International Journal of Management (IJM) InternationalJournal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online) Volume 1, ISSN

SN 0976 Number 2, Aug - Sep (2010), IAEME 6502(Print), ISSN 0976 6510(Online) Volume 1, Number 2, Aug - Sep (2010), pp. 164-173 IAEME IAEME, http://www.iaeme.com/ijm.html

IJM

EXAMINING THE SUSTAINABILITY OF ETHICS IN BUSINESS: AN ACADEMIC PERSPECTIVE

Jagannath Mohanty Assistant Professor Institute of Management Technology, Nagpur E-Mail: jagmohanty@rediffmail.com Bhabani P Rath Professor & Head, Department of Industrial Relations & Personnel Management Berhampur University, Berhampur

ABSTRACT:
The ethics of business practice became the subject of growing social and political debate in the past two and a half decades. The revelations of transgression by businesses and Institutions, time and again has led to debates and dilemmas on the principles and practices of corporations. Large scale human and natural disasters, such as Bhopal tragedy, Chernobyl disaster, fall of Enron, major accounting frauds in Satyam, the illegal mining activities, incessant felling of forests in name of economic development and countless such instances have reiterated the debate as to Can Business and Ethics go Hand in Hand can they survive together or one will disappear in oblivion, most possibly the latter. The issue is not as to how much have been taught and thought on Ethics but the question is about conviction among the people to see and follow through it. Despite being taught in every B School, Business Ethics has never become obvious for the managers and policy makers. This paper aims at examining the relevance and sustainability of ethics in academia and business, looking into the vast cultural drifts taking place both in academia and the corporate. The paper would categorically focus on academic challenges in making ethics a practice beyond the four walls of the classroom. The paper would also look into the possible causes and consequences of a long term avoidance approach to ethics in business.

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INTRODUCTION:
Managerial ethics is defined as the systematic study of right and wrong, good and bad conduct on the part of those responsible for achieving organizational objectives (Kreitner and Rief 1980). The increase in international business in the last couple of decades along with with renewed concerns about the ethics of business activity has created a need on the part of business firms for guidance in international business ethics (Korine and Gomez, 2002). (Dercks, 2001:346) notes that ". . . corporations across the world have been forced to come to grips with the costs and consequences of unethical behavior," but as Maynard (2001) cautions, there is "no true global consensus on what is morally questionable." Weiss (2003) notes that the connected global economy is now a standard consideration for business people The role of academics in providing guidance in this era of globalization has been discussed by Bowie (2001) who suggests a key role for academics to develop partnerships with non academics. Similarly, DeGeorge (1994) indicates that academic focus in the area of international ethics is underdeveloped: "Business ethics is still a young field and its international dimensions have scarcely been raised, much less adequately addressed." In the contemporary business environment, the ethical limits are being constantly pushed leading to a myriad of problems. In an alarming survey consisting of 1,300 employees and managers, 48 percent admitted to practicing some form of unethical conduct in the workplace (Mathis and Jackson, 1999).

ETHICS AND ACADEMICS:

Indeed it is difficult to trace the exact point in time a particular field of study emerged, both the fields of management as well as business ethics appear to have only recently become formal fields of study. For example, according to (Bluedorn 1986, p. 442) in his introduction to a special book review section on the classics of management in the Academy of Management Review, around 100 years [ago] . . . management began as a discipline. The emergence of the management field, according to Bluedorn, may have commenced upon the delivery by Henry Towne of his paper The Engineer as an Economist to a meeting of the American Society of Mechanical Engineers in 1886.

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Townes paper made a resounding call for both management research and education (Bluedorn, 1986, p. 442). While the history of ethics in business is a long one, going back to the beginning of business (De George, 1987, p. 201), the academic field of business ethics appears to have emerged even more recently. According to De George (1987, p. 203), By 1985 business ethics had become an academic field, albeit still in the process of definition. As his evidence, De George points out that by 1985, there were already hundreds of university business ethics courses, enormous textbooks, scores of casebooks, numerous business ethics centers, as well as conferences taking place. Today, on just about every business school campus, one can find courses in either subject, however, business ethics academics continue to face scepticism as to the legitimacy and practicality of their newly emerged field (Swanson, 2005). However, recent research indicates that there has not been a significant shift in the balance of the business studies curriculum. (Smith et al. 1994) have reported a very limited response of both undergraduate and postgraduate business and management studies in the provision of discrete ethics-based courses. Where courses in business ethics or corporate responsibility do exist they are invariably offered as options remaining firmly confined to the periphery of the curriculum. The core curriculum of business studies is still dominated by subject or functional study which excludes debate on the values of the business system. (Tasker and Packham, 1993) and (Wolfe, 1993) comment that the trend towards ethical awareness has done little to disturb the orthodoxy of the free market within the business curriculum.

