Professional Documents
Culture Documents
Isali Amina
Isali Amina
Isali Amina
ABSTRACT
Ethical issues lead to increased tensions among employees, loss of trust and
confidence, which in many ways harms the company.
The aim of this study is to examine the negative or positive effects of ethical
practices or inexperience on SMEs in developing countries. This work, based
on a quantitative research design, uses the survey method as a method of data
collection. Questionnaires were used to collect information using this method.
Random sampling was used to select participants, and the survey was
answered by various groups in the form of transitions. The survey was
conducted among the Azerbaijani population and aims to study the views of
the Azerbaijani population working in small business and to give results in
the study. 100 people took part in the survey, and 80 of them are employees
of small businesses. Data analysis includes descriptive statistics, T tests,
ANOVA test and multiple regression analysis. The results showed that SMEs
are somewhat unethical and weak. It turned out that SMEs do not have
policies to guide ethical behavior, and although there are written laws, ethical
behavior is not high. The results of the regression showed that there is a
positive link between ethical practices and the activities of SMEs. That is,
adherence to ethical rules has a direct impact on the development and growth
of small business.
Key words: business ethics, moral behavior, small and medium enterprises,
developing countries.
iii
TABLE OF CONTENT
ABSTRACT……………………………………………………………. iv
TABLE OF CONTENTS………………………………………………. v
LIST OF TABLES……………………………………………………... vi
LIST OF FIGURES……………………………………………………. vii
LIST OF ABBREVIATIONS………………………………………….. ix
INTRODUCTION……………………………………………………... 1
CHAPTER I LITERATURE REVIEW ON WORKPLACE ETHICS 3
1.1. Aspects of business ethics…………………………………………. 3
1.2. Why Business Ethics is Important to Small Businesses?................. 5
1.3. Ethical dilemmas and challenges of small and medium-sized
enterprises……………………………………………………………… 13
CHAPTER II DATA COLLECTION AND METHODS OF
RESEARCH……………………………………………………………. 19
2.1. Position of small and medium businesses in Azerbaijan………….. 19
2.2. Research methodology and data collection of survey …………….. 23
CHAPTER III DATA ANALYSIS AND FINDINGS ……………… 27
3.1. Evaluation of questionnaire result and findings…………………… 27
iv
LIST OF TABLES
Table 3.1.1: Demographic Feature .................................................................27
Table 3.1.2: Workplace ethics questions and answers....................................28
Table 3.1.3: Leader’s moral behavior on workplace ethics and answers........30
Table 3.1.4: Growth and development questions and answers.......................32
vi
LIST OF FIGURES
Figure 1.2.1 Trainings for ethical behavior……………………………... 12
Figure 1.2.2 Top ethics and compliance topics on which you focus on
training ………………………………………………………………… 13
vii
Figure 3.1.6 Growth and development questions and answers…………. 32
Figure 3.1.7 Reliability statistics for “growth_1 - growth_4”…………... 33
Figure 3.1.8 Multiple regression analysis: Descriptive statistics and
Correlation……………………………………………………………… 34
viii
LIST OF ABBREVIATIONS
SME Small and Medium Enterprises
CEO Chief executive officer
CFO Chief Financial Officer
WBES World Bank Enterprise Surveys
OECD The Organisation for Economic Cooperation and Development
ix
INTRODUCTION
This thesis seeks to assess the role of business ethics in the workplace, the
importance of business ethics for SMEs, the ethical dilemmas and challenges
of SMEs in developing countries.
Statement of Problem – The aim of my research is to prove that proper
adherence to ethical norms and rules has a direct impact on the development
of small business. People in high position want to earn more and take
advantage of all the benefits. This often leads to internal injustice, bribery,
misappropriation of company revenues, in short, a serious violation of ethical
norms.
Purpose of the Study – With this research, I hope to prove to company
executives that commitment to ethical behavior inspires employees, that
stakeholders and buyers treat you more positively than ever, and that the
company's revenue is increasingly successful.
Significance of the Study - The importance of research is primarily to support
the development of small businesses in Azerbaijan as a developing country
and to correct their mistakes. Because there are organizations in our country
that support small business, and their support should not be in vain.
Research questions – My research questions are as follows:
Do the personal ethics that people demonstrate in the workplace and the
ethical standards set by the company help small businesses survive and
thrive?
Does the lack of a code of ethics in SMEs in developing countries
1
affect the ethical responsibility of leaders?
