Explore the responsibilities of moral agents involved in all aspects of business. 2.1 Describe the impact of corporate culture on ethical decision-making.

PHI 4301, Business Ethics 1

Course Learning Outcomes for Unit III Upon completion of this unit, students should be able to:

2. Explore the responsibilities of moral agents involved in all aspects of business. 2.1 Describe the impact of corporate culture on ethical decision-making.

3. Examine the ethical foundations for controversial issues in business.

3.1 Discuss the role of corporate leadership in establishing organizational culture.

5. Formulate ethical solutions for real-world situations using ethical theories and concepts. 5.1 Explain the real-world application of ethics and corporate culture information.

Required Unit Resources Chapter 4: The Corporate Culture—Impact and Implications In order to access the following resources, click the links below. Johnson & Johnson. (n.d.). Our credo. https://www.jnj.com/credo/ Zenger, J., & Folkman, J. (2020, December 30). Research: Women are better leaders during a crisis. Harvard

Business Review. https://libraryresources.columbiasouthern.edu/login?url=https://search.ebscohost.com/login.aspx?dire ct=true&db=bsu&AN=148025137&site=ehost-live&scope=site

Unit Lesson In Unit I, we looked at the Wells Fargo scandal and noted the cultural shift that prioritized sales over customer service, leading to overzealous and fraudulent cross-selling. It is obvious that something went very wrong with the Wells Fargo corporate culture. On the other hand, it is equally obvious—from our own experiences as employees and as customers—that getting corporate culture right is not easy. So, in this unit, we are going to focus on the concept of corporate culture and how it works, for good or for evil. The concept of culture is fundamental to our lives. Whenever a group of human beings organize themselves for whatever reason, a culture for the organization comes into existence. Hartman et al. (2024) describe culture as “a shared pattern of beliefs, expectations, and meanings that influences and guides the thinking and behavior of the members of a particular group” (p. 408). We intuitively think of an organization’s culture as something that depends on its individual members but also as a separate attribute of the organization itself. In other words, it makes sense to say members of an organization can influence its culture and vice versa. Corporate culture is no different. Every business has shared beliefs, expectations, and meanings when it comes to problem-solving, work-life balance, deference to authority, and so forth. Our concern here is corporate culture as it relates to shared ethical beliefs, expectations, and meanings. We commonly refer to these as corporate values. It is now common practice for businesses to declare their values openly. Consider USAA (originally called the United Services Automobile Association), an insurance and financial services company that appears regularly on “Best Places to Work” lists. USAA (n.d.) asserts its values as

UNIT III STUDY GUIDE

Corporate Culture

PHI 4301, Business Ethics 2

UNIT x STUDY GUIDE

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service, loyalty, honesty, and integrity and details the elements of The USAA Standard of Conduct on its website. Statements like these tell us a lot about a company’s culture. Importantly, they signal whether company culture centers on compliance or on values. A compliance-based culture is primarily concerned with steering clear of legal and regulatory rule violations. Anyone who takes annual “compliance training” on subjects like Title VI, Title IX, Health Insurance Portability and Accountability Act (HIPPA), International Organization for Standardization (ISO), Sarbanes-Oxley, anti-harassment, diversity, workplace safety, etc. will understand what this means. If this is the extent of a company’s commitment to ethics, then it is fair to say it has a compliance-based culture. A values-based culture sees adherence to the rules as superficial evidence of its deeper moral commitments to good consequences, principles, and character. The USAA example is illustrative of a values-based culture, as it embraces being compliant while aspiring to a more expansive ethical culture. An ethical corporate culture does not happen by itself; ultimately, it is the responsibility of senior leaders to set a consistent moral tone throughout the company culture. This has important implications for ethical leadership. Leaders must establish clear moral guidance in the form of mission statements, codes of ethics, core values, and similar commitments. Further, good leaders will act, publicly and privately, for the sake of the companies they represent and in accordance with company values. All too often, however, senior corporate executives display indifference to values, resulting in toxic corporate cultures. Most high-profile corporate ethical scandals like Wells Fargo and, more recently, Theranos, have in common a corporate culture with absent or corrupted values demonstrated at the highest level. In the absence of ethical leadership, it falls to others inside the company to take ethical action. Certain individuals, known as whistleblowers, bring the wrongdoing to the attention of the authorities or the public. The whistleblower is an indispensable—and sometimes heroic—figure in business ethics. An ethical company will implement layers of accountability that prevent or mitigate ethical lapses, thereby forestalling the necessity of whistleblowing as a last resort. It will not only communicate its corporate values but also provide incentives, like awards and training, for following them. Ethics hotlines, ombudspersons, and other reporting mechanisms will encourage employees to share concerns about unethical behavior. Some companies take this a step further by setting up systems for continuous monitoring, assessing, and auditing the ethics of their corporate cultures. As challenging as it is to create and maintain, an ethical culture is one of the most valuable assets a company can have.

