A RESEARCH PROPOSAL ON

The effect of employees’ behavioral ethics on firms’

profitability: -A case study from Amin general hospital.
BY
ABREHAM GIRMA

Advisor: MISGINA ASMELASH (PhD)

ADMAS UNIVERSITY,
ADDIS ABABA

MARCH, 2020

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 TABLES OF CONTENT

Chapter one---------------------------------------------------------------------------------------------4

1. Introduction------------------------------------------------------------------------------------4

1.1 Background of the study--------------------------------------------------------------- -4

1.2 Statement of the problem----------------------------------------------------------------6

1.3 Objectives of the study-------------------------------------------------------------------7

1.3.1 General objective of the study-------------------------------------------------
7
1.3.2 Specific objective of the study------------------------------------------------7
1.4 significance of the study-----------------------------------------------------------------7
1.5 scop of the study--------------------------------------------------------------------------7
1.6 Limitations of the study------------------------------------------------------------------8
1.7 Variables of the study---------------------------------------------------------------------
8
1.7.1 Independent variables--------------------------------------------------------8
1.7.2 Dependent variables----------------------------------------------------------8
1.8 operational definition of variable-------------------------------------------------------9
1.9 structure of the thesis--------------------------------------------------------------------
11
Chapter two- ------------------------------------------------------------------------------------------12

2. Review of related Literature review -------------------------------------------------------

12
2.1 theoretical literature---------------------------------------------------------------------12
2.1.1 Ethics in business------------------------------------------------------------
12
2.1.2 The effects of ethical behavior--------------------------------------------13
2.1.3 Individual and Organizational Ethics ------------------------------------13
2.2 Empirical literature----------------------------------------------------------------------14
Chapter three------------------------------------------------------------------------------------------17

3. Research design and methodology---------------------------------------------------------

17
3.1 Research design--------------------------------------------------------------------------
17
3.2 Source and types of data----------------------------------------------------------------
17
3.3 Sampling design-------------------------------------------------------------------------17
3.4 Sample size determination-------------------------------------------------------------18

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 3.5 Method and model of data analysis---------------------------------------------------18
3.6 Target population(universe of the study)---------------------------------------------
19

3.7 Data collection method-----------------------------------------------------------------19

3.7.1 Primary data-----------------------------------------------------------------19

3.7.2 Secondary data---------------------------------------------------------------20
3.8 Validity of the questionnaires----------------------------------------------------------
20
3.9 Ethical consideration--------------------------------------------------------------------21
4. Time schedule and cost budget-------------------------------------------------------------
22

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 CHAPTER ONE
1. Introduction

1.1Background of the study

The subject of ethics in business has gained a striving importance in today’s business
research (Chan, Fung & Yao, 2009). Ethics can be defined as a set of principles, rules and
codes of conduct, that rule an individual or a group (Treviño & Nelson, 1999). Business
ethics is a set of rules, standards and codes, or principles which provide guidelines for
morally right behavior and truthfulness in specific situations (Lewis, 1985).
In the past years several International organizations, studies and reports have
acknowledged and promoted the importance of ethics, aiming to create awareness on
ethical behavior and suggest guidelines for better practices, in 2012GC The European
Commission published, the special Euro barometer 374, about the perceived ethics in
member states of the European Union (EU). This study concluded that the majority of
Europeans believe unethical behavior is a serious problem in their country, and that it has
increased in the last years. It also states the majority of Europeans consider that there is
problem related to ethics both at public and private levels and this is also creating a huge
dissatisfaction in the service that the organizations provide. Ethical behavior has also been
a subject to extensive academic research. Unethical activities by companies will deeply
damage the trustful relationship that has formed the basis of marketplace relationships
between companies and stakeholders. Prahalad and Hammel (1994) stated that the
influences over strategic decisions are no longer only financial or industry driven, but also
social and environmental.
Some scholars state that there is a positive relation between good ethical practices and
financial performance (Bowman & Haire, 1975). Waddock & Graves (1997) also argued
that organizations behavioral ethics is positively related to Corporate Financial
Performance (CFP), In fact, literature points out that an ethically responsible employee and
management can contribute to better financial performance by reducing the cost of
business transactions, building trust with stakeholders, contributing to a successful
teamwork environment and maintaining social capital.

