Examining Sustainability of Ethics in Business and Academia

InternationalJournal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 – 6510(Online)
International Journal of Management (IJM)
ISSN 0976 Number 2, Aug - Sep (2010), © IAEME
Volume 1,
– 6502(Print), ISSN 0976 – 6510(Online) IJM
Volume 1, Number 2, Aug - Sep (2010), pp. 164-173
© IAEME, http://www.iaeme.com/ijm.html ©IAEME

EXAMINING THE SUSTAINABILITY OF ETHICS IN
BUSINESS: AN ACADEMIC PERSPECTIVE
Jagannath Mohanty
Assistant Professor
Institute of Management Technology, Nagpur
E-Mail: jagmohanty@rediffmail.com

Bhabani P Rath
Professor & Head,
Department of Industrial Relations & Personnel Management
Berhampur University, Berhampur

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

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International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 – 6510(Online)
Volume 1, Number 2, Aug - Sep (2010), © IAEME

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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Towne’s paper “made a resounding call for both management research and education”
(Bluedorn, 1986, p. 442). While “the history of ethics in business is a long one, 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).
Rokeach’s 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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