The Empirical Assessment

of Corporate Ethics:
A Case Study

ABSTRACT. Empirical analyses of the ethics of

corporations with the aim to improve the state of
corporate ethics are rare. This paper develops an
integrated, normative model of corporate ethics by
conceptualizing the ethical quality of organizations
and by relating this contextual quality to various
expressions of immoral behavior. This so-called Ethics
Qualities Model for organizations, which contains
21 ethical qualities, allows one to assess the ethical
content of institutional groups of individuals. A
proper conceptualization is highly relevant both for
the empirical corroboration of business ethics theories
and for managerial purposes, such as judging individual and group performance or informing external
stakeholders. The empirical applicability of the model
is illustrated by an explorative case study of a large,
globally operating financial institution. This casestudy demonstrates that the corporate ethical qualities differ with respect to their perceived optimality
as well as to their estimated impact on (un)ethical
conduct. The various results provide managers with
many clues to understand their organization and to
take effective measures to improve the ethical content
of their organization.
KEY WORDS: ethical content of organizations,
ethics audit, ethics development of organizations,
dilemmas of dirty hands, many hands and entangled
hands, virtues

Muel Kaptein is Assistant Professor of Business Ethics at

Rotterdam School of Management, Erasmus University,
and a consultant for KPMG Ethics & Integrity
Consulting.
Jan Van Dalen is Associate Professor of Statistics at
Erasmus University.

Muel Kaptein
Jan Van Dalen

Introduction
Comprehensive empirical analyses of the ethics
of corporations are rare in spite of the energetic
development of business ethics as a scientific
discipline. Such empirical analyses are highly
relevant from managerial, social and legal points
of view. Management is increasingly interested in
the ethical content of their organization in order
to judge the current state of affairs, to justify their
business activities, or to undertake curative,
repressive or preventive action if necessary
(Kaptein, 1998). Social actors like the government, unions and environmental movements call
on organizations rather than individuals to
account for their moral responsibilities (Kaptein
and Wempe, 1998). Also, primary stakeholders
like consumers (Ferrell and Fraedrich, 1997),
employees (Turban and Greening, 1997) and
shareholders (Frooman, 1997) have been increasingly judging the ethical performance of
organizations. Furthermore, the court system
increasingly deals with the conduct of organizations instead of individuals (see for example,
the American Federal Sentencing Guidelines for
Organizations).
An important cause of the moderate application of empirical analyses in this area is the
absence of an adequate operational definition of
the concept of the ethical company. The ethical
company is used by many as a prescient notion
(e.g., Andrews, 1989; Coye, 1986; Chryssides and
Kaler, 1996; Husted, 1993; LeClair et al., 1998;
Sims, 1991), but is rarely demarcated in a meaningful way. Without a proper conceptualization,
the scientific discussion about the ethics of organizations is of a speculative nature. A second
cause is that some existing conceptualizations of

Journal of Business Ethics 24: 95114, 2000.

2000 Kluwer Academic Publishers. Printed in the Netherlands.

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Muel Kaptein and Jan Van Dalen

relevant norms and values primarily refer to the

specific behavior of individuals rather than the
general practice of organizations (c.p., Becker,
1998). Some prevailing business ethical theories
like stakeholder theory, social contract theory,
utilism and deontological ethics have a primary
focus on identifying ethically optimal actions in
particular, well-defined dilemmas. Rather than
dealing with the ethics of corporations, they deal
with the ethics of individual actions within the
corporate setting. Case study books, like those
by Velasquez (1992) and Jennings (1996), stimulate this approach by evaluating employees and
corporations in a case-by-case manner. Yet a
third cause of scant empirical analyses of the
ethics of organizations is the often expressed
relativistic view that the desirable norms and
values of organizations and their representatives
are situation-dependent (e.g., Victor and Cullen,
1987). In this view, the assessment of corporate
ethics for the purpose of inter-organizational
comparisons is of little value; and the development of normative standards of corporate ethics
is largely left aside.
The aim of this study is to develop an operational definition of the ethical content of organizations
through the conceptualization of normative
criteria for organizations, which have a universal
pretension. Our conceptualization gives rise to
the so-called Ethics Qualities Model, which can
be used for systematic analyses of the ethical
content of organizations. Our model complements three existing perspectives in business
ethics: the consequence or impact approach; the
conduct or behavior approach; and the context
or input approach. The consequence approach (see
among others Elkington, 1997; Wheeler and
Sillanp, 1997; and Zadek et al., 1997) describes
the ethics of an organization by examining the
impact of business activities on stakeholders. A
disadvantage of this approach is that meaningful
comparisons of different organizations are difficult to make. For instance, a firm that causes little
environmental damage is not necessarily more
ethical than a firm that has a disastrous impact on
the environment, but produces goods with large
societal value. The conduct approach examines the
actual conduct of individual representatives of
organizations. It is employed by forensic accoun-

tants, detectives and fact-finding experts, for

instance, to determine the extent of fraud, the
existence and nature of sexual intimidation, and
the leaking of confidential information (Bologna
et al., 1995). This approach essentially analyses
ethical incidents. It has not primarily been
designed to express an overall judgments of the
ethical content of the entire organization.
Furthermore, the context approach aims to characterize the climate within organizations (for
instance, as caring, law and code oriented, rules
oriented, instrumental or independent; Victor
and Cullen, 1987, 1988, 1989) or their stage of
moral development (for instance, as pre-conventional, conventional and post-conventional; see
e.g., Pearson, 1995; Wood et al., 1988; Weber,
1990, 1991). A disadvantage of this approach is
that the suggested typologies do not provide solid
ground for objectively evaluating the current corporate ethical state or to prescribe the optimal
course for organizational development. There is,
for example, no reason why a climate of caring
should be worse or better than a climate of rules
in any given situation. By contrast, our model
employs procedural criteria referring to the organizational context conditions that facilitate the
adequate solving of dilemmas. In doing so, it will
become possible to develop a normative ethical
theory that is applicable to every organization.
Below we shall delineate our conceptualization of corporate ethics. It begins with specifying
the characteristic ethical dilemmas that are associated with the acting of individual representatives in collective, organizational settings. The
nature of these characteristic dilemmas is further
described by seven distinct ethical qualities. In
addition, it is assumed that the organizational
context in terms of these ethical qualities affects
the behavioral outcomes of these dilemmas.
Subsequently, the empirical applicability of this
corporate ethics model is demonstrated with a
case study of the ethical content of a large, world
wide operating financial institution. We bring
this paper to a close with a summary of the main
results, a note on the possible practical uses of
the model and an agenda for further areas of
research.

The Empirical Assessment of Corporate Ethics

The ethics qualities model
Both the theoretical and the applied approach to
business ethics require a meaningful notion about
the ethics of businesses in order to address fundamental questions. The notion of corporate
ethics is conceptualized in two distinct ways,
known as the association or reductionist model
(see MacLagan, 1998; Velasquez, 1983) and the
autonomy model (e.g., Bovens, 1998; French,
1984; Goodpaster and Matthews, 1982; Wempe,
1998; Werhane, 1985). The association model
limits the responsibility of corporations to the
responsibilities of individuals within the organization. Corporations carry responsibilities only
to the extent to which these responsibilities can
be traced back to individuals. Moral problems in
a business setting are interpreted as problems of
the individual employees who are somehow
involved in this setting. The association model
therefore delineates the ethics of organizations,
henceforth denoted as corporate ethics, as the
aggregate of the ethics of individuals. This conceptualization is no doubt useful to study various
ethical issues but has serious limitations in analyzing many practical ethical questions that
generally occur in the organizational setting. In
particular, this conceptualization is not suitable
for studying situations in which several individuals simultaneously bear a responsibility. This is
typically the case for complex, non-transparent
situations in which responsibility is spread over
several individuals at the same time or for organizational processes, which involve various
responsible individuals at different points in time.
Also, by neglecting corporate culture, which
emerges from the interactions among personnel
and between personnel and (other) stakeholders,
the association model tends to treat the organization as a tabula rasa, an empty entity.
The autonomy model, which treats the organization itself as a moral entity that shoulders
responsibilities, offers a more promising conceptualization of corporate ethics. It differs from the
reductionist model by taking the manifold activities within organizations as an integrated and
coherent collection of activities instead of a
collection of activities of atomistically acting
individuals. This coherence is the consequence

