Management DecisionOrganisational ethics and employee satisfaction and commitmentHian Chye Koh El'fred H.Y. Boo

Article information:To cite this document:Hian Chye Koh El'fred H.Y. Boo, (2004),"Organisational ethics and employee satisfaction and commitment",Management Decision, Vol. 42 Iss 5 pp. 677 - 693Permanent link to this document:http://dx.doi.org/10.1108/00251740410538514

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Organisational ethics andemployee satisfaction and

commitmentHian Chye Koh and El’fred H.Y. Boo

Nanyang Business School, Nanyang Technological University,Singapore

Keywords Professional ethics, Employees behaviour, Job satisfaction, Decision trees, Singapore

Abstract This study examines the relationship between organisational ethics and organisationaloutcomes based on the justice theory and cognitive dissonance theory. The sample data are derivedfrom a questionnaire survey of 237 managers in Singapore. Results obtained from decision treesindicate significant and positive links between ethical culture constructs (i.e. top managementsupport for ethical behaviour and the association between ethical behaviour and career successwithin the organisation) and job satisfaction. Further, there is a significant and positive linkbetween job satisfaction and organisational commitment. Also, for different levels of jobsatisfaction, particular aspects of organisational ethics are associated with organisationalcommitment. The results suggest that organisational leaders can use organisational ethics as ameans to generate favourable organisational outcomes.

IntroductionOrganisational ethics and corporate social responsibility are not new concepts. Theyhave been traced to the eighteenth century when anti-slavery groups appealed to thepublic to buy sugar that had been produced in a country where unpaid labour was notenforced (Strategic Direction, 2002). However, the recent wave of corporate failures andaccounting scandals (e.g., Enron, WorldCom, Global Crossing and Parmalat) hasheightened attention to the urgent need for corporate governance, corporate socialresponsibility and organisational ethics. The increasing pressure from stakeholderssuch as consumers, investors and the community for organisations to behave ethicallyand in a socially responsible way can no longer be ignored.

For many decades, neoclassical economic theory specifies that businessorganisations exist to maximise profits for shareholders (Stormer, 2003).Increasingly, however, business organisations are beginning to realise that theyhave to behave not only economically (to maximise profits) but also ethically (associally responsible corporate citizens). Economic behaviour and ethical behaviour canactually achieve a common corporate goal. This is because ethical behaviour helpsbring about economic rewards. The most comprehensive empirical evidence of this todate is provided by Orlitzky et al. (2003), who meta-analysed 52 studies comprising atotal of 388 correlations and 33,878 observations. They concluded that a positiveassociation exists between corporate social/environmental performance and corporatefinancial performance across industries and across study contexts. Similar findingshave also been reported by Joyner and Payne (2002).

This paper focuses on the relationship between organisational ethics and employeesatisfaction and commitment (i.e., organisational outcomes). It is proposed thatorganisational ethics is positively associated with not only financial performance but

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Management DecisionVol. 42 No. 5, 2004

pp. 677-693q Emerald Group Publishing Limited

0025-1747DOI 10.1108/00251740410538514

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also employee attitudes. While it is obvious that organisational ethics are intended toguide and influence employee behaviour (e.g., in dealing with ethical dilemma andavoiding unethical situations), it is not obvious what relationship exists betweenorganisational ethics and employee attitudes. In a recent study, Koh and Boo (2001)found that three measures of organisational ethics (namely, top management supportfor ethical behaviour, the organisation’s ethical climate, and the association betweenethical behaviour and career success) are associated with job satisfaction. This studyextends Koh and Boo’s (2001) study by introducing organisational commitment intothe model and using decision trees (a data-mining tool useful for detecting nonlinearand interaction effects) to test the research hypotheses. The findings are expected tohave important managerial implications.

Investigating organisational commitment is important and useful to organisationleaders as organisational commitment has been found to affect other organisationaloutcomes, including turnover intentions (Lum et al., 1998; Sims and Kroeck, 1994) andcompany sales and profitability (Benkhoff, 1997; Brett et al., 1995). Its importance andusefulness underlie the proliferation of studies that investigate the determinants oforganisational commitment (e.g., personal attributes, job characteristics and workexperience - the three broad categories of determinants of organisational commitmentproposed in Steers’ (1977) model). Other determinants found to have an effect onorganisational commitment include job satisfaction (MacKenzie et al., 1998; Mannheimet al., 1997) and socialization tactics or practices (Allen and Meyer, 1990a; Ashforth andSaks, 1996; Buchanan, 1974). There is also evidence that employees’ personal belief inwork ethics had a direct effect on organisational commitment (Chusmir and Koberg,1988; Saks et al., 1996).

