Business Ethical Orientations Among Management Students: A Comparative Study of Two Countries

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1 Business Ethical Orientations Among Management Students: A Comparative Study of Two Countries Dr. Razali Mat Zin, King Fahd University of Petroleum and Minerals, Saudi Arabia ABSTRACT This research is intended to investigate the impact of culture on the ethical attitudes of business managers in Saudi Arabia and Malaysia. Adopting Hofstede s cultural typology, this study examines the relationship between his five cultural dimensions individualism, power distance, uncertainty avoidance, masculinity and long term orientation and management students ethical attitudes and various demographic and organizational variables. This study will use primary data collected from a selected sample of undergraduate students in business management who are studying in two universities in the Kingdom of Saudi Arabia and two other universities in Malaysia. The findings showed that there are significant differences between the Saudi and Malaysian business students views in all the attitudinal statements about business ethics except on the item, export unsafe products. Keywords: Business ethics; individualism, power distance, uncertainty avoidance, masculinity and long term orientation INTRODUCTION There has been considerable debate regarding the effectiveness of business ethics instruction (Arlow & Ulrich, 1980; Beekum, 1996; Braxton, 2004; Razali, 2006). In addition, the AACSB (Barnett & Karson, 2004) states that, "students should have a background of economic and legal environment as it pertains to profit and/or non-profit organizations along with ethical considerations and social and political influences as they affect such organizations." This new trend is also relevant and applicable in the context of higher learning institutions in developing countries such as Malaysia and Saudi Arabia. Universities in Malaysia and Saudi Arabia should give serious attention about inculcating the right ethical value orientations among their students as part of the preparation before they join the workforce in the real world.the purpose of this research is to investigate and compare the impact of national cultures on the ethical attitudes of undergraduate business management students in Saudi Arabia and Malaysian universities. Employing the cultural typology proposed by Hofstede (1980, 1997), this study examines the relationship between the cultural dimensions of individualism, power distance, uncertainty avoidance, masculinity, long-term orientation and the ethical attitudes of business managers in these countries. SIGNIFICANT OF THE RESEARCH This research is the first cross-cultural business-ethical study to focus on these two countries together Malaysia and Saudi Arabia. It should give us a better understanding of the relationship between the culture and the ethical attitudes of future business managers (who are currently enrolling in undergraduate business degree programs) in Malaysia and Saudi Arabia. It should also help facilitate international business transactions in the future among these two countries. It is also the first attempt to study empirically the relationship between Hofstede s five cultural dimensions individualism, power distance, masculinity, uncertainty avoidance, and long- term orientation and the ethical attitudes of future business managers toward common questionable practices in business. This study should give us a better understanding of the relationship not only between culture and ethical attitudes of business managers but also between Hofstede s cultural dimensions and ethical attitudes of business managers. REVIEW OF THE LITERATURE Empirical research on business ethics began thirty five years ago, triggered by rising scandals in business corporations, with Baumhart (1961) publishing a descriptive research on the ethical behavior of managers. The late 1980s witnessed an acceleration in empirical researches descriptive as well as explanatory after a slow growth in the 1960s and 1970s (Fritzsche, 1997). In most of these studies culture is considered as one of the independent variable influencing one s ethical attitudes and behavior. However, culture is a loaded variable, overarching many areas in life. It is an abstraction and not an independently existing entity (Biernatzki, 1991). To facilitate crosscultural comparisons, one needs to operationalize culture and identify aspects or dimensions common to all cultures The Journal of American Academy of Business, Cambridge * Vol. 18 * Num. 2 * March

