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BUSINESS
ETHICS AND ORGANIZATIONAL PERFORMANCE
(A
SURVEY OF SELECTED COMPANIES IN RIVERS STATE)
ABSTRACT
This study
focuses on business ethics and organization: of selected companies in rivers
state. Factors influencing unethical behaviour such as formal company policy,
ethical climate of the industry, ethnic content, behavior of one’s equal,
behaviour of a person’s superior etc were examined. Questionnaire were
administratered and analyzed as the data collected were analyzed with the use
of spearman’s correlation coefficient to determine the measures of the degree
of relationship between two sets of ranked observation. It was however
concluded that ethnics is the science of conduct, hence an integral part of
business organization. Organizations should put in place code of conduct,
statement of moral principles and maintain high moral standards and values to enhance
overall organizational performance. Amongst four findings were first that there
is a significant relationship between professionalism and profitability. This
is because high ethical standards are expected from managers of business which
will enable them to perform their duties devoid of mischief, illegal and
questionable practices in the organization. Second, that there is a significant
relationship between morality and return on investment. This is because
morality is concerned with the principles of right and wrong behaviour and the
degree to which an attitude is seen as the right or wrong is what morality
stands for. Based on the findings of this study, the researcher recommends thatL1) company
must have ethnical code and conducts that will formally direct and guide their
employees. (2) Corporate policies that will build a culture of honesty, trust
and integrity in the work environment should be formulated. (3) That all forms
of reposition and discrimination in the place work should be avoided. (4) Companies
should insist on professionalism. It was finally recommended that companies
should put in place ethical programmes that will serve as a check on the
ethical conduct of the organization members.
TABLE OF CONTENTS
Title Page i
Declaration ii
Dedication iii
Certification iv
Acknowledgment v
Abstract vi
Table of contents vii
CHAPTER
ONE: INTRODUCTION
1.1 Background
of the study 1
1.2 Statement
of the study 5
1.3 Purpose
of the study 8
1.4 Research
questions 9
1.5 Research
hypotheses 9
1.6 Significance
of the study 11
1.7 Scope/limitation
of the study 12
1.8 Definitions
of terms 14
1.9 Organization
of the study 15
CHAPTER
TWO; REVIEW OF RELEVANT LITERATURE
2.0 Introduction 18
2.1 Business
ethnics 19
2.1.1 Why business ethnics 20
2.1.2 Business and ethnics 21
2.2 Ethnics
of finance 27
2.3 Ethnics
of human resources management 28
2.4 Ethnics
of sales and marketing 31
2.5 Ethnics
of production 35
2.6 Contemporary
views of business ethnics 36
2.6.1 Differing
opinions regarding business ethnics 37
2.7 Ethical
principles in business 38
CHAPTER
THREE: RESEARCH METHODOLOGY
3.0 Introduction 50
3.1 Research
design 50
3.2 Sampling
procedure/sample size determination 52
3.3 Data
collection methods 54
3.4 Operational
measures of variables 55
3.5 Test
of validity and reliability 56
3.6 Data
analysis techniques 57
CHAPTER
FOUR: DATA PRESENTATION AND ANALYSIS
4.0 Introduction 60
4.1 Questionnaire
distribution and collection 60
4.2 Data
presentation and analysis 61
4.3 Test
of hypotheses 65
CHAPTER FIVE: DISCUSSION, CONCLUSION AND
RECOMMENDATION
5.0 Introduction 75
5.1 Discussion
of findings 75
5.2 Recommendation 77
5.3 Implication
for research findings 77
5.4 Conclusion 78
5.5 Suggestion
for further studies 79
Bibliography 80
Appendices
Questionnaire letter
Questionnaire distributed
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Over
the years, a great deal of research has focused on business ethnics. Like many
constructs in management, business ethnics. Has been conceptualized and
measured in several ways. Common to all the conceptualizations of business
ethics found in the literatures in a link with ethical principles and morals or
ethical problems that arise in a business environment. previous studies have
also demonstrated that business ethics is positively related to the process by
which good conducts are applied in business (Machan), 2007:38). In addition,
Watson (2003:56) stated that business ethics involves the exhibition of high
level of integrity in business dealings, and in must apply to all aspects of
business conduct which must be relevant to the conduct of individuals and
business organizations as a whole.
