Academic journal article Academy of Entrepreneurship Journal

Ethics in Small Business: Attitudes and Perceptions of Owners/managers

Academic journal article Academy of Entrepreneurship Journal

Ethics in Small Business: Attitudes and Perceptions of Owners/managers

Article excerpt


Research concerning ethics in small business is limited. This study focuses exclusively on the current state of ethics in this segment of businesses. The study was designed to investigate differences in ethical attitudes and perceptions among and between small business owners/managers within select background categories. Results indicated that respondents express attitudes that are more ethical than unethical. Also, owners/managers tended to be more alike than different regarding ethical attitudes and perceptions. However, specific ethical vignettes did result in a number of significant differences in ethical attitudes among owners/managers within various background groups.


Research concerning the importance of managerial ethics in decision-making has increased greatly in the past two decades. Research in the area of small business ethics has, however, lagged dramatically behind--despite the fact that 99 percent of American businesses are classified as small by the Small Business Administration. It is also despite the fact that there is clear evidence that, due to a number of reasons including intense competitive pressures and resources that are often quite limited, small businesses can be particularly vulnerable to unethical practices (Allen 1988; Keuhl and Lambing 1990). And while the majority of small business owners/managers do not feel compelled to act unethically, there remains a significant percentage that do feel pressure to act in a less than ethical manner (Longenecker, McKinney, and Moore 1995). Clearly, there remains a need to better understand the perceptions, beliefs, and attitudes that impact the decision making of small business people. The majority of studies that have addressed small business ethics have considered small business as a homogeneous category used for comparison purposes with large organizations (Longenecker, McKinney, and Moore 1989; and Brown and King 1982). Few have directly addressed ethics within small companies.

This study was designed to investigate the state of ethics within the small business arena. The Small Business Administration's definition of a small business, depending on the industry, can include firms with a relatively large number of employees. The purpose of the study was to determine differences and similarities between and among small business owners/managers in firms with less than 100 employees (according to the 1998 Census Bureau, there were over 100,000 firms employing less than 100 people) to ensure that the company actually does operate as small. The study was developed to explore ethics within this area as opposed to treating small business as a general category for overall comparison purposes. Specifically, it was intended to examine ethical attitudes and perceptions of small business owners/managers. The results should provide greater focus and thus improved knowledge and understanding of the dynamics of small business ethics-an arena that many practitioners feel is particularly vulnerable to unethical practices.


Ethics in Small Business

Research focused directly on ethics in small business has been somewhat limited; however, there have been studies specifically designed for this area. Longenecker, McKinney, and Moore (1988; 1989) conducted a nationwide survey to determine attitudes about ethical issues in both large and small firms. Using 16 separate ethical vignettes, the authors determined that differences did exist between managers of small versus large firms for 12 of the 16 scenarios. Small firm managers were rated more ethical on 6 of the 12, less ethical on the others. The authors concluded that small business managers were more demanding than permissive in ethical attitudes, and that the uniqueness of small business extended to ethical issues.

Brown and King (1982) also explored the state of ethics in small business. Using small business managers, an "other" group of area residents not in business, plus a group of big business managers, the authors investigated differences in ethical attitudes and perceptions between small business managers and the other two groups. …

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