ArticlePDF Available

Building Houses on Rocks: The Role of the Ethical Infrastructure in Organizations


Abstract and Figures

We present and discuss a theoretical model of an organization's ethical infrastructure, defined as the organizational elements that contribute to an organization's ethical effectiveness. We propose that the infrastructure is composed of both formal and informal elements—including communication, surveillance, and sanctioning systems—as well as organizational climates for ethics, respect, and justice. We discuss the nature of the relationship between these elements and ethical behavior, the relative strength of each of these elements, and their impact on each other. Theoretical and practical implications of this model are presented.
Content may be subject to copyright.
Social Justice Research [sjr] pp982-sore-471131 September 18, 2003 10:59 Style file version Nov 28th, 2002
Social Justice Research, Vol. 16, No. 3, September 2003 ( C
Building Houses on Rocks: The Role of the Ethical
Infrastructure in Organizations
Ann E. Tenbrunsel,1,4Kristin Smith-Crowe,2and Elizabeth E. Umphress3
We present and discuss a theoretical model of an organization’s ethical infrastruc-
ture, defined as the organizational elements that contribute to an organization’s
ethicaleffectiveness.We proposethattheinfrastructureiscomposedofbothformal
and informal elements—including communication, surveillance, and sanctioning
systems—as well as organizational climates for ethics, respect, and justice. We
discuss the nature of the relationship between these elements and ethical behavior,
the relative strength of each of these elements, and their impact on each other.
Theoretical and practical implications of this model are presented.
KEY WORDS: ethics; communication; sanctioning; climate; justice; respect.
Therefore everyone who hears these words of mine and puts them into
practice is like a wise man who built his house on the rock. The rain came
down, the streams rose, and the winds blew and beat against the house;
yet it did not fall, because it had its foundation on the rock. But everyone
who hears these words of mine and does not put them into practice is
like a foolish man who built his house on sand. The rain came down, the
streams rose, and the winds blew and beat against that house, and it fell
with a great crash. Matthew 7:24–27
(Holy Bible, 2001)
The business community has been deluged, not with rain per se, but with
reports of corporate wrongdoing. In a sample of 1500 employees in the United
1Mendoza College of Business, University of Notre Dame, Notre Dame, Indiana.
2Tulane University, New Orleans, Louisiana.
3Texas A&M University, College Station, Texas.
4All correspondence should be addressed to Ann E. Tenbrunsel, Mendoza College of Business,
University of Notre Dame, Notre Dame, Indiana 46556-0399.
0885-7466/03/0900-0285/0 C
°2003 Plenum Publishing Corporation
Social Justice Research [sjr] pp982-sore-471131 September 18, 2003 10:59 Style file version Nov 28th, 2002
286 Tenbrunsel, Smith-Crowe, and Umphress
(Joseph, 2000). Recent examples of unethical activity within large corporations
such as Enron and Worldcom have plagued the news and the stock markets. Such
reports have damaged confidence in our businesses, shattered our faith in our
leaders, and undermined our belief in an ownership–based society.
If businesses are to regain the footage that they have lost, they must demon-
strate that they are organizations that can be trusted to make ethical decisions. Part
of that demonstration will involve developing ethical structures that will commu-
nicate and reinforce the ethical principles to which organizational members will
be held. Most organizations have either established such structures or are in the
pliance management with almost 100% of them addressing ethics-related issues
in formal documents and programs (Trevino, Weaver, Gibson, & Toffler, 1999).
Corporate codes of conduct, value-based mission statements, ethical ombudsmen,
and ethical training are just a few of the strategies undertaken by organizations in
response to the increased pressure to become more ethical.
Unfortunately, the results of such efforts are decidedly mixed. Formal codes
of conduct, for example, have been argued by some to produce positive outcomes,
namely a reduction in unethical behavior (McCabe, Trevino, & Butterfield, 1996),
but by others to produce no discernible difference in behavior (Badaracco and
Webb, 1995). It has even been suggested that mechanisms designed to enforce
ethical behavior can actually be detrimental, increasing rather than decreasing un-
desirablebehaviors(Tenbrunsel andMessick,1999).Organizations,andultimately
society, are therefore in a quandary. We all realize that instilling ethical values in
corporations is a must, yet the effectiveness of such systems is questionable, and
therefore the results of such efforts uncertain.
We argue that designing ethical organizations requires an understanding of
how and why such systems work; that is, one must be able to distinguish between
ethical foundations of rock and those of sand. First and foremost, such an un-
derstanding requires an informed, theoretical identification of the organizational
elements that contribute to an organization’s ethical effectiveness. We introduce
the term ethical infrastructure to describe these elements, which we identify as
incorporating the formal systems, the informal systems, and the organizational
climates that support the infrastructure. We suggest that the first two elements can
be categorized both by the formality of these systems as well as the mechanisms
used to convey the ethical principles, including communication, surveillance, and
sanctioning systems. We further argue that these formal and informal elements are
part of another element of the ethical infrastructure—the organizational climates
that support the infrastructure—that permeates the organization.
Second, the nature and form of the relationship between these elements and
ethical behavior in organizations must both be considered. We argue for a positive
relationship between these elements and ethical behavior. However, we argue that
the form of this relationship is curvilinear, rather than linear, in nature.
Social Justice Research [sjr] pp982-sore-471131 September 18, 2003 10:59 Style file version Nov 28th, 2002
Ethical Infrastructure in Organizations 287
Thethird, and equally crucialstepisto understand howtheseelements interact
to influence ethical behavior. We propose a theory of ethical embeddedness to
describe these interrelations. We argue that formal systems are embedded within
their informal counterparts, which in turn are embedded within the organizational
climates that support the infrastructure. The strength and ultimate success of each
layer, we assert, depends on the strength of the layer in which it is embedded. We
use this theory to develop predictions about the relationships between the ethical
infrastructure and ethical behaviors. We conclude by linking these predictions to
their associated practical implications, including offering recommendations for
organizations that desire to enhance their ethical effectiveness.
The ethical infrastructure consists of formal and informal systems—each
including communication, surveillance, and sanctioning components—as well as
the climates that support these systems. These elements are visually depicted in
Fig. 1. In the following discussion, we argue that each of these elements are
important and that one must consider the interrelationships between them to fully
understand their influence on ethical behavior in organizations.
Formal and Informal Systems
We begin by identifying two dimensions by which formal and informal sys-
tems can be characterized: the mechanisms that convey the values and the formal-
ity of these mechanisms. We focus on three mechanisms: communication systems
thatconveyethical principles,surveillancesystemsthatmonitoradherencetothese
Fig. 1. Elements of the ethical infrastructure.
Social Justice Research [sjr] pp982-sore-471131 September 18, 2003 10:59 Style file version Nov 28th, 2002
288 Tenbrunsel, Smith-Crowe, and Umphress
principles, and sanctioning systems that reward or punish ethical behavior. We fur-
ther suggest that the delivery of ethical principles via these mechanisms can either
beformal or informal (cf. Warren,inpress). Wedefine formal systems as thosethat
are documented and standardized (e.g., Pugh, Hickson, Hinings, & Turner, 1968),
visible to anyone inside or outside the organization. Conversely, informal systems
are defined as those indirect signals regarding appropriate ethical conduct that are
received by the organizational members. Noticeable primarily to people inside
of the organization, such signals cannot be verified through formal documents.
Rather, they are “felt” by organizational members through personal relationships
(Lawler and Rhode, 1976; Selznick, 1943). In this section, we discuss the formal
and informal representations of the identified mechanisms and assert that they
make independent contributions to the ethical effectiveness of an organization. In
the next section, we also argue that these elements are interrelated, interacting to
influence ethical behavior. It is important to note that while formal and informal
systems can be directed toward behavior that is either ethical or unethical, our dis-
cussion (unless otherwise noted) assumes that the systems in question are directed
toward ethical behavior. One can expect the consequences of unethical systems to
be the opposite of those of ethical systems.
Formal Systems
Formal systems are those that are documented, that could be verified by an
independent observer. We focus on three types of formal systems that we believe
to be the most prevalent and the most directly observable: communication, surveil-
lance, and sanctioning systems. Formal communication systems are those systems
that officially communicate ethical values and principles. Formal representations
of such systems include ethical codes of conduct, mission statements, written
performance standards, and training programs. Formal surveillance systems entail
officially condoned policies, procedures, and routines aimed at monitoring and de-
tectingethicaland unethical behavior.Examples include the performance appraisal
itself as well as procedures for reporting ethical and unethical actions, including
reporting hot lines and ethical ombudsmen. Formal sanctioning systems are those
official systems within the organization that directly associate ethical and unethi-
cal behavior with formal rewards and punishments, respectively. Perhaps the most
obvious example of such a system is one in which unethical behavior is clearly
and negatively related to performance outcomes, such as evaluations, promotions,
salary, and bonuses.
While related, these systems independently influence ethical behavior. Take
the case of performance evaluations, which were identified in the discussion of
all three mechanisms. Performance standards are communicated through perfor-
mance criteria outlined in job descriptions, behavior relative to these standards is
monitored through the appraisal system itself, and employees are sanctioned (i.e.,
demotion, salary reduction) when such monitoring reveals that standards weren’t
Social Justice Research [sjr] pp982-sore-471131 September 18, 2003 10:59 Style file version Nov 28th, 2002
Ethical Infrastructure in Organizations 289
met. Each of these processes is independent. It is possible, for example, that a
performance standard is set, but never monitored, or that behavior is monitored,
but not sanctioned. Thus, it is important to recognize the contributions that each
of these mechanisms makes to the ethical infrastructure.
We assert that each of these systems influence ethical behavior and discuss
these relationships below. We do not intend, however, to suggest that these are the
only three formal systems that exist. Rather, we believe that these three elements
are representative of formal systems because of their prevalence and visibility.