Review of the Literature – The literature will discuss business ethics, ethical
behavior in the business environment, including the relationship between
ethical behavior and ethical violations, the positive and negative effects of
ethical violations on the company's activities, and the problems that arise. A
review of the principal literature on ethical practices in SMEs in the context
of developing countries has been conducted on numerous journal articles and
related research and books.
Research methodology – The articles reviewed in the current journals were
analyzed to select the factors of enterprise ethics, the importance of business
ethics for SMEs, ethical dilemmas and demanding situations of SMEs, and
proposed methods to overcome ethical dilemmas and their problems.
Delimitations, Limitations, and Assumptions - This article focuses on a
review of SME business ethics literature in developing countries. Thus, it
does not reflect the existing ethical practices of SMEs and large companies.
Thus, future scholars and researchers need to conduct empirical qualitative
and quantitative research on ethical business practices and dilemmas,
involving both SMEs and large companies globally.
Research novelty – Although we can find a lot of research on the ethical
norms and activities of many large and world-renowned companies, research
on small business in developing countries, as well as in Azerbaijan, is very
limited.
Structure of thesis – This research work consists of Introduction, 3 main
chapters, Conclusion and Reference parts. In Chapter 1 you can get
acquainted with the literature review on business ethics, in Chapter 2 you can
get acquainted with the small and medium business of Azerbaijan and the
methodology of my dissertation. Finally, the last part contains the analysis
and findings.
2
CHAPTER I
3
Work ethics is largely concerned with ethical ideals and corporate practices.
4
Twomey and Jennings (2011)34 define business ethics as the application of
morals to strategic policies. It's when general ethical norms are applied to
business activities (Hodgelts and Luthans 2003)17. Business ethics refers to
how a company combines important beliefs like authenticity, trust,
consideration, and logic into its attitudes, practices, and navigation (Hellriegel
et al. 2008)16. According to Rossouw (2004) 28, business ethics is linked to
identifying and implementing leadership principles that ensure that a
company does not negatively impact its partners' interests. Organizations
must lead their activities in such a way that they are visible as moral in order
to be productive nowadays. As a result, ethics encourage the use of profound
quality, whereas morals provide profound quality (Borade 2012)5.
It is important to remember that ethical sensibility leads to moral behavior
(Krebs 2011)19.This is in line with Borade (2012) 5, who claims that, although,
business ethics refers to the theoretical moral code accepted and followed by
employees, profound quality refers to the decisions, values, and standards of
acceptable behavior in the workplace. In this approach, profound quality
assists people in functioning appropriately in terms of essential traits
(Mujtaba 2005)22. However, Krebs (2011)19 asserts that a profound trait is
human harmony, implying that collaboration occurs as a result of a set of
decisions that balance the benefits and weights of involvement.
The purposeful commitment to an ethical quality standard that directs an
individual or corporation to follow specified norms of conduct when
managing people both inside and outside the firm is known as ethical business
practices (Ononogbo et al. 2016)26. In this way, exploitative strategic
strategies often reflect the hierarchical culture's features, viewpoints,
convictions, and methods of acting. Business decisions and behavior are
moral or untrustworthy, according to Abiodun and Oyeniyi (2014) 1, based on
whether they advance or undermine the features and principles of people and
5
the social orders in which they operate.
Despite the fact that, a majority of enterprises in the American economy are
independent operations that contribute primarily to financial thriving,
development, and prosperity, according to Medlin and Green (2003) 21, there
really is no assessment of small company ethics. Understanding independent
ventures' ethical obligations will significantly improve their standing,
development, and worth, particularly at a time when dishonesty is on the rise
and there is increased scrutiny from both administrative and nongovernmental
offices resulting from increased corporate drop - outs in ethical principles and
standards.
One of the severe problems with small businesses nowadays is that business
owners understand that business ethical principles are much lower than they
were 10-20 years ago (Vitell, Dickerson and Festervand, 2000) 36, and as a
result, they will frequently act with some more caution and caution than they
would have previously, contributing to the issue of a lack of ethics in
independent companies and business in general. How small business owners
view ethics and their ethical obligations has an impact on how they conduct
ethically in business situations (Smith and Oakley, 1994)29.
Characterizing and Understanding Business Ethics describes the qualities and
norms that guide activity and behavior (Emerson, 2009)13.