As ethical values may vary from one person to another, it may be necessary forleaders in organisations to adopt certain measures to inculcate certain ethical valuesamong employees in order to manage organisational outcomes. This studyinvestigates the links between organisational ethics and two measures oforganisational outcomes. Specifically, it investigates whether top managementsupport for ethical behaviour, the ethical climate in the organisation, and theassociation between ethical behaviour and career success are associated with differentlevels of job satisfaction and also with different levels of organisational commitment.The findings of this study can contribute to the understanding of how organisationalethics may be used as a means to generate favourable organisational outcomes.

The remainder of this paper is divided into four main sections. The first section laysthe theoretical framework and develops the research hypotheses. The research methodemployed in the study is discussed in the second section. The third section presents theresults and implications. Finally, the fourth section concludes the study, discusses thelimitations and suggests directions for future research.

Research framework and hypothesesThe relationship between organisational ethics and job satisfactionThe link between organisational ethics and job satisfaction can be explained by theorganisational justice theory and cognitive dissonance theory. The salient points aresummarised below (see also Koh and Boo, 2001; Viswesvaran et al., 1998).

Organisational justice theory. According to Hartman et al. (1999), the concept oforganisational justice is central to understanding a wide range of human attitudes and

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behaviours in organisations. The underlying premise is that the justice perceptions ofemployees affect their job attitudes and organisational outcomes. Leigh et al. (1988), forexample, concluded that employees look more to the broader organisationalenvironment than to their particular role in attributing their satisfaction to their job.In particular, as stated by Dailey and Kirk (1992), perceptions of organisational justiceaffect job attitudes such as job satisfaction and turnover intention. Organisationaljustice is often dichotomised into two components:

(1) distributive justice which addresses the fairness of managerial decisionsrelative to the distribution of outcomes such as pay and promotion; and

(2) procedural justice which focuses on how such managerial decisions are made.

Dailey and Kirk (1992) found that employee perceptions of both distributive andprocedural justice play a central role in relation to job satisfaction. Sweeney andMcFarlin (1993) and Hartman et al. (1999), however, found that distributive justicepredicts job satisfaction better than procedural justice does.

On the conceptual front, Lind’s (1992) fairness heuristic states that perceptions offairness in one area influence perceptions of fairness in another area. In the context ofthis study, it means that employees who perceive their organisations to be ethical arealso likely to perceive their organisations as being fair to them. This, in turn, is likely toenhance employee job satisfaction. Hence, organisational ethics and job satisfaction areexpected to be positively linked. More generally, Lind et al. (1993) argued that justicejudgments affect attitudes, behaviour and decisions across a wide variety of socialcontexts and they also play an important role in how employees respond toorganisational outcomes and organisational procedures and process.

In view of the above, if employees perceive strong top management support forethical behaviour, a favourable ethical climate, and a strong association betweenethical behaviour and career success in the organisation, then they are also likely tohave a higher level of job satisfaction. The converse is also true.

Cognitive dissonance theory. According to the cognitive dissonance theory (firstproposed by Festinger in 1942), individuals strive to minimise dissonance in theirenvironment. (Similar concepts include the balance theory (Heider, 1958), the congruityprinciple (Osgood and Tannenbaum, 1955) and the discrepancy theory (Michalos,1991)). Empirical evidence has shown the operation of the cognitive dissonance theoryin finance (Goetzmann and Peles, 1997) and marketing (Albaum et al., 1998). In anutshell, continued dissonance results in distress and dissatisfaction with the situation(Viswesvaran et al., 1998). Essentially, employees desire consistency between theirethical value system and the ethical climate of their organisation (Schwepker, 1999).Assuming that employees generally strive to be individually ethical, dissonanceresults if these employees perceive little top management support for ethical behaviour,an unfavourable ethical climate in their organisation, and/or little association betweenethical behaviour and career success. This dissonance will, in turn, reduce jobsatisfaction.

