- Email: [email protected]
Business and academe: A comparison of perceptions on business ethics
Business and Academe: A Comparison of Perceptions on Business Ethics
JYOTI N. PRASAD” YUNUS KATHAWALA MATTHEW MONIPPALLIL Eastern lllionis
RICHARD
University
E. HATTWICK
Western Illinois
University
ABST’ACT: This article forms the third and final part of a continuing study on the role of business ethics in America. The first part of the study explored the views of business executives and the second part analyzed the values and beliefs of business educators. In this third and final part, the two sets of values and beliefs from business and academic leaders are compared and contrasted.
BACKGROUND It is a widely perceived notion that success in business transcends the limitations of concern for business ethics and social responsibility. The history of commonly used business practices and evolution of industrial society in America has more or less confirmed this widely held belief. However, in the last 25 years, business ethics, specifically the problem of decline in business ethics, has attracted a lot of attention. Today in all spheres of business activities and organizational dynamics, business ethics and a socially responsible behavior pattern has become
* Direct all correspondence Charleston. Illinois 61920.
to: Jyoti N. Prasad,
Lumpkin
College of Business, Eastern
The Journal of Socio-Economics, Volume 22, Number 1, pages 69-83 Copyright @ 1993 by JAI Press Inc. All rights of reproduction in any form reserved. ISSN: 1053-5357
Illinois University.
70
THE JOURNAL
OF SOCIO-ECONOMICS
Vol. 22iNo.
l/l 993
a seriously mandated and desirable attribute, rather than a cause of special applause. With the passage of the Civil Rights Act in 1964, and the rise in consumerism in America the role of educational institutions, especially business schools, has received plenty of spotlight with the burden of inculcating appreciation and adoption of ethical practices in the students who are to become future business leaders. It is obvious that in the last 25 years people in general have become increasingly sensitive to ethical issues involving businesses. Concerns and news related to ethical dilemmas tend to get extraordinary attention today. Numerous books, articles, and monographs have been published worldwide on business ethics related topics, and many journals today are exclusively devoted to the study of business ethics. Courses on business ethics or business and society are being taught at almost all business schools in the western world. And, going a step farther, many business schools have been undertaking the arduous task of revising their curriculum to integrate the concepts of business ethics and social responsibility in all courses across the board. The specific courses in business ethics are graduating from being mere electives to now being required. Furthermore, most of the ethics courses in business schools are actively involving the participating students in major outof-the-class ethics related activities to demonstrate learning. Major scandals involving unethical practices, such as insider-trading, toxic waste, dumping, discrimination in employment practices and sexual harassment, etc. have confused many people as indicators of decline in ethics. But, in fact, one could interpret the constant and frequent exposure of such activities or even voluntary confessions of unethical practices, as a consequence of a high degree of sensitivity to ethical issues. This proves the hypothesis that concern for ethics in general is on the rise contrary to the popular belief that it may be on the decline. Definition
of Ethics
There is a lot of obfuscation about the definition of “business ethics.” The difficulty in dealing with business ethics is defining it. (Herman & Cullen, 1986). Most studies demonstrate that a general perception of the definition of business ethics is limited to a “utilitarian” approach of “common good for most people.” This limits the scope of correctly identifying the true perception of business ethics among critical constituents. Some authors think that a principle of business ethics is a guideline or rule that, if applied when faced with an ethical dilemma, assists one in making an ethical decision (Carroll, 1990). According to another view ethics is concerned with any situation where there is actual or potential “harm” to an individual or to a group (Luoma, 1989). According to some other authors ethics is concerned with moral obligation, character and responsibility, social justice, and the good life (Lewis, 1990).
A Comparison of Perceptions
on Business Ethics
71
Ethics constitutes the set of values and beliefs that one holds which he/she refers to for a conscionable pattern of personal behavior. Since the nature of internalization gives ethics a profile of individuality the ethical values and concerns tend to differ from one person to another. However, for the most part, ethics relates to three different aspects of “desirable” human behavior; the moral (individual) b e h avior, the social (utilitarian) behavior, and the legal (prescribing social justice) behavior. In most situations one or the other of the three become the dominant force in moderating an individual’s behavior. However, the ethical concerns or dilemmas become very obvious when an individual faces conflicting ethical demands. In this situation an individual is most likely to go with his or her moral behavior pattern which is generally the most basic ethical mandates that he/ she may have obtained. That is the reason why a common assumption which is made against any attempt to impart ethical training in college is that most people have already acquired irreversible ethical training by the time they come to college. Training of Ethics
Numerous studies show that a pattern of unethical behavior is attributable to the training one gets in business schools, although many other studies also show that basic ethical values and beliefs are thoroughly ingrained in the individuals by the time they come to college, and any effort to train them anew for an ethical life henceforth, is all but futile. It is perceived that student attitudes-as well as those of many highly regarded business practitioners-may make the teaching of ethics a difficult task. Businesspeople must be willing to visit university and college classes to discuss ethics and to participate in ethics programs (Luoma, 1989). The general purpose of the teaching of ethics ought to be that of stimulating the moral imagination, developing skills in the recognition and analysis of moral issues, eliciting a sense of moral obligation and personal responsibility, and learning both to tolerate and resist moral disagreement and ambiguity. Classes in ethics add explicit, open treatment of the value-laden messages that already exist, permitting students and teachers to examine the rationale for taking different positions and introducing students to methods for working out conflicting moral obligations. The fear of indoctrination is largely illusory, as most business ethics professors do not take a definitive position in their courses. Those few business schools that do have a common ethics curriculum suggest that there are 2 kinds of values-those that are more or less standard and those over which reasonable people are divided (Etzioni, 1989). A business ethics course also asks the what-if questions, teaching students to seek the greatest good for the most people for the longest period of time. Under the leadership of a mature and knowledgeable facilitator, business ethics encourages sensitive and reasoned anticipation or resolution of ethical
72
THE JOURNAL
OF SOCIO-ECONOMICS
Vol. 22/No. l/l 993
dilemmas. As with other dilemmas, the incentives of ethical problems swing the answer in one direction or the other (Henderson, 1988). Many individuals have misconceptions concerning ethics in general and business ethics in particular. The purpose of business ethics education is to develop and enhance moral reasoning abilities and to demonstrate how this complements analytical skills. To ensure that business ethics education develops and matures, gaps in available materials must be filled (Cooke & Ryan, 1988). In a business practitioner survey, more than 75% of respondents said they felt ethics could be acquired in a classroom setting (Forcht, 1991). One view expressed is that the next generation will see a more proactive role for business in taking on the challenge of educating its current and future work force (Sklarz, 1991). In a 1988 study in Canada findings showed that 23 of the 42 schools offered courses in business ethics and that these schools offered a total of 25 ethics courses, 20 of which were electives. Approximately 2,100 business students in Canada took ethics courses annually (700 due to requirements and 1,400 due to choice). Of the schools with no business ethics courses, 42% planned to add such a course by 1989. Thus, by 1989, a business ethics component should be in the curriculum of 7470 of the responding schools (Singh, 1989). There are notions that ethical teachings are inimical to business interests and that laws and regulations control most businesses. But education in business ethics is the starting point for instilling ethics in society. Instead of adopting a decision-making style that weighs only short-term gain or loss, managers should adjust their sights to see beyond the immediate. Business ethics as a mandated part of every course throughout the curriculum, whether the course is required or an elective, is suggested. Business ethics should impart selfconfidence in dealing with ethical issues, should be integrated into everyday life, and should be evident in the corporate context (Herman & Cullen, 1986). However, one argument against ethics education in the college/ professional school is that character and personality are already determined by the age of 20, making subsequent attempts to change a person’s ethics useless (Shenkir, 1990). One view, obvious from a survey of literature, was the contrary belief held by business executives that although business ethics can be taught in the classroom students tend to readjust to their old ways after they take one course or two in business ethics (Weber, 1990). However, business ethics training is more effective it is integrated in the entire curriculum (Poorsoltan et al, 1991). Besides the above major schools of perception about the role of business ethics, some sporadic but interesting findings showed that it is more important for business leaders to return to schools and deliver their rather effective message of the importance of business ethics in the real world (Luoma, 1989). It is also important for the top management, particularly for the CEOs, to demonstrate high standards of ethical practice (Shenkir, 1990). Interestingly one study found
A Comparison of Perceptions on Business Ethics
73
that business professors have to be role models of ethical behavior in their dayto-day life to get their messages across (David et al, 1990). In the above context therefore, it is critical to examine the views of both, the business school educators and the business leaders on some key aspects of business ethics to highlight inherent similarities and differences. METHODOLOGY In the first study (Hattwick et al, 1984) 864 CEOs of the largest 10,000 firms in the United States were mailed a questionnaire consisting of 96 questions on the different aspects of business ethics. Out of 864 a total of 138 usable responses were received, constituting a response rate of 16%. Out of 138 respondents 72% were president or chairman of the board whereas the rest, 28%, were either vicepresident or another officer in the firm. In the second study (Monippallil et al, 1990), 637 deans of college of business were mailed four copies of a questionnaire consisting of 53 questions. The 637 deans were requested to provide their responses on one questionnaire and distribute the other three to their associate deans, assistant deans, department heads, and professors who would be interested in responding to the questionnaire. A final response rate of 17% (445 questionnaires) were received. Approximately 27% of the respondents were deans and the rest were department chairs and both senior and junior faculty members. The 53 questions developed for Monippallil study were culled from the questionnaire in the Hattwick study which had 96 questions. Most of the questions out of the 53 questions chosen for the second study were designed to identify the common denominators in business ethics for both business executives and business educators, rendering both studies comparable on common dimensions. The present article compiles the responses received in the above two studies and presents a comparative analysis of the perceptions of business executives and business educators on business ethics.