Small business owners want to understand that doing business ethically is also
possible. They want to understand that an increasing number of stakeholders
are concerned that agencies be given their ethical commitments to all
stakeholders, regardless of duration or value, and that the decision for ethics
has increased in recent years with an over-emphasis on the environment. As a
result, it is critical to join the brand-new task of ethical responsibility by
6
involving small business owners and managers in ethical reasoning while
making decisions about merchandise and services, customers, enterprise
partners, procedures and operations, and all other aspects of doing business.
Ethical reasoning is the process through which a decision-maker studies an
ethical problem and applies it to other ethical problems in order to solve them
(Murphy and Laczniak, 2006)28. This usually entails three simple steps: (1)
identifying the ethical issue, (2) deciding on an ethical standard, and (3)
implementing the ethical standard (Murphy, Laczniak, Bowie & Klein,
2005)28. It must also include an assessment of the consequences or outcomes,
as well as an assessment of the strategy for remedial action, if necessary. In
this case, public family members have become a significant component of
ethical procedures within organizations, as it is frequently necessary to have a
spokesperson who can represent a company where ethical difficulties persist
and reach the media. For small businesses, there are three areas where ethics
and excessive ethical conduct are required.
The Importance of Trust
Ethics, defined as being fair, honest, responsible, and upright, helps
organizations build confidence and trust. Customers and other stakeholders
require interactions with organizations and business owners they can trust
with their happiness, hopes, and desires, their money, and their safety, health,
and well-being. Capitalism flourishes, according to Twomey and Jennings
(2011)34, because of "accept as true with," and we can see this in the
behaviors and reactions of diverse stakeholders to organizations. People who
become traders for a company, for example, will provide capital because they
believe or believe that the company will generate a return on investment; and
clients buy services and products from businesses because they believe the
businesses will honor their commitments to provide safe, accurate, and
pleasant products, as well as stand behind what they promote or As a result,
7
the small business owner should regard commercial enterprise investment,
growth, and income as arising from a circle of accept as true with (Twomey
and Jennings, 2011)34.
Good Reputation
A correct acknowledgement can go a long way, whether it's miles with
someone or miles with a firm. When a company has a good reputation, it
benefits from a good call, and its positive deeds are observed by the general
public. Being exceedingly ethical, that is, having a moral sense of right and
wrong and being morally conscientious, is a fantastic way to gain outstanding
recognition. This necessitates a small firm being fair and honest, making
decisions and operations with integrity and care, being dependable, and
responding to stakeholders' requests for movement and network engagement.
Building a strong reputation will pay off in the end since the company will be
recognized by administrative or governmental agencies, and it will be well-
recommended by business partners, and the thrill community will bring in
new consumers. Good acknowledgement can assist increase lifetime patron
value since it leads to more powerful patron connections (Peppers & Rogers,
2004; Weinstein, 2012).
Public Policy and Law
Federal, state, and local governments have developed legal norms and laws to
keep agencies morally and legally in check. Understanding and adhering to
the legal rules at all times will ensure moral and prison compliance, as well as
a fantastic business reputation. Those tips will be followed by smart
businesses, as performing voluntarily on the basis of pricing selections will
help them avoid the costs and arbitrariness of law and laws (Twomey and
Jennings, 2011)34. According to Twomey and Jennings (2011)34, business
owners should keep in mind that voluntary exchange is less expensive and
inconvenient, and that "businesses that respond to social dynamics and the
motion of the cycle of societal interplay frequently gain an aggressive
8
advantage." Small businesses should act responsibly and should no longer
defer to society's choices and perspectives of high-quality ethical alternate,
but should instead follow the fashion that society endorses and expects,
whether it's a brand-new environmentalism or a brand-new social
responsibility challenge.
Standards of business ethics
The larger ethical standards and norms that control behavior and how people
interact and relate to one another in society contain the ethical principles that
regulate groups and the behaviors of business owners and employees. These
include the unwritten behaviors and values expected by stakeholders or others
in a network or organization, such as expert corporations or other expert
bodies, as well as the regulation and ethical obligations arising from lifestyle
and organizational norms.
The Law as Standard
The regulation or crime code is one of the most convincing frames of
reference for ethical actions in small firms. We are expected to be law-abiding
citizens as individuals, and all businesses are expected to be law-abiding
businesses in the same way. Small businesses, like humans, must comply with
the law, or as Twomey and Jennings (2011)34 define it, "follow what codified
or good regulation calls for on the road to continue to be morally compliant,"
when you consider that being legally compliant also means being ethically
compliant (Twomey and Jennings, 2011)34.
