The Impact of Ethics on a Corporations Triple Bottom Line

Abstract

This report explores thoroughly on the effects of ethics on corporations triple bottom line. As corporations strive to enhance the value of their businesses while supporting the need for sustainability and competitiveness, the Triple bottom line (TBL) concepts have become a popular approach. However, ethics plays an integral role in ensuring that social, economic and environmental success is achieved. Thus, Ethics has a notable influence and significant effects on the triple bottom line. Thus, this report begins by offering a background discussion of the subjected followed by a review of previous studies. Data was collected from secondary sources which therefore serves as quantitative data. The study concludes that there is a positive correlation between Ethics and corporation’s Triple bottom line as the interaction leads to sustainability.

Introduction

In the rise of high profile corporate scandals and the increasing awareness with respect to the fact that the global populace is suffering from reckless and unethical organizational practices have resulted in the development of measures to address issues facing the Triple Bottom line approach. This is well illustrated by the continuous legislation of policies and positive persecution of corporate officials engaging in corrupt practices. The primary principle of TBL approach similar to that of business ethics asserts that profit should not be the only conciliator of accomplishment in business. In addition according to Leroy (31) the ability to generate revenue, corporations are required to examine their environmental and social stewardship to show commitment to the respective communities in which business is carried out. The traditional strategy to business success measurement is through the TBL approach as it gives emphasizes on non-monetary approaches to business success. The concept holds that the final success of any firm should be measured not only on the basis of conventional monetary TBL but there is a necessity to consider environmental and ethical forces that are a major determinant of the outcome. Actually, most people have agreed that corporations have must accountabilities to all their stakeholders in ensuring that they maintain responsible behaviors. Also, it is unarguable that it is impossible for corporations to achieve success in the long-term in the case that they disrespect the interests of the stakeholders. In support of the notion, the way that business is conducted today in the face of globalization, innovation and need for market domination have changed, meaning that firms must strive not just to increase their financial gains but also impact the society positively.

Research Question

1. What are the effects of ethics on Corporations Triple Bottom Line?

Critical Literature Review

According to Tate and Bals (4), the TBL model does not only measure the success and stability of an organization from only a financial stand but also while focusing on social, environmental and ethical performance. TBL is a consistent process that assists a firm to concentrate on desirable performance that leads to sustainability while constantly conveying through actions to its community, investors, staffs and so on that it is not only seeking to increase its revenue but also seeks to promote the greater good. In other words, this is a sustainable approach that creates a balance amid economic success, environmental sustainability, and social engagement. Those corporations that in the modern business landscape have chosen to pursue these values and practices are able to lower and address any issue that arises thus enhancing their wellbeing. Even though consumers are today focused on acquiring quality products, it is without a doubt that a corporation that shows no consideration of environmental, social and ethical needs of the respective community will fail (Onyali 195). The ability to generate wealth lies in the level of effort and commitment that a firm puts in promoting the greater good. This clearly shows that ethics focuses on the achievement of social responsibility which in turn ensures that TBL achieves sustainability.

Based on Laasch and Conaway (27) the main objective of TBL is to achieve sustainable development which might not occur in the case that a company fails to adhere to ethical business practices. Ethical practices are achieved on the basis of the TBL. Sustainability is one of the leading philosophy in which ethics and TBL originate (Leroy 31). The philosophy mainly emphasizes the ability to meet the needs of existing stakeholders without negatively affecting the ability of others. In that sustainable actions in business are the practices that pursue the maximization of high social ethical and environmental effects. This is a good thing for a business setting because when a corporation encourages ethical behaviors in a sustainable sense then extensive benefits ranging from finances, larger market shares, reduced operating cost, and customer loyalty and so on. Investing in driving a firm onto the sustainability path is likely to generate substantial competitiveness for the corporation.

It is argued highly that a company that follows the TBL model but disregards the provisions of business ethics will not achieve sustainability in the long run (Leroy 31). It is only the forms that integrate the concepts that become a success due to the fact that ethics supplies efficiency while at the same time increasing their competitiveness and triggers innovation and all these are responsible for profitable business over time. Through the assertion on social responsibility, corporations should be willing to improve their surrounding by acting ethically and with integrity while serving and enhancing the living standards of everyone that is touched (Tate and Bals 11). Thus TBL holds that success can never be measured from a single metric since ignoring the rest would only result in an unethical firm that only prioritizes on its financial needs over the interests of the society and its stakeholders. Due to the growing awareness and familiarity of the value of business sustainability, most firms are struggling to embrace Corporate Social Responsibility (CSR) principles which is the process through which efficiency is achieved by ensuring that stakeholders are treated in an ethical manner. CSR is a measure that is used in evaluating corporate behaviors, how a firm impacts the society and its ability to conserve the environment while still guarding its competitive advantage.

