Institutionalization of ethics and its consequences: a survey

of marketing professionals
Anusorn Singhapakdi & Scott J. Vitell
Published online: 1 May 2007
# Academy of Marketing Science 2007
Abstract Because of increasing ethical problems in busi-
ness, organizations have tried to control these problems by
institutionalizing ethics, such as by creating new ethics
positions and formulating codes of ethics. In this study, the
authors develop a scale for measuring the institutionaliza-
tion of ethics in organizations and assess it for dimension-
ality, reliability and validity. Two separate studies are
conducted, both using samples drawn from an American
Marketing Association practitioner population. In Study 1,
using a sample of 126 marketing practitioners, we performed
exploratory factor analysis on 44 institutionalization items
resulting in two separate dimensions of the institutionaliza-
tion of ethics construct: implicit and explicit institutionali-
zation. Using a national sample of 306 marketing
practitioners in Study 2, we performed confirmatory factor
analysis on these two dimensions and investigated the effects
of these dimensions on perceived importance of ethics, job
satisfaction, esprit de corps and organizational commitment.
Implicit institutionalization had a significant direct affect on
all four of these constructs. On the other hand, explicit
institutionalization significantly influenced only the per-
ceived importance of ethics.
Keywords Marketing ethics
.
Institutionalizing ethics
.
Implicit
.
Explicit
Partly because of the increased concern of the general
public about ethical issues in business, organizations have
begun to institutionalize ethics (Gellerman 1986; Murphy
1989; Stevens 1994). Furthermore, the original Federal
Sentencing Guidelines for Organizations and the revised
Organizational Sentencing Guidelines essentially call for
the institutionalization of ethics within organizations.
Indeed, the courts have consistently given substantial
weight to the original Sentencing Guidelines and their
2004 revision when determining appropriate sentences.
These developments might lead one to ask the following
question, how can the institutionalization of ethics for an
organization and its effects on marketing managers be
measured? The current research is designed to provide
answers to this question. Study 1 develops a reliable and
valid scale for measuring organizations institutionalization
of ethics. Study 2 investigates the influences of implicit and
explicit institutionalization on four key constructsjob
satisfaction, esprit de corps, organizational commitment and
the perceived importance of ethics.
Study 1: development of the institutionalization-
of-ethics scale
Specifically, the objectives of Study 1 are: (1) to develop a scale
that measures the institutionalization of ethics, (2) to determine
the dimensionality and reliability of the scale and (3) to assess
the construct and convergent validity of the scale by testing the
relationships between the institutionalization-of-ethics scale
and organizational commitment and job satisfaction.
Conceptual foundation
We define institutionalization of ethics as the degree to
which an organization explicitly and implicitly incorpo-
rates ethics into its decision-making processes. Implicitly
J. of the Acad. Mark. Sci. (2007) 35:284294
DOI 10.1007/s11747-007-0030-8
A. Singhapakdi (*)
Marketing Area, College of Business & Public Administration,
Old Dominion University,
Norfolk, VA 23529-0220, USA
e-mail: asinghap@odu.edu
S. J. Vitell
Department of Marketing, School of Business Administration,
University of Mississippi,
University, MS 38677, USA
e-mail: svitell@bus.olemiss.edu
incorporating ethics means that ethical behavior is implied,
or not directly expressed, and is understood to be crucial;
explicitly incorporating ethics means that ethical behavior
is formally expressed without vagueness. Using Brenners
(1992) explicit-implicit categorization as a framework, Jose
and Thibodeaux (1999) developed, from the business ethics
literature, two lists of the ways that institutionalization of
ethics might be implemented within the organization.
Implicit forms of institutionalizing ethics include corporate
culture, ethical leadership and open communication. Ex-
plicit forms include codes of ethics, ethics training, news-
letters and ethics committees.
The institutionalization of ethics is logically related to
the corporate ethical values (CEV) construct that Hunt et al.
(1989:79) conceptualized as a composite of the individual
ethical values of managers and both the formal and
informal policies on ethics of the organization. According
to Hunt et al., there is also a positive relationship between
CEVand organizational commitment. Furthermore, because
work factors having the greatest influence on an employees
organizational commitment involve ethics or ethics-related
elements, such as fairness at work, care for and concern
about employees, trust in employees, and organization
reputation, the institutionalization of ethics is logically
related to organizational commitment as well. Finally, a
similar argument can be made about the relationship
between institutionalization of ethics and job satisfaction
because organizations that institutionalize ethics appear to
value integrity and trust and, as a result, are often more
likely to treat their employees fairly.
