BUSINESS STUDENTS' VIEWS OF ETHICS: A SITUATIONAL ANALYSIS by Faramarz Parsa and William M. Lankford

Faramarz Parsa and William H. Lankford are both assisant professors in the Department of Management and Business Systems, Richards College of Business, University of West Georgia.  fparsa@sbf.bus.westga.edu   wlankfor@sbf.bus.westga.edu

INTRODUCTION

Ethics may be defined as an "inquiry into the nature and grounds of morality where the term morality is taken to mean moral judgements, standards and rules of conduct." [Hunt and Vitell, 1988] Ethical theories in moral philosophy may be categorized as either deontological or teleological theories. Deontological theories deal mainly with the inherent righteousness of a behavior. Teleological theories stress the amount of good or bad embodied in the consequence of the behaviors. [Hunt and Vitell, 1988]

The deontology school of thought focuses on the preservation of individual rights and on the intentions associated with a particular behavior rather than on consequences. [Ferrell and Fraedrich, 1991] Deontological views have a rich intellectual history dating back at least as far as Socrates. Deontological views include the Golden Rule, "Act in the way you would expect others to act toward you" and also Kant's categorical imperative, 'Act in such a way that the action taken under the circumstances could be a universal law or rule of behavior." [Laczniak, 1983] If one feels comfortable having everyone in the world see him commit an act and if his rationale for acting in a particular manner is suitable to become a universal principle guiding behavior, then committing the act is ethical. [Ferrell and Fraedrich, 1991] Deontologists look for conformity to moral principles to determine whether an action is ethical or not. Standards to defend personal ethics are often developed from types of deontological philosophies. [Velasquez, 1982] Deontologists feel that individuals have certain undeniable rights which include: freedom of conscience, freedom of consent, freedom of privacy, freedom of speech and due process. [Ferrell and Fraedrich, 1991]

On the other hand, teleology focuses on the consequences of the actions or behaviors of the individual. [Singhapakdi and Vitell, 1991] Moral philosophers often look at teleology as consequentialism because they assess the moral worth of a behavior by looking at its consequences. To define teleology in the business sense, egoism is used. Egoists believe they should make decisions that maximize their own self-interest, which is defined differently by each individual. [Ferrell and Fraedrich, 1991] According to each individual egoist, self-interest can be defined in many ways, one may want pleasure, wealth, power, fame, a good physical well-being or something else. Existing weaknesses of ethical egoism prevent one from taking a stand against even blatant business practices or resolving conflicts of egoistic interests among two individuals.

Utilitarianism asserts that one should always act so as to produce the greatest ratio of good to evil for everyone. [Tsalikis and Fritzsche, 1989] An act will be considered ethical if it produces a greater balance of good over evil in any given situation; the question then lies with whose good is it trying to promote. This theory then follows that of egoism because most likely one is going to promote the good of the individual.

People base their personal moral philosophies on their concept of what are right or wrong and therefore act accordingly. Moral philosophies present guidelines for resolving conflicts and for optimizing the mutual benefit of people living in groups. [Ferrell and Fraedrich, 1991] Both deontological and teleological theories should be used when evaluating whether or not the decision or act is ethical.

OVERVIEW OF PREVIOUS RESEARCH

Krackhardt found that MBA students were utilizing a Utilitarian perspective in analyzing ethical issues in business. [Tsalikis and Frizsche, 1989] Simply stated, business men and women are doing what they can to survive and get ahead in today's competitive world. Previous studies have concluded that business students differ from students of other colleges in their ethical beliefs. [Lane and Schaupp, 1989; Glenn, 1992; Arlow, 1991] The overall analysis of these studies indicates that business programs are associated with lower ethical standards, but not with lower ethical behavior. [Merritt, 1991] This suggests that business students are more likely to accept the marginal behavior of others even though they would not engage in such behavior themselves. Non-business students are more cynical about corporate social responsibility than business students and they support greater diversion of corporate social resources in society. [Arlow, 1991] Differences on ethical judgments such as these, can be related to ethical education in the business curriculum. Business students are forced to analyze situations, take positions in ethical issues, and defend their views with logical reasons. [Mintz, 1990] In addition, personal characteristics play an important role in business students' evaluations of ethics. Students' ethical attitudes are influenced by exposure to socio-cultural norms, which may have implications for business ethics instruction. [Arlow, 1991] There appears to be a trend toward increased concern among college students regarding business ethics. This is supported by a study conducted by Manger (1989), who recently noted that students themselves are not satisfied with the attention business ethics receives in college curricula and are calling for increased emphasis. [Peterson et.al., 1991]

