unethical business

7/18/2019 Unethical Business

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Journal of Human Valueshttp://jhv.sagepub.com

Determinants of Unethical Business Behaviour among Owner ManagersSunday Samson Babalola

Journal of Human Values2009; 15; 61

DOI: 10.1177/097168580901500105

The online version of this article can be found at:

http://jhv.sagepub.com/cgi/content/abstract/15/1/61

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Determinants of Unethical BusinessBehaviour among Owner–Managers

SUNDAY SAMSON BABALOLA

Several studies have identified entrepreneurship as a key factor in wealth creations in addition to

associating certain personality characteristics to its growth. The question is to what extent have these wealth

creations performed ethically. The present study is set to explore the cognitive orientation (locus of control,

risk taking ability and impression management) and demographic (age and gender) factors that are

associated with unethical business. Two hundred and fiftysix owner!managers in the age range of "# to $%

years participated in the survey study. &ale participants accounted for $'.' per cent, while female

participants were '$. per cent. The results indicate that risk taking and gender factors were consistently

and statistically significant predictors of unethical business across the three groups in this study. The group

situation appears to have effect on the individual contribution to unethical business. mplications are drawn

from the results, and priorities are established for future research.

Introduction

Several empirical studies have stressed the

important role of free-enterprise economic system

through entrepreneurs (Drucker 1985; Light and

osenstein 1995; eynolds 199!; Schumpeter

19"#$% &ust as the contri'ution of small firms to neemployment opportunities has received significant

attention

()irch 19!9; Light and

osenstein 1995;

eynolds and *hite

199!$+ ,hese studies

and others have

concentrated on the

factors that facilitate

per-formance+ Despitethese% there are

arguments that there is

limited literature on the

determinants of &o'

creation 'y the self-employed ()arkham

199#; aroll et al+

199.; oling et al+

199!; *esthead and

oling 1995$ ith

relatively

Sunday Samson )a'alola is aSenior Lecturer of/ndustrial0rgani2ational 3sychology

at theDepartment of3sychology%4aculty of theSocialSciences%niversity of/'adan% /'adan%

6igeria+ 7-mailss+'a'alolamail+ui+edu+ng

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SA! "u#lications *os +ngeles*ondon-ewelhiSingapore/ashington 0

DOI$1@+11!!0@9!1.858@9@15@@1@5

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University on September

28, 2009







%& ” S6DB S =S6 ) )LL

littleattentiontoresearchon'usinessusesuchasunet

hical'usiness%hichcan'edysf unctionalfor entr epreneur ialgroth+

n

ethica

l

'usin

ess is

defin

ed as

an

act

that is

illegal

or

moral

ly

unacc

epta'

le

ithin

the

'usines

s setting

and

larger commu

nity+ /n

'usines

s%

unethica

l

'ehavio

ur

contradi

cts the

eCpecte

d

'usines

s in a

civili2ed

society+

)usines

ss

demons

tration

of ir-

responsi

'le%

immatur

e%

unethica

l

'ehavio

ur

among

entrepre

neurscan

manifest

in four

different

ays as

reflecte

d 'y

entrepre

neurs

duties

andattitude

toards

custome

rs%

orkers%competi

ng firms

and

govern

ment

(7stola

?@@#$+

,herefor

e% it is

not ise

for an

entrepre

neur to

make

revenue

s 'y

cheating

on the

govern

ment

and the

custome

r as

either of

these

may

create

sanction

s

against

hoever

'reaksthe las

or

negotiat

ed

contract

s+ ,his

advice

is

tena'le

here

strictrules



and

re-

gulati

ons

gover

ning'usin

ess

trans

action

s are

imple

ment

ed+

Strict

imple

ment

ation

of

rules

and

respe

ct for

custo

mers

are

pro'l

ems

in

most

de-

velopi

ng

count

ries+

Studi

es

havesho

n that

'usin

ess

indivi

duals

cut

corne

rs on

Eualit

y%cover

up

incident

s% lie to

and

deceive

customers

(<efter

198.;

:ones

199!;

*erner

et al+

1989$+

,hese

types of

unethica

l

'ehavio

ur cost

industry

'illions

(:ones

199!;