Sample
A self-administered questionnaire was sent to two sets of
respondents: a sample of U.S. practitioner members of the
American Marketing Association (AMA) and the evening
program MBA marketing students at a comprehensive
university. More specifically, questionnaires were mailed
to a systematic sample of 1,000 U.S. practitioner members
of the AMA. Of the 1,000 questionnaires delivered, 96
people responded, for a response rate of 9.6%. To increase
the sample size, additional data were selected from
30 MBA students enrolled in an evening marketing
management class. As a result, there were 126 usable cases
for this study. A comparison of the two samples using t-
tests and chi-square tests on various demographic variables
resulted in no significant differences between the samples
on any of the demographic variables. Thus, we combined
the two samples. As Table 1 shows, slightly more than half
of the respondents (55.6%) were women, and the largest
group (33.3%) was between 30 and 39 years of age. Most
respondents had a minimum of five years of business
experience.
Institutionalization of ethics: scale development
and refinement
The first step in our scale development process was to
generate items that captured the domain of the institutional-
ization-of-ethics construct. Recall that institutionalization of
ethics is the degree to which an organization both explicitly
and implicitly incorporates ethics. Our approach asked
respondents a series of questions about their organizations
institutionalization of ethics. Specifically, we developed a set
of Likert-type items to measure different degrees of organi-
zational compliance with the seven minimum requirements
for ethical compliance programs specified by the U.S.
Sentencing Commission in 1994 (and as adapted by Ferrell
et al. 2002:179). We developed additional items from the
Integrity Manager checklists given by LeClair et al.
(1998). Ultimately, 44 items were generated.
Assessment of scale dimensionality, reliability and validity
Exploratory factor analysis We performed exploratory
factor analysis on the 44 items to assess the dimensionality.
As previously mentioned, the explicit form of institution-
alization includes practices such as codes of ethics, policy
manuals and ethics committees. Implicit practices include
aspects of an ethics program that are inherent in the
organizations culture, such as ethical leadership and a
shared value system. The results of the exploratory factor
analysis reveal dimensions that are generally consistent
with the explicit-implicit premise. Specifically, a principal
components factor analysis using a varimax rotation yields
three factors (with eigenvalues greater than 1). The factor
Table 1 Study 1: profile of respondents
Variables Percentage
Gender
Male 44.4
Female 55.6
Age
29 or under 17.5
3039 33.3
4049 27.8
5059 17.5
60 or over 4.0
Years of business experience
Under 6 18.7
610 14.6
1115 17.9
1620 13.8
2125 17.1
2630 11.4
Over 30 6.5
Total sample size=126 usable cases.
J. of the Acad. Mark. Sci. (2007) 35:284294 285 285
loadings and items of the first two factors appear in
Appendix A. The first factor explains 26.2% of the variance
and consists of 15 items. Essentially, this first factor
measures implicit forms of institutionalization with items
such as My organization values integrity and ethics and
Top management has established a legacy of integrity for
the organization. The second factor consists of explicit
forms of institutionalization with statements such as In
order to prevent misconduct within my organization, there
are training programs to create an effective ethical culture
and Top management evaluates the ethics training pro-
grams on a regular basis. The second factor explains
20.9% of the variance and consists of nine items. The third
factor, which explained only 13.4% of the variance and
consists of six items. In general, the third factor is a
somewhat eclectic mix of both explicit and implicit forms of
institutionalization. Thus, we do not include the third factor in
any further analyses, and we also deleted items that did not
load on any of the first three factors (see Appendix A).
Measurement: CEV We adopted the five-itemCEVscale that
Hunt et al. (1989) developed to assess the convergent validity
of the institutionalization-of-ethics scale. Typical examples of
CEV items are as follows: Managers in my company often
engage in behaviors that I consider to be unethical (reverse-
scored item) and Top management in my company has let it
be known in no uncertain terms that unethical behaviors will
not be tolerated. A 7-point agree/disagree scale was used,
and we computed the CEV score by totaling the scores of all
items. Therefore, a high CEV score indicates that the
respondent believes that he or she works in a corporate
environment that emphasizes ethical values. The CEV scale
is reliable, with a coefficient alpha of 0.83.
Measurement: job satisfaction We measured job satisfaction
with a 5-item scale that Dubinsky et al. (1986) used. This
scale measures the degree to which employees are generally
satisfied with their work. An example of a job satisfaction
scale item is as follows: Generally speaking, I am very
satisfied with this job (measured with a 7-point Likert-type
scale). We computed the score for job satisfaction by totaling
the scores of all items; accordingly, a high value indicates
that the respondent is generally satisfied with his or her work.
The scale is reliable, with a coefficient alpha of 0.88.
Measurement: organizational commitment We used the 4-
item organizational commitment scale that Hunt et al.
(1989) developed to measure a managers degree of
commitment to his or her organization. The scale was
designed to capture a managers strength of intentions to
remain with and psychological bonds to the organization
(Hunt et al. 1989:84). An example of an organizational
commitment item is as follows: I would be willing to
change companies if the new job offered more status. We
used a 7-point agree/disagree Likert-type format. The scale
is reliable, with a coefficient alpha of 0.86.
