The Moderating Effect of Individuals'

Perceptions of Ethical Work

Climate on Ethical Judgments
and Behavioral Intentions

ABSTRACT.
Dimensions of the ethical work
climate, as conceptualized by Victor and Cullen
(1988), are potentially important influences on
individual ethical decision-making in the organizational context. The present study examined the direct
and indirect effects of individuals' perceptions of work
climate on their ethical judgments and behavioral
intentions regarding an ethical dilemma. A national
sample of marketers was surveyed in a scenario-based
research study. The results indicated that, although
perceived climate dimensions did not have a direct
effect on behavioral intentions, there were significant
moderating effects. Climates perceived as emphasizing
social responsibility and rules/codes moderated the
individual ethical judgment-behavioral intentions
relationship such that individuals were less likely to
say that they would engage in a questionable selling
practice even when they themselves did not believe
the practice to be unethical. Respondents were
somewhat more likely to form intentions consistent
with their judgment that the questionable practice was

Tim Barnett is an Associate Professor of Management at

Louisiana Tech University. His primary research interests are ethical decision making in business, religiosity
and spirituality in the workplace, and HR issues in
academia. He has published more than 30 articles in
journals including the Academy of Management

Journal, Personnel Psychology, Human Relations,

Business Ethics Quarterly, and the Journal of
Business Ethics.
Cheryl Vaicys is an Assistant Professor of Management at
Grambling State University. Her dissertation research
concerned ethical work climate and various aspects of
individual ethical decision making and her current
research agenda extends this line of research. She has
presented various professional papers and has published

in Psychological Reports.

Tim Barnett
Cheryl Vaicys

morally acceptable when the ethical climate was

characterized by an emphasis on team/friendship.
KEY WORDS: business ethics, ethical work climate,
ethical decision making, ethical judgments

Although models of ethical decision-making do

not agree in every particular, they recognize that
individual ethical decision-making in organizations cannot be understood without considering
the context within which decision processes
occur. Thus, the models generally include not
only individual infiuences on ethical decisionmaking but also organizational factors such as
reward systems, norms, codes of conduct, and
organizational climate (Brass et al., 1998;
Dubinsky and Loken, 1989; Ferrell and Gresham,
1985; Hunt and Vitell, 1986; Jones, 1991;
Trevino, 1986).
The ethical dimension of organizational
climate has been conceptualized by Victor and
Cullen (1988) as a multidimensional construct,
which they term the "ethical work climate."
Ethical work climates consist of the "prevailing
perceptions of typical organizational practices and
procedures that have ethical content" (Victor and
Cullen, 1988, p. 101). As such, ethical climates
are affected by organizational normative systems
such as policies, procedures, reward and control
systems. Although ethical climate is, by definition, a marco-level construct, the perception of
ethical climate is relevant to individual ethical
decision-making at the micro-level (Wyld and
Jones, 1997). The focus of this paper is on the
individual's perception of the ethical climate

Journal of Business Ethics 27: 3 5 1 - 3 6 2 , 2000.

2000 Kluwer Academic Publishers. Printed in the Netherlands.

352

Tim Barnett and Cheryl Vaicys

existing in his or her organization, which is

consistent with the study of organizational
climate at the micro-level (Victor and Cullen,
1988; Wyld and Jones, 1997). The perceived
ethical climate helps an organization niember
answer such questions as "What issues have
ethical content?" "What are the appropriate
decision criteria?" "What is the correct alternative in the organization's view?" and "What
should I do?" Thus, the perceived ethical climate
aids the individual in determining issues that are
ethically pertinent, and what criteria should be
used to understand, evaluate, and resolve those
ethical issues (Kelley et al., 1989; Singhapakdi
and Vitell, 1991a, 1991b).
Previous research demonstrates that individuals' ethical judgments are strongly predictive of
their behavioral intentions regarding ethical issues
(Bass et al., 1999). Simply put, an individual's
ethical judgment regarding an issue or behavior
is the degree to which he or she considers the
issue or behavior morally significant (Reidenbach
and Robin, 1990). Behavioral intentions are the
subjective probabilities individuals assign to the
likelihood that a given behavioral alternative will
be chosen (Ajzen and Fishbein, 1980; Hunt and
Vitell, 1986). In this paper, we suggest that perceptions of ethical work climate will affect individuals' stated intentions to engage in ethically
questionable behavior as well as the nature of the
relationship between individuals' ethical judgments about an issue and their behavioral intentions. We present the results of an empirical study
designed to test specific hypotheses regarding
perceived ethical climate, individual ethical judgments, and behavioral intentions. If perceived
characteristics of the ethical work climate do
affect behavioral intentions regarding ethical
issues, this has implications for organizational
leaders as to the effects of different types of
ethical climates on the ethical behavior of organizational members.

