How Do Ethics Affect the Financial Results of a Company - Assignment Example

Ethical behavior may involve managing and motivating employees effectively. Ethical corporate behavior mandates the executive management and employees to promote a positive attitude and good conduct. High ethical standards convince employees and customers to trust the company. Ethical behavior guarantees employee satisfaction and loyalty that motivates employees to perform better and establish good working relations (Duggan, 2014). Customer satisfaction and loyalty established by ethical standards in a company develops complete trust in the company products, repeat business, and increased sales that define long-term profitability.

Indeed, satisfied customers will purchase more products and refer potential customers to the company, which enhances sales turnover. Adopting ethical behavior helps a company to avoid unnecessary risks by complying with the ethical standards set for the industry. Indeed, ethical behavior derives legal benefits and reduces criminal or civil liabilities that enhance the profitability of a company (Duggan, 2014). Moreover, companies that invest in ethical production have improved goodwill and profitability.

As such, most entrepreneurs are now focusing on ethics to increase their competitive advantage, customer base, good relations, improved productivity, and long-term profitability.