Do Good Ethics Always Make for Good Business

Schwab, Bernhard. "A Note on Ethics and Strategy: Do Good Ethics Always Make for Good Business." Strategic Management Journal, 17.6. (Jun. 1996), pp. 499-500.

A company must have good business ethics to build trust with those working for the company and those investing within the company. This trust must occur for loyal behavior and long term cooperation. In our world today, it is almost impossible to find a total ethical business. For this to occur, some businesses may incur some costs. Also, stockholders of a company may even want a business to act somewhat unethical, in order to raise stock prices. If good ethics always related to good business, the requirements of laws, regulations, and enforcement would be much less restraining. Most leaders within a business are looking for some gain. Some of these gains may occur through good business, but on the other hand, some may come with some unethical actions. Decisions made by business leaders have many different choices, and some of these choices are unethical. By acting completely ethical, a choice is taken away, which then takes away some flexibility, therefore entailing a cost that can become increasingly complex or uncertain. Businesses that act ethically signal to others that the business is trustworthy, and in turn a good partner to do business with. This means that good ethics drives public relations (PR). A good example used by the writer of this article was, "If, for example, we could be absolutely sure that an unethical but profitable action would never see the light of day, what would be the incentive to continue to hold the high ground?" In some cases, it is not that the business is mainly trying to make unethical decisions, it just may end up that the unethical decision is the most cost effective and efficient choice. This factor causes many businesses to be swayed in the wrong direction. Ethics are not simple, and ethical conduct is not costless. Therefore, acting ethically may not always lead to good business.