Business is one of the most competitive fields we can think of. Striving for competitive advantage and maximizing profits constitute its inevitable part. Many people claim that greed and materialism drive entrepreneurs into the state of the constant pursuit of enormous benefits at all costs. With almost regular news about serial scandals, fines and show trials related to various businesses, becoming an entrepreneur can appear almost criminal. However, looking at this case from a strictly theoretical side, without ethics, any company could not function. In securing a transaction, the ethical approach plays a crucial role since it requires a great deal of trust and integrity.
We can define business ethics as values and principles governing a company's actions regarding what is right and what is wrong for society and the environment. This term also means applying principles of honesty and fairness to relationships with stakeholders (people impacted by the company's actions, that have an interest in its success).
For quite some time, more and more companies have been implementing ethical principles to their core values as parts of a CSR strategy. Corporate Social Responsibility – an evolving business practice incorporating sustainable development into a company's business model - became a new trend in building a brand's image and consumer loyalty. It is completely understandable since customers are becoming more and more demanding towards enterprises. They no longer want just to receive a product or a service. They expect companies to get involved in solving social problems due to their access to resources and the possibilities that businesses have to influence the world.
Some people suggest that ethical business is simply an oxymoron and criticize the CSR concept. Milton Friedman, laureate of the Bank of Sweden Nobel Prize in Economics, was at the forefront of this group. He argued that only human beings have a moral responsibility for their actions and that there is no such thing as the "company's responsibility." In his famous article from 1970, he stated that "The social responsibility of business is to increase its profits."
In discussions on that topic, a frequently reappearing argument is that the costs of companies' involvement in solving social or environmental problems can become a severe issue in reality characterized by extreme competition and overwhelming pressure to cut costs. But does implementing ethics really serve just as an unprofitable practice for business?
It is worth noticing that nowadays, many companies have proven that ethics does not only not bother, but even enables a higher profit. Many companies using ecologically derived ingredients or complying with, for example, Fairtrade provisions are continuously gaining new consumers due to their ethical standards of production. People are becoming significantly more informed about the ways and consequences of the production process. The environmental problems are getting more severe, which made many people switch to more eco-friendly goods and services. Also, the exposition of animal cruelty in several branches made people resign from particular products.
In today's world of instant global information spread, the business environment pays a lot of attention to human rights, corporate governance, and the fight against corruption. A study conducted in 2013 by Crido Taxand, Employers of Poland Organization, and the ICAN Institute proved that the negative consequences of unethical behavior led to image losses claimed by 73% of board members and 77% amongst HR department workers.
Another argument in favor of business ethics is the beneficial influence of ethical principles on the company's functioning and effectiveness. It has been proven that the most potent human motivation is the need for dignity, not necessarily the salary. That was confirmed by the words of an unquestioned expert in the field of management, Peter Drucker. He has claimed that the most efficient work is volunteer work and the least – the work of a slave.
Of course, several branches still have particular problems in introducing business ethics since that could lead them to significant losses of customers in favor of competition. Nevertheless, raising the standards and creating a new business consciousness is still the goal that we should be following. Creating ethical codes and standards that - on the one hand - increase the competitiveness of companies and - on the other - have a good impact on the social and natural environment of the company is the answer to many problems.
To improve their image and reputation, companies will take various actions. If a value for society is created at the same time, it leads to transforming the world into a better place.
Additionally, remember that we are absolutely entitled to feel the power of being consumers – we can all contribute to changing the world every day, only by paying attention to what we buy!
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