Project Title: Relationship between perceived organizational ethics and effectiveness of e-business: A case of SMEs in UK.
Introduction: Small and Medium sized Enterprises (SMEs) constitute an integral part of the economic development and sustainability in United Kingdom. It has been noted that in 2012, there were approximately 4.8 million SMEs operating within the country (Business Innovation and Skills, 2012). Furthermore, SMEs contribute to the 99.9% of business related processes within the private sector of the economy. The factors that determine the success of an SME are attributed to the ability of the management to capitalize on the strengths and opportunities. However, the role of consumers or customers as central stakeholders can’t be overlooked. Technological advancements have also changed the outlook of the business environment for SMEs within UK. An increasing number of organizations have integrated e-business or e-commerce as a part of their operations to fulfill the demands of the consumers in an effective manner (Taylor & Murphy, 2004). The SMEs as well as large scale corporations have perceived e-business as a profitable opportunity, thus leading to the integration of e-business models in SMEs.

Consumers in today’s world engage in decision making process which involves the consideration of various factors. The increased awareness of corporate social responsibility as well as the organizational ethics displayed through the firm’s interaction with the online consumers determines the level of success of SMEs. Creyer (1997) have stated that failure to understand the potential of consumer’s perception about organizational ethics can have negative implications for an organization. This area has also been relatively unexplored as most of the scholars have focused on the impact of corporate social responsibility on the overall performance of SMEs in UK (Spence, Schmidpeter, & Habisch, 2003; Castka, Balzarova, Bamber & Sharp, 2004; Baden, Harwood & Woodward, 2009). Based on this background, the researcher has proposed to investigate the role of perceived organisational ethics by consumers as a factor that has significant impact on the effectiveness of electronic mode of business for SMEs operating within UK (Daniel, Wilson & Myers, 2002).

Literature Review

Various researchers have analyzed the factors that encourage the consumers to engage in online transactions with an organization (Gefen, 2000; Close & Kukar-Kinney, 2010; Kardes, Cronley & Cline, 2011). Such positive online behavior is expected to be facilitated by a wide array of reasons. Limayem, Khalifa and Frini (2000) have used the theoretical framework of planned behavior to identify the factors that result in increased participation of online transactions by the consumers. It was found that the perception of the consumers about the repercussions of their use of internet and the subsequent purchase was the main factor which determined their future internet based purchase behavior. Taking this view into consideration, the ethical behavior of the organisation can support the online consumers in establishing feelings of trust towards the company. According to Kracher and Corritore (2009) the businesses operating in the online world apply similar ethical rules as the businesses that have physically established set ups in the market. Therefore, the presence of trust and credibility holds equivalent importance within e-business context.
Most of the organizations engaging in electronic business use the financial output as a tool of identifying the degree of effectiveness.  However, the return on investment seems to offer limited scope of understanding the notion of success. As proposed by Walker and Brown (2004), the SMEs can utilize non monetary criterion to identify their capability to maintain effective level of performance. The same criterion can be applied within the online arena as customers’ decision to purchase a product or avail a service from an SME is determined by a wide array of non monetary variables.

So and Sculli (2002) have identified the presence of trust as one of the key elements that promotes online consumer behavior. A consumer is likely to develop trust on a business if they underlying perception is supportive of the ethical conduct of the company. It has been further asserted that firms that are not able to maintain positive perception among the target market are likely to face significant loss. The overall ethical outlook of a company is linked with the maintenance of consumer privacy and confidentiality of the data. McKnight, Choudhury and Kacmar (2002) have demonstrated the role of positive perception of the business in the consumer base. It has been stated that in order to facilitate a potential consumer to become an actual consumer of a company, the firm needs to establish validated feelings of dependability. This proposition is further reinforced by the persistent display of moral and ethical choices by the company.
One of the dimensions related to ethical conduct of a business has been identified by Culnan and Armstrong (1999) who regarded the sharing of information with customers as a means of establishing goodwill among them. The consumers who were informed about the company about the nature and scope of use of their profile information were able to view this as a reflection of organizational ethics. On the other hand, firms that collected and used consumer related information, but were reluctant to provide knowledge about the process were perceived with suspicion and low credibility. The tendency of a company to display ethical behavior in the online communication and transactions with the consumers develops a low risk profile of the business in the market (Kim, Ferrin & Rao, 2008). This indicates that the variables of perceived risk and perceived organizational ethics are significantly related to each other.

Ferrell and Hartline (2010) have suggested that the quality of relationship of a company with its external stakeholders can have a strong influence on the pace of logistics and operations. Similarly, in the online context, positive relationship with online consumers can result in increased sales and profitability. The perceived ethical conduct of the firm in this case tends to play a mediating role in the consumer purchase decisions. Boatright (2003) also supported this notion by asserting that e-business success of an organisation in terms of customer retention and loyalty is dependent upon the perception it generates in the mind of the consumers. Organizations that focus on acting in morally responsible ways establish the foundation of long term trust in the consumers. On the other hand, management that keeps its own vested interest central is likely to develop an ethically damaged perception in the market. This in turn has negative implications for the sales, profitability and revenue.

Research Objectives and Research Questions

The behavior of consumers is not only guided by available information about the features of products or services. The rising participation of consumers in online transactions and e-business activities indicates that the customer’s perception about the degree of trustworthiness of a business also play an important role. The consumer’s perception about trustworthiness of an organization is based on their view about the adoption of ethical business practices by the firm. If an organization is deemed as valuing the ethical and moral principles, the consumers automatically attribute the features of trustworthiness and credibility with the firm. As a result, they are more likely to retain their loyalty with the business entity (Kracher & Corritore, 2009).  Based on this assumption, the researcher has established a central question “What is the relationship between perceived organizational ethics and effectiveness of e-business of SMEs in UK?”

