Sustainability and Competitive
Advantage
Does ethical leadership provide a
competitive advantage?
Start off with Debate
Are sub-prime mortgages ethical?
Are sub prime mortgages a sustainable
business model?
Problem
• Businesses need to develop a business
model. Within that general framework an
overarching concern:
• Make quick profits/low prices?
• Build a reliable customer base/quality?
• Provide a company—quick profits (Use
cases or own experience).
• Provide a company—reliable customer
base.
• What is the difference?
• Which ones are more common?
• Is there a hybrid? If so, provide an
example.
Focus on those differences next
• Purpose: Not to give right or wrong answers.
Different business models. My recent
experience with car warranties.
• They are making money.
• Important as an employee, customer, manager.
• Purpose: Ethical dilemmas. Choices to put
yourself into them or avoid them.
• Larger—Do companies that strive to be ethical
flourish?
Begin by examining competitive
advantage and sustainability.
Competitive advantage.
Provides something other than pricing to
gain a market place advantage.
So, Examples. Patents, technology,
employees/culture, brand image, flexibility
(just in time).
Three components
• Value added. Reduce production costs, or
offer premium pricing with improved
quality, repeat customer.
• Distinctive—others do not have easy
access to it.
• Difficult to imitate
Competitive advantage
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3M
Wal Mart
Microsoft
Southwest Airlines
Does ISU have a competitive advantage?
Look at the components of each.
Sustainability
• Overused word. Hard to pin down a good
definition.
• Sustainable development
• Sustainable communities
• Sustainable environment
• Sustainable production
• Sustainable competitive advantage
What aspects do these share?
• Sustainable includes what?
What is the size of the system?
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One firm?
One industry?
One community
One country?
One Eco-system?
How broad do most firms consider their
system?
Sustainable competitive advantage
• How can ethics lead to sustainable competitive
advantage?
• How does ethical behavior by top management
and other employees add value
• Is it distinctive?
• Is it difficult to imitate?
• WWW.patognia.com
• Ben and Jerry’s
• http://www.benjerry.com/
What does Target do that is
unusual and related to ethics?
Henry Ford and $10/hour for
workers.
Heart of the debate
What is the purpose of business?
To be a good community citizen that
provides a product or service? Do positive
things.
To be a fair price provider of a product or
service. Don’t break laws.
• Using ethics as a part of the business
model is an example of sustainable
business practice.
• Think of “it is a wonderful life”
• How does ethical behavior contribute to a
sustainable competitive advantage. Many
different ways.
Why do so few firms claim ethics
as sustainable competitive
advantage?
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Ben and Jerry’s
Patagonia.
Can you think of others?
It is a matter of degree.
Is Business Ethics an Oxymoron.
What use does this have?
#1. Job choice. Some of you care don’t
care about this. But why is it in your self
interest to work in an organization that
emphasizes ethical treatment of
customers, employees.
How do you discern? What are you told
about the company. Are they honest to
you?
• You have to live with yourself. Are you
going to be more content with yourself
wealthy but had to do some unfortunate
things to get there (Boiler Room).
• What are you willing or not willing to do to
get there?
• Willing to trade a positive work climate and
make some good money too.
• #2 Unit leader. Your thoughts and actions
influence work unit.
• What business model would you like to
follow for your unit? You have discretion
at some point.
As a consumer
• Consider sustainable business. Do you
pay more for some products like Ben and
Jerry’s.
• Do you do business with questionable
business people.
• Utilize the BBB.