This study is concerned with the effect that gender, age, income, status, and religiosity have on attitude towards business ethics. This chapter seeks to provide the reader with an overall understanding of the reason for this research. More specifically, the following areas will be discussed: the background of the study, the problem statement, the significance of the study, the purpose of the study, and the definitions of terms to be used in the study.
Background of the Study
Milton Friedman (1912-2006), the famous University of Chicago economist said that the social responsibility of business is to increase (maximize) its profits. Since then, there have been many critiques of this profit maximization philosophy including Mulligan (1986) who concluded that Friedman’s argument is unsound. He goes on to say that Friedman misrepresents the nature of social responsibility and that business people can be socially responsible without the objectionable results. Perhaps Friedman’s argument may have taken root decades ago but it is quite evident today that being socially responsible is equally important to many organizations as is making profits.
Corporate social responsibility (CSR), according to Matten and Moon (2008) is a difficult concept to define because not only is it a contested concept, but it is internally complex and is a dynamic phenomenon. He however, noted that “CSR (and its synonyms) empirically consists of clearly articulated and communicated policies and practices of corporations that reflect business responsibility for some of the wider societal good” (p.405). Embedded in this definition is the need for decision makers to do that which is good for the society and herein lies ethical responsibility, doing what is deemed to be “good” or “right”. A discussion on ‘right” doing takes into the field of ethics. The subject of ethics has been an issue of increasing interest to the fields of academia, business, medicine and politics. The increasing volume of publications relating to ethical studies indicates a strong and growing societal concern (Loo, Kennedy &
Sauers, 1998). Mosley, Pietri and Megginson (1996) define ethics “a set of standards used to
judge the rightness or wrongness of a person's relations to others in terms of truth and justice” (p.
158).
As a result of the international economic crisis of 2008 which necessitated financial intervention by governments to save “To Big to Fail” businesses such as banks, insurance agencies, and large industrial manufacturers in the U.S., U.K., and E.U., business management practices have been under pressure due to ethical concerns. Corporate scandals such as the 2001 Enron scandal, 2006 HP spying scandal, the 2008 Siemens scandal, the Madoff 2008 ponzi scheme are just a few recent examples of the ever growing list. The Wall Street protests which began in September 2011 in the USA and quickly spread across Europe blame what they call the greediness of business organizations and selfishness of top executives. Hence, there is serious concern questioning whether the current and future managers are less ethical than their predecessors.
Harned (2005) president of the Ethics Resource Centre in reference to corporate scandals says “We have seen organizations essentially destroyed, careers shattered, and innocent lives ruined because of ethical lapses of those in leadership positions” (p.350). Ethics have therefore risen to the top of many organizations’ priority list. We are seeing at an increasing rate as more and more people, civil society and other groups are calling on businesses to be economically, environmentally and socially responsible; to be accountable and transparent; to be inclusive; to be ethical and sustainable (Birch, 2003). Therefore companies in their role as corporate citizens have the responsibility to mirror “The social imperatives and the social consequences of business success” (Matten &Moon, 2008, p.405).
The public interest for ethical issues is widespread, reflecting a legitimate concern in light of the many scandals and fraudulent corporate cases worldwide. Lin (1999) argues that the competitive global environment has led organizations to constantly explore ways to enhance their competitive edge as business ethics plays an important role in shaping corporate image.
“Companies that strive to maintain high ethical standards have a competitive advantage over those who do not.” (De George, 1989, cited in Lin, 1999, p.69). This suggests a need for companies to take an active interest in the ethical attitudes of their employees as the employees
play a vital role in establishing and sustaining the corporate image. Therefore research on the ethical attitudes of business employees is an important area not only for managers, but for academia as well. The literature does not only contain studies on business employees but on business students as well. According to Cox, Friedman and Edwards (2009), “Business ethics literature reveals that business schools can be effective in changing student awareness of and attitudes toward business ethics” (p.264). Research suggests that moral development continues during the college years (King & Mayhew, 2002).
Students of business have therefore been selected as they are seen as the “change agents of business” (Kleinrichert & Albert, 2011). Also Albaum and Peterson (2006) say of business students that not only do they “Collectively constitute future leadership of corporations but that they will eventually become members of virtually all imaginable stakeholder groups” (p. 301).
Business employees on the other hand unlike business students, are faced with ethical dilemmas at all levels in the organization ranging anywhere from taking stationery home for personal use to taking the decision to pay below minimum wage to employees in an effort to maximize profits for the company and shareholders alike.
