According to Manley, Benavidez and Dunn (2007), they mention that employees in the certain organization are difficult to conduct an ethical decision making when they face with ethical dilemmas. According to Dempster et al., (2004), the ethical dilemmas they face were come together with the pressure from conflict among the peer or colleague among the company. On the other hand, Fritzsche and Becker (1983) found out that employee’s decision behavior would vary across types of ethical problems or dilemmas which they face and those situations will influence their ethical decision making in an organization, in the same time it will also influence the company’s work performance and out come as well.
As mention by Manley et al., (2007), today’s business organization are increasingly looking to select employees who will perform better on job, make good team workers, be more committed to the organization, stay longer in the organization, be good organizational citizen and the most important one is good in making ethical decision. It is necessary effort to examine those employees’ personality and their organizational social norms which could influence their ethical decision making among the employees in banking industry. As a result, attentions in identifying the factors that influence the banking employees ethical decision making are important to be studied.
2.2 Ethical Decision Making
According to Manley et al., (2007), one performance criterion that an organization is currently focused is making ethical decision and the role of the organization’s managers and employees is crucial in making an ethical decision for the organization. In the recent years, organizations are increasingly looking to select employees or managers that will make good ethical decision. The reason that the organization is looking for the a good employees and managers that can make good decision is because it can helps their organization to avoid from any legal dispute Manley et al., (2007). According to McKendall and Wagner (1997), they found out that 80 organizations will face of lower profitability is because with the association with higher frequencies of detected serious violation of the ethical laws. Therefore, the ethical decision making should be included in the research as the dependent variable.
According to Jones (1991), ethical decision making can be define as the ethical decision that is both morally and legally acceptable and unethical decision that is illegally and morally unacceptable. In the research that was done by Manley et al., (2007 ), they stated that the large company like Tyco, Worldcom and Enron scandals are categorize in those company that could not make a good ethical decision that can be acceptable legally and morally among the economists, corporate head, human resource manager, and the community.
Several writers like Abels (2001); Loewenberg et al., (2000); Reamer (1990) ,Robison and Reeser (2000); and Rhodes (1991) have written about ethical issues for the employees and the managers. Most of the managers and employees have acknowledged the difficulty of making ethical decisions and developing an ethical system for their own organization. Rhodes (1991) says that difficult cases like pressure from the ethical dilemmas is the main contributor to the sense that understanding ethical issues in some rational methods (which means understand the process of making an ethical decision) is essential because it can helps the firms to create a competitive strategies to overcome the ethical dilemmas. Therefore, it is essential that to include the ethical decision making in this research paper which it could help the managers or employees to understand that how the personal attribute and the leadership skills of managers will influence the ethical decision making for their organizations.
2.3 Personal Attributes
In Ford and Richardson, (1994) paper, the researcher has included the individual factors such as Personal Attributes that consist of (Gender, Age, Nationality, Education Background, Personality and Attitude Values) this are the factors that that will influence the ethical decision making of managers and employees in organizations. In this research papers, the personal attributes that was included is the (Gender, Education Level and Years of Working Experience) of employees in banking industry.
Gender has been found to be a significant indicator of ethical behavioral intention, with women acting more ethically than men as the result shown in the study in (Banerjee et al., 1996; Beltramini et al., 1984; Chonko and Hunt, 1985; Dawson, 1997; Deshpande, 1997; Ferrell and Skinner, 1988; Jones and Gautschi, 1988; Kidwell et al., 1987; Leonard and Cronan, 2001; Leonard et al., 2004; Loch and Conger, 1996; Ruegger and King, 1992; Whipple and Swords, 1992).
However, it should be noted that some studies has been conducted previously does not shows that gender to on ethical beliefs which this result was shown in the papers from (Allmon et al., 2000; Browning and Zabriskie, 1983; Callan, 1992; Dubinsky and Levy, 1985; Hegarty and Sims, 1978, 1979; Jones and Kavanagh, 1996; McNichols and Zimmerer, 1985; Mudrack, 1993; Serwinek, 1992). In Glover et al., (2001) paper which the authors use a sample that consist of 367 respondets mostly are business students, the result shows that female students were likely to make ethical decision compare to men.
