This summary should be no more than half a page.
The format of the summary is flexible, so feel free to use bullet points.
THERE ARE THREE ARTICLES THAT NEED A SUMMARY OF A HALF PAGE OR LESS.
can you type three sentences explaining the following: What did you find most interesting, unexpected, disappointing, etc. about each
reading?
ABSTRACT. There is growing recognition that good
ethics can have a positive economic impact on the
performance of firms. Many statistics support the
premise that ethics, values, integrity and responsibility
are required in the modern workplace. For consumer
groups and society at large, research has shown that
good ethics is good business. This study defines and
traces the emergence and evolution within the
business literature of the concepts of values, business
ethics and corporate social responsibility to illustrate
the increased emphasis that has been placed on these
issues over time. Two organizations that have suc-
cessfully dealt with these issues were analyzed to
identify the links among values, ethics, and corpo-
rate social responsibility as they are incorporated into
the culture and management of a firm. This study
identified the presence and implementation of values,
business ethics, and CSR actions within the two orga-
nizations studied.
Introduction
It has been clearly established that ethics is not
just a fad.
“. . . (W)inning companies first emphasize values
– the beliefs and attitudes that . . . the business
owner, ha(s) about . . . employees, customers,
quality, ethics, integrity, social responsibility,
growth, stability, innovation and flexibility.
Managing by values – not by profits – is a powerful
process that will set . . . (a) business on the path
to becoming . . . a “Fortunate 500” company
(Blanchard, 1998).”
Evolution and Implementation:
A Study of Values, Business
Ethics and Corporate
Brenda E. Joyner
Social Responsibility Dinah Payne
Journal of Business Ethics 41: 297–311, 2002.
© 2002 Kluwer Academic Publishers. Printed in the Netherlands.
Brenda E. Joyner is Associate Professor of Management at
Loyola University New Orleans. She received her Ph.D.
from the University of Georgia in 1995. Dr. Joyner
teaches classes in strategic management, entrepreneurship,
and strategic quality management. Her research inter-
ests include venture startups, entrepreneurial behaviors,
and entrepreneurial ethics. Her business experience
includes eight years with a startup venture in the con-
struction industry, two years with a Fortune 500 man-
ufacturing firm, and many years in the financial services
industry in investment and commercial banking. She has
published articles in Journal of Developmental
Entrepreneurship, Journal of Business and
Economic Perspectives, Frontiers of
Entrepreneurship Research, Global Focus and
Quality Progress. She is a 1997 recipient of the
Certificate of Distinction for Excellence in
Research in Entrepreneurship and Independent
Business, given by the Academy of Management and
the National Federation for Independent Businesses.
Dinah Payne is Professor of Management at the University
of New Orleans. A graduate of Loyola University New
Orleans, Dr. Payne earned a Juris Doctor Degree and
a Master of Business Administration Degree. Her
teaching and research interests include multiple facets of
international business: law, strategy, organizational
behavior, corporate social responsibility and ethics.
Additionally, she has done extensive research in U.S.
domestic business law, ethics, management and engi-
neering management. She has had articles published in
the Journal of Business Ethics, the Labor Law
Journal, the Journal of Managerial Issues,
Management Accounting, and the Journal of
Corporate Accounting and Finance. She is a
member of the American Bar Association, the Louisiana
Bar Association, the New Orleans World Trade Center,
the Academy of Legal Studies in Business and the
International Academy of Business Disciplines.
Many statistics support the premise that “talk
about ethics, values, integrity and responsibility
is not only becoming acceptable in the business
community, it’s practically required (Stodder,
1998).” For consumer groups and society at large,
research has shown that good ethics is good
business. Stodder (1998) reports that a Walker
Information survey (1994) of consumers
produced results indicating that good business is
good ethics: forty-seven per cent of those polled
responded that they would be much more likely
to buy from a “good” company given parity in
quality, service and price. Additionally, 70% of
the consumers answered that they would not do
business with a firm that was not socially respon-
sible, regardless of price.
In light of the change in the way values and
ethics are viewed by organizational stakeholders,
there has been growing recognition that prof-
itability measures, in isolation, fail to capture the
essence of an organization’s overall performance,
both as a profit-seeking entity and as a member
of society. This paper suggests, as a starting point,
general suppositions as to why businesses are
ethical and proceeds with a review of the seman-
tics of business ethics and a foundational presen-
tation of the definitions of values, business
ethics/morality and corporate social responsibility
(CSR). Further, it traces the emergence and
evolution within the business literature of the
concepts of values, business ethics and CSR to
illustrate the increased emphasis which has been
placed on these issues over time. Two organiza-
tions that have successfully dealt with these issues
are profiled in order to try to discover the link
between values, ethics, and CSR as they are
incorporated into the culture and management
of a firm. These organizations are also models
to show the positive economic impact that good
ethics can create. Thus, we perceive the eco-
nomic and moral value of good business ethics.
Business ethics: the why
A predicate question to the role of ethics in
business is the question of why businesses engage
in ethical practices. Some authors, notably
Milton Friedman (1962), would strongly deny
that a business has a fiduciary responsibility to
any group but the firm’s stockholders. To initiate
corporate giving, for example, would be a
fiduciary breach of management in Friedman’s
opinion: an agent for a principal is neither legally
nor morally permitted to give away or “waste”
the principal’s capital. The manager’s fiduciary
duty, one wherein stockholders should be able to
repose trust and confidence in management’s
obligation to act in the shareholders’ own best
self-interest, is to husband organizational strength
and generate a growth environment, for the
continued maximization of shareholder wealth.
Employees are also an integral part of the firm’s
environmental ethics. A Walker Information
survey (1997) revealed that 86% of the employees
surveyed who felt their firm’s ethics were
positive, were strongly committed to their orga-
nizations, while only 14% of the respondents
who did not regard the firm’s ethics highly, were
similarly committed. 42% of all surveyed indi-
cated that a firm’s ethical integrity would directly
influence their choice of employer (Stodder,
1998).
The view of pursuing shareholder wealth
alone, of course, is not the approach most
ethicists or, now, most business people take. The
realization has occurred that businesses must
participate in society in an ethically symbiotic
way. A fundamental truth is that business cannot
exist without society and that society cannot go
forward without business. Thus, business must
acknowledge society’s existence and society’s
growing demand for more ethically responsible
business practice.
Businesses will in fact engage in ethical
business practices for one of two reasons, one
ethical in nature and one more machiavellian.
The ethical motivation guiding business is related
to a desire to do the right thing, without external
pressure or governmental constraint. As this
empirical evidence presented here shows,
business does choose this approach without being
forced into doing so. These business people
recognize their own personal existence in society
and thus acknowledge that their firms must also
operate in this sphere in an ethical manner.
The more machiavellian approach that busi-
nesses espouse in their use of ethics has its roots
298 Brenda E. Joyner and Dinah Payne
in a desire to convince the stakeholder that the
firm is doing the right thing. The firm’s end here
is either to avoid legal consequences of its actions
or to convince the stakeholders that the firm does
have their best interests at heart and seeks to serve
their interests rather than their own. An example
of this is the beer industry: the advertising cam-
paigns touting responsible consumption of beer
may in fact be to serve the consumer interest in
safety. However, in a more cynical world, such
an advertising campaign could have been
designed to make the consumer feel that the
firms cared more for their consumers than for
selling their products.
In fact, minimal compliance with legal
standards alone can be deadly to the firm. The
myriad of laws affecting corporate existence and
behavior is numerous enough to entangle any
business to its demise (see the example of Johns-
Manville, the now defunct manufacturer of
asbestos). Public outrage over perceived illegal or
immoral acts is as harsh, if not worse: trust is
lost and public image tarnished, good will that
is extremely expensive to generate initially and
almost impossible to regain once lost. Thus,
“(A)lthough legality generally stems from what
society believes is morally right or wrong, an
issue’s legality does not always reflect the totality
of its perceived morality. This differentiation
reflects the classic distinction between the spirit
of the law (morality) and the letter of the law
(legality) (Raiborn and Payne, 1990).”
Right or wrong: the definitions of ethics
There has been considerable debate regarding
what the terms values, business ethics and CSR
represent. In order to be consistent with prior
literature in social issues and management
research and to assist the reader, the following
definitions were used throughout this research.
Values are defined as the core set of beliefs and
principles deemed to be desirable (by groups) of
individuals (Andrews, 1987; Mason, 1992).
Values are derived from one’s membership in a
culture. With attitudes, beliefs, and behaviors,
values combine to form a continuous spiral of
community culture (Adler, 1999). Each suc-
ceeding generation has impact on the next
generation’s values, beliefs, attitudes and behav-
iors. Thus, our grandparents’ values are likely to
be reflected in ours, as ours are to be reflected
in our children’s and grandchildren’s. As the
movement towards consciously incorporating
ethics into businesses in our society grows, the
stronger will be the cultural pull to be ethical.
Ethics are defined as the conception of what
is right and fair conduct or behavior (Carroll,
1991; Freeman and Gilbert, 1988). “Ethics is a
system of value principles or practices and a
definition of right and wrong (Raiborn and
Payne, 1990).” Velasquez (1999) defined ethics as
being concerned with judgements involved in
moral decisions: normative judgements which
state or imply that something is good or bad, or
right or wrong. Thus, these statements of ethics
or value judgements attempt to ascribe value to
actions, so the actor can determine whether or
not he should engage in the action.
More specifically with regard to business, De
George (1999) defined business ethics as the
interaction of ethics and business. Such a defin-
ition encompasses a moral evaluation of the
economic system of the free enterprise system
in the United States, the businesses which
operate in this system, a moral evaluation of
individuals and their actions in conducting
business and a review of business behavior in the
international arena. De George provides further
illumination: moral judgements should be uni-
versally applicable, they involve serious matters
with potential to cause serious results, and moral
judgements invoke praise or blame. Additionally,
moral judgements can only be made by individ-
uals for themselves: others, including govern-
mental agencies, cannot force moral judgements
on anyone. De George also distinguished
between objective and subjective morality.
Objective morality is the broader, societally held
moral law. This is most easily equated with
promulgated law. Subjective morality, on the
other hand, is one’s own belief as to the right-
ness or wrongness of an action. This is equat-
able to the concept of conscience. In a perfect
world, the decision-maker would make decisions
that were deemed both objectively and subjec-
tively correct. In the world of business and entre-
Evolution and Implementation 299
preneurship, the decision-maker must sometimes
choose between those moralities: strong minded
entrepreneurs choose the subjective right.