ANALYSIS OF RESPONSES Since both the studies were conducted approximately about the same time, namely in 1988 and 1989, they represent a fairly contemporaneous record of views on business ethics by business executives and business educators. Potential
Sources
of Ethical Standards
First of all, the academic respondents’ view of their own sources of ethical standards are presented in Table 1. Later, the views of academic as well as
74
THE JOURNAL OF SOCIO-ECONOMICS
Vol. 22iNo. 111993
Table 1: Responses to the Question: “To What Extent are Your Own Ethical Standards Influenced by.. .I’ E 1.
I.
Formal university
policies and procedures
2. Peer group pressures
S.I.
N.O.
1.1
N.I.
Mean
Academtc:
13.9
53.3
3.2
22.0
6.3
2.6
Academic:
12.1
42.9
3.8
31.5
8.1
2.9
3. Prevatling educationa
practices
Academic:
9.9
51.9
7.9
23.2
5.4
2.7
4. Pertrtved
of your superiors
Academic:
11.5
44.3
7.0
28.1
7.6
2.8
5. Family experience‘s
Academic:
56.2
32.8
1.8
6.7
0.9
1.7
6. Church
Academic:
preferences
experiences
40.5
29.4
4.5
13.3
10.8
2.3
7. Educational
experiences
Academic:
27.2
48.1
3.8
16.0
3.4
2-3
8. University’s
ethrca
Academic:
8.5
42.5
15.1
28.1
9.0
2.9
Academic:
21.8
42.5
10.3
16.6
7.0
2.5
Academic:
9.9
44.5
6.1
28.3
9.2
2.8
code
9. Professor’s ethical code
10. Sotiety’s F.I ~ Fxtm\lvr
moral c limdtr Inlluence;
5.1. 1 Somr
Intlurnc?;
N.O.
= No Opinion,
L.I. = Little
Intluencr,
N.O.
= No Iniluente;
N/A
=
201 ApplI~‘lt~lr
business respondents are compared in Table 2. Although the Hattwick study did not focus on eliciting views of the business respondents as to their own sources of ethical standards as compared to the perceived view of ethical standards of their colleagues, the views of the academic respondents as given in Tables 1 and 2 below suggest that there is a significant difference between the perceptions of the academic respondents towards their own ethical standards as compared to the perception of standards of the business executives. Of the academic respondents 89% thought that family experiences had at least some influence, whereas 56% believed that family experiences had extensive influence on them. However, 75% thought that education experiences had some influence whereas 70% thought that church experiences had some influence. Furthermore, 55% and 54% of the respondents attributed some influence to peer group pressure and society’s moral climate, on business educators’ sources of ethical standards. Fewer than 12% stated that peer group practices and social climate affect them extensively. Most believed that their ethical standards are internalized and social mores and values have only a limited impact on them. The potential sources of ethical standards for business executives, as perceived by the academic educators and the business executives themselves, are compared in Table 2. Of the academic respondents 49% believed that the most powerful sources of influence on business executives were the perceived preferences of top management. Whereas over 61% of the business executive respondents
A Comparison
oi Perceptions on
Business Ethics
Table 2:
75
Responses to the Question:
“To What Extent are Ethical Standards of Business Executives Influenced by.. . .I’ E.I. 11. Formal
IL.
corporatp
policies and procedures
Peer group pressure\
1 I. Prevailing Industry practic-e\
13. Prrc rivrd
1 i.
prrierences
oi top executives
Family experiences
16. Churn-h experiences
17. Educational experienc vs
18. Company’s ethica code or policy
19. ProfrGon’s LO. Sot
ethical code or policy
irty’s moral (limdte
s.1.
N.O.
L 1.
N.I.
Mean
Business:
21.9
60.6
1.5
15.3
0.7
N/A
Acadrmic:
29.4
i7.5
3.2
8.1
0.5
2.0
Business:
22.7
56.2
4.4
8.0
3.6
N/A
Academic:
46.7
46.5
2.0
2.9
0.5
I .7
Business:
10.9
59.1
6.6
20.4
2.9
N/A
Academic:
31.5
58.0
3.6
5.6
0.2
1.9
Business:
26.3
57.7
5.1
10.9
2.9
N/A
Academic:
49.2
41.6
4..3
2.9
0.2
1.7
Business:
613
12.1
3.6
2.9
0.0
N/A
Academic
41.6
40.9
7.2
8.8
0.5
1.9
Bwines5:
39.4
35.0
13.9
10.2
I .5
N/A
Academic:
2i.6
41.8
10.3
16.0
3.2
2.3
Businrss:
26.3
61.3
5.1
7.3
0.0
N/A
Academic.
13.9
50.6
9.0
23.4
2.0
2.5
Busine55:
27.0
62.0
3.6
5.8
1.5
N/A
Academic:
21.8
5 3.9
6.1
16.0
0.9
2.3
Business:
48.2
40.1
4.4
5.1
2.2
N/A
Academic-:
24-3
51.7
5.2
16.6
1.1
2.3
Business:
20.4
59.8
3.6
1 3.1
3.0
N/A
Academic :
26.1
51.2
7.2
13.0
1.1
2.2
perceived that it was the family experiences that had the most powerful influence on their sources of ethical standards; only 42% of the academic respondents thought that the family experiences were the most powerful source of impact on business executives. About 47% of the academic respondents perceived that the most powerful sources of influence on business executives was peer group pressure, however, only 23?& of the business executives attributed strong influence to peer group pressure. Of the academic respondents 25% thought that educational experiences have little or no influence on business leaders lending to the hypothesis that ethical values are deeply instilled long before the college experiences begin. In addition 1970 of the academic respondents thought that church experiences have little or no influence on business leaders and 17% thought the company’s ethical code and policy have little or no influence on business leaders. This view lends to the inference that some of the respondent academicians perceive that business leaders may be immune to theological teachings and also that companies have hardly any code of ethics in place to influence the behavior of business executives.
76
THE
Table 3:
JOURNAL
OF SOCIO-ECONOMICS
Vol. 22iNo.
l/l
993
Responses Regarding the Ethics of Business Practices S.A.
A
N.O.
D
5.D.
Mean
21. The typical business executive has two sets
Business:
5.8
10.1
5.1
52.2
26.8
N/A
of ethical standards, one which he/she
Academic:
9.4
35.5
8.3
38.8
4.9
3.1
appltes to business activities and another which is applied to his/her pnvate Irfe. 22. Ethical standards in business are lower than rn government. 2
s. Ethtcal standards
are lower in business than
in most religious organrzattons.
24. Ethical standards in business are lower than rn the typical American family. 25. The ethical standards
I find
in business are
htghrr than the standards of my colleagues
Business:
1.4
3.6
2.9
42.0
50.0
N/A
Academtc:
2.5
5.8
9.7
56.0
24.1
1.1
Business:
4.4
25.4
14.5
44.2
11.6
N/A
Academic:
7.2
41.6
12.8
29.0
7.4
3.0
Business:
4.3
10.9
13.8
58.0
13.0
N/A
Academtc:
2.7
11.7
17.3
58.4
7.9
3.7
N/A
NIA
N/A
N/A
N/A
N/A
Academic:
2.7
11.7
17.3
58.4
7.9
3.7
Business: Academic:
N/A
N/A
N/A
N/A
N/A
N/A
3.4
22.9
19.1
47.2
5.4
3.4
Business:
N/A
N/A
N/A
N/A
N/A
N/A
2.0
8.5
30.6
54.2
2.9
3.6
37.7
55.1
2.9
2.2
2.2
N/A
1.1
16.9
10.8
51.5
17.8
3.8
Business:
at my university. ?h. The ethical standards
I find
in business are
higher than the standards of my students. 27. The ethica
standards
I find
in business are
htgher than the standards of my counterparts
Academic:
in other universities. 28. The ethrcal standards
I find
in business are
as hrgh as those I practice with my family
Business: Academic:
and mends. 29.
I occastonally
make decisions which are
right for my unrversity but whit h are incon
Business:
1.4
12.3
3.6
52.2
30.4
N/A
Academic:
1.4
18.0
6.5
47.2
24.9
3.9
Business: Academic:
NIA
N/A
N/A
N/A
NIA
N/A
10.6
47.9
14.8
21.1
3.4
2.7
slstent with my personal ethical principles. 30. Most ethical decisions which
I encounter
involve conflict between the legitimate
cldims
of two or more parties (e.g., faculty
vs. student\, administrative vs. faculty, etc.) \.,\.= Strongly Agree,A = Agree;N.O. 7 No Op~r~on,D = Di\agrrr S D = Strongly Drsagree;N/A = Not Applic-dble
Ethics of Business Practices
Table 3 summarizes the comparative responses of business educators and those of business executives on the perceptions they have on the ethics of business practices. Questions 25, 26, 27 and 30 were not used in the Hattwick study. The responses presented in the Table 3, therefore, are comparable only for those questions which were used in both the Hattwick and the Monippallil studies. On question 21, there was a significant difference in responses of academics versus business executives. Whereas only 16% of the business executives agreed or strongly agreed about double ethical standards, 45% of the academic respondents agreed or strongly agreed to the statement that business executives had two sets of ethical standards, one for their business practices and the other for their private lives.
