The Advantages and Disadvantages of Ethics Business

The Advantages and Disadvantages of Ethics Business

The Advantages and Disadvantages of Ethics Business

Nowadays, business competition has been increasing gradually, corporates always have to find methods to compete, maintain and develop their business such as produce new products with more functions, give better services, reduce the price of products,...Besides, according to (McMurrian & Matulich, 2016), business ethics is one of the new factors to rise a company’s competition, ethical business activities can increase their reputation, create more trust to their stakeholders. (Epstein, 1989) showed that “business ethics is the ethical reflection of a business towards its behaviors and their impacts” (as cited Su, 2014). These behaviors and impacts are based on trust, equality, responsibility, cooperation of a business towards its stakeholders include employees, clients, investors, suppliers, society. This essay will show the advantages and disadvantages of ethics business so that corporates have an overall view of ethics business and can apply to their business effectively.

Advantages

There are significant advantages that ethics business can bring to organizations such as: enhancing organizational capital, developing social capital, improving human capital.

Enhancing organizational capital

According to (Su, 2014), organizational capital is the corporate sources such as: corporate culture, databases, procedures, rules, strategy. Ethics business helps to develop the organizational capital of an enterprise. Compliance with ethics values will shape the culture, increase trust in an organization, create a working environment where employees can understand and interact with each other positively. (Caracsco and Singh, 2003) also showed that business ethics can help to create a unified business culture and supply a mechanism for an enterprise to do its values (as cited Roxana, 2014). Trust has been influenced by ethical business (Diallo & Lambey-checchin, 2017). Employees will be willing to share their ideas, knowledge, experience and cooperate with other employees when they trust in their company because they believe others will help them to accomplish their tasks. In addition, trust help to increase communication, solving problem and building learning spirit within the enterprise. Moreover, trust also improves teamworking because team members feel safe, comfortable when expressing their thoughts. As a result, increased trust in ethical business rise the databases, workflow, effective management. From that point of view, ethical businesses can establish a credible and ethical culture that will help to create more organizational capital.

Developing social capital

Social capital of a corporate is the knowledge resources that formed by the interactions between employees of an organization and their network of relationships such as suppliers, customers, colleagues, investors. Companies that adhere to ethical values, create a credible and ethical culture will have increased social capital (Su, 2014). For suppliers, (Vig & Dumičić, 2016) stated that there is positive relationship between choosing supplier which have criterion of ethics and customer satisfaction so that ethical company want to know if their supplier have standard of ethics or not and enterprise tend to be honest, respectful and fair with suppliers during the business process thereby increasing trust and long-term relationship between the corporate and suppliers. For customers, meeting their needs, providing quality products and services will help enterprise to increase their image and the relationship between the company and customers. Moreover, (Cant, Wiid & Kallier, 2013) also showed that customers will assist ethical business in any transactions. A good ethical enterprise will help to keep customers buying their products and increase new customers by word of mouth. Loyalty of customers have been impacted by ethics business (Diallo & Lambey-checchin, 2017). For employees in an organization, ethics business helps to rise sharing information and collaboration among employees. For investors, according to (Breslin, 2016), shareholders will trust in a business when it operates as ethical corporate such as transparent accounting practices, social responsibility. Therefore, shareholders will be willing to capitalize money into a company that managed ethically. In addition, ethical investors will also not willing to invest in an enterprise that are not socially or environmentally responsible. Therefore, social capital will be more increased when company has more ethical values.