The Effects of Ethics Institutionalization on Marketing Managers: The Mediating Role of Implicit Institutionalization and the Moderating Role of Socialization

Abstract

Because of increasing ethical problems in business during the last two decades, many organizations have implicitly and/or explicitly institutionalized ethics. Implicit ethics institutionalization refers to a work climate where ethical behavior is either implied or understood to be crucial to the functioning of the firm (e.g., informal expectations that all employees demonstrate a high level of professionalism, honesty, and integrity). In contrast, explicit ethics institutionalization refers to the formal codification of ethical behavior in terms of policy manuals, orientation programs, and ethics committees. It has been argued that the upsurge of ethics institutionalization was a result of the Federal Sentencing Guidelines first approved by Congress in the early 1990s, which essentially provides for reduced penalties for organizations that demonstrate an adequate degree of ethics compliance. Specifically, the main objective of this research is to empirically demonstrate the direct and indirect effects of different forms of ethics institutionalization (implicit and explicit) on marketing managers’ behavioral responses, such as perceived importance of ethics, quality of work life (QWL), job satisfaction, esprit de corps, and organizational commitment. Demonstrating the significant effects of ethics institutionalization is important from a macromarketing perspective, because findings highlight the moral premise that institutionalizing ethics in the organization (thus benefiting society at large) is likely to influence employee behavioral responses that are traditionally related to the financial health of the organization.