CHAPTER
TWO
LITERATURE
REVIEW AND CONCEPTUAL FRAMEWORK
2.1. CONCEPTUAL FRAMEWORK
This
chapter basically examines the contributions of some experts, practitioners and
scholars toward the impact of unethical business practices and the promotion of
ethical practices as a demand that must be met in order to have a cordial
interlink between the manufacturers and the patronizers of goods and services.
Categorically,
it evaluates the extent of effectiveness of their contributions in solving
problems created by unethical practices. There is no doubt that these
contributors have, from time to time, analyzed the importance, highlighting its
laid down principles and the impact of its unethical practice, especially as it
concerns the consumers.
Unethical Business
Conduct can negatively impact a business, by damaging the business credibility,
brand, reputation and potentially causing significant loss of customers and
potential business failure.
2.2. THEORETICAL FRAMEWORK
This
study is anchored on utilitarian ethical theory which is founded on the ability
to predict the consequences of an action; the choice that yields the greatest
benefits to the most people is the choice that is ethically correct.
One
benefits of this ethical theory is that the utilitarian can compare similar predicted
solutions and use a point system to determine which choice is more beneficial
for more people.
A
convenient starting point is to examine business ethics in action in some of
the developed countries of the world, upon which the Nigerian practice can then
be focused.
Ethics
in Europe has a protestant origin. Schumpeter (1934) linked entrepreneurship
with protestant ethics that legitimized the rational pursuit of economic gains.
Ethics emphasizes the inherently good
nature of work and that by working hard, one can overcome problems by
accumulating material wealth. It holds
that God’s grace is achieved as one succeeds in life (Yoder and Staudohar
1982).
In
the United States, the religious groups similarly introduced ethics into
business practices in the 1930s. The spread of work ethics in the U.S was aided
by a number of factors. These included the country’s vast natural resources,
belief in America as a land of opportunity and wartime patriotism of the
Americans. (Yoder and Staudohar 1982).
Nigerians
like Japanese have customs and moral values that could be used as building
blocks in developing business ethical values. But Nigeria has had vagaries of
political and economic instability, and leadership patterns that had robbed off
the application of these values in business operations. Also, among the ruling
elites, lack of ethics is leading to failure and collapse of multi-million
dollar public corporations enterprises and contracts.
2.2.1 X-RAY OF UNETHICAL PRACTICES IN NIGERIAN
BUSINESS
Surprisingly,
ethics is not taken seriously in Nigerian business terrain despite the critical
importance of ethical practices for sustainable growth and development. The
average Nigerian business sees business and ethics as oxymoron. A study on
ethics in Nigeria business has clearly indicated that 98% of Nigerian
businessmen agreed that they have engaged in one form of unethical practices or
the other (Asolo, 2001). Other research study indicates that Nigerian
businesses are rated worse in ethical practices (Oguechi, 1998, Asolo, 2008).
It also indicates that unethical practices in Nigerian business terrain are
multifarious and multidimensional. It includes short-changing of consumers by
businesses, product-adulteration, over-pricing, shareholders manipulation, tax evasions,
bribery, product misinformation, sales of expired goods etc. (Asolo, 2000). The
perception of an average international investor is that an average Nigerian
business man is not trustworthy. (Fafowora. O. 1998).
It
is not surprising therefore that Nigerian business do not have sustainability
potential. Businesses in Nigeria are founded on wrong principles that are
devoid of strong ethical anchor. Strong ethical anchor can assist Nigeria
businesses to grow and blossom into unforeseeable future (Ekanola A.B.2005).
Most Nigerian businesses are guided by narrow selfish interest.
They
often do not consider the impact of unethical practices of their intra and
inter transactions on critical stakeholders’ that include consumers, society
and the environment.
