The Ethical Decision Making Process of Small Business Owner/managers and Their Customers

Abstract

This article explores four research questions pertaining to the ethical decision making process of small business owner/managers and their customers. The character and extent of this exploration is facilitated by the further extension and use of a multidimensional ethics measure developed by Reidenbach and Robin (1990). The nature of the relationship between a small business firm and its customers is, and must be, one of trust. Consequently, it is highly susceptible to the debilitating and potentially disastrous consequences of unethical behavior. The answers to certain questions concerning practices with potential ethical consequences can be used by small business owner/managers to understand and prevent the perception of unethical practices. Do small business owner/ managers use the same approach in evaluating ethical situations as the rest of society? Specifically, are their perceptions of unethical practices different from their customers? If so, how? How does the ethical evaluation of a situation by small business owner/managers influence their willingness to behave unethically? To what degree? Would their customers behave in the same manner? This article begins the search for answers to these questions. BACKGROUND Several studies suggest the need for separating research on small business ethical attitudes from those of larger organizations. In an article by Longenecker and Schoen (1975) entrepreneurial managers were found to have several different approaches to business in such areas as innovation, risk-taking, and independent action than their counterparts in larger organizations. A study by Erika Wilson (1980) compared perceptions and attitudes of owners or managers of small businesses with employees of larger organizations on 541 statements about social responsibility. Seventy-three of the statements had some reference to ethics, and differences were noted between smaller and larger business managers. Chrisman and Fry (1982) also examined social responsibility using comparisons between small and large organizations. The study indicated more apparent understanding by smaller businesses of social responsibility than larger businesses. Small businesses seem to be in touch with the expectations of society, for the most part, and, in fact, to be more critical of their performance than is the general public (Chrisman and Fry 1982, 26). Brown and King (1982) identified important internal and external factors that affect small business ethics differently from large businesses. Internal factors included such things as different norms and pressures from community and peers as well as the differences in fear of punishment. Differences in external factors included the impact of trade organizations, churches, and competition. Longenecker, McKinney, and Moore (1989) compared small and large business managers' views of ethics. Several significant differences between the views of small and large business managers on ethical were noted. This study is of particular relevance to the research reported here because these authors also used scenarios and an ethics rating scale. The Longenecker, McKinney, and Moore scale was a seven-point univariate measure anchored by never acceptable to always acceptable. In their results they noted that . . the uniqueness of small business extends to ethical issues (Longenecker, McKinney and Moore 1982, 31). One final justification for separating ethical studies of smaller and larger businesses comes from the book Moral Mazes by the sociologist Robert Jackall (1988). In it he describes the sociology of bureaucratic organizations in the U.S. from the view of managers in those organizations. As Jackall portrays it, ethical decisions are heavily dependent on the complex interplay of the individual values of top level management and have little to do with personal values. The small business owner/manager does not have the same constraints or guidance and can employ personal values to a much greater degree. …