definitive causal model.
Some individual factors-such as cognitive moral development, nationality, personal values, and integrity-are
clearly influential, particularly on the moral judgements made by individuals. However, in terms of recognizing
ethical problems and actually acting in response to them, it is situational factors that appear to be the most
influential.
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This is important because it means that situational factors are likely to be the most promising levers for
attempts to manage and improve ethical decision-making in organizations
Building an Ethical Company
Ethical is a lifelong learning. Employers should foster an environment that encourages them to become more
ethical in the long run by practicing moral reflection. The benefits of ethical organizations are well
documented: Such organizations are more attractive than others to employees.

RECOGNIZE THE ROLE OF WORK IN OUR LIVES

Some Protestant theologians hold that work is inherently edifying. Work is an effective place for ethical
learning, for several reasons. Many of us spend the majority of our waking hours there. How could work not
affect our moral thinking and actions? Second, work and life are more tightly intertwined than ever before (a
trend exacerbated by the pandemic). The boundaries between our personal and professional lives have
become blurred “bring one’s whole self to work.” Activism on the job is on the rise. Third, we are likely to face
ethical situations at work that we might not encounter anywhere else.

At our jobs we have regulations to follow, customers to serve, contracts to uphold, and communities to engage
with. Experience with each can foster ethical learning over time.

LET EXPERIENCE BE A TEACHER

Model of ethical decision-making based on research into how the brain processes novel stimuli. According to
his model, we all have certain prototypes in our minds that guide our moral judgments.

When facing a morally relevant situation, we automatically often unconsciously—engage in a pattern-seeking

process, looking to match the situation with one of our prototypes. If we find a match, we make an intuitive
judgment. We then use our more conscious, higher-order reasoning to justify that gut reaction.

When we face a moral decision for which we lack a prototype, our higher-order reasoning kicks in sooner, to
assess and resolve the situation. Our existing prototypes then undergo an updating process. The more
experience we have with varied moral situations, the more opportunities we have to learn and to refine our
prototypes.

Approaching the workplace as a moral laboratory, then, requires giving employees opportunities to learn from
new experiences, both simulated and real. The goal is to help them build prototypes that they can apply to an
array of circumstances.

One way to do this is through experiential training. Whereas traditional teaching is didactic. With the teacher
playing a guiding role. Experiential learning has been slow to catch on as a tool for organizational ethics and
compliance training.

What would an effective experiential-training program look like? Companies could regularly offer classroom-
based programs using real-world case studies.

CREATE A SAFE PLACE FOR REFLECTION

To turn your organization into a moral laboratory, is a must to move beyond scenarios and simulations and let
employees learn on the job. Reflection is key. Management scholars have identified reflection as a critical
capacity for developing ethical expertise at work.
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 - Counterfactual thinking (envisioning alternatives to events that have already occurred),
- Social comparisons (evaluating one’s attitude, abilities, and traits in relation to others’),
- Mental simulation (projecting oneself into hypothetical realities), they have persuasively argued that
employees cannot learn from experience without engaging in moral reflection.

Companies need to create safe space in which in which people aren’t afraid to speak up, ask questions, admit
mistakes, and seek help. Managers can encourage employees to speak up. Create psychological safety by
framing workplace ethics. Having a psychologically safe environment for ethical learning doesn’t mean
granting deviants free rein; it means giving well-intentioned people a space where they can learn through
reflection. Research shows that tolerating unethical behavior sends the wrong signal to employee.

INSTITUTIONALIZE GROUP DISCUSSIONS ABOUT ETHICS

Three core features of systematic reflection that lead to learning.

1.Self-explanation—a process in which learners analyze their behavior to understand what happened and
why.
2. Data verification, whereby learners think through multiple interpretations of a given experience or
experiences.
3. Feedback, meaning both reactions to past performance and recommendations for future
improvement.

To maximize learning, managers can make ethics an explicit part of postmortem meetings or after-action
reviews and evaluate their current practices and decisions and help new members learn from their more
experienced colleagues

CONDUCT ETHICAL PREMORTEMS (Preemptive type of moral reflection—Gary Klein)

Key decision-makers meet before a project to think through ways in which it could lead to ethical lapses. EG. A
young strategist who receives feedback and bias from each stakeholder allows the young consultant to
participate in ethical learning: He acknowledged his potential biases, heard others’ points of view, and
reflected on moral considerations that he had not accounted for in his strategic model. By following a formal
process of moral reflection, leaders of the healthcare system try to ensure that its employees and contractors
always uphold the organization’s stated values.

FOCUS ON SERVING OTHERS

Building a truly ethical culture involves more than just helping people to avoid doing bad things; it also
requires empowering them to do good things. Reduce self-focus and raise awareness of moral concerns. Link
between volunteer service and improved mood and well-being.

Connecting employees with the beneficiaries of their work helps them see their positive impact and increases
what psychologists call prosocial motivation—a desire to expend effort to help others.

ENCOURAGE MENTORS TO ADDRESS ETHICS

positive effects of mentoring on employee outcomes such as job satisfaction, promotions, and salaries. very
few organizations explicitly incorporate ethical issues into their mentoring programs and relationships.

Developing strong, trusting relationships, mentors can bring their vast experience to bear on the ethical
learning of others. help mentees reflect on their own actions.

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With the right environment and support, workplace experiences can also bring out the best. Organization can
play in helping employees become their best selves
How (Un)ethical Are You?

Most of us fall woefully short of our inflated self-perception. We’re deluded by what Yale psychologist David
Armor calls the illusion of objectivity, the notion that we’re free of the very biases we’re so quick to recognize
in others.

Psychological research routinely exposes counter intentional, unconscious biases. The prevalence of these
biases suggests that even the most well-meaning person unwittingly allows unconscious thoughts and feelings
to influence seemingly objective decisions.

Four related sources of unintentional unethical decision-making:

1. Implicit Forms Of Prejudice, Bias That Emerges from Unconscious Beliefs. often people instead judge
according to unconscious stereotypes and attitudes, or “implicit prejudice.”. Rooted in the
fundamental mechanics of thought. only reflect approximations of the truth; they are rarely applicable
to every encounter. They can blind us to those instances in which the associations are not accurate—
when they don’t align with our expectations. Distinct from conscious forms of prejudice, such as overt
racism or sexism. Implicit biases to be strong and pervasive. How implicit biases may work to exclude
qualified people from certain roles.

2. Bias That Favors One’s Own Group, Bias That Favors Your Group. we tend to do more favors for those
we know, and those we know tend to be like ourselves: people who share our nationality, social class,
and perhaps religion, race, employer, or alma mater. They effectively discriminate against those who
are different from them. Such inadvertent bias produces an additional effect: It erodes the bottom
line. In-group favoritism is tenacious when membership confers clear advantages, as it does, for
instance, among whites and other dominant social groups.

3. Conflict Of Interest, Bias That Favors Those Who Can Benefit You. It leads to intentionally corrupt
behavior, even to the most ethical/ kind people. Conflict of interest can unconsciously distort decision
making; for instance, when Nasdaq drops, many more people advising to buy hare to clients, though
were for the client's benefit.

4. Tendency To Overclaim Credit, Bias That Favors You. majority of people consider themselves above
average on a host of measures, from intelligence to driving ability. We tend to overrate our individual
contribution to groups, which, bluntly put, tends to lead to an overblown sense of entitlement. The
more credit each person claimed, the less the parties wanted to collaborate in the future. Claiming too
much credit can destabilize alliances. Unconscious overclaiming can be expected to reduce the
performance and longevity of groups within organizations. If an employee learns of a colleague’s
greater compensation—while honestly believing that he himself is more deserving—resentment may
be natural. At best, his resentment might translate into reduced commitment and performance. At
worst, he may leave the organization that, it seems, doesn’t appreciate his contribution.

TRYING HARDER ISN’T ENOUGH

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Ethics training must be broadened to include what is now known about how our minds work and must expose
managers directly to the unconscious mechanisms that underlie biased decision making. Bringing the
conscious mind to bear. Managers can make wiser, more ethical decisions if they become mindful of their
unconscious biases. What’s required is vigilance—continual awareness of the forces that can cause decision
making to veer from its intended course and continual adjustments to counteract them. Those adjustments
fall into three general categories: collecting data, shaping the environment, and broadening the decision-
making process.

Collect data.
The first step to reducing unconscious bias is to collect data to reveal its presence. Strategy of “unpacking” the
work reduced the magnitude of the bias. In environments characterized by “I deserve more than you’re giving
me” claims, merely asking team members to unpack the contributions of others before claiming their own
share of the pot usually aligns claims more closely with what’s actually deserved. Unpacking is a simple
strategy that managers should routinely use to evaluate the fairness of their own claims within the
organization. Taking the IAT is another valuable strategy for collecting data (test) Simply knowing the
magnitude and pervasiveness of your own biases can help direct your attention to areas of decision making
that are in need of careful examination and reconsideration. It is important to guard against using
pervasiveness to justify complacency and inaction.