97

of the coordinating impact of organizational

structure and culture (i.e. the corporate (internal)
context). The corporation is considered a moral
actor and can, therefore, be judged in moral
terms as there is a corporate culture and
structure that can be distinguished from the individuals who work within the corporation.
According to this model, it is possible to identify
and evaluate the actions, conscience, and intentions of a corporation. It is important to note,
though, that the acceptance of the idea of a
collective responsibility does not imply that individual responsibilities are no longer relevant (cf.
Bovens, 1998).
The implied conceptualization of corporate
ethics in the autonomy model is both more
realistic and potentially fruitful than that in the
reductionist model. It is more realistic in that it
takes into account the many instances in which
responsibilities cannot be traced to individual
stakeholders in the organizational context. Even
in complex or multi-period organizational
processes, responsibilities can be localized by
referring to departments, management or the
organization rather than to individual employees.
It is potentially more fruitful, because it allows
one to focus on organizational factors that are
assumed to impede or stimulate ethical conduct
instead of identifying the constituents of the
morality of individuals. If one assumes that organizational structure and culture condition individual behavior (as do, e.g. Sims, 1991; Trevio,
1986; Trevio and Youngblood, 1990) and if one
can distinguish this organizational context from
the personal intentions and intuitions of individual employees, it makes sense to assess the
ethical content of organizations empirically and
to evaluate the influence of organizational ethics
on individual or group behavior.
Following our preference for the autonomy
model, we define the ethical content of organizations for the moment as the extent to which
the organizational context stimulates the personnel to realize the justified and fundamental
expectations of the stakeholders and to balance
conflicting expectations in an adequate way.
Three comments are justified to this extent. First,
it is recognized that organizations do not just
have a responsibility to meet the legitimate

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Muel Kaptein and Jan Van Dalen

expectations of each of its stakeholders, but also

to balance the interests of various stakeholders
in the course of business (Dunfee and Donaldson,
1999). This matter is highly relevant, since the
interests of stakeholders are often discordant.
Business activities invariably produce situations
in which the satisfaction of one interest (e.g.
the maximization of stockholder wealth) compromises the interests of other stakeholders.
Corporate dilemmas almost always imply the
violation of legitimate interests and expectations
of one or more stakeholders. Secondly, the
definition reflects the idea that the ethical content
of organizations cannot solely be judged by
observed behavior or by the consequences of
conduct, as, for example, Weiss (1994) does.
Corporate ethics, according to our definition,
deals with the corporate intentions that motivate
corporate conduct. In fact, organizations may be
considered to behave quite ethically despite the
damage they inflict upon the interests of several
stakeholders. In our view, an organizations
morality is located in the conditions it creates for
its representatives to act responsibly. In this way,
we avoid the necessity of establishing the priority
of interests on a case-by-case basis, as is common
in deontological or consequential ethics concepts.
It is, after all, impossible to develop an adequate
theory to indicate in minute detail what conduct
is responsible and irresponsible in every situation.
So, in determining the ethical content of a
company, it is not necessary to identify what the
justified expectations of stakeholders are and also
what the specific dilemmas are which organizations have to deal with. Thirdly, the definition
offers a natural operationalization by elaborating
the quality and intensity of interrelated interests
of various stakeholders within the organizational
context. This will be the subject of the next
subsection.

Three fundamental dilemmas

Any operationalization of the ethical content of
organizations should focus on the corporate
intentions associated with the realization and
balancing of justified expectations of various
stakeholders to the organization. In order to

obtain an overview of the factors that comprises

the corporate intentions, Kaptein (1998) studied
a large number of real world cases where the
organizational context contributed to infringements on the stakeholders expectations. Well
known examples include the explosion of The
Challenger, the gas leak at Union Carbide in
Bhopal, the sinking of The Herald of Free
Enterprise near Zeebrugge, the downfall of
Barings, and the sinking of the Brent Spar. Other
types of cases concern, for example, violations
of human rights, evasions of law and legislation,
the paying and receiving of payoffs, business
espionage, manifestations of internal fraud, corruption, abuse of power, and incompatible
sidelines of employees. The categorization of
the observed organizational deficiencies, has
resulted in the identification of three distinct
types of organizational dilemmas which are
characterized by seven typical qualities. We shall
begin with describing the three ethical dimensions.
Corporate ethics reveals itself via the ethical
dilemmas that occur when the interests and
expectations within or between these relations
are in conflict. Three categories of dilemmas may
be discerned on the basis of the examined cases
and the logic of the relationships within organizations and between organization and their stakeholders. These dilemmas are characterized by the
metaphors of entangled hands, many hands
and dirty hands. Entangled hands dilemmas
occur when the interests and expectations of
individual employees do not comply with those
of the organization. Many hands dilemmas arise
when the interests of the functions and tasks of
employees, managers, departments or other organizational sections are not in harmony. Dirty
hands dilemmas present themselves when the
interests and expectations of stakeholders are
incompatible with those of the organization. The
three types of dilemmas are presented here as
dimensions of the ethical content as opposed to
isolated ethical phenomena.1 We shall elaborate
these three dimensions below and show how
these dilemmas are symptomatically revealed.
The dimensions are summarized in Table I.

The Empirical Assessment of Corporate Ethics

99

TABLE I
Summary of the three characteristic dimensions of corporate ethics
Type of dilemma

Description

Cause

Consequences of failing
context

Entangled hands

Tension between the

interests and expectations
of employees and those
of organizations.

Organizations act through

employees who on the one
hand have an authority over
organizational means and
on the other hand have
interests of their own,
which creates a potential
for abuse (mixing of roles).

Careless use or abuse of:

time; information; funds;
authority; equipment;
goods; and staff.

Many hands

Tension between
individual and collective
functions, tasks and
responsibilities within
organizations.

Organizations consist of
departments, units and
individuals having distinct
functional responsibilities,
which creates a potential
for failing awareness of
the interests of colleagues,
other departments, or the
organization as a whole.

Counter-productive
competition between staff,
departments and divisions;
responsibilities getting lost;
collective problems
remaining unresolved;
responsibilities being
shrugged off; and tasks
being not or only partially
performed.

Dirty hands

Tensions between
the interests and
expectations of
organizations and
those of stakeholders.

Organizations have
interests and expectations
that do not necessarily
comply with those of
stakeholders; consequently,
painful decisions
sometimes have to
be made.

Stakeholders are being

misled or misused; the
freedom of stakeholders
is being constrained; the
means of stakeholders
are being withheld.

Entangled hands
The entangled hands dimension relates to the
degree to which employees are stimulated to deal
carefully with the assets of the corporation.
Employees have their own personal interests and
expectations, which do not necessarily parallel
the interest and responsibilities of the corporation (Hardin, 1988; Nash, 1990; Velasquez,
1992). The entangled hands metaphor is used to
characterize the potential conflicts between the
interests of employees and the interests of the
organization in which the corporate assets are at
stake. Employees using their authority thereby
misuse information, funds, goods, equipment,

time, and colleagues. Examples of such dilemmas

are the extent to which employees are allowed to
make use of resources of the firm, to entertain
other sideline interests which do not comply
with the organizations interests, to accept
business gifts, to maintain business relations with
family, and to make private purchases with suppliers of the organization. The entangled hands
dimension would be irrelevant if employees had
no other interest than the interests of the corporation: employees would then have no motive
to misuse the corporations assets.