Reliability assessment We conducted a reliability assess-
ment for each of the two summated subscales of institu-
tionalization of ethics by calculating coefficient alphas for
the set of items that constitute each factor. The first factor,
implicit institutionalization, had a coefficient alpha of 0.95,
and the second factor, explicit institutionalization, had a
coefficient alpha of 0.92.
Validity assessment Although the CEV scale is general in
nature (i.e., it is intended to be an overall measure of CEV),
it closely reflects both the implicit and the explicit
institutionalization-of-ethics subscales of this study. Given
the conceptualization of CEVand of our institutionalization-
of-ethics scale, we expect a high positive correlation
between them. As Table 2 summarizes, our correlation
analyses indicate that CEV and both the institutionaliza-
tion-of-ethics subscales are significantly correlated, as
expected (0.849 for implicit institutionalization and 0.517
for explicit institutionalization). Thus, the results suggest
some degree of convergent validity for both institutional-
ization subscales.
Table 2 Study 1: correlation matrix
IMPLICIT EXPLICIT CEV ORGCOM JOBSAT AGE GENDER
IMPLICIT 1.00
EXPLICIT 0.57* 1.00
CEV 0.85* 0.52* 1.00
ORGCOM 0.49* 0.13 0.48* 1.00
JOBSAT 0.72* 0.33* 0.69* 0.58* 1.00
AGE 0.16 0.10 0.14 0.33* 0.24* 1.00
GENDER 0.04 0.06 0.06 0.00 0.10 0.16 1.00
IMPLICIT implicit institutionalization, EXPLICIT explicit institutionalization, CEV corporate ethical values, ORGCOM organizational
commitment, JOBSAT job satisfaction. GENDER: Female=0, Male=1.
*Correlation is significant at the 0.05 level (two-tailed).
286 J. of the Acad. Mark. Sci. (2007) 35:284294
We assessed the construct validity of the institutionaliza-
tion scale by examining the relationship between this scale
and both job satisfaction and organizational commitment. We
expect that the two types of ethics institutionalization will
predict both job satisfaction and organizational commitment
(Vitell and Davis 1990; Ferrell et al. 2002). We tested these
anticipated relationships using multiple regression analyses.
Because institutionalization-of-ethics is the key construct in
this study, it is important to observe the impact of each
dimension separately. Therefore, we did not include the two
institutionalization-of-ethics subscales together in a regres-
sion model; rather, we estimated a separate regression model
for each subscale (see Table 3). The regression analyses
indicate that both implicit institutionalization and explicit
institutionalization are significant predictors of job satisfac-
tion. The results also indicate that whereas implicit institu-
tionalization is a significant predictor of organizational
commitment, explicit institutionalization is not (see Table 4).
Study 2: conceptual foundations and testing
of hypotheses
The objectives of Study 2 are: (1) to refine further the
institutionalization-of-ethics scale and (2) to investigate the
effect of institutionalization of ethics on marketing profes-
sionals job satisfaction, organizational commitment, esprit
de corps and perceptions of the importance of ethics.
Institutionalization of ethics and job satisfaction
Although a review of the literature reveals that no study has
directly investigated the effect of the degree of institutionaliza-
tion of ethics on job satisfaction, a useful heuristic suggests that
people who work for organizations that institutionalize ethics
tend to be more satisfied with their jobs. A reason for this
expected relationship is that organizations that institutionalize
ethics appear to value integrity and trust and, as a result, often
treat their employees more fairly in terms of compensation,
performance evaluation, promotion and conflict resolution.
Consistent with this, Moorman (1991) found a positive causal
relationship between perceptions of organizational justice and
job satisfaction. Furthermore, Vitell and Davis (1990) found a
direct link between job satisfaction and ethical behavior. Thus,
we expect that people in organizations with a high degree of
institutionalization of ethics will be more satisfied with their
jobs as was found in Study 1.
Researchers such as Murphy (1989) and Brenner (1992)
have noted that the institutionalization of ethics or the
creation of ethical corporate structures must be more than
drafting a code of ethics or creating an ethics program
(explicit); it must also involve the implicit institutionaliza-
tion of ethics. Implicit institutionalization includes top
management commitments and ethical leadership, as well
as other actions that amount essentially to changes in the
culture of an organization itself. In their study of
corporate-level marketing and human resource managers
of U.S. multinational corporations, Jose and Thibodeaux
(1999) focused on the institutionalization of ethics. Their
results reveal that, even though managers generally did
not perceive the need for additional formalization of
ethics, they did perceive implicit forms of institutionaliz-
ing ethics as more effective than explicit forms. On the
basis of all of the above findings and the results from
Study 1, we formulate the following hypotheses:
Hypothesis 1a: The implicit institutionalization of ethics
directly affects employees job satisfaction.
