1.1 Introduction
Procurement ethics refers to the moral principles, values, and standards that guide purchasing and supply chain decisions within an organization, ensuring fairness, transparency, accountability, and integrity in all procurement activities (Walker & Brammer, 2018). It involves adherence to established rules and professional conduct in sourcing goods and services, awarding contracts, and managing supplier relationships in a way that avoids corruption, bias, and undue influence. In contemporary business environments, procurement ethics is considered a fundamental pillar for achieving responsible governance and sustainable organizational performance.
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are significance of the study, scope of work, research hypothesis and questions, limitation of the study and definition of terms.
1.2 Background of Study
Procurement ethics is a fundamental aspect of modern organizational management that defines the moral standards, transparency principles, and accountability mechanisms guiding the acquisition of goods and services within an organization. It ensures that procurement processes are conducted fairly, without bias, corruption, or undue influence, thereby promoting trust and efficiency in organizational operations. According to Walker and Brammer (2018), procurement ethics is central to sustainable supply chain management because it shapes how organizations interact with suppliers and stakeholders while ensuring compliance with legal and professional standards. In contemporary business environments, ethical procurement is no longer optional but a strategic requirement for long term survival and competitiveness.
According to Idemudia (2014), multinational corporations operating in resource rich regions such as the Niger Delta face complex ethical challenges in procurement and community engagement. Idemudia stated that Shell Petroleum Development Company (SPDC) has implemented various corporate social responsibility initiatives, yet issues of distrust, perceived unfairness, and procurement irregularities continue to affect stakeholder relationships. He further affirmed that weak enforcement of ethical procurement standards often undermines the company's sustainability efforts, especially in host communities where expectations of fairness and development are high.
Amaeshi, Adegbite, and Rajwani (2019) asserted that, corporate procurement systems in emerging economies are often influenced by institutional weaknesses, regulatory inconsistencies, and socio political pressures. They contended that these external factors create environments where unethical procurement practices may thrive if not properly controlled. In their view, organizations that fail to institutionalize ethical procurement frameworks risk inefficiencies, increased operational costs, and reduced stakeholder confidence.
Transparency International (2023) affirmed that, public and private procurement systems across developing economies are vulnerable to corruption risks, including bid rigging, favoritism, and lack of transparency in contract awards. Transparency International reported that such unethical practices weaken organizational governance structures and reduce public trust in corporate institutions. In the context of SPDC, these risks are significant due to the scale of procurement activities and the involvement of multiple contractors and suppliers across different operational regions. The organization's sustainability performance is therefore closely linked to its ability to maintain transparent and accountable procurement systems.
According to Thai (2017), procurement ethics is a key determinant of organizational effectiveness because it ensures that resources are acquired at optimal value while maintaining fairness and compliance with established procedures. Thai stated that organizations that prioritize ethical procurement tend to experience improved supplier performance, reduced risks of litigation, and enhanced operational stability. He affirmed that procurement ethics also contributes to sustainability by ensuring that environmental and social considerations are integrated into purchasing decisions.
Brammer and Walker (2019) articulated that, sustainable procurement practices require organizations to go beyond cost considerations and incorporate environmental and social criteria into supplier selection processes. They contended that ethical procurement strengthens organizational sustainability by promoting responsible sourcing, reducing environmental degradation, and improving long term stakeholder relationships. In the case of multinational corporations such as SPDC, this approach is essential for balancing profitability with corporate social responsibility obligations.
This study is set against the backdrop of increasing concerns about corruption, transparency, and sustainability in procurement systems within multinational oil and gas corporations operating in developing economies.
1.3 Statement of Problems
Investigation reveals that many organizations' procurement decisions are influenced by informal networks and external pressures that undermine fairness and accountability. Procurement ethics promotes fairness, integrity, and responsible sourcing, yet gaps in compliance continue to exist within large scale oil operations (Amaeshi et al., 2019). On the other hand, organizations that adopt strict ethical procurement frameworks experience improved supplier relationships and enhanced sustainability outcomes, yet such practices are not consistently implemented in SPDC operations.