In reality, if small businesses adopted a criminal-rational approach to
business, they would undoubtedly find themselves in a desirable ethical
position, because law is based on criteria and behaviors that are established
through formal consensus. A small business owner who wants to learn more
about business law or business law can read books or conduct online research
on the legal aspects of small enterprises, or attend conferences and seminars.
9
Because "the test of whether or not an act is crime is a commonplace ethical
norm employed commonly in business," the law is a solid foundation for
moral behavior in businesses (Twomey and Jennings, 2011)34.
Promoting harmful merchandise to customers, for example, is illegal, and the
act itself is unethical in business.
Universal Standards
The system of principles directing human behavior independent of and often
in opposition to legislated laws and arising from human intellect allows firms
to establish what is ethical and what is unethical. These ideas are broad
because they come from ideas that could be classified as improper, bad, or
unethical by any human sense of right and wrong and rational logical
determination. Twomey and Jennings named this herbal regulation (2011) 34.
For example, a business owner who steals from clients may be considered to
be committing an illegal act or engaging in unethical behavior regardless of
where she or he is located geographically or nationally, because humans in all
cultures expect business owners to be sincere and honest with their customers.
Thus, the application of general human principles and understanding of what
is true, honest, proper, and simple can serve as a model for small company
ethics.
The Stakeholder Standards
Stakeholder requirements are one of the most important sets of criteria used to
determine and manual ethical practices and decision-making in small
organizations. The stakeholder version has been increasingly important to
businesses in recent years, since those components are concerned with more
socially and morally responsible actions and decisions from business owners
and their institutions. This method requires an increasing number of business
owners to make decisions based on their stakeholders' well-being and
expectations.
Balancing the interests of those stakeholders, as Twomey and Jennings
10
(2011)34 point out, is a common strategy for resolving ethical challenges in
business. Clients, internal clients (people), providers and business partners,
shareholders or business proprietors, the network, and the government are
among the several sections or stakeholders. Through stakeholder analysis, the
small business owner must understand how the decisions she or he takes
affect business operations and the vested interests of stakeholders. This
necessitates assessing the impact of various options on various groups
(Twomey and Jennings, 2011)34.
The benefits of adopting commercial enterprise
Businesses cannot survive if their executives do not tell the truth, if customers
and dealers do not regard one another, or if employees refuse to help one
another and clients (Branko, Drago and Zoran 2015) 6. Good ethics, defined
as being fair, honest, accountable, and upright, helps agencies build
credibility and consideration. Customers and other stakeholders want
interaction agencies and business owners with whom they can entirely trust
their happiness, wishes, and needs, their money, and their safety, health, and
well-being (Donovan 2013)11.
After all, being ethical necessitates establishing a strong and higher reputation
among stakeholders, particularly clients, who, in turn, increase their loyalty
and are more likely to buy with more confidence and refer others. As a result,
SMEs must strengthen their ethical presence and attractiveness in the eyes of
customers (Donovan 2013)11
The importance of commercial enterprise ethics cannot be understated
(Mahmood 2008)20. The following are some of the advantages of embracing
business ethics:
When making investment selections, investors consider business
practices and values.
As clients become more aware of their rights, ethical behaviors become
11
more important. As a result, adopting ethics can help agencies gain
popularity.
Building brand recognition can help you build customer loyalty and
increase income.
Attract a skilled team of workers and personnel, hence improving the
overall performance of the business and employee productivity.
Adhere to policies, as well as labor laws and environmental regulations.
Regional and international collaboration with various companies.
A happy and engaged workforce, according to Sraboni and Sharmistha
(2011)31, is the first step toward long-term organizational success. Closer
ethical practices to employees can result in more process pride and employee
motivation, which leads to increased corporate profitability. In general, ethical
hiring practices, the implementation of a rational overall performance
appraisal system, a formal method for worker replacement, a proactive
approach to dealing with worker grievances, administrative center protection,
and voluntary investments in worker welfare are all important steps toward
creating an ethical working environment.
Encouragement of personnel participation in decision-making, addressing
personnel education and development needs without prejudice, and the
establishment of an appropriate code of ethics within the organization are
additional ethical issues that support personnel participation (Sraboni &
Sharmistha 2011)31.
