a conceptual model of corporate moral development

7/26/2019 A Conceptual Model of Corporate Moral Development

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Conceptual Model of Corporate

Moral Development

R Eric Reidenbach

Donald P Robin

ABSTRACT: The conceptual model presented in this article

argues that corporations exhibit specific behaviors that signal

their true lev el of m oral development. Accordingly, the

authors identify five levels of moral development and discuss

the dynam ics that move corporations from one level to

another. Examples of corporate behav ior which are indica-

tive of specific stages of moral development are offered.

The recent and continuing revelations concerning

the ethical wrongdoing of corporate America have

occasioned a studied examination of the dynamics of

ethical decision making in business. Several note-

worthy effors, particularly those by Trevino (1986)

and Ferrell and Gresham (1985), have attempted to

model the ethical decision making process in organi-

zations.

The Trevino model relies heavily on the idea that

an integral part of the ethical decision making

process involves the individual s stage of moral

development interacting with, among other factors,

the organization s culture. It is this complex admix -

ture of individual moral developme nt and corporate

culture which leads to the proposition that, just as

individuals can be classified into a stage of moral

development, so too can organizations. In other

words, corporations can be classified according to

R. Eric Reidenbach is Professor of Marketing and Director of the

Center or Business Development and Research at the University

of Southern Mississippi. He has written extensive ly on business

and marketing ethics.

Donald P. Robin Professor of Business Ethics and Professor of

Marketing at the Universi ty of Southern Mississippi is coauthor

with R. Eric Reidenbach of two recent books on business ethics

with Prentice-Hall. He is a frequent lecturer on business ethics

and is the author o f severaI articleson the subject.

their particular stage of moral development. Such a

typology is useful for better understanding the

dynamics that c ontribute to ethical decision making.

T h e role of corpor te culture in mor l

deve lopment

The moral development of a corporation is deter-

mined by the organizafon s culture and, in recipro-

cal fashion, helps define that culture. In essence, it is

the organization s culture that undergoes moral

development.

Among the array of definit ions of corporate

culture are those that focus on the shared values and

beliefs of organ izational me mbe rs (e.g., Sathe, 1985;

Deal and Kenn edy, 1982), specifically, beliefs about

what works within an organization, and values about

preferred end states a nd the instru menta l approaches

used to reach them. Among the constellation of

beliefs and values that comprise an organization s

culture are those that speak to its beliefs and values

about what is right and what is wrong. This is the

focus o f this article.

The principal sources for cultural beliefs and

values are from (1) individual organizational mem-

bers, especially top ma na ge me nt (e.g., Schein, 1983;

Wiener, 1988), and (2) the reinforcing effect of the

organization s success in prob lem solving and

achiev ing objectives (e.g., Schwa rtz an d Davis, 1981;

Sathe, 1985 ). Cen tral to this latter s ource is the

organization s selection of a mission from which the

more specific objectives and reward systems flow.

One mission of profit-making organizations is

economic. Howe ver, society, with increasing concern

and concomitant pressures, is also demanding that

they achieve certain social goals. The moral develop-

ment of a corporation can be classified according to

.Journal ofBusiness Ethics

1O: 273--284, 1991.

1991 KluwerAcademic Publishers. Printed in the Netherlands.


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R. E. Reidenbach and D. P. Robin

the degree to which this required social mission is

recognized and blended with the econom ic mission.

Several studies and articles have focused on the

importance of the organization's culture in deter-

mining the morality of corporate actvities (Robin

and Residenbach, 1987; Trevino, 1986; Hoffman,

1986). Of particular relevance is the work of Victor

and Cullen (1988) whi ch measures wor k climate.

W or k climates are define d as perceptions th at are

psychologically meaningful molar descriptions that

people can agree characterize a system's practice and

procedures (Schneider, 1975). Th e ethical climate

questionnaire is designed to measure the ethical

dim ension s of organizational culture. Thes e items,

developed within the limited research context of

four firms, measure five ethical climate dimensions

characterized as caring, law and order, rules, ins tru -

mental, and independence.

The recognition that culture is an important

determ inant in ethical decision making has accept-

ance outside academic manag eme nt circles. W he n

asked about Drexel Burnham Lambert's recent

guilty plea and the reasons behind it, Edward

Markey, U . S. Representative (D. Mass.) repli ed tha t

there was a solid foundation of criminal activity

behind their success. And wh en asked if this crim in-

ality was pervasive in the financial industry during

this time, Mark ey responded, there was definitely a

culture that tolerated it Wall StreetJournal (1988) p.

B1).

A n o v e r v i e w o f t h e m o d e l

The mo del of organizational moral de velopm ent is a

conceptual model built by the study of a large

nu mb er o f cases of organizations and t heir actions in

response to a diverse number of situations. The

classificatory variables include ma nag em ent philoso-

phy and attitudes, the evidence of ethical values

manifested in their cultures, and the existence and

proliferation o f organizational cultural ethics and

artifacts (i.e., codes, o mb udsm en, reward systems). By

observing the organization's actions, the researcher

can deduce differences in the m oral develo pm ent of

organizations am ong t he sample of cases. These

differences fo rm the hierarchical stages in t he mode l.

Evidence involving specific cases supporting the

classification schema is provided.

Five stages comprise the mod el. Each stage is

given a label based upon the types of behavior or

organizations that are classified within that stage.

This prod uced the follow ing classificatory schemata:

the amoral organization; the legalistic organization;

the responsive organization; the emergent ethical

organization; and the ethical organization. The

mo del is depicted in Figure 1.

Fig. 1. A model of corporate moral development.

The model is inspired by the work on individual

moral developm ent by K ohlberg (1964, 1976). Ho w-

ever, direct application of Kohlberg's work is not

possible. Organizations simply do no t develo p in the

same man ner and under the same circumstances as

individuals. As was mentioned earlier, individua:l

moral deve lopm ent does contribute to the mo nll

developm ent of an organization but is not deter-

minant.

There are several propositions which make the

mo del operational:

Proposition 1:

Not all organizations pass through all

stages of m oral development. Just as not all ind i-

viduals reach level six of Kohlberg's mo del, not all

corporations are destined to be ethical organizations.

The ultimate moral dev elopm ent destination of a

corporatio n is a function o f several factors inc luding

top management, the founders of the organization

and their values, environmental factors (threats and

opportunities), the organization's history and mis-

sion, and its industry, to name a few (Robin and

Reidenbach, 1987).


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C o r p o r a t e M o r a l D e v e l o p m e n t M o d e l

2 7 5

Propos i t ion 2: A n o r g a n i z a t i o n c a n b e g i n i t s l i f e i n

a n y s t a ge o f m o r a l d e v e l o p m e n t . A g a i n , t h e d e t e r -

m i n i n g f a c t o r s a r e s i m i l a r t o t h o s e m e n t i o n e d i n

p r o p o s i t i o n 1 . T h e k e y t o t h e b e g i n n i n g p o i n t i s a n

o v e rt m a n a g e m e n t d e c i si o n c o n d it i o n e d b y a n u m -

b e r o f s i t u a t e d f a c t o r s .

