International Journal of Innovation and Economic Development
Volume 1, Issue 3, August 2015, Pages 45-55
The Place of Ethics in Entrepreneurship: The Nigerian Perspective
1Uwaoma Ironkwe, 2Ordu Promise A.
1 2 Department of Accounting, Faculty of Management Sciences, University of Port Harcourt, Nigeria
Abstract: Management and entrepreneurship practitioners now face more ethical issues every day of their working lives than ever. They face hard decision that does not have an ethical dimension or facet. This is an issue of ethical problems in the decision making process. Scholars have opined that leaders confront ethical issues as they carry out their management responsibilities (Ordu and Okoroafor, 2014). Leaders face the matters of morality; right and wrong, fairness and unfairness, and justice or lack of justice, actions or behaviours in their decision making process of planning, organizing, motivating, communicating, delegating or committing some other management roles. Furthermore, ethics, entrepreneurship and ethical perspectives in management are crucial and these features are indispensible for business survival. Managers today must be informed and this has been receiving attention from scholars and industry practitioners. The focus of this paper is to assist entrepreneurship practitioners to uphold ethical practices that are vital for business survival given the ethical problems prevalent in organisations especially in Nigerian context. Looking at the theories associated with stages of ethical consciousness of organization, various forms of business ethical code formation are highlighted as these are essential and needs to be in place if any entrepreneurial activity must survive. In addition, factors that influence unethical behaviours are explored. There are ethical challenges entrepreneurship may face given the Nigerian context. In conclusion, a way forward for overcoming the ethical challenges has been suggested: getting managers to be accountable and responsible, as well as designing an ethical management index and integrity testing etc.
Keywords: Entrepreneurship, Ethics, Ethical consciousness, Unethical behaviours, Nigeria
Management and entrepreneurship practitioners in organisations currently face more ethical issues than ever. Scholars have opined that managers and leaders confront ethical issues as they carry out their management responsibilities (Ordu and Okoroafor, 2014). Whether they are engaged in planning, organizing, motivating, communicating, delegating or some other management role, they face the matter of morality; right and wrong, fairness and unfairness, and justice or injustice which creeps into their decisions, actions or behaviours. Virtually, issues of ethics always arise in all the decision in contemporary organisational or business setting (Jamnik, 2011). The topic of ethics and ethical perspectives in management is crucial with which managers today must be informed. This topic has been receiving much attention from scholars and industry practitioners.
This paper attempts to delve into the ethical issues in business that business owners regularly face. These are issues, decisions or actions which contain matters of right versus wrong, fair versus unfair, or justice versus injustice in the process of dealing with various stakeholders.
The main focus of this paper is on the concept of business ethics and social responsibility for business owners. Paper also checks whether business ethics and social responsibility are in line with overall business objectives. Ethics and social responsibility are very important values in entrepreneurship; this is, particularly, essential in decision making process. Ethical conscience guides entrepreneurs to make responsible, trustworthy and profitable entrepreneurship outcomes. Entrepreneurs are trying to implement ethical decision making approach in all business decisions. It is argued that if entrepreneurs do not reflect their understanding on the importance of ethics and corporate social responsibility adequately, this situation leads to the inconsistency in the ethical entrepreneurship practice (Carroll, 2000). Studies have shown that that ethics and social responsibility are very important values to make profitable organizational decisions. If this issues will not adequately put in place, the business fails.
Furthermore, as mentioned earlier, the topics of entrepreneurship and ethics have become more visible with numerous articles breaking out of the confines of academic journals and onto the editorial pages of leading newspapers and magazines. Most recently, both topics have even found a place near the top of the table in political and electoral debates (Durham, 2005). There are, however, perhaps a number of reasons why this is so: first, entrepreneurship has emerged as a distinctive area of academic inquiry with unique problems and questions that can be productively studied in their own right; second, entrepreneurship is an inescapably ethical activity – whether one views it from the societal, organizational or the individual level, entrepreneurial action has powerful ethical dimensions and implications. Therefore, it becomes imperative for entrepreneurship to embrace identical practices in order not to just survive, but to remain sustainable in the long-term. To discuss on this thorny issue, the various definitions of ethics as well as entrepreneurship will be explored. Further, the link between ethical practices and successful entrepreneurship as well as ethical challenges that entrepreneurs may encounter whilst executing their business activities will also be explored as all these helps the prospective entrepreneur to prepare ahead for a successful entrepreneurial launch.
2. Literature Review
2.1 Ethics and Entrepreneurship defined
Ethics is seen as moral principle that controls or influences a person’s behaviour; a system of moral principles or rules of behaviour. Ethics on its own is “a belief of what is right or wrong; what is morally correct or acceptable” (Ordu and Okafor, 2014).
New lexicon Webster’s dictionary of the English language defines ethics as “moral philosophy or moral science which studies the principles of right or wrong in human conduct”. The same dictionary defines moral as “distinctions between right and wrong. Ethics, therefore, in the context of entrepreneurship relates to the principles of conduct in business affairs occurring between the entrepreneur and other related parties.
