the impact of business ethics of competent leadership on the small enterprise

2.1 Introduction

Definition of ethical business Comment by Aisling Gartland: 2.2 Definition of Business Ethics

Bartolacci, Caputo, and Soverchia (2020) define ethics as the principles that govern the behaviour of the individual or the way of doing an activity. In fact, ethics are a code of behaviour that demonstrates how a company, group, or individual behaves when there are no legal requirements. Therefore, regardless, of the fact that small enterprises exist to make as much profit as possible, there is a significant need to embrace ethics. Studies regarding business ethics have shown that the ethics of a business is the ethical conduct of the employees and the leadership of this business (Cahyono & Hakim, 2020). The Rresearchers believe that whenever a business is acting “ethically” it means that they have figured out that this type of behaviour will help them, in the long run, to make more money by strengthening the brand and achieve good PR (Cahyono & Hakim, 2020). In this regard, once all of the business employees and shareholders act ethically, they will be able to discuss ethical business (Chazireni, 2019; Mazza & Furlotti, 2019). Moreover, there are certain business practices that are unethical, like charging a 1000% increase from production for profit only. Business ethics are guidelines that most businesses follow that help protect the customers and the company itself from future lawsuits (Del Baldo, 2020). Ethical leadership will protect the business’ private information and not sell it for profit; however, a business must avoid some ethical decisions that come into play when performing recalls on products but are deemed hazardous in nature.

On the other hand, there is an on-going conflict between what customers, a user, and the shareholder want (Hassan et al. 2013). According to the researchers, Research has found that the customer wants the best quality of product or service to be willing to pay. The user (if different from a customer, as in, for example, the reader of a blog that makes money from the advertising customer) wants the best quality of experience to continue to use the company's products (Hassan et al. 2013; Chazireni, 2019; Mazza & Furlotti, 2019). The shareholder wants to maximize revenues and minimize costs. Moreover, in the tight economic times, the company that has this trinity of personae often has to make a choice between the customer, shareholder, and user - since the shareholder and customer are the ones who pay, the user is often the one whose needs are dropped. Comment by Aisling Gartland: Need reference (source) for this this

Nonetheless, Kesuma et al. (2020) argue that an ethical business practice must be the one that ensures the leaders strive to align the interests of customers, users, and shareholders for the common good of the business. According to the researchers, Aaligning these interests can be done by merging users and customers to ensure the services rendered is to the paying customer, or, in other words, the customer who uses the core offering pays for the offering. By doing this, the company makes money by providing value to the customer, who pays for it (Kesuma et al. 2020; Lin et al. 2020). In fact, a class of counter examples for this are all ad-based businesses where the company has lost or themselves diluted away by ensuring that their users can no longer assign a value to products and services. Comment by Aisling Gartland: Need reference for this

Honesty and integrity are the benchmark of business ethics Comment by Aisling Gartland: 2.3 Honesty and Integrity are the Benchmark of Business Ethics

Manzoor et al. (2019) argue that the growth of both small and big enterprises entirely depends on the satisfaction of employees and customers. The researchers It is believed that operating a small enterprise successfully requires the presence of trust between the business and customers (Manzoor et al. 2019; Mujanah, Ratnawati & Kusmaningtyas, 2019). In the new format, two departments may not be directly connected with each other but as a whole business, they are interconnected where culture starts playing an important part (Suriyankietkaew, 2019). A culture is a habit made by the top people by following a rule and practicing themselves. Hence, we have businesses ranging from those with excellent cultures to those with a very bad one poor cultures existing in the world. A good culture is not a stagnant standard but one changing with time (Szczepańska-Woszczyna & Kurowska-Pysz, 2016). Honesty and integrity have only the potential to sustain growth and provide satisfaction to all internal and external customers. Comment by Aisling Gartland: Need reference for this

Furthermore, Tehseen et al. (2019) believe that a business is long-term commitment binding and can be viewed as a service for humanity even if needs to work with it is profit orientated and so innovation at each step always needs to be evolved within all the departments of operation. However, if and where the linkage of honesty and integrity is weakened the output would show in the quality and spoil the harmony as a whole (Yulinda, Situmorang & Salim, 2018). Contrary, when each section or department or entity works with honest intentintent, they do not work for mere salary but the larger goal for of satisfaction with minimum malice in mind. Such a mind an approach has the ability to crop produce better ideas suited to that particular business at that moment, the ideas can be shared by other members and values from co-workers would also be accepted and with such a culture, everyone wins. Customers get quality products or services, they are satisfied, and do not are not shy in acknowledging other Bartolacci, Caputo, and Soverchia (2020). Moreover, business expands grows vertically with profits where gainer in a company, shareholders, and employee too. People who worked not for mere pay packages also become the beneficiary. In fact, it is the quality alone that is sustainable and needs to be modified or innovated with the change of time. Honesty and integrity are the most potent tools that help human values such as respect and moral work irrespective of any area of operation (Cahyono & Hakim, 2020). These values allow the mind to come up with the best ideas in respective areas helping in modifying and upgrading with the passage of time. Comment by Aisling Gartland: Unclear what you mean?

