Service Business

https://doi.org/10.1007/s11628-019-00410-8

EMPIRICAL ARTICLE

Impact of organizational culture and capabilities

on employee commitment to ethical behavior
in the healthcare sector

DonHee Lee1

Received: 13 June 2019 / Accepted: 26 October 2019

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Abstract
This study empirically examines the effects of the organization’s culture and capa-
bilities on employee commitment to ethical behavior in the healthcare sector. The
proposed research model and associated hypotheses were tested using structural
equation modeling based on data collected from 228 care team members in hospi-
tals with more than 100 beds in metropolitan areas of South Korea. The findings of
the study revealed how hospitals undertake ethical responsibility through organiza-
tional capabilities for care services to enhance competitiveness in today’s dynamic
environment. The study results present that a well-functioning organizational culture
motivates employees for better quality performance through collaboration and ethi-
cal work behavior. In addition, the results proved that ethics is an intangible asset
that affects an organization’s competitiveness. The study also provides new insights
to hospital administrators, institutions, and policymakers about the importance of
establishing high ethical standards for interactions with patients and their family
members.

Keywords Organizational culture · Organizational capabilities · Ethical

responsibility commitment · Ethical behavior · Healthcare service

1 Introduction

Ethical issues in organizations have been extensively researched over the years.
Healthcare-related institutions are no exception (Garba et al. 2018). Recently
reported scandals involving hospitals, such as children with AIDS in Kazakhstan
(2006), reused syringes in Nevada (2008), meningitis outbreak in Massachusetts
(2012) and California female prison sterilization (2013) represent a hospital

* DonHee Lee
dhlee04@inha.ac.kr
1
College of Business Administration, Inha University, 100 Inharo, Michuhol‑gu, Incheon,
South Korea

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 D. Lee

of unethical practices in the healthcare industry (Jie 2015). While organiza-

tions strive to strengthen their core competencies and capabilities for corporate
performance, their image once tarnished by an unethical conduct can threaten
their very survival. A leader or a manager serves as a role model to employees
through ethical behavior to create a high-performance environment for ‘doing
well by doing good’ (Lee 2018b).
Organizational culture is influenced not only by norms, rules, and policies,
but also by invisible factors pertaining to what the organization actually does
for the community and society (Watkins 2013). As such, organizational culture
might be consistent with explicitly stated (ethical) values and policies; but it
could also be manifested in (unethical) activities that are contrary to unstated
values. For example, an employee may perform an unacceptable act, which may
bring financial rewards, or avoid doing or reporting things that may invite pun-
ishment. Unethical practices of healthcare organizations in dealing with human
life are unpardonable criminal acts (Worthington 2004; GMC 2008; Watkins
2013; Nelson et al. 2014). However, the fact that criminal acts committed by the
front-line workforce (medical professionals and non-professionals) may imply
that the members do not regard them as unethical conduct, or as a departure from
moral conduct (Nelson et al. 2014). Therefore, the problem should be resolved
by attacking its very roots and finding the cause for unethical behaviors.
It is important to nurture an organizational culture that can strengthen the
healthcare institution’s competitiveness, enhance its contributions to the com-
munity, and also encourage ethical behaviors by all employees (Watkins 2013;
Valentine et al. 2018). The healthcare provider should develop organizational
capabilities based on its core competences, supported by the organizational cul-
ture, to deliver excellent quality care services to patients (Lee et al. 2012). Con-
sequently, this study focuses on employee commitment to ethical responsibility
through organizational culture, in view of limitations of previous studies in this
important aspect of healthcare systems.
This study thus attempts to answer the following two basic research ques-
tions: (1) Does the organizational culture impact organizational capabilities of
the hospital? (2) Do organizational capabilities have an impact on employee
commitment to ethical responsibility? A research model is proposed to answer
these questions. The results of the study are expected to contribute to both the-
ory and practice of employees’ ethical responsibility commitment in terms of
best practices for providing quality care service to patients. In addition, they
will provide implications for a strategic management regime required for creat-
ing organizational culture that can enhance ethical behavior and organizational
capabilities of healthcare institutions.
The rest of the paper is organized as follows: Sect. 2 reviews relevant lit-
erature; Sect. 3 proposes a research model and hypotheses; in Sect. 4, research
methodology is presented; Sect. 5 reports the results of analysis; and Sect. 6
concludes the study by articulating the results, implications, and limitations of
the study, and future research needs.

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2 Literature review

There is a trend of growing and expanding patient rights to autonomy (Worthington

2004; GMC 2008). In addition, a physician should not treat patients with the pater-
nalistic spirit but make decisions for patients’ own basic rights (Worthington 2004;
GMC 2008). It implies that medical staff need basic education on medical ethics.
Ethics is an important issue in any well-managed healthcare system. Ethics has
been defined by Sulmasy (2001, p. 98) as “the systematic, critical, reasoned evalu-
ation and justification of right and wrong, good and evil in clinical practice, and
the study of the kinds of persons healthcare professionals ought or ought not strive
to become.” Worthington and Rohrbaugh (2011) proposed that ethics is a complex
topic, but medical aspects are based on individual cases with relative risks, burdens,
and benefits due to different conditions or actions. Primarily, medical staff need to
be aware of ethical issues involved in every step in the patient treatment process
(Vähätalo and Kallio 2015). To properly implement this approach, healthcare
organizations should have medical staff fully committed to ethical standards of the
organization.

2.1 Organizational culture

Watkins (2013, p. 3) defined culture as: “A process of sense-making (e.g., a col-

laborative process of creating shared awareness and understanding out of different
individuals’ perspectives and varied interests) in organizations: The best predictor of
what people will do is what they are incentivized to do: and promoting and reinforc-
ing ‘right’ thinking and behaving, and sanctioning ‘wrong’ thinking and behaving.”
Organizational culture is the result of accumulated learning based on long-held val-
ues of the organization and its members (Denison 1990). The organization’s value
system provides the direction and guidance for establishing organizational mission,
vision, goals, strategies, and/or behavioral code (Weiner 1988). Cameron (2013)
suggested some challenges regarding the depth and scope of organizational culture
and noted that while organizational culture is created by the organization’s members
it in turn influences the thoughts, feelings, and behavioral patterns of the members.
However, organizational culture comes into existence by molding unique character-
istics encompassing various organizational entities rather than by building a uniform
and stereotype environment, given the fact that every organization is a creation of
diverging and competing value systems (Morgan 2006).
Organizational culture can be classified into distinctive types according to vari-
ous perspectives and criteria (Wallach 1983; Quinn and McGrath 1985; McDermott
and Stock 1999; Stock et al. 2007). Wallach (1983) classified it into innovative,
bureaucratic, and supportive cultures from the perspectives of inter-organizational
and inter-individual cultural links. Quinn and McGrath (1985) divided organiza-
tional culture into four archetypes based on the competing values framework (CVF):
group, developmental, rational, and hierarchical cultures. McDermott and Stock
(1999) and Stock et al. (2007) also used CVF for classifying organizational culture

