Pages: 74

No chapter abstract available.

Pages: 6

The Securities and Exchange Commission (SEC) requires directors, officers, and employees to follow laws, rules, and regulations and adhere to high ethical standards. In the meantime, a Gallup poll (2023) found that peoples’ expressed confidence in business was 18 percent. The Transparency International Survey (2021) results show that 85 percent of responders said that their industry is susceptible to corruption risks and 40 percent view those risks as significant. Also, a 2019 Washington Post article on ethical misconduct reports that 39 percent of the 89 forced CEO departures in 2018 were because of ethical wrongdoings.

Pages: 10

Ethics is a broad area of philosophy dating back to Plato, Aristotle, and other Greek philosophers and examined by David Hume, Adam Smith, and modern philosophers and writers (Bredillet, 2014). However, philosophical ethics is well beyond the scope of this book and the nature of ethics in this chapter is viewed not from the traditional, philosophical aspect of ethics, but from a practical, business ethics angle. Our focus is narrow and directed to treatment of the manifestation of business ethics, the purpose being to answer questions about its current reality and role in business decisions. More specifically, it is to trace ethics impacts on business performance through its effects on organizational culture, strategy, decision-making, and their links to competitive advantage elements.

Pages: 13

The ethical foundations of capitalism were articulated by Adam Smith who created a model of moral political economy that reflected alignment between business and customer interests due to voluntary business self-restraint. However, today’s business environment is far more complex than what Adam Smith envisioned in terms of balancing the interests of business, customers, and society. Corporate claims of high ethical standards are in annual reports but not always practiced. This raises questions about honest reporting and whether business ethics and maximum profits are compatible in the short run if customer expectations and ethics compliance reduce profits or result in higher prices. And, what about long-run performance?

Pages: 17

Decision-making is a series of steps that define a problem and create and evaluate different solutions. It is about dealing with new market developments which characterize a company’s business decision-making complexity. This is because of multiple interdependent decisions, interconnected stakeholders, and internal and external factors that influence the decision participants’ interests. Ethical decision-making is of higher complexity because alternatives considered are consistent with company code of ethics, values, and practices. The level of complexity is a function of the number of participants, the size of the impact and issues to be addressed, and the differences in the decision-making approaches of decision participants. Complexity is also linked to the level of investment and costs, risk involved, decision-maker styles, approach and basis of decisions, and the decision consequences.

Pages: 14

Business behavior values are reflected in codes of ethics since the beginning of recorded history to facilitate trade and smooth business transactions of the times. Societies and economies have advanced, and laws and regulations have been passed to ensure ethical business practices. In recent times, however, government regulations have made less of a difference on code of ethics compliance than marketplace forces. Interestingly, more companies around the world have been introducing codes of ethics and voluntary compliance programs, but why do they do it and why do business crises and scandals still occur? Answers to these questions are offered in this chapter and others that follow.

Pages: 11

Business cultures may have evolved over time but one aspect remains the same: the gross business misconduct and scandals that occur in the US, Germany, China, Switzerland, Japan, Brazil, India, Russia, and other developed and underdeveloped countries. Focus on scandals and unethical practices is usually on individuals and not corporations. However, the 1909 US Supreme Court decision said that corporations are liable for the consequences of business scandals and gross unethical practices. Our assessment has been of a measured, accumulative approach to determine the causes and implications of unethical business conduct. In the process, questions are raised and explored whose answers help to minimize scandal occurrence. That is why the discussion of this chapter is a continuation of Chapter 5 and a precursor to issues covered in Chapter 21.

Pages: 37

No chapter abstract available.

Pages: 11

There are a lot more gross business and scandal cases across all industries and countries than the few well-publicized scandals presented in Chapter 5. And if business ethics is said to be an oxymoron, why are we concerned with ethical practices and business decisions? First and foremost because government regulations and consumer interests negate the idea that business ethics is an oxymoron. Also, because evidence from long-term business viability experiences suggests that ethical conduct does matter. However, our interest in this subject is motivated by answering questions raised and better understanding the role of ethical business behavior in business decisions and competitive advantage.

Pages: 12

Businesses make operational and strategic, large-impact project decisions that are reviewed, and the way ethical dilemmas are addressed depends on their ethical cultures. To better demonstrate key points and avoid adding complexity to the effects of misconduct pressures on start-ups and small companies, our discussion focuses on large, strategic projects of established, sizable companies. Several of the reviewed strategic projects are illustrative cases from different industries that were selected because they involve distinct stage and gate decisions.

