A Culture of Ethical Behavior Is Essential to Business Success

Research from the University of Notre Dame finds that ethical business operations are highly important to success, while unethical behavior can negatively impact a business’s prospects.

  • There are repercussions for future business from unethical action.
  • Ethical behaviour encompasses honesty, fairness, integrity and understanding.
  • Establishing a corporate ethics code is one of many strategies for fostering a moral working culture.
  • This essay is intended for company owners and entrepreneurs who desire to foster an ethical workplace culture.

The U.S. Department of Justice frequently receives settlement payments in civil cases involving corporate wrongdoing. But how does having a company’s hand in the cookie jar affect possible future business? What you could anticipate, according to research from the University of Notre Dame, is the prospects of a company are severely harmed by unethical actions.

By examining circumstances at almost 200 movie theatres, the study—which was written up in the Journal of Applied Psychology—examined the connection between a company’s level of customer service and its adherence to moral standards. The results show that long-term business success depends on providing high-quality services and having an ethical business strategy.

The study’s lead author, Kaifeng Jiang, who was an assistant professor of management at the University of Notre Dame’s Mendoza College of Business at the time of the study, told Business News Daily that both high-quality service and a lack of unethical behaviour are crucial for predicting business unit performance. This is particularly true in markets with intense competition since customers then have many alternatives and may choose to move to a different product or service provider.

The researchers discovered via their examination of the theatres that better levels of service had a favourable effect on operations when ethical adherence was likewise high. The success of corporate operations, on the other hand, was significantly lowered when unethical behaviour was the norm.

According to co-author Jasmine Hu, an assistant professor of management at the University of Notre Dame’s Mendoza College of Business at the time of the study, “carmakers and banks strive to provide superior customer service, but their unethical conduct and the ensuing fines inevitably jeopardize customer trust and diminish long-run financial returns.”

The authors outlined a number of major findings from their study that might assist firm owners and managers in fostering a culture of consistently ethical behaviour in the workplace.

  • Although vital, providing excellent customer service is not enough to guarantee success.
  • Create environments where ethics and service coexist to direct employees’ ethical and service conduct without monitoring.
  • By routinely monitoring employees’ impressions of the workplace’s ethical atmosphere, business leaders may take remedial action before unethical activities arise.
  • Within tumultuous or competitive marketplaces, with competition intensity being the most significant, service and ethical behaviours are most crucial.

According to Jiang, business owners may foster an ethical culture by elevating leaders and managers who actually care about sustaining high ethical standards and by providing a clear code of ethics for staff members to adhere to. He said that the backdrop of the industry decides how much integrating exceptional service with a high standard of ethics would impact the organization.

Hui Liao from the University of Maryland, Ying Hong from Fordham University, and Songbook Liu from Renmin University of China were Jiang and Hu’s co-authors.

What is ethical behavior?

ldA person who behaves ethically has a clear moral code and a constant set of values, according to evidence. Ethics might be based on conviction or the desire to improve the wor. People who practice ethics act morally no matter if they are praised for it or not. This type of conduct may occur in any setting; it is not only prevalent in the workplace.

Any employee, team captain, or manager is expected to act ethically in a professional situation. In their interactions with coworkers and clients, they should act in an honest and fair manner. Customer interactions and business morale are impacted by ethical behaviour. When workers work for a firm, they believe in, it is simpler for the employer to keep them on board. Employees prefer to work for organizations that operate ethically and equitably toward all of their clients and employees.

Customers are held to a high ethical standard as well. A reputation for upstanding ethics encourages more prospective clients, consumers, and business partners to collaborate with you. Over time, it also increases customer loyalty, resulting in a foundation of devoted clients who are more inclined to recommend your company to others.

Why is ethical behavior important?

Knowing how unethical activity impacts a corporation may be useful in understanding why ethical behaviour is vital. Consider a company that exclusively employs family or one that offers the wrong incentives, for instance. Even while these behaviours may not be against the law, they may undoubtedly harm a company’s success and morale.

On the other hand, a leader who personifies ethical conduct will always act fairly. Employees will then have confidence that their leadership team is looking out for the interests of the entire business. Leaders may create an environment that rewards and promotes positive attitudes by upholding high ethical standards.

What are examples of ethical behavior?

Honesty, integrity, fairness, and a host of other admirable qualities are examples of ethical behaviour. People who make judgements with the interests of others in mind are acting ethically. Here are some other frequent instances of moral conduct:

Respect for others

People inside an organization should always respect one another, regardless of the relationship between two people or what they agree or disagree on. Peers, clients, and supervisors are all included in this. People take criticism less personally, are able to interact more freely, and can recognize and value the other person’s perspective when there is a foundation of respect in place.

Open communication

All organizations that are successful communicate clearly. Misunderstandings are minimized when communication channels are open and staff members are eager to engage in discourse. Employee rule-breaking and low-quality production are less probable when there are frequent dialogues and reminders.


In any workplace, mistakes and misunderstandings are inevitable. Employees must, however, accept responsibility for their conduct when this occurs. They must accept accountability for what occurred and take the initiative to make things right. People in an organization are held to a standard of responsibility when there is an accountability standard in place.

What is a code of ethics?

A company-wide code of ethics may be established in the workplace. A code of ethics is developed by many organizations, and it frequently contains general recommendations for moral conduct like doing the right thing or being fair. Additionally, it could make reference to a particular business procedure. For instance, a doctor’s office code of ethics can include prioritizing the patient and maintaining composure in trying circumstances. A college’s code of ethics could mandate being truthful and objective while assigning grades and encouraging a range of viewpoints in the classroom.

A company’s code of ethics should be developed and made available to the public. To be held to such standards, the company’s vision, values, and goal should be clearly expressed and accessible to both employees and customers. A code of ethics fosters open and honest communication inside a company and increases trust and credibility. Everyone who works there will hold themselves and each other to those standards if an ethical tone is set at the top and followed by management.

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