Having identified and recognized these independent systems, in this manuscript
we integrate the separate systems of surveillance and sanctions. While we believe
thatsurveillanceand sanctioning systems are theoretically andempiricallydistinct,
they have been so closely aligned with each other (Tenbrunsel and Messick, 1999)
that, for the purpose of the ensuing discussion, we treat them as one system.
Formal Communication Systems. Organizational leaders use formal commu-
nication systems to convey expectations and standards for ethical conduct, and to
communicate the core values of organizations to employees. These systems pro-
vide employees with guidelines for ethical behavior by explicitly communicating
rules and procedures for performing one’s job in an ethical manner. In addition,
formal communication systems give top managers the opportunity to communi-
cate the guiding principles of the organization, and to help employees internalize
these values.
Formal communication systems include ethical codes of conduct, mission
statements, written performance standards, and training programs. These systems
are used quite frequently by organizations. For example, in a survey of the Fortune
1000, 98% of the 254 companies that responded formally addressed business
ethics or conduct issues within formal company documents (Weaver, Trevino, &
Cochran, 1995). In addition, 79% of a sample of 1500 U. S. employees reported
that their organization provided written ethics standards, ethics training, and/or a
system for getting advice about ethical issues (Joseph, 2000).
The most common formal communication system, ethical codes of conduct
(Weaver et al., 1995), are formal documents that specify the ethical conduct of
organizational members (e.g., Weaver, 1993). Although codes of conduct vary in
content, codes commonly contain (1) a summary of the purpose, context, adminis-
tration, and authority of the code; (2) a description of the company, including such
information as company philosophy; (3) a list of expectations for employee con-
duct regarding such topics as whistle-blowing, workplace safety, security, bribes,
substance abuse, and harassment; and (4) a reference to legal regulations (e.g.,
OSHA and antitrust regulations) pertaining to the company (Weaver, 1993).
Development of a code of ethical conduct has the potential to provide many
benefits to employers. For instance, a code offers guidelines to employees who
wish to behave ethically and legitimates the discussion of ethical issues within
the company (McDonald, 2000). In addition, codes of conduct help articulate
organizations’values, build employees’confidenceandtrustintheirorganizations,
Social Justice Research [sjr] pp982-sore-471131 September 18, 2003 10:59 Style file version Nov 28th, 2002
290 Tenbrunsel, Smith-Crowe, and Umphress
increase employee morale, regulate behavior, attract employees, and promote a
positive image to outsiders (Weaver, 1993). Codes of conduct also can serve an
instrumental purpose, used as a tool to defend organizations against legal action
(Weaver, 1993).
It has been found that the presence of these systems decreases the unethical
behavior of employees within organizations (McCabe et al., 1996). Messages
about ethics conveyed in mission statements, written performance standards, and
training programs help focus employee attention on ethical dilemmas and help
provide the tools and the guidance for employees to act in an ethical manner.
These systems give employees information about the types of behaviors that are
expected and those that are discouraged. Explicit, formal communications about
ethical conduct have the potential to increase the performance of ethical behavior,
especially when different systems act in concert. Therefore, to the extent that
an organization contains formal communication systems, ethical behavior will
P1: The presence of formal communication systems directed at ethical behavior
will be positively related to ethical behaviors.
Formal Surveillance and Sanctioning Systems. At the heart of management
theory is the command and control of employees (Barnard, 1938). From theo-
ries of reinforcement (Skinner, 1953) to agency theory (Fama, 1980; Jensen and
Meckling, 1976), the “monitoring and sanctioning of employee, managerial, and
organizational actions are portrayed as important components of firm success”
(Tenbrunsel and Messick, 1999, p. 684). According to these theories, to produce
desirable behaviors or reduce undesirable behaviors, one needs to monitor those
behaviors and distribute rewards and punishments accordingly.
Thisperspectivehasbeen the focusofgovernmentalandorganizational efforts
designed to improve ethical effectiveness within the corporate sector. President
Bush’s proposed crackdown on corporate crime focuses almost exclusively on the
use of formal surveillance and sanctioning systems (
news/releases/2002/07/200020709.htm). Highlighted in this proposal, for exam-
ple, are official programs and legislature that “expose and punish acts of corrup-
tion,” “hold corporate officers more accountable,” and “develop a stronger and
more independent corporate audit system.” Tougher criminal penalties and en-
forcement mechanisms are advocated to increase the role of ethics in the corporate
community and repair the damaged integrity of our financial markets.
These proposals have their parallels in the academic community. Brief,
Buttram,& Dukerich(2001) advocatedanorganizationalstructurein whichsurveil-
lance could be carried out through a dispersed system of “checks and balances.”
Organizations are argued to influence ethical behavior through organizational goal
setting practices that utilize objectives and rewards to signal managerial values
(Cohen, 1995) and through demonstration to individuals about which behaviors
Social Justice Research [sjr] pp982-sore-471131 September 18, 2003 10:59 Style file version Nov 28th, 2002
Ethical Infrastructure in Organizations 291
will be rewarded and which will be punished (Trevino, 1986). The magnitude of
the consequences of an unethical act is asserted to be a key factor in influencing
ethical behavior, such that serious consequences are more influential than trivial
consequences (Fritzsche and Becker, 1983; Jones, 1991). Accordingly, organiza-
tions are encouraged to develop “reward systems that reward ethical conduct and
discipline unethical conduct” (Trevino, Butterfield, & McCabe, 1998, p. 471). To-
gether these assertions lend support for the assertion that formal surveillance and
sanctioning systems will directly influence ethical behavior.
P2:The presenceof formal surveillance andsanctioningsystems directedat ethical
behavior will be positively related to ethical behaviors.
Informal Systems
Despite their prevalence and visibility, formal systems reflect only the tip of
theethicalinfrastructure. Underlying formal systems, which again are systems that
aredocumentedand quite visible to the communityatlarge,are the subtle messages
that are received regarding ethical norms, or what is “really” appropriate from an
ethical perspective (Barnard, 1938). It is here that informal reinforcements gain
their stature. Organizational members receive informal signals about which ethical
(and unethical) principles are truly valued by the organization and its members.
Such signals might come through pressure exerted by coworkers to behave in
an ethically appropriate or ethically inappropriate manner, through patterns of
promotions and firings that are inconsistent with stated performance criteria, or
through informal conversations about ethics. As discussed below, while they are
differentin their visibility,informal reinforcements are similar to formal systems in
the mechanisms that are used to deliver ethical values—including communication,
surveillance, and sanctioning systems.
InformalCommunicationSystems. Informal reinforcements are partially dis-
tributed via informal communication channels. Informal communication systems
are defined as those unofficial messages that convey the ethical norms within the
organization. Informal, “hallway” conversations about ethics, informal training
sessions in which organization members are “shown the ropes,” and verbal and
nonverbal behaviors that communicate ethical principles all represent different
mechanisms by which ethical principles are informally communicated. For exam-
ple, organizational leaders communicate the importance or unimportance of ethics
withintheorganization through their ownactions (Cohen, 1993; Trevino,Hartman,
& Brown, 2000). When officials at Enron suspended their own code of ethics to
establish the partnerships that allowed Enron to hide millions (Barrionuevo, Weil,
& Wilke, 2002), this sent a powerful message to employees that ethics was rela-
tively unimportant in actual decision-making. Stories about organizational leaders
committing wrongdoing to save money, or sacrificing profit to remain ethical are
transmitted to organizational members and these informal communications can
impact whether or not formal communication systems are taken seriously.
Social Justice Research [sjr] pp982-sore-471131 September 18, 2003 10:59 Style file version Nov 28th, 2002
292 Tenbrunsel, Smith-Crowe, and Umphress
Informal Surveillance and Sanctioning Systems. In order for informal com-
munication systems to be effective, there must be an accompanying informal
surveillancesystem, consisting ofsomeoneor some mechanismthatcan informally
monitor ethical and unethical behaviors. Informal surveillance systems are those
systems that monitor and detect ethical and unethical behavior, but not through the
official channels of the formal surveillance systems. Rather, informal surveillance
systemsare carried out through,amongotherchannels, personal relationships (e.g.,
peers) and extra-organizational sources (e.g., the police). The informal represen-
tation of the surveillance system may best resemble a spy network, an “internal
CIA.” Contrary to the research on peer-reporting (i.e., Trevino and Victor, 1992),
which focuses on surveillance of group members’ behavior and the reporting of
such behavior to management, informal surveillance systems are conducted by
organizational members but do not follow official channels when reporting such
behavior. Rather, the observation and reporting of such behavior follows an infor-
mal chain of command, the origins of which may or may not be known even to
organizational members.
The informal observance of behavior that deviates from informal ethical
norms is often followed by sanctions delivered through unofficial means. Informal
sanctioning systems are those systems within organizations that directly associate
ethical and unethical behavior with rewards and punishments; however, unlike its
formal counterpart, informal sanctioning systems do not follow official organiza-
tional channels. Informal sanctioning systems may take the form of group pressure
tobehavein acertain manner or theperceived consequences that are experienced if
one engages in certain ethical or unethical activities. Organizational members may
threaten to punish someone for engaging in an ethical behavior, such as whistle
blowing,with such punishment including isolationfromgroupactivities,ostracism
(Bales, 1958; Feldman, 1984), and even physical harm.
