Importance of Business Ethics for Corporations: Factors, Benefits, and Challenges | Desklib

This literature review analyzes the importance of business ethics for corporations, including factors affecting usage, benefits, and challenges. It discusses the concept of business ethics, factors influencing its usage, benefits derived by corporations, and challenges faced by them. The review also highlights the need for corporations to embrace business ethics for long-term growth and sustainability.

Running head: BUSINESS ETHICS AND ITS IMPORTANCE
A STUDY TO ANALYZE THE IMPORTANCE OF BUSINESS ETHICS AND THE
NEED OF THE BUSINESS CORPORATIONS TO EFFECTIVELY USE BUSINESS
ETHICS
Name of the Student:
Name of the University:
Author’s Note:

1BUSINESS ETHICS AND ITS IMPORTANCE
Table of Contents
1.0 Introduction..............................................................................................................2
2.0 Research Problem...................................................................................................2
3.0 Research Questions................................................................................................3
4.0 Overview of the concept of Business Ethics...........................................................3
5.0 Factors affecting the usage of Business Ethics by the Business Corporations..........4
5.1 Legislations of the national government..................................................................4
5.2 Ethical Code of the Business Corporations.............................................................5
5.3 Personal Code of Ethics..........................................................................................5
5.4 Social Pressures......................................................................................................6
5.5 Organizational Culture.............................................................................................6
5.6 Leadership and Management approaches of the Business Corporations..............7
6.0 Benefits derived by the Business Corporations through the usage of Business Ethics
...........................................................................................................................................7
7.0 Challenges faced by Business Corporations for the usage of Business Ethics..........9
8.0 Literature Gap............................................................................................................10
9.0 Conclusion.................................................................................................................10
10.0 References..............................................................................................................12

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1.0 Introduction
As opined by Epstein (2018), a major dilemma that the majority of the business
corporation face in the present times is fact that they are often confused regarding the
fact whether they should take the help of the construct of business ethics. Crane et al.
(2019) are of the viewpoint that the concept of business ethics requires the business
corporations to formulate or for that amend their business activities or processes taking
into account the entities of ethics, morals, common good and others. More importantly,
Alvarado-Herrera et al. (2017) have noted that the effective usage of the construct of
business ethics offers different kinds of benefits to the business corporations and also
offers them the opportunity to attain sustainability as well. However, it had been seen
that the usage of business ethics often reduces the profitability of the business
corporations in the short-term range and this is one of the major reasons why the
majority of the business corporations forego the use of this particular construct (Cooper
2017). It is in this particular backdrop that the researcher will conduct this literature
review related to the topic of business ethics and the need of the business corporations
to embrace the same.
2.0 Research Problem
Wood and Logsdon (2017) are of the viewpoint that the focus of the contemporary
business corporations is to increase thereby profitability and thus it had been seen that
they take the help of the kind of business measures or for that matter activities which
are highly unethical in nature. Adding to this, Trevino and Nelson (2016) have noted that
the short-term benefits or the gains offered by the unethical practices have greatly

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influenced the business corporations to take the help of the same. However, the major
problem arises because of the fact that the long-term usage of the different unethical
business activities rather than enhancing the profitability of the business corporations
adversely affects the same. More importantly, it had been seen that the adequate usage
of the construct of business ethics offers the opportunity to the business corporations to
substantially improve their brand image, gain competitive edge, offer wide ranging
benefits to their stakeholders and others (Rodriguez-Fernandez 2016). Thus, it had
become imperative for the different contemporary business corporations to take the help
of the construct of business ethics so as to attain sustainability or long-term growth.
3.0 Research Questions
1) What are the factors which influence the business corporations to use the
concept of business ethics?
2) What are the benefits that the business corporations have the opportunity to gain
through the usage of business ethics?
3) What are the challenges that the business corporations face for the usage of the
concept of business ethics?
4) How can the usage of business ethics help the business corporations to attain
competitive advantage or sustainability?
5) Why there is a need on the part of the business corporations to use the concept
of business ethics?

