(1-approve; 2- somewhat approve; 3-somewhat disapprove; 4-disapprove)
a. Develop some widely accepted general principles of business ethics. b. Introduce courses in Business Ethics in
business schools. c. Introduce industry codes of ethical practices.
d. Legislate stronger government regulation of business. e. Encourage a more active participation of religious leaders in
developing general ethical norms for business.
(1) Alexander, C.S. and H.J. Becker, "The use of vignettes in survey research," Public Opinion Quarterly, Spring, 1978,
(2) American Assembly of Collegiate Schools of Business, Accreditation Council Policies, Procedures, and Standards
1989-1990, (St. Louis, MO).
(3) Andrews, K.R., "Ethics in practice," Harvard Business Review, Vol. 67, No. 5, Sept-Oct, 1989, pp. 99-104.
(4) Arlow, P. and T.A. Ulrich, "Business ethics, social responsibility and business students: An empirical comparison
of Clark's study," Akron Business and Economic Review, Vol 11, No. 3, Fall, 1980, pp. 17-23.
(5) Arlow, P. and T.A. Ulrich, "Can ethics be taught to business students?" The Collegiate Forum, 1983.
(6) Brenner, S. and E. Molander, "Is the ethics of business changing?" Harvard Business Review, Vol. 55, 1977, pp.
(7) Budner, H.R., "Ethical orientation of marketing students, instructors, and practitioners," Western Marketing
Educators Association Conference Proceedings, 1988, p. 25.
(8) Case, J., "Honest business, It Inc., June, 1990, pp. 65-69.
(9) Clark, J.W., Religion and the Moral Standards of American Businessmen, (Cincinnati: South-Western, 1966).
(10) Douglas, M.E- and S.W. Lamb, "Student counselor satisfaction with the SBI Program: A national survey," Small
Business Institute-Directors, Association National Proceedings, 1986, pp- 391-401.
(11) Feldman, H.D. and R.C. Thompson., "Teaching business ethics: A challenge for business educators in the 1990's,"
Journal of Marketing Summer, 1990, pp- 10-22.
(12) Kassarjan, H.H. and B.E. Kahn, "The ethical standards of business students, business professors, and business
people." Western Marketing Educators Association Conference Proceedings, 1989, p. 48.
(13) Lane, M.S., D. Schaupp, and B. Parsons, "Pygmalion effect: An issue for business education and ethics.." Journal
of Business Ethics Vol. 7, 19881 pp. 223-229.
(14) Martin, T.R., "Do courses in ethics improve the ethical judgement of students? "Business and Society, 20, 2:21, 1,
1981-82, pp- 17-26.
(15) O'Connor, E.L. and J.C. Rogers, "An examination of the attitudes of clients and students in the SBI case situation",
Small Business Institute Directors, Association National Proceedings, 1988, pp. 311-315.
(16) Purcell, T., S.J., "Do courses in business ethics pay off?" California Management Review, Vol. 19, No. 4, 1977,
(17) Roberts, T., "The absence of ethics," Computerworld Focus, 2 December, 1987, p. 48.
(18) Stevens, G., "Business ethics and social responsibility: The responses of present and future managers," Akron
Business and Economic Review, Fall, 1984, pp. 6-ii.
(19) Sturdivant, F.D. and A.B. Cocanougher, "What are ethical marketing practices?" Harvard Business Review, Nov-
(20) Weinstein, A., "Students as marketing consultants: A methodological framework and client evaluation of the
Small Business Institute," Small Business Institute Directors' Association National Proceedings, 1990, pp- 122-128.
TABLE 1 PROFILE OF SAMPLE
Undergraduate SBI Senior business Clients Students
Number: 28 112 Gender: Male 13 66 Female 15 43 Age: < 20 0 0 20 - 30 3 90 31 - 40 12 17 41 - 50 9 0 51+ 3 0 No
Answer 1 5
Taken Ethics Courses: NO 22 48 yes 3 54 No Answer 3 10 Years of School: Some College 10 Not Asked College
Graduate 2.2 Not Asked Graduate School 6 Not Asked Years in Business: 1 - 5 14 Not Asked 6 - 10 7 Not Asked over
10 6 Not Asked No Response 1 TABLE 2
RESPONSES (PERCENTAGES) OF SBI CLIENTS (SBI'S) AND UNDERGRADUATE SENIOR BUSINESS
STUDENTS (STUDENTS) TO WHAT RESPONDENTS FELT PERSON IN SCENARIO WOULD DO. (PLEASE
SEE QUESTIONS 1A, 2A, ... . ,8A ON QUESTIONNAIRE IN APPENDIX.)
