Anglo American Business Ethics
Journal of Business & Economics Research – November 2006
Volume 4, Number 11
Building Customer Value And Profitability With Business Ethics
Robert C. McMurrian, University of Tampa Erika Matulich, University of Tampa
ABSTRACT Firms assume ethical business practices only add costs to the firm. However, business ethics actually add value for customers and result in increased profitability and performance for the firm.
INTRODUCTION
D
ue to constantly changing competitive environments, business organizations must find new methods to meet competition other than the traditional ways of better products (most consumers believe that competitive products are fairly equal in terms of quality), more services associated with a sell (more companies are finding that providing more and more services negatively affect profitability), or lower prices (competing on price results in erratic market share and unstable profits). Business organizations are responding to these challenges today by establishing partnerships and more collaborative relationships with their customers (Dertouzos, Lester and Solow 1989). Relative to these relationships there has been much discussion in the last several years regarding ethical practices by business organizations. For the most part, it has been assumed that organizations would do what was right for both their customers and their employees in the interest of long-term positive relationships. Unfortunately, we have learned the difficult lesson that such behavior is not always the norm. Unethical – and illegal – activities by such companies as Enron, WorldCom and Adelphi have shaken the foundation of trust that has formed the basis of marketplace relationships between companies and stakeholders. While there has been a greater focus on business ethics as a result of these companies’ activities, questions are still asked regarding the financial return related to developing processes that insure absolute adherence to high ethical
Volume 4, Number 11
Building Customer Value And Profitability With Business Ethics
Robert C. McMurrian, University of Tampa Erika Matulich, University of Tampa
ABSTRACT Firms assume ethical business practices only add costs to the firm. However, business ethics actually add value for customers and result in increased profitability and performance for the firm.
INTRODUCTION
D
ue to constantly changing competitive environments, business organizations must find new methods to meet competition other than the traditional ways of better products (most consumers believe that competitive products are fairly equal in terms of quality), more services associated with a sell (more companies are finding that providing more and more services negatively affect profitability), or lower prices (competing on price results in erratic market share and unstable profits). Business organizations are responding to these challenges today by establishing partnerships and more collaborative relationships with their customers (Dertouzos, Lester and Solow 1989). Relative to these relationships there has been much discussion in the last several years regarding ethical practices by business organizations. For the most part, it has been assumed that organizations would do what was right for both their customers and their employees in the interest of long-term positive relationships. Unfortunately, we have learned the difficult lesson that such behavior is not always the norm. Unethical – and illegal – activities by such companies as Enron, WorldCom and Adelphi have shaken the foundation of trust that has formed the basis of marketplace relationships between companies and stakeholders. While there has been a greater focus on business ethics as a result of these companies’ activities, questions are still asked regarding the financial return related to developing processes that insure absolute adherence to high ethical
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