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4.0 Overview of the concept of Business Ethics
As stated by Kolk (2016), business ethics can be seen as a form of professional
ethics or for that matter applied ethics that the business corporations are required to
take into account for the purpose of modeling their business activities or processes.
Adding to this, Ferrell and Fraedrich (2015) have noted that business ethics is generally
seen as a set of procedures as well as business practices which often encompasses a
plethora of topics like corporate governance, corruption, corporate social responsibility,
briber, discrimination and others. Furthermore, the different unethical business practices
followed by the business corporations had necessitated the usage of the construct of
business ethics by the same. In addition to these, it had been seen that the different
benefits offered by the usage of the construct of business ethics like the opportunity to
gain competitive advantage and sustainability, the opportunity to improve brand image,
contribute meaningfully towards the improvement of the social, economic and
environmental conditions also influence the business corporations to use the same
(Monshipouri, Welch and Kennedy 2017). However, as discussed by Hockerts (2015),
the major issue related to the same arises because of the fact that although the usage
of business ethics offers different benefits to the business corporations yet at the same
time it had been seen that in the short-term range it adversely affects the profitability or
for that matter the growth prospects of the business corporations.

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5.0 Factors affecting the usage of Business Ethics by the Business Corporations
5.1 Legislations of the national government
Saeidi et al. (2015) are of the viewpoint that the different legislations, stipulations,
mandates and others of the national governments of the different nations of the world
related the manner in which the business corporations are required to conduct their
business operations in the concerned nation have greatly influenced the usage of the
construct of business ethics by the business corporations. For instance, it had been
seen that the national governments of the different nations in the face of the ever-
increasing number of unethical practices used by the business corporations and also
the benefits offered by the usage of the construct of business ethics had strictly
instructed the business corporations to use the same (Welford 2016). More importantly,
within the spectrum of the different nations of the world failure to comply with the
stipulations related to business ethics by the business corporations can lead to various
kinds of penalties and even liquidation in some of the serious cases. These in turn had
propelled the different business corporations to use the construct of business ethics
within the framework of the different business measures used by them.
5.2 Ethical Code of the Business Corporations
As noted by Grimm, Hofstetter and Sarkis (2016), the different business
corporations realizing the benefits offered by the construct of business ethics in the
present times have formulated an ethical code of their own which in turn is being used
by them for the modeling of the business activities used by them. More importantly,
Tran et al. (2015) have stated that the business corporations need to ensure the fact
that the ethical code which is being used by them is in alignment with the stipulations of

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the national government and also with the various ethical theory of utilitarianism,
stakeholder’s theory, triple bottom approach to sustainability and others. Thus, it can be
said that the formulation of ethical code is an important factor which had made the
business corporations to take into account the entity of business ethics.
5.3 Personal Code of Ethics
As discussed by Picciotto (2017), the employees working with a business
corporation have their own ethical code regarding the manner in which they intend to
complete the different job roles that are belong delegated to them. More importantly, if
the workers are eager to follow ethical measures then this in turn influences the
business corporations to use the concept of business ethics within the spectrum of the
business activities used by them.
5.4 Social Pressures
Grayson and Hodges (2017) are of the viewpoint that in the face of the large
number of options that are available to the customers they have started to take into
account the brand image of the business corporations, the nature or for that matter the
kind of business practices used by them and others. More importantly, it had been seen
that the brand image of the business corporations is directly tied up with the nature of
the business practices which are being followed by them and also with the decision of
the customers as well (Alvarado-Herrera et al. 2017). Furthermore, this had a profound
impact on the profitability of the business corporations and thus it had become
imperative for the business corporations to take into account the aspect of business
ethics.

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5.5 Organizational Culture
The workplace or for that matter the organizational culture which is being
followed within the framework of a particular business corporation directly influences the
usage of business ethics. For example, if the workers and the management team of a
particular business corporation actively take the help of the entity of business ethics for
the completion of the different tasks or projects that they need to complete then it
becomes important for the business corporations to integrate the same within the
broader strategies or measures followed by them (Glass, Cook and Ingersoll 2016).
More importantly, within the spectrum of many business corporations it had been seen
that the employees have activity fostered the usage of the entity of business ethics by
the same.
5.6 Leadership and Management approaches of the Business Corporations
Wood and Logsdon (2017) have noted that the leadership or for that matter the
management approach which is being followed by the different business corporations
greatly influence the usage of business ethics by the business corporations. For
instance, if the practice of ethical leadership is being followed within the spectrum of a
particular business corporation then this in turn encourages not only the employees but
also thee corporation itself to active use the concept of business ethics for the conduct
of their business operations (Ferrell and Fraedrich 2015).