Organizations that do business in a morally acceptable manner reap a variety
of perks and advantages. For instance, ethical behavior may:
have a beneficial impact on a company's sales and earnings since
customers are more likely to support a company that operates ethically;
result in decreased employee turnover and higher productivity because
employees desire to work for an ethical company;
12
quickly attract potential employees who wish to work for the company,
lowering recruitment expenses and assisting the company in hiring the
right personnel;
13
instance, conducting ethics and compliance training in large organisation
increased their annual budget by 42%, whereas the same figure small and
medium sized organisation was 27% (Navex, 2017).
Figure 1.2.2 Top Ethics and Compliance topics on which you focus on training
15
corruption and fraud as normal, accepted practices and use them to get things
done faster, even though they are aware that they are unlawful and unethical
(Rune 2011). Figure 1.2.3 summarizes the ethical concerns and obstacles that
SMEs face:
Figure 1.2.3. Summary of ethical dilemmas and challenges of small and medium sized
enterprises.
16
growing faster than in Ivory Coast, the alternative is genuine for huge
corporations. Every other study referred to through Beck and Demirguch-
Kunt (2005)4 indicates that obstacles to organization improvement are smaller
in international locations with properly-functioning monetary and legal
structures. They concluded that even though SMEs go through extra from
diverse marketplace screw ups, extra working prices and statistics
asymmetries than massive firms, such limitations have a disproportionately
greater effect on the increase of small firms broadcasting activity in less
developed institutions suggests Aterido and others (2007) 3. Moreover,
examines the speculation that constraints as a consequence of the business
environment might not be impartial to employer size. In addition, Kabongo
and Okpara (2009)18 discover the principle obstacles to the increase of SMEs
in growing nations as get admission to monetary assets, lack of administrative
experience, corruption and vulnerable infrastructure. Mainly, they argue that
corruption is extreme as it imposes extra fees in developing enterprise in
terms of bribery and undermines consider and self-belief inside the judiciary,
national integrity, the regulatory system, and business owners in fashionable.
Vulnerability Against Corruption in SMEs
In terms of anomie theory, firms that are under pressure to perform to grow
and survive are more likely to pay bribes to remove such barriers when
financially constrained (Cullen et al., 2007) 9. Relatively lower financial
resources and the cost of corruption are often cited as key factors influencing
the vulnerability of SMEs, but other factors may also contribute to higher
vulnerability and thus the likelihood of using bribery as a coping mechanism:
• Willingness and strategy: as shown above, inexperienced SMEs often do
not see corruption and other business barriers as major barriers to entry and
are therefore not often included as a strategic concern in their entry strategy
(Busquets and Fliess 2006)14.
17
• Corporate culture: If an SME does not have an anti-corruption strategy, the
generally informal and centralized nature and management style of SMEs
compared to large companies can create a corporate-wide corporate culture
where corruption is prevalent (UNODC 2007)61.
• Limited exposure to the 'public': Large companies is under increasing
public pressure to act ethically, and their activities are often subject to
scrutiny by professionals, the media and thus the public. As such, they are
more visible than SMEs, which increases the risk of their reputation being
compromised if they are involved in a corruption scandal. It can facilitate the
perception of corruption, which can 'naturally' nurture a culture and tolerance
towards corruption. way of doing business.
• Limited access to information: Corruption limits access to information on
the development of policies, rules and regulations and makes doing business
difficult (OECD 2008)23,24. For example, in some countries, trade and
investment laws change frequently. Such changes are often not announced or
updated on government websites, and officials are not adequately trained to
provide explanations for the changes. This leads to an arbitrary legal
environment and creates opportunities for authorities to take unfair penalties
or bribes from SMEs.
As highlighted above, there are several factors that can limit SMEs' resilience
to bribery and thus increase their vulnerability to corruption. These factors are
related to both internal and external constraints where they have less impact
and therefore addressing the corruption problem faced by the
internationalization of SMEs requires attention on both sides of the equation.
Gender and ethical practices of SMEs
There is a relationship between social gender and ethical practices of women.
Are there gender differences in ethical positions or behaviors? It is claimed by
Dawson (2013)10 that there are significant gender differences in ethical
behavior. In this context, Dawson (2013)10 states that gender differences in
18
ethical behavior offered by men and women are associated with the
socialization of boys and girls into gender roles. A study by Hazlina 15 and
Seet (2010)30 found that women are treated more ethically than men. This is
probably because women are more likely to act on their moral values.
