Business Ethics as Competitive Advantage

for Companies in the Globalization Era

 WHY STUDY BUSINESS ETHICS?
These companies are examples of how lapsed
ethics and greed can create major failures.

In the early 2000s, the scandals at Enron, Arthur

Anderson and WorldCom caused leading enterprises
and places of higher learning to have more
prominent discussions about business ethics.

The late-2008 global economic meltdown added

more names to the list of once reputable companies
that have now become infamous: Washington Mutual
and Lehman Brothers.
 Keywords in Business Ethics

• VALUES: Those qualities of behavior, thought, and character that society regards

as being intrinsically good, having desirable results, and worthy of emulation by
others.
• MORALS: Modes of conduct that are taught and accepted as embodying
principles of right and good.
• MORALITY: A system of determining right and wrong that is usually
established by some authority, such as a church, an organization, a society, a
deity, or a government.
• ETHICS: The process of determining right and wrong conduct.
• ETHICAL SYSTEM: A specific formula for distinguishing right from wrong.
• UNETHICAL: An action or conduct which violates the principles of one or
more ethical systems, or which is counter to an accepted ethical value, such as
honesty.
 Introduction

• Companies do not operate in a vacuum but rather

are plunged in a universe of relationships with
multiple stakeholders.

• With the globalization the scenario in which

companies operate has become even more
complex, given the emergence of global groups of
stakeholders.
 Introduction

The need for a company to behave “ethically”

is described in terms of a company’s need to
interact productively with its stakeholders.
 Business Ethics

Business Ethics means conducting all aspects

of business and dealing with all stakeholders
in an ethical manner…
Corporate Fraud in India – Case Study of
Sahara and Saradha
Business Ethics as Competitive Advantage
for Companies in the Globalization Era
 Globalization, Business Ethics &
Competitive Advantage

• Globalization has brought about greater involvement

with ethical considerations and most importantly
achieving competitive advantage through business
ethics.
• Globalization and business ethics are linked as they
affect a company’s ability to commit to its
shareholders, in particular to external investors, and
preserve the trust needed for further investment and
growth.
 “Ethics of Scandal” Versus
“Ethics of Strategy”

• It is increasingly important for companies to deal with

ethics as a corporate strategy that, if uniquely
implemented, could achieve competitive advantage for
the company rather than waiting to react to possible
ethical issues of importance to the targeted
stakeholders.

• It is the necessity of being ethically proactive company

rather than being ethically reactive company.
 Business Ethics as
Competitive Advantage

• As the speed of comparable tangible assets acquisition

accelerates and the pace of imitation quickens, firms
that want to sustain distinctive global competitive
advantages need to protect, exploit and enhance their
unique intangible assets, particularly integrity
(building firms of integrity is the hidden logic of
business ethics).
 Business Ethics as
Competitive Advantage (Cont.)

• “behavior that is trusting, trustworthy, and cooperative, not

opportunistic, will give the firm a competitive advantage.”

• Sustainable global competitive advantage occurs when a

company implements a value-creating strategy which other
companies are unable to imitate.

• For example, a company with superior business leadership

skills in enhancing integrity capacity increases its
reputation capital with multiple stakeholders and positions
itself for competitive advantage…
 Business Ethics as
Competitive Advantage (Cont.)

Business ethics as competitive advantage

involves effective building of relationships with a
company’s stakeholders based on its integrity that
maintains such relationships.
 Concluding Remarks

• An integrity approach to business can yield strengthened

competitiveness: it facilitates the delivery of quality
products in an honest, reliable way. This approach can
enhance work life by making the workplace more fun and
challenging. It can improve relationships with stakeholders
and can instill a more positive mindset that fosters
creativity and innovations among the stakeholders.

• The purpose of ethics is to enhance our lives and our

relationships both inside and outside of the organization.
 Concluding Remarks (Cont.)

• As the competitive environment with globalization

could be characterized by the game metaphor rather
than the war metaphor, it is increasingly important to
include ethics in the corporation’s strategy and
potentially implement it in a way that achieves a
competitive advantage for the company and adds value
to the stakeholders.
 Concluding Remarks (Cont.)

• The metaphor of a game sees competition in business

as an exciting game, in which each competitor strives
to achieve excellence, satisfy customers, and succeed
as a result. The motive in this type of game is not to
drive out the competition, but to work hard, play by
the rules of the game, and do one’s best in order to
succeed.
Business Ethics as Competitive Advantage
for Companies in the Globalization Era

Thank You For Your Attention

E-mail: rania.a.azmi@gmail.com