friction costs

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For multinational corporations, friction costs arise where practices of the firm are seen by the public as exploitative or unethical. These actions lead to public criticism and loss in the value of the company's goodwill and may translate into measurable sales losses.

Empirical studies reveal a positive correlation between ethical conduct in a corporation and job satisfaction. The studies reported by the Novaris Foundation for Sustainable Development (http://www.foundation.novartis.com) indicate that structures within a corporation that transmit an ethical and cooperative commitment to employees boost motivation to work. For more study on business ethics and social responsibility, view some of the many links at Regent (http://www.regent.edu/general/library/subjects/business/ethics.cfm)

Issue of business ethics

Business ethics is the branch of ethics that examines ethical rules and principles within a commercial context; the various moral or ethical problems that can arise in a business setting; and any special duties or obligations that apply to persons who are engaged in commerce. In recent times, this word has been referred to as an oxymoron. Those who are interested in business ethics examine various kinds of business activities and ask, "Is the conduct ethically right or wrong?" The corporations apply business ethics by having good corporate governance.
Corporate Governance is all about promoting Corporate Fairness, Transparency and Accountability".
All parties to corporate governance have an interest, whether direct or indirect, in the effective performance of the organisation. Directors, workers and management receive salaries, benefits and reputation; whilst shareholders receive capital return. Customers receive goods and services; suppliers receive compensation for their goods or services. In return these individuals provide value in the form of natural, human, social and other forms of capital. Hence It is clearly good that businesses should seek to minimize their negative social and ...