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Many hands
The many hands dimension relates to the
degree to which employees are stimulated to give
expression to the individual and collective functional responsibilities they are assigned to do.
Within a corporation, each employee has his own
job-related duties. Internal specialization and
division of labor make efficient functioning of
organizations possible. However, the distribution
of these functional responsibilities may be coordinated inadequately, with the result that certain
corporate responsibilities may get lost. Unclear
responsibilities can result in collective problems
that remain unresolved because nobody feels
personally responsible for them. An inadequate
coupling of duties and authorities can also lead
to collective responsibilities not being met. See,
for instance, Badaracco (1997), Bovens (1998),
Cohen (1993), Ladd (1970), Steinmann and
Lohr (1992), Stone (1975), Trevio and Nelson
(1999), and Wempe (1998) who identify similar
erosions of responsibilities in corporations. The
metaphor of many hands points to the moral risks
ensuing from the need to employ more than one
employee in an organization. Examples of such
many hands dilemmas are the extent to which
employees should be individually rewarded rather
than collectively, or the extent to which cooperation is desirable, and the degree with which
responsibilities can be delegated. The many
hands dimension will be irrelevant if a corporation consists of only one person.

Dirty hands
The dirty hands dimension relates to the
degree to which employees are directly stimulated to balance the interests of the stakeholders
against the interest of the corporation. The dirty
hands metaphor refers to the proper coordination of business interests with those of stakeholders.2 Stakeholders can have a legitimate
reason to complain when the company does not
recognize their interests or specific expectations
towards the company, or when the company
inadequately distributes the costs and benefits
among various stakeholders or between the stake-

holder and the company itself. Exactly because

of the competitive pressures and the need to
survive, corporations may be inclined to neglect
those stakeholder expectations, which are not
immediately necessary for realizing their competitive objectives. The necessity to produce
goods and services and to make profits may be
seen as a justification for neglecting legitimate
moral expectations of stakeholders. As a choice
between conflicting norms, interests, and expectations is sometimes unavoidable, it is often
inevitable that corporations and their representatives end up dirtying their hands. Typical
dirty hands dilemmas are the extent to which
personnel can be fired to increase profits, decisions with respect to the size of environmental
investments, the use of child labor, positive discrimination and the manner in which information about competitors is obtained. Thompson
(1987), Sartre (1948), and Waltzer (1973) identify
such dirty hands issues in a public context, while
Badaracco (1997) describes these problems for
private organizations. If an organization had no
stakeholders, this dimension would be irrelevant.

Qualities of the three fundamental dilemmas

The three characteristic dilemmas have been presented here as the fundamental dimensions of
corporate ethics. The threefold distinction structures the notion of corporate ethics; it identifies
distinct potential sources of ethical conflict; and
it allows one to interpret symptoms of failing
organizational responsibilities in terms of these
sources. The distinction does not however
provide a normative framework that could be
used to evaluate the ethical content of (parts of )
organizations and to determine meaningful
directions to improve corporate ethics. The latter
requirement involves the establishment of a
coherent set of organizational virtues that are
worthwhile for organizations to strive for and
which contribute to the adequate balancing of
the three types of organizational dilemmas. The
degree to which corporations possess these
qualities reflects their ethical content. Based on
the empirical cases analyzed by Kaptein (1998)
and an abundant ethics literature, seven organi-

The Empirical Assessment of Corporate Ethics

zational virtues may be identified which pertain
to each of the three dimensions of corporate
ethics: clarity, consistency, sanctionability, achievability, supportability, visibility, and discussability.
Table II provides a summary of these qualities
differentiated with respect to the entangled

101

hands, many hands and dirty hands dimensions

of organizational dilemmas.
Clarity relates to the degree to which the
organizational expectations towards the moral
conduct of employees are accurate, concrete, and
complete. Applied to the entangled hands dimen-

TABLE II
The ethics qualities model for describing the ethical content of organizations
Ethics qualities

Organizational dimensions
Entangled hands
responsibilities in
regards to the
organization

Many hands
responsibilities
within the
organization

Dirty hands
responsibilities on
behalf of the
organization

Clarity

It is clear how staff

should handle
the assets of the
organization.

It is clear what the

functional responsibilities
of the employees are.

It is clear what
stakeholders expect
of employees.

Consistency

Referents make
enough effort to
handle the assets of
the organization
with care.

Referents make enough

effort to fulfill their
functional responsibilities.

Referents make enough

effort to realize the
expectations of
stakeholders.

Sanctionability

If the assets are not

handled with care
deliberately, staff is
sanctioned.

If the functional
responsibilities are (not)
realized deliberately,
staff is sanctioned.

If the expectations of
stakeholders are (not)
realized deliberately,
staff is sanctioned.

Achievability

The expectations regarding

the handling of corporate
assets can be realized.

The staff s functional

responsibilities can be
realized.

The expectations raised

to stakeholders can
be realized.

Supportability

The organization
stimulates support for
the careful use of the
corporate assets.

The organization
stimulates support for an
adequate coordination
between employees.

The organization stimulates

support for the realization
of the interest of
stakeholders.

Visibility

(Consequences of )
conduct regarding the
handling of corporate
assets can be observed.

(Consequences of )
conduct regarding the
realization of functional
responsibilities can be
observed.

(Consequences of )
conduct regarding the
realization of stakeholders
expectations can be
observed.

Discussability

Dilemmas, problems, and

criticisms regarding the
handling of corporate
assets can be discussed.

Dilemmas, problems, and

criticisms regarding
realization of functional
responsibilities can be
discussed.

Dilemmas, problems, and

criticisms regarding the
realization of stakeholders
expectations can be
discussed.

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Muel Kaptein and Jan Van Dalen

sion, clarity is the degree to which the organization is clear about how employees should
handle corporate assets. Lack of clarity regarding
the acceptance of gifts, for instance, can lead to
uncertainty among employees, to the idea that
anything goes, and to moral inflation whereby
practice moves steadily away from the desired
norm. The clarity of the expectations in regards
to the conduct of employees is, then, also the first
criterion by which the context can be described.
Without clarity, employees do not, after all,
know what the organization expects from them;
they remain in uncertainty without any apparent
guidance from the organization. Also see Cooke
(1991) and Waters and Bird (1989) who point
out the organizational risks of unclear norms and
values.
Consistency concerns the degree to which the
organizational expectations towards the moral
conduct of employees are coherent, univocal,
unambiguous, and compatible. In their conduct,
employees take into account the conduct of those
they emulate (referents). The management, for
instance, is an important reference group. The
organization may well pose clear expectations
with respect to the behavior of employees, but
if the behavior of referents undermines these
expectations, the guidance of employees may
become inconsistent. Adequate guidance requires
that the desired norms and values be exhibited
by the referents. The example set by management
is the most cited factor for stimulating unethical
behavior; see e.g., Baumhart (1961), Brenner and
Molander (1977), Ciulla (1998), Ford and
Richardson (1994), Hegarty and Sims (1978),
Laczniak and Murphy (1991), Petrick and Quinn
(1997), Stead et al. (1990), Wimbush and
Shepard (1994), and Zey-Ferrell et al. (1982).
Sanctionability refers to the degree to which
negative or positive sanctions can be applied in
connection with irresponsible or responsible
conduct. Sanctions constitute important behavioral stimuli and are, thus, a relevant aspect of the
organizational context. A context in which the
expectations are clear and are borne by the
referents is still vulnerable if unacceptable
behavior is not punished, but rather tolerated
instead. Unacceptable behavior that goes unpunished sends a signal out that meeting expectations