An extreme representation of informal systems is found in an incident that
occurred at the James River mill in Green Bay, Wisconsin:
The voice on the police line was firm but halting: “OK. I’d like to report an employee
theft which is gonna occur at James River [paper mill] ...I witnessed ah, him, you know,
loading the stuff up take it out...but, he ah, ah, he’s known to be violent ...” After a
five-day suspension for refusing to cooperate with an investigation of the reported theft, the
[accused] employee, Keith Kutska, legally acquired a recording of the call. Then he took
it to work, “because people wanted to know who the snitch was,” he said at a hearing. “I
played it and said, ‘There he is.’” One day later, on November 22, Monfil’s [the accuser’s]
body was found at the bottom of a 20-foot holding vat for tissue pulp. A jump rope attached
to a 40-pound weight was tied to his neck. (Worthington, Chicago Tribune, October 12,
At the heart of this story are two contrary views on the ethical principle
related to employee theft: the formal perspective, which classifies such behavior
as unethical and illegal, and the informal principle that employee theft is an action
thatshould be tolerated and, perhaps more important, not “snitchedon” by a fellow
union member. In exposing these conflicting views, the example depicts the types
Social Justice Research [sjr] pp982-sore-471131 September 18, 2003 10:59 Style file version Nov 28th, 2002
Ethical Infrastructure in Organizations 293
of informal mechanisms that are found in the workplace. The incident of employee
theft was reported via an informal surveillance system, namely by an employee to
someone outside the organization’s chain of control. The unwritten rule to never
snitch on a fellow employee was communicated informally and quite directly to
the rest of the group via the more than 40 replays of the taped conversation. The
sanctionsforviolatingthisethical norm—assault and murder—are extreme in their
formand certainlyinformal(i.e., not approvedby theorganization)in theirdelivery.
Informal reinforcements such as these are influential in ethical decision-
making because they convey which, if any, ethical principles are truly valued.
Whereas formal systems provide a more visible record of these ethical principles,
informal reinforcements are the invisible experiences that highlight behaviors that
are ethically (or unethically) appropriate. We therefore predict that informal re-
inforcements, and in particular informal communication, surveillance, and sanc-
tioning systems, are directly related to ethical behavior.
P3: The presence of informal communication systems that are directed at ethical
behaviors will be positively related to ethical behaviors.
P4: The presence of informal surveillance and sanctioning systems that are di-
rected at ethical behaviors will be positively related to ethical behaviors.
Trevino (1990) likewise noted the distinction between formal and informal
systems but utilized a different categorization than that offered here. Though there
is not a specific definition provided of formal and informal systems per se, Trevino
categorizes leadership, structure, policies, reward systems, orientation and train-
ing programs, and decision-making processes as formal systems, whereas infor-
mal systems include norms, heroes, rituals, language, myths, sagas, and stories.
We expand and enhance this distinction, making the distinction between type of
mechanisms—sanctioning, surveillance, and communications systems—and for-
mality. We assert that elements of the ethical infrastructure can be more accurately
described using both of these dimensions, such that there can be both formal and
informalcounterpartsof the same mechanism. As an example, whereasrewardsys-
tems are listed as formal in Trevino’s (1990) discussion, we believe, as previously
discussed, that there exist both formal and informal reward systems. Similarly,
the categorization of norms, heroes, rituals, language, myths, sagas, and stories
as informal mechanisms represent informal communication systems, which we
assert are just one type of the informal mechanisms that exist.
Organizational Climates That Support the Ethical Infrastructure
At the broadest level of the ethical infrastructure are the organizational cli-
matesthatsupporttheinfrastructure.Asdepicted in Fig. 1, it is within these organi-
zational climates that both the formal and informal ethical systems of
Social Justice Research [sjr] pp982-sore-471131 September 18, 2003 10:59 Style file version Nov 28th, 2002
294 Tenbrunsel, Smith-Crowe, and Umphress
organizations are embedded. In general, we define organizational climate as or-
ganizational members’ shared perceptions (e.g., Chan, 1998; Joyce and Slocum,
1984; Schneider, 1990) regarding a particular aspect of an organization; in other
words,organizationalclimates arein reference to something (e.g., ethics). Because
climate is born out of the context of an organization, climates vary across different
contexts (e.g., Naumann and Bennett, 2000; Rouiller and Goldstein, 1993; Tracey,
Tannenbaum, & Kavanagh, 1995; Zohar, 1980). Also, because the experiences
that organizational members have of any given context are so complex, multiple
organizational climates for different aspects of an organization exist simultane-
ously (Schneider and Reichers, 1983). We should note that some theorists have
made a fundamental distinction between organizational climate and a related con-
cept, organizational culture (e.g., James, James, & Ashe, 1990; Rousseau, 1990),
with the latter construct being essentially broader than the former. However, for
our purposes, we do not assume that these are two distinct constructs, but rather
that they are two different perspectives (i.e., using different language and coming
from different disciplines) of the same phenomenon (e.g., Ashkanasy, Wilderom,
& Peterson, 2000; Denison, 1996).
Just as multiple organizational climates can exist simultaneously within or-
ganizations, there are three related, yet distinct types of organizational climates
that support the ethical infrastructure: climate for ethics, climate for respect, and
climate for procedural justice. Following Victor and Cullen (1988; cf. Dickson,
Grojean, & Ehrhart, 2001), we define organizational climate for ethics as orga-
nizational members’ shared perceptions of “the events, practices, and procedures
and the kinds of behaviors that get rewarded, supported, and expected in a set-
ting” regarding ethics (Schneider, 1990, p. 384). We define organizational climate
for respect, which is a construct original to this essay, as organizational members’
shared perceptions regarding the extent to which individuals within their organiza-
tionareesteemed,shownconsideration, and treated with dignity.Finally,wedefine
organizational climate for procedural justice as organizational members’ shared
perceptions of how they are treated by their organization in terms of the fairness
of the procedures used to make decisions (cf. Naumann and Bennett, 2000).
The relationship between organizational climate and behavior has been con-
firmed in a number of empirical studies (e.g., Rouiller and Goldstein, 1993; Tracey
et al., 1995; Trevino et al., 1999). Generally speaking, organizational climate can
affect behavior because it serves as a signal to organizational members of what
behaviors are expected and rewarded (Schneider, 1990). Given the assumption that
individuals actively seek out information in their environments regarding appro-
priate behavior so that they can behave appropriately (Schneider, 1975), organi-
zational climate, or individuals’ perceptions of what is appropriate, has a clear
theoretical link to behavior.
Regarding the effect of an organizational climate for ethics on ethical behav-
ior,individuals’ climate perceptions signal what behaviors are considered ethically
Social Justice Research [sjr] pp982-sore-471131 September 18, 2003 10:59 Style file version Nov 28th, 2002
Ethical Infrastructure in Organizations 295
acceptable within an organization (Trevino et al., 1998; Victor and Cullen, 1987,
1988). Because individuals want to be accepted by those around them, they will
heed these signals and will behave ethically.
We expect an organizational climate for respect to affect ethical behavior
in a similar fashion, but in two very specific ways. First, we expect a climate
for respect to increase the salience of others in an organization. This salience of
others, in turn, should increase the weight an individual places on others’ welfare
and decrease the prominence of self-interest. Assuming that too great of a focus on
self-interestleadstounethicalbehavior(e.g., Kant 1785/1964), climate for respect,
throughpriming, can promote ethical behavior.Second, we expectthat as a climate
for respect entails organizational members perceiving that they are respected by
their organizations, they will show their respect for their organizations, in turn, by
cooperating with the formal ethical systems in place. This argument is consistent
with Rawls’ (1999) argument that if individuals are shown respect, then they will
not have to be coerced into participating in a system of justice. Rather, they will
participate freely. Likewise, Tyler (2001, p. 420) argued that when organizational
members feel that they are respected by their organizations, “even when dealing
withdifficultconflicts or disagreements, authorities can gainsupportanddeference
from all relevant parties....”
In addition, individuals’ perceptions of procedural justice can affect whether
they act ethically. In this case, as with a climate for respect, if members perceive
that they are treated fairly by their organization, then they will be inclined to recip-
rocate this fair treatment (e.g., Organ, 1988, 1990) through their ready compliance
with the formal ethical system (cf. Rawls, 1999; Tyler, 2001). Conversely, percep-
tions of procedural injustice would not compel organizational members to cooper-
ate with their organization’s ethical system. Our reciprocity explanation is implied
to some extent by speculation that positive procedural justice climates foster or-
ganizational commitment (Brockner and Wisenfeld, 1996; Naumann and Bennett,
2000), which in turn, predicts organizational citizenship behaviors (LePine, Erez,
& Johnson, 2002).
P5: Organizational climates for ethics, respect, and procedural justice will be
positively related to ethical behaviors.
Before progressing to the next section, three caveats are in order. The first is
the issue of conceptual overlap among ethics, respect, and justice. For example,
Kant’s(1785/1964) second formulation of his categorical imperative,knownas the
“respect principle,” states that one should never treat individuals merely as means,
but always as ends. In other words, according to Kant, one must show respect for
othersin ordertobe ethical.Incontrast, thebasicconceptualization ofutilitarianism
(where ethical decisions are based on the greatest happiness for the greatest num-
ber; e.g., Mill, 1861/1962) does not hold respect for others as an ethical principle.
Social Justice Research [sjr] pp982-sore-471131 September 18, 2003 10:59 Style file version Nov 28th, 2002
296 Tenbrunsel, Smith-Crowe, and Umphress
Also,some might arguethattheidea of respect is onepieceof the concept of justice.
Certainly, Rawls’ theory of justice, as it is based on the “original position,” holds
respect for individuals as a fundamental tenet of justice. Also, Tyler (e.g., Tyler,
2001; Tyler, Degoey, & Smith, 1996) has argued that individuals feel respected to
theextentthattheyaretreatedfairly.However, other theoriesof justice (e.g., Marx-
ism; Marx and Engels, 1848/1978) do not rely on respect as a tenet. Therefore,
while we recognize the conceptual overlap among these concepts, we have chosen
to consider them as distinct constructs for the purposes of this essay. In particular,
we feel that respect for the individual is a construct that has been overlooked in
the organizational ethics literature and, thus, deserves its own special treatment.
