Professional Documents
Culture Documents
November
Executive Overview
Ethical climate theory was first proposed by Victor and Cullen (1987, 1988). Ever since, it has been useful
in increasing our knowledge on a variety of organizational outcomes such as workplace bullying, organizational commitment, ethical behavior, job satisfaction, and turnover intentions. In this paper, we
scrutinize the extant research on ethical climates to provide an understanding of what has been observed
thus far, and what else ethical climate theory could be hamessed to examine. We also provide a critique
of the ethical climate theory literature base and suggest a future research agenda for ethical climate theory.
2012
making and behavioral responses to ethical dilemmas, which then go on to be reflected in various
work outcomes.
Ethical transgressions at and involving organizationssuch as insider trading, embezzlement,
corporate fraud, and workplace bullyingcan all
be traced back to the influence of ethical work
climates (Arnaud, 2010), which were at the center of recent ethical scandals at once-respected
organizations such as AIG, Countrywide Financial, Lehman Brothers, and Siemens AG (Arnaud
&. Schminke, in press). The importance of ECT for
both research and practice is underscored when one
examines the different and frequent cases of ethical
transgressions in organizations, especially in light of
the various workplace outcomes influenced by ethical climates (e.g., Bulutlar & Oz, 2009; Fu & Deshpande, 2012; Jaramillo, Mulki, & Boles, in press;
Laratta, 2011; Wang & Hsieh, 2012).
We begin with an overview of the theoretical
background of ECT and then present a detailed
literature review. Next we present our critique of
ECT and provide suggestions for future areas of research that could be explored to further contribute
to ECT.
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November
22
Figure 1
Theoretical Strata off Etiiical Climate (Victor & Cullen, 1987,1988)
Locus of Analysis
Egoism
Ethical Theory
Benevolence
Principle
Individual
Local
Cosmopolitan
Self-interest
Company profit
Efficiency
Team interest
Social
responsibility
Company rules
and procedures
Laws and
professional
codes
Friendship
Personal morality
Figure 2
Five Common Empirical Derivatives off Ethical Climate (Victor & Cullen, 1987,1988)
Locus of
Analysis
Ethical Analysis
Individual
Local
Egoism
Instrumental
Instrumental
Benevolence
Caring
Caring
Principle
Independence
Rules
Cosmopolitan
2012
This segment of the literature base on ECT focuses primarily on external organizational context, organizational structure, and strategic or
managerial orientations. External organizational
context emanates from institutional theory
(DiMaggio & Powell, 1983), and essentially deals
with organizations trying to legitimize themselves
in response to external pressures. Although few
studies investigate how external organizational
contexts and ethical climates interact, one that
does is Bourne and Snead's (1999) exploration of
how community norms and values determine employees' ethical perceptions, and hence determine
the organizational ethical climates. Another such
study by Cullen, Parboteeah, and Hoegl (2004)
investigated how external organizational context
affected ethical decision making. Similarly, Belak
and Mulej (2009) found that ethical climates
change over the life cycle stages of an enterprise.
Another recent study by Weber and Gerde (2011)
found that both organizational role and environmental uncertainty influenced ethical climates in
military units.
The original study by Victor and Cullen (1988)
found that organizational form was a significant
predictor of ethical climate perceptions. They hypothesized that Ouchi's (1980) transaction organizational forms were responsible for encouraging
various types of ethical climates. A study by Wimbush, Shepard, and Markham (1997) also found
that various organizational forms encouraged several kinds of ethical climates. Similarly, Wyld and
Jones (1997) proposed that organizational context
factors were very important in establishing ethical
climates. Stone and Henry (2003) investigated
the development of ethical climates from an information technology (IT) perspective, and found
that IT influenced the development of various
types of ethical climates. Similarly, Jin,
Drozdenko, and Bassett (2007) found that organizational structure in IT organizations affected the
development of ethical climates there.
