Behaving ethically makes good business sense

The goal of business is to make money and maximize profit. Business is to pursue self-interest, while ethics is about the consideration of others. Some people think that, in today's highly competitive world, it is hard to be always ethical, and a lot of people choose profits over principle (Anderson, 1996). Growing regulations in established markets have added costs. During the past several decades, competition has been intensified and driven the costs down, which pressured businesses to find low cost source and consequently some companies ignored ethical compliance. However, business ethics are moral rules and regulations guiding business activities. A great deal of attention has been paid to ethical behaviors nowadays. It is destructive if the leadership of a company does not behave ethically. WorldCom and Enron are examples of companies that ignored the ethical practice of their business. The Enron’s former CEO, Jeff Skilling, was sentenced 24 years in prison after being convicted of 19 criminal counts. Ex-WorldCom chief executive, Bernard Ebbers, was sentenced to 25 years in prison for his role in the biggest corporate fraud in the nation's history. In the wake of corporate scandals that cost employees and investors billions of dollars, the federal government passed legislation that requires publicly-registered corporations to have a corporate code of ethics, which provides a way to legally address such behaviors. The Federal Sentencing Guidelines for Organizations provide an additional incentive for having corporate codes of ethics. Companies that follow the guidelines to prevent unethical and illegal behavior are likely to receive less severe punishment in case something unexpected happened. Though Enron and WorldCom cases are extreme, the growth of the global economy is drawing more attention to the ethical spotlight. Google and Yahoo, both respected Internet search engine companies with good reputations, were criticized heavily for complying with the Chinese Government's efforts to control the flow of information in order to enter the market. Google in particular came under attack from the media, due in part to its informal corporate motto: "Don't be evil". Therefore, industry is under more pressure to improve business ethics through new public initiatives and laws (higher UK road tax for higher-emission vehicles, 2009).

Good ethical practice may cost money in short term. But ethical behavior could gain competitive advantage in the long run. Company’s activities are interdependent on each other for success. Organizations need to cooperate with others to achieve their objectives. For example, a company cannot succeed without the help of its employees, suppliers, and customers. Managers cannot be successful without the help of superiors and subordinates. Good work ethics can produce high quality work. In addition, ethical practice “increases in customer loyalty, enhances brand image, and produces tiebreaker effects for customer purchasing decisions” (Verschoor, 2001). It saves money if employees work hard to do things right at the first time. Japanese cars demonstrated the competitive advantage of good job. Actually, Japanese industries had been dominating world markets in the area of auto, semiconductor, and consumer electronics sectors with the highest customer satisfaction and lowest manufacturing costs. Japanese workers' hard work ethics changed the way people think about the cost and benefit of ethics.  

Modern management theory indicates that financial strategies need to be aligned and supported by employees. To achieve financial goals, companies need employees to stand behind the organization's strategy. The ethical behavior of the leadership can promote employees commitment. Ethical practices not only can ensure moral conduct but also can gain business advantage. Establishing, applying and continually improving a company's code of ethics is one of the steps that can be taken to establish an ethical workplace to increase productivities. “The primary ethical concerns of businesses fell into four categories: equity, rights, honesty, and the exercise of corporate power” (Heil, 2011) Joseph stated: Executives are seeing value in actively promoting ethics within their organizations. The list of potential benefits linked to an effective ethics program includes the following:

• Recruiting and retaining top-quality people;
• Fostering a more satisfying and productive  working environment;
• Building and sustaining association’s reputation within the communities in which you operate;
• Aligning the work efforts of staff with the association’s broader mission and vision. (2000)

More and more firms realized that behaving ethically is important for business to success. Ninety percent of the Fortune 500 firms, and almost 50 percent of all other firms, have ethical codes. Increasingly, customers, clients and employees are deliberately seeking out those who define the basic ground, rules of their operations (Jain, 2010). Without being ethical, companies cannot be competitive at either the national or international markets.