Business Ethics Perceptions of Public and Private Sector Iranians

J Bus Ethics (2011) 104:433–447 DOI 10.1007/s10551-011-0920-z

Business Ethics Perceptions of Public and Private Sector Iranians Bahaudin G. Mujtaba • Reza Tajaddini Lisa Y. Chen

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Received: 15 May 2010 / Accepted: 25 May 2011 / Published online: 5 June 2011 Springer Science+Business Media B.V. 2011

Abstract Ethical maturity is a great concern to all educators, firms, and investors across the globe. This research surveyed 448 citizens, managers and employees in Iran to measure their Personal Business Ethics Scores (PBES) to see if age, education, management experience, and government work experience make a difference in making more ethical decisions. This study contributes to the theory of moral development across the Iranian culture as it is the first known study using this method. The results suggest that education and more years of government work experience make a difference in the moral maturity of respondents. This study confirms that the ethical maturity of respondents is enhanced either through the authoritarian regime or socialization with Islamic values. Kohlberg’s moral development theory regarding ethical maturity is partially supported since those with more years of experience in government and more formal education have higher business ethics scores. Implications are discussed.

B. G. Mujtaba (&) The H. Wayne Huizenga School of Business and Entrepreneurship, Nova Southeastern University, 3301 College Avenue, Fort Lauderdale, FL 33314, USA e-mail: [email protected] R. Tajaddini School of Business, University of Otago, P.O. Box. 56, Dunedin, New Zealand e-mail: [email protected] L. Y. Chen Department of Information Management, I-Shou University, 1, Sec. 1 Syuecheng Road, Dashu Township, Kaohsiung County 840, Taiwan e-mail: [email protected]

Keywords Iran Government experience Business ethics Ethical maturity Morality Morals Moral development

Introduction Have you paid a bribe in the previous 12 months? This is one of the multitudes of questions Transparency International asked more than 73,000 people in 69 countries as part of the 2009 Global Corruption Barometer study. Corruption Perception Index (CPI) ranks countries according to ‘‘the degree to which corruption is perceived to exist among public officials and politicians’’ (Internet Center for Corruption Research 2010, p. 1). Countries are ranked from 10 as the least corrupt to 1 as the most corrupt. Today’s Iran does not score well in these kinds of rankings, although Iranians have contributed in many aspects to the building of the global standards of morality throughout history. The CPI scores for Iran have decreased over the past several years: 1.8 (2009), 2.3 (2008), 2.9 (2005), and 2.9 (2004). Although when the 2010 CPI scores from Transparency International became available in October 2010, it showed a slightly higher score of 2.2 (compared to 1.8 of 2009) for Iran, it is still considered to represent a highly corrupt business environment (Transparency International 2010). In other words, the CPI surveys in Iran point to a higher level of perceived corruption in the public sector. Of course, Iran is an Islamic country where people have similar moral values as their Christian and Jewish colleagues; as such, their ethical values may not necessarily be very different from Western populations. As a matter-offact, there might be many similarities in regards to work ethics. This study will examine if a business ethics measure

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developed in the United States can also be applied in Iran. There is a need for further study using widely used instruments, for cross-cultural comparisons, since a better scientific understanding of ethical perceptions from Iranian entrepreneurs, civil servants, and general working adults would be of interest to academicians and practitioners. Table 1 gives an overview of Iran’s CPI ranking among some developed and developing countries in 2010. Moral development, according to researchers (Mujtaba 2010, p. 8; Rich and DeVitis 1994) is the growth or ability of an individual to distinguish right from wrong, to develop a framework of ethical values, and to learn to act morally. The term development is usually associated with progressive and continuous changes that take place as a result of learning and experience from the beginning of a person’s life until death. Researchers claim that moral development occurs through the process of not only life maturity but socialization in the community, workplace, and educational institutions as well (Mujtaba and Sims 2006; Jadack et al. 1995). Kuper (1975) states that science, religion, culture, standards of good and bad, and other forms of behavior in society are passed on by nurture (that is, they are learned) and not by nature. Covey (1990) states that each individual has the ability to think about his or her very thought process, called ‘‘self-awareness.’’ Covey further emphasizes that it is our ‘‘self-awareness’’ ability which enables us to make significant advances from generation to generation. Consequently, moral character is an aspect of personality which can structure a person’s moral, ethical, and personal beliefs. According to Fritzche (1995), a person may be deemed moral when he/she behaves ethically; as such, moral behavior is a function of one’s past experience with similar situations in which a person has learned to behave in an ethical and a socially responsible manner (Mujtaba, 2010, p. 9). Ethics principles, which are defined as the disciplines dealing with what is good and bad and with moral duty and obligation, have deep roots in Iranian culture. Iran was formerly known as Persia until 1935 and it is home to one of the world’s oldest continuous major civilizations. Cyrus the Great (580–529 B.C.), the founder of the Persian Empire, presented himself not as a conqueror, but as a liberator. He was the first to declare a Charter of Human Rights of nations in the world (Farrokh 2007). Another example, Zoroaster, the ancient Persian prophet, defined what is good and what is bad, and at the same time spoke of the full freedom of will to make a choice. Actually, Zoroaster was the first philosopher who discussed the problem of evil in philosophical terms (Whitley 1957). Islam is now the dominant religion in Iran. This religion, in general, places a strong emphasis on justice, harmony, and generosity in the workplace (Ali and Amirshahi 2002). In addition, popular Iranian scholars such as Avicenna (A.D.

