Business ethics in Ugandan small and medium-sized enterprises

SMEs have been acknowledged by governments globally as a prime source of economic growth and development. In Africa there has been a noticeable increase in the number of SME establishments. In Uganda, SMEs are the most popular business choice and play a major role in the national economy. Although SMEs significant economic contributions are generally acknowledged, being ethical and successful has become a challenge, as many SMEs in Uganda have not fully adopted and integrated ethics into their business strategies. Understanding the reasons for the increased unethical behaviour in SMEs is central to their continued business success. The primary objective of the study was to investigate the factors that influence ethical business conduct in Ugandan SMEs. From a comprehensive literature review, three main independent variables (staff-, business- and external environment factors) were identified as variables influencing ethical business conduct (dependent variable) of SMEs. A hypothetical model was developed to determine whether the independent variables have an influence on the dependent variable. Twelve hypotheses were formulated to test the relationships between three staff factors, five business factors, four external environment factors and ethical business conduct. The study sought the perceptions of SME owners or managers in the Kampala District and utilised the quantitative research paradigm. A survey was conducted with the aid of a structured self-administered questionnaire distributed by three fieldworkers. A combination of convenience and snowball sampling was utilised. The final sample comprised 384 respondents. The validity of the measuring instrument was ascertained by using exploratory factor analysis. The Cronbach‟s alpha values for reliability were calculated for each of the factors identified during the exploratory factor analysis. A total of ten valid and reliable factors were retained. Pearson product-moment correlation and multiple regression analysis were used to test the correlation and statistical significance of the relationships hypothesised between the various independent and dependent variables. One statistically significant relationship was found between the staff factors (employee attitude) and ethical business conduct. Two statistically significant relationships were found between the business factors (knowledge acquisition and management practices) and ethical business conduct. Three statistically significant relationships were found between the external environment factors (legal requirements, industry norm and media power) and ethical business conduct. External environmental factors seem to have a greater influence on SME ethical business conduct in Uganda. Multivariate Analysis of Variance (MANOVA) was used to identify if significant relationships exist between the eight demographic variables and seven reliable and valid independent variables. Furthermore, post-hoc Scheffé tests identified where the significant differences occurred between the different categories. Cohen‟s d-values were calculated in order to assess the practical significance of the mean scores. A total of twelve practical significant relationships were identified. SME owners or managers should consider employing staff with the right attitude to uphold sound ethical business values. They should implement ethical management practices to promote ethical business conduct amongst employees and ensure that employees are made aware of what is regarded as acceptable ethical business behaviour. SME owners or managers should adhere to legal requirements and industry norms to be known as businesses exhibiting ethical behaviour and utilise media to instil and guide ethical values in employees. Lastly, they must pay attention to the role that demographical variables such as: gender, level of education, current employment status, number of years in business and number of employees, play in behaving ethically in business