Management Decision

Organisational ethics and employee satisfaction and commitment

Hian Chye Koh El'fred H.Y. Boo
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Management Decision, Vol. 42 Iss 5 pp. 677 - 693
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Organisational
Organisational ethics and ethics
employee satisfaction and
commitment
677
Hian Chye Koh and El’fred H.Y. Boo
Nanyang Business School, Nanyang Technological University,
Singapore
Keywords Professional ethics, Employees behaviour, Job satisfaction, Decision trees, Singapore
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Abstract This study examines the relationship between organisational ethics and organisational
outcomes based on the justice theory and cognitive dissonance theory. The sample data are derived
from a questionnaire survey of 237 managers in Singapore. Results obtained from decision trees
indicate significant and positive links between ethical culture constructs (i.e. top management
support for ethical behaviour and the association between ethical behaviour and career success
within the organisation) and job satisfaction. Further, there is a significant and positive link
between job satisfaction and organisational commitment. Also, for different levels of job
satisfaction, particular aspects of organisational ethics are associated with organisational
commitment. The results suggest that organisational leaders can use organisational ethics as a
means to generate favourable organisational outcomes.

Introduction
Organisational ethics and corporate social responsibility are not new concepts. They
have been traced to the eighteenth century when anti-slavery groups appealed to the
public to buy sugar that had been produced in a country where unpaid labour was not
enforced (Strategic Direction, 2002). However, the recent wave of corporate failures and
accounting scandals (e.g., Enron, WorldCom, Global Crossing and Parmalat) has
heightened attention to the urgent need for corporate governance, corporate social
responsibility and organisational ethics. The increasing pressure from stakeholders
such as consumers, investors and the community for organisations to behave ethically
and in a socially responsible way can no longer be ignored.
For many decades, neoclassical economic theory specifies that business
organisations exist to maximise profits for shareholders (Stormer, 2003).
Increasingly, however, business organisations are beginning to realise that they
have to behave not only economically (to maximise profits) but also ethically (as
socially responsible corporate citizens). Economic behaviour and ethical behaviour can
actually achieve a common corporate goal. This is because ethical behaviour helps
bring about economic rewards. The most comprehensive empirical evidence of this to
date is provided by Orlitzky et al. (2003), who meta-analysed 52 studies comprising a
total of 388 correlations and 33,878 observations. They concluded that a positive
association exists between corporate social/environmental performance and corporate
financial performance across industries and across study contexts. Similar findings
have also been reported by Joyner and Payne (2002). Management Decision
Vol. 42 No. 5, 2004
This paper focuses on the relationship between organisational ethics and employee pp. 677-693
satisfaction and commitment (i.e., organisational outcomes). It is proposed that q Emerald Group Publishing Limited
0025-1747
organisational ethics is positively associated with not only financial performance but DOI 10.1108/00251740410538514
 MD also employee attitudes. While it is obvious that organisational ethics are intended to
42,5 guide and influence employee behaviour (e.g., in dealing with ethical dilemma and
avoiding unethical situations), it is not obvious what relationship exists between
organisational ethics and employee attitudes. In a recent study, Koh and Boo (2001)
found that three measures of organisational ethics (namely, top management support
for ethical behaviour, the organisation’s ethical climate, and the association between
678 ethical behaviour and career success) are associated with job satisfaction. This study
extends Koh and Boo’s (2001) study by introducing organisational commitment into
the model and using decision trees (a data-mining tool useful for detecting nonlinear
and interaction effects) to test the research hypotheses. The findings are expected to
have important managerial implications.
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Investigating organisational commitment is important and useful to organisation

