An Identity Theory Approach To

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2007 60: 851Human RelationsHugh Gunz and Sally Gunz

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Hired professional to hired gun:An identity theory approach tounderstanding the ethical behaviour ofprofessionals in non-professionalorganizationsHugh Gunz and Sally Gunz

A B S T R AC T Most recent major financial scandals have come about with the

assistance, tacit or active, of highly trained professionals whose ethical

responsibilities were thereby violated. This article addresses the

question of why this might happen. It argues that the problem may

lie in the adoption of a common prescription, namely that to be

effective, in-house lawyers need to be part of the corporation’s

strategic decision-making process. But, paradoxically, in so doing, the

lawyers’ identities might become modified such that the approach

they take to handling ethical dilemmas becomes more like that of

their non-lawyer colleagues, thus losing some of the benefits of their

professionalism. The results of a postal survey of Canadian corporate

counsel provide supporting evidence for this conclusion.

K E Y WO R D S decision-making � ethics � governance � identity theory � lawyer� organizational–professional conflict

The ethics of business-related professionals have had something of a cloudof suspicion hanging over them in recent years (Moore et al., 2006). Thelawyers of firms such as Enron have been accused of supporting – or, at least,not inhibiting – the questionable actions of their clients (DeMott, 2005;

8 5 1

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DOI: 10.1177/0018726707080079

Volume 60(6): 851–887

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McLean & Elkind, 2003). Indeed few, if any, of the recent financial scandalscould have been effected without the active assistance of willing accountantsand lawyers. Yet none of this is supposed to happen. Professionals are highlyeducated people who have passed close scrutiny by their professional bodies.Clients are told to rely on professionals for disinterested advice, free fromthe taint of commercial interest. The nature of the relationship betweenprofessional and client should, in theory, have no impact on the advice givenby the professional, even if the relationship is as close as that of employeeand employer.

Are the inappropriate actions we observe those of a few ‘bad apples’,or is there something more systematic at work here? In this article we do notdiscount the former possibility, but rather focus on the latter. Using as ourexemplar the legal profession, we argue that what has been said to be the bestpractice in the employment of in-house lawyers of the ‘modern era’ – bringingcounsel within the strategic decision-making of the organization rather thanleaving them, comparatively excluded, on the sidelines (Chayes & Chayes,1985; Gunz, 1991; Heineman, 2004; Liggio, 2002; Morgan, 2004; Rosen,1989; Wilkinson et al., 2005) – may paradoxically result in the loss of someof the benefit of their professional judgement. It is not that these practicesturn them into white-collar criminals, but rather that the kinds of ethicaldilemma that they face in practice typically call for fine judgement concern-ing the interests to be considered and the actions to be taken. The more theybecome ‘embedded’ in the firm’s top management team (TMT), the morelikely they are, we argue, to adopt a decision-making style when faced withthese dilemmas that resembles that of a ‘normal’, non-professional executive.

We address this issue by briefly reviewing the literature on professionalsin organizations, in which it has for many years been argued that such peopleshould find themselves in a position of conflict, pulled one way by theirprofession and the other by their employer. More recently this position hasbeen modified in the light of findings that suggest that it is an over-simplification and ignores the ways in which professionals adapt to theircircumstances. We show how identity theory can be used to understand thecircumstances that might influence the kind of adaptation that takes place,and what this could mean for the way in which professionals handle ethicaldilemmas. Finally, we report on the results of a survey of Canadian corpor-ate counsel, in which we found evidence for these processes of adaptation.

Professionals in organizations

A common way to approach understanding the situation of professionalsemployed in non-professional organizations (NPOs: business or public

Human Relations 60(6)8 5 2




corporations that are not professional service organizations [PSOs]; so abank is an NPO, a law firm is a PSO), is to consider the problem of controlthat theoretically they face. The idealized model of the professions as definedin Anglo-Saxon societies is of highly trained practitioners providing servicesto clients in a disinterested fashion and one that is determined by theprofession itself. But the standards of professional practice may not alwaysbe consonant with those of commercial practice, and if this should happenthe professional presumably must choose: does s/he follow the rules of theprofession and give her or his employer an answer the employer may notwant to hear, or does s/he follow the company line, even if it means not doingthings that the profession may require? Undoubtedly, the majority of suchconflicts are addressed by the professional proposing alternative choices thatare compliant with both professional standards and organizational needs.Problems arise either where such accommodation is not possible, or its resultis not palatable to the NPO’s management.

This issue is at the heart of the long-established organizational–professional conflict (OPC) literature (Harrell et al., 1986; Sorensen &Sorensen, 1974) – sometimes called ‘professional–bureaucratic conflict’(Wallace, 1995b) – which addresses the conflict that is said to exist betweenthe professional’s role as, for example, lawyer, and his or her role as employeeof an NPO. However, the ‘competing loyalties’ view is not well supportedby empirical evidence (Benson, 1973; Davies, 1983; Shafer, 2002; Wallace,1993), as witness the comparatively low levels of OPC found amongstprofessional accountants (Aranya & Ferris, 1984; Bamber & Iyer, 2002) orlawyers (Gunz & Gunz, 1994b). Indeed, there has been a considerable streamof research, including at least two meta-analyses, which has demonstrated apositive correlation between the two commitments (Cohen, 2003), albeit alower one for professionals in NPOs (corrected r = .202) than in PSOs(corrected r = .484) (Lee et al., 2000). These studies have led to a search fora greater understanding of what might explain the empirical observations,leading to a number of theoretical challenges to the idealized model of theprofessions that underpins the OPC literature (Gunz & Gunz, 1994b; Lord& DeZoort, 2001; Osinsky & Mueller, 2004; Wallace, 1993, 1995a, 1995b).Essentially, these alternative views argue that the idealized model of theprofessions is an oversimplification of what happens in real life, and thatOPC is typically resolved by employed professionals by adapting theirorientation towards their profession (Daniels, 1975).

Wallace (1995b) provides a useful model. She argues that professionalsmay deal with the problem of conflicting pressures in one of two ways. Sheidentifies two threads in the literature on NPOs she terms the ‘proletarian-ization’ and ‘adaptation’ theses. The proletarianization thesis reflects a longtradition of questioning the likelihood that employed professionals behave

Gunz & Gunz Hired professional to hired gun 8 5 3




as they would in private practice (e.g. Benson, 1973; Cohen, 1999; Davies,1983; Leicht & Fennell, 2001; Scott, 1965), and holds that professionals’departments resemble those of their non-professional colleagues (Wallace,1995b). The adaptation thesis, by contrast, suggests that professionals workin departments that attempt to mimic PSOs (Wallace, 1995b). In a study ofCanadian lawyers, she found evidence supporting the adaptation thesis.

Do these different organizational solutions result in different kinds ofbehaviour on the part of the professionals in question? Identity theoryprovides a useful framework for approaching this issue. The theory seeks:

to answer this quintessential question: Given situations in which thereexist behavioral options aligned with two (or more) sets of roleexpectations attached to two (or more) positions in networks of socialrelationships, why do persons choose one particular course of action?

(Stryker & Burke, 2000: 286)

The behaviour in which we are interested here, as signalled by thetheme in our opening paragraph, is that of ethical decision-making byprofessionals employed in NPOs, here, lawyers.

Employed professionals and ethical dilemmas

Identity, as Sveningsson and Alvesson (2003) point out, ‘is one of the mostpopular topics in contemporary organization studies . . . Identity is viewedas central for issues of meaning and motivation, commitment, loyalty, logicsof action and decision-making, stability and change, leadership, group andintergroup relations, organizational collaborations, etc.’ (pp. 1163–4). Ourinterest in identity in this article is simply as a means to an end: it providesa useful framework for understanding the position of professionals inorganizations.

A recurring concept in the identity literature is of identity as a‘relatively stable and enduring constellation of attributes, beliefs, values,motives, and experiences in terms of which people define themselves in aprofessional role’ (Ibarra, 1999: 764–5, citing Schein, 1978). Any individualmay have multiple identities, organized within self in a salience hierarchy,where identity salience is defined as ‘the probability that an identity will beinvoked across a variety of situations, or alternatively across persons in agiven situation . . . commitment shapes identity salience shapes role choicebehaviour’ (Stryker & Burke, 2000: 286).