Shape your environment.

Research shows that implicit attitudes can be shaped by external cues in the environment. One remedy for
implicit bias is to expose oneself to images and social environments that challenge stereotypes. As well an
audit Managers can audit their organization to uncover such patterns or cues that unwittingly lead to
stereotypical associations.

Broaden your decision making

John Rawls’s concept of the “veil of ignorance,” which posits that only a person ignorant of his own identity is
capable of a truly ethical decision. Applying the veil of ignorance to your next important managerial decision
may offer some insight into how strongly implicit biases influence you.

Just considering a counter stereotypical choice at the conscious level can reduce implicit bias. Keep in mind
that your intuition is prone to implicit prejudice (which will strongly favor dominant and well-liked groups), in-
group favoritism (which will favor people in your own group), overclaiming (which will favor you), and conflict
of interest (which will favor people whose interests affect your own). Instead of relying on a mental short list
when making personnel decisions, start with a full list of names of employees who have relevant qualifications.

Using a broad list of names has several advantages. Using a broad list of names has several advantages.
Similarly, consciously considering counterintuitive options in the face of conflicts of interest, or when there’s
an opportunity to overclaim, can promote more objective and ethical decisions.

THE VIGILANT MANAGER

They must actively collect data, shape their environments, and broaden their decision making Managers
should seek every opportunity to implement affirmative action policies—not because of past wrongs done to
one group or another but because of the everyday wrongs that we can now document are inherent in the
ordinary,everyday behavior of good, well-intentioned people.

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Corporate Sustainability — What It Is and
Why It Matters
1.2 A CHANGING CONTEXT FOR BUSINESS, NATURE AND SOCIETY

1.2.1 Increasing Relevance of ESG Challenges

Corporations impact many environmental, social and governance (ESG) challenges. Of course, the reverse is
true as well: these challenges also impact how firms do business, as they shape relevant risks and
opportunities.
Environmental Dimension: The wide variety of environmental issues (e.g., greenhouse gas emissions,
freshwater supply, pollution. Framework Planetary Boundaries’ specific thresholds at global or regional levels.
The boundaries characterise the conditions that are necessary for planet Earth to remain in a stable state.4/9
are already transgressed, those are climate, biodiversity, biogeochemical cycles (regarding phosphorous and
nitrogen in fertilisers) and land-system change (regarding deforestation).

Social Dimension: Refers to the human and labour rights agendas. Although not a common measure good
point of orientation is the so-called Fragile States Index, which contains as one of its dimensions the Human
Rights and Rule of Law Index. It measure widespread abuse of different types of rights with a range from 0 to
10.

Governance Dimension: relate to the proper governance of corporations, such as the structure and
composition of the Board of Directors, shareholder rights, transparency, corporate lobbying and anti-
corruption measures. In particular, corporate lobbying and corruption very much shape the societies we are
living in. One widely accepted measure of corruption around the world is the annual Corruption Perception
Index (CPI) This index measures the perception of public sector corruption in 180 countries and ranges from 0
(highly corrupt) to 100 (very clean).

1.2.2 Rising Scale and Scope of Corporate Activities

Corporations are increasingly seen as potentially reliable partners that can mobilise resources, provide
innovations and comply with emerging standards. But can create also risks like full dependancy of them or
blurs the relationship between public and private authority.

In short, corporations are critical to an increasing number of aspects of society, many of which are
fundamental to security and welfare. As a result, firms have turned not only into more powerful actors, but
also political ones. But also other players come in this scenario. These SMEs are the backbone of any economy;
they offer essential services and are often part of larger value chains. And Social businesses, for instance, often
have a specific Social or environmental mission as their main purpose, but hey look up for profits.

1.2.3 Digitalisation and Datafication

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Rise of the digital economy. We are increasingly living in a ‘datafied’ society and this has significant
consequences for the responsibilities of corporations. Datafy something implies to put it into a quantified
format so that it can be analysed through digital means. This datafication impacts corporations’ responsibilities
in numerous ways, and it also leads to a concentration of power in the hands of just a few companies. Digital
economy has increased public scrutiny made responsible as well as irresponsible corporate conduct more
transparent. Datafication has increased the connectivity of people who share more content in faster ways and
even access to a product’s sustainability assessment. Datafication has created new powerful corporations with
a new set of responsibilities. Tech giants like Apple, Google. These firms impact peoples’ rights in new and
often unforeseen ways. Digitalisation and artificial intelligence (AI) also offer new ways to strengthen ESG-
related assessments.
Technologies like machine learning and AI can help to analyse not only vast amounts of data, but also data that
is not pre-structured. Digital applications and processes require significant levels of electricity.

1.2.4 Globalisation and (the Lack of) Global Governance

There is an imbalance between the flexibility of MNCs to spread their value chain activities across different
countries and the still limited capacity of nation states and international governmental organisations to
adequately regulate corporate conduct across borders. Scherer and Palazzo (2008) call this the ‘regulatory
vacuum effect’. This makes it difficult for individual countries’ governments to address social and
environmental problems that reach beyond single state boundaries, with this transnational actors (Global
warming) Existing international governmental organisations, which reach beyond individual nation states (e.g.,
the UN system or the World Bank), lack the formal powers or political support to develop and enforce any
binding rules or even sanction.

The missing direct applicability of international law to corporations can partly be compensated by stronger
extraterritorial regulation. Extraterritorial jurisdiction refers to ‘the ability of a state, via various legal,
regulatory and judicial institutions, to exercise its authority over actors and activities outside its own territory’.
But not in yet broader to MCN’s

1.3. Sustainability, Responsibility and Ethics: What Are They?

Sustainable Development. The World Commission on Environment and Development defined such
development in a much-cited report as being about meeting ‘the needs of the present without compromising
the ability of future generations to meet their own needs.’

1.3.1 Defining Corporate Sustainability and Corporate (Social)

Responsibility

DEFINTION CORPORATE SUSTAINABILITY focuses on managing and balancing an enterprise’s embeddedness

in interrelated ecological, social and economic systems so that positive impact is created in the form of long-
term ecological balance, societal welfare and stakeholder value. Recently known as ESG

- Corporate sustainability views an enterprise’s activities in the context of larger systems. To emphasise
that economic, social and environmental issues are part of larger systems, and that these systems
interact with one another. These systems, in turn, influence the risks and opportunities that firms face.

- Corporate sustainability aims at Balancing social, environmental and economic interests while doing
business. Is concerned with outcome measures such as ecological balance, societal welfare and the

38
 creation of stakeholder value. Emphasises the need for systems-level change, how changes made by
an individual corporation connect and contribute to larger systems-level change.

DEFINITION CORPORATE SOCIAL RESPONSABILITY: refers to the integration of an enterprise’s social,

environmental, ethical and philanthropic responsibilities towards society into its operations, processes and
core business strategy in cooperation with relevant stakeholders in a context-specific way.

Main focus is on how to manage these aspects in a corporate context and regarding the impact of corporations
on the social, environmental and economic circumstances of their stakeholders. CSR is not entirely about
philanthropy. Well designed to go into the core of the corporations. CSR influences its everyday practices and
business processes and is aligned with its
overall business strategy. embedded into
a firm’s purpose and what it does on a
day-to-day basis, and it should also be
reflected upon when deciding upon a
firm’s strategic direction (e.g., which
markets or regions it wants to enter).
What are firms responsible for? Check
the pyramid

Neither definition indicates that corporate

sustainability or CSR are voluntary
concepts. Some industrias are the facto
obligue. Not only concepts that are
relevant for larger (multinational)
corporations, but also for SMEs. SMEs are
defined as firms with fewer than 250 employees.

Often, the main motivation to integrate sustainability and CSR into an SME is influenced by the personal beliefs
and values of the founder (who in many cases is also the owner and manager of the firm). By contrast,
corporate sustainability and CSR in larger firms are more often driven by the hope that responsible business
practices will yield some positive financial return and hence satisfy shareholder interests. SMEs’ activities are
also more connected to the specific needs of the local communities in which they are embedded, while larger
firms usually operate a portfolio of social and environmental practices that cut across different geographic
contexts.

Both concepts share a common concern for moving business thinking beyond a purely egocentric perspective
that only considers shareholders as a relevant interest group.

1.3.2 Corporate Unsustainability and Irresponsibility

The occurrence of such ‘negative’ behaviour is often a trigger for firms to implement more ‘positive’
sustainability and responsibility practices.

