How does ethical business practices influence the overarching success of the company?
The corporate business world is a highly competitive field, full of both success and failure. There are millions of companies selling products or services. Only about 25% of those companies will be prosperous after 15 years. A large part of running a successful company is the principles by which it stands. Companies have a responsibility to make ethical decisions regarding the company, in order to obtain sustainability. Business ethics refers to the values and expectations that direct conduct in the business field. It is an essential component of any successful business, not just a theoretical idea. Ethical business practices play a significant role in the overarching success of a company in several ways.
Businesses are realizing the need for ethical practices in a society where social responsibility and transparency are critical. A study conducted by the Ethics & Compliance Initiative (ECI) found that 96% of workers think it’s critical for their companies to have strong ethical values and compliance policies. Moreover, according to a Deloitte survey, 92% of executives think that moral dilemmas pose a serious threat to their company. Businesses must pursue sustainable practices in order to achieve long term success. This highlights the increasing understanding that acting morally is not just the right thing to do, but also a tactical benefit. Companies that put ethics first typically have stronger relationships with their stakeholders, which improves reputation, promotes consumer loyalty, and increases long-term profitability, but there are difficulties in the field of business ethics. Organizations must constantly review and reinforce their ethical frameworks since globalization, technology, and societal standards are changing the expectations. In this dynamic environment, businesses have to manage a balance between revenue and responsibilities, realizing that moral behavior promotes long-term success rather than acts as a constraint.
The logic behind ethical business practices has been evolving since the idea of business itself has been around. No matter how complicated or simple a business may be, people always have to make decisions where they are debating their morals, other’s opinions, and what would be best for the growth of the business. In his journal, The Rise of Business Ethics, Bernard Moss explores the evolution of business ethics in the corporate sector, its historical context, and its current relevance to society. The Journal begins with the development of corporate ethics in the 19th century. The author explains how corporate executives’ actions and choices are closely related to the principles of business ethics. Amongst this, he discussed the significance of business law, and how it set a standard of the principle that business must oblige. The concept of corporate “personhood” in business law was established by the English common law case Foss v. Harbottle in 1843. It established that the courts would not interfere with management decisions made by the company, meaning that a shareholder could not file a complaint against actions that had been approved by the majority of shareholders. The legal notion that a corporation has its own rights and duties and is a distinct legal entity from its stockholders was upheld by the judgment. (Moss, 13) This case has a lasting effect on the world, even today, such that it shows how crucial responsibility and openness are to businesses. In order to represent the interests of shareholders, corporations are now frequently required by corporate governance norms and regulations to hold regular shareholder meetings, disclose information to shareholders, and appoint independent directors to their boards.
Continuing on to the 1900s, large companies have emerged and started monopolies, when one company has total control over the market concerning a particular product or service. This has caused issues with the shareholders of the market, and started debates over corporate companies’ responsibility concerning the shareholders and consumers within the market. There were many cases within courts over the ethical decisions that companies need to make, and who they need to keep in mind when making these decisions. The concept of directors’ duties and the ultra vires rule, as established in Hutton v. West Cork Railway Co., is largely upheld by American courts. But the notion of a business’s “proper purpose” is changing, as seen by the example of Henry Ford and later legal developments like he focus on corporate social responsibility. There is an awareness of the larger impact that firms may and should have on society, provided that they stay within the bounds of the law, even though directors are still expected to operate in the best interests of shareholders and within the company’s legal framework. As time goes on, many more cases emerge in which the more ethical decisions are in question. Many of the cases discussed by Moss explain the precedence made for ethical dilemmas that arise in today’s society.
The corporate field’s ethical dilemmas contain many controversial topics, many which are caused by what the “norm” was in the past. For example, gender equality or racial discrimination. Ethics also pertains to one’s personal values, a decision that one person thinks is morally right could also be offensive to someone different. This all has to do with someone’s personal values, and their “worldview” which is a concept discussed by Michael Boylan, in his journal Business Ethics. He wrote this journal to discuss the general decision making process, and how it relates to our daily lives. Boylan begins by stating that each of us has a unique “worldview.” This has to do with how each of us interprets the world’s goodness or veracity differently. In this regard, Boylan explains that a person’s worldview is composed of four elements: completeness, coherence, connection to the theory of ethics, and practicality. These ideas help to define and shape how an individual or a society views the world, makes decisions, and interacts with others, which relates to the idea behind ethics and how they influence the business world. Boylan shares prominent examples of ethical dilemmas, and how it puts one’s worldview into play, and also how it affects the prosperity of the business. Boylan goes into the idea of job discrimination, this includes intentional and unintentional. Boylan describes how discrimination is hurtful to many people, and gives the company a bad reputation, which will hurt how it progresses in the future. A company that is known for discriminating faces both legal repercussions and moral disapproval. Not just customers from the groups the company discriminates against, but also future clients and customers will be turned away from such a business. The company will be perceived by the public as immoral and out of touch with current societal mores. (Boylan, 280-281) Large demographic gaps within a company indicate a lack of understanding on the part of the company, which will lead to business failures. If women, young people, handicapped people, or other minorities are underrepresented in the workforce, the company is unlikely to make the best decisions. Therefore, discriminating firms are unlikely to succeed. Hence, discrimination is wrong in this sense, but also because it harms people and is unjust, which questions the morality of the managers.