is not important. It reduces the necessity for

employees to keep to the desired norms and
values. Examples are given by Akaah and
Riordan (1989), Falkenberg and Herrenans
(1995), Ford and Richardson (1994), Fritzsche
and Becker (1983), Hegarty and Sims (1978),
Laczniak and Inderrieden (1987), and Trevio
and Nelson (1999).
Achievability concerns the degree to which
responsibilities can be carried out. It is not only
important that moral expectations meet the
requirements outlined above, but that expectations can be carried out in practice. Being able
to carry out expectations means that the expectations are achievable in practice. In regards to
the coordination in the case of the many hands
dimension, specific responsibilities may not be
achievable due to insufficient authority, lack of
time and means, insufficient knowledge and skill,
and a lack of information on the part of the personnel (e.g., Bovens, 1998; and Trevio, 1986).
Achievability in the dirty hands dimension relates
to the degree to which the corporation creates
unrealistically high expectations among the stakeholders (see Shrivastava, 1994, among others).
Achievability in the context of the entangled
hands means that employees are able to realize
the stated expectations relating to the organizations assets in practice.
Supportability is concerned with the support of
employees for the proper use of the corporate
assets (entangled hands), for the close cooperation with the immediate coworkers and supervisors (many hands), and for the active
realization of the interests of the stakeholders
(dirty hands). The context can have a negative
impact on this support from employees. If
employees are of the opinion that they are not
taken seriously, this may cost their loyalty and the
care they usually take with the organizations
assets (entangled hands). If employees cannot
trust their co-workers or immediate supervisors,
this may deteriorate the coordination and cooperation within the organization (many hands).
If employees are not able to present the policy
of the corporation to the stakeholders, this may
indicate an inadequate support for the activities
of the corporation (dirty hands). A context in
which the quality supportability is embedded

The Empirical Assessment of Corporate Ethics

comprises the conditions under which employees
are prepared to be united with the interest of
the corporation, co-workers, and external stakeholders respectively. This quality relates to the
stimulus of the organization for the recognition
by employees of the moral expectations concerning the three dimensions. Examples are
provided by Blanchard and Peale (1988), Boy and
Jones (1997), Carmichael (1992), Cooke (1991),
Kramer and Tyler (1996), and Solomon and
Hanson (1985).
Visibility relates to the degree to which the
conduct of employees and its effects can be
observed. Where clarity relates to the moral
expectations in regards to the behavior of
employees (input), visibility relates to the consequences of their actions (output). Visibility has
two components: horizontal and vertical. Vertical
visibility is, for example, the degree to which
managers know when one of their employees has
behaved unacceptably (top-down) and employees
know when their manager has behaved unacceptably (bottom-up). Horizontal visibility
concerns the degree to which employees know
when one of their own has behaved unacceptably. If the context is characterized by a great deal
of visibility, employees are able to modify or
correct their own behavior or that of coworkers,
supervisors, or subordinates (see Bovens, 1998;
Donaldson, 1982; Carter, 1990; and others).
Discussability is the degree to which meeting
responsibilities is open for discussion. It is the
degree to which dilemmas, problems and criticism can be talked about. A context with a high
degree of discussability means, for example, that
lack of clarity in regards to expectations can be
discussed. In such a context, unethical behavior
can also be brought up for discussion (e.g., Bird,
1996; Solomon and Hanson, 1985; Trevio and
Nelson, 1999).
Our model of corporate ethics relates the
various incidents of unethical behavior to three
fundamental types of organizational dilemmas
(Table I). These three categories of dilemmas
are further described by seven ethical qualities
(Table II), which allows one to identify the
nature of ethical dilemmas in organizations. With
the aid of this ethics qualities model the ethical
content of organizations is straightforwardly

103

defined as the extent to which the organizational

context possesses the seven distinct qualities with
respect to the three types of dilemmas.
The corporate ethics concept may be operationalized both qualitatively and quantitatively.
The latter is definitely preferred in larger organizations, since it enables one to assess the relative
importance of various symptoms and sources of
ethical malfunctioning. The former is useful in
small-scale organizational settings and is a prerequisite for the development of a measurement
instrument to be used in the quantitative analyses.
Also, follow-up activities, like the development
of ethics programs, are largely qualitative by
nature. Here, we demonstrate the empirical
applicability of the model with a case study of a
European-based financial multinational company
in 1997. It serves to illustrate how our conceptualization guides the construction of a measurement tool (survey), which is suited to gather
quantitative information about an organizations
ethical context and about various symptoms of
unethical conduct. The information is analyzed
with simple statistical tools to infer about the
nature and extent of failing corporate ethics, the
results of which are input to the development of
an ethics program.

Application of the corporate qualities

model
This section illustrates the use of the ethics qualities model with a case study of a European-based
financial multinational company in 1997. The
main motivation of the board of directors of this
firm to initiate the assessment has been the
occurrence of several serious cases of fraud within
a short period of time. These incidents have led
to financial losses, but more importantly to an
atmosphere of disquietude and suspicion among
personnel and to a corrosion of the image of the
organization as a reliable, solid and honorable
firm. The directors were particularly interested
in the extent to which the fraud incidents could
be traced to a failing coordination of employees
and in the possibilities to prevent such incidents
in the future. The assessment has been performed
in three distinct business units. The first business

104

Muel Kaptein and Jan Van Dalen

unit (unit 1) has been selected because it is supposedly fraud-free; the second business (unit 2)
because of the occurrence of several small
instances of fraud; and the third business unit
(unit 3) because of two serious incidents of
internal fraud. The opportunities to commit
fraud, like transferring money to ones own
account, are equally present in all three business
units.
The ethical content of this company was
assessed with the aid of a large questionnaire that
is filled out by all individual employees of the
three business units. The questionnaire is structured along the lines set out in the foregoing
section. It consists of about 200 propositions
about various aspects of organizational context
and ethical conduct, which employees have been
asked to evaluate on 5-point agreement scales.3
The individual perceptions thus obtained form
the basis of the quantitative assessment explained
below. The analysis consists of three steps. First,
the variety and extent of immoral behavior is
examined. Secondly, the relevant organizational
context is quantified by measuring the various
ethical qualities differentiated with respect to the
many hands, entangled hands and dirty hands
dilemmas. Thirdly, organizational context and
ethical consequences are related in order to elicit
those ethical qualities that contribute most
prominently to ethical practice. These key qualities are the starting points for the subsequent
development of an ethics program designed to
improve the ethical content of the organization.

The assessment of ethical practice

The failure of corporate ethics may become
apparent in a variety of ways, such as the careless
use of funds, the abuse of confidential business
information, the shrugging of responsibilities,
and the misleading of stakeholders (see Table I).
Table III summarizes the average scores of the
respondents perceptions of the occurrence of
such incidents. It is clear from these results that
the organization gives way to various types of
immoral behavior in addition to fraud. The
outcomes for the many hands type of unethical
conduct indicate that the cooperation between

units is insufficient (3.33) leading to the neglect

of collective tasks. Also, the willingness to deal
with requests from outside the firm is rather
limited (3.12). With respect to the entangled
hands dimension, immoral conduct is observed
in the form of abuse of time (3.61) and interpersonal perversities like gossiping, pestering,
lying, not keeping ones promises, and favoritism
(3.65). Only 19% of all personnel state that the
use of office hours for private purposes does not
occur within their team; while 33% report unjustified claims of illness. Similarly, more than 60%
of personnel mention the occurrence of lying
and pestering; over 80% think that not honoring
ones promises and favoritism do not occur; while
only 8% believes that gossiping is non-existent.
Discrimination and sexual intimidation reveal a
comparatively high score (4.56), which implies
that few individuals have been aware of such
irregularities. A closer look at these results shows,
however, that slightly over 30% is convinced that
sexual intimidation has occurred at least once in
the relevant past; a similar figure applies to acts
of discrimination with respect to race, gender and
sexual inclination. Finally, concerning the dirty
hands dimension, the moderate scores (3.75)
suggest that many respondents belief that external
stakeholders have legitimate reasons to complain
about the way their interests are dealt with.
The three business units reveal a considerable
uniformity with regard to the existence of unethical behavior. Some notable significant differences
exist, however. Business unit 3, which has experienced recent cases of fraud, reveals a relative
tendency to leave problems unresolved as a result
of insufficient cooperation among personnel
(3.44, p = 0.04) and a lack of coordination
between units (2.93, p = 0.00). Business unit 2
shows an opposite tendency: the shifting of
external requests to other units (2.90, p = 0.04).
Moreover, in business unit 3 monetary gifts
with a value of more than $25 are taken and
given on a more regular base than in the other
business units (4.20, p = 0.00). However, the fact
that on the whole the scores differ marginally
between business units implies that it is unwarranted to confine the development of ethical
policy to business unit 3. The results do corroborate, however, the comparative superiority of

