Do ethics really hurt profits, or could they actually help elevate an enterprise’s growth in success and value? An interesting blog, by Farwah Ahmed, discusses whether Corporate Social Responsibility is beneficial or detrimental for a business. In her conclusion, the author states that social responsibility does augment profits. Then, why do some businessmen and strategic thinkers allege that ethical behaviors can abate profits?

Consider Company X and Company Y to be two competitive enterprises, both producing soaps and being equally popular. Company Y discovers a substitute chemical that can substantially lower its production cost; however, this chemical is not too great for one’s skin and could cause skin irritation. Company Y still decides to use that chemical to reduce its production costs, lower its prices,  and to increase its demand among consumers. For a while, Company Y will experience an increased demand, while Company X would suffer a competitive disadvantage despite its ethical production. However, in a longer span, when skin professionals conduct researches and consumers realize the difference in product quality, Company Y can potentially suffer a massive downfall in their profits and value.

Similarly, if any company gets exposed for conducting unethical practices, then they could lose their profits and brand name for good. Whereas, creating trust among consumers can increase a company’s value and its long-term profits.

Work Cited

Ahmed, Farwah. “Corporate Social Responsibility – Beneficial or Detrimental.” Web log post. UBC Blogs. N.p., 10 Sept. 2014. Web. 2 Nov. 2014.

“Building Sustainable Value through Fiscal and Social Responsibility” – Ivey Business Journal.” Ivey Business Journal. N.p., n.d. Web. 16 Sept. 2014.