Furthermore, unethical procurement practices contribute to cost inflation, project delays, and reputational damage, which collectively threaten organizational sustainability. In the Nigerian oil and gas sector, regulatory enforcement is often inconsistent, allowing unethical practices to persist despite existing procurement guidelines (Olowu & Adebayo, 2021). It is against this backdrop that this study seeks to investigate the relationship between procurement ethics and organizational sustainability in Shell Petroleum Development Company.
1.4 Aim and Objectives of Study
The aim of this study is to assess the relationship between procurement ethics and organizational sustainability in Shell Petroleum Development Company. In achieving this aim, the following specific objectives were laid out as follows:
- To examine the effect of transparency in procurement processes on organizational sustainability in SPDC
- To evaluate the influence of accountability in procurement practices on operational efficiency in SPDC
- To assess the impact of supplier selection ethics on stakeholder trust in SPDC
- To determine the relationship between procurement policy compliance and sustainability performance in SPDC
- To investigate how procurement governance systems affect corruption control in SPDC
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- How does transparency in procurement processes affect organizational sustainability in SPDC?
- What is the influence of accountability in procurement practices on operational efficiency in SPDC?
- How does supplier selection ethics affect stakeholder trust in SPDC?
- What is the relationship between procurement policy compliance and sustainability performance in SPDC?
- How do procurement governance systems affect corruption control in SPDC?
1.6 Research Hypotheses
In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
Hypothesis 1
- H0: Transparency in procurement processes does not significantly affect organizational sustainability in SPDC
- H1: Transparency in procurement processes significantly affects organizational sustainability in SPDC
Hypothesis 2
- H0: Accountability in procurement practices does not significantly influence operational efficiency in SPDC
- H1: Accountability in procurement practices significantly influences operational efficiency in SPDC
Hypothesis 3
- H0: Supplier selection ethics does not significantly affect stakeholder trust in SPDC
- H1: Supplier selection ethics significantly affects stakeholder trust in SPDC
Hypothesis 4
- H0: Procurement policy compliance does not significantly influence sustainability performance in SPDC
- H1: Procurement policy compliance significantly influences sustainability performance in SPDC
Hypothesis 5
- H0: Procurement governance systems do not significantly affect corruption control in SPDC
- H1: Procurement governance systems significantly affect corruption control in SPDC
1.7 Significance of Study
It is believed that at the completion of the study, procurement managers in Shell Petroleum Development Company will use the findings to improve transparency and accountability in procurement processes, thereby strengthening compliance with organizational policies and global standards. Also, SPDC management will improve procurement transparency and decision making efficiency
Furthermore, regulatory agencies will use the findings to enhance monitoring and enforcement of procurement ethics in the oil and gas sector. In addition, stakeholders and host communities will benefit from improved organizational accountability and fair procurement practices that will enhance trust and development outcomes.
Lastly, academic researchers will use the findings as a reference for further studies on procurement ethics and sustainability.
1.8 Scope and Limitations of the Study
The study focuses on procurement ethics and organizational sustainability within Shell Petroleum Development Company in Rivers State, Nigeria.
The study was constrained by financial limitations, which restricted extensive field data collection across multiple SPDC operational locations. It was also affected by time constraints, which limited the depth of data analysis.
1.9 Definition of Terms
Procurement Ethics:
Procurement Ethics refers to the moral principles and professional standards guiding purchasing decisions, ensuring fairness, transparency, and accountability in procurement processes (Walker & Brammer, 2018).
Transparency:
Transparency refers to openness in procurement activities, where decisions and processes are clearly documented and accessible for accountability.
Accountability:
Accountability refers to the obligation of procurement officers to justify decisions and actions in accordance with established rules and policies.
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