In Ford and Richardson (1994) paper, 14 result has been show in the table that female tend to act more ethically compare to males. While seven other studies that conducted by (Browning and Zabriskie, 1983; Callan, 1992; Dubinsky and Levy, 1985; Hegarty and Sims, 1978, 1979; McNichols and Zimmerer, 1985; Serwinek, 1992) does not show a significant result that the gender has the impact on ethical beliefs.
In Wimbush et al., (1997) paper, their research has shown that men and women have different moral judgment when face with decision making. It shows that women tend to be more concerned about ethical issue while men report that they are more likely to engage in unethical behavior rather than women which this result was found in the study of Gilligan, (1982); Jones and Gautschi (1988) and Betz et al., (1989).
Wimbush’s et al., (1997) paper has stated the reasons for the differences in ethical behavior between women and men are unclear, there are evidence suggests on Wimbush’s et al., (1997) paper that women are on average more likely to hold higher ethical values and are less likely to engage in unethical behavior than men. Therefore, as mentioned by Wimbush’s et al., (1997), it is expected that the ratio of women in working increases in workgroup compare to men, unethical behavior will decrease, the prevalence of the ethical climate dimensions of caring, rules, law and code, and independence will increase, and the presence of the instrumental ethical climate dimension will decrease.
In Hegarty and Sims (1978); Browning and Zabriskie (1983); Dubinsky and Levy (1985); McNicholas and Zimmerer (1985); Singhapakdi and Vitell (1990); Callan (1992) and Serwinek (1992) studies, gender does not show any significant result on the ethical decision making. There are some study shows that both gender which shows there is significant result between gender and which in the study like Beltramini et al., (1984) which shows that female are more concern on the ethical issues compare to male respondents; Chonko and Hunt (1985) which this study shows that males acknowledging fewer ethical problems than female; Kidwell et al., (1987) also shows that there are slightly different between male respondents on the ethical knowledge and they also found out that male tent to hide their mistake.
On the other hand, Ferrell and Skinner (1988) there are result shows that gender are the significant predictor of ethical behavior; Jones and Gaustchi (1988) study shows that females are less likely than males to be loyal to the organizations that they are working with; while in Akaah (1989) paper, Females indicates higher ethical judgment than males; besides, Barnett and Karson (1989) papers shows that female act more ethical compare to male respondents; Bellizi and Hite and Betz et al., (1989) there are significant result that gender influence the ethical behavior and male are twice more than female to engage in unethical behavior
In Derry (1989) paper, it shows that gender not related to reported experience of moral conflict; Kelley et al., (1990) shows a result that female are more ethical than males; while in Borkowski and Ugras (1992) paper shows that males and MBA students are more utilitarian and females have more definite ethical positions; there are some result show in Dawson (1992) paper which it shows that female operate with higher standard of ethical behavior than males; Goolsby and Hunt (1992) highly educated women are tent to aware of ethical decision making; Ruegger and King (1992) study shows a result that females are more ethical than males respondents;
Tyson (1992) paper shows a result which females are more sensitive in ethical issues; Whipple and Swords (1992) paper show a result that females are more critical of ethical issues compare to male respondents; Galbraith and Stephenson (1993) paper shows that gender differ in use of decision approach making ethical judgment; while in Brady and Wheeler (1996) paper gender is not a significant indicators of ethical disposition.
Both males and females believe that their own sex is more ethical than the opposite sex (Kidwell, Stevens, & Bethke, 1987). Females tend to report fewer delinquent activities than males, even though they do not differ significantly in delinquent action (Jensen & Eve, 1976). Females are less likely to use double standards when it comes to their own (un)ethical behavior compared to corporate (un)ethical actions (Vermeir & Van Kenhove, 2008). One study shows that there are no significant differences found in ethical reasoning based on gender although women tend to use more ethics than men when making an ethical decision (Wilson, 1995).
