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Does Ethical Climate Influence Unethical Practices and Work Behavior?
Does Ethical Climate Influence Unethical Practices and Work Behavior?
DAMODAR SUAR
ROOPLEKHA KHUNTIA
This study examines whether ethical climate influences managersunethical practices and work behaviour.
The sample comprised of 340 middle-level executives from twa private and two public sector companies.
Irrespective of the nature of the organization and the age of the managers, while a caring and professional
climate reduced only the manipulative behaviour of managers, an individual-centred climate consistently
fostered unethical practices of manipulation, cheating and violation of organizational norms. On work
behaviour, a caring and professional climate was conducive for increasing managers performance,
involvement, affective commitment, predominant intrinsic job satisfaction, extrinsic job satisfaction and
taking initiative; while an individual-centred climate was unfavourable for continuance commitment to
the organization.
Damodar Suar is Associated Professor and Rooplekha Khuntia is Research Scholar, Department of Humanities and Social Sciences,
Indian Institute of Technology Kharagpur, Kharagpur 721 302.
Although there is no consensus on a particular Studies have found a relationship between the
typology of ethical climate, Victor and Cullen ethical climate and the ethical behaviour of em-
introduced the concept of ethical climate to ex- ployees.5 Because individuals often search out-
plain and predict ethical conduct in organiza- side themselves for guidance in ethical dilemmas,
tions. They used a two-dimensional theoretical organizations can moderate individual cognition
typology of ethical climate. The first dimension by institutionalizing ethics. Through institu-
represented the ethical criteria-egoism, benevo- tionalized norms, policies and procedures, an
lence and principles-on which organizational organization signals its employees in deciding
decision making was based. An egoistic criterion what is just, right and fair behaviour. Thus, the
implied that a consideration of what was in the context perceived by organizational members is
individuals best interest would dominate the likely to influence their response to ethical issues.
ethical reasoning process; a benevolent criterion Ethical climate is likely to influence em-
suggested that ethical decision making was based ployees work bahaviour. The more marketers
on the consequences of the decision on others; perceived their companies as showing concern
and in principled reasoning decisions were guided for ethics, acting ethically and rewarding ethical
by universal standards of right and wrong. The behaviour, the more positive was the resulting
second dimension represented the locus of influence on their commitment to organizations.
analysis used in ethical decisions-individual, Victor and Cullen also speculated that incongru-
group (or local) and societal (or cosmopolitan) ence between dominant ethical climate and
level. At the individual level, the ethical climate employees ethics might lead to a greater likeli-
of an organization supported an individual source hood of turnover, job dissatisfaction and decreased
for normative standards regarding ethical reason- organizational co~rnmitment.8 It has also been
ing. The local level was supported by group found that in a caring climate employees were
norms favouring ethical reasoning within an more satisfied, more committed and less likely
organization. The cosmopolitan level was sup- to quif.9 While a caring climate increased commit-
ported by norms favouring external sources for ment and supervisory satisfaction, an instrumental
ethical reasoning. climate decreased overall satisfaction.10 Thus,
Cross-tabulation of the three ethical criteria varied dimensions of ethical climate are likely to
with the three loci of analysis resulted in nine the- influence work behaviour differently.
oretical dimensions. By factor analysing the This study focuses on middle-level managers.
scores on nine ethical climate types, five climate Top management policies and strategies are
dimensions emerged: (a) caring; (b) law and code; concretized for action at the middle level, and
(c) rules; (d) instrumental; and (e) independence. corresponding actions are realized through
A caring climate put emphasis on the interests bottom-line managers and workmen. Middle-
and welfare of others. Organizations guided by level managers deal with breakdown in normal
law and codes accommodated external standards flow of work and ensure smooth functioning of
and principles in decision making, and a rule- the organization. Their perception and behaviour
oriented climate referred to internal principles in are crucial for the effective functioning of the
behaviour. Public sector organizations derive type of organization and age of managers on un-
power from state or political bodies and meet the ethical practices and work behaviour and propose
long-range interests and needs of the public. They the following hypothesis:
operate in an environment of red-tapism and
bureaucratic nepotism. Contrarily, private sector Different dimensions of ethical climate influ-
ence unethical practices and work behaviour
companies have a constant drive to meet the
demands of the consumers. They operate in an differently.
