1.4 Moral Leadership and Profit
1.4
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Moral Leadership and Profit
We lose ourselves when we compromise the very ideals we are fighting for. And we honor these ideals by supporting them not when it’s easy, but when it’s hard.— Barack Obama, President of the United States of America, in his Nobel Prize acceptance speech, December 10, 2009
One of the major difficulties globalization brought with it was this very relativization of ethics in companies and in the economic sector. From this perspective, it was considered and still is the case that values and principles, internal rules, and good practices from the country any multinational may originate in cannot be applied a priori in the countries where the majority of the manufacturing has been moved to or in the areas where such a country obtains its raw materials. Moreover, some representatives of the business environment went as far as to the point where they justified this way of making business by saying the Western values are applicable in the West only, whereas other countries must take their local values into consideration. Such a cynical mentality has no place in an organization with a solid ethics culture or within one that took on the mission of promoting integrity in business. Moral leadership is a method of reducing this cynical mentality to the level of just an industry or a region. It promotes the very own upright attitude regardless of the legislative situation from a certain country, regardless of the constraints which may or may not exist there, regardless of how the business environment behaves in general. Moral leadership looks for alternative routes, which are ethical and legal at the same time, alternatives with the help of which the company and its stakeholders’ benefit increases at the same time. For instance, moral leadership transforms thinking such as how do I hide cashing through accounting schemes? The alternative to that is thinking who should I form a partnership with in order to have advocacy work so that authorities develop a new friendlier fiscal policy to satisfy the government’s need of bringing more resources for the state budget at the same time. Both measures require effort and resources, but the second one has the advantage of being a legitimate method of doing business, which attracts trust with it.
1.4.1
Low Transactional Costs
The greatest benefit that moral leadership covers is reducing transactional costs. In other terms, a company known as a moral leader is one that does not have tense relationships with its stakeholders, no matter who they are. This drop in transactional costs, both inside and outside the organization, happens mainly thanks to the trust gained as a follow-up of consistently adopting an upright behavior in business.