Unsustainable and irresponsible behaviour as being based on a corporate activity that ‘negatively affects an
identifiable social stakeholder’s legitimate claims (in the long run)’ (Strike et al., 2006: 852).

39
We should not think of sustainable and unsustainable as well as responsible and irresponsible corporate
behaviour as being mutually exclusive. In most cases positive as well as negative behaviour exists
simultaneously in a corporation. EG WHoleFoods, forbid unions

Firms often invest in corporate sustainability to compensate for past, present or anticipated unsustainable
acts.

1.3.3. Defining Business Ethics

We view business ethics as a foundation for all discussions about sustainable and responsible corporate
conduct. Business ethics is more concerned with questions of right and wrong in the context of business
situations.

DEFINITION BUSINESS ETHICS The study of business situations, activities, and decisions where issues of right
and wrong are addressed. Dedicated exclusively to moral judgements (Crane, Matten, Glozer and
Spence 2019)

Business ethics is also concerned with those situations where values are unclear, in conflict or in tension and
ethical dilemmas occur as a result. We view business ethics as an analytical lens to reflect on the values that
should guide corporate conduct.

Ambiguity of the three concepts has also caused critique. If the meaning of the three concepts cannot be
agreed upon and specified, corporations can easily exploit the concepts by selectively applying them to those
issue areas they can conveniently address. Hence, there is no one-size-fits-all approach towards corporate
sustainability, CSR and business ethics. Discussing a firm’s sustainable, responsible and ethical conduct is
contextually dependent and multidimensional by nature. It depends on what kind of firm is being analyse,
what sector the firm operates in, and the location of relevant business activities. Contexts and events matter
when it comes to sustainability, responsibility and ethics.

1.3.4 Related Concepts: Corporate Accountability and Corporate Citizenship

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DEFINITION Corporate accountability is about a firm’s ability to be answerable for what it did or did not do.
Many argue that corporate accountability is a stronger concept than CSR and corporate sustainability (Utting,
2008).
Being accountable means informing relevant stakeholders about specific practices that enact this
responsibility. Corporate accountability can also be strengthened through rigorous corporate sustainability
reporting. A

DEFINITION CORPORATE CITIZENSHIP: Corporate citizenship is a concept that shares many insights with a
political perspective on CSR. Matten and Crane (2005) have distinguished three different views of corporate
citizenship.
- In the limited view, corporate citizenship is used to describe firms’ philanthropic activities
- In the equivalent view, corporate citizenship becomes another way to describe firms’ CSR activities,
but no business or society
- The extended view of corporate citizenship assumes that corporations start to protect, facilitate and
enable citizens’ rights whenever governments are not willing or not able to do this.

1.4 Which Issues to Address? Organising Sustainability Discussions

(Frameworks)

1.4.1. Environmental, Social, Governance (and Technology)

NO one fit all framework some cases, firms look at reporting standards like the Global Reporting Initiative (GRI)
(see www.globalreporting.org/) to get an overview of the universe of possible ESG issues that could potentially
apply to them. In other cases, they look at more generic frameworks like the Sustainability Accounting
Standards Board’s(SASB)

They must narrow down the universe of potential ESG issues to those issues that specif ically apply to their
own corporate context. This ‘narrowing down’ is often approached through so-called materiality
analyses. Cibersecurity is a T issue

1.4.2 The Sustainable Development Goals

Another widely used framework are the UN-backed Sustainable Development Goals (SDGs). Establish goals for
national governments and address a much broader audience than just corporations. Nevertheless, many
corporations around the world have embraced the SDGs and use them as a yardstick to organise their own
sustainability discussions. The SDGs need to be viewed as a ‘system’ - that is, as a list of issues that interact
with one another. Companies incorporated in their activities around these.

41
1.5 Why Do Corporations Engage in Sustainability?
Firms engage in corporate sustainability for a variety of reasons.

1.5.1 Instrumental Motivation — ‘It Pays to Be

Sustainable’
Reason for engaging in corporate sustainability is
the so-called business case. Corporate
sustainability becomes a means to an end; a
strategic tool to achieve competitive advantage.
View as an iinvestment . Approximately 90
percent of studies report a non-negative
relation between both types of performance.
In other words, while it may not always ‘pay
to be good’, it also does not hurt firms’
financial bottom lines. Usually, this strategic
and financial motivation is thought to reflect
the business case for corporate sustainability.

The UN Global Compact and the Principles for Responsible Investment (2013) have identified three categories
of value drivers

Revenue growth: Some firms profit from sustainability financially because their ESG activities result in
innovative products and services, which in turn improve revenue growth. In some cases, firms can expand
their market share and customer base for existing products enhancing these with social and environmental
features and entering sustainable markets.
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Productivity improvement: Well-managed ESG practices can also lead to productivity
improvements. environmental management practices can lead to operational efficiencies
and result in cost savings. better human resources management, such as when firms are
able to attract and retain talent because of their sustainability commitment or safety
policies.

Risk minimisation: Sustainability can enable companies to minimise business risks and hence better connect
with investors. Risk minimisation can occur in different areas, such as 1) regulatory risks, 2) supply chain risks
3) reputational risks

1.5.2 Ethical Motivation — ‘It Is the Right Thing to Do’

Some firms engage in corporate sustainability because it is quite simply the right thing to do. We call this
motivation the moral case for corporate sustainability. Research has pointed at how this is most often the case
in SMEs. engage in sustainability and
responsibility frames in the context of normative discussions, because it is their ethical obligation to align their
activities with the values of society. Early on, Bowen (1953: 6) defined

DEFINITION business responsibility the obligations of businessmen to pursue those policies, to make those
decisions, or to follow those lines of actions which are desirable in terms of the objectives and values of our
society.

1.5.3. Stakeholder Motivation — ‘Others Ask Us to Do It

Firms often adopt corporate sustainability policies and practices because other firms have done the same.
Such imitative, or mimetic, behaviour is particularly relevant if corporations are faced with a high degree of
uncertainty. The stakeholder motivation is not limited to just competitive, copy-paste behaviour. Often, firms
face pressure to adopt corporate sustainability practices from other stakeholder groups as well.
Stakeholders ask the company to address ESG issues in more proactive ways, and they see such proactive
behaviour as an important step in securing and maintaining the firm’s societal ‘licence to operate’ or societal
license company that is seen as a legitimate part of society by its stakeholders, or, as Gunningham, Kagan and
Thornton

1.5.4 Political Motivation — ‘There Is a Public Responsibility for Us’

Some firms become engaged in corporate sustainability because they start to administer the rights that affect
citizens. ‘political CSR’. It ‘entails those responsible business activities that turn corporations into providers of
public goods in cases where public authorities are unable or unwilling to fulfil this role.’ (Scherer et al., 2016: 3)
Business firms and civil society actors become active participants in the regulation of market transactions.

Often, firms engage in corporate sustainability because they show a certain level of political responsiveness
and alignment with governmental actions. eg., the disclosure of information). Some governments also
incentivize firms to address ESG issues - for instance, by tying public procurement decisions to ESG criteria.

These 4 pillars are not exclusive within each other. For instance, firms that start to provide public
goods because they have operations in countries with no or only weak regulation
(political motivation) will usually also look at what the provision of these goods will do to
their financial bottom line (instrumental motivation).
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KEY TENSIONS AROUND CORPORATE SUSTAINABILITY
These tensions usually reflect organisational situations in which actors are likely to experience discomfort or
even stress when making sustainability-related decisions

1. Shareholder versus stakeholder: Should corporations serve their shareholders (and thus follow mostly
financial objectives) or should they also serve broader stakeholder interests (and thus address social and
environmental objectives)?

This tension is sometimes reframed as a dilemma between corporate short-termism and longer-term
orientation. Ideal case corporations have business cases smoothly align shareholder and stakeholder interests.
Corporate sustainability is also about doing the right thing regardless of whether it pays off in financial terms
(Taylor, 2017).

2. Economic versus social/environmental: There are not always synergies between different sustainability
issues. Our discussion of the SDGs above showed that in some cases economic growth cannot be easily aligned
with progress on social and environmental issues. As with the shareholder-stakeholder tension above, the
ideal scenario is that economic objectives can be achieved through addressing social and environmental
objectives. Not always win win situation

3. Internalisation versus externalities: Corporate sustainability has had important links to the concept of
negative externalities - that is, indirect costs of corporate activity to uninvolved parties. Recently, companies
have been (made) responsible for internalising their negative impacts through improving supply chain working
conditions, instituting fair wages, paying for emissions, estimating climate risks and anticipating stranded
assets. Thus, companies have been increasingly called to internalise into their operations the costs of their
negative externalities.

