The Ethical Perceptions of Small Business Owners: A Factor Analytic Study

Jeffrey S. Hornsby · Donald F. Kuratko · Douglas W. Naffziger · William R. LaFollette · Richard M. Hodgetts

66 citations0/0 files storedJournal of Small Business Management

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Ethics in Business and Education Entrepreneurship Studies and Influences Business Law and Ethics

Abstract

According to Donaldson and Werhane (1993, 2), the word refers to the of whatever is right and good for humans and the study of business ethics investigates business practices in light of human values. Over the last few years, number of researchers have discussed the importance of the ethical considerations in business decisions. (Beversluis 1987; Henderson 1982; Longenecker, McKinney, and Moore 1988; and Stead, Worrell, and Stead 1990). The small business owner personally confronts numerous business decisions that possess ethical challenges. Alpander, Carter, and Forsgren (1990) identified some of the key managerial issues that confront small businesses in their formative years. These issues include employee problems, product pricing, legal problems, product quality, and government regulatory concerns. The authors state, Most owner-managers described their decision process as an action based on significant thought, conscious analysis of the problem, and evaluation of available alternatives (Alpander, Carter, and Forsgren 1990, 15). One reason for this careful decision process on these issues may be the possible ethical ramifications that each issue possesses. Small business owners may often find it difficult to make purely impersonal decisions. Venture success, financial opportunity, and new-product development are all areas that may be impacted by decisions having ethical consequences (Hosmer 1987). What are the ethical considerations of small business owners with regard to their decisions? Are there any underlying dimensions or factors that can be identified within the small business ethics area? This current study investigated the factor structure of small business owners' ethical perceptions. Specifically, the question centers around the possible existence of underlying dimensions which guide owner/managers' behaviors. BUSINESS ETHICS LITERATURE A review of the recent literature concerning business ethics reveals some distinct points. First, number of articles extol the need for businesses to become more aware of their role in ethical behavior (Berenbeim 1987, Andrews 1989, Frederick 1988, Goddard 1988, Hector 1989, Von der Embse and Wagley 1988, Shostack 1990, Evans 1991, Werner 1992). Second, corporate codes of conduct are discussed as means by which businesses attempt to support ethical practices (Robin, Giallourakis, David, and Moritz 1989; Brooks 1989; McDonald and Zepp 1989; and Epstein 1987). Third, the specific value systems and attitudes of executives are examined as the ultimate source of business practices (Cadbury 1987; Andrews 1989; Lank 1988; Giagalone and Ashworth 1988; Goddard 1988; Barnett and Karson 1987; Gellerman 1989; Kirrane 1990; Reilly and Kyj 1990; Enz, Dollinger, and Daily 1990). A final emphasis in the literature is the small business owner's perspective on ethics. There are only few studies that have examined different features of ethics in smaller firms (Wilson 1980; Brown and King 1982; Chrisman and Fry 1982; Timmons and Stevenson 1983; Hills and Narayana 1989; Longenecker, McKinney, and Moore 1989; Humphreys, Robin, Reidenbach, and Moak 1990). Dees and Starr (1992) reviewed the state of ethical in entrepreneurship and small business and concluded that there are only a handful of papers that explicitly address ethical questions in the context of small business It is their contention that solid in the area can have both and practical benefits. They believe that the examination of ethical issues in small firms is not simply an idle academic query. In order to better understand the complexity of the issue, Dees and Starr suggest investigation of the types of ethical dilemmas most characteristic of entrepreneurial management. However, in order to accomplish this, they conclude that the material found in the current literature would be stronger if it could be grounded in solid base of research (Dees and Starr 1992, 91). …

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