Thesis Introduction: Ethics and morale in a Business context and the effect of honor codes
2011/02/21 § 3 Comments
ALL CHAPTERS OF MY MBA THESIS ON BUSINESS ETHICS:
Chapter 1: PSYCHOLOGICAL BASIS OF MORALITY
Chapter 2: SOCIAL COGNITIVE THEORY OF MORALITY
Chapter 4: MEASURING MORALE AND ETHICS
Not only criminals but also citizens who are not habitually in conflict with the law exhibit dishonesty, or engage in actions harmful to their fellow citizens (Gabor 1994). Most members of society are aware of the rules that govern the truthfulness of our actions, namely morale and ethics; however, studies indicate that many engage in dishonest behaviour frequently and show for example that everybody lies on a daily basis (DePaulo BM 1996). As another example; more than a staggering 66% of high-school student in the USA report to have cheated in exams (Bernardi, Metzger et al. 2004).
Ethics and morale is of fundamental importance in business and economics, and unethical behaviour stands for great financial damage. Tax avoidance and tax evasion for instance may have caused a damage of 345 billion USD in 2007 alone (Kaufman 2007). Accountants describe tax evasion as morally questionable less frequently the lower their actual knowledge on the system of taxation is (Eriksen and Fallan 1996). Intellectual property theft worldwide costs the US industry alone more than 250 billion USD in 2004 (Nina, Dan et al. 2010). “Wardrobing”, i.e. the short-term use and return of recently bought clothing for refund, costs the retail industry approximately 16 billion USD, and 9% of all returns are thought to be fraudulent (Hilinski 2005).
Acceptance of fraud and deception is apparently widespread, as demonstrated by the fact that 10% of US Americans stated in a recent survey, that it was acceptable to hand in fraudulent insurance claims, for example when reporting goods as damaged or stolen if they were not. 25% of US Americans even agreed that overstating an insurance claim was acceptable (Accenture 2003). How can dishonest behaviour be curbed? As the Internal Revenue Service (tax office of the USA) noted for instance, more audits did not result in more taxes paid (Herman 2005).
If more control is not the answer, the question remains, which measures, techniques and strategies can be used to address, the problem of fraud and deception in the business arena? Certainly, any measure that does improve moral behaviour will improve the economic bottom line of any business fallen victim.
This thesis intends to review the possibilities of altering moral behaviour. In doing so it will investigate dishonesty in the business arena and evaluate what is known about the underlying reasons for deception, the psychological and sociological mechanisms accompanying this behaviour, and the tools that can be applied to contain deceit. In this context this study investigates the effect of formally agreed upon rules of conduct on human behaviour, such as an Ethical Code of Conduct.
Accenture. (2003). “One-Fourth of Americans Say It’s Acceptable to Defraud Insurance Companies, Accenture Survey Finds.” Retrieved February 16, 2011, from http://newsroom.accenture.com/article_display.cfm?article_id=3970.
Bernardi, R. A., R. L. Metzger, et al. (2004). “Examining the Decision Process of Students’ Cheating Behavior: An Empirical Study.” Journal of Business Ethics 50(4): 397-414.
DePaulo BM, K. D., Kirkendol SE, Wyer MM, Epstein JA (1996). “Lying in everyday life.” J Pers Soc Psychol. 70(5): 979-995.
Eriksen, K. and L. Fallan (1996). “Tax knowledge and attitudes towards taxation; A report on a quasi-experiment.” Journal of Economic Psychology 17(3): 387-402.
Gabor, T. (1994). Everybody Does It: Crime by the Public Univ of Toronto Press.
Herman, T. (2005). “Study Suggests Tax Cheating Is on the Rise.” from http://online.wsj.com/article/SB111214123654192563.html.
Hilinski, D. S. a. M. (2005). “Return Fraud and Abuse: How to Protect Profits.” Retailing Issues Letter 17(1): 1-6.
Kaufman, W. (2007). “Random Tax Audits Return to the IRS.” Retrieved Feb. 13, 2011, 2011, from http://www.npr.org/templates/story/story.php?storyId=15111003.
Nina, M., A. Dan, et al. (2010). “Dishonesty in everyday life and its policy implications.”