A Comparison oi Perceptions on Business
Table 4:
77
Ethics
Responses Regarding the Theory of the Firm A
N.O.
N/A
N/A
Academic: 21.1
40.0
S.A. A corporation’s prtmary responsibility
is to
stockholders.
Business:
D
S.D.
Mean
N/A
N/A
N/A
N/A
3.6
30.6
3.8
2.6
A corporation is equally responsible to its
Business:
N/A
N/A
NIA
NIA
WA
N/A
shareholders, customers, employees, and
Academic: 33.7
35.5
3.6
22.9
2.9
2.3
other interested parties. The corporation should seek to earn a satis-
Business:
39.1
59.4
0.7
0.7
0.0
N/A
factory rate of return for stockholders.
Academic: 24.0
69.2
2.9
2.s
0.5
1.9
44.9
so.7
2.2
0.7
1.4
N/A
7.9
50.3
31.5
4.1
The corporation should seek to maximize
Business:
short run profits.
Acddemic:
0.7
The ethical standards in competition are
Business:
2.9
2.9
2.2
59.4
32.6
N/A
determined by the least ethical competitor.
Academic:
1.8
7.6
4.5
53.9
31.0
4.1
Ii one firm
8.8
engages in unethical conduct, the
others will have to
i~~lk~win
order to survive.
As a general rule, legislation promoter, a
Business:
3.7
39.1
15.9
32.6
8.7
N/A
higher standard of ethics among competing
Academic:
4.3
38.4
15.3
32.8
8.1
3.1
firms. Antitrust laws are generally beneficial to the
Business:
N/A
N/A
N/A
N/A
N/A
N/A
pubIlL
Academic: 18.0
52.6
10.6
13.7
3.2
2.4
S.A = Strongly Agree;A = Agree;N.O. = No Opinion, D = DisagreeS.D. = Strongly Disagree;NIA = Not Applicable
Similarly, about 93% of the business executives agreed or strongly agreed that they find ethical standards in business are as high as those they practice with their family and friends, but only 18% of the academic respondents agreed or strongly agreed that such was the case with the business executives. On the general perceptions of the ethics of business practices 26% of the academic respondents believed that ethical standards in business are higher than those of their students while 53% disagreed with this. Almost 20% stated that they had at least occasionally made decisions which they thought were right for their universities but were inconsistent with their own ethical beliefs. It was the view of 56% of the academic respondents that the ethical conflict in the academic field arises from the legitimate claims of two or more competing parties or interests such as faculty vs. students, etc. Theory of the Firm
The respondents’views on the theory offirm are presented in Table 4. Questions 3 1, 32 and 37 were not included in the Hattwick study. Other questions on this dimension addressed both the academic and business respondents. Of the academic respondents 6 1% agreed that the primary responsibility of the business is to its shareholders while 34% disagreed. Also, 69% of the academicians viewed customers and employees as co-equal stakeholders with shareholders.
78
THE
Table 5:
JOURNAL
OF SOCIO-ECONOMICS
111993
Responses Regarding Employee Relationships S.A.
i8.
Vol. 22/No.
A
N.O.
D
5 D.
Mean
No employee should he required to engage
Business:
43.5
44.2
3.6)
7.2
1.4
N/A
rn business practice which that employee
Academic: 40.9
40.0
6.5
9.9
0.9
2.0
Business:
7.2
44.2
8.7
34.1
5.8
N/A
Academic:
7.2
32.8
83
40.7
9.4
3.2
considers unethical.
19. In accepting an employment offer each employee implicitly agrees to abide by the ethical standards of the employer, even if the
companystandards
differ from those
oi the cmpioyee. 30. Wages and salaries should vary according to an employee’s productivity. 41. Wages and salaries should vary according to both the employee’s productivity and
34.1
61.h
0.7
2.9
0.7
N/A
Academic: 35.1
54.2
4.7
3.6
0.7
1.9
Business:
5.1
42.7
5.1
39.1
8.0
N/A
Ac.ademic:
9.4
52.4
9.9
23.4
3.4
2.7
Business:
1.4
0.7
2.2
41.1
4H.5
N/A
Academic:
0.2
2.9
2.3
59.6
31.5
4.3
Business:
vears of service with the firm. 42. Lliages and salaries should vary primarily with the employee’s years of servire with the firm. -I 3. Wages and salaries thouid vary according
14. Labor unions serve a useiul purpose by prodding a particular management into fulfilling its responsibilities
N/A
N/A
N/A
NiA
N/A
9.9
59.6
11.2
16.9
0.7
N/A 2.5
Business:
1.4
24.6
9.4
41.3
23.2
NIA
Academic:
7.0
52.8
12.1
19.3
7.2
2.8
Business: Academic:
to the iirm’s productivity.
to labor.
There was an obvious agreement between the response patterns of both academics (93%) and business executives (98%) on the statement that shareholders are entitled to a satisfactory return on their investment. However, the dramatic difference was visible in the responses on the statement that “the corporation should seek to maximize the short run profit.” Over 95% of the business executives agreed with the statement whereas only 10% of the academicians tended to agree, with less than 1% showing strong agreement. Also, only 2% of the business executives showed disagreement with the maximization of short run profit for the corporation whereas 82% of the academicians disagreed with the corporation short term profit motive. Employee Relationships Table 5 summarizes and compares the views ethical dimensions of employee relationships. with employee relationships only six questions On the question of the primacy of individual market place 8 1% of the business educators and
of both classes of respondents on Out of the seven questions dealing were included in the both studies. conscience over the dictates of the 88% of the business persons agreed.
A Cornparkon of Pwcqxions
on Business Ethics
79
However, 40% of the business educators and 51Yo of the business executives agreed that the acceptance of an employment contract implies agreement with the employer’s standards which may come into conflict with those of an individual employee. Responses on the above two statements, therefore, stand in contrast to each other. The response pattern creates apprehension that a large number of respondents in both academe and business believe in the primacy of individual conscience only in theory; in practice, the employees may have to go along with business practices, ethical or unethical, in order to retain their jobs and to get ahead. There seemed to be a fair agreement over the notion that wages and salaries should not vary according to an employee’s years of service. Of the business educators 9 1Yoand over 89% of the business executives believed that wages and salaries should not be based primarily on the seniority of employees. On the other hand, 89C&of the business educators and 96Yo of the business executives agreed that an employee’s compensation should be based on his productivity. Of the academic respondents 70% agreed that employee compensation should vary on the basis of the firm’s own productivity. However, 62% of the academics and only 48% of the business executives agreed with the statement that both employee productivity and years of service with the firm should be bases of the employees compensation. Furthermore, 6OY0 of the business educators thought that labor unions play a beneficial role in prodding the management to meet its responsibilities to employees, although, only 26Y~ of the business executives agreed with this statement. Customer Relationships Table 6 presents the responses of both the business educators and the business executives on the ethical implications of the mutual reiationship of business with its customers. A majority (91%) of academic respondents believed that it is in the long run interest of the firm to protect the customer. Business executives (96%) showed a similar level of agreement. Both academicians (98~~~ and business executives (99%) agreed that corporations must be truthful in advertising. Although 62% of the business educators agreed that much of the advertising done by business is misleading to the consumer, only 39% of the business executives agreed to this statement. Only 8C;rof the business executives believed that in order to be effective, advertising has to be somewhat misleading, though only a relatively few more business educators (12%) expressed agreement with this statement. One out of every three business educators surveyed thought that the average customer is less ethical in dealing with the business than the business is in dealing with the customers whereas 43Y0 of the business executives agreed with this statement.
THE JOURNAL OF SOCK&ECONOMICS
80
Table 6:
of business to
protect the customer. 46. Corporations
47. Much
must be truthful
advertising
misleading
somewhat
in advertising.
done by business is
to the ronsumer.
38. Effective advertising
may have to be
misleading.
49. The average customer
l/l
993
Responses Regarding Customer Relationships S.A.
45. It is the long run serf-interest
Vol. 22iNo.
is less ethical in
dealing with business than the business is
A
N.O.
D
S.D.
Mean
Business:
52.9
42.8
2.9
0.7
0.7
N/A
Academtc:
45.2
45.6
2.9
3.6
0.5
1.8
Business:
53.6
44.9
0.7
0.7
0.0
Academic:
57.5
40.2
0.9
0.0
0.2
NIA 1.5
Business:
7.2
31.9
10.1
45.6
5.1
N/A
Academic:
12.4
49.7
4.7
28.8
2.9
2.7
Business:
0.0
8.0
5.8
60.1
26.1
N/A
Academic:
1.1
11.2
0.7
62.7
20.0
3.9
Business:
9.4
33.3
21.7
33.3
2.2
N/A
Academic:
4.3
28.8
21.8
37.3
5.8
3.2
in dealmg with that customer. LA. = Stron& Agree; A = Agree; N.O. = No Opinion; D = Disagree S.D. = Strongly Disagree, N/A = Not Applicable
Social Responsibility of the Corporation
Table 7 presents a summary of the views of the academicians and the business executives towards the social responsibility of the corporation. Although 62% of the academic respondents thought that corporations have the obligation to take the lead in solving social problems such as pollution, discrimination, and safety, surprisingly more than 75% of the business executives agreed to this corporate responsibility. On the issues of conservation 81% of the business educators and 75% of the business executives agreed that corporations should conserve natural resources even if corporate profits are reduced. Almost 67% of the business executives and 74Yc of the business educators agreed that corporations should conserve energy even if corporate profits are reduced. Also, 93% of the business executives and 89% of the academicians agreed that corporations should clean up air, noise, and water pollution even if corporate profits are reduced. There was agreement between the business educators (94%) and business executives (93%) that corporations should promote equal opportunity in hiring and promotion. Similarly, 4OY0 of the business educators and 43% of the business executives agreed that corporations should help minority owned businesses. However 30% of the business educators and 3370 of the business executives indicated either general or strong opposition to preferential treatment for minority owned businesses. On the issue of civic responsibility 75% of the business educators and 90% of the business executives agreed to the statement that corporations have a positive obligation to commit their financial and managerial resources to solving the social problems of the community where they are located.
