What are potential consequences of non-compliance with ethical standards?

The selection of legal penalties and reputational damage is grounded in the understanding that failing to adhere to ethical standards can have serious repercussions for a business. Non-compliance can lead to legal ramifications such as fines, lawsuits, and other regulatory actions that may impose financial strain on a company. Furthermore, ethical breaches often result in tarnished reputations, leading to a loss of trust among stakeholders, including customers, investors, and the general public. This erosion of trust can be long-lasting, resulting in decreased customer loyalty and potentially impacting the bottom line in the long run.

In contrast, the other options suggest positive outcomes that do not align with the potential fallout of unethical practices. Increased market share, improved employee morale, and enhanced brand recognition typically stem from adherence to ethical standards and a strong corporate reputation, rather than from non-compliance. Therefore, the consequences of ethical lapses are predominantly negative, highlighting the importance of maintaining high ethical standards in business practices.