Examining the sustainability of ethics in business an academic perspective

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  • 1. InternationalJournal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 – 6510(Online) International Journal of Management (IJM)ISSN 0976 Number 2, Aug - Sep (2010), © IAEME Volume 1, – 6502(Print), ISSN 0976 – 6510(Online) IJMVolume 1, Number 2, Aug - Sep (2010), pp. 164-173© IAEME, http://www.iaeme.com/ijm.html ©IAEME EXAMINING THE SUSTAINABILITY OF ETHICS IN BUSINESS: AN ACADEMIC PERSPECTIVE Jagannath Mohanty Assistant Professor Institute of Management Technology, Nagpur E-Mail: jagmohanty@rediffmail.com Bhabani P Rath Professor & Head, Department of Industrial Relations & Personnel Management Berhampur University, Berhampur ABSTRACT: The ethics of business practice became the subject of growing social and political debate in the past two and a half decades. The revelations of transgression by businesses and Institutions, time and again has led to debates and dilemmas on the principles and practices of corporations. Large scale human and natural disasters, such as Bhopal tragedy, Chernobyl disaster, fall of Enron, major accounting frauds in Satyam, the illegal mining activities, incessant felling of forests in name of economic development and countless such instances have reiterated the debate as to ‘Can Business and Ethics go Hand in Hand’ can they survive together or one will disappear in oblivion, most possibly the latter. The issue is not as to how much have been taught and thought on Ethics but the question is about conviction among the people to see and follow through it. Despite being taught in every B School, Business Ethics has never become obvious for the managers and policy makers. This paper aims at examining the relevance and sustainability of ethics in academia and business, looking into the vast cultural drifts taking place both in academia and the corporate. The paper would categorically focus on academic challenges in making ethics a practice beyond the four walls of the classroom. The paper would also look into the possible causes and consequences of a long term avoidance approach to ethics in business. 164
  • 2. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 – 6510(Online)Volume 1, Number 2, Aug - Sep (2010), © IAEMEINTRODUCTION: Managerial ethics is defined as the systematic study of right and wrong, good andbad conduct on the part of those responsible for achieving organizational objectives(Kreitner and Rief 1980). The increase in international business in the last couple of decades along withwith renewed concerns about the ethics of business activity has created a need on the partof business firms for guidance in international business ethics (Korine and Gomez, 2002).(Dercks, 2001:346) notes that ". . . corporations across the world have been forced tocome to grips with the costs and consequences of unethical behavior," but as Maynard(2001) cautions, there is "no true global consensus on what is morally questionable."Weiss (2003) notes that the connected global economy is now a standard considerationfor business people The role of academics in providing guidance in this era of globalization has beendiscussed by Bowie (2001) who suggests a key role for academics to developpartnerships with non academics. Similarly, DeGeorge (1994) indicates that academicfocus in the area of international ethics is underdeveloped: "Business ethics is still ayoung field and its international dimensions have scarcely been raised, much lessadequately addressed." In the contemporary business environment, the ethical limits arebeing constantly pushed leading to a myriad of problems. In an alarming surveyconsisting of 1,300 employees and managers, 48 percent admitted to practicing someform of unethical conduct in the workplace (Mathis and Jackson, 1999).ETHICS AND ACADEMICS: Indeed it is difficult to trace the exact point in time a particular field of studyemerged, both the fields of management as well as business ethics appear to have onlyrecently become formal fields of study. For example, according to (Bluedorn 1986, p.442) in his introduction to a special book review section on the classics of management inthe Academy of Management Review, around “100 years [ago] . . . management began asa discipline.” The emergence of the management field, according to Bluedorn, may havecommenced upon the delivery by Henry Towne of his paper “The Engineer as anEconomist” to a meeting of the American Society of Mechanical Engineers in 1886. 165
