Perfecto

An Integrative Approach to Understanding Counterproductive Work Behavior: The Roles of Stressors, Negative Emotions, and Moral Disengagement

Roberta Fida • Marinella Paciello •

Carlo Tramontano • Reid Griffith Fontaine •

Claudio Barbaranelli • Maria Luisa Farnese

Received: 25 December 2012 / Accepted: 30 April 2014 / Published online: 15 May 2014

� Springer Science+Business Media Dordrecht 2014

Abstract Several scholars have highlighted the impor-

tance of examining moral disengagement (MD) in under-

standing aggression and deviant conduct across different

contexts. The present study investigates the role of MD as a

specific social-cognitive construct that, in the organiza-

tional context, may intervene in the process leading from

stressors to counterproductive work behavior (CWB).

Assuming the theoretical framework of the stressor-emo-

tion model of CWB, we hypothesized that MD mediates, at

least partially, the relation between negative emotions in

reaction to perceived stressors and CWB by promoting or

justifying aggressive responses to frustrating situations or

events. In a sample of 1,147 Italian workers, we tested a

structural equations model. The results support our

hypothesis: the more workers experienced negative emo-

tions in response to stressors, the more they morally dis-

engaged and, in turn, enacted CWB.

Keywords Moral disengagement � Counterproductive work behavior � Job stressor � Negative emotions � Aggression

Introduction

Deviant behavior at work represents one of the most rele-

vant emerging criticalities in organizations worldwide

(Chappell and Di Martino 2006). In the literature, it has

been labeled in different ways, e.g., organizational

aggression, unethical behavior, delinquency, deviance,

retaliation, revenge, violence, emotional abuse, mobbing/

bullying, and misconduct. However, despite the specificity

of the different definitions provided, all operationalizations

share a common emphasis on the actual or potential

harmful and detrimental effects of such behaviors on both

the organization and its members (Giacalone and Green-

berg 1997; Spector and Fox 2005). In this study, we focus

our attention on counterproductive work behavior (CWB),

namely, voluntary behavior that violates significant orga-

nizational and social norms (see Collins and Griffin 1998;

Robinson and Bennett 1995; Spector and Fox 2005) and in

turn damages organizations and their shareholders and

stakeholders (employers, supervisors, co-workers, and cli-

ents). CWB may include both overt acts, such as direct

aggression and theft, and covert acts, such as purposefully

failing to follow instructions or doing work incorrectly

(Spector et al. 2006).

Several researches have examined the different factors

that could help to understand the process leading to CWB,

considering both situational and personal dimensions (see

Bowling and Eschleman 2010; Spector and Fox 2005). To

this extent, the stressor-emotion model of CWB (Spector

1998; Spector and Fox 2005) represents a comprehensive

model explaining why workers in stressful conditions may

enact CWB at work. In particular, capitalizing on both the

frustration-aggression theory developed by Dollard and his

colleagues (Dollard et al. 1939; also, see Berkowitz 1989)

and stress theories (Jex and Beehr 1991; Lazarus 1999),

R. Fida (&) � C. Barbaranelli � M. L. Farnese Department of Psychology, Sapienza University of Rome,

Via dei Marsi 78, 00185 Rome, Italy

e-mail: [email protected]

M. Paciello

International Telematic University Uninettuno, Rome, Italy

C. Tramontano

Leonard Cheshire Disability and Inclusive Development Centre

UCL, London, UK

R. G. Fontaine

Social Science Research Institute, Center for Child and Family

Policy, Duke University, Durham, NC, USA

123

J Bus Ethics (2015) 130:131–144

DOI 10.1007/s10551-014-2209-5

Spector and Fox hypothesized that CWB is one of the

possible results of stress at work and constitutes a response

to frustrating working conditions (e.g., Spector and Fox

2005). Therefore, this behavior is considered as a response

to perceived organizational stressors, or more broadly, to

any frustrating condition that substantially interferes with

work goals, job activities, and/or job performance. Previ-

ous research has shown that whenever employees perceive

a job stressor, they may experience negative feelings that,

in turn, may lead them to enact CWB as a strategy to

reduce the emotionally unpleasant condition derived from

organizational frustrations (e.g., Penney and Spector 2005;

Spector 1998). In sum, this is an emotion-centered model

(Chen and Spector 1992; Fox and Spector 1999; Spector

1975, 1997) that highlights the path from perceived

stressors at work to deviant conduct through ‘‘hot’’ affec-

tive processes.

However, CWB does not occur automatically and in a

vacuum; rather, it is enacted within a complex social

context pervaded by shared values, norms, and models of

behaviors acquired during socialization (Schein 1999).

Thus, in order to understand the process leading to CWB, it

is important to also consider the role of socio-cognitive

‘‘cold’’ processes. As underlined in the organizational lit-

erature, as a consequence of negative emotional reaction to

frustrating working conditions, workers may also enact

such forms of unethical and deviant behaviors through

cognitive processes that allow them to temporarily bypass

the acquired collective norms, values, and models (Detert

et al. 2008; Moore 2008; White et al. 2009). Based on this

fact, we aim to extend the stressor-emotion model of CWB

by integrating moral disengagement (MD), a social-cog-

nitive process that may facilitate the translation of negative

feelings derived from perceived stressors into CWB

(Fig. 1). Specifically, we believe that negative feelings can

activate MD as a secondary cognitive process through

which individual moral standards are momentarily

obscured, giving access to CWB as a plausible behavioral

strategy to cope with negative emotions derived from

negatively perceived situations. Thus, MD may intervene

in the stressor-emotion process, mediating the transition

from negative emotional reaction to CWB by legitimizing

this kind of response without concurrently requiring

abandoning personal and shared norms, values, and

models.

CWB and Stressor-Emotion Model

CWB represents a behavioral response to strain aimed at

managing a stressful situation and reducing the consequent

unpleasant negative emotions even though, in so doing, it

threatens organizational and members’ well-being and

reduces their effectiveness (Fox and Spector 1999; Fox

et al. 2001; Krischer et al. 2010; Rodell and Judge 2009;

Spector 1975, 1997). Furthermore, in accordance with

Robinson and Bennett (1995), CWB can be distinguished

on the basis of the target: against the individuals in the

organization (CWB-I) or against the organization as a

whole (CWB-O). The former, CWB-I, is interpersonally

oriented and may include acts of aggression toward fellow

co-workers, such as verbal insults; spreading false rumors

about or making fun of others; playing mean pranks;

making racial slurs; and withholding crucial information

from others. The latter, CWB-O, is oriented toward the

organization and may manifest as taking excessive breaks,

working on a personal matter instead of working for the

employer, withholding effort, violating organizational

policies, or intentionally working slowly (Bennett and

Robinson 2000; Dalal 2005; Mount et al. 2006).

CWB is an increasingly pervasive and costly phenom-

enon (Coffin 2003; Greenberg 1990; Mount et al. 2006;

Murphy 1993; Vardi and Weitz 2004) and has an impact on

organizations in terms of loss of productivity, damage of

property, increased turnover and absenteeism, and threat-

ening the organization and its members’ well-being

(Bensimon 1994; Einarsen et al. 2003; LeBlanc and Kel-

loway 2002; Penney and Spector 2005; Robinson and

Bennett 1995). More generally, although behaviors vio-

lating organizational and social norms in the short time

may meet some organizational goals (for instance, bribery,

deception, cheating or stealing for the benefit of one’s own

unit) and be justified on this premise, long term, these

behaviors are costly and even threaten organizations’ sur-

vival (Moore 2008).

Previous studies on CWB focused on different situations

or conditions that are, at least potentially, mighty stressors

such as organizational constraints, unmanaged conflicts,

work overload, and lack of autonomy and support (Chen

and Spector 1992; Fox and Spector 1999; Fox et al. 2001;

Fig. 1 Theoretical model of relations among stressors, negative emotions, MD and CWB

132 R. Fida et al.

123

Miles et al. 2002; Peters and O’Connor 1980; Spector et al.

1988). While the first three are tangible stressors, auton-

omy and support are situational resources; however, when

they go missing, workers may perceive them as stressors.

Moreover, research has shown that organizational stressors

(such as organizational constraints) are more closely

associated with CWB-O than CWB-I, whereas interper-

sonal conflict is more closely associated with CWB-I than

CWB-O.

In line with the stress model (Lazarus 1999; Lazarus and

Folkmann 1984), the existence of one or more of these

conditions is not per se sufficient to lead to CWB: a fun-

damental element is workers’ appraisal of such conditions

as stressful. Indeed, when a situation is perceived as

stressful, this elicits negative feelings and workers may act

aggressively as a consequence. In this sense, Spector’s

model highlighted the role of negative emotion and affect

regulation on aggressive behavior according to the tradi-

tional hypothesis that frustrations and instigations may lead

to harmful behaviors (Berkowitz 1989; Dollard et al.

1939). Thus, emotions play a pivotal role in the process of

work stress, since they represent the immediate reactions to

perceived stressful situations (Lazarus 1999; Payne and

Cooper 2001) and facilitate behavioral responses. For these

reasons, negative emotions mediate the relation between

stressors and CWB (Fida et al. 2012; Fox et al. 2001;

Rodell and Judge 2009).

Moral Disengagement and Deviant Conduct

MD refers to social-cognitive processes by which a

wrongful, deviant, and antisocial behavior is psychologi-

cally altered such that it is dissociated from these negative

qualities that would serve to deter the actor from per-

forming it. In particular, through MD, the moral content

and ties usually associated with the deviant act are

detached (or disengaged) from it, and consequently, car-

rying out that behavior in pursuit of one’s own desire or

goal is considered neither internally aversive nor obstruc-

tive by the actor. In a sense, it is a process by which the

individual may rationalize, by either excuse or justification,

the harm and wrong that the behavior necessarily serves so

that the deterrent mechanisms (e.g., guilt) regarding the

behavior are neutralized.

MD was originally introduced by Bandura (1990, 1991)

to clarify how people, despite being morally committed to

ethical principles, under specific situations may perform

behaviors that violate shared norms even while continuing

to profess the same principles and avoiding any feelings of

conflict, guilt, shame, or remorse. MD affects the operation

of moral standards in the regulation of conduct by deacti-

vating internal control and therefore self-sanction, allowing

people to avoid the emotional reactions related to specific

moral content. Self-sanctions of deviant conduct may be

deactivated by eight MD social-cognitive mechanisms (see

Bandura 1991) that, for instance, facilitate the cognitive

restructuring of such acts to appear less harmful or

unethical, e.g., being morally justified, labeled with

euphemisms, or advantageously compared with other

worse actions. Other mechanisms are aimed at minimizing

the role of the actor, displacing or diffusing the responsi-

bility of his/her actions among others (e.g., colleagues,

supervisor). Finally, still other mechanisms suggest a

reframe of the effects of one’s action, for instance, dis-

torting or minimizing its consequences, belittling or

dehumanizing the victims of its action, or attributing

blame. Overall, MD may be considered a cognitive dis-

tortion (Gibbs et al. 1995) through which individuals may

view their own aggressive behavior and its negative con-

sequences in a socially and morally favorable (or at least

acceptable) way. This transformation of social under-

standing enhances the probability that the individual will

act aggressively (Crane-Ross et al. 1998; Huesmann and

Guerra 1997) without requiring the abandonment of shared

personal and social norms.

A large body of research has demonstrated the disin-

hibitory power of MD and its strong associations with

several manifestations of aggressive behavior as well as

other forms of deviant conduct across different contexts

(Bandura et al. 1996; Bandura et al. 2000; Detert et al.

2008; Fida et al. 2012; Moore et al. 2012). Specifically, in

explaining deviant conduct in organizations, several studies

have attested to the role of MD in the performance of

various behaviors that violate social and organizational

norms, for example, corporate transgression and organi-

zational corruption (Bandura et al. 2000; Barsky 2011;

Barsky et al. 2006; Moore 2008), violations of legal and

moral rules in producing harmful practices and products

(Brief et al. 2001), violation of safety rules (Barbaranelli

and Perna 2004), and ‘‘crimes of obedience’’1 (Beu and

Buckley 2004; Hinrichs 2007). Moreover, researchers have

focused on the role of MD in ethical decision-making in

organizational contexts (O’Fallon and Butterfield 2005;

Pauli and Arthur 2006; Treviño et al. 2006).

Furthermore, some contributions underlined that specific

conditions may facilitate the activation of these mecha-

nisms. For example, higher levels of MD have been asso-

ciated with the experience of negative emotions such as

anxiety or irritability (Caprara et al. 2012) and the per-

ception of organizational climate as less favorable, leading

to lower levels of job satisfaction (Claybourn 2011).

1 Type of unethical behavior where followers are influenced by a

leader to engage in behavior they would otherwise consider unethical

(Hinrichs 2007).

Understanding Counterproductive Work Behavior 133

123

Therefore, when people are negatively activated, MD can

lead them to perceive the adoption of unethical behavior as

an appropriate strategy to cope with stressful situations

(Paciello et al. 2012). In this sense, MD may be an effec-

tive protection strategy that is useful in stressful job situ-

ations to cope with negative reactions and avoid moral

responsibility toward others (including social organiza-

tions), providing the cognitive framework in which CWB

appears appropriate.

Aims and Hypotheses

The general aim of the present study was to present the work

MD scale and integrate this dimension in the stressor-emo-

tion model of CWB to examine, in a large sample of

employees, its role in translating negative emotional

responses to stressors into deviant behaviors. Specifically,

we posited that negative emotions elicited by the perception

of job stressors on one hand facilitate the recourse to CWB

and on the other hand activate mechanisms of MD that may

free the way to CWB by transforming it into an acceptable

behavior. More specifically, we expected that MD partially

mediated the relation between negative emotions and CWB.

Thus, we hypothesized that the more individuals react to job

stressors with negative emotions, the more prominent MD

will be in countenancing aggressive, wrongful behaviors, in

turn leading to greater CWB. To the best of our knowledge,

there are no studies examining the role ofMD in the stressor-

emotion model of CWB.

As depicted in Fig. 1, we had the following hypotheses:

1. Hypothesis 1: Job stressors are positively related to

negative emotions. In particular, organizational con-

straints, quantitative workload, interpersonal conflict,

and lack of decision latitude and social support are

related to negative emotions so that the higher the

perceived stressors, the higher the negative emotional

response.

2. Hypothesis 2: Negative emotions are positively related

to both CWB-I and CWB-O. In particular, employees

are more likely to engage in both CWB-I and CWB-O

in response to the experience of negative emotions

associated with their jobs.

3. Hypothesis 3: MD is positively related to both CWB-I

and CWB-O. In particular, the more employees

disengage their moral control, the more they engage

in both CWB-I and CWB-O.

4. Hypothesis 4: Negative emotions are positively related

to MD. The more employees are negatively emotion-

ally activated, the more they resort to MD in order to

perform CWB, perceiving deviant conduct as an

appropriate strategy to cope with stressors.

5. Hypothesis 5: Negative emotions mediate the relation

between job stressors and both CWB-I and CWB-O.

6. Hypothesis 6: MD partially mediates the relation

between negative emotions and both CWB-I and

CWB-O.

In testing our hypotheses, we considered gender as a

covariate for all variables, as previous studies have shown

that females are more vulnerable to negative (Newmann

1986; Smith and Reise 1998), whereas males are generally

more prone to deviant behavior and MD (Archer 2004;

Bettencourt and Miller 1996).

Method

Participants and Procedure

Participants were 1,147 (53.5 % women) Italian working

adults with a mean age of 40 years (SD = 11). They were

employed in a broad range of industries, from healthcare to

sales and retail tomanufacturing, mainly in the private sector

(62.6 %). The majority (62.3 %) had a high school educa-

tion, 30 % had a bachelor’s degree or higher, and the

remaining participants had lower educational qualifications

(7.2 %). As pertaining to employment contract type, 68.7 %

were permanent employees, 12.2 % were temporary

employees, 15.7 %had other types of contracts, and 3.4 %of

respondents did not indicate the typology of their contract.

The mean organizational tenure was 16 years (SD = 11),

and on average, participants had held their positions (at the

time of the study) for 10 years (SD = 10). We accessed a

convenience sample of employees recruited by a group of 15

bachelor’s-trained psychology students as part of their

bachelor’s thesis. Each employee filled in the questionnaire

individually and returned it the same day they received it.

Before starting, we explained to them that their responses

would be absolutely confidential and that the research was

not commissioned by the organization for which they

worked. The studywas approved by the ethical committee of

the university to which the first author is affiliated. Partici-

pants were not paid for their participation in this study.

Measures

The anonymous self-report survey included measures of

job stressors, negative emotions in response to work, CWB,

and MD.

Interpersonal Conflict

This was measured by the Italian version of the Interper-

sonal Conflict at Work Scale (ICAWS) (Barbaranelli et al.

134 R. Fida et al.

123

2013; Fida et al. 2012; Spector and Jex 1998). This scale is

a four-point continuous scale measuring the amount of

conflict or discord experienced by an individual at work.

Respondents were asked how often they get into arguments

at work and how often other people at work are rude to,

yell at, and/or do nasty things to them (item example:

‘‘How often do other people yell at you at work?’’).

