A DILEMMA EXPERIENCED BY BUSINESSES: ETHICS AND COST

Abstract

In today's business world, competition is the most important thing. On the other hand, it became quite difficult to survive and ensure a sustainable development for the businesses. Achieving success in the global world requires not only to be productive and creative, but also to give importance to ethical values. While conducting ethical behaviors in business life provides profitability and competitive advantage, unethical behaviors add additional costs to businesses. However, ethical values sometimes vary from one society to another. While the behavior of a firm is unethical according to one society, it may be considered as normal according to another. In such cases, firms may have difficulties in making decisions. In this study, when there is a dilemma between making a profit and behaving ethically, which of the enterprises should be preferred is evaluated in terms of ethical and cost relation. Moreover, the reasons behind the decision are explained. In addition, the types of unethical behaviors of firms and the effects of these behaviors on the costs were investigated. As far as it is known, this study is expected to contribute significantly to the literature because there is no study linking ethical behaviors of businesses to their costs in the current literature. According to the results of this theoretical literature review, the reasons such as political structure, economic situation and legal regulations affect the needs of the enterprises. For this reason, enterprises should first follow through the objectives of cost minimization and profit maximization, then consider ethical values. In other words, the costs incurred by enterprises not behaving ethically are better than the profit loss by behaving ethically.