Propos i t ion 3:

M o s t o r g a n i z a t i o n s i n s t a g e o n e d o n o t

l e a v e st a g e o n e . A m o r a l o r g a n i z a t io n s , b y t h e i r v e r y

n a t u r e a n d o p o r t u n i s t ic p h i l o s o p h y p r o d u c e a c u l -

t u r e t h a t c a n n o t a d a p t t o t h e v a l u e s a n d r u l e s o f

s o c ie t y. T h u s a m o r a l o r g a n i z a t i o n s a r e e i t h e r f o r c e d

t o c e a s e o p e r a t i o n s o r , r e l a t i v e l y q u i c k l y r u n t h e i r

l i f e c y c l e s . T h e s e o r g a n i z a t i o n s t h a t d o e v o l v e p a s t

s t a g e o n e d o s o a t t h e c o s t o f s i g n i f i c a n t s t r u c t u r a l

a n d c u l t u r a l c h a n g e .

P r o p o s i t i o n 4 : A n

o r g a n i z a ti o n c o m p r i s e d o f m u l t i p l e

d e p a r t m e n t s , d i v i s io n s , o r S B U s c a n o c c u p y d i f f e r e n t

s ta g es o f m o r a l d e v e l o p m e n t a t t h e s a m e t i m e . T h a t

i s , o n e o p e r a t i n g a r e a o f t h e o r g a n i z a t i o n c o u l d b e

c l a s s i f i e d i n s t a g e o n e w h i l e o t h e r a r e a s c o u l d b e

l o c a t e d i n s t a g e t h r e e . T h i s m u l t i p l e c l a s s i f i c a t i o n i s

b a s e d o n s u b c u l t u r a l d i f f e r e n c e s w i t h i n t h e o r g a n i -

z a t i o n . E a c h s u b c u l t u r e w i l l h a v e e m b r a c e d , t o

g r e a t e r o r l e s s e r e x t e n t s , t h e f o r m a l c u l t u r e . I n t h o s e

c as es w h e r e t h e f o r m a l c u l t u r e d o m i n a t e s a l l o p e r a t -

i n g a r e a s , a m u l t i p l e c l a s s i f i c a t i o n i s u n l i k e l y . H o w -

e v e r , w h e n t h e i n d i v i d u a l s u b c u l t u r e s d o m i n a t e a n

o r g a n i z a t i o n , m u l t i p l e c l a s s i fi c a t io n s a r e p o s s i b le .

Propos i t ion 5:

C o r p o r a t e m o r a l d e v e l o p m e n t do e s n o t

h a v e t o b e a c o n t i n u o u s p r o c e ss . I n d i v i d u a l c o r p o r a -

t i o n s c a n s k i p s t a g e s . N e w m a n a g e m e n t o r m e r g e r s

a n d a c q u i s i t i o n s c a n i m p o s e n e w c u l t u r e s o n a n

o r g a n i z a t i o n . T h e s e n e w c u l t u r e s m a y b e r a d i c a l l y

d i f f e r e n t f r o m t h e p r e v i o u s c u l t u r e w i t h r e s p e c t t o

t h e i r e t h i c a l c o n t e n t i m p e l l i n g a n o r g a n i z a t i o n t o a

h i g h e r s t ag e o f m o r a l d e v e l o p m e n t .

Propos i t ion 6:

O r g a n i z a t i o n s a t o n e s t a g e o f m o r a l

d e v e l o p m e n t c a n r e g r e ss t o l o w e r s ta ge s. R e g r e s s i o n

t y p i c a l l y o c c u r s b e c a u s e t h e c o n c e r n f o r e c o n o m i c

v a l u e s i s n o t a d e q u a t e l y c o u n t e r b a l a n c e d b y t h e

c o n c e r n f o r m o r a l v a l u e s. I n t i m e s o f o r g a n i z a t i o n a l

s tr es s th e p u r s u i t o f e c o n o m i c v a l ue s m a y w i n o u t

r e g a rd l e ss o f t h e m o r a l i t y o f t h o s e v a lu e s . In a d d i -

t i o n , n e w m a n a g e m e n t o r m e r g e r s a n d a c q u i s i t i o n s

c a n a l s o p r o v i d e a n i m p e t u s f o r r e g r e s si o n .

Propos i t ion

7 : T h e r e i s n o t i m e d i m e n s i o n a s s o c i a t e d

t o t h e m o r a l d e v e l o p m e n t o f a n o r g a n iz a t io n . S o m e

o r g a n i z a t i o n s w i l l s t a y i n a p a r t i c u l a r s t a g e l o n g e r

t h a n o t h e rs . A g a i n , th e l e n g t h o f s t a y i n a p a r t i c u l a r

s t a g e w i l l b e a f u n c t i o n o f t h o s e f a c t o r s c i t e d i n

p r o p o s i t i o n 1 .

Propos i t ion 8: T w o o r g a n i z a t i o n s c a n b e i n t h e s a m e

s t ag e b u t o n e m a y b e m o r e a d v a fi c ed . T h u s , i t is

p o s s i b l e t h a t a c o r p o r a t i o n w h i c h i s c l a s s i f i e d a s a

l e g al is t ic c o r p o r a t i o n m a y a ls o m a n i f e s t c e r t a in c h a r -

a c t e r i s t i c s o f a r e s p o n s i v e c o r p o r a t i o n . T h i s i s a

f u n c t i o n o f t h e d y n a m i c s o f m o r a l d e v e l o p m e n t .

T h e s t a g e s

o f o r g n i z t i o n l m o r l

d e v e l o p m e n t

Stage one the amo ral organiza t ion

T h e A m o r a l O r g a n i z a t i o n h a s a c u l t u r e t h a t i s

e a r m a r k e d b y a w i n n i n g a t a n y c o s t a t t it u d e .

T y p i c a l o f o r g a n i z a t io n s i n t h i s st a g e o f m o r a l

d e v e l o p m e n t i s a c u l t u r e t h a t i s u n m a n a g e d w i t h

r e s p e c t t o e t h i c a l c o n c e r n s . P r o d u c t i v i t y a n d p r o f i t -

a b i l it y ar e t h e d o m i n a n t v a lu e s f o u n d i n t h e c u l t u r e .

C o n c e r n f o r e t h i c s , i f i t e x i st s a t a ll , i s u s u a l l y o n a n

a f t e r - t h e - f a c t b a s i s w h e n t h e o r g a n i z a t i o n h a s b e e n

c a u g h t i n s o m e w r o n g d o i n g . A t t h i s p o i n t t h e c o n -

c e r n f o r e t h i c s , i f a t al l e v i d e n c e d , b e c o m e s m o r e o f a

c y n i c a l j u s t i f i c a t i o n o r a p o s t h o c r a t i o n a l iz a t i o n o f

b e h a v i o r s t r i c t l y f o r d a m a g e c o n t r o l p u r p o s e s . C o m -

m o n t o m o s t m a n a g e m e n t p h i lo s o p h i e s is t h a t b e i n g

c a u g h t i n a n u n e t h i c a l s i t u a t i o n i s c o n s i d e r e d a s a

c o s t o f d o i n g b u s i n e s s . T h i s c u l t u r e i s s h a p e d b y a

s t r o n g b e l i e f i n A d a m S m i t h ' s in v i s i b le h a n d a n d t h e

n o t i o n t h a t t h e o n l y s o c i a l re s p o n s i b i l it y o f b u s i n e ss

i s t o m a k e a p r o f i t . U n l i k e F r i e d m a n ' s o r i g i n a l

c o n t e n t i o n , t h a t r e s p o n s i b i li t y is s e l d o m c o n d i t i o n e d

b y t h e c a v e a t o f a n e e d f o r l a w a n d e t h ic .

