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Assessment of Ethical Performance of Organization Members: A Conceptual FrameworkAuthor(s): Robert D. Gatewood and Archie B. Carroll
Source: The Academy of Management Review, Vol. 16, No. 4 (Oct., 1991), pp. 667-690Published by: Academy of ManagementStable URL: http://www.jstor.org/stable/258976 .
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?
Academy
of
Management Review
1991,
Vol.
16, No.
4,
667-690.
ASSESSMENT
OF
ETHICAL
PERFORMANCE
OF
ORGANIZATIONMEMBERS:A
CONCEPTUAL
FRAMEWORK
ROBERTD.
GATEWOOD
University
of
Georgia
ARCHIE
B.
CARROLL
University
of
Georgia
This
article
describes a
conceptual
frameworkthat
facilitates
the
as-
sessment of
the ethical
performance
of
organization
members.
Based
upon
measurement
principles applied
to
general
work
performance
assessment,
this framework
is
comprised
of three
components:
the
major
stakeholders
of
the
organization,
the
categorizing
of
organiza-
tion
members
into
individual or
group units for
accountability, and
the
division of
performance into
behaviors or
results.
Ethical
stan-
dards can be
formulated for
combinations of
these
three
components
and
expressed
in
terms
of
existing
laws,
or
organizational or
profes-
sional
standards. The
importanceof the
framework for
business eth-
ics research
and
theory
development
is
discussed.
The
ethics of
organization members
has
been the
subject
of
consider-
able research over
the
past
two
decades
as both
organizational
practitio-
ners and the
academic
community
have
embraced
ethical
behavior as a
legitimate business
goal.
Although this
research
has
addressed
many top-
ics, it
has been
hampered
by
the
absence
of an
accepted
approach for
directly
assessing
the
ethical
behavior of
organization members.
Undoubt-
edly
this
deficiency
is at
least
partly
attributable
to
the
complexity and
difficulty of measuring a construct that has not yet been acceptably defined.
The
purpose
of this
article is
to take the
first
steps
toward
developing an
approach
to
assessing
ethical
performance
by
proposing
a
framework
that
defines
and
organizes
the
important
variables of
such
an
assessment.
First,
some
of
the
previous
research in
business
ethics, which has
measured
variables
thought
to be
related to
ethical
performance,
will be
considered.
Second,
some of the
central
principles
of
the
measurement of
general
work
performance are
examined. The
former
provides
an
understanding
of
where ethics
research
has been in
terms
of
attempts
to
measure
ethical
performance.
The
latter
provides
necessary guidelines
for
assessing
ethical
performance. Third, a conceptual framework is presented, and its compo-
nents are
discussed.
Finally,
the
implications
that this
framework
has for
future
business
ethics
research
and
theory
development
are
discussed.
667
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668
Academy
of
Management
Review
October
RESEARCHRELATED
O ASSESSINGBUSINESS
ETHICAL ERFORMANCE
The challenge in conducting a literature review on ethical performance
is that researchers have not looked at
performance directly,
but
rather
they
have examined such related variables as
feelings,
opinions, perceptions,
orientations,
or
values
held
by organization
members. It is
as
though
the
difficulty and
complexity
of
assessing
ethical
performance
has caused re-
searchers to solicit
organization
members'
opinions of issues
related
to eth-
ical performance rather than
directly examining behaviors or results. Con-
sequently, the brief review
presented
here
examines the
approaches that
have been
used in
assessing variables thought to be surrogate
indicators of
ethical
performance
and focuses
on
the four
data-gathering
methods found
most frequently in the literature: self-report questionnaires,
hypothetical
ethical
dilemmas or
vignettes,
the
interview,
and
recording of actual illegal
behavior.
The first and oldest
approach has been the use of
self-report question-
naires,
or
surveys,
that measure
how
managers
or
other
organizational
members feel
about various
ethical issues in business. For
example,
a
1987
study by
Fleming
identified
six
of the
most-referenced articles in business
ethics
as of that date.
Only
three of these
reported
actual
data, all of which
were
survey
data
gathered
from
businesspeople.
These three studies
as-
sessed ethical performance by asking respondents to choose from among
alternative answers
the ones
that reflected their own
viewpoints
or
opin-
ions. The earliest of these three studies
was
the
now-classic 1961 Baumhart
investigation,
in which he
surveyed
executives who
read the Harvard Busi-
ness Review to determine
their
opinions
on the
current state of business
ethics
and other issues. The
second
of the
three was the
1977
replication
of
Baumhart's
study
that was
conducted, using
the
same
methodology, by
Brenner and Molander. The third
empirically based article
identified in
Fleming's
study
was
the
1975
survey by Carroll,
which
sought
to determine
the extent to
which
managers
at various
organizational levels
(top, middle,
and lower management) perceived pressures to go along with their supe-
riors'
expectations
of
them,
even
though
these
managers had to
compro-
mise their
personal
standards
to do so. In
each of these studies
the
primary
approach
was the use of
questions
that
asked
the
respondents
to
choose
from
among
alternative
responses
the one
that
best
represented
how
they
felt about an
issue.
Four other
major
studies
employed self-report
data and merit mention
here. An
investigation by England (1967)
into the
personal
value
systems
of
over
1,000 managers represented
the most
significant attempt
to that date to
profile the values that managers deemed important. England's Personal
Values
Questionnaire
employed
a
scaling technique
for
data-gathering
purposes (1967: 56-58). Aldag
and
Jackson (1977) employed
a
Social
Atti-
tudes
Questionnaire,
which also utilized a
scaling technique
to
gather
view-
points
on
the
trade-offs between ethical and
economic issues.
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1991
Gatewood
and Carroll
669
Perhaps
the most
extensive attempt
to
employ
the
self-report
survey
methodology
was the
broad-based study by
Posner
and Schmidt (1984).
These
researchers
used a ranking
procedure
on
some
questions
and
a
scaling technique on others. Topics included the respondents' opinions on
such questions
as priorities
among organizational
stakeholders,
perceived
pressures
on
managers
to compromise
their
personal principles,
and influ-
ences
on unethical
behavior.
The final
use of the
self-report
questionnaire
referenced
here
is that
of Victor and
Cullen (1988).
They argued
that the
organization's
ethical
climate
helps to determine
how employees
at all lev-
els make ethical
decisions.
These
researchers sought
to assess
ethical work
climates by
asking respondents
to
indicate
on Likert-type
scales
how accu-
rately
they perceived
that
items described
the ethical characteristics
of
their
work
climate.
The ethical
characteristics
of organizations
examined
in-
cluded
law
and code, caring,
instrumentalism,
independence,
and rules.
The
second
major approach
to assessing
ethics
found in the literature
involves
presenting
respondents
with
hypothetical
ethical
dilemmas
and
asking
them
how
they
felt about
or
might
react to alternative
courses of
action
(Brenner
&
Molander, 1977;
Clark,
1966;
Posner &
Schmidt,
1984).
Some
of
the
previously
reported
studies used this
technique
in
part.
This
general
approach
has been taken one step
further through
the use
of
vi-
gnettes.
Vignettes
are
short, hypothetical
cases
that enable
the researcher
to obtain
some
measure
of the
difference
between
espoused
ethics
and
likely ethical behavior (Cavanagh &Fritzsche, 1985). One of the best exam-
ples
of the
use of
vignettes
is the research
by
Fritzsche and
Becker
(1984),
who provided
respondents
with detailed
vignettes
that described
decision
alternatives
for
potential
ethical dilemmas.
The
major
limitation of
this
study,
of
course,
is that
the data
represented
the actions the
respondent
stated
would
be taken
rather
than actual
actions
or
behaviors;
therefore,
this study represented
only
a
modest improvement
over the self-report
stud-
ies,
which
gathered
opinions,
feelings,
or attitudes.
