The influences of vicarious learning and individual differences on ethical decision making in the organization : an experiment

Abstract

Ethical/unethical behavior in the organization is proposed to be a function of both the environment (organizational variables) and the person (individual difference variables). Organizations can influence ethical decision making behavior through the reward system and the effective use of vicarious reinforcement. In addition, differences in individuals influence the way people regulate their own behavior through their cognitive interpretation of ethical dilemma situations. This research investigated the influences of vicarious reinforcement, cognitive moral development, locus of control and decision making processes on ethical decision making behavior. An MBA student sample completed an in-basket exercise. Three decisions involving ethical concerns were embedded in the exercise. Vicarious reinforcement (ethical behavior rewarded, unethical behavior punished) was manipulated via information in the in-basket. In addition, subjects completed two additional questionnaires related to the in-basket exercise, the Defining Issues Test, an objective measure of cognitive moral development and Rotter's Internal-External Locus of Control scale. An hierarchical regression analysis revealed that the specified model explained fifty-one percent of the variance in overall committed ethicality. The individual difference variables, particularly locus of control, explained the largest amount of the variance. Internals were significantly more ethical than externals. Subjects with higher cognitive moral development scores were also significantly more ethical. Next in importance were the decision making process variables, particularly the use of ethics principles in explaining decisions and the expectation of punishment for unethical behavior. Subjects who referred to ethics principles in explaining their decisions and subjects with higher expectations of punishment for unethical behavior were significantly more ethical. A significant interaction between vicarious reinforcement and locus of control also explained a significant amount of the variance. Internals responded predictably to vicarious reinforcement. However, externals exhibited a negative response to vicarious punishment. The smallest amount of variance was explained by the vicarious reinforcement conditions. Only vicarious punishment significantly influenced overall committed ethicality. Observers of a model who was punished for unethical behavior were significantly more ethical. Implications of these findings for management and future research are discussed.