Also, if a company follows ethical practices in its operations it is able to gain customer loyalty. And it is not necessary that to be ethical a company incurs more costs than one that doesn't. It's a win-win situation for ethical companies (Rupal).
There may be numerous reasons for businesses to be considered as acting unethically. Actions used to cut down costs, access more resources, raise their profit earnings, or simply to enter into a new market could be taken in an unethical manner. The prime example could be of Wal-Mart. Wal-Mart has captured the U.S. market for retailers. But in its search for cheaper products to beat out its competition with, it offers its laborers in developing countries with barely subsistence wages due to which laborers put in hundreds of man-hours yet still earn an income which could barely support them (Nassar). Their entrance into foreign markets bring business to that country but the conditions of the people living there do not improve as they are still below their poverty line and there is no rise in their gdp/capita. To provide their consumers with the cheapest products in the market Wal-Mart is abusing its workers and providing them with miserable working conditions.
A similar sweatshop case was witnessed when people found out that the "lovable" Disney franchise was using laborers working in miserable conditions to manufacture the products which helped sustain the multi-billion dollar industry that relied on Disney products such as their clothing line and the other products sold at their theme parks.
In our immediate present we can see how Lehman Bros. helped cause the economic collapse which sent tremors all over the world. By giving mortgages to people who could not afford them they created the sudden defaults which would later cause a chain reaction which would not only affect the U.S. but the entire world. Whole economies collapsed and the tax payer's money was diverted towards the protection of these banks rather than on any infrastructural projects for which they should have been spent. Immense unemployment arose worldwide, countries had trouble importing items since they did not have sufficient funds, defaults in payments for national debts, and fall in investments were observed. This whole incident single handedly brought down the GDP of many European nations as well as the U.S.
The state of our national healthcare system is ample proof that businesses on a whole are unethical if given the choice and freedom to be. Given the slightest laxness from the government and the assurance of no action to be taken on them on legal grounds corporations begin to adapt behaviors which are unethical.
Why Act Unethically
Most businesses act unethically when they know that their actions would result in no consequences to harm them. If they had the fear that they would be persecuted or that they might face negative opinions in the market then they would not resort to unethical means to jump ahead of their competition. This could probably be a reason why unethical practices are observed more in developing countries where the government regulations are weak and corruption