The Relationship Between
Organizational Ethics and Job Satisfaction:
A Study of Managers in Malaysia
Kalavani A/P Daveninderak
Bachelor of Accounting,
Multimedia University
Cyberjaya, Selangor
Malaysia
2003
Submitted to the Graduate School of Business
Faculty of Business and Accountancy
University of Malaya, in partial fulfillment
of the requirements for the
Degree of Master of Business Administration
May 2009
TABLE OF CONTENTS
ABSTRACT...............................................................................................................................i
ACKNOWLEDGEMENT ......................................................................................................ii
CHAPTER 1: INTRODUCTION...........................................................................................1
Chapter Introduction...............................................................................................................1
1.1 Background of the Study.............................................................................................1
1.2 Objectives of the Study................................................................................................7
1.3 Research Questions......................................................................................................8
1.4 Scope of the Study........................................................................................................8
1.5 Significance of the Study .............................................................................................9
1.6 Limitation of the Study..............................................................................................10
1.7 Organization of the Study .........................................................................................11
Chapter Summary .................................................................................................................13
CHAPTER 2: LITERATURE REVIEW ............................................................................13
Chapter Introduction.............................................................................................................13
2.1 Top management support for ethical behavior......................................................13
2.2 The ethical climate in the organization...................................................................18
2.3 The association between ethical behavior and career success ..............................22
2.4 Moral awareness .......................................................................................................25
2.5 Job satisfaction..........................................................................................................29
2.6 Organizational Ethics and Job Satisfaction ...........................................................29
2.7 Prior Literatures on the Relationship between Organizational Ethics and
Job Satisfaction ...............................................................................................................32
Chapter Summary .................................................................................................................34
CHAPTER 3: RESEARCH METHODOLOGY ................................................................35
Chapter Introduction.............................................................................................................35
3.1 Development of Hypotheses .....................................................................................35
3.2 Research Design ........................................................................................................36
3.3 Sampling Technique .................................................................................................37
3.4 Data Collection Procedure .......................................................................................38
3.5 Research Intruments ................................................................................................38
3.6 Data Analysis Techniques ........................................................................................43
Chapter Summary .................................................................................................................44
CHAPTER 4: RESEARCH RESULTS ...............................................................................45
Chapter Introduction.............................................................................................................45
4.1 Summary Statistics ...................................................................................................45
4.2 Analysis of Measures ................................................................................................45
4.3 Testing of Hypotheses...............................................................................................51
4.4 Summary of Research Results .................................................................................55
Chapter Summary .................................................................................................................55
CHAPTER 5: CONCLUSION AND RECOMMENDATIONS........................................56
Chapter Introduction.............................................................................................................56
5.1 Implications of Findings ............................................................................................56
5.2 Conclusions of the Study ...........................................................................................62
5.3 Recommendation for Future Research....................................................................65
Chapter Summary .................................................................................................................66
REFERENCES.......................................................................................................................67
Appendix 1 - Questionnaire ..................................................................................................76
LIST OF TABLES
Table 3.1 : Job Satisfation Dimensions and its items........................................................ 40
Table 3.2 : Organizational Ethics Dimensions and its items.............................................41
Table 4.1 : Demographics Characteristics of Respondents...............................................48
Table 4.2 : Descriptive Statistics and Alpha Coefficient of Variables .............................48
Table 4.3 : Correlation of matrix of variables....................................................................50
Table 4.4 : Results of multiple regression analysis ............................................................54
Table 4.5 : Hypotheses Testing Result ................................................................................55
Table 5.1 : Summary of Research Results ..........................................................................61
Table 5.2 : Summary of Findings of the Research Questions ...........................................65
LIST OF FIGURES
Figure 2.1 : Research Framework.......................................................................................34
ABSTRACT
This empirical study investigates the association between four measures of
organizational ethics (namely, top management support for ethical behavior, ethical
climate in the organization, the association between ethical behavior and career
success, and moral awareness) with job satisfaction. The results obtained from 123
managers in Malaysia confirmed that two measures of organizational ethics showed
significant relationship with job satisfaction. The link between organizational ethics
and job satisfaction is argued from Koh and Boo’s (2001) organizational justice and
cognitive dissonance theories. These findings imply that organizational leaders can
favorably influence organizational outcomes by engaging in, supporting and
rewarding ethical behavior. Another existing study by VanSandt, Shepard and Zappe
(2006) had shown that there is connection between organization’s ethical climate and
moral awareness. Results of the study provide evidence that ethical work climate is a
primary predictor of individual moral awareness. In order to fill a gap in the existing
literature and to make this study more interesting, a theoretical connection between an
individual cognitive element of moral behavior (moral awareness) and job satisfaction
is studied.
ACKNOWLEDGEMENT
First, I would like thank my supervisor, Mr.Zulkifly Ramly, for his kind supervision,
support, constructive criticisms and guidance that helped the completion of this
project paper.
Next, I would like to express my gratitude and heartfelt thanks to my sister, Sham,
who is lecturing at Segi College, Subang Jaya, for the time she took to read and make
appropriate changes where necessary. I would also like to thank her Head of
Department, Dr. Sheela Abraham, who supplied me with all relevant journals and
project papers which were used as reference and guidance.
My deepest appreciation goes out to my respondents for taking their precious time to
answer the questionnaire. Their information was vital for this project.
To my family and friends, thank you so much for your financial support, contributions
and sacrifices throughout the course of my study. May god bless you.
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CHAPTER 1: INTRODUCTION
Chapter Introduction:
This chapter introduces the background of the study covering definition of
organizational ethics and job satisfaction, the importance of business ethics and the
impact of overlooking ethical aspects in business. Some of the actual companies that
are involved in the ethical misconduct scandals are also included in this chapter for
better understanding. Besides, this chapter states the problem and objective of the
study; thereafter it presents a general scope and significance of the study. The
research methods adopted and limitations are also included here. This chapter also
details out the overall structure and the flow of this report.
1.1 Background of the Study
Organization needs ethics quality not only to prevent unhealthy behavior but
also to inspire superior reasoning and performance. It is only through human nature
and ethics- the reasoning science, that organizations can inspire greater levels of
innovation, teamwork, and process breakthroughs that results in sustainable
competitive advantages.
Until recently, only few organizations seriously considered ethics to be a
legitimate topic for enterprise planning and strategic thinking (Koh and Boo, 2001;
Keith, Pettijohn and Burnett, 2003; Wight, 2003; Cruz, 2004) Those at the top of an
enterprise regularly spent time developing their organizational and functional strategic
plans, their growth strategy, possibly even their brand strategy, but ethics and
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regulatory compliance was merely an issue for the finance department, legal counsel,
and possibly human resources.
Today we are painfully aware that, ethics in organizations are becoming
increasingly more complex, involving issues such as societal expectations, fair
competition, legal protection and rights, and social responsibilities (Koh and Boo,
2001). They also have potential consequences on more and more parties, including
customers, employees, competitors and the general public (Vitell and Davis, 1990).
Let’s rewind to the beginning of this new millennium when top companies like
Enron, WorldCom, Arthur Anderson and even a well-known household name- Martha
Stewart were in the lime light for their misconduct. As shocking as it maybe, people
became more cautious and aware of the widespread organizational misbehavior and
criminal activity that’s happening around them. As a result, political leaders have
urged for the creation of a formal ethics strategy to be a high priority for all
enterprises, irrespective of their size or structure (Peppas, 2003; Jaramillo, Mulki, and
Solomon, 2006; Bart, 2006; Mulki, Jaramillo and Locander, 2008; Stanley, 2008;
Premeaux, 2009). Economy leaders began stressing that in business, the trustworthy
conduct of many professions improves the efficiency of industries and the economy as
a whole. For example, when accountants fabricate a company's books, and the stock
price balloons, the bubble must eventually pop, and that innocent third parties will
bear the consequences. Aside from the unfairness, that situation discourages capital
flow to promising ventures later because of investors' mistrust. (Wight, 2003).
Mulki et. al. (2008) stated that there are three major impacts when companies
are found to be unethical. First, consumers tend to shy away from products and
services from organizations with unethical reputations. This affects current and future
business thus hurting the value of the firm. Second, some unethical practices are also
3
illegal or fraudulent, consequently increasing the firm’s liability, financial risk, and
costs. Third, unethical climate has a pervasive effect on employees via high levels of
workplace stress, lower job satisfaction, low performance, and eventually turnover.
Even movies based on true story such as Wall Street and Erin Brockovich became a
huge hit, highlighting the consequences of ethical misconduct in businesses.
Learning from Enron’s mistake, many large organizations have established a
position for an ethics officer [also referred to as the Chief Ethics and Compliance
Officer (CECO)] while smaller organizations turn to consultants that specialize in
ethical consultation. Some of the issues and responsibility of Chief Ethics and
Compliance Officer (CECO) are first, they should be held accountable to the
governing authority while carrying out his or her delegated fiduciary responsibilities.
Second, the CECO should be independent to raise matters of concern without fear of
reprisal or a conflict of interest. Next, the CECO should be connected to company
operations in order to build an ethical culture that advances the overall objectives of
the business. Finally, the CECO should be provided with authority to have decisions
and recommendations taken seriously at all levels of the organization. These four
principles were discussed in depth in the study by Kavanagh (2008).
Meanwhile, looking at international arena, the increasingly globalization of
business has brought about a greater need to deal with ethical questions in new and
different settings (Viswesvaran, Deshpande and Joseph, 1998). These developments
have increased both the depth and breadth of business ethics research today.
According to a publication by PR Newswire (2006), many Americans place a higher
value on a corporation's ethical reputation than on its financial performance or the
costs of its products, the study found. In fact, only 15 percent out of 2000 survey
respondents (consist of U.S. adults) said they would purchase stock in a company that
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had performed well financially but made bad ethical decisions. Half of respondents
who owned stock in some organizations had already at some point decided not to
purchase stock in a company because they knew of questionable ethical actions by the
company's management or employees.
The study of business ethics typically involves inquiry into the nature and
grounds of moral judgments and can be defined as the discipline relating to right and
wrong, moral duty, principles and values in handling ethical issues within an
organization (Vitell and Davis, 1990; Beck, 2002; VanSandt et al., 2006). Koh and
Boo (2001) believe that there are strong needs to study the organizational outcomes of
business ethics because it influences. At a corporate level, a firm’s ethical behavior
can reflect its performance and culture. On the individual level, consequences such as
job satisfaction, stress, motivation, commitment or job performance can have
significant impact on organizations.
To date, many empirical studies have been conducted to investigate the
determinants of ethical behavior in organizations. This includes determinants such as
leadership (Mulki, Jaramillo and Locander, 2008; Stanley, 2008), Human Resource’s
role (Bart, 2006), code of ethics (Jaramillo, Mulki and Solomon, 2007), peer pressure
(Keith, Pettijohn and Burnett, 2003), personal attributes and emotions (Bratton, 2004),
moral development (Ambrose, Arnaud and Schminke, 2006) and others. According to
Bart (2006), human resource personnel play an important role in the implementation
of ethical code and reward system for ethical behavior in organization. It is through
the proper hiring, training and development arranged by the human resource
department that employees can be educated on ethical issues. Keith et. al. (2003)
stated that peer’s behavior in an organization highly influence the way an ethical
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decision is made by an employee. This is because, co-worker serves as the closes
point of referral should an employee face any dilemma in terms of ethics. Peer ethical
behavior exerts a strong influence on the comfort or discomfort level and the ethical
behavioral intentions of employees. Further, the strong influence exerted by peers
seems to transcend the ethical behavior of the manager and carry over to the attitude
toward the entire corporate environment.Employees tend to be influenced by the way
their co-worker behaves in their workplace. Investigating these types of determinants
of ethical behavior is important as it increases understanding of the factors associated
with business ethics and ethical decision-making.
Previous study by Honeycutt, Siquaw and Hunt (1995) however observed that
very few studies have examined ethics across cultures. Culture can be defined as the
collective programming of the mind that distinguishes the members of one category of
people from those of another (Hofstede and Bond, 1988). What may be considered
not ethical in one country may be customary or even acceptable in others (Karande,
Rao and Singhapakdi, 2000). Singhapakdi, Rawwas, Marta and Ahmed (1999) did a
cross cultural study of marketing ethics using the work of Hofstede (1988). It suggests
that national cultures can be classified along four primary dimensions which are
power distance, individualism, uncertainty avoidance and masculinity. Power distance
addresses the degree to which a society's weaker members accept injustices in how
power is exercised. While injustices arise in every society, different cultures accept
varying levels of inequity. Members of cultures characterized by a highpower distance
(e.g. India) are expected to obey a superior's orders with no questions asked.