Nigeria is said to be one of the highly religious nations where the majority of citizens belong to one religious sect or the other churches. Amongst proliferate in geometric progression, Christians and Moslems share a greater percentage of adherents. These religions advocate lofty moral principles of conduct. For instance, the golden rule in Christian religion is love. Love your neighbour as yourself; do not steal your neighbours’ property (Deut 5:19); do not do unto others, as you wish them to not do to you. If these noble tents are put into practice in business behaviour then there would be little to wonder about unethical practices. However, the reality in our business and social interactions is paradoxically inconsistent with the expected ethical standards established. Also, our laws have set down rules or principles of conduct to regulate and guide the affairs of citizens. The company’s Allied Matters Act (CAMA) is one such law setting the principles of conduct or rules of engagement in company business affairs. With these equations firmly in place, there is, nonetheless, a colossal failure in the implementation of sound ethical practices in business. So, the big question is what has gone wrong in ethics and affected significantly to our national development, particularly business practices?
Therefore, by ethical content or principles, we are referring to issues, decisions or actions which contain matters of right versus wrong, fair versus unfair, or justice versus injustice that managers face.
Entrepreneurships is the process of creating something different with value by devoting the necessary time, and effort assuming the accompanying financial, psychological and social risks and receiving the resulting rewards of monetary and personal satisfaction. Entrepreneurship involves 1) Creation process; the creation has to have value to the entrepreneur and value to the target audience. 2) Time and effort; it takes significant amount of time to create something that will be of value both to the entrepreneur as well as the audience. 3) Risk; financial, psychological and social risks; and 4) Rewards of being an entrepreneur: independence, personal satisfaction as well as monetary reward for successful entrepreneurs (Hisrich and Peters, 2002 p10-11). To be able to achieve these, ethical practices are needed so as to win the trust of the people who will be the sole beneficiaries of entrepreneurial actions and activities. So, for entrepreneurs to be successful in their respective businesses and to enjoy business sustainability they must embrace the concept of ethical management of the enterprise.
According to Institute of Business Ethics, ethical management is “The application of ethical values to business behaviour. It applies to any and all aspects of business conduct, from boardroom strategies and how companies treat their suppliers to sales techniques and accounting practices. Ethics goes beyond the legal requirements for a company and is, therefore, discretionary. Business ethics applies to the conduct of individuals and to the conduct of the organisation as a whole. It is about how a company does its business, how it behaves intrinsically.” (www.awics.co.uk and www.awics.eu).
2.2 Business and Ethics
Ethics, whether applied to business, law, medicine, or any other professional practice, is derived from a set of universal values. Some 3,000 years ago, Zarathustra summed up ethics pretty well when he called it “purity of intention, wisdom in utterance, and goodly deeds.” So, ethics is not a recent fad. Most writers on the subject agree on several universal values which underlie ethics and which are found in the writings of the world’s greatest religious traditions. Among these virtues or values, we find honesty and truthfulness; trustworthiness; fairness; respect for others; service; justice; moderation as well as wisdom and prudence (Starcher, 1997).
It is also believed that business ethics is not simply a philosophical concept – it is concerned with decisions. It is obviously concerned with right and wrong. This is usually relatively easy to sort out. We know it is wrong to steal or to kill. More importantly, business ethics seeks answers to real life problems which often involve conflicts of “right versus right” and clashes of moral principles. For example, if an entrepreneur confronts with a choice between bribing officials to obtain government contracts or laying off workers, what should he do? He probably realizes that paying bribes is wrong. However, laying off workers and depriving them of their livelihood is less wrong or less moral than paying bribes? One author defines business ethics as “the study of how personal moral norms apply to the activities and goals of commercial enterprise. It is not a separate moral standard, but the study of how the business context poses its own unique problems for the moral person who acts as an agent of this system” (Matthews, 2015). She goes on to point out that business ethics generally falls into three basic areas of managerial decision making: choices about the law, choices about economic and social issues that are beyond the law’s domain, and choices about the pre-eminence of one’s own self-interest. Since, there are often no right or wrong decisions, business ethics reflects a state of consciousness about moral and human values as well as business obligations which permits sound reasoning on major decisions.
The Holy Bible (Deuteronomy 3:19) says “you shall not steal”. However, it was widely reported that a past president of Nigeria once said that “corruption is not stealing”. With such mental cobweb and disorientation, it can be appreciated that there is disconnection between ethics or ethos as preached by the religions and the psych of some businessmen (whether political or entrepreneurship business). To such businessmen, the end justifies the means; the process or procedure being irrelevant. It is expected that businesses is conducted under a climate that is conducive to ethical behaviour and comply with expected norms, standards and regulations. To arrive at sound ethical behaviours in an organization, integrity and reputation is of essence. The purpose of ethics in business is to direct business men and women to abide by a code of conduct that facilitates public confidence in the products and services. Business ethics, therefore, demands that entrepreneurs, in order to achieve their goals for profit through service or product, must adhere to basic moral rules, because the consequences of failing to do so could be very costly in fines, loss of licensure, or company reputation.