A Comparison
oi Perceptions
on Business
Ethics
81
Responses Regarding the Social Responsibility
Table 7:
S.A.
A
of the Corporation N.O.
D
S.D.
Mean
50. Corporations should: a. take the lead in solving major social problems such as pollution, discrimina-
19.6
55.8
5.1
1 7.4
2.2
N/A
Academic: 20.5
41.1
6.5
25.4
5.2
2.6
Business:
N/A
Business:
tion, and safety. b. conserve natural resources, even if doing so means reductton in corporate profits. c. promote conservation of energy, even if doing so means a reduction in profits. d. clean up or avold causing air, noise and water pollution, even tf doing so means
15.2
59.4
15.9
8.7
0.7
Academic: 25.8
55.1
7.0
9.4
1.6
2.1
Business:
58.0
15.2
16.7
1.4
N/A
Academic: 2 1.6
52.1
10.1
13.5
1.6
2.3
Business:
18.8
74.0
4.3
2.9
0.0
N/A
Academic
32.6
56.6
4.0
4.9
0.7
1.9
Business:
N/A
8.7
a reduction In profits. e. promote equal opportunity In hlring and promotion. f. help minority owned business.
34.8
61.6
23.2
1.4
0.0
Academic: 42.5
15.0
2.5
2.0
0.9
1.7
5.1
$7.7
24.6
29.7
2.9
N/A
Business:
6.5
33.5
28.5
25.2
4.9
3.0
24.6
65.2
3.6
6.5
0.0
N/A
Academic: 17.5
57.5
13.5
8.5
1.8
2.3
Academic: g. contribute money and management time to civic activities
in communities
Business:
where the firm has plants or offices. 51. Corporations should not become involved in solving social problems unless doing so
Business:
2.2
9.4
7.2
68.8
123
N/A
Academic:
3.6
14.2
5.4
33.5
21.8
3.8
Business:
0.7
44.9
8.0
44.2
2.2
N/A
Academic: 11.9
61.1
8.3
15.5
1.8
2.4
bet-ome5 a cost of doing business or an opportunity to earn a profit. 52. Most corporations get involved in solving WC ia responsibility
projects because outside
pressures make such tnvolvement a cost of doing business. 53. Most corporations get involved in social responsibility
projects because of the
Business: Academic:
N/A
N/A
N/A
NIA
N/A
N/A
8.3
56.9
13.0
19.1
1.4
2.6
public relations value of such projects. S A : Strongly Agree:A = Agree;N.O. = No Oplnlon; D = Dl$agrer S.D. = Strongly Wagrer; N/A = Not Applicable
To the statement that “corporations should not become involved in solving social problems unless doing so becomes a cost of doing business or an opportunity to earn a profit” both academicians (75%) and business executives (8 1%) showed disagreement. However, 31Y~ of the academicians stated that most corporations are engaged in social responsibility projects because of the management’s belief that such involvement is intrinsically right. Seventy-three percent attributed the motivation of corporate involvement in social responsibility projects to outside pressures. Sixty-five percent attributed the motivation of corporate involvement in social responsibility projects to public relations value.
82
THE JOURNAL
OF SOCIO-ECONOMICS
Vol. 22iNo.
111993
Methods of Dealing With Ethical Issues
The views of both the business educators and business executives on the relative importance and actual implementation of different methods of dealing with ethical issues, are summarized below. In the Hattwick study (1990) the data were presented in table form, but in the Monippallil Study (1990) the data on this dimension were presented in summary form only. Because of apparent differences only a few common dimensions are compared as follows: Of the business educators surveyed 89% believed that the most widely used method is for individual faculty members to deal with ethical problems as they arise, whereas similar sentiments were expressed by 91% of the business executives. Of the surveyed academicians 53% stated that temporary task forces handle ethical issues on their campuses, and 70% of the business executives expressed their views that this method of dealing with ethical issue was important. However, 50’& of the surveyed academicians believed that the institution administrators were responsible for resolving ethical issues. Of the institution surveyed 62% used a university-wide code of ethics whereas 47Y0 of the business executives believed that an industry-wide code of ethics was important. However, 22% of the business executive had no opinion about an industry-wide code of ethics whereas 31% thought a code of ethics was not important. Of the business educators 34% reported the use of a permanent ethics committee of senior faculty and administration whereas only 25% of business executives favored such a measure. In fact, 57a/, of the business executives did not consider a permanent committee to be an important measure. Whereas 70% of the business educators monitor social and political trends in order to assess their impact on business decisions, 77% of the business executives monitor social and political trends in order to assess their impact on business decisions. CONCLUSION
In conclusion, it is obvious that on most issues, both the business educators and the business executives agree in terms of the relative importance of the ethical on several dimensions. However, the general views of the business educators may seem to be “self-righteous” when appraising the business world on ethical dimensions. The business educators seem to attach major importance to the “bureaucratic” ways of dealing with ethical issues whereas business executives tend to prefer the least possible outside intervention in their dealing with ethical questions. The two studies compared above give a better view of business educators’
A Comparison
oi Perceptions
on Business
Ethics
83
views of their own ethical perceptions and those of the business world rather than other way around. A further study may address that largely underaddressed research question. REFERENCES Carroll.
A.B. (1990).
Principles of business ethics: Their role in decision making and an initial consensus.
Manqernenr Cooke,
R.A.
(8): 20-24.
Drcirion [ UkJ 2X
and
L.V.
Ryan,
(1988).
The
~~fui7u~~ii7~ttf ~t,~l~~~)~n7~rii [ Ukl David,
F.R..
L. Anderson.
management Etjioni,
A.
( 1989).
McTier
education. SAM
relevance
of ethics to management
education.
Journal
of
7 (2): 2X-38.
and K.W. Adv~~r&
Lawrimore. Manqenrenr
(1990).
Perspectives
Jourml55
on business ethics in
(4): 26-32.
Are business schools brainwashing their MBAs? Business & Soc,irl>, Rckk
70 (Summer):
1X-19. Forcht, K. (1991). A diploma can’t ensure ethics. Conrpurrrw~orlJ 25 (17): 25. Hattwick,
R.E.. Y.. Kathawala,
M. Mor~ippallil,
L. Wall, and B.-G. P. Shin. (1990). On the alleged decline
in business ethics, The .Journa/ yf ~~~~~,;~~ru~ Gorromits Hattwick.
18(2):
l29- 143.
R.E.. B.-G. P. Shin, and L. Wall. (19X4). Business ethics--findings
leaders. 7% Journul Henderson.
qf Behoviorul
Eumomic~.s I3 (2): I57-
of a survey of America’s business
185.
V.E. (198X). An ethics roundtable: Can business ethics be taught? Management
Rcwieti, 77 (8):
52-54. Herman. F.A. and T.P. Cullen. (1986). Still needed: Ethics in business instruction. CorneD Hotel Cyc ~e.~f~~ru~/ Admini~rratic~tr
Qucrrirr~r~ 27 (2): 49-52.
Lewis, P.V. and H.E. Speck, 111. (1990). hinrs.\
~‘ommunicution
Ethical orientations for understanding
business ethics. Journal
q/
27 (3): 213-232.
Luoma. C.A. (19X9). Can ethics be taught’? Manugrmenr
Awounting
Luoma. G.A. (1989). Can ethics be taught’? Business & Ewnomic M~~nippalIil. M., Y. Kathawala.
R. Hattwick,
71 (5): 14-16. Review 36 (I): 3-5.
L. Wail, and B.P. Shin. (1990).
Business ethics in America:
A view from the classroom. Jotrmul c$ ~~u~,~i}~~i f?ontmzics 19 (I): 125-140. Poorsoltan,
K.. S.G.
Advanced Shenkir. W.G.
Amin,
Manupwwnt
( 1990).
and A. Pootoonchi. Journal
56
(I):
(1991).
Business ethics: Views of future leaders. SAM
4-9.
A perspective from education: Business ethics.
A~~counring 71 (12): 30.
Managen7ent
33. Singh. .l.B. (19X9). The teaching of ethics in Canadian
schools of management
and administrative
studies.
~[~~~~ff~nf Busiffrss Erhics 8 ( I ): 5 i-56. SkIarT, D.P. (1991). Weber. .I. (1990).
Business-education
Measuring
recommendations.
partnerships:
Part II. Bu.rine.ss & Ewnomit
Review
37 (3): 15-18.
the impact of teaching ethics to future managers: A review assessment, and
Journal
of’&~~iness
Ethics 9 (3): 1X3-190.