The
interview
approach
is the
third methodology
for data gathering
that has
been
used
in business
ethics research.
Some
of the classic
work of
Kohlberg (1981) employed
the creation
of
hypothetical
moral dilemma sce-
narios
that
were
then used
as the
basis for
interviews used
to
probe
and
assess
the
respondent's
moral
reasoning.
Kohlberg's
research
suggested
six
universal
stages
through
which
moral
reasoning
develops among
individ-
uals (Kohlberg,
1981).
Another
appropriate
example
of the interview
ap-
proach
is
illustrated
by
the work of
Derry (1989).
Her
technique
was
the
open-ended
and
semistructured
interview
in which
participants
presented
actual
moral
conflicts
faced
at work and
described
the
conflict,
how
they
evaluated
what
should
be
done,
and
how
the conflict
was resolved.
The
interviews were tape-recorded, transcribed, and coded for subsequent con-
tent analysis. Derry's
approach
was
similar to that
developed
by
Gilligan,
Langdale,
Lyons,
and
Murphy (1982)
in their
study
of different
types
of moral
reasoning.
A variation
of
this
interviewing
technique
was
used
by
Toffler
(1986),
as
she
sought
to chronicle
what
executives
thought
their ethical de-
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670
Academy
of
Management
Review October
cision making
was like as revealed
in
a series of
candid, in-depth
inter-
views. The
advantage
of
this
approach
is
that
it
side-steps
the
use
of
hypo-
thetical vignettes in favor of a self-described, actual ethical
dilemma per-
ceived by the respondent. The limitations are many of the same found in
vignette
research
plus
the
possibility
of selective memories and self-
justifications of the respondents (Derry, 1989: 857).
One final
approach
to
assessing
ethical
performance
is the use of
cor-
porate
crime
or
illegal corporate
behavior.
Using attempts
to examine
spe-
cific
illegal
acts
as a
measure
of ethics is
appealing
because
specific
laws
have
been broken
and, thus,
the
definition
of
right and wrong
is
simplified.
Clinard
and
Yeager (1980)
and Cochran and
Nigh (1987)
conducted studies
that are representative of
this
general line
of
inquiry. The drawback to this
approach
is
that
corporate
crime
data,
to the
extent
they
are
available,
are
aggregated
for
corporations
and are not
easily
identified to
specific persons
within the
organization.
Another
problem
is
that only illegal behavior is
taken into account and, thus, an entire range of ethical behavior and
ques-
tionable
practices may
be overlooked.
In the next
section concepts
that have
been identified as critical to the
measurement
of
work
performance
in
general and, therefore,
that are also
relevant
for
measuring
ethical
performance specifically
are
discussed.
THE
MEASUREMENT F
PERFORMANCE
Much has been written describing the strengths and weaknesses of
various techniques
of
performance measurement (e.g., behavioral
rating
scales, management by objectives,
the
mixed standards
scale, and others).
Such work
is
not
of
primary importance
to
this
article.
Instead, writings
that
address
the more
basic
issues,
the nature of who
and what should be
measured and the
general strategies
for
developing
measurement tech-
niques,
are reviewed.
Logically,
these
considerations must form the
basis
for
the
development
of
a
conceptual
framework for
assessing
ethical
per-
formance
in
organizations.
Hall (1983) explicitly pointed
out the
importance of performance evalu-
ation
of all
employees
in an
organization
when he discussed
the
impact
of
the
performance
of individuals from various levels of
an organization
on an
organization's structure, style,
and
process. Specifically,
he
stated that
the
performance
of the
top-level
individuals can
influence
the
goals
and struc-
ture of the
organization.
The
performance of bottom-level individuals
affects
the organization's culture
and the
delivery and distribution of rewards.
Mid-
dle-level
individuals,
to
a
large extent,
control the
implementation of
top
management's policies
and
systems. Therefore,
these
individuals have
more
power
to
block
or
facilitate
change
in the
organization
than
either
top-
or bottom-level individuals. For this article, the importance of Hall's work is
the related
concept
that
measurement
of
ethical
performance of all individ-
uals
in
an
organization
is
crucial because each strata has
a distinct
effect
on
the overall ethical
performance
of
the
organization. Some previous
work in
ethics
has
primarily
focused
upon managers.
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1991
Gatewood and Carroll
671
Smith
discussed the
necessity
of an
adequately developed
criterion,
which
she defined as a
standard
or rule by which
a judgment can
be
made
(1977:
745).
There are three dimensions
that are critical
in
specifying
a criterion: the time span to be covered, the specificity desired, and the
closeness
of
organizational
goals
to be
approached.
Concerning
time
span,
a criterion
can be obtained
from immediately after actual
on-the-job
behav-
ior has occurred through
a
long period
afterward.
Too often mere conve-
nience, rather
than relevance
to
performance,
dictates
the measure to be
used and
the time span
chosen. Regardless
of the time span,
criteria can
differ
in
specificity
because they
may
refer to
descriptions
of small units
of
performance, global
estimates
of
performance,
or
anything
in between.
At
one
extreme
is
a
rater's check
as to whether a certain behavior has
been
observed.
On
the other extreme
is the
combining
of multiple results (e.g.,
quality,
quantity,
timeliness),
reflecting
various
aspects
of performance,
into
a composite
measure.
About the
third dimension,
Smith
stated,
Most
im-
portant
in
classifying
criteria
is the dimension that concerns
the
closeness
of
the
measure
to organizational
and societal goals. Criteria
range from
the
description
of actual
behavior
to
evaluation
Qf
results to estimates of
the
effects
upon
the
organization
and
society (1977:
750).
Smith
also
discussed
other
important
characteristics
of criteria: reliabil-
ity (consistency/stability
over
time)
and
practicality (availability,
plausibility,
and
acceptability
to those who
wish
to
use the criteria
for
decisions). Gate-
wood and Feild (1990)added controllability to this list. That is, it is important
to evaluate
an individual's
performance
on
criteria
that he or she can di-
rectly
influence. Many
criteria, ranging
from
grievances
filed
by
subordi-
nates
to a
unit's
profitability,
are
greatly
affected
by
exogenous
variables.
Such
criteria
are
inadequate
measures of the individual's
performance.
Of
additional
importance
to
this
article,
Smith
pointed
out that
the
es-
tablishment
of a
single
criterion
to measure
performance appears
to
many
to be a
hopeless quest.
Success
is not
unitary
for different
jobs
for
the same
person,
for different
persons
for
the
same
job,
or for
different
aspects
of the
same job
for the same
person.
The number of criteria measures that should
be
used
to evaluate
performance
will
vary according
to the
circumstances
of
the
job.
Related
viewpoints
are
expressed by
other writers.
Hall
(1983),
when
discussing
measuring
and
rewarding
the
performance
of
individuals,
stated
that
rewards
should
be
linked
to both
long-term
performance
and
performance
that
focuses
on
obtaining organizational
goals
as
well as the
more
commonly
used short-term
topics.
Staw
(1983)
posited
several
general
issues that must
be
addressed
in
performance
evaluation
systems.
Among
these are
the
following:
1. The
measurement
system
used
at
each
level and section of
an
organization
may
need to be different.
2.
The use of individual
versus
collective
(group)
evaluation
may depend
on the
tasks' interdependency
and
the
corporate
culture.
3.
The use of
procedural (behavioral)
measures or outcome
(results)
variables de-
pends
on the confidence
one
has in
a
given
theory
of
performance
or effective-
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672
Academy
of
Management
Review
October
ness.
It
is easier
to rely on procedural
measures when
there is
a known technology
and when
certainty
in the
process
is high.
4.