Apart from religious injunctions, our extant laws are replete with regulations aimed at infusing and instilling sound ethics in business transaction. CAMA 1990 is one such Act. Sections 279 and 287 address the issue. Section 279 (1) state that a director of a company stands in a fiduciary relationship towards the company and shall observe the utmost good faith towards the company in any transaction with it or on its behalf. S244 CAMA defines director as “person dully appointed by the company to direct and manage the business of the company”. In furtherance of emphasizing this fiduciary relation of trust, section 280 states that there should be no conflict of duties and interest: section 280 (1): “The personal interest of a director shall not conflict with any of his duties as a director under this Act”. Section 280 (2) “A director shall not (a) In the course of management of affairs of the company; or (b) in the utilization of the company’s property, make any secret profit or achieve other unnecessary benefits. To expatiate on the prohibition of secret benefit by directors, section 287 CAMA states:
- A director shall not accept a bribe, a gift, or commission either in cash or in any kind from any person or a share;
(2) If a director contravenes the provisions of section 287 (1) of this Act, he commits a breach of duty and the company shall recover from the director the actual gift and then sue him;
(3)Where the gift is made after the transaction has been completed in a form of unsolicited gift, as a sign of gratitude, the director may be allowed to keep the gift provided that he declares it in front of the board and that fact shall also appear in the minutes book of the directors;
(4) In all cases concerning secret benefits, the plea that the company benefited or that the gift was accepted in good faith shall be no defence.
It is submitted that there are extent rules regulations and laws to check unethical practices within Nigeria entrepreneurial, business and political regime. What is lacking is the will of those in the authority to enforce the required punishment, sanction or reprimand when a breach occurs. This is the crux of the matter. It can be recalled that an incident occurred where a top executive in the oil sector was removed from office simply because he accepted a gold wrist watch as a gift. This suggests that there is a state of almost complete ethical and moral breakdown which raises questions about the moral value of public officials and enterprise managers in our society. There is a question of whether ethics significantly affect our national development?
It is a popular fallacy to suggest that Nigerians are generically corrupt. Nigerians are corrupt because the system in which they live in celebrates and glorifies corruptly rich people. Corruption and its impact will cease when it is made difficult and inconvenient through strict application of the sanctions without discrimination as to who is involved. This evil for the resolute will of a serious and determined government committed to confront corruption and unethical practices in its entire ramification. This is possible, after all, why do Nigerians who live or travel overseas not exhibit, the same corruption which they do in Nigeria with impunity, unethical behaviour or tendencies. Because they will be apprehended, investigated and adequately sanctioned. One, therefore, to say that the most serious managerial challenge facing Nigeria’s quest for development is the cankerworm of ethics.
2.3 The Importance of Business Ethics to Entrepreneurial Success
As we mentioned earlier, the public perception of a low level of ethics in business is a major barrier to entrepreneurship. How can entrepreneurs become models if the public equates profits with theft? Is this not the moment of greatest need to bring the ethical dimension of entrepreneurship to the attention of the public as well as of the business community? Let us first discuss what is meant by business ethics.
2.3.1 Stages of Ethical Consciousness
There are clearly wide variations in ethical standards between cultures and countries and probably even greater differences among entrepreneurs in a given country. One way of analyzing these variations is to define different levels or stages of ethical consciousness in a business. This approach parallels leading theory of moral development by Lawrence Kohlberg. One of Kohlberg’s findings was that the moral development occurs in a specific sequence of stages regardless of culture. However, to place this in a business context, the levels might be described as follows (Starcher, 1997):
- Stage 1: “Might Makes Right”. Decisions and actions in this first and lowest stage of ethical consciousness are based on very simple physical and material power. It is a very Darwinian existence in which “might makes right”, “survival of the fittest”, and the “law of the jungle” prevail. Activities of the Mafia such as extortion and price fixing enforced by physical threats could be considered to be Stage 1 behaviour.
- Stage 2: “Anything Goes”. Actions in this stage are still very self-centered and materialistic. Entrepreneurs in this stage seek to maximize personal financial gain in a short term by doing anything that produces a profit as long as they do not get caught. Producing, distributing, and selling drugs or pornography may fall in this level. There are also practices such as false representation of products, bribes to government officials, stealing, not paying taxes, false declarations for customs, and failure to respect written or oral commitments. In this stage, actions are taken with little or no consideration for other people or parties. This stage is characterized by such expressions as “let’s make a deal”, “nice guys finish last”, “we have to pay bribes”, and “anything goes as long as one does not get caught”, and ‘we have to lie and cheat for the next five year, and then we will be honest.’
- Stage 3: “Maximize profits short-term”. This stage involves greater conformity to socially and generally accepted business practices. Entrepreneurs seek to maximize profits within the constraints of the law. “Whatever is good business is good ethics”, “follow the leading crowd”, and “that’s the way business is done here” best describes the reasoning of entrepreneurs and business people operating on this level. Short-term growth in sales and profits are the primary performance measures. They are reassured by some leading economists such as Milton Friedman who say that the basic responsibility of business to society is to make profits for themselves and their stockholders. The father of capitalism, Adam Smith, described the free enterprise system in The Wealth of Nations, published in 1776. He argued that the interests of society are best served by permitting each person to follow his or her own self-interest in economic life. We sometimes forget though that Adam Smith was himself a priest and that moral behaviour and the rule of law were already accepted bases for society when he wrote about capitalism.