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into a two-dimensional flexibility-control axis and an internal–external axis. In addi-

tion, previous studies emphasized the importance of organizational culture in associ-
ation with healthcare quality enhancement (Lee et al. 2013). Organizational culture
plays an important role in dealing with medical errors and related problems (Stock
et al. 2007; Lee et al. 2011) and supporting patient safety (Ginsberg et al. 2005;
Olden and McCaughrin 2007; Lee et al. 2011, 2016).
Medical errors can occur in a hospital due to the attitude of its medical staff.
Truxillo et al. (2016, p. 385) proposed that organizational culture emphasizes ethical
behavior that cuts down misbehavior, and suggested that “whether an organization
to develop a culture that emphasizes doing the right thing even when it is costly
depends on whether its leaders, starting with the CEO, consider the ethical conse-
quences of their actions.”
An example of an unethical organizational culture is Enron Corporation, an
American energy, commodities, and services company based in Houston. Enron
executives created an organizational culture that apparently believed in doing what
is right and claimed that they valued ethical behavior over profits (the bottom line).
Sims and Brinkmann (2003, p. 243) described Enron’s ethics as “the ultimate con-
tradiction between words and deeds, between a deceiving glossy facade and a rotten
structure behind.” Tozer (2012, p. 476) stated that “if an organization is perceived
to lack integrity or to operate in an unethical, immoral, or irresponsible manner
soon loses the support of customers, suppliers and the community at large.” Los-
ing customers, suppliers, and the community would lead to losing the support of its
employees.
As such, for the creation and maintenance of an ethical organizational culture,
efforts should be made to ensure continuous communication over the organization’s
ethical values to all stakeholders, and to motivate all members to follow the values
closely. Ethical organizational culture serves as a guide for decision-making and as a
signpost indicating the invisible direction for members to rely on whenever they face
dilemmas for want of relevant applicable rules (Worthington and Rohrbaugh 2011;
Nelson et al. 2014). Ethical organizational culture not only enhances employee loy-
alty and drives the organization’s image and reputation, but also creates an environ-
ment of responsibility for delivering results achieved by ethical means. Furthermore,
it serves as a catalyst for the ethical commitment necessary to manage major chal-
lenges facing the organization or in adapting to a new environment (Wallace 2014;
Valentine et al. 2018).
Nelson et al. (2014) reported that Northern Heights Regional Hospital (NHRH)
in Houston, Texas is a well-known, comprehensive, and non-affiliated healthcare
facility with an excellence reputation for delivering high-quality care and value.
However, recent financial difficulties of NHRH led its medical staff to seek employ-
ment in other hospitals, and the hospital’s services began to lose their earlier high
standards. Consequently, its top management constituted a fact-finding committee to
address the problem. NHRH’s top management focused that lack of ethical aware-
ness between values and practices as the main factor weakening organizational cul-
ture, care quality, and the financial state (Nelson et al. 2014). This case is a good
example of how employees’ lack of understanding about ethical behavior can cause
major problems, which can likely escalate to other issues. Nelson et al. (2010) also

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suggested that repeated occurrences of ethical issues could have a detrimental effect
on both the care quality and organizational performance.
Due to the nature of medical service, care service is generally provided by differ-
ent departments (group culture). The composition of the medical staff has a hierar-
chical structure that is classified according to the medical career (hierarchical cul-
ture). Medical services are characterized by the need to provide services to patients
with an emphasis on ethical/humanitarian characteristics (ethical culture). There-
fore, in this study, organizational culture is classified into the following: group, hier-
archical, and ethical (Quinn and McGrath 1985; McDermott and Stock 1999; Stock
et al. 2007; Lee et al. 2011). Group culture refers to the development of human
resources based on the norms and values pertaining to building trust and respect
with each other among members, and sharing beliefs, attitudes, knowledge, prac-
tices, and behaviors. Hierarchical culture emphasizes efforts for sustaining organiza-
tional stability and internal orientation as the management hierarchical feature is for
task assignment, coordination, and activities of organizational members to achieve
organizational performance. Ethical culture refers to the behavioral patterns, norms,
and expectations shared by members as common ethical values or convictions of a
healthcare organization, where human values prevail over others. In addition, ethical
culture assumes that the organization would provide a basic frame for thoughts and
attitudes in care service processes that positively influence performance (improved
quality care, patient and staff satisfaction, hospitals’ reputation, etc.) and organiza-
tional stability and development.

2.2 Organizational capabilities

Most organizations strive to provide sufficient support to front line employees work-
ing at service encounters for efficient and effective delivery of their services to cus-
tomers. Organizations also provide strategic support to improve the knowledge and
skills of their employees, the key resource for gaining and sustaining competitive
advantage. Such organizational support is a strategic resource for strengthening
organizational capabilities encompassing differentiation, value, inimitability, non-
refundability, and non-substitutability (Lee et al. 2012, 2016).
Organizational capability of a healthcare provider represents the ability to pro-
vide its employees with sufficient human and material support to help them effi-
ciently perform their work in the care process (Lee et al. 2012; Vähätalo and Kallio
2015; Valentine et al. 2018). In this respect, Day (1994, p. 38) defined organizational
capabilities as “complex bundles of skills and collective learning, exercised through
organizational processes that ensure superior coordination of functional activities.”
Teece et al. (1997) regarded organizational capabilities as a set of differentiated pro-
cesses, technologies, and assets owned by an organization to maintain a sustainable
competitive advantage. According to Dosi et al. (2008), organizational capabilities
enable companies to deal with and solve business problems, showing elements of
continuity in sustaining their operations. Therefore, organizational capabilities are
slow to change, but can be developed through continuous improvement over a period
of time to provide superior competitive positioning for the organization.