Once
an
organization's
philosophy
or market strategy
is formalized,
it provides
a
set
of constraints
and
assumptions
on which more specific
theories
of performance
and effectiveness can be based.
From these
writings, the following
principles
emerge
for the measure-
ment of
ethics
in
organizations:
1.
The measurement
system
should
be linked to the
philosophy,
culture,
strategy,
and goals
of the organization.
2.
Measurement
should be
applied
to
all
levels
of
employees
in the
organization.
3. Multiple
measures
should
be used within
jobs
and across levels.
4. Different
measurement systems
may
be
appropriate
for different organizational
units.
5. Measurement
may
be
applied
to
an
individual
or
a
group
of workers depending
on the characteristics of the work.
6. Measurement
should
address both
long-
and short-term aspects
of
performance.
7. Measurement
should address
both behaviors
and results.
8.
Whatever is
being
assessed should
be under the control of the individual(s) being
evaluated.
These principles provide
the basis
for the conceptual
framework that
is
described
in the
following
section.
FRAMEWORK FOR
EVALUATION OF
ETHICS
The goal here is to set forth a framework or way of conceptualizing the
evaluation
of the ethical
performance
of
employees.
In its
essence
this
framework
may
be
thought
of as a
categorization
scheme
for the assessment
of ethical
performance.
Because
such a framework has
not been
previously
developed,
the concentration
is
placed
on essential
issues
needed
to set a
foundation
for
assessing
ethical
performance.
The framework
consists
of three
parts
that answer the following
key
questions:
(a)
What
is
being
evaluated?
(b)
What content areas
of
employ-
ees'
roles are
being
evaluated?
and
(c)
What
standards
are
being
used to
make
ethical evaluations?
What Is
Being
Evaluated
To
identify
what
is
being
evaluated,
we
propose
separating
conceptu-
ally
(a)
individual
worker
performance
from
group performance,
(b)
behav-
iors of
employees
from
results achieved
by employees,
and
(c)
actions taken
that are
in
response
to mandates
of law from those that are discretionary,
or
not
legally
required.
Regarding
the
first
characteristic,
individual
versus
group
perfor-
mance,
it is
essential
in
effective
evaluation that
the
decision makers
be able
to distinguish between ethical performance for which the individual should
be held accountable
from
that
for which
the
group
should be held account-
able. The
key
issue here
is
pinpointing
accountability.
The
group
referred to
may
be
a
work
group,
a
department,
or
a
larger
administrative unit.
It is
necessary
to
identify
accountability
not
only
for assessment
purposes
but
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1991
Gatewood
and Carroll
673
also for
thinking
about
or
designing
strategies
for
improving ethical
perfor-
mance. The next
key
issue once level of
analysis
or
accountability has been
determined
is
that of
evaluating
employee
behaviors
versus results.
This
is
a process versus outcomes dichotomy discussed previously. At this stage in
the evaluation
scheme the researcher
must
identify whether
it
is
the actions
(behaviors) taken
by
the
employee
that
are
being assessed for
ethical
per-
formance or the
results
being
achieved
by
him
or her.
Whether
employee
behaviors or results
are used will be
principally determined
by
the
charac-
teristics of
the
work.
The third part of
conceptualizing
what is
being evaluated calls for
the
researcher
to consider whether
the action or
result is in
response to a legal
mandate.
It is
helpful
to the
evaluator
to
be able to
separate
performance
in
which the
employee(s)
are
engaging
in
response
to law versus
action
taken
at
the volition of the
individual(s)
or
organization.
This
second
category
is
referred
to
as
discretionary,
to
imply that the
employee's actions
are subject
to
some
degree
of
voluntary decision
making,
rather
than
in
response to a
legal mandate.
Although both
the legal and
the discretionary
components
comprise ethical
performance,
there are two
major
purposes for this
dis-
tinction.
First,
it
allows the
explicit specification of
all
behaviors and results
necessary to exhibit ethical
performance that
complies
with
existing
laws.
Second,
it allows for
ethical standards to
be
systematically
stated
for
per-
formance not
addressed
by
laws or for which
criteria
higher
than
legal
statements are desired.
Content Areas of
Employees'
Roles
The second
major part
in the
framework
development
is to
think in
terms
of the
question,
What content
areas of
employees'
roles
are
being
evaluated? This
part
of the
classification scheme is
based on
the stake-
holder
concept.
An
expansion
of
Freeman's
(1984)
definition of a
stakeholder
is useful:
any
individual
or
group
who can
affect or is
affected
by
the
ac-
tions, decisions,
policies,
practices,
or
goals
of an
organization.
Major, ge-
neric stakeholder
groups, therefore,
would include
customers,
managers,
nonmanagers, owners,
suppliers,
competitors,
the
local
community,
and
any
other
group
such as
government
or the
media
with
which the
organi-
zation has transactions. It
should be
noted
that
managers
and
nonman-
agers
are
considered as
separate
stakeholder
groups.
Throughout
the
arti-
cle, however,
the term
employees
is inclusive of
both
groups.
These
stakeholder
groups
present
a useful
way
of
thinking
about the
important
contacts
or
transactions that define
employees'
roles.
It
should be
emphasized
that the nature of the
job
tasks of
the
employee's position
will
dictate which stakeholder groups are interacted with by the employee. For
example,
at
the
extremes, top-echelon
managers
may
interact
with
all
ma-
jor
stakeholder
groups,
whereas an
operational
employee's
contacts
may
be restricted
to
only
other
employees or, through
product
or
service
quality
or
safety,
to customers. In all
cases,
however,
the
stakeholder
groups
with
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674
Academy
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Management
Review October
which
the various employees
interact will lend definition to
this phase of
the
framework.
Figure
1 illustrates
the framework developed
to this
point.
It
depicts
the
major conceptual distinctions that have been made in this discussion: indi-
vidual versus group
performance,
behavior versus
results, mandated
ver-
sus discretionary
actions,
and interactions
with stakeholder
groups.
Principles
for Setting Ethical
Standards
The
third
part
in the framework addresses
the
question, What
stan-
dards are being
used
to make ethical judgments?
The
process
of ethical
decision making
requires
that
behaviors
or results be
assessed
against
stan-
dards
or norms
of
acceptability.
The most
significant
problem
in this com-
parison process
is the decision
as to what
or
whose standards
will
be
used
in this comparison.
To be sure, standards
of moral behavior emanate
from
many sources:
the law,
family, friends,
one's religious faith, one's
employer,
the community,
and
one's
profession,
just
to
mention
a few.
To make
judgments
about
employees'
ethical
performance,
however,
necessitates
more
specificity
than
just
listing
the sources
of
ethics.
A
number
of different approaches
to
making
ethical judgments
have
been
set forth in
the literature.
Cadbury
(1987),
for example, argued
that a
person
needs to
understand
his or
her own value
system,
potential
conflicts of interest that
might
be encountered,
and
the
social consequences
of decisions or actions.
Nash (1981) proposed a list of 12 questions that, when answered, should
help
an
individual
assess his or her decisions.
These 12 questions address
such issues as
problem
definition,
the
other
person's perspective
on the
issue,
the employee's
motivation,
who the decision could
hurt, and so on.
Finally,
Velasquez,
Cavanaugh,
and
Moberg (1983) presented
a
schematic
for ethical decision making
that focuses
on whether an action or decision
meets three
ethical criteria:
utility, rights,
and
justice.
Each
of these
approaches
is
interesting
and
useful
for a variety of con-
FIGURE 1
A
Framework
for
Evaluating Corporate
Employees' Ethics
Individual
Performance Group Performance
Behavior
Results Behavior Results
Legally Legally
Legally
Legally
Man-
Discre- Man-
Discre- Man- Discre- Man- Discre-
dated
tionary
dated
tionary
dated tionary dated tionary
Owners
Managers
Stakeholder
Nonmanagers
Groups
Customers
Community
Other
Stakeholders
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1991 Gatewood and Carroll 675
texts. However, for the purposes of this article standards are needed that
can be operationally applied. Therefore,
it is
proposed that these standards
be captured by the following questions:
1. Does the behavior or result achieved comply with all applicable laws, regulations,
or
government codes?