Second, it is necessary to discuss how climates supportive of the ethical
infrastructure at levels of analysis other than the organizational level function
within the ethical infrastructure. In addition to existing at the organizational level,
climateexists atlevelssuchas the individuallevel(known aspsychologicalclimate;
e.g., Burke, Borucki, & Hurley, 1992) and the team or group level (e.g., Colquitt,
Noe, & Jackson, 2002). Regardless of the level of analysis, climate is measured
at the individual level, typically through surveys of individuals’ perceptions. As
dictated by the commonly held composition model of climate, which assumes
isomorphism (Rousseau, 1985), a measure of individuals’ perceptions can then be
aggregated to any level for which there is a sufficient degree of agreement among
individuals (e.g., Chan, 1998; Schneider, 1990). However, because psychological
climateexistsat the individual level,agreementin perceptions is not a requirement.
Given the fact that climate at all levels of analysis consists of the perceptions
of individuals and given our argument that individuals’ climate perceptions will
influencetheirbehavior,we assertthatthefunctionoftheclimateswithinan ethical
infrastructure remains consistent regardless of its level of analysis.
The third caveat is this: in order to accurately convey this component of the
ethical infrastructure, it is important to distinguish the idea of organizational cli-
mate from the other primary elements of the ethical infrastructure. The distinction
between climate and the formal ethical system is simple. Organizational climate
consists of the perceptions of organizational members (e.g., Schneider, 1990) re-
garding ethics, respect, or procedural justice within organizations, whereas formal
ethical systems consists of tangible objects and events pertaining to ethics, such as
codes of ethics. Likewise, the informal ethical system consists of tangible objects
and events relevant to ethics (e.g., conversations among workers), while, again,
climate is made of perceptions.
The preceding discussion presents a picture of a relationship between the
elements of the ethical infrastructure and ethical behavior that is perhaps too sim-
plistic. While the relationship between these elements and behavior is expected to
Social Justice Research [sjr] pp982-sore-471131 September 18, 2003 10:59 Style file version Nov 28th, 2002
Ethical Infrastructure in Organizations 297
be positive, the form of that relationship is not expected to be linear. Rather, the
picture is more complex, with curvilinear, rather than linear, the more appropriate
At the root of the proposed curvilinear relationships between elements of
the ethical infrastructure and ethical behavior is a proposed cognitive shift that
occurs when an ethical infrastructure is in place as compared to when such an
infrastructure is nonexistent. When an ethical infrastructure is nonexistent, an
individual must decide what is ethical. In contrast, when an ethical infrastructure
is in place, the individual interpretation of what is ethical is supplanted by the
interpretation that is advanced by the organization. Individuals in this type of
organizationno longer relyontheir ownvalues;rather,theylook to theorganization
to decide what is ethical.
This fundamental shift in whether it is the individual or the organization
that provides the foundation for evaluating ethical dilemmas influences the nature
of the relationship between ethical infrastructure and ethical behavior. When the
individual relies on the organization to provide guidance in interpreting the situ-
ation, as is the case when an ethical infrastructure (weak or strong) is in place,
the individual investigates how serious or committed an organization is to ethical
principles. Examining the strength of the ethical infrastructure provides this infor-
mation. A weak ethical infrastructure is a house built on sand; it suggests that the
ethical principles or values in question are relatively unimportant. Conversely, a
strongethical infrastructure is a house built on rock; it suggeststhat such values are
We argue that a weak ethical infrastructure, because it does not promote
individual reflection, results in more unethical behavior than when the ethical
infrastructure is nonexistent or is strong. When an organization has a weak eth-
ical infrastructure, individuals exhibit more unethical behavior than when such
an infrastructure is nonexistent because they engage in less sophisticated moral
reasoning; instead, they look to the organization for guidance but don’t find much
help. A weak ethical infrastructure also produces more unethical behavior than a
strong ethical infrastructure. In both cases, the individual looks to the organization
for guidance. However, by definition, in a strong ethical infrastructure, unlike in
a weak structure, the organization is clearly conveying the importance of ethical
principles. Consequently, when an organization has a strong ethical infrastructure,
they engage in more ethical behavior than when an organization has a weak ethical
infrastructure because the organization has sent a signal that ethical behavior is
important. While the reason for this ethical behavior is fundamentally different for
a strong ethical infrastructure (“I am doing this because the organization has told
me it is important”) than for a nonexistent ethical infrastructure (“I am doing this
because it is the right thing to do”), the end result is the same. Ethical behavior
is therefore higher when a surveillance and sanctioning system is either nonex-
istent or strong than when such a system is weak, thus producing the curvilinear
Social Justice Research [sjr] pp982-sore-471131 September 18, 2003 10:59 Style file version Nov 28th, 2002
298 Tenbrunsel, Smith-Crowe, and Umphress
Tenbrunsel and Messick (1999) provide an illustration of this phenomenon in
thedomainofformalsurveillanceandsanctioningsystems.Theyargued and found
support for the proposition that cooperative behavior would be lower when a weak
versus a nonexistent sanctioning system was in place. Using a prisoner’s dilemma
asthecontext, subjects had the option to either cooperatebyadheringtoanindustry
agreement to reduce emissions or defect by not adhering to such an agreement.
Halfofthesubjects were told that there would be no fines associated with defection
(nonexistentsurveillance and sanctioning system), whereas the otherhalfweretold
that there would be a weak surveillance and sanctioning system (characterized by
a small probability of being caught and small fines if defection was noted). Results
provided support for the notion that the weak system would increase undesirable
behaviors,with defectionrates higher in the weak sanctioningcondition than in the
condition in which no sanctions were present. An additional study extended these
findings, illustrating that a weak sanctioning system produced less cooperative
behavior than both a nonexistent sanctioning system and a strong sanctioning
Understanding these findings and the corresponding assertions is perhaps
clarified by considering the role that the decision frames play in ethical dilemmas.
Messick (1999) has suggested that decision makers first determine the type of
decision that is presented to them (i.e., to cooperate or compete), with this assess-
mentofthedecisionframe, in turn, influencing behaviors, expectations, and beliefs
about the situational norms. For example, Messick argued that the context might
signal to the decision maker that a situation is competitive versus cooperative. This
signaling, in turn, drives behaviors and other perceptions. If the signal suggests
that the situation is a competitive one, the decision maker determines how best to
compete and presumes that others will be competing as well. Conversely, if the
decision maker judges that it is a cooperative situation, the decision maker’s task
is to determine how to coordinate actions with others, who are also expected to
cooperate. Small changes in the situation, such as linguistic cues, are argued to
dramatically affect behaviors because they change the type of decision with which
individuals feel that they are faced.
Tenbrunsel and Messick (1999) utilized this theory to explain their results.
They found that the presence of a sanctioning system, independent of the strength
of that system, was less likely to prompt an ethical frame than when such a system
was not present. They argued that when a sanctioning system was not present,
individuals were more likely to view the decision as ethical and, hence, engage
in cooperative behavior because it was the right thing to do. When a sanction-
ing system was present, individuals were less likely to categorize the decision as
an ethical one and more likely to see it as a business calculation. In this case,
individuals cooperated only when the sanctions were strong enough to make co-
operative behavior an economically rational choice. One of the reasons for this,
they argued, is because a sanctioning system changes the reason for cooperating:
Social Justice Research [sjr] pp982-sore-471131 September 18, 2003 10:59 Style file version Nov 28th, 2002
Ethical Infrastructure in Organizations 299
without a sanctioning system, individuals cooperate because they have an intrinsic
desire to do the right thing, but when a sanctioning system is in place, that intrinsic
motivation is replaced by an extrinsic motivation to behave in accordance with the
payoff structure. In other words, individuals cooperate when a sanctioning system
is not present because they analyze the ethical components of the decision; how-
ever, when there is a strong sanctioning system, individuals cooperate because it
wouldbecostly to do otherwise. Thus, when a weak sanctioningsystem is in place,
cooperation is at its lowest level because individuals neither perceive the decision
to be ethical nor do the costs of defecting outweigh its benefits.
In the same manner, we argue that a weak ethical infrastructure is less likely
to produce ethical behavior than one in which there is no ethical infrastructure or
when a strong infrastructure is in place. When there is no infrastructure in place,
individuals are more likely to perceive the ethical dimensions of the decision and
hence are more likely to behave ethically. When a strong ethical infrastructure is
in place, individuals behave ethically because the organization is telling them that
they have to do so. However, when a weak infrastructure is in place, individuals
do not perceive the ethical dimensions of the situation nor do they sense any
deep ethical conviction from the organization. Consequently, ethical behavior is
least likely when an ethical infrastructure is weak. More formally, this argument
translates to the following proposition:
P6: The relationship between ethical infrastructure and ethical behavior will be
curvilinear, such that ethical behavior will be less likely when a weak ethical
infrastructure exists than when there is no ethical infrastructure in place or when
there is a strong ethical infrastructure.
The inherent ordering of the elements of ethical infrastructure is not random.