Femke

198.$

and

damage

the

images

of

corporat

ions

(=ahar

199?$+

,his

study is

therefor e

focusing

on

eCplorin

g the

factors

that

influenc

e

unethica

l'usines

s

among

onerA

manage

rs in

6igeria+/t is

eCpecte

d that

the

present

study%

'eing

an

eCplorat

ory

study in

6igeria%

ill spur

eCpansi

on or

compari

son in

future

researc

h and

also

contri'u

te ne

empirica

l

analysis

of in-

dividual

data

(person

ality

factors$in the

predictio

n of

unethica

l

'usines

s+

Lit



erature'eview

7thicsdealsiththedistinction'eteenhat

isrightandrong+ /tisconcernediththe

:6L

4 <=

6 > L

7S 151(?@@9$.1A!5

nature

and

ground

s of

morality

%includin

g moral

&udgem

ents%

standar

ds and

rules of

conduct

(,aylor

19!5$+

Similarl

y%

:ones

(1991$

defines

societal

ethics

as

consisti

ng of

decisions that

are

legal or

morally

accepta

'le to

the

larger

com-

munity+

,o 'e a

society%

a group

must

accept

certain

fundam

ental

practice

s and

principles+

)usines

s% as a

type of

society%

is

possi'le only

ithin a

certain

social

conteCt

of

instituti

ons%

agreem

ents%

underst

andings

and

shared

values

()eu et

al+

?@@"$+

,hus%

the

freedom of

'usi-

ness to

make

profit is

limited

'y the

values

of

fairness

% eEual

opportu

nity%

honesty

and

truth-

fulness

(DeGeo

rge

1999$+

,heinterfac



e

'et

een

ethic

s and

entreprene

urshi

p

involv

es

to

relate

d

sets

of

issue

s+

,he

first

conc

erns

the

entre

prene

urial

conteCt for

ethic

s%

hile

the

seco

nd

involv

es

the

ethic

al

conte

Ct for

entre

prene

urshi

p+

4indi

ngs

fromthe

former

indicate

d that

the

entrepr

eneurialconteCt

poses a

num'er

of

uniEue

ethical

chal-

lenges+

ccordi

ng to

)ucar

and

<isrich

(?@@1$%

ook

(199?$

and

)hide

and

Steven

son(199@$%

the

financia

l and

operati

onal

pressur

es

found

ithin

most

entrepr

eneurial

firms

heighte

n the

incentiv

e to

engage

in

eCpediency+

,he

uniEue

ethical

chal-

lenges

found inentrepr

eneurial

venture

s%

accord-

ing to

=orris

et al+

(?@@?$%

can 'e

traced

to their

nenes

s and

smallne

ss

compar

ed ith

more

esta'lis

hed'usines

ses and

entrepr

eneurial

firms+

)hide

and

Steven

son

(199@$

also

suggest

that

there is

often

little

penalty

for H'ad

in an

entrepr

eneurialfirm%



and

that

Hgood

can

often

'epenal

i2ed+

,hey

state

that

the

funda

ment

al

reaso

n for

actin

g

prope

rly

must

'e

the

indivi

dual

ssens

e of

self% as

Hthe

heels

of

societyare

grease

d 'y

forgiven

ess%

forgetfu

lness

and

toleranc

e++

num'er of ethicaldecision-makingre-searchershaveusedself-

interesttheories toeCplain

hyindividuals'ehaveunethically+einfor cement(,revin

o198.$andsocialeC-change andneoclassicaleconomics

theories

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eterminants of 1nethical 2usiness 2ehaviour among 3wner!&anagers ” %(

(Grover 199"$ have 'een

used to demonstrate that

individuals are pure

egoists+ n the other hand%

Leicki (198"$ stresses the

model of deception+ <e

notes that deception is a

product of the perceptions

of the costs and 'enefits of

using deception+

/mportantly% his model

allos for potentialmisperceptions+ <e

speculates that people

underestimate the costs of

using deception 'ecause

they &ustify their on use of

deception too readily to

themselves+

ognitive processes have

also 'een implicated in

increasing theentrepreneurs suscepti'ility

to 'iases and errors in

reasoning and &udgement

under conditions of time

pressure% high level of

uncertainty% strong emotions

and even fatigue ()aron

1998; Iahneman and

Lovallo 199#; 3alich and

)ag'y 1995$+ ccording to

)aron (1998$% the arising

challenge can 'e

compounded 'y en-

trepreneurs strong

commitment to his 'usiness

ideas% thus increasing his

potential for a self serv-ing

'ias+ ,he sooner an

entrepreneur eChi'its a

tendency toards egoism%

the greater the pressure toengage in unethical

'ehaviour

(Longenecker et

al+ 1988$+ ,hus%

l-Ihati' et al+(?@@#$ suggest

that the individual

code of ethics is

the appropriate

unit of analysis

hen studying

ethics+

,revino and

Boung'lood

(199@$ take as thestarting point the

entrepreneurs

stage in

Iohl'ergs

cognitive

development

model in de-

scri'ing ethical

dilemma+ 4or the

onerAmanager

in a smaller firm%

the need to o'ey

authority or to look

for the approval of

relevant others

may 'e less

relevant+ ,he

normative

structure ithin a

company is likely

to 'e em'odied inthe onerA

manager and

directly relates to

his stage of

cognitive moral

development+

,hey suggest that

situational

moderators are

less significant for

entrepreneurs+

,heir model

implies that the

most influential

factor determiningan actors

'ehaviour hen

facing an ethically

sensitive 'usiness

issue



ill 'e personal ethics%

hich is moderated 'y

psychological varia'les+

<oever% in the vie of

=ischel (19!!$% individual

differences can deter-minate% in a given situation%

most especially hen the

situation is am'iguously

structured so that people are

uncertain a'out ho to

categori2e it% have to

structure it in their on terms

and have no clear

eCpectations a'out the most

likely option to 'eappropriate in that situation+

,he significance of individual

differences ill 'e greatest

to the degree that the

situation is Hunstructured

and each person eCpects

that virtually any response is

eEually likely to 'e eEually

appropriate+ 4urther-more%

=ischel (19!!$ stresses that

the role of individual

differences is minimal to the

degree that people are

eCposed to poerful

treatments and conversely%

hen the treatments are

eak% am'iguous or trivial%

individual differences in

personal varia'les have the

most significant

effects+

Locus of

control and

tolerance of

am'iguity (risk

taking$ are some

of the most

consistently

emphasi2ed

characteristics in

the psychological

area ()egley

1995; =orris and

Fahra ?@@@$%

despite thedifficulties in

identifying the

salient features of

the

entrepreneurial

personality

(SeCton and

)oman 198";

Shaver and Scott

1991$+ =acDonald

(19!.$ defined

locus of control as

the eCtent to

hich persons

perceive

contingency

relationships

'eteen their

actions and their

outcomes+ Locus

of control has

'een linked to

ethical 'eliefs and

perceptions in a

num'er of studies+/n their studies

using

undergraduate

students (:ones

and Iavanaugh

199.; =cuddy

and 3eery 199.;

,erpstra et al+

1991$ report that

individualsclassified as

internals indicate

a greater

sensitivity in their

responses+

Studies conducted

on graduate

students 'y

,revino and

Boung'lood

(199@$ shos

similar findings

hile :ones and

Iavanaugh

(199.$% in their

studies

:6L 4 <=6

> L7S 151(?@@9$ .1A!5

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North West University on

September 28, 2009







%) ” S6DB S =S6 ) )LL

on

gradu

ate

stude

nts%

o'ser

ve a

non-

signifi

cant

differ

ence'y

locus

of

contr

ol of

gradu

ate

stude

nt

su'&e

cts+*ith

regar

d to

the

linka

ge to

ethic

s% an

intern

al

locus

of

contr

ol

seem

s

more

consi

stent

ith

astron

g

reliance

on a

personal

ethical

stand-

ard as

oppose

d t o a

standar

d

derived

from

ones

social

milieu

(<egart

y and

Sim

19!8$+

4ypot hesis56

Therewill besignifi cant relationshipbetweenexternal locusof

control and unethi cal business.