References Hartman, L. P., DesJardins, J., and MacDonald, C. (2024). Business ethics: Decision making for personal

integrity and social responsibility (6th ed.). McGraw-Hill Education. https://online.vitalsource.com/#/books/9781265810153

United Services Automobile Association. (n.d.). Code of business ethics and conduct: Inspiring trust.

https://content.usaa.com/mcontent/static_assets/Media/USAA_code_of_conduct.pdf?cacheid=47233 1104_p&_ga=2.135338993.1393249540.1638201483-1056091997.1638201483

Proceedings of FEB Zagreb 14th International Odyssey Conference on Economics and Business

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PREDICTING BUSINESS ETHICS WITH ORGANIZATIONAL

COMMITMENT AND JOB SATISFACTION

Ana KLIKOVAC

Zagreb School of Economics and Management, Croatia

[email protected]

Katarina SOKIĆ

Algebra University College, Zagreb, Croatia

[email protected]

Abstract Examining the personal characteristics that affect ethical behavior is crucial since corporate

citizenship behavior includes business ethics as one of its fundamental components. The main

goal of the current study is to examine relations between organizational commitment, work

satisfaction, and business ethics, as well as gender differences in these variables. Data were

collected using the business ethics scale, organizational commitment scale, and work

satisfaction scale from a sample of 243 workers (164 males, 79 women) at Metal Product Ltd.

from Zagreb, which produces electrical equipment. As expected, both men and women

demonstrated positive associations between organizational commitment and business ethics

scales. Moreover, only women demonstrated positive relationships between the business ethics

and work satisfaction. Organizational commitment positively correlated with job satisfaction

in men but not women. Regression analysis results showed unique predicted relationships

between the organizational commitment scale and business ethics in both men and women, as

was expected. The relationship between job satisfaction and business ethics varied by gender;

job satisfaction strongly predicted business ethics only in women while not in men. 29% of the

overall score variation in men's business ethics and 24% in women's business ethics were

exclusively explained by organizational commitment and work satisfaction. According to the

study's findings, there are some gender differences in the relationships between organizational

commitment and work satisfaction as well as in the relationships between business ethics and

organizational commitment. Overall, the findings point to the importance of organizational

commitment and job satisfaction in the explanation of business ethics.

Keywords: business ethics, organizational commitment, job satisfaction, gender differences

JEL classification: M10, M12

Introduction

Ethics, values, integrity, and responsibility are essential in today's workplace, believing that

strong ethical standards are necessary for excellent business. It is widely acknowledged that

high ethics can positively impact an organization's economic performance (Shaltegger &

Burritt, 2018). Painter-Morland & Bos (2011) emphasize the role of a code of ethics for the

stability and reputation of companies, as “establishing and maintaining an ‘ethical culture’ by

communicating core corporate values is intended to minimize the risk of reputational damage,

associated erosion of confidence and loss of business.” Moriarity (2002) identified key focus

points that shape individuals’ actions and their characters: (1) business ethics which puts the

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focus on the actions and character of individual people engaged in business, and (2) laws and

policies. The role of laws and regulations in shaping human behavior and ethics can have two

effects. One is to forbid the action that is considered morally permissible. The other is to allow

(when not explicitly forbidden by the law) actions that are considered morally wrong. Lee &

Berleur (1994) examined the implementation of the code in relation to person’s honesty and

have concluded that “codes, like laws, tend to keep the honest persons honest and have little

impact on those who chose to ignore their precepts or who have never been exposed to their

tenets. Moriarity (2002) discusses the difference between ethics and morality. According to a

summary of the relevant literature on ethics, he explains that “ethics is often understood to have

two components: morality, which is concerned with how we relate to others, and prudence,

which is concerned with how we relate to ourselves. Sometimes morality is understood to be

personal, while ethics is understood to be interpersonal or social.

Employee commitment is based on loyalty, identification with the organization, compatibility

with its principles, and other factors. One such factor is whether employees feel appropriately

compensated for their labor (Blanken &Schrieber, 2005). Satisfaction with the organization

should be immediately impacted by compatibility with values or character. The most important

finding for modern business and the application of ethics was made by Cameron et al. (2004),

who established a statistically significant link between perceived ethics and organizational

outcomes. Contrary to popular belief, which holds that applying ethics results in undesirable

compromises, these findings demonstrate that ethics positively impacts economic outcomes.

