The purpose of this study is to identify the influence of company's ethical environment and its social responsibility on management perfornance. The ethical environment of company is divided into external ethical environment including legal regulation...
The purpose of this study is to identify the influence of company's ethical environment and its social responsibility on management perfornance. The ethical environment of company is divided into external ethical environment including legal regulation, governmental encouragement pressure of NGO's and company's awakening and internal ethical environment including CEO's will, operation of ethical management system, education, and training. In the research model, social responsibility is divided into responsibility for society and customers and management performance is divided into financial performance, image of the company and members' satisfaction. We used statistical package, SPSSWIN 10.0 and LTSRELL 8.71 as analysis methods to verify variables mentioned above. The results of research are followings :
First, prior to verbifying research hypotheses, factor analysis of variables suggests that external environment, internal environment, social responsibility of the company, and management performance are all relevant having relatively high degree of reliability(Cronbach's α > .60). The analysis of correlation shows that mostly social responsibility of the company has a meaningful effect on management performance but less meaningful effect on financial performance according to the times of introduction and types of industry, This means that it takes time for ethical management to obtain results. Also, financial performances of finance, service, and architecture industries are less meaningful than manufacturing industry.
Second, governmental encouragement and company's awakening of are adopted as external environment factors which have an effect on social responsibility of the company. This indicates that it is desirable that government makes autonomous environment instead of resorting to coercive measures. Besides, companies can strengthen their global competitiveness by actively applying ethical environment to management.
Third, CEO's will, education, training and ethical management system are all adopted as internal environment factors which have an effect on social responsibility of the company. Success or failure depends on CEO's concern and active support that are common factors in various kinds of management innovation activities. And, it Is necessary to consider ethical management as a management innovation or management strategy Above all, it seems that the integration of customer satisfaction management and quality management system can bring the synergy effect. This study shows that education and training are very useful to Induce all members to participate and further important managerial factors as a previous step to introduce ethical management system.
Therefore, it is essential to devise a plan for long-term education and training and conduct them systematically and continuously. Especially, the curriculum for newcomers should include subjects on business ethics and also the board of directors should participate in education.
Forth, we verified the effects of companies' social responsibility on financial performance(quantitative) and business s image and members' satisfaction(qualitative). The result suggests that responsibility both for society and customers has a statistically meaningful effect on financial performance, business image, and members' satisfaction. Especially, business image(R² = .506) and members' satisfaction(R² = .279) as qualitative evaluation are very meaningful. However, financial performance(R² = .107) as quantitative evaluation should be considered more specifically. Thus, these results are consistent with previous studies conducted by Carrot(1979), Mark(1986), Lee & Yoshiara(1997), and the Federation of the Korean Industries(2003). Therefore, it is necessary to introduce and activate ethical management as a survival strategy of companies.
Finally, one of the main purposes of this study is In identify the influence of critical business ethics factors on management performance. Thus, we conducted path analysis by applying LISREL 8.71 that deals with structural equation widely used in social science and behavioral science. The result indicates that most index numbers showing goodness-of-fit fulfill standards in general and the estimated values of path analysis on study hypothesis Ⅰ, Ⅱ, and Ⅲ are meaningful(1%, 10%). It is same as the result of regression analysis by SPSS. Therefore, these results show that this study model was appropriately designed.
In conclusion, Korean companies should introduce international commercial transaction order and thus establish respectful business image by recognizing changes of global management environment, introducing and internalizing ethical management system. Also, they should consider ethical management as an essential element not just as an optional element since it can help to improve members' affection to their companies and productivity and further management profits.