Several studies have investigated ethical climates in a nonprofit versus profit context (Agar-
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wal & Malloy, 1999; Agarwal, Malloy, & Rasmussen, 2010; Brower &L Shrader, 2000). This realm
of research has found that nonprofit organizations
tend to encourage different types of ethical climates than do for-profit or government organizations (e.g., Agarwal et al, 2010). A recent study
(Duh, Belak, & Milfelner, 2010) investigated differences between family and nonfamily enterprises
in terms of ethical climates. Kidwell, Kellermanns,
and Eddleston (2012) also studied family firms
and investigated the role of conflict and justice
perceptions in the development of ethical
climates.
Another realm of research exploring the antecedents of ethical climates has focused on strategic and
managerial orientations. One study examined the
relationship between strategic and managerial orientations and ethical work climates (VanSandt,
Shepard, & Zappe, 2006). Another study by Parboteeah, Chen, Lin, Chen, Lee, and Chung (2010)
examined the role of managerial practices in establishing ethical climates, and found that practices
such as communication and empowerment influence ethical climates from a functional perspective.
Several studies have investigated the role of leaders
in establishing ethical climates (Dickson, Smith,
Grojean, & Ehrhart, 2001; Grojean, Resick, Dickson, &. Smith, 2004; Upchurch &. Ruhland; Wimbush &. Shepard, 1994). Leadership orientations
have also been considered as an explanatory variable
for the establishment of ethical climates (Schminke,
Ambrose, & Neubaum, 2005), as have entrepreneurial orientations (Neubaum, Mitchell, &.
Schminke, 2004). Managerial orientations have also
been found to influence organizational actors' perceptions of ethical climates (Martin &. Cullen, 2006;
Schwepker & Hartline, 2005).
Effects of Ethical Climates
24
even though the outcome variables being investigated are traditional management and organizational behavior variables such as job satisfaction,
organizational commitment, turnover intentions,
ethical behavior, and dysfunctional behaviors.
Job satisfaction is a popular outcome variable
studied by numerous scholars and studies in the
context of ethical climates (e.g., Deshpande,
1996b; Elci & Alpkan, 2009; Goldman & Tabak,
2010; Joseph & Deshpande, 1997; Koh & Boo,
2001; Martin & Cullen, 2006; Tsai & Huang,
2008; Wang & Hsieh, 2012; Woodbine, 2006).
This construct has been studied in a variety of
contexts, including differing countries, employees,
and industries. An early study by Deshpande
(1996b) investigated the impact of ethical climate
types on facets of job satisfaction, such as pay
satisfaction, promotion satisfaction, coworker satisfaction, supervisor satisfaction, work satisfaction,
and overall job satisfaction. He found that with
the exception of pay satisfaction, ethical climates
were associated with all other measures of
satisfaction.
Another study by Joseph and Deshpande
(1997) found that egoistic climates negatively influenced nurses' satisfaction with their supervisors.
A more recent study by Elci and Alpkan (2009)
also found that egoistic climates were negatively
associated with job satisfaction, whereas benevolent and principled climates were positively associated with job satisfaction. Similarly, Tsai and
Huang (2008) asserted that organizational administrators and managers try to foster benevolent and
principled climates within organizations and prevent egoistic climates from developing. Essentially, what all this research suggests is that egoistic climates (i.e., instrumental, self-interest,
company profit, and efficiency) have a negative
association with work and job satisfaction,
whereas benevolent climates and principled climates have a positive association with work and
job satisfaction. A recent study by Wang and
Hsieh (2012) also found positive associations between caring and rules climates and job satisfaction, and negative associations between instrumental climates and job satisfaction. Table 1
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Tahle 1
Joh Satisfaction
Authors
Ambrose etal. (2008)
Climate measure
A16-item scole odopted from
Schminke etal. (2005) and
Victor & Cullen (1988)
A 6-item scole odopted from
Victor & Cullen (1988)
Sample
304 full-time employees
Elci&Alpkan(2006)
95 nurses
114 nurses
237 monogers
352 nurses
Deshpande (1996a)
Schwepker(2001)
206 middle-level
monogers
152solespersons
Key results
A fit between employee morol development ond
ethicol climote is linked with higher levels of ob
satisfaction.
Professionoi ond coring climates were positively
ossocioted with job sotisfoction; instrumento!
climotes were negotively ossocioted with job
satisfaction.