Hypothesis 1b: The explicit institutionalization of ethics
directly affects employees job satisfaction.
Institutionalization of ethics and organizational
commitment
According to Ferrell et al. (2002), work factors that have
the greatest influence on an employees organizational
commitment include ethical or ethically related elements,
Table 3 Study 1: regression
analyses: job satisfaction
Variables Beta t-value
Model with implicit institutionalization
Implicit institutionalization 0.696 9.359*
Age 0.122 1.632
Gender 0.037 0.498
Adjusted R
2
=0.519, F=33.378, (p<0.05); Gender: Female=0, Male=1
Model with explicit institutionalization
Explicit institutionalization 0.343 3.498*
Age 0.257 2.600*
Gender 0.063 0.642
Adjusted R
2
=0.152, F=6.299, (p<0.05); Gender: Female=0, Male=1
*Significant at the 0.05 level.
J. of the Acad. Mark. Sci. (2007) 35:284294 287 287
such as fairness at work, care for and concern about
employees, trust in employees and organization reputation.
According to Hunt et al. (1989), there is a positive
relationship between CEV and organizational commitment.
In addition, Maignan et al.s (1999) study revealed that
proactive corporate citizenship, of which ethical responsi-
bility is a part (i.e., ethical citizenship), can improve the
levels of employee commitment. Following this literature, it
is expected that marketers in organizations in which ethics
is more institutionalized will be more committed to their
organizations than their counterparts in organizations in
which ethics is not institutionalized. Furthermore, the results
of Study 1 support these conclusions.
Given the positive relationship between job satisfaction and
organizational commitment (Dubinsky and Hartley 1986), we
also expect that marketers, who work in organizations in
which there is a greater institutionalization of ethics, will be
more committed to their organizations than their counterparts.
Therefore, we formulate the following hypotheses:
Hypothesis 2a: The implicit institutionalization of ethics
directly affects employees organizational
commitment.
Hypothesis 2b: The explicit institutionalization of ethics
directly affects employees organizational
commitment.
Institutionalization of ethics and esprit de corps
What effect does the institutionalization of ethics have on
esprit de corps? Esprit de corps can best be defined as the
extent to which there is evidence of a team spirit within the
organization (Jaworski and Kohli 1993). Team spirit would
go hand-in-hand with organizational commitment. That is,
when there is a high degree of team spirit, there should also
be high organizational commitment. Thus, as with organi-
zational commitment, it is expected that the institutionali-
zation of ethics would enhance and strengthen esprit de
corps. Although to our knowledge no study has directly
investigated the impact of institutionalization of ethics on
esprit de corps, Moorman (1991) reported a positive
relationship between perceptions of organizational justice
and relevant organizational citizenship behaviors, such as
altruism, courtesy, sportsmanship and civic virtue. In
addition, Moormans findings are consistent with Organs
(1988, 1990) view that these citizenship behaviors may be a
function of an employees belief that he or she has been
treated fairly by the organization. Thus, we postulate the
following hypotheses:
Hypothesis 3a: The implicit institutionalization of ethics
directly affects employees esprit de corps.
Hypothesis 3b: The explicit institutionalization of ethics
directly affects employees esprit de corps.
Institutionalization of ethics and perceived importance
of ethics
From both a logical and a pragmatic perspective, it has been
argued that mangers must first perceive ethics as an important
ingredient for business success before they will behave more
ethically (Singhapakdi 1999). This assertion is also consistent
with moral philosophies, especially teleological theories that
focus on the consequences of an action. In general,
marketing ethics models recognize that organizational cul-
ture, of which the institutionalization of ethics is a part,
positively affects a managers ethical decisions (e.g., Hunt
and Vitell 1986). On the basis of a survey of AMA members,
Singhapakdi et al. (1995) reported that CEV positively
influences a marketers perception of the importance of
ethics and social responsibility in achieving organizational
effectiveness. Therefore, we expect that marketers in a
culturally ethical organization, or one in which ethics is
Table 4 Study 1: regression
analyses: organizational
commitment
Variables Beta t-value
Model with implicit institutionalization
Implicit institutionalization 0.445 5.752*
Age 0.290 3.715*
Gender 0.050 0.651
Adjusted R
2
=0.300, F=18.152, (p<0.05);Gender: Female=0, Male=1
Model with explicit institutionalization
Variables Beta t-value
Explicit institutionalization 0.163 1.854
Age 0.359 4.070*
Gender 0.039 0.447
Adjusted R
2
=0.119, F=6.226, (p<0.05);Gender: Female=0, Male=1
*Significant at the 0.05 level.