SBI's Students Chi-Square
Q1(a) PURCHASE STOCK 19 78 (73%) (70%) *NOT PURCHASE STOCK 7 34 (27%) (30%) p - 1.0
Q2(a) SUPPLEMENT INCOME 15 65 (54%) (58%) *NOT SUPPLEMENT INCOME 13 47 (46%) (42%) P - .82
Q3(a)*CHOOSE GRIMES 12 41 (QUALIFIED) (43%) (37%) CHOOSE LEONARD 16 70 (CONTACTS) (57%)
(63%) P - .695
Q4(a) DISCHARGE OLDER 14 73 (64%) (69%) *DISCHARGE YOUNGER 8 35 (36%) (32%) p - 1.0
Q5(a) SHUTDOWN SECRET 8 71 (29%) (65%) *NOTIFY EMPLOYEES 20 39 (71%) (35%) p - .001
Q6(a) DISTRIBUTE IN CANADA 25 105 (93%) (95%) *NOT DIST. IN CANADA 2 6 (7%) (5%) p - 1.0
Q7(a) PAY SUBSTANDARD WAGES 25 94 (89%) (86%) *NOT PAY SUBST. WAGES 3 15 (11%) (14%) P - .936
Q8(a) SEND GIFTS 25 90 (96%) (81%) *NOT SEND GIFTS 1 21
Ethical choice (4%) (19%) p - .115
TABLE 3 RESPONSES (PERCENTAGES) OF SBI'S AND STUDENTS TO WHAT THEY THEMSELVES
(RESPONDENTS) WOULD DO IN EACH ETHICAL DILEMMA, (PLEASE SEE QUESTION 1B, 2B, ...., 8B ON
QUESTIONNAIRE IN APPENDIX,)
SBI's Students chi-square
Ql(b) PURCHASE STOCK 13 40 (50%) (36%) *HOT PURCHASE STOCK 33 72 (50%) (64%) P - .2604 Q2(b)
SUPPLEMENT INCOME 0 19 (0%) (17%) *NOT SUPPLEMENT INCOME 28 93 (100%) (83%) P - .0418 Q3(b)
CHOOSE LEONARD 3 20 (CONTACTS) (11%) (18%) *CHOOSE GRIMES 25 91 (QUALIFIED) (89%) (82%) p -
.519 Q4(b) DISCHARGE OLDER 9 39 (41%) (36%) *DISCHARGE YOUNGER 13 69 (59%) (64%) p - .855 Q5(b)
SHUTDOWN SECRET 1 11 (4%) (10%)
*NOTIFY EMPLOYEES 27 99 (96%) (90%) P - .497 Q6(b) DISTRIBUTE IN CANADA 22 91 (82%) (82%) *NOT
DIST. IN CANADA 5 20 (18%) (18%) p - 1.0 Q7(b) PAY.SUBSTANDARD WAGES 7 31 (25%) (28%) *NOT PAY
SUBST. WAGES 21 78 (75%) (72%) P - .846 Q8(b) SEND GIFTS 14 75 (54%) (68%)
*NOT SEND GIFTS 12 36 (46%) (32%) P - .244
TABLE 4 OF THOSE WHO THOUGHT PERSON IN SCENARIO WOULD DO THE LESS ETHICAL ACTION,
WHAT WOULD RESPONDENT HIM/HERSELF DO'.>
SBI's Students Chi-Square
Ql(b) PURCHASE STOCK 12 38 (63%) (49%) *NOT PURCHASE STOCK 7 40 (37%) (51%) P - .382 Q2(b)
SUPPLEMENT INCOME 0 16
(0%) (25%) *NOT SUPPLEMENT INCOME 15 49 (100%) (75%) P - .073 Q3(b) CHOOSE LEONARD 3 19
(CONTACTS) (19%) (27%) *CHOOSE GRIMES 13 51 (QUALIFIED) (81%) (73%) p - 1.0 Q4(b) DISCHARGE
OLDER 9 36 (64%) (49%) *DISCHARGE YOUNGER 5 37 (36%) (51%) P - .462 QS (b) SHUTDOWN SECRET 1
11 (13%) (15%) *NOTIFY EMPLOYEES 7 60 (97%) (85%) p - 1.0 Q6(b) DISTRIBUTE IN CANADA 22 90 (88%)
(86%) *NOT DIST. IN CANADA 3 15 (12%) (14%) p - 1.0 Q7(b) PAY SUBSTANDARD WAGES 7 27 (29%)
(29%) *NOT PAY SUBST. WAGES 15 67 (72%) (71%) p - 1.0 Q8(b) SEND GIFTS 14 69 (56%) (77%) *NOT
SEND GIFTS 11 21 (44%) (23%) P - .0738 Ethical Choice
TABLE 5 RESPONSES OF SBI'S AND STUDENTS TO PREFERRED CO-WORKER. (QUESTION #15 ON
SBI's STUDENTS TOTAL
PREFER WHITE 8 45 53 ("FLEXIBLE) (29%) (43%)
PREFER EASTON 20 61 81 ("NON-COMPROMISING") (71%) (57%)
28 106 134
P - .23
TABLE 6 MEAN RESPONSES OF SBI'S AND STUDENTS TO IMPROVEMENT OF BUSINESS ETHICS
CHOICES. (PLEASE SEE QUESTION #16 ON QUESTIONNAIRE, APPENDIX,)
SBI,'& STUDENTS T-VALUE* P (2-TAIL)
DEVELOP PRINCIPLES OF 1.41 1.64 1.44 .156 BUSINESS ETHICS
ETHICS COURSES IN 1.26 1.22 -.25 .802 BUSINESS SCHOOLS
INDUSTRY CODES OF ETHICS 1.88 1.92 .19 .850
LEGISLATE STRONGER 2.96 2.83 -.53 .598 REGULATION
RELIGIOUS LEADERS MORE 2.96 3.30 1.39 .177 ACTIVE IN BUSINESS