Evidently, ethics impacts corporations TBL as it results in social responsibility. This is an ethical outline suggesting that a corporation or an individual has the sole responsibility of acting in a way that seeks to benefit the society greatly. Social responsibility is that duty that every person should achieve to maintain a reasonable balance amid the economy and the surrounding. Also, the concept conveys that business entities ought to balance profit generating operations with the activities that seek to benefit the society highly. In that, this incorporates the development of a business with a positive connection to the community where its operations are based (Laasch and Conaway 29). The three entities that are the most effective are social welfare, environmental effects, and economic development. Traditionally, businesses were mainly seeking to generate more wealth while ignoring the needs of the society but individuals are more familiar with the concept of social responsibility which in turn pressures the business to act ethically. Ethics ensures that TBL achieves its sustainable development goal through ethical practices as a whole which result in inclusive results. With reference to the environment, TBL strives with the assistance of ethics to ensure that a company considers its environmental effects. For instance, companies avoid polluting the surrounding by proper disposal of water as well as the use of renewable resources. By using natural resources sustainably, the community can benefit while the company increases its ability to operate effectively in a stable environment (Leroy 32). Through the integration of the goal of sustainable development is achieved. Such measures are helpful in attracting more consumers since people begin to view the corporation differently based on its effort to protect the environment from pollution harm.

Treviño and Nelson (44) note that on the other hand, for social welfare corporations ought to examine their impacts on society, which means that they need to act ethically. The social objective is to improve the individual’s living standard by creating employment opportunities and favorable work settings. This is a form of social investment where corporations benefit highly by gaining a positive reputation which not only gathers the most skilled workers but also leads to increased production, quality performance, and market expansion. In addition, this results in reduced operating expenses while at the same time it creates more investment opportunities in the industry (Boeger, Murray, and Villiers 34). Thus, Ethics has notable positive effects on corporations TBL. Brand development, reputation improvement, customer loyalty, reduced operating cost, and quality performance are some of the effects on the model. Corporate reputation is achieved in the case that a firm has acted ethically in fulfilling the needs of the consumers which increases its ability to influence stakeholders and public attitude. Through social responsibility, the benefits are immediate since such practices offer continuous support for sustainable development.

In addition, the impact of integrating ethics with TBL is that it leads to increased profit and market share. Based on the provision of business ethics corporate officials are guided by the belief that through acting for the benefit of the society, then it benefits from market growth and increased revenue generation (Boeger, Murray, and Villiers 34). Through the benefit of market increase, this clearly illustrates that stakeholders will react positively to the effort of TBL. It is without a doubt that economic value can be achieved by a company that focuses on TBL but sustainability is delivered where ethics are considered. The other impact is that it results in increased community support for the model. Communities have the highest influence when it comes to authorizing a corporation to operate effectively which also plays part in building a reputation for the company. A responsible corporation is a result of ethical practices which therefore implies that the success of the TBL is dependent on the concept of ethical practices (Treviño and Nelson, 46). Clearly, ethics impacts corporations TBL by ensuring that the goals become more evident and that individuals strive to become socially responsible for the sustainable development of the business to be achieved in the long run. Both models, therefore, strive to enhance the competitiveness of corporations.

Theoretical Framework/ Hypothesis

Based on the analysis above, this study has established a positive relationship between Ethics and Triple Bottom Line. Ethics enables corporations TBL to consider the ultimate social, environmental and economic outcome of their practices. This is other words accounts to CSR, where corporations have the responsibility of ensuring that they promote deeds that lead to greater good. The achievement of sustainability is one that must uphold the needs of society and stakeholders as a priority. Contrary to past practices, ethics ensures that corporations examine their success not only on the grounds of financial gains but also while focusing on other factors such as environment and social interest. As per today, corporations are required to guard the environment against any form of pollution as a means of promoting social wellness and sustainability (Onyali 195). On the other hand, social responsibilities that promote the stability of communities has been an essential force through which firms are constantly gaining from brand development and reputation. Thus, ethics mainly ensures that TBL is able to achieve its goal by asserting on positive behaviors. In other words, ethics is a framework that influences all the policies of TBL which therefore demonstrates that in its absence then corporations will not benefit from long-term sustainability. In this context, it works to ensure that corporations TBL achieves quality performance, efficiency, reduced operating expenses, market, and revenue increase as well as brand loyalty. Most individuals hold a positive perception for the firms that are socially responsible given that they have proven not to be pursuing profit alone but also seeks to uplift the communities. In other words, they focus on development. Since the main objective of Corporations TBL is to acquire sustainable development ethics guarantees success.