Boylan also addresses the topic of “whistleblowing,” which is the process by which an individual—typically an employee—notifies the authorities of any unlawful, immoral, or dangerous acts taking place within a company, either internally or externally to advocacy groups, government agencies, or other organizations. Boylan gives numerous examples from real life situations where employees of immoral firms rose against them. These individuals took the moral decision in spite of the repercussions, ensuring that no one else might have been harmed. One of these situations is one which involves Jeffrey Wigand working for a large tobacco corporation called Brown & Williamson as a research scientist and vice president of research and development. Wigand believed it was his moral duty to reveal the detrimental effects of the tobacco industry’s activities on public health in order to safeguard consumers. As a scientist and businessman, Wigand had to weigh his ethical obligations to the public and to keep people safe against his commitment to his firm.Wigand suffered reprisals from Brown & Williamson following his exposure. He faced financial and personal difficulties, was sued, and was the target of personal insults. Due to his acts, Wigand faced legal troubles and credibility issues. Because of his image as a whistleblower, he also had trouble getting hired. The tobacco industry’s unethical activities received a great deal of public attention as a result of Wigand’s disclosures. It helped raise public awareness of smoking’s harmful effects and the misleading tactics used by the business. (Boylan, 288) The case serves as an example of an ethical dilemma that whistleblowers face. The struggle between an obligation to reveal unethical or destructive behavior and one’s employer loyalty. Also, it illustrates the personal costs whistleblowers may incur, including court cases, verbal abuse, and financial difficulties. Boylan emphasizes the value of openness, moral judgment, and the possible personal costs whistleblowers may incur in the sake of justice and the public good when confronted with ethical dilemmas.
Chris Provis also explored the ideas behind ethical dilemmas and what they entitle. He writes about the issues surrounding the obligations that come with being a part of a social group, in his journal Individual, Groups, and Business. He explains moral aspects of relationships between friends, family, and coworkers. Also he discusses the extent of our accountability in groups and communities; and the extent to which our ethical commitments to companies, associations, and countries can be based. Provis explains that ethics and business concepts are not dependent on laws or expectations. Provis bases one of his explanations of ethics on the concept of “beneficence.” This is the idea that we should think about how our actions may affect others, seeking to prevent unfavorable results and to maximize positive ones. People argue that treating everyone equally is what’s fair, others think that each person deserves what is based on their individual circumstances, including the amount of effort they have put in and the degree of disadvantage they face. The business sector is aware of how difficult it is to satisfy everyone due to their differences in beliefs and demands. (Provis, Pg. 11) Companies aim to avoid offending someone or causing a dispute since doing so might negatively impact their business. Beneficence is very prominent within corporations as they aim for success, and understand that the employees as well as the customers are what makes a business’s success sustainable. They want to please people, without hurting others, although this is difficult. It relates back to the idea of an individual’s “worldview”, which makes it hard to please everyone, because everyone has different opinions and values.
Provis continues on this idea while explaining how people are frequently forced to make judgements by compelling pressures even when they are not sure what is ethically good or wrong. There may be real differences between people in an organization over what is the right course of action. This emphasizes how values and viewpoints may vary across persons and the subjective character of ethics. Sometimes organizational requirements are valid, and it makes sense to abide by them. The challenge has to do with moral judgment in general. There are several circumstances where choosing a course of action is challenging. This relates to a real life situation that happened in the superior court of New Jersey. Corrine Warthen, the plaintiff, filed a complaint alleging that she was wrongfully fired from her work for refusing to treat a patient who was terminally ill. From a professional standpoint, Warthen believed that operating on the patient would be unethical and would cause more harm than good. Given the patient’s demands, some limitations were reasonable and acceptable. The issue in this case is that the company in question may have obligations and standards that are at odds with what other people view as socially acceptable. (Provis, Pg. 152)
In summary, in the corporate business world, a company’s ethical standards play a major role in determining its success or failure. It is hard to understand the significance of corporate ethics, as shown by both contemporary research and historical situations. Businesses now operate in a dynamic environment where decisions are shaped by stakeholder expectations, transparency, and social responsibility. Not only are ethical business practices morally required, but they also provide an advantage for the success of the company. Businesses that put ethics first typically enjoy longer-term profitability, improved reputations, stronger stakeholder relationships, and increased customer loyalty. Businesses must carefully balance their ethical and financial objectives as they work towards sustainability and development. In the end, the success of the corporate world will depend on its willingness to effectively handle all of these issues and keep an unwavering dedication to moral behavior.
Works Cited
Business Ethics. 2001. ProQuest Ebook Central, pascal-cofc.library.cofc.edu/permalink/01PASCAL_COFC/bkrgbh/alma991009176749705613. Accessed 10 Apr. 2024.
ECI. www.ethics.org/global-business-ethics-survey/. Accessed 10 Apr. 2024.
Individuals, Groups, and Business Ethics. 27 July 2011. ProQuest Ebook Central, ebookcentral.proquest.com/lib/cofc/detail.action?docID=958524. Accessed 10 Apr. 2024.
The Rise of Business Ethics. 18 Dec. 2019, ebookcentral.proquest.com/lib/cofc/reader.action?docID=5986926&ppg=1. Accessed 10 Apr. 2024.
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