Organizational profitability is the main driver, which keeps the organization moving forward and for its sustainability. In the past,I have seen organization's who follow ethics are struggling to achieve profitability, while organization's who deviate ethics achieves greater profitability and growth. While this is subjective, the following questions are related to this main question:-
1. How many of the corporate companies across the globe declare and pay actual income tax to the Governments?.
2. How many of the MNC's pay reasonable wages for the employees in the LDC (Least Developed Countries) and in developing countries?.
3. How many of these companies pay sincere attention to CSR?. While there are millions of companies in the world, why there are least number of companies involved in CSR?.
4. How many of these companies help the needy and poor and how many of these companies real care about the mother nature?.
In long run ethics pays!
No doubt number of companies are not following ethics and CSR for making more profits, but it pays for short term.
See my paper through link.
Dear George and Mohamed,
Thanks for your honest inputs. Sincerely appreciated. We researchers need to do something about this at some point of time. Let's hope.
Best Regards.
Sekar Gopal.
In long run ethics pays!
No doubt number of companies are not following ethics and CSR for making more profits, but it pays for short term.
See my paper through link.
Dear Sekar Gopal,
The profit is the primary motivation for the creation of new or development of existing businesses. Profit potential causes people to look for more effective ways of combining resources to invent new products for which demand may apply organizational and technological innovations that promise to improve production efficiency. Operating profitably, each company contributes to the economic development of society, contributes to the creation and enhancement of social wealth and the welfare of the people.
Earnings - multiple economic category. From the depth of her knowledge and rational use depends on the efficiency of commercial calculation, pricing, and other economic levers of management. Being a source of industrial and social development, profit is a leader in providing self-financing enterprises and associations, the possibility of which is largely determined by how revenues exceed costs.
The multi-value profit increases with the transition of the state economy based on market economy. The fact that stock, rental, or other forms of private ownership of the company, received financial autonomy and independence, the right to decide for what purpose and in what amounts to direct the profit remaining after payment of taxes and other obligatory payments and deductions.
However, the profit margin can not describe the efficient use of its resources now. One of the main indicators characterizing the performance of the enterprise is profitable. Profitability, in a general sense, characterizes expediency resources expended in relation to the newly acquired (profit) resources.
Regards, Shafagat
Dear Subhash,
I am in agreement with you. Yes, it pays for the short term and won't succeed in the long term. However, the concern is that the so-called LONG TERM is TOO LONG for the organizations to practice ethics in many cases. I thank you for sharing the paper and sincerely appreciate your inputs.
Best Regards.
Sekar Gopal.
Quite myopic and suits "fly by night" operators, while Ethics is directly proportional to longevity and sustainability of a business
Good day to all of you!
I believe in good, and I’d rather say “Yes, ethics is important for the long-term success of a company”. But under some circumstances, honest players become losers (hope, just in the short-terms).
It should be also taken into consideration that business ethics is a relative category, and it changes over time and geography. E.g., some of the “big players” did not obey the rules at the beginning of their path, and thanks to this they became winners. After that they are mighty enough to change the rules, and make the others play their game.
Now I wish you to be free enough to do good!
My best wishes,
N.F.
Dear N.F.,
Thanks for your real life business growth relative issues input. Yes. It's true. Many who in the initial stages of business growth tend to deviate from ethics to grow in business.
It should not happen in the first place. There are many factors, which influence this scenario. Let's wish ethical business should also succeed in the short and long term.
Best Regards.
Sekar Gopal.
Dear sirs, Ethics should remain ethical... independently from our goals or objectives of our deeds, in any field of human society.
Ethics are ethics and should remain independent.
This is my strong belief...
There are 2 sets of norms that I think are worthy to consider here, the "social norms" and "market norms" .
In social norms context:
-It is not acceptable to cheat
-It is not acceptable to lie
-Reciprocity is well praised
-It is very good to help people who need help
-Altruism is a virtue (in many cases)
-...
and in case of market norms:
-It is a cost -benefit analysis
-If the probability of getting caught is good to cheat (more profitable to cheat)
-All actions must compensated using a cost-benefit approach
-In many cases someone must lose so someone else could win
-In many cases you try to destroy your rivals
-...
We as individuals are acting based on social norms most of the time but in the world of business it is often actions are taken based the market norms although they may claim otherwise!
For more info see the works of "Dan Ariely" like "The honest truth about dishonesty".
Ethics is necessary to turn life more previsivel. In this context, profit may be absent of catastrophes.
Dear Hossein,
Good inputs. Social and Market norms. 2 different set of norms for the winning game. Thanks indeed. Guess what, market norms can't dominate social norms. Because, markets are meant for society. Hence, the norms should be acceptable by and large if not perfect to be. In any case, interesting discussions.
Best Regards.
Sekar Gopal.
