FACTORS IMPACTING ETHICAL DECISION MAKING IN SMALL BUSINESS: A FOCUS ON THE CANNABIS MARKET IN ONTARIO

Abstract

Ethical decision-making (EDM) in business leadership has been widely studied, with established classifications identifying personal, organizational, and situational factors that shape ethical behaviour. However, limited research has examined how these factors appear within newly legalized or highly regulated industries such as cannabis retail, where small business leaders face unique ethical and legal challenges. This study investigates that gap by examining factors identified by various researchers and incorporated into ethical decision-making frameworks, such as the Person-Situation Interactionist Model and the Contingency Framework. These factors shape EDM among small business leaders (SMLs) in Ontario’s cannabis industry. Using an interpretive approach and unstructured interviews, the research identifies eight new factors relative to existing literature. These new factors are stigma, unfairness, technology, and five government-related factors (licensing, illicit markets, red tape, supply controls, and legal compliance). These factors interact with personal (e.g., historical associations with cannabis) and situational influences (e.g., peer pressure), reshaping how SMLs navigate ethical dilemmas. The findings also reveal that regulatory ambiguity and competitive pressures lead to grey-area practices in all aspects of business, including marketing. By integrating these factors, the study offers a blueprint for adapting EDM frameworks to emerging and stigmatized industries. This research contributes new data to cannabis research, adds to existing research related to Factors and EDM, extends CSR frameworks to stigmatized industries and enhances EDM frameworks through the introduction of the Stigmatized Industry Decision-Making (SIDM) Framework.