Effects Of Ethical Behaviour On Organizational Performance (A Case Study Of Coca Cola Nigeria Plc)

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.

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:

• 43% in the United States
• 37% in Mexico, India, Brazil, Japan and the People’s Republic of China
• 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:

1. To critically x-ray the effects of ethical behaviors on organizational performance.
2. To establish whether ethical behaviour has any relationship with organizational performance.
3. To show-case the necessity of good ethics to the success and eventual institutionalization of an organization.
4. 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 hypotheses, which states thus:

Hypothesis One

• Ho: Ethical behavior has no effect on organizational performance.
• Hi: Ethical behavior has effect on organizational performance.

Hypothesis Two

• Ho: There is no relationship between employees’ ethical behavior and organizational performance.
• Hi: There is relationship between employees’ ethical behavior and organizational performance.

1.7 The Significance Of The Study

The significance of this study is multi-faceted as it helps in identifying the essence of ethnical behaviour on organizational performance, as this will enhance employees’ performance as things are done correctly in a coordinated member. Moreover, newly established firms and organizations will actually know the place of proper ethical behaviour in the continued existence of such an organization. The research of this nature is very important to developing nations like Nigeria that already has a high level of known corruption and sharp business practices, which have permeated all facets of Nigeria’s national life.

1.8 Scope of the Study

The scope of this research work focused strictly on the effect of ethical behaviour on organizational performance using Coca Cola Nigeria Plc as a case study. This work will lead us to the concept of ethical bahaviour and how it impact organizational goals and objectives.

The area covered in the research work is limited to Coca Cola Company Plc, Benin City, in which the population of the study and the sample size of the study were obtained.

1.9 Limitation of the Study

On the course of this research, the following problems were encountered, like short time frame. Financing problem, scarcity of information or data, etc. this is due to mainly, the wide scope of this study which emphasizes on a complex institution like Nigeria. Now, the implication is that the short time frame mapped out for this research work posed a problem of assessing these programs as whole, but that doesn’t threat the authentication and quality of this work.

Again, enough finance for the accomplishment of this work became a problem in the sense that gathering information was costly; the researcher needed enough money to gather them.

1.10 Definition of Terms

1. Behaviour:

Behaviour is the range of actions and mannerisms made by organisms, systems, or artificial entities in conjunction with themselves or their environment, which includes the other systems or organisms around as well as the (inanimate) physical environment. It is the response of the system or organism to various stimuli or inputs, whether internal or external, conscious or subconscious, overt or covert, and voluntary or involuntary.

2. Ethics:

Ethics, sometimes known as philosophical ethics, ethical theory, moral theory, and moral philosophy, is a branch of philosophy that involves systematizing, defending and recommending concepts of right and wrong conduct, often addressing disputes of moral diversity.

3. Performance:

A performance, in performing arts, generally comprises an event in which a performer or group of performers behave in a particular way for another group of people, the audience.

4. Productivity:

This can be defined as efficiency with which work is done, the amount of work done in a certain work.

5. Organizing:

This is determined of activities that need to be done in order to reach the activities to the proper personnel.

6. Responsibility:

This is the duty to perform certain assigned tasks in a satisfactory manner.

7. Management:

The organization and coordination of the activities of a business in order to achieve defined objective. Management is often included as a factor of production along with‚ machines, materials, and money. According to the management guru Peter Drucker (1909-2005), the basic task of management includes both marketing and innovation.

8. Organization:

A social unit of people that is structured and managed to meet a need or to pursue collective goals. All organizations have a management structure that determines relationships between the different activities and the members, and subdivides and assigns roles, responsibilities, and authority to carry out different tasks. Organizations are open systems – they affect and are affected by their environment.

Chapter Five

Summary of Findings, Conclusion and Recommendations

5.1 Summary of Findings

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.

5.2 Conclusion

It must be emphasized that the challenge of ethical behaviour must be met by organizations if they are truly concerned about survival uprightness, integrity, and competitiveness. What is needed in today’s complicated times is for more organization to step forward and operate with strong, positive and ethical cultures. Organizations must ensure that their employees know how to deal with ethical issues in their everyday work lives. As a result, when the ethical climate is clear and positive, everyone will know what is expected of him or her when the inevitable ethical dilemmas occur. This will definitely give employees the confidence to be on the lookout for unwanted unethical behaviour and act with the understanding that what they are doing is correct and will be supported by top management of the organization.

Research in ethical behaviour strongly supports the conclusion that of ethical behaviour is desired; the performance measurement, appraisal and reward systems must be modified to account for ethical behaviour.

5.3 Recommendations

1. Chief Executives should encourage ethical consciousness in their organizations from the top down showing the support and care about ethical behaviour. The philosophies of top managers as well as immediate supervisors must represent a critical organizational factor influencing the ethical behaviour of employees.
2. Organizations should also enhance an ethical-oriented culture by paying particular attention to principled organizational dissent. Principled organizational dissent is the effort by individuals in the organization to protest the status quo because of their objection on ethical grounds, to some practice or policy. Organizations committed to promoting an ethical climate should encourage principled organizational dissent instead of punishing such behaviour.
3. Organizations must strive to provide more ethics training to strengthen their employees’ personal ethical framework. That is, organizations must devote more resources to ethics training programs to help its members clarify their ethical frameworks and practice self-discipline when making ethical decisions in difficult circumstance.
4. An effective organizational culture should encourage ethical behaviour and discourage unethical behaviour. Admittedly, ethical behaviour might cost the organization some fortunes. An example might be the loss of sales when a multinational firm refuses to pay a bribe to secure business in a particular country.
   Again, to enhance ethical behaviour in an organization
5. Be realistic in setting values and goals regarding employment relationships. Do not promise what the organization cannot deliver.
6. Encourage input throughout the organization regarding appropriate values and practices for implementing the cultures. Choose values that represent the views of employees at all levels of the organization.
7. Do not automatically opt for a “strong” culture. Explore methods to provide for diversity and dissent, such as grievance or complaint mechanisms or other internal review procedures.
8. Insure that a whistle-blowing and/or ethical concerns procedure is established for internal problem solving. Harrington (1991).
9. Provide ethics training programs for all employees. These programs should explain the underlying ethical and legal principles and present practical aspects of carrying our procedural guidelines.
10. Organizations should learn to integrate ethics into their organizational management.
11. System audit, examining guides and procedures against stated organizational objectives and values should be regularly taken.
12. Unethical behaviour should be avoided by all means in any organizations.
13. Top managers on their own part should see themselves as role models, be oriented and also realize that ethical behaviour can be managed and the only way is avoid ethical dilemmas.
14. An organization should ensure to have good code of ethics.
15. Organizations should endeavour on their part to reward employee’s actions that in line with the ethical demand made on staff by members. On the other hand, employees that do not meet such demands should be sanctioned or punished.
16. Employees need clear and consistent message on the importance of ethical behaviours. Most organizations do send countless messages about competition, and market performance without bothering much on the company’s ethical values.

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