A common sense, dictionary-type definition
of the word moral or even morality indicates that
morality is the ability to choose between right
and wrong. Reasonably, the definitions of ethics
and morality are cross-referenced to each other.
The terms moral and ethical have been used
interchangeably in this paper, as they are in much
of the social issues literature (Freeman and
Gilbert, 1988). Additionally, the concept of cor-
porate social responsibility, defined more specif-
ically below, is often included in the definition
of ethics in general (Singer, 1993).
Corporate social responsibility (CSR) is
defined as categories or levels of economic, legal,
ethical and discretionary activities of a business
entity as adapted to the values and expectations
of society (Andrews, 1987; Carroll, 1979; Sethi,
1975). The term corporate social responsibility
is used more in the management literature than
in the business ethics literature. However, while
some authors may not agree (Friedman, 1962),
the researchers feel that these concepts, as with
the terms moral and ethical, are similar enough
to be interchangeable for the purposes of this
paper.
Archie Carroll (1979) has developed a frame-
work for integrating all dimensions of social
responsibility into the firm’s corporate culture
and decision making processes. The “Organiza-
tional Social Performance Model” is comprised
of three dimensions and can be visualized as a
three dimensional cube, with all sets of dimen-
sions intersecting with the others: the level of
responsibility can be measured against the social
issue involved, as well as the firm’s social respon-
siveness to these issues. Dimension I contains the
“Social Responsibility” categories. These respon-
sibilities, in order of importance to the firm, are
economic, legal, ethical and discretionary. The
economic responsibilities of the firm are to
produce goods and services to be sold at a profit.
Obedience to societal laws and regulations, while
executing economic responsibilities is the firm’s
legal responsibilities. The firm’s ethical responsi-
bilities are to meet society’s expectations for
conscientious and proper behavior. Carroll rec-
ognized in developing this responsibility that
these expectations may not be only a matter of
legal compliance, according to the letter of the
law, but may go further in pursuit of the spirit
of the law. Finally, the firm’s discretionary
responsibilities encompass the duty to carry out
acts of a voluntary nature designed to provide for
the betterment of society, such as philanthropic
contributions or provisions of certain employee
benefits. Such acts are not required to be under-
taken by the firm, as legal responsibilities are, and
the firm would not be considered unethical for
not engaging in these activities, but it is within
the firm’s discretion to do the acts as a con-
tributing member of society.
The second dimension of Carroll’s model is
represented by the firm’s the “Philosophy of
Social Responsiveness.” These philosophies direct
how an organization will respond to social issues.
There are four types of social responsiveness
philosophies. First, the reaction philosophies
require the firm to address social issues as a result
of the application of external forces, such as legal,
regulatory or social pressures. Defense philoso-
phies address social issues to escape being forced
into it by the external forces. The third philos-
ophy of responsiveness is the accommodation
philosophy: these firms address social issues
because they exist. This represents a stride in the
direction of doing the right thing because it is
the right thing, rather than from some ulterior
motive to further the economic interests of the
firm. In this instance, the demands to recognize
and deal with social issues are not likely to be
made by external forces, but the firm takes a
voluntary stance in dealing with social issues
before being forced into it by outside forces. The
final philosophy goes even further than the
accommodation philosophy. The proaction
philosophy is one that attempts to be proactive
with society: it attempts to anticipate important
social issues before they are generally recognized
as being important and to develop strategies for
addressing these issues.
The third dimension of this model is the
dimensions of the social issues themselves. A
review of stakeholders and issues in our society
yields a list of issues identified by Carroll: con-
sumerism, environmentalism, discrimination
300 Brenda E. Joyner and Dinah Payne
issues, issues involving product safety and occu-
pational safety, and shareholder issues. It can be
anticipated that these issues and stakeholders are
not static; social issues are as dynamic as is society
and the list should be considered illustrative only,
not complete. In light of the Carroll model, it is
clear that one must consider the existence and
importance of the firm’s stakeholders in the
ethical decision making process. These stake-
holders include, but are not necessarily limited
to: employees, stockholders, customers, suppliers,
lenders, communities and society at large
(Vaughn, 1997). This paper attempts to track the
use of these dimensions by entrepreneurs and to
determine the extent to which the entrepreneurs
and their business have incorporated these ideas
into their corporate cultures.
These concepts of values, ethics/morality and
CSR are not mutually exclusive; rather, they are
interrelated and somewhat interdependent.
Values influence the extent of a corporation’s
perceived social responsibility and are influenced
by societal activities and norms or standards. One
component of corporate social responsibility is
an organization’s ethical responsibility, which is
also influenced by the values of society (Carroll,
1979). Conversely, ethical or unethical activities
of an organization can influence the values held
by members of society. Once again, the spiral of
culture, wherein culture influences values, which
influence beliefs, which influence attitudes,
which influence behaviors, which shapes culture,
continues to form.
Literature review
Some of the classic texts that form the founda-
tions of management research and practice were
researched to identify these themes as they
emerged and evolved in the literature to identify
changes in perception of these concepts over
time. In addition, other texts published more
recently were reviewed to identify the most
recent changes in the understanding of these
concepts.
The evolving concepts
While the management literature has many good
books and articles which address values, business
ethics, and CSR, the following works have been
chosen because they have endured through the
years and generated much of the original dis-
course in the concepts of interest (Schendel and
Hofer, 1979; Summer et al., 1990). They are
summarized in Table I.
The role of the organization within the larger
society was addressed by Chester Barnard as early
as 1938 in his seminal book, The Functions of the
Executive. Barnard decried the lack of recogni-
tion that formal organizations are a most impor-
tant characteristic of social life, as they are the
principal structural frameworks of society itself
(1938, p. xxix). He concentrated on aspects of
individual action, which are directed by their
connection with formal organizations. Barnard
recognized that many unwritten rules guiding an
organization’s course of business grew from actual
practice (1938, p. 172). He addressed the need
to analyze the economic, legal, moral, social, and
physical elements of the environment when
making business decisions (1938, p. 198), stating
that the organization endures depending upon
the quality of its leadership, which is in propor-
tion to the breadth of morality on which it stands
(1938, p. 282).
Herbert Simon’s book, Administrative Behavior
(1945), built on the work of Barnard. Like
Barnard, Simon noted the strong influence of the
organization on the individual and addressed
aspects of individual action within the context of
the organization. While Simon recognized that
organizations must be responsive to community
values, far beyond explicit legal considerations,
he saw the primary criteria of “good” business
as economic behavior accurately calculated to
recognized a gain (1945, p. 62). He noted,
however, that an increasing number of businesses
had become affected with a public interest, as
executives had become concerned with respon-
sibilities of trusteeship toward the community
beyond the legal limits imposed on them (1945,
p. 70).
Peter Drucker, in his book The Practice of
Management, was among the first authors to
Evolution and Implementation 301
explicitly address the “social responsibilities of
business” (1954, p. ix). Whereas Barnard (1938)
and Simon (1945) gave far more attention to the
moral/ethical dimensions of individual behavior
in organizations, Drucker concentrated more on
CSR. He included public responsibility as one of
the eight key areas in which business objectives
should be set. Further, Drucker stated that
objectives in this area must be set according to
prevailing political and social conditions as per-
ceived by management (1954, p. 82). Morality
had to be a principle of action, exhibited through
tangible behavior, that stressed building on
strengths, integrity, and high standards of justice
and conduct (1954, p. 146). Drucker recognized
the growing requirement that a manager assume
responsibility for the public good, as he subor-
dinated his actions to an ethical standard of
conduct. While he emphatically declared that the
organization’s first responsibility to society
involved making a profit, he felt it was also most
important that management consider the impact
of every business policy and action upon society.
“It has to consider whether the action is likely
to promote the public good, to advance the basic
beliefs of our society, to contribute to its stability,
strength, and harmony” (1954, p. 388). The
ultimate responsibility of management was “to
itself, to the enterprise, to our heritage, to our
society, and to our way of life” (1954, p. 392).
Philip Selznick primarily addressed values,
although he did provide some insight into
moral/ethical considerations and corporate social
responsibility, in his book Leadership in
Administration: A Sociological Perspective. He noted
that sound organizational leadership required the
“proper ordering of human affairs, including the
establishment of social order, the determination
of public interest, and the defense of critical
values” (1957, p. ix). Like Drucker (1954),
Selznick realized that organizations had become
increasingly public in nature and needed to deal
with problems that affected the welfare of the
entire community. He stated that goal statements
based on making a profit offered little guidance
in the formulation of organizational purpose. A
302 Brenda E. Joyner and Dinah Payne
TABLE I
Corporate social responsibility, business ethics, and values: An historical perspective
Authors Corporate social responsibility Ethical/Moral considerations Values/Other
Barnard Analyze economic, legal, Morals are active result of Responsibility: power of
(1938) moral, social and physical accumulated influences on private code of morals to
aspects of environment persons evident in actions control individual conduct
Simon Organizations must be Ethical propositions assert Firm survival involves
(1945) responsible to community “oughts”, rather than facts adapting objectives to values
values of customers
Drucker Management must consider Morality must be principle First responsibility to society
(1954) impact of every business of action exhibited through is to make a profit
policy upon society tangible behavior
Selznick Enduring enterprise will Definition of mission Leadership requires defense
(1957) contribute to maintenance includes wider moral of critical values
of community stability objectives
Andrews Firm should have explicit Defining firm only in financial Ethical behavior is product
(1971- strategy for support of terms leads to subordination of values
Revision) community institutions of ethical concerns
Freeman Business must satisfy Concern for ethics necessary Enterprise strategy: what do
(1984) multiple stakeholders but not sufficient to decide we stand for?
“what we stand for”
large corporation which shifted from “a narrow
emphasis on profit making to a larger social
responsibility” was required to build special
values into the organization (1957, pp. 26–27).
For Selznick, the formation of an institution was
marked by the making of value commitments
that accounted for its role in the community.
Kenneth R. Andrews, in his 1987 revision of
The Concepts of Corporate Strategy, originally
published in 1971, viewed ethical behavior as a
product of values and, like the previous authors,
recognized the ever growing importance of
values, ethical/moral considerations and CSR.