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6.0 Benefits derived by the Business Corporations through the usage of Business
Ethics
As discussed by Monshipouri, Welch and Kennedy (2017), one of the most
important entities which influence the business corporations to actively take the help of
the process of business ethics can be ascribed to the benefits offered by the usage of
the same. An important benefit that the adequate usage of business ethics offers to the
corporations is the fact that it helps them to substantially improve their brand image
(Tran et al. 2015). For instance, the ever-increasing focus on the contemporary
customers on the aspect of ethics and also the nature of the business activities which
are being used by the business corporations for the management of its business
operations are the two most important factors which influence the customer buying
behavior (Grayson and Hodges 2017). More importantly, the usage of business ethics
also helps the business corporations to fulfill the precepts of the stakeholder’s theory
which states that the business corporations need to indulge in those kinds of business
activities that will create and capture value for their stakeholders (Grimm, Hofstetter and
Sarkis 2016). This finds evidence from the fact that the usage of business ethics by the
business corporations requires them to take into account the triple bottom line approach
to sustainability and thereby contribute adequately towards the improvement of the
condition of the society, environment and the economy of the nations of their operation
(Trevino and Nelson 2016). Thus, the business corporations through the usage of
business ethics have been able to create value not only for the stakeholders who are
directly related to their business but also the ones who are indirectly affected by their
business operations and this in turn have enabled them to effectively improve their

9BUSINESS ETHICS AND ITS IMPORTANCE
brand image. This aspect in turn had helped them to earn customer satisfaction or
loyalty and thereby earn a higher amount of profitability.
Crane et al. (2019) are of the viewpoint that the usage of the construct of
business ethics by the business corporations while offering them the opportunity to
improve their brand image also offers them the opportunity to attain competitive edge as
well. For instance, in the face of the ever-increasing number of options that are
available to the customers it had been seen that the customers generally do not opt for
the products or services offered by a business corporation which takes the help of
unethical measures regardless of the value proposition of the products or services
offered by them (Glass, Cook and Ingersoll 2016). Thus, it had been seen that the
handful of business corporations which are actively using business ethics have been
able to outrival their market or for that matter business competitors irrespective of the
value proposition of the products or services offered by them. More importantly, the
business corporations through the usage of business ethics have been able to remodel
the supply chain management practices, marketing practices, manufacturing processes
and others used by them which in turn have enabled them to substantially reduce their
operations cost and thereby maximize their profitability (Alvarado-Herrera et al. 2017).
These in turn in the longer-run is likely to help the business corporations taking the help
of business ethics to attain sustainability.
7.0 Challenges faced by Business Corporations for the usage of Business Ethics
The benefits offered by the usage of business ethics by the business
corporations notwithstanding there are various challenges that the business

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corporations face for the usage of the same. For instance, the shareholders who are
associated with a particular business corporation often look to maximize the profitability
of the concerned corporation (Grayson and Hodges 2017). Thus, it had been seen that
the shareholders who are associated with a particular business corporation often
discourage the same for the usage of the entity of business ethics. In addition to this, it
had been seen that the usage of business ethics requires the business corporations to
make substantial changes within the supply chain management, operations process,
marketing processes and others used by them so as to make them more ethical and
environmentally friendly (Monshipouri, Welch and Kennedy 2017). The resultant effect
of this is that the business corporations are often hesitant to use business ethics
because of the additional cost that they need to bear for the usage of the same.
8.0 Literature Gap
The researcher during the completion of this literature review found that a
significant amount of academic or for that matter scholarly research have already been
conducted on the topic of business ethics and the benefits that the business
corporations have the opportunity to derive through the usage of the same. However, at
the same time it needs to be said that the researcher was not being able to find number
of scholarly works on the factors which influence the usage of business ethics by the
business corporations or for that matter the challenges that they face for the usage of
the same. In the face of this, it can be said that this will be a unique research since the
future researchers will have the opportunity to use this particular research as a
framework for the purpose of conducting further future research on the topic under
discussion here.