Response options were presented on a five-point continu-

ous scale ranging from less than once per month or never

to several times per day, wherein higher scores indicate

more conflict. The internal consistency for the ICAWS in

the current sample was .71.

Organizational Constraints

These were measured with the Italian version of the

Organizational Constraints Scale (OCS) (Barbaranelli

et al. 2013; Fida et al. 2012; Spector and Jex 1998). This

scale is an eleven-item continuous scale measuring events

or situations at work that interfere with task performance.

Respondents were presented with a list of situational

constraints based on constraint areas identified by Peters

and O’Connor (1980) and were asked to indicate how

often they found it difficult or impossible to do their job

because of each constraint (constraint example: ‘‘Lack of

equipment or supplies’’). Response options were pre-

sented in a five-point format ranging from less than once

per month or never to several times per day. The alpha

reliability coefficient for the OCS in the current sample

was .89.

Workload was measured by the Italian version of the

Quantitative Workload Inventory (QWI; Fida et al. 2012;

Spector and Jex 1998). This scale is a five-item continuous

scale measuring the quantity and speed of work carried out

by the respondents. Participants rated their responses on a

five-point rating scale ranging from less than once per

month or never to several times per day to items such as

‘‘How often does your job require you to work very fast?’’

or ‘‘How often does your job require you to work very

hard?’’. Higher scores represent elevated workloads. The

alpha reliability coefficient was .86.

Lack of Job Decision Latitude

This was measured by three items from the Italian version

of the Job Content Questionnaire (Baldasseroni et al. 2001;

Karasek et al. 1998). Participants responded on a five-point

scale ranging from never or almost never to very often or

always (e.g., ‘‘The job allows opportunity for me to

develop my own special abilities’’). The alpha reliability

coefficient was .65. Items were reversed so that the higher

the score, the higher the lack of decision latitude.

Lack of Social Support

This was measured by three items from the Italian version

of the Job Content Questionnaire (Baldasseroni et al. 2001;

Karasek et al. 1998). Participants responded on a five-point

scale ranging from never or almost never to very often or

always to items referring to both co-workers’ and super-

visors’ support, such as ‘‘People I work with are competent

in doing their jobs.’’ The alpha reliability coefficient was

.75. Items were reversed so that the higher the score, the

higher the lack of social support.

Negative Emotions

These were measured by the Italian translation of the 17

items included in the Job-Related Affective Well-Being

Scale (JAWS) (Fida et al. 2012; Van Katwyk et al. 2000).

Each item is an emotion, and respondents were asked how

often they experienced each at work over the prior 30 days.

Examples of items are ‘‘angry,’’ ‘‘furious,’’ ‘‘depressed,’’

‘‘frustrated,’’ and ‘‘anxious.’’ Response options were pre-

sented in a five-point format ranging from almost never to

extremely often or always. The negative emotions score

was obtained by summing scores on the items. The alpha

reliability coefficient was .90.

Counterproductive Workplace Behavior

This was measured by an abridged version of the Italian

version of the Counterproductive Work Behavior Checklist

(CWB-C) (Barbaranelli et al. 2013; Spector et al. 2006).

This scale is a 30-item continuous scale measuring a wide

range of CWB. Participants were asked to indicate how

often they enacted each of the listed behaviors in their

present job. Response options were presented in a five-

point format ranging from never to every day. Higher

scores indicate higher levels of CWB. The CWB provided

two scores for behaviors that targeted individuals (CWB-I)

(e. g., stole something from a person at work, did some-

thing to make a person at work look bad, insulted someone

about his or her job performance) and behaviors that tar-

geted the organization (CWB-O) (e.g., put into be paid

more hours than worked, purposely did work incorrectly,

stole something belonging to an employer). The CWB-C

demonstrated good internal consistency for both the CWB-

I and CWB-O dimensions, with alpha reliability coeffi-

cients of .89 and .79, respectively.

Work Moral Disengagement

This was assessed by a new scale designed for the scope of

this research. The starting points for the construction of this

Understanding Counterproductive Work Behavior 135

123

Table 1 Work MD scale: items and results of CFA

Work MD scale

Italian version English version Loadings

1. Non c’è niente di male ad appropriarsi del lavoro di un collega

se lui è poco attento e non se ne accorge

There’s nothing wrong with appropriating the work of a

colleague if he/she is careless and does not notice it

.544

2. Se dall’azienda sparisce ogni giorno molto materiale non è

colpa di chi lo sottrae ma dell’azienda che non adotta nessuna

misura preventiva

If things disappear every day from the company it is not the fault

of the people who take them but of the company itself who do

nothing to prevent it

.541

3. Un dipendente che suggerisce solamente di infrangere le regole non dovrebbe essere biasimato se altri dipendenti seguono la sua indicazione e lo fanno*

An employee who only suggests breaking rules should not be blamed if other employees go ahead and do it*

.488

4. Un dipendente che si fa timbrare il cartellino da un collega per

uscire a sbrigare necessità personali non è da biasimare, se

anche tutti i suoi colleghi lo fanno

It is acceptable for an employee to leave work without

permission for personal interests if other employees do the

same

.567

5. Un dipendente non può essere incolpato se spreca materiale di

proprietà della sua azienda, se l’azienda non fa nulla per

controllare

An employee cannot be blamed for wasting organizational

supplies if the organization does nothing to control

.645

6. E’ giusto ‘‘gonfiare’’ la verità per tirar fuori dai guai la propria azienda*

It is alright to exaggerate the truth to keep your company out of trouble*

.524

7. Assentarsi spesso dal posto di lavoro non è poi cosı̀ grave, dal

momento che molta gente viene al lavoro e poi non combina

nulla

Being absent from work frequently is acceptable since many

people at work are not productive anyway

.657

8. Non vi è motivo che i colleghi si offendano se vengono presi

in giro al lavoro, perché anche questo è un modo di interessarsi

a loro

There is no reason that colleagues should be offended if they are

teased at work because this is simply an expression of others

showing interest in them

.632

9. E’ giusto che un lavoratore si assenti per malattia, se questo è

il modo per allontanarsi da un ambiente di lavoro ostile

It’s all right to be absent from work due to illness, when the

employee uses this as a way to cope with his/her hostile work

environment.

.535

10. Impegnarsi meno degli altri sul lavoro non è poi cosı̀ grave,

se si pensa a tutti i dipendenti che non si impegnano affatto

Doing less work when you are at your job is not that bad

considering the fact that many employees do not work at all.

.738

11. Se un lavoratore danneggia l’azienda non adempiendo ai

propri compiti contrattuali, la colpa è dell’azienda stessa che

non è stata in grado di selezionarlo e di formarlo

adeguatamente

When an employee damages the company by not doing the job it

is the fault of the company itself for not doing a good job at

selecting and training employees

.547

12. Un dipendente non deve essere biasimato se fa qualcosa di sbagliato per conto della sua azienda*

An employee should not be blamed for the wrongdoing done on behalf of the organization*

.558

13. Quei colleghi che vengono derisi al lavoro di solito se lo

meritano

Colleagues who are mocked at work usually deserve it. .575

14. Non bisogna farsi troppi problemi ad assentarsi dal lavoro

quando se ne ha bisogno, perché tanto lo fanno tutti

It is not a big deal to be absent from work since everyone does it .612

15. Se la maggioranza dei colleghi si impegna poco non c’è

motivo perché un dipendente si comporti diversamente

If the majority of colleagues do not work hard enough, there is no

reason why an employee should act differently.

.636

16. E’ giusto forzare la verità per proteggere la propria azienda*

It is alright to stretch the truth to protect your company* .506

17. Usufruire impropriamente delle risorse messe a disposizione

dall’azienda non è poi cosı̀ grave, visto che ci sono dirigenti

che si appropriano indebitamente dei capitali degli azionisti

Using organizational resources for inappropriate purposes is not

shameful since managers embezzle stakeholders’ money

.671

18. Danneggiare le cose dell’azienda non è molto grave se si

pensa a quante cose illegali commettono i dirigenti

Damaging an organization’s property is acceptable when you

consider how many illegal actions are committed by managers

.732

19. Non è grave restare indietro con il proprio lavoro dal

momento che lo fanno tutti

It’s not a big deal if you get behind in your work since everyone

does it

.646

20. E’ normale che un dipendente usufruisca impropriamente

delle risorse che l’azienda gli mette a disposizione se nessuno

impedisce che ciò avvenga

It’s ok that an employee improperly benefits from work resources

if no one prevents it happening

.690

21. Se al lavoro i dipendenti battono la fiacca e producono poco è

colpa dei loro superiori o dell’azienda

If the employee is lazy and does little work, only the bosses and

company are to blame

.490

136 R. Fida et al.

123

scale were as follows: (1) the scale developed by Bandura

et al. (1996) within the domain of antisocial behavior, (2)

the 10-item scale developed by Barsky et al. (2006), (3) the

scale developed by Barbaranelli and Perna (2004), and (4)

two focus groups with different employees (30 students

that work at least 20 h per week). We came up with a scale

including 24 items. Participants responded on a five-point

scale (from agree not at all to completely agree).

Data Analysis and Results

Preliminary Analysis on Work MD Scale

We initially examined the dimensionality of the MD scale

by means of confirmatory factor analysis (CFA). Consis-

tent with previous studies (see Bandura et al. 1996; Caprara

et al. 2009; Fida et al. 2012; Pelton et al. 2004), we

hypothesized a one-factor solution. Because several items

presented a deviation from the normal distribution, a CFA

was performed using robust maximum likelihood parame-

ter estimates, with standard errors and the Chi square test

statistic corrected using the Satorra-Bentler approach. This

model fits the data (v2 = 242.10, df = 82, p\ .001, CFI = .90; TLI = .92; RMSEA = .041, SRMR = .038,

WRMR = .672), reproducing with a good approximation

the covariances among the items of the scale (Table 1).

The Cronbach’s reliability coefficient was .89.

Descriptive Analysis of the Study Variables

The means, standard deviations, and correlations for all

studied variables are presented in Table 2.

Analyses showed that all of the stressors correlated with

each other with the following exceptions: (1) lack of

decision latitude, which correlated only with workload and

the lack of social support; and (2) lack of social support,

which did not correlate with workload. Furthermore, while

all stressors correlated with negative emotions only, orga-

nizational constraints and the lack of social support

correlated with MD. Negative emotions were significantly

associated with MD. Overall, both CWB-I and CWB-O

significantly correlated with all stressors; the only excep-

tion was that CWB-O did not correlate with interpersonal

conflict. Finally, both negative emotions and MD corre-

lated with both CWB-I and CWB-O.

Structural Equation Model

To test our hypothesis about the process from job stressors

to CWB through negative emotions and MD, we imple-

mented our theoretical model (see Fig. 1) within the

structural equations modeling framework and used gender

as a covariate. This powerful statistical model allows us to

investigate the mediating role of negative emotions and

MD, which simultaneously acts as a dependent variable

with respect to stressors and as an independent variable

with respect to both CWB-I and CWB-O. In particular, we

used the indirect effect test with the bootstrap procedure

(MacKinnon 2008) to compute the confidence interval of

each effect. The analyses were performed using Mplus 6.1

(Muthén and Muthén 1998–2010).

We used the maximum likelihood estimation of

parameters for handling missing data (Schafer and Graham

2002) under the assumption that the data are missing at

random (Arbuckle 1996). Before proceeding with the

analysis, we ascertained the normality of the variables. Due

to the non-normality of some measures (CWB-I and CWB-

O), we computed the inverse of CWB-I and the logarithm

of CWB-O to normalize these variables, as suggested by

Tabachnick and Fidell (2001). The skewness and kurtosis

of the computed outcomes varied from .69 for CWB-O to

2.45 for CWB-I. Following Bollen (1989), all of the

included dimensions were posited as a ‘‘single-indicator’’

latent variable. To take into account measurement error,

and for the purpose of obtaining more precise estimates of

structural parameters, error variance for each single indi-

cator was fixed at one minus the sample reliability estimate

of the variable multiplied by its sample variance. Since

there was non-normality of CWB variables even after their

Table 1 continued

Work MD scale

Italian version English version Loadings

22. Insultare o trattare male dei colleghi spesso è soltanto un

modo per dare loro una lezione

Insulting or treating colleagues badly is just teaching them a

lesson

.618

23. Non c’è nulla di male nel tenere disordinata o sporca la

propria postazione di lavoro quando lo fanno tanti colleghi

There is nothing wrong if an employee’s work area is sloppy or

dirty if his/her colleagues have theirs the same way

.740

24. Se i dipendenti pensano di non andare incontro a sanzioni non

dovrebbero essere biasimati se fanno azioni sbagliate

Employees cannot be blamed for wrongdoing if they know they

will not be punished

.613

* Items in bold are from Barsky et al. (2006)

Understanding Counterproductive Work Behavior 137

123

transformation in inverse and logarithm, we used the Mplus

MLMV method for parameters estimation, to correct

standard errors and the Chi square test statistic for non-

normality.

The model specified in Fig. 1 showed a good fit:

v2(19) = 61.64, p\ .01; CFI = .97; RMSEA = .044 (CI .032–.057), p = .76; SRMR = .029. Nevertheless, an

inspection of the modification indices revealed four sig-

nificant direct effects from stressors on two dimensions of

CWB (i.e., interpersonal conflict and lack of support on

CWB-I; organizational constraints and lack of decision

latitude on CWB-O) and a direct effect of the lack of social

support on MD. The four direct effects on CWB were in

conceptual accordance with the literature on the influence

of stressors on CWB (Spector and Fox 2005). Moreover,

the effect of the lack of social support on MD is in line with

what Detert et al. (2008) suggested on the antecedents of

MD related to social context in organization. Therefore, we

decided to revise the model (Fig. 2) to include these five

new parameters and to test a more parsimonious model

fixing nonsignificant parameters to zero. This model pro-

vided an excellent fit to the data, as revealed by multiple fit

indices: v2(17) = 21.40, p = .21; CFI = 1.00; RMSEA = .015 (CI .000–.032), p = 1.00; SRMR = .017.

An alternative model testing the process by inverting the

process from negative emotions to MD did not fit the data:

v2(18) = 222.35, p\ .01; CFI = .84; RMSEA = .100 (CI .088–.111), p\ .001; SRMR = .058.

Table 2 Descriptive statistics among all study variables for the total sample

N M SD 1 2 3 4 5 6 7 8

1. Constraints 1,139 2.32 .78 –

2. Conflict 1,140 2.10 .72 .42** –

3. Workload 1,140 3.40 .83 .38** .31** –

4. Lack of decision latitude 1,145 3.38 .59 .10 .04 .13* –

5. Lack of Social Support 1,145 3.65 .70 .29** .21** .02 .27** –

6. Negative Emotions 1,145 2.09 .66 .39** .29** .18** .30** .29** –

7. Moral Disengagement 1,143 1.59 .48 .26** .09 -.03 .14 .12* .15** –

8. CWB-O 1,145 1.40 .41 .21** .07 .12* .16** .20** .32** .37** –

9. CWB-I 1,145 1.20 .33 .19** .14* .11* .14** .22** .26** .38** .60**

** Significant at the p\ .001; * Significant at the p\ .05. Correlations for males are reported below the diagonal, while correlation for females are reported above the diagonal

Fig. 2 Results of the posited model: The meditational role of MD in the stressor-emotion model

138 R. Fida et al.

123

Consistent with Hypothesis 1, interpersonal conflict,

organizational constraints, workload, and lack of social

support significantly and positively affected negative

emotions. Furthermore, as hypothesized, none of the

stressors significantly affected MD, with the exception of

the lack of social support, despite a low beta coefficient.

The results of our model partially supported Hypotheses

2 and 3. In particular, negative emotions significantly

influenced only CWB-O with a low beta coefficient,

whereas MD significantly influenced both CWB-O and

CWB-I. As expected (Hypothesis 4), negative emotions

significantly and positively affected MD.

Finally, with regard to Hypotheses 5 and 6, the posited

model assumed that stressors would have indirectly affec-

ted both CWB-O and CWB-I by influencing negative

emotions and MD. As shown in Fig. 2, only a partial

mediation was confirmed. Table 2 presents the estimates of

indirect effects and their bootstrap confidence intervals. In

particular, some stressors influenced both CWB-I and

CWB-O both directly and indirectly. Interpersonal conflict

influenced CWB-I both directly (b = .16) and indirectly through negative emotions and MD (b = .03). Similarly, the lack of social support influenced CWB-I both directly

(b = .07) and indirectly through MD and through both negative emotions and MD (b = .04, b = .03, respec- tively). Organizational constraints influenced CWB-O both

directly (b = .12) and indirectly through negative emo- tions (b = -.02) and both negative emotions and MD (b = -.024). Finally, lack of decision latitude directly influenced CWB-O (b = .07) (Table 3).

Finally, with regard to the effect of gender as a covar-

iate, the results attested to some gender differences. In

particular, males scored higher in MD (b = -.11), whereas females scored higher on negative emotions

(b = .15) and on quantitative workload (b = .08). Con- sidering that gender was scored zero for males and one for

females, a negative beta indicates higher scores for males

and a positive beta indicates higher scores for females.