Theoretical background and hypotheses

Ethical work climate

Basing their work largely upon moral philosophy

and the theory of cognitive moral development.

Victor and Cullen (1988) theorize that ethical

work climates in organizations vary along two
dimensions, the ethical criterion emphasized
(egoism, benevolence, or principle) and the
social perspective or loci of analysis (individual,
local, and cosmopolitan). The three ethical
criteria differ in terms of the decision rules used
in moral reasoning, and can be described as
follows:
1. An egoistic or instrumental criterion is
based on the moral philosophy of egoism,
which implies that a consideration of what
is in the individual's best interest will
dominate the ethical reasoning process
(Ferrell and Fraedrich, 1997).
2. The benevolence or utilitarian criterion is
based largely on utilitarian principles of
moral philosophy, which suggest that
individuals make ethical decisions by considering the positive or negative consequences of actions on referent others
(FerreU and Fraedrich, 1997).
3. The principled or deontological criterion
is based in large part on deontological
principles of moral philosophy, which posit
that individuals make ethical decisions after
considering actions in regard to universal
and unchanging principles of right and
wrong (Ferrell and Fraedrich, 1997).
The locus of analysis is the reference group
used when making ethical judgments. Victor and
Cullen (1988) base this dimension of ethical
climate on sociological theories of reference
groups (Gouldner, 1957). These theories posit
that individuals refer to different groups for
norms of behavior and role definition. Applying
this reasoning to ethical climates, Victor and
Cullen (1988) conceptualized three levels of
reference groups, individual, local, and cosmopolitan. At the individual level, the ethical
climate of the organization supports an individual-level source for normative standards
regarding ethical reasoning. The local level is
supported by organizational norms favoring
reference groups within the organization itself.
The cosmopolitan ethical climate is supported by
norms favoring external sources for ethical
reasoning.

The Moderating Effect of Individuals' Perceptions of Ethical Work Climate

353

A cross-classification of the ethical criteria

with the loci of analysis yields 9 theoretical
ethical climate "types" as shown in Figure 1.
However, previous research utilizing the Ethical
Climate Questionnaire has found between 5
and 7 factors and not all 9 of the theoretical
dimensions (Cullen et al., 1993; Vaicys et al.,
1997; Victor and Cullen, 1988; Wimbush et al.,
1997). Empirically derived dimensions represent
work climates based on each of the major ethical
criteria, egoism, benevolence (utilitarianism), and
principle (deontology).

dilemmas are resolved (Victor and Cullen, 1988).

Through institutionalized, normative structures,
policies, and procedures, the organization signals
employees as to its priorities in terms of the
resolution of ethical dilemmas. Therefore, the
context created by the organization member's
perception of ethical climate is likely to infiuence
the member's recognition of and response to
ethical dilemmas (Wyld and Jones, 1997). In the
following sections, we suggest specific relationships between the perceptions of ethical work
climate and the individual's behavioral intentions
regarding ethical issues.

Ethical work climate and individual ethical decision

processes

Egoistic climates. The moral philosophy of egoism

defines moral behavior in terms of the selfinterest of the individual (Ferrell and Fraedrich,
1997). Self-interest may be defined in terms of
physical well-being, pleasure, power, wealth,
happiness or other criteria that promote the
wishes and interests of the individual. Egoism
suggests that ethical dilemmas should be evaluated in terms of the individual's subjective
assessment of what will best promote his or her
self-interest. Depending upon the locus of
analysis, a climate characterized by egoistic
criteria would encourage ethical decision-making
based on the individual's personal self-interest,
the interest of the company (company profit), or
the interests of society (efficiency).
A climate characterized by egoism might lead
organization members to make decisions that are
instrumental to their personal interest without
regard to the health of the organization, professional codes, or even laws. An egoistic climate
might reinforce such behavior due to the absence

As stated earlier, models of business ethical

decision-making recognize the influence of
"organizational factors" on individuals' ethical
judgments and behavioral intentions. Trevino
(1986) concludes that because individuals often
search outside themselves for guidance in ethical
dilemmas, organizations can moderate the
relationship between individual cognition and
behavior through reinforcement of ethical
behavior, organizational norms, and managerial
responsibility. Therefore, a logical extension of
research on ethical climate is to test relationships
between individual perceptions of ethical
climate and individual ethical decision-making
(Wimbush and Shepard, 1994; Wyld and Jones,
1997). The perceived ethical climate of the
organization for which one works is likely to
influence the types of ethical dilemmas that are
recognized as well as the process by which the

Ethical criteria

Locus of analysis
Individual

Local

Cosmopolitan

Egoism

Self-interest

Company profit

Efficiency

Benevolence (Utilitarian)

Friendship

Team interest

Social responsibility

Principle (Deontology)

Personal morality

Rules, standard operating

procedures

Laws, professional codes

Figure 1. Theoretical ethical climate types.

