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The Relationship Between Informal Controls, Ethical Work Climates, and Organizational Performance

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Good ethics is the glue that holds organizations and societies together. (Merchant and Van der Stede 2012, p. 657).

Abstract

Due to the frequent occurrence of ethical transgressions and unethical employee behaviors, there has lately been an increasing interest in the ethical foundations of contemporary organizations. However, large-scale comprehensive analyses of organizational ethics are still comparatively limited. Our study contributes to both management control and business ethics literature by empirically examining potential antecedents as well as resulting effects of ethical work climates on organizational-level outcomes. Based on a cross-sectional survey among 295 large- and medium-sized companies, we find that more informal means of control constitute important elements of a broader organizational control context that are strongly related to the emergence of coherent ethical work climates with an increased awareness of ethical issues. Moreover, our results show that the relationship between ethical work climates and organizational performance can be considered as rather indirect as it is fully mediated by increased mutual trust among employees. Overall, our study thus supports the particular importance of ethical work climates and identifies appropriate means to encourage ethical conduct.

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Authors and Affiliations

  1. Chair for Controlling and Business Accounting (BWL IV), Justus Liebig University Giessen, Licher Str. 62, 35394, Giessen, Germany

    Sebastian Goebel

  2. Chair of Accounting, Heinrich Heine University Düsseldorf, Universitätsstr. 1, Geb. 23.31-01.21, 40225, Düsseldorf, Germany

    Barbara E. Weißenberger

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  1. Sebastian Goebel
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Correspondence to Barbara E. Weißenberger.

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Table 6 Multi-item constructs
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Goebel, S., Weißenberger, B.E. The Relationship Between Informal Controls, Ethical Work Climates, and Organizational Performance. J Bus Ethics 141, 505–528 (2017). https://doi.org/10.1007/s10551-015-2700-7

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