Write a 3-page paper to analyze your article based on the course material, ethical issues of misuse of company time and resources, conflicts of interest, bribery, fraud, lying, and d

Common Thread: The Impact of Mission on Ethical Business Culture. A Case Study

Jana L. Craft1

Received: 14 September 2015 / Accepted: 18 January 2016 / Published online: 30 January 2016

� Springer Science+Business Media Dordrecht 2016

Abstract What is the impact of mission on ethical busi-

ness culture? This question was analyzed through a quali-

tative case study of a large nonprofit organization in the

human services industry with a solid history of ethical

business practices and consistent use of a values-based

decision-making model. This research explored ethical

decision making, ethical business culture, and congruence

between enacted and espoused institutional values. Insti-

tutional values were identified, and the following pair of

research questions was examined: To what extent were

incongruent values found between espoused and enacted

values? To what extent did incongruent values impact the

ethical business culture? Incongruent enacted values were

present in the culture, but negative impact was diminished

by a larger number of congruent enacted values. Additional

findings revealed that an intense commitment to the mis-

sion by all employees was the common thread that wound

throughout the organization’s ethical business culture and

essentially abrogated the undesirable effects of incongruent

and negative values.

Keywords Ethical business culture � Ethical decision making � Argyris and Schön � Nonprofit � Qualitative research � Case study

What is the impact of mission on ethical business culture?

In a qualitative case study of a large nonprofit organization

in the human services industry with a solid history of

ethical business practices, a common thread was found that

wove throughout the culture: mission. Belief in the mission

by employees at all levels and locations held together the

fabric of the culture in which there existed a shared com-

mitment to ethics and ethical decision making. While much

can be said for a shared dedication to mission, major gaps

existed between espoused and enacted values. Gaps

occurred between two key descriptors: (1) hierarchical

positions, and (2) geographic locations. Thus, the purpose

of this study is twofold. To what extent were incongruent

values found between espoused and enacted values? And,

to what extent did incongruent values impact the ethical

business culture? The organization studied was a large

nonprofit in the human services industry located in the

upper Midwest. In business for nearly 50 years, the orga-

nization consistently demonstrated ethical business prac-

tices and had in place a values-based decision-making

model (VBDMM) for over two decades. This study is

grounded in the examination of three key issues.

First, what were the institutional values of the organi-

zation? Values can be defined as generalized, enduring

beliefs about the personal and social desirability of modes

of conduct or ‘‘end-states’’ of existence (Rokeach 1979;

Schwartz 1992). Values are important when dissecting

decision-making behavior because they exist at all levels of

social analysis: cultural, societal, institutional, organiza-

tional, group, and individual (Kabanoff et al. 1995).

According to Argyris and Schön (1978), values can be both

espoused and enacted. Espoused values signify what

organizations communicate as important and are found in

organizational documents such as annual reports, mission

statements, and strategic plans. Espoused values that are

consistent with the organization’s culture strengthen the

organization’s reputation and external legitimacy. Enacted

values involve a theory-in-use that explains behavior which

& Jana L. Craft

[email protected]

1 Winona State University, 175 W. Mark Street, Winona,

MN 55987, USA

123

J Bus Ethics (2018) 149:127–145

https://doi.org/10.1007/s10551-016-3034-9

neither the institution nor the individuals may understand

(Argyris 1999; Argyris and Schön 1978; Kabanoff and

Daly 2002). Essentially, espoused values communicate

what we say and enacted values reveal what we do. In this

case, the enacted values of the organization were uncov-

ered during the data collection phase.

Second, to what extent did gaps exist between espoused

and enacted values? Congruence was identified when

espoused values corresponded with enacted values. Simply,

when what was said by participants matched the actual

values in use within the organization, regardless of hier-

archical level or geographic location. Incongruence

occurred when inconsistencies emerged between espoused

and enacted values. Specifically, value dissimilarity was

found to exist between hierarchical positions (i.e., man-

agers versus lower-level employees) and geographic loca-

tions (i.e., corporate employees versus satellite employees).

Third, to what extend did incongruent values impact the

ethical business culture? It stands to reason that incon-

gruent values would negatively impact an ethical business

culture. Using the characteristics of ethical business cul-

tures model developed by Ardichvili et al. (2008), the

researcher analyzed the impact of incongruent values on

the five characteristics of an ethical business culture: mis-

sion and vision driven; stakeholder balance; leadership

effectiveness; long-term perspective; and process integrity.

In conjunction with consistent communication of organi-

zation values and a deep commitment to serving their cli-

ents, a fiercely shared dedication to the mission of the

organization was the common thread that mended gaps that

existed between enacted versus espoused values.

