Ethical Business and Leadership - Essay Example

The paper "Ethical Business and Leadership" is an excellent example of an essay on business. Ethical business practices improve organizations’ image and reputable. According to research, organizations that create codes of ethics and adhere to them generally perform better than others that do not (Hughes and Ginnett, 2012). The UK’s Institute of Business Ethics (IBE) conducted a study that showed that ethical business practices bring huge financial and non-financial rewards. A 2010 report prepared by the IBE and titled Does Business Ethics Pay?, showed that in a sample of FTSE 100 firms, firms that had good codes of ethics and practiced them outperformed firms that did not practice ethics (Hughes and Ginnett, 2012). Ethical companies posted better results than unethical ones in three out of four financial metrics: market value added (MVA), price/earnings ratio and economic value added (EVA). Between 2003 and 2008, findings showed that there was a strong evidential proof that large American corporations with codes of business ethics and conduct posted above-average performances when compared to other categories without “codes.” 

Ethical business practices also play a huge role in promoting organizations’ corporate social responsibility (CSR) practices (Hughes and Ginnett, 2012). Evidence shows that consumers prefer to pay for goods and services from companies that practice ethical business practices compared to ones that do not. For example, companies such as Enron that were involved in unethical business practices collapsed because consumers refused to purchase their products. Unethical business practices and unethical leadership negatively affect organizations’ relationships with consumers as well as organizational culture (Bowie, 2013). Unethical business practices and unethical leadership encourage corruption and unethical behavior among employees. Employees often look at what their leaders do and follow the same cue. This creates a chain reaction that seriously corrupts organizations (Bowie, 2013).  Read More