We assume, following Stryker and Burke (2000), that employedprofessionals make their choice of identity manifest through the decisions





they take, here in resolving ethical dilemmas. The definition we use of anethical dilemma is of a situation in which the professional ‘must choosebetween two or more relevant, but contradictory, ethical directives, or whenevery alternative results in an undesirable outcome for one or more persons’(Dolgoff & Skolnik, 1996: 50; see also Davis, 1988). Dilemmas are, by defi-nition, difficult situations in which there is no obviously ‘right’ course ofaction, typically pitting the dictates of the profession’s ethical code againstthe interests of someone else – the client, the employer, or the professionalhim- or herself.

We posit two ideal-type identities, that we shall call here ‘professional’and ‘organizational’, based on the concepts of ‘lawyer’ and ‘organizationalperson’ suggested by Gunz and Gunz (1994a). The ‘professional’ identity isadopted by someone who sees him- or herself as, for example, a lawyer,accountant or engineer who just happens to be working for the NPO inquestion (cf. Gouldner’s 1957, 1958 ‘cosmopolitan’). This identity is likelyto be associated with Wallace’s adaptation thesis, which describes a situationin which professionals have managed to create a kind of PSO within theiremploying NPO. The ‘organizational’ identity is that of a professional whohas taken on some of the characteristics of a non-professional employee ofthe NPO, in the limit, seeing him- or herself as an employee who just happensto have, for example, a law, accounting or engineering degree. This identityis more likely to be associated with proletarianization, which proposes thatprofessionals become like other employees of the NPO.

In other words, someone enacting a professional identity will ask him-or herself: how does my profession require me to deal with this ethicaldilemma? By contrast, someone adopting an organizational identity will askhim- or herself: how should I, as an employee of this NPO, deal with thisethical dilemma? In both cases the individual is likely to be influenced bythoughts of what is best for the organization. However, the organizationalidentity carries with it other consequences of organizational membership, inparticular how the decision might affect the professional’s position or careerwithin the company. This does not necessarily imply Machiavellianism, butsimply the thought that one’s career is more bound up with the organizationthan would be the case for a ‘pure’ professional. To use the language ofMarch’s (1994) ‘logic of appropriateness’, the professional is implicitly askinghim or herself: What does a person like me do in a situation like this? (Weberet al., 2004: 282). Our position resembles that of the ‘moral seduction’ theoryof Moore et al. (2006), in that both posit an unconscious process. Theprofessional is not deliberately adopting a less ‘pure’ professional approach;rather, s/he is acting in a way that seems natural to her or him.

Our aim is to understand the ethical decision-making of employedprofessionals, and we introduced the concept of organizational or





professional identities because it gives some pointers to the kind of organiz-ational influences that might affect this decision-making. In earlier work(Gunz & Gunz, 2002), we found evidence that corporate counsel (lawyersemployed by NPOs) do appear to adopt ‘professional’ or ‘organizational’identities. What might result in one or the other identity gaining greatersalience? We first address the issue of how the nature of the embeddednessof the role might affect role salience.

Stryker and Burke (2000: 289) suggest that the relative salience ofidentities is a consequence of the extent to which the ‘role or set of roles isembedded in one or more of a variety of groups that provide context forthe meanings and expectations associated with the role’. This, in turn,affects the individual’s commitment to that identity. An important indi-cation of the nature of the embeddedness of the role played by theprofessional is the kind of work he or she does. Professionals working inNPOs spend at least some of their time on non-professional activities. Forexample, it is not uncommon for corporate counsel to be involved in corpor-ate secretarial or government liaison work (Gunz, 1991), both of which areimportant but neither necessarily requires a legal training. The moreinvolved they become in such activities, the more they are drawn away fromtheir professional training and experience.

Hypothesis 1: The more time professionals spend on non-professionalactivities, the more salient their organizational identities are likely tobe by comparison with their professional identities.

We noted at the beginning of this article that it is increasingly accepted as good practice that corporations should bring their key corporateprofessionals into their strategic decision-making process. In so doing theybecome ‘embedded’ in a different role set, which increases the salience of theidentity associated with that role set (Stryker & Burke, 2000: 289). In otherwords, the more the professional becomes part of the TMT, the more salienthis or her organizational identity is likely to be.

Hypothesis 2: The more involved professionals are in the firm’sstrategic decision-making process, the more salient their organizationalidentities are likely to be by comparison with their professionalidentities.

Work experience and tenure affect many aspects of an individual’s orien-tation to his or her role (Tesluk & Jacobs, 1998). It can influence, forexample, performance (McEnrue, 1988; Quinones et al., 1995; Sturman,





2003), and intention to stay (Krecker, 1994). Furthermore there is someevidence that identities change over time if the individual’s social contextchanges sufficiently (Cassidy & Trew, 2004; Serpe, 1987). So it seems reason-able to assume that the length of time a professional has spent with theirorganization may affect the salience of their organizational identity. Thelonger the service of professionals at any given NPO, other things beingequal, the more likely they are to know other members of the managementteam and understand their perspective and the commercial aims of the enter-prise. This is likely to make their organizational identities more salient.

Hypothesis 3: The longer professionals have worked in a given firm,the more salient their organizational identities are likely to be bycomparison with their professional identities.

It is well established that the orientation of employed professionals is influ-enced by their relationship with their employer’s ‘mainstream’ career systemthat typically supplies the organization’s top management cadres (Gunz & Gunz, 1994a; Wallace, 1995b). Careers are an important part of anyorganization’s reward system, and are likely to influence the way in whichorganizational members view their roles (Gunz & Jalland, 1996; Wallace,1995a). However, it is by no means uncommon for professionals such aslawyers to be comparatively isolated from the mainstream career system, inthe sense that their career prospects are often confined to, for example, thelaw department (DeMott, 2005; Nelson & Nielsen, 2000).

The extent to which professionals feel themselves part of the organ-ization’s mainstream career system, then, is likely to be reflected in the extentto which they see themselves as professionals or employees. The moreisolated they are (because the organization does not include their occu-pational category amongst those who are promotable to senior executivepositions outside the professional department), the more likely they are tolook to their profession for career possibilities.

Hypothesis 4: The more isolated professionals feel themselves to befrom the organization’s mainstream career system, the more salienttheir professional identities are likely to be by comparison with theirorganizational identities.

The impact on organizational commitment of isolating professionals fromthe organization’s career ‘mainstream’ is exacerbated if the professionalsbelieve that the mainstream career rewards are more attractive than thoseavailable to them as professionals (Gunz & Gunz, 1994b), a construct we





call here reward inequity. In other words, it is all the more frustrating if thegrass is greener on the other side of the fence, and the fence cannot beclimbed. By the same token, it is not unreasonable to expect that this inter-action might also affect organizational identity, although two implicationscan be envisioned. First, it might be that professionals who believe that thecareer rewards are better outside their department and that they areprevented from reaping these rewards respond by retreating to theirprofessional identities as a way of reducing the dissonance of the situation.The obverse of this argument draws on the connections established betweenorganizational justice, organizational commitment and organizationalcitizenship behaviour (Latham & Pinder, 2005; Moorman, 1991; Simard etal., 2005). The more accessible the mainstream, and the less obviouslyprofessionals are discriminated against (in the sense that reward inequity islow), the more likely they might be to adopt an organizational identity.

Hypothesis 5a: The more that professionals believe that the ‘real’career rewards in the organization go to employees outside theirprofessional unit, and that they are prevented from gaining access tothese rewards, the more salient their professional identities are likelyto be by comparison with their organizational identities.

Hypothesis 5b: The less that professionals believe that the ‘real’ careerrewards in the organization go to employees outside their professionalunit, and the more they believe that they are not prevented from gainingaccess to these rewards, the more salient their organizational identitiesare likely to be by comparison with their professional identities.