Individuals socialized in such cultures tend to use formal standards and ideals for
guidance on appropriate behavior in consumption situations having ethical content
(Vitell et al., 1993). Individuals nurtured in cultures that have low power distance (e.g.
6
the USA) do not always agree to their superiors. Respect generally must be earned in
these cultures. Individuals in low-power distance societies generally turn to their
colleagues or peer group for guidance. Individualism addresses the extent to which
members of a culture are concerned mainly with their own interests and family's
welfare. Collectivist cultures (e.g. Malaysia) view individuals as part of a larger group,
such as an extended family or tribe. The group protects its members' interests and they,
in return, are expected to show loyalty to and concern for the group as a whole.
Members of individualistic cultures (e.g. the USA) frequently question the ethical
norms and standards established by their societies. By contrast, members of
collectivist cultures are inclined to accept them (Vitell, et al., 1993). Malaysia and the
USA are quite far apart on two of these dimensions, power distance and
individualism; therefore, the present study in Malaysia is expected to differ from the
previous studies done in Western countries (Koh and Boo, 2001). .
Growing numbers of firms are expecting more of their profits to be derived
from international sales. To a large extent, such international growth is needed in
today's world, given the ever-increasing globalization of economies. Singhapakdi et.
al. (1999) explains that moving into foreign markets does not guarantee larger profits;
it may, in fact, guarantee more headaches for managers, because different cultures
employ varied methods of communication. For example, acts such as compact disk
piracy or brand counterfeiting are illegal and likely to be considered unethical by
people in most Western countries. These same activities, however, are quite common
business practices in many East Asian nations (Singhapakdi et. al., 1999). In an
empirical study, Burns and Brady (1996) consistently found genuine differences in
ethical perceptions of business students in Malaysia compared to their counterparts in
the USA. As Asian countries are gradually opening their doors to foreign trade and
7
investment, there is correspondingly increasing research interest in organizational
ethics in the region (Koh and Boo, 2001).
1.2 Objectives of the Study
Very little empirical research has been done into business ethical issues in
Asian countries like Malaysia. Most research into business ethics has been carried out
as a way of explaining this phenomenon in (advanced) Western countries (Koh and
Boo, 2001). Yet, given the cultural differences that lead to differences in ethical
attitudes any such research findings would not necessarily apply to the, likely, unique
Malaysian case model.
With the above general problem in mind, the purpose of this research is to
examine the relationship between organizational ethics (consisting of top management
support for ethical behavior, ethical climate in the organization, the association
between ethical behavior and career success and moral awareness) and job
satisfaction among Managers in Malaysia. Moreover, job satisfaction relates to
employee motivation, performance, absenteeism and turnover (Bullen and Flamholtz,
1985) and it is an important organizational construct. Thus, it is useful to investigate
whether corporate leaders can generate favorable organization outcomes through its
role in business ethics.
8
1.3 Research Questions
This Study addresses the following research questions:
(1) Does ethical climate affect the employee’s job satisfaction in organizations in
Malaysia?
(2) Does top management’s support influence the ethical behavior of it’s
employees?
(3) Does an employee with ethical behavior are more likely to be successful in
his/her career?
(4) How does employee’s moral awareness influence his/her job satisfaction?
1.4 Scope of the Study
Scope of this study is to examine the relationship between four dimensions of
organizational ethics (top management support for ethical behavior, ethical climate,
association between ethical behavior and career success, and moral awareness) and
six facets of job satisfaction (pay, promotion, co-workers, supervision, work and
overall job satisfaction) among managers in Malaysia
The primary data used in this study is secured through survey questionnaire.
Cross-sectional data of respondents from various industries is subjected to
quantitative analysis to test the relationship.
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1.5 Significance of the Study
The study is significant in the following ways. First, organizational ethics and
job satisfaction have been studied in the light of western organizations in the past
studies. But in this study, the focus is on Malaysian organization. And also, additional
element of moral awareness is included to test it’s relationship with job satisfaction.
The new element of study multiplies the complexities from the earlier study.
Second, the study serves to break the traditional expectations of Malaysian
society that imposes top management to focus mainly on aspects such as fair
treatment, rewards and recognition and promotion when it comes to employees to job
satisfaction. Thus, this study would add in a modest way to the knowledge of job
satisfaction and employee retention in Malaysia.
Third, this paper also looks at ways on how top management can incorporate
ethics in everyday business and encourage employees to take their leaders as a role
model to behave ethically in this society.
Thus, the findings from this study are meant to be useful in assisting
management to meet the needs of competitive Malaysian and global businesses.
Organizational ethics will help to minimize the negative impacts and maximize
positive effects by portraying a good rapport and corporate image for the
organization. Thus, the quality of Malaysian employees in terms of ethical value and
work performance would ultimately improve.
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1.6 Limitation of the Study
In interpreting the findings of the study, there are some limitations that must
be considered in future investigation. Firstly, a major limitation of this study is the
small sample size. The MBA students may not be representative of the population of
managers in Malaysia. Further, the findings may not be applicable to a different
population (e.g; general workers) or geographical region. As a result, the power of the
test is generally weaker.
Secondly, limitation of a self-report research questionnaire and survey applies
(i.e. non-response bias and response bias). Non-response bias may come about when
sampled subjects who are significantly different from the respondents do not respond.
However, this may not be a serious problem in the study because the response rate of
62% may be considered acceptable for a survey. Further, test results detect no
indication of non-response bias. Response bias may be introduced when a
respondent’s responses are biased by the background characteristics of the respondent
or the study. This, however, is mitigated by the anonymity of the respondents and
promised confidentiality of the responses.
Thirdly due to time and resources constraint, data were collected at a single
point in time, which does not allow for changes in perceptions and attitudes over time.
Fourthly, some of the feedback from respondents is that the questionnaire did
not provide ‘in between answers’ such as somewhat agree or somewhat disagree. It is
proposed that future research questionnaire should take this into account. Finally, the
measure of job satisfaction comprises only a small number of items, which tapped
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different aspects of job satisfaction behavior, and does not represent an overall view
of job satisfaction; therefore this is a considerable biased view of this study.
1.7 Organization of the Study
The presentation of this research is organized into five chapters. The first
chapter presents introduction, background and objectives of the study, the research
questions, scope, significance, the limitations and organization of the study.
The second chapter provides a review of some literature on organizational
ethics (top management support for ethical behavior, ethical climate, association
between ethical behavior and career success and moral awareness) and job
satisfaction (pay, promotion, co-workers, supervision, work and overall job
satisfaction) and the relationship among these variables.
The third chapter, on research methodology, describes the hypotheses to be
tested and deals with the methods for this study with elaboration on sampling
procedures, the research instruments and data analysis procedures.
The fourth chapter, research results, describes the sample’s characteristics,
examines the reliability and validity of scales, and finally explains and analyses the
research results in relation to hypotheses tested.
The fifth chapter summaries the major findings of the study and discuss
possible managerial implication of the research results. It also suggests ideas for
further research in this area.
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Chapter Summary:
This Introduction chapter outlined the background of the studies, the
objectives, scope, significance, limitations and organization of the study. In the
following chapter, the literatures done by previous researchers in the subject of
organizational ethics and job satisfaction are examined for it’s relationship.
Conceptual Framework is also developed for clearer understanding.
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CHAPTER 2: LITERATURE REVIEW
Chapter Introduction:
In this chapter, a review of literature on the each individual variables were
studied thoroughly starting with the independent variables (top management support
for ethical behavior, ethical climate in the organization, association between ethical
behavior and career success, and moral awareness) and followed by the dependant
variable (job satisfaction). This chapter highlights important finding from previous
researchers, and gives a clearer understanding on the variables researched through
conceptual framework. This chapter also outlines the similar and contradicting
literature from past studies.
2.1 Top management support for ethical behavior
According to Wells and Spinks (1996), most companies that wish to improve
their ethical behaviors develop codes of ethics for their organizations. The code
defines the behaviors that are considered ethical as well as unethical, and it provides a
set of written guidelines for each employee to follow. While such a code can, to a
certain extent stimulate ethical behavior among managers, it alone may not be
sufficient. Jack Welch, the CEO of General Electrics in U.S. believed that “an
organization is only as strong as it’s top talent”. Wotruba (1990) also found that
superiors have a strong impact on the ethics of their subordinates. The organization’s
upper-level management themselves must demonstrate ethicality in their everyday
behavior. The attitude of upper-level management towards the company’s code of
ethics sets the tone for the attitudes of lower level employees. Thus, without
commitment from top management, it’s rather difficult for employees to communicate
14
and discuss openly on any problem pertaining ethics. If ethics are to pervade all
aspects of corporate strategy, individuals must feel able to express their ethical views
without fear of retribution (Brigley, 1995). Organizations should create a non-
threatening environment for the discussion of ethical problems; there is a need for this
to encompass a participative process which is seen to include and to value the views
of the widest range of interest groups.
In a study conducted at University of Bath, UK by Brigley (1995), 96% out
of the 712 managers surveyed agreed that as managers, they are responsible in giving
ethical leadership for their employees. When upper-level managers say they support
the code but act differently, lower-level employees will assume that the code is not a
serious document. On the other hand, if upper-level managers say they support the
code and their actions show that support, then lower-level employees will take the
code seriously and support it. In an attempt to find variables that influence the
effectiveness of code of ethics, Boo and Koh 2001 gathered that strong top
management support indeed resulted in higher level of ethical behavior.
It’s no secret that if bosses act in certain ways, employees will follow their
leads (Herb, 1987). According to Trevino (1986), in organizations where legitimate
authority is an accepted tenet of the work setting, employees are expected to carry out
the orders of top management, even if those orders are contrary to their determination
of what is right. The two situations mentioned above are consistent with the cognitive
dissonance theory where individuals strive to minimize dissonance in their
environment. In addition to trying to reduce the dissonance, people will actively avoid
situations and information which would be likely to increase the dissonance
(Festinger, 1942). Furthermore, Morieux and Sutherland (1988) also described the
cultural values and methods of operation of new managers that clash with the existing
15
culture in organizations can lead to conflict, the challenging of existing norms and
certainties and the undermining of the authority of managers. Koh and Boo (2001)
mentioned that such a conflict or dissonance could be a considerable source of stress
leading to lower job satisfaction.
On the other hand, from the perspective of justice theory, top management that
supports ethical behavior is perceived to be fair to employees. This will result in
higher level of employee job satisfaction. When individuals see themselves as treated
fairly, they are also more likely to accept the changes presented to them (Cordery,
Sevastos, Mueller and Parker, 1993; Kirkman, Shapiro, Novelli and Brett, 1996;
Konovsky and Cropanzano, 1991). Spector (1988) also proposed the internal work
locus of control which refers to an individual’s belief that outcomes at work such as
promotions or salary increases are controlled either by one’s own actions and thus it is
positively correlated with job satisfaction, commitment, influence at work, and leader
consideration. However, Greenberg (2001) notes that the perception of justice may
differ from one person to another and from one culture to another. For example,
individuals who perceive their contributions and opinions to be valued by others will
be more likely to believe that decisions made by the group are fair because they
perceive themselves as a valued member of the group.
To support an ethical work environment, firstly top management should not
place the executives under undue pressure to achieve goals that are not possible
without practicing unethical behaviors (Wells and Spinks, 1996). Most unethical
behaviors engaged in by business executives are the results of attempts to accomplish
goals that they feel pressured to accomplish and that they feel cannot be accomplished
within the bounds of ethical behavior. When an executive’s job is on the line, the
temptation to salvage it by any means possible may be acceptable to that executive.
16
For example, a study by Ponnu, Said and Apnizan (2008) on the ethical orientation of
Malaysian middle managers found that corporate gift practice is not acceptable by
many middle managers in Malaysia because it evokes the question of bribery and
ethicality. However, they still pursue to use corporate gifts, in the majority cases
because it’s required by the top management. In this example, among difficult
management issues is the ethical tension between the bottom line and the public
interest. It is the question of whether harm caused to the community as a whole by
redundancies ethically less important than increasing economy and efficiency in one’s
business (Brigley, 1999).