Similarly, Castejón and Lopez (2016)7 argue that women are more charitable
than men, which makes them more ethical. This makes men more abnormal
than women. Chinchilla and Jiménez (2013)8 noted that women are more
likely than men to consider the long-term consequences of ineffective
decisions. Little is known about the relationship between gender and ethical
practices among women. Dutta12 and Banerjee found the fact that women
display more ethical behavior than men. The authors of this study think that
women are less likely to engage in fraud and corruption than men because of
their natural inclinations. Therefore, it is possible to assume that women have
gender differences in ethical practice.
Level of education and ethical practices of SMEs
It is important to consider the factors that affect the ethical behavior of SMEs.
This is important because it provides information on policies. Therefore, the
authors of this study believe that education is a good indicator of moral
behavior among SMEs. Research by Herrera and Ark found that people with a
college degree are more likely to take ethical issues more seriously than their
counterparts without a college degree. Similarly, Dutta and Banerjee (2011) 12
discovered that people with a university education are more sensitive to
ethical issues than non-graduates.
In addition, trained owners claim that they are willing to understand the long-
term consequences of immoral behavior and therefore are willing to act
within the expected code of conduct. Since moral and corporate social
responsibility is part of the teaching module of higher education institutions,
university education plays an important role in shaping individual moral
19
behavior (Pérez, 2010; Larrán Jorge, AndradesPẽna, & Muriel de Los Reyes,
2014)47. We can assume that there are significant differences in the moral
practices of SMEs by education level.
20
CHAPTER II
This segment will present facts about small and medium corporations in
Azerbaijan. Every day, new small enterprises are opened in our growing
country, and we see how strong they are and the ways of development.
21
Figure 2.1.1. SME Policy Index points for Azerbaijan
Figure 2.1.2. SME Policy Index points for Azerbaijan, between 2020 and 2016
22
SME sector
A new definition of SME has been introduced to eliminate differences within
the methodologies used by the State Statistics Committee and the Ministry of
Taxes. The new definition distinguishes micro, small, medium and large
businesses and is partially aligned with the EU definition by synchronizing
standards for a wide range of employees.
Business integrity
Overall, the government's efforts to improve the environment for commercial
enterprises and sell transparency in the public region have had a positive
impact on reducing corruption (ACN OECD, 2016)2.
Various awareness-raising events were held in Azerbaijan to save small
businesses from corruption in the public region. In addition to increasing the
coverage of commercial enterprise integrity facts for the corporations, the
authorities may also take into account economic and various incentives for
corporations to implement SME-related periods and compliance mechanisms
(including tax breaks, honesty rewards, reduced protection, compliance). can
take more careful steps to help his honesty.
SME skills in Azerbaijan.
Most businesses are SMEs, and maximum SMEs are person entrepreneurial
managers who lack the assets wished to take part withinside the series and
evaluation of various skills. Although the effect and sales of the SME region
24
at the financial system are small, it gives substantial employment possibilities,
i.e. growing new activity possibilities for human beings via way of means of
stopping unemployment. A very huge leap forward in assisting SMEs
changed into the status quo of an SME organization that coordinates
stakeholders and performs a critical function withinside the improvement of
those enterprises. However, the organization has been running simplest on
account that 2018. For decades the authorities have been offering monetary
guide for applicable education for SMEs. The participation of SMEs in
worldwide fairs, observe excursions and activities to facilitate business-to-
human beings contacts is likewise supported via way of means of the SME
Agency, the Export and Investment Promotion Foundation, the Ministry of
Economy, the Council10 for State Support. Support efforts attain own circle of
relative’s businesses, youth, women, startups and SMEs with the capacity to
grow, internationalize and take part in international deliver chains. Emphasis
is positioned on assisting SMEs take part withinside the rising virtual
financial system. At the preliminary stage, education for SMEs withinside the
inexperienced financial system and online trainings for SMEs also are
offered.
2.2. Research methodology and data collection of survey
The study covered 100 people in Azerbaijan. Baku is an area where the
number of SMEs is growing day by day, so the survey was conducted here.
