Abstract
Despite its great importance as a crucial aspect of organizational culture, organizational ethics and the implementation of ethics initiatives at all levels of the organization are still largely misunderstood or even neglected, not only in the business world but also in academia. Given the role of universities in educating young people for the labour market and future jobs, the translation of defined and proclaimed ethical policies, norms, and formal documents into desirable ethical behaviours by individuals, departments, and faculties is a sine qua non requirement for any university. This is especially true in less developed countries and emerging economies where the challenge of creating an ethical environment in organizations, corporate or otherwise is even greater.
 
 The main goal of the paper is to explore the interrelationship between formalized ethical policies and initiatives and demonstrated ethical behaviours at the organizational level, as well as to further investigate their role in shaping ethical behaviours of academic staff and, subsequently, ethical behaviours of students in an academic setting in a transitional economy. To achieve this goal, empirical research was conducted in 2021 using a specially designed questionnaire on a sample of 115 employees from one of the leading universities in Croatia. A moderated mediation model was designed and the analysis was conducted using PROCESS macro v4.0 for SPSS. The obtained results suggest that the effectiveness of standalone formalized ethical policies and initiatives is questionable in shaping ethical behaviours of academic staff, whereas these policies and initiatives in conjunction with actually demonstrated high ethical behaviours at the organizational level positively influence the ethical behaviours of academic staff. Moreover, the demonstrated ethical behaviours of academic staff plays an important mediating role in the positive impact of formalized ethical policies and initiatives on student ethical behaviours. In fact, demonstrated high ethical behaviour at the organizational level contribute positively to the indirect effects in this model. These and other findings of the research contribute to the relevant literature by providing additional confirmation of the importance of moving beyond formal ethics-related documents to actually demonstrated ethical behaviours in shaping ethical behaviours of individuals, in this case, university employees and students.
 
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