,her

e also

seems

to 'e a

clear

linkage

'etee

n risk

taking

to

ethics%as

ethical

dilemm

as are

inheren

tly

am'igu

ous and

often

consist

of

comple

C and

contradi

ctory

situatio

ns in

hich

different

element

s or cues

suggest

a range

of

possi'l

e

outcom

es+

hell et

al+

(1991$descri'

e the

risk-

taker as

someon

e% ho

in the

conteCt

of

'usines

s



ventu

re

pursu

es

'usin

essideas

hen

the

pro'a

'ility

of

succ

eedin

g is

lo+

Studi

es of

high

scho

ol

and

colle

ge

stude

nts

shosigni-

ficant

relati

onshi

ps

'et

een

risk

takin

g and

the

devia

nt

(Den

ovan

and

:ess

or

1985$

+

Similarly%

<orvath

and

Fucker

man

(199"$

o'tainsignific

ant

correlati

ons

'etee

n risk

apprais

al and

risky

situatio

ns

across

four

areas

of risk

(crimina

l% minor

rule

violatio

ns%

financial and

sports

risk$

hile

the

result of

Fukerm

an and

Iuhlma

n

(?@@@$

study

sho

that

generali

2ed risk

taking

is

related

to

scalesfor

impulsi

ve

sensati

on

seeking

andaggress

ion+ 4or

instanc

e%

people

assume

small

'usines

s

oners

to 'e

high

risk-

takers

hile

the

Euantita

tive

revie

of

auchand

4rese

(?@@?$

sho

that

high

risk

taking

is

negativ

ely

associ-

ated

ith

'usines

s

succes

s+

7Ctrapo

lating

fromthese



studi

es to

the

curre

nt

study% it is

hypot

he-

si2ed

that

4ypothesis"6

4ighrisk taki ng indiv idualswill scor ehigher onunet hical busi nessmeasuresthanlow risk taki

ng indiv iduals.

:

6L

4 <=

6 > L

7S 151(?@@

9$ .1A!5

/mpr

ession

manag

ement

is the

processhere'

y

individu

als

seek to

influenc

e the

per-

ception

of others

a'out

their

on

image

(osenf

eld et

al+

1995$+

,he

prime

reason

for this

is that

people

need to

appear

more

altruisti

c and

society-oriente

d than

they

actually

are+ 4or

eCampl

e%

giving

the

impression that



one

is

comp

etent

and

am'itious

can

lead

to

'enef

its

such

as

caree

r-enha

ncing

oppor

tuniti

es

(*ay

ne

and

Liden

1995$

+

lso%

indivi

duals

gener

ally

'elie

ve

they

are

moreethic

al

comp

ared

to

their

peers

(an

dall

and4ern

andes

199?$+

/n vie

of the

fact that

'usiness

environ

ment

reEuire

s

integrity

(hung

and

=onroe

?@@"$%this

study

ill

therefor

e

eCplore

the

relation

ship

'etee

n

unethic

al

'usines

s and

impress

ion

manag

ement+

4ypot hesis'6Therewill benegati vesignifi cant relationshipbetwe

enimpre

ssionmanagement and unethi

cal business+

)ey

ond

these

psychol

ogical

charact

eristics%

it is

alsouseful

to

conside

r

person

al

charact

eristics%

to of

themost

salient

'eing

age

and

gender+

4inding

s here

are

hardly

definitiv

e+ *ith

age%

there is

cursory

evidenc

e to

suggest

that

su'&ect

s'ecome



more

cons

ervati

ve in

their

ethical

attitu

des

as

they

get

older

(ad

aev

199#;Seri

nek

199?$

+

<enc

e%

youn

ger

peopl

e

oul

d

have

a

more

li'era

l vie

of

poten

tially

uneth

ical

situatio

ns+ ,he

counter

-

argument is

that

younge

r

people

are

more

idealisti

c and

see theorld in

more

H'lack

and

hite

terms+

4ypot hesis#6

7oung er sub8ec ts will contri bute positiv ely tounethi cal business

scalesthanolder sub8ec ts.

/nthe field

of

criminol

ogy%

gender

is one

of the

stronge

st

correlat

es of

criminal

ity hile

the link

'etee

n

gender

and

non-

complia

nceappear

s to

eCtend

to a

variety

of

forms

of

devianc

e not

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eterminants of 1nethical 2usiness 2ehaviour among 3wner!&anagers ” %*

&ust crime (Grasmick and

Io'ayashi ?@@?'$+ Gender

is used in this article to refer

to 'iological seC+ num'er

of gender studies on ethics

use students and employees

ith miCed results+ 4or

instance% some findings

sho that men are more

likely to engage in various

unethical practices ()ert2 et

al+ 1989$; male 'usiness

students are less ethical on

a ma&ority of ethical indices

(uegger and Iing 199?$%

hile ole and Smith (199.$

and Iohut and orriher

(199#$ findings indicate that

female 'usiness students

are less receptive to

Euestiona'le ethical

responses+ Specifically%*hipple and Sords (199?$%

in a sample of S and I

students state that female

su'&ects are more critical of

unethical issues than male

su'&ects+ /n their study

among employees% <ollinger

and lark (198"$ report that

males are almost one and

three-Euarters times morelikely to report higher than

average levels of theft

activity against their

employers than are their

female co-orkers+ ,he

contradictory position shos

that there are no significant

gender-'ased differences

'eteen the ethical

frameorks held 'y men and

omen ()arnett and Iarson

1989; 3osner and

Schmidt 198!$;

hile )ucar and

<isrich (?@@1$report that female

entrepreneurs are

slightly more

ethical than

males+

Grasmick et al+

(199.$ use poer-

control theory to

eCplain that the

greater compliance of

female is due to

gender differences

in sociali2ation

eCperiences%

particularly

eCperiences

concerning risk

taking+ /n the

ideal-type

patriarchal family%

female children

are sociali2ed into

a Hcult of

domesticity here

strict adherence to

rules is eCpected+

4emales then

come to 'elieve

that dire things ill

happen shouldthey transgress+ /n

contrast% male

children% as part of

the anticipatory

sociali2ation for

the orkplace% are

encouraged to

take risks+ nd in

the process of

taking risks%

male children

come to reali2e

that dire things

do not happen+,heir

transgressions

typically are not

detected 'y

those in authority%

their peers do not

condemn them%

and they develop

self-concepts that

are consistent

ith rule

violations+ ,hus%

in a purely

patriarchal

system% 'oys% as

compared to

girls% ill come to

perceive loer

threats of formal

sanctions%

em'arrassmentand shame for

transgressions+

4ypothesis 96&ale sub8ectswill scorehigher on 122scales thanfemalesub8ects.