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B. G. Mujtaba et al. Table 1 Corruption perception index of selected countries Rank

Country/territory

CPI 2010 score

1

New Zealand

9.3

4

Sweden

9.2

8

Switzerland

8.7

8

Australia

8.7

15

Germany

7.9

17

Japan

7.8

22

United States

7.1

25

France

6.8

38

United Arab Emirates

6.3

50

Saudi Arabia

4.7

56 56

Malaysia Turkey

4.4 4.4

78

China

3.5

87

India

3.3

98

Egypt

3.1

110

Indonesia

2.8

134

Azerbaijan

2.4

143

Pakistan

2.3

146

Iran

2.2

154

Russia

2.1

154

Tajikistan

2.1

172

Uzbekistan

1.6

175

Iraq

1.5

176

Afghanistan

1.4

178

Somalia

1.1

Source: Transparency International, 2010. Retrieved on November 5, 2010 from: http://www.transparency.org/policy_research/surveys_ indices/cpi/2010/results

981–1037) and Khaje Nasir-al-din Tusi (thirteenth century) put special emphasis on teaching and practicing ethical codes (Encyclopedia Iranica, 2010). Moreover, poetry has been a common way for many Persian philosophers to convey moral guidelines over generations. These guidelines can be found easily in IndoIranian poetic literature (Jafarey 2010). Iran represents an important regional economy with a strategic location in the Persian Gulf and Central Asia. Iran has a relatively large population, and tremendous resources, which has the potential for large investment opportunities (Yegahen and Su 2008). Iran’s 1979 Islamic revolution, in which its leaders positioned themselves as a new ideological administration, called for the overthrow of capitalism and social injustice. It has attempted to introduce itself as an alternative way for the governing of a country based on the implementation of religious and moral values in all levels of society. This gives Iran a distinctive feature when compared to some of the Western countries and it would be illuminating to see how these

Business Ethics Perceptions

policies have affected current ethical orientation of Iranians after three decades of a new constitution. Given the previous examples, it is expected that Iranian society has a high level of ethical standards; however, Iran’s poor CPI score is in contrast with these expectations. Moreover, in a survey of public opinion on the ‘‘informal payment’’ or bribes to physicians in Kerman, Iran, researchers (Setayesh et al., 2007) found that over 90% of respondents are aware of and accept this phenomenon in their society. Meanwhile, just 17.8% of them are optimistic about the effectiveness of any legal claims against these illicit activities. Some of the possible factors for the expansion of unethical behavior may be the growing rate of unemployment, inflation and poverty in today’s Iran (Tajaddini and Mujtaba 2010). There have been many authors and researchers who have studied ethics and the unethical behaviors of managers and students in academia, as they are concerned about ‘‘copycatting’’ and the deleterious influence of inappropriate behaviors by managers and senior officers of major firms (Mujtaba et al. 2009; Cavico and Mujtaba 2009; Clark 2008; Crary 2008; McGill 2008; Desplaces et al. 2007; Gao 2004; Klein et al. 2007; Lawson 2004; Cherry et al. 2003; Nonis and Swift 2001; Ridley and Husband 1998; and others). In a study by Mirshekary and Lawrence (2009), the similarities and differences of Iranian and Australian students’ attitudes to unethical behavior in both an academic and a business setting was examined. They did not find a significant difference between the two groups in regard to business ethical misconduct or minor academic misconduct. However, Australian students reported significantly higher unacceptability of serious academic misconduct. Researchers know that greed influences people to behave unethically; furthermore, it could also be a person’s lack of education, young age or lack of management experience that leads him/her to make ethical lapses in judgment (Mujtaba 1997). A key research question might be to see if age, education and management experience actually make a difference in the ethical decision making of Iranian respondents. Consequently, this current research is designed to explore the Personal Business Ethics Scores (PBES) of Iranian respondents. Building on the theory of moral development, the purpose of this study is to determine whether the variables education, age, government work experience, and management experience, gained through the maturation process, are related to ethical decision making. Moral development is the growth of a person’s ability to distinguish right from wrong, to develop a system of ethical values, and to learn to act morally (Kohlberg 1969; Mujtaba 2010). According to Kohlberg (1984), Clark and Clark (1966), and more recently Mujtaba (2010, p. 9), the term

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development refers to progressive and continuous changes from the beginning of life until the end. As the research will show, moral development occurs through the process of not only maturity, but also socialization as a person acquires education, grows older, and obtains management experience (Mujtaba and Sims 2006). It is believed that science, religion, culture, standards of good and bad, and other forms of behavior in society are passed on by nurture (that is, they are learned) and not by nature. Most ‘‘ablebodied’’ individuals have the ability to think about their own thought process, known as ‘‘self-awareness’’, which enables them to make significant advances over time (Mujtaba 1997). This study attempts to examine if the PBES measures are applicable in an eastern culture, and to discern if demographic variables and educational development levels are related to the ethical maturity of respondents in Iran. Age and Ethics Aging is part of life and the accumulation of experience naturally provides support for moral development theory and longevity. Based on a comparison of older individuals (such as those who are 30 years of age and above) and younger respondents (such as those who are 29 years of age and younger), it has been empirically confirmed that the age of a person relates to his/her moral cognizance or ethical maturity (Cannon 2001; Hyppolite 2003; Chavez 2003; Ariail 2005; Huang 2006; Mujtaba et al. 2009). However, some researchers find no relationship between age and moral maturity (Poorsoltan et al. 1991; Evans 2004; Heron 2006; Galla 2006; Freeman 2007). Freeman’s findings based on a comparison of younger and older individuals conclude that there is no significant relationship between age and moral maturity in either ‘‘knowledge management’’ or ‘‘non-knowledge management’’ firms (Freeman 2007, p. 92). However, Freeman noted that his results on age were ‘‘at variance with substantial research that found age as a significant influence in moral maturity’’ (Freeman 2007, p. 107). Galla (2006) concluded that the age of the participants did not have any ‘‘significant effect’’ on their moral maturity score (Galla 2006, p. 52). Heron’s results indicated that there was ‘‘no difference in ethical maturity level between different age groups of IT professionals’’ (Heron 2006, p. 143). Poorsoltan et al. (1991) results indicated that there was no relationship between age and the level of ethical reasoning of managers. However, it is generally agreed that older individuals tend to be more ethical or possess stricter view of moral issues than younger ones. As individuals progress through the experience of life, they should develop higher stages of moral cognition. According to Huang (2006), surveys conducted suggest that students in