intense competitive environment and try to beat
their competitors. Their survival depends on re- Method
tention of market share along with profit maxim-
ization. They are sensitive and respond quickly Sample
to the changing business environment.&dquo; Studies
Permission to collect data was sought from the
on the work culture in private (including a fertil-
authorities of two public sector and two private
izer cooperative) and public sector companies in
sector manufacturing industries located in eastern
India revealed two distinct cultures. 12 In the soft
India. Four hundred middle-level managers from
work culture and pliant management of the public
the rank of assistant/junior managers were select-
sector, employees engaged in non-work activities,
ed randomly for the study. They were approached
social-personal interests, did not work hard, did
not have a positive influence on work and maxim- individually and briefed about the purpose of the
ized personal gains. Managerial policies, prac- study. They were given the questionnaires, as-
tices and philosophy were more liberal. The sured complete anonymity of their responses, and
opposite existed in the private sector, a synergetic requested to return the filled-in questionnaires
work culture with assertive and people-oriented within a fortnight. The questionnaires were col-
management. Given these findings, the unethical
lected personally. It resulted in the return of 340
practices of employees are likely to be less and (85 per cent) completed questionnaires. There
were female executives in such organizations, but
work attitudes more favourable in private than
public sector companies. they were excluded to avoid contamination of
As age increases, employees become more results by sex differences.
ethical.3 Younger employees tend to have a more The sample comprised of 152 middle-level
liberal view and older ones a more adamant view managers from two private sector and 188
on unethical practices. 14 Older employees, by middle-level managers from two public sector
virtue of their longer tenure are more exposed to companies (Table 1). Almost all had nuclear
norms in the organization and are aware of the families. Barring three widowers and two un-
adverse consequences of unethical practices that married persons in the private sector companies,
reinforce them to be ethical. Because they have and 15 unmarried persons in public sector, the
financial security and are settled in jobs, they are rest were married. The private sector managers
less likely to engage in unethical practices that were little older than their counterparts in the
could jeopardize their security. I Older employees public sector and had higher basic salaries, but
were found to be better performers, more com- had less years of formal education than the man-
mitted and more satisfied with their jobs than the agers in public sector companies. However, man-
younger employees.&dquo; Based on this discussion, agers from both the sectors had similar duration
we intend to control the confounding effects of of service in their present organizations.
sticking to organizations rules and policies. The Response categories against each item were on a
alpha reliability for manipulative and expedient 5-point Likert-type scale ranging from strongly
behaviour was 0.89, for cheating in performance disagree (1 ) to strongly agree (5). When scores
and misuse of financial resource 0.82, and for on the items were factor analysed using the
violation of organizational norms 0.51. High principal component method and rotated through
scores indicated high value for each variable. the varimax procedure, two extracted factors
explained 48.60 per cent of total variance. The
Job Performance first factor, affective commitment, contained
five items and its alpha reliability was 0.66.
Job perfonnance was measured through seven
Sample items were, I am proud to say that I am
items-taking decisions, meeting deadlines, a part of this organization and I really care about
producing satisfactory quality of work, producing the fate of this organization. The second factor
satisfactory quantity of work, planning and organ-
Table 2
Unethical Practices and Work Behaviour Against Sector and Age
norms. Post-hoc analysis using Tukeys test entered simultaneously in the second step of
further confirmed that cheating in performance regression analysis. When the effects of sector
and misuse of finance were more acceptable to and age were partialled out, the perceived CPC
middle-level managers in the age group of deterred only manipulative bahaviour, whereas
46-60 years than the same cadre in the age group the perceived ICC reinforced manipulation,
of 24-35 years and 36-45 years. On work behav- cheating and violation of organizational norms.
iour, middle-level managers in the age group of Indeed, perceived ICC increased unethical prac-
46-60 years had significantly higher involvement, tices of middle-level executives.
