In this study, we propose and test a model of the effects of organizational ethical culture and organizational architecture on the perceived unethical behavior of employees towards customers. This study also examines the relationship between organizational ethical culture and moral acceptability judgment, hypothesizing that moral acceptability judgment is an important stage in the ethical decision-making process. Based on a field study in one of the largest financial institutions in Europe, we found that organizational ethical culture was significantly related to the (...) perceived frequency of unethical behavior towards customers and to the moral acceptability judgment of this type of unethical behavior. No support was found for the claim that features of organizational architecture are associated with the perceived frequency of unethical behavior towards customers. This is the first study to document the differential effects of organizational architecture and organizational ethical culture on perceived unethical behavior of employees towards customers, in wholesale banking. Implications for managers and future research are discussed. (shrink)

Scandals in companies such as Enron have been a source of great concern in the last decade. The events that led to a global financial crisis in 2008 have heightened this concern. How does one account for executive behaviors that led to such a crisis? This article argues that a conjunction of motive, means, and opportunity creates ‘an ethical hazard’ making questionable executive decisions more probable. It then suggests that corporate unethical behavior can be minimized by creating a process to (...) identify and remove such ethical hazards, and by appointing an ‘ethical hazards marshal.’. (shrink)

Despite a growing body of research by management scholars to understand and explain failures in ethical decision making (EDM), misconduct prevails. Scholars have identified character, founded in virtue ethics, as an important perspective that can help to address the gap in organizational misconduct. While character has been offered as a valid perspective in EDM, current theorizing on how it applies to EDM has not been well developed. We thus integrate character, founded in virtue ethics, into Rest’s (1986) EDM model to (...) reveal how shifting attention to the nature of the moral agent provides critical insights into decision making more broadly and EDM specifically. Virtue ethics provides a perspective on EDM that acknowledges and anticipates uncertainties, considers its contextual constraints, and contemplates the development of the moral agent. We thus answer the call by many scholars to integrate character in EDM in order to advance the understanding of the field and suggest propositions for how to move forward. We conclude with implications of a character-infused approach to EDM for future research. (shrink)

Lapses in ethical conduct by those in corporate and public authority worldwide have given business researchers and practitioners alike cause to re-examine the antecedents to personal ethical values. We explore the relationship between ethical values and an individual’s long-term orientation or LTO, defined as the degree to which one plans for and considers the future, as well as values traditions of the past. Our study also examines the role of work ethic and conservative attitudes in the formation of a person’s (...) long-term orientation and consequent ethical beliefs. Empirically testing these hypothesized relationships using data from 292 subjects, we find that long-term perspectives on tradition and planning indeed engender higher levels of ethical values. The results also support work ethic’s role in fostering tradition and planning, as well as conservatism’s positive association with planning. Additionally, we report how tradition and planning mediate the influence of conservatism and work ethic on the formation of ethical values. Limitations of the study and future research directions, as well as implications for business managers and academics, are also discussed. (shrink)

Ethical networks are an emerging form of social alliance based on collaboration between organizations that share a common ethical commitment. Grounded in a theoretical framework of virtue-based business ethics and focusing on nonprofit alliances, this study investigates the virtuousness of ethical networks; that is, how they trigger virtuous practices in their member nonprofit organizations. Adopting a qualitative grounded theory approach, the study focuses on one of the largest Italian ethical networks of nonprofit organizations operating in the social care sector. The (...) findings show that shared ethical values and religious beliefs are positively associated with ethical network building. Based on these findings, a circular model of virtuousness is proposed in which ethical networks foster virtuous practices among their members at four levels: (1) the strategic orientation level, (2) the institutional level, (3) the organizational level, and (4) the relational level. At each of these levels, ethical networks foster a habituation to virtues and the propagation of virtuous behaviors among their members. Theoretical, practical, and social implications of the research findings are discussed. (shrink)

In this paper, we develop a conceptual framework of the intra-firm transfer of best practices in moral reasoning by integrating three streams of literature: internal knowledge transfer in strategic management, moral reasoning and epistemology in philosophy and business ethics, and leader–member exchange in human resource management. We propose that characteristics of moral reasoning (nature of moral knowledge, tacitness of moral reasoning and causal ambiguity), source characteristics (moral development of leaders), target characteristics (integrity capacity and moral development of subordinates), leader–member exchange (...) and internal ethical climate influence the transfer of best practices in moral reasoning. (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)