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the 40-plus age group are the most ethical. The findings are consistent with research that older students exhibit more ethical inclinations. Some studies conclude that younger respondents tend to be less ethical than older people (Huang 2006). These findings are similar to the findings of Mujtaba (1997) as those who were 26 years of age and older scored higher on the Personal Business Ethics Score measures. Ariail (2005) found that the age groups 40–49 and 50–59 had higher DIT (Defining Issues Test) moral maturity scores than the other categories, but the scores were not statistically significant, and thus he answered his age research question in the negative (pp. 198–204). Evans (2004) investigated the ethical maturity of African-American business professionals who worked as managers and employees in the private sector as well as entrepreneurs, and who were members of the National Black Master of Business Administration organization. Evans’ results showed that ‘‘there is no difference in ethical maturity level between different age groups of African-American business professionals’’ (2004, p. 74). Chavez (2003) examined the moral maturity scores on Kohlberg’s scale as measured by the Defining Issues Test of banking employees in southeast Florida. His results indicated that ‘‘the common perception of being ‘older and wiser’ may prove correct’’ since banking employees that are less than 30 years old tend to have lower (moral maturity) P scores than banking employees who are 30 years of age and older (pp. 58–59). Hyppolite (2003) examined the ethical maturity level of public sector employees at the local government level. His study’s findings exposed that there was a significant correlation between the two variables. The average P score (for moral maturity) of older participants was higher than the one for younger respondents. As one matures with age, his or her average P score is likely to increase. This research indicated that age is a predictor of individual maturity level (Hyppolite 2003, p. 139). Cannon’s results revealed that ‘‘DIT scores for working adults equal to or over the age of 36 were significantly higher… than DIT mean scores of working adults younger than 36 years’’ (Cannon 2001, p. 195). Furthermore, there is empirical support for age as a predictor of moral development in a meta-analysis of multidisciplinary ethics studies. Kohlberg’s Cognitive Moral Development theory posits that as a person increases in age, his or her capability and level of moral reasoning should concomitantly and progressively increase as well. Furthermore, as a person increases in age, so does the complexity of the moral questions that a person will confront; and accordingly moral reasoning should increase with age. So, does age in fact relate to morality in the sense of moral cognizance or moral maturity? The evidence obtained from the above

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B. G. Mujtaba et al. Table 2 Are age and business ethics related? Cannon (2001)

Yes

Hyppolite (2003)

Yes

Chavez (2003)

Yes

Ariail (2005)

Yes

Huang (2006)

Yes

Mujtaba et al. (2009a)

Yes

Poorsoltan et al. (1991)

No

Evans (2004)

No

Heron (2006)

No

Galla (2006)

No

Freeman (2007)

No

a

The study used p score. All others used DIT

studies, as well as their review of the age and morality literature, is plainly mixed. Perhaps age in combination with education would demonstrate a stronger link to moral maturity than between age and moral maturity (Mobley, 2002, p. 74). In fact, Heron (2006) pointed to one study which reported that 38% of the variance in the Defining Issues Test (moral cognizance) scores can be explained by the variables of age and education (p. 87). A summary of the mixed findings regarding age is presented in Table 2. According to the Index Mundi (2010) data on record, the median age of Iran’s population is 26.3 years old currently. This entry is the age that divides a population into two numerically equal groups; that is, half the people are younger than this age and half are older. Therefore, the age dimension of this study is divided into two groups based on the median age of Iran’s population, using 26 years of age as the cutoff. As such, this study hypothesized that: Hypothesis 1 Iranian respondents who are 26 years of age or older will have PBES that are equivalent to or greater than those individuals who are 25 years of age or younger. Furthermore, Kohlberg (1984) claims that individuals tend to morally mature well beyond their twenties, as such the researchers in this study chose this cutoff age to compare those who are younger with those who are a little older to see if age makes a difference. Management Experience and Ethics According to the concept of moral development theory, formal management experience should make a person more mature in his or her decision-making process regarding ethical dilemmas. As such, a relevant research question would be: Is there a relationship between one’s position and tenure or experience as a manager and one’s level of moral maturity? Some researchers have written that ‘‘there may be a deficiency in moral development of business


leaders, especially in principled reasoning and emphatic concern’’ (Kennedy, 2003, p. 51). Kennedy (2003) sampled ‘‘leaders’’ in a bank, an insurance company, a computer company, a telephone company, and a military command. His results indicated that the experience held by an organizational leader did not relate positively to the leader’s moral judgment level (Kennedy, 2003, p. 75). Huang (2006) conducted a cross-cultural examination of the moral maturity levels of U.S. and Japanese expatriate managers in Taiwan as well as Taiwanese managers who worked for Taiwanese-based multinational corporations (Mujtaba et al. 2009). Huang found that no significant relationship existed in the ethical reasoning abilities of the managers based on their level of education (Huang, 2006, p. 94). Hyppolite (2003) found that there was not a positive relationship between cognitive moral development and education among managers or non-managers (Hyppolite 2003, pp. 137–138). He also found that there was not a positive relationship between the rank and position variables and moral maturity (Hyppolite 2003, p. 139). Cannon (2001) found a ‘‘slightly higher’’ DIT score for working adults with 14 years or more of work experience, but not a significantly higher score, and thus she answered her research question in the negative and accordingly concluded that work experience does not predict moral development (pp. 198–199). She also noted that the relationship between work experience and moral development is not well documented in the literature (Cannon 2001, p. 198). Moreover, in a recent study by Cho (2009), it was assumed that managerial groups put more weight on the core values such as restoration of profit to the society, social responsibility, faithful tax payment, environment/respect for life, fair transaction/competition, transparency of information disclosure, compensation for performance, and customer satisfaction. However, Cho (2009) did not find a considerable difference between managers and union members in the perceived importance of the ethical core values. In contrast with the above studies, Cron (1984) and Weeks et al. (1999) claimed that attitudes toward ethical issues might vary according to a person’s career stage. In other words, work experience could influence a person’s ethical judgment. Mujtaba (2010) demonstrated that respondents who had 5 or more years of retail management experience did have significantly higher PBES. Since Mujtaba’s (2010) retail respondents with management experience and Cannon’s (1991) respondents with more years of experience did have a slightly higher ethical maturity score, the researchers want to determine whether this is the case with Iranian respondents who are socialized in an Islamic country with an authoritarian public sector. A summary of the mixed findings is presented in Table 3. Accordingly, the study for this article focused on the following hypothesis:

