Ideology-Oriented Businesses: Market Competition and Ethical Standards

Subject: Business Ethics
Pages: 11
Words: 3295
Reading time:
13 min
Study level: College

Abstract

This research analyzes whether ideology-oriented businesses operating businesses based upon moral standards like those proposed by free trade could survive in the market, especially with increased competition. By correctly examining the growth of the balance of trade over time, I prove that those organizations cannot thrive in full accordance with moral principles about fairness. Results indicate that growing the scale and the scope of fair-trade goods and services in the market shows that concessions of fairness are required to survive the intensified competition. The organizations guided by quality values and beliefs follow moral philosophy in a business environment while reducing pressure on transferring funds to local manufacturers. In the light of increasing economic inequality and decreased cohesion identified in several wealthy nations currently, findings recommend a greater need for market control at greater extents of income to counteract the corrosion of social relations by relentless market forces. Intense competition induces behavioral convergence among corporate forms to better the price and worse on the ethical front.

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Market Competition and Ethical Standards

The long-time concerns about whether economic theories and laws may adhere to moral values have become pressing now that moral standards are more necessary in the current markets (Cocci et al., 2021). The institution and implementation of a corporate code of behavior have been commonly adopted by micro-business, normally ideologically influenced not-for-profit organizations focusing on matters like poor working conditions and the earnings of tenant farmers in developing countries. Currently, multinational organizations have strategically implemented moral codes, increasing the influence such principles could have. Nevertheless, the impacts of implementing a code of ethics in businesses become uncertain once regulations have to be introduced concerning full compliance.

Adherence with such guidelines is too costly and establishes tension concerning other business motives like maximization of profits. In cases of non-profit enterprises, ideally, they comply with increasing their impacts for their marginalized shareholders, while for-profit has to prioritize the growth of sales over moral standards (Dewatripont & Tirole, 2020). In addition, when profit-driven organizations begin following the moral codes, the chief ideology-driven actors may have to reexamine their set of moral standards since they risk losing potential consumers. More goods and services supplied as per the ethical principles results in increased competition on this item characteristic, possibly reducing the total effects of these guidelines.

Background

This section explains the history of fair trade regarding various backgrounds and manifestations of fairness. The research first outlines the two rivaling perspectives on fairness that have evolved and characterize the main debates concerning mainstreaming (Schmidt, & Herweg, 2021). This will be followed by differentiating the four key historical phases explaining how this phenomenon has occurred and how the operationalization has changed with time. From this point of view, it is resolved that various implementations of morality might be formalized into a single standard that is wealth transfer. In addition, the balance of trade is a form of ethical trade derived from two competitors. One of them is an ideology-oriented business and fully dedicated firm to ethics. The second dimension is delineated by a broad scope of market actors that employ certification programs and project assortment. The retailer category has a money-oriented business strategy, starting with the involvement when free trade copyright labels were instituted.

The Problem

Fair trading has virtually established ethical business norms, forecasting economic exchanges formulated on morality principles. One of the key concerns in fair trade entails moving wealth to small domestic producers in emerging states through a guaranteed world market price. For instance, smallholder cooperatives are awarded price premiums to reinforce developmental schemes such as healthcare and education. The named market price payments are funded mainly by western end-users paying higher costs for comparable items.

Research Question(s)

The research question in this paper is whether ideology-oriented firms could maintain similar levels of fairness, especially when they are compelled to engage with businesses that apply a still less firm notion of fairness. Consequently, the research will elucidate diverse questions regarding the future of free trade. Will balance-of-trade products represent the same equity in compliance with ethical codes with increased competitiveness? Or else are their concessions concerning the impartiality prerequisite to surmount the growing competition in the marketplace for fair trade commodities. This study allies a Hoteling competition framework to examine the impacts of fair trade of confrontation among full adherence and profit creation.

Literature Review

The design of the experiment includes hiring employees through Amazon Mechanical Turk labor market intermediary. Various features enable executing the experimental design. Firstly, it involves multiple times by different employees for quality control purposes. Secondly, households are beneficial in forming arbitrarily complex contracts as this allows for varying the treatment of workers. On the other hand, customers have no personal stake in corporate behavior along the international value chain but desire to enhance workers’ rights and income and minimize the carbon footprint.