JYOTI N. PRASAD” YUNUS KATHAWALA MATTHEW MONIPPALLIL Eastern lllionis
RICHARD
University
E. HATTWICK
Western Illinois
University
ABST’ACT: This article forms the third and final part of a continuing study on the role of business ethics in America. The first part of the study explored the views of business executives and the second part analyzed the values and beliefs of business educators. In this third and final part, the two sets of values and beliefs from business and academic leaders are compared and contrasted.
BACKGROUND It is a widely perceived notion that success in business transcends the limitations of concern for business ethics and social responsibility. The history of commonly used business practices and evolution of industrial society in America has more or less confirmed this widely held belief. However, in the last 25 years, business ethics, specifically the problem of decline in business ethics, has attracted a lot of attention. Today in all spheres of business activities and organizational dynamics, business ethics and a socially responsible behavior pattern has become
* Direct all correspondence Charleston. Illinois 61920.
to: Jyoti N. Prasad,
Lumpkin
College of Business, Eastern
The Journal of Socio-Economics, Volume 22, Number 1, pages 69-83 Copyright @ 1993 by JAI Press Inc. All rights of reproduction in any form reserved. ISSN: 1053-5357
Illinois University.
70
THE JOURNAL
OF SOCIO-ECONOMICS
Vol. 22iNo.
l/l 993
a seriously mandated and desirable attribute, rather than a cause of special applause. With the passage of the Civil Rights Act in 1964, and the rise in consumerism in America the role of educational institutions, especially business schools, has received plenty of spotlight with the burden of inculcating appreciation and adoption of ethical practices in the students who are to become future business leaders. It is obvious that in the last 25 years people in general have become increasingly sensitive to ethical issues involving businesses. Concerns and news related to ethical dilemmas tend to get extraordinary attention today. Numerous books, articles, and monographs have been published worldwide on business ethics related topics, and many journals today are exclusively devoted to the study of business ethics. Courses on business ethics or business and society are being taught at almost all business schools in the western world. And, going a step farther, many business schools have been undertaking the arduous task of revising their curriculum to integrate the concepts of business ethics and social responsibility in all courses across the board. The specific courses in business ethics are graduating from being mere electives to now being required. Furthermore, most of the ethics courses in business schools are actively involving the participating students in major outof-the-class ethics related activities to demonstrate learning. Major scandals involving unethical practices, such as insider-trading, toxic waste, dumping, discrimination in employment practices and sexual harassment, etc. have confused many people as indicators of decline in ethics. But, in fact, one could interpret the constant and frequent exposure of such activities or even voluntary confessions of unethical practices, as a consequence of a high degree of sensitivity to ethical issues. This proves the hypothesis that concern for ethics in general is on the rise contrary to the popular belief that it may be on the decline. Definition
of Ethics
There is a lot of obfuscation about the definition of “business ethics.” The difficulty in dealing with business ethics is defining it. (Herman & Cullen, 1986). Most studies demonstrate that a general perception of the definition of business ethics is limited to a “utilitarian” approach of “common good for most people.” This limits the scope of correctly identifying the true perception of business ethics among critical constituents. Some authors think that a principle of business ethics is a guideline or rule that, if applied when faced with an ethical dilemma, assists one in making an ethical decision (Carroll, 1990). According to another view ethics is concerned with any situation where there is actual or potential “harm” to an individual or to a group (Luoma, 1989). According to some other authors ethics is concerned with moral obligation, character and responsibility, social justice, and the good life (Lewis, 1990).
A Comparison of Perceptions
on Business Ethics
71
Ethics constitutes the set of values and beliefs that one holds which he/she refers to for a conscionable pattern of personal behavior. Since the nature of internalization gives ethics a profile of individuality the ethical values and concerns tend to differ from one person to another. However, for the most part, ethics relates to three different aspects of “desirable” human behavior; the moral (individual) b e h avior, the social (utilitarian) behavior, and the legal (prescribing social justice) behavior. In most situations one or the other of the three become the dominant force in moderating an individual’s behavior. However, the ethical concerns or dilemmas become very obvious when an individual faces conflicting ethical demands. In this situation an individual is most likely to go with his or her moral behavior pattern which is generally the most basic ethical mandates that he/ she may have obtained. That is the reason why a common assumption which is made against any attempt to impart ethical training in college is that most people have already acquired irreversible ethical training by the time they come to college. Training of Ethics
Numerous studies show that a pattern of unethical behavior is attributable to the training one gets in business schools, although many other studies also show that basic ethical values and beliefs are thoroughly ingrained in the individuals by the time they come to college, and any effort to train them anew for an ethical life henceforth, is all but futile. It is perceived that student attitudes-as well as those of many highly regarded business practitioners-may make the teaching of ethics a difficult task. Businesspeople must be willing to visit university and college classes to discuss ethics and to participate in ethics programs (Luoma, 1989). The general purpose of the teaching of ethics ought to be that of stimulating the moral imagination, developing skills in the recognition and analysis of moral issues, eliciting a sense of moral obligation and personal responsibility, and learning both to tolerate and resist moral disagreement and ambiguity. Classes in ethics add explicit, open treatment of the value-laden messages that already exist, permitting students and teachers to examine the rationale for taking different positions and introducing students to methods for working out conflicting moral obligations. The fear of indoctrination is largely illusory, as most business ethics professors do not take a definitive position in their courses. Those few business schools that do have a common ethics curriculum suggest that there are 2 kinds of values-those that are more or less standard and those over which reasonable people are divided (Etzioni, 1989). A business ethics course also asks the what-if questions, teaching students to seek the greatest good for the most people for the longest period of time. Under the leadership of a mature and knowledgeable facilitator, business ethics encourages sensitive and reasoned anticipation or resolution of ethical
72
THE JOURNAL
OF SOCIO-ECONOMICS
Vol. 22/No. l/l 993
dilemmas. As with other dilemmas, the incentives of ethical problems swing the answer in one direction or the other (Henderson, 1988). Many individuals have misconceptions concerning ethics in general and business ethics in particular. The purpose of business ethics education is to develop and enhance moral reasoning abilities and to demonstrate how this complements analytical skills. To ensure that business ethics education develops and matures, gaps in available materials must be filled (Cooke & Ryan, 1988). In a business practitioner survey, more than 75% of respondents said they felt ethics could be acquired in a classroom setting (Forcht, 1991). One view expressed is that the next generation will see a more proactive role for business in taking on the challenge of educating its current and future work force (Sklarz, 1991). In a 1988 study in Canada findings showed that 23 of the 42 schools offered courses in business ethics and that these schools offered a total of 25 ethics courses, 20 of which were electives. Approximately 2,100 business students in Canada took ethics courses annually (700 due to requirements and 1,400 due to choice). Of the schools with no business ethics courses, 42% planned to add such a course by 1989. Thus, by 1989, a business ethics component should be in the curriculum of 7470 of the responding schools (Singh, 1989). There are notions that ethical teachings are inimical to business interests and that laws and regulations control most businesses. But education in business ethics is the starting point for instilling ethics in society. Instead of adopting a decision-making style that weighs only short-term gain or loss, managers should adjust their sights to see beyond the immediate. Business ethics as a mandated part of every course throughout the curriculum, whether the course is required or an elective, is suggested. Business ethics should impart selfconfidence in dealing with ethical issues, should be integrated into everyday life, and should be evident in the corporate context (Herman & Cullen, 1986). However, one argument against ethics education in the college/ professional school is that character and personality are already determined by the age of 20, making subsequent attempts to change a person’s ethics useless (Shenkir, 1990). One view, obvious from a survey of literature, was the contrary belief held by business executives that although business ethics can be taught in the classroom students tend to readjust to their old ways after they take one course or two in business ethics (Weber, 1990). However, business ethics training is more effective it is integrated in the entire curriculum (Poorsoltan et al, 1991). Besides the above major schools of perception about the role of business ethics, some sporadic but interesting findings showed that it is more important for business leaders to return to schools and deliver their rather effective message of the importance of business ethics in the real world (Luoma, 1989). It is also important for the top management, particularly for the CEOs, to demonstrate high standards of ethical practice (Shenkir, 1990). Interestingly one study found
A Comparison of Perceptions on Business Ethics
73
that business professors have to be role models of ethical behavior in their dayto-day life to get their messages across (David et al, 1990). In the above context therefore, it is critical to examine the views of both, the business school educators and the business leaders on some key aspects of business ethics to highlight inherent similarities and differences. METHODOLOGY In the first study (Hattwick et al, 1984) 864 CEOs of the largest 10,000 firms in the United States were mailed a questionnaire consisting of 96 questions on the different aspects of business ethics. Out of 864 a total of 138 usable responses were received, constituting a response rate of 16%. Out of 138 respondents 72% were president or chairman of the board whereas the rest, 28%, were either vicepresident or another officer in the firm. In the second study (Monippallil et al, 1990), 637 deans of college of business were mailed four copies of a questionnaire consisting of 53 questions. The 637 deans were requested to provide their responses on one questionnaire and distribute the other three to their associate deans, assistant deans, department heads, and professors who would be interested in responding to the questionnaire. A final response rate of 17% (445 questionnaires) were received. Approximately 27% of the respondents were deans and the rest were department chairs and both senior and junior faculty members. The 53 questions developed for Monippallil study were culled from the questionnaire in the Hattwick study which had 96 questions. Most of the questions out of the 53 questions chosen for the second study were designed to identify the common denominators in business ethics for both business executives and business educators, rendering both studies comparable on common dimensions. The present article compiles the responses received in the above two studies and presents a comparative analysis of the perceptions of business executives and business educators on business ethics.
