Skip to main content Accessibility help
×
Hostname: page-component-848d4c4894-r5zm4 Total loading time: 0 Render date: 2024-06-20T23:30:35.423Z Has data issue: false hasContentIssue false

43 - The Social and Organizational Psychology of Compliance: How Organizational Culture Impacts on (Un)ethical Behavior

from Part VII - Management and Organizational Processes

Published online by Cambridge University Press:  07 May 2021

Benjamin van Rooij
Affiliation:
School of Law, University of Amsterdam
D. Daniel Sokol
Affiliation:
University of Florida
Get access

Summary

Abstract: In psychological theory and research, compliance is generally seen as the most superficial and weakest form of behavioral adaptation. The current contribution examines how the social context of work – the organizational culture – can be organized to stimulate ethical business conduct. By reviewing social psychological theory and research, we illustrate how an ethical culture can be developed and maintained through ethical leadership and by mainstreaming ethics into existing business models. This is markedly different from more common legal approaches. It requires that a commitment to ethical business conduct is visible from the tone at the top, that organizational leaders “walk the talk” on the work floor, and that this matches the implicit messages that organizational members receive on a day-to-day basis about what really matters and what should be prioritized. Attempts to increase rule compliance are bound to fail when organizational incentives and rewards focus on individual bottom-line achievement regardless of how this is done. Empirical evidence supports the claim that organizational culture is an important factor in stimulating ethical conduct. By creating an ethical culture, organizations develop an “ethical mindset” in organizational members, which helps them not only to understand and internalize existing guidelines in their current work but also to apply the “spirit” of these guidelines to new dilemmas and emerging situations. This makes investing in an ethical culture a sustainable business solution.

Type
Chapter
Information
Publisher: Cambridge University Press
Print publication year: 2021