An ongoing theme in the lives of employed professionals, which has becomemore of an issue of late, is their vulnerability to their work being outsourcedto private practitioners (Knudsen et al., 2003; Rittenberg & Covaleski, 2001;Zhu et al., 2001). Strategic contingency theory predicts that this potentialsubstitutability (Hickson et al., 1971) will result in a sense of powerlessness,in turn lowering counsels’ perceived ability to resist organizational pressuresand increasing their desire to be seen to be good corporate citizens.

Hypothesis 6: The greater the risk professionals see for their work tobe outsourced, the more salient their organizational identities are likelyto be by comparison with their professional identities.

Identity theory, as we have seen, proposes that identity salience shapes be-haviour (Stryker & Burke, 2000). In the present study, the behaviour in





which we are interested concerns the choices professionals make when facedwith ethical dilemmas, specifically those that pit the formal requirements ofa profession against the business requirements of the NPO employing theprofessional. Identity theory suggests that the choice will be affected by therelative salience of the two identities, professional and organizational.

Hypothesis 7: When faced by situations involving conflict between two sets of ethical dimensions, professional and organizational, pro-fessionals are more likely to choose a course of action consistent withthe identity, professional or organizational, that is more salient to them.

Finally, if identity shapes behaviour as Hypothesis 6 suggests, then we canexpect that identity to mediate the effect of the independent variables fromHypotheses 1–4 and 6 – time spent on professional activities, professionals’involvement in the strategic level of the firm, length of experience with thefirm, isolation from the firm’s mainstream career system, and vulnerabilityto outsourcing – on the propensity of the professional to choose a course ofaction when faced with situations involving conflict between two sets ofethical dimensions.

Methods

Sample

The sample was drawn from the membership of the Canadian CorporateCounsel Association (CCCA), part of the Canadian Bar Association. All werelawyers employed as corporate counsel in the law departments of CanadianNPOs in the public and private sectors; governmental organizations wereexcluded from the sample. No corporate counsel in the population sampledworked for independent law firms.1 Although the data are Canadian, thesimilarities in terms of in-house counsel practice between, for example, theUnited States and Canada in most respects that affect this study (Gunz &Gunz, 1994b) suggest that the source of our data as being from one countrydoes not prevent the findings being generalized to other jurisdictions. In orderto avoid the cost and the difficult methodological issues associated withexploring ethical beliefs across linguistic boundaries, only jurisdictionswhose primary official language was English were included. The question-naires were sent to all members of the CCCA (excluding governmentemployees) in Ontario and provinces west of Ontario (2414 counsel). Aftertwo reminders, the number of returned questionnaires totalled 484 (20.1%),all of which were usable.





The response rate was not high, but was fairly typical of this kind ofstudy, in which even lower rates are by no means uncommon (Bamber &Iyer, 2002; Hosseini & Armacost, 1993; Weber, 1992). A further compli-cation for the present study was that, for reasons connected with the needsof the sponsoring organization that provided the mailing list, it was necess-ary to mail the questionnaires during the summer, which undoubtedlyreduced the response rate. In the present study demographic variables (withthe exception of years of professional experience) did not appear to be associ-ated with the dependent variables under investigation, so it is not possibleto draw any inferences about non-response bias (Colombo, 2000; Rowland& Forthofer, 1993). Eight key variables (age, sex, years of professionalexperience and as corporate counsel, position within law department,income, business education and professional/organizational identity) wereexamined to see whether early responders differed at all from late re-sponders (Armstrong & Overton, 1977; Datta et al., 2005). The sample wasdivided into quartiles, based on the order in which the questionnaires werereceived, and the first and last quartiles were compared using t-tests (Dattaet al., 2005) for all variables except position and sex, for which chi-squarestatistics were computed. In each case there were no significant differencesbetween early and late responders, reducing (but not removing) concernabout non-response bias.

Instrument

For a study such as this it is important to employ measures that aresufficiently rich to be able to capture the phenomenon under investigation(Crane, 1999). This issue is of particular importance in ethics research,because of the need to minimize social desirability bias (Crowne &Marlowe, 1964; Edwards, 1953). Because of the sensitivity of the issuesaddressed in ethics research, the problem of social desirability bias isparticularly marked (Dalton & Metzger, 1992; O’Fallon & Butterfield,2005; Randall & Fernandes, 1991; Taylor & Shim, 1993; van der Heijdenet al., 2000). So it is important, when designing a survey instrument to studyethical decision-making, to anchor the measures in ways that are as closeto real life as possible for the respondents and to ensure that the measuresdo not provide a single ‘desirable’ answer (Crane, 1999).

A widely used technique in ethics research which addresses these issuesis to employ vignettes, short cases describing hypothetical situations involv-ing ethical dilemmas (e.g. Cavanagh & Fritzsche, 1985; Dukerich et al., 1993;Greenberg & Eskew, 1993; O’Fallon & Butterfield, 2005; Vallerand et al.,1992; Weber, 1990). Perhaps the best-known example is the Defining Issues





Test, measuring ‘values maturity’ (Rest, 1986). Vignettes have been describedas particularly suitable for reducing social desirability bias (Butterfield et al.,2000; Robertson, 1993); there is evidence that people are more likely todescribe their real reaction to ethical dilemmas if presented with vignettes thanif asked directly about their views on the ethical acceptability, or otherwise,of given courses of action (Clark, 1966; Weber, 1992).

In this methodology, the respondent is given a vignette and is typicallyasked to choose between a number of pre-coded responses, although some-times a free-form answer is called for as well (Dolgoff & Skolnik, 1996).The methodology relies on the assumption that there is a connectionbetween the person’s response to the vignette and the way in which he orshe would behave, were he or she to have experienced the situation in reallife. The essence of the methodology, then, is to devise vignettes that addressthe phenomenon under investigation and which respondents will experienceas ‘realistic’ (Butterfield et al., 2000; O’Fallon & Butterfield, 2005; Weber,1992). Next, we describe how we did this.

Development of vignettes

The vignettes, with one exception (Appendix: Vignette 4) which was basedon the notorious Texaco boardroom imbroglio (Mulligan & Kraul, 1996),were drawn from the experience of senior corporate counsel. The stories astold by counsel were carefully rewritten to ensure anonymity (a serious issue,given the sensitive nature of the situations described). They were distilled andrecast so that the reader became the subject of the vignette. For each vignette,the reader was presented with two possible courses of action developed bythe research team with the advice of senior corporate counsel. Each courseof action was designed to fit one of the two identities, professional andorganizational.2 Essentially, our aim was to devise plausible ways of handlingeach vignette, one each for each of the identities, and respondents were askedto select the course of action they felt most appropriate.

In order to minimize the risk of social desirability bias, three furthersafeguards were employed. First, neither the word ‘ethics’ nor any of itssynonyms were used in the covering letters for the questionnaires, or in thequestionnaires themselves (Butterfield et al., 2000). Second, the options werenot expressed as simple items with overly obvious rationales. Instead, wetried to devise courses of action that the respondents could imagine them-selves following. It was important to avoid presenting courses of action thatmight appear to be caricatures of the identities and therefore potentiallyoffensive to respondents’ professionalism. The organizational identity, forexample, could easily have been portrayed as manifesting itself in someone





who completely forgets his or her legal training as soon as it becomes animpediment. We therefore tried to present the courses of action in such a waythat they brought out the behaviour distinctive of each identity, withoutlosing professional plausibility. This carried with it a problem of confound-ing: a complex course of action has within it more cues to which the respon-dents might react than does a simple one (Gunz & Gunz, 2002). Third, wedid our best to ensure that each of the options for each of the vignettes wasworded as neutrally as possible, so that the choice between them would begoverned by the respondent’s interpretation of the situation rather than byany obviously pejorative terminology.