Self-interest climotes were negotively ossocioted with
job sotisfoction; teom interest, sociol
responsibility, and law ond code climotes were
positively ossocioted with job sotisfoction.
Caring and low ond code climotes were positively
ossocioted with oil focets of job sotisfoction;
instrumentol climotes were negotively associoted
with sotisfoction with the teom.
Caring climotes were positively reloted with both pay
ond supervisor satisfaction; efficiency climotes
were negotively reloted with supervisor
sotisfoction.
Principled ethicol climates were positively ossocioted
with job sotisfoction.
Positive ethicol climotes were positively associated
with job sotisfoction ond orgonizotionol
commitment.
Caring climates were positively associoted with oil
focets of job sotisfoction; independence ond rules
climotes were positively ossocioted with overoll job
sotisfoction. Instrumentol climates were negatively
associated with overoll job sotisfoction.
Instrumentol climotes were negotively related to job
sotisfoction; coring and rules climates were
positively reloted to job satisfaction.
study, Wimbush and colleagues (1997) corroborated the earlier model and found that ethical
climate dimensions were related to ethical behavior. Deshpande (1996b) also found a link between
ethical climate and ethical behavior of successful
managers. This particular nding has been replicated in Polish, Russian, and Chinese contexts
(Deshpande, George, & Joseph, 2000; Deshpande,
Joseph, & Shu, 2011; Simha & StachowiczStanusch, in press). Rothwell and Baldwin (2007)
suggested that benevolent climates have a positive
association with employee willingness to engage
in whistle-blowing. Parboteeah and Kapp (2008)
also found a positive association with principled
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November
Table 2
Commitment
Authors
Ambrose et al. (2008)
Climate measure
A 16-item scale adapted from
Schminke et al. (2005) and
Victor& Cullen (1988)
Both the 26-item and 36-item
scales from Cullen et al.
(1993) and Victor & Cullen
(1988)
Sample
304 full-time employees
Key results
A fit between employee moral development and
ethical climate was linked with higher levels of
organizational commitment.
Egoistic climates were negatively related to
commitment; benevolent climates were positively
related to commitment. A positive relationship
between principled climates and commitment was
found only for professional workers.
111 IT managers
152 salespersons
86 working students
352 nurses
Climate measure
A16-item scale adapted from
Schminke et al. (2005) and
Victor & Cullen (1988)
A 7-item scale adapted from
Schwepker (2001)
A 7-item scale based on Quails &
Puto (1989)
Sample
304 full-time employees
86 working students
Tahle3
Turnover
Authors
Ambrose et al. (2008).
Key results
A fit between employee moral development and
ethical climate was linked with lower levels of
turnover.
Strong and positive ethical climates reduced role
stress and increased trust in supervisors.
Positive ethical climates were positively associated
with job satisfaction and organizational
commitment.
A fit between ethical preferences and ethical climate
values reduced turnover intentions.
Ethical climates moderated the diversity climate and
turnover intentions link such that turnover
intentions were lowest for workers perceiving both
0 pro-diversity and high ethical climate.
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Table 4
Ethical Behavior
V
Authors
Arnaud & Schminke (in
press)
Deshpande (1996b)
Leung (2008)
climates are the worst ones in terms of encouraging employee dysfunctional behaviors (Martin &
Cullen, 2006). Table 5 provides a brief summary
of some of these studies on ethical climate's effects
on dysfunctional behavior.
The essential theme emerging from this stream
of research is that benevolent and principled climates (i.e., caring, independence, rules, and law
and code) are the climates associated with positive
outcomes, and egoistic climates (i.e., instrumental) are associated with a whole host of negative
outcomes. Research (Cullen et al., 2003; Martin
&. Cullen, 2006) has noted that particular types of
organizations tend to have particular ethical climate types. For instance, organizations needing to
adhere to a visible code of conduct and rules (such
as engineering, accounting, and law firms) are
more likely to have principled climates (either
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Navember
Table 5
Dysfunctional Bebavior
Authors
Climate measure
Barnett&Vaicys(2000)
207 marketing
professionals
Sample
243 managers
Peterson (2002)
202 alumni
Vardi(2001)
97 full-time employees
Key results
2012
erature base. We offer a critique of these inconsistencies and suggest that some reframing could
change some emergent themes.