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Grönroos and Voima (2013) emphasized the importance of developing organiza-

tional capabilities for interactive activities. First, a company should develop organi-
zational capabilities to involve customers as co-producers of value. Second, it should
develop and provide a supportive process at each service encounter to ensure a quick
response to customers’ need. To enhance organizational capabilities for interac-
tive activities, an organization should strengthen its internal capabilities and sup-
port its employees with all the necessary skills, information, and knowledge-acqui-
sition training. Likewise, a healthcare organization should develop and implement
measures that can positively influence the interaction with customers by leveraging
organizational capabilities (Lee et al. 2012; Sharma et al. 2014; Hau et al. 2017;
Hong and Lee 2018). Thus, organizational capabilities are an indispensable compo-
nent that helps the firm function smoothly and successfully in the rapidly changing
dynamic environment (Leiblein 2011; Lee et al. 2012).
Front-line employees at a service encounter try to manage their work by offering
the best possible services, whereas customers try to get the upper hand to derive the
maximum possible benefits (Hau et al. 2017; Hong and Lee 2018). The two sides of
this interaction present a challenge to the organization for its efforts to offer qual-
ity services by efficiently organizing human and material resources. Organizational
capabilities should be developed and provided in healthcare services to reflect this
aspect of the provider/beneficiary interaction in a way that can help the process of
co-creation of shared value. It is also necessary to focus on the generation and ongo-
ing development of organizational capabilities to respond with agility and flexibility
to various service encounter activities arising in the course of providing quality care.
Today, many patients have access to the Internet to search health-related infor-
mation. This provides positive effects, but it can also have negative results if infor-
mation is variable in quality, accuracy, and/or difficult to interpret. In addition, as
patients access a great deal of additional information through the Internet, they may
question whether suggested treatments by physicians are the best for them (Lee
2018a). To deal with these situations, hospitals should provide medical staff with
needed education/training programs for the increasingly complex nature of health-
care. Pinnock and Crosthwaite (2004, p. 9) suggested ethics should be a part of such
education: “All healthcare professionals should have a strong grounding in ethics
during their undergraduate training. Providers of postgraduate training and continu-
ing education should regularly include ethics in their programmes.” To strengthen
organizational capabilities, education/training support, ethical work performance
and agile adaptation to the rapidly changing environment are important. Thus, in
this study, organizational capabilities refer to the degree of support that the organi-
zation can provide with human and material resources to medical staff for providing
better quality of care services.

2.3 Ethical responsibility commitment

The healthcare industry is a human-oriented transformative service industry

engaged in improving the health-related quality of life. The strong ethical aspect
of respecting human life lies on the one hand and the operational efficiency aspect

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necessary for managing an organization on the other. However, healthcare organiza-

tions are often forced to lean toward the operational efficiency aspect when choos-
ing between the two. This is best exemplified by the practice of hospitals that partly
relegate inventory management to suppliers to cut operating costs. More specifically,
suppliers are requested to refill the containers for medical products displayed in the
inventory space. Hospitals can thus save personnel cost for sorting out products and
keeping them in right compartments, while suppliers check the inventory level of
their products to avoid opportunity cost of lost business in those hospitals by regu-
larly sending out employees.
As shown in the above example, organizations are not free from ethical respon-
sibilities toward their own employees, customers, and society at large. Organiza-
tional leaders should be committed to being honest with their employees, while
employees need to provide accurate information about their capabilities and career
experiences. Organizations have an ethical responsibility to respect customers, who
expect to receive their desired value, and also providing value to the community and
society (Lee and Schniederjans 2017; Valentine et al. 2018). If organization mem-
bers have correct value-oriented perceptions of ethical programs, ethical responsi-
bility becomes an efficient and positive influence on their behaviors and attitudes.
Although many firms have ethics programs, large irregularities continue to be gener-
ated and exposed. Thus, it is imperative to ensure that value-oriented ethical aware-
ness is shared among employees so that they can efficiently perform their ethical
responsibilities.
In recent years, corporate social responsibility (CSR) has become an important
priority issue among organizations, stakeholders, corporate partners, and social
members (Barnea and Rubin 2010; Lee and Schniederjans 2017). Organizations
can undertake a wide variety of CSR activities such as charitable donations, com-
munity development programs, volunteer programs, and sustainable environmental
improvement programs (Rupp and Mallory 2015; Lee and Schniederjans 2017).
Carroll (1979, p. 500) defined CSR as “the economic, legal, ethical, and discretion-
ary expectations that society has of organizations at a given point in time.” Homburg
et al. (2013) defined CSR from the viewpoint of companies’ voluntary care about
their stakeholders’ interests in internal and external organization operations. Hop-
kins (2007) proposed CSR for organizations to create profits for their stakeholders in
an ethical manner.
With contributions to society and environment, CSR presents directions for
organization members to act in line with the ethical values of the organization (Rupp
and Mallory 2015). Previous studies pointed out that an organization member com-
mitted to CSR tends to take a positive attitude toward the organization (De Roeck
et al. 2014; Rupp and Mallory 2015; Ong et al. 2018). Although all organization
members do not react to an organization’s CSR in a uniform way, CSR can have a
positive impact on them toward social motivation (Ong et al. 2018). This could be
due to their sensitivity toward the impact of their behavior on the organization and
society when carrying out highly important tasks, motivating them to pay special
attention to social norms (i.e., ethical responsibility). Organization members become
aware, consciously or unconsciously, of their positive impact on society medi-
ated by CSR. Therefore, although varying in the degree of being influenced by the