2. Does the behavior
or result
achieved comply
with
organizational standards of
ethical behavior?
3.
Does
the
behavior
or result achieved
comply
with
professional
standards
of
eth-
ical behavior?
The
first
standard corresponds
with the
legally
mandated
component
of
Figure 1,
and
the
second and
third
standards
correspond to the discretion-
ary component
of
this same figure.
These three
levels
of
standards capture
the essential
codified
norms of
acceptable
behavior
as
they
are manifested
in
(a) society's
codified
ethics-law, (b)
the
organization's
belief
system,
and
(c)
codes of behaviors
that
may
have been
promulgated by industry
asso-
ciations or professional
associations. As
such, they provide
the
evaluator
with a useful screen
for
sifting
out
behaviors
or
results
that
are
deemed
unethical according
to
the
set of
standards
employed.
The use of
organizational
or
professional standards, however,
must
embody
a basis
for
normative
judgment
that
transcends
organizational
or
professional
cultures.
Philosophers
and
ethicists,
over the
centuries,
have
debated criteria
and theories for ethical decision
making,
and three
stand
out as particularly prominent and useful: rights, justice, and utilitarianism
(DeGeorge, 1990; Velasquez, 1982).
These three are
proposed as
the nor-
mative
principles
that should be used
to
anchor
organizational
and
profes-
sional
ethical
standard setting.
Each
of the
principles
utilizes distinctive
moral concepts,
and each
one
emphasizes aspects
of
behavior
or results
that are
neglected
or not
emphasized by
the others
(Velasquez, 1982).
Rights theories,
such
as those
proposed by
Kant
(personal rights)
and
Locke
(property rights),
focus on the entitlements of
individual
persons.
Rights express
the
requirements
of
ethics from the
standpoint
of the individ-
ual
(Cavanagh, 1984)
and
essentially
hold that
ethical decisions must
pro-
tect the individual's
legal
and moral entitlements.
Legal rights
are rooted
in
law
and, accordingly,
are
protected.
Moral
rights, according
to
DeGeorge,
are
important, normative, justifiable
claims or
entitlements
and are
rooted
in
the nature
of the members
of the moral
community.
In
just societies, legal
and moral
rights overlap considerably (DeGeorge,
1990:
81).
Justice
theories
have an older tradition than
rights theories,
and these
can be traced to
Plato and Aristotle in the fifth
century
B.C.
The
concept
of
justice requires
that
all
persons
be
guided by fairness, equity,
and
impar-
tiality.
A more recent contribution
to this
body
of
thought
has been made
by
Rawls (1971), who suggested that justice requires that people look at rules
and laws as
if
they
did
not
know what
role
they
were to
play
in
a
society
that
would
be
governed by
them.
Utilitarianism
as
an ethical
theory
holds that an action or decision
is
right
if it
produces,
or tends to
produce,
the
greatest good
for the
greatest
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676 Academy
of
Management
Review
October
number
affected
by
the
action; otherwise,
the decision or action
is wrong
(DeGeorge, 1990). Utilitarianism may be traced
to
Adam Smith and David
Ricardo. Jeremy Bentham (1789/1970) and John Stuart Mill (1863/1957) more
precisely formulated the theory. Utilitarianism employs a teleological ap-
proach to
ethics and asserts that behavior
or
actions
should be evaluated in
terms of their consequences. That is, the behavior that produces the greatest
net
gain
for
all
affected
groups
is considered moral.
Each of
the
theories
presented-rights, justice,
and
utilitarianism -has
its own rich history, nuances and adherents. Each also has its strengths and
weaknesses.
Taken
together
as a set of ethical
principles, however, moral
philosophers
have
argued
that each addresses an ethical
aspect of behav-
ior that should not be overlooked. There is no standard answer to the ques-
tion of how
one
should reconcile
the
different
views if
they
should
compete
with
one
another in a decision situation.
DeGeorge (1990: 72-74) discussed
what course
a
person
should
take when confronted with a
clash of
moral
rules, but space
does not
permit
that
complex discussion here. Velasquez,
Cavanagh,
and
Moberg (1983) presented
a schematic for ethical decision
making
that
employs
the
combined
criteria of
utility, rights,
and
justice.
They essentially argued
that
if
an action meets all three
criteria,
it is
deemed
ethical;
if the action fails all
three
criteria,
it
is deemed not
ethical;
if
the
action fails
to meet one or
two
criteria,
a
person
must consider
whether
any
overwhelming
factors would tilt the decision
one
way
or
the
other. In
addition, Carroll (1989: 128) presented a process of ethical decision making
that
employs
an ethics
screen,
which is
comprised
of
ethical
principles
(utilitarianism, rights,
and
justice),
ethical
tests,
and standards or
norms
(personal, organizational, societal).
A
special challenge arises
when the decision
maker attempts to apply
these
ethical
principles
in the face
of cross-stakeholder interactions.
This
would be a situation
wherein
organizational responsiveness
to
one set
of
stakeholders
(e.g., owners) might
have ethical
implications
for another set
of stakeholders
(e.g., employees).
Ethicists
have
no
sure
way
of
reconciling
these
competing
demands.
Some
general guidelines
were
provided by
Barry (1986: 67), however,
when he
proposed
some decision
making
rules
regarding
cases
of conflicts and mixed effects:
1. When two or more
obligations conflict,
choose the
more
important
one.
2. When two or more ideals
conflict,
or
when
ideals conflict
with
obligations,
choose
the action that honors
the
higher
ideal.
3.
When
the
effects
are
mixed,
choose
the action that
produces
the
greater good
or
the lesser harm.
These
guidelines,
when
used
in
conjunction
with the ethical
principles
discussed
previously, provide
the
decision maker
with
guidance
in
dealing
with cross-stakeholder conflicts and competition. This approach provides
some
assurance
that
principled
decision
making
with
an
aim
toward ethical
due
process
takes
precedence
over a
haphazard
or
thoughtless
consider-
ation
of the trade-offs
involved.
Thus,
it
is
posited
that the ethical
standards
to be
einployed
include
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1991
Gatewood and Carroll
677
those manifested in law
(to
include
regulations or government
codes), or-
ganizational
standards,
and
professional standards. It is
unrealistic, how-
ever,
to
think
of
organizational
or
professional standards that
have
no nor-
mative anchor which transcends the local culture. This is because without
such an
anchor, any
standards
derived by
an
organization,
no
matter how
ill-formed, would by definition be
acceptable.
Therefore, the rich history
and
tradition
of moral
philosophy
should
be employed to
guide the setting
of
standards.
In
particular,
norms
emanating from
a
consideration
of
rights,
justice, and
utilitarianism should be
brought
to
bear on the
standard-setting
process. Though this will not yield a
simple process, it will
produce stan-
dards
for
making ethical
judgments,
which are
rooted in principled decision
making
and which can
be defended when
both
interorganizational and
intraorganizational research is pursued.
Examples
of Ethical
Standards
It
should be
recognized
that,
in
most
instances,
standards would not be
developed
for
each cell
in our
framework
for
every topic
of
ethical perfor-
mance.
For
the
component
of
the
framework,
behaviors versus
results,
the
two
categories are,
for
all
practical
purposes, mutually
exclusive in
use.
That
is,
standards would
normally
be
set for
either
behaviors or
results,
but
not for both.