T o p m a n a g e m e n t r u l e s b y p o w e r a n d a u t h o r i t y

a n d e m p l o y e e s r e s p o n d b y a c q u i e s c i n g t o t h a t

a u t h o r i t y a n d p o w e r t h r o u g h a re w a r d s y s t e m w h i c h

s u p p o r t s a g o a l o n g t y p e o f b e h a v i o r . O b e d i e n c e

i s v a l u e d a n d r e w a r d e d . D i s o b e d i e n c e , o n a m o r a l

b a s i s , i s p u n i s h a b l e t y p i c a l l y b y e x p u l s i o n f r o m t h e

o r g a n i z a t i o n . T h e r e i s l i t t l e c o n c e r n f o r t h e e m -

p l o y e e s o t h e r t h a n f o r t h e i r v a l u e a s a n e c o n o m i c

u n i t o f p r o d u c t i o n .

T h e e t h i c a l c u l t u r e o f a s t ag e o n e o r g a n i z a t i o n

c a n b e s u m m e d u p i n t h e i d e a s t h a t t h e y 'l l n e v e r


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R. E. Reidenbach and D. P. Robin

know, everybody does it, we won 't get caught,

and there's no way anyon e will ever find out. Rules

can be broken if there is an advantage in breaking

them. I f we are n ot caught, the n wh o is to say it 's

unethical?

At the basis of this culture is the philosophical

position th at business is not subject to the same rules

that individuals are and that owners are the most

imp orta nt stakeholders. In essence, belief in a value-

less business env iron men t produc es a valueless busi-

ness.

FR S A Portrait of the Amo ral Corporation ~

Film

Recovery Systems, previously located in Elk Grove

Village, Illinois, exhibited ma ny of the characteristics

of an amoral organization. The co mpany was organ-

ized to extract silver from old x-ray film which

utilized a chemical process involving cyanide. Be-

cause of the potentially acu te toxicity of the process,

the safety of the workers should have been a princi-

pal concern.

On February 10, 1983, Stefan Golab, a worker at

FRS became weak and nauseated. He was working

near a foaming vat of hydrogen cyanide. Fellow

employees helped him outside and urged him to

breathe deeply in the cold fresh air. At that point,

Mr. Golab became unconscious and did not respond

to efforts to revive him. He was rushed to a nearby

hospital where he was declared dead on arrival.

Cause of death - cyanide toxicity.

The investigation of this case reveals a company

that is typical of stage 1 organizations. Inspectors

f rom the Cook County Depar tme nt of Environ-

mental Control had previously cited the plant for 17

violations that we re labeled as gross violations and

were ordered to be rectified immediately. Typical of

these violations was a lack of a cyanide antidote,

legible warning signs, a respirator, and other safety

equipm ent that was judg ed to be mandatory for a

compa ny engaged in this type of work. The plant

itself, wh ich was described as a drab, one-story

structure contained 140 vats of foaming hydrogen

cyanide among which the workers performed the

extraction process. Testimony of many of the work -

ers indicated that nausea, nose bleeds, and rashes

were commonplace. That same testimony revealed

that employees were ordered to remove the skull

and cross bones signs from the containers of cyanide

and th at the owners o f FRS had flatly refused to buy

what was described as routine safety equipment. In

addition, many of the employees who worked

around the vats were illegal immigrants from

Mexico and Poland (as was the case of Mr. Golab)

and did not speak English well. This hiring practice

was adopted, according to the testimony of a book-

keeper, because illegal aliens would be less apt to

complain.

The response of FRS to the investigation involved

laying off workers and closing dow n the plant in

mid-1983. The investigation, and ultimate criminal

prosecution of three FRS executives centered around

the question Can two legitimate corporations form

a third (FRS), set it up to engage in a recHess and

dangerous activity, ignore legal requirem ents - and

get off scot-free? Prosecutors referred to the FRS

case as novel bu t qualified it by saying It's an old

story of poor, uneducated people being exploited by

people who were more educated, more privileged,

and m ore wealthy.

This is a company whose formal culture valued

productivity and profits. Costs, especially those that

wer e morally justifiable in caring for employees,

were not incurred. To do so would have reduced the

profitabili ty of the company. Mana gement operated

on the basis that we wo n't get caught and it's ok

to break rules as long as we profit from it. Thei r

regard for individuals is readily apparent in their

hir ing practices and their treatment of their employ-

ees. Internally, employees were to obey rules which

emphasized productivity and failure to do so meant

dismissal and even perhaps prosecution as an illegal

alien.

Stag e two the legalistic corporation

Stage 2 is the legalistic corporatio n so named because

of the preoccupation the corporation exhibits for

compliance with the

letter

of the law as opposed to

the

spirit

of the law. Organizations in this stage

exhibit a higher level of moral development than

organizations in stage 1 because stage 2 cultures

dictate obedience to laws, codes, and regulations, a

value missing in the cultures of stage 1 organizations.

Corporate values flow from the rules of the state,

and that is why management is principally con-

cerned with adhering to the legality of an action

rather th an the m orality of the action. If it 's legal,


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277

i t' s o k an d i f w e ' r e n o t s u re , h av e t h e l aw y e r s ch eck i t

o u t t y p i fi e s t h e o p e r a t i n g d i c t u m o f s t ag e 2 o r g an i z -

a t ions . M ore tha n jus t a des i r e to o bey socie ty ' s l aws

- t h ey t ak e an

internal

l aw l i k e ap p r o ach t h em s e l v es .

T h e co r p o r a t e l eg a l s t a ff o p e r a t e s a s a ch eck

ag a i n s t w r o n g d o i n g a s in t e r p r e t ed b y l eg a l st at ut e. I n

t h i s cu l tu r e , l aw eq u a t e s w i t h ju s t i c e a n d t h e r e i s n o

d i f f e r en ce b e t w een w h a t i s l eg a l an d w h a t i s r i g h t

an d ju s t . T h e e t h i c s o f an ac t i o n , i f co n s i d e r ed a t a ll ,

i s g en e r a l ly co n s i d e r ed o n a p o s t h o c b asi s.

C o d es o f C o n d u c t r e f l ec t t h i s l eg a l i s t i c t h i n k i n g .

A 1 9 89 a r t i c le o n co d es o f e t h ic s c l u s t e r ed co d es in t o

t h r ee ca t eg o r i e s ( R o b i n et al . , 1 9 8 9 ) . T h e l a r g est

c l u s t e r w as o n e ch a r ac t e r ized b y a D o n ' t d o an y -

t h i n g u n l a w f u l o r i m p r o p e r t h a t w i l l h a r m t h e

o r g an i za t i o n , s u g g es t i n g t h e p e r v as i v en es s o f t h i s

e t h o s . C re s s y an d M o o r e ( 19 8 3) f u r t h e r s u g g es t t h a t

m o s t co d es g i v e t h e ap p ea r an ce o f b e i n g l eg a l i s t i c

d o cu m en t s . I t i s p e r h ap s n o t s u r p r i s i n g t h a t t w o o f

t h e l a r g est t o b acco co m p an i e s , R . J . R ey n o l d s an d

Ph i l i p M o r ri s , h av e l eg a li s ti c co d es o f co n d u c t . T h es e

co d es a r e v e r y co n ce r n ed w i t h , an d l i m i t ed t o ,

u n l aw f u l o r i m p r o p e r b eh av i o r .