354

Tim Barnett and Cheryl Vaicys

of expressed concern for principles of utilitarianism or principle or the failure to enforce

stated policies and procedures (Wimbush and
Shepard, 1994). Thus, we expect normative
climates that are based on egoistic values to be
positively associated with intentions to engage
in behavior that is ethically questionable or
ambiguous.
We also expect that normative climates based
on egoistic values will moderate the relationship
between individual ethical judgment and
behavioral intentions by making it more likely that
judgments will foster behavioral intentions that
are consistent with egoistic goals. Empirical
studies have shown that individual judgments
about the morality of an action are strongly
correlated with intentions to engage in the action
(e.g., Bass et al., 1999). Organizational factors are
likely to moderate this relationship (Trevino,
1986). In a climate perceived as egoistic, individuals are less likely to weigh the interests of
others (utilitarian considerations) or rules, laws,
and codes (deontological considerations) when
making decisions regarding ethical dilemmas.
Thus, we expect the relationship between individual ethical judgments and behavioral intentions to be strengthened, as the organization
imphcitly or explicitly encourages them to rely
more strongly upon their personal interests when
making ethical decisions.
Hla: Normative climates characterized by
high perceived levels of egoism will be
more likely to be associated with stated
behavioral intentions to engage in ethically questionable or ambiguous actions.
Hlb: In normative climates characterized by
higher perceived levels of egoism, the
relationship between judgments that an
action is morally acceptable and individual behavioral intentions will be
stronger than in climates associated with
lower perceived levels of egoism.
Benevolent or utilitarian climates. In general, utili-

tarianism defines moral behavior in terms of the

consequences of the behavior to a relevant group
(Ferrell and Fraedrich, 1997). An ethical climate

characterized by benevolence or utilitarian ideals

would foster the consideration of the effects of
ethical decisions on others. Relevant others
might include an individual's immediate workgroup, organizational members as a whole, the
organization's custofners and other stakeholders,
or society at-large.
The perception of a benevolent climate should
foster ethical decisions made based on their
consequences to others. Utihtarian normative
systems emphasize the importance of the welfare
of others. Therefore, we expect climates characterized by utilitarianism to be less likely to be
associated with stated intentions to engage in
behavior that is ethically questionable or
ambiguous.
We also expect the utilitarian climate to
moderate the relationship between individual
ethical judgment and stated behavioral intentions.
Although an individual may not feel that a
behavior is morally wrong or serious in nature,
a utilitarian climate is likely to encourage the
individual to evaluate the behavior in light of
any possible negative consequences to others.
This might lead the person to refrain from a
behavior that he or she as an individual does not
consider unethical. Therefore, we expect normative climates that emphasize utilitarianism to
moderate the ethical judgment-behavioral intentions relationship such that the relationship
between an individual's ethical judgment and
stated behavioral intentions will be weaker in
climates characterized by a high degree of utilitarianism.
H2a: Normative climates characterized by
high perceived levels of utilitarianism
will be less likely to be associated with
stated behavioral intentions to engage in
ethically questionable or ambiguous
actions.
H2b: In normative climates characterized by
higher perceived levels of utilitarianism,
the relationship between judgments that
an action is morally acceptable and
individual behavioral intentions will be
weaker than in climates associated with
lower perceived levels of ethical utilitarianism.

