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    Enterprise ethical climatechanges over life cycle stages

    Jernej Belak and MatjazMulejFaculty of Economics and Business, University of Maribor, Maribor, Slovenia

    Abstract

    Purpose Life cycle stages may see, result from, and/or cause, changes in culture and climate asthe right-brain attributes of both managers and their co-workers. A four-stage model is used to perceivethese possible changes. Findings are tested in Slovenian enterprises. Differences per stages may becrucial and shouldtherefore be known to managers/owners. Basedon thecase study research,this paperaims to suggest that enterprise awareness of importance of ethical climate can be of essential meaningforits long-termsuccess. Thepurposeof this paper is to discover differences in enterprise ethical climatein different enterprise life cycle stages and to identify their importance for active ethical climate care bythe enterprises.

    Design/methodology/approach In this paper, the qualitative research is applied. The researchcognitions on ethical climate are discussed in application of the dialectical systems theory.

    Findings The paper finds that there are some differences in enterprise ethical climate for enterpriselife cycle stages and indicates a significant presence of the rule, law and code and instrumentalethical climates. Movement towards a more bureaucratic method of enterprise functioning, as anenterprise moves from the pioneer stage towards the stage of turn-over, was also found.

    Practical implications This paper gives us some insights in the state of ethical climate inSlovenian enterprises. In a frame of practical implications, a further research should be done to showwhich measures of such ethical climate implementation should be used to stimulate the enterprisesinnovative behaviour in accordance with the state of enterprises life cycle stage.

    Originality/value The available literature does not provide for a similar research of linkagebetween the ethical climate and enterprises life cycle.

    KeywordsCybernetics, Business ethics, Organizational innovation, Systems theory, SloveniaPaper typeResearch paper

    1. IntroductionOne speaks much more about knowledge management than about values/culture/ethics/norms, which result from the right rather than leftbrain hemisphere and influencehow knowledge is directed and applied (Potocan and Mulej, 2007a, b, c; Mulej, 2007a, b).This situation reflects the usual lack of requisitely holistic (systemic) thinking ofspecialists. In the functioning of enterprises all stakeholders matter and each group ofbusiness participants has its own interests (Kajzer et al., 2008), not knowledge only(Thommen, 2003). Lack of interest consideration of and by any interest group may causeconflict, which has to be resolved, if the enterprises aim is to survive and be successful(Belak and Kajzer, 1994; Belak, 2005). Stakeholders interests develop and change intime, as enterprises change and develop. There is an extensive body of literature on theconcept of organizational life cycle, which attempts to model the stages that enterprisespass through, as they evolve from start-up to mature enterprises (Pu mpin and Prange,1991; Bleicher, 1994, 2004; Fueglistaller and Halter, 2005).

    In economic science, the biological life cycle was used for describing and explainingthe developmental and growth changes of enterprises. Several authors refer to variouslife cycle stages of enterprises within which they then describe different enterprise

    The current issue and full text archive of this journal is available at

    www.emeraldinsight.com/0368-492X.htm

    Enterpriseethical climate

    changes

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    KybernetesVol. 38 Nos 7/8, 2009

    pp. 1377-1398q Emerald Group Publishing Limited

    0368-492XDOI 10.1108/03684920910977032

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    characteristics and problems. Pumpin and Prange (1991), as well as other authors,argue that no uniform management model exists as an answer to problems ofenterprises in different life cycle stages.

    While opinions on the number and nature of specific stages in a life cycle differ, it is

    clear that organizational challenges and managerial approaches vary as the enterpriseevolves (Morris et al., 2002). These developments would also seem to have ethicalimplications, although little research has been done to address the relationship betweenlife cycle stages and enterprise ethics.