2 (Bruhn, 1996), particularly in the area of business. The outcome of the analysis could be influence by a host of factors, including what ethical means to each person involved in this process. All theorists on managerial ethics acknowledge that ethical decision making in organizations is a complex process involving a series of variables at the individual, organizational and cultural levels (Bannett & Karson, 2004; Razali, 2006). The outcome of the analysis could be influenced by a host of factors, including what ethical means to each person involved in this process. All theorists on managerial ethics acknowledge that the ethical decision making in organizations is a complex process involving a gamut of variables at the individual, organizational and cultural levels ( Barnett & Karson, 2004; Jones, 2001). Baumhart (1968) documents the disagreement among the business executives as to what they mean by ethical -- 50% of his respondents equated ethical with what my feeling tells me right ; 25% of the respondents believed that to be ethical is to decide in accord with one s religious beliefs; 18% of the respondents thought that to be ethical is to conform to the golden rule. Though he did not correlate the respondents idea of ethical with their ethical decision making, we can hypothesize the relationship between these two factors (Knouse & Giacalone, 1992). Culture has been identified as one of the important determinants of business-ethical decision making. Culture influences the ethical decision making both directly and indirectly by interacting with other variables (e.g., what a person means by ethical). RESEARCH METHODOLOGY Sampling Procedures For this study, using the matched sample procedures, data were collected from eight-hundred (800) undergraduate students who are enrolling in the business or management programs at two Universities in Saudi Arabia: (i) King Fahd University of Petroleum and Minerals (KFUPM); (ii) King Abdul Aziz University (KAAU), Jeddah; and in Malaysia: (i) University Kebangsaan Malaysia (UKM); and (ii) University of Malay (UM). Data Collection In order to achieve the highest possible rate of return on the questionnaires the researchers administered the questionnaires by personally visited all the universities selected in both countries Instrument for the Study A questionnaire was developed to collect the data. The first section is made of twenty content questions from the Value Survey Module 1994 (VSM 94) developed by Dr. Geert Hofstede, from the Institute for Research on Intercultural Cooperation (IRIC), University of Maastricht, the Netherlands, to compare culturally determined values between people of two or more countries. The second section measures the ethical attitudes of respondents. Researchers believe that it is difficult to get accurate empirical data on ethical attitudes and behavior of respondents, since business ethical decisions involve complex, multidimensional issues personal as well as business and it is impossible to address and control all the variables in a questionnaire. The third section of the questionnaire contains several demographic questions Statistical Data Analysis Simple descriptive statistics of variables were obtained to achieve a general understanding of the characteristics of respondents. Analysis of Variance (ANOVA) were conducted to study the differences in respondents ethical attitudes across cultures. FINDINGS Hofstede s Value Survey Module (94) The first section of the questionnaire, the Value Survey Module (94), contains twenty content point scale: 1 (of utmost importance) to 5 (of little or no importance). Table 4.2 lists mean scores by country for each of these twenty content questions. Mean scores of content questions for each country were calculated treating non-responses and multiple answers as missing values and thereby excluding them in the calculation of mean scores. The lower the mean score for a work value is, the higher is the importance given to it by a particular culture. The Journal of American Academy of Business, Cambridge * Vol. 18 * Num. 2 * March

