The Importance of Business Ethics: Case Study of Amazon

Executive Summary

E-commerce is an exponentially growing industry. Although many new companies take root in the field, giant retailer Amazon remains the largest and most widely used online retailer. However, in recent years, the company underwent significant criticism questioning the ethical principles behind many of their practices fueling their profits (The Guardian, n.d.). Philanthropists and workers’ unions advocate for fairer treatment of workers and accountability for the excessive personal gain by the company’s founder. Business ethics can be defined as the application of individual moral standards in the business environment. Ethical practice formulates a company’s culture through promoting human rights, fairness, and a sense of social responsibility in an otherwise profit-based field (Mea and Sims, 2019). Individual ethical standards are significantly dissimilar to business ethics. The dissimilarity results from the various individuals that contribute to the formation of an organization’s ethical ground.

The analysis of Amazon’s ethics shows the consequence and benefits of incorporating business ethics into practice. Amazon’s continuous unethical practice in tax avoidance, inhumane working conditions, and unfair wages for their workers indicates several consequences the company faced (The Guardian, n.d.). While Jeff Bezos received an award for innovation and social responsibility, Amazon workers protested against inhumane working conditions indicating the disregard for ethics in the organization. The surfacing of these unethical practices in the media resulted in significant consequences for the company. The company faced criticism from social and government leaders, a damaged image, and faces a risk of dropping profits and market viability. The benefits of ethical practices include; profitability, social approval, and higher workforce retaining levels (Tikute, 2020). These benefits inform the conclusion that organizations need to prioritize ethics in their practice.

The analysis shows the importance and benefits of ethics in business. Therefore, this paper makes three recommendations to promote ethics within the organization:

1. Implement and take into serious consideration workers’ rights.
2. Organizations should have a sense of social responsibility.
3. Assessing individual values and virtues and their effect on organizational ethics.

(Section word count-without intext citations: 325)

Contents

Executive Summary. 2

Introduction.. 5

Analysis. 6

Conclusion.. 11

Recommendations. 12

References. 14

Introduction

Amazon is a globally known online retailer that has garnered significant amounts of profit and a leading position in the market. Many business analysts attribute the company’s success and economic position to its CEO, Jeff Bezos, and its business model. Critiques attribute the success to the company’s inherent unethical practice including tax avoidance, poor employee treatment, and payments below minimum wage (the Guardian, 2020). Comparisons between the company’s profits and operations show the perceptible disregard for business ethics. The analysis of Amazon’s business processes shows the importance of ethics in business, consequences of unethical practice, and how businesses can apply ethics for their benefits.

Ethics is a fundamental consideration of organizations regardless of the nature of their operations. Business ethics can be defined as the standards of right and wrong in business management and transactions dependent on human rights, fairness, and obligations (Mea and Sims, 2019). Considerations of human rights for business requires collaboration between different stakeholders in an organization to ensure genuine success without leveraging the human rights of employees or consumers. Ethics in business control several organizational facets to keep businesses in line with the human rights of their employees and customers.

Ethics plays a critical role in the daily processes of a business operation. According to Luu, ethics in business govern decision-making, action, and business processes (Luu, 2016). Business ethics often dictate the success of a business, its reputation, and gives many organizations an edge over their competitors. Businesses need not practice ethics since it presents as a choice and not an obligation. However, society has grown wary of today’s myriad of unethical business practices warranting service delivery and product manufacturing companies to highly consider the ethical practice.

(Section word count-without intext citations: 264)

Analysis

This section discusses the importance of ethical practice in business organizations considering the case study of Amazon. This section will cover two components that are crucial to concluding whether to prioritize ethics in business. First, the discussion will cover the consequences of a lack of ethics in business practices. Then, it will build-up to the significance of ethics in business and explanations of the priority level of ethics in an organization.