He stated that defining the corporation as a
means to serving only the financial interests of
its shareholders led to a subordination of ethical
concern to financial outcome. Andrews suggested
that a company should venture into good works
that were strategically related to its present and
prospective economic functions. He also
proposed that a firm should have both economic
and non-economic objectives, which coincided
with similar views held by Drucker (1954) and
Ansoff (1965). Andrews stated that the strategi-
cally directed company “will have a strategy for
support of its community institutions as explicit
as its economic strategy and as its decisions about
the kind of organization it intends to be and the
kind of people it intends to attract to its mem-
bership” (1987, p. 77).
In his book, Strategic Management: A Stakeholder
Approach, R. Edward Freeman built on a promi-
nent theme found in the previous books
examined here: business organizations operate in
increasingly complex environments and must
satisfy multiple constituencies, or “stakeholders”
(1984, p. 26). Freeman noted that the traditional
corporate strategy attention to stockholder
concerns could involve actions which are
immoral or unethical, as well as illegal. He
recognized the growing importance of ethics, as
evidenced by the development of codes of ethics
in businesses and the increasing number of ethics
courses in business schools. He proposed the
concept of stakeholder management as an inte-
grating force to address CSR, ethical/moral
considerations, and values.
In the decade since the last of these founda-
tional books was published, books and articles
about values, ethics, morality, and corporate
social responsibility have flourished. Today the
demands for social responsibility and ethical
behavior by corporations and their leaders
are stronger than ever before. Solomon (1997)
postulates several reasons for this. First, the
enormous success of American businesses has
bred extravagant expectations by the public.
Second, the new nobility, the privileged class,
that has emerged because of this enormous
success is corporate business – and society has
always made demands of its nobility (noblesse
oblige). Finally, Solomon states that “now that
businesses are often the most powerful institu-
tions in the world, the expanse of social respon-
sibility has enlarged to include areas formerly
considered the domain of governments: quality
of education and support of the arts, funding and
facilities for basic research, urban planning and
development, world hunger and poverty, hard-
core unemployment. The more powerful business
becomes in the world, the more responsibility for
the well-being of the world it will be expected
to bear” (pp. 204–206). Clearly the concept of
corporate social responsibility has grown to
include a stunning plethora of social concerns.
But what about our understanding of values
and ethics today? How do our leaders encourage
and promote ethical behavior by individuals in
an organization? Solomon (1997, p. 140) states
that “. . . corporate cultures set up the network
of people and positions with whom we feel
comfortable and, given the enormous power of
peer pressure in ethics, one should not be sur-
prised that the culture of the corporation – rather
than ‘individual values’ – is the primary deter-
minant of business ethics. Different businesses
provide different cultures, and different cultures
define different values, different ethics, different
lives”. In small firms the cultures, and therefore
the values and ethics of the organization, are
strongly shaped by the founders ( Joyner and
Hofer, 1992). As firms grow, there is the danger
that impersonality may set in and ethics may
generate into a set of abstract rules that can too
easily be compromised (or reinterpreted) under
the pressure of corporate hierarchy (Solomon,
1997, p. 144). However, size is not always the
determining factor. Some individuals may
Evolution and Implementation 303
identify strongly with smaller groups within a
larger organization and ethical responses are
reinforced. Even in small organizations, some
individuals may feel isolated and resort to uneth-
ical behavior.
The emergence of the concepts discussed here
and their evolution over time in the literature of
management shows an increasing emphasis by the
academic community on the social issues that a
firm must consider. However, at the same time
these issues were being considered by the
academic community, they were also being
addressed by the business community. It is the
way in which practitioners have addressed these
issues that is the focus of this study.
Methodology
This study seeks to identify the link between
values, business ethics, and corporate social
responsibility. The first phase of the study was
the empirical identification and description of
these issues within business practice.
Because CSR is a concept made up of various
categories, it was necessary to find a framework
for identifying those levels within the practice
of CSR. A widely used set of categories of CSR
appears to be that set identified by Carroll (1979)
in his “Organizational Social Performance
Model.” It should be noted that the concept of
business ethics falls within the category of ethical
responsiveness in the Carroll model. See Table
II.
Two organizations that have been publicly
acknowledged as socially responsible firms by
organizations and communities where they
operate were selected as subjects for this study.
The first firm (Firm A) is a large commercial
construction company with annual sales of
approximately $150 million. The company has
been in business for more than three decades and
is highly regarded, both in the local business
community where its headquarters are located,
and also within the national community of
builders. The second subject (Firm B) is also a
commercial construction firm with annual sales
of approximately $40 million. This company has
been in business for fifteen years and specializes
in renovation of large commercial complexes. It
is also well regarded by its peers within the local
and national business communities. Both orga-
nizations are still run by their founding entre-
preneurs. The founders were willing to discuss
their experiences during the start up and devel-
opment of these ventures, and agreed to partic-
ipate fully in whatever manner seemed
appropriate for the research.
Data collection
Interviews are an appropriate technique for gath-
ering data concerning cultural categories and
304 Brenda E. Joyner and Dinah Payne
TABLE II
Organizational social performance model
Dimension I – Philosophy Dimension II – Social Dimension III – Social Issues
of Social Responsiveness Responsibility Categories Involved
Proaction Discretionary responsibilities Consumerism
Accommodation Ethical responsibilities Environment
Defense Legal responsibilities Discrimination
Reaction Economic responsibilities Product safety
Occupational safety
Shareholders
Adapted from A. B. Carroll (1979), ‘A Three-Dimensional Conceptual Model of Corporate Performance’,
Academy of Management Review 4, 503.
shared meanings (McCracken, 1988). Semi-struc-
tured interview questions were prepared in
advance to probe those areas of interest to the
researcher. (See Exhibit 1.) These open-ended
questions allowed elaboration by the subject, but
focused the discussion to allow the most efficient
use of time by the interviewer. Both interviews
were recorded on tape and then transcribed for
analysis. The two entrepreneurs then reviewed
the transcripts and made any corrections neces-
sary. The corrected transcripts were used for the
data analysis.
Data analysis
Content analysis was used to search for the three
concepts of values, business ethics and CSR
within the transcripts. All data related to corpo-
rate social responsibility were then further
analyzed to identify whether or not they could
be assigned to any of the four categories of social
responsibility as outlined by Carroll (1979). Data
which fell within the business ethics concept
were placed within the ethical responsiveness
category of the Carroll model. Once the data
were assigned to categories, the categories were
analyzed for possible links to the financial per-
Evolution and Implementation 305
EXHIBIT 1
Interview guide
01. Give me a little background about yourself. How did you end up in this business?
02. How did you identify the business opportunity and evaluate the potential of the business before you started
up?
03. Did you have a fully developed concept of the business when you began? If not, how did it develop? How
has it changed over time?
04. What resources did you need to get started? How did you acquire them?
05. How did you market your company in the beginning? Has that changed over time? How important is
marketing in your business?
06. Do you compete mainly on price, quality, differentiated service or product – or in some other way? Who
do you see as your competition?
07. How do you produce your product or service? Has that changed over time?
08. Has technology played a significant role in the development of your business?
09. As new ventures grow, their cultures develop. How would you describe the culture of this company? How
have you influenced the development of culture within your company?
10. With growth comes the formalization of structure. What kind of structure does this company have and
why did you choose that particular form?
11. With growth, systems and processes must be put in place. What systems and processes did your company
develop? Which were most important? How did your employees react to them?
12. How have you managed the transition from startup entrepreneur to manager of such a large business?
13. Do you foresee selling the company, retiring, or turning it over to other management in the near future?
14. What do you see as the future of the business?
15. What was the state of the industry when you entered it? How has that changed over time?
16. How have you developed the people in your company over time?
17. Were there any people who were especially important in helping you develop the ideas or experience
necessary to begin the company?
18. How does the decision-making process in your business work?
19. Do you do research and development for either products or processes for the business? If so, how do you
do that?
20. Have you ever reached a point where you had to redefine your business concept? When did that occur
and how did you do that?
21. Are there other tasks associated with startup and development of your business that you found essential to
the success of the venture that we haven’t discussed?
formance of the firms. It should be noted that
the design of this study prohibits the ascertain-
ment of causality with respect to financial per-
formance and these issues; while some linkages
have been identified, the authors cannot state that
the values, ethics and CSR linkages cause
changes in financial performance. The findings
are detailed below.
Findings of the study
Economic responsibilities
According to the Carroll model, the economic
responsibilities of the firm are to produce goods
and/or provide services and sell them at a profit.
The need to make a profit is sometimes thought
of as incompatible with the assumption of
responsibility to the larger community. “‘The
marketplace puts one’s convictions to the test. A
business is not a philanthropy, social aid service
or school. And if it tries to be all things to all
people, it won’t be able to fulfill its mission
(Vaughn, 1997, p. 14).’” However, the two firms
in this study had different thoughts on the
subject: they did not perceive that the produc-
tion of goods and/or provision of services at a
profit was mutually exclusive with good business
ethics.
Firm A: In the Atlanta business community you
are expected to be a part of the public service
scene, process. It’s a negative if you don’t do it.
And when you do it you find yourself doing it with
all kinds of other business leaders. So it’s an
opportunity, it’s a tailor made opportunity to
network with other decision-makers and a lot of
the business we get is relationship driven.
The founder of this firm clearly perceived that
his economic responsibility was to make a profit;
he was also farsighted enough to realize that his
firm’s economic welfare, a duty asserted to exist
by the Carroll model, was dependent on his
involvement in the public service sector. Because
of this, he used networking as a means to increase
his exposure with the public service sector. His
statement above unites the fulfillment of the
firm’s economic responsibilities with its ethical
and discretionary responsibilities to meet or
exceed societal standards of what is expected or
considered morally right. This statement also
reflects three of the response philosophies
discussed earlier: the defense, accommodation
and proaction philosophies. His statement implies
that the defense philosophy is only marginally
in place; the entrepreneur would apparently
exceed his ethical and discretionary responsibil-
ities even if he did not want to avoid being forced
into it by outside forces. The statement also
implies the accommodation philosophy of
addressing social issues because they exist –
“because the public service scene” exists. Also,
that such participation is “a tailor made oppor-
tunity to network with other decision-makers”
implies a proactive approach to social issues: the
proaction philosophy. As a whole, the entrepre-
neur’s statement seems to recognize the impor-
tance of Carroll’s model’s Dimension III, social
issues/publics. Acknowledgement of the idea of
a “relationship driven” business is a tacit accep-
tance of a number of stakeholders affected by the
founder’s firm’s actions: stockholders, creditors,
other business leaders in the community, the
community itself . . .
The founder of Firm B found that doing the
socially responsible thing can also result in
positive economic gain.