1 - APPROVE 2 - SOMEWHAT APPROVE 3 - SOMEWHAT DISAPPROVE 4 - DISAPPROVE
SEPARATE VARIANCE ESTIMATES
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ORGANIZATIONAL STRUCTURE AND OPERATIONAL BEHAVIOR
OF SMALL BUSINESS INSTITUTE PROGRAMS
Marilyn Young, The University of Texas at Tyler George Joyce, The University of Texas at Tyler
The importance of small businesses as an integral part of our economy dictates that continuous efforts be undertaken to
assess these organizations in their ever changing environments.
The role of the Small Business Institute program is one of the most effective vehicles for management assistance based
on the results of a variety of past research efforts. Therefore, a better understanding of the Small Business Institute
programs will provide added insight for their development and continued contribution to the success of the small
business sector in the U.S. economy.
This study is based on a survey mailed to all Small Business Institute Directors. The study examined the reasons small
businesses request counseling, as well as the role of other information sources such as SCORE, SBDC, and advisory
committees. The role of the SBI Director, course pedagogy, budget control, and number of cases were also assessed.
The demographics of the institution, as well as the director were also examined.
The continued emphasis on small business as a major component of our economy and, in particular, as one viable
element in national and regional economic growth and development suggests continual attention. In many areas of the
country where economic conditions have reflected a downturn, it has been consistently recognized that the future
prospects for economic growth can be enhanced by the role of small business. Small businesses are an integral, indeed
a major economic institution in the economy of the United States. Estimates as high as 60 percent have been made
concerning the nation's work force which is employed in the small business sector. Small businesses account for
approximately 40 percent of the country's Gross National Product (11). Consistently, economic development studies
recommend that small businesses are areas where growth, innovation and expansion provide a real opportunity for
responding to ever changing environments (9).
Unfortunately, the failure rate for small business within the first year approximates one-half while estimates run as high
as 80 percent within the first three to five years (1). The obvious question is how to protect against the economic and
social costs associated with these conditions which is most often a result of poor management. The role of the Small
Business Institute (SBI) program is one of the most effective vehicles for small business assistance based on the
conclusions of a variety of past studies. These programs help to improve operations and/or reduce the rates of failure
with subsequent effective utilization of their limited resources (12;10;8;3). Although a constant effort has been made
through research and analysis in both education and government, many issues remain unresolved regarding the present
and potential role of small business (13;6;14;7;5;2;4).