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organization’s CSR activities, employees become aware of the importance of work-

ing toward ethical commitment through social motivation.
Today, an increasing number of healthcare customers expect excellent quality
care services through good corporate citizenship of service providers. For example,
patients can evaluate whether the hospital and medical staff perform their responsi-
bilities ethically, and then they share their opinions with others through social media,
which can ultimately lead to the hospital’s failure in the market if found wanting. It
is essential for healthcare institutions to understand how their ethical integrity influ-
ences their patients in terms of value delivery in addition to internal (employees)
ethical responsibility. Thus, medical staff should avoid performing activities that
may negatively affect their ethical integrity by always providing the best services
while complying with their ethical responsibilities. Ethical problems associated with
care services can be looked at from many angles. Each process of care service deliv-
ery and related decision-making carries ethical significance and has implications for
patients, medical staff, and the entire healthcare organization.
For the purpose of this study, which focuses on medical staff’s ethical compli-
ance, only the ethical aspect is considered while excluding all other dimensions of
CSR. The main area of interest of this study is the occupational commitment that
may influence medical staff’s ethical commitment in the care delivery process. This
consideration is based on the specific characteristics of the healthcare industry (i.e.,
the aspect of dealing with human life and dignity) in which ethical commitment
plays a critical role and has wide-ranging dimensions. If nurse A does not report to
a physician about patient B’s suicidal tendencies in the pretext of confidentiality, is
this act ethically and legally acceptable? It is not. Neither ethically nor legally is it
permissible for a nurse to keep the secret of an attempted suicide (Jie 2015).
Ethical responsibility should be reflected in the behaviors and activities of social
members within the scope of social expectations and demands, and can thus be
understood in the socially acceptable sense when patient care service can yield
results going beyond mere healthcare expenses. This is the rationale behind limiting
the scope of this study to the organizational system and occupational environment
required for ethical commitment associated with care service delivery. In this study,
ethical responsibility commitment refers to the degree of fulfillment in the socially
acceptable sense when involving patient care and/or support service.

3 Research model and hypotheses development

The issue of ethical responsibility is gaining greater attention with a general interest
in human values and dignity due to numerous incidents of unethical and unprofes-
sional attitudes and behaviors in hospitals. Some of the examples are as follows:
unhygienic medical equipment management, malaise of sexual harassment during
treatment, surgical instruments left inside a patient after surgery, use of low-quality
drugs, and reuse of disposable medical devices for cost-saving purposes.
This study proposed a research model for organizational capabilities with a view
to preventing ethical misconduct and creating a healthcare environment in which
medical staff can meet their social responsibilities easily and readily. With an

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extensive review of previous studies on organizational culture, organizational capa-

bilities, and ethical commitment in the healthcare sector, this study assumed that
organizational culture positively affects organizational capabilities and that in turn
can positively influence ethical responsibility commitment.
A well-functioning organizational culture provides the groundwork for success
and a framework for ethics-based daily operations. However, the process for estab-
lishing an ethical infrastructure is challenging as it requires strong organizational
leadership and planning. The process involves continuous and multidimensional
efforts for developing strategies for reform, their implementation, and the evaluation
of outcomes, which are closely associated with organizational capabilities (Lee et al.
2011). With the advent of the digital age, in particular, social exchange networking
has gained importance and this is naturally formed, not according to the characteris-
tics of corporate culture, even within companies. Organizations are expected to have
the ability to share and solve social problems, as its culture shared by the members
plays a central role (Valentine et al. 2018).
It is impossible for patients to acquire all-around healthcare knowledge, and it
is difficult for them to judge whether they need care treatment or not, and if so to
what extent. For example, people complain of sexual embarrassment even in cases
where medical treatment is necessary or avoid examination for fear of possible
sexual abuse during the treatment. Even when such problems actually arise, people
often refrain from taking any action for fear of being disadvantaged in treatment
processes. Such cases can be addressed only by establishing an organizational cul-
ture that does not tolerate ethical mistreatment and self-vigilance is exercised by all
members. Ethical commitment is more efficient if practiced voluntarily, rather than
performed because of externally imposed regulations under surveillance. However,
healthcare institutions have a limited number of guidelines or regulatory means to
exercise ethical commitment among their employees (Nelson et al. 2014; Jie 2015;
Garba et al. 2018).
Trevino et al. (2006) argued that an ethical organizational culture is more impor-
tant than formal ethical programs for successful ethical compliance. In particular,
the strategic importance of ethical culture lies in the fact that it is the core element
for a successful implementation of ethical management and its ultimate goal. The
necessity for reflecting the results of such empirical studies led to the 2004 revision
of the Federal Sentencing Guideline (FSG) focusing on setting up a system for creat-
ing ethical organizational culture (Ferrell et al. 1998). Ruiz-Palomino and Martinez-
Canas (2014) suggested that ethical culture is associated with increased organiza-
tional commitment using a sample of the financial industry in Spain.
There is a need to create an environment or culture where ethical responsibility
guidelines are prepared for each patient care unit in carrying out preventive educa-
tion and punishment for breaches of the relevant regulations. Documentation of the
contents regarding ethical commitment should be prepared and shared among all
organization members. Compensation procedures should also be prepared to address
ethical liabilities. The capabilities of the organization and its members should be
strengthened by education programs that include examples of various situations that
may occur in interactions between medical staff and patients as well as among col-
leagues in care services. Organizational culture has been studied as an antecedent

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for organizational support (Bradley et al. 2005; Stock et al. 2007). Therefore, the
following hypotheses are suggested.

H1 The group culture has a positive effect on education/training support as part of

organizational capability.

H2 The hierarchical culture has a positive effect on education/training support as

part of organizational capability.

H3 The ethical culture has a positive effect on education/training support as part of

organizational capability.

H4 The group culture has a positive effect on response capability support as part of
organizational capability.

H5 The hierarchical culture has a positive effect on response capability support as

part of organizational capability.

H6 The ethical culture has a positive effect on response capability support as part of
organizational capability.

With the advent of the digital technology era, the ethical aspect is gaining grow-
ing attention in every area, and organizational culture is no exception. Since ethical
issues are expressed by individual personalities, organization members can easily
assume ethical responsibilities when they act ethically based on their own ethical
standards. Although most companies set and declare ethical standards and require
their members to comply with them, ethical misconduct happens often enough and
when it does, the companies lose their foothold in society. Therefore, while well for-
mulated and pursued ethical rules and processes have their own place, the awareness
or attitude of organization members who implement them is an essential aspect of
ethical commitment.
Employees with a high level of responsibility in the organization tend to be more
active in promoting its CSR activities (Ong et al. 2018; Valentine et al. 2018). Pre-
vious studies on positive attitudes toward ethical responsibility reported that mem-
bers willing to help others are more motivated toward displaying friendly and ethical
behaviors (Lemoine et al. 2015). Above all, individuals who compare positively with
their colleagues in job performance and are engaged in other areas as well tend to
more actively contribute to the mission of the organization indirectly, going beyond
their direct task areas. Therefore, employees with a high level of ethical commit-
ment tend to respond more positively and are actively motivated toward CSR imple-
mentation efforts of the organization (Valentine et al. 2018). Ethical responsibility is
all the more important in the healthcare sector because of the commitment required
toward patients.
Ethical behavior is particularly important in addressing the ethical dilemmas
that occur in the course of patient care, thus a right system or a set of supportive

