This paper examines the critical role that organizational leaders play in establishing a values based climate. We discuss seven mechanisms by which leaders convey the importance of ethical values to members, and establish the expectations regarding ethical conduct that become engrained in the organizations climate. We also suggest that leaders at different organizational levels rely on different mechanisms to transmit values and expectations. These mechanisms then influence members practices and expectations, further increase the salience of ethical values and result in (...) the shared perceptions that form the organizations climate. The paper is organized in three parts. Part onebegins with a brief discussion of climates regarding ethics and the critical role of values. Part two provides discussion on the mechanisms by which leaders and members transmit values and create climates related to ethics. Part three provides a discussion of these concepts with implications for theory, research, and practice. (shrink)

In the context of business, interactions between individuals generate social systems that emerge anywhere within a corporation or in its relations with external agents. These systems influence the behaviors of individuals and, as a result, the collective actions we usually attribute to corporations. Social systems thus make a difference in processes of action that are often morally evaluated by internal and external agents to the firm. Despite this relevance, social systems have not yet been the object of specific attention in (...) the literature on moral agency in business. To fill this gap, I construct a theoretical framework based on Luhmann’s ideas on social systems and morality. In particular, I argue that morality is a phenomenon that occurs in communication, and an agent can engage in morality in three different ways (as a moral factor, an expressive moral agent, or a reflective moral agent) depending on the functions it plays in communicative interactions. Based on this framework, I argue that social systems in business can be considered moral agents of those types. (shrink)

Organizations are faced with the question, not only whether to adopt an ethics program, but also which components to adopt when. This study shows that unethical behavior occurs less frequently in organizations that have an ethics program than in organizations that do not have an ethics program. Nine components of ethics programs were identified and examined. The results show that there is a direct relationship between the number of components adopted and the frequency of observed unethical behavior. No relationship was (...) found between pre-employment screening and unethical behavior, while the strongest relationship was discerned between accountability policies and unethical behavior. The study further reveals that the best sequence for adopting components of an ethics program is a code of ethics, ethics training and communication, accountability policies, monitoring and auditing, and investigation and correction policies—all of which are directly related to less unethical behavior—followed by an ethics office, ethics report line, and incentive policies—all of which are indirectly related to less unethical behavior. With the exception of pre-employment screening, this sequence corresponds closely to the pattern of adoption of organizations in the U.S. (shrink)

The aim of this paper is to explore the role of ethical climate on the relationship between the paternalistic leadership and team identification at the team level. In contrast to the prior studies which tended to focus on ethical climate as a whole dimension, this paper further classified the domain of construct into the categories of egoism, benevolence, and principle using a sample from 143 teams in Mainland China and Taiwan. Hierarchical regression results showed that the average paternalistic leadership had (...) a significant impact on the team identification at the team level. Moreover, the results indicated that the ethical climate of benevolence fully mediated while the ethical climate of egoism partially mediated the relationship between authoritarian leadership and team identification. Also, the ethical climates of benevolence and principle had a partial mediating effect on the relationship between benevolent leadership and team identification as well as moral leadership and team identification, respectively, but the ethical climate of egoism did not play a significant role. The major findings, theoretical contributions, practical implications, and the limitations were discussed. (shrink)

A multidimensional measure of ethical culture was examined for its relationship to person–organization fit, ethical intent and organizational citizenship behavior, using a sample of 525 employees from the financial industry in Spain. As hypothesized, relative to studies using unidimensional assessments, our measure of EC was more strongly related to ethical intent and organizational citizenship. Also, significant differences were found in the degree to which each the EC dimensions related to both ethical intent and OCB. Finally, in a first for the (...) literature, we demonstrated the important role of overall P–O fit in connection with EC, ethical intent, and organizational citizenship. Specifically, as hypothesized, P–O fit moderated positively the association between EC and ethical intent, but mediated the EC–OCB relationship. (shrink)