There are millions of ethical business leaders in the world today. The vast majority work for small family businesses where "doing the right thing" is critical to success and prosperity. In this regard, much fewer work for iconic corporations and brands, as the modern form of the corporation tends to promote those who are arrogant, addictive, and uncaring personality types (Chazireni, 2019; Mazza & Furlotti, 2019). The authors’ research into business ethics is demonstrating clear evidence of these sociopathic character traits in the workplace. However, it is also indicating that many of these leaders are otherwise authentic human beings with real integrity in their personal lives. The biggest challenge small businesses face therefore is how to CTRL-ALT-DEL dysfunctional corporate culture to allow leaders to bring their humanity to work (Chazireni, 2019; Mazza & Furlotti, 2019; Cahyono & Hakim, 2020). The good news is that this is happening right now in at least two global corporations we're working with. Comment by Aisling Gartland: Very bold statement to make – possibly consider rewording to make the point less insulting?? Comment by Aisling Gartland: Unclear maybe just say remove Comment by Aisling Gartland: Who is we?

An example of a country where ethics has significantly helped small businesses to thrive is Norway. A country where the state Capitalism model is followed and implemented wherein the Government itself invests the people's savings on their behalf and invests into good businesses so as to generate returns. In this system, the Government itself acts like a huge business entity or a huge corporate entity (Hassan et al. 2013; Chazireni, 2019; Mazza & Furlotti, 2019). They currently have funds upwards of US $ 1 Trillion which are deployed and invested in stakes of various big businesses around the world. Hence, the public, viz. the people of Norway have amazing stakes in some interesting companies around the world. To this effect, Norway has maintained strict business ethics and policy and a clear message that they have not a penny to invest in businesses that harm the wellbeing of the people such as the tobacco Giants and liquor Giants (Suriyankietkaew, 2019). That is what business ethics is all about and entrepreneurs do not simply enter a business just because there is some money to be made, but they must first look at the social implications of the business. Either the business is providing real value and/or wellbeing to society or it is causing it great harm. Comment by Aisling Gartland: Reference

Bartolacci, Caputo, and Soverchia (2020) believe that one of the fundamentals at the workplace is that a litigious culture and a court system sympathetic to the plaintiff ensure that enterprises with larger asset bases cannot readily admit guilt for anything. Publicists, public relations teams, crisis managers and legal teams will also all counsel against admission (Bartolacci, Caputo & Soverchia, 2020). Nonetheless, corporate governance normally ensures that most boards convene exactly these individuals when things go wrong rather than mitigating the issue - blame has first to be established and the BP deep well disaster was a perfect example (Chazireni, 2019; Mazza & Furlotti, 2019). In their investigation, the researchers in their experience relatively found that few business leaders are often indifferent to causing harm but that does not mean they receive unbiased advice. Regulators and lawmakers have created such a complex environment for non-service industries that 'doing the right thing' gets lost. Comment by Aisling Gartland: Issues? Need to make this clearer Comment by Aisling Gartland: Write full name – British Petroleum (BP) Comment by Aisling Gartland: What researchers? Use their names rather than saying just the researchers

Ethics and success of a business Comment by Aisling Gartland: 2.4 Ethics and Success of a Business

