A Study of the Ethical Values of Metropolitan and Nonmetropolitan Small Business Owners

Abstract

Laws sand, customs rock. Laws can be evaded and punishment escaped, but an openly transgressed custom brings sure punishment (Twain 1962, 156). The insightful, yet admittedly cynical Mark Twain was speaking of small town life at the turn of the century. If Mark Twain were observing business behavior in small town America today, would he feel the same way? Would it make a difference if Twain's focus was on urban business practices rather than that of the small town enterprise? What other factors influence the manner in which business owners view business decisions? This study addressed these questions and attempted to improve our understanding of factors which influence the ethical values of small business owners. BACKGROUND The increased interest in the study of business ethics is reflected by the plethora of articles currently appearing in scholarly journals (for example, Serwinek 1992, Stark 1993, Trevino 1992). The primary thrust of these articles is an attempt to explain the institutionalization of formal policies and the manner in which ethics incorporated into decision making and work practices. With few exceptions (Brown and King 1982; Chrisman and Fry 1982; Longenecker, McKinney, and Moore 1989), ethics research has centered on large organizations (Thompson and Smith 1991). Beyond fiction and folklore, little is known about the ethical values of the approximately 18 million men and women who operate small firms in the U.S. (State of Small Business 1991). These individuals personify our image of American free enterprise. Unquestionably, they face ethical and moral dilemmas similar to those faced by managers of larger organizations. Yet, according to research conducted by Longenecker, McKinney, and Moore (1989), owners of small firms far more demanding than generally perceived in their ethical attitudes. Ethical Values Framework While there is scant empirical evidence, normative assertions lead us to believe that a manager's personal values establish the basic character of his or her business decisions and strategies (Barnett and Karson 1987, Carroll and Hoy 1984, Guth and Tagiuri 1965). Such values are the bases of human activity, and it is upon them that the purpose and objectives of a corporation rest (Serpa 1985, 426). They reflect the organization's general goals, ideals, standards, and 'sins'...[they] often articulated in statements of organizational identity or management philosophy (Dyer 1985, 203). Early theorists (Spranger 1928) postulated a variety of classifications of personal values: economic, religious, and aesthetic. More recently Barnett and Karson (1987) suggested that current social norms may result in additional value categories pertinent to contemporary business issues. Evidence of this supposition is reflected in the number of scholarly articles which address environmentalism (Hoffman 1991, Newton 1988), affirmative action (Groarke 1990), sexual harassment (Olson and Currie 1992), and multinational commerce (De George 1993). Nonetheless, the relationship between the concept of personal values and that of organizational actions continue to challenge students of organizational behavior (Palmer 1982). Environmental Influences on Ethical Values For more than a century, sociologists have studied the differences in rural and urban environments and the values they embrace. The pioneering sociologist Toennies introduced the terms and in 1887 to describe these differences (Toennies 1887). Gemeinschaft refers to social organizations based on tradition and personal relationships, while Gesellschaft describes an impersonal culture where people motivated by narrow self-interest. Toennies observed that the time-honored traditions of rural values (Gemeinschaft) were not found in the new industrial cities of Germany. In urban America, a major figure from the Chicago school of urban sociology, Louis Wirth, observed the same characteristics of communities in the late 1930s (Wirth 1938). …

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