Ethics and Profit

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State: draft

“Greed is eternal.”
– 10th Rule of Acquisition

Consumer driven business ethics

In an article by Philips executive Roy Jakobs he stated clearly that:

“When companies work ethically, they will naturally outpace competition. Why? Simply because customers, as we’ve discovered, will see them as a trusted partner, not only for what they do, but how it is delivered.”

This kind of consumer-driven ethics are to be expected in consumer-facing businesses where brand is important but might not hold up for the supply chain for such businesses as there is clearly a dissipation of responsibility. This is essentially acting ethically as a means to effectively signal as an ethical company. This comes with a bunch of issues such as what would the company do when faced with an ethical dilemma that the consumers will never know the existence of? They might err on the side of caution, and choose ethics over profit for fear of the choice becoming known, or they might err on the side of profit, fullfilling their shareholder obligations.

When the ends justify the means

If a business gives away a sizeable fraction of their profit towards charity or some other good end that could potentially outweigh any unethical conduct. This is essentially Consequentialism.

This is, to some degree, at odds with consumer driven ethics where a company cares about ethics primarily due to signalling reasons. In those cases, some relatively minor unethical conduct could become a PR nightmare despite the end result being net positive. I have no real life example of this, but I’m sure there are some.

Corporate social responsibility

Wikipedia has a great article about this.

I want to be supportive of businesses utilizing these kinds of methods, but I’m sceptical since the primary reason for profit-seeking companies to adopt them is signalling.

It is likely hard for consumers to accurately judge the impact of a company’s CSR efforts and if it truly has net-positive ethical outcomes or if it only makes consumers perceive them as ethical without net-positive effects from the company as a whole.

  • Normative.io - A startup that aims to calculate the sustainability of businesses.
  • https://www.theguardian.com/business/2003/apr/20/globalisation.corporateaccountability
  • http://smallbusiness.chron.com/ethical-issues-maximizing-profit-34328.html