In
the measurement of work
performance
in
general,
a
com-
mon practice is that work behaviors are
assessed
in
those cases in
which (a)
there is one, or a small number of, behavior(s) that are appropriate for
successful
completion
of
the task or
(b)
the
results
of
the work
activity may
not be measurable
for a
long period
of time.
In
other
situations,
it is
common
to
assess
results.
Similarly,
the
applicability
of a
second
component
of the
model,
indi-
vidual versus
group,
is dictated
by
the
nature
of
the work
activity
of
interest.
That
is,
it is often
impossible
to
separate
and
assess
either
the
actions
or
the
results
of
one individual from those
of
others
in
the work
group.
In
these
cases,
the
setting
of standards at the
group level,
but not
the individual
level,
would
be
appropriate
for
assessing
ethical
performance. However,
in
cases
in
which the behaviors
or
results of the
individual are
distinct from
others,
it
is
possible
to set
standards at the individual
level.
For these
reasons,
it
is uncommon
for
standards
to
be
derived
for
each
cell of the framework for a
given topic.
For
example,
standards
developed
for the
stakeholder
group, employees, regarding
their
design
and conduct
of national advertisement
campaigns would,
most
likely,
be
written for
be-
haviors
of
group
members rather than for
results obtained
by
individuals.
This is because the nature of the work involves
group interaction and
the
results
(e.g.,
customer
perceptions
of
advertising
are
difficult to
measure).
On the other hand, sexual harassment is an example of a topic for which
standards
could
be
developed
at
both
the individual
and
the
group levels,
and
both behaviors
and
results could be
assessed.
In the
following
paragraphs examples
are
given
of
types
of
standards
that
may
be
developed by using
this
conceptual
framework.
First,
consider
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678 Academy of Management Review October
a standard that
would address the issue of
bribery.
A
standard for bribery
of a potential customer could
be
depicted
in
an excerpt of the framework
presented earlier
in
Figure 1. For this discussion this standard is categorized
as an individual behavior that is legally mandated by a specific law, the
Foreign Corrupt
Practices Act.
Figure
2
depicts
this
standard placed within
the context
of the
applicable
sections
of
the
Figure
1
framework.
In this case adherence to the Foreign Corrupt Practices Act, which
prohibits bribery for the purpose of getting business, is seen as the standard
of behavior that
would
be
used to
judge
the
ethics of
the individual
orga-
nization member
under
consideration.
Our second
example
illustrates
a
standard
affecting
a different
stake-
holder group-employees.
Here
the
issue or
behavior under
consideration
is sexual harassment.
In
this case,
a
legally mandated standard and a
corporate standard are presented.
This
example
is
also
an
illustration of an
individual behavior.
Figure
3
presents
this
example, along
with an indica-
tion
of
the applicable
law and
corporate policy statement.
A
third example illustrates
a
corporate standard that can be applied to
an
employee's
results rather than to behaviors. Here the
stakeholder
group
is employees and
the result under
consideration is the achievement of a
workplace
where minorities
are not
only
treated
fairly
but also are
fully
integrated
into
supervisory positions.
For
the division
manager whose per-
formance
is
being
evaluated
in
this
example, the achievement
of
specified
results established in corporate goals is the frame of reference. Figure 4
illustrates excerpts
from
the evaluation framework
that
depicts this stan-
dard.
The
final
example
is
one
in
which
group
standards
concerning results
are determined
in
reference
to
the
community
stakeholder
group.
Both
le-
gally
mandated
and
discretionary
standards are set. The
general issue
is
water pollution. The specific issue
is
effluent
limits
for surface water con-
tamination.
In this
case
a
specific manufacturing plant
of
a multidivisional
corporation
is the
group
under consideration. The water
pollution flowing
from
this
plant
is
a function of the
decisions and actions of
a
number of
personnel
within the
plant, and, therefore, corporate headquarters
decided
to use
the
group (entire plant)
as the unit of
evaluation.
The
legally man-
dated
standards
are
those set
by
EPA
Standard 101:
Effluent
Limits.
The
discretionary
standards
are those
set
by
the
National Association of
Chem-
ical
Plant
Managers (NACPM),
a
professional association,
which
has
set
FIGURE
2
An
Example
of
a Legal Standard for Individual Ethical Behavior
Individual Performance
Behavior
Legally
Mandated
Stakeholder
Group
Customers
Standard
for
bribery: Foreign
Corrupt
Practices Act
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1991
Gatewood and
Carroll
679
FIGURE 3
Examples of a
Legal Standard and
a Corporate
Policy
Standard for
Individual
Ethical
Behavior
Individual
Performance
Behavior
Legally
Mandated
Discretionary
Employees Sexual
harassment is
Corporate
policy: Not
only are
prohibited
under
forms of
sexual
harassment (as
Title
VII of the Civil
defined in Title
VII) prohibited,
but
Rights Act.
it
is also
company policy that
Stakeholder
employees have
a right to work
in
Group
an environment
completely
free
of
sexual innuendos, jokes, or
references. Employees
are to be
regarded as
individuals, not as
members of a
gender group
who
have
common
characteristics.
higher
standards
for this
industry
category.
These
standards
are stated in
NACPM
Guideline 44G: Effluent
Goals for
Member
Corporations. The as-
sessment of the
group's performance
in
this
example would be a
product of
comparing
its results to
both federal
guidelines as well
as
those recom-
mended
by
the
professional
association.
Performance Measurement
Principles Manifested
in
the
Framework
In this section
the
proposed
assessment
framework is
elaborated on
through
a discussion of
how it
manifests the
principles
of
performance mea-
surement identified
previously.
The first
principle
is
that
the
measurement
system should be linked to
the
philosophy, culture,
strategy,
and
goals
of
the
organization.
It should be
noted that
when
applied
to
the
measurement
of
ethical
performance,
the
appropriate statement of this
principle
is
that the
measurement system should be linked to the ethical philosophy, culture,
strategy,
and
goals
of
the
organization.
These
ethical
considerations
FIGURE 4
An
Example
of
a
Corporate Standard
for
Individual
Ethical Results
Individual
Performance
Results
Discretionary
Stakeholder
Group
Employees
Corporate
goal
for an
integrated
supervisory
level
of
management:
By
the
end of the
evaluation
period
under
consideration,
each
manager
is
to
have
achieved at least a 12%
representation
rate
of minorities in
entry-level
supervisory positions
reporting
to
him/her.
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680
Academy
of
Management
Review
October
should,
in
turn,
be
linked
to the overall
philosophy, culture,
strategy,
and
goals
of the
firm.
Logically,
an assessment
system
of
ethical
performance
should be directly linked to the former and indirectly linked to the
latter.
The organization's ethical concepts can be directly represented in this
framework. This
representation
is a function of
the stakeholder
groups that
are specified and the standards
that
are designated. The
stakeholder
groups clearly signify
those for whom the
organization chooses to be re-
sponsible. The
standards indicate the level of
responsibility. Legal
man-
dates usually
indicate
minimum
levels,
whereas
discretionary standards
usually indicate higher
levels of
responsibility.
The
resulting
statement of
the
parties
and the
extent of
ethical
responsibility
is a clear
representation
of
the explicit ethical culture, philosophy,
and
goals
of
the organization.
The second principle
is that measurement
should be applied to all
levels
of
the organization.
As illustrated
previously
in
Figure 1, the frame-
work can be
tailored
to
each
employee
or
group
of
employees through the
identification
of stakeholders and the use of the
behavior-results, legally
mandated-discretionary,
and
individual-group
dichotomies. These con-
structs can be
applied
to all
members
of
the
organization,
with differences
among
members
being
reflected
in
the
particular pattern
of
cells that have
specified
standards.