The Moderating Effect of Individuals' Perceptions of Ethical Work Climate

Principled or deontological climates. Principled or

deontological theories of ethics define moral

behavior as behavior that arises from a deliberate
choice to subordinate the circumstances one faces
to certain universal principles of right and wrong.
Actions are considered ethical as long as they
comply with these universal principles. Selfinterest is not an appropriate consideration when
making ethical decisions, according to deontological theories. Likewise, positive consequences
to others would not justify a behavior that is
morally wrong according to deontological principles. Applied to the organizational context,
deontological principles may be reflected by the
individual's beliefs or philosophy (e.g., religious
beliefs that require adherence to the Ten
Commandments), the organizational context
(organizational policies and procedures; professional rules or codes), or moral principles such
as comparative or non-comparative justice or
principles of respect for people.
The perception of a principled climate should
foster ethical decisions made on the basis of relatively inflexible principles of right and wrong.
Deontological cHmates emphasize the importance
of adhering to organizational policies/procedures
regarding ethics and/or adhering to professional
ethics code or societal regulations and laws.
Therefore, we expect climates characterized by
a high level of deontology to be less likely to
be associated with stated intentions to engage
in behavior that is ethically questionable or
ambiguous.
We also expect the deontological chmate to
moderate the relationship between individual
ethical judgments and stated behavioral intentions. Although an individual may not feel that
a behavior is morally wrong or serious in nature,
a deontological climate is likely to encourage the
individual to evaluate the behavior in light of
invariant principles. This might lead the person
to refrain firom a behavior that he or she does not
consider highly unethical. Therefore, we expect
deontological chmates to moderate the ethical
judgment-behavioral intentions relationship such
that the relationship between an individual's
ethical judgment and stated behavioral intentions
will be weaker in climates characterized by a high
degree of deontology.

355

H3a: Normative climates characterized by

high perceived levels of deontology will
be less likely to be associated with stated
behavioral intentions to engage in
ethically questionable or ambiguous
actions.
H3b: In normative climates characterized by
higher perceived levels of deontology,
the relationship between judgments that
an action is morally acceptable and
individual behavioral intentions will be
weaker than in climates associated with
lower perceived levels of ethical deontology.

Method
Sample and procedures

The data necessary for completion of this study

were collected as part of a larger study of
marketers. Our sample frame was taken from the
membership list of the American Marketing
Association. The survey instrument was mailed
to 1 000 randomly selected AMA professional
members. Each survey packet included a cover
letter which assured the respondents of
anonymity, the survey instrument, and a postagepaid return envelope. The survey instrument
included measurement scales designed to assess
the constructs of interest in this study, demographic information, and other information
unrelated to the present study.
Respondents were asked to read a short
vignette containing an ethically questionable sales
tactic. Respondents were asked to (1) make an
ethical judgment about the action represented in
the vignette and (2) indicate the likehhood that
they would engage in the behavior if they were
in a similar situation. The vignette used in this
study was adapted from earlier marketing ethics
studies. The text of the vignette read as follows:
Occasionally, customers of Bill Smith ask Bill
which of his products he recommends for their
company. Regardless of real customer need. Bill
recom^mends one of the more expensive items in
his product line.

356

Tim Barnett and Cheryl Vaicys

Measures

Ethical climate. The Ethical CHmate Questionnaire

(Victor and Cullen, 1988) was used to assess the
dimensions of ethical chmate perceived by the
respondents. The complete ECQ scale has 36
items. The items are descriptive statements
originally designed to describe the various
dimensions of ethical work climate as conceptuahzed by Victor and Cullen (1988). As discussed
previously, factor analyses of the ECQ items has
failed to demonstrate that it taps all 9 of the
theoretical ethical climate dimensions. However,
the ECQ does yield multidimensional solutions
consistent with the assessment of egoistic, utihtarian, and deontological work climates.
The ECQ items are administered on a 6-point
scale with responses ranging from "completely
false" to "completely true." Respondents are
asked to evaluate the extent to which each item
is true about their company. The instrument
places respondents in the role of observers
reporting on, not evaluating, the perceived
ethical climate rather than focusing on whether
respondents perceive the ethical climates as being
good or bad (Victor and Cullen, 1988; Cullen
et al., 1993). The full text of the Ethical Climate
Questionnaire is available in previously published
research (Cullen et al., 1993).
Ethical judgments. We utilized the Multidimensional Ethics Scale developed by
Reidenbach and Robin (1990) to evaluate individual ethical judgments. The instrument is
designed to allow respondents to evaluate the
ethical or unethical nature of an ethical issue that
is presented to them. The instrument consists of
8 items, which are anchored by bi-polar adjectives on a 1 to 7 scale. Sample adjective pairs
include "fair-unfair," "morally right-not moraUy
right," and "culturally acceptable-culturally
unacceptable."
Behavioral intentions. Hunt and Vitell (1986)
propose that individual behavioral intentions can
be measured by asking an individual to express
the likelihood in a probabihty sense that he or
she would actually perform behaviors described
to them. Respondents in the present study were

first asked to read the vignette and then to

indicate the likelihood that they would engage
in the behavior within three specific time
periods: "within the near future," "within the
next year," and "within the next five years."
Assessment scales were anchored by "highly
likely" and "highly unhkely" on a 1 to 7 scale.