Pages: 12

The narrative of the links and interactions of ethics, culture, strategy, decision-making, and value creation is based on and describes the framework developed to examine causal relationships to competitive advantage. The reason for selecting the links and interactions among these factors has to do with their importance in the functioning and efficiency of business operations, managing company growth, and effective decision-making which determine value creation. The outline of that framework is shown in Figure 9.1.

Pages: 63

No chapter abstract available.

Pages: 10

The purpose of this chapter is to establish the first set of links in the complex confluence of events and factors that lead to competitive advantage. The multitude of factors and the complex two-way interactions among them limit detailed coverage and everything that contributes to conditions that lead to competitive advantage in a chapter. High-level 4-Cs, VRIO resources, TQM, and ESG that lead to value creation were selected as the main factors affecting performance which are influenced by and interact with corporate culture. What is the rationale for selecting these factors? The reason these factors were deemed appropriate is because of their effects on decision-making and because of the impact of their interactions on continuous value creation which is a crucial precondition of competitive advantage.

Pages: 11

Corporate strategy is formulated at the corporate, business unit, and functional levels. It is the integration of business, financial, HRM, marketing, R&D, engineering, and procurement strategies of business units. IT and information management and competitive strategy elements are also included in it. In our framework, the development of corporate strategy affects and is affected by the selected factors of company VRIO resources and capabilities, TQM management, ESG activities, and value creation initiatives. To understand these relationships, it is helpful to view them in the context shown in Figure 11.1. That is because corporate strategy requires inputs, evaluations, and considerations of the competitive environment and the internal situation a company is operating in. Note, however, that most of the context-defining factors are highly interconnected and each one exerts some influence on strategy and the links with VRIO resources, TQM, ESC, and value creation.

Pages: 11

A decision is the selection of one option from several alternatives to deal with a problem. Decision-making is the process of creating options and figuring out the right means to achieve results. A good decision is one that has clarity of purpose, is fact-based, verifies and validates data and relevant information, and is made with sound reasoning and good judgment. It is also consistent with corporate strategy, corporate values, risk tolerance, and stakeholder interests. A bad decision is picking the wrong option among alternatives even though there is information about them. A wrong decision is the best-guess option when there is little information or data to base a decision on.

Pages: 9

The major decision-making success factors in our framework are 4-C management, VRIO resources and capabilities, TQM, ESG factor management, and value creation. These factors were selected because they are suited for examining the interaction with the competitive advantage success elements shown in Figure 13.1. Because the collaboration part of 4-Cs is probably the most impactful in creating options and executing the best decision, it is used as a proxy for 4-Cs and focus is directed to its interrelations with other decision-making factors. Where does the higher collaboration impact come from? It derives from its forging teamwork and alignment of stakeholder interests, expectations, objectives, risk perspectives, and relevant processes and synergistic actions. Its importance is also due to its requirements and ability to assemble VRIO-type resources and capabilities and the human, financial, physical, and intellectual capital needed.

Pages: 9

Competition is a vigorous, systematic process that forces companies to sell similar products at lower prices to the same customer base, offer higher quality products, and become efficient to grow profitably. It is a force that drives companies to do their best and innovate and one that has positive effects on the economy and the country’s development. Competition is also a remedy for unethical business conduct, practices, and corruption in well-informed, free societies.

Pages: 11

For reasons discussed earlier, a lot of attention is paid to the sources and paths to and maintain competitive advantage and to SCA requirements. This is appropriate, but the life cycle and eventual decline of the former and questions about the requirements and reality of the latter are not given the same treatment. Hence, the purpose of this chapter is to address issues that explain that difference. Section 15.1 reviews the sources and paths to attaining advantage in competitive industries related to internal sources, focus on customer needs, and commonly used means to achieve that.

Pages: 61

No chapter abstract available.

Pages: 19

Having discussed the interactions among decision-making factors earlier, this chapter builds a bridge from ethical business conduct to elements of competitive advantage. Its purpose is to examine the direct relationship and effects of the main decision-making success factors on the primary elements of competitive advantage shown in Figure 16.1. The intricate relationships between decision success factors and competitive advantage elements are displayed in Figure 16.1. As a reminder, definitions of competitive advantage elements and those of decision-making success factors are restated.

