Putting measures in place to prevent wrongdoing in organizations is important, but detecting and correcting wrongdoing are also vital. Employees who detect wrongdoing should, therefore, be encouraged to respond in a manner that supports corrective action. This article examines the influence of the ethical culture of organizations on employee responses to observed wrongdoing. Different dimensions of ethical culture are related to different types of intended responses. The findings show that several dimensions of ethical culture were negatively related to intended inaction (...) and external whistleblowing and positively related to intended confrontation, reporting to management, and calling an ethics hotline. (shrink)

What is the right thing to do? -- "You have nothing to fear if you've done nothing wrong" -- Between culpable and blameless -- Are all mistakes equal? -- Report, disclose, protect, learn -- A just culture in your organization -- The criminalization of human error -- Is criminalization bad for safety? -- Without prosecutors, there would be no crime -- Three questions for your just culture -- Why do we blame?

This paper describes and discusses the Enron Corporation debacle. The paper presents the business ethics background and leadership mechanisms affecting Enron''s collapse and eventual bankruptcy. Through a systematic analysis of the organizational culture at Enron (following Schein''s frame of reference) the paper demonstrates how the company''s culture had profound effects on the ethics of its employees.

Behaving ethically depends on the ability to recognize that ethical issues exist, to see from an ethical point of view. This ability to see and respond ethically may be related more to attributes of corporate culture than to attributes of individual employees. Efforts to increase ethical standards and decrease pressure to behave unethically should therefore concentrate on the organization and its culture. The purpose of this paper is to discuss how total quality (TQ) techniques can facilitate the development of a (...) cooperative corporate culture that promotes and encourages ethical behavior throughout an organization. (shrink)

In the wake of the current financial crises triggered by risky mortgage-backed securities, the question of ethics and risk-taking is once again at the front and center for both practitioners and academics. Although risk-taking is considered an integral part of strategic decision-making, sometimes firms could be propelled to take risks driven by reasons other than calculated strategic choices. The authors argue that a firm's risk-taking propensity is impacted by its ethical climate (egoistic or benevolent) and its emphasis on output control (...) to manage its marketing function. The firm's long-term orientation is argued to moderate the control–risk propensity relationship. The authors also extend research on risk and performance and argue that the association of risk-taking propensity and firm performance is contingent on the ownership (publicly traded versus privately held) structure of the firm. Based on survey data from a sample of manufacturing industries in the United States, the results show significant impact of ethical climate and marketing output control on a firm's risk-taking propensity; also risk-taking propensity shows a stronger association with firm performance in privately held firms than in publicly traded firms. (shrink)

The concept of organizational stigma has received significant attention in recent years. The theoretical literature suggests that for a stigma to emerge over a category of organizations, a “critical mass” of actors sharing the same beliefs should be reached. Scholars have yet to empirically examine the techniques used to diffuse this negative judgment. This study is aimed at bridging this gap by investigating Goffman’s notion of “stigma-theory”: how do stigmatizing actors rationalize and emotionalize their beliefs to convince their audience? We (...) answer this question by studying the stigma over the finance industry since 2007. After the subprime crisis, a succession of events put the industry under greater scrutiny, and the behaviors and values observed within this field began to be publicly questioned. As an empirical strategy, we collected opinion articles and editorials that specifically targeted the finance industry. Building on rhetorical analysis and other mixed methods of media content analysis, we explain how the stigmatizing rhetoric targets the origins of deviant organizational behaviors in the finance industry, that is, the shareholder value maximization logic. We bridge the gap between rhetorical strategies applied to discredit organizations and ones used to delegitimize institutional logics by drawing a parallel between these two literatures. Taking an abductive approach, we argue that institutional contradiction between field and societal-level logics is sufficient, but not necessary to generate organizational stigma. (shrink)

We assess the organizational culture in the finance industry in relation to the global financial crisis and consider the potential of cultural change to improve the financial sector. To avoid biases, we build on the person–organization fit literature and develop a novel, indirect method for assessing organizational culture that revolves around relationships between employees’ personal traits and their career success in the industry or organization under study. We analyze personal values concerning the pursuit of private gain versus personal values concerning (...) caring for others and consider whether employees that value self-enhancement more and self-transcendence less enjoy more career success relative to their peers when working in finance than when working in other industries. Results do not reveal any sort of cross-industry differences that would implicate the finance industry’s culture in the financial crisis. Instead, we find the opposite, namely that strong self-enhancement values and weak self-transcendence values go together with less career success in the finance industry compared to other industries. Hence, if anything, the culture in the finance industry does not seem to resonate well with professionals that seek to pursue personal gain at the expense of clients’ welfare. Implication is that cultural change has little potential to improve the financial system. Meanwhile, the method for assessing organizational culture indirectly by analyzing relationships between employees’ traits and their career outcomes has wider applicability, particularly when relying on scores or measures obtained directly from the people concerned is likely to render biased evidence. (shrink)