Unethical
business practices in Nigerian business terrain have therefore become a major
disincentive to the growth and sustainable development of existing and
potential businesses. Apart from the fact that absence of core ethical principles
exposes Nigerian existing businesses to growth retardation, honest potential
investors who might want to invest in Nigerian businesses are easily
discouraged (Purmis A. 1994, Asolo A.A.A. 2006). Nigeria currently
has high rate of dead businesses. Most businesses die because they basically
abandoned ethical principles from the onset. The challenge is now much more on
prospective young entrepreneurs who are also being discouraged to operate in an
unhealthy and unethical business environment. The business environment has become
too hostile for young and upcoming entrepreneurs.
With
the ongoing efforts by Nigerian government at promoting entrepreneurship due to
factors such as reduced revenues from crude oil and the need to harness
entrepreneurship potential towards sustainable national growth development,
there is critical challenge of mandatory incorporation of ethical principles
into business practices as a way of enhancing sustainable entrepreneurial
development in Nigeria.
Beyond
the call by government for inclusion of entrepreneurship into the curriculum of
Nigerian educational institutions and the momentary policy directives by
Central Bank of Nigeria (CBN) for commercial banks to develop Entrepreneurship
Support Schemes (ESS) in their financial intervention mechanism, there is
strong and urgent need for businesses in Nigeria to imbibe ethical practices as
compulsory operational requirements in order to attain sustainable growth and
development.
It
is the position of this research study therefore that if Nigeria is to maximize
the benefits of business activities, enterprises in Nigeria must cultivate
ethical practices in their business operations. The problems of unethical practices
have caused the death of many businesses. The lack of ethical practices has
militated against Nigerian development. Far more importantly, the features of
emerging economy included global outlook in which success oriented businesses
and entrepreneurs must take on character of international posture and the major
imperatives for global operation is ethical practices.
The
exigencies of global business moral order has also make it mandatory for
enterprises across every nation (Nigeria inclusive) to operate within the
confines of ethical expectations-both in local and international contexts.
2.2.2 THE CHALLENGE OF INTEGRATING ETHICS PRACTICES
The
take-off point is for business to understand and implement ethical principles
as part of the current efforts at re-inventing Nigerian manufacturing companies’
practices for growth and sustainable development. There are needs to lay greater
emphasis on adequate understanding and implementations of ethical business
practices by Nigerian businesses. Ethical business practices enjoin enterprises
to understand their expected roles in relation to business stakeholders. It
also enjoins businesses to work very hard in order to satisfy and sustain
expectations of broad spectrum of stakeholders which include consumers,
suppliers, government, environment, society, labor/workforce and shareholders.
By so doing, enterprises shall be assured of continuous growth and development.
In Nigeria for instance, stakeholders’ expectations are diverse.
Success-oriented businesses development program therefore must include
effective aggregate of stakeholder’s expectations and manage those expectations
in a way that stakeholders would continually support enterprise activities
(product and services inclusive). Some ethical expectations of stakeholders,
which enterprises must understand, imbibe and manage effectively in order to
attain desired growth and sustainable development in Nigeria, are as follows:
Responsibility to workers
·
Payment of fair wages
·
Provision of safe working environment.
·
Create opportunities for workers’
representative.
·
Equal and available opportunities for
training & promotion.
·
Adequate/regular capacity building
opportunity.
·
Cordial management/employee
relationships.
·
Fair treatment of workers.
Responsibility to the Competitors
·
Fair Competition.
·
Use of defensive instead of destructive
competitive strategy.
·
Promotion of fair and favourable
business climate.
·
Encourage responsible competition.
·
Level playing field which include free
entry and exist.
Responsibility to the Consumers
·
Quality services at reasonable prices.
·
Avoidance of sharp or unethical
practices.
·
Adequate consumer product information.
·
No product misrepresentation.
·
Respect for consumer’s right of choice.
·
Avoidance of activities that may
undermine the consumer.
Responsibility of the shareholders
·
Disseminate timely information on
business state of affairs.
·
Protect and ensure safety of capital
invested.
·
Fair treatment to all categories of
shareholders.
·
Ensure adequate return on capital
invested.
Responsibility to the Environment
·
Resource conservation
·
Commitment to adequate maintenance of
natural ecosystems.
·
Prevention of harmful discharge of
industrial wastes.
·
Minimization of air, land and water
pollution.