The organization under study provided customized ser-

vices for people with disabilities and was chosen because

of its long history using values-based decision making and

consistent ethical business practices. Adopted in 1992, the

values that governed this organization had not changed in

over 20 years. The organization successfully infused ethi-

cal decision making within its culture by creating a tool by

which all decisions were measured; training staff at all

levels on a regular basis; and requiring decisions to be

justified using the four components within the device. At

each of their locations, the model was incorporated into

public spaces, prominent reminders of the importance of

values-based decision making at the firm. As a condition of

research access, confidentiality of the organization and any

identifying factors were masked. The organization will be

referred to as ‘‘Ability, Inc.,’’ a pseudonym.

The researcher examined the supporting literature on the

theoretical frameworks of espoused versus enacted values

(Argyris and Schön 1978), ethical decision-making theory,

and characteristics of ethical business cultures (Ardichvili

et al. 2008). Findings of the case study related to each area

of scholarship are discussed and the main question is

addressed: What is the impact of mission on an ethical

business culture?

Supporting Literature

Institutional Values

An important aspect of this study is the role of organiza-

tional values in everyday decision making. Values can be

defined as generalized, enduring beliefs about the personal

and social desirability of modes of conduct or ‘‘end-states’’

of existence (Rokeach 1979; Schwartz 1992). Values are

important when dissecting decision-making behavior

because they exist at all levels of social analysis: cultural,

societal, institutional, organizational, group, and individual

(Kabanoff et al. 1995).

The value structure of Ability, Inc. included four distinct

elements: ethics, respect, responsiveness, and resourceful-

ness. Decisions should show personal honesty, demonstrate

the mission, and follow the code of ethics (ethical); treat

people with dignity, see people as worthy of having the

best, promote win/win situations (respectful); provide

information and opportunities to make choices, demon-

strate respect for people’s ideas and choices, identify

expectations, and deliver on commitments (responsive);

use resources to support, not replace other resources, and

use resources wisely (resourceful) as shown in Fig. 1. In

addition to the four components of ethical decision making

in the VBDMM, Ability, Inc.’s five core values were

sharing ordinary places, growing in relationships, making

choices, contributing, and being respected. The combina-

tion of these documents represent the espoused values of

the organization.

Espoused Versus Enacted Values

An important aspect of this study was the role organiza-

tional values played in everyday decision making. Argyris

and Schön (1978) separated values into two categories:

espoused and enacted. Espoused values signify what

organizations communicate as important and are found in

organizational documents such as annual reports, mission

statements, and strategic plans. These values denote how

an organization defines itself. Espoused values that are

congruent with an organization’s culture strengthen the

organization’s reputation and external legitimacy. Viola-

tion of espoused values may result in loss of credibility and

relationship disengagement by those who interact with the

organization (Kabanoff and Daly 2002; Siehl and Martin

1990; Sutton and Callahan 1987). Enacted values involve a

theory-in-use that explains behavior which neither the

institution nor the individuals may understand (Argyris

128 J. L. Craft

123

1999; Argyris and Schön 1978; Kabanoff and Daly 2002).

They are congruent with the organization’s culture, and it

is how the organization’s members define it. In essence,

enacted values answer the question, what’s it really like to

work here? and give insight into organizational culture.

Key Terms Defined

Several definitions of key terms should be provided before

a review of the ethical business culture research is under-

taken. The definition of ethics that pertains to this study is

‘‘the study of and philosophy of human conduct, with an

emphasis on determining right and wrong’’ (Ferrell et al.

2013, p. 7). Behavior that is ethical is often deemed correct

by the society in which the behavior exists. In contrast,

moral behavior can be considered more of an individual

choice between right and wrong. While a technical dis-

tinction exists, the two terms are often used interchange-

ably within the literature review among various authors. In

the analysis and findings within this study, the term ethics

will be used because the study involves organizational and

ethical business culture and ethical decision making, not

necessarily individual, moral behavior. For the purposes of

this article, business ethics ‘‘comprises the principles,

values, and standards that guide behavior in the world of

business’’ and values are ‘‘used to develop norms that are

socially enforced’’ (Ferrell et al. 2013, p. 7) such as

integrity, accountability, and trust.