In this study, business employees hereinafter referred to as “employees” and college students hereinafter referred to as “students” are the two target groups. The reason for targeting these two groups is to gain an overall understanding of the nature and direction of ethical thought in Saint Lucia.
The Problem Statement
The present economic problems of the twenty first century is evidence that business and ethics cannot be viewed as separate constructs but has to be seen and dealt with as mutually dependent. Attitude towards business ethics is very important given the costly consequence of unethical decisions. Managers and leaders therefore ought to take a leading role in ethics in their respective organizations. Many of the scandals being reported in the media are usually from the developed countries; this however does not exempt the Caribbean region. According to Arjoon and Gopaul (2003) “Media reports from the region have repeatedly reported business and policy makers as being less than transparent in their dealings, and engaging in unethical and often
illegal transactions” (p.104). In a 2010 US state department report on St Lucia, observers expressed concerned about accountability and transparency on the island.
This situation presents numerous challenges to governments in attempting to create an ethical climate for foreign and local investment. These reports demand that action be taken by policy makers to immediately arrest this development before it threatens to tarnish the region’s reputation. St Lucia being part of this region must contribute to this by addressing this situation.
Policy makers at the state level therefore, must in the medium to long-term gain insight into the prevailing attitudes of managers and future managers to be armed with the necessary information to guide strategic planning for the development of the country.
Knowledge of the prevailing local business ethics is also important as Saint Lucia is heavily dependent on foreign direct investment. This information can be useful for decision makers such as recruiters, multinational managers, and investors when dealing with people of differing ethical orientation, which can lead to misunderstanding, gaining trust and respect etc.
In the Caribbean region, there has been little work published in ethics (Arjoon & Gopaul, 2003).
This suggests lack of research work in this field, therefore one can then deduce that the scientific evidence is lacking.
Significance of the Study
It is important to understand the attitude of business students towards business ethics because “They are the ones who will be forming or influencing the decision making process in their respective corporations” (Al-Shaikh, Elian & Tahat, 2012, p.129). They are not only employees but individual citizens as well and it is therefore vital to understand their belief system. Equally important is the attitude of business employees because they are the ones currently taking the decisions, forming policies and shaping the business environment in which we now operate and are laying the foundation for the future employees to build upon.
A study of the attitudes towards business ethics of the people of the region is also significant for the region’s economic integration as it seeks to remain a viable option for growth and development in today’s global environment. Devonish, Alleyne, Cadogan and Greenidge
(2009) in response to the need for such studies in the Caribbean region said that the study recognizes the necessity and implications of sound ethical behavior in the context of the upcoming Caribbean Single Market and Economy (CSME). The creation of the CSME is a major stage in the deliberate process of Caribbean integration which began in 1965, with the initiation of the Caribbean Free Trade Area (CARIFTA). CARIFTA became a reality in 1968 and was deepened into the Caribbean Community and Common Market (CARICOM) in 1973.
This was a giant step. It not only consolidated the market for goods produced in the region, it defined the trade relations with the rest of the world, introduced a foreign policy component and opened the way for the provision of common services and cooperation in the social sector development. One of the main features of the CSME is to progressively enter into the global trading and economic system by strengthening ties with non-traditional partners. In an era of the Euro Zone, NAFTA, and ASEAN just to name a few, the small island nations of the region have no choice but to come together in order to remain viable especially since the days of preferential treatment for the regions goods and services as but a thing of the past of light of free trade.
The governments of Saint Lucia and the Caribbean by extension are continuously seeking ways of attracting foreign investments to the region as a means of generating and sustaining economic growth. The region though small, face the tremendous task of competing against giants like China, Brazil and other emerging economies and must therefore continue to demonstrate that doing business in this part of the world is beneficial. One way to do so is to ensure that the climate in doing business is one that is highly ethical, as the cost of operating or taking unethical decisions can and has led to the virtual ruin of companies for example Enron.
PricewaterhouseCoopers estimated the cost of corruption in 35 emerging and developing countries amount to as much as US$500 billion between 1997 and 1998 (Soon, 2003). Research has also indicated that the cost of running businesses in a corrupted environment is much higher than in environment with high integrity (Phau & Kea, 2007). This cost is not limited to organizations only but its effects are far reaching as “Ethical misconduct my management can be extremely costly for individual companies and society as a whole” (Donnelly, Gibson,&
Ivancevich, 1992, cited in Lin, 1999, p.641).