T h e p r i n c i p a l em p h as i s is s t il l o n p r o f i t ab i li t y b u t

t h e d i f f e r en ce b e t w een s t ag e 2 an d s t ag e 1 o r g an i za -

t i o n s is t h a t t h e l a t t e r is co n ce r n ed w i t h t h e l eg a l i ty

o f t h e p r o f i t s , n o t n eces s a r i l y t h e m o r a l i t y o f t h em .

O w n er s a r e s t i ll t h e p r i n c i p a l s t ak eh o l d e rs .

C o n t r a r y t o t h e w i n - a t - a l l - co s t a t t i t u d e u n d e r -

ly ing o rgan iza t ional behav io r in s tage 1 , s tage 2

o r g an i za t io n s ad h e r e t o a n o t i o n o f r ec i p ro c i t y . T h a t

i s , c o m p l i a n c e w i t h t h e l a w w i l l p r o d u c e g o o d

resu l t s . By ex tens ion then , s tage 2 o rgan iza t ions ar e

fo l lower s and no t soc ia l l eader s . Socie ty can expect ,

f o r t h e m o s t p a r t , o r g an i za t i o n s t h a t ad h e r e t o t h e

l aw b u t d o l i t t l e a s f a r a s o p e r a t i n g i n t h e i r o w n

en l i g h t en ed s e l f in t e r e s t i s co n ce r n ed .

Ford m otor o f 1973 - a por tra i t o f the legal i st ic corporat ion 2

W h i l e t h e n o t o r i o u s P i n t o ca s e h a s b een d i s s ec t ed

f r o m n u m er o u s v an t ag e p o i n t s , fa r le s s a t t en t i o n h as

b e e n f o c u s e d o n t h e d e f e n s e th a t F o r d M o t o r u s e d i n

i ts b eh a l f d u r i n g t h e E l k h a r t , I n d i an a t r ia l i n 1 9 8 0 . I n

i ts d e f en s e can b e s een m a n y o f t h e ch a r ac t e ri s ti c s o f

an o r g an i za t i o n i n s t ag e 2 o f i ts m o r a l d ev e l o p m e n t .

I t i s i m p o r t a n t t o p o i n t o u t t h a t t h e F o r d M o t o r

C o m p a n y o f 1 9 73 a n d n o t t h e F o rd M o t o r C o m p a n y

of 1988 , i s c i ted as an exam ple .

T h e t r i a l f o cu s ed o n Fo r d ' s cu l p ab i l i t y i n t h e

d e a t h o f t h r e e t e e n a g e rs w h o w e r e s t r u c k f r o m

b eh i n d i n t h e i r 1 9 7 3 P i n t o . T h e g as t an k o f t h e P i n t o

e r u p t ed , b u r s t i n t o f l am es , r e s u l t i n g i n t h e b u r n i n g

d ea t h o f t h e t h r ee t e en ag e r s. A c r i m i n a l h o m i c i d e

i n d i c t m e n t w a s b r o u g h t a g a i n st F o r d o n t h e g r o u n d s

t h a t t h e a u to c o m p a n y h a d e n g a g e d i n p l ai n , c o n -

s c i ou s an d u n j u s t i f iab l e d i sr eg a r d o f h a r m t h a t m i g h t

r esu l t ( f rom i t s ac t ions ) and the d i s r egard invo lves a

s u b s t an t i a l d ev i a t i o n f r o m accep t ab l e s t an d a r d s o f

co n d u c t .

In i t s defense , Ford ' s a t to rney , Jam es F . Nea l ,

a r g u ed t h a t t h e P i n t o me t a l l f ederal , s ta te , and local

g o v e r n m e n t s t a n d a r d s c o n c e r n in g a u t o f u e l s y s te m s . T h i s

co m p l i an ce , Fo r d ' s a t t o r n ey f u r t h e r a r g u ed , w as

co m p ar ab l e t o o t h e r s u b co m p ac t s p r o d u ced i n 1 9 7 3 .

H e c o n t i n u e d b y s a y i n g t h a t F o r d did every th ing to

recal l the Pin to as quick ly as poss ib le as soon as the

N H T S A N a t i o na l H i g h w a y T ra ffi c S a f et y A d m i n i st r a -

t ion) ordered i t to

( emph as is added) .

M a r k D o w i e , t h e n G e n e r a l M a n a g e r f o r

M o t h e r

J o n e s ,

c l a i m ed t h a t t h e P i n t o w as i n v o l v ed i n 5 0 0

b u r n d e a t h s a n d t h a t b u r n i n g P i n t o s h a d b e c o m e

s u c h a n e m b a r r a s s m e n t t o F o r d t h a t J . W a l t e r

T h o m p s o n , t h e a d a g e n c y t h a t h a n d l e d t h e P i n t o ,

d r o p p ed a l i n e f r o m i t s rad i o s p o t th a t s a id , P i n t o

le av es y o u w i t h t h a t w a r m f e el in g . M i c h a e l H o f f m a n

r a i s e s an i n t e r e s t i n g an d ce r t a i n l y r e l ev an t p o i n t i n

l i g h t o f th e m o u n t i n g e v i d e n c e o f th e P i n t o 's d e f e c -

t i v e f u e l s y s t em w h e n h e a sk s , E v en t h o u g h Fo r d

v io la ted n o f ede ra l saf e ty s tandards o r l aws , shou ld i t

h av e m a d e t h e P i n t o s af er i n te r m s o f r ea r - en d

co l li s io n s , e s p ec i a ll y r eg a r d i n g t h e p l ac em en t o f t h e

g as t an k ? I n Fo r d ' s la ck o f re s p o n s e t o t h i s q u es t i o n

an d t h e i r s t e ad f a s t r e f u s a l t o r eca l l t h e i r p r o d u c t

v o l u n t a r i l y can b e s een a s o n e o f t h e i n h i b i t i n g

e f fec t s o f s t ag e 2 b eh av i o r . B ecau s e o f i ts p r eo ccu p a -

t i o n w i t h co m p l i an ce t o l aw s an d r eg u l a t i o n s ,

cu l t u r a l v a lu es f o cu s i n g o n w h a t i s ri g h t r a t h e r t h a n

o n w h a t i s l eg a l a r e e i t h e r n o n ex i s t en t o r u n d e r -

d ev e l o p ed . A s a co n s eq u en ce , th e o r g an i za t i o n d o es

o n l y w h a t i t is req u i r ed t o d o r a t h e r t h an w h a t i t

s h o u l d d o . T h i s i s s y m p t o m a t i c o f t h e l eg a l i s t i c

o rgan iza t ion .

M o r eo v e r , Fo r d ' s co n ce r n f o r t h e s i ze o f t h e

b o t t o m l i n e r a t h e r t h a n t h e m o r a l it y o f t h e b o t t o m

l i n e i s ev i d en ced i n t h e i r co s t - b en e f i t ana ly s is c o n -

ta ined in a r epo r t en t i t l ed Fata li ti es Associa ted w i th

C r as h I n d u ced Fu e l L eak ag e an d F ir es . T h e $ 1 1 co s t

p e r c a r f o r t h e i m p r o v e m e n t d e s i g n e d t o p r e v e n t g a s


6/12

278 R. E. Reidenbach and D. P. Robin

tank ruptures was not cost effective. Ford estimated

that benefits would run to $49.5 million, while the

costs associated with the improvement would total

$137 million. Stage 2 organizations, like their coun-

terparts in stage 1, maintain a preeminent concern

for profitability, especially when it involves a trade-

off with doing what is right .

