The Ethics Behind the Market Relations

Unlike company-stakeholder relationships, the relationship with competitors is different since you cannot close win-win agreements. Therefore, you have to treat each one separately. But, how ethical are these relations in today’s market conditions?

Business ethics vs Social responsibility

First of all, it is remarkable to understand the difference between business ethics and the social responsibility of a company. These two terms are quite tricky to understand, cause they often come hand in hand, but they differ quite a lot on the approach.

On one hand, business ethics is the very broad field of study on ethical decision making in business contexts. In short, it refers not only to the social obligations of a company, but also to the obligations to its employees, customers, suppliers and competitors. In other words, the object of study of this blog post.

On the other hand, social responsibility lies under the umbrella of business ethics, but focuses more narrowly on the social obligations of a company. Social responsibility refers to the extent to which companies owe something to the society or feel a duty to give back, that is, to those who are not directly involved in the business.

Market relations

Nowadays, in the free market there are no obligations of relationships. Each company relates with whom they want and achieve their objectives in the way that interests their most. This situation makes the market full of “slaves”. In other words, few people do have freedom to operate in the market. Because the more important you are in the market, the more freedom you have to set your conditions and operate as you prefer.

Markets with the perfect competition conditions would be the best for these smaller companies. However, this is an ideal situation. So it is an ethical task to try to bring all markets closer to that model. And the state is the only one that can put certain obligations or rules to enforce this situation.

But it is also the companies that must carry out measures and take into account that profitability is not a sole purpose. They have to realize that they have a very important role in the distribution of wealth among society. Companies produce goods and services that satisfy the needs of society and in turn distribute the benefits among its members. This contributes to the increase of happiness and well-being of society, which is necessary to be able to maintain levels of productivity satisfaction among workers, which is reversed in the company.

Another view says that every organization owes itself to its customers. And this is based on the fact that a company without customers could not exist. For this reason, it is very important that the relationship with clients is established in an ethical manner.

Relations with suppliers

At first, in the industrial era, a lot was manufactured and everything was sold. Therefore, the supplier had a great purchasing power. Now, in the post-industrial era, the focus was on the marketing, and this situation gives the customer more strength than ever before.

But capitalism arrived in all its glory, as well as the economies of scale that give greater power to the largest company. Therefore, the State intervenes only when inequality is such that there is practically no competition. For the State not only to intervene in extreme situations, it is necessary to use the power of the market. This power says that a good cooperative relationship between supplier and customer strengthens both by helping them to be better in their respective fields.

On the other hand, there are also other factors that help to make great differences in the process with suppliers, such as bribery and extortion. A bribe is giving money to get something illegally, while extortion is forcing someone to do something to achieve a specific purpose. All ethically non-moral and market-damaging situations.

Relations with competitors

Identifying a company’s competitors is essential for its success. But it is also important to mention that ethics must always prevail when approaching your competitors. There must be real competition and it must be honest and loyal. If this is so, a movement is created that makes economic cooperation grow.

To preserve a legetimate competition, the market provides tools such as patents, industrial property and industrial secrecy. However, there are companies that choose other ways such as the espionage. The formers give a right to have an exclusivity on a product for a certain period of time or the possibility to keep their data safe. Meanwhile, the latter implies spying, breakin the law and doing everything in their power, legally or illegally, to achieve their goals.

Conclusion

The State is the main responsible for guaranteeing clear and reliable rules for a fair market competition and democratic access to power. And today more than ever it has the responsibility of ensuring it in a transparent way so that society know and evaluate what their Government does, how they do it and why.

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