·
Maintain clean and safe environment.
Business Responsibility to
Government
·
Payment of relevant taxes/levies.
·
Supports government activities.
·
Undertakes research and development to
enhance the growth of the society.
·
Contributes towards government
developmental programs.
·
Provides basic needs of the society.
·
Sponsors events and other complimentary
activities of government.
Responsibility to the Community
·
Maintain cordial relationship with
general public especially in the local area of operation.
·
Assists in providing economic, social,
and physical infrastructure.
·
Engage in corporate social
responsibility program.
2.3.
THEORETICAL BASES FOR THE STUDY
Ekpo-Ufot
(1990) study of ethical behaviour in Lagos State among manufacturers, wholesalers
and the general public and Ogundele (1999) study of ethical behaviour in the
primary, secondary and tertiary educational institutions in Lagos and Oyo State
serve as benchmark for this study.
Ekpo-Ufot
(1990) found that reported frequencies of unethical behaviour were high and
were virtually the same among the studied groups. Ogundele (1999) findings were
similar to Ekpo-Ufot (1990) study, except that the latter study isolated the
twelve factors that were responsible for unethical behaviour. Leadership, which
was singled out as being central in promoting corruption in Nigeria was a major
factor. (Eso, 2007).
The
present concern for business ethics or ethical behavior in organizations is
similar to the social responsibility debate of the 1970s. Around the mid –
1960s in the U.S, questions about the role of business and debates about the
business-society relationships had reached a significant pitch (Mintzberg,
1982).
On
the surface, there were elements for radical change, which included:
1.
Widespread debate of the subject of
Ethics;
2.
Widespread call for social audit;
3.
The introduction of codes of practice;
4.
New literature on Ethics springing up in
business schools;
All
these were set in an atmosphere of serious ecological concern (Gray, 1990). In
the U.K., majority of organizations subscribed to a published code of
practice/statement of mission/statement of social responsibility. Therefore,
codes existed as a significant part of organizations life. Gray (1990) noted that the current business
ethics debates and the debates on social responsibility before it has failed to
‘take root’ where it matters in organizations and governments.
Literature
of business ethics is mostly described in terms of individuals and in
particular the self-interest or the moral motivation of individuals. There is
the problem of the nature of relationship between individual and organization
roles, and a consideration for “individual role” in the organization (Wilbug, 1988).
Organizations on the other hand, are seen as managerialists, where managers
have powers in their own hands to change organization to benefit their own
interest. This is a simplistic view. In actual practice, the process of
changing the moral or ethical behaviour of organization is profoundly complex
and requires careful approach (Smith, 1982).
Gray
(1990) suggested two approaches in introducing ethical changes in the society.
The first approach is the revolutionary option. This stems from recognition
that the problems we perceive are the result of systematic distortion and this
morphogenetic change can only be achieved through systematic change. Second is
the market option (doing nothing). This is formed on the principle of person
selfishness, which sees the calculated cleverness in the interest of self. This
option is, unethical and shows no desirable possibilities.
The
above discussion of the practice is not intended to show that ethical issues
are not given the much attention that they require. Rather, it is to show that
there are considerable rooms from improvement. Studies of ethics have been made
compulsory courses in the advanced countries in institutions of learning based
on the belief that the more you teach or repeat them, the more they are likely
to take root in the hearts of the people and consequently influence their
behaviour.
2.3.1 UNETHICAL BUSINESS PRACTICE IN MANUFACTURING SECTORS
There
is a widespread lack of commitment to ethical behaviour concern for excellence
and self-reliance in Nigerian Manufacturing sector. Akinyemi (2002) noted that
one of the greatest social and economic problems in Nigeria and indeed Africa,
which must be tackled, is that of breakdown in morals, work ethics, discipline,
social responsibility and general civility among its citizens.
Ogundele
(1999) reported several acts of indiscipline, which had their roots in
socio-cultural patterns in the; political process, economic system,
psychological orientation, family background, leadership behaviour, value
system, legal/ judicial system, modernization process, majorly due to
management slacks, lack of motivation and lack of commitment to religious
tenets. These had made the attainment of national development goal difficult
and equally resulted in low performance of manufacturing sector in Nigeria.