288 J. of the Acad. Mark. Sci. (2007) 35:284294
more institutionalized, will become more sensitized to the
importance of ethics and, in particular, more likely to believe
that ethical practices contribute to business success. Thus,
we formulate the following hypotheses:
Hypothesis 4a: The implicit institutionalization of ethics
directly affects employees perceived im-
portance of ethics.
Hypothesis 4b: The explicit institutionalization of ethics
directly affects employees perceived im-
portance of ethics.
Study 2: sample and scale issues
Sample The data came from two sources: a systematic
sample of 1,000 U.S. practitioner members of the AMA and
a national sample, which we chose randomly, of marketing
executives from all 50 states; we purchased the national
sample from a firm that specializes in mailing lists (1,500
names). The AMA sample resulted in 101 responses
(10.1%), and the national sample resulted in 205 responses
(13.7%), which represent an overall response rate of
12.24%. A comparison of the two samples using t-tests on
several demographic and substantive variables resulted in
only one significant difference between the samplesthe
number of years in the current position. Table 5 summarizes
the demographic profile of this sample.
Refinement of institutionalization scale The specific instru-
ment used in Study 2 begins with the 24 items from factors
1 and 2 of Study 1 (see Appendix A). We subjected these
items to confirmatory factor analysis using AMOS 5.0. The
chi-square value for the overall model was 712.90 with 251
degrees of freedom (goodness-of-fit index [GFI]=0.831,
adjusted goodness-of-fit index [AGFI]=0.798, comparative
fit index [CFI]=0.906, and root mean error of approxima-
tion [RMSEA]=0.078). We refined this model to improve
the fit by deleting the cross-loading items based on the
modification indexes and items that had standardized
residual covariance that was greater than 2.58 (Byrne
2001), because such values indicate anomalies. After going
through several iterations, we obtained a final model with a
chi-square value of 243.99 (df=103). On the basis of the fit
indexes, this model now represents a fairly good fit (GFI=
0.908, AGFI=0.879, CFI=0.949, and RMSEA=0.067).
The number of items for the implicit and explicit
dimensions in the final model is nine and seven, respec-
tively (see Appendix B). The implicit scale has a coefficient
alpha of 0.870, and the explicit dimension has a coefficient
alpha of 0.920 (see Appendix B).
Measurement issues: other scales Measurement issues
pertaining to the four scales used as dependent constructs
in this study appear in Appendix C.
Study 2: results
We tested all the research hypotheses using multiple
regression analyses. Table 6 shows the correlation matrix.
Table 5 Study 2: profile of respondents
Variables Percentage
Gender
Male 58.0
Female 42.0
Age
29 or under 7.9
3039 27.2
4049 33.3
5059 25.0
60 or over 6.6
Years of business experience
Under 6 6.6
610 15.4
1115 16.8
1620 14.1
2125 19.3
2630 14.1
Over 30 13.7
Total sample size=306 usable cases.
Table 6 Study 2: correlation matrix
IMPLICIT EXPLICIT PIE ESPRIT ORGCOM JOBSAT
IMPLICIT 1.00
EXPLICIT 0.45* 1.00
PIE 0.27* 0.26* 1.00
ESPRIT 0.67* 0.21* 0.20* 1.00
ORGCOM 0.67* 0.26* 0.25* 0.78* 1.00
JOBSAT 0.60* 0.24* 0.15* 0.71* 0.70* 1.00
IMPLICIT implicit institutionalization, EXPLICIT explicit institutionalization, PIE perceived importance of ethics, ESPRIT esprit de corps,
ORGCOM organizational commitment, JOBSAT job satisfaction.
*Correlation is significant at the 0.05 level (two-tailed).
J. of the Acad. Mark. Sci. (2007) 35:284294 289 289
The correlation results indicate that both implicit institution-
alization and explicit institutionalization are significantly
(p<0.05) correlated with organizational commitment, job
satisfaction, esprit de corps, and perceived importance of
ethics.
The regression analysis results for the hypotheses relating
to job satisfaction (Hypotheses 1a and 1b) appear in Table 7.
The adjusted R
2
for this regression is 0.357 indicating that
the two dimensions of institutionalization of ethics, by
themselves, account for over 35% of the variance in job
satisfaction. As the table indicates, implicit institutionaliza-
tion is a significant (p<0.05) determinant of job satisfaction,
but explicit institutionalization is not. Thus, hypothesis 1a
regarding the impact of the implicit institutionalization of
ethics on job satisfaction is supported. However, given the
statistical insignificance of explicit institutionalization, we
conclude that hypothesis 1b is not supported.
The regression analysis results for hypotheses 2a and 2b
relating to organizational commitment appear in Table 8.