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Impact of organizational culture and capabilities on employee…

measures can contribute to the process of making right decisions (Jie 2015). Val-
entine et al. (2018) proposed that a positive relationship between employee percep-
tions with ethical decision-making based on data and organizational commitment.
It implies that ethical climate is important because organizational structure and/or
capability is contributed to favorable employee attitudes and behaviors. Employees’
perceptions of organizational culture, ethics, structures and capabilities may affect
ethical conflicts in the organization because an ethical issue is usually not included
in organizational goals (Hollingworth and Valentine 2015). Thus, organizational
capabilities should include ethical issues and concerns to avoid such conflicts among
employees (Valentine et al. 2018).
Healthcare workers will be able to meet their ethical responsibilities effectively if
the hospital can provide its staff with ethical principles and an ethics code, based on
practical case scenarios and ethical theories, so that they can make moral and ethical
decisions. Organizational capabilities exert a positive influence on the organization
members’ ethical compliance. Thus, the following hypotheses are proposed.

H7 Education/training support as part of organizational capability has a positive

effect on employees’ ethical responsibility commitment.

H8 Response capability support as part of organizational capabilities has a positive

effect on employees’ ethical responsibility commitment.

Figure 1 presents the proposed research model with above-discussed hypotheses.

4 Research methodology

4.1 Data collection

Data were collected from care team members of participating hospitals by means
of visits and/or online contacts with more than 100 beds in South Korea. Hospitals

Organisational culture Organisational capability

Group Education/
culture H1 training
support

H2
H7
Hierarchical H3 Ethical
culture responsibility
commitment
H4
Response
H8
capability
H5
support
Ethical
culture H6

Fig. 1  Proposed research model

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participated in this survey on a voluntary basis. A survey questionnaire was devel-

oped using the double translation protocol (Harkness 2011) as most of the measure-
ment items were derived from previous studies. The questionnaire was developed in
English first and then translated into Korean by two bilingual operations manage-
ment faculty in Korea. The Korean version was translated back into English by two
bilingual American operations management experts. The two English versions of
the questionnaire had no significant difference.
The preliminary questionnaire was tested in a pilot survey involving ten man-
agers and/or medical staff in a Korean hospital. The reason for this pilot test was
as follows: For employees, to have an opportunity to review whether the question-
naire items were accurately and fully described to investigate our research questions.
After the pilot study, the number of measurement items for variables was reduced as
some items suggested by managers were difficult to measure precisely through the
questionnaire. The final questionnaire, shown in Table 1, provides the measurement
items for organizational culture and capabilities, and ethical responsibility com-
mitment. Ethical culture is a part of the organizational-level construct measured by
employees’ perception about the ethical environment provided by the hospital, while
ethical responsibility commitment is measured based on employees’ own behaviors
and activities in care service delivery.
Out of total 700 questionnaires distributed to care team members in Korean hos-
pitals with more than 100 beds, we received 236 (33.71%) responses. Incomplete
or questionnaires with missing items were removed from the sample. The final
sample consists of 228 (32.57%) valid returned questionnaires. The respondents’
demographics and their hospitals’ characteristics are summarized in Table 2. About
75.4% of respondents were in private hospitals and the rest (24.6%) were in public
hospitals. Of the respondents, 59.6% were female, with working experiences ranging
from less than 3 years (7.9%) to more than 20 years (20.2%) in the current hospital.
Occupations of the respondents were as follows: nurse—34.2%; technician—25.9%;
Administrator—21.5%; and physician—18.4%.
As shown in Table 2, most hospitals (89.5%) had a reporting center for unethi-
cal behaviors, while 9.6% hospitals did not, and 0.9% answered “don’t know.” The
percentage of respondents who reported no experience of unethical behavior was
96.1%.
The respondents were requested to rank the importance of the six items in the
following scale: ① the highest, ②, ③,…, ⑥ the lowest. The items rated were: practi-
cal culture for ethical behavior, role of top management (chief executive), willing-
ness to improve when unethical behavior occurs, regular ethical training, freedom
of reporting for unethical behavior with identity protection, and members’ voluntary
efforts to comply with ethical responsibility. The top three items rated in terms of
their importance in the first ranking were (see Table 3): practical culture for ethical
behavior (44.7%), the role of top management (29.8%), and willingness to improve
when unethical behavior occurs (14.5%). In second ranking, two items stood out as
important: members’ voluntary efforts to comply with ethical responsibility (37.3%)
and freedom of reporting and identity protection for unethical behavior (22.8%).
As shown in Table 2, the reporting center for unethical behaviors plays an impor-
tant role in encouraging medical staff to report and improve unethical practices.

13
 Table 1  Measurement items
Variables Measurement items References

Organizational culture
Group Awareness of the group as a family (GC1) Lee et al. (2011)
The development of human resources and teamwork (GC2)
Importance placed on mutual understanding, high trust, openness and respect (GC3)
Participative and comfortable atmosphere (GC4)
Atmosphere that allows talking freely about intimate and private problems (GC5)
Hierarchical Work according to bureaucratic procedures (HC1)
Preference for the attitude of complying and accepting (HC2)
Maintenance of the existing order and practices rather than exploring new methods
(HC3)
Difficulty in changing work procedures and rules (HC4)
Ethical Atmosphere for evaluating both achievements and processes (EC1) Ong et al. (2018)
Atmosphere for fair disciplinary actions against ethics code violations (EC2)
Fair and equitable decision-making (EC3)
Impact of organizational culture and capabilities on employee…

Atmosphere that allows discussions of corporate ethics and values (EC4)

Provision of case scenarios for dealing with ethical issues appropriately (EC5)