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This study will attempt to provide a use full picture of current ethical practices trend in
Amin general hospital, the relationship between employees (both medical and
administrative staffs) ethical practices and the profitability of the firm, Customer’s
perception and attitudes towards ethical practices.
The objective of the study is to identify and analyze the effects of employees’ behavioral
ethics on a firm’s financial profitability (Amin general hospital).
There is no doubt that the developments of employee ethical behaviors will transform the
medical industry since health care industry is one of the industries that are highly sensitive
and strongly related to behavioral ethics. In this study I will focus on analyzing the effects
of ethics on an organization’s financial performance.
The main purpose of this study is to identify the effect of ethics on the profitability of
firms, to be conducted on one of the leading quality service providing hospital in Ethiopia
which is Amin hospital I want to focus on this area of study, for the following few reasons:
 For the past 3 years I have been working in hospital as administrative staff so that I
have detailed information regarding to this issues.
 It is one of the few industries that focus on creation and development of healthy
and productive population so that it play great role in improving countries life
standard and productivity.
 HealthCare industry is one of the largest employers with in the country so that it
play great role in reducing unemployment rate.
 According knoema.com hospitals in Ethiopia contributes about 4 % county’s GDP
in 2017gc only.
 Last but not the least, although there has been wide stock of researches on this
topic, until date, these effects have not been measured over the profitability of
Ethiopian health care industry. My research intended to fill this gap in these area of
study.

Study proceeds as follows. First I review stock of literature on business ethics and the
effects of ethics on business, focusing on profitability as a measure of financial
performance.
Then I will collect data by using different methods data collection including questionaries’
and interviews. The research method and findings are then presented, followed by
discussion, conclusion, limitations, contributions and recommendations for future research.
In today’s competitive world of business ethical practices and activities are one of major
determinants of the profitability and performance, regardless of the size and the type of
firm. Ethical behavior has always been a highly sensitive area of practices that heavily
decide wither a given firm is to be profitable or not, since every single business main aim
is to be more profitable through attaining its goals and objective, developing employees
ethical behaviors is not negotiable in today’s world of business, especially in health care
industry ethical behavior is highly related to the profitability and performance of the firm.

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Medical sector is very sensitive to ethical practices of employees since it deal with patients,
patients need medical service supported by high level of ethical behavior to get well. In
order for a patients to feel free and tell the medical professionals what they really feel
about the pain they are straggling with, as we all know fluent communication between
patients and medical professionals is the first and most important step in curing a person
with a medical problem.

Hospitals have to constantly improve and develop their employee’s ethical behavior to
retain their customers, provide convenient, reliable and expedient services. Hospitals find
that challenging to expand and capture a larger share of the medical market because the
medical industry in Ethiopia is growing very fast than ever before.

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 1.2 Statement of the problem
Currently Ethiopian organizations are not giving appropriate focus to ethical practice and
behavior of their employees because of traditional method of management with in the country. In
today’s civilized world, the issue of ethics is gaining a huge attention both at public and privet
sector especially in the area of business behavioral ethics is one of the major indicator of wither a
firm is going to be profitable or not, Some scholars state that there is a positive relation between
good ethical practices and financial performance (Bowman & Haire, 1975).
Waddock & Graves (1997) also argued that organizations behavioral ethics is positively related
to Corporate Financial Performance (CFP) which indicates that ethically good behavior is linked
to firm’s profitability and performance, also. Corporate social responsibility (CSR) has been
frequently linked to business ethics, by different authors. This study focus on analyzing the effect
of behavioral ethics of employees on the profitability of firms and aims to gain a deeper
understanding of the effect of ethical behavior of employees on the profitability of the Amin
general hospital which is found in A.A Ethiopia.
Previous literatures points out that an ethically responsible employee and management can
contribute to better financial performance by reducing the cost of business transactions, building
trust with stakeholders, contributing to a successful teamwork environment and maintaining
social capital. Carroll (1979) stated that behavioral ethics build the expectations that society has
towards an organization, on economical, legal, ethical and discretionary levels. Valentine and
Fleischman (2007) state that socially responsible companies are viewed as ethical organizations.
The research question for this research will formulated as follows:
 What are the ethical behavior of employees that affect the profitability of amen general
hospital?
 To what extent does the employees of the hospital currently behave ethically?
 What kind of behaviors consider ethical in the health institute?
 What are the major ethical activity of employees’ contribute highly to the profitability of
the hospital?

Information will be gathered from the employees of Amin general hospital (AGH). Addis Ababa
is chosen as it is the largest city in the country and composed of heterogynous population also it
is one of the most developed medical and economic center of the country this will help me in
gathering reliable and trusted data that will represent the other part of the country. These research
will also aim to provide stock of knowledge to both medical professionals, managers of the
hospital and policy makers with public opinion that could assist in the understanding and
appreciation of what is the effect of ethical behavior of employees on the profitability.
The proposed research will contribute a lot for the Amin general hospital as it provide
information related to the organizational behavioral ethics also contribute its own finding for the
existing stock of knowledge.

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 1.3 objective of the study
1.3.1 General objective
The general objective of the study will be to identify and analyze the effect of ethical behavior of
employees on the profitability of Amin general hospital.

