UNIVERSITY OF BEDFORDSHIRE BUSINESS SCHOOL

BSS056-6 Theory into Practice – June 2022

Name: Louise E. Leotaud

Student ID Number: 2020439

Unit Title and Code: BSSO56-6 – Theory in Practice

Unit Coordinator: Dr. Pauline Loewenberger

ASSIGNMENT TITLE: “A Critical Analysis on the impact of unethical behaviour

on organizational performance in the Banking Industry
with emphasis in the United States of America.”

Submission Date: July 15, 2022 5:00 a.m.

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 Table of Contents

1.0 INTRODUCTION....................................................................................................................3

1.1 BACKGROUND.......................................................................................................................3

1.2 RATIONALE ...........................................................................................................................4

1.3 SCOPE......................................................................................................................................5

1.4 AIMS AND OBJECTIVES.......................................................................................................5

1.5 INFLUENTIAL THEORIES...................................................................................................6

1.6 INTEGRATION OF THE AREAS..........................................................................................7

1.7 METHOD OF ANALYSIS.......................................................................................................7

1.8 EVIDENCE AND DATA..........................................................................................................8

1.9 SUMMARY OF CHAPTERS...................................................................................................8

REFERENCES.....................................................................................................................................9

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1.0 INTRODUCTION

Demirtas and Akdogan, (2014) defined ethical behaviour as a measure of the moral principles,

rules and attitudes that organisations demonstrate in their conduct and dealings. More

importantly, ethical behaviours in organisations are necessary for maintaining employee safety,

adherence to law and regulation, and protection of the environment (Rose-Ackerman, 2002). An

organizational culture which fosters ethical behaviour and an ethical climate can bring about

positive and trustworthy change within an organization (Anderson, 2018). In any organization,

leaders provide examples for others to follow. Ethical leadership must be a measured deliberate

decision. Therefore, it is critical that the helm in organizations affirms ethical leadership and

ethical behaviour (Gorsira et al., 2018). It has been demonstrated that such an attitude helps to

engender and set the tone to shape the culture as a leader's vision can be used to assess ethical

leadership. Explicitly, the tone at the top sets forth a company’s cultural environment and

corporate values (Corporate Finance Institute, 2019; CFI Education Inc., Team, 2022).

1.1 BACKGROUND

Moreover, the last decade and more, has witnessed significant growth and emphasis on banking

and investments by society. This has met with undeniable occurrences and growth of unethical

conduct among leadership in this sector (Soltani, 2013). As a consequence, the banking and

financial sectors have come under very close scrutiny since 2008, as a result of scandals and the

collapse of mega corporations that crumbled into liquidation and bankruptcy. Such as: the

aftermath of corruption and dishonest schemes of the Wells Fargo Bank, the saga of Enron’s

Management Fraud - Chairman Kenneth Lay and the failure of Lehman Brothers (Kwaku and

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Mawutor, 2014), (Stanwick, 2017), together with a multiplicity of factors and unethical

management practices. Such irregularities and immoral practices, together with the laxity on the

part of financial regulators have forced legislators, industry regulators and companies to take and

promote ethical responsibility and morality in business (Clark and Jokung, 2015), (John et al.,

2018).

With the onset of technological revolution, the banking and financial sectors have been exposed

to increasing risks and greater dangers of unscrupulous behaviour (Finn, 2015). However, with

the implementation of active and stringent legislations in recent times, coupled with further

technological transformation on banking platforms; banking leadership have been entrusted

greater responsibility to prioritize moral concerns and ethics (Lumpkin, 2010), (Chan, 2021) ,

(Clark and Jokung, 2015). As such, bankers and the financial sector have an obligation to those

who trust them with their money and investments (Schmid, 2020), (Green, 1989), (Soltani,

2013).

1.2 RATIONALE

Bankruptcy and the collapse of some of the world's leading financial institutions has stimulated

investigative research and prompted several studies on its impact (Gürçay & Baron, 2017).

Moreover, the insight gained from this study could assist bankers, financial managers and

organizational leadership to reduce unethical behaviours and increase the levels of effectiveness

of organizational culture. Howell and Avolio, (1992) suggests that trust, developing a positive

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and healthy corporate, in addition to, focusing on strategic proficiencies are critical criterion to

reduce issues causing organizational unethical behaviours.

1.3 SCOPE

The scope of this research encompasses investigating how employees in the banking industry in

the United States are affected by the impact of unethical behaviour on organizational

performance.

1.4 AIMS AND OBJECTIVES

This paper seeks to focus on and critically analyze the impact of unethical behaviour on

organizational performance in the Banking Industry with emphasis on the United States of

America.

The objectives are

(i) To analyse the reasons for unethical behaviour in the US Banking Sector

(ii) To examine the most effective methods for encouraging and promoting ethical

behaviour within organizations for the banking Sector in the US

(iii) To analyse the opportunities of ethical behaviour for the US Banking Sector

(iv) To devise recommendations for unethical behaviour in the Banking Sector in the US

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1.5 INFLUENTIAL THEORIES

This research was theoretically underpinned by GONE theory as to the root causes of unethical

behaviour (Bologna, 1992). . This research includes a review of the reasons for unethical

behaviour such as no code of ethics, training and enforcement and risk assessment in the banking

sector (Bedarkar and Pandita, 2014). The methods for encouraging and promoting ethical

behaviours shall be elaborated on as well as the opportunities of ethical behaviour in the banking

sector.

The following framework model (Fig. 1) was selected since it is relevant to the chosen topic and

would be utilized in conducting the research as the basis of this study in the banking industry.

Figure 1. Source: IBE Ethics (2022) - Factors Influencing Ethical Organizational Behaviour

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1.6 INTEGRATION OF THE AREAS

The research however, will integrate aspects of Business Ethics which was covered in Leading

and Managing Organizational Resources.

1.7 METHOD OF ANALYSIS

In order to perform the necessary research for this work, a systematic review was chosen since it

is one of the many well-established and efficient ways to conduct a high-level overview of

primary research on a specific research subject (Martyn Denscombe, 2014). A systematic review,

according to Ghauri and Gronhaug (2010), is a study of the research literature with the objective

of determining the current state of knowledge on a topic based on a comprehensive and objective

analysis of all the research that has been conducted on the issue.

The systematic review was preferred to a comparative review because it will provide an in-depth,

analytical summary of all primary research that is currently available in response to the research

question, as opposed to the comparative review, which merely compares and contrasts two issues

(Peri and Tanveer, 2019).

To confirm that the data being used is trustworthy and correct, the research would be cited

through a variety of academic publications and sites, including Research Gate, journals, articles

from the banking sector, Google Scholar, and the Google search engine. In order to fulfill the

goals and objectives of this study, the analysis of the information acquired will be used to offer

solutions to Unethical Behaviour in the Banking Industry.

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1.8 EVIDENCE AND DATA

The study's purpose is to acquire evidence of unethical behaviour in the US banking sector from

reputable data sources, utilizing keywords in searches to locate supporting evidence.

1.9 SUMMARY OF CHAPTERS

The research will be divided into four chapters. The study objectives/questions, justification,

theoretical framework, and methodology are all introduced in Chapter 1. The second chapter

includes a survey of literature that is relevant to the study's problem area and aims. Chapter 3

examines and synthesizes all of the data obtained in Chapter 2 in order to meet the study's

objectives. The last chapter contains a discussion and overview of the research findings, as well

as recommendations.

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