Faculty plagiarism and fraud are widely documented occurrences but little analysis has been conducted. This article addresses the question of why faculty plagiarism and fraud occurs and suggests approaches on how to develop an environment where faculty misconduct is socially inappropriate. The authors review relevant literature, primarily in business ethics and student cheating, developing action steps that could be applied to higher education. Based upon research in these areas, the authors posit some actions that would be appropriate in higher education (...) and suggest topics for continued study. (shrink)

Small and medium-sized enterprises (SMEs) play a crucial role in national economic growth and contribute significantly to GDP, acting as the backbone of economies in competitive markets. However, ethical issues in SMEs are often overlooked compared to those in large organisations due to limited public financial exposure and minimal media coverage. Research on ethical culture is still limited, particularly in SMEs, as past studies have predominantly focused on large organisations. To gain deeper insights into the ethical culture of SMEs, more (...) qualitative research is needed to uncover the complexities of ethical conduct and organisational dynamics in SMEs. Therefore, this study employs a qualitative approach to explore the elements of ethical culture implemented in Malaysian SMEs. The data, gathered through in-depth interviews with eleven SME managers in Malaysia, revealed that ethical culture is reflected through formal systems, informal systems, leadership, and the newly highlighted element of religiosity. These four elements were explained with three goals for each element: communication, training, and management. The ethical issues faced by SMEs (favouritisms, selling company inventories, and disrespect towards female-led managers) were also highlighted. Accelerators (family influence, customer retention) and barriers (financial constraints) in implementing ethical culture were identified. Interestingly, this study highlights the significant role of religiosity in the ethical culture of SMEs, contributing to the literature and serving as a framework for future research. It aims to provide valuable insights for policymakers, business leaders, and stakeholders seeking to promote a robust ethical culture within the context of Malaysian SMEs. (shrink)

Important decisions that impact humans lives, livelihoods, and the natural environment are increasingly being automated. Delegating tasks to so-called automated decision-making systems can improve efficiency and enable new solutions. However, these benefits are coupled with ethical challenges. For example, ADMS may produce discriminatory outcomes, violate individual privacy, and undermine human self-determination. New governance mechanisms are thus needed that help organisations design and deploy ADMS in ways that are ethical, while enabling society to reap the full economic and social benefits of (...) automation. In this article, we consider the feasibility and efficacy of ethics-based auditing as a governance mechanism that allows organisations to validate claims made about their ADMS. Building on previous work, we define EBA as a structured process whereby an entity’s present or past behaviour is assessed for consistency with relevant principles or norms. We then offer three contributions to the existing literature. First, we provide a theoretical explanation of how EBA can contribute to good governance by promoting procedural regularity and transparency. Second, we propose seven criteria for how to design and implement EBA procedures successfully. Third, we identify and discuss the conceptual, technical, social, economic, organisational, and institutional constraints associated with EBA. We conclude that EBA should be considered an integral component of multifaced approaches to managing the ethical risks posed by ADMS. (shrink)

The authors of the book have come to the conclusion that it is necessary to effectively use modern approaches the management of innovative development the economic entities in order to increase the efficiency of activity, to ensure competitiveness, to intensify innovation activity. Basic research focuses on assessing the innovation processes, the fourth generation of new industrial revolution, diagnosis of sources of innovation financing, assessment of social innovations. The research results have been implemented in the different models of development innovation management, (...) renewable energy, introduction of start-up projects and lifelong learning. The results of the study can be used in decision-making at the level the economic entities in different areas of activity and organizational-legal forms of ownership, ministries and departments that promote of development the economic entities on an innovative basis. The results can also be used by students and young scientists in modern concepts and mechanisms for management of innovative development the economic entities in the context of efficient use the resource potential and improvement of innovation policy. (shrink)

A vision of a living code of ethics is proposed to counter the emphasis on negative phenomena in the study of organizational ethics. The living code results from the harmonious interaction of authentic leadership, five key organizational processes (attraction–selection–attrition, socialization, reward systems, decision-making and organizational learning), and an ethical organizational culture (characterized by heightened levels of ethical awareness and a positive climate regarding ethics). The living code is the cognitive, affective, and behavioral manifestation of an ethical organizational identity. We draw (...) on business ethics literature, positive organizational scholarship, and management literature to outline the elements of positive ethical organizations as those exemplary organizations consistently practicing the highest levels of organizational ethics. In a positive ethical organization, the right thing to do is the only thing to do. (shrink)