  • 3. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 – 6510(Online)Volume 1, Number 2, Aug - Sep (2010), © IAEMETowne’s paper “made a resounding call for both management research and education”(Bluedorn, 1986, p. 442). While “the history of ethics in business is a long one, goingback to the beginning of business” (De George, 1987, p. 201), the academic field ofbusiness ethics appears to have emerged even more recently. According to De George(1987, p. 203), “By 1985 business ethics had become an academic field, albeit still in theprocess of definition.” As his evidence, De George points out that by 1985, there werealready hundreds of university business ethics courses, enormous textbooks, scores ofcasebooks, numerous business ethics centers, as well as conferences taking place. Today, on just about every business school campus, one can find courses in eithersubject, however, business ethics academics continue to face scepticism as to thelegitimacy and practicality of their newly emerged field (Swanson, 2005). However,recent research indicates that there has not been a significant shift in the balance of thebusiness studies curriculum. (Smith et al. 1994) have reported a very limited response ofboth undergraduate and postgraduate business and management studies in the provisionof discrete ethics-based courses. Where courses in business ethics or corporateresponsibility do exist they are invariably offered as options remaining firmly confined tothe periphery of the curriculum. The core curriculum of business studies is stilldominated by subject or functional study which excludes debate on the values of thebusiness system. (Tasker and Packham, 1993) and (Wolfe, 1993) comment that the trendtowards ethical awareness has done little to disturb the orthodoxy of the free marketwithin the business curriculum.IMPACT OF ACADEMICS ON ETHICAL CONDUCT: There presently exists a great deal of interest in the issue of the ethical perceptionsof business students (Knotts et al., 2000; Kochunny and Rogers, 1994; Merritt, 2002), nodoubt because the college experience has a long-term impact on the development ofstudents’ values (Pascarella and Terenzini, 1991; Pascarella et al., 1988) and businessschools are training future business leaders (Dalton et al., 1994; Etzioni, 2002; Merritt,2002). Since one who is ethical is also moral, such terms are commonly usedinterchangeably. Further, if an individual values a certain mode of conduct more highlythan another, or others, that person will tend to behave accordingly. According to 166
  • 4. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 – 6510(Online)Volume 1, Number 2, Aug - Sep (2010), © IAEMERokeach (1973), there are two types of values, terminal values and instrumental values.Terminal values are concerned with a goal or outcome, describing end-states of existence(e.g. freedom, equality, self-respect). Instrumental values are concerned with a means to agoal, describing desirable modes of conduct (e.g. honest, ambitious, independent).Rokeach’s instrumental values are in line with what Maccoby (1976) calls charactertraits, and these terms may also be used interchangeably. Values (i.e. traits) are, therefore,a useful investigative tool. Based on the work of Kohlberg (1981, 1984), Pascarella andTerenzini (1991) contend that if college contributes significantly to moral developmentthere should be an upward shift in moral stage or there should be a greater proportion ofprincipled reasoners among college seniors than among younger students or less educatedpeers. They concluded that there is strong evidence for an enduring impact of college onthe use of principled moral reasoning to judge moral issues. Studies examining theinfluence of ethics instruction on business students’ ethical attitudes, in particular, are notunequivocal (Arlow, 1991; Glenn, 1992; Weber, 1990). On balance, however, theliterature favors the conclusion that ethics instruction does sensitize business students toethical issues (Green and Weber, 1997; Luthar et al., 1997; Ruhe, 1991) and correlates todevelopment in moral and ethical perspectives (Green and Weber, 1997; Pascarella andTerenzini, 1991). Other studies suggest that students’ ethical attitudes are influencedmore by exposure to the large socio-cultural norms than by education in specificdisciplines (Arlow, 1991).SUSTENANCE OF ETHICS IN BUSINESS: Two tiered teaching methodology may be suggested in dealing with ethics inacademics. The first level has to do with the ethical and moral behavior of schooladministrators. Education takes place in a system where students can observe the ethicsof the university. To make ethics and ethical practices relevant, the student must seeethics being practiced by their teachers, by the administration and by other students. Onlyin an arena where ethics is modeled from above will the concept have an effect onstudents. (Mauro et al. 1999) discusses the concept of role modelling within the corporatestructure, but it can also apply to the university: The way to build an ethical environmentis to start at the top. Senior people must set the tone, in dictating that ethical behavior will 167