leaders as organisational commitment has been found to affect other organisational
outcomes, including turnover intentions (Lum et al., 1998; Sims and Kroeck, 1994) and
company sales and profitability (Benkhoff, 1997; Brett et al., 1995). Its importance and
usefulness underlie the proliferation of studies that investigate the determinants of
organisational commitment (e.g., personal attributes, job characteristics and work
experience - the three broad categories of determinants of organisational commitment
proposed in Steers’ (1977) model). Other determinants found to have an effect on
organisational commitment include job satisfaction (MacKenzie et al., 1998; Mannheim
et al., 1997) and socialization tactics or practices (Allen and Meyer, 1990a; Ashforth and
Saks, 1996; Buchanan, 1974). There is also evidence that employees’ personal belief in
work ethics had a direct effect on organisational commitment (Chusmir and Koberg,
1988; Saks et al., 1996).
As ethical values may vary from one person to another, it may be necessary for
leaders in organisations to adopt certain measures to inculcate certain ethical values
among employees in order to manage organisational outcomes. This study
investigates the links between organisational ethics and two measures of
organisational outcomes. Specifically, it investigates whether top management
support for ethical behaviour, the ethical climate in the organisation, and the
association between ethical behaviour and career success are associated with different
levels of job satisfaction and also with different levels of organisational commitment.
The findings of this study can contribute to the understanding of how organisational
ethics may be used as a means to generate favourable organisational outcomes.
The remainder of this paper is divided into four main sections. The first section lays
the theoretical framework and develops the research hypotheses. The research method
employed in the study is discussed in the second section. The third section presents the
results and implications. Finally, the fourth section concludes the study, discusses the
limitations and suggests directions for future research.

Research framework and hypotheses

The relationship between organisational ethics and job satisfaction
The link between organisational ethics and job satisfaction can be explained by the
organisational justice theory and cognitive dissonance theory. The salient points are
summarised below (see also Koh and Boo, 2001; Viswesvaran et al., 1998).
Organisational justice theory. According to Hartman et al. (1999), the concept of
organisational justice is central to understanding a wide range of human attitudes and
 behaviours in organisations. The underlying premise is that the justice perceptions of Organisational
employees affect their job attitudes and organisational outcomes. Leigh et al. (1988), for ethics
example, concluded that employees look more to the broader organisational
environment than to their particular role in attributing their satisfaction to their job.
In particular, as stated by Dailey and Kirk (1992), perceptions of organisational justice
affect job attitudes such as job satisfaction and turnover intention. Organisational
justice is often dichotomised into two components: 679
(1) distributive justice which addresses the fairness of managerial decisions
relative to the distribution of outcomes such as pay and promotion; and
(2) procedural justice which focuses on how such managerial decisions are made.
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Dailey and Kirk (1992) found that employee perceptions of both distributive and
procedural justice play a central role in relation to job satisfaction. Sweeney and
McFarlin (1993) and Hartman et al. (1999), however, found that distributive justice
predicts job satisfaction better than procedural justice does.
On the conceptual front, Lind’s (1992) fairness heuristic states that perceptions of
fairness in one area influence perceptions of fairness in another area. In the context of
this study, it means that employees who perceive their organisations to be ethical are
also likely to perceive their organisations as being fair to them. This, in turn, is likely to
enhance employee job satisfaction. Hence, organisational ethics and job satisfaction are
expected to be positively linked. More generally, Lind et al. (1993) argued that justice
judgments affect attitudes, behaviour and decisions across a wide variety of social
contexts and they also play an important role in how employees respond to
organisational outcomes and organisational procedures and process.
In view of the above, if employees perceive strong top management support for
ethical behaviour, a favourable ethical climate, and a strong association between
ethical behaviour and career success in the organisation, then they are also likely to
have a higher level of job satisfaction. The converse is also true.
Cognitive dissonance theory. According to the cognitive dissonance theory (first
proposed by Festinger in 1942), individuals strive to minimise dissonance in their
environment. (Similar concepts include the balance theory (Heider, 1958), the congruity
principle (Osgood and Tannenbaum, 1955) and the discrepancy theory (Michalos,
1991)). Empirical evidence has shown the operation of the cognitive dissonance theory
in finance (Goetzmann and Peles, 1997) and marketing (Albaum et al., 1998). In a
nutshell, continued dissonance results in distress and dissatisfaction with the situation
(Viswesvaran et al., 1998). Essentially, employees desire consistency between their
ethical value system and the ethical climate of their organisation (Schwepker, 1999).
Assuming that employees generally strive to be individually ethical, dissonance
results if these employees perceive little top management support for ethical behaviour,
an unfavourable ethical climate in their organisation, and/or little association between
ethical behaviour and career success. This dissonance will, in turn, reduce job
satisfaction.
Further, top management sets the organisational climate for, and serves as a
referent group to, employees. Thus, any discrepancy between employees’ internal
standards of ethics and their perceptions of top management will result in a moral
conflict and cognitive dissonance (Dozier and Miceli, 1985; Festinger, 1942). This again
reduces job satisfaction. More recently, Schwepker (1999), Sims and Kroeck (1994) and
 MD Viswesvaran and Deshpande (1996) found that the lack of an ethical fit (i.e., ethical
42,5 incongruence) between employees and their organisation can result in distress and job
dissatisfaction, among other things.
To summarise, a positive link between organisational ethics and job satisfaction is
expected. That is, a higher level of ethics is expected to be associated with a higher
level of job satisfaction in organisations.
680