1.3.2 specific objective

Based on the above general objective, the following were specific objective
1. To determine the extent to which employee ethical behavior contribute to the
profitability.
2. To identity factors that abstain employees from behaving ethically.
3. To propose opportunities for both participants and researchers to see unseen problems.
4. To identify ethical practice that are mainly expected from medical practitioners that
contribute highly to the profitability of firms.
1.4 Significance of the study
Amin general hospital is expected to be benefited from the findings and recommendations of this
study because of the independent and objective nature of the researcher who do not have any
prior attachment, special indorse or bias regarding the company and its inner workings. I also
will be benefited from the experience of conducting this thesis as it will enable me to apply the
skills acquired and concepts learned during course work to analyze and solve a practical business
case.
AS a researcher I believe that this study can be used as reference material by future graduating
students and researchers interested to conduct more detailed researches covering diffluent
aspects of ethical practice in amen general hospital.

1.5 Scope of the study

The study will be conducted in Addis Ababa, a capital city of Ethiopia at Amin Hospital. Addis
Ababa has ten sub-cities in which the City lies at an altitude of 7,546 feet (2,300metres). It has
twelve governmental and nine non-governmental hospitals.
The study will be basically focused on the investigation and identification of effect of behavioral
ethics of employees on profitability in Amin general hospital.
However, there are many governmental and privet medical institute throughout different region
of the country, so, it’s too large for researcher to travel all over the country. Addis Ababa is one
of the largest commercial and medical center in Ethiopia and has heterogeneous population
which will be ensures a wide spread of potential respondents to the study.
This study will focus on one of the best known quality privet medical service provider with in
the country which is Amin general hospital which is established in 2012 GC and currently create
job opportunity to more than 200 medical and administrative staffs out of this 70 employees are

8
supportive staffs 10 employees are administrative staffs and 120 clinical staffs. I will be
considered for the research and data will be collected by using questioner survey, structured
interview using random sampling methods.
I have choose to conduct my research on privet hospital because like all other privet firms
privet medical institute focus on increasing firms profitability this will help me to clearly
analyze what are the possible relationship between employees ethical behavior and profitability
of the firm but governmental hospitals are not aimed to make profit since they are established to
help improve the wellbeing and health status of the population so it is not directly related to
profitability rather than serving the population of a given country.

1.6 Limitation of the proposed study

There are several limitations to this study. I only focus on one country, Ethiopia, and it is only
relating to one industry: medical sector. I suggest that further research be conducted on more
industries, in order to be able to evaluate and compare the effects of ethics on different sectors
I also suggest the research be extended to other countries in order to perform a cross cultural
study on the effects of ethics in different cultural frameworks. Other variables should also be
considered to evaluate ethical performance.
The study will mainly be focused on Amin general hospital as a case of research and will be
delimited to the extent of determining effect of behavioral ethics of employee recent
implementation and how service delivery and customer satisfaction has been affected. However,
there is no comparison made with other hospital with in the same industry. Moreover, there is a
time, cost limitation as well as distance problem.

1.7 Variables of the study

1.7.1 Independent Variables
When we think about the objective of any business, the most basic idea that will come to our
mind is: to make a profit. However, to make a profit, any business must offer a service or
product to others, which implies a necessary relationship with society. If the definition of ethics
is based on social consideration for others, ethics is therefore related with business itself
(Roussouw, 2002). In fact, there is no business without society, and society needs business to
prosper (Joyner &Payne, 2002). In this study employees ethical behavior is used as independent
variable of the study.

1.7.2 Dependent Variables

There are several factors that influence the profitability of firm’s some of them are educational
level of employee, age, occupation, sex, and other demographic factors.in this study profitability
will be used as dependent variables that depend on the ethical behavior of employees of the
hospital in the context of this study.

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 1.8 Operational definition of variable

Operational definition of terms refers to a detailed explanation of the technical terms and

measurements used during data collection. This is done to standardize the data. Whenever data is
being collected, it is necessary to clearly define how to collect the data. Data that is not defined
runs the risk of being inconsistent and might not give the same results when the study is
replicated. Often we assume that those collecting the data understand what to do and how to
complete the task. However, people may have differing views and interpretations of the same
thing, and this will affect the data collection. The only way to ensure that the data is consistent is
by means of a detailed operational definition of terms. 

Some of operational definitions in this research are listed below.

- Age: the amount of time during which a person or animal has lived.

- Occupation: a person's usual or principal work or business, especially as a means of earning a

living.

- Education:  is about learning skills and knowledge. It also means helping people to learn how
to do things and support them to think about what they learn. It's also important for educators to
teach ways to find and use information.

- Ethical behavior: Acting in ways consistent with what society and individuals typically think
are good values. Ethical behavior tends to be good for business and involves demonstrating
respect for key moral principles that include honesty, fairness, equality, dignity, diversity and
individual rights.

- Employee status: An employee is someone who works under an employment contract. A

person may be an employee in employment law but have a different status for tax
purposes. Employers must work out each worker’s status in both employment law and tax law.

