Is ethics profitable Essay Example | Topics and Well Written Essays - 1000 words

Is ethics profitable - Essay Example The constantly changing competitive environments in the business world forces businesses to find new methods to counter the competition as opposed to the so-called traditional ways. These traditional methods included better products, more services, or lower prices. In the contemporary world, business firms are responding to these competition challenges by introducing partnerships and more mutual relationships with their customers and other stakeholders in the business. In the last years, there have been discussions regarding ethics practices in business firms. The general assumption of this subject is that firms need to do what is morally right for their customers as well as their employees. However, the common practice in the business field is that of unethical and illegal activities. Most organizations are yet to understand or realize the financial impact of high ethical standards in business firms (Heskett et al. 34). According to most businesses in the present world, ethical practices impose an unnecessary financial constraint. Tax evasion and underpaid personnel comprise unethical but, nonetheless, appealing practices. From this perspective, it seems that profits and ethics have an inverse relationship. Managers and directors of businesses assume that ethical practices and programs are very expensive activities. This means that ethical practices have no positive impacts on the profitability of business firms. In this case, this ideology suggests ethics as not being profitable to a business organization. It seems that companies with ethical practices record low or constant profits, and hence, most managers still rely on the traditional modes of improving profit levels of an organization. On a more positive aspect, ethics improves the profit levels of a business firm through various ways. Examples from the business field indicate that there is a positive correlation between a firm’s activit ies, ethical behaviors, and the firm’s bottom line outcomes. The reputation of a business in terms of ethical business activities can be a major source of competitive advantage in the business segment. The most important ways in which ethics contributes towards profitability of a company is through the minimization of the cost of business transactions, construction of a foundation of trust with stakeholders, and maintenance of social capital. More so, high standards of a firm’s ethics contribute towards an internal environment of successful teamwork amongst employees which, in turn, impact the profit levels. According to various studies, companies viewed as ethical by company stakeholders, for instance, employees, public, customers, and suppliers, enjoy several competitive advantages. These competitive advantages in the business community include higher levels of commitment, higher levels of efficiency in operations, and increased levels of