Vitell and Singhapakdi (2008) suggest that organizations should pay close
attention to top management commitments and ethical leadership. According to
Brigley (1997), organization can instill ethical values among its employees through
appropriate leadership training for them to understand or value the importance of
ethics to the success of the organization. To raise awareness, ethical issues should be
seen to matter and to be openly discussed when ethical discomforts arise at all levels
of the organization, from the most senior downwards. Management training should
include consideration of relevant and practical situations involving ethical decision
making. The involvement of managers from different backgrounds can be helpful in
challenging hidden assumptions (Brigley, 1997). Vitell and Singhapakdi further added
that if top management wants its employees to have greater job satisfaction, greater
organizational commitment, and greater esprit de corps, it is important to
communicate to them, on a regular basis, the values and norms as well as the rules
and guidelines of the organization. If a firm’s employees perceive that their employers
are ethical, then that firm may discover that job satisfaction ratings are high and that
turnover intentions are low (Pettijohn C., Pettijohn L. and Taylor A.J; 2007).
17
While many authors found that there is a strong need in top management’s
support for ethical behavior which eventually leads to job satisfaction e.g.; Vitell and
Davis (1990b), the study by Viswesvaran C., Deshpande S.P, Joseph J. (1998) on
Indian managers, however, found that the correlation were not so significant. Koh and
Boo (2001) speculated that the cultural differences among Indian managers as
compared to previous studies that focused on American managers might have been
attributed to this result. It was possible that the Indian managers were accepting the
ethical decisions (regardless of it being right or wrong) from top management more
passively than other managers were.
However, Koh and Boo (2001) found that there is a significant relationship
between top management support for ethical behavior and job satisfaction among
managers in Singapore. Although Singapore is a part of Asia just like India, the
results seems be slightly different. This shows that managers from different national
cultures have different assumptions as to the nature of management and organization
(Vance, McClaine, Boje, and Stage,1992). It is also noted that most research into
business ethics has been carried out mostly in (advanced) Western countries (Koh and
Boo, 2001). Given the cultural differences that lead to differences in ethical attitudes
(Sims, 2006) any such research findings would not necessarily apply to the, likely,
unique Asian case model (Kim and Miller, 2007) . Therefore, it is not known whether
the results in the Western and Singapore context would similarly be observed here in
Malaysia. Thus, a null hypothesis is proposed to test whether top management support
for ethical behavior has any impact on the job satisfaction of Malaysia managers:
H1: Top management support for ethical behavior has no significant effect on job
satisfaction.
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2.2 The ethical climate in the organization
Organizational climates are the psychological environments in which behavior
of individuals occur (Ott, 1998). Organizational ethical climate is defined as an
employee’s general perceptions of organizational signals regarding norms in making
decisions which have a moral component e.g. how to behave ethically and how ethical
issues should be handled (Cohen,1993; Victor and Cullen ,1987 ).Victor and Cullen
(1988) discuss climate as (1) an aggregate perceptions or organizational conventions
concerning forms of structure and procedures for rewards and control (perceptions of
practices and procedures – Schneider, 1975); and (2) aggregate perceptions of
organizational norms concerning warmth towards and support for peers and
subordinates (organizational values – Denison, 1996). O’Keefe (unknown year)
described that ethical climate is conceptualized as general and pervasive
characteristics organizations, affecting a broad range of decision that act as the basis
on which people decide if a decision is right or wrong.
Victor and Cullen (1987, 1988) developed the ethical climate matrix that
consist of three bases of moral judgment and nine ethical criteria that is expected to
guide firms decision making process. They are Egoism, Benevolence and Principled.
Egoism refers to a behavioral tendency that is essentially self-interested in seeking
pleasure, and escaping pain. E.g: self-interest, company profit, and efficiency.
Benevolence/ utilitarianism is associated with concerns to satisfy the interests of as
many people as possible. E.g. friendship, team interest, social responsibility.
Principled climates relates to internalization of universal standards and beliefs by the
members of an organization. E.g. personal morality, company rules and procedures,
19
laws and professional codes. Peterson (2002), Dickson et al. (2001), and Fritzsche
(2000) claim that the nine ethical climate types presented by Victor and Cullen are
still the most convincing and most widely used (Cullen et al., 2003; Deshpande, 1996;
Koh and Boo, 2001; Malloy and Agarwal, 2003; Joseph and Deshpande, 1997;
Peterson, 2002; Vaicys et al., 1996).
According to Randall (1998), the criterion used in ethical reasoning for an
egoism climate is maximizing self interest at the personal, company, or the societal
level. Ethical decisions that are made at the individual level represent an individual’s
internalized values and beliefs. Decisions at the local level satisfy the organization’s
best interest; whereas, ethical decisions at the cosmopolitan level of analysis
symbolize societal or economic interests.
On the other hand, the basic criteria used in ethical reasoning for the
benevolence ethical climate is on maximizing the best interest of organizational
members within prescribed boundaries. Individuals using the benevolence criteria and
an individual locus develop friendships without regard to belonging to the
organization. Local referents exert a collective influence that exists within the
immediate work setting (e.g. work teams). An individual operating from the
cosmopolitan perspective makes ethical decisions based on external factors that guide
socially responsible behavior. As for principle climate type, when an individual
utilizes principle precepts, he or she makes decisions based on the equitable
application of ethical rules and principles. If the person operates from the individual
perspective he or she uses internalized rules and principles. When the individual
operates from the local perspective he or she makes ethical decisions in alignment
with company rules. Often these rules exist in a code of ethics that originate outside of
the organization.
20
The ethical climate in an organization provides the collective norms that guide
behavior (Trevino, 1986). And, it is believed that an organization’s ethical climate is
strongly influenced by management’s ethical conduct. For employee who generally
found personal satisfaction in behaving ethically, a conflict or dissonance will arise if
the norms within the organization require employees to compromise their ethical
values in order to achieve organizational goals. A lack of congruence regarding the
ethical values of employees and their organization is typically referred to as an ethical
conflict. An ethical conflict pertains to situations in which an employee’s personal
ethics are not compatible with the organization’s business ethics and hence the
behavioral expectations and norms of the organization (Soutar et al., 1994). From the
perspective of employees, an ethical conflict usually involves situations in which the
employees feel pressured by their peers, supervisors, and other members of their
organization to compromise their personal values in order to achieve organizational
goals (Leicht and Fennell, 1997). This conflict will then lead to lower level of job
satisfaction, low organizational commitment, substandard job performance, job stress,
and turnover (Judge and Ferris, 1992; Caldwell and O’Reilly, 1990; Schneider et al.,
1995).
According to the cognitive dissonance viewpoint, a perceived lack of
congruence between the ethical standards of the employee and the organization
creates a need state that motivates the employee to eliminate the incongruence
(Moser, 1988). Thus, individuals experiencing an ethical conflict will lead to lower
level of job satisfaction and are expected to withdraw or resign from the organization
in an attempt to reduce the stress associated with cognitive dissonance (Janson and
Von Glinow, 1985). Similarly, argued from the justice theory perspective, employees
who find themselves in an organization that promotes the company’s interest at the
21
expense of other considerations including employees’ interest and ethical values will
feel that fundamental values and their personal rights have been violated. This is also
expected to lead to a lower level of job satisfaction.
From a study by Jaramillo, Mulki and Solomon (2006), it is observed that
ethical climate has both direct effect ( e.g. role stress, job performance) and indirect
effect (e.g. role conflict and role ambiguity) on job satisfaction. Sims and Keon
(1997) found that a match between the ethical climate of the organization and the
ethical preferences of employees was related to increase feelings of job satisfaction
and decreased intentions to turnover. Likewise, Byington and Johnston (1991)
concluded that employees who experience ethical conflict within their organizational
environment reported lower levels of organizational commitment. Ethical conflict
happens when employee’s personal ethical value is incongruent with their
organization’s ethical climate (Byington and Johnston (1991).
In a study of managers in a large non-profit organization in US, Deshpande
(1996) found that an organization could influence the job satisfaction of its employees
by manipulating the ethical climate. However, it is employee’s own individual ethics,
values and beliefs that influence their ethical decision making (Wotruba, 1990). Sims
and Kroeck (1994) did propose that employees who have achieved a match between
their current ethical work climate and their ethical preferences are more likely to
experience positive job satisfaction. Unfortunately, they did not find any significant
results.
22
As mixed findings are observed in prior studies, a null hypothesis is proposed
to test the effect of ethical climate on employees’ job satisfaction in Malaysian
context:
H2: Ethical climate in the organization has no significant effect on job satisfaction.
2.3 The association between ethical behavior and career success
Organizations that have adopted ethics would all agree that ethical behavior is
some abstract term that sounds nice and looks good on paper, but rather difficult to
put in practice. However, Deshpande, (1996); Victor and Cullen, (1987, 1988) had all
agreed that ethical climate of an organization have a strong influence on the
employee’s behavior.
Wotruba (1990) described that the ethical behavior of a decision maker can be
influenced by his or her characteristics. Wotruba developed the Ethical Decision/
Action Process (EDAP) framework based on the Four- Component Model of Moral
Behavior by Rest (1986). Based on this framework, an employee’s behavior is
influenced by two factors: 1) psychological (e.g. empathy, personal values) and 2)
cultural (tradition, belief). Meanwhile, Martin and Cullen (2006) stated that emotional
intelligence, ethical behavior of coworkers, and caring climate were significantly
correlated with ethical behavior of an employee. Some of the previous study
(Deshpande et al., 2006; Bratton, 2004; Keith, Pettijohn and Burnett, 2003) also
supported that coworkers have greater impact than managers on influencing ethical
behavior of employees. They believe that an employee will engage in an ethical
behavior when his or her peers also behave ethically.
23
Career success is the positive psychological or work related outcomes or
achievements that the individual accumulates as a result of work experiences (Seibert,
Kraimer, and Crant., 1999). According to previous research (Judge, Cable Boudreau
& Bretz, 1995; London & Stump, 1982; Seibert et al, 1999) career outcomes
indicators can either be in the form of observable rewards (extrinsic) such as pay
increase or promotions, or individual’s perception of satisfaction with job and with
career progress (intrinsic).
Luthans and Stajkovic’s (1999) meta-analysis on studies that was drawn from
the reinforcement theory stresses that individual behavior is encouraged by three
types of reinforces - money, feedback and social recognition. The link between
reward and ethical behavior is so strong that ignoring the ethical effect of reward can
result in disaster (Mitchell; Schaeffer; and Nelson; 2005). If an employee can be
punished for bad behavior, it is only fair to reward them for doing the right thing.
It is noted that behaviors are observable in which people can seen saying or
doing them. Due to this reason, the occasions on which people demonstrate them, or
fail to demonstrate them, can be tracked. Just like rewarding an employee’s
achievement, people can also be held accountable for the behaviors to be eligible for
some form of reward (Mitchell et. al., 2005). In a study done by Vitell and Davis
(1990), the relationship between ethics and job satisfaction are examined in a few
dimensions, including pay and promotion. It is found that there was a significant
correlation between all aspects of one’s job and degree of optimism about ethical
behavior being linked to success. Thus, in an organization where ethical behavior is
closely associated with career success, the ethical behavior of employee is reinforced.
Vitell and Davis observed that environment that allows ethically behaving employees
to be successful leads to the higher job satisfaction.
24
Contradict to this, Chonko and Hunt (1985) believes that unethical behavior
does help one’s personal career progress. Example was drawn from sales managers,
when they are pressured to achieve a short-term sales goal, it might induce a
temporary ethical ‘compromise’ believed necessary to achieve the goal (Rest, 1986;
Schweitzer, Ordonez and Douma; 2004,). However it is noted that short-term
behavior is not consistent with long-term ethical standards and intentions.
Based on the cognitive dissonance theory, the converse is true for companies
that reinforce unethical behavior, in which their employees are required to change
their behavior in such a fashion that it clashes with their attitudes and gives rise to
dissonance. Furthermore, to achieve team player status, individuals must adopt a “go
along to get along” mentality wherein the individual subjugates his or her own belief
system in favor of the company’s direction (Callanan, 2003).
