Amit Dua

Amit Dua - CoFounder and CEO at Signity Solutions and ValueAppz.

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Business Ethics Hold the Key to Lasting Success for a Business

Bad reputations have a habit of becoming public through ex-employees, disgruntled customers and negative media coverage.

With competition heating up across markets today, the effort required to succeed in a business has increased multifold. It is only natural for entrepreneurs then to become restless and start looking for shortcuts to success, even it means compromising on business ethics for some. Little do such entrepreneurs realise how they are doing more harm than good to the business and that such malpractices can spell doom for the business and bring their dreams crashing down.

First let me define ethics. They can vary from business to business or entrepreneur to entrepreneur but are closely related to the underlying values of business. So, in essence, business ethics refer to strict compliance with the core values and principles of business. They are not only relevant with respect to your external customers and stakeholders, but also with respect to internal stakeholders, such as your team members.

With quite a few corporate scandals making news in the last couple of years for errors of judgement, malpractices and deliberate concealment of facts,the importance of ethical business practices has become all the more apparent. At home, Kingfisher Airlines, the Saradha Group scam, the ongoing Sahara battle, and abroad, the Volkswagen’s emission level fudging, hiking uplifesaving EpiPen costs and many more such instances have thrown ethics to the winds. Though these businesses certainly raked in the moolah in the short term, the long-term far reaching consequences of their unethical practices are still unfolding before us.

Compromising on business ethics under the pressure of competition and annual bottom lines can prove detrimental to the long term health of a company in many ways:

  • Loss of goodwill and market share

Businesses that function without proper business ethics and codes ultimately end up eroding their own reputation and goodwill. Their customers tend to perceive a similar lack of quality and consistency in their products and stop patronising them.

Organisations which are known for their ethical treatment of labour, are environmentally conscious, practice fair trade, and promote people friendly products and practicesautomatically generate a sense of trust in the minds ofcustomers and other stakeholders. Without this kind of goodwill it is impossible for a brand to grow and stand apart from the competition.

  • Inability to attract and retain the right talent

Bad reputations have a habit of becoming public through ex-employees, disgruntled customers and negative media coverage. Talented people are likely to avoid organisations with an unethical reputation as they usually have a high sense of self worth and would want to be associated only with the best of values.

If the top management of a company indulges in unethical business practices,it can send mixed signals to the rest of the employees. Some may take it as a license to bend the rules and get away with it. Others who do not want to be part of it feel insecure and resentful. This atmosphere creates tension and leads to high attrition rates in an organisation.

  • Impacts employees’ performance

An organisation focussed on self serving greed and gain is most likely to affect the mindset of its employees in the same manner. Employees of such organisations indulge in decisions and actions to promote their own agendas than in keeping with the values and objectives of the organisation.

They tend to flout the rules and compromise on quality and service to further their own interests. In turn, decline in employees’ performance can expose an organisation to product failures and returns, monetary losses and legal action by the authorities.  

  • Lack of steady support from vendors and business associates

For an organisation to deliver on what it promises, apart from the support of its staff, it needs the support of a reliable vendors, supply chain, and logistics infrastructure to complete the circle. However unethical companies could resort to irregularities in their pricing and payments with their associates, leading to a lack of trust.

Such companies have trouble setting up a reliable supply chain, ensure quality products and are unable to garner critical support from associates in difficult times. People want to work for and do business with companies they believe in and whom they can trust to do the right thing with them.

  • Financial repercussions

Companies with a background of malpractices are unable to attract future investments due to lack of trust. Not only is it difficult to get investors and other stakeholders interested in placing their bet on their business, there could also be huge financial implications in case the business gets caught in a legal tangle on account of such malpractices. The penalties imposed by the court of law, in such cases, can far outweigh the financial gains reaped in the short run and bring the business to a grinding halt.


Business ethics need to be woven into the very fabric of an organisation right from the early stages. A well defined code of ethics serves as the moral roadmap to steer through times of great stress during hyper growth and structural change and prevents the stakeholders/employees etc. from resorting to misconduct whilst pursuing the goals.

One can learn a lot from the conduct of Indian companies like Wipro, Tata Power, and Tata Steel listed on Ethisphere’scoveted; “World’s most Ethical Companies”. Others held in high regard include Eicher, Maruti Limited. Sound business ethics are, in fact, the secret behind their success; the reason why potential employees, vendors etc. want to associate with them and the why customers trust the offerings from these companies.

There is no greater satisfaction than achieving success by following the righteous path, even if it means choosing the longer and harder road, because while doing so, you build a solid and unshakeable foundation for the company that guarantees long lasting success.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house

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