Overall, the model explained 29 % of the variance in

CWB-I and 20 % of the variance in CWB-O. Stressors

explained 31 % of the variance in negative emotions.

Discussion

The results of the current study suggest that MD plays a

critical role in mediating the relation between negative

emotions in reaction to job stressors and both CWB-I and

CWB-O. Specifically, the more workers react with nega-

tive emotions to work situations that interfere with their

work goals and/or job performance, the more they activate

cognitive maneuvers that rationalize unethical, wrongful,

and deviant behaviors and in turn legitimize enacting

CWB. Indeed, although CWB violates significant social

and organizational norms, it can be restructured by MD and

become an acceptable behavioral response to strain (Rob-

inson and Bennett 1995; Spector and Fox 2005). This

allows employees to reduce the emotionally unpleasant

condition generated by work stressors or perceived wrongs

without abandoning personal and shared norms, values, and

models.

The concurrent examination of the roles of both emo-

tional reactions and social-cognitive mechanisms associ-

ated with job stressors allowed us to better clarify the

relation between emotion and action. Indeed, the inclusion

of MD within the stressor-emotion model substantially

reduces the association of negative emotions with CWB-O,

and moreover the direct effect of negative emotions on

Table 3 Indirect estimates and bootstrap confidence interval of

indirect effects from stressors to

both CWB-I and CWB-O

Significant estimates are

highlighted in bold

CI 95 % bootstrap confidence

interval

Indirect effect Estimate CI

Interp.conflict ? Neg.Em ? MD ? CWB-I .03 .014 to .046

Workload ? Neg.Em ? MD ? CWB-I .02 .007 to .030

Constraint ? Neg.Em ? MD ? CWB-I .04 .017 to .032

Lack of Support ? Neg.Em ? MD ? CWB-I .03 .015 to .047

Lack of Support ? MD ? CWB-I .04 .004 to .086

Interp.conflict ? Neg.Em ? MD ? CWB-O .02 .009 to .036

Interp.conflict ? Neg.Em ? CWB-O .02 .002 to .033

Workload ? Neg.Em ? MD ? CWB-O .01 .005 to .023

Workload ? Neg.Em ? CWB-O .01 .001 to .020

Constraint ? Neg.Em ? MD ? CWB-O .03 .012 to .041

Constraint ? Neg.Em ? CWB-O .02 .002 to .038

Lack of Support ? Neg.Em ? MD ? CWB-O .02 .011 to .036

Lack of Support ? Neg.Em ? CWB-O .02 .002 to .034

Lack of Support ? MD ? CWB-O .03 -.005 to .067

Understanding Counterproductive Work Behavior 139

123

CWB-I becomes nonsignificant. The weaker influence of

emotional reaction on CWB suggests that in the work

context, where norms and models are acquired and shared,

social-cognitive processes are necessary mediators for

converting negative emotions into aggressive and deviant

behavior. In the organizational social scenario, workers

that are usually ethically committed need to rationalize and

justify sanctionable and undesirable behaviors through

social-cognitive processes triggered by emotional reactions

related to stressors. MD captures this ‘‘cold’’ cognitive

process that may give access to a broader repertoire of

misconducts, including behaviors that are potentially more

harmful, less predictable, and more dangerous to the

organization. This process may be particularly valid when

the misconduct is potentially dangerous and harmful for

other people (CWB-I) rather than being for a more abstract

and impersonal entity such as the ‘‘organization as a

whole’’ (CWB-O).

In line with Spector and Fox’s hypothesis, our results

support the posited role played by stressors in eliciting

negative emotions, with the only exception being the lack

of decision latitude. Here, we want to focus our discussion

in particular on the two specific stressors we examined:

lack of support and lack of decision latitude. As stated

initially, these are generally considered as resources rather

than as stressors per se. However, in our study, we exam-

ined the plausible negative impact that their absence may

cause. Our results suggested that the lack of social support

was associated with both negative emotions and with MD

(although modestly). This finding was not so surprising,

since it is plausible that the perception of organizational

context as unsupportive may reduce empathy and therefore

facilitate the activation of cognitive processes aimed at

reducing guilt or shame that would deter resorting to

harmful actions toward the organization and its stake-

holders. These results are also in line with the findings from

studies by Detert et al. (2008) and by Paciello et al. (2012)

that highlight the role of the quality of social ties in

influencing individual choices to perform harmful behav-

iors. Specifically, they found that empathy—an individual

affective competence to understand and to be concerned

with others’ feelings—was negatively related to MD,

which in turn influenced unethical decision-making. The

results related to decision latitude were not in line with our

expectations. This dimension refers to work autonomy and

job control and, as suggested by Spector and colleagues

(Fox and Spector 2006; Spector and Fox 2005), may be a

moderator of the relation between stressors and negative

emotion and between negative emotion and CWB rather

than an independent variable. Moreover, the lack of deci-

sion latitude may play a different role in relation to specific

characteristics of role and organizational position occupied

by workers. Along the same lines, social support could

actually represent a moderator of the stressor–strain rela-

tion. Indeed, as theorized by Karasek and in line with the

job demand-resources model (Bakker and Demerouti

2007), social resources can mitigate the negative effect of

stressors. Future studies should specifically investigate and

examine more in depth the role of these dimensions in the

process leading to CWB in order to identify possible

organizational resources that can contrast and prevent

recourse to unethical and deviant behaviors at work.

In terms of the posited model, in line with previous

findings, some stressors directly influenced CWB above

and beyond their indirect effect through negative emotions

and MD. Moreover, stressors tended to be mainly associ-

ated with a specific CWB. In particular, interpersonal

conflict and lack of support were principally related to

CWB-I, whereas organizational constraints and lack of

decision latitude were principally related to CWB-O.

Hence, on the one hand, stressors referring to the quality of

interpersonal relationships with colleagues and supervisors

tended to foster misconducts oriented toward damaging

organizational stakeholders. On the other hand, stressors

referring to work management and planning tended to

foster misconducts oriented toward damaging the organi-

zation as a whole.

Overall, this study extends the findings that emerged in the

literature, which frequently underline the relevance ofMD in

the unethical decision-making process (Barsky 2011; Detert

et al. 2008; Moore 2008, 2012). The inclusion of MD in the

stressor-emotion model represents an attempt to integrate

two important traditions of research on aggressive behavior:

the frustration-aggression hypothesis, focusing on the effects

that negative emotions and affect regulation exert on

aggression; and social-cognitive theory, addressing pro-

cesses that promote or justify aggression. This integrated

approach may be highly productive and promising for

defining organizational strategies aimed at discouraging and

contrasting CWB. Indeed, unlike emotions, MD mecha-

nisms are susceptible to the reciprocal influences of indi-

viduals and context and can be learned. Thismeans that these

cognitive maneuvers may likely become crystallized over

time (Paciello et al. 2008) in a context where workers

repeatedly have to deal with job stressors, legitimizing

recourse to aggressive and transgressive behaviors. Fur-

thermore, it is plausible that a context inwhichmisconduct is

frequently enacted through moral-cognitive distortions

without being sanctioned may in turn promote a ‘‘morally

disengaged culture’’ in which these mechanisms can be

socialized, learned, and activated, facilitating recourse to

CWB (Farnese et al. 2011; Gino and Galinsky 2012).

Therefore, within a socio-cognitive perspective, it is plau-

sible that organizations in which an increasing number of

employees tend to adopt MD over time will assimilate a

cultural model coherent with the adoption of unethical

140 R. Fida et al.

123

behaviors. For instance, if the cognitive justification of

wrongful acts is the easiest and least costly answer to job

stressors, it may produce a ‘‘routinization’’ of misconducts

both in individuals, in workgroups, and finally within the

organization as a whole (see Moore 2008). This could be

even more likely if leaders or direct supervisors exert a

modeling function in this direction. Complementarily,

organizational cultures may enhance the use of MD pro-

cesses, for instance, disregarding adverse consequences by

not sanctioning, or even worse, promoting them as long as

they are coherent with implicit values of the organization

(e.g., when diffusing responsibility is in line with an uneth-

ical corporate goal, or when moral justifications help the

company to pursue competitive corruption strategies). Some

authors highlight that the way performance objectives are set

defines different contexts that are more or less favorable to

deceptive or harmful behaviors, according to the degree to

which they are ‘‘reframed’’ as serving worthy purposes,

making them personally and socially acceptable (Barsky

2011; Barsky et al. 2006). Further, the management may

produce organizational practices or may promote the crea-

tion of shared beliefs about the weak morality within the

work context, facilitating widespread recourse to MD (see

White et al. 2009).

It is plausible that CWB could be the result of an

unethical decision-making process derived from a distorted

interpretation and application of shared norms. In this vein,

organizational culture may play a role in influencing and

reinforcing cognitive mechanisms such as MD through

which individuals attribute meaning to their work experi-

ence and relations. For instance, organizational culture may

promote a system of beliefs about human relations that

legitimizes dehumanization practices. Similarly, a gap

between explicit and implicit norms may explain the

adoption of moral justification mechanisms that allow

people to consider personally and socially acceptable a

detrimental or immoral style of conduct. However, cultural

dimensions (e. g., collectivism; cf. Jackson et al. 2006)

may on the contrary facilitate the internalization and

adoption of social norms, restricting the use of MD

mechanisms. In this sense, organizational culture, by con-

veying and reinforcing coherent managerial practices

(reward systems, leaders’ behaviors, etc.), guides the sense-

making processes that orient and legitimize ethical deci-

sion-making in work contexts. At the same time, individ-

uals who misbehave without being sanctioned or even

gaining opportunistic advantages from their conduct may

become a model for teammates. From a longstanding the-

oretical perspective, these negative models may make

easier and more obvious the adoption of MD, contributing,

in turn, to the creation of a ‘‘morally disengaged culture.’’

Future research should focus on the link between collective

and individual processes for interpreting interiorized norms

that lead to the adoption of both prosocial and antisocial

behaviors in the work context to deeply investigate their

possible reciprocal influences.

Undoubtedly, the cross-sectional nature of our datamakes

it more difficult for us to infer causal relations among vari-

ables considered, although the posited model is strongly

grounded in theory and prior research. Nevertheless, future

longitudinal and experimental research should be imple-

mented to confirm and strengthen the model herein exam-

ined. Another limitation of this research is the utilization of

self-report instruments. However, it should be noted that Fox

et al. (2007) demonstrated the convergence between self- and

peer-reports of the majority of stressor-emotion model

measures. Finally, the stressors and the negative emotions

included in the model only explain a reduced percentage of

variance of MD. Future studies should include further

determinants of MD more related to social and cultural

aspects to enable a better understanding of the process.

Conclusion

The results of our study highlight the role of MD in better

understanding the processes involved in the emergence and

maintenance of CWB, which is an increasingly pervasive

and costly phenomenon (Coffin 2003; Greenberg 1990;

Mount et al. 2006; Murphy 1993; Vardi and Weitz 2004),

impacting organizations in terms of loss of productivity,

damage of property, increased turnover, and absenteeism

(Bensimon 1994; Einarsen et al. 2003; LeBlanc and Kello-

way 2002; Penney and Spector 2005). Specifically, this study

extends previous research on the stressor-emotion model of

CWB that has mainly investigated the role of emotions

within the relation between work environment and CWB. In

particular, this study suggests that CWB may have both

‘‘hot’’ emotional and ‘‘cold’’ social-cognitive triggers in it.

Moreover, this study suggests the importance of integrating

different theoretical approaches to better understand indi-

vidual behaviors in social context. MD has received wide-

spread attention in the study of deviant behavior, and this

study has promising potential within the organizational lit-

erature for explaining the process leading to CWB.

Acknowledgments This research was supported by a Fulbright Senior Research Scholar Award to R. G. Fontaine and in part by

Grant from the University of Rome ‘‘La Sapienza’’ (2010) to R. Fida.

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Does Ethical Leadership Lead to Happy Workers? A Study on the Impact of Ethical Leadership, Subjective Well-Being, and Life Happiness in the Chinese Culture

Conna Yang

Received: 2 December 2012 / Accepted: 19 July 2013 / Published online: 9 August 2013

� Springer Science+Business Media Dordrecht 2013

Abstract Business ethics has been emphasized through-

out the past decade and organizations are aware of the

influence it has on the organization’s performance. As a

result, ethical leadership is important as it influences the

employees profoundly. This study aims to address this

issue and explore the influence ethical leadership has on

employees by examining job satisfaction, subjective well-

being at work, and life satisfaction. Two groups of inde-

pendent data were collected and a multi-group analysis was

conducted before pooling together for a two-step structural

equation modeling test. The results revealed that ethical

leadership has a negative direct effect on employee well-

being which offers significant findings for the meaning of

ethical leadership in the Chinese culture. Useful manage-

rial implications are provided for managers and supervisors

at the end of this study.

Keywords Ethical leadership � Job satisfaction � Leader–member exchange theory � Life satisfaction � Social identity theory � Subjective well-being

Introduction

As one of the most discussed issues of our time, business

ethics stands as the number one priority to a corporation’s

clients, stakeholders, and to its employees. It is known that

leadership styles can contribute in the success or failure of a

corporation (Lok and Crawford 2004). Before Treviño et al.

(2003) proposed a clear definition of ethical leadership,

many other styles of leadership such as transactional lead-

ership and transformational leadership were often associated

with ethical leadership due to their similar characteristics.

Treviño et al. (2003) defined an ethical leader as one who

influences the ethical behaviors of his subordinates by

encouraging ethical behavior. Indeed, most would agree that

good leadership must possess the qualities of integrity and

ethical behaviors for sustainable development.

Recently, studies on leader–member behavior have aimed

to understand how different leadership styles impact the

outcomes of organizational members (De Jonge et al. 2000;

Ilies et al. 2005). Although ethical leadership has been

studied with relevant studies growing due to the interest of

both empirical and research area, there is still much to learn

about ethical leadership and its outcomes and influences.

Accordingly, the proposed model in this study observes the

ethical leadership and the subjective well-being of employ-

ees while building propositions based upon social identity

theory. Leadership models such as Graen and Uhl-Bien’s

(1995) study the characteristics of the leader, especially the

relationship between the leader and the follower (i.e., LMX).

Cultural background and how employees interact with the

leader should also be studied. Leadership styles need to be

adapted to different environments and cultures in order to

have an effective impact (Dorfman et al. 1997). Hofstede

(1993) divided different groups of nations into various cul-

ture clusters where each has its own characteristic due to the

history, culture, and tradition of the country. Resick et al.

(2011) further labeled the Asian countries as the Asian

Confucius cluster that shared the common traits of collec-

tivism, team orientation, and harmonious relationships. Out

of the Asian Confucius cluster, China seemed to be the most

influenced by the Confucian ideology where workplaces

were shaped into close hierarchy relationships, with the

C. Yang (&) Institute of Business and Management, National Chiao Tung

University, 4F., No. 118, Sec. 1, Zhongxiao W. Rd., Zhongzheng

Dist., Taipei 100, Taiwan, ROC

e-mail: [email protected]

123

J Bus Ethics (2014) 123:513–525

DOI 10.1007/s10551-013-1852-6

subordinates having great respect and honor to the leaders as

a child would behave to a father. For other Asian countries,

which had a stronger influence to Western business cultures

such as Hong Kong or Taiwan, that demonstrated some

characteristics similar to the U.S. respondents, the overall

behavior and perception of employees’ ethics were still

shaped and impacted by traditional Chinese values.

The proposed model in this study observes the ethical

leadership in Taiwan and the well-being of employees

while building propositions based upon sophisticated

models such as social identity theory and leadership

member exchange (LMX) theory. In addition, the rela-

tionship of an individual’s satisfaction at work and how it

affects one’s life satisfaction is often discussed, as work

has become an important part of our life. Since ethical

leadership’s affect on life satisfaction has not yet been

discussed, we hope to examine the role of life satisfaction

in our theoretical framework. In fact, the relationship of

ethical leadership in the Chinese culture and employee

work outcomes has not yet been studied until recently.

Walumbwa et al. (2011) noted that the Chinese people held

an environment in which the cultural values were becom-

ing diverse due to the mixture of traditional Chinese

teachings and the influence of Western thinking and called

for more studies of ethical leadership and employee out-

comes in the Chinese culture. Furthermore, Resick et al.

(2011) also noted that ethical leadership across Asian,

American, and European countries have different meanings

to employees that have different values and cultural sys-

tems and such divergence requires more understanding.

Indeed, extending the research of ethical leadership and its

implications would be useful in a Chinese context due to

the increasing business ties of Western countries and Asia.

Theoretical Background and Hypotheses

Defining Ethical Leadership

Ethical leadership is defined as the behavior of appropriate

conduct through personal actions and interpersonal rela-

tionships. Ethical leadership was first conceptualized by

Brown et al. (2005) as a type of leadership that emphasizes

honesty and integrity. Before the ideology of ethical lead-

ership was introduced, the area of organization behavior did

not have a specific genre that could fully explain this concept.

However, there are some other forms of leadership similar to

ethical leadership due to its nature. These leadership styles

will be discussed and clarified clearly to distinguish the

differences.