- Ethics: or moral philosophy is a branch of philosophy that involves systematizing, defending,

and recommending concepts of right and wrong conduct. The field of ethics, along with
aesthetics, concerns matters of value, and thus comprises the branch of philosophy called
axiology.

- Profitability: is ability of a company to use its resources to generate revenues in excess of its
expenses. In other words, this is a company's capability of generating profits from its operations.

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- Return on investment: measures the gain or loss generated on an investment relative to the
amount of money invested. ROI is usually expressed as a percentage and is typically used for
personal financial decisions, to compare a company's profitability or to compare the efficiency of
different investments.

- Customer satisfaction: is defined as a measurement that determines how

happy customers are with a company's products, services, and capabilities. Customer
satisfaction information, including surveys and ratings, can help a company determine how to
best improve or changes its products and services.

- Business ethics: Business ethics, also called corporate ethics, is a form of applied ethics or

professional ethics that examines the ethical and moral principles and problems that arise in
a business environment.

- Corporate financial performance (CFP): is a subjective measure of how well a firm can use
assets from primary operations and generate revenues

- Corporate social responsibility (CSR): Corporate social responsibility is a broad concept that
can take many forms depending on the company and industry. Through CSR programs,
philanthropy, and volunteer efforts, businesses can benefit society while boosting their brands.
As important as CSR is for the community, it is equally valuable for a company. CSR activities
can help forge a stronger bond between employees and corporations; boost morale; and help both
employees and employers feel more connected with the world around them.

- Gross domestic product (GDP): is a monetary measure of the market value of all the final
goods and services produced in a specific time period. ... GDP is considered the "world's most
powerful statistical indicator of national development and progress".

- Customer retention: Customer retention refers to the activities and actions companies and
organizations take to reduce the number of customer defections. The goal of customer retention
programs is to help companies retain as many customers as possible, often through customer
loyalty and brand loyalty initiatives. It is important to remember that customer retention begins
with the first contact a customer has with a company and continues throughout the entire lifetime
of the relationship.

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- Work environment: describe as the surrounding conditions in which an employee operates.
The work environment can be composed of physical conditions, such as office temperature, or
equipment, such as personal computers. It can also be related to factors such as work processes
or procedures.

- Organizational structure: is a system that outlines how certain activities are directed in order
to achieve the goals of an organization. These activities can include rules, roles, and
responsibilities. The organizational structure also determines how information flows between
levels within the company.

- Descriptive research: Descriptive research is defined as a research method that describes the

characteristics of the population or phenomenon that is being studied. This methodology focuses
more on the “what” of the research subject rather than the “why” of the research subject.

- Dependent variable: variable is in which its value is based on other variable.

-Independent variable: is a variable in which its value is based on other variable which is
independent variable

1.9 Structure of the thesis

The paper has been divided in to five chapters the first chapters was an introduction and which
contain the background of the study, statement of the problem, research question, general and
specific objective, significance, scope, limitation of the study. The second chapter deals with
previous theoretical and empirical studies that are related to the research topic have been
reviewed. The third chapter is concerned with the methodology used for the study. The fourth
chapter is presented with data analysis, interpretation, and presentation of the result. The final
chapter outline the summery of findings, conclusion, recommendation, managerial implication
and suggestion for future studies.

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 Chapter Two
2. REVIEW OF RELATED LITERATURE
2.1 Theoretical literature
In recent years, there has been an increasing interest in identify and analyzing the impact of
ethical behavior of employees on the profitability and performance of a firms.
Service providers and scholars have recognized the importance of customer satisfaction on
increasing market share and return on investment of the companies, various scholars outlined
several definitions, theory and models on impact of behavior on firms profitability .If by
anything else, an organization is comprised of people, with different backgrounds, personalities,
ideologies and beliefs. These factors will eventually influence, the organization ethical behavior
and performance. However, organizational ethics should also consider the role of business
“outside” of the organization. Social responsibility can be considered as the ethical performance
of an organization on a societal level, towards all of its stakeholders (Treviño & Nelson, 1999).
Stakeholders are defined as any person, individual or collective entity that is directly or
indirectly influenced by the activity of an organization, such as customers, employees, suppliers,
government, stockholders, and the surrounding community (Freeman, 1984). A business must
seek to satisfy the needs or interests of those who are directly and indirectly part of the
business’s social environment: stakeholders. The following literature review will approach two
different items: (1) the effects of ethics on an individual level, (2) the effects of ethics on an
organizational level.
2.1.1 Ethics in business