Ethical Climate Questionnaire (ECQ)
One of the inconsistencies in ethical climate research is that authors have used very different
measures of ethical climate. The most popular
instrument is the ECQ formulated by Victor and
Cullen (1987, 1988). Respondents taking the
ECQ were asked to act as observers reporting on
organizational expectations, not their own personal beliefs or their affective evaluations of the
climates. The original format contained 26 items
and used a forced-choice six-point Likert scale
measure. Cullen, Victor, and Bronson (1993) later
developed a lengthier 36-item questionnaire to
measure ethical climate. Both the 26-item and
36-item questionnaires were demonstrated to be
valid and reliable by Cullen and colleagues (1993)
and have heen used hy other scholars in their
research.
However, some studies have used a very short
six-item scale to measure ethical climate types
(Deshpande, 1996a, 1996b; Deshpande et al,
2000, 2011; Joseph & Deshpande, 1997). A few
others have used various shortened versions of the
ECQ. Some studies have not used Victor and
CuUen's (1987, 1988) ECQ at all; their versions of
ethical climate are often measured by very short
scales. For instance, Stewart and colleagues
(2011) measured ethical climate using a two-item
scale. Schwepker (2001) dichotomized his measure of ethical climate hy classifying ethical climates as good ethical climates and had ethical
climates. A measure pertinent to marketing research has been employed by several researchers
(DeConinck, 2010, 2011; Jaramillo et al, in press;
Lopez et al, 2009; Schwepker &. Hartline, 2005;
Valentine, Greller, &. Richtermeyer, 2006). That
particular measure uses four scales measuring responsibility/trust, peer behavior, ethical norms,
and selling practices. However, in comparison to
the original Victor and Cullen scale, it lacks completeness, and is much too specific to marketing
and sales organizational contexts.
Similarly, there are a lot of differences in studies in terms of Likert scale choices used (some used
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cordsone could hope to find a positive association between instrumental climates and an outcome variable that yields a net positive for an
individual. Similarly, if one considers the reverse
of organizational commitment, one could claim
that instrumental climates encourage employees
to seek out better prospects for themselves (an
employee could seek out a more lucrative or beneficial job offer with another organization or intraorganizational unit or group if the employee is
motivated by self-interest-seeking behavior).
In a similar vein, changing the outcome variable to a more nontraditional organizational behavior outcome could yield different results for
benevolent and principled climates. For instance,
it is possible that a pervasive benevolent climate
might prevent organizational leaders from making
difficult decisions even when such decisions are
necessary. Similarly, a restrictive reliance on a
rules climate could result in an organization stifling its employees' urge to speak out on a moral
issue or perhaps inhibit creativity or innovation.
Future Areas of Exploration
ne future area of exploration to enhance ECT
is the determination of contextual determinants of ethical behavior (Arnaud &.
Schminke, in press; Martin & Cullen, 2006;
O'Fallon & Butterfield, 2005). Arnaud (2010)
and Arnaud and Schminke (in press) have introduced a newer measure of ethical climate, the
Ethical Climate Index (ECI), which is a measure
used to determine contextual determinants of ethical behavior. The ECI measures the dimensions
of collective moral sensitivity, collective moral
judgment, collective moral motivation, and collective moral character. More research on the ECI
would be a welcome next step. Similarly, more
research spanning multiple levels of analysis needs
to be conducted to better understand contextual
determinants of ethical behavior. An interesting
area in that regard stems from the informal economy (Godfrey, 2011); perhaps ethical climates
could be studied in the context of informal-economy enterprises. This would be particularly interesting because informal economies are prevalent
in developing and undeveloped nations, and
studying ethical climates in the context of infor-
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2012
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References
Agarwal, J., & Malloy, D. C. (1999). Ethical work climate
dimensions in a not-for-profit organization: An empirical
study. Journal of Business Ethics, 20(1), 1-14.
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2012
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