  • 5. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 – 6510(Online)Volume 1, Number 2, Aug - Sep (2010), © IAEMEbe encouraged and that unethical actions will not be tolerated. This, of course, requiresbuy- in from all members of the board of directors and from the management team. The point is to refine the process during the selection of personnel itself. Thehiring and promoting of managers should focus on emotional intelligence of the personbeing considered for hiring or promotion. It is very easy to favor applicants withoutstanding technical back grounds and records, but if emotional intelligence is lacking theymay be more likely to get into ethical trouble. Such inter personal skills as activelistening, negotiation and mediation and assertiveness can be learned. Candidates withthese skills or some training in their back grounds should be selected for generalsupervisory, team leadership and training positions. Virtue ethics assumes that goodpeople are made as much as born. Character development is a life- long process, whichcan only be encouraged and supported by well- designed and maintained for ethicalstructures.FRAMEWORK FOR ETHICAL CONDUCT: Another controversy is about what to include in business ethics courses, andwhere to include these concepts. In the early 1980s, there was still much reluctance toinclude separate courses in ethics in the business curriculum (George, 1982; Powers &Vogel, 1980). For example, George (1982) discovered that in the business graduateschools he surveyed, close to 70% had no course on business ethics. When consideringwhat and where to put content in ethics, the problem becomes one of relevance to othercourses and to the “real world” of business. Traditionally, studying ethics meansexamination of case studies. While this gives the student an understanding of issues thatare case specific, there is little evidence that this translates into ethical behavior in thebusiness world. Budner (1984) was concerned with whether or not the curriculum that didcover ethics was sufficient to prepare students for ethical conflicts they would face intheir careers as managers. Teaching of ethics in class has encountered many criticisms. One such criticism isthat, there is too much time spent on preaching in the class room. Students find thisirrelevant to their studies. They respond better to cases and incidents that more nearlycoincide with their learning. This may be cited as a reason for the faculty and the 168
  • 6. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 – 6510(Online)Volume 1, Number 2, Aug - Sep (2010), © IAEMEmanagement to provide ethical modeling. In reference to the definitions of ethicsdiscussed above, (de Rond, 1996). Another criticism of teaching ethics addresses the“obsession with problem solving”. He argues that instead of relying on problem solvingas a way to teach ethics, the emphasis should be on the development of moral character.As the reformers of the early nineteenth century endevoured to develop moral characterof their contemporaries (Mintz, 1995), de Rond calls for this development in the present.He goes on to discuss the “where to put ethics” content issue in the curriculum: By thesame token, the traditional single course on business ethics may well possess an inherentdanger: namely that of feeding dualistic thinking as opposed to allowing for the buildupof a holistic world view (Mintz, 1996).Hence de Rond states: “Instead of providing students with cases and situations which will encouragethem to articulate their individual moral frame works, the message that is conveyed tothem is that their chosen profession is no good. Would it not be more helpful to showthem how to climb the corporate ladder while gaining that much- needed sense of pride inwhat they do?” (de Rond, 1996). In other words, teaching ethics should focus ondevelopment of character as well as development of a personal ethical stance that canthen be applied to students’ careers. There has been concern about how ethics is in fusedinto the business curriculum for several years.In 1974, the Academy of Management warned the Standards Committee of theAmerican Association of Collegiate Schools of Business: “To permit