Analysis
Hierarchical regression analysis was used to test
the hypotheses. Hypothesis tests were based on
changes in the level of explained variation after
the variables of interest were entered to the
regression equation.

Results
Sample characteristics

We received 218 responses, 11 of which were

discarded as unusable for various reasons. Thus,
we had 207 usable responses, for an effective
response rate of 20.7 percent. Respondents were
almost equally split between males (52 percent)
and females (48 percent), with an average age of
39.6. Approximately 95 percent of the respondents were college graduates and 41 percent had
earned graduate degrees. Almost three-fourths
(73 percent) of the participants were married.
The mean annual household income was
approximately $105 000. Regarding experience,
42 percent of the respondents had one to ten
years of sales experience, 54 percent had eleven
to twenty years of management experience, and
47 percent had one to ten years of sales management experience. The mean amount of time
participants had spent in their present position
was 4.8 years, while the mean amount of time
with the present company was 8.3 years. The
average organization size was about 5 800
members, but the median size was only 500.
Essentially all of the respondents had some
management responsibilities, with sales and/or
marketing managers comprising 57 percent of
the sample. Respondents reported a mean of
7.3 subordinates reporting directly to them.

357

The Moderating Effect of Individuals' Perceptions of Ethical Work Climate

Respondents to this study were similar to those

of a recent study (Bass et al., 1999) using the
same sampling frame, in terms of demographic
characteristics and work experience.

Descriptive statistics

Table I provides the means and standard deviations for ethical judgments, behavioral intentions,
and four dimensions of ethical work climate, as
well as rehabilities for each multi-item measurement scale and inter-correlations among study
variables. Theoretically, there are nine underlying
ethical climate dimensions. However, previous
empirical research has yielded fewer than nine
factors. Therefore, we conducted a factor analysis
to assess the dimensionality of the scale items.
Maximum likelihood factor analysis with oblique
rotation was used.
After deleting items that did not have large
factor loadings (< 0.40) and items that had crossloadings (i.e. less than a 0.20 difference between
the two largest loadings), and then subjecting the
remaining items to a reliability analysis, four
interpretable factors remained. It should be noted
that, since each respondent represented a different
organization, the four factors represent the ethical
climate dimensions across the organizations in the
study, and not necessarily the dimensions of
chmate existing in any particular organization.
One egoistic climate, "self interest," emerged.
It included three of the four self interest items
from the ECQ. One sample item from this scale

is "In this company, people protect their own

interest above other considerations." The mean
self interest score of 2.40 indicates that, as a
whole, the respondents perceived a moderate
level of this chmate type across the organizations
in the study. However, there was considerable
variation in individual responses on the self
interest scale.
Two benevolent factors emerged from the
analysis. From the first, we formed a 4-item scale
consisting of two items from the friendship
dimension and two from the team dimension.
Sample items include "The most important
concern is the good of all the people in the
company," and "It is expected that each individual is cared for when making decisions here."
The mean of 2.56 indicates that, in general, the
marketers perceived their organizations had a
moderate level of this chmate type.
The second benevolent factor formed a 4-item
Social Responsibility scale. Sample items from
this factor include "People in this company are
actively concerned about the customer's, and the
public's interest," and "People in this company
have a strong sense of responsibility to the community." The mean of 3.74 for this chmate was
the highest of any of the four ethical climate
dimensions and indicated that marketers perceived a high level of this climate type.
One principled or deontological factor
emerged from the analysis. From this factor, we
formed a 7-item scale from the "Rules, Standard
Operating Procedures" and "Laws, Professional
Codes" dimensions of the original ECQ. Sample

TABLE I
Means, standard deviations, reliabilities, and correlations among variables"
Variables
1.
2.
3.
4.
5.
6.

Ethical Judgment
Self interest climate
Team/Friendship climate
Social responsibility
Rules/Codes climate
Behavorial Intentions

Mean

S.d.

2.46
2.40
2.56
3.74
3.43
1.63

1.22
1.04
1.01
0.86
0.78
1.13

(0.92)
0.09
(0.83)
0.05
-0.55** (0.87)
-0.07
-0.50** 0.63** (0 .89)
-0.09
-0.32** 0.52** 0 54** (0.82)
- 0 .17*
0.72** 0.14
-0.01
-0.16*

' Cronbach's Alphas appear on the diagonal for multiple item measures.
* p < 0.05; ** p < 0.01.