Four vignettes were included in a draft questionnaire with the othermeasures to be used in the study, and this was administered to two successivesmall pilot groups. The participants in the pilot studies were asked tocomment on the realism of the vignettes and on any difficulties they experi-enced in both understanding them and choosing one of the courses of action.The vignettes and courses of action were adjusted in the light of thesecomments, in order to improve the clarity of the task while retaining the legalaccuracy of the options. The final versions of the vignettes are reproduced inthe Appendix, which also explains the professional ethical issue raised by eachvignette. Earlier work (Gunz & Gunz, 2002) established that the sample ofCanadian corporate counsel described below saw the vignettes as realistic,that the more likely they were to have encountered situations of the kinddescribed in the vignettes the more realistic they felt the vignettes to be, and that the closer the respondents were to the strategy-making level of their organizations, the more likely they were to have encountered similarsituations.

A further pilot study was conducted with a group of 28 corporatecounsel. Semi-structured interviews were conducted, during which, inter alia,interviewees were asked to select their preferred course of action from thoseoffered. Their verbal protocols were recorded and transcribed. There was anevident difference between the options (professional and organizational) inthe way in which they expressed their thoughts. When respondents chose the‘professional’ option they more noticeably used language associated with theprofession, for example: ‘. . . I would think as a compliance officer you arealso responsible for wider concerns such as fiduciary duties and all that lawschool stuff’, or: ‘I guess three is your option here if there’s an obligation toreport deviations, you have that obligation’. When choosing an ‘organiz-ational’ response they were more likely to use organizational language, forexample: ‘I think you have to use common sense here. You’re not trying tobury anybody. You’re basically just trying to make sure that company policyis followed’, or: ‘I think the politics of working in an organization is if you,





you can overplay your importance in the organization if you take a kind ofholier than thou attitude and you don’t necessarily know all of the facts, Idon’t think you are going to survive there for too long . . . in the absence oftheft or blatant dishonesty I think you have to be quite circumspect in theway that you go about handling situations like this.’

Choice of course of action

For each vignette, then, respondents chose one of two possible courses ofaction, professional or organizational. We totalled the number of times theychose the ‘professional’ approach and the number of times they chose the‘organizational’ approach, yielding two scores, ‘professional’ and ‘organiz-ational’.3 Possible scores, therefore, ranged on a five-point scale from 0 (ifthat course of action was not chosen by the respondent for any of thevignettes) to 4 (if that course was chosen for all four of the vignettes).

Other measures

Organizational–professional conflict (OPC)

Two measures were used (Aranya & Ferris, 1984), each employing a seven-point Likert-type (‘strongly agree/strongly disagree’) scale in response to thestatements: ‘the type and structure of my employment framework gives methe opportunity to fully express myself as a professional’ (reverse scored),and ‘in this organization, there is a conflict between the work standards andprocedures of the organization and my own ability to act according to myprofessional judgement.’

Proportion of time spent on professional activities

Respondents were asked: ‘In general, what percentage of your time is spenton all or any of the following?’ (emphasis in the original) and presented witha list of 10 items (including ‘other’) drawn from Gunz’s (1991) work oncorporate counsel. Of the nine pre-coded items, four (routine legalmatters/caseload, legal counselling, handling legal crises, preventative law)were classified as ‘professional’, and the remainder, which do not requirelegal qualification (corporate secretarial function, management outside legaldepartment, government liaison, administration within legal department,corporate finance), were classified as ‘non-professional’. The ‘other’ categorywas classified as non-professional unless the respondent identified a specifi-cally legal activity.





Isolation from firm’s strategic decision-making process

Three items were used. Respondents were asked how closely involved theywere in their organization’s strategic decision-making processes (1 = ‘notinvolved’; 5 = ‘very closely involved’), whether or not their CEO regardedthem as a member of their organization’s top management team (TMT), andhow often they were consulted by members of their organization’s TMT aboutmatters of strategic importance to the organization (1 = ‘not consulted at all’;5 = ‘a major part of my responsibilities’). The standardized item alpha was0.86, so their z-scores were combined in a single scale for subsequent analysis.

Salience of professional versus organizational identity

A single item asked the following: ‘Given two basic descriptions of lawyersin a corporate setting, which best describes you?’ (Gunz & Gunz, 1994b),with a five-point scale (1 = ‘Lawyer with captive client’; 3 = ‘Both lawyerwith client and employee with law degree’; 5 = ‘Employee of organizationwho happens to have law degree’). Half of the sample (49.4%) describedthemselves as ‘both’; a third (33.6%) as ‘lawyers’ (1 or 2 on the scale), and17.0 percent as ‘employees’ (4 or 5 on the scale). We refer to this variablebelow as ‘organizational identity salience’, in order to indicate the directionin which it was scored.

Experience with current employer

Respondents were asked when they had first become corporate counsel fortheir present employer; this length of service was used as a proxy forexperience with the firm.

Isolation from firm’s career system

Two items (Gunz & Gunz, 1994b) (alpha = .63) were used: ‘In this organiz-ation it is quite feasible for someone with my qualifications to join the‘“mainstream” management career structure outside the corporate counseldepartment’; and ‘A law degree is seen in this organization as a useful qualifi-cation for senior management outside the law department’ (1 = ‘almostalways untrue’; 5 = ‘almost always true’).

Reward inequity

A single item (Gunz & Gunz, 1994b) was used: ‘The real prestige andrewards in this organization go to people outside the corporate counseldepartment’ (1 = ‘almost always untrue’; 5 = ‘almost always true’).





Vulnerability to work being outsourced

Respondents were asked to estimate, on a five-point scale ranging from ‘veryunlikely’ to ‘very likely’, how likely it was in their organization at presentthat their work would be outsourced (i.e. contracted out to privatepractitioners) in the near future.

Control variables

Professional experience

All practising lawyers in Canada must be admitted to the bar, so the yearssince that date indicate the length of a lawyer’s professional career and wasused here as a proxy for professional experience. There is some evidence thatexperience has an impact on the ethical decision-making style of professionals(Ponemon, 1990, 1992). Similar observations have been made about businesspeople (Weeks et al., 1999). There was also evidence from the present studythat the more experienced a professional, the less difficult they found thevignettes to be. Difficulty was measured by asking respondents, after review-ing each vignette, to rate the difficulty they encountered on a five-point scale(‘very little difficulty’ to ‘a lot of difficulty’). The vignettes varied in difficultyto the respondents (Table 1), so bivariate correlations between difficulty andprofessional experience were computed for each individual vignette as well asfor the combined difficulty. The combined difficulty was negatively and signifi-cantly correlated with professional experience (r = –.171; p < .01 for two-tailed test). Three of the four vignettes individually showed the samesignificant negative correlation (Vignette 1: r = –.131; Vignette 3: r = –.182;Vignette 4: r = –.136; all p < .01), but one, Vignette 2, was not correlated atall (r = –.011). This last was the most difficult overall (Table 1).

Familiarity with ethical dilemmas

It is possible that familiarity with ethical dilemmas (operationalized as thefrequency with which dilemmas are encountered) might affect the way in


Table 1 Difficulty in answering vignettes

Mean difficulty (standard deviation)

Vignette 1 2.24 (1.10)Vignette 2 2.94 (1.11)Vignette 3 2.83 (1.19)Vignette 4 2.68 (1.08)




which people approach such situations. It was positively correlated, forexample, with respondents’ strategic involvement and, for reasons that arenot as easy to interpret, their perception of reward inequity (Table 2). Thoserespondents who had encountered situations of the kind described in thevignettes were asked, on a five-point scale, how common it was for them toencounter situations of that general kind (‘very uncommon’ to ‘verycommon’) in their present position, and how many they had encountered inthe past two years. Grouping the latter measure into four categories (none,1–2, 3–4, 5 or more) and combining it with the former yielded a scale witha standardized item alpha of 0.91; the z-scores of the two variables werecombined in the subsequent analysis (‘dilemma frequency’).