Rather, this ordering is designed to both convey the relative strength of the various
elements and to demonstrate the embeddedness of the various elements, or the
extent to which the elements are constrained by each other. More specifically, we
argue that formal systems are weaker than informal systems because the principles
that are conveyed through formal systems are less entrenched in an employee’s
organizational experience and hence the furthest removed from that individual;
similarly, informal systems are weaker than organizational climate because the
principles conveyed through informal systems are less rooted in the organizational
experience and hence further removed from the individual than those conveyed
through the relevant climates. We further argue that differences in the strength
of the various elements result in an ethical infrastructure which is embedded,
Social Justice Research [sjr] pp982-sore-471131 September 18, 2003 10:59 Style file version Nov 28th, 2002
300 Tenbrunsel, Smith-Crowe, and Umphress
one in which the weaker elements are constrained by those elements that are
Relative Strength of the Elements of the Ethical Infrastructure
Ethical systems vary in the degree to which they reflect an organization’s
commitment to ethical principles, which in turn influences the degree to which
they influence an individual employee’s ethical behavior. The lower the perceived
commitment to ethical principles, the less salient they are in the organizational
member’s experience and hence the less influential they are in influencing an
individual’s behavior. We argue that elements that reflect a greater degree of com-
mitment to ethical values are those that are more inherent to the organization. True
belief in ethical principles is reflected not so much in what is said but in what is
done. In this sense, we predict that formal elements of the ethical infrastructure re-
flect a weaker degree of commitment than informal elements, which in turn reflect
a weaker degree of commitment than the relevant organizational climates.
Trevino’s (1990) discussion of ethical components also suggests that certain
systems are more important than others. More specifically, she asserted that those
systems that are more believable are more likely to influence ethical behavior.
Informal systems, for example, because they are more likely to “represent reality,”
are seen as a more important determinant of behavior than formal systems.
We agree, asserting that the degree of perceived commitment to ethical prin-
ciples is the underlying mechanism that explains the relationship between strength
of the ethical infrastructure and behavior. Simply stated, we predict that those sys-
tems that reflect a greater degree of perceived commitment to ethical principles
exhibita strongerinfluence on ethical behavior than those associated with a weaker
degree of commitment.
The assertion that elements of the ethical infrastructure vary in their strength
has support. Codes of conduct, along with other formal systems, are argued to be
limited in their effectiveness when they are not properly implemented or acknowl-
edged (e.g., McDonald, 2000). Thus, it is not entirely surprising that research
shows mixed results for the success of these formal systems (e.g., McCabe et al.,
1996). It has been suggested that some formal systems are used to generate the
appearance of ethical conduct to outsiders (Paine, 1994) when in reality these
systems are virtually ignored, or decoupled (Meyer and Rowan, 1977) from the
internal workings of the organization (Weaver, Trevino, & Cochran, 1999). In this
way, formal systems are seen as “window dressing,” systems that have little to
no impact on the actual performance of employees within organizations (Trevino,
1990). Weaver et al. (1999) stated that decoupling is likely to occur when ethical
principles are communicated to employees only in the form of policy statements
and memos, the format used for the majority of the formal communication sys-
tems. In support of this statement, Weaver et al. (1999) related an anecdote in
Social Justice Research [sjr] pp982-sore-471131 September 18, 2003 10:59 Style file version Nov 28th, 2002
Ethical Infrastructure in Organizations 301
which middle managers denied knowledge of their company’s ethical policy, even
though each of the managers had signed the document. Evidently, these formal
communications can be viewed within some organizations “as distractions to be
skimmed (at best), ‘filed, and forgotten”’ (Weaver et al., 1999; p. 541).
Theelementsof the ethical infrastructure described here—formalsystems,in-
formal systems, and the organizational climates supportive of the infrastructure—
varyin their perceiveddegree of commitmenttoethicalprinciples. Formal systems,
whicharethe most visible, are the mostlikelyto be perceivedasartificial,reflecting
the lowest degree of ethical principles. Informal systems, which represent “what
peoplereallythinkandhow people really behave”(Trevino,1990), conveya higher
degree of commitment to ethical values than do formal systems. Organizational
climate, because it demonstrates an underlying conviction to ethical principles
through the incorporation of ethical principles in the everyday treatment of its em-
ployees,representsthehighest degreeofcommitment to ethical principles. The old
clich´e, “actions speak louder than words” perhaps describes this proposition most
accurately (Trevino et al., 1999). Systems are therefore differentially effective in
their influence on ethical behavior, with pertinent organizational climates being
most effective (cf. Brief et al., 2001), followed by informal systems, and, lastly,
formal systems. More specifically, we make the following predictions.
P7: Elements of the ethical infrastructure differ in the perceived commitment to
ethical principles, with organizational climates for ethics, respect, and justice
perceived to be more reflective of a commitment to ethical principles than infor-
mal systems, which reflect a greater degree of perceived commitment to ethical
principles than formal systems.
P8: Elements of the ethical infrastructure that are perceived to reflect a greater
degree of commitment to ethical principles are more influential in affecting ethical
behavior, such that organizational climates for ethics, respect, and justice are
more effective in influencing ethical behavior than informal systems, which are
more effective than formal systems.
The Embeddedness of the Ethical Infrastructure
The depiction of the elements of the ethical infrastructure also conveys a
notion of embeddedness in which the effectiveness of an element of the ethical
infrastructure depends on the strength of the elements in which it is embedded.
Weaker ethical systems, or those with a more external focus, are part of, or em-
bedded in stronger ethical systems. Thus, the effectiveness of the more exterior or
superficial systems, such as formal systems, depends in part on the strength of the
more deep-rooted elements in which they are embedded.
We borrow the notion of embeddedness from Granovetter’s (1985) discus-
sion of the influence of social relations on institutions and behaviors. In contrast
Social Justice Research [sjr] pp982-sore-471131 September 18, 2003 10:59 Style file version Nov 28th, 2002
302 Tenbrunsel, Smith-Crowe, and Umphress
to a utilitarian perspective, which would argue for a minimal influence of social
relations on such behavior, Granovetter argues that behavior and institutions are
embedded in social relationships, such that they are “so constrained by ongoing
social relationships that to construe them as independent is a grievous misunder-
standing” (p. 482). In a similar vein, we argue that understanding the true impact
of formal systems, such as ethics training or corporate codes of conduct, on ethi-
cal behavior requires knowledge of the more fundamental elements of the ethical
infrastructure in which such mechanisms are embedded.
Atthebase of our proposition is the notion of consistency between the various
elements of the ethical infrastructure. In order for codes of conduct and ethical
training to have an impact, they must be consistent with more systemic ethical
elements, such as the organization’s informal reinforcements and the relevant or-
ganizational climates. If such congruence is missing, then employees receive a
mixed message, substantially reducing the impact that these formal systems might
have. For example, imagine a situation in which an organization engages in exten-
sive ethical training, but has an informal reward system that promotes individuals
based on the bottom-line, independent of the means used to get there. The ef-
fectiveness of this training would be substantially diminished in comparison to
a situation in which the organization’s informal system of promotions rewarded
individuals who were ethical.
Consistency in what is said and what is done has been identified as a crucial
factor in influencing ethical decision making within organizations. Reducing the
disconnect between organizational goals and the means to achieve these goals that
are expressed in the various aspects of culture is seen as necessary to promote
ethical conduct (Cohen, 1993). A failure to do so results in a form of normless-
ness and social disequilibrium, in which stated goals lose their “savor and force”
(Merton, 1964). Trevino et al. (1999), in an effort to determine which aspects of
ethicsand compliance management were beneficial, and conversely,which aspects
were detrimental, investigated how different approaches to ethics and compliance
management influenced the outcomes of such programs. They found that a firm’s
approachdid haveasignificant impact onemployees’attitudes and behaviors.Most
helpful, however, was the “consistency between policies and actions.” Procedures
and policies themselves were relatively unimportant. Rather, it was whether the
company actually followed through with these procedures (i.e., by working hard to
detect unethical behavior and by addressing ethical concerns raised by employees)
that really made the difference.
In addition to consistency between policies and actions that support those
policies, we argue for a more fundamental consistency between the various layers
or elements of the ethical infrastructure. The importance of the consistency among
these elements can be illustrated through the argument that strategically-focused
climates affect behavior (Smith-Crowe, Burke, & Landis, in press). This argument
runs as follows. Individuals seek out information in their environments regarding
appropriate behavior because they desire to cohere with their environments
Social Justice Research [sjr] pp982-sore-471131 September 18, 2003 10:59 Style file version Nov 28th, 2002
Ethical Infrastructure in Organizations 303
(Schneider, 1975). Climate perceptions are the result of this information seek-
ing, and, therefore, climate affects behavior. At the same time, when individuals
are aware of their organizations’ goals (e.g., when they are informed of their
organizations’ formal ethical systems), and when organizational practices are con-
sistent with those goals (e.g., when the formal and informal ethical systems are
consistent), individuals use this information to achieve an adaptive environmental
fit (Burke et al., 1992). Combining these two simultaneous processes, when indi-
viduals’ climate perceptions are consistent with both formal and informal ethical
systems, behavior is most predictable, because individuals have a clear and coher-
ent understanding of what behaviors they must engage in so that they can realize
their desire to “fit in.”
Following the strategically-focused climate argument (Smith-Crowe et al.,in
press), an organization’s ethical infrastructure will only be effective to the extent
that the elements within it act in concert. If they are to be effective, formal ethical
systems must reside in informal reinforcements and organizational climates that
are solid. If not, the formal systems acts more like a Band-Aid than an antibiotic,
addressing the symptoms, but not the underlying causes. Similarly, if the informal
system is incongruent with the pertinent climates, the effectiveness of that infor-
mal system is compromised. We therefore argue that stronger elements, or those
which reflect a deeper commitment to ethical principles and ideals, moderate the
effectiveness of weaker elements. More specifically, we propose the following:
P9: Elements of the ethical infrastructure interact to influence ethical behavior,
such that those elements that represent a deeper commitment to ethical principles
moderate the effectiveness of those that represent a weaker commitment.
Oursocietyis in an ethical crisis. Toconfront this crisis head on, organizations
need to build better ethical infrastructures, but to do so they need to understand
what constitutes this infrastructure and how the various elements that make up
the infrastructure influence unethical behavior. This information, we argue, must
come from an informed, theoretical examination. The purpose of this paper was
to provide the framework by which such an examination can be made.
