Ethical climate refers to the psychological perceptions of subordinates toward the ethical policies and procedures of the organization (Schneider, 1975). Practitioners and academicians have been concerned for many years about the ethical climate within organizations, examining the link between ethical climate and organizational behaviors in a variety of circumstances. Ethical climate contains cues that guide subordinate’s behavior and reflects the ethical character of the organization (Cullen et al., 2003).
Ethical climate has been defined as “the prevailing perceptions of typical organizational practices and procedures that have ethical content” or “those aspects of work climate that determine what constitutes ethical behavior at work.” (Victor &
Cullen, 1988, p. 101). Due to differences in individuals’ positions, work groups, and employment histories, perceptions of organizational climate may vary within the organization (Victor & Cullen, 1988; Schwepker, 2001). Thus, it can also be described as a type of work climate that reflects organizational policies, procedures, and practices that have moral consequences (Mulki et al., 2007). Organizational leaders play a role in shaping ethical climate by both stating and implementing ethical policies and practices (Grojean et al., 2004). According to Victor and Cullen (1988), people who are benevolent tend to be less cognizant of laws or rules and may be less amenable to arguments employing rules or principles. In contrast, people who are principled tend to be less sensitive to particular effects on others. Given this, organizations might also be expected to develop relatively distinct forms of ethical climates. That is, organizations or subgroups within organizations may be prototypically benevolent, principled, or egoistic. However, although Victor and Cullen (1987) found that there was often a dominant climate type in an organization or
a group, organizations did not have single climate types. Since the loci of analysis often combine in unique ways for different organizations (Cullen, Victor, & Bronson, 1993), researchers (Cullen, Parboteeah, & Victor, 2003; Joseph & Deshpande, 1997) often develop hypotheses using the three basic criteria of moral judgment: egoistic, benevolent, and principled.
Egoistic Climate
An egoistic climate is emphasized on maximizing self-interest (Cullen et al., 2003). The egoistic climate is based on the moral philosophy of egoism, which implies that a consideration of what is in the individual’s best interest will dominate the ethical reasoning process (Ferrell & Fraedrich, 1997). Within an egoistic climate, the individual's self-interest becomes the expected primary source of moral reasoning when a decision has to be made (Victor & Cullen, 1987, 1988).
The ethical climate of self-interest, company profit, and efficiency are based on the ethical theory of egoism. Ethical egoism suggests that individuals should make decisions based on what is best for themselves, without regard to stakeholders. In terms of organizational climates, the locus of concern could be the individual, but might also be the organization or larger social system. In any case, egoistic climate emphasize that organization members should behave in a manner consistent with their self-interest when interacting with others and that there is no duty to consider the welfare of stakeholders when making decisions (Barnett & Schubert, 2002).
Benevolent Climate
Benevolence is primarily based on concern for others (Victor & Cullen, 1987;
1988). The benevolent climate is based largely on utilitarian principles of moral philosophy, which suggest that individuals make ethical decisions by considering the
positive or negative consequences of actions on referent others (Ferrell & Fraedrich, 1997). In short, in a benevolent climate, the expectation is that unit members are concerned with the well-being of each other within and outside the organization (Victor & Cullen, 1987, 1988).
The ethical climates of friendship, team interest, and social responsibility are based on benevolence, which is consistent with the ethical theory of utilitarianism. A climate emphasizing benevolence requires individuals to consider the effect of their actions on others when making decisions. Climates based on benevolence suggest that ethical decisions result in outcomes with more positive than negative consequences for others. According to Victor and Cullen (1998), these others can be the individual subordinate's friends, some organizational unit (team, department, etc.), or external constituencies (community, customers, etc.). Benevolent climate are focus on two reasons. First, benevolent climates require that subordinates look beyond self-interest when making decisions. Second, benevolent climates focus on actions' consequences to others as a primary decision criterion (Barnett & Schubert, 2002).
Principled Climate
A principled climate is defined as the organizational normative system emphasizing the compliance with rules and standard operating procedures (Koh &
Boo, 2001; Victor & Cullen, 1988; Weber, 1995). Principled climates are manifested through the application of organizational and plant rules and codes of conduct (Martin
& Cullen, 2006). The principled ethical climate is based in large part on deontological principles of moral philosophy, which posit that individuals make ethical decisions after considering actions in regard to universal and unchanging principles of right and wrong (Ferrell & Fraedrich, 1997). In a principled climate, when faced with an ethical
dilemma, organizational or group norms suggest that the decision-maker resort to decisions that are based on adherence to rules and codes (Victor & Cullen, 1988).
The ethical climates of personal morality, rules and procedures, and laws and codes are based on principle, which is consistent with the ethical theory of deontology.
Actions are judged, not based on consequences, but on universal principles of morality and absolute adherence is required. Principled climates should foster strong organizational values regarding appropriate standards for making decisions (Barnett &
Schubert, 2002).
CHAPTER THREE
RESEARCH DESIGN AND METHODLOGY
This chapter first introduces the construct measurements of research constructs, including three paternalistic leadership types, and three dimensions of ethical climates.
Then, the conceptual model of this research is presented. Finally, the research design, including the sampling plan, data collection, and data analysis techniques are described.