The need remains for a better understanding of the SBI program as an effective tool in assisting small businesses to
continue their contributions to the economy and at the same time to fulfill their role as the foundation for all business,
since all businesses were once small.
The purpose of the research is to examine the SBI program and obtain a more comprehensive appreciation of their
activities and to establish a contemporary posture of these programs. Additionally, this research will provide a clearer
definition of the role of SBI programs and examine methods to improve their contributions to small business by
assisting .owner/managers in a more efficient allocation of their human and financial resources. In order to meet these
objectives, specific research questions are as follows:
1. What are the major reasons small businesses requested counseling in 1989-90?
2. What supporting services are offered through SBI programs?
3. What percent of SBI's are affiliated with SBDC'S?
4. What is the nature of the SBI course and student's grade?
5. What proportion of cases are completed per year and what proportion of those are not funded?
6. What is the normal teaching load for the SBI Director, and does the individual have a reduced teaching load?
7. Which university office controls the budget for the SBI program?
8. What sources other than SBI Directors are used for advisory assistance?
9. Do SBI programs have advisory committees, and what is the nature of such committees?
10. What are the characteristics of the SBI institution as well as the director?
A complete universe data base was used which comprised all SBI directors. This data base was derived from the 1990
official roster of membership of Small Business Institute Directors' Association (SBIDA). The universe of 516 was
reduced to 501, since some programs were found to no longer be in existence. This study is based on a survey mailed to
501 directors on August 24, 1990.
After a follow-up mailing, a total of 300 completed questionnaires were returned which resulted in a response rate of 60
The research was undertaken to develop a current profile of SBI programs and to establish a foundation for analysis
and subsequent measurement. Data for this paper was requested from all SBI's in the United States. Figure 1 is a map
which shows the ten U. S. regions according to the Small Business Administration's designation. The following two
sections provide a summary of computations from the results of the study.
ORGANIZATIONAL STRUCTURE OF SMALL BUSINESS INSTITUTES
The following section describes aspects relating to the organizational structure of SBI's such as demographics of SBI
institutions and directors. Also, geographic location, size of the institutions, and relationship with the Small Business
Development Center (SBDC) are examined.
Demographics of SBI's
Table I illustrates the approximate number, 501, of SBI programs in the United States segmented by SBA region. For
instance, the largest number, 98, or 20% of the total 501, are located in Region 5. Also, 68 out of the 300 responses
were from this region which accounted for 69% of the SBI's in that region. The region having the lowest return was
Region 1 with only 28% of the directors responding.
Figure 2 shows a breakdown of the SBI directors responding to the study according to the geographic location of their
institutions. For instance, 32% of the responding SBI's were located in the Midwest United States.
Size of Academic Organization
Over 60% of the institutions responding were colleges and universities with enrollments of less than 10,000 students. In
fact, approximately 40% were institutions with less than 5,000 students as observed from Figure 3.
Demographics of Directors
Some 97% of the SBI directors held advanced degrees and had served in the director's position for a number of years.
For instance, some 57% held the doctorate, and only 36% had served 4 years or less. The majority of the SBI Directors
responding, 86%, were male, while female directors accounted for 14%. The majority of the directors' academic
specialization was in the field of management which accounted for almost one-half of the total respondents.
The directors reported numerous types of business and professional experience. As may be noted in Table 2, consulting
experience was mentioned most often by approximately one-half of the responding directors, while sales, retailing, and
production followed with smaller proportions.
The organizational structure for assisting small businesses appears to reflect a traditional pattern of continuity. That is,
the survey responses clearly indicate over 80% of the SBI programs have direct access to SBDC. Based on 59% of the
responses, the location of the SBDC is housed in the same location as the SBI program as depicted in Figure 4.
This section describes certain areas of operational behavioral associated with the SBI program such as the nature of
counseling, supporting services, and case load. Also, teaching responsibility, budgetary authority, and sources of
management assistance are analyzed.
Nature of Counsel
The major area of requested counseling was in the functional area of marketing; i.e., sales, advertising and general
Following marketing were marketing research, start-up advice, accounting, and financing as major reasons as observed
in Table 3. Few respondent reported requests for assistance concerning legal issues.
Observable from Figure 5, Small Business Institute programs also offer supporting services in addition to their primary
role of management assistance. It is noteworthy that over 21% of the respondents indicated they had offered seminars;
additionally, another 11% of the directors had held conferences. Further, 10% of the respondents offered other
supporting services, such as individual counseling and research.
