DECISION-MAKING PROCESSES AND PRACTICES OF RURAL BANKS IN

BALANGA, BATAAN: BASIS FOR STRENGTHENING ETHICAL JUDGMENT

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A Thesis
Presented to the Faculty of the Graduate School
Bataan Peninsula State University
City of Balanga, Bataan

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In Partial Fulfillment of the Requirements for the Degree

Master in Business Administration major in
Business Administration

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by:

JESICA A. BAYSAN
November 2021

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 CHAPTER I

THE PROBLEM AND ITS BACKGROUND

Introduction

Every business or any organization must establish its code of ethics and

professional conduct to govern the decision-making and behavior of all members of the

company for the purpose of achieving objectives and meeting success. Failure to

effectively implement and promote the importance of ethical principles may give rise to

issues and conflicts which can impair the reputation of the entire company. The decision-

making process is then conducted by the higher management to assess and select the best

course of action to resolve existing issues. Most decision-making process involves

gathering information with regards to the identified problem, outlining all possible

solutions, assessing, and selecting the best option, and implementing the decision.

However, the process should also include an ethical judgment that involves the assessment

and selection of a morally acceptable course of action, particularly in the context of a moral

dilemma (Conway & Kotera 2020).

In every company, regardless of its size, the board of directors or the higher

management has the ultimate responsibility for planning and decision making which should

be conducted in accordance with the company’s objectives. The chairperson of the board

leads the evaluation of all relevant information for the decision-making process, while

other members of the board should contribute to the selection of the decision. The

principles of ethical and moral judgment have been widely studied and promulgated among

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segments of the community. Several studies have also been conducted to explore the

decision-making process in different organizational settings, the link between human

behavior and decision making, and factors affecting the judgment of decision-makers.

However, there has not been a lot of attention given to the decision-making process taken

by small firms, particularly rural banks.

The decision-makers of the company have their primary role in keeping the

company functioning effectively, selecting the best course of action for continued growth,

and protecting the company’s reputation. Although codes of ethics and professional

conduct have been established to govern the decision-making and the behaviors expected

from all members of the company, ethical issues and scandals still exist. The decision-

making process plays a crucial role in every organization as its effectiveness is one of the

determinants of a company’s profitability and success (Panpatte &Takale, 2019). Failures

to discuss, assess, and select the best decision in addressing existing issues in the company

may result in the impairment of the reputation of the company which they may or may not

recover. Consequently, it is worth having a clear understanding of the importance of

establishing a systematic decision making which does not only base upon a single decision

maker’s judgment of what might be the most ethical option.

In today’s competitive environment, a company’s representation or its reputation

to the market is also one of the key elements in gaining an advantage. Various ethical issues

and scandals still exist which could be attributed to the lack of proper actions taken by the

management. Thus, this study aims to explore the decision-making processes and practices

of rural banks in Balanga, Bataan. In addition, the researcher would strive to determine

factors being considered by the decision-makers and how it affects the selection of the

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course of action, particularly in the context of an ethical dilemma. The beneficiaries of the

study will be able to use the findings of this study as a guide to strengthen their ethical

judgment and improve their decision-making process.

Over the past several years, many businesses were involved in the biggest scandals

and issues which are not yet forgotten by most consumers and the community. Decision-

makers or the management select and implement decisions that conflict with expected

norms and ethical principles of the company due to the increased pressure brought by the

immediate need for ethical judgment over a certain issue (Conway & Kotera 2020). A

failed decision is more attributable to mismanagement of stakeholders and lack of their

support which forces the decision-makers to resort to disorganized and ineffective decision

making (Terziev, Koleci & Solovev, 2020). Coordination between the chairperson, other

members of the board, and management is crucial in directing and maintaining the

company’s stability and reputation. And along with the existing studies and attestations

with regards to the decision-making process and ethical principles, the study of how

decisions are made, particularly in small firms which might have limited coordination

between the management, should also be considered as one of the research subjects.

An individual’s ability to make decisions has been gained from childhood,

developed as they grow older, and continuously applied on a daily basis. Selection of the

decision can be regarded as an uncomplicated task; however, it is the outcome of the

selected decision that would make the process crucial. Many of the small firms have limited

employees and can be presumed to have inadequate coordination between senior

management level or the board members. Accordingly, the researcher would like to explore

and promote the importance of a systematic decision-making process on the basis of ethical

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judgment or principles. Furthermore, the researcher was a former internal auditor in a rural

banking institution and has gone through a series of observations regarding the decision

making of the company, particularly in the context of a dilemma, and for this reason, it has

prompted her to consider the topic with the aim to provide a guideline on strengthening the

ethical judgment of decision-makers of rural banks in Balanga, Bataan.

Statement of the Problem

This study would like to evaluate and explore the decision-making processes and

practices of rural banks in Balanga, Bataan. The findings of the study will serve as a basis

for strengthening the ethical judgment of decision-makers.

Specifically, this study seeks to answer the following questions.

1. What is the current condition of the rural banks in Balanga, Bataan as regards their

decision-making processes and practices?

