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A Proposed Infrastructural

Model for the Establishment of


Organizational Ethical Systems

ABSTRACT. We define ethical system infrastructure


as being composed of three major factors means,
motivation, and opportunity. Means are defined
as organizational rules, policies, and procedures.
Motivation focuses upon the values and the interests
being pursued by the position occupant and the organizational value system, while opportunity is discussed
in terms of the environment in which the dilemma
occurs, proposing that position in the hierarchy
presents its own unique set of ethical dilemmas.
Ethical breeches are discussed in terms of the interactional processes among means, motivation, and
opportunity. Finally, a sequential process is suggested
to use the infrastructural components to institutionalize organizational ethics training and subsequent
behavior.
KEY WORDS: ethical dilemmas, ethical systems,
training on ethics

Ethics constitutes a discipline concerned with


moral judgments, the goodness or badness of
behavior, the rightness or wrongness of an
action (Ferrel and Fraedrich, 1994; MacKinnon,
1995; Shaw, 1991). Judgments are made by
individuals, and the resulting behaviors are those
of individuals. Neither a group nor an organization judges or behaves. Instead, groups and

Louis P. White is Professor of Management at the


University of Houston Clear Lake. His research interests include the ethical considerations in organization
development and the cross-cultural implications of organizational development ethics.
Long W. Lam is an assistant professor of management at
the University of Houston Clear Lake. His research
focuses primarily on organizational adaptation and determinants of corporate performance.

Louis P. White
Long W. Lam

organizations are composed of individuals who


bring their value systems to bear when making
moral judgments (Holloman, 1991).
These individual value systems, instilled during
our early years, are impacted upon by environmental forces. Sometimes these forces are
explicit, but more typically, they very subtly
expand the involvement of individuals in ethical
dilemmas. The following shows the expanding
sphere of an ethical dilemma as a result of environmental influences:
A high school class sells candy to students as a way
to raise money for class activities. Students selling
the candy are placed under no restrictions of
accountability for what they sell, or the amount
of money taken. They merely return the money
and unsold candy to the homeroom teacher at the
end of each sales period. One of the students is
from a poor family and usually goes without lunch.
This student sells the candy, partaking freely of the
product without paying for it, and occasionally
pocketing the monies from the candy sold.
Nothing is said by the teacher about any discrepancies in the inventory or the monies.

It can readily be seen that the student engaged


in dishonest behavior; but less obvious, are the
environmental forces in effect. The scene suggests
an absence of accounting, for either the product
sold or the revenues, and notably, the teachers
silence. In effect, the teacher has created the
opportunity and the means for the theft. The
immediate ethical question, was it right or
wrong for the student to steal? is thus expanded
to include another ethical issue: was it right or
wrong for the teacher to remain silent? The
above is not so different from what occurs in
many organizations, as Paine (1994) notes:

Journal of Business Ethics 28: 3542, 2000.


2000 Kluwer Academic Publishers. Printed in the Netherlands.

36

Louis P. White and Long W. Lam


. . . unethical business practice involves the tacit,
if not explicit, cooperation of others and reflects
the values, attitudes, beliefs, language, and behavioral patterns that define organizations operating
culture. Ethics, then is as much an organizational
as a personal issue. Managers who fail to provide
proper leadership and to institute systems that
facilitate ethical conduct share responsibility with
those who conceive, execute and knowingly
benefit from corporate misdeeds. (p. 106)

In this paper, we investigate what may be the


underlying structural factors for ethical dilemmas
to occur in organizations. First, we will review
the literature to explain why the mere creation
of ethics codes cannot reduce the likelihood of
ethical dilemmas in organizations and that most
organizations rarely implement ethics training
programs for their employees. We believe this is
caused by the lack of understanding of how
ethical dilemmas may occur and why employees
may engage in unethical behavior. Second, we
build an infrastructural model that describes the
roots of ethical dilemmas in terms of organizational rules and procedures, individual motives,
and opportunities from the employees job
position. This model will then be used to illustrate how training in ethics can be implemented
effectively in organizations.

