Corporate Values, Workplace Decisions and Ethical Standards of Employees *

Abstract

Faith in Corporate America has not been so fragile since the early 1900s, when the public's anger over the monopoly powers of big business led to a prolonged period of trust-busting by Theodore Roosevelt. Enron Corporation's ugly demise started the current wave of skepticism and with each revelation of corporate wrongdoing, the goodwill built up by business over many years erodes a bit more, giving rise to more mistrust. Increasingly, the public perception is that too many corporate executives have directly committed flagrant breaches of trust by cooking the books, or shading the truth, or indirectly facilitating the process by turning a blind eye when acts of impropriety were brought to their attention (e.g., WorldCom, Imclone Systems, Tyco International, Dynergy, Qwest Communication, Adelphia Communication). Ending this crisis of lack of confidence in the governance of Corporate America will take more than a single initiative. The challenge to corporate management is to create a corporate culture that encourages and recognizes integrity. To do so, executives need to start at the top and address basic workplace decisions which may not have legal compliance connotation but, nevertheless, are an integral part of corporate culture (e.g., accepting gifts from clients). Popular press and research suggest that top management must take the lead by being a moral compass (Business Week, 2002; Jackson, 2000; Verkerk et al., 2001). Corporate values have an enormous influence on the choices, beliefs, and behaviors of employees (Schroeder, 2002; Velasquez, 2002), as well as the discretion employees perceive is available to them to exercise in ethical situations (Key, 2002). Prior research also suggests that employees' decisions are affected by both organizational factors (e.g., values and policies) and person-based explanations (Henle, 2005). Thus, this study examines how corporate values influence employees to make more ethical everyday workplace decisions and how these values in turn affect employees' own personality (i.e., ethical standards) in making those decisions. The rest of the article is as follows. The next section discusses the theory and states the research hypotheses. Then there is the research method section, followed by the data analyses. The last section summarizes the results and provides concluding comments. THEORY AND HYPOTHSES Corporate Values and Managers' Ethical Decisions Corporate values are often used interchangeably with the concept of corporate culture. The usual paradigm is that corporations with strong positive cultures have institutionalized a set of corporate values. These values help employees identify with the organization and develop a commitment to its goals as well as provide a common language for aligning an organization's leadership and its employees (Robert Hass, Levi Strauss CEO in Howard, 1990). The clarity and nature of corporate values toward ethical issues ultimately influences managers' attitudes to ethical decision making (Jackson, 2000; Galie and Bopst, 2006; Vitell and Hidalgo, 2006). Although an individual retains the ultimate moral agency for his or her actions, research consistently indicates that the ethical philosophies and values of management have a major impact on the ethical choices and behaviors of employees (Stead et al., 1990; Wimbush and Shephard, 1994; VanSandt and Neck, 2003). Enron's unrelenting emphasis on earning's growth at any cost without a system of checks and balances resulted in ethical lapses that ultimately led to the company's downfall. Jeffrey Skilling, former CEO of Enron, communicated his priorities to employees: at all costs (Tracinski, 2002: 3). Enron showed little regard for ethics beyond the bottomline, using a reward system that retained only those employees who achieved target profits (Sims and Brinkmann, 2003; Wong, 2002) and, hence, producing a culture with collectively non-compliant norms (Kuliks, 2005). …

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