Ethical
problems have forced various governments in Nigeria since the 1976
administration to introduce one form of legislation or the other to curb this
monster.
Since
1997 and up to date, Nigeria had consistently been listed as one of the corrupt
countries in the world by Transparency international. In its 2012 annual
corruption index released by Transparency International (TI), Nigeria was
second to the Asian country of Bangladesh. The reported survey of 91 countries
ranked Nigeria 90th while Bangladesh ranked 91st. Other
countries in the bottom ranked states were; Uganda, Indonesia, Kenya, Cameroun,
Bolivia, Ukraine, and Tanzania. Ranking of some other African countries were
Zambia 25, Zimbabwe 65, Malawi 61, South
Africa 38 and Namibia 30.
Ogundele
(2000) reported that other countries in Asia, at the same level of economic
development as Nigeria at independence had established more manufacturing
industries that responded positively to government economic policies, thus
making their countries better developed than Nigeria.
Ogundele
& Opeifa (2004) gave a comprehensive description and analysis of unethical
business practices in Nigeria including electronic fraud. Earlier on, Joseph (1991) stated that Nigeria
obtained and expended $100,000 million US dollars in the periods 1974 to 1982
in oil revenues that were available for investment purpose. Such a sum, if properly
used, could have catapulted Nigerian manufacturing sector and Nigeria as a
whole into the rank of industrialized nations of the world.
The
various governmental initiatives and actions and the writing of concerned
citizens were targeted at ensuring and putting in place an ethically decent society.
The present study of ethical behaviour in
Nigerian manufacturing sector attempts to establish how far Nigerians and
Nigerian organizations have moved towards establishing ethical behaviour.
2.4 EXISTING
GAP FOR THE STUDY
Research
on ethics studies focus on behavior that exceed minimum standards of morality,
such as charitable giving, or whistle-blowing, which occurs when employees
expose illegal and / or unethical actions by their employers.
Other
studies focus in behaviors that fall below minimum standards of morality, such
as lying and cheating (Trevino, Weaver and Reynolds, 2006). Regardless of the
area of focus, unethical acts are of concern to a nation, and are so common in
organizations.
Acceptability
of behavior in business is determined by customers, competitors, government
regulators, interest groups, and the public, as well as each individual’s
personal moral principles and values.
Most
unethical activities within organizations are supported by an organizational
culture that encourages employees to bend the rules (Farrell, 2006).
The
most basic ethical concerns have been codified by laws and regulators such as
SON, NAFDAC, etc. that encourage businesses to conform to society’s standard,
values and attitudes.
It
is worthy to state that ethical issues are not limited to profit organizations
alone. In government and public service, several politicians and high-ranking
officials have been forced to resign in disgrace over ethical indiscretions. A
good example would be the New York governor, Eliot Spitzer, who had a
reputation for fighting crime. He stumbled into an ethical mess of his own
making.
While
there are bodies striving to enhance ethical business practices, there are also
a set of persons crumbling their efforts, in the name of maximizing profit and
market sustainability.
2.4.1 REDUCING UNETHICAL BUSINESS PRACTICES
Three
stage approaches are suggested in this respect, which includes:
a. Strict
Sanctions: This process calls for the imposition of severe and
appropriate sanctions on individuals and organizations that breach business and
societal ethics. These sanctions must be prompt and sufficiently strong to act
as deterrent to other prospective offenders. If people are not punished for
offences committed, it tends to encourage other people with weak morals to
emulate perpetrators of unethical conducts. The law enforcement agencies and
legal system have major responsibilities in this aspect. Strict sanctions could
be sufficient to discourage unethical conducts. In Nigeria, this was
exemplified during the Buhari/Idiagbon administration, 1983-1985.
During
that period with effective enforcement of sanctions against economic and social
offenders, people were fearful of breaking laws, rules, regulations, etc. that
were designed for the good of all.
b.
