Importance of Business Ethics and the Need of the Business Corporations to Effectively Use Business Ethics

3398 words (14 pages) Business Assignment

23rd Sep 2020 Business Assignment Reference this

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1.0 Introduction

As opined by Epstein (2018), a major dilemma that the majority of the business corporation face in the present times is fact that they are often confused regarding the fact whether they should take the help of the construct of business ethics. Crane et al. (2019) are of the viewpoint that the concept of business ethics requires the business corporations to formulate or for that amend their business activities or processes taking into account the entities of ethics, morals, common good and others. More importantly, Alvarado-Herrera et al. (2017) have noted that the effective usage of the construct of business ethics offers different kinds of benefits to the business corporations and also offers them the opportunity to attain sustainability as well. However, it had been seen that the usage of business ethics often reduces the profitability of the business corporations in the short-term range and this is one of the major reasons why the majority of the business corporations forego the use of this particular construct (Cooper 2017). It is in this particular backdrop that the researcher will conduct this literature review related to the topic of business ethics and the need of the business corporations to embrace the same.   

2.0 Research Problem

Wood and Logsdon (2017) are of the viewpoint that the focus of the contemporary business corporations is to increase thereby profitability and thus it had been seen that they take the help of the kind of business measures or for that matter activities which are highly unethical in nature. Adding to this, Trevino and Nelson (2016) have noted that the short-term benefits or the gains offered by the unethical practices have greatly influenced the business corporations to take the help of the same. However, the major problem arises because of the fact that the long-term usage of the different unethical business activities rather than enhancing the profitability of the business corporations adversely affects the same. More importantly, it had been seen that the adequate usage of the construct of business ethics offers the opportunity to the business corporations to substantially improve their brand image, gain competitive edge, offer wide ranging benefits to their stakeholders and others (Rodriguez-Fernandez 2016). Thus, it had become imperative for the different contemporary business corporations to take the help of the construct of business ethics so as to attain sustainability or long-term growth. 

3.0 Research Questions

1) What are the factors which influence the business corporations to use the concept of business ethics?

2) What are the benefits that the business corporations have the opportunity to gain through the usage of business ethics?

3) What are the challenges that the business corporations face for the usage of the concept of business ethics?

4) How can the usage of business ethics help the business corporations to attain competitive advantage or sustainability?

5) Why there is a need on the part of the business corporations to use the concept of business ethics?

4.0 Overview of the concept of Business Ethics

As stated by Kolk (2016), business ethics can be seen as a form of professional ethics or for that matter applied ethics that the business corporations are required to take into account for the purpose of modeling their business activities or processes. Adding to this, Ferrell and Fraedrich (2015) have noted that business ethics is generally seen as a set of procedures as well as business practices which often encompasses a plethora of topics like corporate governance, corruption, corporate social responsibility, briber, discrimination and others. Furthermore, the different unethical business practices followed by the business corporations had necessitated the usage of the construct of business ethics by the same. In addition to these, it had been seen that the different benefits offered by the usage of the construct of business ethics like the opportunity to gain competitive advantage and sustainability, the opportunity to improve brand image, contribute meaningfully towards the improvement of the social, economic and environmental conditions also influence the business corporations to use the same (Monshipouri, Welch and Kennedy 2017). However, as discussed by Hockerts (2015), the major issue related to the same arises because of the fact that although the usage of business ethics offers different benefits to the business corporations yet at the same time it had been seen that in the short-term range it adversely affects the profitability or for that matter the growth prospects of the business corporations.    

5.0 Factors affecting the usage of Business Ethics by the Business Corporations

5.1 Legislations of the national government

Saeidi et al. (2015) are of the viewpoint that the different legislations, stipulations, mandates and others of the national governments of the different nations of the world related the manner in which the business corporations are required to conduct their business operations in the concerned nation have greatly influenced the usage of the construct of business ethics by the business corporations. For instance, it had been seen that the national governments of the different nations in the face of the ever-increasing number of unethical practices used by the business corporations and also the benefits offered by the usage of the construct of business ethics had strictly instructed the business corporations to use the same (Welford 2016). More importantly, within the spectrum of the different nations of the world failure to comply with the stipulations related to business ethics by the business corporations can lead to various kinds of penalties and even liquidation in some of the serious cases. These in turn had propelled the different business corporations to use the construct of business ethics within the framework of the different business measures used by them. 

5.2 Ethical Code of the Business Corporations

As noted by Grimm, Hofstetter and Sarkis (2016), the different business corporations realizing the benefits offered by the construct of business ethics in the present times have formulated an ethical code of their own which in turn is being used by them for the modeling of the business activities used by them. More importantly, Tran et al. (2015) have stated that the business corporations need to ensure the fact that the ethical code which is being used by them is in alignment with the stipulations of the national government and also with the various ethical theory of utilitarianism, stakeholder’s theory, triple bottom approach to sustainability and others. Thus, it can be said that the formulation of ethical code is an important factor which had made the business corporations to take into account the entity of business ethics.   