4. Mandatory versus voluntary: Corporate sustainability is both mandatory and voluntary. On the one hand,
many actions supporting ESG issues are not legally regulated and hence voluntary commitment. On the other
hand, regulators increasingly tighten legal frameworks so that some aspects of corporate sustainability (e.g.,
anti-corruption measures) have turned into legal obligations for some types of firms.
Especially for regulators, the mandatory/voluntary distinction can be a dilemma. While they reach more firms
with legal measures, they also know that regulating through legal means can undercut flexibility and
innovation. Some have therefore suggested keeping selected aspects of corporate sustainability outside of the
legal domain, as innovation to avoid regulation.

5. Global versus local: MNCs often face a dilemma while developing their corporate sustainability strategy.
They want a universal sustainability policy that applies to operations in all countries. Usually, such high-level
policies rest on universal agreements that are supposed to apply everywhere and for everyone, such as the
Universal Declaration of Human Rights. However, sustainability problems and practices ‘on the ground’ are
highly contextual. Many firms must balance and align generic global policies with precise local implementation
practices.

YOUR ROLE IN YOUR OWN FUTURE

David Brooks described this focus as a shift from résumé virtues to eulogy virtues in setting goals for your life.
The résumé virtues are the skills you bring to the marketplace. The eulogy virtues are the ones that are talked
about at your funeral—whether you were kind, brave, honest or faithful. Were you capable of deep love? We
all know that the eulogy virtues are more important than the résumé ones.
44
People in business have a tremendous and increasing influence on how our society is structured. In short,
corporations play an outsized role in our modern world. The actions of corporations, as much as the individuals
who inhabit them, decide how we will live and adapt in a world.

Corporations can, at their best, “be vehicles of social progress and the solution to basic problems such as the
provision of food, healthcare, education and other human needs and wants” and, at their worst, “provide the
tools to multiply the effects of the darkest of human impulses and result in terrorism, genocide, and labor
camps.

THE MANY POSSIBLE FUTURES BEFORE US

Humans are causing these problems and, therefore, humans can solve them. But, the solutions must be as
systemic as the problems we have created, and they must rest on the political and economic institutions of our
society, not only on technology.
In preparation for what is coming in the Anthropocene, will we develop more resilient social, technological,
and economic systems, or will we maintain the status quo, deny that a “new normal” is upon us, and lock into
a structure of institutions that are ill-equipped to handle the problems that we are soon to face.
COLLAPSING SYSTEM
Our public and political discourse become animated by disagreement over not only the reality of our emerging
Anthropocene problems, but also the social, political, and scientific institutions on which that understanding is
based.
Multiple, divergent, and competing perspectives will lead to little consensus or consideration for solutions such
that we continue down the path of political and economic polarization, yielding social strife and perhaps even
violent revolt.
Debate is hyper-polarized, as people and organizations retreat into their “tribes” to challenge the conclusions
of scientific institutions when they threaten their entrenched beliefs. Amplifying this confusión and distorting
the debate are social media channels such as Google, Facebook, and Twitter that introduce an increasingly
diverse range of viewpoints, opinions, and “facts” of varying degrees of legitimacy, labeling uncomfortable
realities as “fake news,” delegitimizing experts by equating their research to mere opinion, and increasing the
hyper-polarization of perspectives and worldviews that make any kind of meaningful dialogue or debate
fruitless, if not imposible.

MARKET RULES
Any effort to address our environmental or social problems will be taken for monetary reasons. In fact,
economic value will overrule most other values. Many of the market failures that caused our social and
environmental problems will be maintained, as certain groups benefit from the political and economic
institutions as presently arranged.
Corporate environmental concern that are based on maximizing eco-efficiency,seeking to reduce
environmental impact by pursuing profit maximization. Money and the time value of money are all that
register and the associated environmental and social costs are overlooked.

For those who want to pursue a solution to our social and environmental problems using presently dominant
logics and values, this scenario will appear to be the most expedient way forward. Trajectories of some
environmental problems may be reversed to the extent that efforts to address them maintain economic
growth and corporate competitiveness.

The term “rules” in this scenario is a double entendre, referring both to the rules of the market logic defining
the future and the extent to which the market rules over all aspects of life (both human and nonhuman). Such

45
a future reality will remain unstable and dynamic, not necessarily because environmental and social problems
create pressures for change, but because consumer interests shift and evolve.

RE-ENLIGHTENMENT

This scenario will involve a deep cultural transition akin to the Enlightenment of the seventeenth and
eighteenth centuries. While the term “Enlightenment” carries some cultural baggage (not the least of which is
whether the period accelerated colonialism and exploitation), the comparison is useful for capturing the scale
and scope of the culture shift before us.

The present transition from the Enlightenment to Re-Enlightenment suggests a similar recasting of our social
institutions and the creation of new ones. From a Middle Ages worldview in which nature determined human
society, to an Enlightenment worldview in which society determined nature, we now find ourselves faced with
an Anthropocene worldview in which society and nature are interconnected, mutually and simultaneously
determining one another.
“The Anthropocene is not a problem for which there can be a solution. Rather, it names an emergent set of
geo-social conditions that already fundamentally structure the horizon of human existence. It is thus not a new
factor that can be accommodated within existing conceptual frameworks, including those within which policy
is developed, but signals a profound shift in the human relation to the planet that questions the very
foundations of these frameworks themselves (Rory Rowan,)

“justice between generations, between small island-nations and the polluting countries (both past and
prospective), between developed industrialized nations (historically responsible for most emissions) and the
newly industrialized ones.”18 With such new thinking comes the opportunity to reconsider Enlightenment
ideas such as “freedom, choice, morality, citizenship, difference and rights.”

It will require new kinds of enlightened leadership that recognize the need for deep systemic change within
the market. toward the right kind of government engagement with the market. consider a relationship
between business and the government that promotes the common good.

The next step is for these notions to become manifest in action and diffused throughout the business
environment. Production processes, for example, will become circular in nature, eliminating both the use of
virgin materials and the disposal of waste. The economy will grow while decreasing the amount of materials
and energy to grow.

Communication processes will be fully transparent, such that all corporate activities (such as political lobbying,
workplace conditions, fair wages paid, environmental impacts) are visible to those who can evaluate their
efficacy.

Organizations will be designed to include employees (such as ESOPs), the community (such as COOPs), social
and environmental considerations (such as Benefit Corporations), or others Human resource protocols, job
design, and reward systems will help employees flourish.

SHAPING YOUR FUTURE

As we consider the possibilities of our future, the market and business are both the cause and the
possible solution to our Anthropocene challenges. may become chaotic as in Collapsing Systems, or it
may become

46
more mindful as in Re-Enlightenment. Humans certainly have the capacity to respond to the
unprecedented social and environmental challenges we face, as we did with reversing ozone
depletion

But future adaptations will depend on forethought, care, and wisdom. To get there, business must be
part of the solution, and you as a business leader must guide it there.

Thomas Berry has called such a challenge The Great Work, and the sentiment in this passage captures
the challenge before us: The success or failure of any historical age is the extent to which those living
at that time have fulfilled the special role that history has imposed upon them. . . . We did not
choose. We were chosen by some power beyond ourselves for this historical task. . . . We are, as it
were, thrown into existence with a challenge and a role that is beyond any personal choice. The
nobility of our lives, however, depends upon the manner in which we come to understand and fulfill
our assigned role.

To my mind, the great work for today’s generation lies in correcting the flaws in capitalism that lead
to the systemic breakdown that issues like climate change and income inequality expose.

The Evolutionary Bases for Sustainable Behavior: Implications for

Marketing, Policy, and Social Entrepreneurship

They propose that many modern environmental and social problems are caused or exacerbated by five
adaptive tendencies rooted in evolutionary history:
(1) propensity for self-interest,
(2) motivation for relative rather than absolute status,
(3) proclivity to unconsciously copy others,
(4) predisposition to be shortsighted, and
(5) proneness to disregard impalpable concerns.

EVOLUTION AND MODERN BEHAVIOR

An evolutionary approach suggests that just as the forces of natural selection can shape
morphological features- This approach maintains that humans inherit brains and bodies equipped
to behave in ways that are adaptive—

DISTINGUISHING PROXIMATE AND ULTIMATE CAUSES OF BEHAVIOR

An evolutionary perspective draws an important distinction between ultimate and proximate explanations for
behavior (Kenrick et al. 2010; Tinbergen 1963). Behavioral scientists have typically been concerned only with
proximate explanations, which focus on relatively immediate triggers for behavior. When asking why people
behave in a certain way, proximate explanations include culture, incentives, preferences, learning, utility,
pleasure, happiness, values, emotions, and personality

However, an evolutionary perspective contends that it is useful and important to consider the ultimate,
evolutionary reasons for behavior—to ask why humans evolved to behave in a certain way. It is important to
note that proximate and ultimate explanations are not competing. Instead, they are complementary. People
are not always aware of the ultimate motives for their behavior.