Consequences of Unethical Practice

Amazon has made questionable exponentially rising profits every financial year since its inception. However, these profits and claims of irregular practice point to several instances of unethical business processes. Amazon has come under considerable amounts of criticism, particularly concerning worker treatment and payment and tax avoidance (Ethical Consumer, 2020). Television programs have covered protests by Amazon warehouse workers who express their discontentment with their wages and working conditions. Besides, the company’s CEO also faces reproach from politicians, media, and local citizens for his wealth and little donations to charity. An analysis of individual and organizational ethical behavior informs the norms and values of a business and indicates the value of human rights in the organization (Grzesiuk, 2016). Profit geared business models are often unethical and result in a disgruntled workforce that in turn significantly affects sales.

Although Amazon faces several accusations of unethical business practices, the company continues to make significant profits. Amazon’s CEO participates in a handful of charity donations, which when compared to his earnings seem meager. The company legally offsets its tax obligation through practices such as paying employees in the form of shares (Ethical Consumer, 2020). Philanthropists and society at large shun this blatant hoarding of profits without a moral consideration for the poor. For a long time, customers trust Amazon to deliver ordered products, however, recent realizations of the company’s unethical practices may significantly drive down profits. In a bid to sensitize the public and force Amazon’s CEO to take responsibility for the workers’ complaints, human rights and anti-poverty campaigners encouraged the public to shun Amazon’s services. Without knowledge of how far the boycotts can go and the crop up of competitors, the company stands to make significant losses in human resources and customers.

Unethical business practices also attract problematic government, social, and legal interventions. For instance, Amazon’s publicized failure to consider its workers’ rights   attracted Union action to fight for better pay and working conditions for the workers in the company’s warehouses (the Guardian, 2020). These interventions may result in significant losses in human resource and overall profit of the company. Although these practices resulted in a massive profit margin, the company was in a constant battle with society to rebuild their image and reestablish trust with the people. There was a media surge targeting Amazon workers’ complaints and public outcries some requesting consumers to boycott the company’s products. An irreparable reputation may result in the loss of their economic and marketing position, which causes major concern as many competitors enter the e-commerce industry.

More radical consequences of lack of business ethics include changes in network ties, ability to trade, and marketing positions. According to Grzesiuk, shareholders may impose additional costs and market-based sanctions on organizations depending on their status (Grzesiuk, 2016). These sanctions pose a significant threat to businesses since they are crucial segments to their success. Grzesiuk explains, “Firms with a higher status are more at risk of loosing their reputation,” (Grzesiuk, 2016, p.32). Bad reputation results in a big slash of support from stakeholders and increased distrust by various audiences. For instance, Amazon faces stiffer competition due to increasing social dissatisfaction tied to the company’s unethical practices.

Significance of Ethics in Business

The majority of business leaders believe that ethical practice prevents them from making a significant profit. However, studies show that ethical practices promote human rights, improve worker and customer considerations, and promote business performance (Singh, 2018). Ethical company activity improves company reputation and increases its preference in society through concrete company-society relationships. Besides, ethical practice applied in financial statement prevents financial and legal dilemmas and implications (Kiradoo, 2020). It is easy for consumers to conclude that if a company cares little about the workers that contribute to their huge profit margins then they would not give many considerations about the customers. Therefore, ethical business practice proves to be an appropriate strategy to improve organizational performance in the social and profits scale.

In addition to better financial performance, self-policing in businesses through ethical practice results in marked profitability. According to McMurrian and Matulich, “There is a positive correlation between an organization’s ethical behavior and activities and the organization’s bottom line results,” (McMurrian and Matulich, 2016, p.1). The positive correlation results from the various key players in business transactions that rely on sensitivity to human needs and rights. Customers rely on trust to purchase or request services from organizations, while quality workflow and company profits depend on the working conditions in the different stages of production or service delivery. Ethical principles create a good working environment ensuring that workers put in maximum effort and exude top performance.