According
to Nwachukwu (2006:18), ethics is seen as the “Science of conduct”. It involves
learning what is right and doing the right thing. Thus, when discussing the
rules and principles that define right and wrong conduct, one is dealing with
ethics.
Most
researchers of business ethics treat the business firm as exhibiting good
ethics when the organizational members known what is right or wrong in the
workplace and doing what is right. The process of exhibiting good ethics is
seen as the principles, policies and values that serve as operational
guidelines for individuals and organizations for decisions concerning what is
morally right and or wrong (Nwachkuwu, 2006:18). To Jaja and Okwandu (2006:51),
ethics is the science relating to moral action and one’s value system. Managers
envision ethics as dealing with principles or morality and what is wrong or
right (Jaja and Okwandu, 2006:51). Ethics is concerned with motives and
attitudes and the relationship of these attitudes to the good of the
individual. Ethics has to do with action we wish people would take, not actions
they must take. Then, values are interwoven with ethics, values are personal
beliefs about the truth and worth of thoughts, objects from the laws as ethics
may be distinguished from the laws. Ethics are internal to one, and it looks to
the good aspect of an individual rather than society as a whole, and concerns
the “why” of one’s actions. The law comprises of rules and regulations
pertinent to society as a whole, and is external to one and concerns one’s
actions and conduct. What did the person do or fail to do as opposed to why did
the person act as he or she did? These are issues in ethics (Jones and Parker,
2005:19).
Ethics
concerns the good of an individual within society where law concerns society as
a whole as opposed to individual in society. Laws can be enforced through the
courts and states while ethics are enforces via ethics committees and
professional codes (Jaja and Okwandu, 2006:51; Seghin, 2003: 49; and Jackson,
2004:16). Ethics have also been an integral part of business. Throughout
business, one can find codes of ethics, statement of moral principles, treatise
on maintaining high levels, and recorded discussion of moral and ethical
issues.
Production
of quality product fit for human consumption is human activities for business.
These human activities and how society views them directly affects the morals,
customs and beliefs of human kind. Business ethics provide the standards for
professional behaviour and are the study of principles of right and wrong
conduct for entrepreneurs and manager. Ethics promote the study of morality,
mental judgment and moral problems.
Consequently,
the study of business ethics provides business owners with the parameters what
is acceptable and unacceptable behaviour. It provides the standard against
which people can compare their behaviour. It provides a focus and common goal.
It helps business owners to deal with managerial mischief which includes
illegal, unethical or questionable practices of individual managers or
organizations. It is a common believe that organizations have goals or
objectives which must be accomplished to achieve goals. All organizations are
purposive. They are established to accomplish an objective. Individuals in an
organization work in order to help accomplish these objectives (Nwachukwu,
2006:11).
These
individuals wish to accomplish their own goals through the organization when
the goals of the individual and the goals of the organization are the same, we
have goal congruency. A company may have many or multiple objectives. The
objectives could be stated to cover major operation responsibility areas such
as, shareholders, customers, employees and society, and joint venture partners.
These goals cover the major stakeholders and they must be achieved through
positive indices that indicate organizational performance, such as return on
investment, sales volume, profitability and profit margin among others gap this
study explores to analyze the interactive, between the dimensions of business
ethics and organizational performance. Hence, this study is intended to examine
“Business Ethics and organizational performance with focus on selected
companies in Rivers State.
1.2 STATEMENT OF THE PROBLEM
Business
ethics has been the focus of many studies in the management literature over the
last 25 years. This attention is likely due to several reasons, the control of
professionalism in business practice, the determination of the main aim which
determines the fundamental purposes of a company, issues regarding the moral
rights and duties between a company and its shareholders, and ethical issues
concerning relations between different companies as well as the corporate
social responsibility of the firm in relation to how ethical rights and duties
existing between companies and society is debated (O’neiil, 1998:27).
Specifically, discussion on ethics in business is necessary because business
can become unethical, and there is plenty of evidence today on unethical
corporate practices.
