We are often skeptical of business behaving ethically in developed markets. Some numbers suggest that global trust in business is rather low – and the way to improve it is greater transparency and more governance. This said, we are often even more skeptical of ethical business practices in developing economies. But it is possible, as this article on Turkey shows, for business to behave more ethically, and changes in business practices can be driven by legal and regulatory reforms.
I am not necessarily talking about mandating ethical practices on business. What I am talking about is creating incentives for business to behave more ethically. In Turkey, it is the legal and regulatory reform of the investment and business climate, driven partly by the government’s desire to harmonize its standards with the EU, that is pushing greater governance and transparency within the private sector. The link between a country’s institutional climate and private sector actions is well captured in this quote by the co-founder of the Corporate Governance Forum of Turkey:
When governments are corrupt, there is less incentive for businesses to be ethical. Corruption, opaque fiscal management and the fact that taxes do not come back to taxpayers as services are all seen as justifications for tax avoidance.
Next challenge: getting the business community, as well as everyone else, to recognize that corporate social responsibility is much more than philanthropy – it is about ethical decision-making, responsible actions, and sustainable business and social development.