Ethical Decision Making in Organizations: A Person-Situation Interactionist Model Linda Klebe Trevino ‘The Academy of Management Review, Vol. 11, No. 3. (Jul., 1986), pp. 601-617 ble URL: bitp://links jstor.org/sici?sici=0363-7425% 28 198607%29 1 1%3A3%3C601%3AEDMIOA %3E2,0.CO%3B2-U The Academy of Management Review: is currently published by Academy of Management. ‘Your use of the ISTOR archive indicates your acceptance of JSTOR’s Terms and Conditions of Use, available at butp:/\vww jstor.orglabout/terms.huml. ISTOR's Terms and Conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at hhup:/www jstor-org/journals/aom. him. Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the sereen or printed page of such transmission, JSTOR isan independent not-for-profit organization dedicated to ereating and preserving a digital archive of scholarly journals, For more information regarding JSTOR, please contaet support @jstor.org, hupulwwwjstororg/ Mon Oct 9 13:38:10 2006Ethical Decision Making in Organizations: A Person-Situation Interactionist Model LINDA KLEBE TREVINO ‘Texas A&M University An interactionist model of ethical decision making in organizations is proposed. The model combines individual variables (moral develop- ment, etc.) with situational variables to explain and predict the ethi- cal decision-making behavior of individuals in organizations. A major component of the model is based on Kohiberg’s cognitive moral devel- ‘opment model which provides the construct definition, measurement tools, and theory base to guide future business ethics research. Research propositions are offered and practical implications are discussed. ‘The issue of ethical decision making in organi- zations has received much attention in recent years for a variety of reasons: the post- Watergate atmosphere, mounting public scorn regarding business behavior, and managers’ cynicism and internal personal-work values conflicts (Brenner & Molander, 1977; Crittenden, 1984; Ingersoll & Pound, 1984; Lincoln, Pressley, & Little, 1982; Rickles, 1983). Despite the intorest, concern, and a number of published prescriptions to deal with ethical decision making in organizations, little ‘empirical investigation has been conducted. The paucity of research is not surprising, however, given the delicate nature and complexity of this area. Managers are not likely to allow their “ethics” to be directly observed or measured, Nor would it be acceptable to attempt to manipu- late ethical decision making in the field. Further, the tendency to regard ethics as a branch of philosophy rather than as social science may ‘The author would like to thank Richard W. Woodman, ‘Stuart A. Youngblood, Don Hellriegel, Ricky W. Grifin, Mar ‘gare! A White, and Robert. Hilfor heir entiques of earlier Gratis of this manuserip. -Requast for reprints should be sentto Linda Klabe Trevino, Department of Management, Texas A&M University, Col. lege of Businese Adiministation, Collage Station, TX 77883. eo lead to the conclusion that business ethics is "Sunday school” subject not worthy of serious, investigation, or that it is a matter of subjective preference about which no objective statements can be made. Finally, the lack of theory to guide investigation has inhibited the systematic devel- ‘opment of a research agenda. ‘An understanding of ethical decision making in organizations is important to the development of organizational science. Uncertainty is a fact of complex, dynamic organizational life. Ethical issues are ever present in uncertain conditions where multiple stakeholders, interests, and val- ues are in conflict and laws are unclear. Manag- ers engage in discretionary decision-making behavior affecting the lives and well-being of others. Thus, they are involved in ethical dect- sion making. Their decisions and acts can pro- duce tremendous social consequences, particu: larly in the realms of health, safety, and weliare of consumers, employees, and the community. Previous approaches to the study of ethical decision making in organizations have tended to emphasize either the individual role or situa- tional variables in producing ethical/unethical behavior. Neither approach has captured the important interfaces among individual and situa-tional variables. This paper proposes an inter- ‘actionist model that recognizes the role of both individual and situational variables—an ap- roach that seems to hold the most promise for advancing our understanding of this complex phenomenen, Interactionist Model of Ethical Decision Making in Organizations ‘The proposed interactionist model (see Figure 1) posits that ethical decision making in organiza: tions is explained by the interaction of individual ‘and situational components. The individual re- ‘acts to an ethical dilemma with cognitions deter- mined by his or her cognitive moral develop- ment stage. The individual's cognitive moral development stage determines how an individ- ual thinks about ethical dilemmas, his or her process of deciding what is right or wrong in a situation. However, cognitions of ightand wrong are not enough to explain or predict ethical decision-making behavior. Additional individual ‘and situational variables interact with the cogni- tive component to determine how an individual is likely to behave in response to an ethical dilemma. Three individual variables, ego strength, field dependence, and locus of control, fare proposed to influence the likelihood of an individual's acting on cognitions of what is right or wrong. Situational variables arising from the immediate job context and the broader organiza- tional culture also moderate the cognition/be- havior relationship. These include the organiza- tion's normative structure, referent others, cbedi- fence to authority, responsibility for conse- ‘quences, reinforcement contingencies, and other pressures. Finally, characteristics of the job itself ‘and the moral content of the organizational cul- ture can have an impact on the moral develop- ‘ment of the individual. This latter relationship is, illustrated by the feedback loop arrow in Figure 1. The proposed specific relationships will be explored and developed further in a series of propositions for future research. Cognitions ‘The point of departure for the model in Figure 1 is the individual's cognitions in response to an. ethical dilemma. This component of the model relies upon Lawrence Kohiberg’s model of cogni- tive moral development. It proposes that an individual's level of cognitive moral development strongly influences the person's decision regard- ing what is right or wrong; the rights, duties, and obligations involved in @ particular ethical dilemma. Kohlberg’s model provides a theoreti- cal basis for understanding how managers think about ethical dilemmas. A brief review of the business ethics survey research suggests that this understanding has been lacking in the past. Business Ethics Survey Research Despite a number of surveys, there is little known about managers’ thought processes re- garding ethical dilemmas in their work. The sur- vey research offers a pessimistic view of Ameri- can business ethics, portraying managers who ‘are cynical about their peers, their superiors, their industries, and sometimes even themselves, Cynicism. A much cited survey of Harvard Business Review readers (Baumhart, 1961) was updated by Brenner and Molander (1977). Be- tween 1960 and 1976, respondents became more cynical regarding the ethical conduct of their peers. Four-fifths agreed that business manag- ers should try to live up to absolute ethical standards, and believed that sound ethics is good business. But nearly one-half reported that man- agers do not apply these standards. Reasons pro- vided included precccupation with gain, lack of reinforcement of ethical behavior, competition, and a sense that only "results" are important to superiors. Two-thirds of these respondents re- ported the existence of generally accepted un- ethical practices in their industries Person-Role Conflicts. Another study surveyed Fortune S00 executives in marketing, finance, ‘and production. These executives overwhelm- ingly admitted to compromises of personal val- ues in order to succeed in their organizations