3 Table 4.2 Mean Scores for Content Questions in VSM (94) by Country (Scale: 1= of utmost importance; 5 = of very little or no importance) NO. VALUES SAUDI ARABIA MALAYSIA Mean Std. Mean Std. Dev. Dev. 1. Have sufficient time for personal or family life Have good physical working conditions Have a good working relationship with your direct superiors Have security of employment Work with people who cooperate well with one another Be consulted by your direct superior in his/her decisions Have an opportunity for advancement to higher-level jobs Have an element of variety and adventure in the job Personal steadiness and stability Thrift (frugality) Persistence (perseverance) Respect for tradition How often do you feel nervous or tense at work How frequently, in your experience, are subordinates afraid to express disagreement with their superiors 15. Most people can be trusted One can be a good manager without having precise answers to most questions that subordinates may raise about their work 17. An organization structure in which subordinates have two bosses should be avoided at all cost Competition between employees usually does more harm than good 19. A company s organizations rules should not be broken When people have tailed in life it is often their own fault Hypotheses Testing Hypothesis One: There is a significant difference in the ethical attitudes among management students in Saudi Arabia and Malaysia; Table 4.4 Attitudes Toward Business Ethics in General -- ANOVA Results Factor: Culture Attitude Country Mean F Sig. Gift-giving Malaysia * S.Arabia 2.04 Marketing unhealthy products Malaysia * S.Arabia 2.16 Padding expense accounts Malaysia * S.Arabia 1.99 Export Unsafe products Malaysia S.Arabia 3.37 Software piracy Malaysia * S.Arabia 2.27 Injury to the environment Malaysia * S.Arabia 2.45 Bribery Malaysia * S.Arabia 2.15 Nepotism Malaysia * S.Arabia 2.76 Compliance with superior s order Malaysia * S.Arabia 2.01 Dishonesty in advertising Malaysia * S.Arabia 2.82 Sharing of insider information Malaysia * S.Arabia 2.41 Firing older supervisors Malaysia * S.Arabia 2.76 *Significant at.000 It is clearly shown in Table 4.4, there are significant differences between the Saudi and Malaysian business students views in all the attitudinal statements about business ethics except on the item, export unsafe products. Thus, the Hypothesis 1 is statistically supported. Overall, the Malaysian sample were more ethical compared to Saudi sample on all common questionable practices items. The Journal of American Academy of Business, Cambridge * Vol. 18 * Num. 2 * March

4 Hypothesis Two: There is a significant relationship between Hofstede's cultural dimensions collectivism, power distance, uncertainty avoidance, masculinity and long-term orientation and one's ethical orientations. H2a: The business students with high individualism score tend to look at business practices such as giftgiving, nepotism, software piracy, sharing of insider information as more unethical than the business students with high collectivism score. For all the Hypothesis 2 (H2a; H2b; H2c; H2d; and H2e), the Computed Index Values of Hofstede Cultural Dimensions scores (see Table 4.3) were used to determine which sample (Malaysian versus Saudi) is considered High or Low on each cultural dimension to be tested in the analysis. The Malaysian sample ranked higher on Individualism score compared to Saudi Arabia. Table 4.5: The Relationship Between Hofstede s Cultural Dimension (Individualism) and Ethical Orientations ANOVA Results Individualism N Mean F Sig. Gift Giving High (Malaysia) High (Saudi) Software Piracy High (Malaysia) ** Low (Saudi) Nepotism High (Malaysia) * Low (Saudi) Sharing of insider High (Malaysia) * information Low (Saudi) *Significant at.000; ** significant at.01 level The Malaysian business students in the sample of this study emerged to be more individualistic compared to the Saudi students. ANOVA was the relationship between the common questionable practices (gift-giving; software piracy; nepotism and sharing insider information) and Individualism cultural dimension. Except for gift-giving the results showed significant differences between the Malaysian students (High Individualism) and the Saudi students (Low Individualism). That means the business students view the common questionable practices (software piracy; nepotism and sharing insider information) as more unethical than the business students in Saudi Arabia. In a more collectivist society such as Saudi Arabia, the interest of one s group, family, clan or tribe prevails over the interest and expectations of the individual. It is clear in more individualistic society like Malaysia, business students perceive more importance on issues such as copyright and patent laws which give exclusive rights to certain individuals to print, manufacture or sell. Also, in Malaysia, business students tend to view the practice of sharing insider information with family members and close friends as more unethical. Nepotism is also viewed with similar attitude. Thus, Hypothesis 2a is fully statistically supported. H2b: The business students with high power distance score take superiors' orders, whether ethical or unethical, more seriously, than the business