TABLE III
Average values of measures of failing organizational context for the entire organization and selective subpopulationsa,b
Organization
dimension

Results of failing
organizational context

Scale Num.
Reliab. Items

Entire
Organization

Business unit
1

Nobs Mean Nobs

Non managem Management

Mean

Nobs

Sig.

Mean

Nobs

Mean

Nobs

Sig.

Many
hands

Insuff. coop among colleagues

0.77
Irrespons. conduct within units

Irrespons. conduct between unit.

Willingness to aid colleagues

Willingness to aid ext. stakehold.

4
1
1
1
1

3.68
3.62
3.33
3.63
3.11

157
154
150
155
157

3.71
3.65
3.73
3.73
3.36

27
27
27
27
27

3.79
3.71
3.41
3.60
2.90

88
88
88
88
88

3.44
3.41
2.93
3.63
3.41

44
44
44
44
44

0.04
0.30
0.00
0.86
0.03

3.62
3.43
3.35
3.56
3.00

120
120
120
120
120

3.81
4.18
3.26
3.82
3.38

34
34
34
34
34

0.18
0.00
0.68
0.20
0.10

Entangled
hands

Taking/giving gifts
Discrimination/intimidation
Careless use of time
Interpersonal perversities
Careless use of business assets

0.86
0.77
0.63
0.80
0.71

4
4
3
6
6

4.68
4.56
3.61
3.65
4.40

151
154
154
153
153

4.99
4.40
3.39
3.52
4.41

27
27
27
27
27

4.83
4.60
3.60
3.65
4.40

88
88
88
88
88

4.18
4.56
3.76
3.72
4.40

44
44
44
44
44

0.00
0.30
0.17
0.58
1.00

4.66
4.50
3.55
3.61
4.39

120
120
120
120
120

4.67
4.73
3.75
3.72
4.39

34
34
34
34
34

0.94
0.05
0.20
0.44
1.00

Dirty
hands

Ext. have reason to complain

Ext. interest adeq. dealt with

0.88
0.86

4
4

3.74
4.06

125
126

3.90
4.23

27
27

3.78
4.04

88
88

3.58
3.99

44
44

0.43
0.48

3.65
4.03

120
120

3.99
4.09

34
34

0.09
0.67

The p-values refer to the significance levels of ANOVA tests of hypotheses of the equality of the means in various sub-populations. Low p-values,
say below 0.05 or 0.10, point at the existence of significant differences between the mean values, whereas high p-values indicate that the equality
of means can not be rejected in light of the data at hand.
b
The indicators of the various concepts have been measured as multi-item rating scales. The column Reliab gives Cronbachs internal consistency
as a measure of scale reliability; the next column Num Items gives the number of items on which the indicator is based. In the case of a single item
indicator, the scale reliability can, of course, not be measured and is accordingly reported missing. All items underlying this table have been evaluated on a 5-points agreement scale varying from strongly disagree to strongly agree, except in the case of the entangled hands indicators. In these
latter instants, a 5-points frequency rating is used varying (after re-coding) from often (= 1) to never (= 5). The higher the scores, the less these
unethical practices occur.

The Empirical Assessment of Corporate Ethics

Mean Nobs Mean

Function

105

106

Muel Kaptein and Jan Van Dalen

business unit 1, which has been the criterion for

its selection.
It surprises that management experiences less
failures of corporate ethics than do employees
without managerial responsibilities: the average
scores given by responding managers are uniformly higher except in the case of coordination
between units (3.35 versus 3.27, p = 0.68).
Though management might be expected to have
an overall view of the conduct of personnel, it
seems that individual employees have opportunities to convey their unethical whereabouts from
their superiors. In any case, employees have more
information than management does. This is particularly true for the coordination of responsibilities within units, the willingness to deal with
external requests, incidents of sexual intimidation
and discrimination, and the justified complaints
of external stakeholders. This information asymmetry is an obvious point of attention for
business policy. For policy purposes, it is necessary to find out to what extent the organizational
context falls short with respect to this unethical
conduct. The following paragraph therefore aims
to quantify this corporate context.

The assessment of the corporate context

The ethical content of organizations is evaluated
by means of the 21 qualities described in
Table II. The employees scores on the propositions related with these qualities are summarized
in Table IV. The main features of these outcomes
are briefly discussed. For the organization as a
whole, it appears that clarity and, to a lesser
extent, visibility are comparatively strong qualities on all three dimensions. In addition, consistency (3.84) and supportability (3.94) in many
hands dilemmas, achievability (3.74) in entangled
hands dilemmas, and consistency (3.87), achievability (3.73) and discussability (3.83) in dirty
hands dilemmas are mentioned as positive assets
of the corporate context. Likely explanations of
these findings are that the internal processes in
the organization at hand are strongly formalized
and that functional tasks and responsibilities are
extensively documented. Note, however, that
these results express a relative favorability: in more

absolute terms, these average scores still imply the

presence of a considerable share of personnel that
holds less favorable views of these organizational
qualities. Also note that the favorable discussability of dirty hands problems (3.83) is illustrative of the service nature of this particular
organization. Relatively weak organizational
qualities are the sanctionability of unethical practices in all three dilemmas; the consistency in
entangled hands dilemmas (3.49); and the supportability in dirty hands dilemmas (3.04). It
follows that the corporate context fails with
respect to adequate correction of deviant
behavior. The responsibilities of personnel seem
to have been formalized to such a degree that
individual employees including management fall
short in taking responsibility for the misbehavior
of direct colleagues. As a result, formal and
informal correction rarely takes place. The weak
supportability in dirty hands dilemmas may be
evidence of employees who experience limited
commitment to their organization. They seem to
be insufficiently capable or prepared to defend
their organization in case of criticisms by external
parties. This lack of involvement of personnel
may also be a consequence of the bureaucratic
internal organization of this firm.
The overall scores of the three fundamental
dilemmas do not indicate the existence of a
singularly weak ethical dimension, although
the organizational qualities regarding many
hands problems may be considered relatively
firmly embedded within the organization. This
is remarkable, since many expressions of
unethical conduct have been found to appear on
this dimension. This seemingly contradictory
outcome may be explained by the existence of a
type of coordination of many hands dilemmas
that performs rather well in the case of strictly
individual responsibilities, but fails in the case of
collective responsibilities that cannot be traced to
individual employees.
Furthermore, the results show few significant
differences between the ethical qualities of the
three business units. Business unit 3 reveals a lack
of achievability (3.47, p = 0.02) and clarity (3.88,
p = 0.14) in many hands matters; but, more
importantly, it expresses serious shortcomings in
the clarity (3.56, p = 0.01), achievability (3.55,

TABLE IV
Mean ethical qualities for the entire organization and for subgroups of business unit and functiona,b
Organization
dimension

Ethical
quality

Scale Num.
Reliab. Items

Business unit
1

Many
hands

0.75
0.59
0.74
0.71
0.66
0.54
0.57

05
02
05
06
02
03
10

Mean Std Nobs Mean Vobs Mean Vobs Mean Vobs Sig.