- Stage 4: “Maximize profits – long term”. A significantly higher level of ethical consciousness is the school of thought that “sound ethics is good business in the long run.” Entrepreneurs look to rules, laws and codes for guidance. Companies like Shell, whose Managing Director in Bulgaria spoke sometimes ago describing why his company in Bulgaria (and in other countries) refused to pay bribes to contractors to complete new stations on time, exemplify this level of behaviour. While the interests of shareholders remains uppermost in the minds of executives, there is equal if not greater concern for doing what is right and what will prove most profitable over the longer term even if other actions might produce greater short-term profits. An increasing number of companies in Western Europe and the United States have codes of ethics which define what they consider to be ethical behavior. Some companies go so far as to appoint an ‘ethics officer’, provide training courses on the ethics code, and build respect of this code into the annual performance evaluations.
- Stage 5: “The Stakeholder Concept”. Reasoning in this stage goes beyond the notion that the purpose of business is essentially to make profits. Companies openly profess to have a social as well as economic mission. Their behavior is influenced by certain universal principles such as justice as well as by legal codes. Profit sharing, community service projects, and philanthropy are examples. There is increasing recognition in the West of the interdependence of various “stakeholders” in the business. By stakeholder is meant any group or individual who can affect or is affected by the achievement of the organization’s objectives. Examples of stakeholder groups beyond stockholders and owners include: employees, customers, suppliers, banks and other creditors, partners whether local or foreign, governments, and communities in which the company operates. A large number of academics have been writing about this “stakeholder concept” for many years, and increasing attention is being given to it by progressive business leaders. The driving assumption of this concept is service to all stakeholders in the business and balancing their respective interests to seek the greatest good for all. The focus is on building and maintaining mutually enabling relationships, which in turn create value for others and thus justify profit. The measures of success are different as well: quality, service, customer satisfaction, community health, team welfare, employee self-realization: these goals are considered important as well as financial results. Some companies have gone so far as to publish regular annual social reports similar to their annual financial reports.
- Stage 6: “Corporate Citizenship”. A yet higher level of ethical consciousness involves redefining the mission of business in society. The World Business Academy and Business for Social Responsibility, both associations and networks of business leaders, are among the principal proponents of this higher level of ethical consciousness. This “social responsibility” school of thought, present in Stage 5 but to a lesser degree, maintains that business has a major responsibility to contribute to the necessary transformation of what they consider to be a very unhealthy society today. Their belief is based on the premise that a business can be healthy only if society around it is healthy and that no other institution in society, including governments and churches, has the resources or the credibility to bring about this transformation. Entrepreneurs operating on this level would seek to achieve certain societal objectives such as community health, job creation, employing handicapped people, and self realization of employees as well as financial success. The growing importance of networks of “social venture entrepreneurs” illustrates how socially desirable objectives can motivate as well as profits.
2.4 Does Good Business Ethics Pay?
So what does all of this have to do with entrepreneurship in developing nations such as Nigeria? Business ethics has a lot to do with profits and survival. As borders break down, as competition increases, as the ability to compete and survive depend increasingly upon quality, faster and more reliable delivery, and customer service, values such as honesty and integrity take on a new significance.
Far from accepting the commonly held theory that a period of unscrupulous and irresponsible personal wealth creation is essential to jump-start failing economies, I maintain that there is an immediate need for entrepreneurs to apply the values described above to their relationships with each of the stakeholders in their enterprise. However, the question remains in the minds of many: “Does good business ethics really pay?” Let’s discuss a few examples of how good ethics can make good business sense in the more competitive environment of a free market economy:
- By developing a reputation for honesty, entrepreneurs can obtain financing from commercial banks and micro-credit facilities more easily and more quickly, and probably on more favourable terms. While it has been perhaps more effective in the past simply to offer a ‘gift’ to a banker in return for a loan, yet, this practice will not last long as banking opens up to private and international banks. Bank has at the top of its list of criteria for making loans “honesty of the client” – even before ability to repay the loan. Even more important, honesty with customers in terms of performance, quality and price will be rewarded by loyalty, repeated orders, and positive word of mouth to introduce new customers. Calculations made of the life-time economic contribution of a loyal customer bear out how important customer loyalty can be;
- Trustworthiness is a key consideration in decisions of foreign partners in licensing, importing or exporting, or franchising. A local entrepreneur is unlikely to find reliable partners abroad unless he can convince them that he is worthy of their trust and confidence;
- Fairness with employees and suppliers can make a real difference in their loyalty, motivation and productivity, as well as in the quality of products and services to customers.
- Respect for others is quickly sensed by customers and will make a difference once customers have a choice of alternative suppliers. It is also very important to demonstrate respect for employees in order to establish an internal climate favourable for good quality and service.
