Is Business Ethics an Oxymoron?
Business, like any other sphere of work, is a basic, cooperative activity. Business ethics set the standard for how a business should be conducted. Ethical business is essentially concerned with how profit is made, whereas traditional, profit-centric, free-market based business is only concerned with how much profit is made.
The dilemma thus arises from the inherent conflict between morality and pursuit of profit. The pivotal question being asked is that if business is about generating profit, can it really do so while still remaining ethical?
The answer is that businesses can act ethically, and they should do so because ethical behavior is by far the best long-term strategy for a company.
Several studies have looked for a correlation between good ethics and good corporate performance. There are huge organisational advantages from behaving ethically — with humanity, compassion, and proper consideration for the world beyond the boardroom and shareholders. There is a sea of examples out there of consistently profitable companies that also have a longstanding history of ethical conduct, such as Microsoft, T-Mobile, Starbucks, Home Depot, PepsiCo, Levi Strauss, Intel Corporation, and Rockwell Collins.
While some studies show no tangible correlation between ethical behavior and corporate profits, no study so far has been able to prove a negative correlation between ethics and profitable operations. Therefore, statistically speaking, running a business ethically can give a company a significant advantage in the long run over companies solely motivated by profit.
In practice, a business run out of sheer self-interest tends to compromise on ethics when there is something to be gained, but because business involves reputation and relationships, unethical behavior usually backfires in the long run. People are more likely to want to associate themselves with a company that has a history of integrity as opposed to one that does not. Unethical behaviour may subvert a business' reputation and thereby estrange all of its stakeholders ― employees, customers, suppliers, and shareholders. Enron, Halliburton, Toyota, Satyam and Lehman Brothers are examples of companies that failed due to unethical and shoddy practices, in spite of large-scale business and rapid growth in business over a relatively short period of time. Therefore, in the end, it is unethical behavior that becomes costly whereas ethical behavior creates its own competitive advantage.
As Aristotle once said, virtue lies in our power, and similarly so does vice; because where it is in our power to act, it is also in our power not to act. In simpler words, with great power comes great responsibility.
Business ethics provide the foundation for commercial organisations. This broadens individual and corporate priorities far beyond the traditional business aims of profit and shareholder enrichment. The validity of the term 'business ethics' ultimately boils down to one simple question directed at every businessman under the sun― if you built a house with your business ethics, would you trust its foundation enough to live in it?