Method

Sampling andData

Collection



,he sampling frame

consisted of onerA

managers of small company

ith feer employees and

registered 'usiness

premises ith yoAState

=inistry of ommerce and

/ndustry% 6igeria% frica+

total of #5@ survey

Euestionnaires ere

distri'uted to the randomly

selected onerA managers

using the )usiness 3remises

egis-tration ecord+ 7ach

of the onerAmanagersreceived a copy of the

Euestionnaire ith a

covering letter through

research assistants+ ,hree

hundred and forty-

seven survey

Euestionnaires

ere returned% of

hich ?5. usa'le

surveys ereutili2ed for the

present study

yielding approCi-

mately 5.+89 per

cent return+ ,a'le

1 shos the

demographic

profile of the

sample+ =a&ority

of the

respondents% ."+"

per cent% ere

male+ >irtually all

of the

respondents ere

under #@ years of

age% ith the

largest proportions

'eteen the ages

"@ and "9 (#5+5

per cent$ and ?#and ?9 (".+# per

cent$+ 4ifty-siC per

cent of the

respondents ere

married hile ."+"

per cent of the

respondents had

received either an

undergraduate or

grad-uate degree+

:6L 4 <=6

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%% ” S6DB S =S6 ) )LL

+a#le ,

Demog r a phi c P r

of i l e of R es po

nd ent s ( N = 2 5

6 )

:ariables

ender

=ale4emaleAge?#A?9"@A"9#@J

Marital status

Single=arried

!ducation

<igh schoolollege rdinary 6ational Diplomaniversity Degree0

<igher 6ational DiplomaGraduate degree

Instruments

self-

report

Euesti

onnair

e asdesig

ned in

hich

oner

A

mana

gers

ere

asked

to

provid

e

anse

rs that

'est

chara

cteri2

ed

them+

,he

Euestionnair

e as

divide

d into

three;

the

first

part

asses

sed

thedemo

graph

ic

varia

'lesof

seC%

age%

marit

al

statu

s and

educ

ation%

the

seco

nd

part

dealt

ith

perso

na-

lity

factor

s of

risktakin

g%

impre

ssion

mana

geme

nt

and

locus

of

contr ol%

hile

the

last

part

dealt

ith

the

scen

arios

hich

meas



ured

the

unet

hical

'usin

ess+

Lo

cu

s

of

co

nt

ro

l$

,h

e

1!

-

ite

m

r

ai

g

et

al+

(198

#$

sc

al

e

as

e

m

pl

oy

ed

+ /t

is

an

ou

tc

o

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e

eff ic

acy

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re%

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chpro

vid

ed

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me

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re

of

the

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&ect

s

per

cep

tion

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the

rela

tion

'et

een

eve

nt

and

'eh

avi

our+

/t

ass

ess

es

'ot

h

the

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ern

al

and

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ern

aldim

en

sio

ns

of

loc

usof

co

ntr

ol+

3a

rtic

ipa

nts

rat

ed

the

ir

agr

ee

me

nt

it

h

ea

ch

state

me

nt

on

a

5-

poi

nt

sc

ale

+

r

on

'a

ch

:6

L 4 <=

6 > L7



S 151(?@@9$.1A!5

alpha

for the

presen

t

sample as

α =

@+81+

,he

scale

used

five

point%

Likert

type

Hstrongly

agree

to

Hstrong

ly

disagr

ee

respon

se

format

+Im-re

ssion

Mana

geme

nt$

?@-

item

measu

re

develo

ped 'y

3aulh

us

(198#%

198.$

as

used+

,he

report

ed

coeffic

ient

alpha

for

the

im-

pressi

onmana

geme

nt

scale

range

d

from

α =

@+!@A

@+!5+

,he

scale

has

'een

eCten

sively

teste

d and

e

can

'efairly

confi

dent

of

their

applic

a'ility

acros

s

time%

placeand

settin

gs+

onsi

stent

ith

value

s

o'tai

ned

in the

origin



al

devel

opm

ent

of

thescale

% the

ron

'ach

alph

a α =

@+!#+

,he

scale

used

five

point

%

Liker

t

type

Hstro

ngly

agre

e to

Hstrongly

disag

ree

resp

onse

form

at+

'is.

ta.in

g$

self-

repor

t #-

item

state

ment

as

devel

oped

to

measure

risk

taking

in

'usi-

ness

ventur e+

elia'i

lity

analys

is for

the

scale

as

condu

cted

'y

inspec

ting

item-

total

and

inter-

item

correla

tions

analysis+

/tem

reducti

on

involv

ed

elimin

ating

items

that

ithitem-

total

correla

tions <

+"5

and

inter-

item

correla

tions <

@+?@

as

sugge

sted

'y

)eard

en etal+

(199"

$ and

6unn

ally

(19!8

$+

/ndivi

dual

items

that

meet

the

a'ove

criteri

a

ere

summ

ed to

form

multiple-

item

scale

s+ ,he

items

ere

score

d on a

5-

point

Likert-type

scale

from

strong

ly

agree

to

strong

ly

disagr

ee+



,he

ron

'ach

alpha

for

thescale

as

α =

@+!"+

Unet

hical

#usi

ness

$

short%to-

scen

ario

as

const

ructe

d and

used

for

this

study+ ,he

scen

arios

used

ere

chose

n and

&udged

as

repres

entative of

curren

t

trends

in

6igeri

a en-

vironm

ent+

/nform

ation

from

previo

us

studie

s

(alle

n and

n'

ey

?@@";4ullert

on et

al+

199.;

=uncy

and

>itell

199?;