The third
principle, multiple
measures within
jobs
and
across
levels,
is
manifested
through
the
use of the
three factors used to define the frame-
work. Each cell of the framework could employ different measurements,
depending
on the combination
of
what
is
evaluated,
the content
areas
spec-
ified, and the standards
used.
A single overall measure would be
unlikely
to
capture
the
appropriate specificity. Similarly,
the fourth
principle,
that
different measurement
systems may
be
appropriate
for
different
units,
can
be
easily
demonstrated.
If two units differ on
any
of
the three factors
in
the
conceptual framework,
the measurement
systems applied
to
them would
necessarily
differ. For
example,
if
the difference was in
the use
of
behaviors
versus
results, entirely
different data would
be
gathered
to make an eval-
uation
of
ethical
performance.
Individuals
or
organizational
units
would
only
use the
same measurement
systems
if
they
were
similar in
all factors of
the
framework.
The
fifth and seventh
principles
are
directly
stated as
part
of
the frame-
work: the distinction between
individual and
group performance
and
the
distinction between
behaviors
and results.
By
direct
implication
the sixth
principle
of measurement of
both short-
and
long-term aspects
of
perfor-
mance
can be
captured by using
these
two distinctions.
The most
direct
example
is the use of behaviors
(short-term)
versus
results
(long-term).
Re-
sults also can be divided to
capture
various frames of
longitudinal
devel-
opment. Lastly, the eighth principle, that of the assessment of performance
controlled
by
the
individual(s),
is
operationalized
in
the
individual
versus
group
and
behavior versus results
dichotomies. The
proper
allocation of
these
factors allows a
precise specification
of
responsibilities
that are
di-
rectly
controlled
by
one
individual or a
group
of
employees.
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1991 Gatewood and
Carroll 681
IMPLICATIONSOR RESEARCH
The most important
characteristic of this framework is that it is a com-
prehensive specification
and
arrangement
of
those variables that are fun-
damental
to ethical
performance
in
organizations. Because
of
this charac-
teristic, the
framework has two uses for
researchers of business ethics. Both
of these uses
will
be described
in
detail in
this section.
The
first use is an
instrument
for
theory development. One critical
part
of
theory development
is the examination of
the relationships among vari-
ables. The framework identifies the variables of
stakeholders, ethical stan-
dards,
unit of
accountability
(group
versus
individual),
and dimensions
of
performance
to
be measured
(behavior
versus
results). Furthermore, sub-
categories
within
pertinent
variables
are
specified (e.g., legally mandated
and discretionary within the variable-ethical standard), and a general
organization
of
these
variables
(Figure 1)
is
given.
The
discussion and elab-
oration
of
interactions
among
these variables will
contribute
to
the
specifi-
cation of
relationships among
constructs of
ethical performance and will
assist
in
model
and
theory development. One example
of
how the frame-
work can be used
in
this
way
will
be discussed.
The second
use of
this
framework
is to
provide
a
method
of
measuring
ethical
performance
of
individuals and
groups. Presently,
business
ethics
research has
been hindered
by
the
difficulty
in
measuring performance
in
terms
of its ethical value. This framework would
enable
researchers
to
scale
ethical behaviors or results
as
having negative
or
positive
value in com-
parison
with the standards that can be
specified
in
each
of
the cells of
the
proposed
matrix.
Such
measurement is
essential to several
topics
of
empir-
ical research
in
business ethics. This use of
the framework
will
be
incorpo-
rated
into a
discussion
of research on the
development
and
implementation
of ethical
standards into
organizations.
Theory Development
in Business
Ethics
In order to
specifically
describe the use of this
framework
in
theory
development,
this section illustrates how it
may
be used to
complete previ-
ous work in ethics
theory.
One
such work is
that
of
Kahn
(1990),
who dis-
cussed activities
necessary
for the
development
of
an
agenda (an organiz-
ing framework)
for business ethics
theory
and research. He
conducted
in-
terviews with 32
business
ethics researchers from various
academic
disciplines
and used this information to
generate
themes about
past
and
present
research activities.
One
of
Kahn's conclusions is
that there are
two
classes of
concepts
that
comprise
the core of
business ethics
theory:
norma-
tive,
which focuses on how
an
individual
ought
to
behave,
and
contex-
tual, which focuses on the situational aspects of ethical behaviors or results.
The next
phase
of business
ethics research
and
theory development
must
bridge
these two classes
of
variables. Kahn described the
images
that
are
essential to this
bridging.
These
images
are the
analogies
that
research-
ers use
to
describe
their
work,
and
they
are
regarded
as
the subtexts and
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682
Academy
of
Management
Review
October
driving
forces of the field's ethical
concepts (1990:
314).
These
images
present
ethics as
conversation, history, vision,
and
community.
Collec-
tively, these images
serve as a
way
to link the
conduct and
content
of
future
research. They map the interaction of academic research and theory with
normative practice. In
order
to
illustrate the use of the present
framework in
theory development,
the
following paragraphs
discuss its use in
operation-
alizing
two
of Kahn's
images.
The image, conversations, emphasizes the
importance
of
dialogues in
creating theory
of
ethical
behavior. An ideal
way
for ethical
behavior to
develop
is to start as
public,
verbal debate between
individuals. Such
de-
bate
requires
the
two-stage process of, first,
self-confrontation
and, second,
confrontation
of others. Inherent in this is
the idea that moral
knowledge
arises
from the confrontation of
diversity
of
opinion (Srivastva
&
Barrett,
1988). The conceptual framework specified in this article would require sys-
tematic
conversations,
as standards for each of
the cells
in
the framework
are
developed. Within-organization
conversations,
for
example,
would
be
necessary
as
ethical standards for behavioral
interactions between
sales
personnel
and
customers
would be determined.
The
specifications
of
the
standards
for all
appropriate
cells of the framework would
require
conver-
sations
among
all
organizational
members.
Similarly,
the
proposed
frame-
work
also can
provide
a
map
for
conversations
among
researchers.
Among
the
specific
research
questions
that Kahn
introduced as
being
appropriate
for the conversation image and which can be addressed effectively with this
framework
are
the
following:
What are the characteristics of conversations that
help people struggle
with
and
resolve ethical dilemmas?
What
types
of issues create
the
need for
conversations about ethical issues?
(1990:
322)
For both of these
questions,
the characteristics of
the framework
(e.g.,
individual versus
group,
results
versus
behaviors, types
of
stakeholders,
and
mandatory
versus
discretionary
standards) provide variables that can
be used in research efforts. For example, in reference to the first
question,
it
may
be
determined
that
there are many
differences of
opinion among
organization
members in conversations
characterized
as
being
about
the
behaviors of individual
employees
directed toward consumers
and which
seek to
develop
standards
other than
legal
ones.
These differences of
opin-
ion,
in
turn,
force
an
examination of the
assumptions
about human
behavior
that are
made
by
the
various
parties
and
lead to more
commonly
under-
stood ethical standards.
The
image
of
ethics
as
history emphasizes that ethics evolve
over time.
It is only possible to understand them by using a longitudinal perspective.
Concurrent
snapshots provide
only momentary relationships
among
vari-
ables,
which
may change
unexplainably.
The
study
of ethics'
relationship
to
organizational
culture,
for
example, would
require
historical data
about
both the traditions and the
ethical standards of
the
organization. Some
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1991 Gatewood and
Carroll
683
relevant research questions that Kahn
posed for study using the history
image include
How does the
history of conflict and segmentation among certain
organization
groups (e.g., labor/management, manufacturing/development) influence ethical and
unethical
behavior?