437 Table 3 Are management experience and business ethics related? Cron (1984)

Yes

Weeks et al. (1999)

Yes

Cannon (2001)

No

Kennedy (2003)

No

Hyppolite (2003)

No

Huang (2006)

No

Cho (2009)

No

Hypothesis 2 Iranian respondents who have management experience will have Personal Business Ethics Scores that are equivalent to or greater than respondents who do not have any management experience. Education and Ethics While experience in the workplace provides many informal educational opportunities, formal education can certainly be assessed to see if it actually has an impact on a person’s level of moral maturity. One aspect of moral development is acquiring new information as part of one’s socialization process in educational institutions. Some researchers claim that there is a relationship between education and higher levels of moral development and reasoning (Mujtaba et al. 2009). Many studies report a strong, positive, and predictive relationship between education and ethics, especially with Kohlberg’s levels of Cognitive Moral Development as ascertained by Rest’s Defining Issues Test (Freeman 2007). Freeman indicated that there was a positive and significant relationship between levels of education and moral maturity (2007, pp. 98, 108). Evans indicated that there was a difference in the ethical maturity level between groups of formally educated African-American business professionals (Evans 2004, p. 76). She reported that ‘‘the statistical evidence…indicated formal education for African-American business professionals, as measured by the DIT, results in increased levels of cognitive moral development (CMD)’’ (Evans 2004, p. 81). Kennedy (2003) found that there is a positive difference in moral judgment by educational level of the leaders he surveyed (pp. 71–72). He also demonstrated that there was a positive and significant relationship between the amount of ethics training received by the leaders and their moral maturity levels (Kennedy, 2003, pp. 72–73). Mobley (2002) found that there was indeed a relationship between education and moral maturity, and in fact, based on her review of the literature and her own research results, Mobley (2002) concluded that ‘‘among the demographic variables, education is by far the most powerfully associated with DIT scores’’ (p. 71). A summary of the findings is presented in Table 4.

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B. G. Mujtaba et al.

Table 4 Are education and business ethics related? Mobley (2002)

Yes

Kennedy (2003)

Yes

Evans (2004)

Yes

Freeman (2007)

Yes

Mujtaba et al. (2009)

Yes

In most schools, 4 years of college education usually means the candidate has successfully completed the general education requirements and has earned a Bachelor’s degree in one’s area of specialization; as such, this research focuses on those who have completed 4 years of college education since fewer years of college education could be interpreted differently, such as attending a semester and dropping out. Due to the declining birth-rates and the increase of educational choices, most jobs now require at least a 4-year bachelor’s degree. Furthermore, employers prefer that their employees get involved in extra-curricular work activities to strengthen their academic skills and reinforce positive character traits (Career overview 2010). Many studies’ results show a connection between character traits and moral judgment, therefore, this study is designed to compare individuals who have at least a 4-year bachelor’s degree or above with those who do not have a 4-year bachelor’s degree. The following is the hypothesis for this study: Hypothesis 3 Iranian respondents who have a four-year bachelor’s degree or above will have Personal Business Ethics Scores (PBES) that are equivalent to or greater than respondents who do not have a 4-year bachelor’s degree. Government and Ethics Governments tend to have more layers of management and higher levels of ‘‘checks and balances’’ to make sure people’s tax money is being spent properly. Kohlberg’s theory of Cognitive Moral Development claims that as people grow, their level of moral maturity also increases with age, experience, and education. If this is the case, then working with a government agency might be a factor since they have strict rules and regulations in almost all functioning areas of strong governments. For example, in a study by Fryxell and Lo (2001), it was shown that Chinese managers in state-owned firms appear to embrace stronger environmental ethical values over their private sector and joint venture counterparts. Svensson and Wood (2004) also concluded that the codes of ethics in the Swedish public sector appear to be more nurturing, more developmental of staff, less regulatory and less directive than the private sector’s. Furthermore, they claimed that the Swedish public

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sector codes seem to be more positive in their approach and thus, the public sector organizations develop a mutually beneficial relationship between themselves, their employees and the society in general. Moreover, the U.S. National Government Ethics Survey (2007) indicated that when both a well-implemented ethics and compliance program and a strong ethical culture are in place within a government organization, misconduct drops by 60%, and reporting rises by 40%. Wal et al. (2008) explained that each value’s priority is considerably different between public and private sectors. The legalistic nature of government ethics codes versus constituency obligation private companies’ codes can be an illumination factor for the differences in ethical perception of two sectors. According to Wal et al. (2008), accountability (act willingly to justify and explain actions to the relevant stakeholders) is the most important value in the public sector followed by lawfulness, incorruptibility, expertise, reliability, effectiveness, and impartiality. However, in private sector, usually higher emphasis is given to profitability, followed by accountability, reliability, effectiveness, expertise, and efficiency. A large group of empirical studies have showed the crucial role of organizational environment as a determinant of the ethical decision making of managers (Hegarty and Sims 1979; Weaver and Ferrell, 1977). Moreover, Singhapakdi and Vitell (1990) showed that organizational ethical culture positively influences perceptions of ethical problems and alternative solutions in a marketing context. Ethical culture was defined by Trevin˜o (1990) as a slice of the organizational culture that influences employees’ ethical behavior through formal and informal organizational structures and systems. On the other hand, the term ethical climate has been defined as a shared perception among organization members regarding the criteria and focus of ethical reasoning within an organization (Victor and Cullen, 1988; Schminke et al. 2005). ‘‘Ethical infrastructures’’ have been adopted by many organizations in order to encourage ethical behavior among organizations’ members (Tenbrunsel et al. 2003). These formal and informal policies contain ethics codes, communications, training, monitoring systems, sanctions, as well as rewards and attention to an ethical climate which are all elements that are deeply integrated into Iranian public sector institutions. The Iranian public sector suffers from a variety of illnesses that may lead to the low ethical performance of its employees. The administrative approach to the public sector is very political in Iran, which has led to managerial myopia and short sighted perspective in planning among managers. Moreover, this phenomenon influences the selection procedure of managers and also causes a high turnover among them (Danaee Fard et al. 2010).