The relationship between job satisfaction and organisational commitment

Past studies have defined organisational commitment in many different ways. Porter
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et al. (1974) defined organisational commitment as the relative strength of an

individual’s identification with, and involvement in, a particular organisation and
characterised it by three factors. These factors are a strong belief in and acceptance of
the organisation’s goals and values, a willingness to exert considerable effort on
behalf of the organisation, and a strong desire to maintain membership in the
organisation.
Allen and Meyer (1990b) conceptualised three components of organisational
commitment:
(1) affective (i.e., employee’s emotional attachment to, identification with, and
involvement in the organisation);
(2) continuance (i.e., commitment based on the costs that the employee associates
with leaving the organisation); and
(3) normative (i.e., employee’s feelings of obligation to stay with the organisation).
Employees with strong affective commitment remain with the organisation because
they want to, those with strong continuance commitment because they need to, and
those with strong normative commitment because they feel they ought to (Schappe and
Doran, 1997).
As the underlying component of commitment in various definitions pertains to the
desire of employees to remain in their organisations or to their unwillingness to change
organisations for moderate personal advantage (Joseph and Deshpande, 1996), greater
job satisfaction is expected to lead to stronger organisational commitment. This is
consistent with Porter et al.’s (1974) suggestion that organisational commitment is
much less specific and more stable than job satisfaction and thus the latter is expected
to affect the former. Similarly, Steers (1977) suggested that employees whose needs are
satisfied by an organisation would likely be more committed to it. Past research has
shown that job satisfaction is a determinant of organisational commitment (e.g.,
Barling et al., 1990; MacKenzie et al., 1998; Mannheim et al., 1997). Research in the
ethics area has also supported this relationship (see, for example, Saks et al., 1996; Sims
and Kroeck, 1994; Trevino et al., 1998).
Finally, for the reasons given earlier in the case of job satisfaction (i.e.,
organisational justice and cognitive dissonance), it can be argued that organisational
ethics also affects organisational commitment. This is consistent with the findings of
Trevino et al. (1998) that ethical culture and ethical climate influence organisational
commitment. More recently, Schiebel and Pochtrager (2003) have also reported that
organisational ethics increases employees’ commitment.
 Hypotheses development and testing Organisational
Based on the above, a two-level analysis is employed. The first level investigates if
organisational ethics has an impact on the job satisfaction of employees.
ethics
Organisational ethics, as operationalised in the study, comprises top management
support for ethical behaviour, ethical climate in the organisation, and the association
between ethical behaviour and career success. Job satisfaction of employees is
measured in terms of satisfaction with supervisor. Koh and Boo (2001), Viswesvaran 681
and Deshpande (1996) and Viswesvaran et al. (1998) postulated and obtained evidence
that the impact of organisational ethics is most pronounced on job satisfaction with
supervisor, amongst the various components of job satisfaction. At the second level,
the effects of organisational ethics as well as job satisfaction on organisational
commitment are investigated. Organisational commitment is assessed as the
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willingness to remain with or leave an organisation. At both levels, the decision tree
approach (which allows for non-linear and interaction effects) is used.
To summarise, the null hypotheses proposed in this study are as follows:
H1a. Top management support for ethical behaviour has no significant effect on
job satisfaction.
H1b Top management support for ethical behaviour has no significant effect on
organisational commitment.
H2. Ethical climate in the organisation has no significant effect on job satisfaction.
H2b. Ethical climate in the organisation has no significant effect on organisational
commitment.
H3a. The association between ethical behaviour and career success in the
organisation has no significant effect on job satisfaction.
H3b. The association between ethical behaviour and career success in the
organisation has no significant effect on organisational commitment.
H4. Job satisfaction has no significant effect on organisational commitment.