Strutt

on et

al+

199!;*ilke

s

19!8$

influe

nced

the

devel

opme

nt of

these

scena

rios+

7ach

su'&e

ct

receiv

ed the

to

unethi

cal

'usiness

scena

rios

ith

the

rating

Downlo

aded

from

http://j

hv.sag

epub.comat

North West

University on

September 28,

2009










eterminants of 1nethical 2usiness 2ehaviour among 3wner!&anagers ” %/

scales+ ,he first unethical

'usiness scenario

involved manufacturing of

furniture for a pu'lic

school hile the second

unethical 'usiness

scenario involved

production of drugs 'y a

pharmaceutical industry+

,o minimi2e response

'ias% each unethical

'usiness scenariopresented different orders

of statement items+ ,here

are nine items at the end

of each scenario+

espondents indicated

the eCtent of their

agreement ith each

statement 'y choosing a

response using a five-

point scale ranging from

strongly agree to strongly

disagree+ 4or the

purposes of analysis%

responses ere coded so

that a higher score

indicated high

acceptance of the

unethical 'usiness

descri'ed in the scenario+

Similar criterion used for

testing the relia'ilityanalysis of risk taking

as used for unethical

'usiness measures+ ,he

folloing ron'ach alpha

of unethical 'usiness

ere o'tained α = @+88

for (Scenario1$% α = @+88

for (Scenario?$ and α =

@+9" for (om'ined

scenarios$+ pplying

6unnallys (19!8$ cri-

terion of α = @+!@ for

accepta'le

relia'ility in

eCploratory

researchsuggested that

the present

developed

scales ere

internally

consistent+

P r

oc ed u r es

group from the

niversity of /'adan% 6igeria

Graduate

3rofessional

lass (=) and

=asters in

=anagerial

3sychology

(==3$$ ere

presented ith

unethical 'usiness

scenarios to read

and comment on

their realisms and

the severity of the

unethical

'ehaviour

descri'ed in each

scenario+ ,he

group also

supplied

suggested

referents and

outcomes for each

scenario+ ,he

comments

provided 'y thisgroup ere used

to make some

ad&ustments to the

scenarios+ ,he

study as pilot



tested ith a complete

Euestionnaire administered

to !@ onerAmanagers+ ll

the onerAmanagers that

participated in the pre-

testing agreed that each of the scenarios used in this

study had high realism+

3articipants 'oth at the pilot

and main study ere not

informed of the aims of the

study until they had

completed the

Euestionnaires+

Statistical nal!sis

ron'achs alpha

coefficients ere computed

to test relia'ility (internal

consistency$ of all the

measures used in this

study+ orrelation analyses

ere computed+ ,o test

predictive relationships of

psychological (locus of

control% risk taking and

impression management$

and demographic (gender

and age$ varia'les ith

participants response to

unethical 'usiness% a

multivariate multiple

regression as performed

(4inn 19!#; 4inn

and =attsson

19!8; Lut2 and

7ckert 199#$+

Specifically%

stepiseregression

analysis as

used+ 4or the

independent

varia'le of

gender in the

analysis% a

dummy varia'le

as created+ ,he

dependentvaria'le is the

composite scores

from the

scenarios

measures+

'es

ults

=eans% standard

deviations and

correlations

among all

measures are

reported in ,a'le

?+ isk taking

shoed negative

significant

relationship

'eteen age andthe dependent

measures of

unethical

'usiness hile

locus of control

as only

significantly

related to the risk

taking% im-

pressionmanagement and

unethical

'usiness under

Scenario to+ n

the other hand%

there as no

significant

relationship

'eteen

impression and

the dependent

measures+

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%0 ” S6DB S =S6 ) )LL

+a#le &

Descripti"e Data# Correlations $atri% and Relia&ilities (Cron&ach's lphas in racets) of *aria&les of Stud!

&ean S 5 " ' # 9 $ %

Gender 1+." +#8 ge ""+." 9+@# 1,(KScenario 1 ?+9? +95 1,%KK 1,*K (+88$Scenario ? ?+.. +89 1&&KK +@1 1/)KK (+88$om'ined ?+!9 +8. 1&2KK +@9 13)KK 13(KK (+9"$/mpression ?+89 +.1 1,,K A+1@ 1,(K +@1 +@8 (+!#$Locus "+"? +58 +@5 A+@9 1&&KK 1,%KK 1&2KK 1*)KK (+81$

isk ?+.9 +95 +@@ –1&*KK 1)3KK 1(%KK 1)%KK 1&0KK 1&%KK (+!"$

Note$ K p @+@5% KK p @+@1+

+urniture $anufacturing Scenario ,

,he third model in the stepise regression analysis

has an 4 statistic = #1+?# and is significant at the p <

@+@@@ level+ ,he -sEuare is @+"?9 and the ad&usted

-sEuare is @+"?1+ ,he regression results indicated

that "?+9 per cent of the variation in su'&ects

unethical 'usiness response scores for the 4urniture

=anufacturing Scenario could 'e eCplained 'ydifferences in risk taking (β = +5.$% age (β = +?!$% and

gender (β = +1?$ (see ,a'le "$+ <ence% high risk

takers% older individuals and male su'&ects

contri'uted significantly to the prediction of unethical

'usiness+ ,he factors of locus of control and

impression management ere not found to 'e

significantly associated ith su'&ects unethical

'usiness scores for the 4urniture =anufacturing

Scenario 1+

Pharmaceutical Industr! Scenario 2

,he fourth model in the stepise regression analysis

has an 4 statistic = 1.+51 and is significant at the p <

@+@@@ level+ ,he -sEuare is @+?@8 and the ad&usted

-sEuare is @+19.+ ,he results in-dicated that ?@+8 per

cent of the variation in su'&ects unethical 'usiness

response scores for the 3harmaceutical /ndustry

Scenario could 'e

eCplained 'y

differences in risk

taking (β M "!$%

gender factors (β M +

?"$% impression

management (β M

A+?1$ and locus of

control (β M +1.$ (see

,a'le "$+ ,hus% high

risk takers% lo im-

pression management

individuals% internally

controlled and male

respondents are likely

to engage in unethical

'usiness+ ,he factor of

age as not found to

'e significantly

associated ith

su'&ects unethical

'usiness scores for the 3harmaceutical

/ndustry Scenario ?+

Com&inedScenari os

,he third model in the

stepise regression

analysis has an 4

statistic = "?+.8 and is

significant at the p <

@+@@@ level+ ,he -

sEuare is @+?8@ and the

ad&usted -sEuare is

@+?!?+ ,he results

indicated that ?8 per cent

of the variation in

su'&ects ethical

response scores for the

com'ined to scenarios

could 'e eCplained 'y

differences in risk taking

(β = +5@$% age (β = +19$

and gender (β = +1!$

(see ,a'le "$+ ,he

regression result

indicated individuals that

are high in risk taking;

old% and males hadsignificant positive

relationship toards

unethical 'usiness+ ,he

factors of locus of control

and impression

management ere not

found to 'e significantly

associated ith su'&ects

unethical 'usiness

scores for the om'ined

Scenarios+



:6L 4 <=6 > L7S 151 (?@@9$.1A!5

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http://jhv.sagepub.comat North

West University on September 28,

2009








eterminants of 1nethical 2usiness 2ehaviour among 3wner!&anagers ” %3

-a&le .