ANALYSIS OF RESPONSES Since both the studies were conducted approximately about the same time, namely in 1988 and 1989, they represent a fairly contemporaneous record of views on business ethics by business executives and business educators. Potential
Sources
of Ethical Standards
First of all, the academic respondents’ view of their own sources of ethical standards are presented in Table 1. Later, the views of academic as well as
74
THE JOURNAL OF SOCIO-ECONOMICS
Vol. 22iNo. 111993
Table 1: Responses to the Question: “To What Extent are Your Own Ethical Standards Influenced by.. .I’ E 1.
I.
Formal university
policies and procedures
2. Peer group pressures
S.I.
N.O.
1.1
N.I.
Mean
Academtc:
13.9
53.3
3.2
22.0
6.3
2.6
Academic:
12.1
42.9
3.8
31.5
8.1
2.9
3. Prevatling educationa
practices
Academic:
9.9
51.9
7.9
23.2
5.4
2.7
4. Pertrtved
of your superiors
Academic:
11.5
44.3
7.0
28.1
7.6
2.8
5. Family experience‘s
Academic:
56.2
32.8
1.8
6.7
0.9
1.7
6. Church
Academic:
preferences
experiences
40.5
29.4
4.5
13.3
10.8
2.3
7. Educational
experiences
Academic:
27.2
48.1
3.8
16.0
3.4
2-3
8. University’s
ethrca
Academic:
8.5
42.5
15.1
28.1
9.0
2.9
Academic:
21.8
42.5
10.3
16.6
7.0
2.5
Academic:
9.9
44.5
6.1
28.3
9.2
2.8
code
9. Professor’s ethical code
10. Sotiety’s F.I ~ Fxtm\lvr
moral c limdtr Inlluence;
5.1. 1 Somr
Intlurnc?;
N.O.
= No Opinion,
L.I. = Little
Intluencr,
N.O.
= No Iniluente;
N/A
=
201 ApplI~‘lt~lr
business respondents are compared in Table 2. Although the Hattwick study did not focus on eliciting views of the business respondents as to their own sources of ethical standards as compared to the perceived view of ethical standards of their colleagues, the views of the academic respondents as given in Tables 1 and 2 below suggest that there is a significant difference between the perceptions of the academic respondents towards their own ethical standards as compared to the perception of standards of the business executives. Of the academic respondents 89% thought that family experiences had at least some influence, whereas 56% believed that family experiences had extensive influence on them. However, 75% thought that education experiences had some influence whereas 70% thought that church experiences had some influence. Furthermore, 55% and 54% of the respondents attributed some influence to peer group pressure and society’s moral climate, on business educators’ sources of ethical standards. Fewer than 12% stated that peer group practices and social climate affect them extensively. Most believed that their ethical standards are internalized and social mores and values have only a limited impact on them. The potential sources of ethical standards for business executives, as perceived by the academic educators and the business executives themselves, are compared in Table 2. Of the academic respondents 49% believed that the most powerful sources of influence on business executives were the perceived preferences of top management. Whereas over 61% of the business executive respondents
A Comparison
oi Perceptions on
Business Ethics
Table 2:
75
Responses to the Question:
“To What Extent are Ethical Standards of Business Executives Influenced by.. . .I’ E.I. 11. Formal
IL.
corporatp
policies and procedures
Peer group pressure\
1 I. Prevailing Industry practic-e\
13. Prrc rivrd
1 i.
prrierences
oi top executives
Family experiences
16. Churn-h experiences
17. Educational experienc vs
18. Company’s ethica code or policy
19. ProfrGon’s LO. Sot
ethical code or policy
irty’s moral (limdte
s.1.
N.O.
L 1.
N.I.
Mean
Business:
21.9
60.6
1.5
15.3
0.7
N/A
Acadrmic:
29.4
i7.5
3.2
8.1
0.5
2.0
Business:
22.7
56.2
4.4
8.0
3.6
N/A
Academic:
46.7
46.5
2.0
2.9
0.5
I .7
Business:
10.9
59.1
6.6
20.4
2.9
N/A
Academic:
31.5
58.0
3.6
5.6
0.2
1.9
Business:
26.3
57.7
5.1
10.9
2.9
N/A
Academic:
49.2
41.6
4..3
2.9
0.2
1.7
Business:
613
12.1
3.6
2.9
0.0
N/A
Academic
41.6
40.9
7.2
8.8
0.5
1.9
Bwines5:
39.4
35.0
13.9
10.2
I .5
N/A
Academic:
2i.6
41.8
10.3
16.0
3.2
2.3
Businrss:
26.3
61.3
5.1
7.3
0.0
N/A
Academic.
13.9
50.6
9.0
23.4
2.0
2.5
Busine55:
27.0
62.0
3.6
5.8
1.5
N/A
Academic:
21.8
5 3.9
6.1
16.0
0.9
2.3
Business:
48.2
40.1
4.4
5.1
2.2
N/A
Academic-:
24-3
51.7
5.2
16.6
1.1
2.3
Business:
20.4
59.8
3.6
1 3.1
3.0
N/A
Academic :
26.1
51.2
7.2
13.0
1.1
2.2
perceived that it was the family experiences that had the most powerful influence on their sources of ethical standards; only 42% of the academic respondents thought that the family experiences were the most powerful source of impact on business executives. About 47% of the academic respondents perceived that the most powerful sources of influence on business executives was peer group pressure, however, only 23?& of the business executives attributed strong influence to peer group pressure. Of the academic respondents 25% thought that educational experiences have little or no influence on business leaders lending to the hypothesis that ethical values are deeply instilled long before the college experiences begin. In addition 1970 of the academic respondents thought that church experiences have little or no influence on business leaders and 17% thought the company’s ethical code and policy have little or no influence on business leaders. This view lends to the inference that some of the respondent academicians perceive that business leaders may be immune to theological teachings and also that companies have hardly any code of ethics in place to influence the behavior of business executives.
76
THE
Table 3:
JOURNAL
OF SOCIO-ECONOMICS
Vol. 22iNo.
l/l
993
Responses Regarding the Ethics of Business Practices S.A.
A
N.O.
D
5.D.
Mean
21. The typical business executive has two sets
Business:
5.8
10.1
5.1
52.2
26.8
N/A
of ethical standards, one which he/she
Academic:
9.4
35.5
8.3
38.8
4.9
3.1
appltes to business activities and another which is applied to his/her pnvate Irfe. 22. Ethical standards in business are lower than rn government. 2
s. Ethtcal standards
are lower in business than
in most religious organrzattons.
24. Ethical standards in business are lower than rn the typical American family. 25. The ethical standards
I find
in business are
htghrr than the standards of my colleagues
Business:
1.4
3.6
2.9
42.0
50.0
N/A
Academtc:
2.5
5.8
9.7
56.0
24.1
1.1
Business:
4.4
25.4
14.5
44.2
11.6
N/A
Academic:
7.2
41.6
12.8
29.0
7.4
3.0
Business:
4.3
10.9
13.8
58.0
13.0
N/A
Academtc:
2.7
11.7
17.3
58.4
7.9
3.7
N/A
NIA
N/A
N/A
N/A
N/A
Academic:
2.7
11.7
17.3
58.4
7.9
3.7
Business: Academic:
N/A
N/A
N/A
N/A
N/A
N/A
3.4
22.9
19.1
47.2
5.4
3.4
Business:
N/A
N/A
N/A
N/A
N/A
N/A
2.0
8.5
30.6
54.2
2.9
3.6
37.7
55.1
2.9
2.2
2.2
N/A
1.1
16.9
10.8
51.5
17.8
3.8
Business:
at my university. ?h. The ethical standards
I find
in business are
higher than the standards of my students. 27. The ethica
standards
I find
in business are
htgher than the standards of my counterparts
Academic:
in other universities. 28. The ethrcal standards
I find
in business are
as hrgh as those I practice with my family
Business: Academic:
and mends. 29.
I occastonally
make decisions which are
right for my unrversity but whit h are incon
Business:
1.4
12.3
3.6
52.2
30.4
N/A
Academic:
1.4
18.0
6.5
47.2
24.9
3.9
Business: Academic:
NIA
N/A
N/A
N/A
NIA
N/A
10.6
47.9
14.8
21.1
3.4
2.7
slstent with my personal ethical principles. 30. Most ethical decisions which
I encounter
involve conflict between the legitimate
cldims
of two or more parties (e.g., faculty
vs. student\, administrative vs. faculty, etc.) \.,\.= Strongly Agree,A = Agree;N.O. 7 No Op~r~on,D = Di\agrrr S D = Strongly Drsagree;N/A = Not Applic-dble
Ethics of Business Practices
Table 3 summarizes the comparative responses of business educators and those of business executives on the perceptions they have on the ethics of business practices. Questions 25, 26, 27 and 30 were not used in the Hattwick study. The responses presented in the Table 3, therefore, are comparable only for those questions which were used in both the Hattwick and the Monippallil studies. On question 21, there was a significant difference in responses of academics versus business executives. Whereas only 16% of the business executives agreed or strongly agreed about double ethical standards, 45% of the academic respondents agreed or strongly agreed to the statement that business executives had two sets of ethical standards, one for their business practices and the other for their private lives.
