New research by the Institute of Business Ethics, leaders in promoting corporate ethical best practice, has shown for the first time that companies with a clear commitment to ethical conduct outperform those which do not.
The research is the most thorough study ever carried out in the UK of the relationship between business ethics and business performance in large companies. Using four indicators of business success – economic value added (EVA), market value added (MVA), price/earnings ratio volatility (P/E ratio), and return on capital employed (ROCE) – it compared two groups of companies: those with a demonstrable commitment to ethical behaviour through having a published code of business ethics, and those without. Their performances were then analysed over the five years 1997-2001. On three of the four indicators (EVA, MVA, P/E) the companies with codes were clearly superior, and on ROCE the results were less clear but supported the overall trend.
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