FGIC2019
FGIC 2nd Conference on Governance and Integrity 2019
Volume 2019
Conference Paper
Ethics in Procurement: A Case Study in
a Logistic Company
Nor Rokiah Hanum Md. Haron and Iman Haddad Qaisara Dhia Mohd Mahzan
Faculty of Industrial Management, Universiti Malaysia Pahang, Lebuhraya Tun Razak, 26300
Gambang, Pahang, Malaysia
Abstract
This paper is part of a preliminary study for the awareness of ethical behaviors in
procurement process specifically in a logistic company in Malaysia. Ethic is a critical
behavior in a business transaction where most of the people misconduct the behavior
unintentionally. The objective of this preliminary study is to get an insight view of a
logistic case company, where it is found that ethics is being implemented in the daily
procurement process. A structured interview question with various research of past
problems concerning ethical behavior addresses the responsiveness of employees
behaving ethically by following the ethical guidelines set by the company. This paper
proposes that the company need to emphasize the importance of implementation
Corresponding Author: of ethics and also create more awareness by having an official ethical guidelines of
Nor Rokiah Hanum Md. Haron
the company, despite the fact that the company is small and has a small number
of employees. The company has gained many benefits such as cost reduction and
Received: 5 August 2019 maintaining a company-supplier relationship through the implementation of ethics in
Accepted: 14 August 2019 procurement.
Published: 18 August 2019
Keywords: ethics, procurement, survey.
Publishing services provided by
Knowledge E
Nor Rokiah Hanum Md. Haron
and Iman Haddad Qaisara Dhia
Mohd Mahzan. This article is
distributed under the terms of
the Creative Commons
Attribution License, which
1. Introduction
permits unrestricted use and
redistribution provided that the In this globalized world, many companies or organizations have finally realized the
original author and source are
importance of portraying ethical behaviors in business practices, and it is becoming
credited.
increasingly difficult to ignore the unethical behaviors of employees in an organization
Selection and Peer-review under
because of the scandals that have arisen previously due to ethical issues in business
the responsibility of the
FGIC2019 Conference practices. As a result, these scandals have given a great shock and impact to the whole
Committee. world, such as the Enron Scandal. Besides that, Enron Corp., which is one of America’s
largest company deteriorates after the scandal. There is also a new law regulated to
prevent such misfortune from happening again in the future, which is the Sarbanes-
Oxley Act (Segal, 2019). Thus, it is certain that the ethical behavior of employees and
managers is important in ensuring the success of the organization.
How to cite this article: Nor Rokiah Hanum Md. Haron and Iman Haddad Qaisara Dhia Mohd Mahzan, (2019), “Ethics in Procurement: A Case Study in
a Logistic Company” in FGIC 2nd Conference on Governance and Integrity 2019, KnE Social Sciences, pages 930–942. DOI 10.18502/kss.v3i22.5104
Page 930
, FGIC2019
In recent years, companies are eventually aware of the importance of implementing
ethical behavior in procurement. However, some companies are still unaware of the
importance of ethics and its benefits in procurement. Therefore, in ensuring that com-
panies can implement ethical practices in procurement, the employees and managers
must follow the company rules and regulations first besides having high integrity in the
workplace. Law-abiding workers will give advantages to the organizations because they
are working in an environment which priorities integrity and honesty. Hence, increasing
the productivity of a company. By acting ethically, a company can also increase its
competitive advantage (Schulze et al., 2014) because they are trusted by the customers,
suppliers, and other stakeholders.
Nevertheless, the question is, why do the employees or managers portray ethical
practices? Is it because of individual awareness or because they are influenced by the
organization culture? Also, if they do behave ethically, is it benefiting the organizations?
So far there has been little discussion about implementation of ethical behaviors in
procurement in Malaysia because some companies refuse to disclose any information
regarding ethics and procurement since they consider that it is a sensitive issue for
them. Therefore, this paper will focus on the ethical behaviors implemented in a logistic
company and their procurement process in Malaysia.
1.1. Research Objectives
The first objective of this paper is to determine the motivation a company implement
ethical behaviour in procurement. Implementing ethical behaviours in the procurement
process can be because of many reasons. For example, a company implements ethical
behaviours in the procurement process because they want to avoid getting involved in
any financial or accounting scandals that can ruin the company image. An organisation
may also implement ethics in procurement because the leaders have nurtured the
importance of portraying ethical behaviours into the organisation’s culture. As a result,
the people in the organisation are aware that they are not allowed to behave unethically
during the procurement process, such as accepting gifts or bribery from the suppliers or
business partners. Besides that, the rules or regulations or awareness campaigns made
by the government or non-government organisation may be the reason a company
implements ethics in procurement. When a company or any individuals in the company
commit a white-collar crime, they can be punished by the law according to the severity
of their crimes. Therefore, the awareness campaign is vital in order to promote the
importance of promoting ethical behaviours in the procurement process.