There are significant gender differences in ethical perceptions of business practices, but the differences decline as work experience increases (Franke, Crown, & Spake, 1997). Men and women may differ in moral orientation, but do not differ in moral reasoning (Pratt, 2002). Ethical decision-making is more likely to differ by social, political, and cultural experiences more than by gender alone (D’Cruz et al, 2002). Whether or not men will have a lower level of response to an ethical dilemma than women really depends on the situation of the dilemma (Hoffman, 1998). There has long been a debate between male and female reasoning about ethical conflict. Several studies supported the hypothesis that females are more care-oriented while males are more justice-oriented (Ford & Lowery, 1986).
2.3.2 Level of Education
Ford and Richardson (1994) paper shows the result of Hawkins and Cocanougher (1972) by comparing business students with other majors students from different faculty through a scenarios or vignettes methods show a result that the business students are tend to more tolerant of unethical behavior than non-business students. On the other hand, Beltramini et al., (1984)’s questionnaire survey shows a result that that business majors are more concerned about ethical issues compare to the students that is not majoring in business courses. The two previous studies were asking different questions and used different methods, these results are not necessarily inconsistent (e.g. business majors may be more concerned than others even though they are more tolerant).
In a different point of view from education scenario, Chonko and Hunt (1985) have done a study on managers that with or without technical background. Therefore, the study shown a result that those managers with technical backgrounds tend to be more ethical than managers with non-technical backgrounds, while Laczniak and Inderrieden (1987) study shows a result that there is no differences in ethical beliefs for MBA students with technical versus those with non-technical educational backgrounds.
On the other hand, Stevens et al., (1989) paper has found out that there are few differences between the ethical beliefs of managers and business students or attorneys and law students which it shows that respondents in executives level are tent to become more ethical compare to students in university. However, the two other studies which conducted by Stevenson et al., (1989); Goodman and Crawford, (1974); McNichols and Zimmerer, (1985); Dubinsky and Ingram (1984); and Serwinek (1992) shows that there is no significant differences of the students with the type of education.
Although some highly educated individuals have been found to be very unethical in their business experience for example in Ivan Boesky and Michael Milken’s paper, there is some evidence which suggests that people who are highly educated are more likely to engage in ethical behavior than their lesser educated counterparts which is mention by Trevino (1986). According to Wimbush et al., (1997), they have found out a result that even if the more highly educated individuals’ educational experience did not include specific ethics courses, they seemed to exhibit more ethical behavior than those with less education. It is expected that education has a positive effect on ethical climate and ethical behavior, and therefore should be controlled.
2.3.3 Years of Working Experience
In Ford and Richardson (1994) paper, it shows that there are two studies that was done to compare students and managers in terms of the working experience. The two research has show a result that managers were more ethical than students (Arlow and Ulrich, 1980; Stevens, 1984). In a similar study that was done by Stevens et el., (1989) by adopting Newstrom and Ruch’s (1975) questionnaire, has found few differences in ethical beliefs between managers, business students, attorneys, and law students, but there also result shows that the professionals’ ethical beliefs were generally higher than their student counterparts.
On the other hand, in the study that related to the influence of the year of experience towards the ethical beliefs, the Dubinsky and Gwin (1981) papers has shown a result that by comparing managers from two different functional areas that is the purchase managers and salesperson. The result was not significantly tested and there is different ethical perspective between the two groups of managers.
In Brenner and Molander (1977) paper, the responses from a variety of functional areas managers do not report any statistical analysis data as these functional identifications may have influence on ethical behavior of the managers in each of their functional area. Then comes with a study that has been done by Bowman (1976), where the researcher sought to compare results of a survey among the public administrators. The data collected in Bowman (1976) was nearly identical to the study by Carroll (1975) of business administrators. Although there is no statistical analysis result shows the differences of a number of comparisons among the managers but the percentage agreement with an ethical issue is clearly different between the two groups of respondents.
There are number of prior studies have found that experience impacts on the ethical decision-making of the managers in any of the organizations especially in the position of accountants and taxation officer Holian (2006), Pimental et al., (2010) and O’Leary and Stewart (2007). However, the direction of the relationship between the working experience and ethical beliefs is ambiguous. In an experiment on working paper review by Bernardi (1994), the researcher found out those managers outperformed seniors with respect to identifying ethical cues.