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Table 5 Are government working experience and business ethics related? Fryxell and Lo (2001)

Yes

Svensson and Wood (2004)

Yes

U.S. National Government Ethics Survey (2007)

Yes

Furthermore, due to the nature of the culture, it is believed that the selection process in many Iranian organizations is based on personal relations and nepotism rather than professional competence. In some state-owned organizations, more attention is paid to compliance and code of conduct, which are based on the religious/revolutionary criteria, during the recruitment process. Such restrictions have resulted in increasing inefficiency in the public sector (Yegahen and Su 2008). According to Danaee Fard et al. (2009), the performance of Iranian public service organizations is low and one of the reasons for this low performance is that the Iranian public service organizations suffer from lack of an organizational culture that promotes learning in these organizations. Danaee Fard et al. (2009) further suggested that Iranian public organizations should develop programs that improve organizational learning culture, learning and creativity, system thinking, team working, and participation level in their organizations. A summary of the findings is presented in Table 5. Kohlberg (1984, 1972) claims that those who are 30 years of age and older might be more morally mature than those who are in their early twenties. If a person graduates college at age 23 to 24 and begins working, then in his/her thirties he or she is likely to have had at least 6 or more years of work experience. Mujtaba (1997) demonstrated that those who had 6 or more years of work experience as managers in the corporate arena did have significantly higher scores than non-managers. Mujtaba claimed that 6 years of being socialized with the organizations’ values might be a stronger influence on the behavior of a person since fewer years may not necessarily impact a person’s decision-making process as strongly. This study uses work experience in the government sector to see if long-term socialization makes a difference in the ethical maturity of respondents. Therefore, the study for this article focused on the following hypothesis: Hypothesis 4 Iranian respondents who have government work experience will have Personal Business Ethics Scores that are equivalent to or greater than respondents who do not have any government work experience. Since an organization’s culture can be a strong influence on a person’s behavior in the workplace, the researchers in this study chose to compare those who have several years of government experience with those who have no

experience to see if long-term socialization in the public sector makes a difference in the ethical scores of respondents. Research Methodology and Analysis As discussed above, there have been several studies that link the moral and immoral behavior of individuals to their experience, education, age, and maturity levels. Researchers (Kohlberg, Piaget, Clark) have concluded that as individuals mature (grow older and acquire knowledge and experience) their ethical values and behaviors tend to improve. This growth in the moral development of individuals takes place from early childhood until the late twenties and thirties (Clark and Clark, 1966; Mujtaba et al., 2009). Moreover, social learning theory of Bandura (1986) provides a theoretical basis for understanding how ethical leaders might influence followers. Previous studies by Clark and Clark (1966), Freedmen (1990), and Mujtaba (1997) have successfully sampled executives and managers in the United States using the PBES instrument. This study uses Clark and Clark’s (1966) instrument to see if it is appropriate to use the PBES measure in an eastern culture such as Iran in order to explore the results of respondents in an Islamic country. The analysis is based on age, management experience, work experience, and education. The research question to be answered is whether age, education, and management experience affect the moral development of individuals in Iran. The independent variables affecting one’s moral development are age, management experience, government work experience, and education. Survey research techniques have been successfully used to study the values and beliefs of people in the organizational culture and environment (Mujtaba et al. 2009). The analytical survey method of research has many advantages when compared to other available methods. When using self-administered questionnaires, the errors associated with interviewer subjectivity are eliminated. The self-administered questionnaires also offer greater anonymity, which can be extremely important when conducting research in the area of ethics. Respondents are asked questions that are very personal in nature because they deal with their values, beliefs, and daily practices. Also, the self-administered questionnaires allow researchers to objectively analyze the data and discover statistically significant relationships. The English version of the survey was translated by the second author, who is a native speaker, into Persian (Farsi), and then it was given to three university professors who spoke both languages fluently for checking the accuracy of the translated survey. Then the first author back-translated the Persian survey into English to see if the meaning had stayed the same. The authors and their colleagues agreed

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Table 6 KMO and Bartlett’s test for this study Variables

Ethics

Kaiser–Meyer–Olkin measure of sampling adequacy

KMO and Bartlett’s test Approx. chi-square

df

Sig.

0.823

857.622

55

0.000

Table 7 Results of factor analysis and reliability test for this study Factor constructs and items

Factor loading

Eigenvalue

Alpha if item deleted

Cronbach’s alpha

ETHICS01

0.740

3.378

0.7610

0.7627

ETHICS02

0.442

0.7356

ETHICS03

0.731

0.7571

ETHICS04

0.754

0.7450

ETHICS05

0.753

0.7550

ETHICS06

0.490

0.7478

ETHICS07 ETHICS08

0.526 0.704

0.7357 0.7320

ETHICS09

0.718

0.7401

ETHICS10

0.619

0.7429

ETHICS11

0.587

0.7407

that the meaning of the survey dilemmas and questions have not changed in the Persian translated version. Factor Analysis Before conducting a factor analysis, it is necessary to check sampling adequacy and sphericity to determine whether if it is worth proceeding with the analysis. According to Kaiser (1974), KMO (Kaiser–Meyer–Oklin) is used to test whether the variables in this study sample are adequate to correlate. A general rule of thumb is that a KMO value should be greater than 0.5 for satisfactory factor analysis to proceed. For this study, KMO is 0.823 for business ethics; therefore, one can proceed with factor analysis. KMO test of the questionnaire results as shown in Table 6. In addition, the factor loadings after rotation are greater than 0.4, it is not necessary to remove any of the measured response questions. For the reliability test, each item had a corrected item-to-total correlation that are greater than 0.4 and Cronbach’s coefficient alpha are greater than 0.7 (Nunnally 1978) as shown in Table 7. Population Demographics This study targeted Iranian employees and managers. The surveys were sent to Iranians in the following cities: Tehran, Karaj, and Kerman. Tehran, which is the capital and the largest city of the country, is the most important