Step/ise Regression nal!sis Results 0nder 0nethical usiness

Scenario 5 Scenario " 0ombined

:ariables β β β

isk taking +5.∗∗∗

+"!∗∗∗

+5@∗∗∗

ge +?!∗∗∗

+19∗∗

Gender +1?+

+?"∗∗∗ +1!∗

/mpression management A+?1∗

Locus of control +1.+

4 ("% ?5?$ = #1+?# 4 (#% ?51$ = 1.+51 4 ("% ?5?$ = "?+.8

? = @+"?9 ? = @+?@8 ? = @+?8@

;d&+ ? = @+"?1 ;d&+ ? = @+19. ;d&+ ? = @+?!?

Note$ + p < @+@5; ∗

p < @+@1; ∗∗

p < @+@@1; ∗∗∗

p < @+@@@+

Discussion

,he main o'&ective of this study as to investi-gate

factors that predict unethical 'usiness+ ,he fitness

coefficients (?$ ere not so high for the three

models (+?@8A+"?9$% 'ut the statistical sig-nificanceas high (p < @+@@@$+ ,he findings of the three

groups in this study shoed different pre-dictor

varia'les contri'uted to each of the group criterion+

,his reflects in findings of earlier studies using this

method (allen and n'ey ?@@"; Smith et al+

1999$+ 4urthermore% the findings also shoed the

importance of individual differences in the

determinant of a given situation+ s =ischel (19!!$%

eCpressed individual differences ill 'e minimal to

the degree that the situation is eak or trivial as

can 'e found 'eteen Scenario 1 and Scenario ?+

,he analysis of the to unethical 'usiness

scenarios and the com'ined scenarios revealed

positive significant contri'ution of risk taking and

gender to unethical 'usiness+ 4irst% the result of high

risk taking as in line ith studies such as Denovan

and :essor (1985$ that found significant relationships

'eteen risk taking and the deviant+ 3ositive

significant relationship of risk taking to

unethical 'usiness

could portend a danger

signal to 'usiness

success as its detection

could lead to negative

associated

conseEuence for the

'usiness enterprise+

3ossi'ly% this is hy

studies have shon

negative relationship

'eteen high risk

taking and 'usiness

success (auch and

4rese ?@@?$+ ,here is

possi'ility that onerA

managers have greater

tendency to engage inunethical 'usiness

'ecause most often

there is little or no

penalty for H'ad in

entrepreneurial firm

()hide and Stevenson

199@$ most especially

in developing nations%

as monitoring and

implementation of rules

are fraught ith lapses

here and there+ ,here is

there-fore a need to

include the situational

varia'les in further

research of this nature

so as to eliminate dou't

on hy onerA

managers eCpress

positive tendency

toards unethical

'usiness+

=ale participants

ere found to score

higher on unethical

'usiness than their

female counterparts+

,his finding is

consistent ith someprevious studies that

males ere likely to

engage in un-ethical

'ehaviour ()ert2 et al+

1989; uegger and

Iing 199?$ hile

females ere less

receptive to

Euestiona'le ethical

responses (ole and

Smith 199.; Iohut and



orriher 199#$ and critical of unethical issues

(*hipple and Sords 199?$+:6L 4

<=6 > L7S 151 (?@@9$.1A!5

Downloaded from

http://jhv.sagepub.comat North West

University on September 28, 2009








/2 ” S6DB S =S6 ) )LL

/t

hoe

ver

contr

adict

ed

the

studi

es of

)arn

ett

andIars

on

(1989

$ and

3osn

er

and

Schm

idt

(198!

$

findin

gs+

,hus%

male

predi

sposi

tion

toar

ds

theuneth

ical

could

'e a

reflec

tion

of

male

chau

vinism

that is

inheren

t in our

environment+

7Cplan

ation of

sociali2

ation

eCperie

nces

given

'y

Grasmi

ck et al+

(199.$

seems

appropr

iate as

the

reason

for the

findings

of this

natureconside

ring the

cultural

environ

ment in

6igeria

here

the

researc

h tookplace+ /t

should

'e

noted

that

6igeria

is

among

cultural

settings

that are

high in

poer

distanc

e+

Stepise

regressi

on

analysis

shoed

the pos-

itive

significa

nt

contri'u

tion of

age on

to of

the

three

groups

under

study+

,he

findings

contradi

cted the

findings

of

Serine

ck

(199?$

and

adaev

(199#$%

hich

stated

that

older

individu

als

'ecome

more

conserv

ative in

their

ethical

attitudes



+ ,his

result

porte

nds a

great

concern as

one

eCpec

ts

that

good

eCam

ple

ill

flo

from

top

don

ard+

,he

result

might

also

'e a

point

er to

the

rising

declin

e in

social

value

s and

integr

ity in

6igeri

a+

,h

e

result

of the

analy

sis

also

sho

ed

that

impre

ssion

manag

ement

and

locus of

controlsignific

antly

contri'u

ted to

unethic

al

'usines

s in

Scenari

o 1hile

age

factor

did not+

3ossi'l

y% the

nature

of the

'usines

s

involve

d could

have

'een

respons

i'le for

this+

lthoug

h prior

studies

(:onesand

Iavana

ugh

199.;

=cud

dy and

3eery

199.;