How do organization
members translate procedures that are developed
in one his-
torical context to
issues reflecting changed
contexts? (1990: 322)
The proposed
conceptual framework
could provide the organizing con-
tinuity for the collection
of
relevant data to address these
questions. For
example, to
examine
the
first
question,
it
would be
appropriate
to note the
changes
in the frequency
of ethical
behavior or
results in
specific
cells of the
framework over
a
period
of time. These changes in the frequency of ethical
behavior or
results could then
be
related to data measuring the degree of
conflict between labor and management.
The usefulness
of
the framework
also can be illustrated with the re-
maining images.
To do
so, however,
is
beyond
the
scope
of
this article.
Rather,
the article's purpose
has been
to
present
one
way
that the variables
that comprise
this framework-stakeholders, behaviors
or results, individ-
ual and
group,
legally
mandated and
discretionary
standards-can be
used
to
systematically expand previous
theory development
in
business ethics.
Research
in the Development
of
Ethics
in
Organizations
In this section the potential use of the framework for a second purpose,
research
into
the
factors
important
for
the
development
of
ethical standards
in
organizations
and
the
socialization of
organization members
to
those
ethical
standards,
is
discussed.
In
research
on these topics,
the framework would serve
mainly
as a
means
to
develop
criteria
or
ethical
performance
measures that are neces-
sary
for
empirical
research. The
development
of
this framework allows
for
the
specification
of standards
of ethical behaviors or results
for
individuals
or
groups
of
employees.
These
standards
would,
in
turn, permit
the
devel-
opment
of either
within-organization
or
between-organization
measure-
ment
systems.
In the
former,
the standards would be the basis
against
which the
actual
behavior or
results
of
organization
members
can be
com-
pared.
These
actual behaviors
or results can then be assessed
as
either
below, equal to,
or above the standards. For
between-organization
mea-
surement,
the standards
for
each
of
the
cells in the framework would be the
points
of
comparison.
This framework
would
permit
the
comparison
of
state-
ments
of ethical standards
on
common
topics
or
issues
by
the
organizations.
Scaling systems
could be
developed
that measured
differences
in
either the
levels
of the standards or
the
breadth
of
the
standards between
organiza-
tions. The scores resulting from these methods would be the ethical perfor-
mance data
necessary
for
empirical analyses. Although
there are
many
research
topics
for which this
conceptual
framework
would be
useful,
four
of these
are addressed.
Stakeholders'
influence
and
ethics.
According
to Freeman's
(1984)
def-
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684 Academy
of
Management
Review
October
inition,
the term
primary
stakeholder
generally applies
to
owners,
suppli-
ers,
employees, customers,
and
competitors. Through
economic
power,
each
group
has influence
on the actions of the
organization. Understanding
the impact that various stakeholder groups have on the ethics of the orga-
nization
is
important.
One
fundamental research
question
is the
extent to which
stakeholder
economic power
translates into
impact
on the
development
of
ethical
stan-
dards of
the
organization.
The
act
of
mapping
relations
between stakehold-
ers and
the firm
(Freeman
&
Reed,
1983)
includes
two
important
assess-
ments of stakeholder
influence:
(a)
how
seriously
the
stakeholder's interests
affect
the firm if left unattended and
(b)
the
extent
to
which the
organization
can be affected in either the
long
or the short run
by
stakeholder demands
and actions. These assessments
are useful
for
this
topic of
ethics research.
Basically,
data
from
the
mapping process
can be
related
to
ethical stan-
dards
developed
for various
cells
of the framework. One research
project
would
be
to compare
the ethical standards of
groups
of firms that differ
in
their assessed profiles of stakeholder influence. For
example,
one
might
suspect
that
ethical standards
would be
lower for those
firms
for
which
competitors
have a
dominant
impact
relative
to other stakeholders than
for
those firms for
which
employee groups
are dominant. This
prediction
is
based
on
the
premise
that firms with
large competitor impact
would
be
less
likely to endorse behaviors
that
may increase costs and lessen their posi-
tions relative to competitors. Frequently, higher-level ethical standards are
regarded
as
being of
increased
short-term cost in
their
development
and
implementation.
Another
research
topic
that
could
be
studied in
a
similar fashion
is the
relationship between
the
level of conflict among stakeholder groups in their
demands
on the
organization
and the ethical behavior
and results of
the
organization.
It is to be
expected
that
there
would
be
various
levels
of
dis-
agreement among
stakeholder
groups
about
the
appropriate
ethical
stan-
dards for
cells in the
framework.
The
examination
of
this
disagreement
in
relationship
to both
the level
of standards
that
are
developed by
the
orga-
nization and
the actual
ethical
behavior or
results
of
individuals
and
groups
of the
organization
would be
important.
Socialization
of
ethics.
This
process
is
the
internalization
of
organiza-
tional ethical standards
by
the individual
employee.
The
dynamics
of
this
internalization
are of
major
research
importance
to the field of
business
ethics. Internalization
is
fundamental
to the
ethical conduct of
organization
members
(Wood, 1990).
According
to
McCoy (1985),
control
systems
are
an
integral part
of
employee socialization. One
important control system
that
he
discussed
is
corporate
culture,
the
embodiment
of
the
values
of the or-
ganization. Saffold (1988) described two important characteristics of corpo-
rate
culture when
measuring
its
impact
on
organizational
variables: cul-
tural
dispersion (diffusion
across
the
social
and personal dimensions of an
organization)
and
potency (power
of
culture
to
influence
behavior).
One
research
question
in
this
topic is,
To what extent
are ethical stan-
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1991 Gatewood and Carroll
685
dards
part
of
organizational
culture? It seems reasonable to
expect that if
culture reflects
the values of the
organization, then standards for
the cells
of
this framework are part
of that
culture. One tentative hypothesis is that
organizations with highly dispersed and highly potent cultures have devel-
oped consensus relative to the ethical behaviors or
results of individuals and
groups
of stakeholders more often than
have other
types
of
organizations
(Victor & Cullen, 1988).
To examine this
hypothesis,
one would
measure the
dispersion
and
potency
of
corporate culture
in
a
sample of organizations.
This
conceptual
framework could be used to
assess the level
(mandatory
versus
discretionary)
and the extent
(number
of
cells with
specified
stan-
dards)
of ethical standards
in
the same
sample
of
organizations. Compar-
isons could be made
among high
and
low
diffusion or
high
and low
potency
organizations
on these measures
of
ethical standards.
One would
anticipate
that organizations
that are
high
on the
cultural measures also would be
high
on the ethical
measures.
A related
and
important
second research
question
is the
relationship
between
value orientations
of
organizations
and
their
ethical standards.
England (1975) developed
a
classification scheme for
identifying
the value
orientations of
managers.
The
pragmatic approach describes those whose
foremost
concern is whether an action
will
advance the
company's objec-
tives. The
ethical/moral
approach
concentrates on
whether the action is
defensible
within a
coherent
framework of
principles.
Managers with
the
affective approach are mostly concerned with the expected pleasure or
pain
of the action. A mixed
approach
is
also
possible,
which describes
combinations
of the
previous
three value orientations.
England (1975)
de-
veloped survey procedures
for
measuring
these values of
managers and
describing
either an
individual's,
or
group
of
managers',
value
orientation.
Generally,
the
pragmatic
orientation
is
the
most
common,
and
the
affective
orientation
is the least common.
One
obvious
expectation
of this
research
topic
is
that
there
should
be
differences in
the ethical standards
among managers
with different domi-
nant
values. For
example,
it
would seem
logical
that
managers
character-
ized
by
the ethical/moral
approach
would have more
stringent
standards
than
others.
However,
this
supposition
has
not been
empirically tested, nor
has
the
nature
of
differences in
ethical
standards
among managers
with
other
value
orientations been examined. The use
of
England's procedures
and this framework would allow researchers
to
gather
data
about
both
values
and
ethical
standards
of
managers
and
to
examine the
relationship
between
the
two.