Transformational leadership leaders possess an influence

over others by demonstrating personal charisma and inspi-

ration. Followers develop a set of moral principles that are

similar to the transformational leader (Brown et al. 2005;

Mayer et al. 2009; Treviño et al. 2003). Having an idealized

influence on followers, transformational leaders can align

the moral beliefs and standard of others to behave ‘‘the right

way’’ and fall in line with the organization culture. Never-

theless, the moral standards of the leader could be very dis-

tantly linked with the welfare of the society and people,

leading to harmful consequences that are influenced by the

decision of personal will instead of value beliefs (Price

2003). Therefore, although there seems to be a certain

resemblance between transformational leadership and ethi-

cal leadership, there is no necessary linkage among them

(Bass and Steidlmeier 1999).

Leader honesty (Brown et al. 2005) also known as

authentic leadership (Avolio and Gardner 2005; Gardner

et al. 2005) is also similar in some characteristics to ethical

leadership since. Although honesty is an important factor

that makes up ethical leadership, it is only one of the many

factors necessary for an ethical leader (Howell and Avolio

1992). Mayer et al. (2009) discussed authentic leadership as

another type of leadership that can be often confused with

ethical leadership due to similar characteristics of being true

and authentic. The definition of authentic leadership by

Avolio et al. (2004) was to know oneself and reflect one’s

personal values onto the actions and behavior of oneself

without intentional changes. Indeed, authentic leaders are

leaders who remain true to themselves and choose to act upon

these values under most circumstances and scenarios.

Despite the similarity of attributes such as honesty and

trustworthiness in the above-mentioned leadership styles,

these types of leadership contribute to only a part of ethical

leadership and cannot represent the full concept. Further-

more, another important resemblance in ethical leaders is

their tendency to use reward and punishment as a mechanism

to encourage ethical behaviors in the organization and that

they are often the role model of the organization. Mayer et al.

(2012) studied ethical leadership by addressing the crucial

influence of ethical leadership and raised the question of why

ethical leadership matters. Using the social learning theory in

which individuals pick up and learn behaviors by observing

the environment and their companions, their study results

suggest ethical leadership as an important factor since the

leaders are looked up to as a role model on how to behave in

an organization. The culture and style of an organization can

be set by the leader to either develop as an honest and morally

ethical company, or an unethical one.

Social Identity Theory

Social identity theory explains the social phenomenon of

individuals forming a sense of recognition and belonging

toward the organization, company, or group of people in

which one belongs. Tajfel (1982) introduced the social

514 C. Yang

123

identity theory in his study of interpersonal relations,

stating that individuals gain the feeling of belonging to a

group which in turn divides their social world into two

halves: ‘‘us’’ versus ‘‘them.’’ For example, a basketball fan

may define himself according to which group he belongs to

such as a New York Knicks or California Lakers fan and

easily gain recognition from the group for supporting the

same team (Ashforth and Mael 1989).

Walumbwa et al. (2011) incorporated social identity

theory to explain the relationship of ethical leadership on

employee outcomes, proposing this theory to be able to

capture the complex situation of studies on ethical lead-

ership. Social identification leads to behaviors that are

congruent with the organization’s beliefs, or identity that

one is assigned to in a group (Ashforth and Mael 1989). As

a result, employees are likely to act similar to other

members of the organization, and more importantly, feel

proud of their social identity. People who choose to stay

within a group strive to achieve a sense of satisfaction with

their social identity (Brown 2000) and maintain a state of

subjective well-being. Also, Brown and Mitchell (2010)

have stated that leaders’ values have a power to shape the

organizational culture, whereas Giberson et al. (2005)

reported that leaders tend to surround themselves with

subordinates and employees who have similar ethical val-

ues and standings. We believe that this can also help

explain the relationship of ethical leadership and employee

well-being.

Leader–Member Exchange Theory

The leader–member exchange theory is unique, since it is

one of the few theories that focus on the interaction of

managers and their subordinates (Fairhurst and Chandler

1989). LMX theory is most often used to analyze teamwork

development in organizations. This theory is useful due to

its explanation of how workplace behavior functions, with

a subgroup of the same unit working in harmony with the

leader and the other group outcast as the out-group. The

quality of the relationship between the employee and the

supervisor is the predictor of outcomes of not only the

individual, but also of the subunit and organization

(Gerstner and Day 1997). Defining quality of communi-

cation, it means that the subset of subordinates who are

loyal and have high performance (the ‘‘in-group’’) usually

receive encouragement, rewards, and more attention from

the managers (DuBrin 2010). In contrast, the other subset,

which is labeled as the ‘‘out-group’’ by the leader receive

less encouragement. Studies describe the comparison of in-

group and out-group as those that lead the role of a trusted

assistant, and the others that are treated formally like a

hired worker (DuBrin 2010). In the organization employees

working under an ethical leader will likely share the same

values and beliefs and become one of the ‘‘in-group’’ if

they fit in. Nevertheless, if employees do not meet the

expectations of the ethical leader, it is likely that they

receive less attention and feel like an outsider in the

organization.

A high-quality relationship between the leaders of an

organization and its members is crucial since it decides the

fate of the subordinate as those who have a better rela-

tionship with the leader have a higher chance of being

promoted and mentored (Sparrowe and Liden 1997). For

instance, Yukl (2013) noted that leaders differ their

behavior according to different groups of subordinates with

those who are favored receiving obvious tangible benefits

such as pay increase, better work schedule, special benefits,

and bigger office space. Though most studies on LMX

theory explain the relationship of other factors with LMX,

few have specifically examined if employees in organiza-

tions reflect the ethical status of their supervisors. Due to

this context of the LMX theory, we build our proposed

model accordingly to observe the relationship of ethical

leaders and their subordinates.

Ethical Leadership and its Influence on Subjective

Well-Being of Employees

Subjective well-being is sometimes defined as the state of

happiness (Easterlin 1995; Ryff 1989; Wright et al. 2007)

or a positive emotional state in which negative feelings

such as fear, anxiety, or anger is not present (Diener et al.

2009). Recent studies have found that well-being benefits

one’s personal life, and also is a helpful factor in the

workplace. The importance of subjective well-being is

crucial since empirically it has been shown that a happy

worker is more likely to be successful in many aspects. For

instance, happy workers usually have higher incomes

(Diener and Biswas-Diener 2002), help their coworkers at

work (George and Brief 1992), and are also more favored

by their boss (Cropanzano and Wright 2001). Moreover,

there is convincing evidence that workers with a positive

state of emotion and mood are more likely to stay in good

health (Argyle 1997) which could lower the cost of human

resources and maintain an efficient work schedule.

There are reasons to believe that ethical leadership may

lead to subjective well-being. First, researchers state that

employees feel obligated to return beneficial favors by

performing better on their work behavior (M. E. Brown and

Mitchell 2010). Prior studies have shown that the man-

ager’s ethical leadership can influence the employee’s

organizational loyalty and also ethical behavior in the

workplace (Cullen et al. 2003; Koh and El’fred 2004;

Schminke et al. 2005). Next, the moral atmosphere in a

workplace forms a group experience where individuals feel

the support of coworkers when facing a moral decision

Ethical Leadership 515

123

(VanSandt and Neck 2003). The manager’s support for

ethical behaviors can increase the level of job satisfaction

(Koh and Boo 2001) which is a determining factor for

employee well-being. Consequently, individuals are more

likely to experience job satisfaction and maintain a good

state at work while working for ethical leaderships. For

instance, a study on nurses’ job satisfaction and ethical

climate in Israel showed a strong relationship and proposed

that training programs that emphasized ethics at work

should be conducted to increase job satisfaction in these

employees (Goldman and Tabak 2010). Ilies et al. (2005)

conducted a study on the impact of authentic leadership by

proposing that leaders with authentic attributes not only

influence the well-being of the leader, but also the well-

being of the employee. Third, ethical leadership can

influence dynamic relationships in the workplace (Mayer

et al. 2012). Ethical leaders tend to exhibit active respon-

siveness; therefore, two-way communication in an ethical

leadership environment encourages work atmosphere. For

example, according to the social learning theory, these

behaviors demonstrated by ethical leaders ‘‘trickle down’’

for employees to imitate. A higher level of liking and

sharing are common in the work environment and creates a

pleasant environment for the workers.

Related to this, prior studies examining the relationship

of ethical leadership and employee outcomes by Toor and

Ofori (2009) have stated that ethical leadership plays a

mediating role between organization culture and employee

outcomes. Employees who work for ethical leaders usually

are satisfied toward the leader and organization whereas the

moral conduct of the employee can also be significantly

increased (Toor and Ofori 2009). Valentine et al. (2006)

studied the effect ethical leadership had on employee job

response, finding that employees have more favorable

attitudes toward an ethical organization. By developing a

corporate ethic culture, employees also feel more con-

nected with the company.

Using data obtained from participants recruited from

college alumni, In this study, we focus on the direct

supervisor of the employees since many studies have stated

that local foci (i.e., relationship with supervisor) have a

larger impact on the employee’s work outcome than global

foci (i.e., relationship with top manager) (Becker 1992;

Becker et al. 1996; Brandes et al. 2004). Direct managers

are important in organizational study due to the role of

linkage they play. Serving as linkages between the top

managers they report to and the subordinates that they

supervise, employees look to these managers as a role

model (Lam et al. 2010).

Hypothesis 1 Ethical leadership of the direct supervisor

will be positively related to the employee well-being of an

individual.

Ethical Leadership, Job Satisfaction, and Life

Satisfaction

Rad and Yarmohammadian (2006) defined job satisfaction

as the attitude that people hold toward their jobs, based

upon the comparison of the expected outcome with the

actual outcome. We expect job satisfaction to mediate

ethical leadership and employee well-being. Investigating

the link between ethics and job satisfaction, Koh and Boo

(2001) found ethical climate of an organization to be

positively associated to the employee’s job satisfaction.

The preference for organization ethics implicates that

leaders who can directly influence the ethical climate can

also impact the job satisfaction of employees (Koh and Boo

2001). Addressing the concern of unethical behavior

Management Information Systems (MIS) professionals

were facing, Vitell and Davis (1990) choose MIS profes-

sionals as study subjects and found that workers who faced

unethical situations at work had lower job satisfaction.

Pettijohn et al. (2008) also suggested that the manager’s

ethical behavior could influence how the employees per-

ceive job satisfaction, which could influence the organi-

zation performance and turnover rate. The subjective well-

being of an individual is decided significantly by the status

of job satisfaction. Indeed, job satisfaction has been viewed

by prior studies as an important indicator of employee

well-being (De Jonge et al. 2000). For example, a sales

person who has not reached his monthly goal would likely

feel pressured and spend personal time in distress due to

this cause. The effect of job satisfaction on employee well-

being has been studied by several researches. For instance,

Pugliesi (1999) conducted a study on emotional labor

finding job satisfaction to be having a negative impact on

the workers’ well-being. Also, Page and Vella-Brodrick

(2009) studied the importance of employee well-being and

noted that job satisfaction should be included as an

important indicator of employee well-being. As a result, it

is important to recognize how job satisfaction can affect

people in terms of their subjective well-being and analyze

the role of job satisfaction as a mediator between ethical

leadership and employee well-being. Through the follow-

ing proposition, we wish to examine the discussed issues:

Hypothesis 2 The relationship between ethical leadership

of the direct supervisor and employee well-being will be

positively mediated by job satisfaction.

To this point, we have discussed the relationship of ethical

leadership, employee well-being, and job satisfaction. In an

effort to complete our theoretical model on the impact of

ethical leadership, we discuss life satisfaction by suggesting

that ethical leadership should be related to life satisfaction

through the effect it has on job satisfaction (Fig. 1). Nowa-

days, work takes up much of our life and the emotion or

516 C. Yang

123

psychology of a person is very much influenced by the work

situation (Lyubomirsky et al. 2005). Past studies have shown

job and life satisfaction to be highly correlated, since most

people contribute a large amount of time to their career and,

therefore, feelings about their job can influence their life

satisfaction (Tait et al. 1989). Satisfaction with one’s life has

been defined as a general state of life as a whole. While this

concept has been discussed often by prior studies, the scale to

assess life satisfaction was first conceptualized by Diener

et al. (1985) with questions measuring the overall assessment

of individuals’ life. Although some would agree that certain

components of our lives (i.e., health, finance, or psychology)

are important in defining whether we lead a satisfactory life

or not, each individual has a unique criteria of life satisfac-

tion. Therefore, life satisfaction is the judgment of one’s

quality of life which varies according to each individual.

Moreover, previous studies have pointed out that job satis-

faction has a significant influence on life satisfaction espe-

cially through extrinsic outcomes such as pay and prestige at

the company (Steiner and Truxillo 1987). Since ethical

leadership leads to extrinsic outcomes in behavior that can

also exist outside work, we propose that job satisfaction acts

as a mediator between ethical leadership and the employee’s

life satisfaction.

Hypothesis 3 The relationship between ethical leadership

of the direct supervisor and life satisfaction will be posi-

tively mediated by job satisfaction.

Methodology

Measures

The questionnaire was designed by using validated items in

the previous studies. For the measurement of ethical lead-

ership, the ethical leadership scale (the ELS) developed by

Brown et al. (2005) was applied. The development of this

instrument was based upon prior theoretical perspectives to

capture the characteristics of ethical leadership. The inten-

tion of this scale is to measure how the employee perceives

the ethical behavior of the supervisor. The instrument used to

measure job satisfaction was borrowed from Seashore et al.

(1982) and Valentine et al. (2006), and consists of 4 items.

For employee well-being, a subjective well-being scale

developed by Lyubomirsky and Lepper (1999) was adapted

to fit our study. Specifically, phrases that identified the spe-

cific situation (such as ‘‘at work’’) were added to the mea-

surement items. To measure life satisfaction, a 5-item scale

developed and validated by researchers was used in this

study (Diener et al. 1985; Pavot and Diener 1993).

Pilot Test

For the pilot study, participants were recruited from

employees who were in an on-the-job graduate program in a

university located in northern Taiwan. These participants

were chosen due to the similar background characteristics

they would share with the participants later recruited for the

survey. Prior to administering the questionnaire, the scales

were first translated into Chinese by a English native speaker

and then back-translated by another bilingual individual

fluent in both languages to ensure that the content would be

accurately represented in Chinese. An expert in organiza-

tional behavior research was asked to help check the content

of the items. 30 participants were asked to complete the

questionnaire and offer feedback to improve the clarity of

our questionnaire. Next, a reliability test was conducted, with

all scales above the standard of coefficient alpha higher than

0.7 (Hair et al. 1998), ranging from 0.82 to 0.93.

Research Subjects

For this study, we aimed to find participants who had

variations in age, salary, and other characteristics so that it

could represent the population of the workers in Taiwan.

Therefore, questionnaires were handed out on two occa-

sions to obtain the data included. Data were collected from

the same college alumni in two different settings. The

survey was distributed offering an incentive of a lottery

drawing of a $30 USD gift certificate drawn by the par-

ticipant’s email address to ensure anonymity and privacy.

As suggested by past studies, an incentive of some form

should be offered to the participants to encourage the

participants to fill out the questionnaires (Biner and Kidd

1994). The first group of respondents was a group of col-

lege alumni attending a speech hosted by the school in

Taipei City, Taiwan. Out of 250 questionnaires collected,

H2b +

H1 +

H3 +

H2a +

Ethical leadership

Job satisfaction

Employee well-being

Life satisfaction

Fig. 1 Research framework

Ethical Leadership 517

123

17 were invalid with a valid response rate of 93.2 %. The

233 valid questionnaires showed that the group consisted of

slightly more male participants (58.5 %) than female

(41.2 %). Over half (52.3 %) of the participants were

30 years or younger and had an education level of mainly

college (40.3 %) or graduate school (54.9 %). The income

ranking showed that most of the participants from group

one had a monthly income of $40,001–$50,000 NTD or

under (65.2 %). These participants had a ranking of

assistant manager or below.

A set of 217 questionnaires was collected at an EMBA

alumni gathering on the school’s graduation ceremony. Out

of the 217 surveys collected, the number of valid ques-

tionnaires was 201 with a high valid response rate of

92.6 %. This set of questionnaires consisted of a higher

percent of male individuals (65.7 %) with an older age.

Considering that the background of the participants is from

an EMBA program with high-ranking managers in well-

established corporations, the demographics are consistent.

Comparing the two sets of data, all respondents filled out

the questionnaire with a response rate of 100 % and 434

valid questionnaires were collected. The demographics of

the participants can be seen in Table 1. We tested the

equivalence of the measurement tool and invariance of the

hypothesized model with three steps including testing for

validity of model, testing for the invariance of a fully

constrained model, and testing for invariance of factor

loadings and factor covariances across groups. Next, a two-

step procedure of structural equation modeling was con-

ducted to examine the proposed model and hypotheses.

Results

Test for Invariance for Multi-groups

The test for multigroup invariance is often used to identify

if an instrument or proposed model operates exactly the

same way for different datasets. We tested for equivalence

across the two groups of data collected using the method

suggested by Byrne (2004) using Amos Graphics. The

23-item instrument used in this study was tested for each

group to derive a baseline model, one that best fits the data

due to consideration for both parsimony and interpretation.