Similarly, from the justice theory perspective, ethical employees who are not
rewarded or promoted because they are not willing to compromise their ethical values
will feel frustrated and hence experience a lower level of job satisfaction. Moreover,
individuals who fail to abide by the company cultural rules (unethical behavior) are
likely to face career plateau at best and outright dismissal at worst. Indeed, the
performance appraisal and reward systems within organizations can exact swift
punishment on those who violate cultural (unethical behavior) expectation.
Weighing both scenarios of employees practicing ethical behavior and non-
ethical behavior, there is empirical evidence that employees are more satisfied when
they perceive a relationship between ethical behavior and career success (Vitell and
Davis, 1990b; Viswesvaran and Despande, 1996). This leads to the following null
hypothesis:
25
H3: The association between ethical behavior and career success in the organization
has no significant effect on job satisfaction.
2.4 Moral awareness
Previous study by Koh and Boo (2001) had linked the top management
support for ethical behavior, ethical climate and association between ethical behavior
and career success towards job satisfaction. However, to make this study more
comprehensive, another component is added, which is moral awareness, to test its
relation to ethical work climate and it’s influence towards job satisfaction. Moral
awareness is a necessary and integral part of moral behavior (Blum, 1991; Rest,
1994). More than eight in ten managers use their own moral values to decide on
ethical issues Brigley (1995),
Several researchers have also acknowledged the possible connection between
ethical work climate and various constructs resembling moral awareness (Cohen,
1995; Cullen et al., 1989; Victor and Cullen, 1987; Wimbush and Shepard, 1994;
Wyld and Jones, 1997). Although most researchers seem to agree that social and
organizational factors have a strong impact on moral awareness, very few have
specified or tested those influences directly or indirectly on job satisfaction. Jones and
Ryan (1997, p. 665) noted, “Most of the models that purport to explain moral decision
making [which encompasses moral awareness] in organizations...contain an element
that refers to organizational or environmental influences on the moral agent, but few
provide much in the way of detail regarding how these influences work.”
Moral awareness can be defined as the degree to which an individual
recognizes the aspects of a situation that carry a reasonable likelihood of moral wrong
26
or harm to individuals, classes of people, or other entities regardless of human or non-
human, living or reifications (VanSandt et al., 2006). Harm is used as a criterion on
the assumptions that if a given action brings universal benefit there is no moral
dilemma, and that most people view morality in terms of harm to self or others
(Reynolds, 2002). This definition is similar to others used in the literature (Butterfield
et al., 1997; Rest, 1994). One significant difference between VanSandt et al.’s (2006)
definition and some of the others is the notion of “degree”. Butterfield et al. (1997),
Trevino (1986), define moral awareness as an either/or state. Either the moral agent is
aware of the moral components of a situation or she is not.
But as Blum (1991; 1994) emphasizes, moral awareness is a more complex
state than this implies. Blum is the only person who has written about the process and
state of moral perception to any significant extent. His primary purposes in doing so
were to distinguish perception from judgment in moral reflection and to emphasize
the importance of awareness in the process (Blum, 1991; Blum, 1994). He includes in
perception “anything contributing to or encompassed within the agent’s take on the
situation – his salience-perception – prior to his deliberating about what to do” (Blum,
1991, p. 707). This includes not only the way in which people perceive particular
situations, but also their ability to recognize the morally significant components as
moral situations.
To further explicate this idea, Blum discusses three aspects of complete moral
awareness. The first of these is an initial recognition of the moral component of a
situation, simply perceiving that a moral “problem” potentially exists. The second
aspect involves fully grasping what the moral component of a situation means to the
party(ies) affected. He notes, “Adequate moral perception is not only a matter of
making ‘moral discriminations’ – noting morally distinct elements in the situation. It
27
is also a matter of the moral aspect of the situation, to weigh adequately within one’s
view of the situation.” This view is similar to David Hume’s and Adam Smith’s
emphasis on the role of sympathy in overcoming exclusive self-interest (Hume, 1751;
Smith, 1759/1986).
The third aspect of full moral perception involves the agent’s ability to
interpret situations in ways that brings out their moral components. For moral
awareness in business situations, it seems that being able to see a situation in a certain
way or from a certain viewpoint is important. Organizational climate wields
significant influence over individuals’ perceptions and behaviors (Jones and Ryan,
1998). Many organizations prompt their members to think only of the effects of their
actions on profits (Hare, 2004). If the climate in an organization discourages the
members from making construal about anything but profits, the members’ abilities to
perceive moral components will most likely be inhibited. Gioia (1992) has shown the
constraints that organizational scripts place on individuals’ cognitive processes.
In a similar vein, framing or problem setting plays a critical role in problem
solving (Baucus and Rechner, 1995, 1996; Rechner and Baucus, 1997; Stephens and
Lewin, 1992). Ethical work climate is a broader construct than either scripts or
frames, and as such, should wield even more influence over a group member’s ability
to recognize moral elements in a situation. Measurement of moral awareness includes
the existence of salience, sympathy, and construal, as described by Blum (1991;
1994). But the key element in the moral awareness construct is the ability to consider
possible harm to others.
As a general rule, one would expect that an individual’s moral awareness
would increase with the degree of concern on what his/her ethical criteria hold for
other parties. This contention is based on the idea that an act that will benefit the
28
moral agent or one’s immediate contacts, but harm others outside of that “scope of
justice” would not elicit the agent’s moral awareness unless her locus of analysis is
sufficiently broad (Deutsch, 1974, 1985). As Jones (1991) points out, proximity of
moral issues tends to increase moral intensity, but that is a different issue than what is
being considered here. Proximity is a characteristic of the moral situation itself, which
is beyond the scope of this research project. The development of the ethical work
climate construct, with its ideas of “whom” and “what” are considered in moral
deliberations supports this generalization (Victor and Cullen, 1987, 1988).
The other major component of the definition of moral awareness is situational,
which refers to the ability to see elements of a situation as morally significant. Since
these elements may be very different from situation to situation, it would be difficult,
if not impossible, to make any meaningful generalizations about this aspect of the
definition. As Blum (1991, p. 716) said, “In a way it is misleading to speak of
someone as ‘sensitive to particulars’ (or ‘good at perceiving the moral character of
particulars’) tout court. Some people are better at perceiving some sorts of particulars
than other sorts.”
Therefore, in formulating hypotheses regarding the relationships between
moral awareness and ethical work climate which contributes to job satisfaction, a null
hypothesis is proposed to test on the relationship between moral awareness and job
satisfaction among managers in Malaysia:
H4: There is high level of moral awareness among members of organization with
ethical work climate, however it has no significant effect on job satisfaction.
29
The next section discusses the literature review on the dependant variable- Job
Satisfaction as well as the literatures on the association between organizational ethics
and job satisfaction.
2.5 Job satisfaction
Job satisfaction has been a key concept in the study of organizations. The
earliest systematic attempts to study job satisfaction date back to the 1930s
(Padmanabhan, 2005). To date, numerous studies have been conducted across the
globe experimenting different elements on job satisfaction, and a handful of them
were also done in Malaysia (e.g., Rowden & Ahmad, 2000; Samad, 2005). Robbins
(2005) cites the Wyatt Company’s 1989 national WorkAmerica study had identified
wide dimensions of job satisfaction, such as work organization, working conditions,
communications, job performance and performance review, coworkers, supervision,
company management, pay, benefits, career development and training, job content
and satisfaction, and company image and change.\
Padmanabhan (2005) summarizes the concept of job satisfaction as follows:
an individual’s overall job satisfaction is the overall feeling one gets from satisfaction
with different aspects of the job. According to Moorman (1993), job satisfaction is a
combination of cognitive and affective contentment of an employee. Affective
satisfaction, which is founded on an overall positive emotional assessment of the
employee’s job, focuses on their mood when working, i.e. whether the job induces a
good mood and positive feeling when working. In contrast, cognitive satisfaction is
the fulfilment an employee gets from a more logical and rational appraisal such as the
job conditions, opportunities or outcomes. Hence, it describes the job and not the
feelings.
30
2.6 Organizational Ethics and Job Satisfaction
According to Koh and Boo (2001), the link between organizational ethics and
job satisfaction can be explained by the organizational justice theory and cognitive
dissonance theory.
The concept of organizational justice is central to understanding a wide range
of human attitudes and behaviours in organizations. The underlying premise is that
the justice perceptions of employees affect their job attitudes and organizational
outcomes such as job satisfaction and turnover intention (Hartman et al., 1999).
Organizational justice is often dichotomized into two components: (1) distributive
justice which addresses the fairness of managerial decisions relative to the distribution
of outcomes such as pay and promotion, and (2) procedural justice which focuses on
how such managerial decisions are made. Dailey and Kirk (1992) found that
employee perceptions of both distributive and procedural justice play a central role in
relation to job satisfaction. Sweeney and McFarlin (1993) and Hartman et al. (1999),
however, found that distributive justice predicts job satisfaction better than procedural
justice does.
In a number of studies on organizational situations cited by Koh and Boo
(2001), for example, layoffs, job insecurity, unfair promotions, selection and hiring,
and part-time employment, fairness, equity and favourable perceptions by the
employees are shown to lead to positive job attitudes and outcomes. Findings by
Singhapakdi and Vitell (1991) reinforced this notion by concluding that ethically
sensitive salespeople prefer to see a punitive or non-punitive action response, as
opposed to a no-action response, taken by their firms in reaction to unethical
behaviour by employees.
31
Conceptually, Lind’s (1992) fairness heuristic states that perceptions of
fairness in one area influence perceptions of fairness in another area. In other words, it
means that employees who perceive their organizations to be ethical are also likely to
perceive their organizations as being fair to them. This, in turn, is likely to enhance
employee job satisfaction. Hence, organizational ethics and job satisfaction expected
to be positively linked.
According to the cognitive dissonance theory, first proposed by Festinger in
1942, individuals strive to minimize dissonance in their environment. Assuming that
employees generally strive to be individually ethical, dissonance in the form of
inconsistencies between their ethical value system and the ethical climate of the
organizations will result in distress and dissatisfaction in the situation. Furthermore,
top management sets the organizational climate for employees. Thus, any discrepancy
between employees’ internal standards of ethics and their perceptions of top
management will result in a moral conflict and cognitive dissonance (Festinger,
1942).
Koh and Boo (2001) also cited several more recent studies by Sims and
Kroeck (1994), Viswesvaran and Deshpande (1996), and Schwepker (1999) which
found that the lack of an ethical fit between employees and their organization can
result in distress and job dissatisfaction, among other things. Job satisfaction of
salespersons were found to be weakened if they perceive the the organization
rewarding the unethical behaviours of co-workers (Bellizzi and Hite, 1989).
In view of the above, if employees perceive strong top management support
for ethical behaviour, a favourable ethical climate, and a strong association between
ethical behaviour and career success in the organization, then they are also likely to
have a higher level of job satisfaction. Vitell and Davis (1990) are in the opinion that
32
if the “ethical” correlates of job satisfaction can be identified, then managers may be
able to find the best ways to influence the organization’s ethical climate so as to
enhance job satisfaction while maintaining an ethical environment.
2.7 Prior Literatures on the relationship between Organizational Ethics and
Job satisfaction
In response to a lack of cross-cultural studies involving non-Western countries
on business ethics, Honeycutt et al. (1995) conducted a research on ethical similarities
and differences, and job-related constructs among 160 Taiwanese and 91 U.S. sales
personnel in the highly-competitive automotive industry. Their findings include that
ethical perceptions of the industry negatively influenced job satisfaction levels of both
Taiwan and U.S. samples. However, this finding may indicate that if ethical standards
at the dealership are low and the employee perceives the overall industry to have
higher ethical standards, the salesperson would understandably become disenchanted
with his or her job.
These findings seem contradicted by another recent study by Jaramillo et al.
(2006) where 138 U.S. salesperson were surveyed to investigate the role of ethical
climate on their role stress, job attitudes, turnover intention and job performance. In
their research, the findings indicated that ethical climate resulted in lower role conflict
and role ambiguity and higher satisfaction, which, in turn, led to lower turnover
intention and increased organizational commitment. Organizational commitment, in
this case, was found to be a significant predictor of job performance. These research
findings have important implications for both practitioners and academicians, because
they demonstrate that creating an ethical climate is not only the right thing to do but
also has significant benefits for both the salesperson and the organization.