Business education

In countries such as Canada or the US it is common – often required – forprofessionals to have completed a degree, or at least to have had some under-graduate education, before beginning their professional training. It is alsonot at all uncommon for them to have had some graduate education in adiscipline other than their profession. If this non-professional education is inbusiness or management, it is not unreasonable to expect the professional tobe more in tune with the business side of their work if they become employedin a NPO, and, potentially, more drawn to it than professionals who havenot been so educated. Respondents were asked for their degrees andprofessional qualifications. Their business education was coded 3 if they hadundergraduate and graduate business degrees, 2 if they had an MBA, and 1if they had an undergraduate business degree. Most (84%) had neither, but8.5 percent had undergraduate degrees, 6 percent had MBAs, and 1.5 percenthad both.

Analysis

The sample was largely (79%) drawn from the private sector. Half of therespondents (51%) were staff lawyers; the remainder were almost evenly splitbetween sole in-house counsel for the organization (23%) and head of thelaw department (25%). Few were under the age of 30; 35 percent were intheir 30s, 44 percent in their 40s, and 19 percent were 50 years or older.Two-thirds were male. On average it had been 15.5 years (standard devi-ation of 7.8 years) since they had been admitted to the bar, 10.5 (7.2) yearssince they first became in-house counsel, and 7.9 (6.1) years since they hadbecome counsel for their present employers.





As with previous studies, OPC was comparatively low. For the twoitems (which appear to tap somewhat different constructs and probably donot belong on the same scale) the mean OPC levels were respectively 2.0(SD = 1.6) and 2.6 (1.6). These levels are very similar to those from thestudies of Aranya and Ferris (1984) and Gunz and Gunz (1994b); the rangeof reported values from the present study and the two cited studies is2.0–3.2.

Control variables

Years of professional experience was significantly related to the salience oforganizational identity (Table 3), but in a direction that seems somewhatcounterintuitive: the longer the professional experience, the more salient theorganizational identity. Although the two forms of experience measured –with the profession and with the current employer – were (not surprisingly)positively correlated (Table 2), standard checks showed that there was noevidence of multicollinearity when they were both entered into the regression(Table 3). Not surprisingly, professional experience was very strongly cor-related with age (r = .82), and substituting age for professional experience inthe regressions did not change any of the other relationships significantly.Business education had no effect on organizational identity.

Hypotheses 1–6 are concerned with variables that are expected to berelated to the relative salience of respondents’ organizational versus theirprofessional identities. OLS multiple regression was used to test thehypotheses (Table 3).

The prediction of Hypothesis 1, that employee identity salience shouldbe affected by the proportion of time a professional spends on professionalactivities, is supported: the more time spent on professional work, the lesssalient is the organizational identity.

Hypothesis 2 predicted that the less isolated professionals are from thefirm’s strategic decision-making process, the more salient their organizationalidentity should be by comparison with their professional identity. No suchrelationship is evident in the regression results, so Hypothesis 2 is notsupported.

Given that the zero-order correlation between strategic involvementand organizational identity was positive and significant (r = .170; p < .001)but organizational identity is strongly and negatively correlated with timespent on professional work (r = –.542; p < .001), some further analysis wasconducted to see how these three variables were related. Baron and Kenny’s(1986) test of mediation was applied. Each pair of variables was significantlycorrelated, but when strategic involvement and proportion of time spent on






Tabl

e 2

Cor

rela

tion

mat

rix

with

var

iabl

e m

eans

(st

anda

rd d

evia

tions

)

12

34

56

78

910

11

1.Fr

eque

ncy

dile

mm

as m

et–0

.02

(0.9

4)a

2.Ex

peri

ence

as

law

yer

–.04

915

.5 (

7.8)

3.Ex

peri

ence

with

firm

–.03

7.5

52**

*7.

9 (6

.1)

4.M

ains

trea

m a

cces

sibi

lity

.055

–.05

4.0

705.

2 (2

.0)

5.R

ewar

d in

equi

ty.1

20*

–.04

1.0

04–.

291*

**3.

41 (

1.28

)6.

Stra

tegy

invo

lvem

ent

.105

*.2

89**

*.0

59.2

45**

*–.

314*

**0.

01 (

0.88

)7.

Vuln

erab

ility

to

outs

ourc

ing

.059

–.05

6.0

18.0

02.0

52–.

058

1.85

(1.

04)

8.Pr

ofes

sion

al v

s or

g.id

entit

y.0

44.0

92*

–.03

3.1

62**

*–.

116*

.170

***

.058

2.72

(1.

02)

9.T

ime

on p

rofe

ssio

nal w

ork

–.08

5–.

220*

**–.

115*

–.22

0***

.190

***

–.54

2***

.008

–.29

5***

68.7

% (

26.0

%)

10.

Exte

nt o

f bus

ines

s ed

ucat

ion

–.03

6–.

055

–.01

0.0

26.0

23–.

027

–.07

1.0

44.0

340.

25 (

0.63

)11

.O

rgan

izat

iona

l res

pons

es–.

008

–.08

6†–.

083†

–.00

4.0

05–.

039

.104

*.1

57**

*–.

037

.033

1.38

(1.

02)

†p

< .1

.*

p<

.05.

**p

< .0

1.**

*p

< .0

01.

a M

eans

(w

ith s

tand

ard

devi

atio

ns in

par

enth

eses

) ar

e sh

own

in t

he d

iago

nal c

ells

.Va

riabl

es:

1.Fr

eque

ncy

that

eth

ical

dile

mm

as a

re e

ncou

nter

ed.

2.Pr

ofes

sion

al e

xper

ienc

e (y

ears

sin

ce c

alle

d to

bar

).3.

Num

ber

of y

ears

as

corp

orat

e co

unse

l for

cur

rent

em

ploy

er.

4.A

cces

sibi

lity

of o

rgan

izat

ion’

s ca

reer

‘mai

nstr

eam

’ to

law

yers

.5.

Rew

ard

ineq

uity

.6.

Invo

lvem

ent

in t

he fi

rm’s

stra

tegi

c m

anag

emen

t.7.

Vuln

erab

ility

of l

aw d

epar

tmen

t’s w

ork

to o

utso

urci

ng in

the

nea

r fu

ture

.8.

Exte

nt t

o w

hich

sub

ject

see

s hi

m/h

erse

lf as

an

empl

oyee

who

hap

pens

to

have

law

deg

ree

(5),

as o

ppos

ed t

o a

law

yer

with

cap

tive

clie

nt (

1).

9.Pr

opor

tion

of t

ime

spen

t on

pro

fess

iona

l wor

k.10

.Ext

ent

of u

nive

rsity

bus

ines

s ed

ucat

ion.

11.P

rope

nsity

to

answ

er v

igne

ttes

from

org

aniz

atio

nal p

ersp

ectiv

e.




professional work were regressed on organizational identity, the relationshipbetween strategic involvement and organizational identity became non-significant (Beta = .01) while that between the proportion of time spent onprofessional work and organizational identity was unchanged. It appears,then, that the proportion of time spent on professional work fully mediatesthe effect of isolation from the organization’s strategic decision-makingprocesses on organizational identity salience.

There is some indication that the less isolated the respondents feltthemselves to be from the organization’s ‘mainstream’ career system(‘mainstream accessibility’), the more salient their organizational identity(Model 2), providing marginal support for Hypothesis 4. Hypotheses 5a/bproposed an interaction effect, in which respondents’ sense of what we callhere ‘reward inequity’ – the belief that the ‘real’ career rewards go toemployees outside the law department (as it is in this case) – moderates thepositive relationship between mainstream accessibility and salience of


Table 3 Salience of organizational identity (standardized coefficient Betas);a OLSregression

Model 1 Model 2 Model 3

Control variables:Professional experience .096* .122* .114*Frequency dilemmas met .051 .025 .017Extent of business education .055 .050 .044

Mainstream accessibility .088† .468***Reward inequity –.049 .323**Experience with firm –.123* –.128*Strategy involvement –.041 –.030Vulnerability to outsourcing .088† .087†Time on professional work –.281*** –.279***

Accessibility � inequity –.479**

F 2.08 6.49*** 7.08***Adjusted R squared 0.007 0.103 0.124

† p < .1.* p < .05.

