Ethical practices of small and medium-sized enterprises in developing countries: Literature analysis

Abstract

Background: There is increasing pressure on business organisations to behave ethically, in addition to running their operations in the most economical, efficient and effective manner possible to increase performance. Customers have also become increasingly mindful of the reputation of the businesses they patronise. Small and medium-sized enterprises (SMEs) have become the worst affected since they lack the funds, strategic information and relevant alliances to implement ethical practices. Aim: This article aims at evaluating the aspects of business ethics, significance of business ethics to SMEs, ethical dilemmas and challenges of SMEs, particularly in developing countries, and suggests strategies to address ethical dilemmas and challenges. Methods: The background literature review on ethical practices in SMEs in the context of developing countries was conducted on several journal articles. Peer-reviewed articles in recent journals were analysed to identify the aspects of business ethics, significance of business ethics to SMEs, ethical dilemmas and challenges of SMEs and the proposed strategies to address ethical dilemmas and challenges thereof. Results and conclusion: It is clear that business enterprises can no longer afford to disregard business ethics. There are continuous business failures as a result of unethical practices, especially those associated with employees and top executives. This article has added to the body of existing literature on ethical practices of SMEs in developing countries. As such, SME owners and managers can use the findings of this article to design ethical policy frameworks and guidelines to improve their reputations and competitiveness.

Perceptions of the importance of business ethics in SMEs: A comparative study of Czech and Slovak entrepreneurs

“…The same study also revealed the expectation that the role of business ethics will expand in the future (Sroka & Lőrinczy, 2015). Some studies have found that business ethics has a positive effect on business competitivity (Turyakira, 2018), brand loyalty and trust (Pivato et al, 2007), and business trustworthiness and dignity (Sroka & Szántó, 2018).…”

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“…This definition envisages a situation in which an entity, person or organisation, is ideally compatible with existing authority legitimately established. The view is that compliance should not only come from avoiding perceived negative consequences of breach but from a state of mind that believes it's a good thing to comply (Turyakira, 2018). This is perhaps what Okafor (2011) and Riley (2012) had in mind when they expressed compliance as conducting activities in a morally upright manner with positive observable behaviour.…”