Mean

Vobs Mean Vobs Sig.

4.03
3.84
3.32
3.69
3.94
3.80
3.31

26
26
26
26
26
26
26

4.11
3.84
3.35
3.80
3.90
3.85
3.27

88
88
88
88
88
88
88

3.88
3,84
3.16
3.47
4.06
3.73
3.34

44
44
44
44
44
44
44

0.14
1.00
0.20
0.02
0.54
0.57
0.54

4.02
3.75
3.24
3.66
3.86
3.80
3.25

120
120
120
120
120
120
120

4.07
4.16
3.59
3.70
4.07
3.75
3.48

34
34
34
34
34
34
34

0.69
0.01
0.02
0.75
0.20
0.75
0.03

3.71 0.52 158

3.72

26

3.73

88

3.64

44

0.63

3.65

120

3.83

34

0.08

3.77
3.49
3.41
3.74
3.56
3.71
3.49

157
152
155
158
158
149
155

3.79
3.52
3.38
3.73
3.66
3.67
3.39

26
25
27
27
27
27
27

3.75
3.43
3.50
3.72
3.42
3.74
3.50

87
86
84
87
87
82
84

3.78
3,60
3.27
3.79
3.78
3.68
3.52

44
41
44
44
44
40
44

0.96
0.66
0.32
0.90
0.03
0.92
0.70

3.73
3.45
3.36
3.71
3.49
3.75
3.39

119
114
118
120
120
113
118

3.87
3.57
3.55
3.82
3.77
3.53
3.81

34
34
33
34
34
33
34

0.29
0.53
0.23
0.42
0.05
0.28
0.00

3.60 0.52 158

3.60

27

3.58

87

3.63

44

0.88

3.56

120

3.71

34

0.14

3.92
3.87
2.67
3.73
3.04
3.71
3.83

125
151
122
150
154
156
128

4.01
3.96
2.42
4.00
2.92
3.69
3.99

21
24
21
22
25
25
21

4.06
3.87
2.72
3.75
3.00
3.78
3.91

70
84
69
85
86
87
73

3.56
3,84
2.72
3.55
3.19
3.60
3.56

34
43
32
43
43
44
34

0.01
0.75
0.53
0.09
0.49
0.32
0.04

3.89
3.82
2.69
3.68
3.03
3.68
3.78

093
114
089
114
117
118
096

3.94
4.03
2.64
3.88
3.15
3.83
3.97

29
33
29
33
33
34
29

0.79
0.09
0.86
0.20
0.52
0.22
0.22

Average dirty hands

3.52 0.48 159

3.52

27

3.58

88

3.40

44

0.11

3.51

120

3.57

34

0.54

Average overall

3.61 0.43 159

3.61

27

3.63

88

3.56

44

0.65

3.57

120

3.70

34

0.12

Clarity
Consistency
Sanctionability
Achievability
Supportability
Visibility
Discussability

0.32
0.75
0.80
0.53
0.73
0.95
0.84

02
02
03
03
03
02
08

Clarity
Consistency
Sanctionability
Achievability
Supportability
Visibility
Discussability

See Table III.

0.96
0.66
0.96
0.90

0.72
0.84

04
02
04
02
01
07
04

0.64
0.80
0.76
0.63
0.85
0.67
0.54

0.69
0.98
0.82
0.75
0.76
1.00
0.70

0.84
0.64
1.12
0.79
1.00
0.62
0.73

107

a,b

Non managem Management

4.03
3.83
3.49
3.71
3.87
3.76
3.39

Average entangled hands

Dirty
hands

158
158
158
158
158
158
158

Average many hands

Entangled
hands

The Empirical Assessment of Corporate Ethics

Clarity
Consistency
Sanctionability
Achievability
Supportability
Visibility
Discussability

Function

108

Muel Kaptein and Jan Van Dalen

p = 0.09) and discussability (3.56, p = 0.04) in

dirty hands problems. Business unit 3 is obviously
less adequately organized in this respect than the
other two units. However, it cannot be concluded on the basis of this typology of the organizational context that incidents of fraud are the
exclusive domain of business unit 3 and are not
likely to occur in the other units. On the
contrary, the considerable uniformity of the
results, which are moderate in their own right,
should stimulate the development of a policy to
improve the ethical context in all three units. In
addition, management is seen to express a more
positive view of the ethical quality of their organization than does non-management, which is in
line with the findings for the perceived unethical practices. In particular, significant differences
between both groups of personnel are observed
with respect to the many hands dimension (3.66
versus 3.83, p = 0.08). Non-management appears
to be comparatively less positive about the consistency, sanctionability and dicussability of the
organization in matters pertaining to many hands
dilemmas. Apparently, non-management expects
a more proactive, regulatory attitude of managers
with respect to the allocation of individual and
collective responsibilities among personnel. This
phenomenon certainly needs to be covered in
follow-up ethical policies of the firm.

Organizational context and moral behavior

Up to this point, the ethical quality of the organization and the occurrence of unethical conduct
have been analyzed separately. In order to assess
the extent to which the organization (rather than
the individual) can be held responsible for unethical practice, this section discusses the relation
between corporate context and ethical consequences by means of pairwise correlations
between qualities and practices and multivariate
analyses of the variations in perceived malpractice. The results are summarized in Table V. An
overall view of these results shows that most
pairwise associations are significantly positive,
which is in accordance with the general idea of
our model that the ethical quality of the organization exercises a positive influence on the moral

conduct of employees. Most surprising are the

negative associations in the case of taking and
giving gifts. An explanation may be that these
acts are not perceived as extremely unethical,
notwithstanding organizational policy at this
point. Regarding the multivariate analyses, it is
found that significant explanations arise for all
types of conduct. However, the degree of
explanation of the regression models is relatively
low: from 0.09 in the case of the willingness to
help colleagues to 0.53 in the case of the perceived manner in which the interests of stakeholders are dealt with. These results are not
unsatisfactory though, given that they are based
on the perceptions of individuals, which may be
assumed to depend on many unique factors.4
In the case of many hands dilemmas, it is
found that clarity has a significant positive influence on the willingness to aid colleagues (0.37,
p = 0.05) and people from outside the organization (0.44, p = 0.04). This is slightly typical, since
clarity has been previously identified as a comparatively positive quality (see Table IV); which
might be considered to offer little instrumental
value for further improving moral practice.
Consistency positively affects the cooperation
among employees (0.30, p = 0.00) and the
resolving of within unit problems (0.29, p =
0.05). This consistency is also positively influenced by achievability (0.37, p = 0.00), supportability (0.29, p = 0.00) and negatively by the
visibility of the organization (0.20, p = 0.05).
The latter is unexpected, although it may signify
that a high transparency of particularly horizontal
relationships is not always conducive to cooperation among personnel.5 More interesting is the
fact that the ethical qualities with the lowest
scores, sanctionability and discussability, have
little or no influence on many hands issues. It
follows that discussability should not be given
priority in an ethics program, if one intends to
improve the moral conduct in the many hands
dimension. In the case of the entangled hands
dimension, positive influences may be expected
from improving organizational consistency and
sanctionability, which have shown relatively low
average scores in Table IV. Moreover, visibility
is seen to act positively against discrimination and
sexual intimidation (0.12, p = 0.01), and the

Results of failing

3.33
3.63
3.11

Irrespons. conduct between units

Willingness to aid colleagues

Willingness to aid ext. stakehold.

4.06
4.29

Interpersonal perversities

Careless use of business assets

Ext. interest adeq. dealt with

4.06

3.74

3.39

Careless use of time

Ext. have reason to complain

4.56

Discrimination/intimidation

4.68

3.62

Irrespons. conduct within units

Taking/giving gifts

3.68

average

tion

Organisa-

Insuff. coop among colleagues

organizational context

126

125

153

153

154

154

151

157

155

150

154

157

of obs.