We identify three important elements of the ethical infrastructure: formal
systems, informal systems, and the organizational climates that support the infra-
structure. With regard to the first two elements, we argue for a distinction between
the formality of a system and the mechanisms—communication, surveillance, and
sanctioning—by which ethical principles can be conveyed. With regard to the last
element, we identify three organizational climates—climate for ethics, climate for
respect, and climate for justice—that further constitute the ethical infrastructure.
While we propose a positive relationship between these elements and ethical
behavior, we also suggest that these relationships are curvilinear, such that ethical
Social Justice Research [sjr] pp982-sore-471131 September 18, 2003 10:59 Style file version Nov 28th, 2002
304 Tenbrunsel, Smith-Crowe, and Umphress
behavior is least likely to occur when these elements are weak in comparison
to when they are nonexistent or strong. We also discuss the relationship between
the elements, proposing that organizational climates have a stronger influence than
informalsystems, which haveastrongerinfluence than formal systems. Further,we
propose that the effectiveness of the weaker elements is dependent on the stronger
elements in which they are embedded, such that strong elements moderate the
effectiveness of the weaker elements.
Practically,ourdiscussionhasseveral implications fororganizationsthat wish
to increase their ethical effectiveness. First, it suggests that a focus on formal
systems—which are the most visible and the most highly touted—isn’t enough.
Rather, it is important to delve below the ethical exterior to uncover, other, perhaps
more important, elements, such as informal systems and organizational climates.
Second, the relationship between these elements is complicated, with half-hearted
attempts producing potentially disastrous results. Third, one must look at the ele-
ments of the ethical infrastructure in conjunction with one another, for it is really
the interplay among them that is critical.
In other words, there is no quick fix. Should organizations develop codes of
conduct, institute ethical offices, and develop training programs? Absolutely. Is
this enough? Absolutely not. It is equally imperative that informal systems and
organizational climates are investigated and addressed as well. Doing so requires
an understanding of such systems, such as the “real” talk that occurs between peers
and coworkers, the corresponding mechanisms that enforce informally prescribed
behaviors, and the extent to which organizational norms and climates emphasize
(or don’t) ethics, respect, and justice. Perhaps one of the worst things that can
happen is for an organization to put in figureheads and systems that are only
weakly supported. Perhaps even worse is to initiate an ethics program only to
abandon it, or decrease its importance, at a later point in time because attention
shifts elsewhere. Such weak, or weakened, efforts may send a signal that ethical
considerations are actually unimportant, thus increasing, rather than decreasing
unethical behavior. Will strengthening the ethical infrastructure as depicted here
take time? Yes. Will it be costly? Yes. Will it be worth it? We believe that it will be.
It is imperative that future research be directed toward advancing our under-
standing of the ethical infrastructure in organizations. For if we are truly to build
a house on rocks, we need to first identify which rocks are the most solid and how
they work with, or against, each other in the structure. Failure to do so will only
result in more storms and, inevitably, more houses coming down with a crash.
Ashkanasy, N. M., Wilderom, C. P. M., and Peterson, M. F. (2000). Introduction. In Ashkanasy, N. M.,
Wilderom, C. P. M., and Peterson, M. F. (eds.), Handbook of Organizational Culture and Climate,
Sage, Thousand Oaks, CA, pp. 1–18.
Social Justice Research [sjr] pp982-sore-471131 September 18, 2003 10:59 Style file version Nov 28th, 2002
Ethical Infrastructure in Organizations 305
Badaracco, J. L., and Webb, A. P. (1995). Business ethics: A view from the trenches. Calif. Manage.
Rev. 37(2): 8–28.
Bales, R. F. (1958). Task roles and social roles in problem-solving groups. In Macoby, E. E., Newcomb,
T. M., and Hartley, E. L. (eds.), Readings in Social Psychology, Holt, Rinehart, & Winston, New
York, pp. 437–447.
Barnard, C. I. (1938). The Functions of the Executive. Harvard University Press, Cambridge, MA.
Barrionuevo, A., Weil, J., and Wilke, J. R. (2002). Leading the news: Enron’s Fastow charged with
fraud. The Wall St. J. October 3, p. A3.
Brief, A. P., Buttram, R. T., and Dukerich, J. M. (2001). Collective corruption in the corporate world:
Toward a process model. In Turner, M. E. (ed.), Groups at Work: Theory and Research, Erlbaum,
Mahwah, NJ, pp. 471–500.
Brockner, J., and Wisenfeld, B. M. (1996). An integrative framework for explaining reactions to
decisions: Interactive effects of outcomes and procedures. Psychol. Bull. 120: 189–208.
Burke, M. J., Borucki, C. C., and Hurley, A. E. (1992). Reconceptualizing psychological climate in a
retail service environment: A multiple-stakeholder perspective. J. Appl. Psychol. 77: 717–729.
Chan, D. (1998). Functional relations among constructs in the same content domain at different levels
of analysis: A typology of composition models. J. Appl. Psychol. 83: 246–324.
Cohen, D. V. (1993). Creating and maintaining ethical work climates: Anomie in the workplace and
implications for change. Bus. Ethics Q. 3: 343–358.
Cohen, D. V. (1995). Moral climate in business firms: A framework for empirical research. Acad.
Manage. Best Pap. Proc. 386–390.
Colquitt, J. A., Noe, R. A., and Jackson, C. L. (2002). Justice in teams: Antecedents and consequences
of procedural justice climate. Pers. Psychol. 55: 83–109.
Denison, D. R. (1996). What is the difference between organizational culture and organizational cli-
mate? A native’s point of view on a decade of paradigm wars. Acad. Manage. Rev. 21: 619–654.
Dickson, M. W., Smith, D. B., Grojean, M. W., and Ehrhart, M. (2001). An organizational climate
regarding ethics: The outcome of leader values and the practices that reflect them. The Leadersh.
Q. 12: 197–217.
Fama, E. F. (1980). Agency problems and theory of the firm. J. Pol. Economy 88: 288–307.
Feldman, D. C. (1984). The development and enforcement of group norms. Acad. Manage. Rev. 9:
Fritzsche, D. J., and Becker, H. (1983). Ethical behavior of marketing managers. J. Bus. Ethics 2:
Granovetter, M. (1985). Economic action and social structure: The problem of embeddedness. Am. J.
Sociol. 91(3): 481–510.
James, L. R., James, L. A., and Ashe, D. K. (1990). The meaning of organizations: The role of
cognition and values. In B. Schneider (ed.), Organizational Climate and Culture, Jossey-Bass,
San Francisco, CA, pp. 40–84.
Jensen, M. C., and Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and
ownership structure. J. Financ. Econ. 3: 305–360.
Jones, T. M. (1991). Ethical decision making by individuals in organizations: An issue-contingent
model. Acad. Manage. Rev. 16(2): 266–395.
Joseph, J. (2002). ERC’s 2000 National Business Ethics Survey: How Employees Perceive Ethics at
Work, The Ethics Resource Center, Washington, DC.
Joyce, W. F., and Slocum, J. W. (1984). Collective climate: Agreement as a basis for defining aggregate
climates in organizations. Acad. Manage. J. 27: 721–742.
Kant, I. (1964). Groundwork of the Metaphysic of Morals (Paton, H. J., Trans.), Harper & Row, New
York. (Original work published 1785)
Lawler, E. E., and Rhode, J. G. (1976). Information and Control in Organizations. Goodyear Pub. Co.,
Pacific Palisades, CA.
LePine, J. A., Erez, A., and Johnson, D. E. (2002). The nature and dimensionality of organizational
citizenship behavior: A critical review and meta-analysis. J. Appl. Psychol. 87: 52–65.
Marx, K., and Engels, F. (1978). Manifesto of the Communist party. In Tucker, R. C. (ed.), The Marx-
Engels Reader, 2nd edn., Norton, New York, pp. 469–500. (Original work published 1848)
McCabe, D. L., Trevino, L. K., and Butterfield, K. D. (1996). The influence of collegiate and corporate
codes of conduct on ethics-related behavior in the workplace. Bus. Ethics Q. 6: 461–476.
Social Justice Research [sjr] pp982-sore-471131 September 18, 2003 10:59 Style file version Nov 28th, 2002
306 Tenbrunsel, Smith-Crowe, and Umphress
McDonald, G. (2000). Business ethics: Practical proposals for organizations. J. Bus. Ethics 25: 169–
Merton,R. K. (1964). Anomie, anomia,and socialinteraction. In Clinard, M. (ed.),Anomie andDeviant
Behavior, Free Press, New York, pp. 213–242.
Messick,D. M. (1999).Alternative logicsfor decision making in social settings. J. Econ. Behav.Organ.
38: 11–28.
Meyer, J. W., and Rowan, B. (1977). Institutionalized organizations: Formal structure as myth and
ceremony. Am. J. Sociol. 83: 340–363.
Mill, J. S. (1962). Utilitarianism. In Warnock, M. (ed.), Utilitarianism, Meridian Books, New York,
pp. 251–321. (Original work published 1861)
Naumann, S. E., and Bennett, N. (2000). A case for procedural justice climate: Development and test
of a multilevel model. Acad. Manage. J. 43: 881–889.
Organ, D. W. (1988). Organizational Citizenship Behavior: The Good Solider Syndrome. Lexington
Books, Lexington, MA.
Organ, D. W. (1990). The motivational basis of organizational citizenship behavior. In Staw, B. M.,
and Cummings, L. L. (eds.), Research in Organizational Behavior, JAI Press, Greenwich, CT,
Vol. 12, pp. 43–72.
Paine, L. S. (1994). Managing for organizational integrity. Harv. Bus. Rev. 72(2): 106–117.
Pugh,D. S., Hickson, D. J.,Hinings, C. R.,and Turner,C.(1968). Dimensions of organization structure.