The study of business ethics may have suffered due to the lack of a theoretical basis for most of the empirical research and much of the nonempirical writings. The discipline of philosophy provides a set of well-developed ethical theories. The 3 basic kinds of moral theories include 1. utilitarian theories, which may be classified as either act or rule utilitarian, 2. theory of rights, which provides a guide for the decision maker to insure respect for the rights of individuals, and 3. theory of justice, which calls upon the decision maker to act with equity, fairness, and impartiality. [Fritzsche et. al., 1984]

As economic boundaries become more global in scope, traditional Western ethical thought may lead to clashes among Western organizations and companies from differing cultural settings. Such clashes could lead to alienation of foreign customers, firms and governments and resultant competitive disadvantage or to an abandonment of ethical considerations altogether in the struggle to compete internationally. [Carting and Strong, 1995]

The result of a survey of AACSB member schools confirm prior reports of similar surveys: the teaching of business ethics is indiscriminate, unorganized, and undisciplined in most North American schools of business. If universities are to be taken seriously in their efforts to create more ethical awareness and better moral decision-making skills among their graduates, they must provide a rigorous and well-developed system in which students can live ethics instead of merely learning ethics. [Solburg et. al., 1995] Ethics are important in an organization. A sensitivity to ethics is particularly important in periods of deregulation. As outside rules are relaxed, inside rules must be enhanced. As ethics are enhanced, so, too, is the organization enhanced. [Kehoe, 1993]

Graduate Vs. Undergraduate: Is There Any Difference?

Several studies have been conducted to measure the difference between ethical views with respect to educational level. Many of these studies use graduate (MBA) vs. undergraduate students as their samples, whereas others use managers vs. lower-level employees. [Merritt, 1991; Lane, et/al. 1989; Glenn, 1992; Wynd, et.al. 1989; Burton, et.al., 1991; Jones, 1990] Regardless of the sample type used, the majority of the studies revealed the same results regarding education level and ethics. The overall analysis indicates that ethical values become less apparent in subjects with a higher level of education in most cases. However, these results include varying degrees of difference according to the situation presented to the subjects. [Beggo, et. al., 1989] Furthermore, in a pre-test/post-test situation, less-educated subjects indicated a greater degree of change in ethical values. [Glenn, 1992; Lane, et.al. 1988]

A survey conducted to measure the effect of a Business and Society course on the ethical judgment of students reveals that the students who took the course responded with a higher ethical standard than did students who did not take the course. Of 53 questions used, 13 showed statistically significant differences between graduate (MBA) and undergraduate students. [Glenn, 1992] Six of these questions showed statistically significant educational level effects. The findings showed that graduate students had less movement toward "more ethical" responses in the post-test than did undergraduates. Statements such as "competition forces businessmen to resort to shady but necessary practices," and "sometimes decisions must be made quickly without regard to ethical implications" showed higher ethical content in undergraduate responses.

Other research findings indicate that certain situations would persuade less educated subjects to find an unethical situation as more acceptable. [Giacalone, 1988] Students were given a situation in which a supervisor revealed the results on a personality test without permission. In this case, undergraduate students viewed that act as more moral when an increase in production resulted. Graduates, on the other hand, found the act as immoral even in this situation. It appears that the graduate students viewed the morality of the manager as less dependant on the outcome than did undergraduates. [Kraft, et.al., 1991]

Other situations also affected the answers given by undergraduate and graduate students, however, both groups tended to be undecided. [Jones, 1990] The response was more toward disagreement in these situations although graduates tended to feel a bit stronger. Other situations involving use of company equipment revealed the same responses with graduates being more in disagreement. A study by Wynd and Mager concluded that "collegians engaged in the study of business management have lower personal ethics than managers." [Wynd and Mager, 1989]

In general, most recent studies on students' ethical values reveal a trend among MBA students to "trade off honesty...to maximize sales or profits." [Peterson, et.al., 1991] On the other hand, more educated subjects tend to be less willing to lower ethical standards in non-profitable situations. [Giacalone, 1988] Considering the studies previously mentioned, there appears to be a conflict between graduate students and undergraduate students. Undergraduate seem to be more concerned with personal interests in a business situation where as graduates care more about the well-being of the company. [Beggo, et.al., 1989] "To avoid conflicts of interest, employees must be able to separate their private financial interests from their business dealings." [Hunt and Vitell, 1988] This should be an easy standard to abide by, but kickbacks and bribery cannot be eliminated from any business environment. In the same manner, using company property for personal use is very difficult to control.