Previous accounting ethics research berates auditors for ethical lapses that contribute to the failure of Andersen (e.g., Duska, R.: 2005, Journal of Business Ethics 57, 17–29; Staubus, G.: 2005, Journal of Business Ethics 57, 5–15; however, some of the blame must also fall on regulatory and professional bodies that exist to mitigate auditors’ ethical lapses. In this paper, we consider the ethical and economic context that existed and facilitated Andersen’s failure. Our analysis is grounded in Akerlof’s (1970, Quarterly Journal of (...) Economics August, 488–500) Theory of the Market for Lemons and we characterize the market for audit reports as a market for lemons. Consistent with Akerlof’s model, we consider the appropriateness of the countervailing mechanisms that existed at the time of Andersen’s demise that appeared to have effectively failed in counteracting Andersen’s ethical shortcomings. Finally, we assess the appropriateness of the remedies proposed by the Sarbanes–Oxley Act of 2002 (SOA) to ensure that similar ethical lapses will not occur in the future. Our analysis indicates that the SOA regulatory reforms should counteract some of the necessary conditions of the Lemons Model, and thereby mitigate the likelihood of audit failures. However, we contend that the effectiveness of the SOA critically depends upon the focus and attention of the␣Public Companies Accounting Oversight Board (PCAOB) towards assessing the ethical climates of public accounting firms. Assessments by the PCAOB of public accounting firm’s ethical climate are needed to sufficiently ensure that public accounting firms effectively promote and maintain audit quality in situations where unconscious bias or economic incentives may erode the public accounting firm’s independence. (shrink)

The purpose of this research is to present the major factors that lead to ethical dissolution in an organization. Specifically, drawing from a wide spectrum of sources, this study explores the impact of organizational, individual, and contextual factors that converge to contribute to ethical dissolution. Acknowledging that ethical decisions are, in the final analysis, made by individuals, this study presents a model of ethical dissolution that gives insight into how a variety of elements coalesce to draw individuals into decisions that (...) result in the ethical undoing of an otherwise healthy organization. ENRON, TYCO and WorldCom did not happen in a vacuum. Nor can such debacles be explained as simply one or two individuals who were morally corrupt. The ethical breakdowns that occurred in these companies happened over a period of time, involved numerous individuals both inside and outside of the organization, and brought about the implosion of viable companies. Seeking to extend the work of previous researchers, this study attempts to tie together a disparate set of factors into a cohesive explanation of ethical breakdowns in organizations. (shrink)

In this study, we propose and test a model of the effects of organizational ethical culture and organizational architecture on the perceived unethical behavior of employees towards customers. This study also examines the relationship between organizational ethical culture and moral acceptability judgment, hypothesizing that moral acceptability judgment is an important stage in the ethical decision-making process. Based on a field study in one of the largest financial institutions in Europe, we found that organizational ethical culture was significantly related to the (...) perceived frequency of unethical behavior towards customers and to the moral acceptability judgment of this type of unethical behavior. No support was found for the claim that features of organizational architecture are associated with the perceived frequency of unethical behavior towards customers. This is the first study to document the differential effects of organizational architecture and organizational ethical culture on perceived unethical behavior of employees towards customers, in wholesale banking. Implications for managers and future research are discussed. (shrink)

This study explores the impact of both individual ethics (IE) and organizational ethics (OE) on ethical intention (EI). Ethical intention, or the individual's intention to engage in ethical behavior, is useful as a dependent variable because it relates to behavior which can be an expression of values, but also is influenced by organizational and societal variables. The focus is on EI in international business decision-making, since the international context provides great latitude in making ethical decisions. Results demonstrate that both IE (...) and OE influence EL Ethical congruence is also discussed as a positive influence. Younger managers are more influenced by OE than older managers. The findings call for creating governance mechanisms to enhance ethical congruence, thereby increasing the likelihood of managers making ethical choices in organizational decision-making. (shrink)

