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 Abayomi (2006)
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 Okunna
(2002).
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, (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. Olugbenga, (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). 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 Ogbodo (1990).
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. Ozo, C.H. (1998) stressed that 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
made it mandatory for enterprises across every nation (Nigeria
inclusive) to operate within the confines of ethical expectations-both in local
and international contexts Ifedayo, D. (1999).
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