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Moral Reasoning and Ethical Climate: Not-for-Profit vs. For-Profit Boards of Directors

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Abstract

Utilizing Rest's moral development and Victor and Cullen's ethical climate surveys, we examine differences in moral reasoning and ethical climate between board members in the for-profit and not-for-profit sectors. Six for-profit corporations and seven not-for-profit corporations, all with base operations in a major midwestern state, participated in the study. We find that profit and not-for-profit boards may not differ in moral reasoning, but do exhibit different types of ethical climates. We also find that for-profit board members may utilize higher stages of reasoning a greater percentage of the time than not-for-profit directors. In contrast, the ethical climates of the two types of organizations are significantly different. For-profit companies had climates higher in egoism than did not-for-profit companies. In addition, not-for-profit firms reflected higher benevolence factors than for-profit firms. Not-forprofit organizations also had somewhat higher, but not significantly different, mean scores on the principle factor compared to the for-profit organizations.

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Authors and Affiliations

  1. College of Business, Department of Management, Iowa State University, 300 Carver Hall, Ames, Iowa, 50011, U.S.A.

    Holly Henderson Brower & Charles B. Shrader

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  1. Holly Henderson Brower
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  2. Charles B. Shrader
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Brower, H.H., Shrader, C.B. Moral Reasoning and Ethical Climate: Not-for-Profit vs. For-Profit Boards of Directors. Journal of Business Ethics 26, 147–167 (2000). https://doi.org/10.1023/A:1006150115975

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