ETHICAL SYSTEMS’ DYNAMICS IN FAMILY BUSINESS

Abstract

Building an ethical culture is challenging and it is a basic requirement for companies to embed transparency in their systems, creating a positive image and serving the internal and external communities. Twelve family-owned businesses participated in qualitative research. Interviews were conducted with employees of these businesses to explore the moral dynamics in their business. The paper significantly adds knowledge to the literature by exploring the role of ethics in particular contexts. It explores how these companies build the ethical culture, identifying the ethical culture sustainability triggers, challenges, and role of religion. Values, culture, community, and social norms are identified as major ingredients of sustainable principled culture development, and implementation of ethical policies and procedures require institutional and structural mechanisms for effectiveness in family-owned businesses. Numerous findings are in contrast to the literature, whereas, in other instances these are similar. Religion, society, family image, the entrepreneurs themselves, and their family members play a vital role. Non-interference in private matters of the employees, whistle-blowing, code of ethics, training and awareness creation, and a number of other factors play a leading role in ethical culture development in family businesses.