Further, top management sets the organisational climate for, and serves as areferent group to, employees. Thus, any discrepancy between employees’ internalstandards of ethics and their perceptions of top management will result in a moralconflict and cognitive dissonance (Dozier and Miceli, 1985; Festinger, 1942). This againreduces job satisfaction. More recently, Schwepker (1999), Sims and Kroeck (1994) and

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Viswesvaran and Deshpande (1996) found that the lack of an ethical fit (i.e., ethicalincongruence) between employees and their organisation can result in distress and jobdissatisfaction, among other things.

To summarise, a positive link between organisational ethics and job satisfaction isexpected. That is, a higher level of ethics is expected to be associated with a higherlevel of job satisfaction in organisations.

The relationship between job satisfaction and organisational commitmentPast studies have defined organisational commitment in many different ways. Porteret al. (1974) defined organisational commitment as the relative strength of anindividual’s identification with, and involvement in, a particular organisation andcharacterised it by three factors. These factors are a strong belief in and acceptance ofthe organisation’s goals and values, a willingness to exert considerable effort onbehalf of the organisation, and a strong desire to maintain membership in theorganisation.

Allen and Meyer (1990b) conceptualised three components of organisationalcommitment:

(1) affective (i.e., employee’s emotional attachment to, identification with, andinvolvement in the organisation);

(2) continuance (i.e., commitment based on the costs that the employee associateswith leaving the organisation); and

(3) normative (i.e., employee’s feelings of obligation to stay with the organisation).

Employees with strong affective commitment remain with the organisation becausethey want to, those with strong continuance commitment because they need to, andthose with strong normative commitment because they feel they ought to (Schappe andDoran, 1997).

As the underlying component of commitment in various definitions pertains to thedesire of employees to remain in their organisations or to their unwillingness to changeorganisations for moderate personal advantage (Joseph and Deshpande, 1996), greaterjob satisfaction is expected to lead to stronger organisational commitment. This isconsistent with Porter et al.’s (1974) suggestion that organisational commitment ismuch less specific and more stable than job satisfaction and thus the latter is expectedto affect the former. Similarly, Steers (1977) suggested that employees whose needs aresatisfied by an organisation would likely be more committed to it. Past research hasshown that job satisfaction is a determinant of organisational commitment (e.g.,Barling et al., 1990; MacKenzie et al., 1998; Mannheim et al., 1997). Research in theethics area has also supported this relationship (see, for example, Saks et al., 1996; Simsand Kroeck, 1994; Trevino et al., 1998).

Finally, for the reasons given earlier in the case of job satisfaction (i.e.,organisational justice and cognitive dissonance), it can be argued that organisationalethics also affects organisational commitment. This is consistent with the findings ofTrevino et al. (1998) that ethical culture and ethical climate influence organisationalcommitment. More recently, Schiebel and Pochtrager (2003) have also reported thatorganisational ethics increases employees’ commitment.

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Hypotheses development and testingBased on the above, a two-level analysis is employed. The first level investigates iforganisational ethics has an impact on the job satisfaction of employees.Organisational ethics, as operationalised in the study, comprises top managementsupport for ethical behaviour, ethical climate in the organisation, and the associationbetween ethical behaviour and career success. Job satisfaction of employees ismeasured in terms of satisfaction with supervisor. Koh and Boo (2001), Viswesvaranand Deshpande (1996) and Viswesvaran et al. (1998) postulated and obtained evidencethat the impact of organisational ethics is most pronounced on job satisfaction withsupervisor, amongst the various components of job satisfaction. At the second level,the effects of organisational ethics as well as job satisfaction on organisationalcommitment are investigated. Organisational commitment is assessed as thewillingness to remain with or leave an organisation. At both levels, the decision treeapproach (which allows for non-linear and interaction effects) is used.

To summarise, the null hypotheses proposed in this study are as follows:

H1a. Top management support for ethical behaviour has no significant effect onjob satisfaction.

H1b Top management support for ethical behaviour has no significant effect onorganisational commitment.

H2. Ethical climate in the organisation has no significant effect on job satisfaction.

H2b. Ethical climate in the organisation has no significant effect on organisationalcommitment.