Honesty and fairness also play an important part in business ethics. Graduate students and undergraduate students seem to have different conceptions of honesty and fairness. Each responded from a different viewpoint. Undergraduates lack honesty and fairness in dealing with their company/employer, while graduates tend to be unfair/dishonest when dealing with consumers. [Burton, et.al., 1991]

Since internal and external communication are important in the business environment, it is important to acknowledge the ethical values of the sample in this study. Undergraduates showed more ethical values in communication by finding the lack of confidentiality immoral. Graduates found this characteristic to be more appropriate only in profitable situations. [Giacalone, 1988] This same ethical issue relates to the behavior of organization members toward customers, suppliers, etc., which implies organizational relationships. As a result undergraduates have a more ethical attitude toward organizational relationships. [Jones, 1990]

Purpose and Methodology of this Study:

This paper explores the attitudes of undergraduate and MBA students in a major urban university. The survey focused on two issues:

• How do students feel about selected issues that might have ethical dimensions?
• Would "situation" affect responses on these ethical dilemmas?

Need for the Study:

The conceptualization and the need for this particular research issue was suggested by Jones (1990). It is speculated that today's business students are tomorrow's managers and employees of organizations. Do they act differently based on their roles in the company? Do more education and work experience alter the ethical perceptions and standards. This study does not control some of the variables contributing to the differences in perceptions such as age, number of years worked, etc. These variables could contribute to the perceptual differences among the undergraduate and graduate students. That would be a fruitful area for the future research.

Research Hypotheses:

To investigate the research problem of assessing the ethical perceptions of graduate and undergraduate business students, in both employee and management capacities, the following hypotheses were derived:

• H1: There is a difference between ethical perceptions of undergraduate students posed as employee vs. managers of an organization.

• H2: There is a difference in the ethical perceptions of MBA students posed as employees vs. manager of an organization.

• H3: There is a difference between ethical perceptions of MBA students posed as employees and undergraduate students posed as employees of an organization.

• H4: There is a difference between ethical perceptions of MBA students posed as managers and undergraduate students posed as managers of an organization.

• H5: There is a difference between MBA and undergraduate students' perception of ethical issues.

METHODOLOGY

Sample Design:

The responses used in this study are from a convenience sample of 104 senior undergraduate and MBA students attending a southern university whose college of business has been accredited by the AACSB. The questionnaires were administered during regular class periods in two separate occasions. First, each respondent was asked to respond to the questions as though they were the employees of the company. Two months later students were asked to answer the twelve questions as a key manager of the company.

Survey Instrument:

The survey instrument used in this study was constructed based on prior research by Glen (1992) and Jones (1990). The questions addressed common ethical issues that businesses encounter (See Appendix 1.) Prior to administering the survey a pretest of the instrument was conducted using 64 junior and senior business students at a large state university. Items identified as either confusing or irrelevant, through a debriefing of pretest subjects, or lacking variability, through analysis of pretest results, were modified. A sample of the questionnaires is included in the Appendix 1.

Results:

The results hypotheses were tested utilizing two tailed t-tests to assess statistical differences in the responses of undergraduate and MBA students posing as employees and managers of a company. Tables 1 thru 5 show the composite mean and standard deviation scores for the questions. The results of the tests indicate that all of the null hypotheses were rejected at p<.001. Stated differently, the results of this study show statistical difference between the perceptions of undergraduate students vs that of MBA students on the ethical issues presented to them. Following is a breakdown of the results by hypothesis.

Hypothesis 1 and 2:

As shown in Tables 1 and 2, there is a statistically significant difference between the means of the undergraduate and MBA students posed as employees as well as managers of a business (t-values of 6.29 and 4.43 and df = 81, df = 21, respectively). It is also indicated in these tables that respondents are more lenient as employees than managers towards ethical issues.

Hypothesis 2:

Table 2 shows that there is a statistically significant difference between the means of employees and managers with the MBAs as the respondents (t = -4.43, df = 21 p<.000). Therefore, based on the results of this test, the null hypothesis of no difference is rejected and the alternative hypothesis is accepted at p<.05.

Hypothesis 3 and 4:

Table 3 shows that there is a difference between the undergraduate and MBA students= perceptions on these ethical issues when they posed as employees (t = value = 3.28, df = 102, P<.001). Therefore, the null hypothesis of no difference is rejected and the alternative hypothesis is accepted.

Hypothesis 4:

Table 4 reveals that there is a difference between the undergraduate and MBA students= perceptions on these ethical issues when they are posed as managers (t-value = 2.23, df = 102, P<.03). Therefore, the null hypothesis of no difference is rejected and the alternative hypothesis is accepted. Results of Tables 3 and 4 show that there is a statistical difference between the perceptions of undergraduate and MBA students with regards to these ethical issues. In both cases, employees vs managers, undergraduates held higher ethical values than their graduate counterparts.