According to estimates by the World Economic Forum, companies spend more than $ 1 trillion worldwide on tip payments each year (Mohindra, 2010). In the executive opinion poll conducted annually with more than 12,000 people from 33 countries, corruption appears as a more serious problem than government instability, high inflation, lack of skilled labour, and health. In the researcher’s view, business ethics arise out of and are a reflection of the basic values of the management and culture of the business (Mohindra, 2010; Szczepańska-Woszczyna & Kurowska-Pysz, 2016). In many cases, an examination of the manner in which the business balances the interests of the several constituents of any business: it is employees, owners, customers, and community. One might, for example, consider how the business prices it is products or services: one company might derive its pricing from production costs, adding the expense of materials and labour, plus a reasonable return on the investment of the owners and the taxes imposed for the benefit of the community; another might derive its pricing from an evaluation of supply and demand, adjusting its production volume (and timing) to the level that produced the greatest return to the owners; another might focus its attention on the needs of the customers, adjusting product design and production to maximize customer satisfaction (Kesuma et al. 2020; Lin et al. 2020). Therefore, these are the values, whether or not formally expressed, that influence the day-to-day actions of the various components of the business and their employees that are described as business ethics. Nonetheless, as to how this affects business growth, different people have different opinions. Comment by Aisling Gartland: Again use names or say Research has found that

Yulinda, Situmorang, and Salim (2018) believe that the business that focuses on the present and future needs of their customers and community will tend to experience the most healthy and consistent growth, particularly if ownership is consistent over time. Lacking morals is very different from being less considerate of others and those two are very different from being less ethical. However, a less business savvy person might put everything on the house or at a very deep discount versus a savvy business owner would give little to no discount without sounding rude or less considerate (Hassan et al. 2013; Chazireni, 2019; Mazza & Furlotti, 2019). In fact, shrewdness has gained negative interpretation over the years but what it really means is "having or showing sharp powers of judgment" and that business shrewdness is necessarynecessary, but entrepreneurs ought not to take advantage. Absolutely the dishonest and unethical businesses rarely succeed in the long run. Comment by Aisling Gartland: Consider a different way of phrasing this Comment by Aisling Gartland: Reference definition Comment by Aisling Gartland: Reference

Bartolacci, Caputo, and Soverchia (2020) believe that in business, an entrepreneur’s credibility is vitally important to the growth of the business, and credibility is built over time. A business develops credibility by being honest, working hard, delivering value, keeping promises, and treating everyone well (Bartolacci, Caputo and Soverchia, 2020; Szczepańska-Woszczyna & Kurowska-Pysz, 2016). However, businesses which are unethical, immoral, and dishonest may appear to succeed for a short time, buttime but will always be found out. For example, looking at a company like Enron, or an individual like Bernie Madoff, they made a lot of money, but were found out to be unethical and are now paying the price (Kesuma et al. 2020). Furthermore, over time, people and companies discover who is reliable, honest, hardworking, and law-abiding, but were also on the other hand quickly to learn who is not. The most important thing is that being immoral and dishonest is the quickest way to destroy not only its business but its life as well. Comment by Aisling Gartland: Reference

Cahyono and Hakim (2020) argue that the secret to outcompeting any competitor is to architect design the business in the most honest and accommodating way possible at every aspect of the customer experience. There are varying degrees of honesty, and the authors witnessed many businesses execute firsthandfirst-hand, somewhat dishonest tactics in their approach to win the sale. But as a society and education advances, honest business owners, through advertising, sales calls, the press, word of mouth, reviews, BBB, slowly render the dishonest business obsolete (Bartolacci, Caputo & Soverchia, 2020). The authors argue that perhaps these businesses were rendered obsolete because they were the least important elements of running a business. Comment by Aisling Gartland: Don’t use abbreviations without having firstly use the full words

On the other hand, Mazza and Furlotti (2019) believe the two industries where there is still a fair amount of dishonesty are law and finance. According to the authors, this only means there is a great opportunity for someone honest to go in and reshape the perception of the industries. In fact, sales is the most prominent aspect of any business and to achieve mastery in sales requires realizing that the more helpful and accommodating the business is in solving other people's problems, the more successful it will be (Yulinda, Situmorang & Salim, 2018). Therefore, a business that learns from its mistakes, and takes the results of learning seriously to increase profits would apparently succeed. The yes-you-did-it and the dopamine you get from reaching getting your target, also money is involved; lesser costs and waste and downtime (Hassan et al. 2013; Chazireni, 2019; Mazza & Furlotti, 2019). Moreover, papering over the cracks will be prevented because there is trust in changing for the better. The future is never a thread. Fear of bad future decreases, which reduces stress in business thus contributing to creativity, so often innovation (and a better position in the changing market). The effort is done for a good future and trust is present, but also for the now-moment.