this subject to be met by being frittered away as a matter of secondaryconcern in other courses, no matter how well taught, is to distort the perceivedsignificance of the subject matter in the mind of the student. It is the en tire organizationthat is under study, and to fractionalize the study of the relationship of the organization toits environment leaves the impact of the sum of the parts significantly less than the whole(Academy of Management, 1974)”. Individuals often justify unethical behavior by rationalizing that the activity issomehow not “really” unethical, “speaking up” may cause adverse repercussions, or theactivity is acceptable because it is in the best interests of the company; therefore, what is 169
  • 7. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 – 6510(Online)Volume 1, Number 2, Aug - Sep (2010), © IAEME“correct” and “moral” is frequently defined by the environment within which anindividual makes decisions (Chen et al., 1997). Reilly and Myroslaw (1990) go as far assaying that the organizational environment is the major cause of unethical behavior.Ethical judgments are in the eye of the beholder, especially when the activity is somehowreinforced or justified by the corporate culture. Maccoby (1976) agrees that individualvalues or ethical inclinations result from the culture of an organization. Accordingly, itmay be argued that organizational culture is a major determinant of acceptable modes ofconduct, values, and ethics (Nwachukwu and Vitell, 1997). This line of reasoning extendsequally to the cultures of colleges and universities since individual values are learnedfrom socialization in the culture of schools as well as through family, religion, andbusiness experiences (Ferrell and Fraedrich, 1990).CONCLUSION In summary, then, it is clear that what (Mauro et al. 1999 ) found in his research,that personal and business ethics are not separate entities, that they coexist in thebehaviour of managers within the corporation, is supported in the current literature. Theprocess seems to be first to employ people who have a strong personal sense of right andwrong that they will bring to their jobs. This sense can then be applied to businesspractices. It appears to be vital that new employees, those coming out of schools ofbusiness, need to have a broader understanding of ethical behavior than that which can begained by examining case studies of ethics-related situations. These new employees needto bring a strong sense of personal ethics to the job, a sense that is gained throughexamination of issues related to their own experiences. Once the person is employed, theresearch shows that ethics must be part of more than orientation to the corporation. Itmust be a constant guiding focus for all employees. The old concept, “What is good forbusiness is good ethics” has definitely shifted to a new paradigm: “What is good ethics isgood for business.” Thus, education in the area of business ethics seems to be floundering, with noagreement about how, what or where to address the issue. There is some discussion aboutwaiting to teach ethics until the student becomes an employee in a corporation. The 170
  • 8. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 – 6510(Online)Volume 1, Number 2, Aug - Sep (2010), © IAEMEresearch shows that this can be more effective as it is more relevant to the “here andnow” of the workers.REFERENCES:1. Arlow, P. (1991), “Personal characteristics in college students’ evaluations of business ethics and corporate social responsibility”, Journal of Business Ethics, Vol. 10, pp. 63-92. Bluedorn, A.C. (1986), “Special book review section on the classics of management”, The Academy of Management Review, Vol. 11 No. 2, pp. 442-64.3. Bowie, N. (2001). The role of business ethics: Where next? Is there a role for academics? Business Ethics: A European Review, 10: 288-293.4. Chen, A.Y.S., Sawyers, R.B. and Williams, P.F. (1997), “Reinforcing ethical decision making through corporate culture”, Journal of Business Ethics, Vol. 16, pp. 855-65.5. Dalton, D.R., Metzger, M.B. and Hill, J.W. (1994), “The ‘new’ U.S. sentencing commission guidelines: a wake-up call for corporate America”, Academy of Management Executive, Vol. 8, pp. 7-13.6. De George, R.T. (1987), “The status of business ethics: past and future”, Journal of Business Ethics, Vol. 6, pp. 201-11.7. De George, R.T. 1982, Business Ethics, MacMillan, New York.8. Dercks, L. (2001). The European Commissions business ethics: A critique of proposed reforms. Business Ethics: A European Review, 10: 346-359.9. Etzioni, A. (2002), “When it comes to ethics, B-Schools get an F”, The Washington Post, 4 August,pp. B4.10. Ferrell, O.C. and Fraedrich, J. (1990), “Understanding pressures that cause unethical behavior in business”, Business Insights, Spring/Summer, pp. 1-4. from Twenty Years of Research, Jossey-Bass, San Francisco, CA.11. Glenn, J.J. Jr (1992), “Can a business and society course affect the ethical judgment of future managers?”, Journal of Business Ethics, Vol. 11, pp. 217-23.12. Green, S. and Weber, J. (1997), “Influencing ethical development: exposing students to the AICP A code of conduct”, Journal of Business Ethics, Vol. 16, pp. 777-90. 171