The purpose of this study is to identify the elements that can be implemented to achieve an ethical infrastructure, in small and medium enterprises. The ethical infrastructure is considered as a set of formal and informal systems, leadership, climate and culture, related to ethical issues. The research was carried out through interviews and focus groups with managers from 28 companies in Madrid, all signatories to the Global Compact. The identified key elements in SMEs are leadership, informal managerial and formal communication. (...) This study also explores different factors that influence the effectiveness, implementation, and sustainability of the ethical infrastructure in SMEs, discovering some factors that can act as both accelerators and barriers such as pressure from customers. Additional findings regarding the concepts of ethics and corporate social responsibility in SMEs, dilemmas and characteristics of the culture and climate are also presented. (shrink)

The research presented in this article aims to contribute both quantitatively and qualitatively to the discussion on family versus non-family businesses' differences in ethical core values, culture and ethical climate. The purpose of our article is to better understand the association between the degree of involvement of a family in an enterprise and its influence on the enterprise's core values, culture and ethical climate as the constitutional elements of enterprise ethical behaviour. The research indicates that family as well as non-family (...) enterprises maintain positive attitudes towards the core values with ethical content. Regarding the type and strength of culture as well as the type of ethical climate, our research results indicate significant differences between family and non-family enterprises. (shrink)

Business codes are a widely used management instrument. Research into the effectiveness of business codes has, however, produced conflicting results. The main reasons for the divergent findings are: varying definitions of key terms; deficiencies in the empirical data and methodologies used; and a lack of theory. In this paper, we propose an integrated research model and suggest directions for future research.

Business ethics and firm economic performance have traditionally often been regarded as mutually exclusive ends. We challenge this “either-or” belief and analyze when and how ethical firm leadership and firm performance may harmonize well. In extension of earlier research on ethical leadership and performance at the individual and team level, we study the context–dependency of the organization level relationship between CEO ethical leadership and firm performance. We propose a moderated mediation model of the link between CEO ethical leadership and firm (...) performance, identifying mediating and moderating variables unique to the organization-level of analysis. CEO ethical leadership is argued to work through organizational ethical culture which promotes firm performance under the condition that there is a strong corporate ethics program in place. Results from a multisource cross-sectional study, in which we surveyed 145 participants from 32 organizations and validated organizational performance ratings by objective performance data, showed support for our conceptual model. (shrink)

We present a theoretical rationale and supporting studies revealing how unethical leader behavior fosters an unethical climate within workgroups that increases member turnover intentions and malfeasance. Drawing on the attraction–selection–attrition model of organizational behavior, we propose a selective attrition effect whereby unethical leader behavior results in the retention of group members who are more comfortable with dishonesty and, consequently, more likely to engage in unethical behavior toward their group. In two experiments, exposure to unethical leader behavior increased group members’ likelihood (...) of choosing to leave the group. Members who chose to remain in a group with an unethical leader were more likely than those who chose to leave to cheat their group in a subsequent task. A two time-period survey replicated these findings and identified psychological distress as the mechanism driving group members’ turnover intentions. This research extends our understanding of the complex relationships between unethical leadership and follower turnover intentions, psychological distress, and malfeasance. We contribute to the behavioral ethics literature by identifying a previously underappreciated form of selective attrition that produces internal costs to groups and organizations, independent of reputational consequences and whether the unethicality is publicized. (shrink)

Abstract:This study tests the usefulness of a person-situation interactionist framework in examining the willingness of a salesperson to lie to get an order. Using a survey of 389 salespersons, our results demonstrate that organizational relationships influence willingness to lie. Specifically, salespersons are less willing to lie to their own company than to their customer, than to a channel partner, and finally, than to a competitor firm. Furthermore, respondents from firms with a clear and positive ethical climate are less willing to (...) lie. Finally, our study finds that interactions between personality factors, such as high Machiavellianism and high self-monitoring, and situational factors have an impact on willingness to lie. Our results suggest that firms can take steps to influence employee ethical behavior. (shrink)

