Virtuous Businesses — What’s Different?

Within the DeVoe School of Business, there has been ongoing research into how virtuous businesses differentiate themselves in the market.  Most of this research has explored virtuous business practices through interviews of the corporate leaders and owners.  The organizations are characterized by their decision-making, focus on integrity, value for the individual, and wise stewardship.  These virtuous businesses also take a long-term perspective—often foregoing short-run profits for the longer-term health of the firm.  But, what are some ways virtuous decision-making shows up in business results?

Leaders of virtuous businesses inevitably report that employee turnover is low.  Employees who are valued and treated well and who can trust others within the organization tend to stay.  This reduces recruitment and training costs for new employees.  It also increases overall efficiency as employees are engaged and have time to become more proficient in their jobs.  The results are both productivity and overall cost efficiency benefits.

Other manifestations of virtue in business decision-making are in the amount of return or repeat business as well as new business generation through word-of-mouth recommendations.  Customers want to do business with firms they trust and will also recommend the firm to others; leaders of virtuous businesses view this as a major way they differentiate themselves in the market.  Return business tends to stabilize cash flows and a reputation for integrity is a critical element for long-term growth.

A recent article published by Entrepreneur magazine appears to affirm DeVoe’s research findings.  In the article titled “Chick-fil-A Makes More per Restaurant than McDonald’s, Starbucks, and Subway Combined…..And, It’s Closed on Sunday,” author McCreary (2018)[i] expresses his amazement at how the organization—well-known for its integrity and virtuous operations—could outperform the behemoths of the fast food industry per unit.

In 2017, the total number of units and annual sales of the top three performers outnumbered Chick-fil-A:  McDonald’s (14,036 units; $37.48 billion), Starbucks (13,930 units; $13.16 billion) and Subway (25,908 units; $10.80 billion).[ii]  Still, the restaurant made its indelible mark.  Comparatively, with just 2,225 units and $9 billion in annual sales, Chick-fil-A outpaced the industry giants per unit “by earning more per store than any other restaurant.  A lot more.  In fact, the average Chick-fil-A unit made around $4,090,900 in 2017” (McCreary, 2018, para. 5),[iii] which well surpassed McDonald’s ($2,670,320 per unit).

And, Chick-fil-A is closed on Sundays.

[i] McCreary, M. (2018, September 25). Chick-fil-A makes more per restaurant than McDonald’s, Starbucks, and

Subway combined…..and, it’s closed on Sunday. Entrepreneur. Retrieved from

https://www.entrepreneur.com/article/320615

[ii] Ibid.

[iii] Ibid.

 

Co-authored by Debbie Philpott

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