Marta Bicho is an assistant professor at IPAM and an invited assistant professor at Católica Lisbon School of Business & Economics (Lisbon, Portugal). Her research interests lay at the intersection between hybrid organizations, social responsibility, and strategy, particularly how organizations achieve legitimacy in contested sectors. She earned a Ph.D. in marketing at ISCTE-Lisbon University Institute.
Ethical business has been under discussion for the past years as one of the most important shifts to be made in the business world. Many companies have been changing their practices to shift to a more ethical and sustainable operation. These practices involve various stakeholders, such as employees, customers, suppliers, and others.
However, what does “ethical” mean in the context of corporations? One understanding is that it as a moral principle, an obligation to maintain business integrity toward social welfare. There is a sense of responsibility in today’s business world that goes beyond obligations of maximizing shareholder profits; many investors are starting to demand that companies take into account ethical considerations in their business practices. Companies should contribute to society beyond the scope of mere corporate social responsibility; instead, they should incorporate the duty to contribute into their mission and with respect to all of the company’s stakeholders.
Profit is necessary for companies to continue to exist, and without profit companies cannot contribute to society. But companies can use their profit also to contribute to the welfare of others. Such shift to focus on welfare takes time, however, since corporations must adjust organizational and cultural structures. Stakeholders and the regulatory environment have a key role in this. For instance, governments can provide incentives to responsible corporations and require companies to improve communities. Employees can also demand ethical practices. However, company leaders would need to be open to this kind of change and provide the means and resources to implement necessary actions.
In the prompt for this piece a number of concerns are raised.
Amazon is an interesting case, because it is an important company with worldwide impact, facing a number of ethical issues raised by various stakeholders.
First, the environmental aspect of their emissions from shipping: Amazon is planning to decrease this. A second issue is related to their employees; companies also have a responsibility towards their employees. When it comes to communities, on the one hand, Amazon’s campus would provide more job opportunities, which can be considered a positive outcome; on the other hand, there is the chance of a negative impact on communities. This negative impact can be tracked, for instance, in partnership with governments or with local community bodies in order to mitigate them.
Companies that redefined consumer behaviors—such as Amazon, which redefined how people shop—have an important responsibility to contribute to welfare. In sum, businesses could work for and with society toward reshaping corporate mentality and promoting more ethical behavior. But only working together with the various stakeholders, such as shareholders, employees, consumers, and governments (among others), could companies promote the common good.
Is being "ethical" a duty? Yes, being ethical has emerged as an important business opportunity and managerial concern, and it should be understood as a duty for businesses. Companies have a new role, a responsibility with dual purposes: to be financially viable and, at the same time, to contribute to general social well-being.