Business Ethics as Competitive Advantage for Companies in the Globalization Era

Abstract:     
Companies are dedicated to being sustainable organizations through building long-term shareholder value while being a responsible corporate citizen. It is globally believed that the only way to achieve that is to incorporate economic, social and environmental codes of conduct into business strategy. Furthermore, global expansion has brought about greater involvement with different cultures and socioeconomic systems. With this development, ethical considerations become more important. Thus, the importance of building a strong ethical culture is integral to the reputation, growth and finances of any organization. It builds a brand that attracts the best talent and creates trust among the stakeholders. Although companies are primarily business organizations run for the benefit of shareholders, they have a wide-ranging set of responsibilities to their own suppliers, customers and employees, to the communities in which they are located, and to society at large. Most corporations recognize these responsibilities and make a serious effort to fulfil them while trying to utilize their business ethics as a source of competitive advantage. This has been defined as the "hidden logic of business ethics." This research will explore the growing issue of business ethics particularly as a competitive advantage. We will also analyze business ethics as a threat to business competitiveness, when ethical failure diminishes the reputation of a company and its products, locally and globally. In certain markets companies' records of positive or negative ethical conduct determine their "licence to operate" in some markets.

Keywords: Business Ethics, Competitive Advantage

JEL Classifications: Z00

Working Paper Series