In testing for the validity for both groups of data, both

groups demonstrated consistency without need for

modification.

Step 1: Testing for the Validity of the Model Across

Groups

When testing for the baseline model, the two groups were

tested separately. However, testing for the validity of the

model requires the test to be conducted simultaneously to

provide a baseline value in which all latter models in our

analysis can be compared to. The goodness of fit statistics

that one should refer to are the comparative fit index (CFI)

and root mean squared error of approximation (RMSEA)

(Byrne 2004). As seen in Table 2, the Chi square value of

729.2 with 406 d.f. provides a baseline value. The CFI and

RMSEA values are 0.95 and 0.04, which is a fairly good

model fit.

Step 2: Testing for the Invariance of a Fully

Constrained Model Across Groups

By placing constraints on the parameters of the model, the

model was tested for its complete invariance. The Chi

square value of 766.5 and 434 d.f. is compared with the

baseline model which had no constraints. The difference

among the constrained model and baseline model were

found to be invariant (Dv2, d.f. = 37.3, 28 n.s.). Therefore,

Table 1 Descriptive data of respondents

Group 1 Group 2 Total

Gender

Male 137 132 269

Female 96 69 165

Age

Below 30 122 27 149

31–40 83 102 185

41–50 25 56 81

51–60 2 15 17

Above 60 1 1 2

Education

College and below 99 77 176

Master 128 118 246

PhD 6 6 12

Incomea

Below $20,000 19 3 22

$20,001–$30,000 25 5 30

$30,001–$40,000 42 15 57

$40,001–$50,000 66 30 96

$50,001–$60,000 22 33 55

$60,001–$70,000 20 24 44

$70,001–$80,000 9 23 32

$80,001–$90,000 2 11 13

$90,001–$10,000 3 11 14

Above $10,000 25 46 71

Rank

Assistant Manager or below 183 85 268

Assistant Manager–Division Manager 38 83 121

Assistant Vice President and above 12 33 45

a 10,000 NTD equals approximately $333 USD

518 C. Yang

123

we can conclude that the model works well across different

data. Next, the data will be pooled together for the fol-

lowing analysis of structural equation modeling.

Measurement Model

This study chose structural equations modeling developed

by Anderson and Gerbing (1988) as the data analysis tool

due to its powerful ability to analyze causal models by two

steps: the measurement model is used to assess the fitness

of the model, the validity, and reliability by a confirmatory

factor analysis (CFA); and the structural model helps

analyze the causal relationships of the variables in the

theoretical model. AMOS 17.0 (Arbuckle 2006) is used as

the statistical tool for data analysis.

Model Fit

To assess the model fit of our proposed model, the most

widely reported and respected model fits in SEM is

examined (Hooper et al. 2008). These following goodness

of fit indices are as follows: v2/d.f. = 2.35; RMR = 0.031; RMSEA = 0.055; NFI = 0.94; CFI = 0.96; IFI = 0.96;

GFI = 0.90; PNFI = 0.81. These goodness of fit indices

are all within the suggested criteria, which shows that the

measurement model is established well.

Reliability and Validity

The Cronbach alpha of the four constructs was measured to

examine the internal consistency of our measurement

scales. Ranging from 0.84 to 0.92, our scales demonstrated

an acceptable requirement for reliability. The mean, stan-

dard deviation, and Cronbach a are shown in Table 3. Convergent validity is assessed to examine whether or

not the measurement items within each construct are

related as they should perform. We examine convergent

validity by examining the composite reliability (CR) and

average variance extracted (AVE). All CRs and AVEs

exceed the required standard of 0.7 and 0.5 (Table 4)

except one item in the subjective well-being scale (‘‘Some

colleagues are generally not very happy at work. Although

they are not depressed, they never seem as happy as they

might be. To what extend does this characterization

describe you?’’). This item was removed for further

analysis. In addition, all factor loadings met the standard

for 0.5 ranging from 0.78 to 0.92.

Discriminant validity was tested to examine if the

measurement of each construct was not correlated with

other constructs. Comparing the proposed model to a

model where the correlations between various constructs

are fixed at 1.0, the constrained model should be compared

to the unconstrained model (Bagozzi and Phillips 1982). If

the Chi square value of the unconstrained model is sig-

nificantly lower, then we can conclude that discriminant

validity is supported (Segars and Grover 1993). The tests in

this study for discriminant validity show that all constructs

are considered distinct (Table 5).

Common Method Variance

The issue of common method variance has been discussed

as a potential flaw due to self-reported measures from the

same source. Conducting a Harman’s one-factor test sug-

gested by the previous studies in social science, this test

examines if most of the variance in a sample can be

accounted for by one factor. If the factor accounts for over

50 % of the variance, then there is the existence of a

common method bias. In this study, we conducted a Har-

man’s one-factor test including all items of the four vari-

ables in our study. The first emerging factor accounted for

46 % of the explained variance. Since it passes the criteria

suggested, we can conclude that the common method bias

is not an issue in our study.

Structural Model

Control Variables

To be consistent with prior studies and avoid model mis-

specification, we controlled for variables that might affect

the measurement of the proposed framework. As suggested

by previous studies of organizational behavior in similar

topics (Wright et al. 2007), both gender and income were

controlled. Spector (1997) stated that gender is one of the

most important factors when discussing job satisfaction.

Income also has been found to have a strong link with job

satisfaction and subjective well-being (Adelmann 1987).

For these reasons, gender and income were both controlled

for.

Table 2 Invariance test for two independent groups

Model description v2 d.f. Dv2 Dd.f. Statistical significance

1. Combined baseline models (short and long tenure) 729.2 406 – – –

2. Factor loadings, variances, and covariances constrained equal 766.5 434 37.3 28 n.s.

n.s. not significant at 0.05 level

Ethical Leadership 519

123

Model Fit Assessment

We fit the hypothesized path model to the data and found

the model to fit well. The structural model (v2 = 699.19, d.f. = 244) was tested for the proposed hypotheses. In the

following, goodness of fit indices are provided as indicators

of the model fitness. These indices are as follows: v2/ d.f. = 2.08; RMR = 0.063; RMSEA = 0.05; NFI = 0.93;

CFI = 0.96; IFI = 0.96; GFI = 0.91; PNFI = 0.81. The

results of the measurement model show an acceptable

level.

Next, we examined the path coefficients to determine if

the proposed hypotheses were supported. The results

indicated that Hypothesis 2 was supported, as ethical

leadership had a positive and significant relationship to

employee well-being (b = 0.98) through the mediation of job satisfaction (b = 0.67). Also, Hypothesis 3 was sup- ported with ethical leadership having a positive and

Table 3 Internal consistency test

Variable Items Mean S.D. Cronbach a

Ethical leadership 9 3.55 0.98 0.92

Job satisfaction 4 3.48 0.93 0.92

Employee well-being 4 3.51 0.89 0.78

Life satisfaction 5 3.24 0.94 0.90

Table 4 Convergent validity test

Factor Factor

loading

AVE Composite

reliability

Factor one: ethical leadership

1. Listens to what employees have to say 0.80 0.56 0.92

2. Disciplines employees who violate ethical standards 0.55

3. Conducts his/her personal life in an ethical manner 0.62

4. Has the best interests of employees in mind 0.85

5. Can be trusted 0.88

6. Discusses business ethics or values with employees 0.64

7. Sets an example of how to do things the right way in terms of ethics 0.83

8. Defines success not only by the results but also the way they are obtained 0.74

9. When making decisions, asks ‘‘what is the right thing to do?’’ 0.75

Factor two: job satisfaction

1. In general, I don’t like my joba 0.77 0.74 0.92

2. I like working where I do 0.87

3. I am comfortable in my job 0.90

4. I am satisfied with my job 0.90

Factor three: employee well-being

1. In general, I consider myself very happy at work 0.88 0.63 0.83

2. Compared to most of my other colleagues, I consider myself more happy 0.73

3. Some colleagues are generally very happy at work. They enjoy work regardless of what is going on.

To what extend does this characterization describe you?

0.76

4. Some colleagues are generally not very happy at work. Although they are not depressed, they never

seem as happy as they might be. To what extend does this characterization describe you?a 0.37b

Factor four: life satisfaction

1. In most ways my life is close to my ideal 0.87 0.68 0.91

2. The conditions of my life are excellent 0.88

3. I am satisfied with my life 0.93

4. So far I have gotten the important things I want in life 0.70

5. If I could live my life over again, I would change almost nothing 0.73

a Item is reverse scored b Item removed due to low factor loading

520 C. Yang

123

significant relationship with life satisfaction (b = 0.63). Turning to the direct relationship of ethical leadership and

employee well-being (b = -0.14), we found partial sup- port for Hypothesis 1. Finally, we examined the indirect

effect (b = 0.66), direct effect (b = -0.14), and total effect (b = 0.52) of ethical leadership on well-being, finding that the total effect was positive. The results can be

seen in Fig. 2.

Discussion

This study is based on the social identity theory, proposing

that since employees are influenced by the behavior of

managers and tend to identify with those that they feel

similar, managerial ethical behavior should have an indi-

rect effect on employee well-being. Our study yielded two

major results. First, ethical leadership indirectly influences

both employee well-being and life satisfaction. We

observed the findings and found that although the coeffi-

cient is slightly higher with employee well-being, it is not

significantly different from life satisfaction. Thus, we can

conclude that ethical leadership not only affects an indi-

vidual’s work, but also affects them after they leave the

office. The second finding is that ethical leadership has a

strong influence on job satisfaction, which is an important

indicator for corporations.

Although we found support for the hypothesis of indi-

rect influence through job satisfaction, the direct effect was

negative. This finding implicates that in the process of

establishing ethical leadership, there may be reasons that

conflict with the well-being of the subordinates. A possible

explanation is that this effect may be caused by ethical

incongruence between the ethical leader and the subordi-

nate. For example, Burke’s (2010) review of workplace

stress and employee well-being reviews several contribut-

ing studies regarding workplace stress and well-being,

stating that leadership style is a factor that plays the role of

a work stressor. Leaders with a higher ethical conduct at

work may induce pressure on their subordinates. If the

employee’s original ethical status does not match with the

supervisor’s leadership style (i.e., ethical incongruence),

the individual’s workplace well-being would be decreased.

This could result in distress in the employee (Schwepker

1999; Viswesvaran and Deshpande 1996).

The finding of this research shows that in the process of

promoting ethical behavior among employees in an orga-

nization, the leadership style may conflict with the unique

way of interaction among Chinese work organizations.

Studies regarding Chinese organization behavior and rele-

vant interaction pointed out that traditional Chinese culture

and the deep-rooted teachings of Confucian concept have

created a system of belief and rules that individuals follow.

One of the most often discussed phenomenon is the special

type of informal social interaction in Chinese societies

defined as ‘‘guan-xi,’’ a personal bonding that links an

individual closely with another (Chen and Tjosvold 2007;

Hong and Engeström 2004). Guanxi is perceived as an

important way of bonding that ties people together in a

harmonious network whereas those who do not share this

bonding are labeled as outcasts. Past studies have observed

that the formation of guanxi usually develops through

informal occasions and social settings such as after work

dinner gatherings or doing favors for co-workers in the

company. In Chinese culture, individuals with a well-

established guanxi are usually more likely to be forgiven

for their mistakes and often taken care of in times of need.

Moreover, different definitions of ethical leadership and

how an ethical leader should act vary across cultures. Re-

sick et al. (2011) conducted a cross-cultural study and

found that the cultural cluster Confucius Asia (including

Asian countries such as China, Hong Kong, and Taiwan)

has a substantial influence on leadership behavior. While

Table 5 Chi square difference test for discriminant validity

Construct pair Unconstrained v2

(d.f. = 202) = 472.4

Constrained v2

(d.f. = 203)

v2

difference

Ethical leadership, job satisfaction 578.7 106.3*

Ethical leadership, employee

well-being

594 121.6*

Ethical leadership, life satisfaction 626.1 153.7*

Job satisfaction, employee well-being 539.7 67.3*

Job satisfaction, life satisfaction 591.5 119.1*

Employee well-being, life satisfaction 566.3 93.9*

* Significant at the .05 overall significance level

0.98***

-0.14**

0.63***

0.67***

Ethical leadership

Job satisfaction

Employee well-being

Life satisfaction

Fig. 2 Structural modeling analysis results. **p \ 0.01, ***p \ 0.001

Ethical Leadership 521

123

the U.S. business culture has gradually started to influence

these Asian countries, traditional values such as Confucius

teachings and traditions still have a strong impact on the

way employees view their leaders (Resick et al. 2011).

Although ethical leadership is emphasized globally across

different nations and cultures, cultural difference has a

strong influence on how ethical leadership should operate

under different societies. In the Confucius Asia cluster,

people are accustomed to familism and emotional consid-

eration between individuals. In other words, subordinates

look forward for the workplace to be a place of harmonious

relationships. Chen et al. (2002) noted that people would be

judged by their loyalty to the leader rather than objective

regulations of the system. Due to the Chinese cultural

background, it is reasonable to expect that instead of a set

of code of ethics to follow, employees believe that their

behavior under different situations should be flexible.

Furthermore, when the code of ethics is being overridden

by the high-ranking managers and the inner workings of a

company which can happen in Chinese culture organiza-

tions (Wu 2002), this situation can cause unhappiness

among the employees. Nowadays, Taiwanese companies

establish a set of code of ethics and the managers are

encouraged by government law to promote ethical employee

behavior. However, while the supervisor promotes and

educates their subordinates using ethical leadership, it is

possible that the supervisor himself may fail to act accord-

ingly due to a higher state of power and authority. Contra-

dictorily, the codes of ethics seem to apply only under

certain circumstances that the supervisor desires. Old Chi-

nese sayings such as ‘‘do as the boss says’’ and ‘‘rules cannot

compare with the boss’s words’’ depict the conflicting sit-

uation that many Chinese employees encounter which can

cause frustration. Moreover, Chinese culture teaches indi-

viduals that a confrontation is ‘‘uncivilized’’ and crosses the

boundary of politeness and should be avoided. As a result,

the dissatisfaction of questionable acts of the leader is likely

to be kept quiet.

Managerial Implications

This research offers several managerial implications and

suggestions. For international organizations working with a

Chinese company, it is important to understand the dif-

ference of culture and the large impact it has on the way

individuals act and think in the workplace. While it may

appear that Chinese organizations are becoming more

Westernized with the way of doing business, the deep-

rooted Confucius teaching and emphasis on guanxi still

dominates their behavior. In order to gain trust and loyalty

of the Chinese company, establishing a good relationship in

an ethical way with the employees is important.

Second, related to the mentioned suggestions above,

when working with Chinese organizations or employees, it

is suggested that the manager or leader can offer programs

and office events that encourage interaction and commu-

nication between the managers and their subordinates. This

study suggests that the approach of enforcing ethical

behavior among employees is important. Communication

should be carried out strategically to create an ethical cli-

mate and harmonious atmosphere. For the Chinese

employees, they need to be gradually taught the importance

of following the code of ethics in a way that is in line with

the Confucius tradition. The intended effects are to tear

down the walls and increase the feeling of a strong guanxi

that leads to the positive state of the individuals. Also,

when communication across the managers and subordi-

nates is encouraged, this can also create a favorable

working environment.

Third, leaders need to establish a set of code of ethics for

the organization which does not conflict with the employ-

ees belief and Confucius teachings. For many Chinese

individuals, they understand rationally that the leader is

right and the code of ethics exists to help create an ethical

working environment. However, the Chinese collective

culture is build on a foundation that consists of sympathy

and care such as ‘‘renqing.’’ Renqing is a crucial element in

the Chinese society that is an important factor for indi-

viduals to success. The word represents the action of

informal and unselfish give and take. Moreover, the Chi-

nese is a relatively shy culture that does not like to loose

‘‘face’’ in front of other people. The mentioned character-

istics are all subtle cultural behaviors that the leader has to

take into consideration when promoting ethical behavior so

they do not fail in the interpretation of Chinese culture.

Limitations and Future Research

This study offers significant and useful findings for man-

agers and practitioners under the Chinese culture. How-

ever, as with all research, this study is not without

limitations. We measured the ethical leadership at the

supervisor level; however, it would also be useful to study

the congruity of the employee and the top management

team. For future research regarding this topic, we suggest

researchers to choose firms that are management dominant

to observe the difference from this study. Organizations

that are management dominant rely on a group of hand-

picked high-level managers at the top of the organization to

decide the direction of the corporation (Olson et al. 2005)

and, therefore, may also have a strong impact on the

employees.

Second, this study did not investigate the different types

of organizations in which the employees worked. Chinese

522 C. Yang

123

are known to develop family businesses with a strong bond

and paternalistic relationship with their subordinates. This

may be a different theme that should be studied separately

with organizations that are not family businesses. Also, this

study did not include the investigation of Western culture

influence on different individuals, which may have influ-

enced the perception of ethical leadership. However, as

Resick et al. (2011) concluded, although several Asian

countries have been influenced by the U.S. business cul-

ture, the Chinese traditional teachings and culture are still

deeply rooted.