Firm B: In 1980 we were two years old. The only
job I could get in (the city) was renovating low-
income housing. I couldn’t get another job. . . .
(W)e were getting robbed every night, we were
getting torched every night. I got this idea. We
could hire four security guards who would cost
$150,000 for the duration of the project. Their
lives would be in jeopardy. Instead I went to the
neighborhood association leader, a marvelous . . .
lady who was President of the neighborhood asso-
ciation. I said, “Look, I need your help. I would
like to put $10,000 in escrow with an attorney of
your choosing. If the neighborhood would simply
call the police if you see strangers around our
project at night. I don’t want anyone to jeopar-
dize his or her life, I want you to simply help us
to secure the job.” I actually found a dead body
on the job one day. There was shooting around the
site. It was a major drug dealing area.
The police got wind of it and they decided that
they had been trying to get a neighborhood watch
306 Brenda E. Joyner and Dinah Payne
program for years and they said this is our chance.
They’re getting $10,000 bucks from this contractor
in return for doing what we’ve been trying to get
them to do. So the police made a commitment to
respond to any call from this neighborhood during
the project time within three minutes. The Fire
Department heard about it. Some of the guys from
the Fire Department lived in the neighborhood.
They promised that on their way back from fires
they would go through the neighborhood. The
school principals sent home flyers outlining the
chance to earn $10,000 for the neighborhood if
residents would just help this contractor. The
ministers from the churches urged their members
every Sunday to remember to watch the (City)
apartments. The crime virtually stopped. The
heavy stuff stopped although we still had some
minor problems.
The neighborhood was presented a check at the
end of the project. They gave me a full accounting
of every nickel of the $10,000 that they spent.
They got uniforms for the neighborhood kids track
team and baseball teams and some equipment for
the community center. We’re still members of the
Neighborhood Association. The press picked up
on it . . . And we just got tremendous mileage out
of the $10,000 instead of $150,000 for watchmen.
Remember that’s what we saved: $140,000.
This is an interesting combination of the two
motivations to do the right thing. In this
instance, the business owner had the choice of
involving the community or not, of acting in
recognition of the symbiotic relationship between
business and the community or not. This entre-
preneur decided to invest in the community, with
the result that his return on his investment was
both tangibly (”the press picked it up” – equating
to free publicity, a marketing method that is not
paid for and frequently results in very positive
gains for the business) and intangibly: the
goodwill of the community and the Neighbor-
hood Association. This action is again commen-
surate with the Carroll model dictating economic
responsibility as the first duty of the firm. By
engaging in ethically laudable behavior, this firm
saved a good bit of money – the first obligation
of the firm.
The firm accepted the possibility of trouble
associated with building in that area and, suc-
cessfully, dealt with them, to the mutual benefit
of both the community and the firm. The stake-
holders who benefited here are numerous:
shareholders (who saved thousands of dollars), the
neighborhood association, the groups funded at
the discretion of the neighborhood association,
the community itself . . .
Legal responsibilities
Obedience to society’s promulgated laws coupled
with pursuit of the firm’s economic responsibil-
ities is the second most important element of
Carroll’s dimensions of social responsibility. It
requires at least minimal adherence to the law.
The entrepreneurs in this study exhibited an
understanding of the importance of laws and
abiding by them, as part of their strategy to be
successful, ethical businesses.
Firm B: This company was the first to test for
drugs. When you go on a scaffold you will know
that the person standing next to you, the person
who erected the scaffold is not on drugs and we
will have random testing every month, because I
want to assure you that your place of work will
be safe.
This statement indicates that the entrepreneur has
accepted the societal prohibition against the use
of controlled substances that could endanger safe
conditions at the workplace. In so accepting these
laws and regulations (laws against illegal substance
abuse and OSHA regulations), the entrepreneur
has not only complied with his basic legal
responsibilities, he has also complied with
Carroll’s model in obeying such laws and regu-
lations to the betterment of the firm’s economic
responsibilities: a safe workplace means fewer
costly accidents.
The organizational response to the example of
the legal issue of drug testing presented here is
once again that of the proaction philosophy.
Rather than wait for one of the many stake-
holders that could be affected to be injured, the
founder of the firm anticipated the need to
address the social issue of drug abuse in the
workplace.
Evolution and Implementation 307
Ethical responsibilities
The founder of Firm A spoke of his role in a
community project and the impact it has had on
the organization. In acknowledging his obliga-
tions to his society, the founder exhibits
commitment to fulfilling Carroll’s ethical respon-
sibilities “to meet society’s expectations for
conscientious and proper behavior, even when
these expectations are not reflected in the letter
of laws and regulations” (Dunham and Pierce,
1989).
Firm A: I am the chairman of (a large, highly
visible social event). I’m able to do that. Not only
am I spending a lot of my time doing that, a lot
of my money doing that. I don’t accept any kind
of money, I’m a volunteer so I don’t get paid. And
I don’t take any reimbursement. And we disqual-
ified our company from doing any of the con-
struction because of the conflict of interest. Which
means we sit here and watch the team who got
picked to do the stadium build the stadium. That’s
a $150 million job . . . So we sit and watch our
competitors . . . do that.
The firm’s ethical responsibilities are to meet
society’s expectations for conscientious and
proper behavior. Additionally, the firm should
have good faith commitment to the spirit of the
law, not just the letter of the law, as the legal
responsibilities category requires. It is important
to note that doing the right thing can be diffi-
cult, both personally and in business. The
question this founder asked and answered is
whether one should do the ethically right thing
in the face of substantial costs to the firm. This
entrepreneur clearly found that his commitment,
his ethical responsibility, to the community was
much greater than the fear of the potential for
lost profits. Vaughn (1997, p. 14) warns of the
dangers of being ethical at any cost. “‘They need
to remember that their shareholders are not
empowering them to manage charities but are
asking them to manage their corporations.’”
While this is most definitely true, it should be
noted that doing the right thing has its own
reward, satisfaction in knowing that one did the
right thing (according to De George, mentioned
previously, moral praise is associated with doing
the right thing). Additionally, doing the right
thing may have other rewards, as well, like in
the previous example wherein the dividends of
doing the right thing were not anticipated but
were a direct result of doing the right thing.
Further, the entrepreneur could experience self-
actualization (Maslow, 1957).
The importance of being ethical in day-to-day
dealings with the many stakeholders of the
organization was addressed by the owner of Firm
B.
Firm B: To people who do business with us, we
should be known as an honorable and fair company
composed of people who keep their word and
always fulfill their obligations in a timely fashion.
We are going to pay our bills on time.
If we say it’s going to be there on Tuesday. If
we say the building will be completed in 16
months, it will be done in at least 16 months. No
matter what it costs and we will keep our word.
This statement smacks of integrity – a
hallmark concept of the ethical responsibilities
Carroll’s model asserts are the duties of the firm.
This founder is clearly more concerned about the
spirit of the law and doing the right thing even
though the expectations are not reflected in
society’s laws and regulations than about the
consequences of failing to complete the “job”
in a timely fashion, a lawsuit for breach of
contract.
Both of the statements related here imply a
proaction philosophy. In acting to serve the com-
munity through chairing a social benefit and in
cultivating the reputation to be an honest and fair
company, these entrepreneurs anticipate the
positive role they play in society and rise to play
that role completely. They have clearly made
great efforts, and even sacrifices, to understand
their business and community environment and
to plan strategies that can help their communi-
ties.
Discretionary responsibilities
The founder of Firm B exercised discretionary
responsibility in a very different area of the com-
munity.
308 Brenda E. Joyner and Dinah Payne
Firm B: When I first came here I thought that all
companies would buy tickets to arts events. I just
thought that’s what you do in a major metropol-
itan area . . . (W)e got a bunch of tickets and all
our employees went and we were all proud. We
took some clients and some of the management
guys thought it was extreme to spend that much
money. I said, “Look let’s think about this. We’re
going to get exposure. We’re getting in the right
circles”.
A lawyer’s wife turned out was on the board of
(the local ballet) where one of our guys was selling
a tenant fit-up to that law firm. The firm gave us
that job basically because . . . (we) sponsored (a
show) for his wife’s favorite ballet company. An
architect said to us, “You know I wouldn’t do this
– work over a weekend – for any other construc-
tion company. But you guys have helped the arts.
I’m going to do this for you. I’m going to work
this weekend to get you that documentation you
need.”
We now give – we tithe to the arts. In 1983
we made that commitment. Ten percent of the
after tax profits are given to the arts in communi-
ties in which we build.
This statement is an indication that the firm
is meeting its discretionary responsibilities. These
duties are to act voluntarily to aid society in some
way, even if not acting this way would not be
considered unethical. There is no legal mandate
that firm’s tithe to the arts; many firms do not
do so and are not necessarily viewed negatively
for not doing so. Thus, the firm is engaging in
philanthropic activities they have no legal or even
moral obligation to do; however, in fulfilling the
firm’s discretionary responsibilities, the firm may
certainly act to the benefit of society.
This entrepreneur also takes a proaction phi-
losophy with regard to the arts in his commu-
nity, an important “social issue” often
undervalued by society as a whole. Knowing this
and anticipating the need in that area, the entre-
preneur committed himself and his firm to being
of service to those stakeholders.
This action also highlights the conundrum of
an ethical business person engaging in ethical
behavior for both the ethical and more
Machiavellian approach discussed in the intro-
duction section of this paper. The founder of
Firm B has already indicated in many instances
his commitment to his community and to doing
quality jobs, the adherence to ethically sound
business practices. In this instance, however, he
found an unexpected payoff for doing the right
thing because it is right. Here, he found that he
gained something other than simple satisfaction
that he did the right thing: he was awarded a
contract as a tangential outcome of his ethical
behavior and he received the help of a required
professional to complete a job in a timely fashion.
The initial motivation of the entrepreneur was to
do the right thing because it was right. His
reward was actually greater than that; in doing
the right thing, his unexpected dividend was the
securing of a contract and the help he needed.
Conclusions and implications
This research identified the presence and imple-
mentation of values, business ethics, and CSR
actions within the two organizations studied. The
study found that the link to financial perfor-
mance of the firm can be either direct or
indirect. However, it is impossible to state that
these linkages caused the changes in financial
performance noted. In one instance, it appeared
to be possible to assign an exact dollar value to
the socially responsible action. In other instances,
it was apparent that the contacts made through
socially responsible behavior resulted in contracts
awarded at a later date. While it is impossible to
generalize the results of this study because of the
small sample, a larger study of the link of CSR
to firm financial performance, using the frame-
work tested in this research, could be undertaken
in order to further explain the direct and indirect
links to performance.