H3a. The association between ethical behaviour and career success in theorganisation has no significant effect on job satisfaction.

H3b. The association between ethical behaviour and career success in theorganisation has no significant effect on organisational commitment.

H4. Job satisfaction has no significant effect on organisational commitment.

Research methodsSample and proceduresThe research questionnaire was administered to a random sample of 400 students whowere enrolled in the MBA programme in one of the universities in Singapore. It can beargued that MBA students comprise an appropriate sample as they are managers whohave to deal with business ethics issues in the course of their work.

A total of 237 usable responses was received, giving a response rate of 59.25 percent. A majority of the respondents is in the age group of between 25 and 45 years old(83.54 per cent), and male (61.21 per cent). Most of the respondents are in the middlelevel (49.57 per cent) and upper level (15.38 per cent) managerial positions. In terms ofworking experience, 113 (48.09 per cent) have at least five years of working experience.

A large proportion of the respondents (64.56 per cent) comes from organisations thatemploy at least 200 employees. Many of the respondents’ organisations are in themanufacturing, service and finance sectors (26.58 per cent, 19.83 per cent and 16.03 percent, respectively). About one third (34.33 per cent) of the respondents’ organisations areprivate companies and about another one third (33.48 per cent) are listed companies.

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Measurement of variablesOrganisational commitment and job satisfaction. Organisational commitment ismeasured by using the instrument developed by Hrebeniak and Alutto (1972). Itconsists of four items assessed on a three-point scale, where 1 represents “definitelynot”, 2 “uncertain”, and 3 “definitely yes”. A higher level of organisational commitmentis indicated by a lower mean score. Job satisfaction is derived from an instrument thathas been used by previous researchers in the business ethics literature (e.g., Joseph andDeshpande, 1996; Koh and Boo, 2001; Viswesvaran et al., 1998; Vitell and Davis, 1990).In this study, the job satisfaction component of satisfaction with supervisor ismeasured. The instrument comprises four items measured on a scale ranging from 1(strongly disagree) to 4 (strongly agree). A higher level of job satisfaction is indicatedby a higher mean score.

Organisational ethics.The findings of Trevino et al. (1998) suggest that ethicalclimate and ethical culture are not alternative ways of conceptualising organisationalethics. They capture somewhat different but strongly related aspects of organisationalethics. Ethical climate reflects the organisation’s broad normative characteristics andvalues, while ethical culture refers to a set of formal and informal control mechanismsthat aim at influencing behaviour and organisational outcomes. This studyincorporates these two aspects of organisational ethics.

The ethical climate questionnaire developed by Cullen et al. (1993) is adapted for thepurpose of measuring ethical climate in this study. The following three categories ofethical climate are assessed:

(1) egoistic, which emphasises company profit;

(2) benevolent, which emphasises team interest; and

(3) principled, which emphasises rules and standard operating procedures.

Additional items are added so that each of the three categories is measured by fouritems on a four-point scale, where 1 represents “strongly disagree” and 4 represents“strongly agree”. An observation is assigned to the ethical climate category with thehighest mean score. That is, ethical climate is a categorical variable with three levels(egoistic, benevolent and principled).

The organisation’s ethical culture is measured using two variables:

(1) top management support for ethical behaviour; and

(2) the association between ethical behaviour and career success.

To measure top management support for ethical behaviour, the three items developedby Hunt et al. (1984) are adapted. An additional item is added to give a 4-item measureusing a four-point scale, ranging from 1 (strongly disagree) to 4 (strongly agree). Ahigh mean score represents strong top management support for ethical behaviour. Tomeasure the association between ethical behaviour and career success in theorganisation, the six-item ethical optimism scale developed by Hunt et al. (1984) isused. Each item is similarly measured on a four-point scale, ranging from 1 (stronglydisagree) to 4 (strongly agree). A high mean score represents a strong associationbetween ethical behaviour and career success in the organisation.

The items to measure the variables are listed in the Appendix.

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Data analysisTo test the research hypotheses, decision trees are constructed. This predictivemodelling method, which is commonly used in data mining, is selected in view of itsability to handle non-linear and interaction effects. Also, decision trees give very goodvisualisation of the results and relationships (see Berry and Linoff, 1997).