47
An important insight from this work is that people are often unaware of the evolutionary reasons behind their
behavior, but because behavior has both proximate and ultimate motives, people often have multiple motives
for a given behavior.

MISMATCHES BETWEEN CURRENT AND ANCESTRAL ENVIRONMENTS

An evolutionary perspective asserts that people interact with their present-day world using brains that evolved
to confront ancestral problems. However not always produce adaptive behaviors today. For example, the
evolved desire for sexual gratification.

An evolutionary approach emphasizes that there is often a mismatch between what our brains were designed
to confront and what we confront in the modern world (Ornstein and Ehrlich 1989; Penn 2003). This is because
brain evolution takes many thousands of years, but the environment (e.g., technology) has changed much
more rapidly.

An important insight from an evolutionary perspective is that strategies aimed to change behaviors might be
fighting an uphill battle when those strategies are mismatched with the ancestral motives driving the
problematic behavior. Influence strategies might be more effective when they are matched to the evolutionary
mechanism driving the problematic behavior.

The takeaway message is that consideration of the evolutionary mechanism driving a problematic behavior can
provide insights into strategies for changing that behavior. By matching influence strategies to work with,
rather than against, evolved tendencies, marketers, policy makers, and social entrepreneurs may be more
effective at mitigating or eliminating socially problematic behaviors.
For example, people might eat more celery, broccoli, and Brussels sprouts if these foods tasted adaptively
valuable—that is, if the taste of these foods was augmented to provide cues of sweetness and fattiness.

Evolutionary Reasons for Modern Ecological Problems

According to popular belief, humans are inherently good and naturally inclined to restrain themselves from
depleting environmental resources. This idea of an ecological “noble savage” dates back to the writings of the
eighteenth-century.

In our evolutionary past, our nomadic hunter-gatherer ancestors moved their camp to new locations when
resources in current locations became scarce or waste accumulated. This nomadic past suggests that human
nature has been designed to extract and consume resources from the environment, rather than to preserve
and conserve them. Why do humans continue to degrade the environment and experience social problems?
We propose that a large portion of human-inflicted ecological damage is caused or exacerbated by five
ancestral tendencies not mutually exclusive, in which the most ecologically damaging behaviors often involve a
combination of several tendencies.:

(1) PROPENSITY FOR SELFINTEREST,

Humans evolved to be tempted by opportunities to reap more rewards for themselves while forcing costs on
others.
Although people vary in the extent to which they exploit others (Van Langeet al. 1997), they are disposed to
make selfish choices in social dilemmas, especially when interacting with strangers in large groups.
Because humans evolved to be self-interested, influence strategies urging people to value the group above
themselves tend to be suboptimal (Penn 2003).

48
Even if such strategies appear to work at the outset, voluntary restraint is likely to be only a temporary
solution because the mere possibility of free-riders (cheaters) breeds paranoia and temptation (Van Vugt
2009).

Theory suggests: ways that people’s selfish tendencies could be harnessed to generate self-sacrificial and
proenvironmental behavior.

Kin Selection and Psychological Kinship: Kin selection has important implications for self-sacrifice and cooperation in
environmental social dilemmas. From an evolutionary perspective, benefiting an unrelated stranger at one’s expense is
critically different than benefiting a genetic relative, because helping a kin member is akin to benefiting oneself. Another
implication of kin selection is that prosocial behavior might be more powerfully motivated by the use of fictitious kin
labels.

Reciprocal Altruism and Social Obligation Consideration of reciprocal altruism suggests that pro -
environmental behavior could be fostered more easily by the creation of small and interdependent social
networks.Consistent with much previous research, people should be more willing to self-sacrifice for a group
of nonrelatives if they perceive themselves as interdependent with those other members.
Reciprocal altruism is related to another popular tit-for tat influence strategy: offering a donation to a
prosocial cause in return for a specific purchase, a strategy that falls under the rubric of cause-related
marketing (Varadarajan and Menon 1988). For example, for every Samsung Reclaim phone purchased,
Samsung donated $2 to the X
Indirect Reciprocity, Reputation, and Group Identity Indirect reciprocity posits that organisms can evolve the
ability to cooperate with nonreciprocating strangers because doing so can establish a reputation as a good
cooperator. The ultimate reason helping strangers evolved is that gaining a reputation for being cooperative is
associated with increased status in a social hierarchy and more opportunities for alliances.

Concerns about reputation are especially powerful when people strongly identify with a group and its
members. For example, the strength of people’s community identification predicts their willingness to help
solve social dilemmas. People can perceive members of their community as kin. Thus, sustainable behavior
might be increased by fostering stronger community identities.

In summary, whether by strengthening community identity, activating reputational concerns, or eliciting the
obligation to reciprocate, an evolutionary perspective suggests that people will be more willing to self-sacrifice
and behave pro- environmentally if they foresee a material gain for themselves, their kin, or their tribe.

(2) DESIRE FOR RELATIVE STATUS: motivation for relative rather than absolute status, in general, people should
be more concerned with relative status than absolute status. For example, people are not so much motivated to have a
large house than to have a house larger than their neighbor’s house

Costly Signaling and Competitive Altruism The evolutionary root of people’s desire for relative status is
usually explained by costly signaling theory (Zahavi and Zahavi 1997). This theory posits that natural selection
favors people who engage in activities that are increasingly costly—involving significant resources, energy, risk,
or time—as a way to signal their ability to incur costs, which is associated with status (Bird and Smith

People who are considered wealthy and helpful tend to be perceived as more trustworthy , as more desirable
friends and romantic partners. People throughout history have been known to compete for status through
self-sacrifice, a concept known as “competitive altruism”

Status and Competitive Environmentalism: Consideration of competitive altruism suggests that people are
particularly motivated to compete for status through pro environmental behaviors that can signal self-
49
sacrifice. A key component of harnessing the desire for status to benefit the environment is that
environmental acts need to be visible to others.

Competitive environmentalism also suggests that a particularly effective strategy would be publicizing a “green
list” that ranks the top greenest companies, celebrities, or ordinary citizens. Suggesting that people worldwide
are willing to engage in self-sacrificing behavior to avoid appearing at the bottom of a status hierarchy.

Finally, consideration of competitive environmentalism also has implications for the pricing of green products.
This perspective suggests that sometimes increasing the price of a green product can cause that product to
become more desirable because it signals that purchasers are prepared to incur costs. An implication of costly
signaling theory is that making some green products cheaper, easier to buy, and more time saving might under
Cut their utility as a signal of environmentalist dedication.

(3) UNCONSCIOUSLY COPYING THE BEHAVIOR OF OTHERS PROCLIVITY TO UNCONSCIOUSLY COPY

OTHERS,
Humans have evolved to instinctively copy and mimic the behavior of others. Psychologists have long
recognized that humans exhibit this tendency (Asch 1956), which is believed to have evolutionary benefits

Imitating others and following the majority are adaptive strategies for learning in social species, in which the
costs of individual. Followed what others were doing had an adaptive advantage, especially in uncertain
situations trial-and-error learning are substantial.
Imitation is an underappreciated contributor to environmental problems because many such problems result
from a conflict between what people believe they ought to do versus what they actually see others doing.

Paradoxically, a common approach in the hope of spurring environmental behaviors is to depict a problem as
regrettably frequent. Messages such as “83% of people are not recycling

Cost-Effective Social Incentives: Two types of appeals are commonly used to persuade people to go green.
One involves informing people about the plight of the environment, and the other involves appealing to
monetary benefits.

The ancestral tendency to imitate others implies that a method for spurring pro environmental behavior might
be to use social rather than financial incentives. For example, hotel cards imploring guests to reuse towels
(mentioning other guest do that at least once)

An impediment to using imitation-based strategies is that often only a small minority of people are engaging in
the desired behavior.

Social Imitation and Large-Scale Behavioral Change: The ancestral tendency to imitate leads people to copy
behavior regardless of whether it helps or hurts the environment. When residents learn that they are using
less energy than their neighbors, for example, they increase energy consumption.

When residents are informed that they are using less energy than their neighbors and they receive a smiley
face to indicate social approval for this action, such information motivates conservationists to continue their
energy efficient ways.

Following the Ancestral Leader: Although people are wired to follow the masses, they also tend to copy
certain types of people more than others. Humans are disposed to imitate those who are perceived as
prestigious or successful. In summary, humans are more likely to voluntarily engage in self-sacrificing behavior
50
when they perceive either that people with ancestral features of leadership are engaging in such behavior or
that many others are doing likewise.