It also appears that the indirect links identi-
fied in the research have associated time lags
between socially responsible behavior by the firm
and financial gain. These lags could be traced in
order to find out how the impact of the time
lag affects the ability of the firm to connect
specific behaviors to future financial reward. A
longitudinal study of a larger sample of firms
using a time frame of from five to ten years could
shed much light on the effect of time lag on the
issue.
Evolution and Implementation 309
For many researchers in the areas of ethics and
corporate social responsibility, the issue of finding
a financial performance link to ethical behavior
is unnecessary and a waste of time. Surely there
are enough compelling reasons besides financial
gain to push firms to support and champion
ethical behaviors from their employees and to
engage in socially responsible behavior with
respect to the environment and the communi-
ties within which they conduct their businesses.
The authors agree with such reasoning. However,
the ability to link socially responsible behavior
with positive firm financial performance adds a
strong, quantitative foundation to the push for
such actions. By showing ways to link changes
in culture that can generate positive financial
performance that shows up as increases in the
bottom line, stock price, or other financial per-
formance measures, a stronger case can be made
for such changes. In a perfect world such studies
would not be necessary. However, in this less-
than-perfect world that we inhabit, where success
for business is measured almost exclusively by
financial performance, the ability to show that
ethical and socially responsible behavior can
boost financial results might provide the impetus
for real change in many organizations.
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The Talmudic Concept of “Beyond the Letter of the Law”: Relevance to Business Social
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Author(s): Moses L. Pava
Source: Journal of Business Ethics, Vol. 15, No. 9 (Sep., 1996), pp. 941-950
Published by: Springer
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The Impact of Perceived Leader Integrity
on Subordinates in a Work Team
Environment
Darin W. White
Emily Lean
ABSTRACT. Over the last decade, the increased use of
work teams within organizations has been one of the most
influential and far-reaching trends to shape the business
world. At the same time, corporations have continued to
struggle with increased unethical employee
behavior.
Very little research has been conducted that specifically
examines the developmental aspects of employee ethical
decision-making in a team environment. This study
examines the impact of a team leader’s perceived integrity
on his or her subordinates’ behavior. The results, which
came from a survey of 245 MBA students functioning for
2 years in a work team environment, indicate an inter-
action between leader integrity and team member ethical
intentions.
KEY WORDS: work teams, leader integrity, ethical
decision-making, teammates
Abbreviations: PLIS: Perceived leader integrity scale;
MCSD: MC form C social desirability scale; SDRB:
Social desirability response bias
Introduction
Over the past decade, the ethical practices of cor-
porations have received increased attention.
Through mass media, the public has consistently
learned about the far-reaching effects of corporate
scandal in organizations like Enron, Adelphia Com-
munications, WorldCom, and Tyco International
(cf. Merritt, 2004). Increased public awareness of
corporate fraud has resulted in an outcry for stiffer
penalties and greater responsibility from business
leaders (Carter and Borrus, 2005). Due to consumers’
concerns related to these dishonorable practices, the
study of corrupt behavior in organizations remains an
area of great interest among academic researchers
(Loe et al., 2000). Associated with much of the dif-
ferences in the observed unethical behavior among
corporations is the integrity of the organization’s
leaders, both at the upper management level and at
the lower work team level (Sims and Brinkmann,
2002). It is our contention that, irrespective of the
level at which work is done, the ethical atmosphere
that a leader sets has a major impact on the ethical
behavior of his or her followers. Specifically, the
moral reputation of an organization may be influ-
enced at many levels by its work team leaders. As the
use of teams has grown and become one of the most
influential and far-reaching trends to shape the
business world, the ethical influence of team leaders
has increased respectively.
The term ‘‘team’’ refers to a working unit com-
posed of more than two members, with at least one
being a leader. Team members stress interdepen-
dence and cooperation with each other, pursue
common goals, and take responsibility for the success
or failure of the work (Jessup, 1990; Katzenbach and
Smith, 1993; Lewis, 1993). Teamwork has become
the basic working arrangement of most enterprises
(Drucker, 1998). Approximately 68% of the 1,000
largest U.S. companies have adopted the system of
teamwork design (Lawler et al., 1995). Teamwork
design offers numerous benefits, such as the
improvement of performance, productivity, cost
reduction, and employee satisfaction (Cohen et al.,
1996). One of the essential components of project-
related teamwork is the team’s leadership. The
leadership of a team impacts everything from the
successful accomplishment of team goals to various
behavioral determinants of team members (George
and Bettenhausen, 1990).
Journal of Business Ethics (2008) 81:765–778 � Springer 2007
DOI 10.1007/s10551-007-9546-6
To be most effective, leaders should be perceived
by followers as displaying a level of integrity consistent
with followers’ expectations and implicit leadership
theories (Craig and Gustafson, 1998). According to
Cheng (2000) and Shea (2000), a leader’s fairness in
giving rewards and punishments has a positive impact
on organizational commitment, team effectiveness,
and team and organizational performance. Research
has also shown that an individual’s ethical definitions
are learned through socialization and are acquired
from peers and managers (Zey-Ferrell et al., 1979).
Thus, any explanation of unethical behavior must take
into account that individuals do not learn values from
‘‘society’’ but rather from members of their immediate
social networks such as leaders of their work teams.
Few studies have looked at how members learn values
from their work teams.
Previous approaches to the study of ethical deci-
sion-making processes in organizations tend to address
either the individual role or the situational variables
resulting in unethical behavior. Further, there is little
empirical or theoretical research on developmental
aspects of employee ethical decision-making in a team
environment, and our knowledge of how employee
behavior is influenced by a team leader is limited. The
present study is unique in that it extends the business
ethics literature by examining the important interac-
tion between a team leader and the team members.
Specifically, we evaluate the degree to which a team
leader affects team members’ ethical intentions in an
organizational setting. By seeking to understand the
degree to which employees’ perceptions of their team
leader influence their individual ethical decision-
making, we seek to enrich our knowledge of how
employee ethical behavior is developed.
In the following sections, we discuss some of the
factors that may account for the impact of perceived
leader integrity in a team-management environment
and outline the hypotheses tested in this study.
Literature review and hypothesis
development
Over the last decade, virtually all organizations, from
production to commercial retailing to customer
service firms, have begun utilizing the work team
structure to some degree within their operations.
Due to this, the work team has emerged as a key
business concept, and unified team performance is
now regarded as crucial to corporate success (Wil-
liams, 2002). With this newfound influence on team
performance and unity, one might hope that ethical
behavior within corporations would improve since
increased accountability is inherent in team envi-
ronments. However, based on the constant stream of
corporate scandal stories saturating our media, this
obviously is not the case.
Kohlberg’s model suggests that individuals define
what is ethically appropriate based on the expecta-
tions of good behavior by others within their circle
of influence. Other scholars have suggested that the
intentions of individuals who do not believe in
universal moral rules are influenced by referent
others (Peterson, 2004), such as their organizational
team leaders. While researchers have questioned
exactly how much leaders influence the ethical
attitudes of their subordinates (Minkes et al., 1999),
most propose that the authority and power bestowed
on leaders in organizations provide them with the
means of setting the tone and ethical atmosphere of
the organization (Trevino, 1986). Results from
Peterson’s (2002) study clearly demonstrated that
deviant workplace behavior could be partially pre-
dicted from the ethical climate of an organization.
Similarly, Schminke et al. (2005) found results
indicating that the correlation between leader moral
development and ethical climate is moderated by the
degree to which the leader uses his or her moral
development as well as by the age of the organiza-
tion. They further found that the leader’s moral
development and the consistency between the lea-
der’s moral development and actions interacted to
affect ethical climate. Team leaders influence their
organizational environment through their manage-
ment techniques and their leadership abilities;
organizing assignments, tracking progress, and
rewarding performance are all under the control of
the work team leader (Thamhain, 2004). It is
through this control that team leaders define the
environment through their own actions and, thus,
build either a favorable, highly moral, team-friendly
environment, or one based on selfish, unethical
actions designed to achieve individual goals, even in
the face of conflicting team or organizational goals.
Numerous scholars have contributed to the
development of the ethical leadership literature. Vitell
and Davis (1990) found strong positive correlations
766 D. W. White and E. Lean
between employee perception of the manager’s
integrity and employee job satisfaction in a study that
linked perceptions of leader ethics with subordinate
outcomes. In their 2003 paper, VanSandt and Neck
examined the possible causes of ethical gaps between
the worker’s sense of right and wrong and the
organization’s ethical code. The findings of Weeks
et al. (2004) suggest that the ethical climate of an
organization has either a direct or indirect effect on
its sales force. Trevino and Brown (2004) recom-
mended that the ethical conduct be managed pro-
actively via explicit ethical leadership and conscious
management of the organization’s ethical culture.
One implication from Forte’s (2004) study on moral
reasoning was that managers or executive level
employees should keep in mind that gender and the
industry experience of a new employee might have
an impact on his or her moral reasoning. Sunder-
land’s theory of differential association states that
whether or not the learning process results in
unethical behavior is contingent upon the ratio of
contacts with unethical patterns to ethical patterns.
Ferrell and Gresham (1985) proposed referent others
as a determinant of whether an individual’s behavior
is ethical. Although both peers and managers fit the
role of referent others, managers have been deemed
more influential due to their greater authority
(Baumhart, 1961; Brenner and Molander, 1977;
Hunt et al., 1984). Similarly, Zey-Ferrell et al.
(1979) found that while an employee may hold a
fairly high standard of ethics individually, he or she
may still adapt his or her moral behavior to imitate
that of the primary group and/or that group’s leader.
In addition, association with co-workers who par-
ticipate in and condone unethical behavior, as well as
the opportunity to be involved in such behavior, are
thought to be major predictors of an individual’s
behavior.
A highly cited survey from Harvard Business
Review (Baumhart, 1961), updated by Brenner and
Molander (1977) and Vitell et al. (2000), found that
between the years 1960 and 2000, respondents
became significantly more skeptical regarding the
ethical conduct of their co-workers. Four-fifths of
those surveyed by Brenner and Molander (1977)
agreed that business managers should try to live up to
absolute ethical standards, and most felt that sound
ethics is good business. Approximately one-half of
the respondents, however, reported that supervisors
rarely if ever apply these ethical standards of good
business. Vitell et al. (2000) found that most
employees believe that the ethical behavior of cor-
porate leadership has the most impact on decisions in
ethical situations. Respondents offered explanations
for the decline in ethical standards as being man-
agement’s preoccupation with increased profit, lack
of reinforcement of ethical behavior, competition,
and a sense that only ‘‘results’’ are important.
