The Effects of Ethical Behaviour on Organizational Performance

The Effects of Ethical Behaviour on Organizational Performance

(A Case Study of Coca Cola Nigeria Plc)

ABSTRACT

Many modern organizations are today faced with numerous challenges such as illegal and unethical business practices in a number of business transactions. Most organizations have come up with codes of ethics in dealing with ethical issues challenging them. Code of ethics is the set of moral principles used by an organization to steer the conduct of the organization, and employees in all their business activities both internally and externally. The paper uses a quantitative method with two hypotheses stated in the null form. Results were analyzed with the aid of appropriate test statistics. Findings revealed that ethical behaviour has effects on the performance of an organization and that good ethical behaviour has a positive correlation with organizational performance. Suitable policy recommendations were offered which decision makers in business organizations and government functionaries will find highly useful.

TABLE OF CONTENT

Title Page    ii

Certification       iii

Dedication            iv

Acknowledgement        v

Abstract                vi

Table of content         vii

CHAPTER ONE 

 INTRODUCTION

1.1  Background of the study           1

1.2  Historical profile of coca cola Nigeria plc      3

1.3  Statement of the problem          7

1.4   Objective of the study               8

1.5  Research Questions                   8

1.6  Statement of Hypothesis              9

1.7 Significance of the study              9

1.8   Scope and limitation of the study       10

1.9   Limitation of the study                11

1.10   Definition of terms            12

CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1 Introduction                      15

2.2 Meaning of ethics                   17

2.3 Ethical behaviour                   18

2.4 Organizational ethics                22

2.5 Basic ethical elements               22

2.6 Intrinsic and extrinsic organizational rewards         24

2.7 Ethical theory and leadership empowerment               24

2.8 Ethical system implementation            27

2.9 Unethical behaviors                      28

2.10 Causes of unethical behaviours          30

CHAPTER THREE

RESEARCH DESIGN

3.1 Introduction           37

3.2 Research design         37

3.3 Population of the study        38

3.4 Sample size/sampling technique       38

3.5 Methods/sources of data collection      39

3.6 Instrument for data analysis           39

3.7 Validity and Reliability of the instrument     40

3.8 Reliability

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.1  Introduction          41

4.2 Data presentation       41

4.3 Test of Hypothesis      51

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATION

5.1 Summary of findings           53

5.2 Conclusion                    54

5.3 Recommendation                55

References                        59

Appendix                          62

Questionnaire                     63

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Over the years, the term ethics in organizational performance has long been associated with management scholars and business leaders around the world. There is a broad agreement around the world that as a matter of corporate policy, every organization strives to be committed in a manner that is ethically transparent. Steinberg (1994) argued that ethics in the world of organization’s business involve “ordinary decency” which encompasses such areas as integrity, honesty and fairness. Behaving in an ethical manner is seen as part of the social responsibility of organization, which itself depends on the philosophy that organizations ought to impact the society in ways that goes beyond the usual profit maximization objective Adenubi (2000).

It is often argued in many instances that, it is in the interest of an organization to behave in a way that recognizes the need for moral and ethical content in managerial decision as this will benefit the organization especially in the long run.

Ethical behaviour is characterized by honesty, fairness and equity in interpersonal, professional and academic relationship and it respects the dignity, diversity and the right of individual and groups of people. Legan, (2000). Therefore for an organization to move forward in the aspect of performance, it is however important for such an organization to have a good understanding of ethics and also take it seriously as this can undermine the competitive strength of the organization and the society at large.

Morals spring virtually from every decision, thus organization stability and survival depends on the consistency of quality of ethical decision made by managers. Managers are challenged and encouraged to have obligation on organization performance and society at large, to support and the assist the society to imbibe the ethical culture in which there was the interest of is everyone [Oladunni, 2000].

In recent times, most organizations have come up with codes of ethics in dealing with ethical issues challenging them. Code of ethics as defined by the national institute of the management is a set of moral principle used by organization to steer conduct of the organization itself and the employee, in all their business activities, both internally and externally. According to cole, (1996), he stated that codes are opposed to straightforward policy have advantage of providing explicit guidance on key moral issues that might arise during the course of organization activities.

The present study has been stimulated by this idea of observing the effects of ethical behaviour on organizational performance with reference to Cocal Cola Nigerian Plc.

1.2 HISTORICAL PROFILE OF COCA COLA NIGERIA PLC

The Coca-Cola Company is an American multinational beverage corporation and manufacturer, retailer and marketer of nonalcoholic beverage concentrates and syrups, which is headquartered in Atlanta, Georgia. The company is best known for its flagship product Coca-Cola, invented in 1886 by pharmacist John Stith Pemberton in Columbus, Georgia. The Coca-Cola formula and brand was bought in 1889 by Asa Griggs Candler (December 30, 1851 – March 12, 1929), who incorporated The Coca-Cola Company in 1892. The company operates a franchised distribution system dating from 1889 where The Coca-Cola Company only produces syrup concentrate which is then sold to various bottlers throughout the world who hold an exclusive territory. The Coca-Cola Company owns its anchor bottler in North America, Coca-Cola refreshment.