Business ethics is described as the ultimate rules which dominate the assessment of “What
constitutes right or wrong, or good or bad human conduct in a business context” (Shaw, 2010, p.
8). The theme of ethics in business has been widely approached on a global scale. Sims and
Gegez (2004) conducted a cross cultural study, comparing attitudes towards business ethics, in
countries such as United States of America, Western Australia, Israel, South Africa and Turkey,
confirming the idea that although there are similarities in moral perceptions, cultural differences
influence ethical behavior. Rossouw (1997) also studied business ethics in South Africa, both on
academic and practical societal levels, and concluded that business ethics as an academic
discipline still needed to be developed, as well as ethical business practices. Many authors and
investigators have focused their studies on the theme of ethics in business (Tsalikis & Latour,
1995; Enderle, 1997; Trevino & Nelson, 1999; Husted, 2001; Roussouw, 2002). Business ethics
is sometimes referred to as management ethics or organizational ethics, limiting its framework to
organizations (Beekun, 1996). However, research has noted the impact of multiple aspects of
organizational contexts on individuals’ ethical behavior. For example, individuals’ perceptions of
organizations’ ethical climate (Victor, & Cullen, 1988), are potential influences on organization
members’ ethics-related attitudes and behavior.

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 2.1.2 The effects of ethical behavior

Much literature has been published on the effects of ethical behavior. Some authors
studied the effects of ethics on employee behavior (Ferrell & Gresham, 1985; Trevino,
1986; Abratt, Nel and Higgs, 1992; Treviño, 1992; Ashkanasy, Windsor & Treviño,
2006), and on an organizational level (Goodpaster, 1991; Enderle, 1997; Jones, 1995;
Lovett, Simmons & Kali, 1999; Robertson & Fadil, 1999; Somers, 2001; Treviño,
Weaver & Reynolds, 2006; Singh & Del Bosque, 2008).
In the following section we will approach two different types of effects of ethics:
Individual and organizational effects.There has been a long ongoing debate between
scholars, on whether unethical behavior and decision making is a consequence of “bad
apples” or “bad barrels” (Treviño & Youngblood, 1990). While the former theory
argues that organizational unethical behavior is caused by the personal characteristics of
its employees; the latter states that it is the organizational behavior or climate that
influences employee behavior. Given the main objective of this research, our greatest
emphasis will be on the effect of ethics on a firm’s financial performance, more
specifically, to what extent a firm’s ethical behavior will influence its profitability,
although I will briefly mention the effects on individuals.

2.1.3 Individual and Organizational Ethics

“In business, when people talk about ethics they’re talking about behavior” (Treviño &
Nelson, 1999, p. 148). It is stated that individual characteristics, such as values and
moral issues, influence ethical conduct (Treviño, 1986; Jones, 1995). People frequently
face ethical dilemmas such as whether to use office supplies for personal purposes,
cheat on a test, inflate their business results, or fail to report an additional source of
income on a tax return. “Employees are not just organizational drones; they are
individual human beings who are concerned about their relationships and their personal
reputation” (Treviño & Nelson, 1999, p. 28). Some scholars suggest that people engage
in unethical behavior, when they are faced with an opportunity to do so (Mazar, Amir,
& Ariely, 2008). The fact that one’s behavior is forbidden or reprehensible may
strengthen this experience (Wood, 1995). Brass, Butterfield and Scaggs (1998) suggest
that unethical behavior of one person may influence the behavior of another, enhancing
the importance of relationships among employees.
Employees are also more committed to organizations, in which the top management
represents highly ethical and credible standards, supporting and rewarding ethical
conduct, and disciplining unethical behavior (Treviño, Butterfield & McCabe, 1997).
Another study showed that managers, who believe in the credibility of their senior
management, also feel more attached and committed to the organization (Posner &
Schmidt, 1992). Stevens, Steensma, Harrison and Cochran, (2005) found that financial
managers are willing to consider the company’s code of ethics in the decision- making

14
process when they are obliged to do so, when faced with pressure from the company’s
stakeholders or, if and when they believe that a code can promote a better external
image of the company. Much research has focused on understanding the factors that
influence ethical conduct in organizations, specifically the conduct of its members.
However, employees express the company’s organizational ethics in the way they are
personally treated. (Treviño & Nelson, 1999). Ethical climate, as introduced by Victor
and Cullen (1988) and adapted by others (Schminke, Ambrose & Neubaum, 2005) is
defined as a shared perception among organization members, reflecting organizational
practices with moral consequences. Cullen, Parboteeah and Victor (2003) found that the
ethical climate of a company can influence its compromise, stating that a favorable
climate has a positive relationship with organizational commitment, while a selfish
climate has a negative relationship with commitment (Victor and Cullen, 1987).