Adm. Sci. Q. 13: 65–105.
Rawls, J. (1999). A Theory of Justice, Rev. edn., Belknap, Cambridge, MA.
Rouiller, J. Z., and Goldstein, I. L. (1993). The relationship between organizational transfer climate
and positive transfer of training. Hum. Resour. Dev. Q. 4: 377–390.
Rousseau, D. M. (1985). Issues of level in organizational research: Multi-level and cross-level per-
spectives. In Cummings, L. L., and Staw, B. (eds.), Research in Organizational Behavior, Vol. 7,
pp. 1–37.
Rousseau,D. M. (1990). Assessing organizationalculture: Thecase for multiple methods. InSchneider,
B. (ed.), Organizational Climate and Culture, Jossey-Bass, San Francisco, pp. 153–191.
Schneider, B. (1975). Organizational climates: An essay. Pers. Psychol. 28: 447–479.
Schneider, B. (1990). The climate for service: An application of the climate construct. In
Schneider, B. (ed.), Organizational Climate and Culture, Jossey-Bass, San Francisco, pp. 383–
Schneider, B., and Reichers, A. E. (1983). On the etiology of climates. Pers. Psychol. 36: 19–39.
Selznick, P. (1943). An approach to a theory of bureaucracy. Am. Sociol. Rev. 8: 47–54.
Skinner, B. F. (1953). Science and Human Behavior, Macmillan, New York.
Smith-Crowe, K., Burke, M. J., and Landis, R. S. (in press). Organizational climate as a moderator of
safety knowledge-safety performance relationships. J. Organ. Behav.
Tenbrunsel, A. E., and Messick, D. M. (1999). Sanctioning systems, decision frames, and cooperation.
Adm. Sci. Q. 44: 684–707.
The Holy Bible, New International Version. (2001). Zondervan, Grand Rapids, MI.
Tracey, J. B., Tannenbaum, S. I., and Kavanagh, M. J. (1995). Applying trained skills on the job: The
importance of the work environment. J. Appl. Psychol. 80: 239–252.
Trevino, L. K. (1986). Ethical decision making in organizations: A person–situation interactionist
model. Acad. Manage. Rev. 11(3): 601–617.
Trevino, L. K. (1990). A cultural perspective on changing and developing organizational ethics. In
Research in Organizational Change and Development, Vol. 4, pp. 195–230.
Trevino, L. K., Butterfield, K. D., and McCabe, D. L. (1998). The ethical context in organizations:
Influences on employee attitudes and behaviors. Bus. Ethics Q. 8(3): 447–476.
Trevino,L. K.,Hartman, L.P.,and Brown,M. (2000).Moralperson andmoral manager:Howexecutives
develop a reputation for ethical leadership. Calif. Manage. Rev. 42: 128–142.
Trevino,L. K., and Victor,B. (1992). Peer reporting of unethical behavior: A socialcontext perspective.
Acad. Manage. J. 35(1): 38–64.
Trevino, L. K., Weaver, G. R., Gibson, D. G., and Toffler, B. L. (1999). Managing ethics and legal
compliance: What works and what hurts. Calif. Manage. Rev. 41(2): 131–151.
Tyler, T. R. (2001). A psychological perspective on the legitimacy of institutions and authorities,
In Jost, J. T., and Major, B. (eds.), The Psychology of Legitimacy: Emerging Perspectives on
Social Justice Research [sjr] pp982-sore-471131 September 18, 2003 10:59 Style file version Nov 28th, 2002
Ethical Infrastructure in Organizations 307
Ideology, Justice, and Intergroup Relations, Cambridge University Press, Cambridge, UK,
pp. 416–436.
Tyler, T. R., Degoey, P., and Smith, H. J. (1996). Understanding why the fairness of group procedures
matters: A test of the psychological dynamics of the group-value model. J. Pers. Soc. Psychol.
70: 913–930.
Victor, B., and Cullen, J. B. (1987). A theory and measure of ethical climate in organizations. In
Frederick, W. C. (ed.), Research in Corporate Social Performance and Policy, JAI Press, Green-
wich, CT, pp. 51–71.
Victor, B., and Cullen, J. B. (1988). The organizational bases of ethical work climates. Adm. Sci. Q.
33: 101–125.
Warren, D. E. (in press). Constructive and destructive deviance in organizations. Acad. Manage. Rev.
Weaver, G. R. (1993). Corporate codes of ethics: Purpose, process, and content issues. Bus. Soc. 32:
Weaver, G. R., Trevino, L. K., and Cochran, P. L. (1995). Corporate ethics practices in the Mid-1990’s:
An empirical study of the Fortune 1000. J. Bus. Ethics 18: 283–294.
Weaver, G. R., Trevino, L. K., and Cochran, P. L. (1999). Integrated and decoupled corporate social
performance:Management commitments,external pressures, and corporate ethics practices. Acad.
Manage. J. 42: 539–552.
Worthington, R. (1993). Employee’s call as a deadly ring. Chic. Tribune October 12.
Zohar, D. (1980). Safety climate in industrial organizations: Theoretical and applied implications. J.
Appl. Psychol. 65: 96–102.
... In approaching the question of ethics in the workplace, the field of descriptive (empirical) ethics, which examines the actual thought-processes and behaviour of actors in organisations, has become an increasingly significant locus of attention (see Craft, 2013;Kish-Gephart et al., 2010;Lehnert et al., 2015;O'Fallon & Butterfield, 2005;Rees et al., 2019;Rodgers & Fayi, 2018;Tenbrunsel et al., 2003;Tenbrunsel & Smith-Crowe, 2008;Trevino et al., 2006). In terms of conceptualisation, the work of Rest (1986) "has guided the majority of research and narrative reviews of research findings within behavioral ethics" (Kish-Gephart et al., 2010, p. 1). ...
... We are interested in this firm-level socialisation, and the influence of the firm's "ethical infrastructure" (Tenbrunsel et al., 2003). We, therefore, explore differences across firm size categorised by the number of employees as micro (fewer than 10); small (11-50); medium (51-100); and large (more than 100). ...
... The formative impact of these early years adds gravity to the finding that this is the period in which ethical awareness is low. This is potentially a weak point in the "ethical infrastructure" (Tenbrunsel et al., 2003), not only of the firm, but the profession as a whole. Such bounded ethicality is even more concerning if it sets the tone for an entire career. ...
Full-text available
As professionals, accountants hold a public interest mandate based in part on ethical claims. However, individual professionals, particularly in tax, commonly see their work as more technical than relating to the common good. Rising public concern about tax avoidance focuses attention on how ethical values are brought to bear on tax work. In these contexts, the tension between personal and organisational values merits attention. This study draws on a large international survey and a set of 68 semi-structured interviews to explore the balance between the personal ethical or spiritual values that individuals bring to their tax work and the ethical framing of their organisations. This direct approach captures self-reported moral awareness experienced at the level of the individual tax professional, framed by the concept of ethical awareness as a base level of ethical action (Rest, J., Moral development: Advances in research and theory. Praeger, 1986). We find, inter alia, that spiritual values are understood as personal and are most influential in smaller, more domestic firms and among those still undertaking professional exams, while ethical awareness is lowest among early career professionals in large international firms. The study highlights a disconnect between ethical learning acquired during professional training and its application at the early career stage. Socialisation within the firm adds to the potential for the early-career stage to set the tone for career-long ethical framing. This heightens the responsibility of firms as well as professional bodies to valorise moral judgement.
... The organization's ethical context guides employees on how to behave ethically in the workplace (Kish-Gephart et al., 2010). An organization's ethical context contains both formal and informal systems (Tenbrunsel et al., 2003). Formal systems are the set of tangible and explicit measures and instruments organizations purposely design, adopt, and implement to manage ethics (Kaptein, 2015). ...
Full-text available
Many organizations have adopted a corporate ethics program to prevent unethical behavior within the organization. Decoupling the adoption of corporate ethics programs from their implementation has been identified in the literature as an explanation for their ineffectiveness. Next to this so-called policy-practice decoupling, there may also be a means-ends decoupling, which is when a well-implemented corporate ethics program is still ineffective. This study examines whether team ethical culture acts as a decoupling mechanism that mediates the effects of a well-implemented corporate ethics program on unethical behavior in teams. We conducted a survey of 202 teams working in a UK business organization. The results of a structural equation analysis support a fully mediated relationship by team ethical culture. Through this team-level study, we argue that organizations aiming to have an effective corporate ethics program should acknowledge and manage team ethical cultures to avoid means-ends decoupling.
... Among the many organizational characteristics, organizational orientation has been underexplored, even though it can function as an important norm, cue, and signal that regulates employees' attitudes and behaviors in the workplace [66]. In several studies [67,68], the notion of organizational orientation has often been juxtaposed with corporate philosophy, strategic stance, and as something that is manifested by mission statements, credos, codes of conduct, or top executives' official messages to stakeholders. This study confirms that hospital orientation is tightly coupled with a doctor's subjective judgment of their job. ...
Full-text available
This study integrates two competing views to examine whether medical doctors are satisfied with their jobs when they perceive their hospitals as being oriented toward profit (i.e., rational choice theory) or purpose (i.e., public service motivation). Using a sample of 127 doctors from 70 hospitals, this study tests these competing views. The results show that doctors who perceive their hospitals as purpose-driven are likely to experience job satisfaction, and this pattern still holds even if they also perceive their hospitals to be emphasizing profits. However, only the purpose-driven orientation results in job satisfaction via a sense of meaningfulness. Thus, this study offers comprehensive evidence that while medical doctors are likely to be satisfied with their jobs when they work at either purpose-driven or profit-driven hospitals, only purpose-driven hospitals give doctors a sense of meaningfulness. This finding suggests that both rational choice theory and public service motivation perspective are valid; however, public service motivation plays a greater role in terms of a sense of meaningfulness. Theoretical contributions and practical implications are discussed.
