How important are ethics and social responsibility?

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How important are ethics and social responsibility?

Introduction

The study of ethics has become increasingly important with global business expansion, because of an increase in ethical and social responsibility - concerns that businesses face in different country environments. There exists, however, a wide divergence in the level of importance attached to these two issues in different countries (Czinkota and Ronkainen, 1998). Moreover, vast differences exist from country to country in the economic development, cultural standards, legal/political systems, and expectations regarding business conduct (Wotruba, 1997). In addition, there is great divergence in the enforcement of policies (Mittelstaedt and Mittelstaedt, 1997).

In the business ethics literature, ethical variations among marketers/managers from different nations are documented in many empirical studies on various types of ethical issues (e.g. Armstrong et al., 1990; Graham, 1985; Becker and Fritzsche, 1987). Variation in ethics across cultures was evidenced in a cross-national study of industrial salespeople by Dubinsky et al. (1991) where some significant differences in ethical perceptions were found among marketing managers from Japan, Korea, and the USA. A study by Singhapakdi et al. (1994) also revealed that American and Thai marketers differ on various components of their ethical decision-making process.

However, international researchers have not investigated differences in the extent to which marketers from different countries believe that ethics and social responsibility are important for organizational effectiveness. An individual's perception about whether ethics and social responsibility contribute to organizational effectiveness is likely to be a critical antecedent of whether he/she even perceives an ethical problem in a given situation (Singhapakdi et al., 1995). This is a pragmatic view based on an argument that managers must first perceive ethics and social responsibility to be vital to organizational effectiveness before their behaviors will become more ethical and reflect greater social responsibility.

This view is consistent with Hunt and Vitell's (1986) depiction of ethical judgment as including a teleological evaluation, when an individual evaluates alternative actions by weighing the perceived probability and desirability of consequences. Essentially, a manager's choice of behavior in a situation that has problematic ethical content will be based on his/her perception of the likelihood that the actions will bring about a desired outcome. This view is also consistent with Jones' (1991) issue-contingent model where it is postulated that the "probability of effect" which is defined as "the probability that the act in question will actually take place and the act in question will actually cause the harm (benefit)" (Jones, 1991, p. 375) will affect an individual's ethical decision making.

Intuitively, ethics and social responsibility should have a positive impact on the success of an organization, because consumers make ethical judgments that are likely to influence their purchases. As Laczniak and Murphy (1993, p. 5) put it:

Consumers over time will normally recognize the organizations that attempt to be responsive to various ethical and social factors in the marketplace.

Accordingly, it is vital for marketers to incorporate ethical and social considerations in their work.

Thus, the aim of this study is to investigate whether marketers from Australia, Malaysia, South Africa, and the USA differ in the extent to which they believe that ethical and socially responsible practices are important in relation to various aspects of organizational effectiveness such as quality, communication, profits, competitiveness, survival, efficiency, and stakeholder satisfaction. Based on past literature that emphasizes cultural factors, corporate culture, and individual characteristics (e.g. Hunt and Vitell, 1986; Ferrell and Gresham, 1985), the cross-cultural variation in marketers' perceived importance of ethics and social responsibility in achieving organizational effectiveness is explained by country differences (including cultural differences and differences in the economic environment), organizational ethical climate, and selected demographic characteristics of individual marketers. The four countries included were judged appropriate because they are geographically separated and exhibit differences in terms of Hofstede's (1980) five cultural dimensions and the level of economic development, which are used to support the hypothesis about country differences.

Theoretical foundation and hypotheses

In this section it is proposed that the variations in the perceived importance of ethics and social responsibility as determinants of organizational effectiveness is explained by country differences (including cultural differences and differences in the economic environment), organizational ethical climate, and individual characteristics of gender and age. Figure 1 summarizes the proposed framework.

Country differences

Cultural differences. Hofstede (1980) and Hofstede and Bond (1988) proposed a typology for classifying cultures based on five dimensions:

(1) individualism;

(2) uncertainty avoidance;

(3) power distance;

(4) masculinity; and

(5) Confucian dynamism.

It is hypothesized that these cultural dimensions contribute to differences in the perceived importance of ethics and social responsibility. For example, marketers in collectivistic countries (such as Malaysia) would be expected to be more loyal to their organizations because of greater dependence (Hofstede, 1983), and therefore, concerned for their organization's well-being when making decisions that enhance organizational effectiveness. Consequently, collectivistic cultures would attach more importance to achieving superior organizational performance than to ethics and socially responsibility.

Masculine societies encourage individuals to be ambitious and competitive, and to strive for material success (Hofstede, 1980), which may tempt marketers from countries ranking high on masculinity to achieve greater efficiency, at all costs. Therefore, they would attach less importance to ethics and social responsibility than to efficiency, competitiveness, and long-term survival. Individuals from cultures with high power distance (such as Malaysia) usually accept the inequality of power, perceive differences between superiors and subordinates, are reluctant to disagree with superiors and believe that superiors are entitled to privileges (Hofstede, 1983). Consequently, marketers from high power distance countries are likely to perceive a need to minimize disagreement with superiors and satisfy superiors through improved performance. In other words, organizational performance is likely to be relatively more important to them relative to the extent to which a decision is ethical and socially responsible. The risk-taking orientation of marketers from low uncertainty avoiding countries would lead them to believe that it might be worth taking the risk of unethical actions in order to improve efficiency and competitiveness. Therefore, marketers from low uncertainty avoidance countries are likely to attach less importance to ethics and social responsibility in achieving organizational effectiveness. Individuals in countries ranking high on Confucian dynamism tend to adhere to the more future-oriented teachings of Confucius; those from countries ranking low on Confucian dynamism tend to be more present- and past-oriented (Hofstede and Bond, 1988). From the perspective of this study, marketers from cultures ranking high on Confucian dynamism have a strong sense of shame and are likely to be wary of actions that are improper or disgraceful. Marketers from high Confucian dynamism countries (such as Hong Kong, Taiwan, Japan, and Korea) would, therefore, believe that any actions bringing disrepute and shame to the company would be detrimental to organizational performance. This is also consistent with the greater future-orientation of individuals from these countries. Alternatively, it is also possible that marketers from high Confucian dynamism countries might be sensitive to the shame arising out of inferior performance and might therefore believe that greater efficiency and profits are important at the cost of ethics and social responsibility. In other words, the effects of Confucian dynamism might be expected in both directions.

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Table I summarizes Hofstede's ranking of the four countries on five dimensions of culture (Hofstede, 1980; Hofstede and Bond, 1988). It is apparent that, in general, Australians, Americans, and South Africans are higher on individualism and masculinity and lower on uncertainty avoidance and power distance than Malaysians. On Confucian dynamism, the USA and Australia rank very close. Although there is no ranking available for South Africa and Malaysia, Malaysians can be expected to rank higher because of a strong Chinese influence, especially in the business sector (Hong Kong and Taiwan rank first and second on Confucian dynamism). Based on individualism, ...

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