students with low power distance score. Saudi business students from this study sample turned out to be higher in Power Distance cultural dimension as compared to their Malaysian counterparts (Table 4.3). The ANOVA analysis in Table 4.8 clearly indicated that there is significant differences between Saudi business students and Malaysian students. The Saudi students who scored higher on Power Distance tend to respond to the directions of a superior more positively regardless of whether they are ethical or non-ethical. Disagreeing, opposing or confronting superiors or elders is regarded as rude and impolite in high power distance societies such as Saudi Arabia. Therefore, Hypothesis 2b is fully statistically supported by the data of this study. Table 4.8: The Relationship Between Hofstede s Cultural Dimension (Power Distance) and Ethical Orientations ANOVA Results Power Distance N Mean F Sig. Compliance Low (Malaysia) *** with the superior s order High (Saudi) ***Significant at.05 H2c: The business students that scored high in uncertainty avoidance score perceive business practices which are done legally as less unethical than the business students that are low in uncertainty avoidance score. The Journal of American Academy of Business, Cambridge * Vol. 18 * Num. 2 * March

5 From the computed index of Hofstede Cultural Dimension on Uncertainty Avoidance, the Malaysian sample had a higher score compared to the Saudi sample. In Table 4.9, the data showed that, there is significant statistical differences between the Saudi sample (High uncertainty avoidance) and Malaysian sample (Low Uncertainty avoidance) in relation to how they view the common questionable practices such as, Padding expenses accounts and Bribery. For Malaysian business students who belong to a lower uncertainty avoidance cultural orientation tend to be more tolerant toward uncertainty or ambiguous situations. On the other hand, the Saudi business students are more likely to focus on the legality of the action and they may not perceive the ethical problems when the practices are strictly legal but not ethical. From the data, the Saudi students perceive business practices which are done legally although can be construed as padding expense accounts and/or bribery as less unethical as compared to those Malaysian students who belong to low uncertainty avoidance group. Thus, the data clearly fully supported the Hypothesis 2c. Table 4.9: The Relationship Between Hofstede s Cultural Dimension (Uncertainty Avoidance) and Ethical Orientations ANOVA Results Uncertainty Avoidance N Mean F Sig. Padding expense accounts High (Saudi) * Low (Malaysia) Bribery High (Saudi) ** Low (Malaysia) ** Significant at.01 level H2d: The business students with high masculinity scores are less likely to perceive ethical problems in practices such firing older employees, dishonesty in advertising, damage to the environment and marketing products that are injurious to health than the business students with high femininity scores. The Saudi business students in this sample scored higher on Masculinity cultural dimension computed score compared to the Malaysian business students. This can be understood, in a society such as Saudi Arabia, gender roles are clearly distinct; and males are encouraged to be dominant, assertive, competitive and to strive for material success and progress. However, the data displayed in Table 4:10 showed mixed findings. There are statistical differences between the Malaysian samples (low masculinity) and Saudi sample (high masculinity) on three common questionable business practices i.e Marketing unhealthy products; Export of unsafe products; and Firing older supervisors. There is no significant difference between Masculinity and the other practice, Dishonesty in advertising. Thus, the business students in Saudi Arabia (more masculine) are less likely to perceive problems as ethical issues when it comes to the marketing harmful products, export of unsafe products, and firing of older supervisors. From this ANOVA results, the Hypothesis 2d is partially supported. Table 4.10: The Relationship Between Hofstede s Cultural Dimension (Masculinity) and Ethical Orientations ANOVA Results Masculinity N Mean F Sig. Marketing Low (Malaysia) *** unhealthy High (Saudi) products Export of unsafe Low (Malaysia) *** products High (Saudi) Dishonesty in Low (Malaysia) advertising High (Saudi) Firing of older Low (Malaysia) *** supervisors High (Saudi) ***Significant at.05; H2e: The business students with low long-term orientation scores will perceive practices such profiting at the expense of damaging the environment as less unethical