Industrial organization is an economics-related concept defined as the manner in which a market or industry is organized, particularly in terms of the competitiveness of the firms. The discipline evaluates the behavior of businesses, the market they participate in and the interaction between the two. The adoption of ethical practices and moral values such as ethical decision-making, recognition of rights, corporate governance and disclosure, as well as sustainable business practice, has emerged as a key component of firm competitiveness and efficient industrial organization.

Ethical Decision-making

Ethical decision-making is one of the values that characterize modern industrial organization. Organizations in the 21st century embrace ethics as an organizational priority that guides the leadership in making decisions that are not only legal but that are also morally correct and socially responsible. Ethical decisions are premised on a value-based culture, where the organizational leaders and members adhere to shared core values such as respect and integrity, are committed to acting in a morally correct manner and apply these values to every aspect of their work in the organization, especially when faced with ethical dilemmas such as breach of confidentiality.

Recognition of Rights

According to the Institute of Faith, Work and Economics, ethical presuppositions support the market economy through principles that maintain the universal order of the system and guide policy makers and judges when disputes arise for resolution. The interaction between ethics and the market results in a situation where constraints are placed on individual and corporate behavior in the market as a means of protecting the rights and freedoms of all participants. For example, the right to ownership and protection of individual interests is achieved through upholding the ethical values of fairness and integrity. Therefore, the recognition of rights emerges as an ethical value guiding industrial organization.

Corporate Governance and Disclosure

Full disclosure of all material facts affecting an organization and its position in the market is a moral and ethical value in modern industrial organization. Although organizations have a general legal duty to accurately report on their affairs in annual reports and statements, modern industrial organization calls for greater accountability to the organization’s stakeholders including employees, investors, suppliers and customers. As a result, organizations have ethical codes that guide the behavior of organizational members and that they disclose together with other ethical corporate governance measures that have been implemented in the organization.

Sustainable Business Practice

An organization consistently driven by ethical and moral considerations gains credibility and benefits in the long term due to its adoption of ethical business practices. In a dynamic operating environment where the factors affecting business such as labor force diversity, supply chain demands, technological advances are constantly changing and evolving, organizations that adhere to a clear set of moral and ethical standards especially in areas that are not fully regulated by the law, distinguish themselves in the market and enhance their competitiveness.