... A pertinent issue for organizations is how to eliminate performance pressure's negative side effects without eradicating pressure altogether. Existing recommendations for reducing the harmful effects largely involve leader-centric or work redesign approaches, such as incorporating ethical standards into performance expectations (Jensen et al., 2019;Mitchell et al., 2018;Tenbrunsel et al., 2003) or improving selection practices to hire more resilient employees (Mitchell et al., 2019). While certainly appropriate, these recommendations have limitations. ...
Full-text available
Pressure to perform is ubiquitous in organizations. Although performance pressure produces beneficial outcomes, it can also encourage cheating behavior. However, removing performance pressure altogether to reduce cheating is not only impractical but also eliminates pressure's benefits. Therefore, the purpose of this research is to test an intervention to counteract some of the most harmful effects of performance pressure. Specifically, I integrate the self-protection model of workplace cheating (Mitchell et al., 2018) with self-affirmation theory (Steele, 1988) to demonstrate the utility of a personal values affirmation intervention to short-circuit the direct and indirect effects of performance pressure on cheating through anger and self-serving cognitions. Two experiments were used to test these predictions. In a lab experiment, when people affirmed core personal values, the effect of performance pressure on cheating was neutralized; as was pressure's direct effect on anger and indirect effect on cheating via anger. A field experiment replicated the intervention's ability to mitigate performance pressure's direct effect on anger and indirect effect on cheating through anger. Altogether, this work provides a useful approach for combating the harmful effects of performance pressure and offers several theoretical and practical implications. (PsycInfo Database Record (c) 2021 APA, all rights reserved).
... It should be added that ethical embeddedness can be applied not only within the context of business relationships and networks but also within business organisational infrastructure. For instance, Tenbrunsel et al. (2003) proposed ethical embeddedness theory emphasising that ethics is embedded in formal (documented code of behaviour) and informal (informal interaction) systems of an organisation, which are placed at the core of an organisational climate. Organisational climate defines how employees regard ethical values prevalent in the organisation, such as respect, dignity, fairness, judgment etc. Ethical norms within a business organisation are most likely to affect interaction with other business organisations that are engaged in business relationships with them. ...
Full-text available
This doctoral thesis aims to scrutinise and develop the understanding of (un)ethical practices of managers engaged in social interaction in business relationships and networks within the specific context of international business markets. The Industrial marketing and purchasing (IMP) approach (Håkansson & Snehota, 1989; 2006) is adopted to conceptually frame the study. First, this study shows how business ethics are understood and what ethical values can be involved in international business relationships and networks. Second, it explores how ethical values differ in international business-to-business (B2B) contexts. Third, it specifically explores trust in business relationships and networks as a significant value of business ethics. Finally, it provides insight into the dissemination of knowledge on business ethics and emphasises the role of higher education institutions and instructors in this process. The study is based on four empirical research papers. Three of the papers represent different individual perspectives of managers and entrepreneurs in small companies on their business activities, ethics, and moral concerns. The empirical data are interpreted with the help of established theoretical frameworks in the international business marketing literature and expand this literature by shedding light on the role of business ethics in B2B relationships and networks. The fourth paper is dedicated to pedagogic issues and addresses the teaching of business ethics and sustainable development to future managers and entrepreneurs. This thesis is grounded on the ontological premises of constructivism and an interpretivist approach to knowledge development. Conceptually and methodologically, the studies completing this doctoral project contribute to the business marketing literature by extending the understanding of IMP approaches regarding business ethics. Particularly, the project contributes to the conceptualisation of how business ethics are embedded in B2B relationships and networks. This study also contributes to the business ethics literature by addressing concepts of ethical relativism and trust in different B2B contexts. The study furthermore contributes to university pedagogics with implications for educators drawing on constructivist perspectives to develop teaching methods. In terms of managerial implications, this study helps to explore and evaluate business actors’ (un)ethical behaviours in relation to other actors involved in business and social interactions. Generally, the findings highlight that business ethics and ethical values have varying meanings and roles in international business relationships and networks.
In the digital workspace, new forms of (negative) interactions have emerged. Workplace cyberbullying can be pervasive, fast, and intrude the private sphere. These aspects make organizational surveillance and prevention challenging. In this conceptual chapter, the authors argue that for establishing an ethical digital workspace, civility values and ethical principles of individual responsibility and mutual respect are crucial. For prevention of workplace cyberbullying, formal systems like technological detection systems or policies are insufficient. Rather, organizations need to foster informal “social control.” The social norms in small workgroups and the leader's role-modeling behavior should guide the digital behavior of employees at and beyond work, and eventually create a climate of respect. This should also help to increase bystanders' moral awareness of allegedly minor uncivil incidents. Examples of different formal and informal preventive measures are discussed. The chapter ends with a brief discussion and outlook on future legal and technological advancements.
Conference Paper
Full-text available
V prispevku proučujemo vrednote in etičnost študentov. Tako kot v drugih razvitih državah, se tudi v Sloveniji vrednotne orientacije in pogled na etiko spreminja z odraščanjem. Ključne spremembe so se zgodile ob prehodu iz tradicionalne v moderno, ter nato v postmoderno informacijsko družbo. Skozi generacije se tako zaznajo razlike glede vrednot in pogleda na etiko. Zato si v našem prispevku zastavljamo raziskovalno vprašanje, kako študentje ocenjujejo svoje vrednote in kako visoka je njihova samoocena etičnosti. V raziskavo je bilo vključenih 182 študentov dodiplomskega študija. Zbiranje podatkov je potekalo od marca 2020 do decembra 2021. Skozi analizo zbranih podatkov, ki temeljijo na samoocenah študentov ugotavljamo, kateri tip vrednot in katere posamezne vrednote so najbolje ocenjene, ter kako vrednotijo svojo etičnost. Prispevek zaključimo s podajo našega mnenja glede na ugotovitve iz raziskave.
We test the theoretical and practical utility of the vigilante identity, a self-perception of being the kind of person who monitors their environment for signs of norm violations, and who punishes the perceived norm violator, without formal authority. We develop and validate a measure of the vigilante identity scale (VIS) and demonstrate the scale’s incremental predictive validity above and beyond seemingly related constructs (Studies 1 – 2e). We show that the VIS predicts hypervigilance towards organizational wrongdoing (Studies 2 and 4), punishment intentions and behavior in and of organizations (Studies 3 and 4) as well as in the wider community (Study 1), and is activated under organizational justice failure conditions (Study 3). We maintain that vigilantes can impact organizations and society from both inside and outside organizational walls and we discuss theoretical implications for scholarship on vigilantes, as well as on morality, social norms, and third-party punishment in organizations.
Boundary spanner corruption—voluntary collaborative behavior between individuals representing different organizations that violates their organizations’ norms—is a serious problem in business-to-business (B2B) marketing relationships. Drawing on insights from the literatures on the dark side of business relationships and deviance in sales and service organizations, the authors identify boundary spanner corruption as a potential dark side complication inherent in close B2B marketing relationships. The same elements that generate benefits in interorganizational relationships, such as those between customer and seller firms, also enable the development of boundary-spanning social cocoons that can foment corrupt activities under certain conditions. A conceptual framework illustrates how trust at the interpersonal, intraorganizational, and interorganizational levels enables corrupt behaviors by allowing deviance-inducing factors stemming from the task environment or from the individual boundary spanner to manifest in boundary spanner corruption. Interpersonal trust between representatives of different organizations, interorganizational trust between these organizations, and intraorganizational agency trust of management in their representatives foster the development of a boundary-spanning social cocoon—a microculture that can inculcate deviant norms leading to corrupt behavior. Boundary spanner corruption imposes direct and opportunity costs on the involved organizations, with the additional burden of latent financial risk associated with potential exposure. The authors substantiate their multi-level framework and propositions with field-based insights from qualitative interviews with senior executives. The multi-level framework of boundary spanner corruption extends beyond extant marketing literature, highlights intriguing directions for future research, and offers new managerial insights.
Full-text available
The recent use of quantitative survey methods and "dimensions" in culture studies contradicts some of the epistemological foundations of culture research and calls into question a similarity to earlier research on organizational climate. These two perspectives are compare in terms of their definition of the phenomenon, methods and epistemology, and theoretical foundations.
This paper examines the influence of surveillance and sanctioning systems on cooperative behavior in dilemma situations. The first study provides evidence that a weak sanctioning system can actually result in less cooperation than no sanctioning system at all and suggests that one reason for this effect is that sanctions affect the type of decision that individuals perceive that they are making, prompting a concentration on the business versus ethical aspects of the decision. Based on this finding, a theoretical model is then presented that postulates that the relationship between sanctions and cooperation is due to both a signaling effect, in which sanctions influence the type of decision that is made, and a processing effect, in which the decision processing that occurs, including whether or not the strength of the sanction is considered, is dependent on the decision frame that has been evoked. A second study provides support for the processing effect hypothesis. Theoretical and managerial implications of these findings are discussed.
This paper introduces a conceptual framework for studying moral climate in business firms. Key themes from organizational climate theory are applied to describe and diagnose moral climate. The relevance of organizational goal-setting practices for moral climate analysis is explored and research implications are proposed.
This paper integrates elements from the theory of agency, the theory of property rights and the theory of finance to develop a theory of the ownership structure of the firm. We define the concept of agency costs, show its relationship to the 'separation and control' issue, investigate the nature of the agency costs generated by the existence of debt and outside equity, demonstrate who bears the costs and why, and investigate the Pareto optimality of their existence. We also provide a new definition of the firm, and show how our analysis of the factors influencing the creation and issuance of debt and equity claims is a special case of the supply side of the completeness of markets problem.