Business Ethics: MBA Students in Armenia and the US

Business and ethics are often seen as mutually exclusive

BY MIHRAN AROIAN

You just entered a coffee shop where the smell of freshly baked muffins is wafting from the oven. You step up to the counter and order a large to-go cup of freshly brewed coffee along with a banana-nut muffin. You give the young clerk $10 and are rewarded with a steaming hot cup of coffee and a freshly baked muffin. As you walk out the door, you count your change and notice that the clerk gave you change for a $20 bill. What would you do?

You have three choices: go back to the clerk and return the money, leave the store and commit to yourself to pay back the money next time you return, or enjoy the coffee, muffin, and the extra $10!

Having done this little experiment for many years with thousands of college students in Texas, the results in the US are 60% keep the free money, 15% promise to return the money next time they visit the store, and 25% return the excess money to the clerk.

I have done this same experiment in Armenia with 4 classes for a total of approximately 100 students and the results are as follows. Two students kept the free money and 98 students returned the money. That is pretty amazing when you stop to think about it. In Armenia, where the per capita income is far below the US, people are willing to act more ethically. Now, we don’t know what actually happens – but nor do we know in the US! In the US, when you ask the students why they would keep the extra money, the answer is typically that the clerk made the error and why should the customer be held responsible? In Armenia, the students immediately recognize that the clerk will be held responsible for the monetary error and the likelihood is high that the clerk will lose his job or, at the very least, have to make up the difference. In the US, there are a few students who recognize this same negative outcome for the clerk.

On a very different subject, the likelihood of overt cheating (as defined by most higher educational institutes in the US) is also very different when compared to Armenia. I asked students in Armenia if their friend was unable to come to class to take an exam, would they step in and take the exam for the absent student? Although I have not asked this question in the US, I am confident enough to know that 100% of the students would say that this was both unethical and against the policies of their university.

In Armenia, approximately 25% of the students said that they would take the exam for their friend. In their mind, it had nothing to do with cheating – since they did not personally benefit. They were simply helping a friend who was unable to attend class. What was even more surprising was that only a few of the students recognized that they had signed a code of conduct that prohibited this course of action. How could so few students recognize this behavior as unethical? How could they not know that they had signed a commitment not to engage in such unethical academic behavior? Why would they be willing to take such a risk?

It comes down to wanting to help someone that they have a relationship with that simply needs some help!

There are examples of where Armenian students and American students were equally as convinced of unethical behavior and there were also examples of where Armenian students were equally as confused about unethical behavior. For example, when provided with the text in the next paragraph, both Armenian and American students were virtually identical in their response.

You figure out a way to use a complex financial transaction to make your results look much better in the short run, even though you know there is no underlying change in your company’s performance. In fact, you know that in the future there will be significant consequences for shareholders and other stakeholders. But, in the short run, you’ll make a lot of money by doing this.

Virtually 100% of all students, Armenian and American, recognize this as unethical behavior. However, there are scenarios where students from both countries are just as unsure as to what constitutes unethical behavior. For the most part, when actions and consequences are black and white and clearly cause someone harm, Armenian students are more astute as to the ethical nature of the situation. But when it is not clear who is being harmed or what damage is being caused to a third-party, Armenian students are more likely to engage in such behavior.

Ethical behavior in Armenia has a very different meaning than in America. In Armenia, if you need or want a higher course grade, simply pay-off the professor. In America, it is unheard of! The thought that grades can be purchased is simply not a part of the American culture. It may happen, but not on a wholesale level.

In Armenia, low-level governmental employees earn significantly less than the national average. This includes policemen. If you want to put food on the table, you have to supplement your income, which can lead to many unethical acts. Corruption in Armenia may include the wealthy oligarch families that are overtly corrupt but it includes even the most common of citizens – people trying to feed their families and wanting to provide the very basics to survive and live. We may look at Armenia and wonder how corruption becomes a part of society, yet when the average citizen has nothing to live on, corruption becomes a way to simply survive in a society where real jobs are scarce and survival is on a day-to-day basis.

When you travel to the smaller towns in Armenia you learn that the only way to survive is to leave Armenia to look for work. Many of the men travel to Russia to find work for six months in order to send money home. They return to be with their families but what kind of a life is it to have to leave in order to find work only to return to be dismayed by the lack of job prospects?

Teaching business ethics to students in Armenia was a privilege but when you put it into perspective, trying to teach ethical decision-making in a society that is simply trying to survive is challenging. When you see your next door neighbor surviving because they know how the system works makes it hard to convince someone that they should play by the rules.

When it comes down to taking care of yourself, your loved ones, and your friends, business ethics can be a foreign concept. If you cannot eat, why should you worry about making the right ethical choice?

What does Armenia need in order to solve so many of her problems? Jobs, jobs, and more jobs. I want our future business leaders in Armenia to be ethical but I also know that they need jobs. Without the very basic necessities in life like food, water, shelter and clothing how can we expect Armenian’s to work towards a higher level business thinking?

As Armenians in the diaspora, if we want to help solve so many of the problems that are faced in Armenia, we need to help them find jobs. They already have too many taxi drivers earning $1.50 per trip and paying $5 per gallon of gas. What they need are some real jobs in manufacturing and export. Armenia needs to generate some hard currency that can help grow the economy. Did you know that the GDP of Armenia is only $10 billion? Vermont has the lowest GDP in the US yet it has 25% of the Armenian population and three-times the GDP of Armenia.

In the not too distant future, a new web site will be opening that aims to help bring jobs to Armenia. This web site will allow some of the best and brightest entrepreneurs in Armenia to tap into the vast Armenian diaspora network to find connections that are necessary to bring their products to world markets. For example, a small high tech company in Gyumri, the second largest city in Armenia, has developed some of the latest and greatest earthquake detection technology and aside from selling a few units to the Armenian government, they do not have the connections or resources to bring this technology to the world. As it turns out, there are three major companies in the world that manufacture and distribute this type of technology and are located in the US, UK, and Japan. What are the chances that an Armenian works at one of these three companies? Could they help this small company in Gyumri to make introductions to either license, sell or market their technology outside of Armenia? The chances are probably pretty high. When we can bring the power of the diaspora network to help Armenian business, we not only provide for opportunities of growth, jobs and prosperity – but we also provide hope and a future for our homeland.

Mihran Aroian is an instructor at the McCombs School of Business at the University of Texas at Austin and the McCoy College of Business at Texas State University. For the past two summers, he has been a lecturer at the American University of Armenia in Yerevan. He can be contacted at Mihran.aroian@mccombs.utexas.edu.

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  5. zareh said:

    i admire you and your support to build a better armenia, like minded people are needed to carry out this vision, it will be done ! i am a strong supporter of the development of armenia.

  6. Ethics Unwrapped said:

    A compelling story, Mihran, and insightful as well. Without the basics to survive, it’s challenging to to be ethical and engage in ethical decision-making if the unethical options lead to food, water and a roof over one’s head. Thanks for your good work in Armenia, and your proactive stance on making change possible!

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