(0.98)

358

Tim Barnett and Cheryl Vaicys

items include "In this company, people are

expected to strictly follow legal or professional
standards," and "Successful people in this
company strictly obey company policies." The
mean value of 3.43 on this ethical climate was
the second highest of the four chmate types.
The mean ethical judgment of 2.46 indicates
that the sample generally perceived that recommending an expensive product regardless of
customer need was unethical. Not surprisingly,
the members of the sample also stated that they
were not likely to engage in the behavior
themselves.
There were relatively strong negative correlations between the egoistic climate of self interest
and the other three ethical climates. This is as
expected, since the self interest chmate has both
an individual focus and an egoistic ethical dimension, as opposed to the other ethical climates. In
contrast, the correlations among the team/friendship, social responsibihty, and rules/codes
chmates were all positive. This suggests that companies that have egoistic climates are not likely
to have high levels of the other ethical chmate
characteristics, but that characteristics of the
utilitarian and deontological climates can co-exist
in organizations. Only the social responsibility
(r = -0.17, p < 0.05) and the rules/codes
(r = -0.16, p < 0.05) climates were significantly
correlated with expressed behavioral intentions.

Hypotheses testing

As stated earlier, hierarchical regression was used

to test the hypotheses. Behavioral intentions was
the dependent variable. We conducted the
analysis after mean-centering (Stone, 1988) all
variables because of the relatively high multicollinearity among the independent variables.
Variables were entered into the regression in
three steps. First, the individual-level variable
ethical judgment was entered. Next, the four
climate types were entered. Finally, the interactions between the ethical climate dimensions
and individual ethical judgments were entered.
Table II summarizes the results of the regression
analysis. Individual ethical judgment was strongly
predictive of stated behavioral intentions to

TABLE II
Regression results"
Variables

Ethical judgment
Ethical climate dimensions
1. Self interest
2. Team/Friendship
3. Social responsibility
4. Rules/Codes
Interactions'"
Ethical judgment X 1
Ethical judgment X 2
Ethical judgment X 3
Ethical judgment X 4
Full equation^

Behavioral intention

0.72

0.52***
0.02

0.04
0.09
-0.131-0.06
0.08***
0.33
0.81**
-1.33***
-0.58+
0.62***
(0.60)

" N = 207.
'' Numbers refer to ethical climate dimensions listed
above.
" Adjusted R^ in parentheses.

V < 0.10.
010
** p < 0.01.
*** p < 0.001.
engage in the action. To test Hla, H2a, and H3a,
the four ethical climate dimensions were entered
into the regression on the next step. Overall, the
four dimensions did not account for a significant increase in R^ Therefore, Hla, H2a, and
H3a were not supported. It did not appear that
the ethical climate perceived by the marketers
directly affected their behavioral intentions about
the selling practice. In regard to the individual
ethical climate dimensions, only the utilitarian
ethical climate of social responsibility was a
marginally significant predictor of intentions to
engage in the selling practice.
To test the moderating effect of the ethical
climate dimensions on behavioral intentions,
interaction terms were entered into the regression. Overall, the four interaction terms
accounted for a significant increase in R^
(AR2 = 0.08, p < 0.001), indicating that the
interaction between individual ethical judgments
and perceived ethical chmate dimensions

The Moderating Effect of Individuals' Perceptions of Ethical Work Climate

explained a significant amount of the variation

in stated behavioral intentions beyond that
explained by ethical judgment alone.
H l b stated that normative climates based on
egoistic values would moderate the individual
ethical judgment-behavioral intentions relationship such that the relationship between individual
judgments and intentions would be stronger
when there was a perception of a high level of
the egoistic chmate. Although the [3 coefficient
for the interaction term was positive as predicted
(0.33), it was not statistically significant.
Therefore, H l b was not supported.
H2b stated that utilitarian ethical climates
would moderate the individual ethical judgments-behavioral intentions relationship such that
the relationship would be weaker when individuals perceived a high level of the utihtarianism
climate. There were two utilitarian dimensions
in the analysis, team/friendship and social
responsibility. The p coefficients for both were
statistically significant. H2b was strongly supported for the social responsibility dimension. As
the perception of this climate increased, the
relationship between individual ethical judgment
and behavioral intentions became weaker.
Two post-hoc analyses shed additional light on
the moderating effect of a perceived social
responsibility climate. In one analysis, we
compared the correlation between ethical
judgment and behavioral intentions for perceptions of social responsibility that were one
standard deviation above and one standard
deviation below the mean of 3.74. For the higher
values of perceived social responsibility, the
ethical judgment-behavioral intentions correlation was 0.39. For the lower values of perceived
social responsibility, the correlation was much
stronger at 0.70. A second analysis substituted
values for social responsibility into a re-arranged
regression equation to determine the effect of
ethical judgments on behavioral intentions at
values one standard deviation above and below
the social responsibility mean value of 3.74
(Aiken and West, 1981). To illustrate this analysis,
suppose that the individual ethical judgment
score was 7, indicating that the respondent
believed the sales practice was highly ethical. At
a value of social responsibility one standard