The objective of decision trees is prediction by dividing observations into mutuallyexclusive and exhaustive subgroups. The division is based on the levels of particularindependent variables that have the strongest association with the dependent variable.In its basic form, the decision tree approach begins by searching for the independentvariable that divides the sample in such a way that the difference with respect to thedependent variable is greatest among the divided subgroups. At the next stage, eachsubgroup is further divided into sub-subgroups by searching for the independentvariable that divides the subgroup in such a way that the difference with respect to thedependent variable is greatest among the divided sub-subgroups. The independentvariable selected need not be the same for each subgroup. This process of division (orsplitting in decision trees terminology) usually continues until either no furthersplitting can produce significant differences in the dependent variable in the newsubgroups or the subgroups are too small for any further meaningful division. Thesubgroups and sub-subgroups are usually referred to as nodes (see also Lehmann et al.,1998).

In the automatic interaction detection (AID) algorithm, all possible two-way splits ofeach node for each independent variable are examined. The split that leads to the mostsignificant t-statistic (as per analysis of variance or ANOVA) for the difference inmeans of the dependent variable between the two lower-level nodes is selected. In thechi-square automatic interaction detection (CHAID) algorithm, the chi-square statisticis used to determine the best split. For the study, a combined version of AID andCHAID as available in the SPSS AnswerTree 3.0 software is used. This algorithm hasthe desirable features of providing p-values and allowing multiple splits.

Results and implicationsJob satisfactionThe decision tree results for job satisfaction are summarised in Figure 1. As shown, theassociation between ethical behaviour and career success in the organisation (eth_succ)is the most important aspect of organisational ethics affecting job satisfaction ( p-value, 0.0001). In particular, a higher level of eth_succ is associated with a higher level ofjob satisfaction. This can be seen from the decision tree where a low, medium and highlevel of eth_succ is associated with a mean job satisfaction level of 2.54, 2.87 and 3.26,respectively.

Further, in the situation where the association between ethical behaviour and careersuccess in the organisation is relatively low (# 2.33), top management support forethical behaviour (tmgt_sup) also has a significant effect on job satisfaction( p-value ¼ 0.0024). As shown in Figure 1, a higher level of tmgt_sup is associated witha higher level of job satisfaction. In particular, a low, medium and high level oftmgt_sup is associated with a mean job satisfaction level of 2.21, 2.59 and 2.91,respectively.

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There is insufficient evidence to support a significant effect of ethical climate on jobsatisfaction, after eth_succ and tmgt_sup are incorporated into the decision tree.Hence, the null hypothesis H2a cannot be rejected.

However, based on the results, the null hypotheses H1a and H3a can be rejected at a0.05 level of significance. That is, a stronger association between ethical behaviour andcareer success in the organisation and a higher level of top management support forethical behaviour (where the association between ethical behaviour and career successin the organisation is relatively low) are associated with greater job satisfaction. Thesefindings support the justice theory and the cognitive dissonance theory.

While the findings are generally consistent with those of prior studies (e.g., Koh andBoo, 2001; Viswesvaran and Deshpande, 1996; Viswesvaran et al., 1998), there areimportant differences. First, there is insufficient evidence in this study to suggest asignificant association between ethical climate and job satisfaction. Second, theassociation between ethical behaviour and career success in the organisation is foundto have the greatest impact and a nonlinear impact (i.e., stronger at higher levels ofeth_succ) on job satisfaction. Third, the significant effect of top management supportfor ethical behaviour on job satisfaction applies only where the association betweenethical behaviour and career success in the organisation is relatively low. That is, athigher levels of eth_succ, tmgt_sup is not an important factor affecting jobsatisfaction. Hence, an interaction effect between eth_succ and tmgt_sup exists.

Figure 1.Decision tree results – jobsatisfaction

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Organisational commitmentThe decision tree results for organisational commitment are summarised in Figure 2.As shown, job satisfaction (job_sat) has the most significant impact on organisationalcommitment (p-value ,0.0001). The results show that a higher level of job satisfactionis associated with a higher level of organisational commitment (note that a lower scorefor the organisational commitment measure indicates a higher level of organisationalcommitment).