Explanations of organizational misconduct frequently point to declining firm performance and/or the actions of unethical or suspect leaders. Evidence that high-performing firms act illegally or unethically is an enigma. The purpose of this paper is to address these issues by exploring organizational performance using aspirational rather than absolute measures and examining the effect that suspect leader succession has on the increased probability of organizational misconduct. Our analysis of 128 collegiate football programs competing between 1953 and 2016 reveals an increased likelihood (...) of misconduct among organizations with strong as well as weak performance, most notably in comparison to competitive peer programs. Social- and self-referenced aspirations produced distinct relationships between relative performance and misconduct. The impact of leader succession was conditional. The data revealed an increased likelihood of infraction episodes with the appointment of suspect leaders. In some instances, however, a reduced likelihood of misconduct accompanied succession events involving untainted leaders. (shrink)

In mainstream business and economics, prizes such as the Presidential Medal of Freedom are understood as special types of incentives, with the peculiar features of being awarded in public, and of having largely symbolic value. Informed by both historical considerations and philosophical instances, our study defines fundamental theoretical differences between incentives and prizes. The conceptual factors highlighted by our analytical framework are then tested through a laboratory experiment. The experimental exercise aims to analyze how prizes and incentives impact actual individuals’ (...) behavior differently. Our results show that both incentives (monetary and contingent) and prizes (non-monetary and discretional rewards) boost motivation to perform if awarded publicly, but only prizes crowd in motivation promoting virtuous attitude. (shrink)

The ethical culture of any organization is not simply a reflection of its mission statement or even its code of conduct. Rather, the real ethics of institutions are often embedded in their reward systems. We suggest how ethics professors can lead students to develop a greater understanding of rewards by providing a review of various forms of organizational rewards. We also offer insights into how professors can compare reward systems in their classes. We conclude by addressing a number of pedagogical (...) approaches that are useful in equipping ethics students with awareness and understanding of reward systems’ power and influence on employee attitudes and behaviors surrounding ethical decision making. (shrink)

Many prescriptions offered in the literature for enhancing creativity and innovation in organizations raise ethical concerns, yet creativity researchers rarely discuss ethics. We identify four categories of behavior proffered as a means for fostering creativity that raise serious ethical issues: breaking rules and standard operating procedures; challenging authority and avoiding tradition; creating conflict, competition and stress; and taking risks. We discuss each category, briefly identifying research supporting these prescriptions for fostering creativity and then we delve into ethical issues associated with (...) engaging in the prescribed behavior. These four rubrics illustrate ethical issues that need to be incorporated into the creativity and innovation literature. Recommendations for how organizations can respond to the ethical issues are offered based on practices of exemplary organizations and theories of organizational ethics. A research agenda for empirically investigating the ethical impact these four categories of behavior have on organizations concludes the article. (shrink)

Many prescriptions offered in the literature for enhancing creativity and innovation in organizations raise ethical concerns, yet creativity researchers rarely discuss ethics. We identify four categories of behavior proffered as a means for fostering creativity that raise serious ethical issues: (1) breaking rules and standard operating procedures; (2) challenging authority and avoiding tradition; (3) creating conflict, competition and stress; and (4) taking risks. We discuss each category, briefly identifying research supporting these prescriptions for fostering creativity and then we delve into (...) ethical issues associated with engaging in the prescribed behavior. These four rubrics illustrate ethical issues that need to be incorporated into the creativity and innovation literature. Recommendations for how organizations can respond to the ethical issues are offered based on practices of exemplary organizations and theories of organizational ethics. A research agenda for empirically investigating the ethical impact these four categories of behavior have on organizations concludes the article. (shrink)

A heterogeneous survey sample of for-profit, non-profit and government employees revealed that organizational factors but not personal characteristics were significant antecedents of misconduct and job satisfaction. Formal organizational compliance practices and ethical climate were independent predictors of misconduct, and compliance practices also moderated the relationship between ethical climate and misconduct, as well as between pressure to compromise ethical standards and misconduct. Misconduct was not predicted by level of moral reasoning, age, sex, ethnicity, job status, or size and type of organization. (...) Demographic variables predicted job satisfaction and organizational variables added significant incremental variance. Results suggest the importance of promoting a moral organization through the words and actions of senior managers and supervisors, independent of formal mechanisms such as codes of conduct. (shrink)