Number

0.30
0.50
(0.00)

0.43

(0.00)

(0.00)

(0.10)

0.15

0.30
(0.00)

0.32
(0.00)

0.44
(0.00)

0.37
(0.00)

0.32
(0.00)

0.22
(0.01)

0.33
(0.00)

0.23

(0.29)

0.09

0.16

(0.00)

(0.48)

0.06

0.24

0.18
(0.03)

0.24
(0.00)

0.10
(0.23)

0.18
(0.03)

0.34
(0.00)

0.28
(0.00)

0.58
(0.00)

0.38
(0.00)

tency

Clarity Consis-

(0.91)

0.01

(0.22)

0.11

(0.12)

0.13

(0.00)

0.36

(0.00)

0.28

(0.05)

0.16

(0.21)

0.10

0.21

(0.16)

0.11

(0.01)

0.21

(0.00)

0.25

(0.00)

0.41

tion

(0.00)

0.40

(0.00)

0.34

(0.00)

0.24

(0.00)

0.31

(0.03)

0.17

(0.00)

0.25

(0.61)

0.04

0.13

(0.02)

0.18

(0.30)

0.09

(0.00)

0.28

(0.00)

0.54

ability

(0.79)

0.02

(0.53)

0.06

(0.21)

0.10

(0.02)

0.18

(0.03)

0.18

(0.31)

0.08

(0.01)

0.22

0.23

(0.01)

0.21

(0.38)

0.07

(0.00)

0.28

(0.00)

0.58

ability

(0.00)

0.57

(0.00)

0.47

(0.08)

0.15

(0.06)

0.16

(0.00)

0.26

(0.00)

0.24

(0.88)

0.01

0.15

(0.10)

0.13

(0.09)

0.14

(0.02)

0.19

(0.00)

0.23

bility

(0.00)

0.44

(0.07)

0.16

(0.30)

0.09

(0.00)

0.27

(0.04)

0.17

(0.02)

0.19

(0.54)

0.05

0.19

(0.01)

0.21

(0.09)

0.14

(0.04)

0.16

(0.00)

0.33

ability

Sanc- Achiev- Support- Visi- Discuss-

Pearson correlations

In all instances, significance values have been reported between parentheses below the correlation coefficients and the parameter estimates.

hands

Dirty

hands

Entangled

Many

dimension

Organization

TABLE V

(0.70)

0.16

(0.53)

0.42

(0.00)

3.20

(0.00)

1.42

(0.00)

1.51

(0.00)

3.15

(0.00)

4.85

1.11

(0.02)

1.50

(0.00)

2.26

(0.03)

1.46

(0.01)

0.93

cept

Inter-

0.04

(0.02)

0.15

(0.38)

0.09

(0.01)

0.21

(0.04)

0.21

(0.71)

0.04

(0.89)

0.01

(0.89)

0.01

0.44

(0.05)

0.37

(0.20)

0.24

(0.40)

0.15

(0.71)

(0.19)

0.13

(0.66)

0.07

(0.07)

0.10

(0.00)

0.22

(0.00)

0.23

(0.04)

0.12

(0.19)

0.09

0.11

(0.88)

0.02

(0.70)

0.06

(0.05)

0.28

(0.00)

0.30

tency

Clarity Consis-

(0.93)

0.00

(0.16)

0.10

(0.77)

0.02

(0.02)

0.19

(0.01)

0.22

(0.54)

0.04

(0.01)

0.20

0.23

(0.24)

0.19

(0.10)

0.27

(0.45)

0.12

(0.49)

0.06

tion

Sanc-

(0.08)

0.12

(0.06)

0.22

(0.61)

0.04

(0.32)

0.09

(0.55)

0.06

(0.26)

0.08

(0.79)

0.02

0.21

(0.78)

0.05

(0.33)

0.18

(0.58)

0.10

(0.00)

0.37

ability

(0.41)

0.04

(0.17)

0.12

(0.91)

0.01

(0.59)

0.05

(0.56)

0.06

(0.26)

0.08

(0.00)

0.25

0.26

(0.31)

0.14

(0.86)

0.02

(0.19)

0.17

(0.00)

0.29

ability

Achiev- Support-

Regression coefficients

Pearson correlations between ethical qualities and various symptoms of failing organizational context a

Visi-

(0.00)

0.45

(0.00)

0.79

(0.82)

0.01

(0.76)

0.02

(0.01)

0.16

(0.01)

0.12

(0.51)

0.04

0.01

(0.51)

0.11

(0.64)

0.08

(0.84)

0.03

(0.03)

0.20

bility

(0.01)

0.20

(0.41)

0.11

(0.53)

0.05

(0.60)

0.06

(0.58)

0.06

(0.32)

0.09

(0.87)

0.02

0.08

(0.24)

0.27

(0.69)

0.09

(0.13)

0.35

(0.23)

0.15

ability

Discuss-

0.53

0.29

0.15

0.29

0.23

0.18

0.10

0.10

0.09

0.06

0.15

0.51

R2

0.24

0.68

0.25

0.40

0.49

0.30

0.37

1.40

1.07

1.06

1.02

0.30

s2

113

113

138

138

138

138

138

147

147

147

147

147

The Empirical Assessment of Corporate Ethics

109

110

Muel Kaptein and Jan Van Dalen

careless use of time (0.16, p = 0.01). Similarly,

clarity has a positive contribution to the reduction of perversities like gossiping, pester and
favoritism (0.21; p = 0.04) and the careless use
of business assets (0.22, p = 0.01). Discussability
again has little influence on the extent of entangled hands problems. In the case of the dirty
hands dimension, ethical conduct seems most
prone to achievability and visibility, and to some
extent to clarity and discussability. It is unexpected to find that sanctionability and supportability, which have previously been shown to be
developed to a limited extent in this organization (see Table IV), have no significant influence
on moral conduct.
Summing up, the case study demonstrates the
existence of various sorts of unethical conduct,
which differ with respect to their frequency of
occurrence. It also shows that the ethical qualities constituting the organizational context differ
with respect to perceived optimality as well as
their impact on unethical practice. Recalling the
organizations motivation to involve into a corporate assessment, several spearheads for ethical
policy may be advanced, such as the clarity and
sanctionability of unethical practice, consistency
in entangled hands dilemmas, the relatively
inferior ethical context of business unit 3, the
information asymmetry between managers and
executive personnel and the supportability in
dirty hands matters. Examples of measures that
have been taken in this present organization to
improve its ethical content are the initiation of
group sessions in which people are taught how
do discuss their dilemmas and to call on misbehaving colleagues to account for their actions.
Moreover, managers have been trained to act
adequately upon signals of unwanted behavior
within their units, and personnel have been
supplied adequately and in a timely manner with
information about possibly sensitive issues in
order to improve supportability with respect to
dirty hands dilemmas. Also a code of conduct has
been developed to reduce the careless use of
business assets.