The Nature of the Course
A significant number, 82%, of the responding directors reported that the SBI program was offered through an elective
course, rather than a course which was required. Only one fourth of the respondents stated that the SBI programs were
a part of a required course. The course mentioned most often was the capstone business course entitled, Business
Policy/Strategy. Figure 6 clearly conveys the importance of the counseling project as a partial requirement for the
course. Over half of the directors indicated that the SBI consulting project encompasses more than 75% of the grade.
Funded and Non-Funded Cases
The largest number of cases completed during the academic year, 1989-90, as reported by 72% of the directors was
within the range of 1-9. The median number of cases was computed to be 12. Only 11 percent of the institutions
completed 30 cases or more in this period as shown by Figure 7.
More than half, 54%, of the directors reported that they completed more cases than the Small Business Administration
funded in 1989. The median number per institution of non-funded cases for this period was 4. Therefore, through
extrapolation, a figure in the vicinity of 2,000 cases a year are the directors counted the project three fourths of the
The average number of cases completed per SBI program during the academic year, 1989-90, was 12. Over 72% of the
directors completed a range of 1-9 cases. Over one half of the directors completed more cases than were funded by the
SBA; the average number of unfunded cases was 4. The majority of the directors, 74%, were fulfilling the role of the
SBI director in addition to, a full teaching load at their respective institutions. Only 34% were permitted a reduced
teaching assignment, which was typically three semester hours. The budgetary authority for the SBI program was at the
director's level in 52% of the responding institutions.
In addition to the director, the faculty of each institution were relied upon as a major information resource for small
business client management assistance. Also, 32% of the directors utilized the experience of SCORE personnel.
Over 80% of the directors did not have an advisory committee. This situation may be an avenue to pursue as a means of
obtaining additional management assistance with a minimal cost of providing service to the small businesses.
The survey findings reveal that businesses requested many types of counseling. it would appear directors should
continue to seek outside resources for this additional assistance. Since directors reported they possessed a variety of
business and professional experience, it would suggest that overall the SBI's are furnishing valuable management
assistance to their communities at low cost.
(1) Anderson, Robert L. and Dunkelberg, John S., Entrepreneurship; Starting a New Business, (New York: Harper &
Row, 1990), p. 5.
(2) Bruckman, J. C. and Imon, S., "Consulting With Small Business: A Process Model." Journal of Small Business
Management, 1980, Vol. 18, No. 2. pp.41-47.
(3) Chrisman, J. J. and Leslie, J., "Strategic, Administrative and Operating Problems: The Impact of Outsiders on Small
Business Performance." Entrepreneurship Theory and Practice, 1989, Vol. 13, No. 3. pp. 37-51.
(4) Elbert, D. J. et al., "SCORE/ACE Volunteers and SBI Programs: An Evolution of Support Potential." Journal of
Small Business Management, 1983, Vol. 21, No. 2. pp. 38-44.
(5) Franklin, S. G. and Goodwin, J. S., "Problems of Small Business and Sources of Assistance: A Survey." Journal of
Small Business Management, 1983, Vol. 21, No. 2. pp. 5-12.
(6) Kennedy, James, et al., "Problems of Small Business Firms: An Analysis of the SBI Consulting Program." Journal
of Small Business Management, 1979. pp. 7-14.
(7) Krause, David, et al., "Can Academia Truly Help Small Business Owners?" Small Business Forum, 1990. pp. 54-
(8) Nohavandi, Afsaneh and Chesteen, Susan, "The Impact of Consulting on Small Business: A Further Examination."
Entrepreneurship Theory and Practice, 1988, Vol. 13, No. 1. pp. 29-40.
(9) Perryman, M. Roy, Texas Economic Forecast: The Perryman Report, (Baylor University: Texas Economic
(10) Rocha, J. R. and Kohn, R. M., "The Human Resource Factor in Small Business Decision Making." American
Journal. of Small Business, 1983, Vol. 3, No. 1. pp. 53-62.
(11) Scarborough, Norman M., et al., Effective Small Business Management, (Columbus: Merrill Publishing Co.,
1991), p. 16.
(12) Solomon, G. T. and Weaver, K. M., "Small Business Institute Economic Impact Evolution." American Journal of
Small. Business, 1983, Vol. 3, No. 1. pp. 41-51.
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