359

deviation below its mean, stated behavioral intentions were about 43 percent greater than at values
of social responsibility one standard deviation
above the mean. That is, at the same level of
individual ethical judgment about the sales
practice, individuals were more likely to state that
they themselves would engage in the behavior
when they did not perceive the climate of their
organization as reflecting a high degree of social
responsibility.
The moderating effect was the opposite
expected for the team/friendship ethical climate.
As the perception of this dimension increased,
the relationship between ethical judgment and
behavioral intentions actually became stronger.
However, this effect was not nearly as strong as
that for social responsibility. For example, when
we considered the correlation between ethical
judgment and behavioral intentions at values of
team/friendship one standard deviation above
and below its mean, we found that the ethical
judgment-behavioral intentions correlation was
0.83 for high values of perceived team/friendship
climate and 0.67 for low values of perceived
team/friendship climate. Thus, H2b was supported for social responsibility but was not
supported for team/friendship.
H3b stated that deontological ethical climates
would moderate the relationship between individual ethical judgment and behavioral intentions
such that the relationship would be weaker as the
perception of the deontological climate became
stronger. The dimension of rules/codes was the
deontological climate in the analysis. As shown
in Table II, H3b was marginally supported by the
results of the hierarchical regression, as the
interaction between ethical judgment and
behavioral intention was negative and marginally significant {p < 0.10). As the perception of
the rules/code climate became stronger, the
relationship between individual ethical judgment
and behavioral intentions weakened. For
example, when the correlation between ethical
judgments and behavioral intentions were
compared for values of perceived rules/codes
climate one standard deviation above and below
its mean, the correlation was 0.79 for low
perceived rules/codes climate and 0.61 for high
perceived rules/codes climate.

360

Tim Barnett and Cheryl Vaicys

Discussion
The results of this study provided relatively strong
support for the moderating eflfect of ethical work
climate. The strength of the ethical judgmentbehavioral intentions relationship varied depending on the individual's perception of ethical
chmate. The results did not support a direct effect
of ethical climate on behavioral intentions.
The general pattern of the results suggests that
an individual's perception of the ethical climate
of his or her organization may not directly affect
their stated behavioral intentions regarding
ethically questionable activities. Thus, efforts to
change organizational members' perceptions of
the ethical climate might not lead to dramatic
shifts in ethical decision-making. However, perceptions of the ethical climate might have a more
indirect effect on individuals' behavioral intentions through their impact on the ethical
judgment-behavioral intentions decision link.
The likelihood that an individual will engage in
morally questionable behavior when they themselves do not find the behavior unethical may be
affected by the ethical chmate they perceive. One
possible implication of this for managers and
organizations is that rather than attempting to
change individual-level ethical judgments about
ethically ambiguous actions, they should attempt
to develop ethical climates that encourage the
individual to look outside themselves (to organizational policies, societal considerations) for
guidance on whether they should engage in
morally questionable actions.
The results are particularly interesting as they
pertain to the individual dimensions, especially
the utilitarian climate of social responsibility.
Consistent with expectations, a climate perceived
as emphasizing social responsibility appeared to
have a strong moderating effect on the ethical
judgments-behavioral intentions relationship.
Apparently, the social responsibility climate not
only encourages a consideration of the effect of
an action's consequences on others, but directs
this concern outside the organization to the
stakeholders of the organization, the community,
and society at-large. When individuals' perceived
that their organization had a strong emphasis on
social responsibility, the relationship between