Data Collection Method

In fulfilling the needs of this reports, the study focused on the collection of both primary and secondary data. Primary data was collected from online sources such as public surveys report while secondary data was acquired from books and articles. Data from secondary sources, therefore, acted as quantitative data acquired from a review of the existing literature. These sources were mainly selected based on their ability to maximize data, accessibility, affordability, and convenience. The researcher sought to gather as much information as possible to support the set hypothesis while ensuring that reliable and credible results are derived.

Data Analysis

The thematic or content analysis is the approach that was used to analyze all the acquired information gathered. This is an analysis approach where all the collected information is classified in terms of themes which makes it comparable. The main objective of the approach is that it helps in narrowing down information as well as simplification of the theme while still generating quantifiable results. In addition, the approach increases the ability to organize qualitative data in a manner that meets the needs of the study. However, since it highly depends on individuals skills human errors might affect the reliability of the result meaning that it should be applied with caution.

Results

The study established that ethics is positively connected with corporations TBL. In that, while ethics is a framework that outlines on the behaviors that corporations should undertake for competitiveness and social stability, it also seeks to ensure that sustainability is achieved. The ultimate goal of both concepts is to ensure that the organization does not only achieve financial stability which leads to competitiveness but also enhances its reputation and brand loyalty. A socially responsible firm is one that adheres to ethical practices meaning that it conserves the environment, promotes economic development and social growth. This is the firm that cares about the needs of the stakeholders such as its employees by providing them with a favorable workplace and ensures that they are motivated to perform well. The focus should not only be to generate more revenue but this, in other words, should entail the creation of a sustainable society. Measuring the effectiveness of the business based on its ability to produce more revenue is an outdated approach given that the effects of the firm to the surrounding must be assessed. In this case, the study found out that ethics ensures that TBL achieves its goal by creating a path to be followed and setting guidelines which mainly incorporate ethical business practices that leads t sustainability.

Table 1: Impacts of Ethics of Corporations EBL

Ethic practices Advantages	EBL goals	Integration Impacts
Reputation	Sustainable development	Better financial gains
Social, environmental and economic development	Competitiveness	Lower operating expenses
Sustainability	Market domination	Improved reputation and brand image
Quality performance	Business efficiency	Increased customer loyalty
Reduced operating expenses	Corporate stability	High productivity and superiority
Market supremacy	Long run success	Increased market share

 

Table 2: Drivers of EBL

Driving Factors	Hypothesis
Sustainability	Market development and profitability
Markets	Competition and compliance
Technology and globalization	Quality production
Corporate responsibility	Reputation and brand loyalty
Values	Economic gains
Partnerships	Market dominance
Communication	Efficiency

 

Conclusion

In summing up, it is clear from the analysis above that corporations TBL is an essential measure of the success of any business. However, businesses today must ensure that they account for the financial, social, as well as economic results of their companies as a whole. Ethics plays a crucial role in achieving sustainability given that it does not only asserts on ethical behaviors but also the need for corporations to be socially responsible. The benefits of such approaches are undeniable in an era where there is an increasing rate of corporate malpractices that are affecting not just their reputation but their performance as well as profit generation. Thus, it is evident that ethics helps in ensuring that TBL achieves the goal of sustainable development for the long run through focusing on corporate responsibility to the respective communities.

 

 

 

 

 

 

 

 

 

References

Boeger, Nina, Rachel Murray, and Charlotte Villiers. Perspectives on Corporate Social    Responsibility. , 2008. Internet resource.

Laasch, Oliver, and Roger N. Conaway. Principles of Responsible Management: Glocal Sustainability, Responsibility, and Ethics. , 2015. Print.

Leroy, Miller. The Legal Environment Today - Summarized Case Edition: Business in its Ethical, Regulatory, E-Commerce, and Global Setting. 2015. Cengage Learning.

Onyali, Chidiebele Innocent. Triple Bottom Line Accounting and Sustainable Corporate

            Performance. 2014. Research journal of finance and accounting.

Tate, Wendy L., and Lydia Bals. "Achieving shared triple bottom line (TBL) value creation: toward a social resource-based view (SRBV) of the firm." Journal of Business Ethics (2016): 1-24.

Treviño, Linda K, and Katherine A. Nelson. Managing Business Ethics: Straight Talk About How to Do It Right. New York: J. Wiley, 2011. Print.