5.3 Personal Code of Ethics

As discussed by Picciotto (2017), the employees working with a business corporation have their own ethical code regarding the manner in which they intend to complete the different job roles that are belong delegated to them. More importantly, if the workers are eager to follow ethical measures then this in turn influences the business corporations to use the concept of business ethics within the spectrum of the business activities used by them. 

5.4 Social Pressures

Grayson and Hodges (2017) are of the viewpoint that in the face of the large number of options that are available to the customers they have started to take into account the brand image of the business corporations, the nature or for that matter the kind of business practices used by them and others. More importantly, it had been seen that the brand image of the business corporations is directly tied up with the nature of the business practices which are being followed by them and also with the decision of the customers as well (Alvarado-Herrera et al. 2017). Furthermore, this had a profound impact on the profitability of the business corporations and thus it had become imperative for the business corporations to take into account the aspect of business ethics. 

5.5 Organizational Culture

The workplace or for that matter the organizational culture which is being followed within the framework of a particular business corporation directly influences the usage of business ethics. For example, if the workers and the management team of a particular business corporation actively take the help of the entity of business ethics for the completion of the different tasks or projects that they need to complete then it becomes important for the business corporations to integrate the same within the broader strategies or measures followed by them (Glass, Cook and Ingersoll 2016). More importantly, within the spectrum of many business corporations it had been seen that the employees have activity fostered the usage of the entity of business ethics by the same. 

5.6 Leadership and Management approaches of the Business Corporations

Wood and Logsdon (2017) have noted that the leadership or for that matter the management approach which is being followed by the different business corporations greatly influence the usage of business ethics by the business corporations. For instance, if the practice of ethical leadership is being followed within the spectrum of a particular business corporation then this in turn encourages not only the employees but also thee corporation itself to active use the concept of business ethics for the conduct of their business operations (Ferrell and Fraedrich 2015). 

6.0 Benefits derived by the Business Corporations through the usage of Business Ethics

As discussed by Monshipouri, Welch and Kennedy (2017), one of the most important entities which influence the business corporations to actively take the help of the process of business ethics can be ascribed to the benefits offered by the usage of the same. An important benefit that the adequate usage of business ethics offers to the corporations is the fact that it helps them to substantially improve their brand image (Tran et al. 2015). For instance, the ever-increasing focus on the contemporary customers on the aspect of ethics and also the nature of the business activities which are being used by the business corporations for the management of its business operations are the two most important factors which influence the customer buying behavior (Grayson and Hodges 2017). More importantly, the usage of business ethics also helps the business corporations to fulfill the precepts of the stakeholder’s theory which states that the business corporations need to indulge in those kinds of business activities that will create and capture value for their stakeholders (Grimm, Hofstetter and Sarkis 2016). This finds evidence from the fact that the usage of business ethics by the business corporations requires them to take into account the triple bottom line approach to sustainability and thereby contribute adequately towards the improvement of the condition of the society, environment and the economy of the nations of their operation (Trevino and Nelson 2016). Thus, the business corporations through the usage of business ethics have been able to create value not only for the stakeholders who are directly related to their business but also the ones who are indirectly affected by their business operations and this in turn have enabled them to effectively improve their brand image. This aspect in turn had helped them to earn customer satisfaction or loyalty and thereby earn a higher amount of profitability.

Crane et al. (2019) are of the viewpoint that the usage of the construct of business ethics by the business corporations while offering them the opportunity to improve their brand image also offers them the opportunity to attain competitive edge as well. For instance, in the face of the ever-increasing number of options that are available to the customers it had been seen that the customers generally do not opt for the products or services offered by a business corporation which takes the help of unethical measures regardless of the value proposition of the products or services offered by them (Glass, Cook and Ingersoll 2016). Thus, it had been seen that the handful of business corporations which are actively using business ethics have been able to outrival their market or for that matter business competitors irrespective of the value proposition of the products or services offered by them. More importantly, the business corporations through the usage of business ethics have been able to remodel the supply chain management practices, marketing practices, manufacturing processes and others used by them which in turn have enabled them to substantially reduce their operations cost and thereby maximize their profitability (Alvarado-Herrera et al. 2017). These in turn in the longer-run is likely to help the business corporations taking the help of business ethics to attain sustainability.      