The main focus in this domain will be to investigate the linkages between consumer’s perceptions of a firm’s ethical behavior. The researcher will also explore the perception of consumers about the moral principles upheld by organizations and their willingness to engage in e-business activities with these firms. The research objectives identified for the study are as follows:

1. To understand the perception of organizational ethics among the online consumers of SMEs.
2. To explore the factors developing perception of organizational ethics among online consumers.
3.    To investigate the impact of perceived organizational ethics on effectiveness of e-business for SMEs.
The study will be based on the following questions:
1.    What is the perception of organizational ethics among the online consumers of SMEs in UK?
2.    What are the factors which develop the perception of organizational ethics among online consumers?
3.    What is the impact of perceived organizational ethics on effectiveness of e-business for SMEs in UK?

Research Design

The researcher intends to use qualitative research design for conducting the study. Qualitative research is deemed as suitable for seeking information about the areas that are relatively unexplored. The present study is aiming to understand, explore and investigate the role of perceived organizational ethics on success of e-business of SMEs. Considering this context qualitative approach will be provide access to in-depth and detailed information which can be used to develop a comprehensive framework in this regard. The researcher can therefore establish findings which support in enhancing the knowledge and understanding about the phenomenon of perceived organizational ethics. The use of qualitative research is aligned with the deductive approach which is based on the underlying principle of moving from general information to the development of a specific theoretical concept (Bryman & Bell, 2007). Since the context of present study is an under researched area, the use of qualitative approach is more appropriate. Secondly, perception can be explored and analyzed with a greater degree of effectiveness through the use of subjective accounts and narration from the participants.

The researcher will be using grounded theory as a strategy of qualitative research. Glaser (2008) has stated that grounded theory helps a researcher in establishing a clear framework out of the generalized information. Critics have outlined the limitations embedded in the use of grounded theory and qualitative research by asserting that they are based on subjective data only. The researcher can gain insight into the thoughts and beliefs held by individuals; however the observable behavior and objective information are significantly overlooked (Bryman & Bell, 2007). Furthermore, the process of theoretical construction can be time consuming as well. Belk (2006) on the contrary has argued in favor of the use of grounded theory for investigating the various themes related to consumer behavior, as the development of new theory is needed to understand the complex phenomenon of consumer perception.

Data Collection and Analysis

[large]Data collection in a research can be based on primary or secondary sources of information. For this study, the researcher will be collecting primary data which entails collection of first hand information from the sample of study as well as secondary data from peer reviewed journals and books. There are various methods that can be used for gathering primary information. The researcher will be using focus group as it provides access to the perception underlying the behaviour of the participants. Various scholars have used focus groups to obtain information from the consumers about an area of interest (Grunert, 1997; Joseph, Sekhon, Stone & Tinson, 2005; Becken, 2007). The choice of focus group is further facilitated on the grounds that it offers adequate flexibility and validity to the researcher. Moreover, the collection of information is less time consuming as compared to other means of qualitative data collection. Another important benefit of focus group is that the researcher is likely to gain access to unexpected aspects of data. The respondents in the focus group can bring out some information which the researcher wasn’t aware of, thus creating significance of focus group in developing theory (Babbie, 2012). 

The data will be collected from 8 individuals who have indicated that they have engaged in online purchases in the last 2 months (from SMEs located in UK). These participants will be required to respond to the semi structured questions developed by the researcher. The nature of data will be based on direct responses to questions as well as the discussion generated responses. The focus group session is expected to last from 60 to 90 minutes. The session will be recorded by the researcher after obtaining informed consent from the participants. Later on it will be transcribed and coded to identify the various themes discussed by the participants. The analysis of the data will provide an overview of the various factors that have emerged during the focus group discussion. The data from secondary sources will be utilized to develop an understanding about the impact of perceived organisational ethics on the effectiveness of e-business. Peer reviewed journal articles and books will provide content in this regard which can be analyzed to evaluate the validity of this notion.

Time Scale

In order to represent the process of initiation, conductance and completion of research, I have used a Gantt chart. The chart will illustrate various stages of research and the time allocated for each of the research activity. As demonstrated in the chart given below, the research project will be initiated in February in the form of development of proposal. The next step in this regard will be literature review which will last up to 2 months. It will provide the researcher with an understanding of the theoretical constructs that can be used for formulating the questions for participants. Once the questions have been formulated the researcher will conduct a pilot study of focus group to gauge the degree of reliability and validity of the questions. In addition to this, the pilot study will also help the researcher in identifying any problems in the question structure and formatting. After the pilot study, the next phase will be focused on collection of actual research data which will also be done in June. The researcher will collect data through focus group as well as from the plethora of researches conducted by other scholars. The analysis of data will be carried out in July. The last 2 months of the research process will be dedicated for the write up draft and final submission of the dissertation.



The research is focusing on the impact of perceived organizational ethics among the online consumers on the performance of SMEs in terms of their e-business domain. The expected findings in this regard can be summarized on the basis of the three research objectives. The consumers who engage in online purchase and transactions are likely to hold positive perception about the ethical conduct of those businesses. Another expected outcome of the study is that the participants will attach low risk and high trust with organizations that are perceived to be ethical. Moreover, the degree of privacy and availability of information about the use of customer data by firm will also be associated with an indication of organizational ethics.  Lastly, the study is also expected to provide information about the impact of organizational ethics on effectiveness of e-business for SMEs through exploration of pertinent secondary data. The secondary literature will show significant relationship between consumer perception of organizational ethics and the sales and profitability of the e-business activities.


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