Complementary or competing climates? Examining the interactive effect of service and ethical climates on company-level financial performance.

Abstract

By bending rules to please their customers, companies with high service climates may be less ethical but ultimately more profitable. In this article, we pose the question of whether being ethical comes at a cost to profits in customer-oriented firms. Despite the organizational reality that multiple climates coexist at a given time, research has largely ignored these types of questions, and the simultaneous analysis of multiple climate dimensions has received little empirical attention to date. Given their scientific and practical importance, this study tested complementary and conflicting perspectives regarding interactions between service (outcome-focused) and ethical (process-focused) climates on company-level financial performance. Drawing on a sample of 16,862 medical sales representatives spread across 77 subsidiary companies of a large multinational corporation in the health care product industry, we found support for a complementary view. More precisely, results revealed that profitability was enhanced, not diminished, in service-oriented firms that also stressed the importance of ethics. Results suggest studying the interactive effects of multiple climates is a more fruitful approach than examining main effects alone. (PsycINFO Database Record