IMPACT OF ACADEMICS ON ETHICAL CONDUCT:

There presently exists a great deal of interest in the issue of the ethical perceptions of business students (Knotts et al., 2000; Kochunny and Rogers, 1994; Merritt, 2002), no doubt because the college experience has a long-term impact on the development of students values (Pascarella and Terenzini, 1991; Pascarella et al., 1988) and business schools are training future business leaders (Dalton et al., 1994; Etzioni, 2002; Merritt, 2002). Since one who is ethical is also moral, such terms are commonly used interchangeably. Further, if an individual values a certain mode of conduct more highly than another, or others, that person will tend to behave accordingly. According to

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Rokeach (1973), there are two types of values, terminal values and instrumental values. Terminal values are concerned with a goal or outcome, describing end-states of existence (e.g. freedom, equality, self-respect). Instrumental values are concerned with a means to a goal, describing desirable modes of conduct (e.g. honest, ambitious, independent). Rokeachs instrumental values are in line with what Maccoby (1976) calls character traits, and these terms may also be used interchangeably. Values (i.e. traits) are, therefore, a useful investigative tool. Based on the work of Kohlberg (1981, 1984), Pascarella and Terenzini (1991) contend that if college contributes significantly to moral development there should be an upward shift in moral stage or there should be a greater proportion of principled reasoners among college seniors than among younger students or less educated peers. They concluded that there is strong evidence for an enduring impact of college on the use of principled moral reasoning to judge moral issues. Studies examining the influence of ethics instruction on business students ethical attitudes, in particular, are not unequivocal (Arlow, 1991; Glenn, 1992; Weber, 1990). On balance, however, the literature favors the conclusion that ethics instruction does sensitize business students to ethical issues (Green and Weber, 1997; Luthar et al., 1997; Ruhe, 1991) and correlates to development in moral and ethical perspectives (Green and Weber, 1997; Pascarella and Terenzini, 1991). Other studies suggest that students ethical attitudes are influenced more by exposure to the large socio-cultural norms than by education in specific disciplines (Arlow, 1991).

SUSTENANCE OF ETHICS IN BUSINESS:

Two tiered teaching methodology may be suggested in dealing with ethics in academics. The first level has to do with the ethical and moral behavior of school administrators. Education takes place in a system where students can observe the ethics of the university. To make ethics and ethical practices relevant, the student must see ethics being practiced by their teachers, by the administration and by other students. Only in an arena where ethics is modeled from above will the concept have an effect on students. (Mauro et al. 1999) discusses the concept of role modelling within the corporate structure, but it can also apply to the university: The way to build an ethical environment is to start at the top. Senior people must set the tone, in dictating that ethical behavior will

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be encouraged and that unethical actions will not be tolerated. This, of course, requires buy- in from all members of the board of directors and from the management team. The point is to refine the process during the selection of personnel itself. The hiring and promoting of managers should focus on emotional intelligence of the person being considered for hiring or promotion. It is very easy to favor applicants without standing technical back grounds and records, but if emotional intelligence is lacking they may be more likely to get into ethical trouble. Such inter personal skills as active listening, negotiation and mediation and assertiveness can be learned. Candidates with these skills or some training in their back grounds should be selected for general supervisory, team leadership and training positions. Virtue ethics assumes that good people are made as much as born. Character development is a life- long process, which can only be encouraged and supported by well- designed and maintained for ethical structures.

