The importance of ethics in the business world is extensive and fundamental. New issues and trends emerge daily which may attract an obligation to organizations and consumers. Presently, the need for ethical behavior in organizations has become necessary to forestall likely lawsuits. The public scandals of corporate malfeasance and deceptive practices have affected the public opinions of many organizations.
The recent expansion of international businesses and the failure of trade barriers globally have also highlighted the issue of ethical behavior; multinational companies develop and expand globally and enter foreign markets.
Thus, ethical behavior of the organization and employees assumes added significance because the cultural diversity connected with the expansion may reduce the shared social and cultural values that are manifest in comparable organizations.
Business organizations are dedicated to being sustainable organizations by fixing cohesive shareholder value while being cautious and responsible. It is internationally affirmed that the only possible way to attain this strategy is to incorporate social, economic and environmental ethics into an organization business strategy.
With this development, ethics stands out as pivotal because it establishes a greater engagement with different socioeconomic and cultural systems. Thus, ethics has remained a significant basis for businesses which aim for success as the sense of forming a strong ethical culture has become part and parcel of an organization’s growth, reputation and finances.
According to Lennick and Kiel, managing a supply chain responsibly is a leading global issue affecting most international businesses globally (2007).
Whereas business organization is not legally responsible for their suppliers performance, ethics makes a business appropriate and reasonable to engage in direct cooperation and encourage dialogue with their suppliers. This promotes ethical practice between suppliers and the organization (to Lennick and Kiel, 2007).
An ethical business practice places an organization in a favorable political and legal framework, improves the organization’s public image and guarantees a competitive advantage over its competitors in the long-term plan besides helping it to streamline its management portfolio more comprehensively.
Further, the demands of customers, market forces globally and the opportunity for pre-empting the laws provides more incentive to an organization (Roberts, 1998). An ethical business improves its profitability and the ability of the organization to reach a larger share in global markets.
An organization which abides by the legal and political aspects sets an outstanding example and encourages other international organizations to emulate it thus spreading the practice globally (Dicken, 2003).
It also improves its relationship with the regulatory bodies and finds it less difficult for decisions on operating licenses. It also lessens or uproots exposure to criminal, civil or litigation sanctions in territories the business operates.
Also, on aspects of relations to the public, customers and suppliers are also improved. The organization establishes satisfaction, customer attraction and loyalty when customers are exercising their right of choice. Besides, it reduces the risk of boycotts, tarnished public image and eradicates negative publicity.
According to Dickens (2003) the organizational aspects of the business are streamlined i.e. there is increased transparency, employees are motivated, it diffuses new technologies and encourages best management practices. This induces better control and efficient management of supply chain.
Wimbush and Shephard (1999) also draws that ethics plays a decisive role in economic and financial management. An ethical business reduces the operations cost through systematic management of resources.
Moreover, it spends less in doing businesses and attracts new business opportunities through strict business ethics policies (Dicken, 2003). The business also surges productivity by having a motivated workforce and include opportunities in ethical responsible investment indices.
Ethics is essential towards business success. They articulate an organization stand in the society and what is expected of it.
Thus, to secure a competitive advantage and add value to its services/products, a global organization should have ethics which guarantee standards and benefits to its operations worldwide (Robertson and Fadil, 1999). This will help it win or retain customers, improve the relationship with its suppliers, motivate its employees, build its public image and avert legal and political aspects wherever found.
References
Dicken, P., 2003. Global Shift: Reshaping the Economic Map in the 21st Century (4th Eds.). London: Wiley
Lennick, D., & Kiel, F., 2007. Moral Intelligence: Enhancing Business Performance and Leadership Success. Pennsylvania: Wharton School Publishing
Roberts, S., 1998. Harness The Future: The 9 Key Strategies To Emerging Consumer Behavior. London: Wiley.
Robertson, C., and Fadil, P.A., 1999. “Ethical Decision Making in Multinational Organizations: A Culture-Based Model”, Journal of Business Ethics 19: 385- 392.
Wimbush, J.C., and Shephard, J. M., 1984, “Toward an Understanding of Ethical Climate: It’s Relationship to Ethical Behavior and Supervisory Influence”, Journal of Business Ethics 13:637-647.