Stage three - the responsive corporation

Unlike their legalistic counterparts in stage 2,

responsive corporations begin to evolve cultures that

contain values other th an prod uctivi ty and a sense of

legality. Responsive organizations begin to strike a

balance between profits and doing right. However,

doing right is st il l more of an expediency rather than

an end unto itself. Social pressures are such that these

stage 3 corporations must respond to those pressures

or face censure or worse. The managem ents of these

corporations are more sensit ive to the demands of

society than the managements in the previous stages.

Managements begin to recognize that the organiza-

tion's role exceeds a purely economic one and that it

has certain social duties and obligations.

Codes of ethics take on greater importance and

their focus begins to reflect a greater societal

orientation. As an example, consider the codes of

ethics of the Bank of Boston, whic h are typical of

stage 3 organizations. Among the codes include

standards, values, and prescriptions concerning

integrity, confidentiality, quality, compliance, con-

flict of interest, objectivity, personal finances,

decency, and accountabil i ty. The standard concern-

ing social responsibility reads, Seek opportunities to

participate and, if possible, to play a leadership role

in addressing issues of concern to the communities

we serve. Th e ma jor part of the codes, however, is

still designed to identify behaviors that will bring

potential har m to the Ban k of Boston (e.g., compli-

ance, conflict of interest, personal finances, con-

fidentiality). In that sense they are interna lly directed.

Concern for ethical conduct is evidenced in the

accountabili ty statement which reads, Report ques-

tionable, unethical, or illegal activity to your m anage r

wit hou t delay (Bank of Boston). It is interesting to

point out that these codes were published at about

the same t ime that the Bank of Boston pleaded

guil ty to charges of m oney laundering.

Studies indicate that about 75% of all U. S. firms

have codes of conduct. Those same studies also

indicate that the most common i tems mentioned in

the codes are conflict of interest provisions, political

contributions, use of insider information, illegal

payments, bribery and kickbacks, improper relat ion-

ships, proprietary information, use of corporate

assets, gifts and favors, and unrecorded or falsely

recorde d funds or transactions, most of which, like

their stage 2 counterparts, have an internal focus

designed to pro tect the or ganization (Raelin, 1987, p.

177; Ro bin et al. 1989).

Concern for other stakeholders begins to manifest

itself as managements being to realize the import-

ance of employees and the co mm unity in which they

operate. Again, this nascent concern is not motive-

ated by a sense of doing right for right's sake, but

rather as a recognition of the organization's greater

social role.

Movement from stage 2 to stage 3 is often

initiated by outside events. Some potentially damag-

ing occurrence to the organization or other organiz-

ations may happen forcing the organization to react

by countering with some apparent ethical response.

The intention is to sway opinion of different state-

holders by doing good. A do wh at we gave to do,

not because it 's right but because it 's expedient

dominates the responsive organization's ethical

system.

P G reacts to the Re ly Tam pon problem. The reaction

that Proctor & Gamble made to the Rely Tampon

problem is indicative of an organization that has de -

veloped a stage 3 responsive level of morality. It is

decidedly different from the type of thinking and

actions one finds in the stage 2 legalistic type of

organization. P & G management made an enlight-

ened decision to act in the best interests, not only of

themselves, but also with respect to a number of

different publics.

In the summer of 1980, Proctor & Gamble was

first ma de aw are, by the C enters for Disease Control,

that there might be a possible linkage between the

incidence of toxic shock syndrome and the use of

tampons. No indication existed that there was any

linkage between toxic shock and the specific use

of P & G's Rely product. Dur ing this s am e period

of time, P & G began an investigation into the

alleged linkage. Initial informa tion ind icated no rela-


7/12

Corporate M oral D eve lopment Mode l 279

t ionsh ip be tw een tox ic shock syndrom e and tam pon

usage.

O n Sep tember 15, 1980 , the C enters fo r Disease

Co n t r o l i n f o r m ed P & G th a t i n t h e i r s t u d y o f 4 2

cases o f tox ic shock syndrome, 71% of the women

wer e Re ly user s. T h is p u t P & G m an ag em en t i n t h e

posi t ion o f dec id ing to defend the i r b rand aga inst

what P & G sc ien t i s t s consdered ra ther ske tchy

evidence. O n Septe mbe r 18, 1980, three days af ter

the s tudy resu l ts w ere announ ced , P & G m ade the i r

d ec i s io n to w i th d r aw th e p r o d u c t f r o m th e m ar k e t

an d to h a l t p r o d u c t io n o f Re ly T am p o n s . T h e

decision, according to Edward G. Harness, chairman

and c h ief execu t ive o f P & G, h inged on th e

d i l em m a , W e d id n ' t k n o w en o u g h ab o ut to x ic

shock to ac t, and ye t , we k new too m uch no t to ac t .

(Gatew ood and Carroll , 1981, p . 12)

P & G ha d b egun pu l l ing 400 ,000 cases o f the i r

p r o d u ct . Un d e r an ag r eem en t w i th t h e FDA, P & G

was abso lved of any v io la t ion of federa l law or

l iab il i ty fo r p rod uct defec t. H owever , the remarkab le

aspect of the response was yet to come. P & G

bought back a l l unused products , inc lud ing $10

mil l ion in f ree p romo t ional samples . Moreover , they

volun tar i ly p ledged research assistance to th e Ce n-

ters for Disease Co ntro l for the study of toxic shock

and agreed to f inance and in i t ia te an educat ional

campaign about the d isease . The educat ional cam-

paign was remarkab le in bo th the speed and the

scope of inform ation dissemination.

P & G m an ag em en t r eco g n ized th e l o n g e r t e r m

value o f ma king this type o f response . Al thoug h 20

years o f research and market ing expendi tu res were

t ied up in what would u l t imate ly be a s ign i f ican t

loss, their action demonstrates a greater balance

between prof i t s and e th ics than would be seen in

ear l ie r s tages o f corpora te mora l development .

Cynics migh t respond tha t P & G d id th is ou t o f

eco nom ic reasons. In part, that is probably true. Yet,

un l ike Ford w hose so le in te res ts we re economic , P &

G recognized tha t the i r long te rm econ om ic wel l -

be ing was inex tr icab ly in te r twined wi th the m ora l i ty

of the i r dec is ion . Th is i s the ha l lm ark of the resp on-

sive organization.

Stage three is a pivotal point in the moral

development o f most corpora t ions . I t i s a learn ing

stage where in managements tes t the e f f icacy of

socially responsive b ehavior and b egin to und erstan d

the econom ic va lue o f mo ra l behav ior . Th is a t t i tude ,

however, moves the organization beyond a str ict ly

legalistic focus and, in so me cases, has the effect o f

making the organization a social pioneer . Sti l l , i t

must be emphasized tha t cu l tu res o f s tage th ree

corpora tions a re d om inated by a reac tive menta l i ty ,

not a proactive mentali ty .

Stage o u r the emergentethical o rganizat ion

The emergen t e th ica l o rgan iza t ion i s one in which

management ac t ive ly seeks a g rea ter ba lance be-

tw een profits and ethics. Th ere is an ov ert effort to

man age the o rganizat ion 's cu l tu re to p rod uce the

desi red e th ica l c l imate . Th is change in the cu l tu re

involves a recognition of a social contract between

the business and society. Management approaches

prob lem so lv ing wi th an awareness o f the e th ica l

consequence of an action as well as i ts potential

profitability.