- Justice also has its place in business. For example, suppliers can be real partners for the entrepreneur if they feel they are being treated fairly and with justice, that is, being given a fair price and being paid on time rather than simply being exploited. During the early years of one of the world’s best managed corporations Hewlett Packard (HP), its entrepreneurial president once reprimanded a purchasing agent for negotiating a contract which left no profit for the supplier, and called the supplier to negotiate a fairer contract. Needless to say, that supplier became a very loyal partner and remains today one of the leading suppliers of HP.
Many of today’s entrepreneurs have lived in a corrupt business environment where there was no competition, consumers had no choice, and foreign partners lived under the same system and practiced the same values. It exists also in more developed economies where materialism is rampant and moral values are underdeveloped. So, why entrepreneurs should change today and decide to climb up the ladder of ethical consciousness? Quite simply, and in closing, entrepreneurs’ behaviour and values must change to reflect the radically different requirements for success in the economy emerging from the collapse of the socialist central planning system.
The trends are very clear: moving toward a free market system, privatization of major parts of the economy, new competition in most sectors, deregulation, new trading partners in the West, new market and consumer demands, new environmental constraints, and an increasing demand by the public for more responsible behaviour on the part of business and government alike. This change represents a revolution in the economic and social system, a revolution which is opening up a new world of opportunity for entrepreneurs, but a world in which the requirements for success and the “rules of the game” call for dramatic changes in business practices including good business ethics. Those entrepreneurs who are able to understand and adapt to these changes will create new wealth for themselves and for society as well (Starcher, 1997).
2.5 Factors that Influence Unethical Behaviours
According to Baridam and Nwibere (2008), many factors create a climate conducive to unethical behaviour:
- Lack of clear procedure;
- Personal financial needs;
- Excessive emphasis on short-term revenue over long term considerations;
- A desire for simple “quick fix” solution to ethical problems;
- An unwillingness to take an ethical stand that may impose financial cost;
- Response to the demand of shareholders at the expense of other constituencies;
- Ethical climate of the industry;
- The behavior of man’s equality in a company;
- The behaviors of man’s superiority in a company;
- Failure to establish simple written code of ethics, consideration of ethics solely as a legal issue or a public relation tool.
2.6 Ethical Business Tit-Bits
A successful business is like a well-built house. Good ethics represents a solid foundation. To build a strong successful business, lay the following behaviour over an ethical foundation;
- Punctuality: Be on time at business appointments. If you are late for meeting, you will lose customers and clients, and perhaps, eventually even your business. If you are late or miss an appointment for some reasons beyond your control, beg apologies immediately and graciously.
- Reliability: Just as your customers must be able to count on you to arrive on time, they will need to count on your product or service to perform properly. A successful business is built on customers who keep coming back because the product or service is reliable.
- Courtesy: If you are not courteous and polite, you will turn off customers and business contacts. Advice and support from other business people are extremely important to new business owners, but you will not get them if you are rude.
- Respect: Show respect for your customers and other business people by being punctual, reliable and courteous.
- Communication: Show respect for others and yourself by the way how you speak, and by the way how you listen. The best entrepreneurs are good listeners. Do not use slangs or obscenities.
- Clothing: From the moment they meet you, customers are deciding whether or not they should trust you with their money. Before your product or service can prove itself, you are already being judged by what you are wearing. Thus, entrepreneurs should choose clothes that project the image they want their customers to associate with their business.
- Neatness: Entrepreneurs should always make sure they look clean and neat. Customers are quick to judge people by appearance. Accept this as part of doing business.
- Honesty: Always tell the truth. You will develop a solid reputation that will draw customers to you. Do not lie, steal, or cheat. Make your word your bond and always stand by your word. When you are wrong, own up to it and make good on the deal. Treat others as you’d want to be treated. Do not hire or retain people who do not have integrity. Other employees, customers and vendors will not trust them. That lack of trust is like a virus; eventually they will not trust you either. Make sure no one is selling the company’s values short to make a quick buck. After all, making a bad deal to meet a quota or target is not only unethical, it’s often unprofitable in the end.
- Empathy: Get in the habit of putting yourself in other people’s shoes. This will help you in both selling and negotiating.
- Competence: Be efficient and capable in all your dealings with customer and employees (Nwibere, et al, 2009).
- Honor: Good people are a fundamental part of good ethics. They are also great ambassadors for doing things right. Give special attention to strong performers and people who exemplify the spirit of your organization. Most companies recognize top achievers and producers. Go beyond quotas and sales figures. Point out, and show your gratitude to the people who exhibit exemplary behavior, and who have made sacrifices on your behalf. These are people who have helped you be successful, and you need to acknowledge and honor their contributions publicly, as well as privately.
- Customer focus: A company is nothing if it does not have customers. More to the point, if a company does not produce what people want and will pay for, there is no point to that company. A focus on your customers reinforces the responsibility you have to the market. Your decisions affect your people, your investors, your partners and ultimately, your customers. Serving all of these people is part of your ethical responsibility. Selling your customers short not only risks compromising your ethics, it also risks the long-term health of your company.