For respondents with lower job satisfaction (# 2.75), the association between ethicalbehaviour and career success in the organisation (eth_succ) is the next most significantvariable ( p-value ¼ 0.0055). In particular, a higher level of eth_succ is associated witha higher level of organisational commitment.

For respondents with higher job satisfaction (.2.75), top management support forethical behaviour (tmgt_sup) is the next most significant variable (p-value ¼ 0.0456).

Figure 2.Decision tree results –

organisationalcommitment

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In particular, a higher level of top management support for ethical behaviour isassociated with a higher level of organisational commitment. Finally, for the groupwhere job satisfaction is higher (.2.75) and tmgt_sup is lower (#2.75), ethical climate(eth_clim) is the next most important variable ( p-value ¼ 0.0055). The benevolentethical climate (which emphasises team interest) is associated with the highest level oforganisational commitment (1.50) whereas the principled ethical climate (whichemphasises rules and standard operating procedures) is associated with the lowestlevel of organisational commitment (2.16).

Based on the above, at a significance level of 0.05, the null hypotheses H1b, H2b,H3b and H4 can be rejected. That is, there is sufficient evidence to show thatorganisational ethics and job satisfaction are significantly associated withorganisational commitment. While the findings generally support the impact oforganisational ethics on organisational commitment, it is noted that different aspects oforganisational ethics have differential impact on organisational commitment,contingent on other variables. Hence, the relationship between organisational ethicsand organisational outcomes (e.g., job satisfaction and organisational commitment) ismore complex than that suggested by prior studies (which look mainly only at directlinear relationships).

Implications of findingsThe finding of an association between organisational ethics and organisationaloutcomes in this paper has important implications. It is noted that top managementsupport for ethical behaviour and the association between ethical behaviour and careersuccess can be influenced by top managers in organisations. Thus, by consciouslyworking on these variables, top management can enhance job satisfaction andorganisational commitment among employees and in the workplace. In addition, bypromoting and developing a more benevolent ethical climate, top management can alsoenhance organisational commitment among its employees.

Job satisfaction and organisational commitment are important determinants ofabsenteeism and turnover intention (Dailey and Kirk, 1992). Both absenteeism andturnover are very costly to the organisation. They lead to lower productivity andmorale, and higher cost of hiring, retention and training. While some turnover may bedesirable (e.g., as a channel to phase out unsuitable employees), absenteeism andturnover are largely disruptive to the organisation and its other employees. Thecurrent findings suggest that organisational ethics can help enhance job satisfactionand organisational commitment, which can in turn reduce absenteeism and turnover.

Further, the literature suggests that job satisfaction is associated with higherprofitability and productivity. Whitehead (1998) cited surveys that report jobsatisfaction as a crucial element in the business success of organisations and in theprovision of quality service to customers. The end results are higher profitability andproductivity. The positive relationships between higher job satisfaction and higherprofitability and productivity are also supported by West and Patterson (1998). Theyreported that high levels of job satisfaction (as well as higher levels of organisationalcommitment) are determinants of improved financial performance. They alsosuggested that effective employee management (and the resultant enhanced jobsatisfaction among employees) explain the variation among companies in terms ofprofitability and productivity and this impact far outstrips the impact of quality,

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technology, competitive strategy or research and development in its influence on thebottom line. Grant (1998) reported similar findings in large employee surveys. Giventhe above, an implication of the findings is that organisational ethics can be expected tobe associated with organisational performance. This is consistent with the recentfindings of Joyner and Payne (2002) and Orlitzky et al. (2003).

In addition to job satisfaction affecting organisational commitment and businessperformance, a recent study by Hagedoorn et al. (1999) examined the role of jobsatisfaction in employees’ reactions to problematic events in the organisation.Generally, employees can react to problematic events via exit (e.g., leaving theorganisation), voice (e.g., suggesting solutions), loyalty (e.g., waiting for conditions toimprove), and neglect (e.g., being absent from work). Both voice and loyalty are oftencategorised as constructive behaviours while exit and neglect as destructivebehaviours. It is found that job satisfaction promotes constructive reactions andsuppress destructive reactions to problematic events. Hagedoorn et al. (1999) alsospeculated that organisational justice (which is expected to affect job satisfaction asper this study, via organisational ethics) may also be a motivator of constructivebehaviours and suppressor of destructive behaviours.