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9.0 Conclusion
To conclude, on the score of the plethora of benefits which the usage of business
ethics offers to the business corporations it had become important for them to take the
help of the same. More importantly, the discussion clearly indicates that the
governmental legislation, ethical code of the business corporations, organizational
culture and others are some of the major factors which affect the usage of business
ethics by the corporation. Furthermore, the business corporations have the opportunity
improve their brand image, gain competitive edge, attain sustainability and others
through the usage of business ethics. Lastly, two of the major challenges that the
business corporations face for the usage of business ethics can be attributed to the
resistance from the shareholders and the cost that they incur for the usage of the same.
These aspects of the concept of business ethics and the benefits that the business
corporations derive through the usage of the same become apparent from the above
analysis of the same.

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10.0 References
Alvarado-Herrera, A., Bigne, E., Aldas-Manzano, J. and Curras-Perez, R., 2017. A
scale for measuring consumer perceptions of corporate social responsibility following
the sustainable development paradigm. Journal of Business Ethics, 140(2), pp.243-262.
Cooper, S., 2017. Corporate social performance: A stakeholder approach. Routledge.
Crane, A., Matten, D., Glozer, S. and Spence, L., 2019. Business ethics: Managing
corporate citizenship and sustainability in the age of globalization. Oxford University
Press.
Davies, A., 2016. Best practice in corporate governance: Building reputation and
sustainable success. Routledge.
Epstein, M.J., 2018. Making sustainability work: Best practices in managing and
measuring corporate social, environmental and economic impacts. Routledge.
Ferrell, O.C. and Fraedrich, J., 2015. Business ethics: Ethical decision making & cases.
Nelson Education.
Glass, C., Cook, A. and Ingersoll, A.R., 2016. Do women leaders promote
sustainability? Analyzing the effect of corporate governance composition on
environmental performance. Business Strategy and the Environment, 25(7), pp.495-
511.
Grayson, D. and Hodges, A., 2017. Corporate social opportunity!: Seven steps to make
corporate social responsibility work for your business. Routledge.

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Grimm, J.H., Hofstetter, J.S. and Sarkis, J., 2016. Exploring sub-suppliers' compliance
with corporate sustainability standards. Journal of Cleaner Production, 112, pp.1971-
1984.
Hockerts, K., 2015. A cognitive perspective on the business case for corporate
sustainability. Business Strategy and the Environment, 24(2), pp.102-122.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business, 51(1),
pp.23-34.
Monshipouri, M., Welch, C.E. and Kennedy, E.T., 2017. Multinational corporations and
the ethics of global responsibility: Problems and possibilities. In Human Rights and
Corporations (pp. 123-147). Routledge.
Picciotto, S., 2017. Rights, responsibilities and regulation of international business.
In Globalization and International Investment (pp. 177-198). Routledge.
Rodriguez-Fernandez, M., 2016. Social responsibility and financial performance: The
role of good corporate governance. BRQ Business Research Quarterly, 19(2), pp.137-
151.
Saeidi, S.P., Sofian, S., Saeidi, P., Saeidi, S.P. and Saaeidi, S.A., 2015. How does
corporate social responsibility contribute to firm financial performance? The mediating
role of competitive advantage, reputation, and customer satisfaction. Journal of
business research, 68(2), pp.341-350.

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Tran, M.A., Nguyen, B., Melewar, T.C. and Bodoh, J., 2015. Exploring the corporate
image formation process. Qualitative Market Research: An International Journal, 18(1),
pp.86-114.
Trevino, L.K. and Nelson, K.A., 2016. Managing business ethics: Straight talk about
how to do it right. John Wiley & Sons.
Welford, R., 2016. Corporate environmental management 3: Towards sustainable
development. Routledge.
Wood, D.J. and Logsdon, J.M., 2017. Theorising business citizenship. In Perspectives
on corporate citizenship (pp. 83-103). Routledge.