The adjusted R
2
for this regression is 0.448 indicating that
the two dimensions of institutionalization of ethics, by
themselves, account for over 44% of the variance in
organizational commitment. The regression results reveal
that implicit institutionalization of ethics is a significant and
direct predictor of organizational commitment, as hypothe-
sized; however, explicit institutionalization is not. There-
fore, hypothesis 2a is supported, and hypothesis 2b is not
supported.
The results also indicate that implicit institutionalization
is a significant determinant of esprit de corps, but explicit
institutionalization is not (see Table 9). Thus, hypothesis 3a
is supported, but hypothesis 3b is not supported. We can
conclude that implicit forms of institutionalization have a
significant positive influence on esprit de corps but explicit
forms of institutionalization do not. The adjusted R
2
for this
regression is 0.440 indicating that the two dimensions of
institutionalization of ethics, by themselves, account for
44% of the variance in esprit de corps.
Both explicit and implicit institutionalizations were signif-
icant determinants of the perceived importance of ethics (see
Table 10). Thus, both hypothesis 4a and hypothesis 4b are
supported. These results indicate that both implicit institu-
tionalization and explicit institutionalization have a strong
influence on the perceived importance of ethics. Unfortu-
nately, the adjusted R
2
for this regression is only 0.087
indicating that the two dimensions of institutionalization of
ethics, by themselves, account for less than 10% of the
variance in the perceived importance of ethics.
Discussion
This study establishes a scale for measuring both the implicit
and the explicit dimensions of the institutionalization of
ethics. Furthermore, the results reveal that at least one of
these dimensions (implicit institutionalization) tends to have
a positive impact on each of the studied constructs: job
satisfaction, organizational commitment, esprit de corps and
the perceived importance of ethics. Explicit institutionaliza-
tion, on the other hand, appears to only have a significant
impact on the perceived importance of ethics. Nevertheless,
organizations should still maintain explicit rules and guide-
lines, including established and strictly enforced ethical
codes, to make it clear to employees what the appropriate
Table 7 Study 2: regression analysisdependent variable: job
satisfaction
Variables Beta t-value
Implicit institutionalization 0.619 10.149*
Explicit institutionalization 0.039 0.640
Adjusted R
2
=0.357, F=61.414, (p<0.05)
*Significant at the 0.05 level.
Table 8 Study 2: regression analysisdependent variable: organiza-
tional commitment
Variables Beta t-value
Implicit institutionalization 0.694 12.236*
Explicit institutionalization 0.051 0.890
Adjusted R
2
=0.448, F=88.285, (p<0.05)
*Significant at the 0.05 level.
Table 9 Study 2: regression analysisdependent variable: esprit de
corps
Variables Beta t-value
Implicit institutionalization 0.701 12.398*
Explicit institutionalization 0.090 1.593
Adjusted R
2
=0.440, F=85.807, (p<0.05)
*Significant at the 0.05 level.
Table 10 Study 2: regression analysisdependent variable: per-
ceived importance of ethics
Variables Beta t-value
Implicit institutionalization 0.192 2.627*
Explicit institutionalization 0.169 2.313*
Adjusted R
2
=0.087, F=11.252, (p<0.05)
*Significant at the 0.05 level.
290 J. of the Acad. Mark. Sci. (2007) 35:284294
courses of action are. Of course, organizations do not
necessarily have to create their own explicit codes of
ethics in order to institutionalize ethics as they might be
able to rely upon industry and/or professional codes and
standards for this institutionalization (De Lorme et al.
2001). Still, whether relying upon industry/professional
codes or an organizations own codes, strict enforcement
is critical.
As our results indicate, the institutionalization of ethics
is vital to an employees perception of the importance of
ethics, which in turn can often lead to more ethical
behavior. The current study provides researchers with a
useful tool for measuring various dimensions of the
institutionalization of ethics within organizations. Such a
valuable tool can assist greatly in the advancement of our
knowledge in the marketing/business ethics area.
Limitations of this study include a relatively low
response rate, especially for Study 1. In addition, we
generated only cross-sectional data, but a longitudinal study
might have been more suitable. Finally, the percentage of
explained variance was low for at least one of the
regressions in Study 2. Future research should explore the
relationships between the institutionalization of ethics and
other components of the ethical decision-making process
that are specified in various ethics theories, especially
concepts such as perceived moral intensity, perceived
ethical problems and ethical judgments. Such research
would likely add to the richness of knowledge and
understanding within the ethics field. Because the institu-
tionalization of ethics is, to a large degree, a controllable
factor, a high priority should be given to studying its impact
on the organization. We believe that institutionalizing ethics
is analogous to creating a good barrel because most
people are often swayed by the corporate culture surround-
ing them. This is partially supported by our results
suggesting that the organization can potentially shape
behavior in an ethical direction through the institutionali-
zation of ethics.
Table 11 Study 1: institutionalization of ethics scale exploratory factor analysis results
Items Factor loadings
Factor 1 Factor 2
Factor 1: implicit institutionalization
1. My organization values integrity and ethics as much as profits and performance. 0.798 0.078
2. Top management has established a legacy of integrity for the organization. 0.797 0.154
3. Top management believes that ethical behavior, not just legal compliance, is paramount to the success of the
organization.
0.766 0.203
4. In my organization there is a sense of responsibility among employees for maintaining an ethical reputation. 0.737 0.035
5. Top management in my organization accepts responsibility for unethical and illegal decision making
on the part of employees.
0.715 0.065
6. Some employees in my organization are allowed to perform certain questionable actions because they are
successful in achieving other organizational objectives.
a
0.704 0.023
7. There is a shared value system and an understanding of what constitutes appropriate behavior in my organization. 0.692 0.126
8. Managers in my organization take responsibility for encouraging integrity and ethics at work. 0.689 0.092
9. My organization consistently enforces ethical standards and codes. 0.675 0.286
10. Top management consistently enforces ethical standards. 0.659 0.236
11. There is open communication between superiors and subordinates to discuss ethical conflicts and dilemmas. 0.647 0.201
12. My organization does not communicate with employees concerning the procedures and activities that are
considered unacceptable ethical behavior.
a
0.565 0.238
13. Top management believes that our organization should help to improve the quality of life and the general
welfare of society.
0.559 0.412
14. In my organization, there are no rewards for good ethical decisions.
a
0.547 0.323
15. Top management consistently punishes ethical transgressions. 0.525 0.399
Factor 2: explicit institutionalization
1. My organization does not have a formal ethics training program focusing on ethics.
a
0.182 0.809
2. My organization does not conduct ethics audits on a regular basis.
a
0.141 0.796
3. Top management evaluates the ethics training programs on a regular basis. 0.132 0.778
4. My organization does not have a top-level person(s) responsible for ethics compliance programs.
a
0.076 0.747
5. Top management is not involved in ethical training programs.
a
0.201 0.713
Appendix A
J. of the Acad. Mark. Sci. (2007) 35:284294 291 291
Table 11 (continued)
Items Factor loadings
Factor 1 Factor 2
6. My organization does not have training programs that effectively communicates ethical standards and policies.
a
0.242 0.641
7. My organization does not have an ethics committee or team that deals with ethical issues in the organization.
a
0.049 0.618
8. In order to prevent misconduct within my organization, there are training programs to create an effective ethical
culture.
0.243 0.596
9. Top management in my organization has a mechanism for detecting ethical issues relating to the local
community.
0.251 0.577
Deleted Items (includes items from factor 3)
1. My organization has methods for detecting ethical concerns externally with suppliers and/or customers.
2. Employees within my organization do not receive advice on how to behave more ethically.
3. There have been instances where employees were disciplined for committing unethical acts within my organization.
4. My organization has specific policies on the legal and ethical conflicts that are common in the industry.
5. My organization does not have programs and policies to help employees recognize ethical and legal issues in the
workplace.
6. My organization does not try to hire employees whose values are consistent with those of the organization.
7. My organization has a method for reporting misconduct without fear of reprisals.
8. My organization does not communicate its ethical standards to suppliers.
9. My organization communicates its ethical standards to customers.
10. My organization recognizes the economic pressures to engage in unethical practices.
11. My organization does not understand how competition may cause employees to engage in unethical practices.
12. My organization has a clear policy of not assigning sensitive work to those employees who have a known
propensity for misconduct.
13. My organization has not established systems to monitor, audit, and report misconduct.
14. My organization does not continuously improve ethical compliance programs.
15. My organization has not integrated its core ethical values into the strategic planning process.
16. Top management in my organization has a mechanism for detecting ethical issues relating to employees.
17. My organization has standards and procedures, such as a code of ethics that are reasonably effective in detecting
and preventing misconduct.
18. My organization does not have methods for detecting ethical concerns within the organization.
19. Top management in my organization does not have a mechanism for detecting ethical issues relating to customers.
20. There is a system to determine ethical and legal risks associated with doing business in my industry.
Total variance explained: 26.2% for Factor 1 and 20.9% for Factor 2.
a
Reverse-scored item.
Table 12 Study 2: institutionalization of ethics scale confirmatory factor analysis results
Items Standardized coefficient
Factor 1: explicit institutionalization
1. My organization does not conduct ethics audits on a regular basis.
a
0.796
2. Top management evaluates the ethics training programs on a regular basis. 0.838
3. My organization does not have a top-level person(s) responsible for ethics compliance programs.
a
0.769
4. Top management is not involved in ethical training programs.
a
0.718
5. My organization does not have training programs that effectively communicate ethical standards and policies.
a
0.867
6. My organization does not have an ethics committee or team that deals with ethical issues in the organization.
a
0.779
7. In order to prevent misconduct within my organization, there are training programs to create an effective ethical
culture.