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Arnold, Martin. 2018. “ING to Pay €775 m in Money Laundering Case.” Financial Times (September). www.ft.com/content/f3e64e3e-b02b-11e8-99ca-68cf89602132.Google Scholar
Bandura, Albert. 1977. “Self-Efficacy: Toward a Unifying Theory of Behavioral Change.” Psychological Review 84:191215.Google Scholar
Bandura, Albert. 1986. Social Foundations of Thought and Action. Englewood Cliffs, NJ: Prentice-Hall.Google Scholar
Brown, Michael E., Treviño, Linda K., and Harrison, David A.. 2005. “Ethical Leadership: A Social Learning Perspective for Construct Development and Testing.” Organizational Behavior and Human Decision Processes 97, no. 2 (July): 117134. doi:10.1016/j.obhdp.2005.03.002.CrossRefGoogle Scholar
Cialdini, Robert B., and Goldstein, Noah J.. 2004. “Social Influence: Compliance and Conformity.” Annual Review of Psychology 55: 591621.CrossRefGoogle ScholarPubMed
Cullen, John B., Victor, Bart, and Bronson, James W.. 1993. “The Ethical Climate Questionnaire: An Assessment of Its Development and Validity.” Psychological Reports 73, no. 2 (October): 667–74. doi:10.2466/pr0.1993.73.2.667.Google Scholar
Deal, Terrence E., and Kennedy, Allan A.. 1982. Corporate Cultures: The Rites and Rituals of Corporate Life. Reading, MA: Addison Wesley.Google Scholar
Eisenbeiss, Silke A., Van Knippenberg, Daan, and Fahrbach, Clemens M.. 2015. “Doing Well by Doing Good? Analyzing the Relationship between CEO Ethical Leadership and Firm Performance.” Journal of Business Ethics 128, no. 3 (March): 635–51.Google Scholar
Ellemers, Naomi. 2017. Morality and the Regulation of Social Behavior: Groups as Moral Anchors. London/New York: Routledge.Google Scholar
Ellemers, Naomi, and Haslam, Alexander S.. 2011. “Social Identity Theory.” In Handbook of Theories of Social Psychology, edited by Van Lange, Paul A. M., Kruglanski, Arie W., and Higgins, Tory, 379–98. London: Sage.Google Scholar
Ellemers, Naomi, and Van der Toorn, Jojanneke. 2015. “Groups as Moral Anchors.” Current Opinion in Behavioral Sciences 6: 189–94.Google Scholar
FCA. 2018. Transforming Culture in Financial Services. Discussion Paper 18/2, March 12. London: Financial Conduct Authority.Google Scholar
Fehr, Ernst, and Rockenbach, Bettina. 2003. “Detrimental Effects of Sanctions on Human Altruism.” Nature 422, no. 6928 (March): 137–40. doi:10.1038/nature01474.Google Scholar
Feldman, Yuval. 2018. The Law of Good People: Challenging States’ Ability to Regulate Human Behavior. Cambridge: Cambridge University Press.Google Scholar
Fortado, Lindsay. 2015. “Kweku Adoboli: A Rogue Trader’s Tale.” Financial Times (October). www.ft.com/content/0fa0b42a-783a-11e5-a95a-27d368e1ddf7.Google Scholar
FSB. 2018. “Strengthening Governance Frameworks to Mitigate Misconduct Risk: A Toolkit for Firms and Supervisors.” Report, Financial Stability Board, Basel, April 20.Google Scholar
Garratt, Bob. 2010. The Fish Rots from the Head: The Crisis in Our Boardrooms: Developing the Crucial Skills of the Competent Director. London: Profile Books.Google Scholar
Gorsira, Madelijne, Steg, Linda, Denkers, Adriaan, and Huisman, Wim. 2018. “Corruption in Organizations: Ethical Climate and Individual Motives.” Administrative Sciences 8, no. 1: 4.Google Scholar
Haslam, Alexander S., and Ellemers, Naomi. 2011. “Identity Processes in Organizations.” In Handbook of Identity Theory and Research, edited by Schwartz, Seth J., Luyckx, Koen, and Vignoles, Vivian L., 715–44. New York: Springer.Google Scholar
Haslam, Alexander S., Reicher, Stephen D., and Platow, Michael J.. 2011. The New Psychology of Leadership: Identity, Influence, and Power. Hove, UK: Psychology Press.Google Scholar
Kaptein, Muel. 2008a. “Developing and Testing a Measure for the Ethical Culture of Organizations: The Corporate Ethical Virtues Model.” Journal of Organizational Behavior 29, no. 7 (October): 923–47.Google Scholar
Kaptein, Muel. 2008b. The Living Code: Embedding Ethics into the Corporate DNA. Abingdon, UK/New York: Routledge.Google Scholar
Kaptein, Muel. 2011. “Understanding Unethical Behavior by Unraveling Ethical Culture.” Human Relations 64, no. 6 (June): 843–69. doi: 10.1177/0018726710390536.Google Scholar
Kish-Gephart, Jennifer J., Harrison, David A., and Treviño, Linda K.. 2010. “Bad Apples, Bad Cases, and Bad Barrels: Meta-analytic Evidence about Sources of Unethical Decisions at Work.” Journal of Applied Psychology 95, no. 4 (July): 791. doi:10.1037/a0020073.CrossRefGoogle ScholarPubMed
Martin, Kelly D., and Cullen, John B.. 2006. “Continuities and Extensions of Ethical Climate Theory: A Meta-analytic Review.” Journal of Business Ethics 69: 175–94. doi:10.1007/s10551-006-9084-7.Google Scholar
Mayer, David M., Kuenzi, Maribeth, and Greenbaum, Rebecca L.. 2010. “Examining the Link between Ethical Leadership and Employee Misconduct: The Mediating Role of Ethical Climate.” Journal of Business Ethics 95: 716. doi:10.1007/s10551-011-0794-0.Google Scholar
Mooijman, Marlon, van Dijk, Wilco W., Van Dijk, Eric, and Ellemers, Naomi. 2017. “On Sanction-Goal Justifications: How and Why Deterrence Justifications Undermine Rule Compliance.” Journal of Personality and Social Psychology 112, no. 4 (April): 577–89. doi:10.1037/pspi0000084.Google Scholar
Moore, Celia. 2015. “Moral Disengagement.” Current Opinion in Psychology 6: 199204. doi:10.1016/j.copsyc.2015.07.018.Google Scholar