FRAMEWORK FOR ETHICAL CONDUCT:

Another controversy is about what to include in business ethics courses, and where to include these concepts. In the early 1980s, there was still much reluctance to include separate courses in ethics in the business curriculum (George, 1982; Powers & Vogel, 1980). For example, George (1982) discovered that in the business graduate schools he surveyed, close to 70% had no course on business ethics. When considering what and where to put content in ethics, the problem becomes one of relevance to other courses and to the real world of business. Traditionally, studying ethics means examination of case studies. While this gives the student an understanding of issues that are case specific, there is little evidence that this translates into ethical behavior in the business world. Budner (1984) was concerned with whether or not the curriculum that did cover ethics was sufficient to prepare students for ethical conflicts they would face in their careers as managers. Teaching of ethics in class has encountered many criticisms. One such criticism is that, there is too much time spent on preaching in the class room. Students find this irrelevant to their studies. They respond better to cases and incidents that more nearly coincide with their learning. This may be cited as a reason for the faculty and the

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management to provide ethical modeling. In reference to the definitions of ethics discussed above, (de Rond, 1996). Another criticism of teaching ethics addresses the obsession with problem solving. He argues that instead of relying on problem solving as a way to teach ethics, the emphasis should be on the development of moral character. As the reformers of the early nineteenth century endevoured to develop moral character of their contemporaries (Mintz, 1995), de Rond calls for this development in the present. He goes on to discuss the where to put ethics content issue in the curriculum: By the same token, the traditional single course on business ethics may well possess an inherent danger: namely that of feeding dualistic thinking as opposed to allowing for the buildup of a holistic world view (Mintz, 1996).

Hence de Rond states:

Instead of providing students with cases and situations which will encourage them to articulate their individual moral frame works, the message that is conveyed to them is that their chosen profession is no good. Would it not be more helpful to show them how to climb the corporate ladder while gaining that much- needed sense of pride in what they do? (de Rond, 1996). In other words, teaching ethics should focus on development of character as well as development of a personal ethical stance that can then be applied to students careers. There has been concern about how ethics is in fused into the business curriculum for several years. In 1974, the Academy of Management warned the Standards Committee of the American Association of Collegiate Schools of Business: To permit this subject to be met by being frittered away as a matter of secondary concern in other courses, no matter how well taught, is to distort the perceived significance of the subject matter in the mind of the student. It is the en tire organization that is under study, and to fractionalize the study of the relationship of the organization to its environment leaves the impact of the sum of the parts significantly less than the whole (Academy of Management, 1974). Individuals often justify unethical behavior by rationalizing that the activity is somehow not really unethical, speaking up may cause adverse repercussions, or the activity is acceptable because it is in the best interests of the company; therefore, what is

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correct and moral is frequently defined by the environment within which an individual makes decisions (Chen et al., 1997). Reilly and Myroslaw (1990) go as far as saying that the organizational environment is the major cause of unethical behavior. Ethical judgments are in the eye of the beholder, especially when the activity is somehow reinforced or justified by the corporate culture. Maccoby (1976) agrees that individual values or ethical inclinations result from the culture of an organization. Accordingly, it may be argued that organizational culture is a major determinant of acceptable modes of conduct, values, and ethics (Nwachukwu and Vitell, 1997). This line of reasoning extends equally to the cultures of colleges and universities since individual values are learned from socialization in the culture of schools as well as through family, religion, and business experiences (Ferrell and Fraedrich, 1990).

CONCLUSION
In summary, then, it is clear that what (Mauro et al. 1999 ) found in his research, that personal and business ethics are not separate entities, that they coexist in the behaviour of managers within the corporation, is supported in the current literature. The process seems to be first to employ people who have a strong personal sense of right and wrong that they will bring to their jobs. This sense can then be applied to business practices. It appears to be vital that new employees, those coming out of schools of business, need to have a broader understanding of ethical behavior than that which can be gained by examining case studies of ethics-related situations. These new employees need to bring a strong sense of personal ethics to the job, a sense that is gained through examination of issues related to their own experiences. Once the person is employed, the research shows that ethics must be part of more than orientation to the corporation. It must be a constant guiding focus for all employees. The old concept, What is good for business is good ethics has definitely shifted to a new paradigm: What is good ethics is good for business. Thus, education in the area of business ethics seems to be floundering, with no agreement about how, what or where to address the issue. There is some discussion about waiting to teach ethics until the student becomes an employee in a corporation. The

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research shows that this can be more effective as it is more relevant to the here and now of the workers.

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