45. The speaker claims that following high ethical standards is the best way to
maximize profits in the long run. However, this claim seems to be more of a normative
statement than an empirical observation. The issue is more complex than the speaker
suggests. In my observation, the two objectives at times coincide but at other times
conflict.
In many ways behaving ethically can benefit a business. Ethical conduct will gain
a company good reputation that earns repeated business. Treating suppliers, customers
and others fairly is likely to result in their reciprocating. Finally, a company that treats
its employees fairly and with respect will gain their loyalty which, in turn, usually
translates into higher productivity.
On the other hand, taking the most ethical course of action may in many cases
reduce profits, in the short run and beyond. Consider the details of a merger in which
both firms hope to profit from a synergy gained thereby. If the details of the merger
hinge on the ethical conviction that as few employees as possible should lose their jobs,
the key executives may lose sight of the fact that a leaner, less labor-intensive
organization might be necessary for long-term survival. Thus, undue concern with
ethics in this case would results in lower profits and perhaps ultimate business failure.
This merger scenario points out a larger argument that the speaker misses
entirely―that profit maximization is per se the highest ethical objective in private
business. Why? By maximizing profits, businesses bestow a variety of important
benefits on their community and on society: they employ more people, stimulate the
economy, and enhance healthy competition. In short, the profit motive is the key to
ensuring that the members of a free market society survive and thrive. While this
argument might ignore implications for the natural environment and for socio-economic
justice, it is a compelling argument nonetheless.
Thus the choice to follow high ethical standards should not be made by thinking
that ethical conduct is profitable. While in some cases a commitment to high ethical
standards might benefit a company financially, in many cases it will not. In the final
analysis, businesses might best be advised to view their attempts to maximize profits as
highly ethical behavior.
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