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economic center and populated city of Iran. Karaj is an industrial city and located nearly 20 km west of Tehran. Over 30% of the country’s factories are sited around these two cities. Kerman is the center of the largest province of Iran and is located in south east of the country. Although it is not a very large city, it is one of the main centers of the agricultural and mining industries of Iran. For this study, 800 questionnaires were sent to candidates. The convenience sample was obtained through educational institutions, businesses and entrepreneurs, private and public sector institutions. A paragraph explaining the purpose of this research and guaranteeing total confidentiality was included with each survey. At the end of the questionnaire some blank space was provided for the respondents’ comments. The respondents were asked to voluntarily complete the questionnaire and return it to the specified researcher by company mail. Out of 800 distributed surveys, a total of 448 surveys, comprising a response rate of 58%, were returned. From the returned surveys, a total of 15 surveys were incomplete and could not be used. Of the subjects, as presented in Table 8, there were 228 (50.9%) female respondents and the rest are males (220 or 49.1%). The questionnaire consists of 11 questions which represent the PBES. The PBES represents a total score between 11, indicating low personal business ethics for the 11 scenarios, to 55, indicating very high personal business ethics for these dilemmas. Researchers can compare the total added scores for the 11 dilemmas (that can range from 11 to 55) or use the average mean which can range from 1 to 5 based on the Likert scale. This study used SPSS software to analyze the collected data. Descriptive statistics, including means and standard deviations and a Pearson’s correlation were obtained. The probability level of significance for t test and analysis of variance (ANOVA) analysis at the p \ .05 level of significance is used to determine if there are differences in the responses of people based on age, education, management experience, and government work experience. A stepwise multiple regression analysis is then used as a measure of the explanatory power of the model to predict the relationship between variables. Pearson’s correlation for each of the variables are listed in Table 9, the correlation coefficients (r) reach statistical significance levels. There were statistically significant differences between government work experience groups (with work experience in government agency = 3.62 ± .594; without work experience in government agency = 3.81 ± .566; t446 = -3.517, p \ .001). The results of t test and the ANOVA are shown in Tables 10 and 11. Based on the results, there were no statistically significant differences between age groups (25 or younger = 3.64 ± .623; 26 or older = 3.75 ± .574; t446 = -1.667, p = .096) and management experience groups (with management experience = 3.76 ± .619;

Business Ethics Perceptions Table 8 Demographic characteristics of the sample (n = 448)

441

Frequency

%

Mean

SD

1.51

.500

2.31

1.085

2.90

.998

2.41

1.629

1.61

.487

1.55

.498

1.69

.464

Gender Male = 1

220

49.1

Female = 2

228

50.9

17–25 year old = 1

108

24.1

26–35 year old = 2

181

40.4

36–45 year old = 3

88

19.6

46–55 year old = 4

53

11.8

Over 56 year old = 5

18

4.0

High school = 1

59

13.2

Two years of college = 2

52

11.6

Age

Education

Bachelor degree = 3

227

50.7

93

20.8

17

3.8

215

48.0

34

7.6

1–5 year = 3

101

22.5

6–15 year = 4

18

4.0

16–30 year = 5

58

12.9

Over 30 year = 6

22

4.9

No = 1

173

38.6

Yes = 2

275

61.4

No = 1

202

45.1

Yes = 2

246

54.9

No = 1

140

31.3

Yes = 2

308

68.8

Master degree = 4 Doctorate degree = 5 Government work experience No experience = 1 Less than 1 year = 2

Management experience

Ethics course

Ethics training

without management experience = 3.69 ± .565; t341 = 1.184, p = .237). However, there were statistically significant differences between education groups (3.76 ± .590; 3.61 ± .565; t446 = -2.395, p \ .05) and government working experience groups. As can be seen in Table 11, the variances were not significantly different for age, education, and government work experience, but the p value (p = .016, equal variances not assumed) was significant for management experience. Multiple regression analysis results The following paragraphs and explanations are geared toward each hypothesis and its explanation. This study first used t test and ANOVA to compare differences of the means for independent variables (i.e. age, management experience, education, government work experience) on a dependent variable (personal business

ethics). The results only reveal whether there is a significant difference of means between the groups. A stepwise multiple regression analysis thereby is used to test the effects of these independent (predictor) variables on a dependent (criterion) variable. It is used to select the best subset of predictors from the candidate predictors by avoiding the impact of collinearity. It helps to understand the relative degree of influence of several independent variables on a dependent variable. In the stepwise multiple regression model, as showed in Table 12, gender (1 = male, 2 = female) is included as a control variable to further examine whether there were any relationships with the other variables. The overall coefficient of multiple determination is found as R2 = .070, Adj-R2 = .062, and Durbin–Watson = 1.931 (within the accepted range 1.5-2.5), shows no autocorrelation within variables. Variance Inflation Factor (VIF) of each variable is below ten which shows no multicollinearity between

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442


Table 9 Correlation between independent and dependent variables Age Age

Education

1

Education

Mag. exp.

Gov. exp.

Ethics

.103*

.402**

.720**

.144**

.029

.000

.000

.002

1

.234**

.132**

.147**

Mag. Exp.

.000

.005

.002

1

.443**

.057

.000

.228

Gov. Exp.