    Since science recognizes the fact that an enterprise passes through different lifecycle stages, and that life cycle stages differ in terms of management systems, formalstructures, control systems, documentation of transactions and number of proceduralhurdles (Morriset al., 2002), our main research problem was focused on differences inenterprise ethical climate as one of the most important business ethics impact factor.The present paper considers the fact that there are several elements and factorsimpacting the enterprises ethical behaviour such as enterprises core values, enterprise

    culture, formal and informal measures of business ethics implementation (Kaptein,1998; Belak, 2008), not enterprise climate only.The first part of this contribution therefore deals with the argumentation of the

    enterprise life cycle phenomena. In the second part, the importance of the enterpriseethical climate is argued, and in the third part the empirical research and the researchcognitions are presented. Before them, we will briefly present how this research hasbenefited from the application of the Dialectical Systems Theory (DST).

    2. The general and the dialectical systems theoriesIn our understanding of the General Systems Theory (Bertalanffy, 1968, edition 1979),the most crucial sentences read: [. . .] systems theory originally intended to

    overcome current over-specialization (exposure of these words by bolding is ours,M. Mulej) [. . .] (Bertalanffy, 1968, edition 1979, p. VII); General systems theory, then, isscientific exploration of wholes and wholeness which, not so long ago, were consideredto be metaphysical notions transcending the boundaries of science (Bertalanffy, 1968,edition 1979, p. XX). As we see inEncyclopaedia (Francois, 2004), most authors of variousversions of systems theories and cybernetics have not overcome the currentover-specialization. This may solve many problems rather the one of crucialoversights resulting along with deep insights due to over-specialization. Hammond(2003) studied the history of systems theory and found that the fathers of both systemstheories and cybernetics used to work on an interdisciplinary basis.

    Three decades earlier the same problem was detected by Mulej (1974, 1979) and Mulejet al. (2009). His response was labeled the dialectical system. The ancient Greek word for

    interdependence was used dialectics (Britovsek et al., 1960). For wholeness of insightsand action (Drack and Apfalter, 2007), all attributes of the object under investigationwould have to be considered, which is impossible to attain inside a single selectedviewpoint that the narrow specialist tend to apply (tacitly and mostly). Hence, a system,i.e. network of all viewpoints of all different specialists is needed, which reaches beyondthe human capacity. Thus, the dialectical system is defined as a system, i.e. network ofall crucial viewpoints, which enables the requisite holism (Mulej, 2007b). TheBertalanffys crucial aim to fight important oversights has thus become attainable by

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    the DST much more than by most other versions of systems theory and cybernetics.DST supports also informal systemic thinking and requisitely holistic behaviour.

    In the case of investigation reported about in this contribution, the requisite holismis met by the synergy of the enterprise life cycle approach and the enterprise ethical

    climate viewpoint.

    3. Enterprise life cycle approachThe application of the biological life cycle model to economic science and practice is arelatively new phenomenon. Fueglistaller and Halter (2005) refer to Grabowski andMueller (1975), who developed the Life Cycle Theory (Lebenszyklustheorie) in the 1970s.According to Fueglistaller and Halter (2005) and Korallus (1988) was the author whoimportantly contributed to this area, likewise Pumpin and Prange (1991), Rosenbauer(1995) and Kemmetmuller and Schmidt (1995). An especially significant role indeveloping the enterprise life cycle among these authors was played by works of theco-creators of the St Gallen Model of Integral Management Bleicher (1994, 2004),Pumpin and Prange (1991) and Fueglistaller and Halter (2005).

    Pumpin and Pranges (1991) concepts of the enterprise life cycle described in theirlatest work have been used by various Slovenian scientists and researchers. Pucko(2003) and Duh (2002), in particular, derived from it important discussions andresearch. With the application of ideas from these enterprise developmental models,Duh (2003) developed her own developmental model of family enterprise.

    Cathomen (1996 in Fueglistaller and Halter, 2005) differentiates betweenorganizational and technology life cycles. He categorizes the organizational life cycleinto: life cycle of products, organizations, branches and industries, as well as resourcepotentials. His concepts focus on the establishment/beginning and aging of enterprisesand organizations, which in time change from entrepreneurial to bureaucratic

    organizations. In technology life cycles, the author (Cathomen 1996 in Fueglistallerand Halter, 2005) differentiates between: the life cycles of technologies, systems, costsand processes. In his classification, the author proposes a combination of economic andmanagerial ideas, as well as ideas about the enterprise life cycle (the enterprises partsyste