This is likely to be reflected in SMEs in Azerbaijan. A quantitative research
method has been adopted for this study. In this study, which used random
sampling methods, data were collected using self-administered
questionnaires. The research questionnaire consisted of 4 parts; (1)
biographical questions (2) ethical practice questions and (3) ethical activities
of leaders and (4) SME development questions. All the questions used in the
questionnaire are very selective. The study used questions on a 5-point Likert
25
scale for both ethical practice and growth and development. Questions range
from decisive disagreement to firmly agreeing with ethical practice questions
and not knowing what excellent performance is. The data obtained from the
questionnaire were analyzed using descriptive statistics, factor analysis, T-test
and regression analysis. Descriptive statistics were conducted to summarize
information on the ethical practices and activities of SMEs. T-tests were used
to compare leaders' ethics with the development of SMEs, and factor analysis
was performed to check whether the variables of different ethical practices
confirmed the basic constructions, as noted in the existing literature. Multiple
regression analysis was performed to investigate the hypothetical link
between ethical behavior, leader’s moral behaviors and the development and
growth of SMEs. In this study, ethical practices were an independent variable,
and growth was a research-dependent variable. Cronbach alpha was used to
measure reliability.
All the analyzes I mentioned above will be analyzed using SPSS software.
Below you will find the results of the survey, which was attended by 100
people, collected in SPSS. Of the first 4 questions, 3 were nominal, 1 was
ordinal, and the other 12 questions were measured on a scale.
26
Figure 2.3.1. Survey Data
27
Figure 2.3.3 Survey Data
29
CHAPTER III
The graphs below show the gender and age of the respondents, whether there
is a written code of ethics in the company they work for, and whether the
respondent has small or medium business experience. The gender distribution
of the survey participants is 45 percent female and 55 percent male. The
tables also show that the majority of participants are young, 49 percent of
whom are between 18 and 25 years old. 80 percent of respondents have small
or medium business experience. The analysis also shows that most employees
do not have a written code of ethics in the workplace.
Table 3.1.1 Demographic Feature
Demographic N %
Feature
Gender
Male 55 55%
Female 45 45%
Total 100%
Age
18- 25 years 49 49%
25-35 years 42 42%
35+ years 9 9%
Total 100%
Experience
Yes 80 80%
No 20 20%
Total 42 100%
Code of ethics
Yes 31 31%
No 69 69%
Total 100%
30
Figure 3.1.1 Demographic Feature
31
Figure 3.1.2. Workplace ethics questions and answers
32
Figure 3.1.3. Reliability statistics for “ethics_1 - ethics_4”
33
Figure 3.1.4. Leader's moral behavior on workplace ethics questions and answers
In our second part, the Alpha value is 0.956 (> 0.7), which is interpreted as
excellent.
Item analysis was required to ensure that the questionnaires Q4.1 to Q4.4 of
34
the questionnaire were relevant to the measurement of the topic. However,
sample size requires a minimum of 100 respondents to perform this analysis
(scale measurement product and number of items on this topic). With these
questions, we will examine how the level of development and growth will
change for people after ethics is brought closer.
Table 3.1.5 shows how the level of development and growth will change.
Table 3.1.5. Growth and development questions and answers
35
In our third part, the Alpha value is 0.831 (> 0.7), which is interpreted as very
good and acceptable.
36
Multiple regression is a statistical technique that can be used to analyze the
relationship between a single dependent variable and several independent
variables. The purpose of multiple regression analysis is to use independent
variables whose values are known to predict the value of a single dependent
value.
A
Inventor
y 1070
37
in the model is effective on the dependent variable. According to the ratio
table, marketing costs have a positive and significant impact on the company's
success. In my survey, the success rate corresponds to the measurement level
and the cost measurement level, and is positive. Therefore, it is important to
take into account the non-standardized ratio. In other words, a change in a
single standard deviation in ethical behavior leads to an increase in the
success rate of 0.256 standard deviation. Or a single standard deviation
change in leaders' behavioral values results in an increase of 0.364 standard
deviation at the development level. (Figure 3.1.10)
38
Figure 3.1.11. Regression Standardized Residual
39
Figure 3.1.13. Observed Cum Prob
The T-test is a statistical test used to compare the means of two groups. It is
often used in hypothesis testing to determine whether a process or treatment
actually has an effect on the population of interest or whether the two groups
differ from each other.
41
CONCLUSION
As a result of our analysis, I can say that the personal ethics that people
demonstrate in the workplace and the ethical standards set by the
company help small businesses to survive and thrive. Since the answer
to our analysis is positive, the development of ethics and income
growth are considered to be directly proportional and interdependent.