1

.167** .000

Ethics

1

* Correlation is significant at the 0.05 level (two-tailed) ** Correlation is significant at the 0.01 level (two-tailed)

Table 10 The mean and standard deviation of each variable in various groups

Table 11 The results of Levene’s test and t test on dependent variable

Variables

Variable

N

Mean

SD

Age

Levene’s test

T test

F

p

t

p

25 or younger

108

3.64

.623

Age

.008

.927

-1.667

.096

26 or older

340

3.75

.574

Education

1.231

.268

-2.395

.017*

Management experience Government experience

5.847 1.25

.016 .723

1.184 -3.517

.237 .000***

Education 4 year bachelor degree or above

112

3.61

.565

Without 4 year bachelor degree

336

3.76

.590

173

3.76

.619

275

3.69

.565

No experience

215

3.62

.594

With experience

233

3.81

.566

Management experience Yes No Government experience

each independent variable and dependent variable. For model 1, it indicated that government work experience (GWE) (b = .165, p \ .0001) has the ability to predict the dependent variable alone. The overall regression model 1 suggested that GWE (F = 12.432, p = .000 \ .001) has a statistically significant association with personal business ethics. With respect to H4 (government work experience), the positive sign of b coefficient indicates support. As for the model 4, all independent variables including control variable can successfully predict the dependent variable. The results suggest that education (EDU) (b = .0.93, p \ .005) has a statistically significant association with personal business ethics. With respect to H3, it means that the Iranian respondents with a bachelor degree or higher have higher personal business ethics than respondents who do not have a bachelor degree (Support H3). As for H1, (b = .013, p = .798) and H2 (b = -.34, p = .671), the result did not show a significant difference in ethics between the two groups. Therefore, H1 and H2

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* p \ .05; *** p \ .0001

were not supported. For gender, the model indicated that gender (b = .112, p \ .005) has a significant effect on personal business ethics. This study also tested an interaction between the two factors but only found a significant interaction between GWE (government work experience) and MAN (management experience) (b = .146, p \ .001). Discussion and Implications The study demonstrates that using the PBES measures in an eastern culture such as Iran is appropriate as the findings are comparable to those in western societies. Furthermore, this study provides partial support for the theory of moral development across the Iranian culture where people are socialized with traditional Islamic values. The results suggest that formal education in this country and more years of government work experience in this Islamic Republic make a statistically significant difference in the moral maturity of respondents. In other words, this study confirms that the ethical maturity of Iranian respondents is enhanced through the authoritarian regime which is in place as well as their socialization with Islamic values. These results are contrary to the findings of Transparency International which ranks Iran as a country with a high level of corruption.


443

Table 12 The result of stepwise multiple regression analysis Model

R2

Adj-R2

Stand. Coef.

t

Sig.

b 1 (Constant)

.027

.025

.165

GWE

91.578

.000***

3.525

.000***

Collinearity statistics Tolerance

VIF

1.000

1.000

.000*** 2 (Constant)

.050

.046

GWE

.170

88.053

.000***

.999

1.001

.151

3.686

.000***

.999

1.001

3.273

.001**

.190 .152

67.206 4.062

.000*** .000***

.968 .999

1.033 1.001

3.297

.001**

.969

1.032

2.364

.019*

GWE * MAN 3 (Constant) GWE

.062

.055

GWE * MAN

.110

GENDER 4 (Constant)

.182

50.035

.000***

.961

1.040

GWE

.070

.062

.146

3.894

.000***

.995

1.005

GWE * MAN

.112

3.187

.002**

.969

1.032

GENDER

.093

2.404

.017*

.989

1.011

2.014

.045*

EDU A dependent variable: Personal business ethics R2 = .070, Adj-R2 = .062, F = 8.373, and Durbin–Watson = 1.931 *** p \ 0.001; ** p \ 0.01;* p \ 0.05

The PBES determines one’s commitment level of personal integrity and honesty in business dealings and in the observance of the laws governing business. In this study, using the PBES instrument with the Iranian population, age and management experience did not produce any statistically significant results. However, it should be mentioned that the older group and those in management ranks did have higher business ethics scores. Overall, the results indicate that (1) younger and older individuals have statistically similar levels of ethical maturity; (2) management rank does not seem to be a significant factor in the business ethics scores of respondents compared to those who are not in management; (3) education appears to be a positive and statistically significant factor in the ethical maturity of respondents; and (4) working in the government sector can enable people to have significantly higher business ethics scores than those without work experience in the public sector, thereby supporting the theory of moral development. As presented in Table 13, most studies using Clark’s PBES instrument have been conducted with Western samples, mainly in the United States. The comparison of studies in the United States and Iranian sample demonstrates that the survey appears to be adoptable in Asian and Middle-Eastern cultures. Iranians, who are socialized mainly in a culture with Islamic values, tend to score in the same range as employees and managers in the United States. This opens up research opportunities for comparing Western and Islamic values in regards to ethical dilemmas in the workplace.

The results from the Iranian respondents demonstrate that there is no significant relationship between age and ethical maturity. These results are consistent with the findings of Freeman (2007), Galla (2006), Heron (2006) and Huang (2006) which claimed that mere age does not play an independent role in the ethical maturity of a person. Perhaps, age in combination with other factors such as education would demonstrate a stronger link to moral development (Mobley 2002; Heron 2006). Iranian respondents with higher levels of education did reveal more commitment to moral obligations than their less educated counterparts. These results are similar to the findings by studies of Browning and Zabriskie (1983), Rest (1983), Kennedy (2003), and Evans (2004) that showed educational level is positively related to undertaking higher ethical standards and moral development. More educated individuals should be better able to recognize nuances in situations that might justify expectations to moral norms. Therefore, it is possible to conclude that managers and superiors should be aware that most Iranian employees, especially with higher education levels, have a good understanding of moral dilemmas and unethical practices. Nevertheless, it is worth mentioning that ethics training programs and other forms of ethicsrelated communications should be targeted to all employees, not just entry-level or less educated workers, as communicating and enforcing high ethical standards pays off in many ways for an organization. If high ethical values are demonstrably part of an organizational culture, then they may also boost employees’ commitment to the organization,

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444


Table 13 Studies using Clark’s Instrument (Mujtaba 2010, p. 69) Authors

Year

Sample populations

Results and findings

John Clark

1966

Executives

Mean PBES 43.28

Arlow and Ulrich

1980 and 1985

Accounting, Marketing and Management students

Accounting students (42.63)and other majors (39.8)

George Stevens

1984

Wynd and Mager

1989

113 executives and 349 business students Two year study of Business and society students

