•BE 485 Summer 2024, Lecture 10/10

•May 3, 2024
•Dr Mrinalini Greedharry
•mrinalini.greedharry@essex.ac.uk
Ethics and
Strategy
 L1: Introduction
L2: An Inside Out View of Strategy
L3: An Outside In View of Strategy
L4: Structure and Strategy
BE 485 L5: Strategic Decision Making
Module map L6: Top Level Management and Strategy
L7: Teams and Strategy
L8: Cultures and Strategy
L9: Power, Politics, and Control
L10: Ethics and Strategy
 A. Strategy and crisis

Today’s plan B. Theories of ethics

C. CSR and strategy

Strategy and crisis
Keywords: Nietzsche, financialization, economism, neo-classical economics, Porter
Strategy is not truth
“The object ‘strategy’ does not exist as starting point: only the practices associated
with the word makes us believe that strategy is a ‘thing’ that can be observed,
crafted, and managed in departments, whereas it is, in fact, only a projection of
possible practices – practices that might differ and change fundamentally from one
setting of strategy to another” (Carter et al, 2008, 132)

Remember Nietzsche’s claim? “All things are subject to interpretation. Whichever

interpretation prevails at a given time is a function of power and not truth”

We live in the world that strategy has built, so what analysis do we need to bring to
it?
Global financial collapse
• 2007: US financial products targeted at low-income
clients (housing and consumer credit bubble)
• Irresponsible (unethical) and unregulated lending
practices
• Credit packaged in complex bundles and sold globally
• Led to
• Breakdown of state’s ability to collect taxes
• erosion of trust in central financial institutions,
corporations, and the political system
Causes of the financial collapse
• Dishonest investment decisions made by elites who faced no
accountability (numerical complexity obscured actions)
• Shareholder returns as the principal (only?) measure of
performance
• Financialisation: the primacy of the financial sectors over all
others (private profits, socialized losses)
• Economist allowed to determine policy in matters where
other values have a critical role
Is strategy the crisis?
• Strategy is framed as just a response to ‘real world’
conditions

• Economism: the rationalization and maximization of all

activity to utility

• Moral considerations and arguments are replaced with

quantitative analysis
Complicity with capitalism
• The development of strategy has followed the narrow logic of what is valuable
derived from neo-classical economics (individuals maximize utility)

• Mainstream frameworks disregard the state, employees, power relations,

national and cultural contexts in which organisations operate

• Elevates managers and, in particular, CEOs

• Strategy benefits primarily those who know how to use the ‘object’ strategy
Strategy normalises
To return to Porter (1985)

“Competition is at the core of the success or failure of firms. Competition

determines the appropriateness of a firm’s activities that can contribute to its
performance, such as innovations, a cohesive culture, or good
implementation. Competitive strategy is the search for a favorable (sic)
competitive position in an industry, the fundamental arena within which
competition occurs. Competitive strategy aims to establish a profitable and
sustainable position against the forces that determine industry competition.”

Strategy is about competition(!), but to what end?

Theories of Ethics
Keywords: morality, objectivism, relativism, pluralism, utilitarianism, deontology,
virtue ethics
Starting points
Ethics, or moral philosophy, is the study of
• Morality: the normative understanding of right and wrong for an
individual, as produced by the society in which they live and act
• Ethics: the codification of morality (systematic reasoning about
what makes the right thing ‘right’ rather than ‘wrong’)
• Business ethics is a form of applied ethics, which focuses on what
makes something ethical or unethical in business practice
• (Law is the codification of ethics in a society)
Can there be
business ethics?
Ethics asks us to think systematically
about how our behaviour should be
oriented towards ultimate aims,
ends, and values.

Q: If strategy is always primarily

about the survival of the
organisation and competitive
position, can this be done ethically?
Rationales for ethics
For philosophers, there is no question that business and strategy must
be conducted along ethical lines.

For management researchers, business ethics matters because

• Business is inextricable from both society and government
• Globalization and MNC pose more and more complex kinds of ethical issues
• Many consumers and employees believe business is inherently unethical and
demand better practices (e.g. greenwashing)
Ethical standpoints
There are both different theories of ethics and different standpoints on
how we understand morality itself:
• Objectivism: moral principles are universally valid; any rational agent can
know right from wrong
• Relativism: ethical norms vary individually (subjective); culturally or
historically
• Pluralism: a pragmatic position between objectivism and relativism that
accepts agreement on moral truths can only be achieved through negotiation
among different agents
Normative ethical theories (1/3):
Utilitarianism
The most ethical act is the one that produces the greatest
good for the greatest number of people. Calculation is key
because if you can calculate the good and the bad
consequences of an action, you can come to a rational
decision about whether to carry it out or not.

