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Discuss the view that few business make truly moral decisions and that most implement ethical policies to gain a competitive advantage

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Introduction

Discuss the view that few business make truly moral decisions and that most implement ethical policies to gain a competitive advantage. Ethics alone tend to be defined as a moral code of conduct that is perceived to be the right thing to do. An ethical decision means doing what is right, as apposed to assessing the most profitable course of action. In the past, free market ideology was that corporations were kept responsible to customers, shareholders, workers and society by customer and investor behavior, seen in share price. Millions of individual "voters" in the market place ensured they behaved. "Bad" corporations were punished by selling. "Good" corporations were rewarded by buying. "Market forces will sort it all out". This ideology weakened the idea of business ethics and accountability as the most profitable and secure were the best for investment and how they held and maintained this position wasn't a consideration. Today, the increasing involvement of the media in business affairs has resulted in members of the public being more informed and less tolerant of what they consider to be immoral behaviour. The amount of information available to the general public has increased due to the actions of pressure groups and easy access through evolving technology. ...read more.

Middle

If a commercial advantage can be gained without incurring too many additional costs, then a complete change of corporate philosophy might result. However, this is still based on potential rewards outweighing potential costs. An ethical decision based on nothing but morals is free of monetary constraint and therefore even in this ethics conscious age the bottom line of cost and profit still rules within business, making truly ethical policy an impossibility. Even in the absence of truly righteous behavior businesses nowadays certainly like to be perceived as being morally ethical and there is no doubt this does pay. The performance of a sample from FTSE 350 companies with an available code of ethics was recently compared to a similar sample of those without. Four financial measures were used and the data covered the period 1997-2001. * Regarding financial performance, from three of the four measures of corporate value used in this study (EVA, MVA and P/E ratio) it was found that those companies in the sample with a code of ethics had, over the period 1997-2001, out performed a similar sized group who said they did not have a code. * Companies with a code of ethics generated significantly more economic added value (EVA) ...read more.

Conclusion

In business ethics, what was good is becoming bad and what was considered bad is now good. Standards for business ethics that have worked for decades are looking old fashioned or immoral while other practices that raised questions are becoming totally acceptable. If ethics and morals truly are black and white and true ethical decisions can be made, how can they change with consumer perception? Consumer sovereignty sets the standards and businesses change their 'image' to comply in the way that results in survival and maximum profitability. The danger now for businesses adopting token ethical stances is that the attentions of the media and pressure groups might reveal the superficial nature of their principles. This would be a public relations nightmare, causing substantial damage to the business reputation and profits. So what is going to happen next in business ethics? How can corporations use business ethics to restore confidence and protect themselves against tomorrow's headlines? What will be the new "Gold Standard" for business ethics and corporate governance? How much further than legal minimum requirements for business ethics should corporations go to ensure sustainable success? Whatever happens it will all just be the next image that is in-keeping with public requirements and profit will always remain the driving force behind business. Economies and society simply wouldn't survive any other way. ...read more.

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