** p < .01.*** p < .001.a See Table 2 for key to variables.




organizational identity proposed in Hypothesis 4. Model 3 reveals a signifi-cant interaction term, such that (Figure 1) the positive relationship is onlyevident when reward inequity is low. Hypothesis 5a, which suggested thatreward inequity and inaccessibility of the mainstream career system wouldbe associated with higher salience of the professional identity, then, is notsupported; if anything, there is a slight trend in the opposite direction. Onthe other hand Hypothesis 5b, which proposed that low reward inequity andan accessible mainstream career system would be associated with higherorganizational identity salience, is supported.

The longer the respondents’ experience with their current employer, theless salient their organizational identity, which is the opposite effect to thatpredicted by Hypothesis 3.

Marginal support is provided for Hypothesis 6, concerning the relation-ship between the respondents’ estimate of the likelihood that they felt abouttheir work being outsourced, and salience of their organizational identity.

Hypothesis 7 proposed a link between professionals’ organizationalidentity and the kind of approach they take to resolving ethical dilemmas.Specifically, it suggested that the more salient their organizational identity by


0

0.5

1

1.5

2

2.5

3

3.5

4

2 10

Mainstream accessibility

Org

aniz

atio

nal i

dent

ity

Reward inequity = 1

Reward inequity = 5

Figure 1 Salience of organizational identity, mainstream accessibility, and rewardinequity interaction




comparison with their professional identity, the more likely it is that they will choose organizational rather than professional approaches to ethicaldilemmas. These variables were positively and significantly correlated (r = .157; p < .001). The converse was also the case: the number of vignettesthey answered from a professional perspective was negatively and signifi-cantly correlated with the organizational identity measure (r = –.104; p < .05). It should, of course, be borne in mind that the indices of how pro-fessionally or organizationally inclined respondents were in their answers arenot independent; a forced three-way choice was presented for each vignette(see Notes 2 and 3). That said, Hypothesis 7 is supported.

We also proposed a mediating role for the salience of organizationalidentity, between, on the one hand, the independent variables time spent onprofessional activities, professionals’ involvement in the strategic level of thefirm, length of experience with the firm, isolation from the firm’s mainstreamcareer system, and vulnerability to outsourcing, and on the other hand thetendency to select organizational or professional approaches to the vignettes.Only one of these variables (perceived vulnerability to outsourcing) is directlycorrelated with the choice of action in response to the vignettes (Table 2).However in a Monte Carlo simulation of mediating effects, MacKinnon etal. (2002) showed that the test for mediation with ‘[t]he best balance of TypeI error and statistical power across all cases is the joint significance of thetwo effects comprising the intervening variable effect’ (p. 83). This does notrequire a significant relationship between the independent and dependentvariable. Salience of organizational identity is jointly significantly relatedboth to the proportion of time spent on professional work and length ofexperience with the firm on the one hand, and on the other the choice ofaction in response to the vignettes. Isolation from the mainstream careersystem and vulnerability to outsourcing are both (when controlled for othereffects) only marginally associated with salience of organizational identity.The partial mediating role of organizational identity salience betweenproportion of time spent on professional work and choice of action(Figure 2) is therefore supported.

Since we have already established that the proportion of time spent onprofessional work fully mediates between isolation from the organization’sstrategic decision-making process and the salience of organizational identity,we also have support for a causal chain (Figure 2) in which isolation affectsthe proportion of time spent on professional work, which affects the salienceof the lawyer’s organizational identity, which in turn affects the type of choicehe or she makes when faced with an ethical dilemma.

As just noted, the one independent variable that was correlated withthe tendency to adopt an organizational approach to the vignettes was






H

7

H

4

H5a

/b

H

1

H

3

H

6

–

–

Fig

ure

2M

edia

ting

role

of o

rgan

izat

iona

l ide

ntity

sal

ienc

e




perceived vulnerability to outsourcing. A separate analysis of the organiz-ational response (Gunz & Gunz, 2002) suggested evidence for two distincttypes of organizational identity. The first (which we shall label here O1) isone in which the lawyer warns his or her colleagues of the legal risks of theircourse of action without any implication that he or she will follow throughas an officer of the court (all lawyers who have been called to the bar havethis role). It is, in other words, similar to the professional response, exceptthat he or she stops short of his or her full professional responsibilities, actingas a kind of inside expert advisor. The second type of response (O2) is onein which the respondent adopts a minimalist reaction, maintaining, so tospeak, a watching brief over events but not intervening unless he or she reallyhas to. It seems to be O2 that was responsible for the positive relationshipbetween perceived vulnerability to outsourcing and organizational identity(r = .134; p < .01). There was no significant relationship between the O1

response and perceptions about outsourcing.

Discussion

In this article we have been investigating possible reasons for professionalsemployed in non-professional organizations (NPOs) abandoning, at leastpartially, their professional ethical standards when faced with ethicaldilemmas. We opened with the well-documented observation that many – ifnot most – of the corporate scandals that have been shaking countries suchas the US recently have involved the complicity of professionals acting inways that their professional training and bodies should prevent. We took asour point of departure the now well-established finding that, although onemight expect professionals employed by NPOs to have difficulty reconcilingtheir duties as independent professionals with their responsibilities asemployees (so-called ‘organizational–professional conflict’: OPC), apparentlythey do not. A number of empirical studies designed to examine this questionhave established that the degree of OPC experienced by professionals suchas accountants and in-house lawyers (corporate counsel) is comparativelylow, and it is now well established that organizational commitment andprofessional commitment can be positively correlated.

Building on the work of Wallace (1995b), we explored the possibilitythat this lack of internal conflict can be explained using Stryker and Burke’s(2000) concept of identities. Our primary interest is not identity theory itself;we are merely using it as a means to the end of understanding the ethicalbehaviour of employed professionals. Wallace showed how professionalsemployed by NPOs seem to adopt one of two organizational responses she





named ‘proletarianization’ and ‘adaptation’. We argued that these couldappear at the individual level of analysis as the identities ‘organizational’ and‘professional’, and we put forward a number of suggestions for the contextualfactors that might influence the relative salience of these two identities.Because identity is believed to be linked to behaviour, we proposed that therelative salience of the identity adopted by a professional would influence hisor her approach to handling an ethical dilemma.

We did indeed find evidence that identity shapes intended behaviour.The more salient the organizational identities of our respondents, all lawyersemployed in NPOs, the more likely it was that, when presented with avignette containing an ethical dilemma, they would choose a pre-codedcourse of action that was more to be expected of an ‘ordinary’, non-professional employee of the company than of a lawyer. In other words, ourrespondents did not automatically always choose the professionally correctresponse. The less they saw themselves as lawyers, the more their judgementappeared to resemble that of non-lawyers.

What might differentiate a lawyer who behaves like a lawyer from onewho does not? Identity theory predicts that identity salience is a consequenceof the embeddedness of the role in question in groups that provide contextfor that role. Indeed we found that the less time our respondents spent onprofessional work, the more salient their organizational identities. Theirinvolvement at the strategic level of the organization – for example, theextent to which they felt themselves to be members of the firm’s TMT –appeared to have no effect on identity. However, secondary analysis showedthat this was because the relationship was mediated by the time they spenton non-professional work. The more a corporate counsel worked as amember of the TMT, the less time he or she had for professional work, andthe more salient his or her organizational identity by comparison with his orher professional identity.

We also found some evidence that isolation from the organization’scareer ‘mainstream’ enhanced the salience of a professional identity, as did afeeling of vulnerability to having one’s work outsourced. Both relationshipswere marginally significant. However, the relationship between isolation fromthe mainstream career system and organizational identity was moderated byperceptions of reward inequity. As organizational justice theory predicts, acombination of an accessible mainstream career system and a sense that the‘real’ rewards in the organization were not limited to people outside the lawdepartment (i.e. that the lawyers were not penalized in organizational careerterms for being lawyers) was associated with greater organizational rolesalience.

One variable – perceived vulnerability to outsourcing – differed fromthe others. Secondary analysis suggested that it was most closely related with





a subset of the organizational responses that describe a kind of hands-offbehaviour: of keeping one’s head below the parapet if at all possible, andonly taking professional action if one really has to.