2. What are the factors considered by decision-makers of rural banks in Balanga,

Bataan before implementing their decision or their selected course of action?

3. How are the ethical judgments of decision-makers of rural banks in Balanga, Bataan

applied to their decision-making process and practices?

4. Based on the findings, what aspect of ethics is the most vital for strengthening the

judgment of decision-makers?

Significance of the Study

The following entities are deemed significant to this study:

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 Chairperson of the Board of Directors. The primary role of the chairperson of

the board is to provide leadership and governance to the company’s board of directors

which also involves ensuring a sound and proper decision-making process. The findings of

this study will provide the chairperson with an idea on how to effectively lead and direct

the members of the board towards making an ethical judgment. Moreover, as one of the

decision-makers in the company, the chairperson must have a clear understanding of the

effectiveness of their decision-making process.

Board of Directors. The board of directors has the responsibility for overseeing

the implementation of strategies to achieve company objectives and therefore, they should

be able to maintain unbiased decision making. The findings of this study will serve as

guidance for the members of the board in improving their decision-making processes

towards ethical judgment. Furthermore, as one of the decision-makers of the company, all

members of the board must understand the importance of ethical decision-making for the

growth and protection of the company’s reputation.

Management. The decision or course of action selected by the chairperson and

other members of the board is implemented by the management. The exploration of this

study and its resulting data will serve as a basis for the management’s evaluation of the

effectiveness of the board of directors’ decision. With such an opportunity to evaluate the

effectiveness of the selected and implemented decision, the management will be able to

provide recommendations to the company’s board of directors for the improvement of its

decision-making process.

All personnel of the company. While ordinary members of the company are not

associated with the decision-making process of their management and the board, the

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company’s adoption of the principle of ethics will strengthen employees’ dignity and

satisfaction. Thus, the findings of this study will provide them with a clear understanding

of the importance of the processes and practices being implemented by their company.

With such understanding and knowledge, each employee will be driven to conform to the

company’s rules and regulations with enthusiasm.

Future Researchers. Research and other studies reveal the unknowns and help in

the exploration of the environment from a different perspective. Other researchers may use

the findings of this study either as a new concept or as a supplementary reference related

to their research interests. Moreover, the use of the findings in this study will strengthen

their ideas.

Scope and Delimitation of the Study

The study will provide an evaluation and exploration of the decision-making

processes and practices in rural banks on the basis of ethical judgment. Moreover, this

study seeks to identify the effect of a diverse judgment of each decision-maker on the

selection of the course of action or decision.

Participants of the study would include five senior management levels on each rural

bank located in Balanga, Bataan. The method of selecting a sample from the population

would involve random sampling. Furthermore, a survey questionnaire will be given to each

participant and an interview will also be conducted if deemed necessary. References on

this study would include full articles or journals about the decision-making process in

banking institutions. On the other hand, all articles or journals not related to the decision-

making process will be excluded as a reference for this study.

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 Most related studies comprise the decision-making process in different

organizational settings, particularly in the health sector, and the link between human

behavior and decision-making. However, the researcher believes that exploring the

decision-making process on the basis of ethical judgment is also an essential research topic,

particularly in small banking firms which may presumably have limited coordination

between decision-makers. Other studies which involve the investigation of ineffective

decision-making that result in ethical issues and scandals are not considered by the

researcher in order to make the achievement of her research objectives possible.

Notes in Chapter I

Conway, E. & Kotera, Y. (2020). Ethical judgement and intent in business school students:
the role of the psyche? Available at
https://link.springer.com/article/10.1007/s40889-020-00094-z#citeas
Panpatte, S. & Takale, V. (2019). To study the decision-making process in an organization
for its effectiveness. Available at
https://d1wqtxts1xzle7.cloudfront.net/60599181/214363589220190915-56712-
1etup90.pdf?1568533513=&response-content-
disposition=inline%3B+filename%3DTo_Study_the_Decision_Making_Process_
in.pdf&Expires=1637561126&Signature=dh9CqaDIZr8JPpeRumssd-
E75~0AC2TBvSq8QCqRHNmVphM9Qgwd8iG1OCy1xSeAsYaV-
fLtbdrmafOqzl28OlaPL2TESrxSXcxbRedIg4iTpPETRmFbOhHdFPY7W0EJSE
H5DST6CqeoeWx7gDU6j3g5tAM8S2Q3FrJign7kQ~D7a6~uvk7ZnZ~3cRwiGw
vV5iZBqTKeRu6ZJ3PjAHNd0RfZ4ysPnWYFjq8170aA-
zF9u2ZkeKh1piohpZmHVvNOJ3Cct7A1WkM0GbZ4JqM7cdseTqY8~0EEAxZl
a2jqUibRsYYoIVwbSgTLU-MKGOrNETIMUL68RttmwukVVbYZbA__&Key-
Pair-Id=APKAJLOHF5GGSLRBV4ZA
Terziev, V., Koleci, R. & Solovev, D. (2020). Role of ethics in decision making in public
and private organizations. Available at
https://www.researchgate.net/publication/338831627_Role_of_ethics_in_decision
_making_in_public_and_private_organizations

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