- Being result-oriented: You wouldn’t be an entrepreneur if you weren’t focused on results already, but ethics factor into results too. Don’t aim for results at any cost. Work on achieving your results within your company values. Results should be attained in the context of developing something that customers want, and producing and delivering it at a price that is fair to all the parties involved. Good managers clearly identify the results they expect, then support their employees and help them achieve those results. They provide feedback on performance in an effort to help the employee achieve their potential, and the results the company needs for success. In a good company (and an ethical company), results are more than just numbers. They are benchmarks and lessons for the future as well as goals for the present.
- Risk-taking: So far, you might be feeling that ethical companies are timid and mousy, scared of doing the wrong thing. That is simply not true. Organizations that thrive, prosper and grow do so by taking risks. They do not stick to the safe path. Great companies innovate, they think “out of the box”, and they try new things. They re-invent themselves and they reward the risk-takers. As long as you stick to your philosophical guns, risk-taking poses no threat to your ethics. Great companies attract employees who are willing to take risks, and they encourage, support and reward them for taking calculated risks. When the risks pay off, they share the rewards with those who produced. When the risks do not pay off, they take the time to analyze what went wrong, and learn what to do better next time. Think about this; who would you rather be surrounded by when you are taking risks: people who you trust and respect, or the sharks and snakes?
- Passion:Great organizations are comprised of people who have a passion for what they are doing. These are people who are working for you for the thrill and challenge, not merely putting in time to collect a pay-check. They are excited, driven, and believe that their work and efforts can make a difference. Without the passion burning within them, people put in a minimal effort, getting paid and going home. These people are role models to others: why work so hard when you can come in late and leave early? People can demonstrate their excitement in many ways, so be aware that extra effort on a project or working on the weekend shows passion as much as enthusiastic cheerleading.
- Persistence: People in awesome organizations have the will to persist. They will keep working even when results are not what they hoped, or when customers refuse to buy. Their persistence is tied to their passion for what they are doing and a belief that this group of people, this company, has the best chance of “making it” of any company they could join. And so, they work harder, they continue to take risks. They behave with honor and integrity. They keep their focus on the customer’s needs and wants. And, they are not satisfied until they achieve the goals and results that are expected. You, as the leader, need to put a lot of time and effort into hiring people who share these values. Talk to your team about the importance of these values to the strategy, plans and decisions made. You need to clearly draw the line which separates “what’s allowed” from “what’s not allowed” in the company. And, when someone steps over the line, the leader needs to tell them they stepped over. Depending on the person (and the incident), give them another chance and get them to change their behavior, or let them go. Taking no action is unacceptable. Sticking to your beliefs might be the ultimate representation of good ethics. And not surprisingly, it doesn’t just make good sense from an ethical standpoint, but it makes great business sense (Matthews, 2015).
3.1 Developing Ethical Codes and ethical dimensions of entrepreneur
Ethical code must be carefully written and tailored to individual companies’ philosophy. Most ethical codes address subjects such as employee conduct, community and environment, shareholders, customers, suppliers, contractors, political activity and technology. To make ethical code effective, Nigerian managers must;
- Involve everyone, who has to live with it in writing the statement;
- Keep it short and therefore easily understood and remembered;
- Have a corporate statement, but also allow separate statements by different units throughout the organization.
Ethical codes should always match with practice, or it becomes a ridiculous exercise in futility. When reality differs from the statement, the statement becomes a joke to employees rather than a guiding light; e.g. when a motto says “people are our most precious assets” but in fact, people are treated poorly.
3.2 The Ethical Dimensions of Entrepreneurial Action
At the societal level, entrepreneurship significantly influences the sort of lives we will live in the future. To the extent that our lives are shaped by market activity, changes in the way we will live are driven by entrepreneurs. These visionaries create and commercialize new products and services for which there has not been in the market previously. Furthermore, the ethical influences of entrepreneurship also have more immediate and individual impacts. The very process of creating new products, services and markets is a journey with its own enormous ethical impact on the stakeholders immediately affected by the entrepreneur’s actions. Such groups of individuals support the emerging venture, place much at stake and put themselves in a position of great vulnerability to the entrepreneur. Relationships formed and developed under such circumstances are necessarily imbued with strong ethical dimensions in terms of the roles and responsibilities.
Given the tremendous complexities involved in operating in new, untested areas and at the edge of knowledge, entrepreneurship requires entrepreneurs to make important, and as we have seen, often ethical, decisions under conditions of extreme uncertainty, ambiguity and ignorance. As a result, the entrepreneurial process places extraordinary ethical demands on entrepreneurs, whether they realize it and act on it or not.
In sum, entrepreneurship has ethical concerns richly woven throughout. This is not to say that entrepreneurship is an inherently “good” process or that all entrepreneurs are inherently good moral agents; rather, it is to face quite squarely the reality that entrepreneurial action leads unavoidably to ethical consequences that can be either good or bad, and whose significance we cannot afford to ignore (Starcher, 1997).