Finally, we found unexpected relationships between professionalexperience (or age), length of experience with the current employer, andidentity salience. The longer the respondent’s professional life, the moresalient was his or her organizational identity. By contrast, the longer theirassociation with their employer, the more salient their professional identity.We can only guess at the reasons for these findings. Age and professionalexperience are, not surprisingly, very closely correlated in the sample, and itis known that age is positively associated with organizational commitment(Smeenk et al., 2006) and organizational citizenship behaviour (Wanxian &Weiwu, 2007). So the former association may simply be an age effect. Thesecond association – the effect of length of experience with the firm – is morepuzzling. Possibly someone who is well established within a company hasthe confidence to adopt a professional identity in the way that someone whois relatively new and comparatively lacking in confidence does not.

Perhaps, then, we are beginning to uncover possible explanations forthe behaviour of the professionals such as lawyers and accountants in theEnron-style scandals of turn-of-the-century western capitalism. The kindsof behaviour specified in the vignettes, of course, are not the egregiouslyunprofessional conduct to which we referred at the beginning of this article,nor are we suggesting that our respondents were anything other than well-trained and highly professional in their work. Nevertheless, although theywere hired as professionals, it seems that the context in which they worked– their proximity to the top management team, the nature of the rewardsystem and the accessibility of non-professional career structures – did affectthe way they responded to ethical dilemmas. And the secondary analysiswhich suggested that the more vulnerable someone feels to their work beingoutsourced, the less likely they were to take a position on ethical issues, isworrying, too.

This suggests a troubling dilemma. As we pointed out at the beginningof this article, it is often argued that corporate counsel should be broughtinto the TMT, so that they are best placed to give professional advice as issuesarise. But the implication of our findings is that this might have the un-intended and undesirable consequence of tempering the professionalism ofthe advice, of shading it in the direction of what the TMT would like to hear,rather than what it should be hearing. In other words, the more corporatelawyers are brought into the strategic counsels of the company, the greaterthe risk that they will no longer be acting exactly like the lawyers thecompany thought it had hired. And that, in turn, potentially poses grave risksfor corporate governance.





The solution, presumably, is a mixture of being aware of the risks ofprofessionals being co-opted by top management rationalities (Whitley,1987), and of ensuring that legal advice is taken from more than one source.Interestingly, while, as we have seen, many have argued that corporatecounsel should be brought into the strategic decision-making of the firm,others have argued the opposite. They maintain that lawyers are there ‘to dolaw’ (Gunz, 1991), that counsel are hired, often at a considerable premium,for their legal expertise rather than their managerial expertise and as such itis a misuse of a valuable resource to distract them from their primaryfunction of delivering legal services. But if so, the employed lawyer is at riskof becoming indistinguishable from the outside lawyer and the value addedthat comes from close interactions with management at early stages indecision-making when paths of action might be changed, is lost.

This study does have limitations, of course. Most obviously, it is astudy of ethical intentions rather than of ethical behaviour, a feature shared,as noted above, by much if not most work in this area. We can never knowwhether a person would do as he or she says he or she would when review-ing a hypothetical case, even though the indications are that this is likely(O’Fallon & Butterfield, 2005; Weber, 1992). Furthermore the vignettesdescribed hypothetical situations that were unrelated (apart from beingabout corporate counsel) to the respondents’ actual positions, so intro-ducing a question of external validity. However, we did indeed find evidencethat respondents’ positions affected their responses, suggesting that at leastsome of the relative salience of the respondents’ professional and organ-izational identities was carrying over to the vignette responses.

Using closed-ended vignettes introduces another issue: asking re-spondents to check one of three responses to necessarily relatively complexvignettes means that they may well find themselves giving answers which donot reflect their real feelings about the situation (Butterfield et al., 2000).Qualitative interviews briefly reported on above suggested that the pre-codedresponses were indeed relatively representative of practising counsels’reactions to the cases. The response rate, as is usually the case in this type ofresearch, was low. Although the normal checks showed no evidence of a non-response bias this cannot be dismissed as a possibility. Finally, we have noway of knowing whether the relationships we observed were a result of theinfluence of the environment in which the professional was working as wehypothesized, or whether a selection effect was at work such that the counselwho were closest to their firms’ TMTs were those whose natural inclinationwas to favour an organizational, rather than a professional, response. Moregenerally, we have suggested a direction of causality in Figure 2 for therelationships between the phenomena we studied, but because the study wascross-sectional we cannot know for sure that we are right.





As ever, these limitations point to the need for future research. Morework is clearly needed to explore the extent to which intentions are carriedover to action. An obvious implication is that it is important to move beyond,if at all possible, self-report studies with hypothetical vignettes. But ethicaldilemmas are both comparatively rare events (the respondents overall saidthat they had met, on average, 1.2 situations of the kind described in thevignettes within the previous two years), and also very sensitive. So a fieldstudy would have difficulty both finding such incidents, and getting peopleto talk about them if it did. However, retrospective studies may be possible.

These findings have brought us a little closer to understanding howemployed professionals handle ethical dilemmas, and what influences mightbe at work to draw them away from the approach that their professionaltraining dictates. They raise the equally important question: can one general-ize the findings from employed professionals to the behaviour of self-employed professionals, when the latter have a particularly close anddependent relationship with a particular client? Is there much of a differencein practice between a firm’s in-house law department and a law firm that hasa very large retainer from a very large client? Recently, the term ‘clientcapture’ has been used to describe the situation in which a powerful clientcontrols the behaviour of its professional advisors. It has been used to explainmany of the recent high-profile governance failures in which legal andaccounting advisors from professional service firms were prominent (Coffee,2003; Leicht & Fennell, 2001; Macey, 2004; Macey & Sale, 2003; Prakash,2004). Perhaps the most spectacular recent example was the ‘capture’ ofArthur Andersen by Enron (Ley Toffler, 2003).

There is clearly still a great deal more that needs doing to explore thisimportant field. Complex societies such as those in western-style economiesrely heavily on the conduct of practitioners of what we call ‘professions’, sothat betrayal of this trust is typically deeply felt and has sweeping impli-cations. The better we understand what is happening, and the more we areable to separate myth from reality, the more secure the complex economicsystems on which we depend are likely to be.

Acknowledgements

We are most grateful to Robert V. Jones and his colleagues at the CanadianCorporate Counsel Association for their extensive help in designing and carryingout the survey described in this article, and to the Social Science and HumanitiesResearch Council of Canada for funding support. Many colleagues have helpedus by commenting on earlier versions of the article, including Martin Evans,Jegoo Lee, Mark Weber, participants at a number of seminars and conferencesessions, and several anonymous reviewers.





Notes

1 The definition of ‘corporate counsel’ in Canada is not precise and lawyers in govern-ment, quasi-governmental bodies, and non-governmental organizations (NGOs)sometimes call themselves corporate counsel and often do not. For this study aconservative approach was taken towards the decision as to whether or not toinclude counsel in the sample, erring in favour of exclusion where any doubt existedabout whether the person could reasonably be thought of as a corporate counsel.

2 A third identity was included, the ‘technician’, derived from the model of Gunz andGunz (1994a). The technician becomes fascinated with the technicalities of theproblem to the exclusion of any wider issues, including ethical ones. It proveddifficult to distinguish from the other two and, perhaps for this reason, was rarelychosen by the respondents. It was not included in the analysis, and is not shown inthe vignettes (Appendix).

3 It was necessary to total each separately because, in fact, respondents had a three-way choice (see Note 2; the third choice [‘technician’] is not included in this analysisfor reasons explained in that endnote).

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Appendix

The four vignettes are reproduced below with, in parentheses following eachoption, the identity (professional or organizational) the option represents. Asexplained in the main body of the text, a third option (technician) wasdropped from the analysis and is not shown here. The professional ethicsissue that each vignette raises is described, where it is not obvious, in italics.