Nguyen, Duc Duy, Nguyen, Linh, and Sila, Vathunyoo. 2019. “Does Corporate Culture Affect Bank Risk‐Taking? Evidence from Loan‐Level Data.” British Journal of Management 30, no. 1 (January): 106–33. doi:10.1111/1467-8551.12300.Google Scholar
Oded, Sharon. 2017. “The Intoxication of Force: When Enforcement Undermines Compliance.” Inaugural Lecture. Erasmus Law Lectures 42.Google Scholar
Pagliaro, Stefano, Presti, Alessandro Lo, Barattucci, Massimiliano, Giannella, Valeria A., and Barreto, Manuela. 2018. “On the Effects of Ethical Climate(s) on Employees’ Behavior: A Social Identity Approach.” Frontiers in Psychology 9: 110. doi:10.3389/fpsyg.2018.00960.Google Scholar
Peterson, Dane K. 2002. “The Relationship between Unethical Behavior and the Dimensions of the Ethical Climate Questionnaire.” Journal of Business Ethics 41, no.4 (December): 313–26. doi:10.1023/A:1021243117958.Google Scholar
Raven, Bertram H. 1992. “A Power/Interaction Model of Interpersonal Influence: French and Raven Thirty Years Later.” Journal of Social Behavior and Personality 7: 217–44.Google Scholar
Reckard, E. Scott. 2013. “Wells Fargo’s Pressure-Cooker Sales Culture Comes at a Cost.” Los Angeles Times (December). www.latimes.com/business/la-fi-wells-fargo-sale-pressure-20131222-story.html.Google Scholar
Ring, Patrick John, Bryce, Cormac, McKinney, Ricky, and Webb, Rob. 2016. “Taking Notice of Risk Culture – the Regulator’s Approach.” Journal of Risk Research 19: 364–87. doi:10.1080/13669877.2014.983944.Google Scholar
Schein, Edgar H. 1996. “Culture: The Missing Concept in Organization Studies.” Administrative Science Quarterly 41, no. 2 (June): 229–40. doi:10.2307/2393715.Google Scholar
Scholten, Wieke, and Ellemers, Naomi. 2016. “Bad Apples or Corrupting Barrels? Preventing Traders’ Misconduct.” Journal of Financial Regulation and Compliance 24: 366–82.Google Scholar
Schuchter, Alexander, and Levi, Michael. 2016. “The Fraud Triangle Revisited.” Security Journal 29: 107–21. doi:10.1057/sj.2013.1.CrossRefGoogle Scholar
Simha, Aditya, and Cullen, John B.. 2012. “Climates and Their Effects on Organizational Outcomes: Implications from the Past and Prophecies for the Future.” Academy of Management Perspectives 26, no. 4 (November): 2034. doi:10.5465/amp.2011.0156.Google Scholar
Soltani, Bahram. 2014. “The Anatomy of Corporate Fraud: A Comparative Analysis of High Profile American and European Corporate Scandals.” Journal of Business Ethics 120, no. 2 (March): 251–74. doi:10.1007/s10551-013-1660-z.Google Scholar
Stöber, Thomas, Kotzian, Peter, and Weißenberger, Barbara E.. 2019. “Culture Follows Design: Code Design as an Antecedent of the Ethical Culture.” Business Ethics: A European Review 28, no 1. (January): 112–28. doi:10.1111/beer.12201.CrossRefGoogle Scholar
Stringer, Robert. 2002. Leadership and Organizational Climate. Upper Saddle River, NJ: Pearson Education.Google Scholar
Tajfel, Henri, and Turner, John C.. 1979. “An Integrative Theory of Intergroup Conflict.” In The Social Psychology of Intergroup Relations, edited by Austin, William G. and Worchel, Stephen, 3347. Monterey, CA: Brooks Cole.Google Scholar
Tenbrunsel, Ann E., and Messick, David M.. 1999. “Sanctioning Systems, Decision Frames, and Cooperation.” Administrative Science Quarterly 44, no. 4 (December): 684707. doi: 10.2307/2667052.Google Scholar
Treviño, Linda B., and Nelson, Katherine A.. 2011. Managing Business Ethics: Straight Talk About How to Do It Right. New York: Wiley.Google Scholar
Tyler, Tom R. and Blader, Steven L.. 2005. “Can Businesses Effectively Regulate Employee Conduct? The Antecedents of Rule Following in Work Settings.” Academy of Management Journal 40, no. 6 (December): 1143–58. https://doi.org/10.5465/amj.2005.19573114.Google Scholar
Van Rooij, Benjamin, and Fine, Adam. 2018. “Toxic Corporate Culture: Assessing Organizational Processes of Deviancy.” Administrative Sciences 8, no. 23. doi:10.3390/admsci8030023.Google Scholar
Van Steenbergen, Elianne F., Van Dijk, Danny, Christensen, Celine, Coffeng, Tessa, and Ellemers, Naomi. 2019. “Learn to Build an Error Management Culture.” Journal of Financial Regulation and Compliance 28, no. 1 (February): 5773. doi:10.1108/JFRC-12-2018-0156.Google Scholar
Van Yperen, Nico W., Hamstra, Melvyn R. W., and van der Klauw, Marloes. 2011. “To Win, or Not to Lose, at Any Cost: The Impact of Achievement Goals on Cheating.” British Journal of Management 22: S5S15. doi:10.1111/j.1467-8551.2010.00702.x.Google Scholar
Victor, Bart, and Cullen, John B.. 1988. “The Organizational Bases of Ethical Work Climates.” Administrative Science Quarterly 33:101–25.Google Scholar
Welsh, David T., Ordóñez, Lisa D., Snyder, Deirdre G., and Christian, Michael S.. 2015. “The Slippery Slope: How Small Ethical Transgressions Pave the Way for Larger Future Transgressions.” Journal of Applied Psychology 100, no. 1 (January): 114–27. doi:10.1037/a0036950.Google Scholar
Zyglipodopoulos, Stelios C., and Fleming, Peter J.. 2008. “Ethical Distance in Corrupt Firms: How Do Innocent Bystanders Become Guilty Perpetrators?Journal of Business Ethics 78, no. 1–2 (March): 265–74. doi:10.1007/s10551-007-9378-4.Google Scholar

Save book to Kindle

To save this book to your Kindle, first ensure coreplatform@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×