(4) Valuing the present over the Future predisposition to be shortsighted

Instead, natural selection has shaped our psychology to maximize the here and now. Many social and
environmental problems result from valuing immediate over delayed rewards, in which today’s desires often
prevail against tomorrow’s needs. Because people have evolved to value the present over the future, influence
strategies that. In the following subsections, we discuss several theories from evolutionary biology that
address the origin of the tendency to discount the future. Although zero discount.

Life History Theory and Predictable Environments; Evolutionary theorists believe that the extent to which
people weigh the present versus the future is linked to life history theory. An important implication of life
history theory is that it is a mistake to emphasize the unpredictability of the environment when trying to
motivate people to care about the environment and the future.

This means that influence strategies emphasizing that life today shares many commonalities with life in the
past (and likely with life in the future) are more likely to lead people to perceive that they live in a predictable
world

Gender Differences and the Power of Female Choice An evolutionary perspective predicts that men should discount the
future more steeply than women. The sex in a species with lower obligatory investment in offspring (e.g., gestation,
birthing, lactation, parenting) will be more competitive. Because the male counterparts have lower obligatory parental
investment, much research men are more willing to deplete environmental resources and engage in wasteful
consumption for present gains.

Because many gender differences are rooted in the ancestral past, an evolutionary perspective suggests that specific
types of environmental cues could be powerful at mitigating such gender differences.

An evolutionary perspective also suggests that men’s behaviors tend to be strongly influenced by women’s mate
preferences. This implies that a powerful lever in shaping men’s behavior may be information conveying that women
desire men who are pro environmental and value sustainability.

(5) Disregarding Impalpable Concerns

Many environmental and social problems are exacerbated by a general lack of strong concern about such
issues.Because our ancestors evolved to value the present rather than the future (see previous section), we do
not possess evolutionary mechanisms for reacting to large-scale. An important reason people often fail to
respond to environmental hazards is due to their evolved sensory and cognitive mechanisms

They ate something poisonous, they got sick and possibly died. A critical difference between the modern world
and the ancestral environment is that today people rarely see, feel, touch, hear, or smell how their behaviors
affect the environment

Tangible Links and Visceral Cues Consideration of the evolved sensory mechanism suggests that people may
be more responsive to environmental threats that they can feel, hear, smell, touch.
People may be more responsive to environmental problems when there are tangible and visceral cues
indicating a problem

51
Similarly, people may be more likely to do something about water pollution if the taste and smell of public
drinking water has been altered according to the level of pollutants in the water. In summary, whereas people
tend to be relatively unresponsive

Harnessing Dormant Biophilia: Although human nature has been shaped to extract and consume resources,
our ancestors did live in natural settings for many hundreds of thousands of years. An increasing body of
research suggests that our evolution in nature (rather than in cement boxes in concrete cities) may have
endowed us with biophilia, or an innate appreciation and desire for the natural world.
Exposure to such natural environments even grants positive benefits, such as increasing recovery from
stressful experiences.

CONCLUSION ; By considering the evolutionary roots of each tendency through the lens of specific theories
from the natural sciences, we suggest ways that marketers, social entrepreneurs, and policy makers can
harness and redirect people’s evolutionary tendencies to lessen or even eradicate environmental problems
(see Table 1). We contend that for influence strategies to be optimally effective,

52
Five-Step Approach to Stakeholder Engagement

The investor community has become significantly more focused on the need for companies to consider
environmental, social, and governance issues if they intend to survive and thrive over the longer term.
Emphasis of our BSR framework toward building mutual trust, including the introduction of core stakeholder
engagement principles.

The frameworks are driving a shift from exclusive consideration of corporate risk to an understanding of
corporate impacts on society.

Stakeholder engagement requires a shift in corporate mindset and a change from treating stakeholders’
concerns as external risks that need to be managed to considering them serious topics that merit
transparent dialogue—and a strategic response

53
STEP 1 ENGAGEMENT STRATEGY
Set vision and level of ambition for future engagement, and review past engagements. Is a dialogue
rater just to get info

Before step 1: identify internal champions and owners of future engagement activities. These individuals and
functions are your internal stakeholders; collaborate with them as you build your overall strategy. identify
internal champions and owners of future engagement activities. These individuals and functions are your
internal stakeholders; collaborate with them as you build your overall strategy. The Value of Stakeholder Trust,
to help to build future financially resilience. Because they are better able to anticipate risks and opportunities
Better stakeholder relationships help companies develop such assets as customer or supplier loyalty, reduced
employee turnover, and an improved reputation, all sources of competitive advantage and corporate value.3

Aim to achieve
 Focus on where stakeholder engagement can have the biggest impact on your strategy and
operations
• Define and lead cost-effective and impactful stakeholder engagement activities
• Learn from past experiences to assess your goals and clarify objectives
• Clarify the business case for engagement
• Understand and manage stakeholder expectations

STEPS
1.1 HISTORY OF ENGAGEMENT: Check results previous initiatives. What, How, Who,
Why. look at your company’s history. Lessons learned from past efforts will inform the
current strategy.

1.2 SET A STRATEGIC VISION: by answering the following question and steps
set the objetives
PRIORITY: What is our priority in engaging stakeholders at this phase? Reacting to external
pressures? Developing strategic insights? Protecting our reputation? Seeking innovation and
building new products and services? Building relationships in new markets? Mitigating systemic
risk?

SCOPE: What is the scope? Let’s consider issues and geography to set boundaries. Given
increasing transparency, we should consider both global and local exposure—and the interaction
between them.

WHERE does engagement fit in our organization? Who should be owners (CEO, corporate affairs,
business units, etc.)? What is their level of willingness and understanding?

Determine as well how to engage: determine whether this is to be a one-off event or the start of
an ongoing, iterative process. Engagement could take the form of a single meeting or involve the
creation of a continuing dialogue mechanism such as a stakeholder advisory board.

Strategy Do´s
Link engagement strategy to business strategy. Focus internally before externally (gain buy-in, find
champions). Learn from past experience, both successes and failures.

STEP 2 STAKEHOLDER
MAPPING
54
What Is Stakeholder Mapping? Stakeholder mapping is a collaborative process of research, analysis,
debate, and discussion that draws from multiple perspectives to determine a key list of
stakeholders across the entire stakeholder
spectrum. Mapping can be broken down into four phases:
2.1 IDENTIFY STAKEHOLDERS With a brainstorm identify them. Consider Learn from
past and current engagements, Consider future, Ensure Diversity, Use technology tools—
and judgment, Consider your impact:

 Owners (e.g., investors, shareholders, agents, analysts, and ratings agencies)

• Customers (e.g., direct customers, indirect customers, and advocates)
• Employees (e.g., current employees, potential employees, suppliers’ employees, retirees, representatives,
and dependents)
• Industry (e.g., suppliers, competitors, industry associations, industry opinion leaders, and media)
• Community (e.g., residents near company facilities, chambers of commerce, resident associations, schools,
community organizations, and special interest groups)
• Environment (e.g., nature, non-human species, future generations, scientists, ecologists, spiritual
communities, advocates, and nongovernmental organizations, or NGOs)
• Government (e.g., public authorities and local policymakers, regulators, and opinion leaders)
• Civil society organizations g., NGOs, faith-based organizations, labor unions, and general public

2.2 Analize, considering 6 criterias

Influence: How much influence does the stakeholder have over your company or project, either
directly or via other stakeholders?
Expertise: Does the stakeholder have information, counsel, or expertise on the issue that could
be helpful to the company, either directly or because they will shape the future of an issue
Orientation: Is the view of the stakeholder toward the company/engagement/issue a
collaborative or combative one?
Vulnerability: To what degree will the stakeholder be impacted by the project, company, or
initiative
Capacity: To what degree does the stakeholder have the capacity to engage at the level desired
by the company
Trust: What degree of mutual familiarity and trust is there between the company and the
stakeholder?

Analize AND ECOSYSTEM

55
2.3 MAP Mapping stakeholders generates a visual analysis that you can use to further
determine which stakeholders
will be most useful to engage with. Mapping allows you to evaluate stakeholders by using
consistent criteria, and helps you visualize the often
complex interplay of issues and relationships
created in the criteria chart above. Select u 3 criteria
to map
2.4 SELECT ENGAGEMENT
APPROACHES
Choose the way to engage with the stakeholders
according the best fit. Being strategic and clear about
whom you are engaging with—and why—can help
save both time and money. Even more important, it
will help you manage expectations. When
stakeholder groups are consulted and then express
opinions, only to find no action taken, this can
significantly undermine the perceived value of the

exercise and negatively impact trust and reputation.