Research methods
Sample and procedures
The research questionnaire was administered to a random sample of 400 students who
were enrolled in the MBA programme in one of the universities in Singapore. It can be
argued that MBA students comprise an appropriate sample as they are managers who
have to deal with business ethics issues in the course of their work.
A total of 237 usable responses was received, giving a response rate of 59.25 per
cent. A majority of the respondents is in the age group of between 25 and 45 years old
(83.54 per cent), and male (61.21 per cent). Most of the respondents are in the middle
level (49.57 per cent) and upper level (15.38 per cent) managerial positions. In terms of
working experience, 113 (48.09 per cent) have at least five years of working experience.
A large proportion of the respondents (64.56 per cent) comes from organisations that
employ at least 200 employees. Many of the respondents’ organisations are in the
manufacturing, service and finance sectors (26.58 per cent, 19.83 per cent and 16.03 per
cent, respectively). About one third (34.33 per cent) of the respondents’ organisations are
private companies and about another one third (33.48 per cent) are listed companies.
 MD Measurement of variables
42,5 Organisational commitment and job satisfaction. Organisational commitment is
measured by using the instrument developed by Hrebeniak and Alutto (1972). It
consists of four items assessed on a three-point scale, where 1 represents “definitely
not”, 2 “uncertain”, and 3 “definitely yes”. A higher level of organisational commitment
is indicated by a lower mean score. Job satisfaction is derived from an instrument that
682 has been used by previous researchers in the business ethics literature (e.g., Joseph and
Deshpande, 1996; Koh and Boo, 2001; Viswesvaran et al., 1998; Vitell and Davis, 1990).
In this study, the job satisfaction component of satisfaction with supervisor is
measured. The instrument comprises four items measured on a scale ranging from 1
(strongly disagree) to 4 (strongly agree). A higher level of job satisfaction is indicated
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by a higher mean score.

Organisational ethics.The findings of Trevino et al. (1998) suggest that ethical
climate and ethical culture are not alternative ways of conceptualising organisational
ethics. They capture somewhat different but strongly related aspects of organisational
ethics. Ethical climate reflects the organisation’s broad normative characteristics and
values, while ethical culture refers to a set of formal and informal control mechanisms
that aim at influencing behaviour and organisational outcomes. This study
incorporates these two aspects of organisational ethics.
The ethical climate questionnaire developed by Cullen et al. (1993) is adapted for the
purpose of measuring ethical climate in this study. The following three categories of
ethical climate are assessed:
(1) egoistic, which emphasises company profit;
(2) benevolent, which emphasises team interest; and
(3) principled, which emphasises rules and standard operating procedures.
Additional items are added so that each of the three categories is measured by four
items on a four-point scale, where 1 represents “strongly disagree” and 4 represents
“strongly agree”. An observation is assigned to the ethical climate category with the
highest mean score. That is, ethical climate is a categorical variable with three levels
(egoistic, benevolent and principled).
The organisation’s ethical culture is measured using two variables:
(1) top management support for ethical behaviour; and
(2) the association between ethical behaviour and career success.
To measure top management support for ethical behaviour, the three items developed
by Hunt et al. (1984) are adapted. An additional item is added to give a 4-item measure
using a four-point scale, ranging from 1 (strongly disagree) to 4 (strongly agree). A
high mean score represents strong top management support for ethical behaviour. To
measure the association between ethical behaviour and career success in the
organisation, the six-item ethical optimism scale developed by Hunt et al. (1984) is
used. Each item is similarly measured on a four-point scale, ranging from 1 (strongly
disagree) to 4 (strongly agree). A high mean score represents a strong association
between ethical behaviour and career success in the organisation.
The items to measure the variables are listed in the Appendix.
 Data analysis Organisational
To test the research hypotheses, decision trees are constructed. This predictive ethics
modelling method, which is commonly used in data mining, is selected in view of its
ability to handle non-linear and interaction effects. Also, decision trees give very good
visualisation of the results and relationships (see Berry and Linoff, 1997).
The objective of decision trees is prediction by dividing observations into mutually
exclusive and exhaustive subgroups. The division is based on the levels of particular 683
independent variables that have the strongest association with the dependent variable.
In its basic form, the decision tree approach begins by searching for the independent
variable that divides the sample in such a way that the difference with respect to the
dependent variable is greatest among the divided subgroups. At the next stage, each
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subgroup is further divided into sub-subgroups by searching for the independent