,erpest

ra et al+

1991$

support

ed

eCternal

locus of

control

on the

unethical

dilemm

a% this

as

less

clear-

cut in

this

study+ /t

asonly in

one

group

that

there

as

support

+

,hough

% prior

studies

used

student

s

(underg

raduate

and

graduat

e$% the

current

studyused

the real

practitio

ner in

the field

(oner

A

manag

er$+ ,he

stepis

e

regressi



on

analy

sis

revea

led

aninver

se

relati

onshi

p

'et

een

uneth

ical

'usiness

and

impre

ssion

mana

geme

nt

revea

led

amon

g

one

rA

mana

gers+

,his

sho

ed

the

inclin

ationof the

one

rA

mang

ers to

ant

to toe

the

acce

pta'l

e

ays%

as it is

ell

knon

:6L

4 <=6 > L7S 151(?@@9$.1A!5

that the

'usines

s

environ

ment

reEuires

integrity

(hung

and

=onroe

?@@"$+

,hus%

confirmi

ng

osenf eld et

al+

(1995$

descript

ion of

impress

ion

manag

ement

has a

tendenc

y to 'e

society-

oriente

d than

one

actually

is+

<oev

er% the

inverserelation

-ship

finding

contradi

cted

Leisck

is

(198"$

pro-

position

that

that



peopl

e

under

estim

ate

thecost

of

using

dece

ption+

,he

findin

g

seem

s tosho

that

the

partic

ipant

s

must

have

su'd

ued

their

ego

'eca

use%

as

Long

enec

ker et

al+

(1988

$noted

% the

tende

ncy

toar

ds

egois

m

leads

to

press

ures

to

engage

in the

unethic

al+

4onclusion

,he

focus

of this

study

as to

investig

ate thepsychol

ogical

and

demogr

aphic

varia'l

es that

predict

onerA

managers

evaluat

ion of

unethic

al

'usine

ss

scenari

os+

isk

taking%

age

and

gender

factors

ere

found

to 'e

contri'

utory

factorsto the

unethic

al in

'usine

ss+

isk

takingand

gender

ere

found

to 'e

signific

ant

contri'

utors to

un-ethical

'usine

ss

respon

se for

each

scenari

o and

the

com'in

ed

scenari

os+ ,he

informa

tion

provide

d 'y

this

study

should

'euseful

for

policy

makers

and for

various

ethicall

y

oriente

d

organi2



ation

s+ /t

is

also

usef

ul toeduc

ators

ho

desig

n

cour

ses

ith

the

intention

of

raisin

g

'usin

ess

ethic

al

aar

enes

s+

1i mit ati on

sa

nd Di r ec t i ons

for +u tur eResearc h

s an

eCplorat

ory

study inevaluati

ng

factors

that

have

influenc

e on

unethic

al

'usines

s% this

study

might

have

some

eakne

sses+

4irst%the

study is

not

rooted

in

'road-

'ased

theory+

s a

result%the

findings

herein

should

'e

vieed

as a

demons

tration

of a

relation

ship

rather

than as

confirm

ation of

a

generali

2ed

theory+

lsoorthy

Download

ed from

http://jhv.s

agepub.comat

North West

University on

September 28,

2009









eterminants of 1nethical 2usiness 2ehaviour among 3wner!&anagers ” /,

of note is the disparity in the

num'er of male and female

managers from this study;

this can not 'e divulged from

the cultural and religious

diversity in eCistence in

6igeria+ s a cross-sectional

study% causal interpretations

of these findings should 'e

made ith caution+ lthough

e cannot 'e certain a'out

the direction of theserelationships% there are

reasons to 'elieve that the

causal chain runs from

personality traits to the use

of unethical 'usiness+

)ecause personality traits

are 'oth glo'al and sta'le

over time% it is likely that they

underlie un-ethical dilemma

and not vice versa+

=any other varia'les that

ere not addressed in this

study may influence onerA

managers unethical

'usiness% such as situational

varia'les% self-esteem%

importance of religious faith

and

A--endi5

UnethicalBusiness$Scenario ,

furniture manufacturing

company got a contract to make

chairs and ta'les for the pu'lic

secondary school in the localgovernment council+ ,he factory

manager informed

the 'usiness oner

that the ood

'ought in

family

'ackground+

,hese and some

other vari-a'lesshould 'e

eCamined in future

research+

6onetheless% the

study

demonstrates a

significant

relationship that is

grounded in data

and in itself% may

contri'ute to

'uilding the

theoretical

foundation this

line of research

needs (Sass

?@@@$ (,a'le 1$+

,he use of

scenarios also

imposes certain

limitations on theresults+ Scenarios

can only eCamine

hypothetical

situations% 'ut this

is the

recommended

method for

researching

ethical dilemmas

'ecause it

reduces socially

desira'le

responding ()rief

et al+ 199.$+ ,his

study 'eing an

eCploratory one in

6igeria can 'e

eCpanded or

comparisons

made in future

research 'y usingdifferent means to



measure o'served onerA

managers or replicated in

other settings+

for the ork is of inferior Euality

and ill not 'e enough to make

the Euantity of the furniture to 'e

supplied+ /n

response to the

complaint of the

factory manager% the

'usiness oner said

that hat assupplied as hat

he ordered for and it

should 'e used for

the ork+ <e also

said that the factory

manager should not

'other himself much

as fe Euantities ill

'e supplied as thenecessary officials

concerned ill 'e

settled+

+a#le A,

Scenario ,

S,-

Unethical #usiness$ Scenario ,

1 ,he onerAmanager can manipulate situation to achieve his purpose+

? ,he onerAmanager is smart+" / ont 'lame the manager; / 'lame the situation of the country+# ,he contract from the government is an opportunity for the oner-manager to

grasp his on share of the national cake+5 / ould feel indifferent to the managers action+. / ill not 'e happy ith the manager 'ecause he used inappropriate ood+! /t is not 'ad for the oner-manager to tell a lie to achieve his goal+8 ,he onerAmanagers action deserves condemnation+9 ,he onerAmanager should not 'e 'ound 'y any oath of office in a difficult

country like this+

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UnethicalB

usiness$S

cenario&

Dele

got a

callthat

the

consi

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nt of

the

parac

etamo

l

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pharm

aceuti

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compan

y sold

the

previous

eek

had

'een

returned

as not

good for

consum

ption

(,a'le

?$+

*hatthis

means is

that

continuo

us sales

of this

product

ill 'e

difficult

'ecause

it has

'een

tagged

Nfake

productO+

Dele% the

manufac

turer

thought

a'out

the

paymen

t of the

loan heo'taine

d from

the

'ank

for

produci

ng this

product

and told

his

manag

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the

'rand

name

has to

change

and re-

packed

for the

market

again

so as tomeet

up ith

the loan

repaym

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manag

er then

asked%

could

the

pro'le

m e

are

eCperie

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no 'e

due to

one of

the

adulter

ated

chemic

als thatere



used

in the

produ

ctionP

Ieep

Euiet%

Dele

said+

+a#le A&

Scenario 2

S,-

Unethical #usiness$ Scenario &

1 Dele can manipulate things0 situation to achieve his purpose+

? Dele is smart+" / ont 'lame Dele; / 'lame the situation of the country+# / ould feel indifferent to Deles actions+5 ,he situation is an opportunity for Dele to make money+. / ill not 'e happy ith Dele for reselling the product+

!89

'is. ta.ing

1?"

