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In terms of impact on business and society, large firms tend to impose much more influence on both economic and social currents. It is due to their greater revenue and net weight that they are more relevant to the public discussion. Medium and small-size companies are also quite important for the economy; however, when compared to the profits of large corporations, they tend to become more or less invisible. Moreover, large companies are usually more exposed to the public eye. Thus the corporate scandals they evoke influence society significantly. Medium and small companies do not have that level of public impact.
During the first decade of the XXI century, there were many corporate scandals related to ethical violations. Companies were not ready for society’s newly acquired interest in workplace hazards, payment complaints, improper use of taxes, and the ecological impact of business. Nelson (2006) emphasizes that “the impact of unintended consequences to the third parties is often underestimated and should not be overlooked” (p. 25). This resulted in the United States implementing several legal regulations that have affected medium and small companies significantly. For example, Ruchkina et al. (2017) state that the taxation system was not tailored to such companies’ specifics, ultimately bringing more harm while it could be used instead to reduce the costs. This harmed medium and small businesses in different ways: first, the health safety and work environment regulations reduced their capability of hiring, proving it to be increasingly difficult to meet up the untailored requirements. Additionally, unclear regulative formulations still do not play in their favor, reducing their chances of hiring an international workforce and decreasing competitive capability.
However, there were also positive effects: for example, well-defined employment regulations resulted in the managing lead being able to properly fulfill their obligations to the employees. Additionally, the study from Juniarti and Anggrahini (2020) states that the reduced taxation tariffs with a certain time limit provide a much-needed boost for SMEs, giving them more financial opportunities to compete. As the European Commission established the legal guidelines for medium and small businesses, it became much easier to access the capital for creating them. Overall, it is safe to say that the effect is ambiguous: while, in general, there were many positive consequences of ethical violations scandals, their negative outcomes are also present.
References
Juniarti, J., & Anggrahini, Y. (2020). Four factors based on government regulation number 23 of 2018 affecting the compliance with taxation of small and medium enterprises.Proceedings of the Annual International Conference on Accounting Research (AICAR 2019), 127, 191–196. Web.
Nelson, B. L. (2006). Law and ethics in global business: How to integrate law and ethics into corporate governance around the world. Aspen Law Publishers.
Ruchkina, G., Melnichuk, M., Frumina, S., & Mentel, G. (2017). Small and medium enterprises in the context of regional development and innovations.Journal of International Studies, 10(4), 259–271. Web.
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