A key concern for many businesses is their ability to retain their workforce while maintaining standards of production. Amazon’s reluctancy to pay their workers and improve the working conditions results in a significant employee dissatisfaction that reflects in their inability to retain low-tier workers (Ethical Customer, 2020). Amazon could avoid these problems by implementing a human considerate practice policy that promotes ethical business. Business ethics foster employee motivation and retention through fair and on-time wages, justice, and dignified treatment (Tikute, 2020). Building a good and satisfied workforce is equivocal to watering a plant to harvest good fruit. The workforce is crucial to a company’s success and inconsiderate treatment only reflects in the output and profits levels.

Incorporating ethics in business improve business relations between various organizations in the same plane field. It is impossible to separate human aspects from business processes even in e-commerce practices like Amazon (Luu, 2016). Today, business ethics gets more attention from stakeholders and business partners indicating how it has evolved. The practice of business ethics governs relationships between companies and stakeholders. Business ethics allow for companies to work together, while intracompany practices control the need for relentless profit. Higher status companies must incorporate business ethics in their practice to protect their business relations and retain profitable economic collaborations. Ethical business practices increase the attractiveness of a company, welcomes investors, and opens foreign investment opportunities.

The aforesaid benefits indicate that organizations need to make ethics one of their core priorities to ensure economic and social success. The overwhelming benefits of applying ethical ideas to business behavior indicate its importance in organizations (Tikute, 2020). Considering the cost and benefit analysis of unethical practice when compared to the cost and benefit of ethical business practice signposts the need to prioritize ethics. Society understands that individual values and norms drive organizational ethical practice, and may differ depending on the socialization of the different people. However, the undeniable human aspect in business processes shows the need for ethical considerations in organizations even with profit-based business models. Therefore, ethics should be a key priority for any organization to keep optimal performance without undermining the rights and values of people.

Prioritizing ethical practice need not mean a devaluation of profit goals, rather it means that companies equally prioritize human and business aspects. Making ethics the main priority of an organization may not sit well with many business-oriented managers, because it is largely associated with social benefits (Luu, 2016). However, there is no loss, since incorporating ethical practice in profit-based business primacies increases the profitability and social appeal of an organization. Therefore, business ethics should be one of the main priorities of an organization to concretize its chances of success, economic, and market viability.

(Section word count-without intext citations: 1264)

Conclusion

The above analysis sought to discuss the consequences and benefits of business ethics through the scrutiny of Amazon and the need for prioritizing ethics in organizations. Worryingly, the case study shows growing discontent towards Amazon, which mainly points to their unscrupulous business systems and disregard for workers’ rights (Ethical Customer, 2020). The unethical business practice attracts avoidable government and social scrutiny, damaged reputation, and economic sanctions that may significantly affect an organization’s pursuit of profitability. The consequences of unethical business practices are avoidable, by prioritizing ethics in all transactions. Undoubtedly, ethical considerations result in better business-society relationships, maintain profitability and business relations, and retainment of a motivated workforce. The analysis shows that business ethics is an indispensable philosophy for any company. Consequently, business ethics should be one of the key priorities in organizations owing to its attached benefits. The next section lists various informed recommendations to help organizations promote ethical practices to maintain or improve their economic and social positions.

(Section word count-without intext citations: 154)

Recommendations

Considering the importance of business ethics and the advantages associated with it, the following recommendations help organizations promote it in practice:

1. Implement and take into serious consideration workers’ rights.

• Workers are an integral part of an organization and often are the cause of success or failure.
• An effective strategy to promote business ethics is embedding ethical practice in business models through ethical programs suitable for different companies (Lashley, 2016).
• Intracompany changes in policies and business models need to accommodate ethical principles that promote workers’ rights.
• Accommodating and implementing workers’ rights is a critical step towards promoting ethical practice (Luu, 2016)
• Moreover, organizations should ensure that workers work under humane conditions and get paid according to their output.
• Also, companies need to allow workers to join unions, which is indicative of an organization’s will to practice ethically and the respect accorded to their employees.