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Literature Genres

The study has a strong relationship with the literature on corporate social responsibility (CSR). A prominent perspective of CSR equates it with delegated philanthropy. The company is an outlet for the expression of common values; put differently, shareholders demand businesses to participate in charity on their behalf. Environmentally conscious investors will thus accept getting little returns from green funds, and employees will thus get a salary cut when employed by non-governmental organizations. As indicated above, product-consumer organizations and investment institutions maximize profits as they pass through high prices or lower returns to shareholders. In the insider-initiated corporate, the stakeholders compare their monetary gains with the moral impact of their deeds. The trade-offs have a bite when they vote in the general assembly or board of directors since both effects are non-zero only if their ballot is pivotal. By contrast, this makes them focus solely on monetary gains when they purchase shares since they rationally expect to be necessary and therefore impact the future of the business actions with a tiny probability.

Framework and First Analysis

Ethical behavior is invariant to competitive pressure regardless of whether prices are constrained or market-determined. Since the moral choice does not impact demand, it is not influenced by the degree of competition and does not show the patterns linked with the replacement excuse. The difference between the environments in the case of constrained prices could be the object of empirical examination. This paper views investors’ social preferences influencing the cost of capital, for instance, assuming that manufacturing needs a specified amount of asset proportional to the quantities produced. It implies that worker altruisms and investors function exactly like corporate altruism. The paper also considers cost-benefits originating from cutting ethical corners, which lower demand rather than increasing it. Indeed, one can observe both situations, whereby individual consumers directly benefit from socially unpalatable supplier choices due to internalities, externalities, and shrouded characteristics.

Corporate Social Responsibility

Returning to supplier’s social responsibility conditions appropriately re-interpreted have implications that state that moral conduct is a normal good, and therefore likely to improve as communities become richer. Furthermore, an increase in the number of opponents reduces the individual suppliers’ demand, impoverishes them, and lowers their effective altruism. Conversely, an increase in the price has an ambiguous effect, so the same holds. Moreover, the placement impact makes suppliers less ethical, yet they are richer, and because the ethical conduct is good, the increased stake also makes the distributors more ethical.

Since the general impact on market morality is ambiguous, it is not necessarily the case rich physicians should be expected to behave better than their poorer counterparts in other areas of the world. Under free entry, facilitating an increase in the parameter makes the market less moral under both market and constrained prices. Under market prices, the invariance leads to longer holds. Similarly, under constrained costs, the impoverishment and replacement impacts signify that an increase in the number of opponents makes the marketplace less ethical. In contrast, they have opposite effects of the latter on market morality ambiguous.

Morality of Markets and the Nature of Competition

Adherence to moral principles is expensive and creates pressure concerning other business reasons such as profit-maximization. In cases of non-profit enterprises, ideally, they comply with increasing their impacts for their marginalized shareholders, while for-profit has to prioritize the growth of sales over moral standards. In addition, when profit-driven organizations begin following the moral codes, the chief ideology-driven actors may have to reexamine their set of moral standards since they risk losing potential consumers. More goods and services supplied as per the ethical principles results in increased competition on this item characteristic, possibly reducing the total effects of these guidelines.

Methodology

This research applied interviews, surveys and open-ended questions to collect data. The named chosen methods are effective because they gauge the representatives of the individual experiences and views. In addition, they provide a great number of opinions of individuals and behaviors that can be utilized to deduce vital decisions. The participants here included suppliers, distributors, customers as well as selected team of people who were neutral.

Analysis

Details of the Analysis

Competition of ideology-oriented and for-profit businesses could imply the disappearance of world shops. At the same time, revenues obtained from free trade stickers have increased, with most sales in the for-profit business environments. The alternative trade organizations are vital in disseminating the message of wealth transfers and identity through stringent measures that are termed a yardstick for other parties. Furthermore, the full adherence to the strict guidelines could be subjected to pressure when the competition goes up with businesses ready to comply. The firms should lower their regulations, leading to general lower brand fairness.

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The survival of the alternate trade organizations affects the fairness of wealth transfer in certified commodities being offered by western markets. One of the four main debates is governance schemes of the trade certifications, which are accused of not allowing participants in social movement and medium scale holders to participate actively. This forms an important aspect of guidelines in fair trade, which are normally co-constructed with the domestic manufacturers to ascertain efficacy. Moreover, the involvement of multinational organizations may translate to the lowering of regulations. In addition, the labeling of multi-ingredient items has resulted in a distinct version of wealth transfer on the packaging of products, thereby making fairness confusing and less visible for customers. Lastly, multinationals get their products from plantations. A tension has evolved as larger plantations are termed as opponents for the initial small-scale manufacturers that already encounter challenges selling their produce.

Explanations of unethical behavior often abandon the role of the contest, in contrast with greed, in reassuring its expansion. I suggest that competition could eventually benefit moral behavior because it encourages growth and raises revenues. Higher incomes increase the willingness to pay for ethical conduct, but at the same time, it may change how individuals believe to be ethical for the better (Chow & Calvard, 2021). Moreover, perfect market competition is fundamental as it helps attain the maximum consumer surplus and economic welfare and all perfect information is available, so there is no information failure. In addition, the normal cost profits cover the opportunity cost and aid in allocating resources most efficiently.

