Ethical misconducts

In industry, ethical fraud is more difficult to tackle than bad financial results. Moral behavior is critical in determining the viability of a business venture. In industry, ethics refers to a defined code of conduct and a representation of the principles that an individual employs while carrying out business operations. Ethical corporate practices aim to shield the company’s public image from outsiders. Business ethics is also critical in assisting an organization in avoiding legal influences that could have negative consequences.

Ethical lapses in the industry have a negative impact on both the internal and external environments. However, the financial performance of a business is influenced by various factors such as the competition rate, input costs as well as the stability status of the economy. An increase in the competition rate causes poor financial performance which may have an influence on the business (Keiser, 2008).

Regaining the financial results of a company may require improvement of the operations as well as increasing the market segment which may not be a complicated process. However, ethical misconduct which leads to loss of reputation, as well as loss of the shareholder’s confidence and other stakeholders, is an elaborate affair which may not be easy to regain (Shahzad, & Sharfman, 2015).

Most of the business enterprises experience conflicts with the stakeholders which is hard to avoid in business. Such uncontrollable circumstances, as well as the environment, may influence diverse the perception and the preference of the stakeholders regarding the reputation of the firm .

Eventually, the destruction of the public reputation, as well as the customer loyalty, makes it a futile activity to retain clients or attract new clients. It is, therefore, evident that overcoming ethical misconduct in business in difficult in comparison with overcoming poor financial performance. A company can regain the financial results even after a downfall in the financial status but overcoming the ethical misconduct such as the loss of reputation is hard to overcome.

References

Shahzad, A., & Sharfman, M. (2015). Corporate Social Performance and Financial Performance:

Sample-Selection Issues. Business & Society. http://dx.doi.org/10.1177/0007650315590399

Keiser, J. (2008). Business Ethics and Ethics Education in American Business

Programs. Competitio, 7(2), 195-200. http://dx.doi.org/10.21845/comp/2008/2/13