their ethical judgments and behavioral intentions,

although still positive, was much weaker. In the
context of the specific selling practice considered
in the study, when the marketers perceived
that recommending a more expensive product
regardless of customer need was not highly
unethical, and when they perceived their organizational climate to be characterized by a
concern for social responsibility, they were
considerably less likely to form behavioral
intentions to engage in the questionable selling
practice.
This finding appears to be of particular interest
to managers and organizations interested in
promoting ethical behavior on the part of their
employees. The finding suggests that organizations can positively influence ethical behavior by
establishing chmates characterized by a utilitarian
ethical criterion directed toward external constituencies.
The principled or deontological ethical
climate dimension, rules/codes, also had the
expected moderating effect, albeit a marginally
significant one (p < 0.10). When individuals
perceived that their climate was characterized by
an emphasis on rules/codes, the relationship
between their individual ethical judgments and
behavioral intentions was not as strong as
otherwise. Thus, even when they found it
personally acceptable, the marketers were less
likely to state that they would engage in the
questionable selling practice when they perceived
their climate as deontological. Again, the implication for organizations and managers is that a
climate with a deontological climate and a broad
locus of analysis (local or cosmopolitan) may
make it less likely that organization members will
engage in an ethically questionable practice, even
when the organization member does not believe
the act is unethical.
The expected moderating effect for the
egoistic climate of self interest did not materialize. The effect, although in the predicted
direction, was not statistically significant. The
moderating effect of a second utilitarian dimension, team/friendship, was" significant, but in the
opposite direction from that predicted. When the
marketers perceived a high level of this dimension, they were actually more likely to form

The Moderating Effect of Individuals' Perceptions of Ethical Work Climate

behavioral intentions to engage in the selling

practice that were consistent with their personal
ethical judgment.
Why were the moderating hypotheses for
social responsibility and rules/codes largely
supported but that of egoistic and team/friendship climates not supported? One possible
explanation lies in the loci of analysis. The
pattern of the results suggest that a locus of
analysis that is external to the individual is more
likely to have a significant (and positive, in terms
of ethical behavior) moderating effect on the
ethical judgment-behavioral intentions link. The
climates that were entirely or partly at the
individual level of analysis (self interest and team
friendship) appeared to strengthen the individual
ethical judgments-behavioral intentions link.
Future research should address the importance of
the individual, local, or cosmopolitan component
of ethical climates.
Another possible explanation for the nuU result
regarding perceptions of an egoistic climate is
that, in general, the marketers did not perceive
that their organizational climates were highly
egoistic. Perhaps the level of the self interest
climate perceived by the marketers was not
sufficient to influence their intentions regarding
the sales practice or to moderate the hnk between
their ethical judgments and behavioral intentions.
There are several limitations associated with
this study. Non-response bias is often a concern
in survey research and our study was no
exception, as approximately 80 percent of those
contacted did not respond. However, the characteristics of our respondents were similar to
those of recent studies using the AMA sample
frame (Bass et al., 1999; Ho, Vitell, Barnes, and
Desporde, 1997). The study was cross-sectional
in nature so causal implications cannot be drawn.
The responses were based on a hypothetical
ethical scenario and not actual events. Scenario
research is very common in business ethics and
it allows researchers to approximate ethical
issues encountered by organizational members.
However, scenario-based studies are obviously a
step removed from real-world decision situations.
The marketers evaluated only one ethical
scenario on a specific selling practice. Future
research should include a wider variety of ethical

361

dilemmas. Studies of ethical decision-making are

also subject to social desirability biases. Although
the existence of this problem cannot be ruled
out, participants in our study were guaranteed
that their responses were anonymous.
The measure of ethical climate used was at the
micro-level of analysis. Thus, it represented an
individual's perception of ethical climate from
each of the organizations and not a shared perception of multiple members of each organization. However, we were primarily interested in
analyzing the effects of perceived ethical chmate
on ethical decision-making at the individual
level, not in attempting to describe the shared
perceptions of multiple members of any given
organization.
Another limitation of the research design was
that the ethical climate dimensions derived from
factor analysis did not represent the actual dimensions within a particular organization. Instead,
the factors represented the dimensions of ethical
climate perceived by individuals across the 207
organizations in the study.
Finally, we could only ask the respondents
about their behavioral intentions, not actual
behavior. Although this is typical of ethical
decision-making studies, it still constitutes a
limitation to the interpretation of results. The
sample included only marketers, whose responses
might or might not be generalizable to other
types of organizational members.
The ethical work climate conceptualization of
Victor and Cullen (1988) continues to generate
research interest. This study suggests that
dimensions of ethical climate may have significant effects on individual ethical decisionmaking. If future studies are able to replicate and
extend these findings, it would indicate that the
perceived ethical work climate of organizations
is a key organizational factor that affects the
decision-making of individuals about issues with
ethical content.

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Tim Barnett
Louisiana Tech University,
Department of Management & Marketing,
Ruston, Louisiana 71272,
U.S.A.
E-mail: barnett@jcab.latech.edu
Cheryl Vaicys
State University Crambling,
Louisiana 71270,
U.S.A.