Ethical business practices in the Eastern Cape automotive industry

Abstract

High profile scandals have brought about a renewed interest in business ethics and, in particular, inunderstanding the factors that promote ethical behaviour. Business ethics is about identifying andimplementing values, rules and standards of conduct for guiding morally right behaviour in an organisation’sinteraction with its stakeholders. Against this background a quantitative analysis of the ethical practices of46 companies operating in the Eastern Cape automotive industry was conducted to determine the extent towhich ethics-related interventions contributed to establishing and maintaining an ethical organisationalenvironment. A structured online questionnaire was used to collect the data. The data collected wassubjected to extensive statistical analyses, including Cronbach Alpha coefficients and item total correlations,and various descriptive statistics were included as a quantitative summary of the data. A constant referencevalue for the study was also calculated to allow inferences regarding the significance of the tested variablesto the study. The results revealed that the organisations in the sample are highly ethical due to the presenceof ethics-related interventions, including a code of ethics, committed leadership, adherence to internal andexternal governance requirements, compliance with legislation and encouragement and disclosure ofunethical behaviour. In light of the high number of ethical scandals internationally, this study will add to theempirical body of business ethics research, as it provides organisations with a framework to establish andmaintain an ethical business environment.

More does not always mean better : do more comprehensive ethics management programmes result in better outcomes?

“…Less than two-thirds of respondents indicated that their organisations had ethics training in place, which is significantly less than the 81 percent of US companies that provide ethics training (ERC, 2014). Lloyd et al (2014) found that 85 per cent of South African organisations have a person who is responsible for ethics and, according to the SACEI (Groenewald & Geerts, 2013), employees" awareness of this initiative had increased significantly from 2009 to 2013. The Ethics Institute (Groenewald, 2016) report, however, that awareness of safereporting mechanisms (an ethics hotline, 79%) and ethics officers or persons responsible for ethics management and advising on ethical matters (58%) declined substantially from 2013 (83% and 72% respectively) to 2016.…”

“…In order to understand and prevent unethical behaviour in the workplace, it is essential to take cognisance of contextual, organisational and individual drivers of such behaviour. Contextual drivers include, for example, the competitiveness of the business environment (Kulik, O"Fallon & Salimath, 2008) and religiosity or national culture (Rashid & Ibrahim, 2008;Holmquist, 2013), while intra-organisational factors that have been reported as antecedents of unethical behaviour include a lack of ethical leadership (Lloyd et al, 2014;Mayer, Nurmohamed, Treviño, Shapiro & Schminke, 2013), organisational culture (Ardichvili, Jondle & Kowske, 2010;Clarke, 2011), ethical climate (Bartels, Harrick, Martell & Strickland, 1998) and the absence of or disregard for a code of ethical conduct (Kish-Gephart, Harrison & Treviño, 2010). Individual-level factors such as morality (Klikauer, 2012) or moral ideology (Ruiz-Palomino & Martinez-Cañas, 2011) an individual"s propensity for moral disengagement (Moore et al, 2012) and, to a limited extent, demographic characteristics such as age, gender, education level and marital status (Yücel & Çiftci, 2012;Kish-Gephart et al, 2010) may also impact on an individual"s propensity to engage in unethical behaviour.…”

“…Codes of ethics are also often implemented with the aim of conveying the organisation"s commitment to the adherence of moral standards, in order to project a positive image of a socially responsible organisation, which may ultimately result in tangible benefits (Bodolica & Spraggon, 2015). Creating an organisational context that promotes ethical conduct is further dependent on having policies and procedures in place to institutionalise the behaviour and standards set out in codes of ethics (Lloyd et al, 2014).…”

“…The main responsibility of the ethics officer is to instil ethical behaviour in the organisation (Mafunisa, 2008). The ethics officer must furthermore ensure that the organisation has a strong code of ethics that is applicable to all employees; coordinate the training of ethical standards and drive the communication effort with regard to reinforcing the organisation"s standards of behaviour; provide guidelines on the implementation of a code of conduct; advise employees regarding ethical dilemmas; satisfy internal and external stakeholders; oversee corporate ethics; and guide the company on how to avoid ethical pitfalls (Lloyd et al, 2014;Mafunisa, 2008;Segon, 2010).…”

“…For instance, Rossouw and Van Vuuren (2013) have written extensively on business ethics and the values and standards that determine the interaction between an organisation and its stakeholders. Lloyd and May"s research (2010) proposes a model to develop an ethical organisation, and also reports on ethical business practices used in South African organisations (Lloyd et al, 2014). The practices used to encourage ethical behaviour in organisations have also been subject to scrutiny.…”