Aristotle's doctrine of the mean states that a virtue is the mean state between two vices: a deficient and an excessive one. The Corporate Ethical Virtues Model defines the mean and the corresponding deficient vice for each of its seven virtues. This paper defines for each of these virtues the corresponding excessive vice and explores why organizations characterized by these excessive vices increase the likelihood that their employees will behave unethically. The excessive vices are patronization, pompousness, lavishness, zealotry, overexposure, talkativeness, (...) and oppressiveness. (shrink)

Due to the frequent occurrence of ethical transgressions and unethical employee behaviors, there has lately been an increasing interest in the ethical foundations of contemporary organizations. However, large-scale comprehensive analyses of organizational ethics are still comparatively limited. Our study contributes to both management control and business ethics literature by empirically examining potential antecedents as well as resulting effects of ethical work climates on organizational-level outcomes. Based on a cross-sectional survey among 295 large- and medium-sized companies, we find that more informal (...) means of control constitute important elements of a broader organizational control context that are strongly related to the emergence of coherent ethical work climates with an increased awareness of ethical issues. Moreover, our results show that the relationship between ethical work climates and organizational performance can be considered as rather indirect as it is fully mediated by increased mutual trust among employees. Overall, our study thus supports the particular importance of ethical work climates and identifies appropriate means to encourage ethical conduct. (shrink)

In this article, the focus is on developing a governance concept built on integrating the ISO 26000 Social Responsibility standard with an “employee social responsibility” concept developed by the authors. To this end. The authors propose to compliment the voluntary, organizationally adaptable, ISO 26000 SR standard for the organization/firm with a seamlessly integrated—and equally adaptable—ESR concept for the individual/employee of that organization/firm. An SR/ESR governance concept emerges, with an emphasis on implementing a SR-based business enterprise code of conduct and ESR-related (...) functional-level codes of conduct, the latter firmly ensconced in an organization's ethical climate. The conclusion section discusses the strengths and weaknesses of our proposed SR/ESR governance concept. (shrink)

This article develops a multidimensional approach for the investigation of the ethical codes of professional associations. The authors: (a) examine various ethical frameworks to identify ethical constructs, (b) select ethical constructs to apply to the assessment of professional codes of ethics, (c) content analyze conceptual and descriptive similarities and differences across a large sample of professional codes of ethics, (d) address organizational variables that affect the development of ethical codes, and (e) investigate through survey research the beliefs and attitudes of (...) association leadership toward ethical code issues. The content analysis and survey research results have implications for association leadership, its membership, public policy makers, the general public and for future research. (shrink)

The dynamic organisational processes in businesses dilute the boundaries between the individual, organisational, and societal drivers of corporate philanthropy. This creates a complex framework in which charitable project selection occurs. Using the example of European tour operators, this study investigates the mechanisms through which companies invest in charitable projects in overseas destinations. Inextricably linked to this is the increasing contestation by local communities as to how they are able to engage effectively with tourism in order to realise the benefits tourism (...) development can bring. This research furthers such debates by exploring the processes through which tour operators facilitate community development through charitable giving. Findings show, with no formal frameworks in existence, project selection depends upon emergent strategies that connect the professional with the personal, with trust being positioned as a central driver of these informal processes. Discretionary responsibilities are reworked through business leaders’ commitment to responsible business practises and the ethical subjectivity guiding these processes. (shrink)

This study examined the influence of two organizational context variables, codes of conduct and supervisor advice, on personnel decisions in an experimental simulation. Specifically, we studied personnel evaluations and decisions in a situation where codes of conduct conflict with supervisor advice. Past studies showed that supervisors’ advice to prefer ingroup over outgroup candidates leads to discriminatory personnel selection decisions. We extended this line of research by studying how codes of conduct and code enforcement may reduce this form of discrimination. Eighty (...) German managers evaluated and selected candidates from an applicant pool including Germans (ingroup members) and foreigners (outgroup members). Supervisor advice to prefer ingroup members lowered suitability ratings of outgroup members as well as their chances to be selected for an interview. Ethical codes of conduct referring to equal opportunities limited this form of discrimination, but only when codes were enforced by sanctions and integrated into organizational every-day practice. The implications of these findings for research and practice are discussed. (shrink)