56
The Circular Business Model
Three Strategies for Circularity. Interface’s experience shows that creating a sustainable
circular business model depends on many factors, but
perhaps the most important is choosing a pathway that aligns
with a company’s capabilities and resources—and one that
addresses the constraints on its operations

Retain product ownership (RPO). of this approach, the producer rents or leases its product to the customer
rather than selling it. Thus the producer is
responsible or products when consumers have
finished with them. Require companies to invest
heavily in after-sales and maintenance capabilities,
which may be more expensive for them and,
ultimately, their customers than a strategy of sell
and replace. EG Xerox

Product life extension (PLE). this strategy focus on

designing products to last longer, which may open
up possibilities for markets in used products.
Because a longer product lifespan means fewer
purchases over time, this may seem like a bad idea
for original-equipment manufacturers. EG Miele or
Patagonia.

Design for recycling (DFR). strategy redesign their

products and manufacturing processes to maximize
recoverability of the materials involved for use in
new products. This strategy often involves
partnering with
companies that have specific technological
expertise or that may be best able to use the
materials recovered.

57
Companies can clarify their thinking by answering just two questions
- How easy is it to get my product back?
- How easy is it to recover value from my product?

Hard to access and hard to process. To prevent the loss of the value embedded in them, we advise
manufacturers to consider a combination of design for recycling and retain product ownership.

For companies in this quadrant, going circular may have low value potential even with expensive products
containing lots of valuable ingredients.

Easy to access but hard to process. The bottom right quadrant includes relatively low-embedded-value
products such as carpets, mattresses, and athletic footwear. On the one hand, ease of portability and the
absence of a lucrative secondary market create a strong likelihood that these products can be recouped from
the consumer. On the other hand, they can’t be easily reconditioned, and extracting materials from them is
complex. When products have relatively low value, companies—even very big ones—may need to find
partners to make circularity work. Here we can find smartphones, and other products like Nike and Adidas.

Hard to access but easy to process Takeout food packaging, for example, may contain easily recyclable
materials but very often winds up in landfills because of the food residue on it, which is costly to remove. Here
the strategy should be DFR, with a focus on the recovery infrastructure.

The greater the embedded value, the more common are PLE and RPO combinations, because RPO both
facilitates access to parts that would be extremely costly to rebuild from scratch and promotes consumer
trust, thereby improving participation in trade-in and remanufacturing programs. Caterpillar, the heavy-
equipment company, provides multiple PLE options.

Easy to access and easy to process. Products in the lower left quadrant are usually items or components for
which a well-oiled recycling infrastructure already exists, as it does for plastic bottles in Norway. Many
commodity raw materials also fall into this category. Appropriate circularity strategies for this category will be
based on expanding and streamlining processes that already work well.

High-value products that are easy both to access and to process are ideal for circularity, because they require
neither a significant business model change nor efforts to facilitate material recovery. This category includes
relatively lightweight products whose value lies in their brand rather than in what they’re used for or what
they’re made from. Here there is plenty of scope for companies not already in the circular economy to
contemplate entering it. Patagonia, for example.

Chapter 7: Ecological Approaches to Corporate Sustainability

Sustainable development as “development that meets the needs of the present without compromising the
ability of future generations to meet their own needs. It definition makes sustainability inter-generational and
thus adopts a longer time horizon than the quarterly or yearly targets or planning cycles of many companies.

Sustainability is not an organizational characteristic, but should be understood as a systemic (inter-

organizational) element. We will examine companies not as external actors with a relationship to the
environment, but rather as embedded within their natural environments.

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2. ECOLOGICAL TRENDS AND CHALLENGES
Quite simply, there are more of us (increasing population), we are using more resources (increasing affluence),
and we are severely harming our natural ecosystems (increasing impact). We should also note that, from the
perspective of environmental justice, those with high socioeconomic status have a disproportionally high
environmental impact (see Nielsen, et al., 2021). In fact, human beings’ impacts on the planet are considered
so vast that we have started calling this epoch the Anthropocene, the age of humans the word referes to the
age of climate change. Humans becoming the main cause of the ongoing sixth mass extinction period that our
planet has seen

3. ECOLOGICAL PRINCIPLES OF CORPORATE SUSTAINABILITY

Science-based. Corporate sustainability is deeply rooted in sustainability science and engineering as well as
management studies. Evidence based.

Practical. Is inherently a practical problem of how to minimize the negative environmental impacts and
maximizing positive environmental.

Contextual. The old adage from town planning – “Think global, act local" – has a lot of truth to it. Universal
solutions to sustainability are rare and all approaches should be adapted to the local context.

Just Ultimately environmental issues such as climate change have important social justice elements which are
important to consider when assigning costs and thinking of solutions.

Systemic not only individuals and organizations, but as a broader system with interrelated parts, we can have
a better understanding of sustainable change over time.

Balanced. Corporate responsibility and sustainability literature has traditionally been based on the notion of
triple bottom line – the economic, environmental and social responsibilities of firms. These balances at
different levels look like is heavily influenced by normative, ethical, political and ideological considerations.

Transformational. Sustainability is all about transformation and change. We often contrast incremental
change with more transformational one

5. LENSES IN (CORPORATE) SUSTAINABILITY

twelve lenses especially prevalent in the field of management and categorize these according to their nature.
These include progress indicators, critiques of growth, social science and indigenous contributions,
sustainability innovation concepts, and approaches for sustainable organizing.

Progress indicators Ways to measure it have been proposed over the decades. Here we will look at three
interrelated frameworks which aim to measure progress on a set of themes or indicators: the United Nations
Sustainable Development Goals, Planetary Boundaries, and Doughnut Economics.

United Nations Sustainable Development Goals are a roadmap for global sustainability. It consists of a set of
17 goals and 169 more specific targets. The SDGs are part of the so-called Agenda 2030. All interconnected.
Planetary Boundaries: set of science-based indicators aiming to determine a “safe operating space for
humanity” (Rockström, Steffen et al., 2009) The basic premise of this framework is that we can scientifically
identify and evaluate progress on key planetary boundaries that we should stay within to avoid catastrophic
abrupt environmental change.

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Doughnut Economics, which is an extension of the planetary boundaries framework combined with insights
from scholars What makes the doughnut interesting is that it is able to depict both social ambitions and
planetary boundaries in one framework.

Critiques of Economic Growth

This critique of economic growth takes many forms but has crystallized into a movement called
Degrowth. Degrowth. Rethinking of how we see and measure well-being. Nonetheless it also aims to
provide alternatives including better metrics of prosperity, a mindset of sufficiency, a focus on
participatory local economies.

Social Science and Indigenous Contributions

Next we turn to social sciences and indigenous studies and selectively pick lenses that can be insightful to our
understanding of corporate sustainability: Ecological economics, environmental justice and indigenous
knowledge.
Ecological economics: natural resources flow through the economy instead of the economy as being separated
from the natural world.
Social Justice: It includes elements of distributive and procedural justice. It includes elements of distributive
and procedural justice.
Indigenous Studies: argue that as our current ecological crisis is a product of human-nature dualism and
Enlightenment thinking, these cannot be the basis of looking for solutions to the crisis.

Sustainability Innovation Concepts:

Circular economy, sustainability transitions and sustainable business models.

Circular economy A circular economy is an industrial system that is restorative by design. The central idea is
not to only recycle waste, but to stop producing waste in the first place. The key principles of the circular
economy are to design out waster and pollution, keep products and materials in use, and regenerate natural
systems

Sustainability
transition is
defined as a
“radical
transformation
towards a
sustainable
society, as a
response to a
number of
persistent
problems
confronting
contemporary
modern
societies”
Multiple dimensions and actors come together in co-evolutionary and uncertain long-term processes of
stability and change aiming at sustainability

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Approaches for Sustainable Organizing
As environmental problems of corporate activity began to surface in the 1960’s voluntary environmental
action would be more effective than commandand- control legislation
- (EMS). The first incarnation of this thinking was the environmental management systems approach
which begun to emerge in the late 1980s, taking after quality management movement. The aim of the
EMS approach was to control risk and reduce the harm caused by existing business.
- Eco-efficiency thinking, introduced to business management by Schmidheiny in the 1990s. The idea
was to develop new products, services and eventually business models that “do more with less”. Win
Win situation
- Environmental, Social and Governance (ESG) Corporate sustainability’s triple bottom line has become a
dominant way for companies to report on sustainability

Categorization of Ecological Lenses

In a matrix with eco-social or economic perspective and secondly whether the related discourses focus on
environmental opportunities or more critical perspectives related to environmental limits.
We need to see the so-called triple bottom line of companies – the economic, social and environmental
responsibilities and impacts of firms – not as separate spheres, but as deeply interconnected.
Economy, society and environment in a concentric way. economy which is for the benefit of society and an
economy and society which operate within planetary boundaries. Ecological sustainability is the
fundament upon which sustainable societies and economies can thrive

CONCLUSION
Firstly, while (slightly) changing
consumption habits will not save the world,
small actions do add up.
Second, change is constant. While many
changes have involved the deterioration of
our natural environment, there are
countless positive trends related to for
instance developments in literacy, health,
average life expectancy, scientific
discoveries, technological development and
increasing wealth.
Thirdly, and relatedly, some transitions can
happen (surprisingly

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The triple layered business model canvas:
A tool to design more sustainable business models
Tool for exploring sustainability-oriented business model innovation. It extends the original business model
canvas by adding two layers: an environmental layer based on a lifecycle perspective and a social layer based
on a stakeholder perspective.