That is, small businesses with a high level of ethics will grow in the
future and achieve more success.
Our analysis has shown that employers and high-ranking employees,
using their positions in the workplace, violate business ethics,
although it is not desirable.
This article provides a wealth of information and analysis on the ethical
behavior of SMEs in developing countries. Thus, SME owners,
managers or trusted employees can use the results of this text to
promote the company's interests, development, creating a healthier
work environment and at the same time to compete with other
companies on stakeholders.
Undoubtedly, SMEs act as agents of change and engines of economic
growth and development. However, a significant proportion of SMEs
have been found to die prematurely. It was noted that SMEs engage in
unethical behaviors such as tax evasion, non-compliance with quality
standards, lack of policies to protect employees and customers, fraud
and the sale of illicit substances.
42
Therefore, resolving the ethical dilemma, in addition to a whole new set
of recruitment skills, requires interpersonal and negotiation skills:
honesty, the ability to paint collaboratively, to value others, to enjoy
one's drawings, to learn, to be credible, to be responsible for one's
actions, to be honest and loyalty.
I believe that unethical behavior threatens the sustainability of SMEs. Ethical
behavior has become an important issue for SMEs to take seriously to avoid
negative consequences such as negative brand image, litigation and mistrust
between different stakeholders in their networks. Our analysis in the
simulation part also showed that even if there are written ethical laws, ethical
relations in SMEs in Azerbaijan and in developing countries do not seem
encouraging, and people believe that if these relations are corrected,
companies will develop and leaders will be more honest.
4
3
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APPENDIX A
This questionnaire is based on an ethical and moral analysis of small businesses in
developing countries, as well as in Azerbaijan.
Your feedback is very valuable and important for me to understand ethics in the workplace
and to analyze my dissertation. I promise to maintain strict confidentiality and anonymity.
Thank you for participating!
Directions:
Please read the cases described below and select the answers that indicate the degree to
which you feel they are ethically acceptable.
Remember: We are interested in your personal opinions.
Isali Amina
Azerbaijan State Oil and Industrial University
4
7
7. All employees in your workplace are honest with each other and with
entrepreneurs.
(1-Strongly Disagree; 2 – Disagree; 3 – I don’t know; 4 – Agree; 5 – Strongly Agree)
8. All employees in your workplace balance their organizational and
personal needs.
(1-Strongly Disagree; 2 – Disagree; 3 – I don’t know; 4 – Agree; 5 – Strongly Agree)
9. Leaders in your organization absorb most of the company's revenue and
do not make any changes to employees' salaries.
(1- Strongly Disagree; 2 – Disagree; 3 – I don’t know; 4 – Agree; 5 – Strongly Agree)
10. The management should display proper ethical behavior in order for the
employees to follow suit.
(1- Strongly Disagree; 2 – Disagree; 3 – I don’t know; 4 – Agree; 5 – Strongly Agree)
11. Managers, being in the top tier of the firm, are allowed to act freely as they
please.
(1- Strongly Disagree; 2 – Disagree; 3 – I don’t know; 4 – Agree; 5 – Strongly Agree)
12. If the company's ethical values change in a positive direction, the growth of
your organization (for example, sales, membership, etc.) will accelerate.
(1- Strongly Disagree; 2 – Disagree; 3 – I don’t know; 4 – Agree; 5 – Strongly Agree)
13. If your company's ethical values change in a positive direction, the
profitability of your organization's assets will increase.
(1- Strongly Disagree; 2 – Disagree; 3 – I don’t know; 4 – Agree; 5 – Strongly
Agree)
14. If your company's ethical values change in a positive direction, your
organization will be more successful in attracting employees.
(1- Strongly Disagree; 2 – Disagree; 3 – I don’t know; 4 – Agree; 5 – Strongly Agree)
15. If your company's ethical values change in a positive direction, your
organization's success in attracting customers / clients will increase day by
day.
(1- Strongly Disagree; 2 – Disagree; 3 – I don’t know; 4 – Agree; 5 – Strongly Agree)
48
APPENDIX B
4
9
Figure 3.1.3. Reliability statistics for “ethics_1 - ethics_4
50
Figure 3.1.7. Reliability statistics for “growth_1 - growth_4”
5
1
Figure 3.1.8. Multiple regression analysis: Descriptive statistics and Correlation
52
Figure 3.1.11. Regression Standardized Residual
Figure 3.1.13. Observed Cum Prob
5
3