Business ethics studies the actions and policies companies take regarding issues such as environmental impact, bribery, and fiduciary responsibilities to clients and shareholders. Firms can be guided on the behavior they abide by the law, which often explicitly states what firms must or cannot do on particular topics such as bribery and environmental impact. Sometimes, firms go beyond the minimum required by the law to gain favor with the public or because it is part of their corporate culture.
Why Should Firms Engage In Ethical Behavior In The Marketplace?
The goal of a business is to make money for its shareholders or owners. Consumers are increasingly becoming more socially and environmentally aware. They may want more environmentally friendly products or prefer cruelty-free products that are not tested on animals. Consumers may also demand that manufacturers source their raw materials from suppliers that do not use child labor and that farmers get paid a living wage.
All of this leads to the question, should firms source their raw materials from suppliers that do not use child labor and pay their workers a fair wage even though it will cost them more? Or should they use the cheaper supplier that may be using child labor and not pay their workers enough money to support their families? These dilemmas and the consumer pressure that follow these dilemmas are why firms need to consider and engage in ethical marketplace behavior.
Firms that engage in ethical business practices can often win more market share for their products and services. This is because ethical behavior helps build an image of trust and quality in the minds of consumers and the public. The reputation of a business often helps guide consumers on whether to purchase that firm’s products or services or go to a competitor.
Business Ethics Summary
In conclusion, business ethics involves actions and policies firms take regarding their employees, suppliers, and customers and whether those actions are fair or not. Ethical behavior raises the business’s reputation and can help it win more market share and avoid legal trouble. Employees tend to appreciate ethically-inclined companies as well. Business ethics often involves controversial issues, and ethical behavior can be a way for corporations to stand out from competitors.