0.743
Factor 2: implicit institutionalization
1. Top management has established a legacy of integrity for the organization. 0.846
2. Top management believes that ethical behavior, not just legal compliance, is paramount to the success of the
organization.
0.798
Appendix B
292 J. of the Acad. Mark. Sci. (2007) 35:284294
Appendix C
Study 2: Measurement Issues of Dependent Scales
Organizational Commitment
For this study, we adopted the 7-item organizational commit-
ment scale that Jaworski and Kohli (1993) developed to
measure a managers degree of commitment to his or her
organization. As Jaworski and Kohli stated, the scale was
designed to tap the extent to which a business units
employees were fond of the organization, and were willing
to make personal sacrifices for the business unit (p. 60). An
example of an organizational commitment item is as follows:
Employees often go above and beyond the call of duty to
ensure this business units well-being. We used a 7-point
agree/disagree Likert-type format. Similar to those of
Jaworski and Kohli (1993), our results indicate that the scale
is reliable, with a coefficient alpha of 0.917.
Esprit de Corps
We also adopted the esprit de corps scale that Jaworski and
Kohli (1993) developed. The scale consists of seven items
designed to assess the extent to which a team spirit
prevailed in the organization (p. 60). An example of an
esprit de corps item is as follows: People in this business
unit are genuinely concerned about the needs and problems
of each other. We used a 7-point agree/disagree Likert
format, in which a high score indicated a high level of
esprit de corps. Similar to those of Jaworski and Kohli
(1993), our results also indicate that the scale is reliable,
with a coefficient alpha of 0.945.
Job Satisfaction
As in Study 1, we measured job satisfaction by the 5-item
scale that Dubinsky et al. (1986) used. An example of a job
satisfaction scale item is as follows: Generally speaking, I
am very satisfied with this job. In this study, we used a 7-
point Likert-type scale anchored by strongly disagree (1)
and strongly agree (7). Thus, a high value indicates that
respondents are generally satisfied with their work. This
scale had a coefficient alpha of 0.890.
Perceived Importance of Ethics
To measure this construct, we adopted the perceived role of
ethics and social responsibility (PRESOR) scale that
Singhapakdi et al. (1995) developed. The original PRESOR
scale, which consists of three dimensions, was designed to
capture a managers perception of the roles of ethics and
social responsibility as determinants of different aspects of
organizational effectiveness. For the purpose of the current
study, we included only the 7-item Good Ethics is Good
3. In my organization there is a sense of responsibility among employees for maintaining an ethical reputation. 0.774
4. Top management in my organization accepts responsibility for unethical and illegal decision making on the part
of employees.
0.663
5. There is open communication between superiors and subordinates to discuss ethical conflicts and dilemmas. 0.692
6. Some employees in my organization are allowed to perform certain questionable actions because they are
successful in achieving their organizational objectives.
a
0.590
7. In my organization, there are no rewards for good ethical decisions.
a
0.494
8. There is a shared value system and an understanding of what constitutes appropriate behavior in my
organization.
0.752
9. Top management believes that our organization should help to improve the quality of life and the general
welfare of society.
0.498
Deleted items
1. My organization does not have a formal ethics training program focusing on ethics.
b
2. Top management in my organization has a mechanism for detecting ethical issues relating to employees.
b
3. My organization values integrity and ethics as much as profits and performance.
c
4. My organization does not communicate with employees concerning the procedures and activities that are
considered unacceptable ethical behavior.
c
5. Top management consistently enforces ethical standards.
c
6. Top management consistently punishes ethical transgressions.
c
7. My organization consistently enforces ethical standards and codes.
c
8. Managers in my organization take responsibility for encouraging integrity and ethics at work.
c
Chi-square (df): 243.99 (103); CFI=0.949; GFI=0.908; AGFI=0.879; and RMSEA=0.067.
a
Reverse-scored item.
b
Deleted from the explicit scale in Study 1.
c
Deleted from the implicit scale in Study 1.
Table 12 (continued)
J. of the Acad. Mark. Sci. (2007) 35:284294 293 293
Business dimension. Examples of typical items are as
follows: Good ethics is often good business and The
ethics and social responsibility of a firm is essential to its
long-term profitability. We used a 7-point agree/disagree
Likert format, in which a high score indicated a high degree
of perceived importance of ethics. Similar to those of
Singhapakdi et al. (1995), our results indicate that the scale
is reliable, with a coefficient alpha of 0.861.
Acknowledgment This research was supported by the University of
Mississippis Robert Hearin Foundation and Old Dominion Univer-
sitys College of Business Faculty Research Grant Program. The paper
also benefited from the valuable comments of three anonymous JAMS
reviewers and the editor.
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