Three years later the research was conducted by Bernardi and Arnold (1997) have found a positive association between years of work experience and moral development which this research’s respondent was accountant and the test was measured by DIT scores (a methods use to study intensity of a managers to act or make decision on ethical issues). However, only for female accountants are included in the DIT score measuring.
In contrast, a research has been done by Shaub (1994) with a result showing that there is a negative association between DIT scores and years of work experience. Ponemon and Gabhart (1993) obtained conflicting results between Canadian and US accountants. Years of experience were negatively related to DIT scores for the US accountants but positively related with DIT scores for Canadian accountants. The findings of this study are in contrast with those of Thorne et al. (2003) who found a significant negative association between years of experience and DIT scores for both the US and Canadian accountants.
Finally, a study was done by Kidwell et al., (1987) has found a positive relationship between years of employment and ethical beliefs among the respondents that from managerial level. With the small amount of empirical work has been done, it really cause difficulty to conclude that the working experience and ethical beliefs of a managers are correlated. However, in Kidwell et al., (1987) papers, it shows that the greater work experience that the managers more ethical to respond to the ethical dilemmas.
Since these variable factors are frequently included in the data collection and the data may be available in the majority of the studies reported above. All of the authors of the previous studies as mentioned above might easily reanalyze their data to discover if there are any significant differences due to any of these factors. However, it is very likely that age and years of employment would be highly inter-correlated as would managerial position, education, and age as mentioned in the study by (Posner and Schmidt, 1987). There also a research done by Callan (1992) where the length of employment is not related to ethical values that a manager has.
2.4 PERSONALITY TRAITS
Traits are defined as “dimensions of individual differences in tendencies to show consistent patterns of thoughts, feelings and actions” Liu and Arnett (2002). McCrae et al., (1986) theorized and evaluated the Five-Factor Model, which is based in Trait Theory. The Five-Factor Model (FFM) was a breakthrough in the personality psychology field. This model gave some congruence to the vast number of incongruent theories that had been peppering the discipline up to that point. This model has also been referred to in other research as the Big Five. According to Korzaan and Boswell (2008), although the Five-Factor Personality Trait theory has been researched heavily in behavioral fields, there has been little research on the impact of personality traits with regards to business ethics issue and ethical decision making issue.
Korzaan and Boswell further argue that the more an individual has a particular trait, the more he/she exhibits certain types of behavior that are associated with that trait. Because the sheer variety of personality traits has rendered systematic investigation problematic, scholars have reduced them to a manageable number that reflects dominant personality traits in individuals. According to Goldberg (1992), there are five broad personality domains that reflect a person’s character i.e. extraversion, agreeableness, conscientiousness, neuroticism, and openness to experience.
Briefly, extraversion implies an energetic approach toward the social and material world and includes traits such as sociability, activity, assertiveness, and positive emotionality, whereas introversion is the opposite (John and Srivastava, 1999). Agreeableness refers to a friendly, compliant personality, one who avoids hostility and tends to go along with others (Cloninger, 2004). Conscientiousness describes socially prescribed impulse control that facilitates task- and goal-directed behavior, such as thinking before acting, delaying gratification, following norms and rules, and planning, organizing, and prioritizing tasks (John and Srivastava, 1999). Neuroticism contrasts emotional stability and even-temperedness with negative emotionality, such as feeling anxious, nervous, sad, and tense. Finally, openness to experience describes the breadth, depth, originality, and complexity of an individual’s mental and experiential life Korzaan and Boswell (2008). Ethical Decision Making not only happen in among the employees but it also happen in all level of the people like student as mention in the paper by Kreitler, Dansereau, Barth, Ito (2009). Below are some of the brief discussions on the each of the personality traits.
As mention in Kreitler et al., (2009), the research that they done has review that reveals that college students high on extraversion are most likely to exhibit indecisiveness in their decision-making and engage in riskier decisions as this also supported by Kelly & Lee, (2005) and Rim, (1982). In the same time in preliminary study that done by Moradian and Swan (2006), it shows that that are empirical support for the robust association Extraversion and ethical decision making.