33
Sims and Kroeck (1994) studied the influence of ethical fit on employee
attitudes and intentions to turnover. 66 employees working in five different
departments in a medium-sized hospital were surveyed. They used the Minnesota
Satisfaction Questionnaire to measure intrinsic and extrinsic satisfaction of the
employees. Their findings revealed that job satisfaction was not significantly related
to the fit between the current ethical work climate and the employees’ expressed
preferences. The authors suggested that this could be due to the fact that satisfaction is
a measure of job attitudes, while ethical work climates are a measure of the
organization, i.e. a conceptual difference. They further suggested that an
organizational measure of satisfaction should be used instead to determine if
organizational satisfaction is influenced by ethical work climate.
Vitell and Davis (1990a) examined empirically the relationship between ethics
and job satisfaction for 61 Management Information System (MIS) professionals.
Their results indicated that MIS professionals were more satisfied with the various
measured dimensions of their job (pay, promotions, co-workers, supervisors, the work
itself) when top management stresses ethical behavior and when they are optimistic
about the relationship between ethics and success within their firms. The one
exception to this was pay satisfaction which was unrelated to these constructions.
One’s sense of social responsibility was also found to be relatively unrelated to job
satisfaction.
Based on the literature reviews above, the research framework for the study
can be represented by Figure 2.1. In particular, it suggests that ethics in organizations
has an impact upon the job satisfaction of employees. Organizational ethics comprises
top management support for ethical behavior, the ethical climate in the organization,
association between ethical behavior and career success and moral awareness. Job
34
satisfaction of employees can be measured in terms of the following dimensions: pay,
promotion, co-workers, supervision, work and overall of five different dimensions.
Viswesvaran et al. (1998) postulated and obtained evidence that the impact of ethics is
most pronounced on the job satisfaction dimension of supervision.
Figure 2.1 : Research Framework
Chapter Summary:
Chapter two thus far had examined previous literatures for each variable of
organizational ethics and job satisfaction. Chapter three will focus on the research
methodology, elaborating on the hypotheses, data sample and collection method,
questionnaire design and data analysis techniques.
Top management support
for ethical behavior
Ethical Climate
1. Egoistic
2. Benevolent
3. Principled
Association between ethical
behavior and career success
Moral Awareness
Job Satisfaction
1. Pay
2. Promotion
3. Co-workers
4. Supervision
5. Work
6. Overall
35
CHAPTER 3: RESEARCH METHODOLOGY
Chapter Introduction:
This chapter describes the research design of this study and sampling
technique. The chapter also elaborates on the survey instrument, data collection
methodology and the statistical techniques used to analyze the data found in this
study.
3.1 Development of Hypotheses
From the review of the related literature on chapter two, a total of four
hypotheses have been developed. These include:
Hypotheses 1:
H1: Top management support for ethical behavior has no significant effect on job
satisfaction.
Hypotheses 2:
H2: Ethical climate in the organization has no significant effect on job satisfaction.
Hypotheses 3:
H3: The association between ethical behavior and career success in the organization
has no significant effect on job satisfaction
36
Hypotheses 4:
H4: There is high level of moral awareness among members of organization with
ethical work climate, however it has no significant effect on job satisfaction.
3.2 Research Design
Generally, descriptive design is employed in order to ascertain and be able to
describe the characteristics of the variables of interest in a situation. Descriptive
design is undertaken in organizations in order to learn about and describe the
characteristics of group of employees. As to discover relationships and interaction
among organizational ethics and job satisfaction, descriptive design is applied for this
study. A cross-sectional study was done in this study where investigation only made
at a single point of time. The purpose of this study is to gather data that would be
pertinent to find answers to research questions. Thus, data collection at one point in
time should be sufficient.
The unit of analysis refers to the level of aggregation of the data collected
during data analysis stage. As this study is to gauge employees individual level of
analysis, questionnaires were distributed to part time students enrolled in the MBA
program in University of Malaya and working manager who did not enroll any MBA
program. The data gathere from each individual should be treated as an individual
data source.
37
3.3 Sampling Technique
Nonprobability sampling, i.e. convenience sampling method was adopted for
this study. Convenience sampling involves sampling procedure used to obtain units or
people who are most conveniently available.
Owing the fact that the purpose of this study is to examine the relationship
between organizational ethics and job satisfaction among managers in Malaysia, the
research questionnaire was administered to a convenience sample of 200 part time
students enrolled in the MBA program in University of Malaya and working manager
who did not enroll any MBA program. It can be argued that MBA students would bias
towards this survey and it can be reduced by selecting sample from another
population. Hence, this combination of sample will give meaningful responses to the
questionnaire.
3.4 Data Collection Procedure
Both Primary and secondary data were collected for this study. For the start,
secondary data was collected in order to have better understanding on the subject
under study. Previous researchers on the study subject were secured through journals,
electronic journals, magazines, books, dissertations and other printed materials.
For the primary data collection, a sample of 200 respondents was taken from
the population of part time MBA program students in University of Malaya and
working manager who did not enroll any MBA program. Questionnaires were
disseminated to the respondents based on purposive convenience sampling basis and
it was done in two and a half weeks period. The questionnaires were personally
distributed and were collected right after respondents complete it. At the same time,
38
questionnaires were also sent out by e-mail and some had been distributed via friend’s
networks. Only responses that were received within the two and a half weeks period
were considered for this study. Follow-up emails had been sent out after one week
from the date of distribution in order to secure better response rate.
It was stressed that questionnaire were confidential and anonymity of
respondents were guaranteed. Furthermore, the respondents were informed of the
purpose of the study. Also, it was ensured that the sample was drawn from
respondents with varied backgrounds in terms of age group, gender, education level,
marital status, job position and working experience.
A total of 200 survey questionnaires were disseminated and 123 usable
responses were received, giving a respondent rate of 62%. The unusable
questionnaires were those containing missing value or selected the same scale for all
the questions.
3.5 Research Instruments
The questionnaire for this study consists of three parts, i.e. (1) Job
Satisfaction, (2) Organizational Ethics and (3) Demographic Information was
employed to collect relevant data to be measured in order to attain the objectives of
this study.
The dependent variable, job satisfaction, is measured using a 20-item
instrument which has been used by previous researchers in the business ethics area.
(e.g. Vitell and Davis, 1990b; Joseph and Deshpande, 1996; Viswesvaran et al.,
1998). This instrument for overall job satisfaction is derived from satisfaction with
pay, promotion, co-workers, supervision and work. Each dimension comprises four
39
items measured on a scale ranging from 1 (strongly disagree) to 4 (strongly agree). A
higher level of job satisfaction is indicated by a higher mean score.
The four independent variables in the study are measured as follows. For top
management support for ethical behavior, the four items developed by Koh and Boo
(2001) to measure top management action are adapted to give a 4-items measure
using a 4-point scale, ranging from 1 (strongly disagree) to 4 (strongly agree). A high
mean score represents strong top management support for ethical behavior.
To measure the association between ethical behavior and career success in the
organization, Koh and Boo (2001) is used. Each item is similarly measured on a 4-
point scale, ranging from 1 (strongly disagree) to 4 (strongly agree). A high mean
score represents a strong association between ethical behavior and career success in
the organization.
Ethical climate in organizations adapted the questionnaire that developed by
Cullen et al. (1993). The following three categories of ethical climate are assessed: (1)
egoistic, which emphasizes the company’s interest; (2) benevolent, which emphasizes
the employees’ interest; and (3) principled, which emphasizes compliance with rules
and standard operating procedures. Each of three categories is measured by four items
on a 4-point scale, ranging from 1 (strongly disagree) to 4 (strongly agree). A high
mean score represents a strong association between ethical behavior and ethical
climates in organizations.
The additional independent variable was tested through the questionnaire that
developed by VanSant et al. (2006). It consist of seven items and each of the items
measure using a 4-point scale, ranging from 1 (strongly disagree) to 4 (strongly
agree). A high mean score represents moral awareness strongly associated with ethical
behavior.
40
The items to measure the dependent variable (i.e., job satisfaction) and
independent variables (i.e., top management support for ethical behavior, ethical
climate, association between ethical behavior and career success and moral
awareness) are presented in the Table 3.1 and Table 3.2.
Table 3.1 Job Satisfaction Dimensions and its items
Dimensions Items
1. My organization pays better than competitors.
2. My pay is adequate considering the
responsibilities I have.
3. I am underpaid for what I do.
Pay
4. My fringe benefits are generous.
1. I do not like the basis on which my organization
promotes people.
2. Promotions are infrequent in my organization.
3. If I do a good job, I am likely to get promoted.
Promotion
4. I am satisfied with my rate of advancement.
1. The people that I work with do not give me
enough support.
2. In my organization, when I ask people to do
things, the job gets done.
3. I enjoy working with the people in my
organization.
Co-workers
4. In my organization, I work with responsible
people.
1. The managers I work for back me up.
2. The managers I work for are competent.
3. My supervisors do not listen to me.
Supervision
4. Management does not treat me fairly.
41
1. My job is interesting.
2. I feel good about the amount of responsibility in
my job.
3. I would rather be doing another job.
Work
4. I get little sense of accomplishment from doing
my job.
Table 3.2 Organizational Ethics Dimensions and its items
Dimensions Items
1. Top management in my organization has clearly
conveyed that unethical behavior will not be
tolerated.
2. Top management in my organization should have
higher ethical standards than they do now.
3. If a manager in my organization is discovered to
have engaged in unethical behavior that results
primarily in personal gain rather than corporate
gain, he will be promptly reprimanded.
Top management
support for ethical
behavior
4. If a manager in my organization is discovered to
have engaged in unethical behavior, he will be
promptly reprimanded even if the behavior results
primarily in corporate gain.
1. My organization emphasizes the importance of
furthering its interests.
2. Employees in my organization are not expected to
be concerned with the organization's interests all
the time.
3. All decisions and actions in my organization are
expected to contribute to the organization's
interests.
Ethical climate
(egoistic)
4. Work that hurts my organization's interests can be
acceptable.
Ethical climate
(benevolent)
1. Concern for employees is prevalent in my
organization.
2. My organization does not emphasize employee
welfare.
3. All decisions and actions in my organization are
expected to result in what is generally best for
everyone.
4. My organization does not consider the well-being
of all employees.
42
Ethical climate
(principled)
1. Compliance with organization rules and
procedures is very important in my organization.
2. Employees in my organization are not expected to
stick to organization policies strictly.
3. People who do not follow organization rules and
procedures are not viewed favorably in my
organization.
4. My organization does not emphasize the
importance of its rules, procedures and policies.
1. Successful managers in my organization are more
ethical than unsuccessful managers.
2. In order to succeed in my organization, it is often
necessary to compromise one's ethics.
3. Successful managers in my organization withhold
information that is detrimental to their self-
interest.
4. Successful managers in my organization make
rivals look bad in the eyes of important people.
5. Successful managers in my organization look for
a "scape-goat" when they feel they may be
associated with failure.
6. Successful managers in my organization take
credit for the ideas and accomplishments of
others.
Association between
ethical behavior and
career success
7. Ethical behavior is important for success in my
organization.
1. In this company, people protect their own interest
above other considerations.
2. There is no room for one’s own personal morals
or ethics in this company.
3. It is expected that each individual is cared for
when making decisions here.
4. The most important concern is the good of all the
people in the company.
5. In this company, people are expected to follow
their own personal and moral beliefs.
6. In this company, people are guided by their own
personal ethics.
Moral Awareness
7. The most important consideration in this
company is each person’s sense of right and
wrong.
43
3.6 Data Analysis Technique
The returned questionnaires were first screened for completeness and
incomplete survey questionnaire were rejected. The completed data were analyzed
using the Statistical Programmer for Social Science (SPSS) computer program. The
scores for the negatively phrased items were reversed before analysis.
The survey questionnaire responses were coded according to the scale
measurements. Some recoding was necessary using SPSS ‘transform’ function so that
the data could be grouped together for statistical analysis.
Descriptive statistics (i.e., frequency distributions, means and standard
deviations) are used to develop a profile of the respondents, summarize the variables
and illustrate central tendency. Measurement of reliability is useful in determining the
degree to which observations are consistent. Thus, alpha coefficients (Cronbach,
1951) are computed to assess the reliability of job satisfaction, top management
support for ethical behavior, ethical climate, association between ethical behavior and
career success in the organization and moral awareness. To better understand the
relationships among the variables, correlation analysis is performed to generate the
correlation matrix.
