Vol. 34, No.1 - Winter 2010 292
DOES SIZE MATTER? ETHICS APPLIED
TO SMALL BUSINESSES COMPARED TO LARGE BUSINESSES
Kevin Cooksey & Dolores Kuchina-Musina, Christopher Newport University Abstract
Considering the normative statement that both large and small businesses should follow the same ethical and moral standards, this paper analyzes the perceptions of individuals based on the relative ethical behavior of small business as compared to large business. The study of ethics focuses on the differences between what is right and what is wrong in society which affects both small business and large business due to their obligation to the public and their stakeholders. Both entities are guided by the same standards and both are expected to meet all legal regulations and ethical standards.
The analysis employs surveys to gauge the public’s perceptions of the ethical decision making by management in both small business and large business. The survey also analyzes the role of those ethical decisions within scenarios and their impact on the individuals’ patron behavior in small business as compared to large business. Statistical analysis has been utilized to test the authors’ overall hypothesis that the public is generally less concerned about ethical decision making of small business relative to large business. The implications of these findings for both large and small businesses are provided with the analysis and suggestions to correct the disparity between both entities.
During the past decades it has been evident that ethics has become the hot topic in business. However, much of the talk is not comprised of all types of business it involves primarily the large corporations. Large corporations such as Enron have caused much grief to those around them and everyone that they employed. Due to this reason regulations such as the Sarbanes- Oxley Act have been enforced to hold large businesses accountable. While these regulations have focused solely on large corporations, efforts to regulate small businesses have been small. It is estimated that small businesses make up over 80% of all business in the United States of America. That is a huge sector which is unregulated due to its size. While the adverse actions of each entity do not do great harm to the economy; the cumulative damage of all components of the group could have devastating impacts on the general economy. Literature Review
Businesses today are completely different than the businesses of years past. Today, business ethics has become an area of great concern in both corporate culture and academia. Companies such as WorldCom and Enron have caused people to reevaluate philosophy and business. Ethics can be defined by the morals that people and companies hold. Although internal and external forces influence businesses, there are three issues that affect issues in business. These three issues are systematic, corporate, and individual.
To truly understand each factor one has to understand how each of these issues differs and how they influence the business itself. Systematic issues analyze ethical values in economic, political, legal, and other social systems in which the business operates (Velasquez, 2006). An example of this would be a question of morality about the current laws pertaining to accounting systems. Laws influence the actions of people because they stem through consequences with the local or federal government. People tend to be scared of a higher authority more than self punishment. 2010 Small Business Institute® National Conference Proceedings Vol. 34, No.1 - Winter 2010 293
The second factor is corporate issues which are issues of morality of internal activities such as policies, practices, and organizational structure (Velasquez, 2006). Corporate issues are based on corporate cultures. If a company treasures capital gains more than human capital the company would then lay off...