Introduction
Firms are facing increasing competition from small and well-established rivals in domestic and international markets for a perpetually shrinking market. As a consequence, some companies engage in unfair and unethical competitive practices, such as predatory pricing, acquisitions, and aggressive advertising to remain profitable and improve their position (Feltovich, 2019). Despite strengthening their competitive advantage, such predatory strategies may have devastating consequences. This essay will discuss the ethics of aggressive competition and its impact on small businesses and families.
Competition and Ethics
Firms have to be competitive to realize sustainable success and superior performance. Firms adopt aggressive business strategies to drive their productivity, output growth, and market expansion (Porter & Ramirez-Vallejo, 2017). However, established retailers are pursuing unfair and unethical competitive practices (such as predatory pricing and aggressive advertising), leading to the displacement of local stores (Freedman et a., 2016). For example, Walmart has faced unprecedented criticism for leveraging its financial capabilities to open new stores rapidly (Sciara et al., 2018). Such practices inflict significant harm on local enterprises in the market.
The severe effects of eliminating small retailers from the production chain have raised serious ethical concerns. Corporate entities in these areas are expected to conduct their operations in a manner that complies with the ethical principles and standards envisioned by fair trade (Feltovich, 2019). Firms are increasingly likely to pursue decisions, policies, procedures, strategies, and practices that are ethically sound (Weber & Wasieleski, 2018). Although strict adherence to ethical standards can be costly to an organization and conflict with other business objectives (such as profit maximization), companies have to fulfill their responsibilities toward society (de Gelder et al., 2019). To become a responsible corporate citizen, corporations, Walmart needs to hold itself accountable for the financial, social, and environmental effects of its business practices on the community and society at large.
Expanding into local markets and ousting existing small businesses such as the Coombs family’s dairy enterprise constitutes unfair competitive and gross ethical misconduct. With the declining small enterprises, such competitor bashing and abuse of near-monopoly do not create a level playing field for small players, thus amounting to unfair competition. In light of this trend, abusive market leaders such as Walmart apply predatory strategies to decimate small rivals. Feltovich (2019) asserts that fierce rivalry increases the risk of businesses engaging in unethical behavior. Kilduff et al. (2016) agree by stating that this association is more significant when an organization is competing with its rival than with non-rivals. An archival study and a series of experiments conducted by Kilduff et al. (2016) revealed that individuals and businesses facing intense rivalry are more likely to engage in ethical misconduct, deception, and use unethical tactics when negotiating deals. Therefore, there is a strong need for established corporations such as Walmart to strategically implement ethical standards across their business operations to promote their corporate citizenship and compliance with legal and ethical standards.
Impact of Unfair Competition on Small Businesses and Families
Unfair competition has unprecedented adverse consequences on small businesses and families. Notably, a rapid expansion of large retailers has led to the widespread closure of local stores including grocery, hardware, variety, and pharmaceutical stores (Freedman et al., 2016). The massive closures of dairy farms in the U.S. present a clear demonstration of the severe impact of unethical competition on small business enterprises. The recent displacement of the Coombs family’s business from the local Kentucky dairy market is the most blatant ethical misconduct (NBC News, 2018). The lower milk prices compromised the financial stability and overall sustainability of the family business.
Moreover, the closure of the dairy business had unintended negative consequences on families. The shutdown of local stores leads to massive job losses and loss of income (Freedman et al., 2016). For example, Coombs dairy farm employees constitute a significant source of employment and income for the local community. The collapse puts many dependent on the risk of unemployment and poverty (NBC News, 2018). Coombs’s family is uncertain about their future after selling off the last batch of their cows. Daily activities such as children’s education are severely disrupted. Therefore, large enterprises should be monitored to ensure they comply with their ethical and social responsibilities.
Conclusion
In conclusion, competition is a fact of life in all business enterprises. It is a critical criterion for evaluating the relative success of a company and the attractiveness of an industry. However, the struggle to stay ahead of their competitors heightens the risk of engaging in unethical practices. Organizations should constantly monitor and evaluate their business practices to ensure that they comply with ethical standards.
References
de Gelder, E., de Vaal, A., Driessen, P. H., Sent, E.-M., & Bloemer, J. (2019). Market competition and ethical standards: The case of fair trade mainstreaming. Review of Social Economy, 1–31.
Feltovich, N. (2019). The interaction between competition and unethical behavior. Experimental Economics, 22(1), 101–130.
Freedman, E., McConnon Jr, J. C., Hunt, G. L., & Gabe, T. M. (2016). An Analysis of the Economic Impacts of Big-Box Stores on a Community’s Retail Sector: Evidence from Maine. Journal of Regional Analysis & Policy, 46(2), 138-153.
Kilduff, G. J., Galinsky, A. D., Gallo, E., & Reade, J. J. (2016). Whatever it takes to win: Rivalry increases unethical behavior. Academy of Management Journal, 59(5), 1508–1534.
NBC News. (2018). The last days of an American dairy farm: “Hard to believe it’s over” [Video]. YouTube.
Porter, M. E., & Ramirez-Vallejo, J. (2017). Walmart: Navigating a changing retail landscape. Harvard Business School Case.
Sciara, G. C., Lovejoy, K., & Handy, S. (2018). The impacts of big box retail on downtown: A case study of Target in Davis (CA). Journal of the American Planning Association, 84(1), 45-60.
Weber, J., & Wasieleski, D. M. (2018). Corporate social responsibility. Emerald Group Publishing.
Appendix
de Gelder, E., de Vaal, A., Driessen, P. H., Sent, E. M., & Bloemer, J. (2019). Market competition and ethical standards: The case of fair trade mainstreaming. Review of Social Economy, 1–31.
The review article examines the probability of ideology-driven corporations that comply with ethical principles to survive when faced with increased competition. Understanding this relationship can help to discern the root cause of unethical competition and the impact of rivalry on the sustainability of the firm. This journal article is befitting as it delves into the relationship between market competition and ethical standards.
Feltovich, N. (2019). The interaction between competition and unethical behavior. Experimental Economics, 22(1), 101–130.
The researcher undertakes an experiment to determine how ethical misconduct and competition overlap. The findings of this study can help in understanding the mechanism through which unfair competition can lead to a breach of ethical standards. This article is suitable to the current task as unearths the incentives and conditions that promote unethical behavior related to competition.
Freedman, E., McConnon Jr, J. C., Hunt, G. L., & Gabe, T. M. (2016). An Analysis of the Economic Impacts of Big-Box Stores on a Community’s Retail Sector: Evidence from Maine. Journal of Regional Analysis & Policy, 46(2), 138-153.
This article examines how the expansion of large retailers impacts the operations of local stores. Entry of established firms saturates local retail markets. The study was selected due to its articulation of potentially breach of business ethics by large retailers.
Kilduff, G. J., Galinsky, A. D., Gallo, E., & Reade, J. J. (2016). Whatever it takes to win: Rivalry increases unethical behavior. Academy of Management Journal, 59(5), 1508–1534.
The article investigates how rivalry relates to ethical misconduct. The source exposes the reader to the ways in which strong rivalry between firms encourages ethical misconduct. This article is useful to the current essay as it identifies the pathways and interplay between the competition and unethical behavior.
NBC News. (2018). The last days of an American dairy farm: “Hard to believe it’s over” | NBC News [Video file].
This video documents the real-life consequences of Walmart operations on small businesses in Kentucky. Watching the resource can help to better understand the impact of unethical competition and other practices on small retailers, families, and the communities at large. This resource is appropriate because it provides a real-life example of unethical conduct in the retail niche.
Porter, M. E., & Ramirez-Vallejo, J. (2017). Walmart: Navigating a changing retail landscape. Harvard Business School Case.
The article explores how Walmart has managed to outpace traditional and digital retailers in the domestic and international markets. The firm’s strong focus on creating value shared value can help struggling firms to understand how to navigate the challenging retail landscape. Analyzing its business strategy and practices can help to comprehend how certain competitive advantages can lead to breach of legal and ethical standards and responsibilities. This article is appropriate because it centers on Walmart, which has attracted attention over unethical practices.
Sciara, G. C., Lovejoy, K., & Handy, S. (2018). The impacts of big box retail on downtown: A case study of Target in Davis (CA). Journal of the American Planning Association, 84(1), 45-60.
The article examines the proliferation of large stores such as Walmart on local retail markets. The study found that although these stores are affordable and convenient to customers, they drive away local firms. The choice of this source was informed by its focus on the impact of large firms on small ones.
Weber, J., & Wasieleski, D. M. (2018). Corporate social responsibility. Emerald Group Publishing.
The book draws on 13 essays to explore the history, core concepts, and current and emerging trends in corporate social responsibility. The resource is relevant as it provides an extensive analysis of the ethical, legal, social, and environmental responsibilities of a business. Examining the current and emerging trends in this area can shed more light on business ethics and their importance in the contemporary corporate environment.