2.2 Empirical literature

On an organizational level, “organizational ethics is a company’s adoption of desired
ethical standards and business practices” (Valentine & Fleischman, 2007, p. 160), and
therefore, organizational ethics should be a fundamental management concern, at all
levels of an organization (Treviño & Nelson, 1999). Unethical business practices can
possibly undercut the development of trusting, long-term business relationships.Among
venture partners, unethical behavior can cause conflicts between partners, creating
suspicion and lack of trust, which may end up terminating the relationship (Fassin,
2009). Unethical behavior can lead to negative publicity, substantial fines, and
ultimately decreased sales and profits (McGuire, Sundgren & Schneeweis, 1988).
The effects of ethics on a company’s reputation have taken on particular urgency, given
the struggle with an increased media scrutiny of governance, social and environmental
issues. The Reputation Institute (RI) finds that corporate ethics has become an indelible
feature of stakeholder engagement — not just as a set of principles but as a cultural
process affecting decision-making at all levels. Ethical culture has been defined as a
slice of the organizational culture that influences employees’ ethical behavior through
formal and informal organizational structures and systems (Trevino, 1992). Ethics play
in fact a very important role in long-term business sustainability, and will gradually
form the basis of serious executive leadership (Fombrun & Foss, 2004).
Although some organizations still view ethical business decisions as an additional cost,
ethical performance can actually add value to all stakeholders, increase profitability and
improve financial performance (McMurrian & Matulich, 2011). According to Jones
(1995), companies with a higher social performance tend to have better financial results
by attracting socially responsible consumers (Bagnoli & Watts, 2003).

15
Hsu (2012) found that the perceptions of policyholders, concerning the CSR initiatives
of life insurance companies, exert positive effects on customer satisfaction, corporate
reputation and brand equity. Konar and Cohen (2001) found that firms with a strong
concern on environmental performance have their market value increase considerably.
The environment is one of the issues that should be incorporated in a firm’s social
responsibility activities. The principal way of addressing these issues is through
statements of corporate values and their application through codes of business ethics.
These alone are not enough to make any difference – they have to become part of the
way staff think and act. Having such a program has been shown not only to be morally
right but also worthwhile (Webley, 2003).
Establishing and complying with behavioral ethics goals helps firms to improve both
brand and corporate image (Bramer & Pavelin, 2006; Rowley & Berman, 2000), which
are important elements of a firm’s reputation. An improved reputation allows a firm to
attract better employees (Turban & Greening, 1997), increase commitment, negotiate
better terms with capital suppliers, and build customer loyalty (Fombrun & Shanley,
1990). All of these factors contribute to corporate financial performance improvements
(Fombrun & Shanley, 1990; Roberts & Dowling, 2002).
However, in what concerns the extensive research on the effects of ethics on
profitability, the opinions diverge. Vance (1975) showed that there is a negative
relationship between CSR and corporate financial performance, concluding that social
responsible firms are not good investments. Abbott and Monsen (1979) analyzed the
annual reports of the Fortune 500 list, and after dividing the firms into high and low
social responsible groups, and examining each group for profitability, they found that
there was very little difference between them, in term of financial performance.
Alexander and Buchholz (1978) also found that there was no relation between stock
risk levels and the degree of social responsibility, suggesting that there is also no
relation between CSR and CFP. Nevertheless, there are many authors who state that
there is a positive relationship between CSR and CFP (Moskowitz, 1972; Bowman &
Haire, 1975; Parket & Eilbert, 1975; Sturdivant & Ginter, 1977; Roberts & Dowling,
2002; Kurucz, Colbert & Wheeler, 2008; Ameer & Othman, 2012).
Decades ago, Moskowitz (1972), after studying a short list of 14 firms, claimed that
firms who portrayed a social responsible and ethical behavior were good investments.
Bowman and Haire (1975) used a different approach to study the relation of social
responsibility and profitability, rating firms as high or low in social responsibility, by
counting the number of lines devoted to that topic on their annual reports. The
researchers compared the 14 firm list used by Moskowitz as a list of high social
responsible firms, and another list of 14 random chosen firms. The firms on
Moskowitch’s list had more lines dedicated to social responsibility. After using the
line-counting method, they analyzed the firms performances based on a five year
financial performance and concluded that the firms on the Moskowitz had better
profitability ratio than those on the random list.