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 Table 1  (continued)
Variables
13
Organizational capability
Education/training support
Response capability support
Ethical responsibility commitment Willingness to observe and implement the norms and code of ethics (ER1)
Measurement items References
Degree of education/training offered necessary for job performance (ES1) Kumar and Motwani (1995), Lee (2001),
Schienstock (2009)
Degree of education/training received necessary for job performance (ES2)
Degree of education/training regularly received necessary for job performance (ES3)
Level of quality of education/training (ES4)
Level of budget for education/training (ES5)
Degree of overall satisfaction with education/training (ES6)
Rapidity of response in an accident situation (RS1)
Ability to swiftly address the demand of patients and care givers (RS2)
Ability to deliver services tailored to patients and care givers (RS3)
Efficient management of patient-oriented cooperation system with external coopera-
tion partners (RS4)
Ability to implement patient-oriented innovative hospital management extensively
(RS5)
Schwartz and Carroll (2003), Staples (2004)
Attaching importance to ethical attitude and behavior in healthcare delivery (ER2)
Willingness fair treatment of colleagues (ER3)
Willingness to adhere to transparent management principles (ER4)
Willingness for fair treatment and remuneration of employees (ER5)
Willingness for voluntary activities or social contribution (ER6)
D. Lee
Impact of organizational culture and capabilities on employee…

Table 2  Hospitals’ characteristics and respondents’ demographic data

Employees respondents’ characteristics Hospitals’ characteristics
Items Frequency (%) Items Frequency (%)

Gender Hospital type

Male 92 (40.4) Tertiary (3rd) 133 (58.3)
Female 136 (59.6) General (2nd) 95 (41.7)
Age Ownership
20s 13 (5.7) Private hospital 172 (75.4)
30s 99 (43.4) Public hospital 56 (24.6)
40s 66 (28.9) Location
50s 50 (21.9) Metropolitans 228 (100.0)
Position Number of beds
Physician 42 (18.4) ≥ 100 to < 300 25 (11.0)
Nurse 78 (34.2) ≥ 300 to < 500 42 (18.4)
Medical technician 59 (25.9) ≥ 500 to < 1000 124 (54.4)
Administrator 49 (21.5) ≥ 1000 37(16.2)
Experiences to report unethical behaviors Our hospital has a reporting center for
unethical behaviors
Yes 0 (0.0) Yes 204 (89.5)
No 219 (96.1) No 22 (9.6)
Missing 9 (3.9) Don’t know 2 (0.9)
Work experiences in this hospital (in years)
< 3 years 18 (7.9)
≥ 3 to < 5 17 (7.5)
≥ 5 to < 10 62 (27.2)
≥ 10 to < 15 37 (16.2)
≥ 15 to < 20 48 (21.1)
≥ 20 46 (20.2)

Table 3  Ranking of importance on ethical practices/behaviors for developing ethical organizational cul-
ture
Assessment items of ethical practices/behaviors for developing ethical Ranking
organizational culture
First place Second place
Frequency (%) Frequency (%)

Practical culture for ethical behavior 102 (44.7) 0 (0.0)

Role of top management (chief executive) 68 (29.8) 27 (11.8)
Willingness to improve when unethical behavior occurs 33 (14.5) 31 (13.6)
Regular ethical training 12 (5.3) 19 (8.3)
Freedom of reporting for unethical behavior with identity protection 9 (3.9) 52 (22.8)
Members’ voluntary efforts to comply with ethical responsibility 4(1.8) 85 (37.3)
Missing 00 (0.0) 14 (6.1)
Total 228 (100.02)

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 D. Lee

Typically, as shown in Table 2 (no experience of unethical behavior was 96.1%) and
Table 3, most unethical behaviors were not reported by medical staff, and practical
culture for ethical behavior appeared to be important. Thus, hospitals can provide a
variety of ways to report unethical behaviors, such as a system for freely reporting
incidents with protection for informers to continuous efforts to prohibit unethical
behavior in ethical organizational culture.

4.2 Variables

The questionnaire utilized 5-point Likert scales to measure the constructs. The data
were analyzed by SPSS 21.0 and the AMOS 21.0 programs for structural equation
modeling (SEM), which provides all of the tools necessary to test the hypotheses for
this study.
Reliability was tested based on Cronbach’s alpha value (Table 4). All of the coef-
ficients of reliability measures for the constructs exceeded the threshold value of 0.7
for exploratory constructs in basic research (Nunnally 1978). In the reliability test,
Cronbach’s alpha value for group culture was the highest (0.930) while hierarchical
culture was the lowest (0.749). All of the Cronbach’s alpha values were significant
at p < 0.05.
For the validity test, the principal component analysis (PCA) and the confirma-
tory factor analysis (CFA) were used to identify the most meaningful basis and to
examine similarities and differences of the data based on Brown’s (2006) recom-
mendation. Eigen values and percent of variance explained for each construct are
shown in Table 4. The cumulative percentages of explained variance were 70.744
for the constructs on statistics of PCA. The loading values of each factor ranged
from 0.501 to 0.853 as shown in Table 4. However, EC3 variable of ethical culture,
ES1 variable of education/training support and ER2 variable of ethical responsibil-
ity commitment had less than 0.5 loading values, and these were removed from the
study (see Table 1).
The results of CFA can provide evidence of the convergent and discriminant
validity of theoretical constructs (Brown 2006). This measurement model consisted
of six components of culture of group, hierarchy, and ethics, education/training sup-
port, response capability support, and ethical responsibility commitment. The stand-
ardized factor loadings and t values for measurement variables and results of CFAs
to test measurement models for each construct using the AMOS program are pre-
sented in Table 4. The values of standardized regression weight and all variables
proposed by the study were greater than 0.5 and statistically significant at the 0.05
level.
The results of goodness of fit test for the measurement model are summarized
and shown in Table 5. Compared to the recommended values for the goodness of fit
tests, the values of CFI, SRMR, RMSEA, χ2, and the p value were satisfactory, while
the value of GFI was not. Deepen (2006, p. 238) suggested that GFI is desired to be
over 0.9, however, “this must not automatically require the model to be rejected.” In
our model, the majority of fit indices showed good acceptance measures and only
GFI was below the required threshold.