Extraversion, typically measured by self-report e.g., Big Five Factor Inventory which this also adopt by the researcher like Benet-Matinez & John, (1998) and it is considered to be a personality trait that reflects sociability. This construct, however, appears to be related to numerous other personality characteristics as mention by Duijsens & Diekstra (1996). In addition to sociability, extraverts typically exhibit liveliness, assertiveness and have the need for activity, adventure, excitement, and stimulation Costa & McCrae, (1992). Eysenck and Eysenck (1985) found that elevated extraversion is associated with more impulsivity and lower self-control. College students who are high on extraversion appear to be at an even greater risk for problematic and potentially unethical decision-making.
There are research also shows that like in Forgas (1989), where neuroticism are influencing in the ethical decision making and it also supported by the paper from (Ormel and Wohlfarth, (1991). Extraversion is the most personality-and-culture scholars now agree that the high-level traits in the Five-Factor Model generalize across cultures, coexisting with indigenous traits in some cultures Katigbak et al., (2002); McCrae, (2002 and 2004); McCrae et al., (2004 and 2005).
McCrae (2001) has asserted that the five factors “are not inventions of Western psychologists; they are part of human nature-dimensions of enduring dispositions that somehow find expression in every culture”. Extraversion, in particular, has been well established as a cultural universal as this can be proven in Lucas et al., (2000). Measures of Extraversion have been validated across languages and cultures. Finally, Extraversion has been linked with other nation-level parameters (e.g., work ethic, achievement motivation, and savings) in nomological systems supporting the validity of this trait in describing an important aspect of national character (Kirkcaldy et al., 1998; Lynn and Martin, 1995). In Olson and Suls (2000) paper there are no hypothesized for the extraversion dimension.
Within five-factor model, Extraversion is defined as energetic, cheerful, and sociable (i.e., predisposed toward positive affect and preferring interpersonal interaction by Costa and McCrae, (2001); Lucas et al., (2000); Watson and Clark (1997). “The most commonly recurring themes in definitions of Extraversion are those of Ascendance and Sociability-in all of these views, extraverts are gregarious, friendly, dominant and socially facile” Watson and Clark (1997).
Lucas et al. (2000) contend that sensitivity to rewards constitutes the core of Extraversion across cultures, but concur that “sociability is undoubtedly an important part of Extraversion”. Very similar forms of Extraversion have been identified across myriad cultures: in strictly emic and in emic-etic approaches e.g., Bond (2000); in comprehensive studies of natural languages even when the generalization of other domains among the Big Five is more equivocal Saucier and Goldberg (2001); and in studies utilizing nonverbal measures Paunonen et al., (2001).
Neuroticism is the dimension most closely related to the above-average effect as mention by Olson and Suls (2000). The dimension is characterized by emotion instability, pessimism, fear, and low self-esteem Olson and Suls (2000). People high in Neuroticism often perceive themselves as holding unfavorable positions, positions that fall short of their ideal and they also likely to make self-judgments that are further from their ideal-judgments than people low in Neuroticism as this also mention by Olson and Suls (2000).
Therefore, there are significant results that there are three significant three way interaction of the Neuroticism between ethical decision making and the ethical dilemmas that they face and in the same paper that done by Olson and Suls (2000), there also a significant result for judgment on the ethical dilemmas and the ethical decision making.
Conscientiousness is another personality trait that likely influences members’ views of the organization. Conscientiousness has been shown to influence several workplace behaviors, such as overall job performance and training proficiency e.g., Barrick and Mount (1991), and organizational citizenship behavior (OCB) Organ (1994).
Conscientiousness appears to be characterized by two main sub facets, dutifulness and achievement striving Mount and Barrick, (1995). Individuals who score high on the facet of dutifulness may be more likely to engage in ethical behavior and aid in the establishment of ethical norms. Dutifulness is defined in terms of conscience, reliability, dependability, and adherence to ethical principles and moral obligations Costa and McCrae (1992).
Additionally, Ones et al., (1993) suggest that conscientiousness appears to be the underlying factor in personality-based integrity tests. In summary, emotional stability, positive and negative trait affectivity, and conscientiousness appear to be important personality characteristics involved in climate development. In addition Penner et al., (1995) developed a personality measure designed to specifically measure pro-social personality orientation, finding that scores on these measures are generally related to pro-social behavior. This perspective on personality may also be important for ethical conduct.
Persons high in Conscientiousness are characterized as responsible and trustworthy (Costa & McCrae, 1992) and this also supported by Olson and Suls (2000). In addition, this deliberation facet describes an individual’s tendency to be cautious and to consider the consequences of his or her actions as mention by Olson and Suls (2000). In Olson and Suls (2000) paper, it shows that there are significant result between conscientiousness and the ethical decision making and judgment on the dilemmas.
Agreeableness is defined by Costa and McCrae (1992) as being trusting, sympathetic, straightforward and selfless. In Olson and Suls (2000)’s paper, the five factors model o personality by Costa & McCrae (1992); Goldberg (1990), represent the basic dimension of personality which has received strong support among researchers that it will influence the ethical decision making. However, this is not supported by Block (1995); McAdams (1992) where they suggest that personality traits that influence the ethical decision making is Agreeableness.
According to Olson and Suls (2000), people that has high agreeableness have favorable belief towards others and value the beliefs and convention other people hold. There are three facets of trusts, compliance and tender – mindedness emphasizes this willingness to please others and to make socially acceptable judgments. There are significant result has been shown in the same paper by Olson and Suls where there are significant result on the ethical dilemmas judgment and the ethical decision making.
Besides, in Olson and Suls (1998) papers also mention that high agreeableness people tend to be more concern on the organization’s social norms or they tend to be more in well being behavior. In the same time, the result that they come out in the paper of Olson and Suls (2000) where people in high agreeableness were more concern on other parties when they were in the situation that facing dilemmas of making decision.
2.4.5 Openness to Experience
Openness to Experience is largely characterized by open-mindedness versus conservatism and traditionalism (Costa & McCrae, 1992). Whereas people high in Openness are likely to make more liberal responses, people low in Openness are likely to make more conservative and moderate recommendations Olson and Suls (2000). In the same paper that done by Olson and Suls (2000), there are significant result that shows that between openness to experience with the ethical dilemmas judgment and ethical decision making.
Three of the facets of Openness to Experience: Openness to Actions, Ideas and Values all reflect the willingness to embrace new concepts and make `open’ judgments in novel scenarios. Although open people seek novelty, they are not hedonists willing to perform any action at any time (Costa & McCrae, 1992). As mention by Olson and Suls (2000) people who are high in openness to experience, they are likely to make extreme judgments toward ethical dilemmas and ethical decision making.
2.5 ORGANIZATIONAL CLIMATE
An organizational climate can be defined as the shared perception of what behaviors of those employees are expected and rewarded inside the organization which this is stated by Zohar and Luria (2005) in their research paper. On the other hand, Burnes and James (1995) have further defined the organizational climate as a clear appearance of the deeper elements of culture such as values, beliefs, and assumptions commonly held, and a reflection of the collective attitudes and behavior of the organization members. Organization climate is important factor that will influence the ethical decision making behavior of a manager or an employee because it is believed that varying dimensions of ethical climate may be associated with very different types of ethical behavior of a person which it stated by (Cullen, Victor and Stephens, 1989; Wimbush and Shepard, 1994).
Several studies have proposed that a relationship exists between the ethical climate of an organization and the ethical behavior of employees as mention in the studies from (Deshpande, 1996; Deshpande et al., 2000; Fritzsche, 2000; Wimbush and Shepard, 1994). Since it has been demonstrated through the vignette or study through scenarios, it shows that managers or supervisors are capable of influencing the climate of an organization. Therefore, it may be feasible for managers to influence the ethical behavior of employees by altering the ethical climate of workgroups where inappropriate behavior is prevalent Wimbush et al., (1997).
In Wimbush’s et al., (1997) paper, it stated that the relationship between ethical climate and ethical behavior was examined for the store employees at the individual and district levels of analysis. At the individual level of analysis, some of the hypothesized relationships were significant and others were not. One can only speculate as to why only twelve of the twenty relationships were significant. On the other hand, the research that done by Wimbush et al., (1997) was the first research that involve with the variable like ethical climate dimension and the behavior of a manager and there are several research has been done which using the same as well as different measuring methods applied to the same or different type of sample may also