Ethical Behavior Brings Tangible Benefits to Organizations

By Verschoor, Curtis C. | Strategic Finance, May 2001 | Go to article overview

Ethical Behavior Brings Tangible Benefits to Organizations


Verschoor, Curtis C., Strategic Finance


PRAGMATIC ACCOUNTANTS ARE ALWAYS LOOKING FOR A RETURN ON THE INVESTments their organization makes. This is true for ethics systems as well as bricks-and-mortar. Management accountants want to know that ethical behavior has demonstrable positive results rather than just knowing it's the "right thing to do." A study by Walker Information, a global stakeholder research firm, reports the results of 13 academic studies of empirical evidence that relate ethical corporate behavior, or "good corporate citizenship," to positive business outcomes.

These studies show that tangible benefits result from greater attention to various aspects of ethical behavior. Good corporate citizenship improves employee relations and results in human resource benefits. The factors identified include more effective recruitment; higher retention; and better morale, loyalty, motivation, and productivity.

Customer relationships are also improved. Factors identified include increases in customer loyalty, enhancement of brand image, and tiebreaker effects for customer purchasing decisions. Empirical evidence suggests that customers' sensitivity to corporate citizenship continues to gain momentum. Good corporate citizenship also enhances overall business performance, particularly improved competitive advantage, higher financial returns, and better reputation. A considerable number of studies, including work done by this editor, demonstrate a positive link. Yet critics maintain that too many "best business practices" and other influences are present to attribute the superior performance solely to good corporate citizenship.

Earlier research by Walker warns that a low level of employee loyalty exists globally, as does a dwindling level of faith in organizational ethics and leadership. …

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Ethical Behavior Brings Tangible Benefits to Organizations
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