Why Good Business Ethics Drives Performance and Trust
This paper examines the importance of ethical conduct in business, tracing the consequences of corporate ethical failures — including the Enron, Tyco, and MCI scandals — that led to costly compliance legislation such as the Sarbanes-Oxley Act of 2002. Drawing on foundational definitions of ethics from scholars such as Josephson (2001) and Lichtman (1998), the paper explores cross-cultural core values identified through empirical research. It then analyzes studies connecting ethical behavior to measurable job performance in sales and real estate, demonstrating that ethical conduct functions as an effective business strategy. Finally, the paper considers how organizational accountability and employee ownership of objectives can reduce unethical behavior and foster a culture of transparency and trust.
- Introduction: Corporate scandals, SOX compliance costs, and ethics crisis
- Defining Ethics: Scholarly definitions and cross-cultural core values
- Finding the Connection of Ethics and Performance: Studies linking ethical behavior to sales outcomes
- Alleviating Ethical Meltdowns: Accountability and objectives reduce unethical behavior
- Summary: Transparency and ownership drive ethical organizational culture
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What makes this paper effective
- The paper grounds abstract ethical concepts in concrete empirical studies, such as the Behrman and Perreault (1982) four-dimension sales performance model and Izzo's (2000) real estate agent study, making the argument practical and credible.
- It moves logically from defining ethics, to measuring its impact on performance, to prescribing organizational remedies — giving the argument a clear cause-and-effect structure.
- The opening framing around Sarbanes-Oxley provides immediate real-world stakes, motivating the reader to care about the abstract discussion that follows.
Key academic technique demonstrated
The paper demonstrates effective use of synthesized literature review — drawing on multiple independent studies across different professional contexts (sales, real estate, management surveys) to converge on a single, unified claim: ethical behavior is not merely morally desirable but measurably improves business outcomes. This cross-domain synthesis strengthens the argument by showing it is not discipline-specific.
Structure breakdown
The paper opens with a policy-level problem (SOX compliance costs and corporate scandals), then narrows to define the term "ethics" using scholarly sources. The middle sections build an empirical case linking ethics to performance using quantitative studies. The final two sections shift from diagnosis to prescription, arguing that clear objectives and employee accountability are the practical tools for reducing ethical failures. The conclusion reinforces the paper's central thesis without introducing new material.
Introduction
There has been a crisis of confidence in corporate ethics over the last ten years, and as a result, legislation continues to be used as the primary mechanism to restore trust in business. Many argue that the Sarbanes-Oxley Act (2002) has significantly raised the cost of doing business, enriching Indian Business Process Outsourcing (BPO) companies with 30% revenue growth in the process (Economist, 2006). The issue of corporate responsibility — the extent of its existence and what corporate ethical responsibility should ideally look like — is examined in this paper. Simply put, the lack of business ethics has introduced compliance-based initiatives at both the national and global level in an effort to legislate confidence and trust back into business. The high costs of Sarbanes-Oxley compliance could have been averted, as could the billions of investors' dollars lost from the Enron, Tyco, and MCI scandals, to name just a few.
References
Behrman, D., & Perreault, W. (1982). Measuring the performance of industrial salespersons. Journal of Business Research, 10, 35–70.
Economist (2006). Virtual champions. Economist Magazine.
Institute for Global Ethics (1996). Global values, moral boundaries: A pilot survey. Camden, ME.
Izzo (2000). Cognitive moral development and real estate practitioners. Journal of Real Estate Research, 20, 119–142.
Josephson, M. (2001). Making ethical decisions. Josephson Institute of Ethics. Marina del Rey, CA.
Lichtman, J. (1998). Invoke employee loyalty. Workforce, 77(1), 121–122.
Marchetti, M. (1997). Whatever it takes. Sales & Marketing Management, 149, 28–37.
McKerrow, K. (1997). Ethical administration: An oxymoron? Journal of School Leadership, 7, 210–225.
Sarbanes-Oxley Act (2002). Discussion of the Act.
Schwepker, C., & Ingram, T. (1996). Improving sales performance through ethics: The relationship between salesperson moral judgment and job performance. Journal of Business Ethics, 15, 1151–1160.
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