Its stock is listed on the NYSE and is part of DJIA, S & P 500 index, the Russell 1000 Index and the Russell 1000 Growth Stock Index. Its current chairman and CEO is Muhtar Kent.

The company has a long history of acquisitions. Coca-Cola acquired Minute Maid in 1960, the Indian cola brand Thums Up in 1993, and Barq’s in 1995.  In 2001, it acquired the Odwalla brand of fruit juices, smoothies and bars for $181 million. In 2007, it acquired Fuze Beverage from founder Lance Collins and Castanea Partners for an estimated $250 million. The company’s 2009 bid to buy a Chinese juice maker ended when China rejected its $2.4 billion bid for the Huiyuan Juice Group on the grounds that it would be a virtual monopoly. Nationalism was also thought to be a reason for aborting the deal. In 1982, Coca-Cola purchased Columbia Pictures for $692 million. It sold the movie studio to Sony for $3 billion in 1989.

According to the 2005 Annual Report,  the company sells beverage products in more than 200 countries. The report further states that of the more than 50 billion beverage servings of all types consumed worldwide every day, beverages bearing the trademarks owned by or licensed to Coca-Cola account for approximately 1.5 billion (the latest figure in 2010 shows that now they serve 1.6 billion drinks every day). Of these, beverages bearing the trademark “Coca-Cola” or “Coke” accounted for approximately 78% of the company’s total gallon sales.

Also according to the 2007 Annual Report, Coca-Cola had gallon sales distributed as follows:

1. 43% in the United States

2. 37% in Mexico, India, Brazil, Japan and the People’s Republic of China

3. 20% spread throughout the rest of the world

In 2010, it was announced that Coca-Cola had become the first brand to top £1 billion in annual UK grocery sales.

Since 1919, Coca Cola has been a publicly traded company. One share of stock purchased in 1919 for $40, with all dividends reinvested, would be worth $9.8 million in 2012, a 10.7% annual increase, adjusted for inflation. In 1987, Coca Cola once again became one of the 30 stocks which makes up the Dow, the Dow Jones Industrial Average, which is commonly referenced as the performance of the stock market. It had previously been a Dow stock from 1932 to 1935. Coca Cola has paid a dividend, increasing each year for 49 years. Stock is available from a direct purchase program, through Computer share Trust Company, but unlike many programs, has investment fees.

Throughout 2012, Coca-Cola contributed $1,700,500 to a $46 million political campaign known as “The Coalition Against The Costly Food Labeling Proposition, sponsored by Farmers and Food Producers” This organization was set up to oppose a citizen’s initiative, known as Proposition 37, demanding mandatory labeling of foods containing genetically modified ingredients. In the aftermath of the proposition’s defeat at the polls, backers called for a boycott of companies that contributed to the opposition campaign.

1.3 STATEMENT OF PROBLEM 

Many modern organizations including Coca Cola are faced with numerous challenges such as illegal and unethical behaviour in a number of business transactions. Managers are also faced with the challenge of evaluating the effect of this critical behaviour on the performance of such organizations. Again, many business managers operate their activities today, without keen interest of bothering whether their actions are right or wrong and the extent of employees understanding of the term ethics while the level of compliance is highly infinitesimal, (Oladunni 2002).The way Nigerian society cares little about the source of wealth tend to make some of these business operators to begin to wonder about the necessity of ethics in an organization.

1.4 OBJECTIVES  OF THE STUDY

The objectives of this research among others are:

[a] To critically x-ray the effects of ethical behaviors on organizational performance.

[b] To establish whether ethical behaviour has any relationship with organizational performance.

[c] To show-case the necessity of good ethics to the success and eventual institutionalization of an organization.

[d] To examine the effect of unethical bahaviour in organizations.

1.5 RESEARCH QUESTIONS

(1) Does ethical behaviour have effect on an organization performance?

(2) Does ethical behaviour have direct relationship with organization’s productivity?

(3) Does good ethical behaviour have positive impact on organizational productivity?

(4) Does ethical behaviour have direct relationship with workers performance?

(5) Does the behaviour of workers in your organization meet up with the organizational ethical behaviour standard?

(6) Is there moral standard in your organization?

(7) Is there any relationship between unethical behaviour and organizational productivity?

(8) Does unethical behaviour have negative impact on organizational productivity?

(9) Is there reward for high moral standard in your organizations?

(10) Can unethical behaviour be eradicated in organizations?

1.6 RESEARCH HYPOTHESIS

The research uses a quantitative method with the following hypothesis, which states thus: