ATTITUDINAL EFFECTS OF ETHICAL WORK CLIMATE: AN ORGANIZATIONAL ANALYSIS.

Author:Jeon, So Hee

INTRODUCTION

In 2015, the Commerce Inspector General resigned his position in response to allegations of ethical misconduct and mismanagement (Westwood, 2015). Investigations revealed that the Office of Inspector General (OIG) failed to consistently follow procedures and monitor the whistleblower hotline, and that questionable ethical leadership was associated with some of the lowest levels of employee morale and job satisfaction of any federal agency (Government Accountability Office, 2015).

The OIG, as a federal watchdog, must serve as an ethical standard bearer in order to complete its work. Yet, ethical leadership and workplace ethics are likely to impact all public employees, not just those who are charged to enforce the ethical compass of the government. Leaders that allow workplace retaliation, engage in questionable personnel practices, or fail to maintain high standards of honesty and integrity are likely to influence the work climate in ways that are detrimental to employee morale.

This study aims to address the relationship between ethical work climate (EWC) and employee work attitudes. Specifically, the present study seeks to answer the following question: does a public organization's EWC influence the organization's level of employee work motivation and turnover intention rate? Human resources are essential to effectively delivering goods and services to citizens. Thus, the question of how to attract, motivate, and retain the best workers for government service has been of particular interest to government employers and human resources scholars alike (Berman, Bowman, West, & Van Wart, 2016; Ertas, 2015). Once an organization hires employees, "investigat[ing] the motivation to work hard and well within the organization, in addition to the motivation to [stay] in the organization" is crucial for organizational success (Wright, 2007, p. 55). Given the importance, this study focuses on these two factors of employee work motivation and intention to stay and examines the impact of EWC on an organization's level of work motivation and turnover intention rates. By examining this research question, the present research contributes to broadening our understanding of the impact employee work attitudes. Although the past two decades have observed a growing research on the link between ethics and public human resource management, multiple scholars suggest that "a good deal more needs to be done to understand the critical links between ethics and organizational performance" (Menzel, 2015, p. 354) and between ethics and employee job attitudes/behaviors (Hassan, Wright, & Yukl, 2014; Thaler & Helmig, 2016). It is this line of research that the present study contributes by investigating how an agency's level of EWC is associated with the agency's employee motivation level and turnover intention rate.

The structure of this study is as follows. Drawing on EWC theory, the paper first provides theoretical arguments detailing why we expect EWC to positively impact agency-level work motivation and turnover intention rate. Next, we outline the data source, estimation method, and variable construction used to provide quantitative estimates of our hypotheses. Following the methodology section, we provide results of our estimation models. We close the paper with a general discussion of this paper's contributions to public sector ethics and human resource management research and implications for practitioners.

ETHICAL WORK CLIMATE THEORY AND HYPOTHESES

Work Climates (WCs) are the shared understanding of organizational norms and practices. The collective perceptions of formal and informal procedures, practices, and policies within the organization exert a powerful influence over organizational actors. The WC teaches employees appropriate organizational behavior via work rules and procedures. The frequency and importance attached to organizational topics emphasizes to employees the issues that are valued by influential stakeholders in the organization and acceptable employee responses (Schneider, 1975; Schneider & Reichers, 1983). WC is not monolithic. Rather, all organizations contain multiple work climates, such as those for innovation, safety, and ethics (Schneider & Reichers, 1983). In all, work climate research conducted since the 1950s provides strong evidence that work climates are linked to a variety of desirable organizational outcomes, such as employee work attitudes (e.g., satisfaction, commitment) and behaviors (e.g., absenteeism, organizational citizenship behavior, unethical behavior, safety violation rates, and innovation) (for an excellent review, please see Kuenzi & Schminke, 2009).

EWC is defined as "the prevailing perceptions of typical organizational practices and procedures that have ethical content" (Victor & Cullen, 1988, p. 101). When employees perceive that policies, procedures, and practices in their organization are developed (and enforced) in ways to support ethical values and behaviors, the employees perceive that EWC is present in their organization (Ferrell & Gresham, 1985; Mulki, Jaramillo, & Locander, 2008; Schwepker, Ferrell, & Ingram, 1997). By its definition, EWC is not limited to or determined by a particular dimension of organizational policies or procedures, but is more comprehensive in that it considers overall policies, procedures, and directives of the organization that have ethical content.

EWC guides employee behaviors (Ahmed & Machold, 2004; Deshpande, 1996) and decision-making (Kish-Gephart, Harrison, & Trevino, 2010) and aids employees in distinguishing between ethically appropriate behaviors and those behaviors that will not be tolerated (Cullen, Parboteeah, & Victor, 2003). EWC effects do not occur with the mere presence of an organizational or professional code of ethics. Organizational leaders play a critical role in creating EWC, and as such, their behaviors influence employee perceptions of EWC in the organization (Schein, 2010; White & Lean, 2008). Evidence suggests that EWC expectations must be communicated clearly, often, and become part of employees' working knowledge (Kish-Gephart et al., 2010).

Victor and Cullen (1987; 1988) developed an influential typology from which the EWC construct evolved. The purpose was to "identify the normative systems that guide organizational decision making and the systemic responses to ethical dilemmas" (Victor & Cullen, 1988, p. 123). The typology contains two main dimensions--ethical criterion and locus of analysis. The ethical criteria are three bases on which individuals judge the morality of a decision (egoism, benevolence, and principled). In ethical theory, these three criteria loosely translate to the goals of maximizing self-interest, maximizing joint interests, or adhering to principles. The locus of analysis dimension identifies the three referent groups for which the moral criterion is applied (individual, local, and cosmopolitan). These groups translate to the self, inter-organizational, and social (professional or clients). From this nine-celled typology, Victor and Cullen identified five important EWCs (caring, law and code, rules, instrumental, and independence).

The typology and the Ethical Work Climate Questionnaire were designed to help researchers understand the processes that underlie ethical decision making in organizations. Additional research expanded on the original purpose and seeks to characterize the relationships between ethical climate types and employee attitudes and behaviors (Martin & Cullen's (2006) meta-analysis provides an excellent overview). For these purposes, the multi-dimensional EWC construct is necessary and appropriate. However, alternative, unidimensional EWC measures are also used to estimate the effects of EWC on employee attitudes and behaviors (Fournier, Tanner, Chonko, & Manolis, 2010; Itani, Jaramillo, & Chonko, 2017; Mulki et al., 2008; Schwepker, 2001; Schwepker et al., 1997). Schwepker and colleagues in 1997 developed a frequently-used unidimensional scale that focuses on the presence and enforcement of professional and corporate ethical codes (Fournier et al., 2010; Mulki et al., 2008; Schwepker, 2001; Schwepker et al., 1997; Weeks, Loe, Chonko, Martinez, & Wakefield, 2006). Still other researchers develop similar unidimensional EWC scales to understand EWC effects on employees and organizations (Ferrell & Skinner, 1988; Itani et al., 2017). The present research utilizes the unidimensional approach in measuring EWC to understand its associations with agency level work motivation and turnover intention rate.

Work motivation is defined as "how much a person tries to work hard and well--to the arousal, direction, and persistence of effort in work settings" (Rainey, 2001, p. 20). The specific question of how EWC affects work motivation remains unaddressed in the public administration and business ethics literatures. The theoretical arguments supporting EWC and work motivation draw on scholarship that explores various facets of ethical work environments (e.g. ethical leadership, ethical culture) and related employee attitudes and behaviors (e.g. job satisfaction, worker absenteeism, organizational commitment, and intention to quit). Brown, Trevino, and Harrison (2005) provide results that are most germane to this study indicating that ethical leadership is positively associated with workers' willingness to put in extra work. It should be noted that Brown et al.'s (2005) definition of "willingness to put in extra work" is very similar to the current study's operationalization of "work motivation."

The negative relationship between EWC and turnover intention is well-documented in business ethics literature (DeConinck, DeConinck, & Banerjee, 2013; Fournier et al., 2010; Mulki et al., 2008; Schwepker, 2001; Stewart, Volpone, Avery, & McKay, 2011). Leadership and role ambiguity are important mediators in this relationship (Grojean, Resick, Dickson, & Smith, 2004; Mulki et al...

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