Pages: 11

Several factors contribute to competitive advantage and one major factor alone may or may not help a company to hold it even for a short period. However, it is impossible to isolate and measure the direct impacts of a single factor in competitive markets because the influences of all other factors cannot be held constant. That is because of the complex, back-and-forth interactions between decision-making success factors and competitive advantage elements, separating their influence is impossible. Thus, the scope of the chapter is to address the impacts among the key determinants of competitive advantage to gain insights into the acquisition and its sustainability potential. The order of interactions to be assessed is sketched out in Figure 17.1.

Pages: 15

Corporate strategy for ongoing businesses is a disciplined process that monitors market changes and updates vision, direction, and goals and objectives. The components it is concerned with are strategic intent, organizational structure, resource allocation, portfolio management, and growth tradeoffs. Its value lies in helping management to anticipate future problems, opportunities, and risks and developing directions and objectives to be achieved. Hence, the purpose of corporate strategy is goal setting, planning on how to reach goals and objectives, and pulling together resources to implement plans to achieve them. That is, it provides the framework for operational plans and decisions concerning growth, higher efficiency, and increased employee motivation.

Pages: 14

The real purpose of business is guided by long-term value creation and evidence shows that long-term focus creates more value than “short-termism” (McKinsey & Company, 2017). With this as the backdrop, the objective of this chapter is to trace and examine the multitude of competitive advantage effects abstracting from lesser factors and feedback effects. Motivation for this comes from the consequences of competitive advantage effects on company performance, customer loyalty, the nature of internal and external relationships, and competitive response strategies.

Pages: 54

No chapter abstract available.

Pages: 13

Reasonable discussions of capitalist economy business ethics begin with the role of the key players; namely, the business sector, customers and the public, and government within the totality of influencing factors. There are several factors that determine business ethics and it is instructive to examine the arguments of ethicists and proponents versus skeptics and opponents. However, it is important that they are considered against expectations of key market players and motives of unethical conduct in the context of forces and pressures senior managers are facing.

Pages: 18

Business ethics is about moral principles determining what is right and the company policies and practices supporting them. It is important because it guides decision-making, minimizes moral dilemmas, and specifies appropriate conduct beyond what laws require. It has become a common practice to equate code of ethics compliance with ethical conduct because they both affect business conduct, but they are not the same. The former means following government laws and regulations while the latter means that plus adhering to moral values and principles. For practical purposes, ethics compliance refers to both in our discussion. Thus, the intent of this chapter is to reiterate points made earlier concerning ethical business conduct and answer the questions of whether there is a need for and what kind of ethics compliance is preferred.

Pages: 13

Unethical business conduct and corruption are prevalent across countries, industries, and businesses as well as in governments, NGOs, and institutions such as religious, educational, and healthcare entities. Business scandal types include corporate crises, gross misconduct, scandals, corporate crimes, and corruption with serious consequences. A survey shows low levels of customer positive views of industries, for example: accounting 43 percent, banking 35 percent, healthcare 35 percent, and oil and gas 24 percent (Gallop, 2023). KPMG reports that compliance pressure comes from boards (53 percent), regulators (49 percent), investors (39 percent), employees (36 percent), customers (34 percent), and public perception (27 percent) (KPMG Advisory, 2023a). Shareholder and customer demands to control unethical conduct are increasing and companies realize that code of ethics compliance is an important business asset. Hence, the senior management’s obligation is to understand the causes of unethical business conduct and scandals and prevent their occurrence.

Pages: 8

The primary objective of the book has been to evaluate the role of ethics in business decisions with competitive advantage being the criterion to judge its effects. The assessment is from the practical and objective perspective of a capitalist system economist. To achieve that, an approach is created to identify intermediate links of ethics and assess its effects on factors that affect competitive advantage and sustainability. The rationale underlying this approach is that it enables assessing the impact of business ethics and observable results on the key players of free economic systems. To what end? To provide some understanding of the universality of corruption and its impacts, the need to control it effectively, and the need for appropriate use of business regulation. This is necessary to manage elements that create conditions for competitive advantage and to use sensible and measured regulation to ensure a well-functioning economy and level the playing field. A prerequisite is that regulation must be considered in the context of market forces and their interactions with the outcome of unethical business conduct.