Review of the literature


The types of systems organizations have instituted
in the interest of facilitating the ethical conduct
of individuals are varied, as are their outcomes.
Some organizations begin and end ethical systems
development with the creation of an ethics
code. In a 1987 survey of 2,000 U.S. companies,
eighty-five percent (85%) reported having a
written code of ethics (Ireland, 1991). In another
survey conducted by the Ethics Resource Center
in 1997, almost three out of every four companies reported they had written standards of
ethical business conduct. These surveys suggested
that the creation of an ethics code is a very
typical approach to ethical systems infusion.
However further analyses offer doubts as to the
effectiveness of such approaches. In the same
1987 survey, results indicated that only 50% of

the ethics code were actually distributed to all


employees and 38% of companies restricted distribution to management only (Ireland, 1991). In
the 1997 survey by the Ethics Resource Center,
57% of the executives interviewed had observed
actual instances of business misconduct within
the previous year. In another study of 350 firms
who had written ethics codes, it was found that
those companies with written policies were more
often charged with wrongdoing than those
without policies (Mathews, 1988).
Bohren (1992) and Hyman et al. (1990) are
among those who have argued that the existence
of an ethics code is a necessary, but not sufficient condition for creating an ethical organizational climate (Bernheim, 1987; Dean, 1992;
Robin et al., 1989). Whereas Borhen suggests
that a code of ethics needs to be combined with
effective management and employee education,
Hyman et al. (1990) have suggested the use of a
checklist, a series of questions a manager should
ask to determine if a decision is or is not ethical.
There are numerous case studies and anecdotal
reports suggesting that many companies agree
with Borhen and the other researchers, and
employ some form of management education as
a strategy for creating an ethical climate.
However, a study conducted by the Ethics
Resource Center suggests that only 28% of the
firms responding to a 1988 survey provided ethics
training. A 1991 study conducted by Training
magazine reported a higher percentage of firms
offering training to employees, 37% of 1,649
firms. A Price Waterhouse survey also offered a
similar conclusion. Among the sixty Fortune 250
companies surveyed, only 21% provided education and training to all employees in the company
(Price Waterhouse, 1994). These results suggest
that the educational efforts are not as widespread
as one would think, given the volumes written
about organizational ethics.
A review of the case studies and anecdotal
reports suggests that the nature of these training
programs is also quite variable, implying that the
effectiveness of ethics training may be equally
varied. For example, Citicorp developed a game
intended to teach ethics by asking employees
to confront difficult scenarios (Ireland, 1991).
This approach differs from the nature of the

A Proposed Infrastructural Model


ethics training received by the management of
Pharmacia Company, who was exposed to
autonomous cognitive ability training rather than
moral content (Kavathatzopoulos, 1994).
Empirical evidence of the success of these
varying types of ethics training programs is scant,
and for the most part, focuses on the nature and
delivery of the programs rather than effectiveness
(Thompson, 1990). For instance, in a 1994
survey by Price Waterhouse, only 17% of the
surveyed companies formally assessed the effectiveness of their training programs. One source
of empirical evidence includes a survey conducted by Working Women which indicated that
eleven percent (11%) of the readers had received
ethics training, but only one percent (1%)
believed that it made a difference. Delaney and
Sockell (1992) suggest that there is room for
cautious optimism that ethics training has value.
They cited a study by Vitell and Davis (1990)
which indicated that top management attention
to ethics has been reported to increase employees
job satisfaction. Another study also suggests that
training reduces the occurrence of opportunistic
behavior among members of corporate research
departments (Kelley et al., 1989). Further, a
survey conducted by Delaney and Sockell (1992)
of Columbia University alumni revealed that
training does have a positive effect, but that relatively few firms provide such programs (about
one third) (p. 719).
The preceding suggests two important questions: (1) Why have not more organizations
adopted ethics training, given that individuals
make moral judgments and that these judgments,
when ignored, can expand the sphere of an
ethical dilemma? (2) Why is there so little effort
aimed at evaluating the effectiveness of ethics
training programs among those who do offer
them? We believe there are three plausible explanations behind this lack of attention.
First, the answers to these questions may be
found in the attitudes of management toward
ethics infusion. For example Paine (1994, p. 105)
believes that many managers think of ethics as
a question of personal scruples, a confidential
matter between individuals and their consciences. As indicated earlier, ethical judgments,
as is typical of all judgments, are made by

37

individuals; but as also pointed out earlier, these


individual judgments are influenced by the organizational environment. Thus, the decision not to
invest in training may be attributable to a truncated perspective regarding the factors which
bear on ethical judgments. At the very least, the
organization creates the type of climate which
can either expand the sphere of ethical dilemmas
or contain them (as exemplified by the teachers
lack of action in our previous example).
Ferguson (1993), the chairman and chief
executive officer of NYNEX, provides alternative reasons for reluctance of managers to recognize the importance of ethics infusion:
Most managers saw bottom line, hard business
issues as priorities and ethics didnt make the short
list. Other people felt that ethics training was
unnecessary for them, and some even felt that it
was a personal affront. (p. 32)

The preceding quotes suggest that the absence of


organizational efforts aimed at evaluating ethics
programs, including the effectiveness of codes
and training, can be attributed to management
attitudes.
Second, the absence of pro-active reasoning
suggests another reason why effectiveness of
ethics training program is rarely measured.
Ireland (1991, p. 75) found that motivations
influencing the introduction of ethics codes were:
company growth (53%); diversification (29%);
industry trends (26%) and; prompting by the
board of directors (23%).Notably absent from this
list is pro-active reasoning, i.e. the introduction
of ethics codes or training as a strategy for
resolving and containing ethical dilemmas before
they become high profile, media cases. When
companies institute ethics training as a reaction
to the bad news of an ethical violation, the efforts
may be the band-aid that gives an appearance of
problem resolution, but not the cure. In effect,
despite the volumes published on ethics in organizations, the ethics program is not considered
strategically important enough to measure effectiveness.
Third, another reason for the absence of widespread ethics training and the lack of evaluative
efforts, may be found in an argument proffered
by Delaney and Sockell (1992). They contend

38

Louis P. White and Long W. Lam

that there is an absence of a link between moral


reasoning, which constitutes most ethics training
programs and organizational decision making
(Kavathatzopoulos, 1994). Delaney and Scokell
(1992) suggest that there is a gap in our knowledge of work place ethical behavior and the
factors that influence it (p. 720). The same gap
is also evident from both of Paines preceding
quotes concerning the influence of organizational
climate on ethical decision making.

A model of ethical behavior


We propose a model of ethical behavior that may
fill the gap proposed by Delaney and Sockell
(1992). The same model is also intended to
clarify the role and scope of the individual and
the organization in creating and resolving ethical
issues. The clarification of the role and scope of
both, we believe, is needed as a pre-requisite for
demonstrating and evaluating the strategic importance of ethics training. The conceptual framework for doing so is provided in Figure 1.
Addressed in this model are macro level components of the factors bearing on ethical behavior
in the workplace. These factors include: means,
motivation and opportunity for engaging in
unethical behavior. In short, we suggest that individuals are more likely to face an ethical dilemma
if (1) Organizations do not provide the means
to prevent unethical behavior; (2) Individuals
have personal motivation to be benefited from

behaving unethically; and (3) Job positions


provide the opportunity to engage in unethical practices.

Means
The Means presented in Figure 1 are the rules,
policies and procedures in an organization, and
not limited only to those which refer specifically
to ethics. In this paper, however, we are primarily concerned with whether organizations
have provided clear rules and policies that safeguard unethical behavior. We also propose that
it is the organizational climate that determines
whether ethical rules and procedures will be
created and will actually be implemented. As
Hyman et al. (1990) suggested, organizational
climates are composed of the countless, every day
events, attitudes, policies, beliefs and culture no
matter. Organizational climate shapes individual
actions by providing explicit and implicit guidelines of acceptable behavior. In effect, the nature
of the organizations climate provides the
means for the emergence of an ethical
dilemma, and the blueprint for resolving any
emergent dilemmas.
Thus, while ethics is a question of an individuals judgment and behavior, the host organization must accept primary responsibility for
the means component of an ethical system.
Because the means are composed of all organizational policies, procedures and practices considered collectively, it is incumbent upon
managers to set clear expectations and standards
for the ethical conduct of every organizational
member and to model the highest ethical practices. Modeling ethical practices is not limited
to the exercise of moral judgment in areas where
there are obvious potential conflicts of interest.
It includes a proactive and continuous reassessment of all aspects of organizational life.

Motivation

Figure 1. Components of ethical dilemmas.

Even in those organizations where management


models ethical behavior in all aspects of organization life, there may exist ethical violations

A Proposed Infrastructural Model


attributable to individual motivations. Referring
back to the earlier scenario, it may be recalled
that the childs motivation for stealing candy and
money was hunger and poverty. The interplay
between means and motivation is now obvious:
Had the child known that the teacher would
account for every penny of the candy sold and
the inventory, even the most basic motivation
may have been averted by the childs cognizance
of penalties. Yet, had the dishonesty occurred
anyway, the means for determining that an
ethical violation had occurred would have been
available to the teacher. This notion fits with
Paines argument, that creating a climate that
encourages exemplary conduct may be the best
way to prevent damaging misconduct (p. 117).
Every individual brings to the organization his
or her own motivations, the need to achieve, the
need to affiliate, and the need for power and
dominance. These motivations are mirrors of
our value systems, and as Rokeach (1973) has
noted, the social environment can influence this
system. Similarly, the social environment can be
influenced by individuals who, through awareness of a companys ethical policies and beliefs,
can affect the nature and extent of ethical
violations incurred by others. The process is
cyclical because an organization is composed of
the unique constellation of all of its members
values or motivational systems, or what many
researchers call, the organizational value
system.

Opportunity
Opportunity plays a unique role in the framework depicted in Figure 1 when compared to the
majority of discussions about organizational
ethics. This departure is highlighted by the
proposition that categories of ethical dilemmas
operate as a function of job position in the hierarchy. Specifically, different job positions create
their own unique sets of opportunities to engage
in ethical or unethical behavior. A corollary to
this proposition is that, given the heterogeneity
of job classifications and accompanying ethical
scenarios, effective ethics training would vary as
a function of job classification.

39

This notion is grounded in the state of professional ethics and unique sets of standards.
Attorneys have a code of ethics geared to situations that confront the legal profession as do
psychologists and physicians. The same pattern
prevails in the model shown in Figure 1. The
CEO of an organization faces ethical dilemmas
unique to that position as does the human
resource employee and other job classes within
the organization. In a 1994 survey conducted by
the Ethics Resource Center, employees in technical positions, such as manufacturing and quality
control, felt the strongest pressure to commit
business misconduct. The prevailing method of
ethics training, however, assumes homogeneity of
ethical confrontations as reflected by ethics
training programs.
The literature also suggests that opportunity
for engagement in unethical conduct is a
function of occupational category. Bernheim
(1992), in a study of how MBA candidates and
executives view ethical situations, concluded that:
it appears that ethical priorities depend on
where you sit (p. 46). Further, a study by Kroll,
Wright and Theerathorn (1993) of insurers and
top managers found that when managers have
discretionary control . . . they are more likely to
absorb greater pecuniary and non-pecuniary
benefit and shirk responsibilities (p. 145). As
Cyriac (1992) has stated,
ethics therefore should be integrated into the functional and technical specialties of management.
Each function of management and each area of
business education should discuss extensively and
debate seriously on related ethical issues (p. 12).

Inferred from Cyriacs statement is the notion


that related ethical issues is specific to a given
discipline.
Figure 1 can be summarized, then, as an
infrastructural model for integrating the shared
interaction between the individual and the organization in the emergence of an ethical dilemma.
Dilemmas operate as a function of the interactive qualities of means and motivation which, in
turn, are influenced by opportunity provided by
position or job classification. In other words,
we suggest ethical dilemmas as an interactive
product of means, motivation, and opportunity:

40

Louis P. White and Long W. Lam

Ethical Dilemmas = (Means Motivation


Opportunity). Ethical dilemmas are much less
likely to occur if one of the interactive components is absent.

Institutionalizing organizational ethics


How can our model be applied in ethical training
in organizations? The analysis so far has focused
on the components as forming the infrastructure
of ethical dilemmas. It follows then that the
establishment of viable organizational ethical
systems should be grounded in this infrastructure.
To do so organizations need to look at each
of the components as an individual contributor
to the total ethical milieu existing at the organization.
We have defined means as the rules, policies,
and procedures of organizations. Ethical behavior
or being ethical connotes pro-activity from the
organization by formulating policy that sets the
tone for acceptable behavior. A well-publicized
indictment of an aerospace contractor in 1980s
was tainted by its reactivity; that is, unethical
behavior was terminated as a result of getting
caught (Hartley, 1993). While the result may be
more acceptable business practices, this kind of
situation does not set what would appear to be
the right tone. Paine (1994) appears to support
organizational pro-activity by arguing that
management has the responsibility for ethical
behavior and that through integrity strategies,
ethical lapses can be prevented. Management
should set the tone and provide the leadership
for a viable ethical system (Hartley, 1993). The
organizations leadership should state publicly that
ethical behavior is a top priority. To accomplish
this, representatives for all job classifications or
levels of the organizational hierarchy should take
part in the formulation of a company policy on
ethical behavior (Bernheim, 1992; Kroll et al.,
1993; Cyriac, 1992). The formulation and subsequent publication through this inclusionary
process contributes to ethical behavior and is
linked to the means component of the infrastructural model (Shaw, 1991; De George, 1995).
Motivation focuses upon the resultant behavior
of the interactional processes between the values