16
Parket and Eilbert (1975) sent a questionnaire to the Forbes 1971 Annual Directory,
and received a reply from 96 firms. They assumed that the respondents were more
actively engaged in social responsibility than those that didn’t. When analyzing their
financial performance with other firms of the Fortune 500 list, they stated that the firms
assumed as more socially active are also the most profitable. Sturdivant and Ginter
(1977), used a sample of 67 firms characterized by Moskowitz as examples of
exceptional social performance, divided them in four industrial groups, and studied
their financial performance, based on a 10-year earnings per share growth (EPS). Firms
rated as highly or moderately social responsible featured the best performance.
One of the advantages identified by Kurucz et al. (2008), which a company may attain
by engaging in social responsible activities, is reputation. Firms with a better reputation
can also achieve lower contract costs compared to other firms, which will increase the
return on assets (Roberts & Dowling, 2002), thus improving profitability.
Ameer and Othman (2012) measured the corporate sustainability reports of one-
hundred sustainable global companies and the following profitability measures: sales
growth, return on assets, profit before taxation and cash flow from operating activities.
The authors concluded that companies with higher sustainability performances also
have higher financial performances. Business ethics is defined as the rules, standards,
codes, or principles that provides guidance for morally appropriate behaviour in
managerial decision relating to the operation of the corporation and business’s
relationship with the society (Sexty, 2011). To Heysel (2013) business ethics is a set of
guidelines for business people to use to avoid making a wrong decision. Business
ethics has evolved over the years, with growing concern to curtail the activities of
managers in the management of the organization. Peters and Waterman, 1982, (as cited
by Elias, 2005) show that nearly all highly performance firm have at the core a well-
established set of shared values, particularly ethical values.
Ethical code from organization to organization varies but it content or message remains
the same all through as it is geared towards enhancing organizational performance.
Ethical codes are aligned with the organisational culture, mission, vision and objective
statement and the core values of the organisation in order to maximise corporate
growth. Hosmer, 1994; and Jones, 1995 (as cited by Berrone, Surroca and Tribo, 2005)
argue that ethics are good business investment because it generates positive
externalities like trust and commitment with relevant stakeholders, which in turn assure
long-term performance. According to Beer (2009) many of the Wall Street companies
that collapsed during the economic crisis of 2008 result from their lack of focus on
customer service, lack of clear business strategies, and their propensity to over
prioritize profits at the expense of commonly accepted ethical practices.

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 CHAPTER THREE
3. RESEARCH DESIGN AND METHODOLOGY
3.1 Research Design

Research design is the structure of an enquiry that is not identified with a specific strategy for
gathering information or a specific kind of information (De Vaus & de Vaus, 2001).
It holds a study together (Trochim, 2006). Descriptive research design method will be applied to
investigate the key impacts of ethical behavior of employees on the profitability of the firms
(Amin general hospital) to describe the existing situation of the service provided.
It depicts a subject, frequently by making a profile of a gathering of issues, individuals or
occasions, through accumulations of information and the arrangement of frequencies on
exploration variables and the examination uncovers who, what, when, where or how much
(Saunders, Lewis, & Thornhill, 2012).
Firm’s profitability is the dependent variable while employee’s behavioral ethics is the
independent variable.

3.2 Source and types of data

In order to obtain more accurate data both primary and secondary data will be collected via
questionnaires and interviews. I will use manuals, different books, and publications like journals,
newspaper prepared by the hospital and internet to generate secondary data.

3.3 Sampling design

According to Cooper and Schindler (2008) sampling design is a part of the research plan that
indicates how cases are to be selected for observation. The design maps out the procedure to be
followed to draw the study’s sample. Shapiro (2008) indicates that it is a road map, that serves as
the basis for the selection of a survey sample and provides the basic plan and methodology for
selecting the sample (Shapiro, 2008). A sample is simply a subset of population. The concept of
sample arise from the inability of the researcher to test all the individual in a given population.
Sample must be representative of the population from which it was drown and it must have good
size to warrant statistical analysis. The main function of the sample is to allow the researchers to
conduct the study to individual from the population so that the result of their study can be used to
drive conclusion that will apply to the entire population.
A sampling technique involves the procedure of selecting a sample from a population. (Cooper
& Schindler, 2008). From the total population with in the hospital, probability sampling method
specifically Simple random sampling method will be used to select respondents for the purpose
of convenience. So convenience method of sampling will be applied to select the sample of the
population.

18
Therefore, questionnaire will be distributed for the respondents, interviewing administrative
staffs will also be one of the methods’ to be used to collect data on selected area of study.

3.4 Sample size determination

The sample size is a tinier set of the bigger populace (Cooper and Schindler, 2008). It must be
keenly chosen to be an agent of the populace and the requirement for the researcher to guarantee
that the subdivisions involved in the examination are precisely catered for.
In this portion of the paper I will discuss the question of how many items are to be observed and
how are the collected data and information going to be analyzed, which deals with number of
items to be selected from the universe I will be studying which is the employees of Amin general
hospital
(AGH).
The total number of employees in Amin general hospital is 200 including clinical, supportive and
administrative staffs from this total number of employees with in the hospital I will select
sample that help me to generalize the universe of the hospital ,in order to select a sample from
the population I will use (taro yamane)simplified sample size formula.

n= N
1 +N*(e) ^2
Where n= number of sample to be selected.
N= total number of population
e= margin of error
Margin of error (MOE) is = 5
Their for: N=200
e =0.5
Based on the above formula I can calculate my sample size as follow
200

1+200*(0.05) ^2

= 200
1+0.05
= 133.333 = 133

19
So Based on the taro yamane formula from the total number of population with in the hospital
133 respondent will be selected for the purpose of data collection.
3.5 Methods and model of data analysis
Levine (2006) states that data analysis methods assist in describing facts, detecting patterns,
developing explanations, and testing hypotheses. This research will use inferential method of
data analysis specifically causal method of data analysis. Statistical Package for Social Sciences
(SPSS) program will be used to analyze data for this study. The findings of the study will be
presented in tables, and charts. These will be used to organize, summarize, and present the
analyzed data enabling the researcher to meaningfully describe distribution of measurements
(Cooper & Schindler, 2008).