A Comparison oi Perceptions on Business
Table 4:
77
Ethics
Responses Regarding the Theory of the Firm A
N.O.
N/A
N/A
Academic: 21.1
40.0
S.A. A corporation’s prtmary responsibility
is to
stockholders.
Business:
D
S.D.
Mean
N/A
N/A
N/A
N/A
3.6
30.6
3.8
2.6
A corporation is equally responsible to its
Business:
N/A
N/A
NIA
NIA
WA
N/A
shareholders, customers, employees, and
Academic: 33.7
35.5
3.6
22.9
2.9
2.3
other interested parties. The corporation should seek to earn a satis-
Business:
39.1
59.4
0.7
0.7
0.0
N/A
factory rate of return for stockholders.
Academic: 24.0
69.2
2.9
2.s
0.5
1.9
44.9
so.7
2.2
0.7
1.4
N/A
7.9
50.3
31.5
4.1
The corporation should seek to maximize
Business:
short run profits.
Acddemic:
0.7
The ethical standards in competition are
Business:
2.9
2.9
2.2
59.4
32.6
N/A
determined by the least ethical competitor.
Academic:
1.8
7.6
4.5
53.9
31.0
4.1
Ii one firm
8.8
engages in unethical conduct, the
others will have to
i~~lk~win
order to survive.
As a general rule, legislation promoter, a
Business:
3.7
39.1
15.9
32.6
8.7
N/A
higher standard of ethics among competing
Academic:
4.3
38.4
15.3
32.8
8.1
3.1
firms. Antitrust laws are generally beneficial to the
Business:
N/A
N/A
N/A
N/A
N/A
N/A
pubIlL
Academic: 18.0
52.6
10.6
13.7
3.2
2.4
S.A = Strongly Agree;A = Agree;N.O. = No Opinion, D = DisagreeS.D. = Strongly Disagree;NIA = Not Applicable
Similarly, about 93% of the business executives agreed or strongly agreed that they find ethical standards in business are as high as those they practice with their family and friends, but only 18% of the academic respondents agreed or strongly agreed that such was the case with the business executives. On the general perceptions of the ethics of business practices 26% of the academic respondents believed that ethical standards in business are higher than those of their students while 53% disagreed with this. Almost 20% stated that they had at least occasionally made decisions which they thought were right for their universities but were inconsistent with their own ethical beliefs. It was the view of 56% of the academic respondents that the ethical conflict in the academic field arises from the legitimate claims of two or more competing parties or interests such as faculty vs. students, etc. Theory of the Firm
The respondents’views on the theory offirm are presented in Table 4. Questions 3 1, 32 and 37 were not included in the Hattwick study. Other questions on this dimension addressed both the academic and business respondents. Of the academic respondents 6 1% agreed that the primary responsibility of the business is to its shareholders while 34% disagreed. Also, 69% of the academicians viewed customers and employees as co-equal stakeholders with shareholders.
78
THE
Table 5:
JOURNAL
OF SOCIO-ECONOMICS
111993
Responses Regarding Employee Relationships S.A.
i8.
Vol. 22/No.
A
N.O.
D
5 D.
Mean
No employee should he required to engage
Business:
43.5
44.2
3.6)
7.2
1.4
N/A
rn business practice which that employee
Academic: 40.9
40.0
6.5
9.9
0.9
2.0
Business:
7.2
44.2
8.7
34.1
5.8
N/A
Academic:
7.2
32.8
83
40.7
9.4
3.2
considers unethical.
19. In accepting an employment offer each employee implicitly agrees to abide by the ethical standards of the employer, even if the
companystandards
differ from those
oi the cmpioyee. 30. Wages and salaries should vary according to an employee’s productivity. 41. Wages and salaries should vary according to both the employee’s productivity and
34.1
61.h
0.7
2.9
0.7
N/A
Academic: 35.1
54.2
4.7
3.6
0.7
1.9
Business:
5.1
42.7
5.1
39.1
8.0
N/A
Ac.ademic:
9.4
52.4
9.9
23.4
3.4
2.7
Business:
1.4
0.7
2.2
41.1
4H.5
N/A
Academic:
0.2
2.9
2.3
59.6
31.5
4.3
Business:
vears of service with the firm. 42. Lliages and salaries should vary primarily with the employee’s years of servire with the firm. -I 3. Wages and salaries thouid vary according
14. Labor unions serve a useiul purpose by prodding a particular management into fulfilling its responsibilities
N/A
N/A
N/A
NiA
N/A
9.9
59.6
11.2
16.9
0.7
N/A 2.5
Business:
1.4
24.6
9.4
41.3
23.2
NIA
Academic:
7.0
52.8
12.1
19.3
7.2
2.8
Business: Academic:
to the iirm’s productivity.
to labor.
There was an obvious agreement between the response patterns of both academics (93%) and business executives (98%) on the statement that shareholders are entitled to a satisfactory return on their investment. However, the dramatic difference was visible in the responses on the statement that “the corporation should seek to maximize the short run profit.” Over 95% of the business executives agreed with the statement whereas only 10% of the academicians tended to agree, with less than 1% showing strong agreement. Also, only 2% of the business executives showed disagreement with the maximization of short run profit for the corporation whereas 82% of the academicians disagreed with the corporation short term profit motive. Employee Relationships Table 5 summarizes and compares the views ethical dimensions of employee relationships. with employee relationships only six questions On the question of the primacy of individual market place 8 1% of the business educators and
of both classes of respondents on Out of the seven questions dealing were included in the both studies. conscience over the dictates of the 88% of the business persons agreed.
A Cornparkon of Pwcqxions
on Business Ethics
79
However, 40% of the business educators and 51Yo of the business executives agreed that the acceptance of an employment contract implies agreement with the employer’s standards which may come into conflict with those of an individual employee. Responses on the above two statements, therefore, stand in contrast to each other. The response pattern creates apprehension that a large number of respondents in both academe and business believe in the primacy of individual conscience only in theory; in practice, the employees may have to go along with business practices, ethical or unethical, in order to retain their jobs and to get ahead. There seemed to be a fair agreement over the notion that wages and salaries should not vary according to an employee’s years of service. Of the business educators 9 1Yoand over 89% of the business executives believed that wages and salaries should not be based primarily on the seniority of employees. On the other hand, 89C&of the business educators and 96Yo of the business executives agreed that an employee’s compensation should be based on his productivity. Of the academic respondents 70% agreed that employee compensation should vary on the basis of the firm’s own productivity. However, 62% of the academics and only 48% of the business executives agreed with the statement that both employee productivity and years of service with the firm should be bases of the employees compensation. Furthermore, 6OY0 of the business educators thought that labor unions play a beneficial role in prodding the management to meet its responsibilities to employees, although, only 26Y~ of the business executives agreed with this statement. Customer Relationships Table 6 presents the responses of both the business educators and the business executives on the ethical implications of the mutual reiationship of business with its customers. A majority (91%) of academic respondents believed that it is in the long run interest of the firm to protect the customer. Business executives (96%) showed a similar level of agreement. Both academicians (98~~~ and business executives (99%) agreed that corporations must be truthful in advertising. Although 62% of the business educators agreed that much of the advertising done by business is misleading to the consumer, only 39% of the business executives agreed to this statement. Only 8C;rof the business executives believed that in order to be effective, advertising has to be somewhat misleading, though only a relatively few more business educators (12%) expressed agreement with this statement. One out of every three business educators surveyed thought that the average customer is less ethical in dealing with the business than the business is in dealing with the customers whereas 43Y0 of the business executives agreed with this statement.
THE JOURNAL OF SOCK&ECONOMICS
80
Table 6:
of business to
protect the customer. 46. Corporations
47. Much
must be truthful
advertising
misleading
somewhat
in advertising.
done by business is
to the ronsumer.
38. Effective advertising
may have to be
misleading.
49. The average customer
l/l
993
Responses Regarding Customer Relationships S.A.
45. It is the long run serf-interest
Vol. 22iNo.
is less ethical in
dealing with business than the business is
A
N.O.
D
S.D.
Mean
Business:
52.9
42.8
2.9
0.7
0.7
N/A
Academtc:
45.2
45.6
2.9
3.6
0.5
1.8
Business:
53.6
44.9
0.7
0.7
0.0
Academic:
57.5
40.2
0.9
0.0
0.2
NIA 1.5
Business:
7.2
31.9
10.1
45.6
5.1
N/A
Academic:
12.4
49.7
4.7
28.8
2.9
2.7
Business:
0.0
8.0
5.8
60.1
26.1
N/A
Academic:
1.1
11.2
0.7
62.7
20.0
3.9
Business:
9.4
33.3
21.7
33.3
2.2
N/A
Academic:
4.3
28.8
21.8
37.3
5.8
3.2
in dealmg with that customer. LA. = Stron& Agree; A = Agree; N.O. = No Opinion; D = Disagree S.D. = Strongly Disagree, N/A = Not Applicable
Social Responsibility of the Corporation
Table 7 presents a summary of the views of the academicians and the business executives towards the social responsibility of the corporation. Although 62% of the academic respondents thought that corporations have the obligation to take the lead in solving social problems such as pollution, discrimination, and safety, surprisingly more than 75% of the business executives agreed to this corporate responsibility. On the issues of conservation 81% of the business educators and 75% of the business executives agreed that corporations should conserve natural resources even if corporate profits are reduced. Almost 67% of the business executives and 74Yc of the business educators agreed that corporations should conserve energy even if corporate profits are reduced. Also, 93% of the business executives and 89% of the academicians agreed that corporations should clean up air, noise, and water pollution even if corporate profits are reduced. There was agreement between the business educators (94%) and business executives (93%) that corporations should promote equal opportunity in hiring and promotion. Similarly, 4OY0 of the business educators and 43% of the business executives agreed that corporations should help minority owned businesses. However 30% of the business educators and 3370 of the business executives indicated either general or strong opposition to preferential treatment for minority owned businesses. On the issue of civic responsibility 75% of the business educators and 90% of the business executives agreed to the statement that corporations have a positive obligation to commit their financial and managerial resources to solving the social problems of the community where they are located.