Business ethics are associated with working attitudes and values, employee behavior at work,

performance, distinct personality traits, demographic factors, and educational attainment (e.g.,

Fakunjoju, 2018; Zabel et al., 2016). Companies may have a variety of values that are clearly

marketing-related, such as those that govern the calibre of goods and services, the language

used in advertisements, the choice of distribution methods, and how clients are handled.

Corporate ethical values, however, serve as the foundation for all of these particular values.

Several studies document gender differencies in managers' and aspiring corporate leaders'

ethical perceptions. This research stream's overall finding is that men are much more likely than

women to act unethically, while women are significantly more likely than men to perceive

certain dubious behaviors as unethical (see McCabe et al., 2006). However, other studies,

indicate that there are no variations in corporate ethics between men and women based on

gender (e.g., Roxas, & Stoneback, 2004). Given these inconsistent results, more research is

required to determine how other contextual and individual factors, such as socialization, job

satisfaction, loyalty to the company, motivation, gender equality, etc., affect business ethics.

Business ethics and organizational commitment

One of the main work-related mindsets that demonstrates how closely an individual identifies

and feels a connection to the organization is organizational commitment (Mowday, Steers &

Porter, 1979). Numerous studies demonstrate that unique job features, such as job demands,

business problems, competencies, range of abilities and skills, and task interdependence, are

important determinants of organizational loyalty (Judge & Kammeyer-Mueller, 2012).

Communication, management style, and organizational justice are the main organizational

determinants of this attitude toward work. On the employee side, personality qualities,

particularly conscientiousness, extraversion, and neuroticism, have a significant impact.

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According to Shanker and Bin Sayed's (2015) investigation into the connection between

emotional intelligence and organizational commitment, affective loyalty to the organization is

significantly predicted by emotional intelligence, including its components such as self-

awareness, focus on problem-solving, assertiveness, empathy, self-confidence, and managing

others. Employee despair and poor management practices may cause firms where employees

express their desire to leave. Only the imagined duty to stay in such a circumstance ties the

person to the company.

The Eagly & Chaiken (1993) model (E&C model), one of the most popular models of

organizational commitment, demonstrates that while the influence of organizational loyalty on

behavior is indirect (i.e. mediated), relevant routine behaviors (for example, certain habits) can

directly influence certain behaviors—even if the person does not develop an attitude toward

that behavior. This implies that organizational commitment to particular activities can be

reduced in the presence of strong habits. Generally, habits both directly and indirectly

contribute to the explanation of a person's behavior; that is, they are mediated by the attitude

toward the conduct and the associated intention.

This model's most significant contribution is the contrast between attitudes toward goals and

behaviour. As a result, attitudes toward conduct and intentions mediate the relationship between

attitudes toward goals and actual behavior. Both internal organizational elements and personal

characteristics are predictors of organizational commitment. According to research, job

features, such as job demands, job challenges, necessary competence, range of competencies

and skills, and task interdependence, are the most significant determinants (Judge &

Kammeyer-Mueller, 2012). When it comes to the company, what matters most is how managers

treat their staff, including their communication, empathy, professionalism, ability to work with

others, and sense of fairness. Trust, reciprocity, sharing of duties and responsibilities, and task

execution are crucial among coworkers. The size of the organization is something that is not to

that extent, and centralization is crucial. Conscientiousness, extraversion, and neuroticism have

a strong relationship with loyalty, just like job satisfaction does. Despite being conscientious,

work ethics, benevolence, and a thorough evaluation of skills and competency are all connected.

There hasn't been enough scientific research on the relationship between organizational

commitment and business ethics.

Hunt et al. (1989) findings strongly support the relationship between organizational

commitment and business ethics. A recent study (Lee &Vo, 2022) examined how the corporate

ethics of audit firms and the code of ethics affect the moral judgment of auditors in Vietnam.

The study's findings show that the code of ethics for professional accountants significantly

affects the auditors' ethical judgment. The results, however, only weakly support the idea that

the corporate ethics of audit firms influence the auditors' ethical judgment.

Lee (2020) investigated leaders and other company members interact to achieve business

sustainability performance as well as how both positive and bad employee behaviors might

affect these relationships. According to the study's findings, employee actions have a significant

impact on a company's sustainability performance. Employee actions can either promote greater

corporate citizenship behavior or reduce counterproductive work behavior, depending on

contextual or/and relational circumstances.

These results show how important it is to have strong relationships with direct managers as well

as ethical workplace condition.