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 individual organizations, governments and its agencies, churches
and mosques. This calls for serious moral evangelism on a higher scale than
what is presently in place. Our religious leaders should think less of calling
people to miracles and prosperity but channel their efforts at impacting
positive moral values in the souls of converts.
They
should address this deadly disease of moral decadence in Nigerian organizations.
The dangers inherent in perpetration of unethical conducts should be
highlighted and emphasized. Equally the advantages derivable from ethical
business practices both domestically and internationally have to be emphasized.
Examples abound in the industrial miracles achieved by the Japanese and to a
lesser extent in New Zealand and Singapore.
c.
Reward of Excellence or Outstanding
Ethical Behaviour: In situations where an individual
exhibit outstanding act of disciplined behaviour he/she should be rewarded in
status and in kind. Such gesture on the part of appropriate authorities,
institutions or individuals will motivate others to be ethical in their
behaviour. Oshunkeye (1991), reported that a taxi driver returned N20,500.00
which a business woman forgot in his car to the owner. Such an outstanding act
of honesty should be rewarded promptly.
2.4.2 DEVELOPING ETHICAL BUSINESS PRACTICES
In
developing business ethical practices, there are deep and rooted approaches to
changing the perception, values and orientation of the society in general and
the operations of business organizations in particular. Three broad approaches
are equally suggested in this study, namely:
1.
General development of ethical behaviour
in individuals, groups and organizations.
2.
Developing ethical codes for various
professionals and adhering to such codes.
3.
Revitalizing the culture of excellence.
1. General development of ethical behaviour in individuals, groups and
organisations: This calls for massive education, training and
development in Schools; Colleges, Polytechnics and Universities. At the primary
and secondary school levels, a subject such as Moral Instruction should be made
a compulsory subject. It is here being suggested that it should even be made
one of the compulsory subjects at the school certificate level. In colleges of
education, polytechnics and Universities, Ethics should be made a compulsory
sub-course cutting across all the various disciplines. Education is the
foundation of the development of any society. It is through it that knowledge
is transferred. Education also kills the plight of disease, ignorance,
superstition, fear and consequently poverty. Equally, organization members
(public and private) from the lowest to the highest levels should go through
intensive training and development and re-training and re-development that are
designed to impart ethical values. They should equally be encouraged to put
such training into practice in their daily activities.
2. Development of ethical codes for various
professionals and adhering to such codes: It is worthy to note that
professional bodies e.g. medicine, accountancy, engineering, law, etc. have
ethical codes of conduct. The same cannot be said of business organizations or
chambers of commerce and industry in Nigeria. To restore sanity into their
operations and to earn respectability from the outside world and prospective
foreign investors, private and public organizations in Nigeria need to fashion
out codes of ethics. As reported earlier on in this research study, ethical
issues are big challenges to organizations in Nigeria and as such, must be
addressed seriously. A serious problem requires an equally serious solution.
3. Revitalizing the Culture of Excellence: This
calls for the restoration of African traditional values.
Africa
had a culture of excellence which modernization and civilization 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 etc, African personality should
be appropriate to borrow from the Japanese experience in a number of ways.
These include (i) building an organizational culture that support excellence
(ii) establishing ethical standard based on culture founded on ethical
principles and sound values which will be force for excellence (iii) Having
strategic and articulated human resources – through the process of selection,
placement and training (iv) Building a spirit of high performance into culture
– by inspiring people to do their best (v) Having shared values by employees
and managers which will be the core of excellence (Lawal, 2002).
2.5. SUMMARY OF THE REVIEW
In
this chapter, related literatures were reviewed from various sources and
various authors which were done according to sub-heads as approved by the supervisor.
Relevant Materials were thoroughly reviewed in order to find out missing links.
Materials on unethical business practices were x-rayed because of their
importance and relevance to this study. Some
ethical expectations of stakeholders, which enterprises must understand, imbibe
and manage effectively in order to attain desired growth and sustainable
development in Nigeria, were reviewed as well. Finally, the study was anchored
on utilitarian ethical theory and in the course of the researcher’s review; the
theory was thoroughly reviewed in order to divulge its importance.
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