variable that divides the subgroup in such a way that the difference with respect to the
dependent variable is greatest among the divided sub-subgroups. The independent
variable selected need not be the same for each subgroup. This process of division (or
splitting in decision trees terminology) usually continues until either no further
splitting can produce significant differences in the dependent variable in the new
subgroups or the subgroups are too small for any further meaningful division. The
subgroups and sub-subgroups are usually referred to as nodes (see also Lehmann et al.,
1998).
In the automatic interaction detection (AID) algorithm, all possible two-way splits of
each node for each independent variable are examined. The split that leads to the most
significant t-statistic (as per analysis of variance or ANOVA) for the difference in
means of the dependent variable between the two lower-level nodes is selected. In the
chi-square automatic interaction detection (CHAID) algorithm, the chi-square statistic
is used to determine the best split. For the study, a combined version of AID and
CHAID as available in the SPSS AnswerTree 3.0 software is used. This algorithm has
the desirable features of providing p-values and allowing multiple splits.

Results and implications

Job satisfaction
The decision tree results for job satisfaction are summarised in Figure 1. As shown, the
association between ethical behaviour and career success in the organisation (eth_succ)
is the most important aspect of organisational ethics affecting job satisfaction ( p-value
, 0.0001). In particular, a higher level of eth_succ is associated with a higher level of
job satisfaction. This can be seen from the decision tree where a low, medium and high
level of eth_succ is associated with a mean job satisfaction level of 2.54, 2.87 and 3.26,
respectively.
Further, in the situation where the association between ethical behaviour and career
success in the organisation is relatively low (# 2.33), top management support for
ethical behaviour (tmgt_sup) also has a significant effect on job satisfaction
( p-value ¼ 0.0024). As shown in Figure 1, a higher level of tmgt_sup is associated with
a higher level of job satisfaction. In particular, a low, medium and high level of
tmgt_sup is associated with a mean job satisfaction level of 2.21, 2.59 and 2.91,
respectively.
 MD
42,5

684
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Figure 1.
Decision tree results – job
satisfaction

There is insufficient evidence to support a significant effect of ethical climate on job

satisfaction, after eth_succ and tmgt_sup are incorporated into the decision tree.
Hence, the null hypothesis H2a cannot be rejected.
However, based on the results, the null hypotheses H1a and H3a can be rejected at a
0.05 level of significance. That is, a stronger association between ethical behaviour and
career success in the organisation and a higher level of top management support for
ethical behaviour (where the association between ethical behaviour and career success
in the organisation is relatively low) are associated with greater job satisfaction. These
findings support the justice theory and the cognitive dissonance theory.
While the findings are generally consistent with those of prior studies (e.g., Koh and
Boo, 2001; Viswesvaran and Deshpande, 1996; Viswesvaran et al., 1998), there are
important differences. First, there is insufficient evidence in this study to suggest a
significant association between ethical climate and job satisfaction. Second, the
association between ethical behaviour and career success in the organisation is found
to have the greatest impact and a nonlinear impact (i.e., stronger at higher levels of
eth_succ) on job satisfaction. Third, the significant effect of top management support
for ethical behaviour on job satisfaction applies only where the association between
ethical behaviour and career success in the organisation is relatively low. That is, at
higher levels of eth_succ, tmgt_sup is not an important factor affecting job
satisfaction. Hence, an interaction effect between eth_succ and tmgt_sup exists.
 Organisational commitment Organisational
The decision tree results for organisational commitment are summarised in Figure 2. ethics
As shown, job satisfaction (job_sat) has the most significant impact on organisational
commitment (p-value , 0.0001). The results show that a higher level of job satisfaction
is associated with a higher level of organisational commitment (note that a lower score
for the organisational commitment measure indicates a higher level of organisational
commitment). 685
For respondents with lower job satisfaction (# 2.75), the association between ethical
behaviour and career success in the organisation (eth_succ) is the next most significant
variable ( p-value ¼ 0.0055). In particular, a higher level of eth_succ is associated with
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a higher level of organisational commitment.