Reporting peers’ counterproductive work behaviors (CWBs) is important for maintaining an ethical organization, but is a significant and potentially risky action. In Bandura’s Theory of Moral Thought and Action (Bandura, 1991) he states that such acts require significant moral agency, which is generated when an individual possesses adequate moral self-regulatory capacities to address the issue and is in a context that activates and reinforces those capacities. Guided by this theory, we assess moral potency (i.e., moral courage, moral efficacy, and moral (...) ownership) as key capacities predicting peer reporting intentions and assess three contextual factors influencing the generation and effects of moral potency: whether a potential informant (1) works for an ethical leader, (2) is embedded in a psychologically safe climate promoting interpersonal risk-taking, and (3) operates in a more normal or extreme context. We assess the proposed model across three field studies entailing both normal and extreme (i.e., firefighting units) contexts. Results show that ethical leaders raise employees’ moral potency, promoting greater willingness to report their peers’ CWBs. In normal work contexts, psychological safety positively moderated both the relationship between ethical leadership and moral potency and between moral potency and peer reporting intentions. However, psychological safety had the opposite effects in more extreme work contexts. Whereas psychological safety strengthens the positive association between moral potency and peer reporting intentions in normal work contexts, in contexts where individuals are more frequently exposed to extreme events, psychological safety weakens this relationship, thus highlighting the unforeseen downsides of psychological safety in extreme contexts. (shrink)

Organisations increasingly use automated decision-making systems (ADMS) to inform decisions that affect humans and their environment. While the use of ADMS can improve the accuracy and efficiency of decision-making processes, it is also coupled with ethical challenges. Unfortunately, the governance mechanisms currently used to oversee human decision-making often fail when applied to ADMS. In previous work, we proposed that ethics-based auditing (EBA)—that is, a structured process by which ADMS are assessed for consistency with relevant principles or norms—can (a) help organisations (...) verify claims about their ADMS and (b) provide decision-subjects with justifications for the outputs produced by ADMS. In this article, we outline the conditions under which EBA procedures can be feasible and effective in practice. First, we argue that EBA is best understood as a ‘soft’ yet ‘formal’ governance mechanism. This implies that the main responsibility of auditors should be to spark ethical deliberation at key intervention points throughout the software development process and ensure that there is sufficient documentation to respond to potential inquiries. Second, we frame AMDS as parts of larger sociotechnical systems to demonstrate that to be feasible and effective, EBA procedures must link to intervention points that span all levels of organisational governance and all phases of the software lifecycle. The main function of EBA should, therefore, be to inform, formalise, assess, and interlink existing governance structures. Finally, we discuss the policy implications of our findings. To support the emergence of feasible and effective EBA procedures, policymakers and regulators could provide standardised reporting formats, facilitate knowledge exchange, provide guidance on how to resolve normative tensions, and create an independent body to oversee EBA of ADMS. (shrink)

Ethical attitudes and behaviour are complex. This complexity extends to the influencers operating at different levels both outside and within the organisation, and in different combinations for different individuals. There is hence a growing need to understand the proximal and distal influencers of ethical attitudes, and how these operate in concert at the individual, organisational, and societal levels. Few studies have attempted to combine these main research streams and systematically examine their combined impact. The minority of studies that have taken (...) a combined approach have often done so using conventional statistical and analytical techniques which imply linearity between variables—a situation that rarely exists in business settings and is likely to lead to simplistic or even erroneous conclusions. Applying a fuzzy-set qualitative comparative analysis approach, this paper reports on the mutual and simultaneous influence of individual demographic factors, as well as proximal and distal factors stemming from within and outside the work environment to understand individuals’ ethical views within the workplace. The multiple configurations that emerged reveal the complex nature of influencers of ethical attitudes, and reinforce the view that “one size does not fit all”. We discuss these implications together with managerial recommendations and future research directions. (shrink)