Price fixing should be addressed since it negatively impacts businesses since competition between the participants cuts down prices for products. Another way price-fixing is critical is that it causes rigging of bids which entails promising a commercial contract to one team (Ockenfels, Werner, & Edenhofer, 2020). There are many disparities of this breach, and all entail some pre-established covenants between businesses engaged in securing a tender.

Price discrimination refers to a strategy of selling the same item at varying prices to various groups of customers, usually based on the maximum they are willing to pay (Purwanto et al., 2019). The practice surfaces in hiding the reduced-priced commodities from consumers who are more willing to pay. Moreover, skim pricing might harm shoppers. Its objective is to allow manufacturers to acquire every step on the equilibrium price, consumers who are prepared to pay higher prices for the goods first, and afterward, drop in prices sparks new teams. Entrepreneurs should never carry out anything unlawful when adjusting prices, yet with the unethical practices, always attempt to recede and consider that price compatible with the end-user.

Conclusion

Many marketers find it challenging to sell their products that have been designed and produced with a certain target market in mind, but to maximize the sales, the goods are disposed to an audience who does not need them. The only method of making profits in a free market is by giving a product people value enough to pay an increased price than the opportunity cost of the resources used to produce the goods. Firms can disseminate information to potential consumers in an ethical or unethical way.

Ethical entrepreneurs should differentiate their products in the market by figuring out ways in which current markets are frustrating consumers and then looking for methods to respond to customer dissatisfaction. In addition, they should utilize corporate tools to assist purchasers in making resolutions compatible with the client’s best long-term interests (Bartling & Özdemir, 2020). To provide integrity and honesty, they should invent new items, differentiate their commodities, and market the ethical aspects of their businesses. In serving the market with open data, moral businesspeople are not engaging in charitable activities but rather are aiding to serve better and coordinate the market economy.

Additionally, fairness is described as the volumes of wealth transfer to smallholder manufacturers in emerging nations. In the simulation, organizations select optimal degrees of fairness considering expenses of compliance, consumer preferences, and the extent of the fairness with their competitors (Sutter et al., 2020). The simulation encompasses the benefits of associations between a firm’s compliance costs, customer tastes, choices, and profit creation with time. Its application relates to the wealth transfer of the companies to a specific market phenomenon by taking into account the distinct historical phases of leveraging fair trade. The findings show that the impact of mainstreaming on fairness is positive until the labeling phase, regardless of intensified competition. The fairness would increase only if impartial organizations find ways to attract more end-users by differentiating other aspects apart from fairness.

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Answers to the Research Questions

The findings are consistent with the results derived from consumer behavior literature. For instance, when organizations with full compliance focus on the customer’s choice, more end-users will be eager to choose their items (Paganelli, 2020). To be precise, nearly eighty-six percent of the representative sample will go for their commodities compared to thirty-four percent when the fair-trade products majored on the item’s ethical aspect. This paper contributes much to the threefold literature, including the debate on literature concerning wealth transfer by organizations. Evolutionary economics states that competition needs enough responses to thrive in dynamic global markets. The disappearance of opinion-oriented firms will both impact the compliance of profit-maximizing organizations (Leef, 2020). This study shows that competition may be adversely influencing fair trade guidelines adherence with time, even though escalated efficiency and innovation, in the end, could mean more benefits to producers.

Another finding is that ideology-driven businesses can survive if only they begin to differentiate on other brand features that are fair (Gelder et al., 2021). The paper contributes to widespread criticisms on the present-day imbalances between non-western and western states. Furthermore, the literature has identified and concentrated on a diverse conceptualization of wealth transfer, hindering direct comparison over time. This framework facilitates the continual comparison of separate but historically relevant stages of leveraging fair trade and creates fairness principles with time. By examining the impacts of merging moral codes with profit-maximization conduct, this research sheds light on the tensions between the execution of moral standards and rational economic behavior. Consequentially, this study may aid in comprehending the reasons why various diverse policies have appeared on sustainability-driven markets.

Limitations of the Study and Recommendations for Future Studies

As critics of market economies have long emphasized, the institutional context frames the moral choices. In addition, competition, known as an increase in the number of competitors, strengthens incentives to please the consumers, raising potential concerns (Hodgson, 2021). This paper considered market conditions in which attracting the customer and lowering the costs varies from pursuing social welfare. Furthermore, suppliers may decrease ethical corners to woo more end-users in the presence of externalities. An alleviating force is a social preference, the partial internalization of the welfare by the corporate, workers, and investors, whose altruisms add up and have identical results. The paper illustrated how to market morality is influenced by the instruments and intensity of competition. The material benefit derived from reducing the moral corners, the social preferences of administration, and the income impacts.