I would say the inverse relation is not only of linear order but of higher order, the very reasons ethics diminishes fast and gains or profits sky rocket fast. The economic collapse we witnessed recently is caused bu such unethical behaviors including the ones dear Sekar mentioned in his question. Not paying taxes, paying almost nothing for labor and collect almost cost free product for sell for mountain of revenue, hiring employees part time eliminating "full time employment " to avoid payments for benefits and other related costs, simply losing the concept called social responsibility.
Think we also need to define what ethics people / organizations are subscribing because different organizations might subscribe different moral philosophies e.g. Utilitarianism (actions are justified if they are useful or for the benefit of a majority), Kantianism (duty to the moral law), Natural Rights Theory (life, liberty & property for man's natural rights), Religious Ethics (Christian ethics, Hindu ethics, Islamic ethics etc). If an organization is subscribing to Utilitarianism for its stakeholders as an ethical moral philosophy, they are willing to do everything to make profits (utility) which are deemed justifiable.
To some organizations think ethics can be inversely proportional to organizational profitability. However, there are some large & successful organizations also focus & enforce more on ethics & compliance to gain higher profitability. Because to them, they are already successful large organizations & don't want to risk their brand name & subsequent business opportunities, they place emphasis to enforce ethics & compliance (to their staff, suppliers & customers etc) so that they can perform business as usual. Also I come across such large / successful organizations willing to walk away from certain deals e.g. that need under table money from some customers' personnel.
In my view , companies' willingness to follow ethical standards depends largely on citizens / consumers awareness to demand that kind of behavior, including requests to government's control agencies.
As Prof. Abedi says, markets are guided by costs and benefits considerations. The key is that unethical behaviors become a cost. This is one of the roles of consumer organizations and other NGOs. When public awareness is high, also authorities pay political costs if control agencies do not work properly.
Dear Han / Brenda / Jose,
Thanks for your excellent inputs. Really useful and informative. The very reason for raising this question is that, like organizations measuring their profitability, they do not measure their ethical compliance. Even large organizations with good brand value, tend to deviate. Like one of our friend mentioned about Volks Wagen. Ethics should be inbuilt in the organizational culture, so that, the employers and employees have a role to play on it. Government control agencies should monitor effectively. I am aware that, it is VERY FAR from REALITY in the short term. Guess what, one day, it may happen.
Once again, thanks for your good inputs. Value them a lot.
Best Regards.
Sekar Gopal.
Good questions. But society perhaps sustains these issues. Controls, punishment, penalty, fine etc are part of bureaucracy who reprts to governance. It means such traits are anticipated! Then in my views, these traits are either by design or by default. In any case, it is upto the individual and entity to pursue the way convenient!
Some great points raised - I would also add that a significant part of the problem is not the particular firm but the system within which it operates: capitalism.
Relatedly, we could undoubtedly find better or worse ways in which a colonial empire operates (e.g. some offer more input opportunities for the ruled, some build up manufacturing export capacity), but we would also want to inquire into the ethics of the colonial relationship and, secondarily, the ethical possibilities colonialism enables, encourages, discourages and bars.
The same holds for capitalism. Is the capital relation ethical (in relation to what alternative and a given definition of ethics)? And what ethical possibilities does the relation enable, encourage, discourage and bar?
I don't think so ethics depends upon the professional trainings of your team.
Sekar,
I believe the answer lies in the culture of individual organizations. It would vary with organizations such as the Red Cross and religious institutions where ethics would be helpful, but ethics could harm organizations based solely on a profit motive such as gambling casinos or used car dealerships. Val
I think that a team or organization can be more or less ethical in how they act, but if a team or organization is not also concerned about the context within which they operate then the team or organization (and the individuals that comprise this groupings) is less ethical than it could be.
So a Belgian charity operating in the Congo under Belgian rule might have well-trained staff who provide amputees with prosthetics and food, but, if they do not also work to dismantle Belgian colonialism, their ethics is seriously compromised. They practice a form of what Paulo Freire calls "false generosity", leaving untouched the structural conditions of others' misery and only offering assistance within the parameters of the governing political, social and economic system (my example here is of colonialism).
This is the problem with corporations and business ethics. You can have better and worse businesses, but capitalism necessarily requires the immiseration of some for the benefit of others. The problem is not simply the training of managers or workers on how to treat others but that capitalism is not an ethical system (if the aim of ethics is to enable everyone to have sufficient free time and resources to exercise their human capacities with others in ways they find meaningful).
ethics are ethics there should be no influence of profitability on that
I think that unrestricted capitalism can conflict with ethical standards. Social democracy tires to mitigate the malevolent aspects of this form of capitalism by selective state intervention. Unfortunately, the state itself is subject to corruption and abuse and can be inimical to ethical standards.
Val
These two articles may be useful:
Hausken, K. (1996), “Ethics and Efficiency in Organizations,” International Journal of Social Economics 23, 9, 15-40.
Hausken, K. (1996), “Self-Interest and Sympathy in Economic Behavior,” International Journal of Social Economics 23, 7, 4-24.
Article Ethics and efficiency in organizations
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