Is There a Correlation Between A Company’s Ethical Practices and Financial Performance?

Abstract

This paper examines thirty-nine different companies within and across various sectors to determine if a correlation exists between a company’s ethical business practices and financial success. To create such a comparison, a unique model of business ethics was created; one that was both quantifiable and took into account various aspects of the company. As a relatively new field, business ethics has traditionally been examined qualitatively and largely neglected. By examining business ethics directly with success, this project not only aims to raise awareness of business ethics but also determine whether companies have an incentive to follow through with ethical practices. After thorough research, nine factors comprised the ethics score, while five factors were totaled to obtain the success portion of the score; each score was worth 100 points. The calculations and graphing were done in Python using Google Colab. The results indicated that no correlation existed between a company’s ethical conduct and success, with companies in the Media sector scoring the highest on the ethical scale. These results point out the need for stricter policies on business ethics and more ethical training within companies.