The Sir Arthur Lewis Community College (SALCC) is Saint Lucia’s lone national tertiary level institution whose mandate is to provide quality education in an effort to build a
workforce capacity to meet individual needs, market demands and national priorities. Embedded in this mandate is the delivery of a workforce that would be the driving force for the sustainable economic development of St Lucia and its residents. Employees from the business sector also play a critical role in determining the climate in which the business environment operates. Aside from all the incentives, fiscal and monetary policies implemented to encourage investment, the climate in which the businesses operate is just as important for sustenance. Therefore understanding the attitudes of the students of the SALCC as well as employees from the business sector will provide valuable information to educators and policy makers on what attitudes presently exists and therefore be in a better position to make informed decisions on the way forward.
A comparative study of employees and students offers greater insight than does a study comparing students only. Lin (1999) believes that a comparative study of students and employees is appealing and that the findings may shed some light for both Corporate Human Resource Strategy and the formal education system. The attitudes of employees will provide information to equip decision makers on action to be taken in the short-term and for the students, information useful for long-term strategic planning as well as to provide insight of future ethical trends. The combined information will give a balanced view of what prevailing attitudes are.
A few studies on business ethics have been conducted in the Caribbean region. One example is the Sims 2006 study using a sample from Jamaica, West Indies. This study used culture as the main determinant of attitudes towards business ethics and compared the findings to results from studies conducted from Israel, South Africa, Turkey, the USA, and Western Australia. Other studies on the ethical orientation of undergraduate students was conducted on the island of Trinidad by Arjoon and Gopaul (2003) and in Barbados, Devonish et al., (2009) studied whether demographics influenced the likelihood of engaging in unethical business practices. This study will add to the exiting literature on studies in the Caribbean region.
Purpose of the Study
This research investigated the effect that gender, age, household income, status and religiosity have in determining attitudes towards business ethics. To gain further insight into the business ethical attitudes the study also investigated the effect of gender, household income and religiosity on the five business philosophies that are contained in the attitude towards business ethics questionnaire (ATBEQ). The ATBEQ was the main instrument of this study to measure ethical attitudes. Based on the aforementioned variables, the researcher investigated the attitude toward business ethics of students and employees in St Lucian. The results of this study provide information for potential investors in the region, policy makers, managers, and academia. For policy makers, this information can be useful for the formation of, or adjustments to the business code of ethics, for managers, information to guide recruiting and other Human Resource functions and to academia, guidance in curriculum development etc. In order for this information to be useful for the stakeholders in the aforementioned list, the results of the study must highlight the current ethical attitudes that currently exists between the two sample groups and the effect that the factors investigated have in determining these attitudes. Embedded in the business ethical attitudes in this study are five business philosophies which provide more analysis on the philosophical preferences of the sample group. Equally important for this study is the effect of the factors on the business philosophies. It therefore was necessary that the study answer the following research questions.
Questions of the Study
Based on the research purpose, the following questions will be answered: what is the general attitude of business students and employees towards business ethics? Are there significant differences between employee attitudes and student attitudes? What effect does gender, age, household income, status as well as religiosity have on attitudes towards business ethics and finally the effect of gender, household income and religiosity in predicting the business philosophies as well as the preferences held by the sample groups.
Definition of Terms
This study makes use of many terms and the researcher therefore finds it necessary to provide the reader with definitions of various terms as it pertains to the study. This study seeks to gain an understanding into the attitudes towards business ethics, therefore before attempting to define business ethics it is important to first define the term ethics. Aside from the definition stated above by Mosley et al., (1996) ethics according to the Merriam Webster dictionary is the discipline dealing with what is good and bad and with moral duty and obligation, or a set of moral principles governing an individual or a group. Therefore “Business Ethics is concerned with good and bad or right and wrong behavior and practices that take place within a business context” (Carroll & Bucholtz, 2008, p. 242). Attitude towards business ethics is “The subjective assessment by a given individual with respect to sets of premises that make up various business philosophies” (Preble & Reichel, 1988, p. 942). Income for employees refers to the combined income of employees’ personal and household income and for students’ income of their parents or guardians. Status refers to employee or student. Religion is “An organized system of beliefs, practices, rituals and symbols designed (a) to facilitate closeness to the sacred or transcendent (God higher power or ultimate truth/reality), and (b) to foster an understanding of one’s relation and responsibility to others in living together in a community”. (Koenig, McCullough &Larson, 2000, p.18). Finally religiosity is defined as “the extent to which an individual’s committed to the religion he or she professes and its teachings, such as the individual’s attitudes and behaviors reflect this commitment” (Johnson, Jang, Larson, & Li 2001, p.25).