For respondents with higher job satisfaction (. 2.75), top management support for
ethical behaviour (tmgt_sup) is the next most significant variable (p-value ¼ 0.0456).

Figure 2.
Decision tree results –
organisational
commitment
 MD In particular, a higher level of top management support for ethical behaviour is
42,5 associated with a higher level of organisational commitment. Finally, for the group
where job satisfaction is higher (. 2.75) and tmgt_sup is lower (# 2.75), ethical climate
(eth_clim) is the next most important variable ( p-value ¼ 0.0055). The benevolent
ethical climate (which emphasises team interest) is associated with the highest level of
organisational commitment (1.50) whereas the principled ethical climate (which
686 emphasises rules and standard operating procedures) is associated with the lowest
level of organisational commitment (2.16).
Based on the above, at a significance level of 0.05, the null hypotheses H1b, H2b,
H3b and H4 can be rejected. That is, there is sufficient evidence to show that
organisational ethics and job satisfaction are significantly associated with
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organisational commitment. While the findings generally support the impact of

organisational ethics on organisational commitment, it is noted that different aspects of
organisational ethics have differential impact on organisational commitment,
contingent on other variables. Hence, the relationship between organisational ethics
and organisational outcomes (e.g., job satisfaction and organisational commitment) is
more complex than that suggested by prior studies (which look mainly only at direct
linear relationships).

Implications of findings
The finding of an association between organisational ethics and organisational
outcomes in this paper has important implications. It is noted that top management
support for ethical behaviour and the association between ethical behaviour and career
success can be influenced by top managers in organisations. Thus, by consciously
working on these variables, top management can enhance job satisfaction and
organisational commitment among employees and in the workplace. In addition, by
promoting and developing a more benevolent ethical climate, top management can also
enhance organisational commitment among its employees.
Job satisfaction and organisational commitment are important determinants of
absenteeism and turnover intention (Dailey and Kirk, 1992). Both absenteeism and
turnover are very costly to the organisation. They lead to lower productivity and
morale, and higher cost of hiring, retention and training. While some turnover may be
desirable (e.g., as a channel to phase out unsuitable employees), absenteeism and
turnover are largely disruptive to the organisation and its other employees. The
current findings suggest that organisational ethics can help enhance job satisfaction
and organisational commitment, which can in turn reduce absenteeism and turnover.
Further, the literature suggests that job satisfaction is associated with higher
profitability and productivity. Whitehead (1998) cited surveys that report job
satisfaction as a crucial element in the business success of organisations and in the
provision of quality service to customers. The end results are higher profitability and
productivity. The positive relationships between higher job satisfaction and higher
profitability and productivity are also supported by West and Patterson (1998). They
reported that high levels of job satisfaction (as well as higher levels of organisational
commitment) are determinants of improved financial performance. They also
suggested that effective employee management (and the resultant enhanced job
satisfaction among employees) explain the variation among companies in terms of
profitability and productivity and this impact far outstrips the impact of quality,
 technology, competitive strategy or research and development in its influence on the Organisational
bottom line. Grant (1998) reported similar findings in large employee surveys. Given ethics
the above, an implication of the findings is that organisational ethics can be expected to
be associated with organisational performance. This is consistent with the recent
findings of Joyner and Payne (2002) and Orlitzky et al. (2003).
In addition to job satisfaction affecting organisational commitment and business
performance, a recent study by Hagedoorn et al. (1999) examined the role of job 687
satisfaction in employees’ reactions to problematic events in the organisation.
Generally, employees can react to problematic events via exit (e.g., leaving the
organisation), voice (e.g., suggesting solutions), loyalty (e.g., waiting for conditions to
improve), and neglect (e.g., being absent from work). Both voice and loyalty are often
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categorised as constructive behaviours while exit and neglect as destructive

behaviours. It is found that job satisfaction promotes constructive reactions and
suppress destructive reactions to problematic events. Hagedoorn et al. (1999) also
speculated that organisational justice (which is expected to affect job satisfaction as
per this study, via organisational ethics) may also be a motivator of constructive
behaviours and suppressor of destructive behaviours.

