Ethical Business for Competitive Advantage


Business Ethics (The Office)

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BUSINESS ethics has grown over the years to become a management discipline, and this is in response to a recognized corporate need just as the discipline of strategic management, human resources management, risk management and many other management disciplines that have evolved overtime.

You take a bird’s eye view of the global economy today and you will see that businesses have become highly competitive, and the management of corporate ethics has become a key strategic issue companies cannot afford to ignore.

Business ethics management has apparently become a corporate initiative that positively shapes a firm’s bottom line when properly embedded with the firm’s overall strategy.

The world over, companies’ intangible assets are assuming an increasingly competitive significance and business ethics is no exception.

Apparently, business ethics management has become a cutting edge, a new frontier for companies’ competitive advantage.

Globally, the business sector is littered with cases of misconduct perpetrated by staff, from top executives to shop-floor level employees, resulting in company collapses and closures that leave many people whose lives are dependent on these companies vulnerable and without a source of income.

The recent world recession that was a clear result of a total disregard of good corporate governance and ethical business conduct resulted in the closure of a number of firms around the world.

Concerted effort by company leaders to develop an ethical mindset amongst their staff is the answer to overcoming workplace misconduct.

A focus on business ethics develops mindsets that value integrity, hard work and long-termism, shunning malpractices such as corruption, greed and dishonesty.

It helps individuals and institutions to focus on the bigger picture. In the long term, competitive advantage is a result of pursuing an enduring propagation of a corporate ethical culture that increases shareholder value.

Companies thus can commit themselves towards longevity and sustainability by incorporating business ethics management in their business strategies.

Global expansion has brought about greater involvement of all peoples with different cultures and socio-economic systems in the business world, and with this development, ethical considerations have become even more relevant and essential.

The importance of building a strong ethical culture in a firm is integral to the reputation, growth and finances of that firm.

It builds a brand that attracts the best talent and creates trust among customers and all stakeholders.

Although companies are primarily business organisations run for the benefit of shareholders, they have a wide-ranging set of responsibilities to their own suppliers, customers and employees, to the communities in which they do business, and to society at large.

Corporations grounded on a sound ethical foundation recognize these responsibilities and make a serious effort to fulfill them, and in so doing making use of their business ethics drive as a source of competitive advantage.

The process of managing business ethics is premised on managing company values and knowing that company values or value systems are an intrinsic matter for the individual and the organisation.

Value management processes should invoke a spirit of self-regulation in the individual or organisation, and make this the basis of a successful business ethics management environment.

In examining the role of ethical standards in multinational companies, Bowie and Vaaler (1999) noted that the ethical climate of a corporation is knowledge-based, and embodied in individual employees or in organisational routines.

As a result the ethical climate is in-built and rather difficult to duplicate, thus is a source of durable competitive advantage.

This company uniqueness or the hard-to-copy nature of the company’s ethical culture adds value to the firm’s bottom line.

In a recent study by Arthur Andersen and theLondonBusinessSchool(2000) company secretaries and other senior executives of leadingUKcompanies reported that business ethics initiatives had a positive influence on profit, winning new business, productivity and business growth.

Companies should know that continually improving the ethics environment is an essential element of becoming a preferred choice by customers, employees, shareholders, communities, business partners and investors.

Ethical commitment enhances the bottom line through improved reputation, and is an enduring, hard-to-copy intangible asset.

Development of ethics codes is the cornerstone of building an ethical culture in an organisation.

The codes enable employees to understand what is expected of them in the workplace.

They provide a device for enabling employees to communicate to customers and suppliers about the expectations of their firm in its business dealings.

Ethics codes provide a formal, outside-the-chain-of-command way to communicate upwardly in the organisation without fear of reprisal.

Codes cover areas that range from responsibilities to the environment and communities, questions of safety and health, relationships with employees and customers, etc.

Above all, the ethics code is a positive document that reminds us of those enduring values that influence attitudes, actions, and the choices and decisions we make every day in our work stations that subsequently create an organisation’s uniqueness.

However, the code need not be allowed to work as a stand-alone. Instead other supportive infrastructure should be built around the code to ensure its effectiveness.

The strategic benefits of actively managing ethics in an organisation include:

  • Building employee loyalty, hence reducing hiring and training costs.
  • Reducing theft, fraud and other illegal activities in the firm.
  • Driving sales up and building customer loyalty.
  • Creating community goodwill.
  • Attracting quality applicants with minimum investment in recruitment.
  • Substantial improvement of society through poverty alleviation.

Ethical business is indeed good business and, when it becomes part of your company’s fabric, it really does pay off in the end.

By Bradwell Mhonderwa – Managing Consultant of Business Ethics Centre.

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About Georges Abi-Aad

CEO, electronic engineer with MBA in marketing. Multicultural; French citizen born in Lebanon working in the Middle East and fluent in French, English and Arabic. I have more than 30 years of proven experience in the Middle East with European know how. I am good in reorganization and in Global strategic management business. I am a dependable leader with an open approach in working with people, forging a strong team of professionals dedicated to the Company and its clientele. Perseverance is my key word. Married to Carole and having 2 children: Joy-Joelle and Antoine (Joyante!).
This entry was posted in Business Analysis, Global Business, Global Management, strategic management, Turnaround, Tutoring and tagged , , , , , , , . Bookmark the permalink.

5 Responses to Ethical Business for Competitive Advantage

  1. Pingback: The ethics of business… and the business of ethics | Joyante's Blog

  2. Pingback: The ethics of business… and the business of ethics

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