Third, the social desirability problem is perhaps one of the

issues organizational researchers who use self-reports are

most concerned about. According to Podsakoff and Organ

(1986), certain items in a questionnaire may induce respon-

dents to respond in a biased way since certain answers seem

to put the individual in a better light or create a flattering

social image. Future research can use methods suggested such

as elimination of social desirability through measuring the

individual’s need for social approval and scale trimming.

Another limitation of this study is that while building

our argument based on the LMX theory, we did not mea-

sure this variable in the study. Although due to our research

design LMX was not measured, LMX is essential in dis-

cussing leadership and employee behavior. Future research

can provide a more exhaustive test of whether LMX varies

according to different factors including the variables we

have named in our study.

Yet, the limitations mentioned above do not lessen the

significance of this research’s findings. The influence of

ethical leadership on Taiwan’s society provides an inter-

esting finding in the meaning of employee well-being and

ethical leadership. We suggest that future research should

take into consideration the mentioned limitations and

consider collecting a wider range of sample with a com-

parison of different levels of cultural influence.

This study offers several directions for researchers who

aim to extend the issue of ethical leadership and employee

outcomes in Asian nations such as China. First, due to the

results of this study, more clarifications on how ethical

leadership can lead to positive employee well-being need

to be examined. Since the Chinese society puts strong

emphasis on traditional Confucius teachings and informal

interactions such as establishing supervisor–subordinate

guanxi (Law et al. 2000), future studies should incorporate

such variables to provide a deeper understanding of the

leader’s actions and employee outcomes. For instance,

while the leader is an ethical leader, does this authority

figure have a good guanxi with the subordinate? Special

Chinese cultural behaviors such as guanxi could possibly

have a profound effect on employee well-being. Therefore,

additional variables that play an important role in the

Chinese culture should be examined.

In addition, ethical leadership theories across Western

culture and Chinese culture should be compared to

understand if they work equally across different cultures.

Although most leadership models have been well estab-

lished and extremely practical in Western culture, some of

these models may fail to work due to cultural differences.

For example, an empirical study by Von Weltzien Hoivik

(2007) found that Chinese employees consider code of

ethics that are written by Westerners to be ‘‘too western’’

and do not feel that they are comfortable with these unfa-

miliar rules. In future studies, an ethical leadership scale

should be developed to measure specifically the Asian

culture definition of good ethical leadership. By doing so,

we can clarify the definition of ethical leadership across

cultures and compare the outcomes of the impact.

The third suggestion for future research is to measure

the moral character of the leader and also the degree of

ethical leadership. Brown et al. (2005) proposed a concept

which divided ethical leadership into three layers: being an

ethical role model, treating others fairly, and leading the

people to behave ethically. In this study, we only tested for

the third layer of the definition which was to teach their

followers to behave ethically. However, we suggest that by

measuring all three levels of the leader, the results can

provide a better understanding of the unique effect of

ethical leadership.

In conclusion, this study offers significant understanding

to Chinese ethical leadership and employee outcomes as it

adds to the chain of studies concerning the importance of

ethical leadership and its strong impact on the workers and

society. Due to the worldwide emphasis on ethical lead-

ership, this study aims to extend current studies on ethical

leadership to gain understanding on its current role in the

Chinese environment. Moreover, for organizations in Tai-

wan, it is not until recently that the government asked for

businesses to set a code of ethics. While the relationship of

leadership attributes and employee outcomes has been

given attention in recent studies, a clear understanding of

ethical leadership and employee well-being has not yet

been established.

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Mid-level Managers, Organizational Context, and (Un)ethical Encounters Author(s): Kathy Lund Dean, Jeri Mullins Beggs and Timothy P. Keane Source: Journal of Business Ethics, Vol. 97, No. 1 (November 2010), pp. 51-69 Published by: Springer Stable URL: http://www.jstor.org/stable/40929373 Accessed: 21-09-2015 02:20 UTC

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Journal of Business Ethics (2010) 97:51-69 © Springer 2010 DOI 10.1007/sl0551-010-0495-0

Mid-level Managers, Organizational Context, and (Un) ethical Encounters

Kathy Lund Dean Jeri Mullins Beggs Timothy P. Keane

ABSTRACT. This article details day-to-day ethics issues facing MBAs who occupy entry-level and mid-level management positions and offers defined examples of the Stressors these managers face. The study includes lower- level managers, essentially excluded from extant literature, and focuses on workplace behaviors both undertaken and observed. Results indicate that pressures from internal organization sources, and ambiguity in letter versus spirit of rules, account for over a third of the most frequent unethical situations encountered, and that most managers did not expect to face those issues. Various contextual factors accounted for 32% of the organizational factors that affected decisions. We discuss implications for the workplace, especially the unique ethics challenges for newer managers.

KEY WORDS: ethics, unethical behaviors, ethical decision-making, MBA ethics, ethical climate, entry-level manager, ethical context

Introduction

While the benefits of ethical behavior are not always tangible, the costs of unethical behavior are increasingly evident: Enron lost $90 billion in shareholder value in 24 days and insurance giant American International Group (AIG) lost $70 billion and has now been rescued by U.S. taxpayers. In the research that has followed to examine the destruc- tion, three major and related inquiry areas emerge: business schools' ethics curricula (e.g., Giacalone,

A version of this paper was presented at the annual Academy of Management meeting, Chicago, August 7-ÍÍ, 2009. This manuscript has benefited from comments & suggestions made by three anonymous Academy MED division reviewers as well as those by the J BE reviewers.

2004; Peterson and Ferrell, 2005; Williams and Dewett, 2005), individual factors in decision-making (e.g., Harman, 2003, 2006; Loviscky et al, 2007; Solomon, 2003), and organizational context (Anand et al., 2004; Coates, 2004; Moberg, 2006).

As part of a larger study about ethical decision- making that examines the three areas above - education, individual factors, and organizational context - this article reports on research outcomes with respect to organizational context, detailing real issues MBAs occupying entry-level and mid-level management positions face day-to-day. Results offer defined examples of the Stressors entry- to mid-level managers who hold MBAs face in the workplace and lend insights into what aspects of organizational context can facilitate or inhibit ethical decision- making. Following O'Fallon and Butterfield's (2005) methodological advice (p. 404), we pose questions to these managers about their own ethical decision- making, that which they observe around them, and how they rate their own decision-making within their workplace environments.

The sample itself constitutes another major con- tribution of the study. We examine entry- and mid- level managers, critically important to study due to their sheer numbers and their subsequent aggregate impact on organizational outcomes, and virtually absent from the literature. The vast majority of extant empirical work focuses on executive-level managers and/or CEOs, reducing applicability for situations most ' 'regular" managers face each day. In other words, executive-level managers and their perceptions are poor proxies for those of entry-level managers. For example, Trevino et al. (2008) recently showed statistically significant gaps in the way senior executives and lower level employees perceive ethical aspects of the firm.

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52 Kathy Lund Dean et al.

Many scholars have lamented the mono-dimen- sionality of business education, with its instrumental focus on measurable, bottom line issues (Ghoshal, 2005; Giacalone, 2004). Despite repeated exhorta- tions that business school education must be aug- mented by integrating character, moral imagination, care for others, and a longer-term perspective (Hartman, 1998; Trevino and McCabe, 1994; Williams and Dewett, 2005) - in essence, non- bottom-line issues - ethical education in business is still viewed as auxiliary to the "real" aims of business school.

Individual factors impacting ethical decision- making have, rather intuitively, been a research cornerstone when trying to understand why people make the decisions they do. Loe et al. (2000) and more recently O'Fallon and Butterfield (2005) provide a reviewed list of individual factors that permeate the ethical decision-making empirical lit- erature, from gender to locus of control to religious orientation. Overall, both reviews find inconsistent results for most of the constructs studied. Tenbrunsel and Smith-Crowe (2008) created a 2 x 2 typology of ethical decision-making based on an exhaustive state-of-the-field review. Their model "begins with moral awareness" (p. 555) which allows for delin- eation of "intentional" and "unintentional" ethi- cality (p. 554); thus, moral awareness is the foundation to which they correlate both individual factors and situational factors. Of individual factors' influence, they indicate that research "paints an incomplete and confusing picture" (p. 559), echoing prior reviews of empirical work.

Although Loviscky and colleagues demonstrated a valid and reliable measure of ethical decision-making for managers (their Managerial Moral Judgment Test or MMJT), they caution that its measurements should only be used in organizations that structurally support ethical norms, such as through performance appraisals (p. 275). Empirically examining individual characteristics and orientations in ethical decision- making is extraordinarily complex and there is little consensus on how it should or can be done (e.g., Harman, 2003; Hendry, 2006).

Rest's Model (Rest, 1979) has four components including moral sensitivity, moral judgment, moral will, and moral action, but the majority of research has been conducted using the Defining Issues Test (DIT), and the newest version Defining Issues Test 2

(DIT-2), which focuses on the second component, Moral Judgment. One of the assumptions of the Four Component Model is that moral behavior re- sults from relationships among the Four Component processes. The relationship between moral judgment and behavior, though, has been very problematic to define. Rest's view is that, "moral judgment is an important factor in real-life decision making, but that the interaction with other factors complicates the relationship so that simple, linear correlations cannot be expected" (Rest, 1979, p. 260). Actual behavior, then, must be considered.

Finally, the holistic role of organizational context, including culture, climate, and rewards, has re-gained prominence in the business ethics literature. Seminal work (e.g., Trevino et al. 1998; Victor and Cullen, 1988) is being re-examined and new work (e.g., Ashkanasy et al., 2006; Martin and Cullen, 2006; Tenbrunsel and Smith-Crowe, 2008) points to the need for more precision in understanding how orga- nizational context affects ethical decision-making.

This new work examining organizational context and ethical decision-making asserts that at the deci- sion point itself, context exerts more influence, and contextual factors are more salient, than either individual factors or educational background. Thus, the overall theory driving our research is that orga- nizational context both stresses (introduces anxiety or pressure) and drives (compels some sort of solution) members' decision-making when they are consid- ering ethical situations in the workplace. Working from the assumption that organizations are made up of mostly well-intentioned people, and this is a worldview bias we take into our research, we want to better understand how "good" people can be influenced to make unethical decisions.

Resolving the normative "What should I do?" question (Victor and Cullen, 1988, p. 101) ulti- mately depends on many contextual factors. Trevino (1990) asserted that external influence in the form of organizational culture directly impacts behaviors and anecdotally there are myriad instances of this. For example, FerrelPs multiple interviews of Ken Lay after his indictment in the Enron disaster (Ferrell and Ferrell, 2007) appear to indicate that Lay was a well- respected, decent man who got caught up in the toxic winner-take-all culture. Sims and Brinkmann (2003) echo the significant part they believe the culture played in that organization's demise.

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Mid-level Managers, Organizational Context, and (Un)ethical Encounters 53

Based on the literature, we consider " context" to subsume both organizational climate as well as organizational culture; we discuss this distinction below. We are especially interested in the role con- text plays when lower or mid-level organizational members encounter ethical dilemmas and try to re- solve them. Betty Vinson, a former WorldCom accounting manager, was the lowest level manager to serve jail time as part of the massive WorldCom fraud (Pulliam, 2003, June 23). Ms. Vinson's experience is a "cautionary tale" (p. Al) that even employees with good reputations and above-board intentions can be persuaded to commit serious unethical actions.

In addition, recent research indicates that individ- ual decision-making orientations, and educational learning retention and application, can be modified in important ways by organizational contextual factors. Moberg (2006) chronicles stories of former students' experiences as they enter organizations as professionals for the first time and try to manage significant ethical situations. Their intentions are sterling, while results of their efforts are relatively dismal. Moberg's work echoes Louis's (1980) findings that newcomers need much more help with organizational entry strategies and coping mechanisms by which to function effec- tively, including the day-to-day choices they make with behavioral response selection (p. 242).

In this article, we first offer conceptual grounding in literature that explores ethical decision-making as a whole, utilizing several recent review pieces as the launching point. We also frame our work within the culture and climate literature, which is the backbone of what we consider the larger concept of "context." After describing our research methodology and design, we detail results from 53 semi-structured, in-depth interviews we had with respondents in three major areas: the nature of ethical dilemmas they have faced or observed in the workplace, whether they had expected to face such issues, and their perceptions of organizational context that influences their and others' decision-making.

We discuss implications for the workplace, including changing perceptions of how managers enter organizations, how influential organizational contextual issues may manifest themselves in unique ways, how infrastructure such as ethics codes or training may affect our results, and whether it is appropriate to have hope that ethical behavior can be maintained despite serious organizational influences.

Relevant literature

Trevino and colleagues have been advocates for including contextual issues in ethics research and pedagogy for years. Given acknowledgement that personal characteristics seem to stop short of explaining why people make unethical decisions, and the methodological issues with measuring moral development, others in the field have been exam- ining the role of external influences (see, for exam- ple, O'Fallon and Butterfield, 2005, for a review).

Study in organizational climate supports that general effort. Climate is a normative system of "general and pervasive characteristics of organiza- tions, affecting a broad range of decisions" (Victor and Cullen, 1988, p. 101). Those authors make the distinction between climate and culture where cli- mate is essentially a sub-culture; culture is a much larger construct (pp. 103-104). Victor and Cullen (1988) identified and named five "manifestations" of climate types, including instrumental, caring, inde- pendence, law and code, and rules. Newer research in ethical climate theory (Martin and Cullen, 2006) confirms, via meta-analysis, the initial theoretical contribution from Victor and Cullen. Directional regression coefficients among climate constructs and organizational outcomes reasonably mean that cli- mate characteristics influence important organiza- tional experiences such as commitment, satisfaction, and dysfunctional behavior (p. 188).

Trevino et al. (1998) clarified and built on Victor and Cullen's (1988) theory in organizational climate, examining effects of both ethical culture and ethical climate as different constructs, and breaking out via factor analysis key differentiating factors of each construct. Although statistically related, they found that "climate" describes what the organization values and as such, is more of an indirect influence on decisions. "Culture" is more formalized and encompasses more direct ways of influencing behaviors and decisions, such as expected norms of obedience to authority. In recognizing this difference, we use "context" as an umbrella term that includes factors within both culture (ethical leadership, rewards, and organizational norms) and climate (employee focus, self-interest focus, and law focus).

Other research points to the critical role of con- text with respect to ethical decision-making. In their review, Trevino et al. (2006) note that selected peer

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54 Kathy Lund Dean et al.

groups, role models and social networks in the workplace significantly influence individual ethical decision-making, and that the strength of that influence may be modified by the frequency of referent interactions and perceived closeness of those relationships (pp. 966-967). The field has also been relatively convergent about the important role managerial orientation toward ethics plays in influ- encing employee ethical behaviors.

They offer a "state-of-the-field" review in myriad aspects of behaviors and ethics and end the review by noting multiple assumptions that undergird the re- search in this field that should be revisited. For our purposes, the assumption that behavioral decisions with respect to ethics result from a rational evaluative process is crucial. To be influenced is a complex ef- fect and our research indicates that respondents move outside the rational/analytic realm when determining behaviors or making sense of others' behaviors.

O'Fallon and Butterfield (2005) found in their review that the existence of codes of ethics relates positively to ethical decision-making (p. 397). They also found that there is general support to conclude that ethical cultures and climates positively affect ethical decision-making (p. 397). The seven studies in their review that examined behavioral outcomes associated with organizational culture/climate vari- ables report widely mixed results.

Tenbrunsel et al. (2003) assert that ethics codes and infrastructure need more examination, offering relatively straightforward proposals for future re- search. Of interest are proposals that, following O'Fallon and Butterfield's (2005, p. 401) conclu- sions, examine various moderators to ethical deci- sion-making, such as informal systems and ethics policies (e.g., p 301).

Trevino et al. (1999) found that aspects of ethical context were the most important variables (as a set) influencing a battery of organizational ethical out- comes including willingness to report ethical viola- tions, making better individual decisions, increasing organizational commitment, and behaving in uneth- ical ways themselves. Four contextual aspects were influential: leaders who modeled ethics, perceptions that ethics were important discussion points and were rewarded in the organization, and that the organiza- tion operated in a fair manner.

Ashkanasy et al. (2006) examined effects among some personal differences such as cognitive moral

development (CMD), and belief in a just world (BJW), and organizational factors such as reward systems. They found those who believed manage- ment rewarded unethical decisions (like promoting someone for remaining discreet about a CEO's unethical behavior) behaved more unethically than those who did not. Interestingly, they did not find statistical evidence for a link between demonstrated ethical decision-making and respondents' beließ about how they had to perform to be rewarded. Contextually, reward systems and perceived execu- tive beliefs were key variables.

Weaver and Agle (2002) found that perceptions of ethical decision-making interact with important as- pects of one's perception of self, in their case, reli- giousness. They proposed that expectations of one's own behaviors based upon one's religious identity interact with organizational contextual factors, and that such identity salience can be moderated by per- ceptions of competing identity-based roles. Contex- tual factors they identified include organizational status and perceived organizational cultural norms. Weber's work (Weber et al, 2003; Weber and Wasieleski, 2001) identified influential contextual factors such as type of ethical dilemma and how employees perceive their direct manager might re- spond to this dilemma. They found these factors af- fected ethical judgment in individuals that, outside the workplace, might have made different decisions.