In order to inculcate ethics and positive culture in employees, several companies now prescribe a dress code for all their staff including female employees (Chazireni, 2019; Mazza & Furlotti, 2019; Cahyono & Hakim, 2020). Moreover, other cultures like Islamic areis also given considerations and the Muslim women employees are allowed to wear their cultural dress code. Nonetheless, in some instances, if they have to wear the uniform, then they have to remove their veils and put the same in the dressing room (Chazireni, 2019; Mazza & Furlotti, 2019). These companies normally introduce this dress code from the level of their senior management to the level of a working employee to treat all of them as equal and to earn a brand name for their products. According to the researchers, whether the decision of the management to insist on their Muslim employees to wear the uniform is ethical or not, other employees are given the democracy to argue either for or against the management’s decision. Finally, Kesuma et al. (2020) argue that employees who cannot grasp the organizational values and who habitually violate these values after being given earnest mentorship and coaching in those values need disciplinary actions. However, ift management fails to make it clear that core value violations will not be tolerated, the organization will end up fostering a culture that is entirely separate from the stated values of the organization. Comment by Aisling Gartland: Reference

Proactive transparency and fairness in all things Comment by Aisling Gartland: 2.5 Proactive Transparency and Fairness in all Things

Mujanah, Ratnawati, and Kusmaningtyas (2019) argue that ethics will also ensure that a small enterprise’s customers must often get what they paid for. According to the researchers, They argure that the business must easily understand what customers buy and what the price will be, and if fees may be incurred, such as when returning a rental late, it should be obvious when fees will be charged and the amount should be related to the actual cost of whatever incurred the fee (Kesuma et al. 2020; Lin et al. 2020). However, in case a company accidentally makes a promise it cannot keep, it should compensate the customer until there is no question the customer is satisfied. Moreover, when a customer's data is part of the deal, they should be told as clearly as possible what data they are giving up and how it will be used (Kesuma et al. 2020). A customer should only be able to consent to give up their own data, not other customers, although this line is impossible to draw perfectly.

Furthermore, Chazireni (2019) argues that employees must often be treated similarly and paid as agreed to do the work they were told they would be doing. If the company has a bonus target, the average employee should consistently receive the target bonus and employees told the number of hours they will be working (Chazireni, 2019; Mazza & Furlotti, 2019; Cahyono & Hakim, 2020). On the other hand, hiring, firing, and performance reviews also need to be fair. Nonetheless, it is not unethical to charge change an hourly employee’s hours to fit the business need, but it is unethical to mislead them about the expected number and variability of hours. Consequently, companies and their personnel must not pay or accept bribes because that is unethical as well (Manzoor et al. 2019; Mujanah, Ratnawati & Kusmaningtyas, 2019). In the researchers’ opinion, it is not unethical to pay small “facilitating payments” in countries where that is expected, but the US law does ban those and should be obeyed. Comment by Aisling Gartland: Who?

Cahyono and Hakim (2020) argue that it is important for small business enterprises to follow the law. In this regard, in graygrey areas companies should take the most careful position when it comes to safety and deception, but may interpret the laws in their favour in dealings with the government (Bartolacci, Caputo & Soverchia, 2020). Moreover, these businesses must also have a conscience and seek to improve society through their work. However, it is a myth that small enterprises must put profit above all. They must put shareholder interests above all, and shareholders are generally interested in not being evil (Mujanah, Ratnawati & Kusmaningtyas, 2019). Therefore, setting aside virtue and deontological ethics and looking at it from purely the standpoint of consequentialism and the researchers suggest that it is efficient and profitable for a business in the long run.

Moreover, looking at Wal-Mart, Sam Walton believed in treating people, especially his employees, as number one and sales last (Cahyono & Hakim, 2020). In this regard, Wal-Mart got so big; however, after the death of Sam Walton and Wal-Mart decided to make more money by lowering wages and benefits and selling child slaves in another country which did not ogre well with the company. However, in the long term, ethics determine the stability of growth in the economic environment (Chazireni, 2019; Mazza & Furlotti, 2019). Ethical practice is a practice that grows the customer base, creating a more valuable asset to the business by raising the ability of the consumer to consume more profitable goods and services (Mazza & Furlotti, 2019). A small enterprise’s customers are usually customers elsewhere as well and this is why the ethical practice grows employees as well as consumers into more profitable assets who are more productive. Comment by Aisling Gartland: Need to clarify this

Consequently, Mazza and Furlotti (2019) believe that the difference between utilizing natural resources and depleting them is ethics and it is also the difference between empowering people and enslaving them is ethics. Therefore, ethics should be the cornerstone of a business, though it rarely is the case (Kesuma et al. 2020; Lin et al. 2020). Moreover, ethics, today, is often seen as something that should be implemented by some governing body, rather than the company itself, but the problem with ethics is that often adhered to the bare minimum and there are a loophole that are exploited. For example, clothing and fashion companies would never use child labour in the US because it is an unethical thing (Suriyankietkaew, 2019). However, ethics does not just matter in business; it matters in life because how leaders often carry themselves normally is important for the success of the company.