# / think / can endure the capital lost in the process of starting a 'usiness+ +5.

'!6!'!N4!S

l-Ihati'%:+ +%=+B++aasan

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in=anagerialDecisio

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eterminants of 1nethical 2usiness 2ehaviour among 3wner!&anagers ” /(

7ntrepreneurs from

=anagers of Smaller)usinesses%

;ournal of 2usiness:enturing % 1@ (?$% ?#9A."+

)ert2% =+% L+ onnel and:+=+ Shepard (1989$%HGender Differences in3roclivity for nethical%;ournal of 2usiness<thics% 8 (5$% "?1A"?+

)eu% D+S+% =++ )uckley and =+G+

<arvey (?@@"$% H7thical

Decision-=aking

=ultidimensional onstruct%2usiness <thics6 + <uropean

=eview % 1? (1$% 88A1@!+ )hide% +

and <+<+ Stevenson (199@$% H*hy

'e <onest if

<onesty doesnt 3ay%4arvard 2usiness =eview %.8 (Septem'er0cto'er$%1?1A9+

)irch% D+L+ (19!9$% The ;ob>eneration ?rocess(am'ridge = =/,3ress$+

)rief% +3+% :+=+ Dukerich% 3++)ron and :+4+ )rett

(199.$% H*hat is *rong

ith the ,readay

ommission eportP

7Cperimental nalyses of

the 7ffects of 3ersonal

>alues and odes of

onduct on 4raudulent

4inancial eporting%

;ournal of 2usiness

<thics% 15 (?$% 18"A98+

)ucar% )+ and +D+ <isrich(?@@1$% H7thics of )usiness =anagers vs+7ntrepreneurs% ;ournal of evelopmental <ntrepreneurship, . (1$%59A8?+

allen% I+S+ and S+4+ n'ey

(?@@"$% Hssociations 'e-

teen Demographics and

3erceptions of nethical

onsumer% nternational

;ournal of 0onsumer Studies,

?! (?$% 99A11@+aroll% +% D+ <olt2-7akin% =+

ider and <+S+ osen (199.$%

H/ncome ,aCes

and

7ntrepreneurs

use of La'our%

entre for 7conomic 3olicy

Studies% *orking

3aper "?+

hell% 7+% :+ <aorth

and S+ )rearley

(1991$% The

<ntrepreneurial

?ersonality6

0oncepts, 0ases

and 0ategories

(6e Borkoutledge$+

hung% :+ and G+S+=onroe (?@@"$%H7CploringSocialDesira'ility)ias% ;ournal of 2usiness<thics% ## (#$%?91A"@?+

ole% )+ and D+L+

Smith (199.$%

H3erceptions of

)usiness

7thics Students

versus )usiness

3eople% ;ournal

of 2usiness

<thics% 15 (8$%

889A9.+

ook% S+ (199?$%H,he 7thics of )ootstrapping%nc. &aga@ine%1# (9$% 8!A9@+

oling% =+% 3+

=itchell and =+

,aylor (199!$%

H:o' reation

and the Self-

7mployed

Story of Life%

*ealth and

>ocational

Qualification%

enter for S=7s%

*arick

)usiness School%

*orking 3aper

#!+raig% ++% :++

4ranklin and G+ ndre (198#$%H Scale to=easure Locus

of ontrol of%2ritish ;ournal of &edical ?sychology % 5!(?$% 1!"A8@+



DeGeorge% +,+ (1999$%2usiness <thics (pper Saddle iver% 6:3rentice-<all$+

Denovan% :+ and + :essor (1985$%

HStructure of 3ro'lem in

dolescence and Boung

dulthood% ;ournal of 0on

sulting and 0linical

?sychology % 5" (.$% 89@A9@#+

Drucker% 3+4+ (1985$% nnovationand <ntrepreneurship

(6e Bork <arper ando$+

7stola% =+ (?@@#$% H'out the7thics of )usinessompetition% 7lectronic:ournal of )usiness 7thicsand rgani2ation Studies%9 (?$% 1@A?"+

4inn% :+ D+ (19!#$% + >eneral

&odel for Statistical &ethods

in =esearch (6e Bork <olt%

inehart and *inston$+

4inn% :+D+ and /+ =attsson(19!8$% &ultivariate +nalysis in <ducational =esearch6 +pplications of the &ultivariance?rogram (hicago6ational 7ducationalesources$+

4ullerton% S+% I+)+ Ierch and <++

Dodge (199.$% Honsumer

7thics n ssessment of

/ndividual in the =arket 3lace%

;ournal of 2usiness <thics%

15 (!$% 8@5A1#+ Grasmick% <+G+% :+

<agan% )+S+ )lackell and )+:+

meklev

(199.$% Hisk 3reference and

3atriarchy 7Ctending 3oer-

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HGender and

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of <conomics

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Science% #. (?$%

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Grover% S+L+(199"$% HLying%Deceit% andSu'terfuge

=odel of Dishonesty inthe *orkplace%3rgani@ational Science% # ("$%#!8A95+

<efter% + (198.$%H,he ripplingrime%Security /orld %?"("$% ".A"8+

<egarty% *+<+ and

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HSome

Determinants of nethical

Decision n

7Cperiment%

;ournal of

+pplied

?sychology, ."

(#$% #51A."+

<ollinger% + and:+3+ lark(198"$%HDeterrence inthe *ork-

place3erceivedSeverity and7mployee,heft% Social Aorces% .? (?$%"98A#18+

<orvath% 3+ and =+Fuckerman(199"$%HSensationSeeking% isk ppraisal andisky%?ersonality and ndividual ifferences% 1#(1$% #1A5?+

:ones% D+ (199!$%HDoing the

*rong ,hing#8R of *orkers dmitto nethical or /llegal cts%1S+ Today % pril% #A.+

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(199.$% Hn

7Cperimental

7Camination of

the 7ffect of

/ndividual andSituational

4actors on

7thical /ntentions

in the

*orkplace%

;ournal of

2usiness <thics%

15 (5$% 511A?"+

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