2. Organizations should have a sense of social responsibility.

• Amazon’s CEO, Jeff Bezos’s significant gain at the expense of his company’s workers should be dynamically challenged.
• Top leadership in such big companies should recognize their insensitivity towards lower-tier workers and the entire society.
• To be ethical, organizations need to take responsibility for their business frameworks and foster new organizational principles and values that bind all workers in various tiers (Greenwood and Freeman, 2018).
• New company policies should also reflect ethical principles of justice and fairness that ensures workers at all levels get fair wages and that the company gives back to society.

3. Assessing individual values and virtues and their effect on organizational ethics.

• Holistic ethical practice depends entirely on individual drives, virtues, and norms.
• Stakeholders need to assess individual motivation and the consequent dialogue needed to achieve a consensus on organizational ethics (Wang et al., 2016)
• Moral standards significantly inform individual ethics and reflect in any business environment
• Considering what is right, just, and reasonable in business processes promotes ethical practices and ensures society retains its moral standards.

(Section word count-without intext citations: 311)

References

Ethical Consumer. 2020. How Ethical Is Amazon.Com Inc? | Ethical Consumer. [online] Available at: <https://www.ethicalconsumer.org/company-profile/amazoncom-inc> [Accessed 15 July 2020].

Greenwood, M., and Freeman, R., 2017. Deepening Ethical Analysis in Business Ethics. Journal of Business Ethics, [online] 147(1), pp.1-4. Available at: <https://link.springer.com/article/10.1007/s10551-017-3766-1> [Accessed 15 July 2020].

Grzesiuk, K., 2016. Unethical Behaviour of Organisations from a Social Network Perspective. A Literature Review. Annales. Etyka w Życiu Gospodarczym, [online] 19(4). Available at: <http://dspace.uni.lodz.pl/xmlui/bitstream/handle/11089/21060/4_2_%5B23%5D-37_grzesiuk.pdf?sequence=1&isAllowed=y> [Accessed 15 July 2020].

Kiradoo, G., 2020. Ethics in Accounting: Analysis of Current Financial Failures and Role of Accountants. International Journal of Management (IJM), 11(2), pp.241-247. Available at: <shorturl.at/joFMY> [Accessed 15 July 2020]

Lashley, C., 2016. Business ethics and sustainability. Research in Hospitality Management, [online] 6(1), pp.1-7. Available at: <https://www.tandfonline.com/doi/pdf/10.2989/RHM.2016.6.1.1.1289> [Accessed 15 July 2020].

Luu, T., 2020. The Role Of Ethics In Business Operations. Undergraduate. Laurea University of Applied Sciences. Available at: <https://www.theseus.fi/bitstream/handle/10024/112545/The+Role+of+Ethics+in+Business+Operations+final.pdf?sequence=1> [Accessed 15 July 2020].

McMurrian, R., and Matulich, E., 2016. Building Customer Value And Profitability With Business Ethics. Journal of Business & Economics Research (JBER), [online] 14(3), pp.83-90. Available at: http://file:///C:/Users/user/AppData/Local/Temp/9748-Article%20Text-36220-2-10-20160712.pdf [Accessed 15 July 2020]

Singh, A.K., 2018. Ethical Business Practices and Improving Business Performance. GST Simplified Tax System: Challenges and Remedies, 1(1), pp.202-206. Available at: file:///C:/Users/user/AppData/Local/Temp/170-Article%20Text-520-1-10-20180328.pdf  [Accessed 15 July 2020].

the Guardian. 2020. Amazon Could Give the World A Gift On Its 25Th Birthday – By Paying More Tax. [online] Available at: <https://www.theguardian.com/business/2019/jul/07/amazon-25th-birthday-jeff-bezos> [Accessed 15 July 2020].

Tikute, V., 2020. Notes on Business Ethics. [pdf] pp.1-4. Available at: <http://studymaterial.unipune.ac.in:8080/jspui/bitstream/123456789/3009/1/Notes%20on%20Business%20Ethics.PDF> [Accessed 15 July 2020].