Managerial implicationsThe finding that favourable organisational ethics (i.e., a positive ethical culture andclimate) produces favourable organisational outcomes begs the question as to how anorganisation can implement favourable organisational ethics. The following arepossibilities.

First, an organisation can embrace an organisational code of ethics. By setting downthe ethical philosophy, rules of conduct and practices, the code can enhance corporatereputation and brand image, signal to internal and external parties that theorganisation is committed to ethical behaviour, create a cohesive corporate culture, andguide and influence behaviour within the organisation (Carasco and Singh, 2003). Inthe context of this paper, the code of ethics can demonstrate and reinforce topmanagement support for ethical behaviour and help develop a favourable ethicalclimate and culture in the organisation. To have the intended effects, it is alsoimportant that the code of ethics be communicated, monitored and enforced. Further, itis essential that management shows commitment to the code of ethics. Interestingly,Vitell et al. (2003) have found that the enforcement of a code of ethics is positivelyrelated to how important employees perceive the role of ethics and social responsibilityin achieving long-term organisational effectiveness.

Second, related to the above, an organisation can appoint ethics officers and/or offeremployee training programmes in ethics. Corporate ethics programmes can provide aneffective means of setting and communicating expectations among employees for theiraction and behaviour. In addition, an ethics officer can play a major role in ethicstraining as well as the monitoring and enforcement of ethical behaviour and standards.These, too, can demonstrate and reinforce top management support for ethicalbehaviour and help develop a favourable ethical climate and culture in theorganisation.

Third, the association between ethical behaviour and career success can beincorporated into the corporate culture, which usually encompasses the ways work andauthority are organised, the ways people are rewarded and controlled, as well as

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organisational features such as customs, taboos, company slogans, heroes and socialrituals (Brickley et al, 2002). Besides the rewarding of ethical behaviour, the softerelements of corporate culture such as slogans, role models and social rituals, can alsoplay an important role in communicating the message that ethical behaviour is highlyvalued by the organisation.

Finally, an organisation can integrate ethics into the normal channels of strategicdecision-making and train managers in decision-making skills that incorporate ethicalprinciples and values (Joyner et al., 2002). It is expected that an organisation that doesgood does well and vice versa (Bennett, 2002). In this aspect, the Weizhi Group is aninteresting case study of a highly successful Chinese clothing manufacturer andwholesales that is founded on both principles and profit, where organisational ethicspermeates the entire organisation (Strategic Direction, 2002).

ConclusionThis study examines the relationships between organisational ethics andorganisational outcomes. In particular, it investigates if a higher level of topmanagement support for ethical behaviour, a more favourable ethical climate in theorganisation, and a stronger association between ethical behaviour and career successcan lead to a higher level of job satisfaction as well as greater organisationalcommitment.

Decision tree results indicate significant and positive influence of bothorganisational ethics and job satisfaction on organisational commitment. They alsoindicate significant and positive links between ethical culture constructs and jobsatisfaction. However, no significant relationship between ethical climate and jobsatisfaction is observed. This may not be surprising as ethical culture comprisescontrol mechanisms that specifically aim at influencing organisational outcomes whileethical climate is associated with attitudes and perceptive values that may or may notinfluence behaviour (Trevino et al., 1998). The practical implication to organisationalleaders is that organisational ethics can be used as a means to generate favourableorganisational outcomes. Some possibilities on enhancing organisational ethics havebeen suggested in an earlier section.

In interpreting the findings of the study, however, the following limitations shouldbe borne in mind. First, the sample comprises students enrolled in the MBAprogramme conducted by one of the universities in Singapore. Although most of theseMBA students hold full-time positions in organisations while they pursue their MBAstudies, they may not be representative of the population of managers in Singapore.Further, the findings may not be generalized to a different population (e.g., blue collarworkers) or a different geographical region.

Second, the usual limitations of a self-report research questionnaire apply (i.e.,non-response bias and response bias). Non-response bias may come about whensampled subjects who are significantly different from the respondents do not respond.However, this may not be a serious problem in the study because the response rate of59.25 per cent can be considered high for a survey. Response bias may be introducedwhen a respondent’s responses are biased by the background characteristics of therespondent or the study. This, however, is mitigated by the anonymity of therespondents and promised confidentiality of the responses.