Finally, to test the research hypothesis, multiple regression analysis is used.
This statistical method is appropriate as job satisfaction, top management support for
ethical behavior, ethical climate, association between ethical behavior and career
success in the organization and moral awareness are measured on an interval scale.
Such an approach is also consistent with those of previous studies from Koh and Boo
(2001). As there are multiple items for each construct, the average of the multiple
items is used in the multiple regression. As ethical climate is measured as a
44
categorical variable (egoistic, benevolent or principled), it is coded as two dummy
variables with the egoistic ethical climate as the reference point.
Chapter Summary:
This Chapter has outlined the development of hypotheses, research methods
and design and data analysis techniques. The next chapter discusses on summary
statistics, analyses of measures, testing of hypotheses and reveals the research result.
45
CHAPTER 4: RESEARCH RESULTS
Chapter Introduction:
This chapter organizes the findings of the survey and presents the research
results. Firstly, this chapter describes the summary statistics of respondents and
characteristics of respondents, followed by the analysis and testing of hypotheses and
summarizes the overall key findings. The Statistical Package for the Social Science
(SPSS) software was used to analyze the data collected from the survey.
4.1 Summary Statistics
4.1.1 Sample Characteristics
Majority of the respondents is in the age group of between 25 and 45 years old
(90%), and male (53%). Most of the respondents are in the lower (54%) and middle
(37%) level managerial positions. In terms of working experience, 31% have at least
five years of working experience. This demographic characteristic of respondents is
shown in table 4.1.
(As pointed out by an anonymous referee, MBA students with less than five
years of working experience may not be good surrogates for managers. Koh and Boo
(2001) did access this confounding factor, differences in results (i.e. regression
intercepts as well as slopes) attributable to a dummy variable representing five years
or more of working experience were accessed. No statistical significant was found.
Hence, results relating to the entire sample are presented. Therefore, the same results
were adopted whereby the combination of respondents is more relevant to this survey.
46
Table 4.1 Demographic Characteristics of Respondents
Description Frequency Percentage
Age 20-24 years
25-29 years
30-35 years
36-39 years
40-44 years
45 years and above
Total
20
26
32
18
15
12
123
26%
21%
16%
15%
12%
10%
100%
Gender Male
Female
Total
65
58
123
53%
47%
100%
Education Level Secondary
Diploma
Degree
Post Graduate
Total
6
17
70
30
123
5%
14%
57%
24%
100%
Marital Status Single
Married
Total
73
50
123
59%
41%
100%
Current Job Position Administrative/clerical
Technician
Executive
Assistant Manager
Manager/Senior Mgr
Others
Total
39
27
21
25
11
-
123
32%
22%
17%
20%
9%
-
100%
Type of Organization Private Limited
Government
Government-linked (GLC)
Others
Total
43
36
26
18
123
35%
29%
21%
15%
100%
Size of Organization Less than 50 employees
51-199 employees
200-499 employees
500 or more employees
Total
22
19
44
38
123
18%
15%
36%
31%
100%
Years served in
current Organization
Less than 5 years
5-10 years
More than 10 years
Total
85
29
9
123
69%
24%
7%
100%
47
4.2 Analyses of Measures
4.2.1 Descriptive statistics and Alpha Coefficients
The descriptive statistics and alpha coefficient of job satisfaction (pay,
promotion, co-workers, supervision and work), top management support for ethical
behavior, ethical climate (egoistic, benevolent or principled), association between
ethical behavior and career success, and moral awareness are summarized in table 4.2.
As shown, the alpha coefficients range from 0.471 to 0.819. That is, some of the
variables have reliability less that the typical acceptable benchmark of 0.70 (Hair et
al., 1998). In particular, job satisfaction (pay, promotion, co-workers), ethical climate
(egoistic, principled) and moral awareness have alpha coefficients 0.625, 0.566,
0.662, 0.533, 0.577 and 0.471 respectively.
It is noted that some of the alpha coefficients are consistent with prior studies.
For example, Koh and Boo (2001) reported an alpha coefficient of 0.74 for their
measure of satisfaction with supervision, while this study reported an alpha
coefficient of 0.76. In most cases, this study’s alpha coefficients are generally lower
than Koh and Boo’s (2001), however, the findings follow a similar trend. For
example, the alpha coefficient for egoistic ethical climate reported by Koh and Boo
(2001) is quite low (i.e. 0.55), which is comparable to this study (0.533). A mitigating
factor is that satisfaction is a multi-faceted concept, and individually, each aspect of
satisfaction being studied comprises one of the many facets of job satisfaction. In
addition, egoistic ethical climate is not used directly in the data analysis. Instead it is
used with two other measures to derive two dummy variables to capture the
organizations ethical climate.
48
Generally, variables with low reliability lead to an underestimation of the
actual strength of the relationships among them (Dooley, 1995). Thus, the error is on
the conservative side.
Table 4.2 Descriptive statistics and alpha coefficient of variables
Variable Mean Std.
Dev.
Alpha coefficient
(present study)
Alpha coefficient
(Koh & Boo,
2001)
Job satisfaction (Pay) 2.55 0.47 0.625 0.71
Job satisfaction (Promotion) 2.43 0.50 0.566 0.63
Job satisfaction (Co-workers) 2.71 0.51 0.662 0.79
Job satisfaction (Supervision) 2.76 0.57 0.759 0.74
Job satisfaction (Work) 2.65 0.52 0.716
0.75
Job satisfaction (Overall) 2.62 0.35 0.819 0.89
Top management support for ethical
behavior
2.56 0.48 0.814
0.77
Ethical climate (Egoistic) 2.82 0.41 0.533
0.55
Ethical climate (Benevolent) 2.61 0.52 0.755
0.77
Ethical climate (Principled) 2.70 0.48 0.577 0.76
Association between Ethical Behavior and
Career Success
2.49 0.40 0.707
0.84
Moral Awareness 2.64 0.29 0.471
-
4.2.2 Correlation Coefficients
The correlation matrix of the variables in the regression model is given in
Table 4.3. As can be seen, all the measures of job satisfaction are significantly and
positively correlated among themselves. Top management support for ethical
behavior is significantly and positively correlated with all measures of job satisfaction
with the exception of satisfaction with work. On the other hand, association between
ethical behavior and career success is significantly and positively correlated with all
measures of job satisfaction. Moral awareness, however, is significantly and
positively correlated with job satisfaction except for satisfaction with supervisor, and
is negatively correlated with satisfaction with work.
49
Benevolent and principled ethical climates are found to be negatively
correlated to each other; this is expected as the two climates are dissimilar. Based on
the correlations, only the benevolent ethical climate is found to be significantly and
positively correlated with satisfaction with supervisor, and with overall job
satisfaction. This finding is opposite of Koh and Boo’s (2001), who found that
principled ethical climate to be correlated with job satisfaction.
Correlation of matrix of variables
M_JSPAY M_JSPRO M_JSCOW M_JSSUP M_JSWOR M_OJS
M_TOPMG
T
DUM_BE
N DUM_PRI M_CAREER
Pearson Correlation 1 .216(**) .197(*) .226(**) .250(**) .536(**) .246(**) .102 .087 .266(**)
Sig. (1-tailed) .008 .014 .006 .003 .000 .003 .130 .170 .001
N 123 123 123 123 123 123 123 123 123 123
Pearson Correlation .216(**) 1 .329(**) .305(**) .357(**) .646(**) .295(**) .099 .023 .192(*)
Sig. (1-tailed) .008 .000 .000 .000 .000 .000 .138 .399 .017
N 123 123 123 123 123 123 123 123 123 123
Pearson Correlation .197(*) .329(**) 1 .531(**) .446(**) .745(**) .215(**) .149 .117 .416(**)
Sig. (1-tailed) .014 .000 .000 .000 .000 .008 .050 .100 .000
N 123 123 123 123 123 123 123 123 123 123
Pearson Correlation .226(**) .305(**) .531(**) 1 .362(**) .737(**) .274(**) .276(**) .065 .280(**)
Sig. (1-tailed) .006 .000 .000 .000 .000 .001 .001 .236 .001
N 123 123 123 123 123 123 123 123 123 123
Pearson Correlation .250(**) .357(**) .446(**) .362(**) 1 .716(**) .088 .047 .096 .270(**)
Sig. (1-tailed) .003 .000 .000 .000 .000 .168 .303 .145 .001
N 123 123 123 123 123 123 123 123 123 123
Pearson Correlation .536(**) .646(**) .745(**) .737(**) .716(**) 1 .329(**) .203(*) .114 .419(**)
Sig. (1-tailed) .000 .000 .000 .000 .000 .000 .012 .105 .000
N 123 123 123 123 123 123 123 123 123 123
Pearson Correlation .246(**) .295(**) .215(**) .274(**) .088 .329(**) 1 .318(**) .160(*) .259(**)
Sig. (1-tailed) .003 .000 .008 .001 .168 .000 .000 .039 .002
N 123 123 123 123 123 123 123 123 123 123
Pearson Correlation .102 .099 .149 .276(**) .047 .203(*) .318(**) 1 -.059 .076
Sig. (1-tailed) .130 .138 .050 .001 .303 .012 .000 .260 .202
N 123 123 123 123 123 123 123 123 123 123
Pearson Correlation .087 .023 .117 .065 .096 .114 .160(*) -.059 1 .062
Sig. (1-tailed) .170 .399 .100 .236 .145 .105 .039 .260 .248
N 123 123 123 123 123 123 123 123 123 123
Pearson Correlation .266(**) .192(*) .416(**) .280(**) .270(**) .419(**) .259(**) .076 .062 1
Sig. (1-tailed) .001 .017 .000 .001 .001 .000 .002 .202 .248
N 123 123 123 123 123 123 123 123 123 123
Pearson Correlation .228(**) .259(**) .254(**) .084 -.041 .224(**) .377(**) .172(*) .104 .380(**)
Sig. (1-tailed) .006 .002 .002 .177 .326 .006 .000 .028 .125 .000
N 123 123 123 123 123 123 123 123 123 123
** Correlation is significant at the 0.01 level (1-tailed).
* Correlation is significant at the 0.05 level (1-tailed).
M_JSPAY = Job satisfaction (Pay) M_TOPMGT = Top management support for ethical behavior
M_JSPRO = Job satisfaction (Promotion) DUM_BEN = Benevolent ethical climate (Dummy)
M_JSCOW = Job satisfaction (Co-workers) DUM_PRI = Principled ethical climate (Dummy)
M_JSSUP = Job satisfaction (Supervision) M_CAREER = Association between Ethical Behavior and Career Success
M_JSWOR = Job satisfaction (Work) M_MORAL = Moral Awareness
M_OJS = Job satisfaction (Overall)
51
4.2.3 Multiple regression analysis results
A total of six regression models were performed – for overall job satisfaction
as well as satisfaction with pay, promotion, co-workers, supervision and works. The
multiple regression analysis results are summarized in Table 4.4.
When considering the separate individual facets of job satisfaction, it was
found that management support for ethical behavior significantly affects satisfaction
for promotion and overall job satisfaction. Benevolent ethical climate significantly
affects satisfaction with supervision, whereas principled ethical climate did not seem
to affect any aspects of job satisfaction. Association between ethical behavior and
career success was found to significantly affect satisfaction for pay, co-workers,
supervision, work and overall job satisfaction. Moral awareness significantly affects
satisfaction with work.
From Table 4.4, the highest R-square value among the individual facets of job
satisfaction shown by satisfaction with co-workers (R-square = 0.204) indicates that
ethics in organization enhances job satisfaction with co-workers to the largest extent.
Incidentally, Viswesvaran et al. (1998) suggested that ethics in organization should
enhance satisfaction with all facets of the job, especially job satisfaction with
supervision.
4.3 Testing of Hypotheses
For the purpose of this study and for hypotheses testing, the effects of ethics
variables on the overall job satisfaction are of paramount importance. As shown in
Panel F of Table 4.3, the regression model is significant (p-value = 0.000) and has an
52
R-square of 0.244 (adjusted R-square = 0.212). That is 24.4% of the variation in
employee overall job satisfaction can be explained by the variation in the ethics
variables in organizations. The R-square level is considered adequate as the objective
of the model is to assess the direction and strength of the association between
organizational ethics and job satisfaction, and not to predict job satisfaction.