7.0 Challenges faced by Business Corporations for the usage of Business Ethics

The benefits offered by the usage of business ethics by the business corporations notwithstanding there are various challenges that the business corporations face for the usage of the same. For instance, the shareholders who are associated with a particular business corporation often look to maximize the profitability of the concerned corporation (Grayson and Hodges 2017). Thus, it had been seen that the shareholders who are associated with a particular business corporation often discourage the same for the usage of the entity of business ethics. In addition to this, it had been seen that the usage of business ethics requires the business corporations to make substantial changes within the supply chain management, operations process, marketing processes and others used by them so as to make them more ethical and environmentally friendly (Monshipouri, Welch and Kennedy 2017). The resultant effect of this is that the business corporations are often hesitant to use business ethics because of the additional cost that they need to bear for the usage of the same.   

8.0 Literature Gap

The researcher during the completion of this literature review found that a significant amount of academic or for that matter scholarly research have already been conducted on the topic of business ethics and the benefits that the business corporations have the opportunity to derive through the usage of the same. However, at the same time it needs to be said that the researcher was not being able to find number of scholarly works on the factors which influence the usage of business ethics by the business corporations or for that matter the challenges that they face for the usage of the same. In the face of this, it can be said that this will be a unique research since the future researchers will have the opportunity to use this particular research as a framework for the purpose of conducting further future research on the topic under discussion here.  

9.0 Conclusion

To conclude, on the score of the plethora of benefits which the usage of business ethics offers to the business corporations it had become important for them to take the help of the same. More importantly, the discussion clearly indicates that the governmental legislation, ethical code of the business corporations, organizational culture and others are some of the major factors which affect the usage of business ethics by the corporation. Furthermore, the business corporations have the opportunity improve their brand image, gain competitive edge, attain sustainability and others through the usage of business ethics. Lastly, two of the major challenges that the business corporations face for the usage of business ethics can be attributed to the resistance from the shareholders and the cost that they incur for the usage of the same. These aspects of the concept of business ethics and the benefits that the business corporations derive through the usage of the same become apparent from the above analysis of the same.

10.0 References

  • Alvarado-Herrera, A., Bigne, E., Aldas-Manzano, J. and Curras-Perez, R., 2017. A scale for measuring consumer perceptions of corporate social responsibility following the sustainable development paradigm. Journal of Business Ethics140(2), pp.243-262.
  • Cooper, S., 2017. Corporate social performance: A stakeholder approach. Routledge.
  • Crane, A., Matten, D., Glozer, S. and Spence, L., 2019. Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.
  • Davies, A., 2016. Best practice in corporate governance: Building reputation and sustainable success. Routledge.
  • Epstein, M.J., 2018. Making sustainability work: Best practices in managing and measuring corporate social, environmental and economic impacts. Routledge.
  • Ferrell, O.C. and Fraedrich, J., 2015. Business ethics: Ethical decision making & cases. Nelson Education.
  • Glass, C., Cook, A. and Ingersoll, A.R., 2016. Do women leaders promote sustainability? Analyzing the effect of corporate governance composition on environmental performance. Business Strategy and the Environment25(7), pp.495-511.
  • Grayson, D. and Hodges, A., 2017. Corporate social opportunity!: Seven steps to make corporate social responsibility work for your business. Routledge.
  • Grimm, J.H., Hofstetter, J.S. and Sarkis, J., 2016. Exploring sub-suppliers' compliance with corporate sustainability standards. Journal of Cleaner Production112, pp.1971-1984.
  • Hockerts, K., 2015. A cognitive perspective on the business case for corporate sustainability. Business Strategy and the Environment24(2), pp.102-122.
  • Kolk, A., 2016. The social responsibility of international business: From ethics and the environment to CSR and sustainable development. Journal of World Business51(1), pp.23-34.
  • Monshipouri, M., Welch, C.E. and Kennedy, E.T., 2017. Multinational corporations and the ethics of global responsibility: Problems and possibilities. In Human Rights and Corporations (pp. 123-147). Routledge.
  • Picciotto, S., 2017. Rights, responsibilities and regulation of international business. In Globalization and International Investment (pp. 177-198). Routledge.
  • Rodriguez-Fernandez, M., 2016. Social responsibility and financial performance: The role of good corporate governance. BRQ Business Research Quarterly19(2), pp.137-151.
  • Saeidi, S.P., Sofian, S., Saeidi, P., Saeidi, S.P. and Saaeidi, S.A., 2015. How does corporate social responsibility contribute to firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction. Journal of business research68(2), pp.341-350.
  • Tran, M.A., Nguyen, B., Melewar, T.C. and Bodoh, J., 2015. Exploring the corporate image formation process. Qualitative Market Research: An International Journal18(1), pp.86-114.
  • Trevino, L.K. and Nelson, K.A., 2016. Managing business ethics: Straight talk about how to do it right. John Wiley & Sons.
  • Welford, R., 2016. Corporate environmental management 3: Towards sustainable development. Routledge.
  • Wood, D.J. and Logsdon, J.M., 2017. Theorising business citizenship. In Perspectives on corporate citizenship (pp. 83-103). Routledge.

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