Rettinger and Jordan (2005), in a study of college students, found what constituted acceptable behavior as part of an organization's climate significantly af- fected decision-making outcomes in a variety of scenarios respondents rated. Sims and Brinkmann's (2003) study about the role a "free-for-all" and extremely competitive organizational culture had on the Enron fall is a dramatic example of the power of a closed system of acceptable behaviors.

Thus, it is obvious that organizational context importantly impacts ethical decision-making. Using open-ended questions in one-on-one interviews, we explore these contextual issues with an almost unexamined cohort of organizational managers.

Research questions

We asked respondents about their own behaviors as well as those they had observed around them and

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Mid-level Managers, Organizational Context, and (Un)ethical Encounters 55

asked them to contextualize them within perceived organizational norms. We also asked about their expectations with respect to the ethical issues they had faced - a key research outcome identified by Louis' (1980) seminal work about organizational newcomers. Finally, we report on responses to questions about whether respondents believe they made the right decision each time they have faced some kind of dilemma. This follows Martin and Cullen's (2006) call for more closely managing cli- mate-based aspects of employees' jobs by ascertain- ing their perceptions of where they "fit" within organizational mores. This article reports on the following research question results:

RQ1. What kind of ethical issues have respon- dents faced or observed in the work- place?

RQ2. Did they expect to face these ethical is- sues, given the education they received?

RQ3. What organizational factors appear most influential in ethical decisions that respon- dents make or observe others making?

RQ4. Do respondents think they made the right decision each time?

Research design and methodology

Study design

The larger study from which this article is drawn examines ethical decision-making as it relates to three major areas discussed in the introduction: organizational context, education, and personal decision-making orientations. The overall research design includes a web-based survey and in-depth, semi-structured interviews. The research results re- ported in this article do not include data obtained via the survey, but in the interest of completeness we briefly describe the survey questions here.

The survey included 385 respondents from five different universities spread throughout the country. Respondents were asked to rate and then rank a list of resources based on how helpful the resource is to them during ethical decision-making in the workplace. Examples of resources include discussing the issue with a direct manager to referring to the company's

code of ethics. In addition, respondents were asked to rate and then rank a list of factors judging how influ- ential the factor was in making ethical decisions in the workplace. Examples of such factors include earning rewards to feeling good about the decision to the probability that co-workers would find out.

In constructing the research design and research questions, we followed classic (Strauss and Corbin, 1998) methodology, and we weighed arguments by methodology scholars about benefits and limitations as they specifically related to ethics research. We briefly discuss three here. Liedtka, Trevino, and Phillips (all 1992) each have seminal works discuss- ing methodologies appropriate to exploring the rich, contextually complex, psycho-socially embedded domain of business ethics in practice.

Liedtka (1992) advocated for interviewing as a methodology particularly appropriate for ethical decision-making because researchers can explore sense- making processes and contextual variables with validity. She warned against "oversimplifying]" ethics research by using quantitative methods that can miss the complexity of the respondents' experiences (p. 163). She worried about common ethics research problems such as social desirability and self-report bias, and raised the question of whether respondents are even able to report sensitive information correctly, but ulti- mately concluded that interviewing may do the best job in reducing those problems due to the intimacy of the contact between researcher and respondent.

Phillips (1992) argued that, "...the philosophical aspect of business ethics requires a foundation which can only be provided by qualitative investigations of actual organizational members in real organizational situations." (p. 225). Quantitative methods have their place, but only in conjunction with deeper and richer knowledge of organizational context. He ultimately recommended, not surprisingly, ethnomethodologi- cal, qualitative approaches to ethics research and indicated that researchers must acknowledge their own epistemological understandings before embark- ing on any research study.

Finally, Trevino (1992) asserted that the limita- tions of interview and survey methodologies, including cognitive and social desirability biases, were significant enough to merit finding alternative research methodologies. After a review, she argued for experimental designs, due to validity gains. Recommended experimental designs include see-

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56 Kathy Lund Dean et al.

nano analyses and in-basket exercises. We continue to observe these methods in Trevino's body of work (e.g., Ashkanasy et al., 2006).

Given our own understandings of epistemology and goals for the study, we adopted a mixed meth- odological approach and took steps to minimize recognized qualitative issues when possible. For example, we used first person and third person reports to collect data (following, for example, Fiedler's (1967) Least Preferred Coworker standard), aimed at reducing social desirability bias (also see Trevino et al., 1998). We probed questions multiple times during the interviews to increase reliability. Ultimately, we acknowledged real issues with interview data gath- ering and took demonstrable steps to minimize these problems in our study.

Sample

The study's sample was entry- and mid-level man- agers who had either completed their MBA at one of the host institutions or were within several courses of being completed. To be included, respondents had to either be working full-time, or prior to returning for graduate studies, have held full-time positions. The host institutions are two large, public United States universities, one located in the Midwest re- gion and the other located in the Western region. The sample population was 35% female and 65% male with an average age of 29.6. The majority of the participants were Caucasian, with only about 12% of the population either an ethnic minority or an international student. These core demographics match quite closely with MBA demographics as a whole (Graduate Management Admissions Council [GMAC], 2009) found with their annual survey. Men make up 66% of the overall MBA survey sample (N = 47,182) and 54% are between the ages of 28 and 34 (N = 47,130). In the United States, non-Hispanic whites make up 83% of the MBAs surveyed, with Asian- Americans and "Under- represented Minorities" making up the other 17% (N = 26,489).

Although the sample in general mirrors the MBA population at both institutions, women were slightly under-represented in the sample (35% sample versus 38-39% general MBA population) and international and ethnic minority students were slightly under-

represented in the sample (12% sample versus 14% general MBA population). Mean age for the popu- lation was 30. We also noted whether the respon- dent's organization was international in scope. The sample characteristics are shown in Table I.

Study participants were recruited in two ways: for those already finished with their degree, private email invitations were sent asking for participation in the study, along with a brief description of the study. Interested participants contacted the researchers and purposeful sampling (directly inviting participants) was then used to fill in under-represented demographic gaps (Gall et al., 2003) . For those who were still in MBA coursework, the researchers described the study and asked for participation during classes; interested par- ticipants were given contact information for the researchers and again, purposeful sampling was used to fill in under-represented population demographics.

After receiving consent forms for each participant, we conducted 53 in-depth one-on-one, semi- structured interviews in the fall of 2008. Interviews generally lasted between 45 min and 1 h. Interviews were audio-taped and transcribed; per Institutional Review Board guidelines, audio-tapes are locked up until the end of the research project then they will be destroyed. All respondents at the Midwestern school agreed to be audio-taped while one respondent at the Western institution did not agree to be audio-taped. That interview took just over 1 h and the researcher took verbatim notes as well as possible.

Data explication

We followed Plowman et al. 's (2007) interview data analysis methodology closely. Those authors detail how they gathered and analyzed their interview data using seven delineated steps. Germane to our anal- ysis, we followed six of their seven steps (using a contact summary sheet, creating a complete theme list, narrative analysis, coding interview data, visual mapping for coded data, and validity checks). We skipped their step 3 (constructing a timeline) because it was irrelevant to our study, and we coded only primary interview data, not newspaper data (their complete step 5).

We used the commercial product QDA Miner °, considered a qualitative standard in analyzing text data, to code all data into inductively derived

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Mid-level Managers, Organizational Context, and (Un)ethical Encounters 57

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Mid-level Managers, Organizational Context, and (Un)ethical Encounters 59

themes. Following Krippendorff (1980, pp. 57-64), we unitized the data using "contextual units" as the unit of analysis. Commonly referred to as "text units" in qualitative coding, we grouped data units by commonality of theme. By doing this, the number of respondents usually will not match the number of text units, as each response may be coded into multiple thematic groups.

Although not included in the 2007 methodology discussion, Plowman and colleagues (Blair et al., 2008) described in detail their validity assurance process, which we also followed. Qualitative cod- ing's validity is strongly enhanced by creating a "codebook," a process by which a priori coding categories are created independently by multiple people external to the project.

For this project, we gave interview transcripts to three colleagues, who read through them and recorded macro themes they observed in the data. Integrating their work along with our reading of the transcripts, we created the codebook within QDA Miner° and coded all 53 interviews within those categories. While this process goes a long way again for validity purposes, "...individual differences in interpretation of codes between dif- ferent coders often occur no matter how explicit, unambiguous and precise the coding rules are" (Datasense, 2009 - Help file "Assessing Inter- coders Agreement").

QDA Miner describes multiple ways of creating the codebook and coding the data; given what we believed to be the rich, interpretive nature of the data we opted for their "mixed solution" wherein an initial codebook is created by multiple independent people, and once it appeared to capture the data well through minor modifications, we independently coded the transcripts themselves a final time to re- port results. This option is in lieu of a "predefined unmodifiable codebook" (Datasense, 2009).

We assessed inter-rater reliability in what QDA describes as the "most stringent" level of coding agreement, Code Overlap. While coding the doc- ument, coders agree that codes are present in the data, occur at the same level of frequency, and in- clude the same text sources. To be considered "agreement" using Code Overlap, the baseline was 90% or better. The data were coded by one of the authors and an external colleague. For any differ-

ences we encountered in coding, we discussed them and reached consensus for each code definition.

For RQ1, we agreed just under 80% of the time, with the main distinction being "gray areas" and "bending rules." After clarifying these constructs, we re-coded and agreed on 97%. For RQ2, we agreed on all coding on the initial effort. For RQ3, we initially agreed on all codes except for breaking out types of stealing into tangible and intangible items. Our initial rater reliability was 85%. After discussion we re-coded and agreed on 95%; we re- mained at odds as to whether software constituted a tangible (the program itself) or an intangible (copy- right violation) item. For RQ4, we initially agreed on all codes after the "not his/her decision" code had been added to the codebook.

Results

Research question 1

The responses to question 1, "What kind of ethical issues have you faced or observed?" were coded into 163 text units and were broken down into 10 cat- egories. Responses are included in Table II.

The largest number of responses (31 text units, 19%) fell into the respondents' perceptions of being pressured to do something they were uncomfortable with, knew was against policy or standards, or was just flat out wrong. Pressure sources included clients, direct managers, and the generalized organization itself:

TABLE II

RQ1 results

Coding category # %

Pressure 31 19 Bending the rules 28 17 Gray areas 22 13 Stealing 21 13 Misuse of time 18 11 Privacy concerns 15 9 Dishonest or political activity 15 9 Nature of work environment 6 4 Dishonest billing 5 3 Accepting gifts 2 1

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60 Kathy Lund Dean et al.

...there were certain politicized actions that had to be taken, specifically with students that had failed a course before but the administration wanted to push them on through, and so even though they were not doing the work and they were failing themselves, they said you make sure this person passes no matter what, even if you just give them the grade.

The second largest category was bending the rules, or experiencing some gap between the letter and the spirit of a law or rule. This code was applied when it ap- peared that a respondent understood the rule or letter of the rule/law, but was facing a situation where bending the rule or breaking the letter but

keeping with the spirit could be appropriate. The

category had 28 text units representing 17% of re-

sponses:

. . .like sending drugs out that customers didn't have an active prescription for but we knew that we could probably get it refilled by the physician or that we were getting a hard copy if the DEA caught that they would probably flag us and fine us, but really it's in the best interest of the patient.

The third largest category was gray areas, in which

respondents identified situations characterized by ambiguity or flexibility in the rules or regulations, and thus right and wrong behavior was unclear. This

category represented 22 text units and 13% of the

sample. The next category was stealing, which in- cluded intangible things like intellectual property as well as tangible property, like tools. This category represented 21 text units (13%).

The fifth category is misuse of time in well-defined

ways. Respondents described using work time to do

personal tasks, gaming, or surfing the internet while "on the clock," and deliberately falsifying time sheets to be overpaid. This category represented 18 text units (11%). The next two categories, privacy concerns and dishonest or political activity, both had 1 5 text units (9%). Privacy concerns included situations where private information could be shared or mis- handled such as in the finance, insurance, or health care industries. Dishonest or political activity was described as a form of negative impression man-

agement, dishonest, and/or untrustworthy behavior. The last three categories each represent <5% of

the total text units recorded. The nature of work environment was mentioned in six text units (4%) and

was described as situations where the workplace climate itself was characterized by dishonest behav- ior, corruption, or other accepted unethical behav- iors. Dishonest billing, or deliberately over-charging clients or customers, was indicated in five text units (3%) and accepting gifts, when doing so was expressly prohibited by law or company policy, was indicated in two text units (1%).

Research question 2

The responses to question 2, "Did you expect to face these ethical issues, based on your education?" were coded into 64 text units and were broken down into three categories. Results are included in Table III.

Coding had to be more finely grained than "yes" or "no" because some of our respondents qualified their responses in two important ways. First, they indicated that they had expected certain issues but not others they discussed in RQ1, and second, they qualified their affirmative response by indicating that

they had encountered certain issues during intern-

ships or required on-the-job training, so the "real" encounter did not surprise them. We were interested in finding out the extent to which respondents be- lieved their educational backgrounds had prepared them to face the real issues they did. We did not

specify "ethics" education to allow for preparation they could have received in any course they had taken.

The majority of responses indicated that the

respondents did not expect to face the ethical issues

they defined in RQ1 (36 text units, 54%). The affirmative responses were divided into two cate-

gories {yes and yes with prior experience). When asked if

they had known about these issues prior to their

TABLE III

RQ2 results

Coding category # %

No 36 54 Yes 14 22 Yes with prior experience 14 22

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Mid-level Managers, Organizational Context, and (Un)ethical Encounters 61

on- the-j ob- training (OJT) experience they re- sponded in the negative. The "yes" category repre- sented 14 text units (22%) and the "yes only with prior experience" category also represented 14 text units (22%). An interesting point is that if we combine the negative responses and the affirmative responses that were only affirmative because of internship experi- ence or on the job training, we can see that two- thirds of the responses indicate no expectation of facing the ethical issues they did when they first entered the job or profession.

Research question 3

The responses to question 3, "What organizational factors appear most influential in ethical decisions that you make or observe others making?" were coded into 119 text units and were broken down into nine coding categories. Responses are included in Table IV.

The largest number of text units fell into the category of cultural issues (38 text units, 32%). This category was described by respondents as the existence of enunciated cultural norms includ- ing cultures of compliance, profit maximization, bureaucracy, or employee empowerment. Culture in this category was identified norms that shaped behaviors, rather than the existence of formal rules or structures:

I think since I started Tve heard repeatedly that [my organization] likes to "do the right thing." So keeping that in mind, and when I evaluate... If I have a

TABLE IV

RQ3 results

Coding category # %

Cultural issues 38 32 Managers or other superiors 19 16 Organizational rules or codes 14 12 Peers 12 10 Customer drivers 11 9 Professional rules or codes 9 8 Financial issues 7 6 Rewards and potential sanctions 9 7 or punishments

decision that I have to make, I evaluate what's the right thing to do.

The second largest category reported was managers or other superiors as factors that influence decisions (19 text units, 16%). This category included asking man- agers or superiors how to handle certain situations as well as observing how managers or superiors handled similar situations. The third category was the existence of organizational rules and codes (14 text units, 12%). This category was described as knowing and following well-defined organizational rules and norms for conduct:

There are unions here, rules and regulations that are followed much more closely. There's a lot more tiered decisions. It's not necessarily just a manager's decision to do something.

The fourth category was the influence of peers in decision-making (12 text units, 10%). Similar to managers, the influence of peers included asking peers how to handle certain situations, taking part in group peer discussions, as well as observing how peers handled similar situations. Customer drivers were the fifth category, representing 1 1 text units and 9% of the total text units. Customer drivers included customer expectations, externally known or industry standards, customer relationships, etc. One respon- dent described an action taken:

It just felt a little wrong, but [coworkers] said everyone did it. The whole industry does this, and so while I felt bad, it was what everyone did anyway, so that is kind of why I went along.

The sixth category reported was the existence of professional rules or codes (9 text units, 8%). This

coding category was distinct from organizational rules in that respondents alluded to some professional rules and codes of conduct that superseded those in the organization. Although not always the case, the professional codes tended to appear more legalistic in nature than internal organizational rules:

...the insurance industry is highly regulated, and the regulations that they operate within are very conser- vative. This is a good thing. Accounting is a profession that as a general rule comes with a set of very, you know, promulgated and codified rules that we are all supposed to obey, so there should be very few ethical issues to begin with.

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62 Kathy Lund Dean et al.

Financial issues was the next most reported cate- gory (7 text units, 6%) and included decisions based on some kind of financial metric and/or impact to an

organizationally important financial standard. The final category is rewards or punishments, with a total of 9 text units (7%).