Managerial implications
The finding that favourable organisational ethics (i.e., a positive ethical culture and
climate) produces favourable organisational outcomes begs the question as to how an
organisation can implement favourable organisational ethics. The following are
possibilities.
First, an organisation can embrace an organisational code of ethics. By setting down
the ethical philosophy, rules of conduct and practices, the code can enhance corporate
reputation and brand image, signal to internal and external parties that the
organisation is committed to ethical behaviour, create a cohesive corporate culture, and
guide and influence behaviour within the organisation (Carasco and Singh, 2003). In
the context of this paper, the code of ethics can demonstrate and reinforce top
management support for ethical behaviour and help develop a favourable ethical
climate and culture in the organisation. To have the intended effects, it is also
important that the code of ethics be communicated, monitored and enforced. Further, it
is essential that management shows commitment to the code of ethics. Interestingly,
Vitell et al. (2003) have found that the enforcement of a code of ethics is positively
related to how important employees perceive the role of ethics and social responsibility
in achieving long-term organisational effectiveness.
Second, related to the above, an organisation can appoint ethics officers and/or offer
employee training programmes in ethics. Corporate ethics programmes can provide an
effective means of setting and communicating expectations among employees for their
action and behaviour. In addition, an ethics officer can play a major role in ethics
training as well as the monitoring and enforcement of ethical behaviour and standards.
These, too, can demonstrate and reinforce top management support for ethical
behaviour and help develop a favourable ethical climate and culture in the
organisation.
Third, the association between ethical behaviour and career success can be
incorporated into the corporate culture, which usually encompasses the ways work and
authority are organised, the ways people are rewarded and controlled, as well as
 MD organisational features such as customs, taboos, company slogans, heroes and social
42,5 rituals (Brickley et al, 2002). Besides the rewarding of ethical behaviour, the softer
elements of corporate culture such as slogans, role models and social rituals, can also
play an important role in communicating the message that ethical behaviour is highly
valued by the organisation.
Finally, an organisation can integrate ethics into the normal channels of strategic
688 decision-making and train managers in decision-making skills that incorporate ethical
principles and values (Joyner et al., 2002). It is expected that an organisation that does
good does well and vice versa (Bennett, 2002). In this aspect, the Weizhi Group is an
interesting case study of a highly successful Chinese clothing manufacturer and
wholesales that is founded on both principles and profit, where organisational ethics
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permeates the entire organisation (Strategic Direction, 2002).

Conclusion
This study examines the relationships between organisational ethics and
organisational outcomes. In particular, it investigates if a higher level of top
management support for ethical behaviour, a more favourable ethical climate in the
organisation, and a stronger association between ethical behaviour and career success
can lead to a higher level of job satisfaction as well as greater organisational
commitment.
Decision tree results indicate significant and positive influence of both
organisational ethics and job satisfaction on organisational commitment. They also
indicate significant and positive links between ethical culture constructs and job
satisfaction. However, no significant relationship between ethical climate and job
satisfaction is observed. This may not be surprising as ethical culture comprises
control mechanisms that specifically aim at influencing organisational outcomes while
ethical climate is associated with attitudes and perceptive values that may or may not
influence behaviour (Trevino et al., 1998). The practical implication to organisational
leaders is that organisational ethics can be used as a means to generate favourable
organisational outcomes. Some possibilities on enhancing organisational ethics have
been suggested in an earlier section.
In interpreting the findings of the study, however, the following limitations should
be borne in mind. First, the sample comprises students enrolled in the MBA
programme conducted by one of the universities in Singapore. Although most of these
MBA students hold full-time positions in organisations while they pursue their MBA
studies, they may not be representative of the population of managers in Singapore.
Further, the findings may not be generalized to a different population (e.g., blue collar
workers) or a different geographical region.
Second, the usual limitations of a self-report research questionnaire apply (i.e.,
non-response bias and response bias). Non-response bias may come about when
sampled subjects who are significantly different from the respondents do not respond.
However, this may not be a serious problem in the study because the response rate of
59.25 per cent can be considered high for a survey. Response bias may be introduced
when a respondent’s responses are biased by the background characteristics of the
respondent or the study. This, however, is mitigated by the anonymity of the
respondents and promised confidentiality of the responses.
 Third, the variables investigated in the study are not meant to be complete or Organisational
exhaustive. For example, job satisfaction and organisational commitment are only two ethics
of several possible organisational outcomes. Other variables that future research can
focus on include staff motivation and productivity. Similarly, organisational ethics in
the study are limited to only top management support for ethical behaviour, ethical
climate, and the association between ethical behaviour and career success in the
organisation. Other possibilities include the existence or implementation of a code of 689
ethics, and some measures of staff attributes and ethical attitude. However, it is noted
that a lengthy research questionnaire is likely to make the questionnaire more difficult
to complete and hence is likely to reduce the response rate.
In this concluding section, it is appropriate to suggest some directions for future
Downloaded by UNIVERSITI TEKNOLOGI MALAYSIA At 19:01 26 May 2016 (PT)

