In choosing among strategic alternatives, company managers are well advised to embrace actions that are aboveboard and can pass the test of moral scrutiny. Crafting an ethical strategy means more than keeping a company’s strategic actions within the bounds of what is legal.
A strategy is ethical only if it meets two criteria:
a. It does not entail actions and behaviors that cross the line from “can do” to “should not do”.
b. It allows management to fulfill ethical duties to all stakeholders.
It is not always easy to categorize a given strategic behavior as definitely ethical or definitely unethical. Whether they are deemed ethical or unethical hinges on how high the bar is set. Senior executives with strong character and ethical convictions are generally proactive in linking strategic action and ethics; they forbid the pursuit of ethically questionable business opportunities and insist all aspects of company strategy reflect high ethical standards.
Recent instances of corporate malfeasance, ethical lapses, and misleading or fraudulent accounting practices at Enron, WorldCom, Tyco, Adelphia, Dynergy, HealthSouth, and other companies leave no room to doubt the damage to a company’s reputation and business that can result from ethical misconduct, corporate misdeeds, and even criminal behavior on the part of company personnel. There is little lasting benefit to unethical strategies and behavior and the downside risks can be substantial.
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