Critics of the markets are real in arguing that competition among distributors to attract clients may weaken moral concerns. The replacement impact is a refusal to please the customers, which will make them look elsewhere (Landowska, Piana, & Feola, 2020). When suppliers have lowered marginal utilities, the immiserating-competition effect proposes that the competition will impoverish distributors and reduce ethics. When prices are constrained, the replacement effect is more potent; the higher the number of competitors, the less differentiated they are, and the greater the regulated fee. However, the detrimental impacts of competition hold for particular conditions and are reversed in others. Moreover, the competition to a certain degree reduces prices, on the other hand, lowers the suppliers’ benefit from attracting customers in morally dubious ways.

Furthermore, criticism of the market economy should envision its counterfactuals. In that respect, this paper’s market evaluation only examines the general issue of the morality of markets prominent in political disclosure. In businesses, diverse incentivizing workers and managers lead to different ethics. The interaction between ethics and the design of incentives is a rich object of study for further studies (Mele, 2020). My recommendation is that the suppliers be role models and thus share any information on the gravity of the magnitude of externality. They may signal to other distributors that unethical conduct is simply unacceptable by moving first.

Furthermore, when competition results in decreased effect, this removes the credibility and morality of ethical norms in consumer-centered markets, thus impacting the shelf span and interventions of the code of ethics. It is advisable to examine how incorporating moral principles in standard business policies influences adherence to the values in product marketing (Luetge, 2018). While the elementary free trade products used to be sold purely by ideology-centered alternative trade businesses, the same commodities are nowadays being marketed through maximization of profits delivery channels, making it a mainstream experience.

Certification of free trade could promote payments to small-holder marketers but can also be lowered due to stiff competition between enterprises having varying conceptions of morality. The strictness and expensive nature of the moral concerns may be lowered, particularly when the ideology-driven businesses following these principles cannot compete with the for-profit entrants. In addition, reduced compliance with ethical standards in fair trade might undermine its legitimacy.

Furthermore, by considering the interrelationship between competition in the western markets and adherence, this study outlines a mechanism through which small-scale manufacturers could be impacted rather than their efficiency in fair trade. The study further indicates that the impacts of competitions are highly applicable to the variations in moral markets. Furthermore, the analysis shows that the process of commoditization demonstrates that competitiveness drives corporations to look for strategies for differentiation, concentrating on quality and preference other than ethical issues.

General Summary

Intensified administered prices induce less ethical behavior than competitively determined ones. In cases where reducing the ethical corners reduces costs instead of escalating the demand, the magnitude of competition plays no role in corporate or workers’ altruism. Moreover, when customers care about the manufacturing process, avoiding pollution of child labor, reaching to buyers’ entail being more ethical, not less, competition then enables customers to express their preferred tastes better and makes the market more ethical.

References

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Chow, D. Y. L., & Calvard, T. (2021). Constrained morality in the professional work of corporate lawyers. Journal of Business Ethics, 170(2), 213-228.

Cocci, A., Russo, G. I., Martinez-Salamanca, J. I., Ralph, D., Djinovic, R., Şerefoğlu, E. C., & Mondaini, N. (2021). Is there a line between ethics and market competition? Lights and shades of the withdrawal of collagenase treatment for Peyronie’s disease. International Journal of Impotence Research, 1-2.

Dewatripont, M., & Tirole, J. (2020). The morality of markets and the nature of competition. Unpublished paper.

Gelder, E., de Vaal, A., Driessen, P. H., Sent, E. M., & Bloemer, J. (2021). Market competition and ethical standards: the case of fair-trade mainstreaming. Review of Social Economy, 79(2), 191-221.

Hodgson, G. M. (2021). On the limits of markets. Journal of Institutional Economics, 17(1), 153-170.

Landowska, A. M., Della Piana, B., & Feola, R. (2020). Humane Entrepreneurship Model: Does morality of entrepreneurs’ matter? Journal of the International Council for Small Business, 1(3-4), 177-198.

Leef, G. (2020). The Morality of Markets. Regulation, 43, 64.

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Paganelli, M. P. (2020). Markets and Morality: Complements or Substitutes? Erasmus Journal for Philosophy and Economics, 13(1), 1-7.

Purwanto, R. M., Mukharrom, T., Zhilyakov, D. I., Pamuji, E., & Shankar, K. (2019). Study the importance of business ethics and ethical marketing in digital era. Journal of Critical Reviews, 6(5), 150-154.

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