On e of the mo re v isib le manifes ta tions o f s tage 4

organizations is the proli ferat ion of ethics vehicles

th roug hout the o rgan iza tion. Codes o f conduc t

becom e more ex terna lly o r ien ted and bec ome l iv ing

docum ents ins tead of lo f ty idea ls to be read once and

then pu t away or h igh ly l imi ted ru les tha t a re

designed primarily to protec t the organization. In

addit ion, and typical of stage 4 corporations, is that

handbooks, po l icy s ta tements , comm it tees , om buds -

men , and e th ics p rogra m d i rec to rs beg in to re in force

the existence o f codes. This signals stronger m ana ge-

me nt co mm itm ent to e th ica l behav ior .

For example, at Boeing, an emergent ethical

corpora tion , g rea ter CEO involvem ent in e th ics , and

l ine management invo lvement in e th ics t ra in ing

programs are two aspec ts o f the i r cu l tu ra l concern

for mora l i ty . In add i t ion , the i r e th ics commit tee

repor ts to the board an d m anag em ent has ins ta lled a

to l l - f ree number fo r employees to repor t e th ica l

violations.

General Mills has developed guidelines for deal-

ing with vendors, competitors, and customers.

Recru i t ing focuses on the h i r ing o f ind iv iduals tha t

share the same cultural values and an emphasis on

open dec is ion making ha l lmark the i r concern fo r

ethic al behavior.

Whi le responsive corpora t ions beg in to develop

ethical mechanisms to increase the probabil i ty of


8/12


ethical behavior, these organizations are not yet fully

comfor table with their implementat ion. Organiza-

tional actions are still characterized by ad hoc

attempts to develo p and instill organizational values.

These at tempts of ten lack direct ion in both the

select ion of the values and their implementat ion.

Top management recognizes the impor tance and

value of this type of behavior but lacks the experi-

ence and expertise to make it work effectively.

Dynamics has recently (1988) been indicted on

further charges of defense contractor fraud. The

process has been revised at General Dynamics to

include a squeal clause whic h is designed to both

reward and protect employees who repor t on co-

workers who have broken c ompa ny s tandards .

Consider the following excerpts from Sara Lee's

codes which recognize the im por tance of balancing

profits and ethics:

Examples of emergent ethical organizations A growing

number of organizations can be classified as the

emergent ethical. Boeing and General Mills were

cited earlier for their ethical efforts . Boeing's pro-

grams have been in place since 1964 but the mere

existence of ethical programs does not insure that

the emergent ethical organization will behave ethi-

cally. In 1984, a unit o f Boe ing was cit ed for illegally

us ing ins ide information to secure a government

contra ct, a case of regression.

Often cited for unethical behavior, General

Dynamics has an extensive ethics program. A publi-

cation by the giant defense contractor asks 10

questions about the program. These questions in-

clude:

1. W ho is my Ethics Progr am Director?

2. Ho w can the Ethics Directo r help me?

3. Ho w can I contact my Ethics Director?

4. Do I need my supervisor's permissio n to talk

with the Ethics Director?

5. Ho w does the ethics hotlin e work?

6. How do I kno w what General Dynamics ' eth ics

standard s really are?

7. Wh at is my responsibility if I beco me aware of

some one wh o is violating the standards?

8. Wh at hap pens ifI violate the standards?

9. Ho w does the ethics prog ram apply to me?

I 0. Wh at should I do if I am dire cted to do some -

thing that I believe is a violation of company

standards?

The publication goes on to answer each question.

For example, in response to the question concerning

how an employee contacts the Ethics Director,

General Dynamics has created a hotline complete

with answering machine. In addition, the Ethics

Director can be reached by mail, EMOS, o r by direct

contact.

Does the system work? Not perfectly. General

Business has a role beyond the generation of profits. By

investing their good will, time, and money, companies

can - and should - serve as catalysts in helping deal with

significant social issues.

Perhaps one of the best examples of the emergent

ethical corporatio n is that of Joh nson & Johnson.

Johnson & Johnson is an advanced stage 4 corpora-

tion as suggested both by their CREDO and their

actions in the wake of the Tylenol tamperings. First

consider the CREDO.

The CREDO represents a strong balance between

ethical concern and profitability. However, what

really signals John son & John son as an advanced

stage 4 corporation is foun d in the response of one o f

their senior executives who was asked about the

decision concerning the massive recall of Tylenol

products . We never real ly thought we had muc h of

a choice in the matter of the recall. Our Code of

Conduct CR ED O) was such a way of life in the irm that

our employees, including me, would have been scandalized

had we taken another course (emphasis added). We

never seriously considered avoiding the costly re-

call. (Will iam and Mu rph y, 1988).

What can be seen in all of these examples is

a management that is wres t l ing with a growing

realization that the corporation must develop a

mechanism to balance the organization's concern for

profits and ethics. Some attempts are clumsy, some

work, some don' t . What is important is that there is

among stage 4 organizations a shift in the culture,

one th at gives increasing emphasis to the morality of

the bottom line.

Stage ive - the ethical organization

The final s tage of organizational moral development

is the ethical organization. We kn ow o f no examples

of organizations which have reached this level of

development .


9/12

orporate M oral Development M odel 281

Exhibit 1

John son Johnson's Corporate Credo

O U R C R E D O

W e b elieve our first responsibility is to the d octors,

nurses and patients,

to m others and all others wh o use our products and services.

In meeting their needs everything we d o

m ust be o f high quality.

W e m ust constantly strive to reduce ou r costs

in ord er to ma intain reasonable prices.

Customers' orders m ust be serviced prom ptly and accurately.

Ou r suppliers and distributors mu st have an opportunity

to m ake a fair profit.

W e are responsible to our employees,

t he m en and wom en who work wi t h u s

throughout the world .

Everyone m ust be considered as an individual.

W e mu st respect their dignity and recognize their merit.

Th ey m ust have a sense of securi ty in their jobs.

Compensation mu st be fair and adequate

and w orking conditions clean, orderly and safe.

Employees mu st feel free to m ake suggestions

and complaints.

The re m ust be equal oppo rtunity for employment,

development and advancem ent for those qualified.

W e must provide com petent management ,

and the ir actions must be just an d ethical.

W e are responsible to the communities in wh ich we l ive

and work a nd to the world com mu ni ty as wel l.

W e mu st be good cit izens - support good works

and c harities and bear o ur fair share of taxes.

W e m ust encourage civic improvements

and be tter health and education.

W e m ust maintain in good order

the property w e are privileged to use,

protecting the en vironm ent and natural resources.

S t a g e f i v e b e h a v i o r i s c h a r a c t e r i z e d b y a n o r g a n i -

z a t i o n - w i d e a c c e p t a n c e o f a c o m m o n s e t o f e th i c a l

v a l u e s t h a t p e r m e a t e s t h e o r g a n i z a t i o n ' s c u l t u r e .

T h e s e c o r e v a lu e s g u i d e t h e e v e r y d a y b e h a v i o r o f a n

i n d i v i d u a l ' s a c ti o n s . D e c i s i o n s a r e m a d e b a s e d o n t h e

i n h e r e n t j u s t n e s s a n d f a i rn e s s o f th e d e c i s i o n a s w e l l

a s t h e p r o f i t a b i l i t y o f t h e d e c i s i o n . I n t h i s s e n s e t h e r e

i s a b a l a n c e b e t w e e n c o n c e r n s f o r p r o f i t s a n d e t h i c s .

E m p l o y e e s a r e r e w a r d e d f o r w a l k i n g a w a y f r o m

a c t io n s i n w h i c h t h e e t h ic a l p o s i ti o n o f t h e o r g a n i z a -

t i on w o u l d b e c o m p r o m i s e d .