Even
Adam Smith (1920:13) opined that “people of the same trade seldom meet
together, even for merriment and diversion, but the conversation ends in
conspiracy against the public or in some contrivance to raise prices”. Business
does not operate in a vacuum. Firms and corporations operate in the social and
natural environment. by virtue of existing in the social and natural
environment, business is duty bound to be accountable to the natural and social
environment in which it survives (Viraghalmy, 2003:31).
Irrespective
of the demands and pressures upon it, business by virtue of its existence is
bound to be ethnical for at least two reasons. One, because whatever the
business does affects its shareholders, and two, because every juncture of
action has trajectories. One of the conditions that brought business ethics to
the fore front is the demise of small scale/high trust and face to face
enterprises and emergence of huge multi-national corporate structures capable
of drastically affecting everyday lives of the masses. Thus, the overriding
assumption is to ascertain how professionalism in business practices can be
developed? In what ways can individual’s behaviour in corporate bodies be
ascertained? Identification of the
abilities and skills of each employee in the company, ascertaining how the
employee is capable of working with other colleagues given that behaviour,
structure, and processes are all crucial to the overall and successful
operation of a company while working with people of diverse cultural
backgrounds.
Based
on this, it will be necessary to examine the ethical climate of the
organization. The ethical climate of an organization refers to the process by
which decisions are evaluated and made on the basis of right and wrong. When
people make decisions that are judged by ethical criteria, these questions
always seem to get asked why did he or she do it? Good motives or bad ones? His
responsibility or someone else’s? Who get the credit, or the blame? So often
responsibility for an unethical act is placed squarely on the individual who
comments it but the environment has a profound influence, as well. (Baridam and
Nwibere, 2008:28). Thus, the problems to be investigated in this study will be
to examine how professionalism, a dimension of business ethics affect profitability,
cans which is a dimension of organizational performance. In what ways can value
system enhance the realization of sales volume? To what extent can morality
influence return on investment? How can rules affect profit margin? Based on
this, the study will explore the interactive relationship of the dimensions of
business ethics and organizational performance.
1.3 PURPOSE OF THE STUDY
According
to Borgerson and Schoreder (2008:96), evidences has shown that business ethics
is a form of applied ethics or professional ethics that examines ethical
principles and moral or ethical problems that arise in a business environment.
applied ethics is a field of ethics that deals with ethical questions in many
fields such as medical, technical, legal and business ethics. Consequently, the
man objectives of this study are to:
1. Investigate how professionalism can
influence profitability.
2. Identify the effect of value system on
sales volume.
3. Examine
the extent to which morality can influence return on investment.
4. Ascertain
how rules can influence profit margin.
5. Identify
the common conceptualizations of business ethics within the Nigerian work
environment.
6. Investigate
the common conceptualizations of organizational performance within the Nigerian
work environment.
1.4 RESEARCH QUESTIONS
In
view of the objectives of this study, an attempt will be made to address the
following research questions.
1. What
is the relationship between professionalism and profitability?
2. To what
extent can value system affect sales volume?
3. Does morality
influence return on investment?
4. What is
the relationship between rules and profit margin?
1.5 RESEARCH HYPOTHESES
Using
the literature review, conceptual, framework, and the research question as the
backbone to the study, the following hypotheses were formulated.
H01:
There is no relationship between professionalism and profitability.
H02:
There
is no relationship between morality and return on investment.
Figure 1.1 Conceptual Frameworks
Business Ethics Organizational
Performance
Source: Survey Data, 2010
1.5.1 OPERATIONAL DISCUSSION OF
THE CONCEPTUAL FRAMEWORK
The
conceptual framework seeks to ascertain the interactive relationship between
the measures of business ethics and organizational performance. Business ethics
is a decision involving choosing between wrong or right, and accepting the
right one. It involves moral principles and high level professionalism to avoid
unethical business activities. Hence, morality which is the process of adhering
to what is good, and professionalism, which is the exhibition of high work
standards are the measures of business ethics. On the other hand,
organizational performance is the level at which the achievement of a firm are
identified by the use profitability index and return on investment as score
cards to ascertain the degree to which a company can carry out its activities
and realize the set objectives. Thus, profitability, which is the rate at which
revenue, is greater that expenses, and return on investment, which shows how
well corporate resources are used to achieve set objectives by efficient and
effective management of corporate resources are the measures of organizational
performance.