Conclusion and discussion

In this study, an integrated, normative model of
corporate ethics has been developed, which can
be used to assess the ethical content of organizations and to propose directions for ethical
progress. This Ethical Qualities Model satisfies
the need of a proper conceptualization of corporate ethics, which has potential for empirical
application. Our model is based on the autonomy
view of business ethics implying that organizations are considered as moral entities by themselves rather than as collections of individual
responsibilities (as they are in the reductionist
view). More specifically, our model distinguishes
three fundamental types of ethical dilemmas in
organizations, which are denoted as many hands,
entangled hands and dirty hands dilemmas. These
dilemmas prevail in all organizations in which:
(a) people operate on behalf of the organization
with respect to other people or other organizations (dirty hands dilemmas); (b) the conduct of
these representatives is evaluated from a collective point of view (many hands dilemmas); and
(c) these representatives have access to company
assets which they could in principle misuse
(entangled hands dilemmas). The behavior of
employees in each of these dilemmas is assumed
to be affected by the ethical quality of the organizational content, which is apparent in the
clarity, consistency, sanctionability, achievability,
supportability, visibility, and discussability of the
organizations coordination mechanisms. The
model hereby integrates numerous scattered
scientific insights into the ethical behavior of
employees. Moreover, the model is normative, in
the sense that it relates the ethical content of
organizations to the extent in which organizational factors that stimulate unethical conduct are
absent and in which organizational factors that
stimulate ethical conduct of employees are
present. Since the various ethical qualities refer
to organizational processes instead of specific
expectations of stakeholders with respect to
desired acting in ethical dilemmas, the model
may be applied to both profit-making and nonprofit-making organizations.
The Ethics Qualities Model has various practical business applications. First, it provides

The Empirical Assessment of Corporate Ethics

managers with a conceptual model for understanding all the elements of the corporate context
which influence the ethical conduct of
employees. Secondly, the results of an assessment
provide decision-makers with information about
the extent to which unethical practices can be
found in the organization and relates this information to the strong and weak elements of the
organizational context. The outcome of this
exercise is input for business policies aimed at
improving the organizational context in order to
reduce the likelihood of unethical incidents and
to stimulate moral behavior. Depending on the
amount of information gathered, the results may
be specified with respect to distinct parts of the
organization, such as business units, teams and
function levels, to increase knowledge about the
comparatively weak and strong spots in the organization. Thirdly, the results of an ethical assessment can also be included in a social report to
inform external stakeholders. In this case, the
employment of an independent third party to
perform the assessment is highly advisable to
reduce the likelihood of manipulation, windowdressing and socially desired response. Also, it is
recommendable to include other measures than
the used questionnaire in this study. Finally, by
repeating the assessment in time, the effectiveness of ethical programs may be judged. The
results may be used both internally, to evaluate
the performance of management, and externally,
to demonstrate the organizations performance to
stakeholders. In addition, monitoring the ethical
evolution of organizations in time provides an
alternative to Robin and Reidenbachs (1991)
classification based on five consecutive stages of
moral development (amoral, legalistic, responsive,
emerging ethical, and ethical).
The present empirical analysis can be extended
in various ways to further increase knowledge
about business ethics. Particularly for profit
organizations, it is worthwhile to relate the
quantitative measures of moral organizational
qualities to commonly used indicators of the
economic performance of firms, such as profit
rates, share prices, negative publicity, strikes or
the break-down of production. In this way it
becomes possible to assess the added value of an
ethical corporation in financial-economic terms.

111

Furthermore, the repeated application of the

Ethics Qualities Model to different organizations
broadens its empirical basis, which is necessary
to assess its dimensional integrity and to analyze
more thoroughly the influences of objective
organization characteristics, like size, type of
activities, or type of buyers served, on corporate
ethics. In addition, a more explorative approach
may be pursued to determine the relevant ethical
qualities for particular organizations, for example,
by employing a factor analysis on the survey
material. In the present study, this has deliberately not been done, since it would have distracted from our primary aim to conceptualize
corporate ethics and to demonstrate the empirical applicability of the associated Ethics Qualities
Model. It may be fruitful though, in situations
where different aspects of ethical quality weigh
up differently or where some ethical qualities
may even be considered irrelevant.
Much effort is needed to build up experience
in gauging corporate ethics and establishing a
solid body of empirical evidence to support both
empirical practice and ethical theory. However,
the proposed corporate ethics concept offers
many ways to proceed and many challenges for
further research and practical applications.
Notes
1

This is not to deny that these ethical aspects have

occasionally been the subject of analysis. In fact,
Velasquez (1992) essentially deals with entangled
hands dilemmas when describing the conflict of interests that occur when employees perform tasks on
behalf of an organization and simultaneously have a
private interest in the outcome of this task. Thompson
(1987) deals with many hands dilemmas in the context
of public organizations where various employees
contribute to government decisions which makes
if difficult or even impossible to trace the moral
responsibility for the political outcomes. Moreover,
Thompson (1987) uses the idea of dirty hands
dilemmas in a political context by noting that
whatever politicians decide upon, it violates the legitimate interest of at least one stakeholder. It is hard for
politicians to keep their hands clean. Badaracco (1992)
describes similar dilemmas for private organizations.
The distinguishing feature of our approach is the
unification of these different types of dilemmas as

112

Muel Kaptein and Jan Van Dalen

dimensions of a single concept denoted as corporate

ethics.
2
Employees are representatives of the corporation
as well as a stakeholder group. The entangled hands
dimension involves the gearing of responsibilities of
the employees as representatives with respect to the
corporation. The dirty hands dimension involves
the gearing of corporate responsibilities with respect
to, for example, the employees as stakeholders.
3
The questionnaire is also denoted as Ethics
Thermometer to express the notion of a short measurement period, during which a quantitative view of
the organization is compiled, which is displayed on a
standardized scale. The Ethics Thermometer consists of
approximately 200 propositions (100 propositions
regarding the perceived ethical content, 60 propositions regarding perceived conduct and 40 propositions
regarding the perceived consequences). The use of
multi-item bimodal rating scales to measure ethical
qualities seems to be congruent with the objective of
our study to establish a normative framework for the
assessment of ethical qualities, which are inexact, nonmetric by nature. Completing the survey takes about
30 minutes. Before submitting the questionnaire, all
personnel has been extensively informed by directors,
management and the researchers both in writing
and in person in order to avert misapprehension.
Anonymity of the respondents is warranted to further
stimulate the reliability of the response. Also, the
questionnaire has been sent to the home addresses of
employees and could be returned to the addresses of
the researchers without intervention of the organization. The research report for the organization exclusively contains aggregate information that can not be
traced to individual respondents. The response rates
on this questionnaire are: 62% for business unit 1; 59%
for business unit 2; and 58% for business unit 3.
4
The degree of explanation R2 may be considered a
direct measure of the extent to which the organization can be held responsible for immoral conduct, if
one maintains that the perceived ethical qualities are
synonymous with the actual quality of the organizational context and that all remaining determinants of
unethical behaviour are independent of this corporate
context (as is usually assumed in regression analysis).
In this view, the organizational responsibility is large
in the case of the failing co-operation among colleagues (R2 = 0.51) and the inadequate dealing with
the interests of external stakeholders (R2 = 0.53). It
is moderate in the case of the resolving of within unit
problems (R2 = 0.15), discrimination (R2 = 0.18),
careless use of time (R2 = 0.23) and business assets
(R2 = 0.16), perversities (R2 = 0.29) and the encour-

aging of complaining by external stakeholders (R2 =

0.29). It is low elsewhere. This ranking, which seems
plausible up to a certain level, demonstrates both the
relevance of organizational context and the need for
more explicit insights into the individual morality.
Future research into the nature of individual qualities would certainly enhance the present results;
specifically when these insights can be implemented
in HRM tools.
5
This unexpected outcome may also be explained
by the nature of our observation method, which is
based on the perceptions of employees. In this case,
respondents in organization parts with a comparatively
superior visibility, are likely to express both a high
perceived visibility and a relative awareness of incidents
of a failing organizational context, which would yield
a negative estimated effect of visibility. The significantly negative influence of supportability on entangled hands dilemmas associated with the taking and
giving of gifts may be explained in similar fashion:
respondents in a supportive context may feel a greater
assurance to make notice of perceived immoral behaviour. A problem of these explanations is that these
negative impacts occur incidentally and not occur
throughout. The limitations of using perceptions to
evaluate actual states of affair are left as a further
refinement of our measurement method.

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Rotterdam School of Management, F344,

Erasmus University Rotterdam,
The Netherlands.