A t t h e h e a r t o f th i s o r g a n i z a t i o n i s a p l a n n i n g

s y s t e m m u c h l i k e t h e o n e d e s c r ib e d b y R o b i n a n d

R e i d e n b a c h ( 1 98 7 , 1 9 89 ). T h e c o n c e p t o f a p a r a ll e l

p l a n n i n g s y s t e m w h e r e i n i d e a s a n d c o n c e p t s f r o m

t h e n o r m a t i v e m o r a l p h i l o s o p h i e s a r e u s e d i n t h e

a n a l y s is o f p o t e n t i a l o r g a n i z a t i o n a l a c t iv i ti e s .

A n e x a m p l e o f p a r a ll e l p l a n n i n g i s s e en i n t h e

d e l i b e r a t i o n m a d e S i r A d r i a n C a d b u r y ' s g r a n d f a t h e r

( C a d b u r y , 1 9 8 7 ) . S i r A d r i a n ' s g r a n d f a t h e r , t h e n C E O

o f C a d b u r y ' s w a s c o n f r o n t e d w i t h a p r o f i ta b l e p r o -

p o s i t i o n t h a t h e f o u n d m o r a l l y r e p u g n a n t . I t c o n -

c e r n e d a c o n t r a c t t o f u r n i s h E n g l i s h s o l d i e r s i n t h e

B o e r W a r w i t h a C h r i s t m a s t i n o f c h o c ol a te s . H e w a s

o p p o s e d t o t h e w a r o n m o r a l g r o u n d s b u t w a s

c o g n i z a n t o f t h e e c o n o m i c r e p e r c u ss i o n s t o h i s

e m p l o y e e s t h a t r e f u s a l o f t h e c o n t r a c t w o u l d b r i n g a s

w e l l a s t h e m o r a l e i m p a c t o n t h e s o l d i e r s . H i s

d e c i s io n i n v o l v e d p r o d u c i n g t h e c h o c o l a t e a t c o s t so

t h a t h i s e m p l o y e e s w e r e c o m p e n s a t e d , t h e s ol d i er s

r e c e i v e d t h e c h o c o l a t e , b u t S i r A d r i a n p e r s o n a l l y d i d

n o t p r o f i t f r o m a s i t u a ti o n h e f o u n d u n e t h i c a l .

I n i m p l e m e n t i n g t h e p a r a ll e l p l a n n i n g s y s te m , th e

o r g a n i z a t i o n m a y b e v i e w e d a s a f a m i l y w i t h c e r t a i n

e t h ic a l f a m i l y v a lu e s t h a t g u i d e d e c i s i o n m a k i n g .

T h e s e c o r e v a l u e s c a n b e t r a n s l a t e d i n t o e t h i c a l

a c t i o n s t a t e m e n t s s u c h a s:

O ur final responsibility is to our stockho lders.

Business m ust m ake a sound profi t .

W e mu st experiment wi th new ideas.

Research mu st be carried on, innovative programs developed

and mistakes paid for.

New equipm ent m ust be purchased, new facili ties provided

and ne w products launched.

Reserves m ust be created to provide for adverse times.

W he n we operate according to these principles,

the stockho lders should realize a fair return.

J o h n s o n J o h n s o n

Treat customers with respect , concern, and honesty, the

way you yoursel f would w ant to be t reated or the w ay

you w ould w ant y our fam i ly t reated.

Make and market products you would feel comfortable

and safe having y our o wn fami ly use.

Treat the envi ronment as though i t were your own

prop erty (Robin Reidenb ach, 1987, p. 55).

W h a t m a k e s a n e t h i c a l o r g a n i z a t i o n w o r k i s t h e

s u p p o r t o f a c u l tu r e t h a t h a s a s t r o n g s e n se o f m o r a l

d u t y a n d o b l i g a t i o n i n h e r e n t w i t h i n i t . T h i s c u l t u r e


10/12

282

R E Reidenbach and D P Robin

TABLE I

A summa ry of the moral developm ent of corporations

Stage in Moral

Development

Management Atti tude

and Approach

Ethical Aspects of

Corporate Culture

Corporate Ethics

Artifacts

Defining Corporate

Behavior

Stage I

The Am oral

Organization

Stage II

The Legalistic

Organization

Stage III

The Responsive

Organization

Stage IV

The Emerging

Ethical

Organization

Get away with al l you

can; It's ethical as long as

we're not caught; Ethical

violations, when caught,

are a cost of doing

business

Play within the legal

rules; Fight changes that

effect your economic

outcome; Use damage

control through public

relations whe n social

problem s occur; A

reactive concern for

damage to organizations

from social problems

Management understands

the value of not acting

solely on a legal basis,

even though they believe

they could win; Manage-

me nt still has a reactive

mentality; A growing

balance between profits

and ethics, although basic

premise, still ma y be a

cynica l ethics pays ;

Managem ent begins to

test and learn from m ore

responsive actions

First stage to ex hibit an

active concern for ethical

outcomes; We want to

do the 'right' thing ; Top

management values

becom e organizational

values; Ethical pe rceptio n

has focus but lacks or-

ganization and long term

planning; Ethics manage-

men t is characterized by

successes and failures

Outlaw culture; Live

hard and fast; Damn the

risks; Get what you c an

and get out

If it's legal, it's OK;

Work the gray areas;

Protect loopholes and

don't give ground

without a fight;

Economic performance

dominates evaluations

and rewards

Ther e is a growing

concern for other

corporate stakeholders

other than owners;

Culture begins to

embrace a more

responsible citizen

attitude

Ethical values become

part o f culture; These

core values provide

guidance in some

situations but questions

exist in others; A

culture that is less

reactive and mo re

proactive to social

problems when they

o u r

No meaningful code of

ethics or oth er

documentation; No set

of values other than

greed

The Code of Ethics, if i t

exists, is an intern al

document; Don't do

anything to harm the

organization ; Be a

good corporate ci t izen

odes

are more

externally oriented and

reflect a concern for

other publics; Other

ethics vehicles are

undeveloped

Codes of Ethics bec ome

action documents; Code

items refle ct tile core

values of the organiza-

tion; Handbooks, policy

statements, committees,

ombudsmen are

sometimes used

Film Recovery Systems;

Numerous Penny

Stock Companies

Ford Pinto

Firestone 500

Nestle Infant Formula

R.J. Reynolds

Philip Morris

P & G (Rely Tam pons)

Abbott Labs

Borden

Boeing

General Mills

Johnson & Johnson

Tylenol)

General Dynamics

Caterpillar

Lev i Strauss


11/12

orporate M oral Developm entModel 283

Tabl e I C ont i nue d)

Stage in M ora l

D e v e l o p m e n t

M a n a g e m e n t A t t i tu d e

a n d Ap p r o a c h

Ethical Aspects of

Co r p o r a te Cu l tu r e

Corpo ra te Eth ics

Artifacts

Def in ing Corpora te

Behavior

Stage V

The Eth ica l

Organization

A balanced concern for

ethical and econo mic

outcomes; Ethical analysis

is a fu lly integrated

par tner in deve loping

both the mission and

s tra teg ic p lan ; SW O T

analysis is used to

ant ic ipate

p r o b le ms a n d

analyze alternative

o u tc o me s

A total ethical profile

with carefully selected

core va lues which

reflect that p rofile

directs the culture;