Suriyankietkaew (2019) believes that ethics, as well as money both, are equally important in business. According to the researchers, there are always goals in business, long term goals as well as short term goals. Long-lasting business can be builtd up with great ethics only (Manzoor et al. 2019; Mujanah, Ratnawati & Kusmaningtyas, 2019). Nonetheless, sometimes, people make compromises at certain levels to avoid several hurdles. Consequently, we cannot generalize sometimes, this is the right and may be wrong, but wrong or right decisions are the most crucial and we should not try to justify all time. However, basic ethics should never be compromised in the long- term business development process. Moreover, business ethics is fairness and ethics play a very important role in shaping our future (Chazireni, 2019; Mazza & Furlotti, 2019; Cahyono & Hakim, 2020). Ethics unknowingly teach us some of the essential requirements needed to thrive in the business sector, but rules are laid down for a reason, and one has to adhere to it for the smooth functioning and running of the business.

Cahyono and Hakim (2020) argue that every company has a set of codes of conduct or ethical codes that can have serious consequences if violated. Most people think the term “ethics” refers to morality and that is why it is often important to consider the ethical guidelines as laws rather than suggestions. It is not a driving force, so it depends on the business- person an individual is working with because some are ethical, some are not (Manzoor et al. 2019; Mujanah, Ratnawati & Kusmaningtyas, 2019). There are plenty of ethical businesses that closed shop because they couldn’t close the sale. Similarly, there is probably an equal number of ethical businesses that are thriving and growing. Therefore, such a business can do well and grow and make more money for their owners while creating awesome products for society rather than pissing everyone off losing public trust and going bankrupt or, worse, getting mobbed, boycotted, and having their owners thrown in jail. Comment by Aisling Gartland: Can’t say it like this – use angering the public or something similar

In conclusion, if a business exists in an industry where all participants sell poor quality, medically dangerous products, overwork, underpay and belittle their employees, there is no need to pay their suppliers, causing major environmental damage or deceives its shareholders with false accounting techniques (Yulinda, Situmorang, and Salim (2018). In fact, ethical businesses will not probably lose any customers, employers, suppliers, community support, or shareholders. However, the moment a competitor moves in which is ethical in one or more of these areas and is able to clearly communicate that, then the days of the unethical company are thankfully doomed ((Bartolacci, Caputo & Soverchia, 2020). The view that business ethics is merely a useless “optional extra” is the view of people who either have not been around long enough on this earth or have not thought about it very deeply. The businesses usually exert a great deal of influence within society by the products they sell and by the marketing they produce and by the donations they make ((Szczepańska-Woszczyna & Kurowska-Pysz, 2016)). Nonetheless, if a company knowingly sells a defective product to thousands of people and lives can be lost. Sometimes businesses do a cost-benefit analysis and determine that it will be cheaper to pay out awards in lawsuits than to do a product recall because this is shameful (Bartolacci, Caputo & Soverchia, 2020). Companies that go belly up due to intentional mismanagement in order to profit a few but leave shareholders to lose everything are also shameful and these are just a few examples why ethics should be important to the business. Comment by Aisling Gartland: Need to phrase a different way Comment by Aisling Gartland: 2.6 Conclusion – need to link to what you are doing your research project on

Bibliography

Bartolacci, F., Caputo, A., & Soverchia, M. (2020). Sustainability and financial performance of small and medium sized enterprises: A bibliometric and systematic literature review. Business Strategy and the Environment, 29(3), pp. 1297-1309. Comment by Aisling Gartland: Capital letter on all words

Cahyono, B., & Hakim, A. (2020, April). Green Intellectual Capital and Competitive Advantage: The Moderating Effect of Islamic Business Ethics. 3rd Asia Pacific International Conference of Management and Business Science (AICMBS 2019)， pp. 78-84.

Chazireni, B. (2019). Business owners’ ethical values and social responsibility in Kwazulu-Natal’s small and medium enterprises. Journal of Management & Administration, 2019(2), pp. 55-72.

Del Baldo, M. (2020). Overview: Virtue Ethics and Managerial Control. Intrinsic CSR and Competition, pp. 87-104.