Incorporating
ethics
into
performance
measurement
systems.
Accord-
ing
to
reinforcement
theory,
one means
of
increasing
the
frequency
of eth-
ical behavior or results would be to reward such activity when it occurs.
Giving
rewards in reinforcement
theory, however,
assumes
that
appropri-
ate
behaviors
can
be
defined and identified.
Otherwise,
the
reward
is
some-
times
given
for
inappropriate behavior,
and the association that must
be
made
by
the
individual between
the reward
and
the
desired
behavior
is
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686 Academy
of
Management
Review October
tenuous; deficiency
in
forming
this
association reduces the impact of the
reward
in
increasing
the frequency
of
the desired behavior. Jansen and Von
Glinow (1985)
described this
phenomenon
in
organizations.
In terms of reinforcement for ethical performance, the framework de-
scribed here
would enable
organizations
to be
specific
in
the
standards of
expected ethical
behavior or results. In
essence,
these standards would be
the statements
developed
for
the
cells of
the framework. These standards
could be
incorporated
into
existing performance
measurement
systems
of
the organization and, thereby,
would formalize the review of ethical behav-
ior or results of employees. Rewards
could
then be linked
to the results of
this formalized review.
A
more
nearly complete description
of
the appro-
priate
features of reward systems
can be found in
Lawler
and Rhode (1978).
One
important
research
question regarding
this
topic is,
What is the
effect of the use of rewards on the frequency of ethical behavior or results of
employees?
This
question
can
be
studied
in different
ways.
For
one, orga-
nizations similar in terms of industry and size could be
compared on the
basis
of
how
adequately
rewards
are
linked
to
ethical actions
or
results
of
employees
based on the
previously
mentioned
guidelines
of Lawler
and
Rhode
(1978).
The
hypothesis
would
be
that
a
positive relationship
would be
found
between
the
adequacy
of the reward
system
and
the level of
ethical
performance
of
the
employees.
Because of the
expected
small number of
organizations
that
actually
have reward and measurement
systems linked
to ethics, a second, more feasible approach, might be to collect data in a
sample
of
organizations
before and after the
implementation
of this
concep-
tual framework
and an
accompanying
reward
system.
The hypothesis
would
be that an
increase in ethical
performance
would
occur after the
intervention. A third
approach
would be to examine the effect of
monetary
versus nonmonetary
rewards
on
the
frequency
of
ethical performance.
Such
information
would be
important
in
the
design
of reinforcement
sys-
tems.
Ethical performance and
economic
performance.
Most of
the research
which has
focused on the
relationship
between
socially
beneficial
organi-
zation performance and economic performance has been conducted under
the rubric
of
corporate
social
performance (CSP).
In
some instances the term
CSP
has been
used
in
a manner consistent
with
ethical
performance.
In
other
instances,
ethical
performance
more
nearly
has been seen as a
subset
of
CSP.
In
either
case, previous
research has
yielded
inconsistent
findings
concerning
the
relationship
between
corporate
social
performance
or ethi-
cal
performance
and measures
of the
organization's
financial
performance
(Aupperle, Carroll,
&
Hatfield, 1985; McGuire, Sundgren,
&
Schneeweis,
1988).
This is due
in
part
to the
variability
in the measures of social or
ethical
performance that have been used. For one early measure, researchers
used
expert
evaluation of
corporate policies.
For
example,
Sturdivant and
Ginter
(1977)
used an index from the Council of Concerned Businessmen.
Moskowitz
(1972, 1975)
used
two
rankings
from Business and
Society.
The
validity
of such
evaluations
depends
to
a
large
extent on the
knowledge
of
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1991 Gatewood and Carroll
687
the
individuals
doing
the evaluation and the
agreement among
evaluators
of what characteristics
are
being judged.
For a
second
type
of
measure,
researchers used
content
analysis
of
corporate
annual
reports
or
other cor-
porate documents (Abbott & Monsen, 1979; Preston, 1978). However, the
relationship between such public statements
and
actual
corporate actions is
unknown. For
a third
measure,
researchers used
performance
in control-
ling pollution as an indicant (e.g., The Council of
Concerned Businessmen
Pollution
Performance Index
[Spicer, 1978]). However, pollution control is
only one segment
of total ethical
performance,
and it
applies to only a
limited number
of
industries. Other studies have nicely summarized the
kinds of measurements
that
have been used
to
operationalize corporate
social and economic
performance (Aupperle
et
al., 1985;
Cochran &
Wood,
1984; Ullmann, 1985).
The use of the framework presented in this article would provide a more
direct measure
of
ethical
performance
than
any
of
the
previously mentioned
methods.
Therefore,
it
is
expected
that there
would
be more
consistency
in
the demonstrated
relationships
between ethics
and performance across
studies.
The most feasible research
strategy
would focus
on the
organization
as the unit of analysis
rather
than individual
or
groups within
the
organi-
zation.
For a
sample
of
firms
in
the same
industry,
the standards of each
of
the firms
for
cells
of the
conceptual
framework
could be
gathered.
These
data would enable
researchers to rank the
firms on the basis of
level
of
specified ethical performance standards. This ranking could be related to
the
financial performance
of
the firms
to
estimate the
relationship between
these ethical
standards
and economic performance.
DISCUSSION
AND
IMPLICATIONS
The
ethical
performance
of individuals and
groups
within business or-
ganizations
has become
an
increasingly
important topic
in
management
research.
Though
this
body
of
research
has
addressed
several subjects,
including managers' opinions
about
the
general
level
of
ethical perfor-
mance in business, organizational factors related to the level of ethical
values expressed by employees,
and factors
affecting
the
alternative cho-
sen
by
individuals
when faced with
ethical
dilemmas,
almost no research
has
directly
studied the actual ethical
performance
of
organizational
mem-
bers
and
the variables related
to
this
performance.
This article addresses
this
deficiency
in research
by describing
a frame-
work
for
assessing
ethical
performance.
This framework is
composed
of
three organizing components:
an
identification
of the
major
stakeholders of
the
organization,
the
categorizing
of
organization
members
into
individual
or group units for accountability, and the division of performance into be-
haviors
or
results.
These
three
components
are crossed in a
three-variable
framework
in
which the cells
represent
combinations of the interactions
among
these three
components.
Ethical standards can
then
be
formulated
for each cell
in terms of
existing laws,
or
organizational
or
professional
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688 Academy
of
Management
Review
October
codes of conduct established through
the
application of normative princi-
ples such
as
rights, justice,
and utilitarianism. These
standards become,
then, the criteria for
ethical
performance
of
organization members. Assess-
ment of ethical performance becomes the result of evaluating the behaviors
or results of members in comparison to the expressed, appropriate ethical
standards.
Both the process of developing this framework within organizations and
the resulting
measurement
of
ethical
performance
of
organizational mem-
bers should make important
contributions to the
body of research in busi-
ness
ethics. The
process
of
development
forces the interactions
that Kahn
(1990) described
as critical
for the
specification
of
the next
stage
of
theory
in
business ethics. The assessment
of
individuals and groups provides the
quantification
of ethical
performance
and
the possibility of conducting em-
pirical research using this measured variable.
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Robert D. Gatewood received his Ph.D. from Purdue University. He is currently serving
as the Interim Chairman
of the
Department
of
Management
at
the University
of
Geor-
gia. His recent research is in the areas of recruitment, selection, and adjustment to job
loss.
Archie B. Carroll is professor of management and holder of the Robert W. Scherer
Chair
of
Management
and
Corporate
Public Affairs at the
University
of
Georgia.
He
received his D.B.A. degree from the Florida State University. His current research
interests include business ethics and corporate social performance. He is a former
chairperson (1976-1977)
of the
Social
Issues in
Management
Division of
the Academy
of Management.