3.3 Managerial Implications
The Nigerian manager of today needs to create an ethically healthy climate for his or her employees, where they can do their work productively and be able to objectively differentiate right from wrong. The idea that commitment to ethical decision-making could be essential to corporate success should be emphasized within the organization. This will have the effect of shifting the focus from individual development towards organizational interests. With the development of a more ethical organizational culture, the question of ethics ceases to be an individual issue, instead of becoming a corporate responsibility.
3.4 Ethical challenges Entrepreneurship May face
In their quest to be socially responsible, contemporary organisation seeks to concurrently be profitable, obey the law, engage in ethical behaviour, and give back through philanthropy, they will face new and continuing ethical challenges. According Ordu and Okafor, (2014), the following pose challenges to ethical management in organisations: Organisational culture, presentation, turnover and perception .These are further explained below.
3.4.1 Organizational Culture
As the business world continues to become more global, you will find a diverse set of cultural backgrounds in the staff composition. These can be differences in religion, nationality or beliefs based on life experiences. Ethics can often come into conflict with cultural backgrounds because what is perceived to be ethical in one nation may offend those members of staff that come from a different culture. This can pose a great challenge. It is therefore important to take into account not only the broad range of cultures within organization’s staff when developing and implementing business ethics, but also need to consider the cultures you will be doing business with.
Part of the problem in implementing a corporate ethics policy is a potential lack of understanding by the people implementing it, according to corporate policy expert James O’Toole as quoted on the Markkula Centre for Applied Ethics website (www.scu.edu), one can create a comprehensive ethics policy for a company; but if the managers and trainers implementing the policy are not aware of the possible nuances involved in implementing it, then there can be problems arising due to misinterpretation. For example, creating an in-depth presentation on one particular set of religious holidays, while glossing over others, can offend some people. The written policy many be comprehensive, but the presentation can cause problems.
Employee turnover can create gaps in the ethics policy if it is not reviewed on a regular basis. Giving new employees printed information to review without backing it up with extensive ethics training can allow the information to be misinterpreted or forgotten. Without constant reinforcement of the ethics policy, it can become weakened due to employee turnover.
How the public perceives the company’s ethics policies can affect the future success of the organization. It can be difficult to gauge how the public will react to the way a company treats its employees, the charitable contributions a company makes and how the company sells and presents its product to the public. The shifting wave of public opinion can often become a driving force with the ethics policies, but trying to keep up with public perception can become a difficult and frustrating process. Other factors that may also cause challenges are Technological advancements, that is Information and Communication Technology (ICT) boom, Moral shifts in society etc.
4. Conclusion and Recommendations
Considering the fact that contemporary organization faces with many challenges in upholding ethical management practices, practitioners and managers are expected to embrace options such as accountability and responsibility, revitalizing the culture of excellence, encouraging the establishment of ethical organization, orientation and a host of others as good measures to forestall standard practices in Nigeria. This measure will not only make contemporary organization to be socially responsible but would assist them to also engage in ethical behaviour and practices, obey existing laws and identify and practice what is morally right and wrong.
Above all, there will be emergence of ethical management practices as well as growth and attainment of organizations in Nigeria.
4.1 Way Forward
There are a number of things to be done to encourage and sustain ethical management practice in contemporary organisations. Some of the things as a way forward are enumerated below:
- Accountability and Responsibility. Getting management to be more accountable for their activities and actions. Holding employees accountable for their actions; taking responsibility for the outcomes of one’s own actions, questioning authority if unethical behaviour occurs.
- Designing an ethical management index and Integrity testing. Integrity tests are one measure for encouraging the observance of an organisation’s Code of Ethics / Code of Conduct. Integrity testing is generally employed by the employee’s agency or an anti-corruption body, to detect individuals who are prepared to accept a bribe, or other inducement, to act corruptly by doing (or not doing) something that they are required to do in their position. This will lead to general development of ethical behaviour in individuals, groups and organization (Ordu and Okoroafor, 2014).
- Regulation – regulatory framework: both governments and organisations set out the Policies and Codes. Strictly following written codes of ethics, the ethics code serving as more than just window dressing, enforcing all ethical behaviours—not just the ones that are high profile. Sanctioning offending organizations will go a long way to encourage ethical management.
- Recruitment and Selection: Using ethical hiring practices, hiring employees with strong ethical values, emphasizing ethics when recruiting new employees, searching for ethical applicants as well as ethical managers.
- Orientation and Training: Requiring attendance at ethics training, using the things employees learn in ethics training when performing their jobs, discussing ethical issues with new employees as part of their initial orientation.
- Reward and Punishment Systems: Providing positive feedback and rewards for making ethical decisions, measuring and tracking ethical behaviours, disciplining employees who violate ethical standards. Strict sanctions to individuals and organizations that breach business ethics, and wielding the big stick if necessary.
- Decision-Making: Taking ethical issues into account when making decisions, discussing ethical concerns at meetings, talking about whether something is the “right thing to do or not.
- Revitalising the Culture of Excellence: especially in some countries where traditional values form part of the business ethics. For example, in African nations.This calls for the restoration of African traditional values. Africa had a culture of excellence which modernization and civilisation had robbed off our social fabric. This would mean that private and public organizations would have to create in their members a sense of total belonging. The honest, considerate, truthful respectable, accountable emphasized (Lawal, 2002).
