|
|
|
Ethics Digest
THE
RELATIONSHIP BETWEEN ETHICAL CITIZENSHIP AND INTRAFIRM TRUST,
COMMITMENT TO QUALITY, AND MARKET ORIENTATION One
of the dimensions of corporate citizenship is an ethical work
climate that includes values, traditions, and pressures
exerted in the work environment to make legal and ethical
decisions. An
ethical climate involves formal values and compliance
requirements as well as an understanding of how interpersonal
relationships affect the informal interpretation of ethics.
Loe (1996) examined the association between an ethical
climate and improved organizational processes.
When clear barriers are established to limit the
opportunity for unethical activities, and when ethical
behaviors are rewarded, an ethical climate prevails in an
organization. In
an ethical work climate, employees are able to identify
ethical issues as they arise and are aware of the company
resources available to help them act ethically and according
to organizational policy and culture.
An ethical climate characterizes businesses that are
committed to ethical citizenship. Before we
examine the benefits of an ethical work climate, it may be
useful to briefly consider the negative outcomes that may
arise from a work climate that does not emphasize ethical
conduct. Consider
the case of Bausch and Lomb.
A few years ago, the company=s
organizational culture was described by Business Week
as Aa
train wreck waiting to happen@
(ABlind
Ambition@
1995, p. 80). The
company=s
operations were governed almost exclusively by strict sales
and earnings objectives.
Under stringent bottom-line pressures and with no
counterbalancing values helping them to differentiate right
from wrong, managers engaged in unscrupulous pricing and
fraudulent billing. These practices translated into a series
of lawsuits from customers and distributors, bad publicity,
and a sharp decline in the firm=s
market value. Thus, a
major benefit of an ethical climate is avoidance of negative
consequences that may result from unscrupulous conduct in the
workplace. Loe=s
(1996) study suggests that concrete business benefits can be
expected from an ethical climate.
A research design was developed whereby employees
assessed the ethical climate of their organization before and
after implementation of an extensive ethics training program.
The intrafirm trust, employee commitment to quality,
and market orientation as perceived by organizational members
were also rated at the two stages of the research.
Loe=s
research first indicated that significantly higher levels of
trust exist within the organization when employees perceive it
as having a more ethical climate.
This study considered trust among employees both within
and among departments. The
influence of higher levels of ethical climate was greatest for
the relationships within individual departments, but was also
a significant factor in the relationships among departments.
Therefore, when the work climate is ethical,
individuals are more willing to rely and act upon the
decisions and actions of their coworkers. This
observation is easily understood because the most important
contributing factor to gaining trust is the individual=s
perception that another is unwilling to sacrifice integrity
standards (Moorman, Zaltman, and Deshpande 1992).
In an ethical work climate, employees can reasonably
expect to be treated with respect and consideration by their
coworkers and superiors.
Trusting relationships within an organizationCi.e.,
between managers and their subordinates and among all
employeesCcontribute
to creating greater efficiencies and productivity.
Loe=s
(1996) findings further indicate that as employees perceive an
improvement in the ethical climate of their organization,
their commitment to the achievement of high quality standards
also increases. They
become more willing to personally support the quality
initiatives of their management. Individuals within the company who are committed to producing
higher quality goods and services can be described as feeling
strongly about improving overall quality.
These employees often discuss quality-related issues
with others both inside and outside of the organization and
gain a sense of personal accomplishment from providing quality
goods and services. These
stakeholders exhibit effort beyond what is either expected or
required in order to supply quality products in their
particular job and area of responsibility.
On the other hand, those employees who are not
committed to providing such quality can be described as those
who work only for the pay, take longer breaks, and are anxious
to leave everyday whether or not the work is completed. According
to this research, employees who work in an ethical climate are
likely to believe that they have to treat all their business
partners respectfully, regardless of whether they operate
inside or outside of the organization.
As a result, it becomes essential for them to offer the
best possible value to all customers. These findings imply that an ethical work climate is likely
to have a positive effect on the bottom line, because
employees=
commitment to quality has been shown to have a positive effect
on the firm=s
competitive position. Indeed,
past research has shown that improved employee commitment to
quality is associated with greater customer satisfaction (Heskett,
Sasser, and Schlesinger 1997).
This is because customer satisfaction is affected
directly by customers=
perception of customer service (Hartline and Ferrell 1996).
In addition, elements of quality, such as service
quality, influence the company=s
image as well as its ability to attract new customers and
charge premium prices (Blumberg 1987; Blume 1988; Sonnenberg
1989). Other
benefits of employee commitment to quality include greater
market share (Kordupleski, Rust, and Zahork 1993; Phillips,
Chang and Buzzell 1983; Zeithaml, Berry, and Parasuraman
1988), increased profitability and lower costs (Jacobson and
Aaker 1987; Phillips, Chang, and Buzzell 1983; Shapiro 1983;
Zeithaml, Berry, and Parasuraman 1988), and return on
investment (Phillips, Chang, and Buzzell 1983). Hershey
Foods=
offers an example of a business that draws substantial
benefits from its long-lasting commitment to ethical
citizenship. Every
year, Hershey=s
employees receive a booklet entitled AKey
Corporate Policies,@ which describes the valuesCfairness,
integrity, honesty, and respectCat the
heart of the company=s
way of doing business. Employees are asked to signal their acceptance of these
values by signing the booklet.
Employees are also made aware of the procedures
available to report any concerns regarding proper conduct or
policies in the workplace.
Through such initiatives, employees understand the
importance of developing and maintaining respectful
relationships with both colleagues and customers.
Because organizational members are highly supportive of
the idea that customers should get full value for their money,
they are also committed to delivering the highest quality
standards possible. The
support of Hershey=s
employees to strict ethical standards appears to benefit the
company: Hershey continues to be the most profitable company
in the confectionery market, and it has outperformed the stock
market over the last ten years (Ferrell and Fraedrich 1997, p.
224).
Market
Orientation Loe’s
(1996) study also offers evidence that an ethical climate is
conducive to a strong market orientation.
Market orientation refers to Athe
organizational culture Y
that most effectively and efficiently creates the necessary
behaviors for the creation of superior value for buyers and,
thus, continuous superior performance for the business@ (Narver and Slater 1990, p. 21). Market
orientation Aplaces
the customer=s
interests first, while not excluding those of the other
stakeholders such as owners, managers, and employees, in order
to develop a long-term profitable enterprise@
(Deshpande, Farley, and Webster 1993, p. 27).
Market-oriented, or customer-oriented organizations
have systems in place that allow open and frequent
communication between the customer and the company.
This provides the company with a clearer view of the
customer=s
needs and desires. Additionally,
market-oriented companies allow for greater communication
between and among organizational departments.
Discussion of the changing needs of the customer is
common place. An ethical
climate calls for organizational members to incorporate the
interests of all stakeholdersCincluding
customersCin
their decisions and actions.
Hence, employees working in an ethical climate are
willing to make an extra effort to better understand the
demands and concerns of customers.
These findings further emphasize the role of an ethical
climate in building a strong competitive position because
market orientation has been shown to affect business
performance and product innovativeness positively (Gatignon
and Xuereb 1997; Jaworski and Kohli 1993; Narver and Slater
1990; Slater and Narver 1994). The result
of Loe’s investigation clearly suggest that an ethical
climate is not only a way to limit costly litigation and bad
publicity, but also promotes the development of constructive
and fruitful relationships with coworkers and customers. This
in turn facilitates intrafirm trust, employees=
dedication to quality, and a market orientation. Thus,
ethical citizenship emerges as a set of business practices
potentially useful to establish a strong competitive position.
|