To test the four research hypotheses, the significance of the t-tests for the
model coefficients is assessed. As shown, the p-value for “top management support
for ethical behavior” is 0.042, which is significant. Hence, the null hypothesis H1 (that
top management support for ethical behavior has not significant effect on job
satisfaction) can be rejected. In particular, the positive coefficient indicates that a
stronger top management support for ethical behavior is associated a higher level of
job satisfaction in the organization. This finding is consistent with expectation.
Two dummy variables are included in the regression model to represent
ethical climate; namely, “benevolent ethical climate” and “principled ethical climate”.
The reference group (coded as “0” for both dummy variables) is “egoistic ethical
climate”. At a significance level of 0.05, both “benevolent ethical climate” and
“principled ethical climate” are not significant (p-values = 0.159 and 0.398
respectively). Hence, the null hypothesis H2 (that ethical climate in the organization
has no significant effect on job satisfaction) can be accepted. This indicated that a
more favorable ethical climate is not associated with a higher level of job satisfaction
in the organization, which is contrary to expectations.
The p-value for the “association between ethical behavior and career success”
is highly significant at 0.000. Therefore, the null hypothesis H3 (that the association
between ethical behavior and career success in the organization has no significant
effect on job satisfaction) can be rejected. As expected, the coefficient is positive.That
53
is, a stronger association is linked to a higher level of job satisfaction; a finding
similarly obtained in Viswesvaran and Deshpande (1996).
Finally, the p-value for the “moral awareness” is not significant (p-value =
0.888). Therefore, the null hypothesis H4 (that moral awareness has no significant
effect on job satisfaction) can be accepted. Interestingly, the slight negative
coefficient indicates that a higher level of moral awareness may actually reduce the
level of job satisfaction in the organization, although this relationship is not
significant.
The regression equation obtained form the analysis is:
Overall job satisfaction = 0.138 (Top management support for ethical behavior)
+ 0.316 (Association between ethical behavior and career success)
+ 1.474
54
Table 4.4 Results of multiple regression analysis
Variable Coefficient t-value p-value*
A. Job satisfaction (Pay)
Intercept 1.216 2.991 0.003
Top management support 0.143 1.474 0.143
Benevolent ethical climate (dummy) 0.028 0.299 0.765
Principled ethical climate (dummy) 0.042 0.490 0.625
Ethical behavior and career success 0.221 1.981 0.050
Moral Awareness 0.150 0.921 0.359
Model R2 = 0.114; Adjusted = 0.076 F = 3.007 0.014
B. Job satisfaction (Promotion)
Intercept 0.928 2.153 0.033
Top management support 0.234 2.263 0.025
Benevolent ethical climate (dummy) -0.007 -0.068 0.946
Principled ethical climate (dummy) -0.034 -0.377 0.707
Ethical behavior and career success 0.099 0.838 0.403
Moral Awareness 0.257 1.491 0.139
Model R2 = 0.119; Adjusted = 0.081 F = 3.147 0.011
C. Job satisfaction (Co-workers)
Intercept 1.017 2.434 0.016
Top management support 0.052 0.516 0.607
Benevolent ethical climate (dummy) 0.106 1.117 0.266
Principled ethical climate (dummy) 0.088 1.002 0.318
Ethical behavior and career success 0.463 4.034 0.000
Moral Awareness 0.128 0.765 0.446
Model R2 = 0.204; Adjusted = 0.170 F = 6.009 0.000
D. Job satisfaction (Supervision)
Intercept 1.844 3.884 0.000
Top management support 0.206 1.810 0.073
Benevolent ethical climate (dummy) 0.271 2.514 0.013
Principled ethical climate (dummy) 0.055 0.553 0.581
Ethical behavior and career success 0.373 2.860 0.005
Moral Awareness -0.247 -1.304 0.195
Model R2 = 0.176; Adjusted = 0.141 F = 4.990 0.000
E. Job satisfaction (Work)
Intercept 2.367 5.229 0.000
Top management support 0.054 0.499 0.619
Benevolent ethical climate (dummy) 0.051 0.499 0.619
Principled ethical climate (dummy) 0.097 1.030 0.305
Ethical behavior and career success 0.423 3.409 0.001
Moral Awareness -0.365 -2.019 0.046
Model R2 = 0.111; Adjusted = 0.073 F = 2.929 0.016
F. Job satisfaction (Overall)
Intercept 1.474 5.278 0.000
Top management support 0.138 2.059 0.042
Benevolent ethical climate (dummy) 0.090 1.417 0.159
Principled ethical climate (dummy) 0.049 0.848 0.398
Ethical behavior and career success 0.316 4.120 0.000
Moral Awareness -0.016 -0.141 0.888
Model R2 = 0.244; Adjusted = 0.212 F = 7.545 0.000
* For t-tests of model coefficients, this is the p-value for a one-tailed test since the expected direction
of the alternative hypothesis is known.
55
4.4 Summary of Research Results
This chapter outlined the first part of data analysis and findings. Four research
hypotheses were tested. From the survey, the hypotheses resting result is summarized
in table 4.5 below.
Table 4.5 Hypotheses Testing Result
Hypothesis Findings
H1: Top management support for ethical behavior has no
significant effect on job satisfaction
Rejected
H2: Ethical climate in the organization has no significant
effect on job satisfaction
Accepted
H3: The association between ethical behavior and career
success in the organization has no significant effect on job
satisfaction.
Rejected
H4: There is high level of moral awareness among
members of organization with ethical work climate,
however it has no significant effect on job satisfaction.
Accepted
Chapter Summary:
This chapter has summarized all the statistics, analyzed the measures and tests the
hypotheses and presents the research result. Next chapter will wrap up and discuss on
this entire study.
56
CHAPTER 5: CONCLUSION AND RECOMMENDATIONS
Chapter Introduction:
Chapter five aims to summarize and conclude this entire study. This chapter
highlights the implications of findings that would be beneficial for top management to
apply in their organization. It also outlines the suggestions for future research.
5.1 Implications of Findings
Ambrose et al. (2007) mentioned in their study that if the ethical correlates of
job satisfaction can be identified, then managers may be able to find the best ways to
influence the organization’s ethical climate so as to enhance job satisfaction while
maintaining an ethical environment. This study thus far has discussed in depth on the
four measures of organizational ethics and its link to job satisfaction.
The findings of the study are partly consistent with expectations and prior
findings in the ethics literature. Previous study by Koh and Boo (2001) found that
positive relationship exist between the three measures of organizational ethics (top
management support for ethical behavior, the organization’s ethical climate and the
association between ethical behavior and career success) and job satisfaction (with
respect to pay, promotion, co-workers, supervision, work and overall). However the
current findings reveal that only two measures showed significant relationship
between organizational ethics and job satisfaction (namely, top management support
for ethical behavior, and the association between ethical behavior and career success).
There is no significant relationship found between the rest of two organizational
57
ethics measures, which are the organization’s ethical climate and moral awareness in
the organization. The summary of these findings is as per table 5.1 below.
Meanwhile, in a study by Viswesvaran et al. (1998), only one significant
positive correlation is found, that is between perceived top management support and
job satisfaction with supervision. It is interesting to learn that current finding also
rejects the prior study of Joseph and Deshpande (1997) and Mulki et al.(2008) that
ethical climate is significantly associated with job satisfaction. However, current
findings validate the results obtained by Viswesvaran and Deshpande’s (1996) that
the association between ethical behavior and career success is significantly associated
with job satisfaction. Based on the study by Samad (2005), it is possible that cultural
differences such as norms, values or beliefs of a particular group or community in
different geographical areas might have contributed to the variances of findings
reported here.
It is crucial for an organization to realize that favorable organizational ethics is
associated with job satisfaction. It has strong implication on an employee’s job
performance, absenteeism, motivation, stress level etc. Many previous researches
agreed that the success of creating an ethical environment in an organization lies
mainly in the hands of the top management. This study in line with most of the
previous literatures seems to disclose that top management’s support for ethical
behavior and the association between ethical behavior and career success can highly
be influenced by top managers in organizations. Thus, by consciously working on
these variables, top management can enhance job satisfaction and organizational
commitment among employees and in the workplace. For example, leadership
training, with an ethics component, may be necessary to help managers understand or
value the importance of ethics to the success of the organization. That is, if top
58
management wants its employees to have greater job satisfaction, greater
organizational commitment, and greater esprit de corps, it is important to learn to
communicate to them, on a regular basis, the values and norms as well as the rules
and guidelines of the organization.
According to Valentine and Fleischman (2007), their findings contribute to the
ethics literature by indicating that management should consider invigorating the
ethical focus and culture of the organization with ethics codes, training, and Corporate
Social Responsibility activity, which might prompt more positive beliefs about the
firm, as well as the immediate work context and culture. Based on the survey by PR
Newswire (2006), in a healthy culture, an employee should be able to turn to one
another to find help and support for doing the right thing. At the same time,
companies need to be sure employees are turning to informed sources so that the right
decisions are being made, and productivity is not constrained.
Top management should be the role model to support and encourage ethical
behavior among employees and reward them for doing the right thing. It is noted that
ethical behavior is really driven by how it is encouraged and rewarded. If
organizations are serious about ethics, they must have the elements of an ethics
infrastructure and a real commitment from the leadership on the subject of ethics.
They also need to define ethical behavior in the corporate context and develop a
strategy to reward desired behavior (Mitchell et al., 2005). The key role of top
management is emphasized here; as commitment and support from top management
significantly impact on the effectiveness of any organizational development
intervention. According to Koh and Boo (2001), by promoting and developing a more
benevolent ethical climate, top management can possibly improve job satisfaction and
also enhance organizational commitment among its employees. It is wise to bear in
59
mind that absenteeism and turnover intentions are highly influenced by job
satisfaction and organizational commitment (Elci and Alpkan, 2008).
One of the conventional wisdom of management is that a happy worker is a
productive worker. Employee’s job satisfaction which can be divided into the
affective satisfaction (positive mood and feeling) and cognitive satisfaction (working
conditions and opportunities) is an important variable in organizational settings. It has
been found to influence job attitudes, employee behaviors and organizational
outcomes such as commitment, absenteeism and turnover (Joseph and Deshpande,
1997).
Both absenteeism and turnover are very costly and detrimental to the
organization, because they lead to lower productivity and morale in the organization,
whilst incurring higher costs of hiring, retention and training of new and existing
employees (Koh and Boo, 2001). This result implies that one means for a business to
reduce employee’s turnover and build their job satisfaction is to improve the
employee’s ethical perception. This suggests that the employer’s ethical behavior
significantly affects their satisfaction with their jobs and their likelihood of staying in
their positions (Pettijohn et al., 2007). This study’s findings also suggest that top
management can enhance organizational commitment by giving support such as by
developing and enforcing code of ethics for their organization (Koh and Boo, 2001).
Infact, code of ethics was found to be the most effective measure for encouraging
ethical behavior (Clark and Leonard, 1998). However, some literatures dictate that
codes alone could not address many ethical dilemmas, thus it was not sufficient to
promote ethical behavior. It still requires the top management support to create an
ethical work climate in the organization for the codes to be effective (Koh and Boo,
2001).
60
Jaramillo et al. (2006) observed that higher job satisfaction leads to greater job
commitment, which in turn leads to greater levels in performance. Thus, a firm that
has an enhanced level of ethical perceptions should logically find that these
perceptions lead to greater performance. Obviously, higher performance levels in
return translate into greater productivity and profitability for the firm. For example,
Mulki et. al. (2008) mentioned that identifying leadership practices that promote
ethical climate perceptions in the sales environment has ample managerial
implications. This is because it taps into the specific actions that sales leaders can
undertake to help develop an ethical climate where salespeople are happier with their
jobs and willing to put forth the amount of effort needed to achieve a higher
performance.
Thus, positive job attitudes, reflected in higher job satisfaction, are likely to
result in higher job performance (Brown and Peterson, 1993).The positive relationship
between higher job satisfaction and organizational outcome are also supported by
West and Patterson (1998). It is noted that high level of job satisfaction and
organizational commitment are determinants of improving financial performance. In
fact, effective employee management can actually bring in better and faster result that
to emphasis on quality, technology, competitive strategy or research and development
in its influence on the bottom line (Koh and Boo, 2001).