Several authors have shown a positive relationship
between different dimensions of leadership and cit-
izenship-type behavior. Farh et al. (1990) reported
that, beyond the variance explained by satisfaction,
leader fairness accounted for 9% of variance in
altruism among individuals. Williams et al. (2002)
reported that leader fairness was associated with
subordinate intentions to engage in organizational
citizenship behavior. Different types of leadership
have also been found to be positively related to
citizenship-type behaviors (Pearce and Herbik,
2004). One method of categorizing ethical issues is
to classify them according to those directly affected
by the unethical behavior itself. Soutar et al. (1994)
reported that most unethical behavior in business
environments involve acts that adversely affect one
of three entities: the organization, co-workers, or
the customers. In addition, Vitell et al. (2000) found
that respondents held differing ethical responsibility
levels for these same three entities. Although man-
agers have begun increasing their ethical awareness
and, in turn, making more ethical decisions,
Premeaux (2004) reported that this is mainly due to
managers’ risk aversion.
In the current study, we theorize that three
internal entities would be impacted by potential
unethical behavior that occurs within a work team
environment: work team members, the team as a
cohesive unit, and the organization as a whole. Our
reasoning for choosing these three entities is outlined
below.
Teammates
Why unethical activity is common in some com-
panies but not in others has been a highly debated
topic among researchers (Sims and Brinkmann,
2002). The unethical behaviors found in these
organizations could be from many sources: poor
The Impact of Perceived Leader Integrity on Subordinates 767
hiring practices, societal ethical shifts, unclear goals,
etc. Numerous studies (Deluga, 1995; Schnake et al.,
1993; Wayne and Green, 1993) have shown cor-
porate leadership to be strongly associated with
employee behavior at the individual level.
Researchers have speculated that the integrity of
leaders may be the primary driving influence on
subordinates’ behaviors with regard to ethical issues
involving other individuals. Based on this theory,
managers develop into role models and, thus, are
responsible for establishing the norms for how other
individuals, such as teammates, are to be treated
(Paine, 1997; Sims and
Brinkmann,
2002).
When team members perceive that their leader
has low integrity the atmosphere within the team
will become one of independent gain as opposed to
unity and progress. In this environment, we propose
that team members will be more willing to engage in
unethical behaviors regardless of the negative out-
comes to their teammates. Similarly, if a team leader
is perceived as having high integrity, his or her
subordinate team members will be less willing to
behave in a manner that would hurt individual team
members. Following this reasoning, we posit:
Hypothesis 1 As perceptions of team leader
integrity increase, team members’ intentions to
engage in unethical activity adversely affecting
other team members will decrease.
The team as a cohesive unit
A work team’s success on a project depends to a
large degree on effective interactions among the
team members responsible for the project. If team
members have positive emotional attachments to the
team and its leaders, it seems likely that they would
engage in behaviors that would be beneficial to the
team (Pearce and Herbik, 2004). Conversely, if the
situational environment is such that the emotional
attachments to the team are negative or very weak
due to poor or unethical leadership practices, it is
more likely that individuals would engage in
behaviors harmful to the team.
As previously mentioned, Williams et al. (2002)
found that leader fairness was associated with subordi-
nate intentions to engage in organizational citizenship
behavior. Team citizenship behavior is defined as
encompassing the following behaviors: altruism, civic
virtue, conscientiousness, courtesy, teamwork, and
team mindedness (Pearce and Herbik, 2004). If the
team leader exhibits unfair and unethical behaviors,
subordinates will, we theorize, be less likely to engage
in team citizenship behaviors such as civic virtue,
courtesy, teamwork, and team mindedness.
Based upon this line of reasoning, we propose that
the leader, through his or her own unethical
behavior and the resulting harmful environment,
will reduce the level of personal attachment between
the individual and the team as a cohesive unit. This
will result in individual team members being more
likely to engage in activities having adverse out-
comes to their team. If however, the manager
engages in behaviors that create positive subordinate
perceptions of his or her integrity, these subordinates
will be less likely to engage in behaviors that would
have a negative impact on the team. Accordingly,
we propose:
Hypothesis 2 As perceptions of team leader
integrity increase, team members’ intentions to
engage in unethical behavior adversely affecting
the team as a whole will decrease.
The organization
Many key functions within organizations exist in
teams of individuals. Both Hunt and Vitell (1986)
and Trevino (1986) speculated that organizational
norms are a determinant of ethical or unethical
behavior. Stated differently, organizational norms
identify what is and what is not appropriate behav-
ior, thus determining the ethical environment of the
organization itself. Theorists assert that leaders have
the ability to establish and communicate these
organizational norms as well as to offer rewards and
impose sanctions in order to ensure compliance with
these norms (Paine, 1997; Sims, 2000; Sims and
Brinkmann, 2002).
The social exchange theory (Settoon et al., 1996;
Wayne et al., 1997) suggests that when team
members perceive that they are being treated ethi-
cally, they will feel an obligation to reciprocate this
positive behavior to the organization. Therefore, if
768 D. W. White and E. Lean
the leader, who is perceived as an agent of the
organization, creates an atmosphere of trust and
loyalty through positive, personal integrity, the team
member will replicate the leader’s behavior by not
acting in ways that would cause harm to or create
negative attention for the organization. Conversely, a
team leader that is perceived as having poor integrity
implicitly communicates that the organization
approves of an unethical environment. In this situa-
tion, it is likely that team members will take no heed
of whether their actions cause adverse affects to the
organization. Therefore, we posit the following:
Hypothesis 3 As perceptions of team leader integrity
increase, team members’ intentions to engage in
unethical behavior adversely affecting the organi-
zation that the team is a part of will decrease.
Research design and methodology
Pretest
A self-report survey was used for the current study.
A pretest was conducted with 41 undergraduate
college students to assure that respondents would
properly interpret the wording in the various sce-
narios and items. Based on their feedback a few slight
revisions were made to the instrument. At this point,
the survey instrument was deemed ready to be
administered to the chosen sample frame.
Sample frame
The questionnaires were administered to MBA
students from two southeastern universities over
several months. The students completed the survey
instrument in class when they were within 2 months
of finishing the MBA program or via e-mail some-
time after they had completed the program. Each
student had been part of a work team that consisted
of the same five to seven individuals for two con-
secutive years. The teams had met twice per week
during the entire program to work together on
projects, cases, and papers. Each team had a leader
who was responsible for scheduling meetings,
developing agendas, and keeping the team on track.
These teams were designed by the MBA director to
closely reflect work teams in real organizations.
During the 8 weeks leading up to the time when
the students completed the survey instrument, the
teams were engaged in an intensive business simu-
lation game. Teams were required to function in an
environment very similar to that of the real business
world with extreme workloads, pressures, and
responsibilities. Course participants were expected
to allocate at least 8 h per week to outside-of-class
activities during which time they would meet with
their MBA work teams to make informed, strategic
business decisions for their companies. The com-
petitive nature of the simulation game, the feedback
that it provided, and the wide open challenge it
presented the students were the primary driving
forces that determined the extent of their efforts.
Thus, extreme pressure existed within each team for
each member to pull his or her own weight. Due to
the required workload, it was virtually impossible for
a team to be successful unless everyone in the group
significantly participated. Team leaders were given
complete control of their groups with both reward
power and the authority to fire poor performing
members. At the end of the 8 weeks, team leaders
were responsible for determining grade assignments
for each member of the team based on individual
and team performance measures. Team members
who received a ‘‘C’’ or lower or were fired had to
repeat the class. Insights into the culture of the class
are perhaps best provided by the following quota-
tions, which have been taken from course evalua-
tions of previous course participants:
This is the real world, fraught with real world work-
loads, satisfactions, and frustrations. A course offering a
lot of fun but little sleep… the most challenging course
I’ve taken.
I found the job interviewers were fascinated, by the
way, with the kinds of problems we were asked to
solve – especially the organizational problems. What
do you do with the free loader? How do you handle
the good friend who tries hard but really doesn’t
perform? The study group is the most real world thing
you will do here.
The scenarios
A total of 12 scenarios were written to be directly
relevant to the MBA work team groups. The ethical
dilemmas involved realistic situations that a MBA
The Impact of Perceived Leader Integrity on Subordinates 769
work team might potentially face while in the pro-
gram. In two of the scenarios, the respondents were
required to project their MBA work team group
into a different environment.
There were four scenarios that involved acts
impacting other team members. These scenarios
described a hypothetical teammate who either
engaged in financial misconduct; went into the team
leader’s office when they were not there, opened a
file marked ‘‘private’’ and read damaging informa-
tion about teammates (Conger et al., 1995); violated
the team charter in a way that impacted other team
members; or pretended to be sick resulting in more
work for other team members (Zey-Ferrell and
Ferrell, 1982).
Four scenarios involved actions negatively
impacting the team as a whole. These four scenarios
described a team member who abruptly resigned
without advance notice (Abratt and Penman, 2002);
a team member who used group equipment without
obtaining approval from the team leader (Zey-Fer-
rell and Ferrell, 1982); a team member who took a
trip and then lied on the reimbursement documen-
tation, thus leaving the team less budget money for
the year (Zey-Ferrell and Ferrell, 1982); and a team
member who decided to lie to an external party, thus
negatively impacting the team.
The remaining four scenarios involved acts
affecting an organization of which the team is a part.
These scenarios described a team member who fre-
quently made derogatory comments about the
organization to friends and acquaintances (Peterson,
2004); a team member who drove away potential
customers from the organization through unsavory
conduct; a team member who falsely reported
information to a regulatory agency, resulting in
potential negative consequences for the organiza-
tion; and a team member who hired an employee
with a reputation of poor integrity, resulting in
negative media coverage for the organization.
The ordering of the 12 scenarios on the survey
instrument was random. Following Peterson’s
(2004) example, three questions followed each sce-
nario to access (1) the extent to which society in
general is perceived to agree that the act in question
was morally repugnant; (2) the degree of damage
caused by the act; and (3) the behavioral intentions
of the respondent (‘‘I might take the same action’’ as
the individual in the scenario). As a result of the
pretest, a few of the scenarios were slightly changed
to ensure respondents would view the acts as
‘‘causing damage’’ and ‘‘morally wrong.’’ Each of
the questions was answered using a Likert scale
(1 = strongly agree and 7 = strongly disagree). For
each participant, three average behavioral intention
scores were calculated relating to intended ethical
behavior in teammate situations, team situations, and
organizational situations. Higher values indicated
lower intentions to engage in unethical behavior.