Executives had higher scores (45.52) than students (39.56) Business and Society class did not affect PBES scores of students after one semester

Allen Freedman

1990

Hospitality students and managers

Managers with five yrs. of Experience scored higher (41.81) than students (38.73)

Stephenson, Galbraith and Grimm

1995

Five constituent groups of an accredited school

Individuals perceive themselves to be more ethical than others

Bahaudin Mujtaba

1997

Retail associates and managers

Managers with five or more yrs. of mgmt. experience scored higher (45.25) than associates without management experience (43.62)

Iranian respondentsa

2011

448 Iranian employees and managers

PBES mean = 40.93. Iranians with more education and six or more years of government experience have significantly higher PBES scores

a

Data from the current study with Iranians—all other studies are in the United States

potentially leading to improved job satisfaction, performance, and other desirable outcomes (Singhapakdi et al. 1999). The need for ethical educational programs was emphasized by our respondents as well. In their written comments at the end of the PBES survey, some put emphasis on national programs: Having a national award for those who follow high business ethics standards will be helpful in increasing the motivation of managers to follow good ethics. It leads them to put more effort in the education of their employees and to expect high business ethics standards in their organizations. And some pay more attention to the organizational programs: If a company educates its employees and managers and equips them with the latest techniques and information available in the market, they do not have to use unethical actions to prevent financial loses. One of the other issues raised by the Iranian respondents of this survey was the significant role of religion in Iranian society in regard to ethical problems: As our society is a religious one, spiritual guidelines are used to promote good business ethics behaviors. Most Iranians are Muslim and have to obey the Islamic rules and these rules are moral rules. So, if we don’t like to face any difficulty and injustice by

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others it is much better to take care for others interests as we expect others to do for us. Nevertheless, many blame government and lack of democracy in Iran for increased practices of undesirable behavior in their society: In current conditions, many ethical rules are sacrificed just in order to achieve some economic advantages. Economic progress, well being of society, prevention from addiction and unemployment are among some of the reasons that we (people and government) use to compromise moral principles. If we had a true democracy and our government was truly selected by our people’s votes and its concern was to serve the people, we wouldn’t have most of today’s problems in our country. The other outcome of this study was the insignificant role of management rank in the ethical maturity of Iranian respondents. Work and management rank are highly correlated with age and are expected to be positively related to ethical sensitivity (Harris and Sutton 1995). As experience accumulates, individuals may be exposed to greater variety of ethical problems and become more sensitive to the harm that ethical transgressions can do to the organization and its stakeholders. In alignment with moral development theory’s concept that age makes a difference, it is possible that more senior workers as well as managers, supposedly, are less willing to make exceptions to ethical guidelines and


are more committed to taking steps that produce desirable outcomes. However, in this study, although ‘‘management experience’’ variable’s lack of effect on ethical maturity is rather surprising, it is consistent with the findings of Singhapakdi et al. (1999), Kennedy (2003), Hyppolite (2003), and Huang (2006). A very recent study by Cho (2009) also did not find a noticeable difference between managers and union members in the perceived ethical core values. Future research, including longitudinal studies to track changes in age and managerial experience levels, would help to clarify the antecedents of personal moral development. Iranian respondents with longer work experience in government sector show significantly higher business ethics scores, something that was confirmed by Fryxell and Lo (2001) as well. Svensson and Wood (2004) concluded that more robust codes of ethics in government agencies may be the reason for the higher ethical scores of public sector personnel. The codes of ethics in the public sector encourage the right things to be done by employees. The fact that the public sector is judged by the service imperative rather than financial imperatives and moreover, encouragement of its employees to embrace the ideals of the organization and also to contribute to the betterment of the society, may help to explain why respondents with a longer connection with this kind of environment achieved better ethical scores in this research. Although the Iranian public sector is large and dominates many areas in society, at present, there is an emphasis on the transition to a market economy in Iran, including the encouragement of private sector development and some privatization of state-owned enterprises. Thus, it is worthwhile to note that there are needs for the establishment of monitoring systems on unethical corporate activities and providing the best-practiced ethical management firms with social support, in order to promote more ethical behavior in the Iranian private sector working environment; and meanwhile, to transfer high ethical values from Iranian public sector to the private sector. In addition, developing and implementing the differentiated ethical management system and training programs based on corporate culture and industry features of Iran, would be helpful in the successful implementation of ethical management in all segments of society.

445

of the country with similar working backgrounds and demographic variables. It is acknowledged that the convenient sample collected by the authors without any funding is small for a big country like Iran which is very diverse and widespread. The authors would like to clarify that this is a rather small scale study, not necessarily representative of an entire country or the culture in Iran since Iranians have years of history and socialization among different people groups living there. Furthermore, the values might be different across ethnically diverse cultures. Therefore, it would be meaningful to investigate the relationship between ethical maturity and the variables of age, education, management rank, and government experience among other Asian or Middle Eastern countries around the world from a comparative perspective. In addition, future researchers can consider demonstrating cross-cultural equivalence of measures prior to cultural conclusions being made. Furthermore, longitudinal studies can be implemented by future researchers to investigate the effects of changes in age and managerial ranks on personal moral development.

Conclusions This research was designed to test the applicability of a measure developed in a western culture and to explore the ethical perceptions of Iranians using the PBES survey based on age, education, management experience, and work experience in the public sector. The study empirically tested to see the impact of education, age, government work experience, and management experience gained through the maturation process on ethical decision making of Iranians. The outcomes demonstrate that while age and management experience may not be a statistically significant factor in the level of ethical maturity, government work experience, and education can enhance a person’s moral maturity or business ethics scores. The importance of ethics education programs at the national and organizational levels is emphasized by both the respondents and authors of this study. The establishment of a national plan for transmission of ethical values from the Iranian public sector to the private sector is also recommended.

Limitations and Recommendations for Future Research References There are several limitations to this study and one of them is the fact that this study was conducted with a convenient sample population, and convenience samples are always suspect in generalizing to a larger population. Future studies can compare specific populations in different parts

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