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IMPACT OF BUSINESS ETHICS ON CORPORATE IMAGE AND PROFITABILITY IN AN ORGANIZATION

CHAPTER ONE 

INTRODUCTION 

1.1   BACKGROUND TO THE STUDY 

Business ethics has to do with the study of light and wrongs, acceptable and unacceptable, just and unjust practices that is practiced in business organization with a view to promoting mutual understanding and corporate image within and outside the company. Ethical behavior contributes to the good reputation of a firm and to other parties being ready to trust it, and promotes employees commitment to the the success of the firm. In recent times, it has been observed that business activities causes a lot of hazards such as air pollution, toxic waste especially in the manufacturing companies, thus, it has become morally just that such persons to whom such harm is been cause are compensated in one way or the other.

Business ethics play paramount roles in enhancing corporate image and profitability. When a business is morally ethical in what it produces and its services to its environment e.g. it is morally acceptable that marketing communication should be truthful and informative in every aspect, do not promise your customers what you know your product will not be able to do. All this will create an atmosphere of sincerity and will in turn affect corporate image and profitability of the company. But an ethical minded organization will help to promote good will, good image and enhanced profitability of the organization. A well grounded ethical theory must accommodate all the following four conditions. It must show reasonable consistency, a good ethical theory or principle must be consistence with the facts irrespective of whom or what is involved. For example, if a manager that says bribery is wrong but shift position when his relation is liable for the act, then something is certainly wrong with such an ethical position. An ethical view or judgment must show consistency with such a view come rain or shine.

A good ethical theory does not discriminate. It calls a spade a spade irrespective of whose ox is good. Managers should always think of groups that are adversely affected before arriving at the final decision. This is because some of these groups are customers, competitors, shareholders, employees, suppliers, creditors and the society at large (Nwaoke, 2013). Ethics is important in business especially for managers who lead other people because if managers do not lead by proper ethics, people working under them are likely to follow the same path that enters the organizations. It is like a virus that enters into your computer, it destroys the system very quickly, unlike ethical minded organization, will have employees of high integrity and are committed to their work practices, quality goods and services, builds customers trust and confidence on the long run and has an optimal performance. 

1.2   STATEMENT OF THE PROBLEM

This project is meant to address the following factors that affect business. They are as follows:

1. The growing problem arising from toxic substances that are caused to the society as a result of companies activities. In most organizations when carrying out their production activities; they hereby dump some toxic substances such as oil spills, chemicals, dumping of refuse, production waste which in turn become poisonous and therefore bring about environmental pollution. When business environment is being polluted, such as land, rivers and lake thereby rendering the community individualsjobless, because farm on lands and fishes and fishes in the waters. The impact of such environmental degradation result in low farm product, lost of livestock, diseases, loss of livelihood, limitation of economic activities, food shortage, polluted water, etc.

2. The growing rate of the production of sub-standard (low quality) goods and services, various companies produce substandard goods, the life blood of any organization depends on its quality products and services, misrepresentation in advertisement, exploration and inferior goods are some of unethical practices carried out in business organizations. 3. The growing of business not showing concern to their customers’ needs through the distribution of inferior goods and services that are beneficial to the company’s image and societal value; some business organizations show no or less concern for their customers; they fail to recognize the fact that customers are the sources of business therefore the need to have value for his or her money for him to be satisfied. 

4. The failure of business organizations not seeing corporate social responsibility as an obligation to be fulfilled. When business organization refuses to carry out their obligation to the society in which their obligation to the society in which they operate is like cutting the hand that feed them. If the society they operate in refuses to harbor them, raise war against them or refuse to patronize them, it thereby brings loss of investment and properties and not achieving their goals and objectives. 

1.3     PURPOSE OF THE STUDY 

The main purpose of this research work is to determine the impact of business ethics on corporate image and profitability of the organization and: To determine the effect of environmental pollution on profitability To examine the effect of substandard goods and services on corporate image To determine the effect of ethical practices on productivity 

1.4     RESEARCH QUESTIONS 

The following research questions were formulated in the research work

To what extent does environmental pollution affect productivity?

To what extent does substandard goods and services affect corporate image? 

To what extent does ethical practice affect productivity? 

1.5    HYPOTHESIS FORMULATION 

The hypothesis formulated here are as follows: 

Ho: There is no significant relationship between substandard goods, services and corporate image 

Hi: There is a significant relationship between substandard goods, services and corporate image 

Ho: There is no significant relationship between environmental pollution and profitability 

Hi: There is a significant relationship between environmental pollution and profitability 

Ho: There is no significant relationship between ethical practices and productivity 

Hi: There is a significant relationship between ethical practices and productivity.

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