Additional measures
In addition to the scenarios and various demographic
questions, the survey instrument included two well-
established, highly reliable and valid measurement
scales: Craig and Gustafson’s (1998) 31-item per-
ceived leader integrity scale (PLIS) and Andrews and
Meyer’s (2003) MC Form C social desirability scale
(MCSD) originally developed by Crowne and Mar-
lowe (1960). According to Reynolds (1982), the
shortened version of the MCSD is comparable to the
full version with only a slight reduction in internal
consistency. For both scales, a seven point, strongly
agree/strongly disagree, Likert scale was used, and
responses were averaged across all items to create a
mean value for each participant. Higher values indi-
cate higher perceived leader integrity and a higher
social desirability response bias (SDRB). To mini-
mize the effect of common rater bias, we undertook
numerous precautions.
On the survey instrument, we strongly assured
participants of the anonymity of their responses,
promised them that no identifying marks were on
the survey, assured them that there was no right or
wrong answer, and encouraged them to be honest
with their responses. According to Podsakoff et al.
(2003) these procedures can greatly reduce or even
eliminate common rater effects. Second, we in-
cluded the MCSD scale on our survey instrument
and utilized it to control for SDRB. Social desir-
ability response bias is the tendency of respondents
to answer questions in the perceived socially
acceptable way rather than with their true feelings. It
is one of the most prevalent common rater effects
impacting ethics research. To determine if SDRB
was a problem, we utilized a Harman’s one-factor
test as well as a partial correlation procedure
770 D. W. White and E. Lean
described below. Finally, we physically distanced the
MBA work team leaders from the respondents by
asking them to leave the room while the survey was
being completed. According to Scott (1982), this
procedure has been shown to reduce social desir-
ability bias in some situations. Respondents who
completed the survey instrument via e-mail were
assumed to be in a similar condition. Indeed, Booth-
Kewley et al. (1992) found no SDRB difference
between computer-administered and paper and
pencil modes when precautions were taken with the
face-to-face
group.
Analysis and results
Demographics and response rate
About 249 MBA students completed the survey over
the course of several months. A final sample of 245
was established after rejecting four unusable, partially
completed responses. Of the respondents, 58.8%
were male and 41.2% were female. The average age
was 24 with a standard deviation of 2.41. Ages
ranged from 21 years to 34 years old. The majority
of the respondents (96%) was from the United States
and was currently employed on a full-time basis
(93%). The primary industries of employment in-
cluded healthcare, manufacturing, services, sales,
transportation, and consumer products.
The total sample frame for the in-class condition
was 174, of which 169 provided us with completed
usable surveys (one was incomplete and four de-
clined to participate). This resulted in a response rate
of 97.1%. Team leaders were asked to leave the class
(before we announced what was going to happen)
and were not included in the sample. This was done
to ensure honest responses and to guard against
potential unwanted leader influence regarding the
leader integrity scale.
The total sample frame for the e-mail condition
was 138, of which 76 provided us with completed
usable surveys (three were incomplete). A total of
three e-mails were sent out to each respondent over
the course of 10 days. This resulted in a response rate
of 55.1%. The excellent response rate was due in
part to a strong relationship with the professor, high
levels of involvement in the simulation course, and a
general interest in the topic.
To test for possible difference between the two
conditions, the 169 questionnaires received from the
in-class respondents were compared to the 76 ques-
tionnaires received from the e-mail respondents. A
total of 11 separate t-tests were conducted to com-
pare the mean values of every scale for the two
conditions. The 11 scales included three average
behavioral intention scores for teammate, team, and
organizational situations, three agreement with
society scores, three degree of damage caused scores,
perceived leader integrity scores, and the social
desirability scores. None of the constructs were dif-
ferent between the two groups at the p < 0.05 level.
Scale reliabilities
The general psychometric characteristics of the
constructs used to evaluate the hypothesized rela-
tionships are described in this section. For the 12
ethical scenario scales, we followed a traditional scale
development procedure. The first step was to
investigate the internal consistency of the construct
items by calculating a Cronbach’s alpha. The next
step involved an analysis of the correlation matrix
and the item-to-total correlations. This was done to
identify potential scale contaminants. Items with low
item-to-total correlations (below 0.3) were deleted
from the scales as the low correlations suggested that
the items might not fit the construct or might tap
into another dimension of the construct (Churchill,
1979). The third step involved an analysis of the
factor structure of each scale by carrying out a
principal component analysis. An eigenvalue of one
was used as a criterion for creating the dimensions
(cf. Green, 1978; Hair et al., 1992). Emergence of a
single factor indicates the unidimensionality of a
scale (Churchill, 1979). Items that loaded on more
than one factor were deleted. After all split loading
items were deleted, a final principal components
factor analysis was conducted to assure scale unidi-
mensionality. Items with communality of 0.4 or
greater remained in the factor solution (cf. Green,
1978). The final step was to calculate a concluding
Cronbach’s alpha. Ideally, the coefficient alpha for a
purified scale should exceed 0.7 (Nunnally, 1978).
For the ethical scenarios, we utilized the behav-
ioral intention of the respondent question for scaling
purposes. In the literature review section, it was
The Impact of Perceived Leader Integrity on Subordinates 771
predicted that a three-factor solution would result.
We theorized that respondents would view situa-
tions involving teammates, the team, and the orga-
nization differently. Three scenarios, one from each
group, had to be deleted because of cross loadings.
The deleted teammate scenario dealt with a violation
of the team charter in a way that impacted other
team members. The deleted team scenario con-
cerned a team member who decided to lie to an
external party thus negatively impacting the team.
The deleted organization scenario dealt with a team
member who frequently made derogatory comments
about the organization to friends and acquaintances.
The remaining nine scenarios loaded on their pre-
dicted factor. As Table I demonstrates, the coeffi-
cient alpha of two of the scales was above the 0.70
threshold recommended by Nunnally (1978). The
organization ethical scenario scale fell just shy with a
coefficient alpha of 0.65.
Following Parry and Proctor-Thomson (2002), a
principal component analysis was conducted on the
PLIS to verify dimensionality. It found that a four-
factor solution best fit the data. These four factors
accounted for 55.89% of the variance. Similar to
Craig and Gustafson (1998) and Parry and Proctor-
Thomson (2002), the first factor produced an
eigenvalue five times larger than the second eigen-
value, indicating a latent one-factor construct. In
addition, the high Cronbach’s alpha (0.97) for the
complete scale supports the finding of a latent one-
factor construct.
As noted by Parry and Proctor-Thomson (2002),
the potential negative effect of heteroscedasticity
caused by highly skewed means is a weakness of the
PLIS scale. However, they recognized that the scale
is useful for measuring ‘‘a level of global perceived
integrity’’ but that a ceiling effect on the positive end
of the scale limits its usefulness to other types of
analyses. In line with Parry and Proctor-Thomson’s
suggestion, we utilized the PLIS in the current study
as a global measure of perceived integrity. By con-
verting the data from Likert scale data into nominal
categorical data, we minimized the impact of the
ceiling effect. Individuals who rated their leader
above the PLIS mean of 6.09 were placed into the
high-perceived leader integrity group. Individuals
who rated their leader below the mean but still
within one standard deviation of the mean were
placed into the medium perceived leader integrity
group. Those who rated their leader more than one
standard deviation below the mean were placed into
the low perceived leader integrity group. This
approach is logical given the characteristics of PLIS.
Since the PLIS utilizes items that describe clear,
unambiguous unethical acts, the presence of uneth-
ical behavior is detected when respondents rate their
leader lower than the highest end of the scale.
However, if all unethical behavior is completely
absent, then the leader is said to act ethically and
posses integrity (Parry and Proctor-Thomson, 2002).
Factor analysis was not conducted on the ten-item
social desirability response scale (MCSD) because its
factor structure has been confirmed many times in
the literature. Similar to Andrews and Meyer’s
(2003), the scale produced a final Cronbach’s alpha
of 0.88.
TABLE I
Summary Statistics, Correlation Coefficients, & Scale Reliabilities
Variable Mean S 1 2 3 4 5
1. MCSD 4.821 1.432 (0.880)
2. PLIS 6.091 1.114 0.146 (0.970)
Dependent Measures
3. Teammates 5.090 1.192 0.389** 0.201* (0.764)
4. Team 5.559 1.279 )0.122* 0.318** 0.073 (0.757)
5. Organization 5.137 1.419 )0.134* 0.194* 0.278** 0.207* (0.653)
Note: Cronbach’s alpha coefficients are in parentheses
*p < 0.10; **p < 0.05
772 D. W. White and E. Lean
Preliminary analyses
Before hypothesis testing could begin, two series of
tests were conducted to assure that respondents be-
lieved the situations described in the scenarios would
be viewed as (1) unethical by society in general and
(2) harmful to the affected individual or group.
Three means were calculated for the social consensus
items relating to teammates (2.22), the team (2.41),
and the organization (2.40). All three were below
the neutral value of four, which indicates that
respondents believe the situations would be viewed
as unethical by society in general. In addition, three
means were calculated for the magnitude of conse-
quence items – teammates (5.39), the team (4.92),
and the organization (5.16). The mean values were
all above 4 indicating that respondents viewed the
situations as harmful to the affected individual or
group.
Hypotheses testing
The three hypotheses predicted a positive relation-
ship would exist between a team members’ percep-
tion of his leader’s integrity and his own ethical
intentions. To test these hypotheses, it was first nec-
essary to identify those team members who were
characterized as having very high perceptions of the
team leader’s integrity and those team members who
were characterized as having low perceptions of the
team leader’s integrity. As was described above, a
frequency distribution of all respondents was con-
ducted on the mean scores of the PLIS. We then
divided the respondents into one of three groups
based on the PLIS mean and standard deviation: low
perceived team leader integrity (PLIS-LG) – more
than one standard deviation below the mean; mod-
erate perceived team leader integrity (PLIS-MG) –
less than one standard deviation below the mean yet
not above the mean; and high perceived team leader
integrity (PLIS-HG) – above the mean. The 128
respondents in the high group had a mean PLIS of
6.98. The 77 respondents in the middle group (PLIS-
MG) had a mean PLIS of 6.41, and the 40 respondents
in the low group (PLIS–LG) had a mean PLIS of 5.10.
