Ethical Business Behaviour

Definition:

Ethics is the practical application of moral values; the promotion of actions, decisions and processes that result in ‘good’ outcomes for individuals and society. Most unethical actions are against the law, but the law does not (and cannot) cover everything.

In pursuit of profit, business enterprises can undertake actions that are deemed to have negative consequences for society and the environment.

Businesses are created to make profit for their owners. But if in pursuit of profit their behaviour damages the lives (health, lifestyle, wellbeing) of consumers, employees and the community within which they operate, this  is considered unethical.

In order to maximise sales and minimise costs, businesses can cut corners in pursuit of profit, putting lives at risk.

Contemporary Ethical Issues:

Ethical issues can involve business processes (the way they do things) and business output (what they actually produce and sell).

Ethical process issues can include:

• Utilising low cost labour from developing nations

• Underpaying staff and forcing overtime

• Using technology that damages the health and wellbeing of communities

• Denying customer complaints and delaying / denying resolution

• Using marketing tactics that mislead consumers / intentionally manipulate

• Targeting vulnerable markets for profit (children, sick, elderly, poor)

• Restricting access to services; outpricing poorer markets

• Intentionally cheating suppliers, ripping off consumers

Ethical output issues include:

• The sale of food and beverage goods that are damaging to the health of consumers (fast food, sugary drinks, sugary foods)

• The sale of goods that have been proved to cause diseases and social issues (cigarettes, alcohol, drugs that don’t work)

• The sale and distribution of goods that damage lives through violence (weapons manufacturing, arms dealers)

• The sale of goods that are unproven to do what advertised to do (natural therapies, supplements)

Encouraging Corporate Social Responsibility:

The practice of Corporate Social Responsibility (CSR) by a firm can have multiple positive consequences. Committing to ethical practice as a firm (Code of Ethics) can have an impact on firm profitability, but is vital for the long-term success of the firm. Positive consequences include: 

• Reduced risk of brand damage as a result of exposure of unethical practices;

• Increased customer satisfaction and willingness to pay a premium (more revenue);

• Increased business culture and worker satisfaction (higher productivity and loyalty)

• Development of a reputation for positive impacts on lives (consumers, workers)

• Edge over low-cost rivals