1.6 SIGNIFICANCE OF THE STUDY
This
study is carried out with a view to increasing the wealth of knowledge
accumulated so far on the subject matter, business ethics and organizational performance.
The study will also expose the objectives of the firm with respect to how
business ethics is applied in the decision making process of a company in order
to achieve set goals which the realization of the expected performance for
proper competitive advantage.
In
addition, Nigeria organizations, businessman and women, students, resources
owners, and lecturers in management will stand to gain a lot as the study will
contribute immensely to their wealth of experience in the area of business
ethics, and it will stimulate thoughts in creative minds as a basis for further
research.
1.7 SCOPE/LIMITATION OF THE STUDY
The
study is supposed to focus on the activities of selected companies in Rivers
State from 1985 to 2010 in terms of business ethics and organizational
performance. Specifically, the study will investigate selected companies in
Rivers State of Nigeria, and they include Rivers vegetable oil company limited,
Dutil Prima Nigeria Limit ed, Epenal Boats
Builders, Nigeria Limited, first Aluminum Nigeria Limited, and New Engineering
Nigeria Limited.
However,
in the process of carrying out this study, the researcher encountered some
limitations and constraints. A limitation would be any constraint beyond the
ability of the control of the researcher that may affect the internal validity
of the study. The internal validity of an experiment is the extent to which
extraneous variables have been controlled by the researcher, so that any
observed effect can be attributed solely to the treatment of the variable
(Gall, et al, 1996:96).
This
study is supposed to cover selected companies operating in Rivers State of
Nigeria so as to collect adequate data on the interactive relationship of
business ethics and organizational performance. This intended scope could not
however be attained due to cost of collecting data, and considering the time
available for the research.
The
study, therefore, will cover the major headquarters of the twenty-three local
government areas of rivers state: Okrika, Bonny, Port Harcourt, Opobo, Bori,
Omoku, Sakepenwa, Nchia-Eleme, Okechi, Kpor, Rumuodomanya, Abua-Central, Ngo,
Ogu, Eberi-Omuma Isiokpo, Abonnema, Ahoada, Buguma, Akinima, Degema, Afam and
Emohua. This is based on the spatial distribution of companies in Rivers State
of Nigeria, which shows a high concentration of these companies in a few
administrative and urban duties. Data collected from the companies in these
headquarters of local government areas were generalized to be a true
presentation of the other parts of Rivers State not covered in this study.
Another
limitation was the attitude of most managers of the companies towards giving
out information in good time. Besides, most of the managers are very reluctant
to part with information about other jobs or giving vital information to
competitors. All these frustrated the efforts of the researcher to retrieve the
entire questionnaire that were administered. These limitations not within-standing,
the sample technique adopted for this study will provide valuable findings that
will make it add some information to the already existing body of knowledge.
1.8 DEFINITION OF TERMS
To avoid possible confusion, ten terms will be
operationally defined.
Business
The
sum total of all activities involved in the production of goods and services
for profit.
Ethics
Science relating to moral action and one’s
value system.
Business Ethics
A
professional ethics that examines ethical principles and moral problems in the
business environment.
Organizational
Connected
with a company
Performance
A
means of accessing results.
Organizational Performance
The
indices indicating the achievement of corporate goals.
Professionalism
The
degree to which work standard is highly regarded.
Profitability
The excess of revenue over expenditure
Morality
The extent to which good will be chosen for
bad
Return on Investment
An
indication of how well resources are used effectively to generate profits.
1.9 ORGANIZATION OF THE STUDY
The
study is organized into five chapters. Chapter one deals with the introductory
aspect of the study, which is the background of the study, statement of the
problem, purpose of the study, research questions and research hypotheses.
Others are: significance of the study, scope/limitations of the study,
definition of terms and organization of the study. Chapter two deals with the
review of related literature on the subject matter. Chapter three attempts to
describe the research design, sampling procedure/sample size determination,
data collection method, operational measures of the variables, test of validity
and reliability, and data analysis technique. Chapter four deals with the
presentation and analysis of data. And, chapter five presents the discussion,
conclusions, and implications of the research findings, recommendations and
suggestions for further research.
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