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Third, the variables investigated in the study are not meant to be complete orexhaustive. For example, job satisfaction and organisational commitment are only twoof several possible organisational outcomes. Other variables that future research canfocus on include staff motivation and productivity. Similarly, organisational ethics inthe study are limited to only top management support for ethical behaviour, ethicalclimate, and the association between ethical behaviour and career success in theorganisation. Other possibilities include the existence or implementation of a code ofethics, and some measures of staff attributes and ethical attitude. However, it is notedthat a lengthy research questionnaire is likely to make the questionnaire more difficultto complete and hence is likely to reduce the response rate.

In this concluding section, it is appropriate to suggest some directions for futureresearch. For example, future research can be extended to cover more organisationaloutcomes and other measures of organisational ethics. In addition, as Cohen (1998)suggests, organisational ethics may not directly lead to particular behaviour; rather, itprovides a context in which certain behaviours are likely to occur if other supportiveindividual and contextual conditions also exist. Thus, future research may explore howethics-outcome links may differ depending on the employee-organisational fit. Futureresearch can also investigate the process mechanisms by which organisational ethicsaffect organisational outcomes.

In addition, it is useful to study business ethics in different countries to understandthe antecedents and consequences of ethical behaviour from an international, global, oreven cultural, perspective. The globalisation of businesses has resulted in severalchallenges, including the need for self-regulation through the articulation of coreprinciples that are applicable and applied in a vast array of cultures and industries(Carasco and Singh, 2003). The challenge is not trivial in that what comprise ethicallyacceptable behaviour and practices may be dependent on the geography and context aswell as local customs, laws and regulations. Further, as mentioned by Bennett (2002),organisational ethics for multinational corporations has a wider scope which mayinclude human rights issues, resolution of conflicts, stability and security.

Finally, it is submitted that organisations and managers in the twenty-first centuryhave to enhance organisational ethics, among other things, in order to enhanceorganisational outcomes.

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Appendix. Measurement of constructsOrganisational commitmentWould you leave your current organisation if another organisation offered you:

. Slight increase in pay.

. Slightly more freedom to be professionally creative.

. Slightly more status.

. The opportunity to work with friendly people.

Job satisfaction with supervision. The managers I work for back me up.. The managers I work for are competent.. My supervisors do not listen to me.*. Management does not treat me fairly.*

Top management support for ethical behaviour. Top management in my organisation has clearly conveyed that unethical behaviour will

not be tolerated.

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. Top management in my organisation should have higher ethical standards than they donow.*

. If a manager in my organisation is discovered to have engaged in unethical behaviour thatresults primarily in personal gain rather than corporate gain, he will be promptlyreprimanded.

. If a manager in my organisation is discovered to have engaged in unethical behaviour, hewill be promptly reprimanded even if the behaviour results primarily in corporate gain.

Ethical climate (egoistic, benevolent and principled)Egoistic:

. My organisation emphasises the importance of furthering its interests.

. Employees in my organisation are not expected to be concerned with the organisation’sinterests all the time.*

. All decisions and actions in my organisation are expected to contribute to theorganisation’s interests.

. Work that hurts my organisation’s interests can be acceptable.*

Benevolent:. Concern for employees is prevalent in my organisation.. My organisation does not emphasise employee welfare.*. All decisions and actions in my organisation are expected to result in what is generally

best for everyone.. My organisation does not consider the well-being of all employees.*

Principled:. Compliance with organisation rules and procedures is very important in my organisation.. Employees in my organisation are not expected to stick to organisation policies strictly.*. People who do not follow organisation rules and procedures are not viewed favourably in

my organisation.. My organisation does not emphasise the importance of its rules, procedures and policies.*

Association between ethical behaviour and career success in the organisation. Successful managers in my organisation are more ethical than unsuccessful managers.. In order to succeed in my organisation, it is often necessary to compromise one’s ethics.*. Successful managers in my organisation withhold information that is detrimental to their

self-interest.*. Successful managers in my organisation make rivals look bad in the eyes of important

people.*. Successful managers in my organisation look for a “scape-goat” when they feel they may

be associated with failure.*. Successful managers in my organisation take credit for the ideas and accomplishments of

others.*.

* Indicates reverse-scored items.

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