Moreover, a recent study by Hagedoorn et al. (1999) examined the role of job
satisfaction in employees’ reactions to problematic events in the organization.
Generally, employees can react to problematic events via exit (e.g. leaving the
organization), voice (e.g. suggesting solutions), loyalty (e.g. waiting for conditions to
improve), and neglect (e.g. been absent from work). Both voice and loyalty are often
categorized as constructive behaviors while exit and neglect as destructive behaviors.
61
It is found that job satisfactions promotes constructive reactions and suppress
destructive reactions to problematic events. Hagedoorn et al. (1999) also speculated
that organizational justice (which is expected to affect job satisfaction as per this
study) may also be a motivator for constructive behavior and suppressor of destructive
behavior.
The findings of the present study should prove helpful to leaders in
government, business, and institutions of higher education as they manage, train, and
educate today’s diverse workforce. From the above, it can be concluded that
organizational ethics positively affect job satisfaction, and this in turn creates a
domino effect towards employee’s behavior, performance, and organizational
outcomes. And most importantly, it’s crucial to note that the key role of top
management in promoting ethics in the organization is paramount.
Table 5.1 Summary of Research Results for “The Relationship between
Organizational Ethics and Job Satisfaction: A Study of Managers in
Malaysia”
Hypothesis Findings
H1: Top management support for ethical behavior has no
significant effect on job satisfaction
Not Supported
H2: Ethical climate in the organization has no significant
effect on job satisfaction
Supported
H3: The association between ethical behavior and career
success in the organization has no significant effect on job
satisfaction.
Not Supported
H4: There is high level of moral awareness among
members of organization with ethical work climate,
however it has no significant effect on job satisfaction.
Supported
62
5.2 Conclusions of the Study
As mentioned earlier in this study, majority of the previous research in this
area were carried out in western settings. This is the first study that emphasized on
issues relating to organizational ethics and job satisfaction in Malaysia. This study
revealed that western management and organizational theories might not be valid in a
non-western setting and the findings found in a society might not be evident in a
different society. The overall objective of this study was to explore the relationship
between four measures of organizational ethics and job satisfaction perceived by
managers in Malaysia. In particular, it investigates whether a higher level of job
satisfaction is associated the higher level of top management support for ethical
behavior, a more favorable ethical climate in the organization, a stronger association
between ethical behavior and career success and moral awareness. In order to get
accurate responses, a total of 200 questionnaire survey was distributed, which yielded
123 usable responses (a response rate of 62%). The results of the data analyses in this
study suggest that the most significant variables that contribute towards job
satisfaction are the two measures of organizational ethics (namely, top management
support for ethical behavior, and the association between ethical behavior and career
success). However, it is found that there is no relationship found between the rest of
two organizational ethics, which are the organization’s ethical climate, and moral
awareness.
Table 5.1 summarizes the hypotheses result, and this finding implies that top
management support is one of the means through which corporate leaders can
generate favorable business outcomes. Top management whom acts as a role model
should exhibit an ethical behavior and support ethical climate in the organization to
encourage the rest of the employees to act in the same manner.
63
More importantly, top managers have to be aware that enhanced job
satisfaction can lead to higher organizational commitment, lower absenteeism and
turnover, higher profitability and productivity, and more favorable job
attitudes/behaviors. It also highlights the importance of continued research in this
area.
Else than the 3 variables above that had been mentioned in previous studies,
moral awareness was added as an additional variable. The relationship between moral
awareness and job satisfaction has not been well-researched, and so this study and
findings were exploratory in nature. It was found that moral awareness has that no
significant effect on job satisfaction. It is postulated that this may be connected to
other researchers’ findings that there may possibly be a connection between ethical
work climate and various constructs resembling moral awareness (Cohen, 1995;
Cullen et al., 1989; Victor and Cullen, 1987; Wimbush and Shepard, 1994; Wyld and
Jones, 1997). Since ethical climate was found not to affect job satisfaction in this
study’s sample, hence it is possible that moral awareness will, similarly, have no
effect in the research model. This could be a point for further research work to further
explore the consequents and effects of moral awareness on organizational outcomes
other than job satisfaction (e.g. performance, absenteeism, turnover, commitment,
etc.)
In summary, this paper reports on an exploratory investigation of the
relationship between organizational ethics and job satisfaction based on managers in
Malaysia. The findings enhance the understanding of the organizational ethics and
employee’s job satisfaction. The study objectives have been met and the research
questions are answered. Table 5.2 summarizes the research questions and findings.
64
This research has also provided a better understanding of the relationship
between the 4 factors in order to enhance managerial effectiveness and organizational
success. The findings stress the need of organizational ethics, especially of top
management support to evolve better management practices so that employees'
satisfaction is maintained at a high level. In other words, the findings could prescribe
potential practical implications for managers and consultants in management
development programmes consistent with the training needs of the employees in the
organization.
When ethical difficulties prevail in the working environment, both individuals
and organizations must cooperate to ensure that ethics not only appears on the
business agenda but is openly discussed. Top management is responsible to raise
awareness and understanding of ethics through training of individuals. Organizations
should create a non-threatening environment for the discussion of ethical problems,
and rewarding these ethical behaviors could possibly encourage employees to go an
extra mile in adopting ethical behavior in their decision making. There is a need for
this to encompass a participative process which is seen to include and to value the
views of the widest range of interest groups. Hence, employees will be likely to
perform better and feel a high level of job satisfaction, and in turn will develop more
commitment towards their organizations. Finally, the higher levels of employee’s
satisfaction in such organizations may give an advantage over other organizations in
attracting and retaining employees in a competitive environment.
65
Table 5.2 Summary of Findings of the Research Questions
Research Questions Findings
1. Does ethical climate affect the employee’s job
satisfaction in organizations in Malaysia?
Achieved
2. Does top management’s support influence the ethical
behavior of it’s employees?
Achieved
3. Does an employee with ethical behavior are more
likely to be successful in his/her career?
Achieved
4. Does employee’s moral awareness influence his/her
job satisfaction?
Achieved
5.3 Recommendation for Future Research
From this study, it can be observed that the independent variable (top
management support for ethical behavior, ethical climate, association between ethical
behavior and career success and moral awareness) were the four components
researched. It is suggested that future research should, however, to go beyond these
four components. For example, job security .Stability and security is vital to everyone
and at all times. Security in terms of job is no exception. Insecurity in job is very
likely to affect job satisfaction, performance, morale and confidence, degree of ethic
stress (e.g. difficult ethical issues, limited respect at work place) and individual
personality.
Likewise, the dependent variable (job satisfaction) researched in this study is
only one of the several outcomes of an organization. Future research can perhaps
66
focus on other outcomes such as organizational commitment, company profit,
employee’s motivation, stress level and others.
As mentioned earlier in the limitation, some of the feedback from respondents
in this study is that the questionnaire did not provide ‘in between answers’ such as
somewhat agree or somewhat disagree. It is proposed that future research
questionnaire should take this into account.
Future research can also look into the multicultural aspect in Malaysia and
how ethnicity and its consequences towards organizational ethics. Further it’s also
useful to study business ethics in different countries and the impact of ethical
behavior from an International perspective.
Chapter Summary:
This chapter summarizes the overall report on an exploratory investigation of
the relationship between organizational ethics and job satisfaction based on managers
in Malaysia. This study endeavors to make both theoretical and practical contribution
to the literature, and it also contains several implications for further research. The
findings stresses the need of organizational ethics, especially of top management
support to evolve better management practices so that employees' satisfaction is
maintained at a high level.
67
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Behavior, with a Focus On Sales Organizations”, The Journal of Personal Selling
& Sales Management,10, 2; pg. 29
76
Appendix 1 - Questionnaire
THE RELATIONSHIP BETWEEN ORGANIZATIONAL ETHICS AND JOB SATISFACTION: A STUDY OF MANAGERS IN MALAYSIA Dear Sir/Madam,
This survey is conducted as part of Research Project, which shall be submitted in part
completion of the Master of Business Administration degree from the University of Malaya.
The general purpose of this study is to understand the relationship between organizational
ethics and job satisfaction among Malaysian managers.
I am therefore inviting you to participate in this survey by filling up the attached
questionnaire. The said questionnaire is constructed in a straightforward manner and easy to
answer, which should take not more than 10 minutes of your valuable time. Please be assured
that all information will be treated with the strictest confidentiality and only the aggregate
data will be analyzed.
Please answer all the questions in the worksheet and return the completed questionnaire to me
by email at: [email protected].
Thank you for your valuable assistance in participating in the survey.
Yours sincerely,
Kalavani D.
Supervised by,
Zul Ramly
Lecturer,
Faculty of Business and Accountancy,
University of Malaya
UNIVERSITY OF MALAYA
The Faculty of Business and Accountancy
Master of Business Administration
1. Job Satisfaction
Please mark “����” in the box that corresponds best to your answer. Strongly
Disagree Disagree Agree
Strongly Agree
My organization pays better than competitors.
My pay is adequate considering the responsibilities I have.
I am underpaid for what I do.
My fringe benefits are generous.
I do not like the basis on which my organization promotes people.
Promotions are infrequent in my organization.
If I do a good job, I am likely to get promoted.
I am satisfied with my rate of advancement.
The people that I work with do not give me enough support.
In my organization, when I ask people to do things, the job gets done.
I enjoy working with the people in my organization.
In my organization, I work with responsible people.
The managers I work for back me up.
The managers I work for are competent.
My supervisors do not listen to me.
Management does not treat me fairly.
My job is interesting.
I feel good about the amount of responsibility in my job.
I would rather be doing another job.
I get little sense of accomplishment from doing my job.
2. Organizational Ethics
Please mark “����” in the box that corresponds best to your answer. Strongly
Disagree Disagree Agree
Strongly Agree
Top management in my organization has clearly conveyed that unethical behavior will not be tolerated.
Top management in my organization should have higher ethical standards than they do now.
If a manager in my organization is discovered to have engaged in unethical behavior that results primarily in personal gain rather than corporate gain, he will be promptly reprimanded.
If a manager in my organization is discovered to have engaged in unethical behavior, he will be promptly reprimanded even if the behavior results primarily in corporate gain.
My organization emphasizes the importance of furthering its interests.
Employees in my organization are not expected to be concerned with the organization's interests all the time.
All decisions and actions in my organization are expected to contribute to the organization's interests.
Work that hurts my organization's interests can be acceptable.
Concern for employees is prevalent in my organization.
My organization does not emphasize employee welfare.
All decisions and actions in my organization are expected to result in what is generally best for everyone.
My organization does not consider the well-being of all employees.
Compliance with organization rules and procedures is very important in my organization.
Employees in my organization are not expected to stick to organization policies strictly.
People who do not follow organization rules and procedures are not viewed favourably in my organization.
Strongly Disagree
Disagree Agree Strongly Agree
Successful managers in my organization are more ethical than unsuccessful managers.
In order to succeed in my organization, it is often necessary to compromise one's ethics.
Successful managers in my organization withhold information that is detrimental to their self-interest.
Successful managers in my organization make rivals look bad in the eyes of important people.
Successful managers in my organization look for a "scape-goat" when they feel they may be associated with failure.
Successful managers in my organization take credit for the ideas and accomplishments of others.
Ethical behavior is important for success in my organization.
In this company, people protect their own interest above other considerations.
There is no room for one’s own personal morals or ethics in this company.
It is expected that each individual is cared for when making decisions here.
The most important concern is the good of all the people in the company.
In this company, people are expected to follow their own personal and moral beliefs.
In this company, people are guided by their own personal ethics.
The most important consideration in this company is each person’s sense of right and wrong.
3. Demographic Information Age:
20 – 24 years 25 – 29 years 30 – 35 years
36 – 39 years 40 – 44 years 45 years and above
Gender:
Female Male
Education level:
Secondary Diploma Degree Post Graduate
Marital status:
Single Married
Current job position:
Administrative/clerical Assistant Manager
Technician Manager/Senior Manager
Executive Other – please specify
Type of your organization:
Private limited Government-linked (GLC)
Government Other – please specify
Please state your organization’s industry (e.g. Manufacturing, Service, Finance, etc.)
Size of your organization:
Less than 50 employees 51 to 199 employees
200 to 499 employees 500 or more employees
How long have you worked in your current organization?
Less than 5 years 5 to 10 years More than 10 years
THANK YOU FOR YOUR PARTICIPATION!
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