Ethical Business Culture

Components of ethical business cultures can be categorized

into two distinct types: formal and informal. Formal rep-

resentations of ethical business cultures include mission

statements, codes of conduct, indoctrination and orienta-

tion rituals, decision-making processes, rules, and regula-

tions, and so forth. Informal symbols of ethical business

cultures include less obvious components of culture such as

Fig. 1 Ability, Inc.’s Values-

based decision-making model

Common Thread: The Impact of Mission on Ethical Business Culture, A Case Study 129

123

norms, values, and behavior. Organizational values are

‘‘basic determinants of human behavior and social atti-

tudes’’ that express what is acceptable to individuals and

society (Dion 1996, p. 333). Sims and Brinkmann (2003)

argued that ethical business culture matters more than

codes of ethics; they use the catchphrase, ‘‘Enron Ethics,’’

which asserts that ‘‘business ethics is a question of orga-

nizational ‘deep’ culture rather than of cultural artifacts

like ethics codes, ethics officers and the like’’ (p. 243).

Sims and Brinkmann use Schein’s (1985) five mechanisms

for influence regarding an organization’s culture to illus-

trate the impact of leadership on ethical business cultures.

The five mechanisms are: attention, reaction to crisis, role

modeling, allocation of reward, and criteria for selection

and dismissal. Sims and Brinkmann illustrated these

mechanisms through use of the Enron case, highlighting

that the organization used the mechanisms ‘‘to reinforce a

culture that was morally flexible, opening the door to ethics

degeneration, lying, cheating and stealing’’ (p. 247). Small

(2006) investigated ethical culture at four distinct Aus-

tralian organizations in order to better understand how

ethical culture can be developed, encouraged, and main-

tained. Small’s study substantiated Gilmartin’s (2003)

conditions in developing an ethical business culture:

(1) The top leaders must set the right tone;

(2) the organization must offer formal training in ethics

and standards of conduct;

(3) and the organization must provide formal mecha-

nisms, both internally and externally to the organi-

zational structure, for reporting wrongdoing.

Small’s study concluded that ‘‘organizational theory and

ethical theory are complimentary and that the combination

of the two areas can facilitate understanding in developing

an ethical corporate culture’’ (p. 599).

Ardichvili et al. (2008) conducted a grounded theory

study that elicited five clusters and statements about the

characteristics of ethical business cultures (Fig. 2): they are

mission and vision driven; seek stakeholder balance; strive

for leadership effectiveness and process integrity, and

adopt a long-term perspective.

Based on their findings, the significant characteristic of

ethical business cultures is described as the ‘‘lifeblood of

the organization’’ (p. 449), the mission and vision. For an

organization to survive, and ultimately thrive, it needs to

connect its mission and vision to its long-term strategic

goals and objectives. The alignment of mission and vision

is vital in developing organizational norms that result in

codes of conduct and ethics, which is why mission and

vision are in the center of the model. The second charac-

teristic found by Ardichvili et al. (2008) was stakeholder

balance. This characteristic was in contrast with

Friedman’s (1970) popular theory that making a profit for

stockholders is the sole goal of the organization. Rather,

respondents believed in balancing customer value and

profit, keeping in mind competing needs of stakeholders

(i.e., customers, employees, owners, and community) and

respecting and fairly compensating employees. Echoing

Small (2006), Gilmartin (2003) and Ardichvili et al. (2008)

also found the ethical ‘‘tone at the top’’ or the example set

by leadership, to be the third characteristic of ethical

business cultures. Respondents indicated the decisions and

actions of senior management to be an important trait as

well as consistency between words and actions. Congru-

ence between words and actions results in increased, long-

term effectiveness. The fourth characteristic of an ethical

business culture was process integrity, indicated by the

statements describing a dedication to quality and fairness,

investments in ongoing ethics training, outstanding cor-

porate governance processes, and transparent decision

making. Lastly, ethical organizational cultures must also

elicit long-term perspective by ‘‘placing mission above

profit and long-term over short-term; acting in the best

interests of customers, over the longer term; connecting

environmental sustainability with corporate social respon-

sibility and profit’’ (Ardichvili et al. 2008, p. 448); and the

CEO taking a long-term approach to building the

organization.

Ethical Decision Making

Numerous studies supported a connection between ethical

business culture and ethical decision making. In a review

of the ethical decision-making literature from 1996 to

2003, O’Fallon and Butterfield (2005) reported sixteen

findings on ethical climate or ethical culture that influenced

Fig. 2 Five clusters of characteristics of ethical business cultures

(Ardichvili et al. 2008)

130 J. L. Craft

123

the ethical decision-making process. Of the sixteen, twelve

findings reported that at least one dimension of ethical

climate or culture positively influenced ethical decision

making (see Singhapakdi et al. 2001; Trevino et al. 1998;

VanSandt and Neck 2003; Weber and Seger 2002). Loe

et al. (2000) earlier review of ethical decision-making lit-

erature revealed support for the connection between ethical

culture or climate and ethical decision making, albeit with

fewer studies published (see Ferrell and Skinner 1988;

Jones and Hiltebeitel 1995; Verbeke et al. 1996). More

recently, Craft (2013) reported ten findings related to eth-

ical culture in the areas of awareness, judgment, and intent.