DOI 10.18502/kss.v3i22.5104 Page 931
FGIC 2nd Conference on Governance and Integrity 2019
Volume 2019
Conference Paper
Ethics in Procurement: A Case Study in
a Logistic Company
Nor Rokiah Hanum Md. Haron and Iman Haddad Qaisara Dhia Mohd Mahzan
Faculty of Industrial Management, Universiti Malaysia Pahang, Lebuhraya Tun Razak, 26300
Gambang, Pahang, Malaysia
Abstract
This paper is part of a preliminary study for the awareness of ethical behaviors in
procurement process specifically in a logistic company in Malaysia. Ethic is a critical
behavior in a business transaction where most of the people misconduct the behavior
unintentionally. The objective of this preliminary study is to get an insight view of a
logistic case company, where it is found that ethics is being implemented in the daily
procurement process. A structured interview question with various research of past
problems concerning ethical behavior addresses the responsiveness of employees
behaving ethically by following the ethical guidelines set by the company. This paper
proposes that the company need to emphasize the importance of implementation
Corresponding Author: of ethics and also create more awareness by having an official ethical guidelines of
Nor Rokiah Hanum Md. Haron
the company, despite the fact that the company is small and has a small number
of employees. The company has gained many benefits such as cost reduction and
Received: 5 August 2019 maintaining a company-supplier relationship through the implementation of ethics in
Accepted: 14 August 2019 procurement.
Published: 18 August 2019
Keywords: ethics, procurement, survey.
Publishing services provided by
Knowledge E
Nor Rokiah Hanum Md. Haron
and Iman Haddad Qaisara Dhia
Mohd Mahzan. This article is
distributed under the terms of
the Creative Commons
Attribution License, which
1. Introduction
permits unrestricted use and
redistribution provided that the In this globalized world, many companies or organizations have finally realized the
original author and source are
importance of portraying ethical behaviors in business practices, and it is becoming
credited.
increasingly difficult to ignore the unethical behaviors of employees in an organization
Selection and Peer-review under
because of the scandals that have arisen previously due to ethical issues in business
the responsibility of the
FGIC2019 Conference practices. As a result, these scandals have given a great shock and impact to the whole
Committee. world, such as the Enron Scandal. Besides that, Enron Corp., which is one of America’s
largest company deteriorates after the scandal. There is also a new law regulated to
prevent such misfortune from happening again in the future, which is the Sarbanes-
Oxley Act (Segal, 2019). Thus, it is certain that the ethical behavior of employees and
managers is important in ensuring the success of the organization.
How to cite this article: Nor Rokiah Hanum Md. Haron and Iman Haddad Qaisara Dhia Mohd Mahzan, (2019), “Ethics in Procurement: A Case Study in
a Logistic Company” in FGIC 2nd Conference on Governance and Integrity 2019, KnE Social Sciences, pages 930–942. DOI 10.18502/kss.v3i22.5104
Page 930
, FGIC2019
In recent years, companies are eventually aware of the importance of implementing
ethical behavior in procurement. However, some companies are still unaware of the
importance of ethics and its benefits in procurement. Therefore, in ensuring that com-
panies can implement ethical practices in procurement, the employees and managers
must follow the company rules and regulations first besides having high integrity in the
workplace. Law-abiding workers will give advantages to the organizations because they
are working in an environment which priorities integrity and honesty. Hence, increasing
the productivity of a company. By acting ethically, a company can also increase its
competitive advantage (Schulze et al., 2014) because they are trusted by the customers,
suppliers, and other stakeholders.
Nevertheless, the question is, why do the employees or managers portray ethical
practices? Is it because of individual awareness or because they are influenced by the
organization culture? Also, if they do behave ethically, is it benefiting the organizations?
So far there has been little discussion about implementation of ethical behaviors in
procurement in Malaysia because some companies refuse to disclose any information
regarding ethics and procurement since they consider that it is a sensitive issue for
them. Therefore, this paper will focus on the ethical behaviors implemented in a logistic
company and their procurement process in Malaysia.
1.1. Research Objectives
The first objective of this paper is to determine the motivation a company implement
ethical behaviour in procurement. Implementing ethical behaviours in the procurement
process can be because of many reasons. For example, a company implements ethical
behaviours in the procurement process because they want to avoid getting involved in
any financial or accounting scandals that can ruin the company image. An organisation
may also implement ethics in procurement because the leaders have nurtured the
importance of portraying ethical behaviours into the organisation’s culture. As a result,
the people in the organisation are aware that they are not allowed to behave unethically
during the procurement process, such as accepting gifts or bribery from the suppliers or
business partners. Besides that, the rules or regulations or awareness campaigns made
by the government or non-government organisation may be the reason a company
implements ethics in procurement. When a company or any individuals in the company
commit a white-collar crime, they can be punished by the law according to the severity
of their crimes. Therefore, the awareness campaign is vital in order to promote the
importance of promoting ethical behaviours in the procurement process.
DOI 10.18502/kss.v3i22.5104 Page 931