Research question 4

The responses to question 4, "Do you think you made the right decision each time?" were coded into 49 text units and were broken down into five cat-

egories. "Right" and "wrong" perspectives are

purely those of our respondents. Rather than asking respondents to reflect on each ethical decision they made, we instead asked them to reflect on those

experiences as a whole and to consider their own feelings about their historical ethical decisions. Results are included in Table V.

Almost half of the responses to this question were

reported in the first category "Yes" (24 text units, 49%):

I think so. I feel comfortable that I have. They [ethical decisions] haven't been easy.

The "No" response to this question resulted in 11 text units (24%):

No, and I think that at the beginning I made fewer right decisions. It is definitely the learning curve that goes there.

The third category "Not Sure' was 9 text units

(18%):

I can't tell. I really can't tell. I'm sure I did the best I could but I really can't tell.

TABLE V

RQ4 results

Coding category # %

Yes 24 49 No 11 24 Not sure 9 18 Not applicable 3 6 Not their decision to make 2 4

The next category was the result of question not being applicable because the respondent had not personally faced any ethical decisional issues in their job (3 text units, 6%). The final category included responses where respondents may or may not have agreed with the particular decisions made, but did not have the organizational power or position power to make the final decision. Their hands were tied, so to speak (2 text units, 4%).

Discussion

Our managers faced or observed a relatively broad array of ethical issues that appeared to be technical and industry-specific. There were multiple, but identifiable contextual fronts that influenced deci- sions they made or saw being made in their work-

places. They were bifurcated about whether they made the right decisions when faced with dilemmas, and with the exception of having prior industry experience, they did not expect to face or observe the issues they did. Their experiences appear to be

unique with respect to current ethical decision- making literature, in that they admit errors in

judgment and face what we consider to be incre- mental or episodic challenges, rather than the rela-

tively high-level accounting frauds or stakeholder abuses we see perpetrated by executive-level mem- bers.

Their issues faced or observed are of the everyday variety - it appears to be the "little" things, like the

single client pressuring them or the sole opportunity to take a software program, which are striking newer

managers as unexpected. One implication for ethics education is that we do not seem to be preparing new managers very well, but, given the lack of

convergence about specific issues faced, how can we

prepare them? Our findings indicate the serious need for experiential learning for our MBAs - internships, managerial shadowing, or other OJT would greatly assist newer managers in being forewarned, and thus forearmed, about ethical challenges.

The power of observing others and asking what others would do was echoed in our findings. Con-

sulting or observing peers or superiors accounted for a quarter of our coding responses. Although this is a

finding fairly routinely included in context and ethics research, we found little evidence in the

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Mid-level Managers, Organizational Context, and (Un)ethical Encounters 63

literature and with our respondents that senior managers were paying much attention to who entry- and mid-level managers were considering as advis- ors. Too, we found little treatment in the literature and nothing with our respondents that industry leaders and managers ascertained what specific eth- ical challenges face them and coached employees from that perspective.

Michael (2006) notes with irony that the Wall Street corporate ethics scandals occurred in one of the most intensely regulated, rules-based environments that exists. His essay examines the nature of rules per se and argues that in some respects, having more and tightly defined rules limits their effectiveness for ethical decision- making because rules can remove the need to exercise judgment. Because no rule set can govern every aspect of desired behavior but can give the illusion of doing so (e.g., the Securities & Exchange Commission's Byzantine codes), ambi- guity actually increases.

We encountered empirical evidence of Michael's thoughts. Coding for both RQ1 and RQ3 included experiential gaps between letter and spirit of laws and regulations, and enunciated the influence of both organizational and professional rules/codes while acknowledging their ambiguity in application. What we heard about red tape, professional codes, legal constraints, and levels of organizational struc- ture played out in two fascinating ways. First, extensive structure and red tape narrowed decision choices whereby respondents were not truly choosing actions but simply complying. Paradoxi- cally, the same conditions increased decision choices by making day-to-day decisions so difficult or nonsensical that it became an ethical imperative to work around the rules to get the product to the customer. A respondent who worked for a federal agency summed it up:

I think the rules have not kept up. A lot of them were put in place years and years and years ago when the [federal agency] ... had different objectives in mind. And they don't have those anymore but the rules haven't changed much. We're trying to make money as a contractor and the [federal agency] didn't really care at that time; whether they were or not, they were spending it. We have a big problem trying to mesh the regulations with our project objectives because they just don't seem to coincide very well.

We also found evidence that one of Moberg's (2006) four types of dilemmas was a common experience. "Psychic struggles" (p. 309) include situations where an action may be organizationally accepted but morally suspect, or pressures from others in the organization to act unethically, be complicit, or look away from unethical actions by others:

Yeah, there was pressure coming from [my direct manager], from everybody. I mean, I joined right after this place was started up. And one of the things is hey, do whatever you can to get business so that we can get ourselves going, do that underbidding, overpromising on delivery and etc.

Moberg notes that newer organizational members are prone to these types of problems, especially that of complicity, because of perceived negative threats to their employment. We believe it could also be a less active situation for the respondent, given results of RQ4. Of our respondents who said they did not make the right decision every time, 22% indicated they were either not sure of what the right thing to do was, or, it was not their call to make the final decision:

No [I didn't make the right decision each time], and I think that at the beginning I made fewer right deci- sions. It is definitely the learning curve that goes there. Part of the learning curve was I don't think I knew what ethically I should be... My later experience level was when clients started getting into a questionable conversation, I stopped the conversation and at the beginning, I didn't do that.

No manager makes the right decision every time; no manager can anticipate every type of ethical di- lemma she will encounter. However, RQ2 and RQ4 results suggest that newer managers may benefit from more directive conversations about expectations, and more "heads-ups" from senior managers than they currently receive:

Having stronger leadership would definitely help me. I have to be in a pretty dire situation before I feel justified enough to go to my supervisor with any is- sues. Because of his position, he's not accessible and so most of the time I deal with all of the issues in a vacuum, by myself, until I feel it's large enough to be justified to actually have any sort of discussion with

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64 Kathy Lund Dean et al

anybody else.... I don't have a sounding board of peers or anyone else that knows anything of what I am doing.

Armed with that information, entry-level managers can more mindfully assess fit between personal values and organizational norms and assess decision-making leeway.

One very interesting outcome we observed in the data was the existence of hedging, or sometimes qualifying language when describing ethical issues they have experienced. In some cases respondents seemed apologetic for disclosing the issues and/or wanted to make excuses for the organization or manager's decisions. The following is from a phar- macist:

A patient would come in and give the owner a script for something, or get a refill for something, and there wouldn't be a refill on file, but he knows this patient's been taking this medication, a pretty common medi- cation to be taking long term, and without even calling the doctor, he would just fill the medication. I mean, technically, that's illegal... That guy has been in busi- ness for over 30 years, he hasn't lost his pharmacy, he's doing pretty well. It works for him so I'm just going to go along with it. I've asked him about it and he's sat down and explained it to me. That's his rationale. But there are better ways to go about it.

This kind of qualification would be evidence of

internalizing or owning organizational-level prob- lems at the expense of one's own values or agency as

Jackson (Guthey and Jackson, 2005; Jackson, 2001) has described. Newer managers may be encouraged, implicitly or explicitly, to accept and rationalize unethical behaviors and inappropriately take on

responsibility for them, due to their managerial role. We found there is still discomfort about discussing ethics issues and as Moberg (2006) pointed out, newer or lower level organizational members may be especially prone to this. Fear, shame, and own-

ership of harms are real issues newer managers face in the workplace with respect to ethics.

Another way to consider our results is to

acknowledge the sometimes deliberate gap between

organizational norms or formal rules, and individual value systems. VanSandt and Neck (2003) indicate the culturally individualistic American culture can be at odds with even the conception of shared organi- zational destiny that would delimit unethical

behavior from a social learning perspective. Those authors indicate that the way to tighten this gap is to align organizational decision-making with ethical norms - embedding right decision-making so that employees do not experience a values-based dis- crepancy and "learn" ethical decision-making through consistent modeling from others. This be- came evident when coding for the various pressures respondents said they experienced:

Sometimes I think work is strictly... resumé related. Sometimes managers promote [including] certain types of stuff on your resume which I'm not sure is com- pletely supported by what we actually do there... There's internal pressure to make yourself look as good as possible. Not directly from say a supervisor, but it's hard because there kind of is [pressure from a super- visor].

In a related vein, we found that our respondents could indeed articulate enunciated and actively influential cultural elements. An important concept emerged from the data - isolation versus empowerment. Being left alone was experienced as isolating for some...

...there's not a whole lot of communication from the executives or how they want our company to appear or how they want it to be. And so again, I'm kind of a lot on my own on that. When I'm doing different projects I'm kind of making up what I would think they want our company to be portrayed as... So I just kind of guess.

...the hospital has leased some office space right near administration offices, and I'll be moved closer to everybody. So right now, I'm kind of all by my- self... There is very little traffic outside my door. It's definitely not ideal for me and not ideal for them as well. It's part of my frustration because I'm out of loop. I'm not in the hallway where people have the discussions and so I go to a meeting and they've talked all week about this thing and I've been upstairs in my office...

...but as empowering for others:

I feel very empowered to do pretty much.. spend my time however I want to with a loose set of goals we'd like to accomplish but, you know, how you approach them, what you work on, how much time, how you go about your day is completely up to you.

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Mid-level Managers, Organizational Context, and (Un)ethical Encounters 65

The difference in experience appears to be embedded in how secure the respondent felt that s/he was included in the overall organization's goals, and the extent to which the respondent believed the

organization cared about his or her ultimate needs. Coding indicates later that being left alone and feeling isolated was consistent with feeling unim- portant to the ultimate goals and infrastructure of the organization, whereas being left along and feeling empowered was consistent with feeling assured that s/he was still considered an important part of the organization's goals and outcomes.

This is consistent with Valentine and Fleischman (2004) who found that ethics training positively impacted employees' perceptions of their organiza- tion's ethical climate as well as increased job satis- faction. They acknowledge, however, that training is only one piece of providing an overall culture of ethical norms, and that other factors probably co- mingled with their findings, such as an employee's belief that the organization was interested in her or his welfare (p. 387).

Self-established and differentiating organizational characteristics also emerged from the data: safety records, competitive reputation, and community image were other sources of decision-making information. These were not rules per se, but were more informal identity-based issues that the organi- zation took pains to perpetuate, sometimes in extreme ways:

. . .they have great big signs as you walk in the building and the number changes every day, '1128 days since we were hurt last' and... it's a great big number that everybody sees and you have people that can seriously be hurt and you know that if it's your person, that's a big consideration.... they put so much emphasis on it you have to make decisions to not mess that up and you have pressures even if you do [have an employee get hurt] to not really report it like you should.

Given these results, senior managers need to exam- ine exactly what outcomes are being rewarded and what potential unintended consequences are. Kerr's (1975) admonitions more than 30 years ago remain vitally relevant and do not allow us to be terribly surprised by the data about which the above quote is representative.

The degree of transparency and perceived accountability mattered to our respondents as a

contextual factor. The degree to which they be- lieved their actions were open to scrutiny and to which they felt accountable to their peers came up for consideration when deciding on courses of ac- tion:

It's not only that everybody knows everybody, and they know where everybody lives, but [our group] is a really informal [personal] type gathering. We know each other very well. That definitely plays a big role.

I think also that my group was really small and you know what everybody else is doing. And, I don't know... I feel like I have a responsibility to them, to not disappoint them maybe.

Thus, we found that peer pressure was not always a negative experience, but could be a factor that, like living in a small town, bridged the gap between individual and organizational impacts. It is clear that our overall theoretical frame driving the research has merit - that organizational context both stresses and drives members' decision-making when they are considering ethical situations in the workplace.

Going forward

Greenberg et al. (2007) note that through social comparison processes, organizational members make sense of critical workplace experiences such as per- formance appraisals, justice, and affective experiences. Creating and managing organizational structures must be done with the understanding of how members make sense of them. Our results offer rich evidence that ethical decisions are not made in any kind of an organizational vacuum and that especially for newer managers, there are competing values, expectations, and roles that must be managed explicitly. Why do not we create, for example, a VP for Culture Manage- ment? A Chief Culture Officer (CCO)? If culture and context are so very crucial to ethical decision-making, organizational structures must accommodate and validate their importance. What are the barriers to formally recognizing culture's consequences in this structural way?

When examining our results, we discussed what we believed was the role of virtue ethics in ongoing ethics research. What is the role of character when we think about how impactful organizational

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66 Kathy Lund Dean et al.

context is? Are organizational members, and entry- or mid-level managers so malleable that it is inap- propriate to hope for norms of virtue based ethics? Much of the literature emphasizes a normative wishfulness or an assurance that virtues will win out eventually (e.g., Hartman, 2006; Klimoski, 2006). We are skeptical, especially when we consider what Anand et al. (2004) identify as the normalization of corrupt behaviors. Norms and expectations become quickly embedded and we found multiple examples of such corruption normalization reported by our respondents.

For the past year we've had a problem with one of our managers stealing money. He would take equipment home and sell it, and created a position within his department for his son who never actually came to work and did anything, but he would write checks to his son and cash them. As far as I know, he was only reprimanded [when he was caught], I don't know if he had to repay for the stuff that he's taken. But he's apparently up for a promotion actually. You think I'm kidding, but he is currently up for promotion.

This kind of acceptance of grossly unethical behavior by an organization's reward structure will certainly lead to degraded decision-making by observers and subordinates, and perpetuates a culture of self-absorption and corruption. And, since our results indicate that managers are routinely entering and operating in organizations without clear expec- tations of what kinds of issues they will face, the risks of corruption normalization increase. What kinds of interventions would be effective for newer managers, given the fact of cultural assimilation and its power- fully formative effects?

Our enthusiasm for ethics training should be tempered by understanding that any disparities be- tween training exhortations and the actual decisions managers make everyday will almost invariably ac- crue to the actual decisions. That is, entry-level managers closely observe and are influenced by ac- tual behaviors, whether or not they are supported by organizational systems. Designing such systems rep- resents one of the greatest ethics norming challenges around, and that is with respect to overt, or ob- servable organizational phenomena. What might a wholly congruent, culturally consistent ethics train- ing program look like?

While gross misconduct presents its challenges, so do our unconscious biases, which are ethically problematic and difficult to ferret out. Banaji et al. (2003) describe unintentional unethical decision- making as a special kind of bias, and assert that because such bias is not in our consciousness, traditional "fixes" including ethics training and even punishment for unethical behaviors are ineffective. An ongoing research project housed at Harvard empirically confirms how pervasive unconscious bias is and how its impacts have been recognized in difficult situations, such as gender, ethnic, and age discrimination (https://implicit.harvard.edu/ implicit/). When we re-visit our respondents, we will include some kind of psychological measure- ment such as the Implicit Association Test or Rowe's Decision Style Inventory (Rowe and Mason, 1987) to contextualize our findings more holistically.

Finally, Trevino's (1986) interactionist perspec- tive has been widely accepted conceptually and has been validated empirically over the years (see Ashkanasy et al., 2006 for a review). That model proposed that those at the highest level of CMD would be best able to resist unethical managerial influences. Our data do not allow for examining interactive effects and going forward, we can remedy this by including a moral development instrument in our data collection such as Rest's instrument (Rest et al, 1999).

Limitations

Methodologically, although interviewing is an extensively used qualitative research technique, Fontana and Frey (2005) remind us that interviews are far from scientifically neutral endeavors. And Krippendorff (1980) acknowledged reliability and efficiency issues in coding qualitative data (p. 60), but also recommended that we seek meaning and faithfulness to respondent voice in text analysis (p. 64). We want to acknowledge, then, that while interviewing is a constructed, interactional, and contextual (Fontana and Frey, 2005, p. 695) process, it allowed us what we believed to be the best access to our respondents' articulated opinions, ideas, and experiences.

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Mid-level Managers, Organizational Context, and (Un)ethical Encounters 67

Although 53 is an acceptable number for in-depth qualitative interviewing (e.g., Rubin and Rubin, 2005; Strauss and Corbin, 1998) care must be taken to remember that these are geographically central- ized respondents representing two major parts of the United States. Although our sample demographics match rather well with overall MBA demographics we do not want to suggest that because of this, our results are appropriate to generalize. Results should be interpreted with caution; it is much more appropriate to consider cross-sectional, inductive methodological findings as preliminary to be more reliably confirmed as we continue with the longi- tudinal research design.

For research question 4, we must examine a curious and disparate outcome between the two researchers' set of respondents. One of the research- ers' respondent group accounted for 8 of the 11 "no" responses and we are not sure why that is, or if it is simply chance. To examine this, we went back to the data and matched demographics with RQ4 coding to run cross- tabulations. None of the demographic information we ran appeared to show a pattern, including type of industry, or age. While we have had extensive interviewing experience and have cali- brated our interviewing techniques to be similar both verbally and non-verbally, this result seems worthy of investigation and so we interpret those results with caution, both in the affirmative as well as in the negative.

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Kathy Lund Dean Idaho State University,

Pocatello, U.S.A. E-mail: [email protected]

Jeri Mullins Beggs Illinois State University,

Normal, IL, U.S.A.

Timothy P. Keane Saint Louis University,

St. Louis, MO, U.S.A.

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