To test the hypotheses we needed to determine
whether or not each population (PLIS-HG, PLIS-
MG, and PLIS-LG) had a statistically different ethical
intention mean in the three different situations. To
achieve this, we conducted an ANOVA test for each
of the three situational scenarios. An ANOVA test
was used to find out if there was a significant dif-
ference between the three group means. The
ANOVA analysis, however, simply indicated there
was a difference between two or more group means;
it did not indicate which means were significantly
different. Thus, we performed a post hoc pairwise
multiple comparison Scheffe’s test to determine
which means differed. Scheffe’s test was selected
since we had unequal group sizes.
For H1 (ethical situations impacting specific
teammates), the overall relationship was significant
(F = 14.12, p < .001). The PLIS-HG exhibited a
stronger tendency toward ethical behavior with a
mean of 4.94 than did the PLIS-LG with a mean of
3.71. The PLIS-MG also had a statistically lower
ethical intention score of 4.49 from that of PLIS-
HG. The PLIS-LG and PLIS-MG ethical intention
means were not statistically different. Overall these
findings lend support for H1.
For H2 (ethical situations impacting the overall
team), the overall relationship was again significant
(F = 21.44, p < .001). The PLIS-HG exhibited a
stronger tendency toward ethical behavior with a
mean of 6.38 than did the PLIS-LG with a mean of
4.94. The PLIS-MG had a statistically lower ethical
intention score of 5.11 from that of PLIS-HG. The
PLIS-LG and PLIS-MG ethical intention means
were not statistically different. Overall these findings
lend support for H2.
For H3 (ethical situations impacting the organi-
zation of which the team is a part), the overall
relationship was significant (F = 12.94, p < .001).
The PLIS-HG exhibited a stronger tendency toward
ethical behavior with a mean of 5.69 than did the
PLIS-LG with a mean of 4.46. The PLIS-MG also
had a statistically lower ethical intention score of
5.23 from that of PLIS-HG. The PLIS-LG and
PLIS-MG ethical intention means were also statis-
tically different. Overall these findings lend support
for H3.
Social desirability response bias
Previous research that has sought to study the rela-
tionship between the ethical attitudes of leaders and
The Impact of Perceived Leader Integrity on Subordinates 773
subordinates has produced confusing results (Akaah
and Riordan, 1989; Murphy et al. 1992; Trevino
et al., 1999; Zey-Ferrell et al., 1979). Peterson
(2004) suggests that SDRB could be partially to
blame. To test for SDRB in the present study, we
first performed a Harman’s single-factor test. We
loaded all of the variables in the study into an
exploratory factor analysis and examined the unro-
tated factor solution. The first factor explained
45.34% of the variance which seemed to indicate the
presence of one general factor that accounted for the
majority of the covariance among the measures
(Iverson and Maguire, 2000). Next we calculated
partial correlations between the PLIS and respondent
ethical intentions while controlling for MCSD.
These scores were 0.186, 0.289, and 0.186 for
teammates, team, and the organization scenarios
respectively. We then compared these scores to the
Pearson correlations of the same variables found in
Table I. MCSD was not controlled for when cal-
culating the Pearson correlations in Table I. These
scores were 0.201, 0.318, and 0.194 for teammates,
team, and the organization scenarios respectively.
When not controlling for MCSD, the correlations
were larger for all three scenario conditions. From
this comparison, it appeared that SDRB might have
inflated the simple correlations, which is indicative
of the potential spurious impact of the SDRB
(Peterson, 2004).
Discussion and conclusions
As Trevino (1986) noted in her manuscript,
understanding the ethical decision-making process in
organizations is significant to the development of
organizational science. With the structure of tradi-
tional organizations shifting in reaction to changes in
the local and global economy, it is becoming
increasingly important to understand the determi-
nants of ethics within corporations and, more
importantly, in the work team environment. The
contingent thesis that is proposed by this study is
perceived leader integrity will influence subordinate
ethical intentions in a work team environment.
More specifically, it was theorized that team mem-
bers who serve under a leader who is perceived as
having strong integrity would be less likely to engage
in unethical conduct than would team members
who serve under a leader who is perceived as having
weak integrity. It was also thought that ethical
intentions of team members might vary depending
on who was being impacted by the unethical
behavior. Three salient, internal entities were iden-
tified in the literature as: (1) team members, (2) the
team as a cohesive unit, and (3) the organization as a
whole.
The findings confirm that perceived leader
integrity does indeed have an impact on the ethical
intentions of team members in all three situations.
The relationship was strongest in ethical situations
impacting the team itself and the organization as a
whole. This is significant in light of current events in
the business world. As corporations are searching for
ways to decrease unethical employee activity, it is
important to note that team members who perceived
their team leader to have high integrity were less
likely to commit unethical acts that impact the team
itself and the organization.
Most of the previous work researching the effects
of leadership on subordinate behavior looked at the
effects of CEO or top management ethical behavior
rather than at the team level, as in the present study.
By increasing the use of work teams, corporations
can create a stronger sense of identity within their
employees and foster an environment where
employees feel they are part of something larger than
themselves. In addition, work teams tend to produce
accountability between team members which may
help to improve ethical conduct. It was found that
respondents who perceived their team leader to have
high integrity reported lower intentions of com-
mitting unethical acts directed at other team mem-
bers. Interestingly, however, the relationship was not
as strong as it was in situations impacting the team
and the organization. Only leaders who were per-
ceived as having extremely high integrity were
found to positively impact the ethical intentions of
team members toward each other. This seems to
lend support to Robinson and Bennett’s (1995)
argument that unethical acts that affect co-workers
may be more explicable in terms of individual,
personal factors rather than in terms of situational
factors such as leader influence.
As with all empirical research, there were several
limitations associated with this study. First and fore-
most was that a team leader’s integrity was assessed
strictly through a single participant’s perceptions. In
774 D. W. White and E. Lean
order to obtain the most accurate moral reading of a
team leader, it would be preferable to survey an
entire team. However, in such a case, the anonymity
perceived by participants may begin to diminish.
Further, the actual integrity of a team leader may not
be properly assessed by surveys of his or her imme-
diate subordinates. A related issue would be that
leaders are not likely to allow their integrity to be
directly observed or measured. The purpose in our
study, however, was to assess the relationship
between the team member’s ethical intentions and
that member’s perception of his leader’s integrity
as opposed to his leader’s actual integrity. Thus, it is
the team member’s perception of his leader that is
expected to influence his behavioral intentions
(Vidaver-Cohen, 1998). Since all research designs
contain limitations, we must caution against potential
implications of this study until further inquiries can
confirm our results.
No attempt was made to determine the impact
that leaders external to the work team have on group
members. It is likely that other leaders (spiritual,
work, athletic, etc.) have significant impact as well.
In the future, it would be valuable to determine the
degree of influence external leaders have as com-
pared to the internal group leader.
Another potential limitation of our study relates
to the fact that the respondents provided the measure
for both the PLIS and their own ethical intentions.
According to Podsakoff et al. (2003), a common
rater effect bias can be produced when the predictor
and criterion variable measures are provided by the
same individual. This type of self-report bias or
‘‘artificial covariance between the predictor and
criterion variable’’ is a potential weakness of the
current study. In an effort to reduce the possibility of
these types of method biases, we followed proce-
dures recommended by Podsakoff et al. (2003).
They state that by following two procedural reme-
dies, researchers can greatly minimize, if not totally
eliminate, the potential effects of common rater
variance on the findings of their studies. First, we
promised the respondents that their answers would
be completely anonymous multiple times through-
out the survey instrument. Second, we assured
respondents that there were no wrong or right an-
swers and encouraged them to answer the items as
honestly as possible. Finally, we pointed out that no
markings were used to identify the respondents on
the survey instrument. According to Podsakoff et al.
(2003), these procedures ‘‘should reduce people’s
evaluation apprehension and make them less likely
to edit their responses.’’ In addition, we physically
distanced the respondents from the work team
leaders (Scott, 1982).
The findings that emerged from this study, though
consistent with previous studies regarding the rela-
tionship between the ethical attitudes of leaders and
their subordinates, raise several questions worthy of
additional research. Future research should investigate
how a belief in universal moral rules by team members
impacts the perceived leader integrity/ethical inten-
tions relationship. Individuals join organizations with
an individual level of cognitive moral development as
well as other personal characteristics. A personal
characteristic likely to moderate the influence of sit-
uational variables, such as perceived leader integrity, is
the degree to which an individual believes in universal
moral rules. For example, one team member may
believe that certain behaviors are always unethical
regardless of the situation while another team member
may reject the idea of universal moral rules and believe
that morality depends on situational variables or the
outcome. Assessing a subordinate’s level of universal
moral rules may help researchers to understand exactly
how much of an impact the team leader has on the
subordinate’s ethical intentions.
As was stated earlier, the PLIS has a tendency to
produce extremely high means due to the fact that it
only uses negative items. This limits the potential
usefulness and the analyses it can provide. In the
future, researchers should seek to deal with the po-
tential effects of heteroscedasticity caused by the
highly skewed means (Parry and Proctor-Thomson,
2002).
An implication of these results, as Craig and
Gustafson (1998) studied, is that researchers do not
yet fully understand how a follower’s impressions of
leader integrity develop, how those impressions
change over time, or even which leader behaviors
are most influential in the perception formation
process. Studying each of these issues would greatly
expand the literature with regard to team members’
ethical intentions as a result of their perceived leader
integrity.
In summary, the present study provides needed
research on the relationship between perceived lea-
der integrity and its effect on employee behavior.
The Impact of Perceived Leader Integrity on Subordinates 775
Rather than focusing on the impact of the ethical
influences of top management and CEOs, as much
of the previous literature has done, the present study
examined how leaders of work teams affect the
ethical intentions of their subordinates. It is hoped
that the findings from this study can add to the
conceptual base needed to develop a research agenda
for future investigations of the integrity of team
leaders and its effect on work team groups.
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Darin W. White
McAfee School of Business Administration,
Union University,
1050 Union University Dr, Jackson, TN, 38305,
U.S.A.
E-mail: dwhite@uu.edu
Emily Lean
Walton College of Business,
University of Arkansas,
Business Building 402, Fayetteville, AR, 72701,
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778 D. W. White and E. Lean
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