affective commitment, predominant intrinsic CPC boosts performance, job involvement,
satisfaction, extrinsic satisfaction and initiative affective commitment, predominant intrinsic job
than the age group 24-35 years. In all the vari- satisfaction, extrinsic job satisfaction and taking
ables of work behaviour except extrinsic satis- initiative. ICC decreased the commitment of
faction, the managers in the age group of 36-45 middle-level managers in continuing their service
years had significantly more positive attitudes in the same organization. Supporting the hypo-
towards work than managers in the age group of thesis, CPC enhanced work behaviour and ICC
24-35 years (Table 2). In Indian culture, with reinforced unethical practices of middle-level
permanent jobs and corruption 21 older managers managers (Table 3).
were more unethical towards the fag end of their
career to amass wealth, false reputation and Discussion
happiness, but had more positive work behaviour
than younger managers. These findings con- Ethical climate dimensions have significantly
finned our assertion that the nature of the organ- predicted unethical practices and work behaviour.
ization and age of the managers influenced Irrespective of the nature of the organization and
unethical practices and work behaviour. age of managers, a caring and professional cli-
mate was favourable for increasing managers
Ethical Climate, Unethical performance, involvement, affective commit-
Practices and Work Behaviour ment, predominant intrinsic job satisfaction,
extrinsic job satisfaction and taking initiative. On
CPC was more prevalent in the private (M =
the other hand, an individual centred climate
31.74, SD 5.14) than public sector (M = 27.29,
=
reinforced unethical practices and decreased the
SD 5.85; t (338) 7.45, p < 0.001). However,
= =
commitment of middle-level managers.
ICC was equally prevalent in private (M= 10.51, Empirical studies had shown that the dimen-
SD 2.80) and public (M = 10.12, SD = 2.74)
=
sions of ethical climate varied in different organ-
sector companies. To control the confounding izations.26 Victor and Cullen contended that
effects of sector and age on unethical practices different types of ethical climate could exist even
and work behaviour, sector as a dummy variable in different departments of an organization. 21
(private 1, public 0) and age of managers
= =
Climate perception was influenced by organiza-
were entered in the first step of regression ana- tional values and culture. In Indian organizations,
lysis. CPC and ICC did not correlate significantly, employees prefer to maintain a personal rather
than a professional relationship with their loomed large among managers. Individual goals
superiors, and, hence, readily surrender to their took precedence over organizational goals. Man-
authority and demands. They depend on their agers adopted unscrupulous means to serve their
superiors for support, advice, guidance and help. interests.
They are used to a lifestyle filled with ample rest This study focuses on unethical practices and
and relaxation, and tend to portray themselves work behaviour. Unethical behaviour may some-
as superior to others.&dquo; In such a set-up, CPC times pay off, but ethical behaviour is the best
emerged to be the dominant climate in private long-term business strategy.3 Work behaviour
sector companies. CPC was characterized by of managers can ensure current performance
efficiency, concern for others good, fairness to and organizational effectiveness. The gist that
the customer and public, cost control, compliance emerges is that the two dimensions of ethical
with organizational norms, and obedience to law climate are determinants of unethical practices
and professional standards. Such a climate called and work behaviour. Organizations can dis-
for managerial accountability and created an courage unethical practices by dismantling an
atmosphere that was conducive for better perfor- individual-centred approach held by its members
mance, involvement, affective commitment, job and promote work behaviour by encouraging a
satisfaction and taking initiative, and aversive to caring and professional climate.
manipulative practices. The study has certain limitations that must be
An ICC was perceived as the absence of re- acknowledged. First, data has been procured
strictions, rules and regulations. Such a climate through self-reported inventories that are likely
fostered a focus on self-interest and nurtured to be tainted with a social desirability effect.
unethical practices. Indians favour a hierarchical Qualitative research needs to be carried out to
system of administration. They exercise little ascertain the external validity of the results.
discretion and are conditioned to depend on their Second, the findings were obtained after studying
superiors.&dquo; Breaking away from such traditions, four manufacturing units only. Caution must be
ICC encourages the employees to follow their exercised in generalizing the findings to other
own judgements- and standards in deciding what organizations. Notwithstanding the limitations,
is right or wrong. Discussion during data col- we generated empirical evidence on the import-
lection revealed that the studied organizations ance of an ICC that reinforced unethical practices
were undergoing restructuring. Job insecurities and a CPC that facilitated work behaviour.
Appendix
Unrotated and Rotated Factor Loadings on Ethical Climate
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