The TLBMC contributes to this special issue on organizational creativity and sustainability by proposing a user-
friendly tool to support sustainability-oriented business model innovation. First, as a multi-layer business
model canvas, the TLBMC offers a clear and relatively easy way to visualize and discuss a business model's
multiple and diverse impacts

Second, the TLBMC provides a concise framework to support visualization, communication and collaboration
around innovating more sustainable business models. Support transitioning from incremental and isolated
innovations to more integrated and systemic sustainability-oriented innovations which are likely better suited
to meeting

DEFINITION BUSINESS CANVAS the rationale of how an organization creates, delivers and captures value”
Include 3 concepts:
(1) How key components and functions, or parts, are integrated to deliver value to the customer;
(2) How those parts are interconnected within the organization and throughout its supply chain and
stakeholder networks;
(3) How the organization generates value, or creates profit, through those interconnections.

2.1. A canvas as a creative tool for business model innovation

Business model tools can be used to support sustainability through outside-in or inside-out approaches. This
allows firms to explore innovations which may resu lt from adapting their current business model towards a
particular archetype.

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The cross-pollination of business models ideas happens when an archetype from one context or industry is
reinterpreted or applied in another. The term outside-in applies because an ‘outside’ business model
archetype is adapted or translated to the organization.

Inversly, an inside-out approach to business model innovation involves starting with the current elements in
the organization. First, one details an organization's existing business model then explores the potential
changes to the model.

2.2. Building on the original canvas

Nine interconnected components e customer value proposition, segments, customer relationships, channels,
key resources, key activities, partners, costs and revenues. While using it may help users align profit and
purpose to support more sustainability oriented value creation on its own.

The triple bottom line (TBL) perspective, advocating organizations consider and formally account for their
economic, environmental, and social impacts. Innovating towards more sustainable business models requires
developing new business models which go beyond an economic focus to one which generates and integrates
economic, environmental and social value through an organization's actions.

Presentation of the triple layered business model canvas tool

TLBMC provides ‘horizontal’ coherence within each canvas layer for exploring economic,
environmental and social value individually and ‘vertical’ coherence integrating value creation across
the three canvas layers; which supports developing a deeper understanding of an organization's
value creation (Lozano, 2008). Thus, the TLBMC is proposed to creatively explore sustainability-driven
product, process, and business model innovation in support of organizations better addressing
sustainability challenges

Foundation of the environmental layer of the TLBMC

The environmental layer of the TLBMC builds on a life cycle perspective of environmental impact. This stems
from research and practice on Life Cycle Assessments (LCA), which is a formal approach for measuring a
product's or service's environmental impacts across all stages of the its life

Foundation of the social layer of the TLBMC

The social layer of the TLBMC builds on a stakeholder management approach to explore an organization's
social impact.

Environmental layer of the TLBMC

the organization generates more environmental benefits than environmental impacts. Doing so allows users to
better understand where the organization's biggest

The social layer of the TLBMC builds on a stakeholder management approach to explore an
organization's social impact

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Functional value: The functional value describes the focal outputs of a service (or product) by the
organization under examination. It emulates the functional unit in a life cycle assessment. $0 pods
Nexpresso

Materials: The materials component is the environmental extension of the key resources component
from the original business model canvas. Materials refer to the bio-physical stocks used to render the
functional value. Aluminium cups and coffee beans

Production The production component extends the key activities component from the original
business model canvas to the environmental layer and captures the actions that the organization
undertakes to create value. For Nespresso, the industrial processes to prepare the coffee beans
represent 4.5% of the carbon impact and the manufacturing of the packaging capsules
represents 13.3%.

4.1.4. Supplies and outsourcing Supplies and out-sourcing represent all the other various material
and production activities that are necessary for the functional value but not considered ‘core’ to the
organization. Similar to the original business model canvas, the distinction here is between is
considered core versus non-core to support the organization value creation.

4.1.5. Distribution As with the original business model, distribution involves the transportation of
goods. Nespresso, distribution involves the shipment of coffee beans and, subsequently
manufactured, coffee pods over thousands of kilo metres Their distribution practices favour train
over trucks.

4.1.7. End-of-life End-of-life is when the client chooses to end the consumption of the functional
value and often entails issues of material reuse such as remanufacturing, repurposing, recycling,
disassembly, incineration or disposal of a product. For Nespresso, end-of-life means addressing the
impacts of its spent expresso pods consisting of spent coffee and aluminum. The capsules, the
packaging and the machine in a mix of end of life scenarios that includes landfill and recycle.

4.1.8. Environmental impacts The environmental impacts component addresses the ecological costs
of the organization's actions. For Nespresso, its environmental impacts can point to its largest
contributor, the use stage with 46.6% of the carbon footprint.

Environmental Benefits environmental impacts and costs, environmental benefits extends the
concept of value creationbeyond purely financial value.. For Nespresso, an example of this would be
the 20.7% reduction in carbon emissions they achieved by redesigning the machines to be energy
efficient. By evaluating environmental impacts with a life cycle approach in the business model
canvas, the description of impacts

Social Layer
Social Value: Social value speaks to the aspect of an organization's mission which focuses on creating
benefit for its stakeholders and society more broadly. Mutually beneficial relationships with coffee
farmers. company's social value can be extrapolated from its corporate business principles “to

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enhance the “quality of consumers' lives every day, everywhere, by offering tastier and healthier
food and beverage choices and encouraging a healthy lifestyle.

4.2.2. Employee: The employees' component provides a space to consider the role of employees as a
core organizational stakeholder. Given Nespresso's global reach and rapid growth, maintaining a
positive workplace and strong customer relationships likely need to be considered a core part of its
business.

Governance: The governance component captures the organizational structure and decision-making
policies of an organization. In many ways, governance defines which stakeholders an organization is
likely to identify and engage with and how the organization is likely to do so. As an autonomous
business unit within Nestle, Nespresso has made a point of being transparent in decision making and
actively engaging stakeholders to create value.

Communities: While economic relationships are built with business partners, there are social
relationships built with suppliers and their local communities. Each community different stakeholder.
For Nespresso, developing successful supplier relationships within coffee farmers is particularly
important as Nespresso requires large quantities of high quality coffee. As a way to meet its coffee
demands, Nespresso has partnered with the NGO Rainforest Alliance.

Societal Culture: recognizes the potential impact of an organization on society as a whole. the other
hand,.Nespresso's strong corporate social responsibility practices and programs can be interpreted as
a culture of accountability and proactiveness.

Scale of outreach: describes the depth and breadth of the relationships an organization builds with
its stakeholders through. For Nespresso, the scale of outreach is represented by a growing company
operating in over 60 countries with over 320 storefronts. Additional social programs such as language
education and micro-credit programs for its supply chain.

4.2.7. End-users The end-user is the person who ‘consumes’ the value proposition. Nespresso, the
end-user often happens to be the customer who seeks high-quality/low-effort coffee on demand in
the economic.

4.2.8. Social impacts: The social impacts component addresses the social costs of an organization. It
complements and extends the financial costs of the economic layer and the bio-physical impacts of
the environmental layer. For Nespresso, negative social impacts could stem from its engagement
with local farmers, potentially disrupting or displacing existing cultural farming and social practices;
or potentially the impact of caffeine addiction should perceptions change to consider caffeine a social
ill as with tobacco, alcohol, and junk food.

Social benefits: are the positive social value creating aspects of the organization's action. For
Nespresso, social benefits may include the personal development and community engagement
impacts of providing training opportunities for its employees directly and indirectly with its coffee
suppliers through its partnership with the Rainforest Alliance

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TLBMC provides:
- First, it provided a visual representation of an organization's business model.
- Second, the TLBMC is a creation tool. Users explored the consequences of changing individual
elements of a business model through the cascading impacts of such change within and across
the canvas layers.
- Third, the TLBMC is a validation tool. Users tried to balance the costs and benefits of their
business model idea in a more holistic manner with economic.

Horizontal coherence: Each layer allows some level of depth in making explicit different types of
value creation, which may facilitate broader systems thinking towards a more holistic view of the
entire business model.

5.2.2. Vertical coherence: The alignment of each layer component across the canvas layers provides a
vertical coherence. This supports exploring the alignment of actions and interconnections across the
different types of value

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