1. Business Ethics and Organizational Performance
Chapter 10
Business Ethics and Organizational Performance

2. Relationship of Business Ethics to Performance
customers, employees, and investors are major concerns for firms that want to develop loyalty and competitive advantage
goal is to increase customer dependence on the company & to provide products in an environment of mutual respect & perceived fairness
create satisfying relationships with employees
support relationships with investors based on trust, dependability, & commitment

3. Trust as a Component of Business Ethics
trust is defined as a virtue that creates a predisposition to place confidence in the behavior of others while taking the risk that the expected behavior will be performed
employees must share a common vision of trust
trust is the ‘glue’ that holds organizations together
trust is essential for maintaining long term relationships between business & consumers

4. Ethics Contributes to Organizational Quality
an organizational commitment to quality causes employees to be more willing to support quality initiatives & discuss ethical issues
employee’s commitment to quality has a positive effect on a firm’s competitive position, an ethical work climate should have a positive effect on the financial bottom line

5. Ethics Contributes to Customer Satisfaction
consumers respond positively to socially concerned businesses
being good can be extremely profitable
customer satisfaction dictates business success
a strong organizational ethical climate often places the customer’s interests first
research shows a strong relationship between ethical behavior & customer satisfaction

6. Ethics Contributes to Employee Commitment
employee commitment comes from employee’s who believe their future is tied to that of the organization & their willingness to make personal sacrifices for the organization
the more dedication on the part of the company, the greater the employee dedication
concerns include a safe work environment, competitive salaries & benefit packages, & fulfillment of contractual obligations

7. Ethics Contributes to Profits
corporate concern for ethical conduct is increasingly being integrated with strategic planning to maximize profitability
corporate citizenship is positively associated with:
return on investment & assets
sales growth
many studies have found a positive relationship between citizenship & performance

8. The Role of Ethics in the Economic Performance of Nations
societal institutions that promote trust are important for the economic well-being of society
trust is the extent to which individuals identify with or have a sense of community
conducting business in an ethical & responsible manner generates trust & promotes productivity & innovation
reputation matters greatly in business