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Business ethics and job satisfaction

Job satisfaction refers to an employee's affective attitude about their work, which comprises a

range of attitudes regarding various parts of their employment that have an impact on their

interaction with the business (Spector, 1997).

Job satisfaction is correlated with positive affectivity toward one's work, whereas negative

affectivity toward one's work is associated with lower levels of job satisfaction. Hertzberg's

two-factor theory of motivation (Herzberg, Mausner, & Snyderman, 1964) distinguishes

between hygiene elements and motivators when explaining job satisfaction. Because there is

little chance that employees will have an impact on these characteristics, hygienists offer a

possible source of unhappiness (e.g. salary, working conditions, job security, administration,

technical supervision, and benefits). In contrast, because they are associated with results that

the employee can control and self-actualization, motivators can be a source of potential job

happiness. These internal, intrinsic elements are associated with job satisfaction and have a

favorable impact on employee motivation. Achievement, acclaim, demanding work,

commercial success, career advancement, personal development, and well-being are some

motivators.

Locke's value theory (Locke, 1976) is another theory that explains job satisfaction. According

to this theory, the main elements of job satisfaction are values (also known as "subjective

demands of the mind"), value significance (importance of values for an individual), and value

perception (evaluation of the current situation and values). According to this view, a person can

alter the components of his or her job that he or she finds unsatisfactory.

Situational and dispositional factors might have an impact on job satisfaction (Judge & Klinger,

2007). Situational determinants for job satisfaction include things like the difficulty of the job,

the importance of the task, and feedback, whereas affectivity—that is, positive and negative

emotions and personality traits—are the most significant dispositional factors. According to

research, the top personality traits to predict job satisfaction are neuroticism, conscientiousness,

and extraversion (Judge & Kammeyer-Mueller, 2012). Work outcomes and organizational

behaviors including turnover, absenteeism, leaving the company, and job performance are all

correlated with job satisfaction. Job performance is most strongly correlated with job

satisfaction, particularly in more complicated jobs, according to meta-analytic research (e.g.,

Judge et al., 2001). Among Croatian scientists, one research (Jerneić & Kutleša, 2012) showed

that low job satisfaction significantly predicts the intention to leave the organization.

Significant differences in employee outcomes and workplace behavior are influenced by job

satisfaction. Less satisfied employees are more inclined to either explore alternative chances

and positions or find ways to reduce their involvement at work (Coomber & Barriball, 2007).

In the first situation, there is a voluntary exit or turnover; in the second, there is workplace

laziness and steadily rising absenteeism, or absence from work. Those who don't show up for

work are expressing their displeasure with their jobs, attempting to escape the unpleasant

aspects of their jobs, harming the company, and decreasing their productivity and contribution.

One of the first published studies (Vitell & Davis, 1990) examined the relationship between

business ethics and job satisfaction in a sample of experts in information system management

whose organizational positions ranged from programmer to head of information systems.

Several aspects of job satisfaction were examined: income satisfaction, promotions

satisfaction, coworker satisfaction, supervisor satisfaction, and work satisfaction. Findings

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showed that when top management emphasizes ethical behavior and is positive about the

connection between ethics and success, participants were more satisfied with the various

aspects of their jobs.

In a recent study, Al-Nashash et al. (2018) investigated how strong work ethics affected job

satisfaction among Jordanian bank employees. The study showed a positive relationship

between work ethics and job satisfaction. These results show that work ethic is one of the critical

characteristics to improving employee job satisfaction and other organisational outcomes.

Moreover, raising employee work satisfaction raises organizational commitment, reduces labor

turnover, and boosts productivity. Findings SEM analysis (Attar et. al., 2017) show that moral

leadership behavior has a beneficial impact on employees' job satisfaction. The findings from

this study support the theoretical idea that job satisfaction increases when ethical leadership

behavior is perceived to be more effective.

Current study: objectives and hypotheses

This study's main goal was to examine the relationship between organizational commitment,

job satisfaction, and business ethics among Metal Product Ltd. personnel as well as the gender

differences in these variables.

Based on the findings of the aforementioned studies (Al-Nashash et al., 2018; Attar et al., 2017;

Hunt et al., 1989; Lee, 2020; Lee & Vo, 2022; Vitell and Davis, 1990) and in light of the

presented theoretical knowledge the following hypotheses were created:

H1: Business ethics will be positively related to organizational commitment.

H2: Business ethics will be positively related to job satisfaction.

H3: Organizational commitment will be positively associated with job satisfaction.

H4: The associations between business ethics and organizational commitment and job

satisfaction differed across

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