of the individual and organizational values that


manifest themselves through the organizational
culture or climate. Motivation to behave ethically
can be increased by making ethical behavior
a part of the performance evaluation of each
position holder. In doing so, the valence for
ethical behavior becomes very positive and the
causal link between behavior and outcome is
established. Moreover, the organization demonstrates the value placed on ethical behavior,
thereby influencing and enhancing organizational
culture.
While means and motivation are seen as
interacting to direct the job occupant toward
ethical behavior, opportunity is seen as the milieu
in which the behavior occurs. A key proposition of our analysis is that the type of ethical
dilemma occurs as a part of, and is unique
to, position in the organizational structure.
Employees throughout the organization, from
CEO to mail room clerk, confront dilemmas
relating to his/her job. Recognition of this positional difference is fundamental to a viable ethical
system.
In Table I, we propose a list of organizational
activities that can be done to manipulate the
means, motivation, and opportunity variable in
the infrastructural model.

Summary and conclusions


Paine (1994) and Hyman et al. (1990) are among
those who argue for a comprehensive approach
to the infusion of ethics in an organization. A
comprehensive approach contrasts with the predominant practice of relying principally on
ethical codes as a means of influencing individual
moral judgments. The perception of some
managers, that these individual judgments are
impervious to organizational influences, may be
one of the reasons organizations do not move
beyond ethical codes. However, as indicated, the
scope of an ethical dilemma can expand when
the ethical milieu is included.
Even in the minority of companies who do
move beyond ethical codes by implementing
training programs, there are some questions
regarding their effectiveness. The minimal

A Proposed Infrastructural Model

41

TABLE I
Proposed activities on using the infrastructural model of organizational ethics
Means
1. Lead by examples. To foster a positive organizational climate, top management should set the tone and serve
as role models of acceptable ethical behavior.
2. Involve employees of all levels. Include members from different job levels to formulate a companys rules and
procedures on ethical behavior.
Motivation
1. Restructure performance evaluation. Part of the evaluation criteria on employees should include adherence to
rules and procedures on ethical behavior.
2. Compensating for the right behavior. Pay and salary systems should tie monetary values to ethical performance
of employees.
Opportunity
1. Group ethical scenarios by job types. This activity can be accomplished by asking job occupants to describe the
types of ethical questions they confront.
2. Develop simulations from these critical incidents. These simulations will be used in subsequent ethics training
workshops.
3. Develop resolution strategies. These resolution strategies should include input and participation by employees
who experience the set of ethical situations that are part of a particular milieu.
4. Develop training programs. Design training programs based upon the information from these incidents and
simulation.

evidence which does exist is not overwhelming,


and the absence of training evaluation implies
that there may be discrepancies between
expressed commitment to infusing ethics in the
organization and reality. Further, much of ethics
training focuses on moral content rather than the
factors which affect ethical behavior, suggesting
that the training may not be regarded as relevant,
or relevant only to the extent that the organization is reacting to externally imposed sanctions.
The model we have suggested provides organizations with a tool for overcoming some of the
previously cited barriers to ethical infusion. By
proposing the model, we anticipate that managers
who believe ethics are personal decisions will also
come to understand that there is an interplay
between an ethical organizational environment
and individual ethical judgments. The organizational environment can also avert motivations
contrary to an ethical spirit and reinforce those
which support the ethical organization. Finally,
the nature of the ethical judgments confronted
by individuals will also vary according to the job.
In practical terms, the model points to the
need for ethics audits, not merely of existing

ethics codes, but of all the organizations practices. When discussing social responsibility of
organizations, De George (1995, p. 13) emphasized the need for social and moral audits such
that corporations are able to inform the public
as to where they stand on some social issues, and
to explain their policies and their impact on
society. The same principle can be applied to
ethics audits. This is inferred from the notion that
organizational practices serve as the means for the
emergence of ethical dilemmas, and the existence
of ethics audits can enhance or retard the individuals motivation to behave in an ethical
manner. In other words, organizations can implement ethics audits to determine if there are clear
rules and procedures that prevent unethical
behavior of employees.
Finally, the model points to the need for
training tailored to individual job classes. Such a
design may make ethics training more relevant
and effective than what has been practiced
by most organizations. We suggest that since
opportunity to commit unethical behavior
differs among job positions, organizations should
provide different training programs to employees

42

Louis P. White and Long W. Lam

of various positions. In other words, the ethical


training a vice president of finance receives
should be drastically different from that of a salesperson. We have also proposed a list of training
activities that organizations can develop to create
ethical scenarios and resolution strategies by
various job categories.

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University of Houston Clear Lake,


2700 Bay Area Blvd.,
Houston, TX 77058,
U.S.A.

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