Vignette 1

Several years ago your company formed a legal department and appointedyou as one of three staff lawyers. Before this, the company’s legal work wasdone by an outside counsel. This counsel has developed close relations withthe senior officers of the company, and he has been on the board for manyyears. He has a particularly close relationship with the CEO, to whom youreport. His firm continues to provide specialized legal services to thecompany and the accounts are passed directly to you for signature. However,you have good reason to believe that he is overcharging your company forhis work, and your discussions with him on this matter have had littleimpact.





The client should pay a reasonable sum for legal services and thelawyer should be responsive to a client’s concerns. In this case it isarguable that the client, the corporation, is being over-charged andthere is an inappropriate response to the questioning of these feesbecause of a lack of independence between the CEO and the outsidelawyer. There are also issues of the outside lawyer/board member’spossible conflicts of interest.

You believe that you should (please circle one only):a. Do a proper comparative fee study using firms of equivalent quality,

confirm that these fees are too high, request proposals, and bring the issuewith recommendations for alternative suppliers to the attention of the CEO(to whom you report), and the Board if necessary. (P)

Here counsel sees it as her/his responsibility to pursue the clients’interests to those ultimately responsible for them, namely the Board.

b. Find an opportunity to raise with the CEO (to whom you report)the question of whether he would like you to review the sources of supplyof legal services to the company, just to make sure that the company is gettingbest value for money. If he reacts negatively, you can let the matter lie. (O)

In this case counsel is prepared to allow the CEO, who arguablyher/himself is in a conflict of interest, to make the final decision.

Vignette 2

You are general counsel, and senior officer with responsibility for regulatorymatters, for a Canadian business that was recently bought by a US company.You are also now Canadian counsel for the US company. The attraction tothe new owner was your company’s portfolio of patents which had emergedfrom its R&D efforts. At the time of the takeover, you were primary nego-tiator on behalf of the US company with the Canadian government forformal approval of the takeover. Final approval was subject to the newlyacquired subsidiary’s continued investment in R&D in Canada, and an obli-gation was placed upon the purchaser to report to the Competition Bureauon a timely basis deviations from the meeting of these conditions.

You have become aware that, for all intents and purposes, theCanadian R&D effort has shut down and has been transferred to the parentlocation. You are worried because this appears to violate the agreement. Youbelieve it may also have an impact on your credibility with the regulatory





arm of the government. On the other hand, it is possible that the govern-ment would take no action if this were to be reported since it may sense,accurately in your view, that if it forced the issue, the Americans would closethe subsidiary and Canadian jobs would be lost.

The company has an ethical and legal responsibility to report to theregulator. Counsel, as legal representative of the company, shouldensure that the company is advised of its responsibilities and under-stands that they must be fulfilled. In the qualitative pilot interviews,issues of maintaining confidentiality led some respondents to beconcerned about the correctness of answer b, but for reasons otherthan those mentioned above. In this case, the correct answer might wellbe to resign rather than to be associated with improper actions.

You believe that you should (please circle one only):a. In view of the possible government response and your knowledge

that senior management is aware of its obligations, maintain a watching briefand take no action for the moment. (O)

b. Advise senior management of the Canadian and parent companiesof your concerns. If no changes ensue, you have the responsibility to notifythe Canadian regulator. (P)

Vignette 3

You are general counsel and compliance officer for a distribution company.You report to a Vice President who has been a key figure in the revival ofthe company in the last five years. In the course of your duties you havediscovered that the VP is breaking company policy by suggesting to one ofthe company’s customers that it deal directly with your company’s suppliers.You have established that your company is missing out on substantialamounts of business and profits as a result. You have been told that there isno evidence that the VP is receiving any direct financial benefits from thecustomer, but she does get wined and dined a lot by the customer and is ofteninvited to golf games.

The VP is breaking company policy, has cost the company a consider-able amount of money, and will continue to do so if not stopped. If the mattercomes to light subsequently, people might also discover that you knew aboutit earlier but did nothing. On the other hand, the VP has been a key figurein the revival of the company in the last five years and is a very powerfulmember of the top management team. You are concerned that you mightmake an enemy of the VP, to whom you report, if you were to raise theproblem with her. In any event, you are not sure what impact your wordalone might have.





Counsel’s responsibilities include issues of compliance and s/he mustensure these are fulfilled irrespective of self-interest. Counsel must servethe client company and not second-guess what those ultimately respon-sible for policy compliance might do. The responsibility is to reportinfractions irrespective of personal self-interest.

You believe that you should (please circle one only):a. Have a quiet word with the VP, tactfully suggesting that you think

that it would be in the best interests of both the company and herself if shewere to desist. (O)

Here there is no indication counsel will pursue the matter should theinfractions persist.

b. Go to the VP to discuss what you know. Advise the VP that you areobliged to report this to her superior, the CEO. You would prefer that sheand you go to the CEO together to discuss the matter but, if necessary, youwill go alone. (P)

This would generally be considered the appropriate ethical stance.

Vignette 4

You are general counsel and compliance officer for a large corporation witha major public profile. The ethnic composition of the top management team(TMT) is almost uniformly WASP (White Anglo-Saxon Protestant). It iscommon for these senior colleagues to inject racist comments into theirconversation. You know that if the media became aware of these commentsit would not only be a public relations disaster, but many employees andwould-be employees would have prima facie cases under variousequity/human rights statutes against the corporation. You are worried aboutthe possibility of a disaffected employee somehow making the issue public,perhaps using surreptitious recordings of your colleagues’ conversations.

On the other hand, the TMT members are your close colleagues andfriends. You are also worried about their reaction if you were to challengetheir basic behaviours. Already your discreet suggestions to them that theirbehaviour should be modified have been met with mild derision.

In each of the courses of action below it is assumed that appropriatesteps have been taken to preserve solicitor/client privilege.

The ethical responsibility of legal counsel is to ensure that all partiesare advised of the inappropriateness/illegality of the actions. Should the





behaviour persist even following an appropriate message being given,the lawyer would likely need to resign or risk being associated them-selves with the behaviour.

You believe that you should (please circle one only):a. At the next meeting of the TMT, plan to initiate a non-minuted, in

camera discussion in which you explain to the team your concerns about thepotential harm to the company if knowledge of these habits/practicesbecomes public. Suggest to them that they relax only when they are meetingwith colleagues in whom they have great trust. (O)

While it is possible this might be an adequate precursor to b, the clearimplication in the final sentence is that counsel is advising them theymay persist with the inappropriate behaviour so long as they arediscreet.

b. Ask for this issue to be put on the agenda for the next TMT meeting.Prepare a memorandum for discussion at the meeting explaining the legalrisks to the corporation and individuals, and advise the TMT that, if thereis a failure to change existing habits/practices, you are obligated to reportyour concerns to the Board of Directors. (P)

While counsel might initially select a less formal approach, thisultimately will be the type of action required to ensure the client/corporation is adequately protected.

Hugh Gunz has PhDs in Chemistry and Organizational Behaviour. Heis currently Professor of Organizational Behaviour at the Rotman Schoolof Management, University of Toronto and Chair of the Department ofManagement at the University of Toronto Mississauga, having previouslytaught at the University of Manchester. He has published articles on thecareers of managers, professionals and others, the management of tech-nical professionals, and management education, is the author of the bookCareers and corporate cultures (1989), and the co-editor of the Handbookof career studies (2007). He is Associate Editor of M@n@gement, andserves on the editorial boards of Academy of Management Journal, Journalof Managerial Psychology, and Emergence.[E-mail: [email protected]]





Sally Gunz is a Professor of Business Law and Accounting Ethics and isDirector of the Centre for Accounting Ethics, School of Accountancy,University of Waterloo. She is the author of the book The new corporatecounsel and has published articles on ethical decision-making byprofessional accountants and lawyers and legal issues for accountants. Sheis a section editor (accounting and finance) for The Journal of BusinessEthics and is a staff editor for Journal of Legal Studies Education. She is aformer president of the Academy of Legal Studies in Business.[E-mail: [email protected]]





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An Identity Theory Approach To