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 Table 4  Results of PCA and CFA
Constructs Variables PCA CFA Cronbach’s alphas
Eigen value Percent of vari- Factor loadings Standardized t value p value
ance explained loading

Group culture GC1 10.177 36.347 0.782 0.839 14.913 0.000 0.930
GC2 0.853 0.901 16.716 0.000
GC3 0.820 0.881 16.052 0.000
GC4 0.769 0.841 14.985 0.000
GC5 0.768 0.812 – –
Hierarchical culture HC1 1.122 4.006 0.585 0.631 4.944 0.000 0.749
HC2 0.708 0.596 6.880 0.000
HC3 0.803 0.874 8.094 0.000
HC4 0.795 0.756 – –
Ethical culture EC1 1.435 5.123 0.690 0.599 9.611 0.000 0.804
EC2 0.739 0.535 6.520 0.000
Impact of organizational culture and capabilities on employee…

EC4 0.586 0.889 15.656 0.000

EC5 0.601 0.844 – –
Education/training support ES2 1.634 5.536 0.616 0.820 9.784 0.000 0.854
ES3 0.649 0.863 10.082 0.000
ES4 0.636 0.763 9.311 0.000
ES5 0.774 0.507 9.202 0.000
ES6 0.767 0.628 – –
Response capability support RS1 2.161 7.719 0.793 0.743 7.723 0.000 0.882
RS2 0.821 0.745 7.732 0.000
RS3 0.811 0.895 8.403 0.000
RS4 0.813 0.882 8.375 0.000
RS5 0.686 0.526 – –

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 Table 4  (continued)
Constructs Variables PCA CFA Cronbach’s alphas
Eigen value Percent of vari- Factor loadings Standardized t value p value

13
ance explained loading

Ethical responsibility commitment ER1 3.364 12.013 0.501 0.883 9.966 0.000 0.899
ER3 0.747 0.849 13.505 0.000
ER4 0.737 0.875 13.969 0.000
ER5 0.795 0.848 13.483 0.000
ER6 0.696 0.764 – –
D. Lee
Impact of organizational culture and capabilities on employee…

Table 5  Results of fit indices for CFA

Model χ2 df χ2/df GFI CFI SRMR RMSEA

Measurement model 542.238 327 1.658 0.858 0.947 0.073 0.054

Recommended values ≤ 3.0 ≥ 0.9 ≥ 0.9 ≤ 0.08 ≤ 0.08

GFI goodness of fit index, CFI comparative fit index, SRMR standardized root mean square residual,
RMSEA root mean square error of approximation

Table 6 provides the square roots of average variance extracted (AVE) of latent
variables, while the off-diagonal elements are correlations between latent variables.
For adequate discriminant validity, the square root of AVE of any latent variable
should be greater than the correlation between this particular latent variable and
other latent variables (Barclay et al. 1995). As the convergent validity of the meas-
urement model is to be assessed by AVE and CR, Fornell and Larcker (1981) rec-
ommended that AVE, which measures the level of variance captured by a construct
versus the level due to measurement error, be above 0.7 to be considered very good
and the level of 0.5 is acceptable. CR is considered to be a less biased estimate of
reliability than Cronbach’s alpha, and the acceptable value of CR is 0.7 and above.
Statistics shown in Table 6 satisfied this requirement, leading to discriminant
validity. The values of AVE and CR for culture of group, hierarchy, and ethics; edu-
cation/training support, response capability support, and ethical responsibility com-
mitment were all greater than 0.6 and 0.8, respectively. Thus, convergent validity
met the threshold. The statistics shown in Table 6 satisfied this requirement, lending
evidence to construct validity.

5 Results and discussion

As a result of the goodness of fit test for hypotheses testing, compared to the recom-
mended values, our model had the values of CFI (0.960), RMSEA (0.047), SRMR
(0.073) that were good for fit and χ2/df (1.504) was significant. However, the value
of GFI (0.872) did not satisfy the recommended value (0.9).
Table 7 presents the result of the significance test for the research model as well
as the summary of the hypotheses test. For H1, H2, and H3, the standardized path
coefficients between education/training support and group culture, hierarchical cul-
ture, and ethical culture were 0.463, 0.130, and 0.221, respectively, and statistically
significant at the 0.05 level. Thus, H1, H2 and H3 were supported. The results of
this study imply that organizational culture influences the education/training sup-
port, which supports employees to improve customer satisfaction through process
of service delivery and to gaining and sustaining competitive advantage through the
knowledge and skills (Lee et al. 2012).
For H4 and H6, the standardized path coefficient between group culture and
response capability support was 0.197, and between ethical culture and response
capability support was 0.554 and both were statistically significant at the 0.01
level, supporting H4 and H6. For H5, the standardized path coefficient between

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Table 6  Correlation matrix and average variance extracted (AVE)
Factor Group culture Hierarchical culture Ethical culture Education/train- Response capabil- Ethical responsi-
ing support ity support bility commitment

Group culture 0.900

Hierarchical culture 0.188* 0.796
Ethical culture 0.661*** 0.216** 0.827
Education/training support 0.635*** 0.259** 0.582*** 0.785
Response capability support 0.611*** 0.129** 0.345** 0.385** 0.827
Ethical responsibility commitment 0.203** 0.229** 0.614*** 0.523*** 0.510*** 0.856
CR 0.955 0.871 0.892 0.886 0.913 0.932
AVE 0.810 0.634 0.684 0.616 0.684 0.732

CR (critical ratio) = ∑ (factor ­loading2)/(∑ (factor ­loading2) + ∑ (error)

AVE = ∑ (factor loading)2/(∑ (factor loading)2 + ∑ (error)
Bold value is the square root of AVE
**p < 0.05, ***p < 0.001
D. Lee
 Table 7  Results of significance test for paths of the model
Path Path coefficient SE t value p value Hypothesis test

Group culture → education/training support 0.463 0.089 5.115 0.000*** Supported H1

Hierarchical culture → education/training support 0.130 0.064 2.018 0.044* Supported H2
Ethical culture → education/training support 0.221 0.095 2.467 0.014* Supported H3
Group culture → response capability support 0.197 0.063 3.217 0.001** Supported H4
Hierarchical culture → response capability support 0.059 0.045 1.372 0.170 Not supported H5
Ethical culture → response capability support 0.554 0.085 7.194 0.000*** Supported H6
Impact of organizational culture and capabilities on employee…

Education/training support → ethical responsibility commit- 0.036 0.074 0.478 0.632 Not supported H7
ment
Response capability support → ethical responsibility com- 0.521 0.077 6.313 0.000*** Supported H8
mitment

