(Classical, Stakeholder, CSR)
Is Ethical Behavior Good for Business? • "The successful entrepreneur must know how to glide over every moral restraint with almost childlike regard... [and have], besides other positive qualities, no scruples whatsoever, and [be] ready to kill off thousands of victims -- without a murmur.” - John D. Rockefeller.
Is Ethical Behavior Good for Business? • Some Costs of Ethical Misconduct – Public/Interest Group/NGO disgrace/scandal/ostracism/repudiation/protest s – Litigation/Prosecution – Decreased Employee Morale/Loyalty/Commitment/Performance/Prod uctivity – Loss of Business/Profits – Loss of Customer/Supplier/Partner, Trust/Goodwill/Loyalty
Is Ethical Behavior Good for Business? • Some Additional Costs of Ethical Misconduct – Loss of Social/Reputation Capital/Goodwill (i.e. the willingness of stakeholders to overlook failings) – Shaken public confidence in company and in capital markets – Layoffs – Loss of Investments/Pensions – Increased Government Scrutiny/Regulation – Environmental/Health Damage
Is Ethical Behavior Good for Business? • Impact on the Bottom Line – Ethical Behavior Enhances profitability - Most academic studies support the conclusion that ethical behavior and profitability go hand in hand
Is Ethical Behavior Good for Business? • A 1999 DePaul University study of 300 large firms found that companies that make an explicit commitment to follow an ethics code provided more than twice the value to shareholders than companies that didn't. And it gets better: According to Management Review, published by the American Management Association, "For the 47 companies expressing a more extensive or more explicit commitment to ethics, the market value added difference was larger--an average of $10.6 billion, or almost three times the MVA of companies" without similar commitments.
Is Ethical Behavior Good for Business? • “Two professors at the Harvard Business School did a study of 207 major companies over an 11-year period. They used all sorts of measuring devices and came up with a ranking by corporate cultures. What they measured were things that are sometimes called the soft side of business-morale, rewards for creativity, emphasis on ethics, how well managers listen to their employees, and so on. In my business we call them more or less spirited workplaces. We could also call them companies with a high or low level of integrity. They then put these companies up against the hard side, the bottom line, on three measures: 1] gains in operating earnings, 2] return on investment, and 3] increase in stock prices. Terry Deal, who coined the term corporate culture, took a second look at those numbers, ran the same numbers again, and came up with an analysis of the top 20 companies vs.
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- Summer '16
- DWI MARTANI
- Business, Ethics, moral principles, Responsibility Theory