It's often true that firing assholes improves others' output, but that shouldn't be the only reason to fire them.
I think there is independent merit to removing people who are terrible, even if doing so deprives the company of an incredibly valuable asset--e.g. firing your mythical 10x founding engineer because they're harassing other employees and making them feel unwell/unsafe, even if it severely damages your company's ability to produce. This is because growth and profit are not--and despite the "100% meritocracy free market" advocates' arguments, never have been--the sole aims of a business.
Businesses exist within a broader community; they aren't optimizing for widget creation in a vacuum. The rise of intangible/cultural reasons for punishing a business in the court of public opinion (uber; those scandals didn't highlight things that directly impacted the company's bottom line, but rather things that were unacceptable ethically to the broader community, or things that might have, given time impacted the bottom line) speaks to this; so does the decrease over time in Tamany Hall/Boss Tweed-type abuses of employer authority.
In short, for a business, acting ethically has an objective value which is independent from (or, if you want to nitpick "independent", at least has primary influence on) profit/growth.
I think there is independent merit to removing people who are terrible, even if doing so deprives the company of an incredibly valuable asset--e.g. firing your mythical 10x founding engineer because they're harassing other employees and making them feel unwell/unsafe, even if it severely damages your company's ability to produce. This is because growth and profit are not--and despite the "100% meritocracy free market" advocates' arguments, never have been--the sole aims of a business.
Businesses exist within a broader community; they aren't optimizing for widget creation in a vacuum. The rise of intangible/cultural reasons for punishing a business in the court of public opinion (uber; those scandals didn't highlight things that directly impacted the company's bottom line, but rather things that were unacceptable ethically to the broader community, or things that might have, given time impacted the bottom line) speaks to this; so does the decrease over time in Tamany Hall/Boss Tweed-type abuses of employer authority.
In short, for a business, acting ethically has an objective value which is independent from (or, if you want to nitpick "independent", at least has primary influence on) profit/growth.