*p < 0.05, **p < 0.01, ***p < 0.001

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 D. Lee

hierarchical culture and response capability support was 0.059 and not significant,
thus not supporting H5. Organizational culture can improve work conditions to
encourage the staff members to quickly report adverse events and improve care qual-
ity through organizational capability (Lee et al. 2012).
Employee who have a positive perception about response support of organi-
zational capability are critical success factors because hospitals operate based on
integrated activities by licensed professionals (Yoon et al. 2007). Group culture is
based on the norms and values pertaining to building trust and respect with each
other among members, ethical culture is a result of common ethical values of the
organization, while hierarchical culture emphasizes stability by organizational role
(Bradley et al. 2005; Stock et al. 2007). Thus, it seems that hierarchical culture can-
not drive quick response because the decision-making process for responding to cus-
tomer requirements or solving problems takes several procedures in the hierarchy.
For H7 and H8, the standardized path coefficient between education/training sup-
port and ethical responsibility commitment was 0.036 and statistically not signifi-
cant, and between response capability support and ethical responsibility commit-
ment was 0.521 and statistically significant at the 0.001 level. Thus, H7 was not
supported, while H8 was.
Employees who have a high level of responsibility for their work are likely to
make fewer errors (Lee et al. 2012; Ong et al. 2018; Valentine et al. 2018). Employ-
ees willing to help others are more motivated in response capability support based
on actual experiences, rather than in education/training support by indirect expe-
rience to perform ethical responsibility commitment. Therefore, hospitals should
provide real activities or implications through organizational capabilities, such as
developing unique and creative procedures, to motivate and contribute to the ethical
responsibility.

6 Conclusions

This study explored the impact of organizational culture and organizational capabili-
ties on ethical commitment in hospitals. The results of the study offer new insights
about how hospitals should operate for ethical responsibility through organizational
capabilities in care services, which would help enhance organizational competitive-
ness in today’s environment of highly emphasized ethical responsibility.
The study results confirmed positive effects of group culture (H1), hierarchical
culture (H2), and ethical culture (H3) on education/training support in hospitals.
The study also found positive relationships between response capability support
and group culture (H4), ethical culture (H6), and ethical responsibility commitment
(H8). However, no positive relationships were found between hierarchical culture
and response capability support (H5), as well as between education/training support
and ethical responsibility commitment (H7).
The results of this study imply that a well-functioning organizational culture
would encourage participation of hospital employees in quality care performance
through collaboration and ethical behaviors. What an organization actually does with
their employees’ attitudes and behaviors affects their customers, the community, and

13
Impact of organizational culture and capabilities on employee…

society (Watkins 2013; Valentine et al. 2018), thus, an effective work environment
enforced by organizational capabilities is essential for accomplishing organizational
goals by the members (Morgan 2006). Since healthcare providers are transforma-
tive organizations dealing with disease treatment, any intentional unethical prac-
tices constitute unpardonable criminal acts (Worthington 2004; GMC 2008; Wat-
kins 2013; Nelson et al. 2014). Therefore, it is important to pursue the mission of
healthcare institutions through organizational capabilities. The results of this study
revealed the current practices of hospitals in motivating their employees for ethi-
cal practices/behaviors during their care service delivery. Although some hospitals
implement or try various ethical practices/behaviors in care services, while main-
taining human dignity, what is important is to establish an overarching organiza-
tional culture that encourages their employees to voluntarily comply with ethical
responsibility. In other words, to fulfill ethical commitment, organizational capa-
bility and support efforts are required to enable hospital staff to learn and practice
through actual experiences rather than simply providing theoretical training.
These results suggest feasible approaches that can motivate hospital staff for ethi-
cal performance through organizational capability. To engage employees in ethical
commitment, they should be able to first perceive the hospital’s full support and
commitment to high-quality ethical patient care. In addition, hospitals that are plan-
ning to build ethical culture should focus on socially accepted ethical values. From
the results of the study, it is evident that organizational culture plays a key role in
achieving the mission of the healthcare provider, which in turn affects employees’
attitudes and behaviors in the care delivery process. Therefore, a successful hospital
with social mission should focus on social value as the core resource for all employ-
ees in their efforts to provide well-being of the community.
This research makes both theoretical and practical contributions based on the
implications of the study results. Theoretically, this study provides a new direc-
tion of ethical management in healthcare providers through organizational culture,
organizational capabilities, and ethical responsibility. For practical contribution, the
results of this empirical study provide insights to hospital administrators about the
importance of their leadership roles in developing effective organizational culture,
capabilities, and support of employees for ethical responsibility commitment. This
study contributes to the literature by empirically testing the effects of organizational
culture and organizational capabilities on ethical responsibility in hospitals. Ethi-
cal commitment helps hospitals effectively manage challenges, including innovation
with advanced digital technologies (Wallace 2014; Lee and Lim 2018). With the
various applications of digital devices, hospitals can drive productivity, efficiency,
and for the greater good (Lee and Lim 2018). Ethical concerns also emerge where
using advanced digital technologies like artificial intelligence (AI) supported opera-
tions. Therefore, ethical responsibility should be fulfilled by recognizing that eth-
ics is an intangible asset that can enhance a hospital’s competitiveness. In addition,
the establishment of consistent national ethics standards across the entire spectrum
of healthcare services is essential for providing broad innovative care services.
The advanced digital devices should help implement ethical practices concerning
authorization for specific types of technology-enabled treatments (Beaulieu and
Lehoux 2018; Hong and Lee 2018), and who should decide and when to withhold or

13
 D. Lee

withdraw treatments. Healthcare professionals, institutions, and policymakers must

ensure that high ethical standards are clearly established and practiced in all interac-
tions with patients and their family members.
There are several limitations of this study. First, this study did not distinguish the
type of care team members (e.g., doctors, nurses, and technicians) and type of hos-
pitals (e.g., private and public), although they have the same obligation to keep ethi-
cal commitment in patients care service. Also, the response rate (32%) reported for
data collection was relatively low, although not unusual for busy healthcare work-
ers as the sample target. Second, the data used in this study were collected only
from hospitals with more than 100 beds in South Korea. Third, the study did not
consider whether or not selected hospitals actually practice ethical commitment in
care and treatment services. Thus, the generalizability of this study’s results may be
somewhat limited. Future research should consider the limitations discussed above,
including the need for cross-cultural analysis and longitudinal study of organiza-
tional capabilities on ethical commitment, the size of hospitals, and the like. Each
country has its own unique culture, government regulations, and healthcare stand-
ards (He et al. 2011). Thus, cross-cultural studies may render valuable new insights.

Acknowledgements This work was supported by INHA UNIVERSITY Research Grant (INHA-61494).

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