Hypothesis 5:

Table 5 indicates that there is a difference between the undergraduates' and MBAs' perceptions on the ethical issues regardless of their assumed positions in the organization. Irrespective of position held, the undergraduate students were more ethically oriented.

Hypothesis 1 thru 5:

Discussion:

While this is a small sample, and the data are limited, it is interesting to reflect upon the attitudes of the 104 students. The results show that undergraduate students differ from MBAs in their perception of ethical beliefs. There is also evidence of difference between two groups based on the roles they assume in the organization. While student ability to assume roles, such as "employee" or "president," is surely limited, the situation/role they were asked to assume did affect the pattern of their responses. "The employee" response pattern tended to be less ethical in these selected ethical issues while the "manager" response pattern was more protective of company resources. This "situational" view constantly held across all 12 issues.

One has to remember that there could be a gap between what respondents say they would do and their actual behavior. Since ethical or unethical behaviors, like other classes of behavior, are a function of the person and the environment [Lewin, 1951; Magnusson and Endler, 1977; Zinkhan et.al., 1989], the work environment in which the MBAs could potentially face these types of ethical dilemmas may influence their choice of behavior. Obviously, there are many other factors that affect an individual's choice of behavior in ethical dilemmas, including perceptions of others, peer group pressure, organizational ethical codes and norms, organizational reward systems, and the individual's own moral philosophy.

Future Research:

Recommended:

1. A comparison of practicing managers at various levels of responsibilities and in various stages of their career progress.

2. Another desirable, and perhaps obvious avenue for research would be to examine student attitude before and after exposure to a course dealing specifically with ethics.

3. Future research should statistically control some of variables contributing to the difference in perceptions e.g., age, number of years worked, etc.

 

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Appendix 1

Questionnaires

#1

Personal information: last 4 digits Social Security number, sex, major.

Assume that you are an employee of a medium-size manufacturing company. The company is profitable and appears to have reasonable prospects for the future. Please indicate your natural and honest feeling about the items below by using numbers 1-4 as:

______ 1. As an employee I should not be expected to inform my superiors of my peers= wrong doings.

______ 2. There are times when I must overlook contract and safety violations in order to get on with the job.

______ 3. It is not always possible to keep accurate expense account records; therefore, it is sometimes necessary to give approximate figures.

______ 4. There are times when it is necessary to withhold embarrassing information from my superior.

______ 5. I should do what my manager suggests, though I may have doubts about it being the right thing to do.

______ 6. It is sometimes necessary to conduct personal business on company time.

______ 7. It is O.K. to make a personal copy on the company's copying machine.

______ 8. I would quote a "hopeful" shipping date in order to get the order.

______ 9. It is proper to use the company WATS line for personal calls as long as it's not in company use. (WATS are long distance lines for which company pays a flat monthly fee).

______ 10. There is nothing wrong to call in sick when some personal time is needed as long as I'm not paid for that day.

______ 11. Taking home a few office supplies (paper clips, pencils, etc.) for personal use is an accepted fringe benefit.

______ 12. A competitor's disgruntled employee has just mailed me plans for what looks like a promising new product. I'll send them to our research department for analysis.

Thank you

#2

Personal information: last 4 digits of  Social Security number, sex, major

Assume that you are the manager of a medium-size manufacturing company. The company is profitable and appears to have reasonable prospects for the future. Please indicate your natural and honest feeling about the items below by using numbers 1-4 as:

______ 1. As a manager I expected my employees to inform me of their peers' wrong doings.

______ 2. There are times when I must allow my employees to overlook contract and safety violations in order to get on with the job.

______ 3. It is not always possible to keep accurate expense account records; therefore, it is sometimes necessary for employees to give approximate figures.

______ 4. There are times when it is necessary for employees to withhold embarrassing information from me.

______ 5. My employees should do what I suggest, though they may have doubts about its being the right thing to do.

______ 6. It is sometimes necessary for employees to conduct personal business on company time.

______ 7. Employees should be allowed to make a personal copy on the company's copying machine.

______ 8. Employees should quote a "hopeful" shipping date in order to get the order.

______ 9. It is proper for employees to use the company WATS line for personal calls as long as it's not in company use. (WATS are long distance lines for which the company pays a flat monthly fee).

______ 10. There is nothing wrong for employees to call in sick when some personal time is needed as long as I do not pay them for that day.

______ 11. Taking home a few office supplies (paper clips, pencils, etc.) for personal use is an accepted fringe benefit.

______ 12. One of my disgruntled employees has just mailed my competitor plans for one of our promising new products. My competitor has the right to send it to his research department for analysis.

 

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