IMPACT OF BUSINESS ETHICS ON ORGANIZATIONAL PERFORMANCE: A STUDY OF DANGOTE FLOUR MILL, APAPA, LAGOS

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CHAPTER ONE

INTRODUCTION

1.1   Background to the Study

Doubtless to say that Ethics play important role in successful operations of business. If someone paying no head to professional ethics in daily life as well as in business, he commits crime: the act prohibited in Islam. A growing interest in codes of ethics in organization is evident over the past few decades. The recent popularization of business community has still not rationalized how ethical values will affect organizational performance (Zadek, 1998). However, much research on ethical values has focused on the individual rather than its impacts upon organizations in Pakistan. Numerous researchers have evaluated relationship between organizational ethics and job task-related variables (Victor & Cullen, 1987).

Over the years, the term ethics in organizational performance has long been associated with management scholars and business leaders around the world. There is a broad agreement around the world that as a matter of corporate policy, every organization strives to be committed in a manner that is ethically transparent. Boatright (2008). argued that ethics in the world of organization’s business involve “ordinary decency” which encompasses such areas as integrity, honesty and fairness. Behaving in an ethical manner is seen as part of the social responsibility of organization, which itself depends on the philosophy that organizations ought to impact the society in ways that goes beyond the usual profit maximization objective (Akinbayo and Adenubi, 2000).

It is often argued in many instances that, it is in the interest of an organization to behave in a way that recognizes the need for moral and ethical content in managerial decision as this will benefit the organization especially in the long run (Deshpande, 1996).

Ethical behaviour is characterized by honesty, fairness and equity in interpersonal, professional and academic relationship and it respects the dignity, diversity and the right of individual and groups of people (Deshpande, George & Joseph, 2000). Therefore for an organization to move forward in the aspect of performance, it is however important for such an organization to have a good understanding of ethics and also take it seriously as this can undermine the competitive strength of the organization and the society at large.

Morals spring virtually from every decision, thus organization stability and survival depends on the consistency of quality of ethical decision made by managers. Managers are challenged and encouraged to have obligation on organization performance and society at large, to support and the assist the society to imbibe the ethical culture in which there was the interest of is everyone [Oladunni, 2000].

In recent times, most organizations have come up with codes of ethics in dealing with ethical issues challenging them. Code of ethics as defined by the national institute of the management is a set of moral principle used by organization to steer conduct of the organization itself and the employee, in all their business activities, both internally and externally. Kantor & Weisberg (2002) stated that codes are opposed to straightforward policy have advantage of providing explicit guidance on key moral issues that might arise during the course of organization activities.

1.2   Statement of Problem

Many modern organizations are faced with numerous challenges such as illegal and unethical behaviour in a number of business transactions. Managers are also faced with the challenge of evaluating the effect of this critical behaviour on the performance of such organizations. Again, many business managers operate their activities today, without keen interest of bothering whether their actions are right or wrong and the extent of employees understanding of the term ethics while the level of compliance is highly infinitesimal, (Oladunni 2002).The way Nigerian society cares little about the source of wealth tend to make some of these business operators to begin to wonder about the necessity of ethics in an organization.

Today, many African Nations are faced with the crisis that is making the competitive strength of the business organization more challenging. This crisis involves people in business, customer, and at the peak of unethical behaviour and especially more worrisome is the unethical behaviour among employees at all level of the organization. For example, a recent study found that employees theft ranges from stealing company’s product to using company’s service without authorization, such as making personal long distance calls at work (thereby “stealing” both the call and their productive time (Akinbayo, 2000). Others on the other hand forge checks and commit other type of fraud.

Also, Oladunni [2002] once observed that it is believed in Nigeria that people have poor attitude to work or do not like to work, which result in the low productivity in some organizations. This is rooted in the McGregor theory X approach. When people are forced to do things like Nigerians experience during military era, people tend to put in their best and thus behave well.

1.3   Purpose of the Study

The purpose of the study is to examine the impact of business ethics on organizational performance. The specific objectives of the study are to:

1. To examine the awareness of business ethical conducts on the organization performance.
2. To examine if business adherence towards ethical conducts will enhance organization growth.
3. To examine the impact of unethical conduct on organizational performance.

1.3   Research Questions

The following research questions were buttressed for the study:

1. To what extent will the awareness of business ethical conducts affect organization performance?
2. How will business adherence towards ethical conducts enhance organizational growth?
3. What are the impacts of unethical conduct on organizational performance?

1.4   Research Hypothesis

H_O:   Business ethics does not have significant effect on organizational Performance.

H₁:   Business ethics have significant effect on organizational Performance.

1.5       Significance of the Study

The significance of the study can be viewed from two perspectives.
The study of business ethics on organizational performance is indispensable for good corporate entity. And the knowledge of ethics informs accountability. This knowledge will help to proffer veritable course of action that can deter the problems of business ethics on organizational performance in various firms within and  across the country such like corruption, impartiality, absenteeism and other forms of unethical behavior.

The greater the quality of business ethics the greater the quality of good governance and vice versa. The sound knowledge of this study will help law makers in making an outstanding and achievable law for the nation accountability in the state civil service. It will expose different cases of ethical and accountability problems in organization. It will also unveil the factors that caused these problems.

The research will serve as reference material for future researchers in the field of business ethic on organization performance.

Academically, it contributes to the existing knowledge by explaining why workers exhibit unethical and lack of accountability behaviors in the discharge of their functions and their remedial measures.

1.6       The Scope and Limitation of Study

This study examines Impact of Business Ethics on Organizational Performance. The study used Dangote Flour Mill as a case study. Therefore the study will be limited within the selected organization. These factors include:

1. Inadequate Literature:The inadequate materials on the subject matter really threatened the success of this research.
2. Attitude of the Respondents:Attitudes of the respondents in the various departments chosen for this study were discouraging. They were in many occasions very reluctant in supplying relevant information for security reasons as expression of being afraid to expose their vital official secretes.
3. Financial Cost:The researcher cannot overemphasized how problematic the cost implication of this research was. It was really a big task sourcing for funds as money was limited in supply, bearing also in mind that the researcher is a student.
4. Time:The fact that effective researcher needs ample time dedication is undoubtful. But to the researcher, dedicating such time must be at the expense of other numerous issues competing attention such as her course work, consequently, minute time was hared between the research and other contending issues. The researcher therefore, did not have the whole supposed time for this work as required. Despite all odds, the researcher made frantic efforts to collect sufficient data for the analyses upon which reliable inference was made.

1.7       Definition of Terms

Ethics: Moral principles that govern a person’s behaviour or the conducting of an activity.

Business: Business is the activity of making one’s living or making money by producing or buying and selling products (such as goods and services). Simply put, it is “any activity or enterprise entered into for profit.

Organization: Organization is a consciously co-ordinate social unit composed of two or more people, that functions on a relatively continuous basis to achieve a common goal or set of goals. It other words of McShane (2000), an organization is a group of people who work interdependently towards some people.

Performance: Performance is an action or achievement considered in relation to how successful it is.

Code of Ethics: A code of ethics outlines the ethical principles that govern decisions and behavior at a company or organization. They give general outlines of how employees should behave, as well as specific guidance for handling issues like harassment, safety, and conflicts of interest.

Accountability: The obligation of an individual or organization to account for its activities, accept responsibility for them, and to disclose the results in a transparent manner.

Behaviour: The mental and moral qualities distinctive to an individual.

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