research. For example, future research can be extended to cover more organisational
outcomes and other measures of organisational ethics. In addition, as Cohen (1998)
suggests, organisational ethics may not directly lead to particular behaviour; rather, it
provides a context in which certain behaviours are likely to occur if other supportive
individual and contextual conditions also exist. Thus, future research may explore how
ethics-outcome links may differ depending on the employee-organisational fit. Future
research can also investigate the process mechanisms by which organisational ethics
affect organisational outcomes.
In addition, it is useful to study business ethics in different countries to understand
the antecedents and consequences of ethical behaviour from an international, global, or
even cultural, perspective. The globalisation of businesses has resulted in several
challenges, including the need for self-regulation through the articulation of core
principles that are applicable and applied in a vast array of cultures and industries
(Carasco and Singh, 2003). The challenge is not trivial in that what comprise ethically
acceptable behaviour and practices may be dependent on the geography and context as
well as local customs, laws and regulations. Further, as mentioned by Bennett (2002),
organisational ethics for multinational corporations has a wider scope which may
include human rights issues, resolution of conflicts, stability and security.
Finally, it is submitted that organisations and managers in the twenty-first century
have to enhance organisational ethics, among other things, in order to enhance
organisational outcomes.

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Appendix. Measurement of constructs

Organisational commitment
Would you leave your current organisation if another organisation offered you:
.
Slight increase in pay.
.
Slightly more freedom to be professionally creative.
.
Slightly more status.
.
The opportunity to work with friendly people.

Job satisfaction with supervision

.
The managers I work for back me up.
.
The managers I work for are competent.
.
My supervisors do not listen to me.*
.
Management does not treat me fairly.*

Top management support for ethical behaviour

.
Top management in my organisation has clearly conveyed that unethical behaviour will
not be tolerated.
 .
Top management in my organisation should have higher ethical standards than they do Organisational
now.*
.
If a manager in my organisation is discovered to have engaged in unethical behaviour that
ethics
results primarily in personal gain rather than corporate gain, he will be promptly
reprimanded.
.
If a manager in my organisation is discovered to have engaged in unethical behaviour, he
will be promptly reprimanded even if the behaviour results primarily in corporate gain. 693
Ethical climate (egoistic, benevolent and principled)
Egoistic:
.
My organisation emphasises the importance of furthering its interests.
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.
Employees in my organisation are not expected to be concerned with the organisation’s
interests all the time.*
.
All decisions and actions in my organisation are expected to contribute to the
organisation’s interests.
.
Work that hurts my organisation’s interests can be acceptable.*
Benevolent:
.
Concern for employees is prevalent in my organisation.
.
My organisation does not emphasise employee welfare.*
.
All decisions and actions in my organisation are expected to result in what is generally
best for everyone.
.
My organisation does not consider the well-being of all employees.*
Principled:
.
Compliance with organisation rules and procedures is very important in my organisation.
.
Employees in my organisation are not expected to stick to organisation policies strictly.*
.
People who do not follow organisation rules and procedures are not viewed favourably in
my organisation.
. My organisation does not emphasise the importance of its rules, procedures and policies.*

Association between ethical behaviour and career success in the organisation

.
Successful managers in my organisation are more ethical than unsuccessful managers.
.
In order to succeed in my organisation, it is often necessary to compromise one’s ethics.*
.
Successful managers in my organisation withhold information that is detrimental to their
self-interest.*
.
Successful managers in my organisation make rivals look bad in the eyes of important
people.*
.
Successful managers in my organisation look for a “scape-goat” when they feel they may
be associated with failure.*
.
Successful managers in my organisation take credit for the ideas and accomplishments of
others.*.
* Indicates reverse-scored items.
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