Studies showed ethical decision making was significantly

impacted by workplace ethics, standards, and practices

(Elango et al. 2010); age and perceived ethical climate

types (Forte 2004); management’s efforts to encourage

ethical decision making and the tone at the top (Sweeney

et al. 2010); and ethical norms and incentives (Shafer and

Simmons 2011). Zhang et al. (2009) found a positive

correlation between employee perception of an ethical

culture and their whistleblowing judgment.

Several important theories buttress the ethical decision-

making literature. The two most prevalent models are

Rest’s (1986) four-component model for individual ethical

decision making and Jones’ (1991) Issue-Contingent

Model. Rest’s (1986) model reduces ethical decision

making to four key components: awareness, judgment,

intent, and behavior. Building on Rest, Jones (1991) coined

the term moral intensity, which is comprised of six

elements:

(1) magnitude of consequences: the sum of the harm/

benefits of the moral act to those involved

(2) social consensus: the degree of social agreement that

a proposed act is good or bad

(3) probability of effect: the probably the act will

actually take place and will harm/benefit those

involved

(4) temporal immediacy: length of time between the

present and the act

(5) proximity: the feeling of immediacy to those

involved

(6) concentration of effect: strength of consequences for

those involved

As of the writing of this article, over 2800 articles cited

Jones (1991), including numerous articles that tested at

least one example of the model (e.g., Carlson et al. 2002;

Davis et al. 1998; Harrington 1997; May and Pauli 2002;

Paolillo and Vitell 2002; Singhapakdi et al. 1996) or

revising the model itself (e.g., Kelley and Elm 2003;

McMahon and Harvey 2007). Recent research in ethical

decision making using Jones (1991) included a study by

Hopkins et al. (2008) that concluded female managers were

more inconsistent than male managers in their ethical

decision making and in their responses to items on the

discrimination scale. They related this to the proximity

component of Jones’ model and suggested that decisions

made by females with regard to ethics and discrimination

may affect them personally and have a more immediate

impact on an individual’s personal life, thus being in close

proximity. Hayibor and Wasieleski (2009) found the

availability of consequences associated with an act was

positively related to Jones’ perceptions of the magnitude of

consequences of the act. Karacaer et al. (2009) found the

perceptions of moral intensity influenced both ethical

judgments and behavioral intentions (Jones 1991; Rest

1986) in their study of Pakistani and Turkish auditors.

McMahon and Harvey (2007) found mixed results for the

effect of perceived moral intensity on ethical decision

making. Further, both probable magnitude of consequences

and social consensus had a significant effect on ethical

decisions, whereas proximity did not. Finally, ethical

judgment was found to be a stronger predictor than per-

ceived moral intensity in one of their studies. Leitsch

(2006) found that two dimensions of moral intensity, per-

ceived corporate concern and perceived involvement

effect, when combined, significantly predicted accounting

students’ moral intentions.

This is by no means a complete discussion of the

instruments and theories involved in ethical decision-

making research. Rather, it should serve as context for the

larger framework of ethical decision-making research.

Mission-Driven

Ability, Inc., a large, not-for-profit organization in the

human services industry, had a well-documented history of

being mission driven. Founded over 40 years ago by

families of children with special needs, at the time of the

study Ability, Inc. operated eight program locations in a

large Midwestern metropolitan area. In 2012, Ability, Inc.

earned over $54 million in revenue and projected 4.5

percent annual revenue growth in subsequent years. With

nearly 500 volunteers and over 4300 clients and staff,

Ability, Inc. was a major player in the human services

industry.

A nonprofit organization is driven by its mission and

uses profit to improve services rather than pay dividends to

investors as in for-profit businesses. The reason an orga-

nization seeks nonprofit status is not only to encourage

donations through tax incentives, but ultimately to benefit

the general public. Each nonprofit organization states its

purpose and how it will benefit the public through the

declaration of a mission statement. Brinckerhoff (2009)

discussed the role of mission in nonprofits as ‘‘what the

organization does [emphasis original]’’ (p. 39). This

Common Thread: The Impact of Mission on Ethical Business Culture, A Case Study 131

123

statement can be amended with the words ‘‘and strives to

be’’ because organizations are more than just what they do

but also what they are striving to become.

In 1992, Ability, Inc. created a VBDMM (Fig. 1) that

put its mission into context in order to make decisions

based on the mission and values. Often revisited by the

board of directors and executive leadership, the values

were the driving force behind the organization’s mission.

What motivated the researcher to seek out an opportunity

to work with this organization was her prior experience

with Ability, Inc. clients, c

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