3.6 Target population (universe of the study)

Mbokane (2009) defines a population as an aggregate or totality of all the objects, subjects or
members that conform to a set of specifications. A population consists of individuals who
possess certain characteristics or a set of features a study seeks to examine and analyze. The
target population for this study will be defined as employees of the hospital both medical
practitioners and administrative staffs

3.7Data Collection Methods

The research data will be collected from primary sources using questionnaires and interview.
Most data will be collected using questionnaires because it is easy to administer to the sample
population and collect the required information. A questionnaire is well-defined as a formalized
structure that contains an assemblage of keenly, detailed inquiries for data gathering (Kothari,
2004). I also preferred this method because it did not require monitoring of the respondents as
they are giving the information. According to Coopers and Schindler (Cooper & Schindler,
2003), questionnaires also are cost effective and can be formatted in a way that enables the
respondents to give much information which is easy to analyze.

3.7.1 Primary data

According to Kothari (2004), primary data collection engages in collection of fresh data and data
that are gathered for the first time and thus happened to be original in character. In this research,
a structured open ended type of questionnaire will be prepared and delivered to employees of the
hospital, and administrative staffs of the hospital.

20
 3.7.2 Secondary data
It involves in data collection of those which are already collected by another researcher or author
and should give a great deal of concern in using secondary data since there a possibility of using
data that are unsuitable or may be in adequate in the context of problem (Kothari 2004).
As a researcher I will use articles, newspaper, internet, academic journals and company’s reports
which were published are more believed to provide credibility. To overcome source credibility
problems, the paper I will use articles mostly from the university data base.

3.8 Validity of the Questionnaires

According to Kumar, (1996), in terms of measurement procedures, validity is the ability of an
instrument to measure what it is designed to measure. This means that an instrument measures
what it is intended to measure, and does so correctly and accurately. Validity determines whether
the research truly measures that which it was intended to measure or how truthful the research
results are. Researchers generally determine validity by asking a series of questions, and will
often look for the answers in the research of others. Validity is, therefore, subjective in that it is
guided by the observer’s perceptions. The instrument of Weiss et.al. (1967) has already
established and recognized validity. To further strength the validity of the instrument, I as a
researcher will use simple appropriate English, which is easily understand by the respondents to
facilitate respondent cooperation and to enhance respondents’ understanding. Moreover,
documents and litterateurs in the area will be viewed and referred about the instrument
developed.

As standardized by many researchers and scholars my questioner will have three content
1. The cover latter
2. The instruction
3. The questions
Structured types of self-administered questioner will be used which means that there will be
concentrate and preordained types of questions will be used in the research.

21
I have chosen questioner as data collection method because of the following few reasons
- Better sample: questioner is better method of data collection to be used when researchers have
greater attitude to obtain better sample.
- Respondent privacy: since I planned to use self-administered type of questioner it will help
me to protect the privacy of my respondent.
- Standardization: questioner is one of the best method of data collection which is used to
generalize results.
-adequate time: it will give adequate time to for respondent to respond questions freely without
rushing.

3.9 Ethical consideration

Ethical consideration is one of the most important part of the research proposal since it specify
all ethical consideration to be followed by both the researcher and those who participate in the
research.
As a researcher I will consider this points to be strictly followed in my researcher.
1. Research participant will not be subjected to harm in anyways whatsoever.
2. Respect for the dignity of research will be prioritized.
3. Full consent should be obtained from participant prior to the study.
4. The protection of the privacy of research participant.
5. Adequate level of confidentiality of the research date will be presented
6. Anonymity of individual and organizations participating in the research date will be
ensured.
7. Affiliation in any forms, sources of funding, as well as any possible conflict of interest
will be declare.

22
 4. Time schedule and cost budget
Work plan (time break down)

The proposed study is expected to be completed within the time table stated below.

23
 Budget (cost break down)

The following table depicts the estimation I made about the total expenses to develop the
system.
Item Cost per item(ETB) Amount Total cost(ETB)
Photocopies of literature 400 2 800
Photocopies of questionnaire 3 133 399
Internet charge 300 300
For binding 100 1 100
Busing journal, book and etc 250 2 500
Transport cost 1500
Photo copies of research paper 100 2 200
Other expense 500
Office supplies 200
Total Funding requested 4499

24
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