Corpo ra te cu l ture is

p lanned and m anaged

to b e ethical; Hir ing

training f ir ing and

rewarding all ref lect the

ethical profile

Do c u m e n ts f o c u s o n

the ethical profile and

core values; All phases

of organizational

documents re f lec t them

??????

h a s b e e n designed a n d managed b y t o p m a n a g e m e n t

t o p r o d u c e t h e w o r k c l i m a t e n e ce s sa r y t o s u p p o r t a n

a s s u r a n c e o f t h e b a l a n c e b e t w e e n p r o f i t a b i l i t y a n d

e t h i c s . R e w a r d s y s t e m s a r e d e v e l o p e d w h i c h s u p p o r t

i n d i v i d u a l s w h o m a k e th e r i g h t d e c i s io n , e v e n a t

the expense of prof i t ab i l i ty . Sanc t ion sys tems ex i s t t o

p e n a l iz e a n d c o r r e c t th e b e h a v i o r o f th o s e m a k i n g a

w r o n g d e c i s i o n . E t h i c s t r a i n i n g is a n o n g o i n g c o n -

c e r n o f t h e s t a g e f i v e o r g a n i z a t i o n , w h i c h i n t e g r a t e s

t e c h n i c al t r a in i n g w i t h a f o cu s o n t h e m o r a l i t y o f th e

j o b . H i r i n g p r a c t ic e s e m p h a s i z e n o t o n l y t h e a p t i t u d e

a n d s k il l o f t h e p o t e n t i a l e m p l o y e e b u t a ls o h o w t h a t

e m p l o y e e i s l i k e l y t o b e h a v e i n m o m e n t s o f s t r e s s .

A n o r g a n i z a t i o n a l m e n t o r p r o g r a m e x i s t s w i t h t h e

p u r p o s e o f p r o v i d in g w o r k a n d m o r a l g u i d a n c e f o r

t h e n e w e m p l o y e e . T h i s p a r al le l s y st e m w h e r e i n

p r o f i t s a n d e t h i c s g o h a n d - i n - h a n d i s t h e h a l l m a r k

o f t h e e t h i c a l o r g a n i z a t io n .

T h e p r i n c i p a l d i f f e r e n c e b e t w e e n s t a g e f o u r a n d

s t a g e f i v e o r g a n i z a t i o n s i s s e e n i n t h e c o m m i t m e n t

t h a t t h e o r g a n i z a t i o n m a k e s t o e t h i c a l b e h a v i o r .

S t a g e f o u r o r g a n i z a t i o n s h a v e n o t f u l l y p l a n n e d f o r

a n d i n t e g r a t e d e t h i c a l v a l u e s t h r o u g h o u t t h e i r c u l -

t u r e . I n s t e a d , t h e y r e l y o n m e c h a n i s m s t o g u i d e

e t h i c a l b e h a v i o r . T h e r e i s s ti ll a n i m b a l a n c e b e t w e e n

t h e g o a l s o f p r o f i t a b i l it y a n d e t h i c s so t h a t i n t i m e s

o f s t r e s s , i t i s n o t u n c o m m o n t o s e e t h e p u r s u i t o f

p r o f i t a b i l i t y p r o d u c e u n e t h i c a l b e h a v i o r . I t i s h e r e

w h e r e a n o r g a n i z a t i o n i n s t a g e f o u r , i n s p i t e o f t h e

e t h i c s v e h i c l e s e x i s t e n t i n a n o r g a n i z a t i o n , c a n

r e g r e s s t o a n e a r l i e r s t a g e o f m o r a l d e v e l o p m e n t .

T h i s i s u n l i k e l y t o o c c u r i n t h e s t a g e f i v e o r g a n i z a -

t i o n . T h e e t h i c a l e m p h a s i s i n t h e c u l t u r e o f t h e

o r g a n i z a t i o n i s s o s t r o n g t h a t t h e i n d i v i d u a l i s n o t

p l a c ed i n a d i l e m m a i n w h i c h h e o r s h e m u s t c h o o s e

t h e c o r r e c t a c t i o n . T h e c o r r e c t a c t i o n i s a l w a y s t h e

j u s t a n d f a i r a c t i o n . O f c o u r s e , o r g a n i z a t i o n s w i l l

m a k e m i s t a k e s i n t h e i r p l a n n i n g . H o w e v e r , t h e s e

m i s t a k e s , o n c e i d e n t i f i e d , w i l l b e c o r r e c t e d s o t h a t

t h e f i n a l o u t c o m e c o r r e s p o n d s t o a n e t h i c a l o u t -

c o m e .

o m e c o n c l u d i n g c o m m e n t s

O r g a n i z a t i o n s a r e s t r u g g l i n g w i t h t h e i r r e c o r d s o f

e t h i c a l b e h a v i o r . T h i s s t r u g g l i n g i s i n d i c a t i v e o f

m o r a l g r o w t h w h e r e i n o r g a n i z a t i o n s m o v e f r o m

o n e l e v e l o f m o r a l d e v e l o p m e n t t o a n o t h e r .

T h i s c o n c e p t u a l m o d e l o f o r g a n i z a t i o n a l m o r a l

d e v e l o p m e n t i d e n t i f ie s f i v e s ta g es o f g r o w t h . T a b l e 1

s u m m a r i z e s t h e s a l ie n t fe a t u r e s o f t h is d e v e l o p m e n t

p r o c e s s . N o t a l l o r g a n i z a t i o n s w i l l e v o l v e t o t h e

h i g h e s t s t a g e . A n d , n o t a l l o r g a n i z a t i o n s b e g i n a t

s ta g e 1 . I t is o u r o p i n i o n t h a t m o s t o r g a n i z a t io n s a r e

cur ren t ly in the l ega l i s t i c and respons ive s t ages of

m o r a l d e v e l o p m e n t . M o r e a n d m o r e o r g a n i z a t i o n s ,

h o w e v e r , a r e b e g i n n i n g t o m a n i f e s t t h e c h a r a c t e r i s -

t ic s o f s ta g e f o u r o r g a n i z a ti o n s . C o r p o r a t e e m p h a s i s

o n p r o f i t a b i li t y s t il l fa r o u t w e i g h s c o n c e r n f o r e t h ic s .

M o r e o v e r , m a n y m a n a g e m e n t s h a v e n o t y e t l e a r n e d

t h a t c o r p o r a t e c u l t u r e s c a n b e m a n a g e d t o p r o d u c e


12/12


the desired ethical behaviors . What we are seeing are

cu l tu res tha t a re unmanaged , and when unmanaged ,

evolve in their own direct ions , usual ly in the direc-

t ion pointed out by the reward system. Thus,

cul tures devoid of ethical concerns or in whic h

ethical values are absent , wi l l normal ly grow in the

direct ion of product iv i ty and profi tabi l i ty , two

values typical ly embraced by management .

While the conceptual model presented in this

art icle requires confi rmat ion and possible respecif-

icat ion, i t represents a s tart in the s tudy of the

dynamics o f co rpora te mora l development . Fur ther

s tudy is sure to provid e a clearer view o f the process

by whic h organizat ions change and develop their

own moral characters .

o t e s

Abstracted from McClory, R.: 1986, 'Murde r o n the Shop

Floor',

Across heBoard

(June), pp. 2 9-32 .

2 Abstracted from Hoffman , W. M.: 1984, 'The Ford Pinto',

in W. M. Hoffman and J. Mills Moore (eds.),

Business Ethics

(McGraw-Hill Boo k Co., Ne w York).

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a conceptual model of corporate moral development

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