The moral ideology of banking and insurance employees in Spain was examined along with supervisor role modeling and ethics-related policies and procedures for their association with ethical behavioral intent. In addition to main effects, we found evidence supporting that the person–situation interactionist perspective in supervisor role modeling had a stronger positive relationship with ethical intention among employees with relativist moral ideology. Also as hypothesized, formal ethical polices and procedures were positively related to ethical intention among those with universal beliefs, but (...) the relationship was much weaker among relativists. Thus, firms wishing to optimally promote ethical attitudes and behavior must tailor their organization-based initiatives to the individual characteristics of their employees. (shrink)

The rash of high-profile accounting frauds involving internal corporate accountants calls into question the individual accountant’s perceptions of the ethical climate within their organization and the limits to which these professionals will tolerate unethical behavior and/or accept it as the norm. This study uses social cognitive theory to examine the antecedents of individual corporate accountant’s perceived personal fit with their organization’s ethical climate and empirically tests how these factors impact organizational attitudes. A survey was completed by 203 corporate accountants to (...) assess their perception of relevant variables. The results of the structural equation model indicate three significant antecedents relating to ethical climate fit: higher internal levels of locus of control; greater numbers of prior job changes; and higher perceptions of an increasingly better fit with the firm’s ethical climate. Our results also indicate that higher levels of perceived fit to the ethical climate of a firm are associated with higher levels of perceived job satisfaction and organizational commitment. We also theorize that perceptions of an organization’s ethical climate may be reflections of client narcissism and serve a potential indicator of fraud risk. This is an important topic of study, since current auditing standards call for auditors to examine organizational attitudes toward fraud, but offer minimal guidance in doing so. (shrink)

The article describes a framework that identifies event, organizational, and individual factors that threaten ethical decision making in organizations facing discrete crises or in an ongoing crisis environment. Nine propositions are stated that predict threats to ethical decision making during crisis. A comparison between predictions from our model and from Jones's (1991) model is made. Suggestions for research to test and refine the framework are proposed.

This article theorizes and analyzes how two aspects of the increasing accountingization of academia in the form of evaluative pressures and group identification, independently and interactively, work to cultivate academics’ self-interest for their social interactions with the scientific community, forming them to adopt more competitive orientations and cynical attitudes. Using data of a large number of faculty members from the 17 universities in Sweden, it is shown that evaluative pressures and group identification perceived by academics jointly reinforce each other in (...) affecting their competitive orientation, and that group identification strengthens the positive relation between evaluative pressures and academics’ rivalry notions and cynical attitudes. It is shown, contributing further to research on performance evaluation and the cultivation of self-interest and an egoistic ethical climate in academia, that it is evaluative pressures from peers rather than from performance measurements that are the major driver of an individual’s competitive orientation and cynical attitudes. It is also concluded that while evaluative pressures are related to an increase in academics' competitive orientations, which may be viewed as an intended effect from control designers in universities, such an orientation is inversely related to cooperativeness and openness toward others and goes hand in hand with an increase in having cynical attitudes about peers and the work environment. Control designers in universities may thus not be able to have the one without the other, something that raises ethical concerns for academic leaders to reflect upon when aiming at cultivating self-interest orientations of academics. (shrink)

Interest in the microfoundations of corporate social responsibility has grown over the past decade. In this study, we draw on social learning theory to examine the effects of prosocial leaders on followers’ motivation to engage in CSR practices, and consequently on their CSR performance. Further drawing from social learning theory, we propose that followers’ trait compliance and leader-member exchange moderate the above relationships by affecting the conceptual mechanisms of social rewards and role-modeling motives. We tested our hypotheses with data from (...) a sample of 138 employees who were responsible for implementing an organization-initiated CSR practice. Our results showed that among followers who were high in trait compliance, leaders’ prosocial motivation was positively associated with followers' CSR motivation. In addition, followers’ CSR motivation was positively related to their objective CSR performance when they had a high-quality relationship with their leaders. Our findings advance our understanding of the conditions under which leaders will be more versus less influential on followers’ motivation and engagement in CSR activities. We discuss the theoretical and practical implications of our results. (shrink)