than the business students with the high score on the long-term orientation. Malaysian business students from this sample came out showing higher Long-term Orientation computed scores compared to the Saudi students. They are more focused toward the future, while the Saudis are towards the past and the present. From the Table 4:11, the ANOVA Results showed that there is a significant difference between this particular cultural dimension and the practice which leads to creating injury to the environment. It is highly likely that, Saudi students who belong to the short-term oriented society will be more concerned about making short- The Journal of American Academy of Business, Cambridge * Vol. 18 * Num. 2 * March

6 term and quick success at any cost, even at the expense of destroying relationships and/or causing long-term damage to the environment. Therefore, Hypothesis 2e are statistically supported. Table 4.11: The Relationship Between Hofstede s Cultural Dimension (Long-term Orientation) and Ethical Orientation ANOVA Results Long-term Orientation N Mean F Sig. Injury to the environment Low (Saudi) ** High (Malaysia) **Significant at.01 level CONCLUSION The main purpose of this research was to investigate and compare the impact of national cultures on the ethical attitudes of undergraduate management students in two Malaysian and two Saudi Arabia universities using ANOVA statistical analysis. Further, employing Hofstede s cultural typology, this study examined the relationship between cultural dimensions of individualism, power distance, masculinity, uncertainty avoidance and long-term orientation, and the ethical attitudes of business managers in these countries. The findings clearly suggested that culture has a strong influence on the managements students attitudes toward both business ethics in general and various questionable business practices in particular and there are significant differences between the two countries. Acknowledgement We would like to express our heartfelt gratitude to KFUPM for funding this research through Internal Research Funds. We also would like to thank all the respondents for their generosity in participating in this research. REFERENCES Abratt, R., Nel, D., & Higgs, N.S. (1992). An examination of the ethical beliefs of managers using selected scenarios in a cross-cultural environment. Journal of Business Ethics, 11(1), Ajzen, I. (1988). Attitudes, personality and behavior. Chicago, IL: Dorsey. Akaah, I. P. (1989). Differences in research ethics judgments between male and female marketing professionals. Journal of Business Ethics, 8(5), Arlow, P., & Ulrich, T. A. (1980). Business ethics, social responsibility and business studies: An empirical comparison of Clark s study. Akron Business and Economic Review 11, Bannett, J. H., & Karson, M. J. (2004). Managers, values, and executive decisions: An exploration of the role of gender, career stage, organizational level, function, and the importance of ethics, relationships and results in managerial decision-making. Journal of Business Ethics, 8(10), Baumhart, R. (1961). How ethical are our businessmen? Harvard Business Review, 39(4), 6-19, Baumhart, R. (1968). An honest profit; What businessmen say about ethics in business. New York: Holt, Rinehart and Winston. Beekum, R. I. (1996). Islamic business ethics. Herndon, VA: Institute of Islamic Thought. Biernatzki, W. E. (1991). Roots of acceptance: The intercultural communication of religious meanings (inculturation). Rome: Pontifical Gregorian University. Bruhn, M. (1996). Business gifts: A form of non-verbal and symbolic communication. European Management Journal, 14(1), Fritzsche, D. J. (1997). Business ethics: A global and managerial perspective. New York: McGraw-Hill. Hofstede, G. (1980). Culture s consequences: International differences in work-related values. Beverly Hills, CA: Sage. Hofstede, G. (1994). Values survey module 1994 manual. Maastricht, The Netherlands: Institute for Research on Intercultural Cooperation. Hofstede, G. (1997). Culture and organizations: Software of the mind. International cooperation and its importance for survival. New York: McGraw-Hill. Knouse, S. B., & Giacalone, R. (1992). An ethical decision-making in business: Behavioral issues and concerns. Journal of Business Ethics, 11(5,6), Razali, M.Z. (2006) "An exploratory study of attitudes towards business ethics: Muslim versus non-muslim managers." Accounting, Commerce and Finance: Islamic Perspective Journal, Australia, vol. 10, Issue 1 &2, The Journal of American Academy of Business, Cambridge * Vol. 18 * Num. 2 * March

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