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Does an Ethical Work Context Generate Internal Social Capital?

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Abstract

Ethics has recently gained importance in the debate over social capital creation. The goal of this study is to empirically examine the ethical work context of the firm as an antecedent of the firm’s internal social capital. We build on person–situation interactionist theory to argue that individuals can learn standards of appropriate behavior induced by the ethical work context in which they are embedded. By creating an ethical work context, managers can facilitate the process through which employees learn to feel empathy toward others and establish profound affective relationships with them. Data were collected from 1,817 individuals in 36 business units of 7 Spanish, French, and Portuguese corporations. Using structural equation and hierarchical linear modeling techniques, our results reveal three phenomena. First, we show that a business unit’s ethical work context exerts significant influence on the structural, relational, and cognitive dimensions of internal social capital. Second, the managerial practices that constitute the ethical work context are not equally important across the seven corporations; in particular, managerial practices are more influential in those corporations that belong to knowledge-intensive industries. Third, a business unit’s internal social capital is influenced not only by the business unit’s ethical work context, but also by the ethical work context of the corporation to which it belongs.

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Notes

  1. We assessed the fit of the partial models using two fit indexes (Medsker et al. 1994): the comparative fit index (CFI) and the root mean square error of approximation (RMSEA). The CFI assesses the correspondence between the observed and the hypothesized covariances. A CFI value of .90 is generally considered to indicate acceptable model fit. Models whose RMSEA is .10 or more have poor fit. Additionally to these two fit indexes, we used the Chi-square test (χ 2) to assess the fit of the overall final model. The χ2 provides a measure of the inappropriateness of a model if the model is not truly representative of the observed data. A small (non-significant) chi-square indicates a good fit.

  2. Previous studies have considered several types of consulting firms as knowledge-intensive firms: law and accounting firms (Empson 2001), high-tech and engineering consultancies (Robertson and Swan 2003) and management consultancy firms (Hansen et al. 1999).

  3. We note the item “factor loadings” in square brackets.

  4. Individuals were explicitly asked to rate the ethical work context and internal social capital of the specific business unit for which they work, not the corporation to which the business belongs.

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Authors and Affiliations

  1. HEC Montreal, Chemin de la Cote-Sainte-Catherine 3000, Montreal, QC, H3T 2AT, Canada

    David Pastoriza

  2. IESE Business School, Avda. Pearson 21, 08034, Barcelona, Spain

    Miguel A. Arino, Joan E. Ricart & Miguel A. Canela

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  1. David Pastoriza
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Appendix

Appendix

Scales and Items of Ethical Work Context and Internal Social CapitalFootnote 3,Footnote 4

Ethical Work Context

Social Support Context

Managers in my business unit…

  1. (1)

    “Devote considerable effort to developing their subordinates” [.72].

  2. (2)

    “Give everyone sufficient authority to do their jobs well” [.80].

  3. (3)

    “Push decisions down to the lowest appropriate level” [.80].

  4. (4)

    “Give ready access to information that others need” [.79].

  5. (5)

    “Work hard to develop the capabilities needed to execute our overall strategy/vision” [.78].

  6. (6)

    “Base decisions on facts and analysis, not politics” [.73].

  7. (7)

    “Treat failure as a learning opportunity, not something to be ashamed of” [.71].

  8. (8)

    “Are willing and able to take prudent risks” [.74].

  9. (9)

    “Set realistic goals” [.73].

Accountability Context

Managers in my business unit…

  1. (1)

    “Set challenging goals” [.65].

  2. (2)

    “Issue creative challenges to their people, instead of narrowly defining tasks” [.73].

  3. (3)

    “Are more focused on getting their job done well than on getting promoted” [.53].

  4. (4)

    “Make a point of stretching their people” [.82].

  5. (5)

    “Reward or punish based on rigorous measurement of business performance against goals” [65].

  6. (6)

    “Hold people accountable for their performance” [.57].

  7. (7)

    “Use their appraisal feedback to improve their performance” [.77].

Internal Social Capital

Structural Dimension

  1. (1)

    “In my organization employees engage in open and honest communication with one another” [.81].

  2. (2)

    “In my organization employees share and accept constructive criticisms without making it personal” [.90].

  3. (3)

    “In my organization employees willingly share information with one another” [.86].

  4. (4)

    “Employees at this organization keep each other informed at all times” [.81].

Relational Dimension

  1. (1)

    “I can rely on the employees I work with in this organization” [.81].

  2. (2)

    “Employees in this organization are usually considerate of one another`s feelings” [.82].

  3. (3)

    “Employees have confidence in one another in this organization” [.89].

  4. (4)

    “Employees in this organization show a great deal of integrity” [.84].

  5. (5)

    “There is no ‘team spirit’ among employees in this organization” [.87].

  6. (6)

    “Overall, employees at this organization are trustworthy” [.79].

Cognitive Dimension

  1. (1)

    “In my organization people share the same ambitions and vision for the organization” [.79].

  2. (2)

    “In my organization people enthusiastically pursue collective goals and mission” [.86].

  3. (3)

    “There is a commonality of purpose among people at this organization” [.79].

  4. (4)

    “People at this organization are committed to the goals of the organization” [.74].

  5. (5)

    “People view themselves as partners in charting the organization direction” [.69].

  6. (6)

    “Everyone is in total agreement on our organization`s vision” [.71].

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Pastoriza, D., Arino, M.A., Ricart, J.E. et al. Does an Ethical Work Context Generate Internal Social Capital?. J Bus Ethics 129, 77–92 (2015). https://doi.org/10.1007/s10551-014-2145-4

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