J Bus Ethics DOI 10.1007/s10551-016-3374-5 ORIGINAL PAPER The Moderating Role of Context in Determining Unethical Managerial Behavior: A Case Survey 1 1 1 Christof Miska • Gu¨nter K. Stahl • Matthias Fuchs Received: 2 January 2016 / Accepted: 31 October 2016 Ó The Author(s) 2016. This article is published with open access at Springerlink.com Abstract We examine the moderating role of the situa- CMD Cognitive moral development tional and organizational contexts in determining unethical EWC Ethical work climate managerial behavior, applying the case-survey methodol- ICC Intra-class correlation coefficient ogy. On the basis of a holistic, multiple-antecedent per- MI Moral intensity spective, we hypothesize that two key constructs, moral MP Moral philosophy intensity and situational strength, help explain contextual SEM Structural equation modeling moderating effects on relationships between managers’ individual characteristics and unethical behavior. Based on a quantitative analysis of 52 case studies describing Introduction occurrences of real-life unethical conduct, we find empir- ical support for the hypothesized contextual moderating Over recent decades, the extant body of organizational effects of moral intensity and situational strength. By ethics research has identified numerous antecedents of examining these complex contextual moderators, we aim to unethical managerial behavior, including individual char- contribute to organizational ethics research as we shed light acteristics, situational and moral-issue aspects, and orga- on the critical role that context may play in influencing nizational factors. In explaining unethical managerial unethical managerial behavior. conduct, both theoretical and empirical research tradition- ally emphasize characteristics of individual managers (cf., Keywords Case survey Á Moral intensity Á Multi- O’Fallon and Butterfield 2005) and show a strong focus on determined antecedents Á Organizational ethics Á Situational trait theory, which assumes consistent patterns of individ- strength Á Unethical managerial behavior ual behavior due to stable dispositional traits. In contrast, recent reviews and meta-analyses (Craft 2013; Kish- Abbreviations Gephart et al. 2010; Lehnert et al. 2015; Moore and Gino AVE Average variance extracted 2015; Trevin˜o et al. 2014) increasingly point to the importance of situational and organizational contexts in influencing unethical behavior in organizations. For & Christof Miska example, Palmer (2013, p. 5) argues that managerial mis- [email protected] conduct is ‘‘perpetrated by people who are for the most part Gu¨nter K. Stahl upstanding (otherwise ethical, socially responsible, and law [email protected] abiding), and is a function of a plethora of structures, Matthias Fuchs processes, and mechanisms that are integral to the efficient [email protected] and effective functioning of organizations’’. This is in accordance with work in social psychology (e.g., Mischel 1 Department of Global Business and Trade, Institute for 1968, 1973) that traditionally makes a strong case for the International Business, Vienna University of Economics and Business (WU Vienna), Building D1, Welthandelsplatz 1, power and the situational strength of the context in which 1020 Vienna, Austria individuals act. Thus, unethical managerial behavior is not 123 C. Miska et al. only a function of individual characteristics, but is influ- novel to the field and helps grasp the role of context beyond enced by the situational and organizational contexts in the immediate moral issue in question. Consequently, we which managers operate. aim to examine the moderating role of context by consid- However, while some early conceptual work in the ering both the specific moral situation and the organiza- organizational ethics literature (e.g., Jones 1991; Trevin˜o tional ethical infrastructure, and thus adopt a holistic 1986) has proposed how individual characteristics and perspective on the context in which unethical managerial contextual factors might combine and determine ethical behavior occurs. and unethical behaviors, few empirical examinations of We test our hypotheses on a sample of 52 case studies such moderating effects have been conducted. Lehnert describing occurrences of real-life unethical managerial et al. (2015) in their review observed a number of orga- behavior. In this way, we quantify the information gathered nizational ethics studies testing moderators. However, only from case studies and analyze it statistically (Bullock and a few of these related to contextual moderating effects, and Tubbs 1987; Jauch et al. 1980; Larsson 1993) using those that did for the most part examined select contextual structural equation modeling (Ringle et al. 2005) and factors. The authors noted that a focus on interactive regression analysis. We aim to contribute to organizational effects is required in order to truly understand the boundary ethics research by shedding light on the critical role that conditions of ethical behaviors. Correspondingly, Kish- context may play in influencing unethical managerial Gephart et al. (2010) remarked that ‘‘there is a need for behavior. broader band research that investigates more complex configurations of individual, moral issue, and organiza- tional environment variables’’ (p. 23). Thus, while the Literature Review organizational ethics literature has identified numerous individual, situational and moral issue, as well as organi- Notably, in the organizational ethics literature several lit- zational antecedents of unethical managerial behavior, the erature streams have emerged seeking to address the range gap in existing research relates to how individual charac- of antecedents that might affect ethical and unethical teristics and contextual factors may combine. This gap is behaviors in organizations. Sonenshein (2007) identifies important because the complex interactions between indi- three major streams: managers as philosophers, person-si- vidual characteristics and contextual influences provide tuation theories, and issue-contingent approaches. The first great potential to more clearly understand the boundary stream assumes that managers apply normative theories to conditions of unethical managerial behavior. resolve ethical dilemmas. An example is Hunt and Vitell’s We aim to address this gap by empirically examining (1986, 1993, 2006) general theory of marketing ethics, the moderating role of the contexts in which managers act which grants a central role to individuals’ moral philoso- in order to explain unethical managerial behavior. Lehnert phies. The second stream is characterized by an interac- et al. (2015) noted that the high complexity of the business tionist perspective, as exemplified by Trevin˜o’s (1986) environment makes it challenging to isolate the influence person-situation interactionist model, which combines of such contextual moderating influences, and Bartlett individual and situational characteristics to predict ethical (2003) suggested methodological considerations to decision-making behavior in an organizational context. The accomplish such interrelations. We therefore use the case- third stream, as exemplified by Jones’s (1991) influential survey methodology (Larsson 1993) to test for contextual theory of moral intensity, seeks to explain how the char- moderating effects, as it allows the examination of real- acteristics and dimensions of moral issues affect ethical world unethical managerial behavior in its full decision-making. Other approaches place greater emphasis complexities. on antecedents of the proximal context. For example, We first review extant work on organizational ethics, Fritzsche’s (1991) model of decision-making incorporates summarizing the numerous antecedents of unethical individual ethical values, with the assumption that they are behavior in the work context identified by previous mediated by organizational elements, such as the organi- research. We then draw on the concepts of moral intensity zational climate or goals. This interaction of personal (Jones 1991) and situational strength (Mischel 1968, 1973) values and organizational influences should result in deci- to hypothesize that situational and organizational contexts sions that differ significantly from those based solely on moderate the effects of managers’ individual characteris- personal values. tics on unethical behavior. While the first is a well-estab- Despite these variations in conceptualizing and lished construct in the organizational ethics literature— explaining ethical and unethical behaviors, a common where its moral-issue components have been frequently theme in organizational ethics research is that these directly associated with unethical behavior as situational behaviors are determined by individual characteristics, antecedents (Kish-Gephart et al. 2010)—the latter is rather aspects of the immediate situation or moral issue at hand, 123 The Moderating Role of Context in Determining Unethical Managerial Behavior… and organizational influences. Due to the multi-determined outside forces (externals). Trevin˜o(1986) proposed that nature of unethical choice (Kish-Gephart et al. 2010), it is externals are more likely to engage in unethical behavior, important to take into consideration these multiple-an- as they are less likely to take personal responsibility for the tecedent sets (Flannery and May 2000; Trevin˜o and Wea- consequences of their actions, a link that empirically finds ver 2003). Therefore, in the following we draw upon this support (Kish-Gephart