Corporate Social Responsibility (CSR) has become a household topic among scholars, particularly in the field of business management, and it is gaining wider acceptance in today’s contemporary world. The central debate surrounding CSR revolves around whether organisations should be socially responsible. Within private organisations, this discussion primarily presents an ethical dilemma, blending social welfare concerns with the profit and wealth maximisation motives of private firms.
Interestingly, the principle of business ethics cannot be entirely separated from the concept of CSR. Business ethics can be defined as the study of proper business policies and practices related to potentially contemporary and controversial topics such as corporate governance, insider trading, bribery and corruption, embezzlement, discrimination, fiduciary responsibilities, and corporate social responsibility (CSR) (Wikipedia).
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It is important to note that debates persist across various corporate jurisdictions about whether ethical or morally acceptable behaviour necessitates rejecting potentially profitable activities due to their unacceptable dimensions. Business ethics is often considered subjective, varying between firms and geographical locations.
Several pressing questions have emerged in different contexts: Should a firm relocate to a country with lower wage levels? Should a company release a life-saving drug for examination? Can a firm balance health and safety considerations? Should an organisation practice positive discrimination in any way? Should working hours be limited? Above all, should advertising exclude children and focus solely on adults?
“Remarkably, a strong business ethics model can substitute for costly advertising and publicity efforts, leading to increased sales volume and profitability.”
Answering these critical questions effectively gives rise to the concept of business ethics.
Corporate code of ethics examined
The Corporate Code of Ethics, also known as Business Ethics, involves the study of proper business policies and practices concerning contemporary and controversial issues, including corporate governance, insider trading, bribery and corruption, embezzlement, discrimination, fiduciary responsibilities, and corporate social responsibility.
This code can be viewed as a framework regulated by rules, while some believe it provides a basic guideline that businesses may choose to follow for general public acceptance.
In simple terms, business ethics comprises the principles that guide the behaviour of a business. The same rules and ideologies that govern an individual’s actions and inactions are applicable in the context of business. Moreover, business ethics offer robust rules and guidelines for an organisation’s decision-making structure.
It is crucial to understand that business ethics differ from general social behavioural patterns. Evidence suggests that a firm’s ethics significantly influence its reputation.
Good business ethics are essential for the long-term success of any business. Implementing sound ethical practices fosters a healthy organisational culture, which, in turn, significantly boosts profitability. While establishing a strong ethical framework requires considerable time and energy, the results go beyond enhancing the company’s image—it can also change lives.
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The role of ethics in business success
An organisation’s ethical stance reflects its commitment to surpassing minimum regulatory and ethical obligations toward its stakeholders and society at large. The extent to which a company adopts such practices often depends on the ethical perspective of the firm and its leadership.
Ethical stance, which represents the position one takes when confronted with ethical dilemmas, may be influenced by numerous factors. A robust ethical model leads to greater brand patronage, increased sales, and higher profit margins over time.
Business ethics influence all levels of business activities and interactions with stakeholders, including employees, customers, competitors, and suppliers. A well-implemented ethical model encourages addressing customer concerns, ensuring honest and fair dealings with suppliers and customers, and enhancing the welfare of stakeholders without prejudice. It also supports the production and delivery of high-quality goods or services, fostering product loyalty.
Remarkably, a strong business ethics model can substitute for costly advertising and publicity efforts, leading to increased sales volume and profitability. This financial success translates into adequate tax payments to the government, bolstering public revenue and supporting the provision of essential infrastructure.
Building public trust and credibility
Above all, adherence to a good ethical framework promotes a company’s ability to act in the public interest, thereby enhancing public trust in the business and improving its credibility.
Kingsley Ndubueze Ayozie, FCTI, FCA, is a Public Affairs Analyst and Chartered Accountant writing from Lagos.
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