 In practice, most moral agents involved in business are

utilitarians, implicitly or explicitly
Normative ethical theories 2/3:
Deontology
We have foundational moral obligations (duties) regardless of the
situation and our intuitions

• Immanuel Kant’s Categorical Imperative

• Maxim 1: Consistency Act only according to that maxim by which you can at
the same time will that it should become a universal law
• Maxim 2: Human Dignity Act so that you treat humanity, whether in your
own person or in that of another, always as an end and never as a means only.
• Maxim 3: Universality Act only so that the will through its maxims could
regard itself at the same time as universally lawgiving
Normative ethics
3/3: Virtue ethics

• Virtue is a result of good

character
• Virtue is a matter of
finding the balance
between too much and
too little of a given
quality
• Virtue is an adaptation to
the situation; doing what
is appropriate.
Ethics in practice: Grenfell Tower and
the moral right to housing
• June 2017 Grenfell Tower, a 24 storey building in London, was the site
of a serious fire that killed 72 people
• An £8.7 million renovation on the building was completed in 2016.
Rydon Ltd carried out the work, including re-cladding the building
with an aluminium composite material.
• The cladding panels were designed to give the building a ‘fresh,
modern’ look, but created a cavity that pulled flames up along the
building rather than letting burning material fall off and away from it.
A map of housing
inequality

• Grenfell area 62% Black, Asian,

or Minority
• Average income £30, 956
• Richest area of borough 88.6%
white
• Average income £136, 977

Source: Burgum 2019

 Jeremy Corbyn proposed that those who
had lost their home should be rehoused in
the many empty luxury flats around the
borough. (YouGov poll found 59% agreed
with his idea.)

Solutions Prime Minister’s office responded: ‘We

don’t support proposals to seize private
property, our focus is on rehousing people
as quickly as possible, in the borough and
the neighbouring borough, and that still
stands’ (Independent 2017)
Balancing rights and responsibilities
• Historical precedent (1939 local authorities granted right to
requisition empty buildings to house refugees)
• 1945 Brighton ‘Vigilantes’ squatted in empty hotels
• Normally, owners’ permission had to be secured for a ‘requisition’ to
proceed
• ‘the protection of property ownership norms has been considered
optional under emergency circumstances, and that the decision to
uphold them today is therefore also a choice and not an
insurmountable limit of property use’ (Burgum 2019)
Are rights of ownership sacrosanct?
• I’m very sad that people have lost their homes, but there are a lot of
people here who have bought flats and will now see the values drop. It
will degrade things. And it opens up a can of worms in the housing
market. (The Guardian 2017)
• I would feel really resentful if someone got the same thing for free. I
feel sorry for those people. But my husband and I work very hard to be
able to afford this. (LBC 2017)
• North Kensington is not this Kensington. They should be in a place
where they are happy, but not here. I don’t want them here. In the
circumstances, they can’t all expect to be rehoused in these parts of
London. (Independent 2017)
The
people of
Grenfell
Tower
CSR and Strategy
Keywords: code of ethics, compliance,
Corporate Social Responsibility (CSR)
• Explicit engagement with ethics happens mostly under the banner of
CSR
• CSR is a voluntary, autonomous practice that organisations use to
respond to social concerns ( e.g. climate change)
• However, legal compliance and risk limitation are strong drivers of CSR
initiatives which raises questions about the ethical stance of the
organisation
• Is the organisation diverse because it is the right thing to do, or because the
Equality Act 2010 sets a legal obligation to meet minimum requirements?
• Organisational Codes of Ethics
Strategy and CSR
CSR

Inside-Out
Outside-In
Internal processes
Relationships with external agents
Use of human and material
(suppliers, state, society
resources

Strategic aims
- Better use of resources
- -Organisational reputation
- Increase transparency
- Reduce risks
- Improve and increase social and environmental impact
 • CSR can become the strategy rather than an ‘authentic’
CSR as commitment to declared values

Strategy • Organisations have a vested interest in looking ethical

Source: PR Daily
Marxist critique of CSR
• Codes of ethics are a means for management to control workers
(organisational hegemony)
• Blunt or dilute staff’s own analyses and political critiques
• Codes of ethics are a form of agenda-setting (Lukes 1974) and
ignoring or silencing other issues that may be salient
• Individualizes structural problems (codes of ethics focus on how the
employee should behave not what management does to create
unworkable conditions)
Beyond power and politics: ethics has
no end
The contemporary moral philosopher, TM Scanlon (1998) writes:

The reasons we have to treat others only in ways that could be justified to them
underlie the central core of morality, and are presupposed by all the most
important forms of human relationship. These reasons require us to strive to
find terms of justification that others could not reasonably reject. But we are
not in a position to say, once and for all, what these terms should be. Working
out the terms of moral justification is an unending task.
References
Burgum, S. (2019). From Grenfell Tower to the Home Front: Unsettling Property
Norms Using a Genealogical Approach. Antipode, 51 (2), pp.458-477. DOI:
10.1111/anti.12495
Carter, C, Clegg, S, and Kornberger, M. (2008). A Very Short, Fairly Interesting and
Reasonably Cheap Book About Studying Strategy. Sage.
Porter, ME. (1985). The Competitive Advantage: Creating and Sustaining Superior
Performance. Free Press.
Scanlon, TM. (1998). What We Owe to Each Other. Harvard University Press.