- Moral suasion – This approach calls for the launching of massive propaganda and campaign calling for disciplined behaviour and practices of sound moral values. This should be championed by individuals, organization such as NGOs, governments and its agencies, religious houses.
- Encouraging the establishment of Ethical organisation – the body shop (a cosmetics company) example. According to Kersey (1998: 231-234), Anita Roddick created the body shop as “a caring corporation” with over 2,600 stores with net worth of over $ 500 (as at 1997) and holds ethical principles at the core of the entire corporation. Some of the highlights of the body shop, as Kersey stated includes: is a powerfully effective vehicle for social and environmental awareness and change; products are out in a cruelty – free and environmentally responsible manner; raw materials harvested by a group of people in underdeveloped region, thus generating income for them; launched campaigns supported by loyal customers such as save whales, ban animal testing in the cosmetic industry, help the homeless as well as protect the rain forest. Others are: in store, customers are encouraged to register and vote, recycle their plastic containers, and bring their own shopping bags to save paper and plastic. And all these have had the shop to be tagged “the body and soul shop” as customers emerge not only “looking good but also feeling good” (kersey, 1998).
- Alessandra, A. and O’Connor M.J. (1996).The Platinum Rule; Discover the four Basic Business Personalities and how they can lead you to Success. Warner book: New York.
- Andre, C. and Valesquez, M. (1990). Justice and Fairness. Issue in Ethics, Vol. 3, No. 2.Retrieved April 10, 2006 from http:I/www.scu.eduJethics/publications/iie/v3n2.
- Babalola, S.S. (2005). Positive Leadership: Antidote of Fraud to Fraudulent Practice in Corporate Organizations. Quoted in Adebayo Olukoshi, et al. (eds.) Beyond the State: Nigeria’s Search for Positive Leadership. University of lbadan Press, Ibadan.
- Botes, A. (2000). A Comparison between the Ethics of Justice and the Ethics of Care. Journal of Advanced Nursing, Vol. 32, No5, pp. 107-1075. Crossref
- Burke, F (2005). Social Ethics. Theological Studies, Vol. 66, No. Pp.137-158.
- Carroll, A.B. (2000), Ethical Challenges for Business in the New Millennium: Corporate Social Responsibility and Models of Management Morality. Business Ethics Quarterly, Volume 10, Issue 1. pp. 33-42. Crossref
- Geva, A. (2000). Moral Decision-Making in Business: A Phase-Model. Business Ethics Quarterly, Vol.4, 773-803. Crossref
- Jana Matthews (2015) Building an Awesome organization (http://janamatthewsgroup.com/) accessed 9/09/2015.
- Kamberg, M. (2001).Making Ethical Business Decisions. Women in Business, Vol. 532, pp. 22- 25.
- Kersey, C. (1998), Unstoppable: 45 Powerful stories of perseverance and Triumph from people just like you. Sourcebooks Inc, Naperville, Illinois.
- Landrum, N.E.; Howell, J.P.; and Paris, L. (2000).Leadership for Strategic Change. Leadership and Organization Development Journal, Vol. 21, pp.150-56. Crossref
- Lawal, A.A. (2002), Enhancing polytechnic education through culture of excellence. In Adeseye et al (Eds.), Polytechnic education in Nigeria: Problems and prospects (pp.246-256). Lagos: Bolufemi Enterprises
- Marriotti, S. and Towle, T. (2006).Entrepreneurship: How to Start and Operate a Small Business: A Guide for the Young Entrepreneur. 10th ed. The National Foundation for Teaching Entrepreneurship, New York.
- Moberg, D.J. and Vales quez, M. (2004).The Ethics of Mentoring. Business Ethics Quarterly, Vol. 14, 95-122. Crossref
- Ordu, P.A and Okoroafor, S. (2014). Sustaining Ethical Management Practice in contemporary organization: Challenges and Mitigations in Nigeria. EBSU Journal of Contemporary Management, Vol. 2, No 1, pp 43-58.
- Sandel, M. (1982). Liberalism and the Limits of Justice. Cambridge University Press, Cambridge.
- Stainer, L. (2004).Ethical Dimensions of Management decision-Making. Strategic Change. Vol. 136, 333-342. Crossref
- Valesquez, M.; Andre, C.; Shanks, TC.J. and Mey M.J. (1987). ‘What Is Ethics? Issues in Ethics.”Markula Centre for Applied Ethics, IE VI, NI.
- Valesquez, M; Andre, T.; Shanks, S.J. and Meyer, M.J. (not dated) Thinking Ethically: a framework for moral decision-making.”Markula Center for Applied Ethics. Retrieved May 19, 2005 from thinking.html.
- Wikipedia, (2007) “Business Ethics.” Free Encyclopedia.
- Wikipedia, (2007) “Ethics”. Free Encyclopedia.
- awics.co.uk accessed on 8/11/2014
- ee.ed.ac.uk accessed on 8/11/214
- scu.edu/ethics/practicing/focusareas/business/ethics-human-resources.html accessed on 8/11/2014