A Comparison
oi Perceptions
on Business
Ethics
81
Responses Regarding the Social Responsibility
Table 7:
S.A.
A
of the Corporation N.O.
D
S.D.
Mean
50. Corporations should: a. take the lead in solving major social problems such as pollution, discrimina-
19.6
55.8
5.1
1 7.4
2.2
N/A
Academic: 20.5
41.1
6.5
25.4
5.2
2.6
Business:
N/A
Business:
tion, and safety. b. conserve natural resources, even if doing so means reductton in corporate profits. c. promote conservation of energy, even if doing so means a reduction in profits. d. clean up or avold causing air, noise and water pollution, even tf doing so means
15.2
59.4
15.9
8.7
0.7
Academic: 25.8
55.1
7.0
9.4
1.6
2.1
Business:
58.0
15.2
16.7
1.4
N/A
Academic: 2 1.6
52.1
10.1
13.5
1.6
2.3
Business:
18.8
74.0
4.3
2.9
0.0
N/A
Academic
32.6
56.6
4.0
4.9
0.7
1.9
Business:
N/A
8.7
a reduction In profits. e. promote equal opportunity In hlring and promotion. f. help minority owned business.
34.8
61.6
23.2
1.4
0.0
Academic: 42.5
15.0
2.5
2.0
0.9
1.7
5.1
$7.7
24.6
29.7
2.9
N/A
Business:
6.5
33.5
28.5
25.2
4.9
3.0
24.6
65.2
3.6
6.5
0.0
N/A
Academic: 17.5
57.5
13.5
8.5
1.8
2.3
Academic: g. contribute money and management time to civic activities
in communities
Business:
where the firm has plants or offices. 51. Corporations should not become involved in solving social problems unless doing so
Business:
2.2
9.4
7.2
68.8
123
N/A
Academic:
3.6
14.2
5.4
33.5
21.8
3.8
Business:
0.7
44.9
8.0
44.2
2.2
N/A
Academic: 11.9
61.1
8.3
15.5
1.8
2.4
bet-ome5 a cost of doing business or an opportunity to earn a profit. 52. Most corporations get involved in solving WC ia responsibility
projects because outside
pressures make such tnvolvement a cost of doing business. 53. Most corporations get involved in social responsibility
projects because of the
Business: Academic:
N/A
N/A
N/A
NIA
N/A
N/A
8.3
56.9
13.0
19.1
1.4
2.6
public relations value of such projects. S A : Strongly Agree:A = Agree;N.O. = No Oplnlon; D = Dl$agrer S.D. = Strongly Wagrer; N/A = Not Applicable
To the statement that “corporations should not become involved in solving social problems unless doing so becomes a cost of doing business or an opportunity to earn a profit” both academicians (75%) and business executives (8 1%) showed disagreement. However, 31Y~ of the academicians stated that most corporations are engaged in social responsibility projects because of the management’s belief that such involvement is intrinsically right. Seventy-three percent attributed the motivation of corporate involvement in social responsibility projects to outside pressures. Sixty-five percent attributed the motivation of corporate involvement in social responsibility projects to public relations value.
82
THE JOURNAL
OF SOCIO-ECONOMICS
Vol. 22iNo.
111993
Methods of Dealing With Ethical Issues
The views of both the business educators and business executives on the relative importance and actual implementation of different methods of dealing with ethical issues, are summarized below. In the Hattwick study (1990) the data were presented in table form, but in the Monippallil Study (1990) the data on this dimension were presented in summary form only. Because of apparent differences only a few common dimensions are compared as follows: Of the business educators surveyed 89% believed that the most widely used method is for individual faculty members to deal with ethical problems as they arise, whereas similar sentiments were expressed by 91% of the business executives. Of the surveyed academicians 53% stated that temporary task forces handle ethical issues on their campuses, and 70% of the business executives expressed their views that this method of dealing with ethical issue was important. However, 50’& of the surveyed academicians believed that the institution administrators were responsible for resolving ethical issues. Of the institution surveyed 62% used a university-wide code of ethics whereas 47Y0 of the business executives believed that an industry-wide code of ethics was important. However, 22% of the business executive had no opinion about an industry-wide code of ethics whereas 31% thought a code of ethics was not important. Of the business educators 34% reported the use of a permanent ethics committee of senior faculty and administration whereas only 25% of business executives favored such a measure. In fact, 57a/, of the business executives did not consider a permanent committee to be an important measure. Whereas 70% of the business educators monitor social and political trends in order to assess their impact on business decisions, 77% of the business executives monitor social and political trends in order to assess their impact on business decisions. CONCLUSION
In conclusion, it is obvious that on most issues, both the business educators and the business executives agree in terms of the relative importance of the ethical on several dimensions. However, the general views of the business educators may seem to be “self-righteous” when appraising the business world on ethical dimensions. The business educators seem to attach major importance to the “bureaucratic” ways of dealing with ethical issues whereas business executives tend to prefer the least possible outside intervention in their dealing with ethical questions. The two studies compared above give a better view of business educators’
A Comparison
oi Perceptions
on Business
Ethics
83
views of their own ethical perceptions and those of the business world rather than other way around. A further study may address that largely underaddressed research question. REFERENCES Carroll.
A.B. (1990).
Principles of business ethics: Their role in decision making and an initial consensus.
Manqernenr Cooke,
R.A.
(8): 20-24.
Drcirion [ UkJ 2X
and
L.V.
Ryan,
(1988).
The
~~fui7u~~ii7~ttf ~t,~l~~~)~n7~rii [ Ukl David,
F.R..
L. Anderson.
management Etjioni,
A.
( 1989).
McTier
education. SAM
relevance
of ethics to management
education.
Journal
of
7 (2): 2X-38.
and K.W. Adv~~r&
Lawrimore. Manqenrenr
(1990).
Perspectives
Jourml55
on business ethics in
(4): 26-32.
Are business schools brainwashing their MBAs? Business & Soc,irl>, Rckk
70 (Summer):
1X-19. Forcht, K. (1991). A diploma can’t ensure ethics. Conrpurrrw~orlJ 25 (17): 25. Hattwick,
R.E.. Y.. Kathawala,
M. Mor~ippallil,
L. Wall, and B.-G. P. Shin. (1990). On the alleged decline
in business ethics, The .Journa/ yf ~~~~~,;~~ru~ Gorromits Hattwick.
18(2):
l29- 143.
R.E.. B.-G. P. Shin, and L. Wall. (19X4). Business ethics--findings
leaders. 7% Journul Henderson.
qf Behoviorul
Eumomic~.s I3 (2): I57-
of a survey of America’s business
185.
V.E. (198X). An ethics roundtable: Can business ethics be taught? Management
Rcwieti, 77 (8):
52-54. Herman. F.A. and T.P. Cullen. (1986). Still needed: Ethics in business instruction. CorneD Hotel Cyc ~e.~f~~ru~/ Admini~rratic~tr
Qucrrirr~r~ 27 (2): 49-52.
Lewis, P.V. and H.E. Speck, 111. (1990). hinrs.\
~‘ommunicution
Ethical orientations for understanding
business ethics. Journal
q/
27 (3): 213-232.
Luoma. C.A. (19X9). Can ethics be taught’? Manugrmenr
Awounting
Luoma. G.A. (1989). Can ethics be taught’? Business & Ewnomic M~~nippalIil. M., Y. Kathawala.
R. Hattwick,
71 (5): 14-16. Review 36 (I): 3-5.
L. Wail, and B.P. Shin. (1990).
Business ethics in America:
A view from the classroom. Jotrmul c$ ~~u~,~i}~~i f?ontmzics 19 (I): 125-140. Poorsoltan,
K.. S.G.
Advanced Shenkir. W.G.
Amin,
Manupwwnt
( 1990).
and A. Pootoonchi. Journal
56
(I):
(1991).
Business ethics: Views of future leaders. SAM
4-9.
A perspective from education: Business ethics.
A~~counring 71 (12): 30.
Managen7ent
33. Singh. .l.B. (19X9). The teaching of ethics in Canadian
schools of management
and administrative
studies.
~[~~~~ff~nf Busiffrss Erhics 8 ( I ): 5 i-56. SkIarT, D.P. (1991). Weber. .I. (1990).
Business-education
Measuring
recommendations.
partnerships:
Part II. Bu.rine.ss & Ewnomit
Review
37 (3): 15-18.
the impact of teaching ethics to future managers: A review assessment, and
Journal
of’&~~iness
Ethics 9 (3): 1X3-190.