The ethics of business strategy

Abstract

Purpose

This chapter examines the linkage between strategy and ethics in business.

Design/methodology/approach

We examine the implicit assumptions underlying the “business‐as‐war” versus the “business as value creation” models of business strategy. Drawing on the work of sociologists, we lay out the consequences those implicit assumptions have on the conduct of business.

Findings

We find that the “business‐as‐war” mindset sees corporations as sovereign states engaged in battle against other sovereign states, while the “value creation” mindset sees corporations as institutions engaged in an ongoing journey toward realizing potential, both in terms of capability and service. We further show how these two mindsets evoke different moral systems – a “guardian syndrome” for the “business‐as‐war” mindset and a “commercial syndrome” for the “value creation” mindset. Since both mindsets represent legitimate, though divergent moralities, we conclude that the recent crises in American business do not reflect the lack of morality or ethics. Rather, they reflect an application of an inappropriate morality/ethic dictated by the wrong model of business strategy.

Originality/value

This chapter serves executives by advocating a strategic mindset that that is more conducive to ethical business activity, and at the same time, is better suited to meeting the profit imperative and pressure from Wall Street. This chapter serves policy makers by showing that ethical reforms are unlikely to be effective if they simply add stiffer penalties without “changing the game” that executives are playing.

Citation

Hansen, F. and Smith, M. (2006), "The ethics of business strategy", Handbook of Business Strategy, Vol. 7 No. 1, pp. 201-206. https://doi.org/10.1108/10775730610618828