How Does Ethics Affect Corporate Ethics

Article 2: CORPORATES IN INDIA CANNOT AFFORD TO BE ETHICAL (Published in Management & Labour Studies, February 2003)

This article explores the cultural and social issues which make it difficult for a company to remain ethical, in a predominantly unethical environment based on studies conducted in India and other developing nations. Sims et al (1999) studied the impact of the perceived organizational environment and found that it was significantly related to employee decision. It is a common belief among most Indians that government officials are corrupt, the legal system is ineffective and that bribing and ingratiating are accepted practices. A study on the ethical attitudes of Indian managers conducted by Arun Monappa and published in 1977

It reveals that there is a slightly significant relationship between particular cultural characteristics and employee perceptions of organizational ethics. This finding provides modest support for the theory that organizational values are associated with organizational members’ perception of ethical business dilemmas. It likewise confirms that organizations take on various cultural characteristics along the different stages of their life cycle, and that individual values and ethical perceptions do interact with the organizations’ value systems. “Corporate culture” refers to the assumptions, beliefs, goals, knowledge and values that are shared by organizational members (Schwartz and Davis, 1981; Deal and Kennedy, 1982; Sathe, 1983; Schein, 1992). Such values and beliefs, when supported by various operating norms and rituals, can exert a decisive influence on the overall ability of the organization to deal with the challenges that it faces (Morgan, 1997). Ethics are the principles that will tell us the right thing to do, or what things are worth doing. Ethics refers to a set of standards governing behavior; it refers to broader-based, value driven rules (Sims, 1992; Jansen and von Glinow, 1985; Kubal, Baker and Coleman, 2006). There is evidence that there is an interaction between individual values and the organizations’ value systems. Thus, when an individual is faced with an ethical dilemma, his or her value system will color the perception of the ethical ramifications of the situation. It is, A. D. Racelis / Asia Pacific Management Review 15(2) (2010) 251-260 254 therefore, critical to have a basic understanding of the relationship between value systems and individuals’ perceptions of organizational ethics. (Finegan, 1994; Nwachukwu and Vitell,