  • 9. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 – 6510(Online)Volume 1, Number 2, Aug - Sep (2010), © IAEME13. Knotts, T.L., Lopez, T.B. and Mesak, H.I. (2000), “Ethical judgments of college students: an empirical analysis”, Journal of Education for Business, Vol. 76, pp. 158- 63.14. Kochunny, C.M. and Rogers, H. (1994), “Head-heart disparity among future managers: implications for ethical conduct”, Journal of Business Ethics, Vol. 13, pp. 719-21.15. Kohlberg, L. (1981), Essays in Moral Development, Volume I: The Philosophy of Moral Development, Harper and Row, New York, NY.16. Korine, H. & Gomez, P. (2002). The leap to globalization: Creating new value from business without borders. San Francisco: Jossey-Bass.17. Kreitner, R. and Rief, W.E. (1980), “Ethical inclinations of tomorrow’s managers: cause for alarm?”, Journal of Business Education, Vol. 56, pp. 25-9.18. Luthar, H.K., DiBattista, R.A. and Gautschi, T. (1997), “Perception of what the ethical climate is and what it should be: the role of gender, academic status, and ethical education”, Journal of Business Ethics, Vol. 16, pp. 205-17.19. Maccoby, M. (1976), The Gamesman, Simon & Schuster, New York, NY20. Mark de Rond, (1996) "Business ethics, where do we stand? Towards a new inquiry", Management Decision, Vol. 34 Iss: 4, pp.54 – 6121. Mathis, R.L. and Jackson, J.H. (1999), Human Resource Management, 9th ed., South- Western College, Cincinnati, OH22. Maynard, M. L. (2001). Policing transnational commerce: Global awareness in the margins of morality. Journal of Business Ethics, 30: 17-27.23. Merritt, J. (2002), “MBAs get an ethics refresher”, Business Week, 16 September, pp. 64-6.24. Mintz, S. (1996). Aristotelian virtue and business ethics education. Journal of Business Ethics, 15, 827-838.25. Mintz, S.M. (1995), "Virtue ethics and accounting education", Issues in Accounting Education, Vol. 10 No.2, pp.247-67.26. Nicholas Mauro, Samuel M. Natale, Anthony F. Libertella, (1999) "Personal values, business ethics and strategic development", Cross Cultural Management: An International Journal, Vol. 6 Iss: 2, pp.22 – 28 172
  • 10. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 – 6510(Online)Volume 1, Number 2, Aug - Sep (2010), © IAEME27. Nwachukwu, S.L.S. and Vitell, S.J. Jr (1997), “The influence of corporate culture on managerial ethical judgments”, Journal of Business Ethics, Vol. 16, pp. 757-76.28. Pascarella, E.T. and Terenzini, P.T. (1991), How College Affects Students: Findings and Insights Pascarella, E.T., Ethington, C.A. and Smart, J.C. (1988), “The influence of college on humanitarian/civic involvement values”, Journal of Higher Education, Vol. 59, pp. 412-37.29. Powers, C. W. and Vogel, D.: 1980, Ethics in the Education of Business Managers (Institute of Society, Ethics and the Life Sciences, Hastings-on-Hudson, NY).30. Reilly, B.J. and Myroslaw, J.K. (1990), “Ethical business and the ethical person”, Business Horizons, Vol. 33 No. 6, pp. 23-8.31. Rokeach, M. (1973), The Nature of Human Values, The Free Press, New York, NY.32. Ruhe, J.A. (1991), “Value importance for success: a longitudinal study”, SAM Advanced Management Journal, Vol. 56 No. 1, pp. 10-15, 20.33. Smith, D., Hart, D. and McCloskey, J., “Greening the business school: environmental education and the business school”, Management Learning, Vol. 25 No. 3, 1994, pp. 475-88.34. Swanson, D.L. (2005), “Business ethics education at bay: addressing a crisis of legitimacy”, Issues in Accounting Education, Vol. 20 No. 3, pp. 247-53.35. Tasker, M. and Packham, D., “Industry and higher education: a question of values”, Studies in Higher Education, Vol. 18 No. 2, 1993, pp. 127-35.36. Weber, J. (1990), “Measuring the impact of teaching ethics to future managers: a review, assessment and recommendations”, Journal of Business Ethics, Vol. 9, pp. 183-90.37. Weiss, J. W. (2003). Business ethics: A stakeholder and issues management approach. Mason, OH: South-Western.38. Wolfe, A., “We’ve had enough of business ethics”, Business Horizons, May/June 1993, pp. 1-3. 173